<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
---------
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
-----------------------------------
For fiscal year ended June 30, 1994 Commission file
number 1-7899
BELL INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 95-2039211
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11812 San Vicente Blvd., Los Angeles, California 90049-5069
- - ------------------------------------------------ ----------
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (310) 826-2355
Securities registered pursuant to Section 12(g) of the Act:
<TABLE>
<S> <C>
Name of each exchange
Title of each class on which registered
- - ------------------- -------------------
Common stock, $.25 par value New York Stock Exchange
Pacific Stock Exchange
</TABLE>
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein.
NOT APPLICABLE X
---
As of August 22, 1994, the aggregate market value of the voting stock held by
non-affiliates of the Registrant was: $108,930,268.
As of August 22, 1994, the number of shares outstanding of the Registrant's
class of common stock, $.25 par value was: 6,147,771.
DOCUMENT INCORPORATED BY REFERENCE
----------------------------------
Proxy Statement for the 1994 Annual Meeting
of Shareholders, November 1, 1994. PART III
<PAGE> 2
PART I
Item 1. Business
Bell Industries, Inc. ("Bell" or "the Company") is primarily a national
distributor of electronic components. In addition, Bell also distributes
graphic arts and recreational-related products. Bell presently employs 1,400
persons.
The Electronics Group (79% of 1994 sales) includes one of the nation's largest
electronic components distributors, which sells semiconductors; passive and
electromechanical components; connectors; and personal computers, software and
related accessories. The group also manufactures high-precision,
close-tolerance products for the computer and aerospace markets. The Graphic
Arts Group (13% of 1994 sales) distributes electronic imaging equipment, film,
plates, chemicals, and related supplies throughout California and southern
Nevada to the advertising and printing industries. After-market products for
the recreational vehicle, motorcycle, mobile home, snowmobile, and marine
industries are distributed by the Recreational Products Group (8% of 1994
sales).
The Electronics Group's distribution business markets electronic components
through seven regional service centers and over 20 sales facilities located
throughout the United States. Regional service centers support selling
operations in the following geographic areas and locations: Northwest
(Sunnyvale, California); Southwest (Orange County, California); Central
(Chicago, Illinois); Heartland (Indianapolis); Northeast (Boston,
Massachusetts); Mid-Atlantic (Philadelphia, Pennsylvania) and Southern
(Orlando, Florida). The group's microcomputer distribution and services
business is based in Indianapolis, Indiana and provides services through four
facilities located in Indiana, Ohio and Kentucky. Electronics manufacturing
facilities are located in Redmond, Washington, Mountain View, California and
Gardena, California.
The Graphic Arts Group is based in Los Angeles, California and markets its
products through five distribution facilities located in California and Nevada.
The Recreational Products Group distributes products from facilities in St.
Paul, Minnesota and Milwaukee, Wisconsin.
For additional information regarding the Company's business and developments
during the year, see "Item 7. Management's Discussion and Analysis of Results
of Operations and Financial Condition."
In 1994, the Company acquired LMB Microcomputers, Inc., a privately-owned
personal computer reseller, which complements Bell's established presence in
the major corporate and institutional PC market in the Midwest.
2
<PAGE> 3
Item 2. Properties
At June 30, 1994, the Company leased 52 facilities containing approximately
818,000 square feet and owned 9 facilities containing an aggregate of
approximately 333,000 square feet. The facilities utilized by each of the
Company's business segments are set forth in the following table:
<TABLE>
<CAPTION>
Area in Square Feet
(number of locations)
---------------------------------------
Owned Leased
------------ -------------
<S> <C> <C>
Electronics Group 78,000 (4) 376,000 (35)
Graphic Arts Group 73,000 (5)
Recreational Products
Group 67,000 (1) 98,000 (1)
Corporate and other 36,000 (3)
Discontinued operations 188,000 (4) 235,000 (8)
------- -------
333,000 (9) 818,000 (52)
======= =======
</TABLE>
For the most part, the Company's facilities are fully utilized, although excess
capacity exists from time to time, based on product mix and demand. Management
believes that these properties are in good condition and suitable for their
present use.
The Company has subleased substantially all of the facilities related to
discontinued operations.
3
<PAGE> 4
Item 3. Legal Proceedings
The Company is not involved in any litigation of a material nature which might
affect its financial condition.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Executive Officers of the Registrant
The Executive Officers of the Registrant, all of whom hold office until the
meeting of the Board of Directors following the next annual meeting of
shareholders and until their successors have been elected or appointed, are as
follows:
<TABLE>
<CAPTION>
Year First
Named
Name Age Position Officer
- - ---- --- -------- ----------
<S> <C> <C> <C>
Paul F. Doucette 48 Senior Vice President (1) 1981
Tracy A. Edwards 37 Vice President and Chief
Financial Officer (2) 1991
Gordon M. Graham 59 Senior Vice President (3) 1986
D. J. Hough 57 Vice President 1984
Bruce M. Jaffe 50 Executive Vice President and
Chief Operating Officer (3) 1973
Theodore Williams 74 President and Chief
Executive Officer (3) 1969
Stephen A. Weeks 43 Treasurer and
Corporate Controller (4) 1994
</TABLE>
(1) Paul F. Doucette's wife is the niece of Theodore Williams.
(2) Tracy A. Edwards was a Senior Manager with Price Waterhouse for the
five years prior to his appointment as Vice President and Chief
Financial Officer.
(3) Also serves as a member of the Board of Directors.
(4) Stephen A. Weeks was employed in several accounting management
positions for the five years prior to his appointment as Treasurer.
4
<PAGE> 5
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
Bell's common stock (ticker symbol BI) is listed on the New York and Pacific
Stock Exchanges. The following table shows the high, low and closing market
prices for the Company's common stock during the most recent two years.
<TABLE>
<CAPTION>
Quarter ended Sep. 30 Dec. 31 Mar. 31 Jun. 30
- - ----------------------------------------------------------------
<S> <C> <C> <C> <C>
Fiscal 1994
Price: High $17.13 $18.75 $19.75 $17.63
Low 13.38 16.50 14.63 14.50
Close 17.13 17.50 14.88 16.63
Fiscal 1993
Price: High $11.25 $12.50 $12.75 $14.00
Low 9.50 9.75 9.25 11.50
Close 10.00 11.63 11.88 13.88
</TABLE>
The Company declared and paid dividends of $.10 per share for the quarters
ended September 30, 1992 and December 31, 1992. No cash dividends have been
declared subsequent to December 31, 1992. In July 1993, the Company declared a
4% stock dividend payable to shareholders of record on August 20, 1993. Fiscal
1993 per share prices in the table above were not adjusted for the stock
dividend.
Approximate number of record holders of common stock as of August 22, 1994:
1,500.
5
<PAGE> 6
Item 6. Selected Financial Data
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
- - --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating Results
- - -----------------
Net sales $451,153 $365,323 $353,347 $317,125 $308,151
Income (loss) from
continuing operations,
net of taxes (1) $ 9,075 $ 5,005 $ 919 $ (677) $ 6,050
Net income (loss) $ 9,075 $ (5,025) $ 417 $ 678 $ 8,202
Capital expenditures $ 2,562 $ 5,744 $ 8,669 $ 5,725 $ 5,429
Depreciation and
amortization $ 5,574 $ 5,735 $ 4,935 $ 5,695 $ 5,682
Financial Position
- - ------------------
Working capital $107,455 $ 97,710 $114,715 $118,853 $ 90,924
Total assets $184,713 $175,272 $191,557 $189,167 $175,947
Long-term liabilities $ 39,972 $ 47,569 $ 52,592 $ 57,159 $ 29,569
Shareholders' equity $ 95,553 $ 86,288 $ 92,338 $ 93,996 $ 94,838
Share and Per Share Data (2)
- - ----------------------------
Income (loss) from
continuing operations,
net of taxes $ 1.45 $ .81 $ .15 $ (.11) $ .99
Net income (loss) $ 1.45 $ (.81) $ .07 $ .11 $ 1.35
Cash dividends
declared (3) $ .20 $ .40 $ .40 $ 4.37
Shareholders' equity $ 15.55 $ 14.08 $ 15.09 $ 15.41 $ 15.73
Market price - high $ 19.75 $ 14.00 $ 13.13 $ 18.38 $ 18.75
Market price - low $ 13.38 $ 9.25 $ 9.00 $ 9.38 $ 13.25
Weighted average
common shares
outstanding (000's) 6,263 6,185 6,163 6,124 6,087
Financial Ratios
- - ----------------
Current ratio 3.2 3.4 3.5 4.1 2.8
Return on average
shareholders' equity 10.0% (5.6)% 0.4% 0.7% 7.9%
Long-term liabilities
to total capitalization 29.5% 35.5% 36.3% 37.8% 23.8%
</TABLE>
(1) Includes before-tax provisions for computer write-down ($4,400) in
1992 and facility closure ($3,500) in 1991.
(2) Adjusted to give effect to 4% stock dividend declared in July 1993
(excluding cash dividend and market price data).
(3) Includes special cash dividend of $4.00 per share declared in 1990.
6
<PAGE> 7
Item 7. Management's Discussion and Analysis of Results of
Operations and Financial Condition
RESULTS OF OPERATIONS
Results of operations by business segment were as follows
(in thousands):
<TABLE>
<CAPTION>
Year ended June 30 1994 1993 1992
- - -----------------------------------------------------------------------
<S> <C> <C> <C>
Net sales
Electronics $357,968 $282,190 $274,555
Graphic Arts 58,764 55,410 52,790
Recreational Products 34,421 27,723 26,002
-------- -------- --------
$451,153 $365,323 $353,347
======== ======== ========
Operating income
Electronics $ 23,741 $ 17,543 $ 15,935
Graphic Arts 1,405 2,115 1,606
Recreational Products 3,050 2,550 2,536
-------- -------- --------
Operating income 28,196 22,208 20,077
Corporate costs (7,975) (8,005) (8,272)
Computer write-down (4,400)
Interest expense (4,492) (5,538) (5,432)
Income tax provision (6,654) (3,660) (1,054)
-------- -------- --------
Income from
continuing operations 9,075 5,005 919
Discontinued operations
Loss from operations,
net of taxes (1,100) (502)
Loss on disposal,
net of taxes (8,100)
Cumulative effect of
accounting change,
net of taxes (830)
-------- -------- --------
Net income (loss) $ 9,075 $ (5,025) $ 417
======== ======== ========
</TABLE>
FISCAL 1994 COMPARED WITH FISCAL 1993
Overall Results
For fiscal 1994, net sales increased 23% to $451.2 million and operating income
increased 27% to $28.2 million. Income from continuing operations, as well as
net income, was $9.1 million, or $1.45 per share, compared to income from
continuing operations of $5 million, or $.81 per share, in fiscal 1993. After
providing for the effects of an accounting change and losses on discontinued
operations, the Company recorded a net loss of $5 million, or $.81 per share,
in the prior year.
7
<PAGE> 8
Continuing Operations
Electronics Group sales increased 27% to $358 million and operating income
increased 35% to $23.7 million. The improved performance was primarily
attributed to strong electronic component shipments, including the first
significant sales from the Company's franchise agreement with IBM
Microelectronics. Operating income improvement was attributed to stronger
sales, while operating expenses remained unchanged due to the Company's
restructuring and cost control programs. These improvements were partially
offset by reductions in gross margins in electronic components sales due to
product mix changes primarily arising from increased sales of lower margin
memory and microprocessor products. While IBM products contributed to the
group's excellent performance for the year, the longer term impact of this line
on the Company's electronics business is difficult to judge given IBM's recent
entry in the electronic component merchant market.
The Electronics Group sells the following products to over 20,000 customers
nationally: semiconductors (Analog Devices, IBM, Maxim, National
Semiconductor, SGS-Thomson, Siliconix); passive components (Aromat, Bourns,
Kemet, Vishay); connectors (Amphenol, Berg); computers (Apple, Compaq,
Hewlett-Packard, IBM); power supplies (Power-One) and board-level products. The
group provides value-added services including Bell's Just-In-Time Delivery
System, assembly of custom cables, harnesses and connectors, contract
purchasing and direct programming of chips. Group manufacturing operations
produce switches, push-buttons and electroluminescent panels used in commercial
aircraft; precision stampings used in the personal computer industry; and
electronic components including coils, filters and chokes marketed under the
J. W. Miller name.
Graphic Arts Group sales increased 6% to $58.8 million while operating income
decreased 34% to $1.4 million. Margin pressures resulting from adverse economic
conditions in California contributed to the overall decrease in operating
performance for the group. Results during the last half of fiscal 1994
improved over the first six months as a result of programs to increase gross
margins and reduce operating expenses.
Major product lines distributed by the Graphic Arts Group include film, plates,
chemicals and other printing supplies from Agfa, DuPont, Eastman Kodak, and 3M,
as well as prepress and related electronic imaging equipment from Agfa, Apple,
Howtek, Intergraph, and Screen.
Sales and operating income for the Recreational Products Group increased 24% to
$34.4 million and 20% to $3.1 million, respectively. Sales and income growth
resulted from enhanced efforts to penetrate winter product markets and the
expansion of certain product lines.
8
<PAGE> 9
The Recreational Products Group sells parts and accessories to dealers for
motor homes, mobile homes, motorcycles, snowmobiles, boats and other
recreational vehicles. The group supplies more than 9,000 recreational
vehicle-related products, as well as over 8,500 marine items, 11,000 motorcycle
items, and 4,000 snowmobile items. Major product lines distributed by the group
include Alcoa, Coleman/Recreational Products, Inc., Dunlop, NGK, and Nordyne.
The following table sets forth the consolidated percentage relationship of
various costs and expenses to net sales:
<TABLE>
<CAPTION>
Year ended June 30 1994 1993 1992
- - ------------------------------------------------------------------
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Cost of products sold (77.5) (75.3) (74.9)
Selling, general and
administrative expenses (18.0) (20.8) (21.8)
Computer write-down (1.2)
Interest expense (1.0) (1.5) (1.5)
------ ------ ------
Income from continuing
operations before income taxes 3.5 2.4 .6
Income tax provision (1.5) (1.0) (.3)
------ ------ ------
Income from continuing operations 2.0% 1.4% .3%
====== ====== ======
</TABLE>
The increase in cost of products sold primarily resulted from product mix
changes in electronics distribution. Selling, general and administrative
expenses decreased as a result of cost control programs. Interest expense
decreased due to reductions in long-term debt. The Company's income tax rate on
continuing operations was 42% in both fiscal 1994 and 1993. In fiscal 1992, the
income tax rate of 53.5% resulted from lower earnings and the effects of
certain expenses for which tax benefits are limited, including goodwill and
state income taxes.
Discontinued Operations
During the last half of fiscal 1993, the Company recorded an after-tax charge
of $8.1 million in connection with a plan to dispose of its Building Products
Group. Income tax benefits of approximately $5.9 million were recorded in
connection with the disposal charge. In July 1993, the Company sold a majority
of the assets of the discontinued operations for approximately $11 million in
cash. During the first quarter of fiscal 1995, the Company sold substantially
all of the remaining operating net assets of the discontinued operations for
cash and notes totaling approximately $4.5 million.
9
<PAGE> 10
FISCAL 1993 COMPARED WITH FISCAL 1992
For fiscal 1993, net sales increased 3% to $365.3 million and operating income
increased 11% to $22.2 million. Income from continuing operations was
$5 million, or $.81 per share, compared to income from continuing operations of
$0.9 million, or $.15 per share, for the prior year. The Company recorded a net
loss of $5 million, or $.81 per share, compared to net income of $0.4 million,
or $.07 per share, in fiscal 1992.
Electronics Group sales increased 3% to $282.2 million and operating income
increased 10% to $17.5 million. Sales growth was primarily attributed to strong
electronic component and computer systems shipments in the eastern, southern
and southwestern United States. Value-added and telemarketing programs also
contributed to the solid sales performance. In addition, sales increased as a
result of strong shipments of precision-stamped metal products for the
electronics and computer industries. Operating income improvement was
attributed to sales growth and previously announced restructuring and payroll
cost reduction programs and increased manufacturing volumes. These improvements
were partially offset by reductions in gross margins in electronics
distribution during the year due to product mix changes and competitive
pressures.
Graphic Arts Group sales were $55.4 million, a 5% increase over the prior year.
Operating income increased 32% to $2.1 million. Sales and operating income
benefited from the expansion into new product lines, including electronic
imaging equipment, and stronger market performance in northern California.
Operating margins improved as a result of efficiency programs.
Recreational Products Group sales increased 7% due to stronger marketing
efforts and favorable weather conditions. Operating income increased slightly
as a result of increased sales offset by decreases in gross margins due to
competitive pricing efforts and changes in product mix.
10
<PAGE> 11
FINANCIAL CONDITION
At June 30, 1994, the Company continued to maintain a strong financial position
as set forth in the following table (dollars in thousands, except per share
amounts):
<TABLE>
<CAPTION>
June 30 1994 1993
- - -----------------------------------------------------------------------
<S> <C> <C>
Cash and cash equivalents $ 4,370 $ 10,717
Working capital $ 107,455 $ 97,710
Current ratio 3.2:1 3.4:1
Long-term liabilities to
total capitalization 29.5% 35.5%
Shareholders' equity per share $ 15.55 $ 14.08
Days' sales in receivables 47 49
Days' sales in inventories 73 91
</TABLE>
In fiscal 1994, operating activities generated cash totaling $6.6 million
compared to $2.7 million in the prior year. The increase in operating cash
flows in fiscal 1994 was primarily related to the growth in earnings offset by
increased investment in working capital required to support the Company's
electronics business. Cash provided by investing activities included the
proceeds from the sale of certain assets of discontinued operations. Offsetting
these proceeds were payments for accounts payable and other obligations
relating to the discontinued operations. In addition, the Company invested $5.9
million to acquire a microcomputer distribution and services business during
the year. Investing activity cash flows in the prior year included the addition
of peripheral equipment for the Company's computer system and the addition of
leasehold improvements and related equipment at the Company's corporate
offices. Financing activity cash flows primarily included scheduled and
optional repayments on the Company's Senior Notes. Non-cash investing and
financing activities for fiscal 1994 included a $1.6 million equipment
addition which was financed through a capital lease.
The Company believes that sufficient cash resources exist to support short-term
requirements, including debt and lease payments, and longer term objectives,
through available cash, bank borrowings, cash realized on the disposition of
discontinued operations, and cash generated from continuing operations.
11
<PAGE> 12
Item 8. Financial Statements and Supplementary Data
<TABLE>
<CAPTION>
Index to Financial Statements Page
- - ----------------------------- ----
<S> <C>
Financial Statements:
Report of Independent Accountants 13
Consolidated Statement of Operations for the
three years ended June 30, 1994 14
Consolidated Balance Sheet at June 30, 1994 and 1993 15
Consolidated Statement of Shareholders' Equity for
the three years ended June 30, 1994 16
Consolidated Statement of Cash Flows for the
three years ended June 30, 1994 17
Notes to Consolidated Financial Statements 18-26
Financial Statement Schedule:
For the three years ended June 30, 1994
VIII - Valuation and Qualifying Accounts and Reserves 28
</TABLE>
The financial data included in the financial statement schedule should be read
in conjunction with the consolidated financial statements. All other schedules
have been omitted because they are not applicable or the required information
is shown in the consolidated financial statements or notes thereto. The
individual financial statements of the Company have been omitted since the
Company is primarily an operating company and the subsidiaries included in the
consolidated financial statements are considered wholly owned and deemed to be
totally held and do not have indebtedness to any person other than the Company
or its consolidated subsidiaries in amounts which together exceed five percent
of total consolidated assets as of June 30, 1994.
12
<PAGE> 13
REPORT OF INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
To the Board of Directors and
Shareholders of Bell Industries, Inc.
In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of Bell Industries, Inc. and its subsidiaries at June 30, 1994 and
1993, and the results of their operations and their cash flows for each of the
three years in the period ended June 30, 1994, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As discussed in the Notes to Consolidated Financial Statements, the Company
changed its method of accounting for postretirement benefits in fiscal 1993.
PRICE WATERHOUSE LLP
Los Angeles, California
August 3, 1994
13
<PAGE> 14
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
Year ended June 30 1994 1993 1992
- - -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $451,153 $365,323 $353,347
------------------------------------------
Costs and expenses
Cost of products sold 349,573 275,081 264,634
Selling, general and
administrative expenses 81,359 76,039 76,908
Interest expense 4,492 5,538 5,432
Computer write-down 4,400
------------------------------------------
435,424 356,658 351,374
------------------------------------------
Income from continuing
operations before income taxes 15,729 8,665 1,973
Income tax provision 6,654 3,660 1,054
------------------------------------------
Income from continuing operations 9,075 5,005 919
Discontinued operations
Loss from operations,
net of taxes (1,100) (502)
Loss on disposal, net of taxes (8,100)
Cumulative effect of
accounting change, net of taxes (830)
------------------------------------------
Net income (loss) $ 9,075 $ (5,025) $ 417
==========================================
SHARE AND PER SHARE DATA
Income from continuing operations $ 1.45 $ .81 $ .15
Discontinued operations
Loss from operations, net of taxes (.18) (.08)
Loss on disposal, net of taxes (1.31)
Cumulative effect of
accounting change, net of taxes (.13)
------------------------------------------
Net income (loss) $ 1.45 $ (.81) $ .07
==========================================
Cash dividends declared $ $ .20 $ .40
==========================================
Weighted average common
shares outstanding 6,263 6,185 6,163
==========================================
</TABLE>
14
<PAGE> 15
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
<TABLE>
<CAPTION>
June 30 1994 1993
- - ---------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 4,370 $ 10,717
Accounts receivable, less allowance for
doubtful accounts of $884 and $1,271 65,835 50,215
Inventories 80,179 71,543
Prepaid expenses and other 6,259 6,650
-------------------------
Total current assets 156,643 139,125
-------------------------
Properties, at cost
Land 443 443
Buildings and improvements 8,750 8,767
Equipment 31,269 30,224
-------------------------
40,462 39,434
Less accumulated depreciation (24,284) (22,733)
-------------------------
Total properties 16,178 16,701
-------------------------
Other assets
Goodwill and other intangibles, less
accumulated amortization of $4,638 and $4,126 6,738 5,521
Net assets of discontinued operations 383 7,752
Deferred tax benefits and other 4,771 6,173
-------------------------
Total other assets 11,892 19,446
-------------------------
$ 184,713 $ 175,272
=========================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 28,885 $ 20,465
Accrued payroll 6,114 4,868
Accrued liabilities 5,254 5,643
Current portion of long-term liabilities 7,616 9,703
Income taxes payable 1,319 736
-------------------------
Total current liabilities 49,188 41,415
-------------------------
Long-term liabilities
Notes payable 32,857 41,000
Obligations under capital leases 3,234 3,364
Deferred compensation and other 3,881 3,205
-------------------------
Total long-term liabilities 39,972 47,569
-------------------------
Shareholders' equity
Preferred stock, $1 par value
Authorized-1,000,000 shares
Outstanding-none
Common stock, $.25 par value
Authorized-10,000,000 shares
Outstanding-6,146,107 shares and
6,130,422 shares 1,537 1,533
Other paid-in capital 47,167 46,981
Reinvested earnings 46,849 37,774
-------------------------
Total shareholders' equity 95,553 86,288
Commitments and contingencies
-------------------------
$ 184,713 $ 175,272
=========================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
15
<PAGE> 16
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Dollars in thousands)
<TABLE>
<CAPTION>
Other
Common stock paid-in Reinvested
Shares Amount capital earnings
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at
June 30, 1991 5,863,387 $ 1,466 $ 43,407 $49,123
Exercise of
stock options 18,850 5 270
Net income 417
Cash dividends (2,350)
- - -------------------------------------------------------------------------------
Balance at
June 30, 1992 5,882,237 1,471 43,677 47,190
Exercise of
stock options 12,400 3 150
Net loss (5,025)
Cash dividends (1,178)
4% stock dividend 235,785 59 3,154 (3,213)
- - -------------------------------------------------------------------------------
Balance at
June 30, 1993 6,130,422 1,533 46,981 37,774
Exercise of
stock options 15,685 4 186
Net income 9,075
- - -------------------------------------------------------------------------------
Balance at
June 30, 1994 6,146,107 $1,537 $47,167 $46,849
===============================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
16
<PAGE> 17
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Year ended June 30 1994 1993 1992
- - -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Cash received from customers $437,143 $401,801 $410,532
Cash paid to suppliers and employees (421,052) (390,628) (383,791)
Interest paid (4,979) (5,664) (5,276)
Income taxes paid (4,561) (2,806) (528)
------------------------------------
Net cash provided by operating activities 6,551 2,703 20,937
------------------------------------
Cash flows from investing activities:
Purchases of equipment and improvements (2,562) (5,744) (8,669)
Disposal of discontinued operations 7,369
Purchase of business (net of cash received) (5,864)
Other 121 43 363
------------------------------------
Net cash used in investing activities (936) (5,701) (8,306)
------------------------------------
Cash flows from financing activities:
Bank borrowings (payments), net 2,000 (1,600) (1,600)
Proceeds from capital lease arrangements 5,411
Payments on Senior Notes (12,600) (2,000)
Payments on capital leases (1,362) (939)
Dividends paid and other (1,766) (2,532)
------------------------------------
Net cash used in financing activities (11,962) (894) (4,132)
------------------------------------
Net increase (decrease) in cash
and cash equivalents (6,347) (3,892) 8,499
Cash and cash equivalents at
beginning of year 10,717 14,609 6,110
------------------------------------
Cash and cash equivalents at
end of year $ 4,370 $ 10,717 $ 14,609
====================================
Reconciliation of net income (loss) to
net cash provided by operating activities:
Net income (loss) $ 9,075 $ (5,025) $ 417
Loss on disposal of discontinued operations 8,100
Cumulative effect of accounting change 830
Depreciation and amortization 5,011 5,036 4,090
Amortization of intangibles 563 699 845
Computer write-down 4,400
Provision for losses on accounts receivable 755 2,022 1,457
Changes in assets and liabilities
net of effects of discontinued operations:
Accounts receivable (14,010) (2,882) (3,872)
Inventory (6,384) 866 5,614
Accounts payable 8,168 (3,549) 3,642
Deferred compensation and
other liabilities 857 (3,017) 3,317
Income taxes 2,169 (327) 819
Other 347 (50) 208
------------------------------------
$ 6,551 $ 2,703 $ 20,937
====================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
17
<PAGE> 18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF ACCOUNTING POLICIES
Principles of consolidation - The consolidated financial statements include the
accounts of the Company and its subsidiaries, all of which are wholly owned.
All significant intercompany transactions have been eliminated.
Cash and cash equivalents - The Company considers all highly liquid investments
purchased with an original maturity date of three months or less to be cash
equivalents. The carrying amount of cash equivalents approximates fair value.
Revenue recognition and receivables - The Company is a distributor of
electronic components, graphic arts supplies and equipment, and
recreational-related products. Sales are recognized and trade receivables are
recorded when products are shipped. Concentrations of credit risk with respect
to trade receivables are limited due to the large number and general dispersion
of trade accounts which constitute the Company's customer base. The Company
performs ongoing credit evaluations of its customers and generally does not
require collateral. The Company estimates reserves for potential credit losses
and such losses have been within these estimates.
Inventories - Inventories are stated at the lower of cost (determined using
weighted average and first-in, first-out methods) or market (net realizable
value).
Properties, depreciation and amortization - All properties are depreciated
using the straight-line method based upon estimated useful lives which range
from 15 to 40 years for buildings and 3 to 10 years for machinery and
equipment. Leasehold improvements and assets recorded under capital leases are
amortized over the shorter of their estimated service lives or the term of the
lease.
Intangibles - Cost in excess of the fair value of net assets of purchased
businesses (goodwill) is amortized using the straight-line method over 25
years. The costs of other intangible assets purchased from acquired businesses,
primarily composed of customer lists, franchise agreements and the assembled
work force, are being amortized using the straight-line method over their
estimated lives ranging from 5 to 10 years.
Income taxes - Provision is made for the tax effects of temporary differences
between the financial reporting basis and the tax basis of the Company's assets
and liabilities. In estimating deferred tax balances, the Company considers all
expected future events other than enactments of changes in the tax law or
rates.
18
<PAGE> 19
Stock option plans - The Company recognizes compensation expense relating to
the plans in an amount equal to the difference between the market value of
shares at the date of option grant and the expected proceeds upon exercise.
Such compensation expense is accrued ratably over the period to be benefited.
When an installment of a grant is exercised, common stock is credited with the
par value of shares issued and other paid-in capital is credited with the
balance of market value at date of grant.
Per share data - Operating results data per common and common equivalent share
is based upon the weighted average number of common and common equivalent
shares outstanding, after adjustment to reflect the 4% stock dividend declared
in July 1993. Common equivalent shares represent the net number of shares which
would be issued assuming the exercise of dilutive stock options, reduced by the
number of shares which could be repurchased from the proceeds of such
exercises.
ACCOUNTING CHANGES
During fiscal 1993 the Company adopted two new accounting principles, Statement
of Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions" and SFAS No. 109 "Accounting for
Income Taxes."
The Company provides postretirement medical coverage for qualifying employees.
Annual costs associated with these benefits, which were immaterial to the
Company's financial results, were previously expensed as incurred. In 1993, the
Company implemented SFAS No. 106 and elected to record the previously
unrecognized obligation covering prior years for postretirement medical
coverage provided to qualifying employees. The charge of $830,000 relating to
this accounting change was recorded net of estimated tax benefits of $600,000.
Accumulated and vested benefit obligations relating to postretirement medical
benefits were not significant at June 30, 1994 and 1993.
SFAS No. 109 replaced the Company's prior method of accounting for income taxes
under SFAS No. 96. The cumulative and current annual impact of the accounting
change was not material to the financial position or operating results of the
Company.
DISCONTINUED OPERATIONS
In April 1993, the Company's Board of Directors adopted a plan to dispose of
its Building Products Group. In connection with this plan, the Company recorded
an after-tax loss on disposal of $8.1 million which included a provision for
future operating costs during the phase-out period, primarily lease commitments
of approximately $2.0 million, and adjustments of net assets to estimated
realizable values. Income tax benefits of $5.9 million were recorded in
connection with the disposal charge.
19
<PAGE> 20
Summarized operating results of discontinued operations through the measurement
date of March 31, 1993 were as follows (in thousands):
<TABLE>
<CAPTION>
Year ended June 30 1993 1992
- - -----------------------------------------------------------------------------
<S> <C> <C>
Net sales $ 36,818 $ 61,057
-------- --------
Loss before income tax benefit $ (1,739) $ (976)
Income tax benefit 639 474
-------- --------
Loss from discontinued operations $ (1,100) $ (502)
======== ========
</TABLE>
Operating losses of discontinued operations subsequent to the measurement date
through June 30, 1994 totaled approximately $0.6 million.
Net assets of discontinued operations at June 30, 1994 and 1993 included the
following (in thousands):
<TABLE>
<CAPTION>
June 30 1994 1993
- - ------------------------------------------------------------------------------
<S> <C> <C>
Accounts receivable, net $ 2,665 $ 5,661
Inventories 1,749 9,061
Properties and other assets 2,490 2,738
Accounts payable and
accrued liabilities (6,521) (9,708)
--------- --------
$ 383 $ 7,752
========= ========
</TABLE>
In July 1993, the Company sold a majority of the assets of the discontinued
operations for approximately $11 million in cash. The Company retained
liabilities, primarily accounts payable and accrued payroll costs, in
connection with the asset sale. During the first quarter of fiscal 1995, the
Company sold substantially all of the remaining operating net assets of the
discontinued operations for cash and notes totaling approximately $4.5 million.
COMPUTER WRITE-DOWN
During 1992, management decided to replace the mainframe computer which was
utilized by a substantial portion of the Company's operations. The resulting
before-tax charge of $4.4 million represented the remaining book value of the
old computer equipment which was replaced.
20
<PAGE> 21
NOTES PAYABLE
Notes payable at June 30, 1994 and 1993 consisted of the following
(in thousands):
<TABLE>
<CAPTION>
June 30 1994 1993
- - ---------------------------------------------------------------
<S> <C> <C>
Bank borrowings $ 2,000 $ 1,600
9.70% Senior Notes due 2001 37,000 48,000
-------- --------
39,000 49,600
Less current portion 6,143 8,600
-------- --------
$ 32,857 $ 41,000
======== ========
</TABLE>
The Company's bank loan agreement provides for a $25 million secured revolving
line of credit which is available through October 1995. Borrowings against the
line accrue interest at either the bank's reference rate or LIBOR plus .875%
(5.375% at June 30, 1994). The Company is subject to an annual commitment fee
of .25% on the unused line of credit.
The agreement underlying the 9.70% Senior Notes, as amended, requires the
Company to make annual principal payments. In addition, the Company has the
right, but not the obligation, to prepay $2 million in fiscal 1995. Interest
payments on the Senior Notes are due in semi-annual installments.
The fair value of the Senior Notes at June 30, 1994 was approximately $39
million. The fair value was estimated using an interest rate currently
available to the Company for debt with similar terms and remaining maturities.
In connection with certain amendments to the Senior Note agreement, the
noteholders received warrants to purchase 187,200 shares of the Company's
common stock. The warrants may be exercised at any time prior to February 1,
2001 at $13.05 per share.
The Senior Notes and bank borrowings under the revolving line of credit are
secured by receivables and certain inventories of the Company. These agreements
contain various provisions for the maintenance of financial ratios and amounts,
limitations on long-term borrowings, payments of cash dividends, and other
provisions.
Aggregate maturities of notes payable are as follows (in thousands):
<TABLE>
<S> <C> <C> <C>
1995 $ 6,143 1998 $ 7,143
1996 7,143 1999 7,143
1997 7,143 2000 4,285
</TABLE>
21
<PAGE> 22
COMMON STOCK
The Company's 1990 Stock Option and Incentive Plan (the 1990 Plan), which
succeeded the 1981 Restricted Stock Purchase Plan, authorized 500,000 shares of
common stock to be available for purchase by employees. Under the 1990 Plan,
both incentive and nonqualified stock options, stock appreciation rights and
restricted stock may be granted. At June 30, 1994, 511,097 shares were reserved
for future issuance under both plans.
A summary of changes under the plans follows:
<TABLE>
<CAPTION>
Available for Shares under Price Market value
future grant option per share per share
- - ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Outstanding at
June 30, 1991 570,785 50,270 $ .25
Termination
of 1981 Plan (70,785)
Granted (26,500) 26,500 $ .25-$10.00 $ 9.25-$10.00
Exercised (18,850)
Canceled (1,520)
----------------------------------------------------------
Outstanding at
June 30, 1992 473,500 56,400 $ .25-$10.00
Granted (195,000) 195,000 $10.25-$13.75 $10.25-$13.75
Exercised (12,400)
Canceled 9,000 (12,425)
Adjustment for 4%
stock dividend 11,500 9,063
----------------------------------------------------------
Outstanding at
June 30, 1993 299,000 235,638 $ .25-$13.22
Granted (2,500) 2,500 $19.25 $19.25
Exercised (15,685)
Canceled 4,966 (12,822)
----------------------------------------------------------
Outstanding at
June 30, 1994 301,466 209,631 $ .25-$19.25
----------------------------------------------------------
Exercisable at
June 30, 1994 23,046 $ .25-$13.22
----------------------------------------------------------
</TABLE>
In fiscal 1994, the shareholders approved the Bell Industries Employees' Stock
Purchase Plan (the ESPP) under which 750,000 shares were authorized for future
issuance to Bell employees. Eligible employees may purchase Bell stock at 85%
of market value through the ESPP. No shares were issued in 1994 under the ESPP.
In July 1994, the Board of Directors approved the 1994 Stock Option Plan
covering 500,000 shares. This plan is subject to shareholder approval at the
next annual meeting.
In July 1993, the Board of Directors declared a 4% stock dividend payable to
shareholders of record on August 20, 1993. Share and per share amounts were
adjusted to give effect to the dividend.
22
<PAGE> 23
INCOME TAXES
The income tax provision charged to continuing operations was as follows
(in thousands):
<TABLE>
<CAPTION>
Year ended June 30 1994 1993 1992
- - --------------------------------------------------------------------------------
<S> <C> <C> <C>
Current
Federal $5,240 $2,714 $1,219
State 1,444 782 221
Deferred
Federal (58) 329 (438)
State 28 (165) 52
--------------------------------------------
$6,654 $3,660 $1,054
============================================
</TABLE>
A reconciliation of income tax expense to the statutory federal income tax rate
follows (dollars in thousands):
<TABLE>
<CAPTION>
Year ended June 30 1994 1993 1992
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income from continuing
operations before taxes $15,729 100.0% $8,665 100.0% $1,973 100.0%
---------------------------------------------------
Federal statutory
provision $ 5,405 34.4% $2,946 34.0% $ 671 34.0%
State taxes,
net of federal benefit 920 5.8 503 5.8 300 15.2
Goodwill 138 .9 136 1.6 124 6.3
Other, net 191 1.2 75 .8 (41) (2.0)
---------------------------------------------------
$ 6,654 42.3% $3,660 42.2% $1,054 53.5%
===================================================
</TABLE>
The provision (credit) for deferred income taxes from continuing operations is
summarized as follows (in thousands):
<TABLE>
<CAPTION>
Year ended June 30 1994 1993 1992
- - --------------------------------------------------------------------------------
<S> <C> <C> <C>
Depreciation $(444) $(571) $(1,475)
Deferred compensation and
other employee benefits (77) 463 (119)
California franchise tax (80) (67) 130
Inventory capitalization 146 77 34
Receivables allowance 371 (18) (34)
Accruals for facility closure 272 1,087
Other 54 8 (9)
--------------------------------------------
$ (30) $ 164 $ (386)
============================================
</TABLE>
23
<PAGE> 24
Deferred tax balances were composed of the following (in thousands):
<TABLE>
<CAPTION>
June 30 1994 1993
- - ----------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Discontinued operations $3,701 $5,234
Deferred compensation and
other employee benefits 889 812
Receivables allowance 443 814
Inventory capitalization 591 737
Postretirement benefits 608 568
Other 253 170
-------------------------------
Gross deferred tax assets 6,485 8,335
-------------------------------
Deferred tax liabilities:
Depreciation (347)
-------------------------------
Net deferred tax assets $6,485 $7,988
-------------------------------
</TABLE>
Current deferred income tax benefits included with prepaid expenses and other
and noncurrent deferred income tax benefits included with other assets were as
follows (in thousands):
<TABLE>
<CAPTION>
June 30 1994 1993
- - ----------------------------------------------------------------------------
<S> <C> <C>
Current deferred income tax benefits
Federal $4,375 $4,246
State 236 688
Noncurrent deferred income tax benefits
Federal 1,628 2,947
State 246 107
------ ------
$6,485 $7,988
====== ======
</TABLE>
24
<PAGE> 25
EMPLOYEE BENEFIT AND DEFERRED COMPENSATION PLANS
The Company has a qualified, trusteed, savings and profit sharing plan for
employees of the Company and its subsidiaries. Employees must contribute at
least 1% of their annual compensation to participate in the plan. The Company's
contribution to the plan is determined by the Board of Directors. The Company's
contributions were $500,000 in 1994, $250,000 in 1993, and $0 in 1992.
The Company has employment and deferred compensation agreements with certain
current and retired officers. Expense associated with the deferred compensation
element of the agreements was $331,000 in 1994, $343,000 in 1993 and $192,000
in 1992.
COMMITMENTS AND CONTINGENCIES
At June 30, 1994 the Company had operating leases on certain of its facilities
expiring in various years through fiscal 2000. Under certain of these leases
the Company is required to pay property taxes and insurance. Rent expense
pertaining to these leases was $3,821,000 in 1994, $3,899,000 in 1993 and
$3,692,000 in 1992. The Company has certain computer equipment under capital
leases. Amortization of capitalized leases amounted to $1,580,000 in 1994 and
$1,157,000 in 1993. Non-cash investing and financing activities for fiscal 1994
included a $1.6 million equipment addition which was financed through a capital
lease.
Minimum annual rentals on these leases for years subsequent to 1994 are as
follows (in thousands):
<TABLE>
<CAPTION>
Capital Operating
leases leases
------ ------
<S> <C> <C>
1995 $1,724 $3,445
1996 1,724 2,751
1997 1,724 2,043
1998 - 1,592
1999 - 1,128
Thereafter - 491
----------
5,172
Less amount representing interest (465)
----------
Present value of net minimum lease
payments under capital leases $4,707
==========
</TABLE>
The Company is involved in litigation incidental to its business. In the
opinion of management, the expected outcome of such litigation will not
materially affect the Company's financial position or results of operations.
25
<PAGE> 26
BUSINESS SEGMENT INFORMATION
Depreciation and amortization, identifiable assets and capital expenditures by
business segment are as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
- - -----------------------------------------------------------------------------
<S> <C> <C> <C>
Depreciation and amortization
Electronics $ 2,528 $ 2,429 $ 2,210
Graphic Arts 112 103 105
Recreational Products 104 189 181
Corporate 2,830 2,285 1,375
Discontinued operations 729 1,064
------------------------------------------
$ 5,574 $ 5,735 $ 4,935
==========================================
Identifiable assets
Electronics $134,299 $109,479 $111,436
Graphic Arts 15,967 15,900 14,663
Recreational Products 12,686 11,443 10,164
Corporate 21,378 30,698 26,025
Discontinued operations 383 7,752 29,269
------------------------------------------
$184,713 $175,272 $191,557
==========================================
Capital expenditures
Electronics $ 1,939 $ 2,151 $ 1,811
Graphic Arts 203 96 124
Recreational Products 123 106 112
Corporate 297 3,155 4,981
Discontinued operations 236 1,641
------------------------------------------
$ 2,562 $ 5,744 $ 8,669
==========================================
</TABLE>
The net sales and operating income of each of the Company's business segments
are included under "Item 7. Management's Discussion and Analysis of Results of
Operations and Financial Condition." A description of the Company's business
and products appears under "Item 1. Business." Sales between product groups are
insignificant. Corporate assets are primarily cash, data processing equipment
and deferred income tax benefits.
The Company purchased a microcomputer distribution and services business during
1994 for approximately $5.9 million cash. Goodwill involved in the transaction
was approximately $1.6 million. Operating results for the purchased business
were not significant.
26
<PAGE> 27
QUARTERLY RESULTS OF OPERATIONS (Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Quarter ended Sep. 30 Dec. 31 Mar. 31 Jun. 30
- - ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994:
- - -----
Net sales $106,718 $102,241 $113,507 $128,687
-----------------------------------------------------------
Cost and expenses
Cost of products sold 82,560 79,338 88,064 99,611
Selling and administrative
expenses 19,368 19,387 20,721 21,883
Interest expense 1,198 1,127 1,099 1,068
-----------------------------------------------------------
103,126 99,852 109,884 122,562
-----------------------------------------------------------
Income before income taxes 3,592 2,389 3,623 6,125
Income tax provision 1,527 1,015 1,540 2,572
-----------------------------------------------------------
Net income (loss) $ 2,065 $ 1,374 $ 2,083 $ 3,553
===========================================================
Share and Per Share Data
- - ------------------------
Net income (loss) $ 0.33 $ 0.22 $ 0.33 $ 0.57
===========================================================
Weighted average common shares
outstanding 6,227 6,278 6,284 6,263
===========================================================
1993:
- - -----
Net sales $ 92,479 $ 86,182 $ 90,724 $ 95,938
-----------------------------------------------------------
Cost and expenses
Cost of products sold 69,507 65,211 68,527 71,836
Selling and administrative
expenses 19,374 19,016 18,449 19,200
Interest expense 1,421 1,412 1,383 1,322
-----------------------------------------------------------
90,302 85,639 88,359 92,358
-----------------------------------------------------------
Income from continuing operations
before income taxes 2,177 543 2,365 3,580
Income tax provision 914 231 990 1,525
-----------------------------------------------------------
Income from continuing operations 1,263 312 1,375 2,055
Discontinued operations
Loss from operations,net of taxes (76) (443) (581)
Loss on disposal, net of taxes (8,100)
Cumulative effect of accounting
change, net of taxes (830)
-----------------------------------------------------------
Net income (loss) $ 357 $ (131) $ (7,306) $ 2,055
===========================================================
Share and Per Share Data
- - ------------------------
Income from continuing operations $ 0.20 $ 0.05 $ 0.23 $ 0.33
Discontinued operations
Loss from operations,net of taxes (0.01) (0.07) (0.10)
Loss on disposal, net of taxes (1.31)
Cumulative effect of accounting
change, net of taxes (0.13)
-----------------------------------------------------------
Net income (loss) $ 0.06 $ (0.02) $ (1.18) $ 0.33
===========================================================
Weighted average common shares
outstanding 6,173 6,174 6,174 6,185
===========================================================
</TABLE>
27
<PAGE> 28
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<TABLE>
<CAPTION>
Additions Deductions
--------- ----------
Balance at Charge to Accounts Balance
beginning costs and charged at end
Description of period expenses off of period
- - ----------- --------- -------- -------- ---------
<S> <C> <C> <C>
Allowance for doubtful accounts:
Year ended -
June 30, 1992 $1,757,000 $1,457,000 $1,617,000 $1,597,000
June 30, 1993 $1,597,000 $2,022,000 $2,348,000 $1,271,000
June 30, 1994 $1,271,000 $ 755,000 $1,142,000 $ 884,000
</TABLE>
28
<PAGE> 29
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant
(a) Directors: The information required by Item 10 with respect to directors
appears in the Proxy Statement for the 1994 Annual Meeting of Shareholders and
is hereby incorporated by reference.
(b) Executive Officers: The information required by Item 10 with respect to
Executive Officers appears in Part I of this Form 10- K.
Item 11. Executive Compensation
The information required by Item 11 appears in the Proxy Statement for the 1994
Annual Meeting of Shareholders and is hereby incorporated by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information required by Item 12 appears under "Election of Directors" in
the Proxy Statement for the 1994 Annual Meeting of Shareholders and is hereby
incorporated by reference.
Item 13. Certain Relationships and Related Transactions
The information required by Item 13 appears in the Proxy Statement for the 1994
Annual Meeting of Shareholders and is hereby incorporated by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedule, and Reports on
Form 8-K
(a) 1. Financial Statements:
The Consolidated Financial Statements and Report of
Independent Accountants dated August 3, 1994 are
included under Item 8 of this Annual Report on
Form 10-K.
2. Financial Statement Schedule:
The financial statement schedule listed in the Index to
Financial Statements included under Item 8 is filed as
part of this annual report.
29
<PAGE> 30
3. Exhibits:
3.a) The Articles of Incorporation and By-laws are
incorporated by reference to Exhibits 2 and 4,
respectively to Registrant's Form 8-B dated November
19, 1979.
b) Amendment to By-Laws of Bell Industries is
incorporated by reference to Exhibit 3 to
Registrant's Form 8-K dated November 4, 1992.
4.a) The Specimen of Registrant's Common Stock
certificates is incorporated by reference to Exhibit
5 to Amendment number 1 to Registrant's Form 8-B
filed January 15, 1980.
b) The Note Purchase Agreement dated February 1, 1991
among Registrant and Insurance Companies named
therein providing for the issuance of Registrant's
$50,000,000 of 9.7% Senior Notes due February 1, 2001
is incorporated by reference to Exhibit 4.b of the
Form 10-K dated June 30, 1991.
c) The First Amendment Agreement, including as exhibits
thereto, the Collateral Trust Indenture and Security
Agreement, dated June 1, 1992, among Registrant and
Insurance Companies named therein providing for
certain amendments to the Note Purchase Agreement
dated February 1, 1991 is incorporated by reference
to Exhibit 4.c of the Form 10-K dated June 30, 1992.
d) The Second Amendment Agreement dated September 15,
1993, among Registrant and Insurance Companies named
therein providing for certain amendments to the Note
Purchase Agreement dated February 1, 1991 is
incorporated by reference to Exhibit 4.d of the Form
10-K dated June 30, 1993.
e) Warrant Agreement dated September 15, 1993 including
Form of Warrant Certificate issued to the named
Insurance Companies included in the Note Purchase
Agreement dated February 1, 1991, as amended, is
incorporated by reference to Exhibit 4.e of the Form
10-K dated June 30, 1993.
30
<PAGE> 31
f) Amendment Agreement dated March 29, 1994, between the
Registrant and the Security Trustee named therein
providing for certain amendments to the Collateral
Trust Indenture and Security Agreement included with
the First Amendment Agreement dated June 1, 1992.
g) Letter Agreement dated May 17, 1994, among Registrant
and Insurance Companies named therein providing for
certain amendments to the Warrant Agreement dated
September 15, 1993.
10.a) The Employment and Deferred Compensation Agreements
dated January 1, 1979 and the Amendment thereto dated
August 6, 1979 concerning certain officers of
Registrant are incorporated by reference to Exhibits
9A, 9C and 9D to Amendment number 1 to Registrant's
Form 8-B dated November 19, 1979.
b) The 1981 Restricted Stock Purchase Plan is
incorporated by reference to Exhibit A of
Registrant's definitive Proxy Statement (File No.
1-7899) filed in connection with the Annual Meeting
of Shareholders held October 30, 1981.
c) The 1990 Stock Option and Incentive Plan is
incorporated by reference to Exhibit A of
Registrant's definitive Proxy Statement (File No.
1-7899) filed in connection with the Annual Meeting
of Shareholders held October 29, 1990.
d) The 1993 Employees' Stock Purchase Plan is
incorporated by reference to Exhibit A of
Registrant's definitive Proxy Statement (File No.
1-7899) filed in connection with the Annual Meeting
of Shareholders held November 2, 1993.
21. Subsidiaries of the Registrant.
23. Consent of Independent Accountants.
27. Financial Data Schedule.
(b) Reports on Form 8-K:
None.
31
<PAGE> 32
SIGNATURES
Pursuant to the requirement of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
BELL INDUSTRIES, INC.
By THEODORE WILLIAMS
---------------------------
THEODORE WILLIAMS
Chairman of the Board,
President and Chief
Executive Officer
Date: September 1, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on September 1, 1994 by the following persons on
behalf of the Registrant and in the capacities indicated.
<TABLE>
<CAPTION>
Signature Title
- - ---------------------------------- ------------------------------------------
<S> <C>
THEODORE WILLIAMS
- - ---------------------------------- Chairman of the Board, President
THEODORE WILLIAMS and Chief Executive Officer
BRUCE M. JAFFE
- - ---------------------------------- Director, Executive Vice President
BRUCE M. JAFFE and Chief Operating Officer
JOHN J. COST
- - ---------------------------------- Director and Secretary
JOHN J. COST
GORDON GRAHAM
- - ---------------------------------- Director and Senior Vice President
GORDON GRAHAM
ANTHONY L. CRAIG
- - ---------------------------------- Director
ANTHONY L. CRAIG
MILTON ROSENBERG
- - ---------------------------------- Director
MILTON ROSENBERG
CHARLES TROY
- - ---------------------------------- Director
CHARLES TROY
TRACY A. EDWARDS Vice President and
- - ---------------------------------- Chief Financial and
TRACY A. EDWARDS Accounting Officer
</TABLE>
32
<PAGE> 33
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibits
--------
<S> <C> <C>
3) Article of incorporation and by-laws (*)
4) Instruments defining the rights of
security holders, including indentures.
a) Specimen of Registrant's Common
Stock certificate. (*)
b) Note Purchase Agreement dated
February 1, 1991 among Registrant
and Insurance Companies named therein,
providing for the issuance of Registrants'
$50,000,000 of 9.7% Senior Notes due
February 1, 2001. (*)
c) First Amendment Agreement, including as
exhibits thereto, the Collateral Trust
Indenture and Security Agreement, dated
June 1, 1992, to the Note Purchase
Agreement dated as of February 1, 1991
(4.b above). (*)
d) Second Amendment Agreement dated
September 15, 1993, to the Note Purchase
Agreement dated as of February 1, 1991
(4.b above). (*)
e) Warrant Agreement dated September 15, 1993
including Form of Warrant Certificate
issued to the named Insurance Companies
included in the Note Purchase Agreement
dated February 1, 1991, as amended. (*)
f) Amendment Agreement dated March 29, 1994
to the Collateral Trust Indenture and
Security Agreement dated June 1, 1992.
g) Letter Agreement dated May 17, 1994
amending the Warrant Agreement dated
September 15, 1993.
</TABLE>
33
<PAGE> 34
10) Material contracts.
<TABLE>
<S> <C> <C>
a) The Employment and Deferred Compensation
Agreements dated January 1, 1979 and
the Amendment thereto dated August 6, 1979
concerning certain officers of Registrant. (*)
b) The 1981 Restricted Stock Purchase Plan
included as Exhibit A to Registrant's
definitive Proxy Statement (File No. 1-7899)
filed in connection with the Annual Meeting
of Shareholders held October 30, 1981. (*)
c) The 1990 Stock Option and Incentive Plan
included as Exhibit A to Registrant's
definitive Proxy Statement (File No. 1-7899)
filed in connection with the Annual Meeting
of Shareholders held October 29, 1990. (*)
d) The 1993 Employees' Stock Purchase Plan
included as Exhibit A to Registrant's
definitive Proxy Statement (File No. 1-7899)
filed in connection with the Annual Meeting
of Shareholders held November 2, 1993. (*)
</TABLE>
21) Subsidiaries of the Registrant.
23) Consent of Independent Accountants.
27) Financial Data Schedule.
(*) Incorporated by reference.
34
<PAGE> 1
EXHIBIT 4.f
===============================================================================
BELL INDUSTRIES, INC.
-----------
AMENDMENT AGREEMENT
-----------
DATED AS OF MARCH 29,1994
COLLATERAL TRUST INDENTURE
SECURITY AGREEMENT
===============================================================================
<PAGE> 2
AMENDMENT AGREEMENT
AMENDMENT AGREEMENT (this "Amendment"), dated as of March 29,1994,
between BELL INDUSTRIES, INC., a Delaware corporation (together with its
successors and assigns, the "Company"), and STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association, as
security trustee (the "Security Trustee") under that certain Collateral Trust
Indenture (the "Existing Collateral Trust Indenture," and the Existing
Collateral Trust Indenture, as amended by this Amendment, the "Amended
Collateral Trust Indenture"), dated as of June 1, 1992, between the Company and
the Security Trustee.
RECITALS:
A. The Company entered into separate Note Purchase Agreements
(collectively, as amended, the "Note Purchase Agreement") with each of the
original purchasers of the Company's issuance of Fifty Million Dollars
($50,000,000) of 9.70% Senior Notes due February 1, 2001 (the "Notes");
B. The Company has entered into a certain Second Amended and
Restated Loan Agreement, dated August 13, 1992, with the Bank, (as amended
through and including Amendment No. 5 thereto, dated as of February 11, 1994,
the "Existing Loan Agreement") which provided for the extension of credit by
the Bank to the Company in the nature of a revolving line of credit as
evidenced by a revolving promissory note (the "New Revolving Note") in the
maximum principal amount of Ten Million Dollars ($10,000,000) and for the
extension of a trade letter of credit facility in the maximum amount of Three
Hundred Thousand Dollars ($300,000). The Company has requested that the Bank,
and the Bank has agreed to, increase the amount of credit available under the
New Revolving Note to a maximum principal amount of Twenty-Five Million Dollars
($25,000,000). In connection therewith, the Company, on the Effective Date, as
such term is defined below, will enter into a Sixth Amendment to the Existing
Loan Agreement (the Existing Loan Agreement, as so amended, being hereinafter
referred to as the "New Loan Agreement") with the Bank, which will provide for
an increase in the amount of credit extended by the Bank to the Company under
the New Loan Agreement to a maximum aggregate principal amount of Twenty-Five
Million Three Hundred Thousand Dollars ($25,300,000).
C. Certain obligations of the Company owed to the Holders and the Bank
have been secured pursuant to the Existing Collateral Trust Indenture and that
certain Security Agreement, dated as of June 1, 1992, between the Company and
the Security Trustee (the "Existing Security Agreement," and the Existing
Security Agreement, as amended by this Amendment, the "Amended Security
Agreement").
D. As a condition precedent to entering into the New Loan Agreement, the
Bank requires that the contemplated increase in the maximum principal amount of
credit available to the Company thereunder be secured by the Existing
Collateral Trust Indenture and the Existing Security Agreement.
E. The Company has requested the Holders and the Bank to amend and modify
the Existing Collateral Trust Indenture and the Existing Security Agreement, as
in effect on the date hereof and has also requested the Bank to enter into the
New Loan Agreement.
<PAGE> 3
F. The Holders, the Security Trustee and the Bank are agreeable
to such request on the terms and conditions set forth in this Amendment.
G. All acts and proceedings required by law and by the
certificate of incorporation and by-laws of the Company, necessary to
constitute this Amendment a valid and binding agreement for the uses and
purposes set forth herein, in accordance with its terms, have been done and
taken, and the execution and delivery hereof has been in all respects duly
authorized.
NOW, THEREFORE, in consideration of the premises and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:
SECTION 1. THE COLLATERAL TRUST INDENTURE
SECTION 1.1. COLLATERAL TRUST INDENTURE DEFINITIONS
Capitalized terms used in Section 1 of this Amendment and not
otherwise defined herein shall have the respective meanings ascribed to them in
the Amended Collateral Trust Indenture.
SECTION 1.2. AMENDMENTS TO THE COLLATERAL TRUST INDENTURE
1.2.1. The Recitals of the Existing Collateral Trust Indenture are
hereby amended and restated in their entirety as follows:
"A. The Company entered into separate Note Purchase
Agreements (collectively, as amended by the First Amendment
Agreement (the "First Amendment Agreement"), dated as of June
1, 1992, and the Second Amendment Agreement (the "Second
Amendment Agreement"), dated as of September 15, 1993, and as
hereafter amended, the "Note Purchase Agreement") with each of
the original purchasers of the Company's issuance of Fifty
Million Dollars ($50,000,000) of 9.70% Senior Notes due
February 1, 2001 (the "Notes");
"B. The Company has entered into a certain
Second Amended and Restated Loan Agreement, dated August 13,
1992, with the Bank, (as amended through and including
Amendment No. 5 thereto, dated as of February 11, 1994, the
"Existing Loan Agreement") which provided for the extension of
credit by the Bank to the Company in the nature of a revolving
line of credit as evidenced by a revolving promissory note
(the "New Revolving Note") in the maximum principal amount of
Ten Million Dollars ($10,000,000) and for the extension of a
trade letter of credit facility in the maximum amount of Three
Hundred Thousand Dollars ($300,000). The Company has
requested that the Bank, and the Bank has agreed to, increase
the amount of credit available under the New Revolving Note to
a maximum principal amount of Twenty-Five Million Dollars
($25,000,000). In connection therewith, the Company has
entered into a Sixth Amendment to the Existing Loan Agreement
(the Existing Loan Agreement, as so amended and as hereafter
amended, being hereinafter referred to as the "New Loan
Agreement") with the Bank, which provides for an increase in
the amount of credit extended by the Bank to the Company under
the New Loan Agreement to a maximum
2
<PAGE> 4
aggregate principal amount of Twenty-Five Million Three
Hundred Thousand Dollars ($25,300,000).
"C. Certain obligations of the Company owed to the
Holders and the Bank shall be secured pursuant to this
Indenture and that certain Security Agreement, dated as of
June 1, 1992 and amended as of March 29, 1994, between the
Company and the Security Trustee (the "Security Agreement").
"D. All acts and proceedings required by law and by
the certificate of incorporation and by-laws of the Company,
necessary to constitute this Indenture a valid and binding
agreement for the uses and purposes set forth herein, in
accordance with its terms, have been done and taken, and the
execution and delivery hereof has been in all respects duly
authorized."
1.2.2. Section 1 of the Existing Collateral Trust Indenture is hereby
amended by amending each of the following existing definitions to read in its
respective entirety as follows.
"BANK PREPAYMENT FEE -- at any time means the prepayment
fee, if any, payable at such time in respect of the New
Revolving Note under Section 2.5 of the New Loan Agreement."
"COLLATERAL RELEASE DATE -- has the meaning assigned to
such term in the Note Purchase Agreements as amended by the
First Amendment Agreement and the Second Amendment Agreement."
"FINANCING DOCUMENTS -- means this Indenture, the Note
Purchase Agreements, the Notes, the New Loan Agreement, the
New Revolving Note and the Security Agreement."
"FIRST AMENDMENT AGREEMENT -- Recital A. hereto."
"NEW REVOLVING NOTE -- Recital B. hereto; the maximum,
principal amount permitted to be outstanding under the New
Revolving Note shall be Twenty-Five Million Dollars
($25,000,000)."
"SECURED OBLIGATIONS -- means, at any time, all
obligations of the Company
"(a) in respect of the payment of the principal
and interest (and Make-Whole Amount, if any) on the
Notes and under the Note Purchase Agreements at such
time and the payment of all other amounts of the
Company owing thereunder at such time,
"(b) in respect of the payment of the
principal and interest (and Bank Prepayment Fee, if
any) on the New Revolving Note and under the New Loan
Agreement at such time and the payment of all other
amounts of the Company owing thereunder at such time
(provided that if the aggregate amount of principal
on the New Revolving Note and under the New Loan
Agreement shall at any time
3
<PAGE> 5
exceed Twenty-Five Million Three Hundred Thousand
Dollars ($25,300,000) then the amount of such excess
together with accrued interest on such excess and any
Bank Prepayment Fee in respect of such excess shall
be deemed not to constitute Secured Obligations),
"(c) under the Security Agreement, and
"(d) under this Indenture.
"For purposes of clause (b) above, Secured
Obligations shall exclude any default interest to the
extent that such default interest exceeds a rate of
interest equal to two percent (2%) per annum over the
otherwise (nondefault) applicable rate of interest
established in the New Loan Agreement or the New
Revolving Note, as the case may be."
1.2.3. Section 1 of the Existing Collateral Trust Indenture
is hereby amended by adding each of the following definitions to such
Section 1, each in its respective alphabetical place therein.
"REQUIRED BENEFICIARIES -- means
"(a) if the Notes comprise at least sixty
percent (60%) or less than forty percent (40%) of the
aggregate principal amount of the Secured Obligations
outstanding at such time, then the holders of not
less than fifty-one percent (51%) in principal
amount of the Secured Obligations outstanding at such
time held by, or owing to, the holders of Notes and
the Bank; and
"(b) if the Notes comprise less than sixty
percent (60%) but at least forty percent (40%) in
principal amount of the Secured Obligations
outstanding at such time, then both:
"(i) the holders of not less than
fifty-one percent (51%) of the aggregate
principal amount of the Secured Obligations
outstanding at such time held by, or owing to,
the holders of Notes and
"(ii) the holders of not less than
fifty-one percent (51%) in principal amount of
the Secured Obligations outstanding at such
time held by, or owing to, the Bank
"exclusive, in any case, of Notes then owned by any
one or more of the Company, any Subsidiary (as such
term is defined in the Note Purchase Agreements) or
any Affiliate (as such term is defined in the Note
Purchase Agreements)."
4
<PAGE> 6
"SECOND AMENDMENT AGREEMENT -- means the Second
Amendment Agreement among the Company and each Holder,
dated as of September 15, 1993."
1.2.4. Section 1 of the Existing Collateral Trust Indenture is
hereby amended by deleting each of the following definitions to such
Section 1, each from its respective alphabetical place therein.
"REVOLVING NOTE -- Recital B. hereto."
"SECOND TERM NOTE -- Recital B. hereto."
"TERM NOTE -- Recital B. hereto."
1.2.5. Section 2.1(c) of the Existing Collateral Trust
Indenture is hereby amended and restated in its entirety as follows:
"(C) EVENTS OF DEFAULT UNDER OTHER FINANCING
DOCUMENTS -- any "Event of Default" or "event of default"
under and as defined in any one or more of the Note
Purchase Agreements, the New Loan Agreement or the
Security Agreement shall exist."
1.2.6. The first sentence of Section 2.3 of the Existing
Collateral Trust Indenture is hereby amended by deleting the words "Majority
Beneficiaries" therefrom and inserting in their place the words "Required
Beneficiaries".
1.2.7. Section 2.4 of the Existing Collateral Trust Indenture is
hereby amended and restated in its entirety as follows:
"2.4. OTHER ENFORCEMENT RIGHTS.
"(A) ENFORCEMENT OF FINANCING DOCUMENTS. In
the case in which
"(i) all Notes shall have been
declared, or otherwise shall have become,
due and payable as provided in the Note
Purchase Agreements,
"(ii) the New Loan Agreement or the
New Revolving Note shall have been declared,
or otherwise shall have become, due and payable
as provided in the New Loan Agreement, or
"(iii) the events specified in both
of the foregoing clauses (i) and (ii) shall
have occurred,
"the Security Trustee may, but, unless requested in
writing by the Required Beneficiaries and unless
furnished with reasonable indemnity, shall not (subject
to the requirements of Section 3.1 hereof) be
obligated to, proceed to protect and enforce this
Indenture or the Security Agreement by suit or suits or
proceedings at law, in equity, in bankruptcy or
otherwise, and whether for the specific
5
<PAGE> 7
performance of any covenant or agreement herein or
therein contained or in execution or aid of any power
herein or therein granted, or for foreclosure hereunder
or thereunder, or for the appointment of a receiver or
receivers for the Collateral or any part thereof or for
the enforcement of any legal, equitable or other remedy
available under applicable law.
"(B) BANKRUPTCY PROCEEDING. In case there
shall be pending a case or proceedings in bankruptcy with
respect to, or for the reorganization or arrangement of,
the Company under any Bankruptcy Law or in case a
conservator, liquidator, custodian, receiver or trustee
shall have been appointed for the Company or its Property,
the Security Trustee may, but, unless requested in writing
by the Required Beneficiaries and unless furnished with
reasonable indemnity, shall not (subject to the
requirements of Section 3.1 hereof) be obligated to, file
such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of
the Beneficiaries allowed in such case or proceeding for
the entire Secured Obligations, at the date of the
institution of such case or proceeding, and for any
additional amounts that may become due and payable under
any of the Financing Documents after such date.
"(C) REQUIRED BENEFICIARIES. ANYTHING IN THIS
INDENTURE TO THE CONTRARY NOTWITHSTANDING, the Required
Beneficiaries, by an instrument or instruments in writing
executed and delivered to the Security Trustee, and
providing for indemnity pursuant to Section 3.3(f) hereof,
may direct, and at all times shall have such right to so
direct, the method and place of conducting the proceedings
to be taken in connection with the enforcement of the
terms and conditions hereof, provided such direction shall
not be otherwise than in accordance with the provisions of
law, this Indenture and the Security Agreement (in which
case the Security Trustee shall proceed in accordance with
such direction), provided further, that
(i) if the Notes comprise less than
forty percent (40%) of the aggregate principal
amount of the Secured Obligations outstanding at
the time of any such direction by the Required
Beneficiaries, then the Security Trustee shall
give written notice of such direction to each
holder of Secured Obligations within five (5)
Business Days, and shall not proceed pursuant to
such direction for a period of ninety (90) days
after the Required Beneficiaries shall have given
written notice of their direction to the Security
Trustee unless the holders of at least fifty-one
percent (51 %) of the aggregate principal amount
of the Notes outstanding at such time (exclusive,
in any case, of Notes then owned by any one or
more of the Company, any Subsidiary (as such term
is defined in the Note Purchase Agreements) or
any Affiliate (as such term is defined in the
Note Purchase Agreements)) shall have consented
to such direction; and
(ii) if the Notes comprise more than
sixty percent (60%) of the aggregate principal
amount of the Secured Obligations outstanding
at the time of any such direction by the
Required Beneficiaries, then the Security
Trustee shall give written notice of such
direction to each holder of Secured Obligations
within five (5) Business Days, and shall not
proceed pursuant to such direction for a
6
<PAGE> 8
period of ninety (90) days after the Required
Beneficiaries shall have given written notice of their
direction to the Security Trustee unless the Bank shall
have consented to such direction."
1.2.8. Section 2.7(c) of the Existing Collateral Trust
Indenture is hereby amended and restated in its entirety as follows:
"(c) Third, to the payment of the Make-Whole
Amount and the Bank Prepayment Fee, if any, then unpaid
with respect to the Notes and the New Revolving Note
and, in case such proceeds shall be insufficient to pay
in full such amounts, then ratably according to the
amounts of the Make-Whole Amount and the Bank Prepayment
Fee so unpaid owing to each obligee thereof;"
1.2.9. Section 2.9(b) of the Existing Collateral Trust
Indenture is hereby amended by deleting the words "Majority Beneficiaries"
therefrom and inserting in their place the words "Required Beneficiaries".
1.2.10. Section 3.1 of the Existing Collateral Trust
Indenture is hereby amended by deleting the words "Majority Beneficiaries"
therefrom in each place in which such words appear and inserting in such place
the words "Required Beneficiaries".
1.2.11. Section 3.1 (b) of the Existing Collateral Trust
Indenture is hereby amended and restated in its entirety to read as follows:
(B) DIRECTION. If an Event of Default shall
have occurred and be continuing, the Security Trustee
shall, to the extent so directed by the provisions hereof
or by the Required Beneficiaries subject to Section
2.4(c) hereof, exercise such of the rights and powers
vested in it by this Indenture and the Security Agreement
for the benefit of the Beneficiaries, and in such
exercise use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under
the circumstances in the conduct of his or her own
affairs.
1.2.12. Section 4.2(b)(iv) of the Existing Collateral
Trust Indenture is hereby amended and restated in its entirety to read as
follows:
"(iv) modify the definition of "Majority
Beneficiaries" or the definition of "Required
Beneficiaries," or otherwise change the percentage of the
aggregate principal amount of Secured Obligations, the
holders of which are required to join in any action with
respect to enforcement of any rights or remedies as
against the Collateral or the Trust Estate, consent to
any waiver or supplemental agreement or amendment or
modification pursuant to this Section 4.2 or otherwise
modify or amend this Section 4.2, without the consent of
all of the Beneficiaries, or"
7
<PAGE> 9
SECTION 2. THE SECURITY AGREEMENT
SECTION 2.1. SECURITY AGREEMENT DEFINITIONS
Capitalized terms used in Section 2 of this Amendment and not otherwise
defined herein shall have the respective meanings ascribed to them in the
Amended Security Agreement.
SECTION 2.2. AMENDMENTS TO THE SECURITY AGREEMENT
2.2.1. The Recitals of the Existing Security Agreement are hereby
amended and restated in their entirety as follows:
"A. The Company entered into separate Note Purchase
Agreements (collectively, as amended by the First Amendment Agreement
(the "First Amendment Agreement"), dated as of June 1, 1992, and the
Second Amendment Agreement (the "Second Amendment Agreement"), dated
as of September 15, 1993, and as hereafter amended, the "Note Purchase
Agreement") with each of the original purchasers of the Company's
issuance of Fifty Million Dollars ($50,000,000) of 9.70% Senior Notes
due February 1, 2001 (the "Notes");
"B. The Company has entered into a certain Second Amended
and Restated Loan Agreement, dated August 13, 1992, with the Bank, (as
amended through and including Amendment No. 5 thereto, dated as of
February 11, 1994, the "Existing Loan Agreement") which provided for
the extension of credit by the Bank to the Company in the nature of a
revolving line of credit as evidenced by a revolving promissory note
(the "New Revolving Note") in the maximum principal amount of Ten
Million Dollars ($10,000,000) and for the extension of a trade letter
of credit facility in the maximum amount of Three Hundred Thousand
Dollars ($300,000). The Company has requested that the Bank, and the
Bank has agreed to, increase the amount of credit available under the
New Revolving Note to a maximum principal amount of Twenty-Five
Million Dollars ($25,000,000). In connection therewith, the Company
has entered into a Sixth Amendment to the Existing Loan Agreement (the
Existing Loan Agreement, as so amended and as hereafter amended, being
hereinafter referred to as the "New Loan Agreement") with the Bank,
which provides for an increase in the amount of credit extended by the
Bank to the Company under the New Loan Agreement to a maximum
aggregate principal amount of Twenty-Five Million Three Hundred
Thousand Dollars ($25,300,000).
"C. Certain obligations of the Company owed to the
Holders and the Bank shall be secured pursuant to the Collateral
Trust Indenture and this Security Agreement.
"D. All acts and proceedings required by law and by
the certificate of incorporation and by-laws of the Company,
necessary to constitute this Agreement a valid and binding agreement
for the uses and purposes set forth herein, in accordance with its
terms, have been done and taken, and the execution and delivery hereof
has been in all respects duly authorized."
8
<PAGE> 10
2.2.2. Section 1 of the Existing Security Agreement is hereby amended
by amending each of the following existing definitions to read in its
respective entirety as follows.
"BANK PREPAYMENT FEE -- at any time means the
prepayment fee, if any, payable at such time in respect of the
New Revolving Note under Section 2.5 of the New Loan
Agreement."
"FINANCING DOCUMENTS -- means this Agreement, the Note
Purchase Agreements, the Notes, the New Loan Agreement, the
New Revolving Note and the Collateral Trust Indenture."
"FIRST AMENDMENT AGREEMENT -- Recital A. hereto."
"NEW REVOLVING NOTE -- Recital B. hereto; the maximum
principal amount permitted to be outstanding under the New
Revolving Note shall be Twenty-Five Million Dollars
($25,000,000)."
"PERMITTED LIENS -- means and includes any Lien or
Liens which the Company is permitted, by the terms of each of
the Note Purchase Agreements and the New Loan Agreement, to
incur, create, maintain and permit to exist."
"SECURED OBLIGATIONS -- means, at any time, all
obligations of the Company
"(a) in respect of the payment of the
principal and interest (and Make-Whole Amount, if
any) on the Notes and under the Note Purchase
Agreements at such time and the payment of all other
amounts of the Company owing thereunder at such time,
"(b) in respect of the payment of the
principal and interest (and Bank Prepayment Fee, if
any) on the on the New Revolving Note and under the
New Loan Agreement at such time and the payment of
all other amounts of the Company owing thereunder at
such time (provided that if the aggregate amount of
principal on the New Revolving Note and under the New
Loan Agreement shall at any time exceed Twenty-Five
Million Three Hundred Thousand Dollars ($25,300,000)
then the amount of such excess together with accrued
interest on such excess and any Bank Prepayment Fee
in respect of such excess shall be deemed not to
constitute Secured Obligations),
"(c) under this Security Agreement, and
"(d) under the Collateral Trust
Indenture.
"For purposes of clause (b) above, Secured
Obligations shall exclude any default interest to the
extent that such default interest exceeds a rate of
interest equal to two percent (2%) per annum over the
otherwise (nondefault) applicable rate of interest
established in the New Loan Agreement or the New
Revolving Note, as the case may be."
9
<PAGE> 11
2.2.3. Section 1 of the Existing Security Agreement is hereby amended
by adding the following definition to such Section 1, each in its respective
alphabetical place therein.
"REQUIRED SECURED PARTIES -- means
"(a) if the Notes comprise at least sixty percent (60%) or
less than forty percent (40%) of the aggregate principal amount of the
Secured Obligations outstanding at such time, then the holders of not
less than fifty-one percent (51%) in principal amount of the Secured
Obligations outstanding at such time held by, or owing to, the holders
of Notes and the Bank; and
"(b) if the Notes comprise less than sixty percent (60%) but
at least forty percent (40%) in principal amount of the Secured
Obligations outstanding at such time, then both:
"(i) the holders of not less than fifty-one percent
(51%) of the aggregate principal amount of the Secured
Obligations outstanding at such time held by, or owing to, the
holders of Notes and
"(ii) the holders of not less than fifty-one percent
(51%) in principal amount of the Secured Obligations
outstanding at such time held by, or owing to, the Bank
"exclusive, in any case, of Notes then owned by any one or more
of the Company, any Subsidiary (as such term is defined in the Note
Purchase Agreements) or any Affiliate (as such term is defined in the
Note Purchase Agreements)."
2.2.4. Section 1 of the Existing Security Agreement is hereby amended
by deleting each of the following definitions to such Section 1, each from its
respective alphabetical place therein.
"REVOLVING NOTE" -- Recital B. hereto.
"SECOND TERM NOTE -- Recital B. hereto."
"TERM NOTE -- Recital B. hereto."
2.2.5. Sections 2.2(a) through 2.2(e) of the Existing Security
Agreement are hereby amended and restated in their entirety as follows:
"2.2 COLLATERAL-RELATED RIGHTS AND UNDERTAKINGS.
"(a) The chief executive office of the Company is located
at the address set forth in Section 3.6 hereof and the Company shall not
change the same to an address outside of the State of California, or
merge or consolidate with any
10
<PAGE> 12
Person or change its name, without prior written notice to and consent of
the Required Secured Parties.
"(b) The Collateral is now, and at all times shall be,
solely owned by the Company free and clear of all Liens, security
interests, claims and encumbrances, except as permitted under the Note
Purchase Agreements and the New Loan Agreement. The security interests of
the Security Trustee in the Collateral shall at all times be valid,
perfected, first priority security interests therein (subject to only the
Lien of the Security Trustee provided for in Section 3.2(c) of the
Collateral Trust Indenture and any Permitted Liens). The Company shall,
at the request of the Required Secured Parties, defend the Collateral from
all claims and demand of all other Persons. The Company shall comply with
the requirements of all state and federal laws, rules and regulations in
order to grant the security interests herein granted in and to the
Collateral, to maintain the perfection and priority of such security
interests and to permit the Security Trustee to realize promptly and
directly on such Collateral, as provided herein. The Company shall, at
its sole cost and expense, perform all acts and execute all documents
reasonably requested by the Security Trustee or the Majority Secured
Parties from time to time to evidence, perfect, preserve the priority of,
maintain or enforce the Security Trustee's security interests granted
herein or otherwise in furtherance of the provisions of this Agreement.
At any time and from time to time, the Company shall, at its sole cost and
expense, execute and deliver to the Security Trustee such financing
statements pursuant to the Code or any other applicable Uniform Commercial
Code, and other papers, documents, resolutions, certificates or
instruments as may be reasonably requested by the Security Trustee or the
Majority Secured Parties in connection with this Agreement, and the
Company hereby authorizes the Security Trustee to execute and file at any
time and from time to time one or more financing statements or copies
thereof or of this Agreement with respect to the Collateral signed only by
Security Trustee.
"(c) The Company shall not assign, sell, transfer, or
otherwise dispose of, nor shall the Company suffer or permit any of the
same to occur with respect to, any Collateral other than (i) in respect of
the sale of California Inventory in the ordinary course of business, on
open account or for cash and on terms substantially similar to the terms
currently being extended by the Company to its current customers, (ii) as
otherwise permitted under the Note Purchase Agreements and the New Loan
Agreement, (iii) in respect of the collection of checks, drafts, money
orders or other instruments in respect of the Accounts as contemplated by
clause (g)(ii) of this Section 2.2 or (iv) with the prior written consent
of the Required Secured Parties. The foregoing notwithstanding and
notwithstanding anything to the contrary in the Note Purchase Agreements
and the New Loan Agreement, the Required Secured Parties may, in their
sole discretion, withdraw the aforesaid permissions to assign, sell,
transfer or otherwise dispose of California Inventory upon the existence
of any Event of Default.
"(d) The Security Trustee shall at all times have free
access to and right of inspection of the Collateral and any records
pertaining thereto (and the right to make extracts from and to receive
from the Company originals or true copies of
11
<PAGE> 13
such records and any papers and instruments relating to any Collateral
upon request therefor).
"The Company shall advise the holders of Secured Obligations
promptly and in sufficient detail of any substantial change relating to
the type, quantity or quality of the California Inventory or any event
which would have a material adverse effect on the value of the California
Inventory.
"The Company shall maintain the Books and Records and such
other records as will enable it and the Security Trustee to determine the
status of each Account.
"(e) Anything contained in the Note Purchase Agreements or
the New Loan Agreement notwithstanding, the Company agrees to maintain
insurance, with financially sound and reputable insurers acceptable to the
Required Secured Parties, with respect to the California Inventory and any
returned, repossessed or reclaimed tangible personal Property included in
the Collateral against casualties, contingencies, hazards and such other
risks (including, without limitation, (i) fire, hurricane, tornado, wind
damage, and such other risks insured against by a standard all-risk
property and fire insurance policy and endorsement for extended coverage
and (ii) flood, earthquake and public disturbance insurance) and in such
amounts as shall be satisfactory to the Required Secured Parties. The
Company shall deliver the copies of the policies of such insurance to the
Security Trustee with satisfactory lender's loss payable endorsements
naming the Security Trustee as loss payee to the extent of its interest
and as such interest may appear. Each such policy of insurance or
endorsement shall contain a clause requiring the insurer to give not less
than ten (10) days' prior written notice to the Security Trustee in the
event of cancellation of the policy for any reason whatsoever and a clause
that the interest of the Security Trustee shall not be impaired or
invalidated by any act or neglect of the Company. If the Company shall
fail to provide and pay for such insurance, or have the same provided and
paid for, the Security Trustee, upon being instructed by the Required
Secured Parties, may, at the Company's expense, procure the same, but may
not be required by the Company to do so. The Company agrees to deliver to
the Security Trustee, promptly as rendered, true copies of all reports
made in any reporting form to insurance companies.
"Anything contained in the Note Purchase Agreements or the New
Loan Agreement notwithstanding, the Company shall maintain or caused to be
maintained insurance with financially sound and reputable insurers with
respect to its Property and business (including, without limitation, the
Collateral) covering any public and/or product liability of the Company or
its officers, agents or employees and in such amounts as are satisfactory
to the Required Secured Parties. The Security Trustee shall be named as a
co-insured on such policies. The Company shall deliver to the Security
Trustee on the Effective Date evidence of insurance of the type and in the
amounts provided for in this Section 2.2(e) being in full force and effect
and payment of all premiums in respect thereof."
12
<PAGE> 14
Sections 2.2(f) through 2.2(l) of the Existing Security Agreement
shall remain unmodified and in full force and effect.
2.2.6. The initial sentence of Section 4.1 of the Existing Security
Agreement is hereby amended and restated in its entirety as follows:
"4. 1 NATURE OF EVENTS.
An "Event of Default" shall exist if any "Event of Default"
or "event of default" under, and as defined in, the Note Purchase
Agreements, the New Loan Agreement or the Collateral Trust Indenture
occurs and is continuing."
2.2.7. The second sentence of third paragraph of Section
4.2(c) of the Existing Security Agreement is hereby amended by deleting the
words "Majority Secured Parties" therefrom and inserting in their place the
words "Required Secured Parties."
SECTION 3. CONDITIONS TO EFFECTIVENESS.
The amendments set forth in Section 2 and Section 3 hereof shall
become effective only upon the satisfaction in all respects of the conditions
set forth below. The first date upon which all such conditions shall have been
satisfied is herein referred to as the "Effective Date."
3.1. Each of the Holders, the Bank, the Security Trustee and the
Company shall have executed and delivered to each other this Amendment, and
each of the Amended Collateral Trust Indenture and the Amended Security
Agreement shall be in full force and effect.
3.2. The representations and warranties set forth in Section 4
hereof shall be true and correct as of the date hereof and as of the Effective
Date; no Default or Event of Default pursuant to any of the Note Purchase
Agreement, the Existing Collateral Trust Indenture or the Existing Security
Agreement shall have occurred or be continuing on the Effective Date; and each
of the Holders and the Bank shall have received a written certificate, in the
form of Exhibit A hereto, signed by two (2) duly authorized officers of the
Company to such effect. Each of the Holders and the Bank shall have received a
certificate of the Secretary or an Assistant Secretary of the Company,
substantially in the form of Exhibit B hereto, with respect to the matters
therein set forth.
3.3. The Company shall have paid all amounts which are
payable pursuant to Section 5 hereof.
3.4. All proceedings taken in connection with the closing
of this Amendment and all documents and papers relating thereto shall
be satisfactory to each of the Holders and their special counsel.
Each such holder shall have received copies of such documents and papers as it
may request in connection therewith, all in form and substance satisfactory to
the Holders and their special counsel.
13
<PAGE> 15
SECTION 4. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to each of the Holders and the Bank
as follows:
4.1. The Company:
4.1.1. is a corporation duly organized and validly in good
standing under the laws of the State of Delaware;
4.1.2. has all requisite power and authority and all necessary
licenses and permits to own and operate its Properties (as such term is
defined in the Note Purchase Agreement) and to carry on its business as
now conducted and presently proposed to be conducted; and
4.1.3. is duly qualified and is authorized to do business and is
in good standing as a foreign corporation in each jurisdiction where the
character of its Properties (as such term is defined in the Note Purchase
Agreement) or the nature of its activities makes such qualification
necessary.
4.2. The Company has the corporate power and authority to execute,
deliver and perform its obligations under this Amendment, and to perform its
obligations under the Amended Collateral Trust Indenture and the Amended
Security Agreement.
4.3. This Amendment has been duly authorized, executed and
delivered by the Company. The Amended Collateral Trust Indenture and the
Amended Security Agreement constitute the legal, valid and binding obligations
of the Company, enforceable in accordance with their respective terms, except
as such enforceability may be:
4.3.1. limited by bankruptcy, insolvency or other similar
laws affecting the enforceability of creditors' rights generally; and
4.3.2. subject to the availability of equitable remedies.
The holders of the Secured Obligations (as such term is defined in the
Collateral Trust Indenture) are entitled to the benefits of the Amended
Collateral Trust Indenture and the Amended Security Agreement.
4.4. The authorization, execution and delivery by the Company of
this Amendment is not, and the performance by the Company of its obligations
under each of the Amended Collateral Trust Indenture and the Amended Security
Agreement will not be, inconsistent with its certificate of incorporation or
by-laws, do not and will not contravene any law, governmental rule or
regulation, do not violate any judgment, order or award of any arbitrator
applicable to the Company, do not and will not contravene any provision of, or
constitute a default under, any indenture, mortgage, contract or other
instrument to which the Company is a party or by which any of its Property (as
such term is defined in the Note Purchase Agreement) is bound, and will not
result in the imposition of a Lien (as such term is defined in the Note
Purchase Agreement) upon any Property (as such term is defined in the Note
Purchase Agreement) of the Company
14
<PAGE> 16
(other than the existing Liens of the Amended Security Agreement and the
Amended Collateral Trust Indenture).
4.5. No consent or approval of, giving of notice to, registration
with, or taking of any other action in respect of or by, any federal, state or
local governmental authority or agency, or other Person (as such term is
defined in the Note Purchase Agreement) is required with respect to:
4.5.1. the authorization, execution and delivery by the
Company of this Amendment; or
4.5.2. the performance by the Company of its obligations
under either of the Amended Collateral Trust Indenture and the Amended
Security Agreement.
4.6. After giving effect to the authorization, execution and
delivery by the Company of this Amendment, the Lien (as such term is defined in
the Note Purchase Agreement) of the Amended Security Agreement and the Amended
Collateral Trust Indenture will continue to constitute a valid and perfected
security interest in and to the Collateral (as such term is defined in the
Amended Security Agreement), and such Lien will continue to have such priority
with respect to such Collateral as such Lien had immediately preceding the
consummation of the foregoing transactions.
4.7. After giving effect to this Amendment, no Default or Event of
Default will exist under the Note Purchase Agreement and no default or event of
default exists under the Amended Collateral Trust Indenture, the Amended
Security Agreement, the Note Purchase Agreements or the New Loan Agreement.
ARTICLE 5. COSTS AND EXPENSES.
The Company shall pay all costs, expenses and fees of the Security
Trustee and the Holders in connection with the negotiation, preparation,
execution and delivery of this Amendment, including, without limitation, all
attorneys' fees and disbursements.
ARTICLE 6. MISCELLANEOUS.
6.1. This Amendment may be executed in one or more counterparts,
all of which taken together shall constitute a single instrument.
6.2. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CONNECTICUT, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW.
6.3. Except as expressly provided herein (a) no other terms and
provisions of either of the Existing Collateral Trust Indenture or the Existing
Security Agreement shall be modified or changed by this Amendment and (b) the
terms and provisions each of the Amended Collateral Trust Indenture and the
Amended Security Agreement shall continue in full force and effect. The
15
<PAGE> 17
Company hereby acknowledges and reaffirms all of its obligations and duties
under the Amended Collateral Trust Indenture and the Amended Security
Agreement.
6.4. All headings and captions preceding the text of the several
paragraphs of this Amendment are intended solely for convenience of reference
and shall not constitute a part of this Amendment nor shall they affect it
meaning, construction or effect.
6.5. All the provisions of this Amendment by or for the benefit of
the parties hereto shall bind and inure to the benefit of their respective
successors and assigns hereunder.
16
<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized officers as of the day and year
first above written.
BELL INDUSTRIES, INC.
By TRACY A. EDWARDS
------------------------------------------
Name: Tracy A. Edwards
Title: Vice President
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
SECURITY TRUSTEE
By W. JEFFREY KRAMER
------------------------------------------
Name: W. Jeffrey Kramer
Title: Assistant Vice President
<PAGE> 19
EXHIBIT A
1 of 1
CERTIFICATE OF OFFICERS OF BELL INDUSTRIES, INC.
We, Bruce M. Jaffe and Tracy A. Edwards, each hereby certify that we
are, respectively, the Executive Vice President and Chief Operating Officer, and
the Vice President and Chief Financial Officer of BELL INDUSTRIES, INC., a
Delaware corporation (the "Company"), and that, as such, we are authorized to
execute and deliver this Certificate in the name and on behalf of the Company,
and that:
1. This certificate is being delivered pursuant to Section 3.2 of the
Amendment Agreement (the "Amendment"), dated as of March 29, 1994, between the
Company and State Street Bank and Trust Company of Connecticut, National
Association, a national banking association, as security trustee (the "Security
Trustee") under that certain Collateral Trust Indenture, dated as of June 1,
1992, between the Company and the Security Trustee. The terms used in this
certificate and not defined herein shall have the respective meanings ascribed
to them in the Amendment.
2. The warranties and representations contained in Section 4 of the
Amendment are true in all material respects on the date hereof with the same
effect as though made on and as of the date hereof.
3. The Company has performed and complied with all agreements and
conditions contained in the Amendment that are required to be performed or
complied with by the Company before or at the date hereof, and after giving
effect to the execution and delivery of the Amendment, no Default or Event of
Default pursuant to any of the Note Purchase Agreement, the Existing Collateral
Trust Indenture or the Existing Security Agreement shall have occurred or be
continuing on the date hereof.
4. John J. Cost is on and as of the date hereof, and at all times
subsequent to March 15, 1994 has been, the duly elected, qualified and acting
Secretary of the Company, and the signature appearing on the Certificate of
Secretary dated the date hereof and delivered to the Purchasers
contemporaneously herewith is his genuine signature.
IN WITNESS WHEREOF, we have executed this Certificate in the name and on
behalf of the Company on March 31, 1994.
BELL INDUSTRIES, INC.
By: BRUCE M. JAFFE
-----------------------------------------
Name: Bruce M. Jaffe
By: TRACY A. EDWARDS
-----------------------------------------
Name: Tracy A. Edwards
<PAGE> 20
EXHIBIT B
1 of 2
CERTIFICATE OF SECRETARY OF BELL INDUSTRIES, INC.
I, John J. Cost, hereby certify that:
I am the duly elected, qualified and acting Secretary of BELL
INDUSTRIES, INC., a Delaware corporation (the "Company"), and that, as such, I
have access to its corporate records and am familiar with the matters herein
certified, and I am authorized to execute and deliver this Certificate in the
name and on behalf of the Company, and that:
1. This certificate is being delivered pursuant to Section 3.2 of
the Amendment Agreement (the "Amendment"), dated as of March 29, 1994, between
the Company and State Street Bank and Trust Company of Connecticut, National
Association, a national banking association, as security trustee (the "Security
Trustee") under that certain Collateral Trust Indenture, dated as of June 1,
1992, between the Company and the Security Trustee. The terms used in this
certificate and not defined herein shall have the respective meanings ascribed
to them in the Amendment.
2. Attached hereto as Attachment A is a true and correct copy of
resolutions, and the preamble thereto, adopted by the Board of Directors of the
Company on March 15, 1994, and such resolutions and preamble set forth in
Attachment A hereto were duly adopted by said Board of Directors and are in
full force and effect on and as of the date hereof, not having been amended,
altered or repealed, and such resolutions are filed with the records of the
Board of Directors.
3. The Amendment was executed and delivered by the Company
pursuant to and in accordance with the resolutions set forth in Attachment A
hereto and said documents as executed are substantially in the form submitted
to and approved by the Board of Directors of the Company as aforementioned.
4. The bylaws of the Company have not been modified or amended
in any respect since November 1992.
5. Each of the following named persons is on and as of the date
hereof, and at all times subsequent to March 15, 1994 has been a duly
elected, qualified and acting officer of the Company holding the office or
offices set forth below opposite his name:
<PAGE> 21
EXHIBIT B
2 OF 2
<TABLE>
<CAPTION>
Name Office Signature
<S> <C> <C>
Bruce M. Jaffe Executive Vice President and /s/ BRUCE M. JAFFE
Chief Operating Officer -----------------------
Tracy A. Edwards Vice President and Chief /s/ TRACY A. EDWARDS
Finance Officer -----------------------
John J. Cost Secretary /s/ JOHN J. COST
-----------------------
</TABLE>
6. The signature appearing opposite the name of each such person
set forth above is his or her genuine signature.
7. Attached hereto as Attachment B is a short-form good standing
certificate in respect of the Company from the State of Delaware.
8. There have been no amendments or supplements to or
restatements of the Certificate of Incorporation of the Company since
September 10, 1993. Copies of the Certificate of Incorporation and all
amendments thereto were delivered in connection with the original purchase
of the Notes.
IN WITNESS WHEREOF, I have hereunto set my hand in the name and on
behalf of the Company on March 31, 1994.
BELL INDUSTRIES, INC.
JOHN J. COST
---------------------
Secretary
2
<PAGE> 22
ATTACHMENT A
RESOLUTIONS OF THE BOARD OF DIRECTORS
BOARD OF DIRECTORS
BELL INDUSTRIES, INC.
RESOLUTIONS ADOPTED
MARCH 15,1994
WHEREAS, there have been submitted to this Board of Directors drafts
of the Amendment Agreement (the "Amendment Agreement") which provides for the
amendment of certain sections of (i) that certain Collateral Trust Indenture
(as amended, the "Collateral Trust Indenture"), dated as of June 1, 1992,
between the Company and State Street Bank and Trust Company of Connecticut,
National Association, as security trustee (the "Security Trustee") and (ii)
that certain Security Agreement, dated as of June 1, 1992, between the Company
and the Security Trustee (as amended, the "Security Agreement"); and
WHEREAS, this Board of Directors has reviewed in detail and discussed
the terms and provisions of the Amendment Agreement;
WHEREAS, on the basis of its review of the Amendment Agreement and of
the principal terms and provisions of the transactions provided for therein,
this Board of Directors deems it advisable and in the best interest of the
Company that the transactions be consummated substantially in accordance with
the provisions of the Amendment Agreement;
NOW, THEREFORE, BE IT RESOLVED, that the form of, and each of the
terms and provisions contained in, the Amendment Agreement are hereby
authorized and approved in each and every respect; and each and every
transaction effected or to be effected pursuant to and substantially in
accordance with the terms of the Amendment Agreement, including, but not
limited to, each specific transaction that is described, authorized and
approved in these resolutions, is hereby authorized and approved in each and
every respect;
RESOLVED, that the Company enter into the Amendment Agreement with the
Security Trustee; and that each of the President, the Executive Vice President,
any Vice President, the Secretary or any Assistant Secretary, the Treasurer or
any Assistant Treasurer and each other officer of the Company is hereby
severally authorized to execute and deliver, in the name and on behalf of the
Company, the Amendment Agreement, with such changes therein as shall be
approved by the officer executing and delivering the same, such approval to be
evidenced conclusively by such execution and delivery; and
RESOLVED, that the officers of the Company and any person or persons
designated and authorized so to act by any officer of the Company are hereby
each severally authorized to do all other acts, to pay or cause to be paid, on
behalf of the Company, all related costs and expenses and to execute and
deliver or cause to be executed and delivered such other notices, requests,
demands, directions, consents, approvals, orders, applications, agreements,
instruments, certificates, undertakings, supplements, amendments, further
assurances or other
Attachment A-1
<PAGE> 23
communications of any kind, under the corporate seal of the Company or
otherwise and in the name and on behalf of the Company or otherwise, as he, she
or they may deem necessary, advisable or appropriate to effect the intent of
the foregoing Resolutions or to comply with the requirements of the instruments
approved and authorized by the foregoing Resolutions, including, but not
limited to, the Amendment Agreement; and
RESOLVED, that any acts of any officer or officers of the Company and
of any person or persons designed and authorized to act by any officer of the
Company, which acts would have been authorized by the foregoing Resolutions
except that such acts were taken prior to the adoption of such Resolutions, and
hereby severally ratified, confirmed, approved and adopted as the acts of the
Company; and
RESOLVED, that each of the Secretary and each Assistant Secretary of
the Company is hereby severally authorized and empowered to certify to the
passage of the foregoing Resolutions.
Attachment A-2
<PAGE> 24
ATTACHMENT B
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY "BELL INDUSTRIES, INC." IS DULY INCORPORATED UNDER THE LAWS OF
THE STATE OF DELAWARE AND IS IN GOOD STANDING AND HAS A LEGAL CORPORATE
EXISTENCE SO FAR AS THE RECORDS OF THIS OFFICE SHOW, AS OF THE THIRTIETH DAY OF
MARCH, A.D. 1994.
AND I DO FURTHER CERTIFY THAT THE ANNUAL REPORTS HAVE BEEN FILED
TO DATE.
AND I DO HEREBY FURTHER CERTIFY THAT THE FRANCHISE TAXES HAVE BEEN
PAID TO DATE.
WILLIAM T. QUILLEN
--------------------------------------
William T. Quillen, Secretary of State
[SEAL]
AUTHENTICATION: 7073510
DATE: 03-30-94
<PAGE> 1
EXHIBIT 4.g
BELL INDUSTRIES, INC.
11812 San Vincente Boulevard
Los Angeles, CA 90049-5069
May 17, 1994
To each of the Holders of Warrants Named
on the Signature Lines Below
Re: Warrants to Purchase Shares of Common Stock
Dear Sirs and Madams:
Reference is hereby made to the Warrant Agreement (the "Warrant
Agreement"), dated as of September 15, 1993, among Bell Industries, Inc. (the
"Company") and each of the holders of the Warrants (the "Warrants") to purchase
shares of the Common Stock, par value $.25 per share, of the Company named
below (the "Holders"). Capitalized terms used herein, and not defined herein,
shall have the respective meanings set forth in the Warrant Agreement.
1. The Company agrees, and each of the undersigned Holders
agrees, that, upon the effectiveness of this letter agreement, the first
sentence of the definition of "Market Price" contained in Section 6 of the
Warrant Agreement is hereby amended in its entirety to read as follows:
" 'MARKET PRICE' shall mean, as of any date of determination,
the arithmetic mean of the daily Closing Prices for the twenty (20)
consecutive trading days immediately preceding such date of
determination; provided that if the Common Stock is not then listed
or admitted to trading on any national securities exchange or quoted
in the over-the-counter market, then 'Market Price' shall mean the
greater of (i) the book value of one share of Common Stock, as
determined in accordance with generally accepted accounting
principles, as of the date of determination, and (i) the Fair
Valuation of one share of Common Stock, as of the date of
determination."
Except as expressly set forth in this paragraph 1, the Warrant Agreement shall
not be amended hereby and shall remain in full force and effect.
2. Each undersigned Holder agrees that, upon the effectiveness of
this letter agreement, the Holders waive any right or entitlement to receive
any payment of liquidated damages from the Company pursuant to Section 5.1(d)
of the Warrant Agreement in respect of, and waive the effect of any default or
violation which occurred or may have occurred pursuant to the Warrant Agreement
solely in respect of, the failure of Amendment No. 2 to the Company's
Registration Statement on Form S-3 (No. 33-71030), as filed with the Securities
and Exchange Commission on April 18, 1994, to be declared effective by the
Securities Exchange Commission prior to April 19, 1994.
<PAGE> 2
This letter agreement shall become effective and binding upon the Company
and each Holder upon the execution and delivery of a counterpart of this letter
agreement by the Company, the Required Warrantholders and the Holders of at
least sixty-six and two-thirds percent (662/3%) of all Registrable Stock then
outstanding (excluding any Registrable Stock directly or indirectly held by the
Company or any Subsidiary or Affiliate).
If you are in agreement with the provisions of this letter agreement,
please so indicate by executing it below.
Yours very truly,
BELL INDUSTRIES, INC.
By: TRACY A. EDWARDS
-----------------------------------------
Name: Tracy A. Edwards
Title: Vice President
AGREED TO AND ACCEPTED BY:
CONNECTICUT GENERAL LIFE
INSURANCE COMPANY
By: CIGNA Investments, Inc.
By: MAURICE A. GORDON
-----------------------------------------
Name: MAURICE A. GORDON
Title: Vice President
INSURANCE COMPANY OF NORTH AMERICA
By: CIGNA Investments, Inc.
By: MAURICE A. GORDON
-----------------------------------------
Name: MAURICE A. GORDON
Title: Vice President
2
<PAGE> 3
INTEGON LIFE INSURANCE CORPORATION
By: ROBERT L. DANN
-----------------------------------------
Name: Robert L. Dann
Title: Vice President
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By: J. THOMAS CHRISTOFFERSON
----------------------------------------
Name: J. Thomas Christofferson
Title: Vice President
ROYAL MACCABEES LIFE INSURANCE COMPANY
By: JOHN F. McCORMICK
----------------------------------------
Name: John F. McCormick
Title: Vice President and Treasurer
PROVIDENT MUTUAL LIFE INSURANCE
COMPANY OF PHILADELPHIA
By: _________________________________________
Name:
Title:
PAN-AMERICAN LIFE INSURANCE COMPANY
By: LUIS INGLES, JR.
-----------------------------------------
Name: Luis Ingles, Jr., C.F.A.
Title: Senior Vice President - Investments
3
<PAGE> 4
SOUTHERN FARM BUREAU LIFE
INSURANCE COMPANY
By: _________________________________________
Name:
Title:
THE UNION CENTRAL LIFE INSURANCE COMPANY
By: JOSEPH A. TUCKER, III
-----------------------------------------
Name: Joseph A. Tucker, III
Title: Assistant Treasurer
UNITED COMPANIES LIFE INSURANCE COMPANY
By: _________________________________________
Name:
Title:
WASHINGTON NATIONAL INSURANCE COMPANY
By: C. BRUCE DUNN
-----------------------------------------
Name: C. Bruce Dunn
Title: Director of Investments
NATIONAL LIFE INSURANCE COMPANY
By: SCOTT HIGGINS
-----------------------------------------
Name: R. Scott Higgins
Title: Vice President
National Life Investment Management Co.,
Inc.
4
<PAGE> 1
EXHIBIT 21
Subsidiaries of the Registrant:
<TABLE>
<S> <C>
Bell Electronics Corp. (California) (*)
Bell Industries, Inc. (Minnesota)
J. W. Miller Company (California) (*)
</TABLE>
All companies listed are considered wholly owned by the Registrant (Bell
Industries, Inc. of Delaware) and are included in the consolidated financial
statements.
(*) Inactive.
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (No. 2-74896, No. 33-38737 and No. 33-73044) and in
the Prospectus constituting part of the Registration Statement on Form S-3
(No. 33-71030) of Bell Industries, Inc. of our report dated August 3, 1994
appearing on page 13 of this Form 10-K.
PRICE WATERHOUSE LLP
Los Angeles, California
August 30, 1994
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1994
<PERIOD-END> JUN-30-1994
<EXCHANGE-RATE> 1
<CASH> 4,370
<SECURITIES> 0
<RECEIVABLES> 66,719
<ALLOWANCES> 884
<INVENTORY> 80,179
<CURRENT-ASSETS> 156,643
<PP&E> 40,462
<DEPRECIATION> 24,284
<TOTAL-ASSETS> 184,713
<CURRENT-LIABILITIES> 49,188
<BONDS> 39,972
<COMMON> 1,537
0
0
<OTHER-SE> 94,016
<TOTAL-LIABILITY-AND-EQUITY> 184,713
<SALES> 451,153
<TOTAL-REVENUES> 451,153
<CGS> 349,573
<TOTAL-COSTS> 349,573
<OTHER-EXPENSES> 81,359
<LOSS-PROVISION> 755
<INTEREST-EXPENSE> 4,492
<INCOME-PRETAX> 15,729
<INCOME-TAX> 6,654
<INCOME-CONTINUING> 9,075
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,075
<EPS-PRIMARY> 1.45
<EPS-DILUTED> 1.45
</TABLE>
