No. pages 14
--
index exhibit pg. none
----
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
( Mark one )
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 1997
--------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ____________
Commission file number 0-21528
-------
Bell Microproducts Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 94-3057566
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1941 Ringwood Avenue, San Jose, California 95131-1721
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(408) 451-9400
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No initial report, previously not
--- --- required to file
Common Stock, $.01 Par Value -- Number of Shares Outstanding at March 31, 1997:
- ----------------------------
8,515,117
1
<PAGE>
BELL MICROPRODUCTS INC.
INDEX TO FORM 10-Q
Page
PART I - FINANCIAL INFORMATION Number
------
Item 1: Financial Statements
Condensed Balance Sheets -
March 31, 1997 and December 31, 1996
3
Condensed Statements of Operations -
Three months ended March 31,
1997 and 1996 4
Condensed Statements of Cash Flows -
Three months ended March 31,
1997 and 1996 5
Notes to Condensed Financial Statements 6
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports 13
Signature 14
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
Bell Microproducts Inc.
Condensed Balance Sheets
(in thousands, except per share data)
(unaudited)
March 31, December 31,
1997 1996
- --------------------------------------------------- -------- --------
ASSETS
Current assets:
Cash $ 3,318 $ 5,682
Accounts receivable, net 90,959 70,686
Inventories 85,900 78,659
Deferred and refundable income taxes 3,714 3,714
Prepaid expenses 1,504 885
-------- --------
Total current assets 185,395 159,626
Property and equipment, net 10,002 9,006
Goodwill 6,606 6,685
Other assets 392 363
-------- --------
Total assets $202,395 $175,680
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable, current portion $ 147 $ 294
Accounts payable 64,951 45,725
Other accrued liabilities 7,785 6,271
Current portion of capitalized lease
obligations 1,457 1,378
-------- --------
Total current liabilities 74,340 53,668
Line of credit 49,200 45,900
Capitalized lease obligations, less current portion 4,905 4,985
-------- --------
Total liabilities 128,445 104,553
-------- --------
Commitments and contingencies
Shareholders' equity:
Common Stock, $0.01 par value, 20,000 shares
authorized; 8,515 and 8,445 issued and
outstanding
52,086 51,644
Retained earnings 21,864 19,483
-------- --------
Total shareholders' equity 73,950 71,127
-------- --------
Total liabilities and shareholders' equity $202,395 $175,680
======== ========
See accompanying notes to condensed financial statements.
3
<PAGE>
Bell Microproducts Inc.
Condensed Statements of Operations
(in thousands, except per share data)
(unaudited)
Three months ended March 31,
----------------------------
1997 1996
--------- ---------
Sales $ 140,968 $ 115,431
Cost of sales 124,820 101,809
--------- ---------
Gross profit 16,148 13,622
Marketing, general and
administrative expenses 11,151 9,759
--------- ---------
Income from operations 4,997 3,863
Interest expense (892) (995)
--------- ---------
Income before income taxes 4,105 2,868
Provision for income taxes (1,724) (1,205)
--------- ---------
Net income $ 2,381 $ 1,663
========= =========
Earnings per share $ .27 $ .20
========= =========
Weighted average common
shares and equivalents 8,935 8,423
========= =========
See accompanying notes to condensed financial statements.
4
<PAGE>
<TABLE>
Bell Microproducts Inc.
Condensed Statements of Cash Flows
(Increase/(decrease) in cash, in thousands)
(unaudited)
<CAPTION>
Three months ended March 31,
---------------------------------------------------------------------------- -------------------------------
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,381 $ 1,663
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 769 612
Change in allowance for doubtful accounts (767) 899
Change in deferred and refundable income taxes - 382
Changes in assets and liabilities:
Accounts receivable (19,506) (11,515)
Inventories (7,241) 2,979
Prepaid expenses (619) 89
Other assets (29) (98)
Accounts payable 19,226 9,776
Other accrued liabilities 1,514 2,092
-------------- -------------
Net cash provided by (used in) operating activities (4,272) 6,879
-------------- -------------
Cash flows from investing activities:
Acquisition of property and equipment (1,345) (178)
-------------- -------------
Cash flows from financing activities:
Net borrowings/(repayments) under line of credit agreement 3,300 (8,500)
Payments on short term borrowings (147) -
Proceeds from issuance of Common Stock 442 -
Principal payments on long term liabilities (342) (271)
-------------- -------------
Net cash provided by (used in) financing activities 3,253 (8,771)
-------------- -------------
Net decrease in cash (2,364) (2,070)
Cash at beginning of period 5,682 2,489
-------------- -------------
Cash at end of period $ 3,318 $ 419
============== =============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 960 $ 792
Income taxes $ 907 $ 17
Obligations incurred under capital leases $ 341 $ 443
<FN>
See accompanying notes to condensed financial statements.
</FN>
</TABLE>
5
<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
Note 1 - Basis of Presentation:
The condensed financial statements presented in this Quarterly Report
are unaudited. It is management's opinion that all adjustments, consisting of
normal recurring items, have been included for a fair basis of presentation.
This Quarterly Report on Form 10-Q should be read in conjunction with the
Company's 1996 Annual Report on Form 10-K. The operating results for the period
ended March 31, 1997 are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 1997.
Recently Issued Accounting Statements
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings per Share." This
statement is effective for the Company's fiscal year ending December 31, 1997.
The Statement redefines earnings per share under generally accepted accounting
principles. Under the new standard, primary earnings per share is replaced by
basic earnings per share and fully diluted earnings per share is replaced by
diluted earnings per share. If the Company had adopted this Statement for the
year ended December 31, 1996 and for the three month period ended March 31,
1997, the Company's earnings per share would have been as follows:
Year Ended Three Months Ended
December 31, 1996 March 31, 1997
----------------- --------------
Basic earnings per share $0.94 $0.28
Diluted earnings per share $0.92 $0.27
Note 2 - Inventories:
A summary of inventories follows (in thousands):
March 31, 1997 December 31, 1996
-------------- -----------------
Purchased components and materials $77,535 $69,513
Work-in-process 8,365 9,146
------- -------
Total $85,900 $78,659
======= =======
Note 3 - Property and equipment:
A summary of property and equipment follows (in thousands):
March 31, 1997 December 31, 1996
-------------- -----------------
Manufacturing and test equipment $ 9,445 $ 9,070
Warehouse equipment 240 195
Furniture and fixtures 1,179 1,147
Computer and other equipment 4,413 3,212
Leasehold Improvements 30 -
--------- ---------
15,307 13,624
Accumulated depreciation (5,305) (4,618)
--------- ---------
Total $ 10,002 $ 9,006
========= =========
6
<PAGE>
Note 4 - Line of Credit
On June 25, 1996, the Company entered into an amendment to the Amended
and Restated Syndicated Credit Agreement arranged by Sumitomo Bank of California
("Sumitomo Bank") as Agent. The amendment increased the Company's $70 million
revolving line of credit to $80 million and extended the maturity date to May
31, 1998. The syndicate includes Sumitomo Bank of California, Union Bank, The
First National Bank of Boston, Comerica Bank - California and The Sumitomo Bank,
Limited. At the Company's option, the borrowings under the line of credit will
bear interest at Sumitomo Bank's prime rate or the adjusted LIBOR rate plus
1.625%. At March 31, 1997 the interest rate was 8.5%. The revolving line of
credit requires the Company to meet certain financial tests and to comply with
certain other covenants, including restrictions on incurrence of debt and liens,
restrictions on mergers, acquisitions, asset dispositions, declaration of
dividends, repurchases of stock, making investments and profitability. The
Company is in compliance with its bank covenants; however, there can be no
assurance that the Company will be in compliance in the future. The Company's
failure to remain in compliance with such covenants could have a material
adverse effect on the Company's financial conditions or results of operations.
Obligations of the Company under the revolving line of credit are secured by
substantially all of the Company's assets.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Three months ended March 31, 1997 compared to three months ended March 31, 1996
Sales were $141.0 million for the quarter ended March 31, 1997, which
represented an increase of $25.5 million, or 22.1% over the same quarter in
1996. Substantially all the increase in sales was attributable to computer
products with the expansion of unit sales in existing product lines due to
increased demand for mass storage products, a larger proportion of value-added
and subsystem sales and the expansion of the customer base due to the addition
of sales and marketing resources. While semiconductor and manufacturing sales
remained relatively flat in the first quarter of 1997 compared to the same
period in 1996, sales increased 21.7% and 11.1%, respectively, from the fourth
quarter in 1996. For the quarter ended March 31, 1997, Quantum, the Company's
largest supplier, provided products which represented 43.5% of the Company's
sales, as compared to 34.7% in the same quarter in 1996. The loss of Quantum or
any other significant supplier would have a material adverse effect on the
Company's results of operations.
The Company's gross profit for the first quarter of 1997 was $16.1
million, which was $2.5 million, or 18.5% higher than the first quarter of 1996.
As a percentage of sales, gross margin was 11.5% in the first quarter of 1997,
compared to 11.8% in the same quarter of 1996. The decrease in gross margin was
primarily due to increased computer product sales as a percentage of total
sales, which typically contribute lower margins than other products, and
decreased semiconductor gross margins. Gross margins may fluctuate quarterly due
to the mix of products sold to customers.
Marketing, general and administrative expenses increased to $11.2
million in the first quarter of 1997 from $9.8 million in the first quarter of
1996, an increase of 1.4 million or 14.3%, but decreased as a percentage of
sales to 7.9% from 8.5%. The decline in marketing, general and administrative
expenses as a percentage of sales was primarily attributable to the Company's
successful efforts to control costs while increasing sales, and a higher portion
of sales from large volume orders, particularly for disk drives and certain
semiconductor devices, both of which resulted in lower operating expenses as a
percentage of sales. The increase in expenses was attributable to increased
sales volume and the Company's continuing effort to expand its sales and
marketing organization and strengthen its financial and administrative support.
Interest expense was $892,000 in the first quarter of 1997 as compared
to $995,000 in the first quarter of 1996. The decrease in interest expense was
primarily due to lower average bank borrowings throughout the quarter.
7
<PAGE>
Net income grew to $2,381,000 in the first quarter of 1997 from
$1,663,000 in the same period last year. The increase in net income was
primarily the result of higher gross profits driven by sales growth and
decreased interest expense partially offset by increased operating expenses and
decreased gross margin percentage.
LIQUIDITY AND CAPITAL RESOURCES
The Company has funded its working capital requirements principally
through borrowings under bank lines of credit and sales of equity securities.
Working capital requirements have included the financing of increases in
inventory and accounts receivable resulting from sales growth.
On June 25, 1996, the Company increased its revolving line of credit
from $70 million to $80 million to provide working capital for the Company. At
the Company's option, the borrowings under the line of credit will bear interest
at Sumitomo Bank's prime rate or the adjusted LIBOR rate plus 1.625%. At March
31, 1997 the interest rate was 8.5%. The revolving line of credit has a final
payment due date of May 31, 1998. The revolving line of credit requires the
Company to meet certain financial tests and to comply with certain other
covenants, including restrictions on incurrence of debt and liens, restrictions
on mergers, acquisitions, asset dispositions, declaration of dividends,
repurchases of stock, making investments and profitability. The Company is in
compliance with its bank covenants; however, there can be no assurance that the
Company will be in compliance in the future. The Company's failure to remain in
compliance with such covenants could have a material adverse effect on the
Company's financial conditions or results of operations. Obligations of the
Company under the revolving line of credit are secured by substantially all of
the Company's assets. The Company intends to utilize its revolving line of
credit to fund future working capital requirements. The Company evaluates
potential acquisitions from time to time and may utilize its line of credit to
acquire complementary businesses, provided consent from its banks is obtained.
Net cash used by operating activities for the three months ended March
31, 1997, was $4.3 million. The Company's accounts receivable as of March 31,
1997 increased to $91.0 million from 70.7 million as of December 31, 1996, as a
result of increased sales at the end of the quarter. The Company's inventories
as of March 31, 1997 increased to $85.9 million from $78.7 million as of
December 31, 1996, primarily as a result of the Company's need to support
anticipated future sales requirements. The Company's accounts payable increased
to $65.0 million as of March 31, 1997 from $45.7 million as of December 31,
1996, primarily due to increased inventory purchases as well as timing of
inventory receipts and payments related thereto. The Company's future cash
requirements will depend on numerous factors, including the rate of growth of
its sales. The Company believes that its working capital, including its existing
credit facility, will be sufficient to meet the Company's short term capital
requirements. However, the Company is in the process of negotiating an increase
in its credit facility and it may, in the future, seek additional debt or equity
financing to fund continued growth.
RISK FACTORS
In evaluating the Company's business, prospective investors should
carefully consider the following risk factors in addition to the other
information set forth herein or incorporated herein by reference. This report on
Form 10-Q contains forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Actual results could differ materially from those projected in the
forward-looking statements as a result of the risk factors set forth below and
in the documents incorporated by reference herein. Forward looking statements
are indicated by an asterisk immediately following the relevant statement.
8
<PAGE>
Potential Fluctuations in Quarterly Operating Results and Effect on Liquidity
The Company's quarterly operating results have in the past and could in
the future fluctuate substantially. The Company's expense levels are based, in
part, on expectations of future sales. If sales in a particular quarter do not
meet expectations, operating results could be adversely affected. Factors
affecting quarterly operating results include the timing of delivery of products
from suppliers, the product mix sold by the Company, the percent of revenue
derived from distribution versus contract manufacturing, managing Company
inventory in both the contract manufacturing ("Quadrus") division and the
distribution division, availability of products from suppliers, reductions in or
cancellations of orders from significant contract manufacturing or other
customers of the Company, management of growth, the Company's ability to collect
accounts receivable, price decreases on inventory that is not price protected
and price competition for products sold by the Company, including the Company's
ability to sell inventory at anticipated prices. Due in part to supplier rebate
programs and increased sales by the Company near the end of each quarter, a
significant portion of the Company's gross profit has historically been earned
by the Company in the third month of each quarter. Failure to receive products
from its suppliers in a timely manner or the discontinuance of rebate programs
could have a material adverse effect on the Company's results of operations in a
particular quarter. In addition, price competition for the products sold by the
Company is intense and could result in gross margin declines, which could have
an adverse effect on the Company's results of operations. In various quarters in
the past, the Company's operating results have been affected by these factors.
There can be no assurance that any of the foregoing factors will not materially
adversely affect future operating results.
Dependence on Suppliers
The Company relies on a limited number of suppliers for products which
represent a significant portion of its sales. For the quarter ended March 31,
1997, sales of Quantum products represented 43.5% of the Company's sales, and
for the quarter ended March 31, 1996, sales of Quantum products represented
34.7% of the Company's sales. The Company's distribution agreement with Quantum
is cancelable upon 90 days' notice. In the past, distribution arrangements with
significant suppliers have been terminated and there can be no assurance that,
in the future, one or more of the Company's significant distributor
relationships will not be terminated. The loss of Quantum or any significant
supplier could have a material adverse effect on the Company's results of
operations. As the Company enters into distribution relationships with new
suppliers, other competitive suppliers may choose to terminate their
distribution arrangements with the Company with minimal notice. In the first
quarter of 1996, Hitachi America Ltd. terminated its distribution agreement with
the Company. This supplier accounted for approximately $1.7 million and $297,000
of the Company's sales and gross profit respectively, for the quarter ended
December 31, 1995. To the extent that the Company is unable to enter into or
maintain distribution arrangements with leading suppliers of components and
computer products, the Company's sales and operating results could be materially
adversely affected.
The Company has entered into agreements with most of its distribution
suppliers which generally provide the Company with price protection and limited
inventory rotation rights. There can be no assurance that such agreements will
not be canceled, or that price protection and inventory rotation policies will
provide complete protection or will not be changed in the future. If the Company
were to purchase significant amounts of products on terms that do not include
effective price protection or inventory rotation rights, it would bear the risk
of obsolescence and price fluctuation for those products. In particular, in
February 1996 the Company reported fourth quarter 1995 charges of $1.6 million,
net of tax related to inventory valuation issues of certain DRAM products. The
price levels of such DRAM products had fallen significantly, requiring
revaluation of inventory and these products were not subject to the price
protection and inventory rotation rights normally applicable to components
purchased from the Company's franchised suppliers. There can be no assurance
that the Company will not have to take additional charges to earnings in the
future due to inventory valuation issues, which could have a material adverse
effect on the Company's results of operations.
9
<PAGE>
Dependence on the Personal Computer Industry
Many of the products the Company sells are used in the manufacture or
configuration of personal computers. These products are characterized by rapid
technological change, short product life cycles and intense competition. The
personal computer industry has experienced significant unit volume growth over
the past three years, which has in turn increased demand for many of the
products distributed by the Company. Any slowdown in the growth of the personal
computer industry, or growth at less than expected rates, could adversely affect
the Company's ability to continue its recent revenue growth. In addition, many
of the Company's customers in the personal computer industry are subject to the
risks of significant shifts in demand and severe price pressures, which may
increase the risk that the Company may not be able to collect accounts
receivable owed by some of its customers. To the extent the Company is unable to
collect its accounts receivable, the Company's results of operations will be
adversely affected.
The Company faces certain industry-related risks. To the extent that
its suppliers do not maintain their product leadership, the Company's operating
results could be materially adversely affected. Moreover, the increasingly short
product life cycles experienced in the electronics industry may increase the
Company's exposure to inventory obsolescence and the possibility of fluctuations
in operating results. Other factors adversely affecting the semiconductor or
computer industries in general, including trade barriers which may affect the
Company's supply of products from its Japanese suppliers, could have a material
adverse affect on the Company's operating results.
Cyclical Nature of the Semiconductor and Disk Drive Industries
Semiconductors and disk drives have represented a significant portion
of the Company's sales and the Company believes they will continue to do so in
future periods.* Both the semiconductor and the disk drive industries have
historically been characterized by fluctuations in product supply and demand
and, consequently, severe fluctuations in price. In the event of excess supply
of disk drives or semiconductors, the Company's gross margins may be adversely
affected. In the event of a shortage of supply of disk drives or semiconductors,
the Company's results of operations will depend on the amount of product
allocated to the Company by its suppliers and the timely receipt of such
allocations. Additionally, technological changes that affect the demand for and
prices of the products distributed by the Company may further affect the
Company's gross margins. Although the Company's agreements with its suppliers
provide the Company with limited price protection and certain rights of stock
rotation, rapid price declines or a shortfall in demand for disk drives or
semiconductor products could have an adverse effect on the Company's sales or
gross margins.
Competition
The distribution industry is highly competitive. In the distribution of
semiconductor and computer products, the Company generally competes for both
supplier and customer relationships with numerous local, regional and national
authorized and unauthorized distributors and for customer relationships with
semiconductor and computer product manufacturers, including some of its own
suppliers. Many of the Company's distribution competitors are larger, more
established and have greater name recognition and financial and marketing
resources than the Company. The Company believes that competition for
distribution customers is based on product lines, customer service, product
availability, competitive pricing and technical information, as well as
value-added services including kitting and turnkey assembly. The Company
believes that it competes favorably with respect to these factors. There can be
no assurance that the Company will be able to compete successfully with existing
or new competitors. Failure to do so would have a material adverse effect on the
Company's results of operations.
Contract manufacturing and other value-added services are highly
competitive and are based upon technology, quality, service, price and the
ability to deliver finished products on an expeditious and reliable basis. The
Company believes it competes favorably with respect to such factors. The Company
attempts to focus on markets where it has advantages in flexibility, service and
high component content of the total price.
10
<PAGE>
In this area, the Company competes with many contract manufacturers and other
distributors, as well as with the in-house manufacturing capabilities of its
existing and potential customers. Many of the Company's competitors are larger,
more established and have greater name recognition and financial and marketing
resources than the Company. The Company also faces significant offshore
competition in turnkey manufacturing. Although such competitors may offer lower
bid prices, the Company believes that offshore manufacturing is often less
attractive due to the additional costs and risks associated with utilizing
offshore services, such as delays in shipping, long lead items, shipping and
insurance costs, inflexibility with respect to production and engineering
changes, high cancellation charges, uncertain product quality and difficulty in
communication.
Both distribution and contract manufacturing businesses are highly
competitive, and there can be no assurance that the Company will be able to
compete successfully with existing or new competitors. Failure to do so would
have a material adverse effect on the Company's operating results.
Short History of Profitability in Contract Manufacturing
The Company's revenues from its contract manufacturing operations are
likely to depend on the availability of necessary components, from a single
source or otherwise, whose lack of availability could delay or curtail
production and shipment of assemblies utilizing such components. Manufacturing
sales levels and profitability have increased in recent periods as compared to
prior years. Due to the highly competitive nature of the contract manufacturing
industry, there can be no assurance that this trend will continue, that higher
sales levels will in fact result in increased profitability or that the Company
will be able to successfully manage the expanded operations, retain existing
customers or attract new contract manufacturing customers sufficient to support
its expected expanded level of operations. Failure to do so could have an
adverse effect on the Company's operating results. To date the Company's
contract manufacturing division has been dependent on a relatively limited base
of significant customers, including Fore Systems and Cisco Systems Inc. Any
significant rescheduling or cancellation of orders from these customers, or the
lack of financial strength of these customers, could have a material adverse
effect on the results of operations of the contract manufacturing division and
on the profitability of the Company. In addition, the Company has recently
increased head-count and expanded its contract manufacturing facilities as a
result of its recent growth in that division and in anticipation of further
growth. Due to the fixed nature of these expenses, any slow-down in the
Company's contract manufacturing division could result in operating losses for
that division and could materially adversely affect the Company's financial
condition and results of operations.
Management of Growth
The Company has grown rapidly in recent years, with sales increasing
from $34 million in 1991 to $483 million in 1996. The Company intends to
continue to pursue its growth strategy through increasing sales of existing and
new product offerings, as well as through acquisitions. This strategy will
require increased personnel, expanded information systems and additional
financial and administrative control procedures. There can be no assurance that
the Company will be able to attract and retain qualified personnel, further
develop accounting and control systems or successfully manage expanding
operations, including an increasing number of supplier and customer
relationships and geographically dispersed locations. Further, there can be no
assurance that the Company will be able to sustain its recent rate of growth.
Hazardous Materials
The Company uses small quantities of certain hazardous materials in its
contract manufacturing operations. As a result, the Company is subject to
stringent Federal, state and local regulations governing the storage, use and
disposal of such materials. Although the Company believes that its safety
procedures for handling and disposing of such materials comply with the
standards prescribed by state and Federal regulations, there is nevertheless the
risk of accidental contamination or injury from these materials. To date, the
Company has not incurred substantial expenditures for preventative action with
respect to hazardous
11
<PAGE>
materials or for remedial action with respect to any hazardous materials
accident. In the event of such an accident, the Company could be held liable for
any damages that result. The liability in the event of an accident or the costs
of such remedial actions could have a material adverse effect on the Company's
financial condition and results of operations.
Dependence on Key Personnel
The Company's success depends to a significant extent upon the
continued contributions of its key employees, particularly, W. Donald Bell,
President, Chief Executive Officer and Chairman of the Board. The loss of other
key employees could also have a material adverse impact on the Company. The
Company's future success will depend in part upon its continuing ability to
attract and retain highly qualified personnel. Competition for such employees is
intense and there can be no assurance that the Company will be successful in
attracting and retaining such personnel. Failure to attract and retain highly
qualified personnel could have a material adverse effect on the Company's
results of operations.
Possible Volatility of Stock Price
The market price of the Company's Common Stock is likely to be highly
volatile and could be subject to wide fluctuations in response to such factors
as, among others, variations in the Company's anticipated or actual results of
operations and market conditions (which may be unrelated to the Company's
operating performance).
12
<PAGE>
Item 6. Exhibits and Reports
(a) Exhibits:
27. Financial Data Schedule for the quarter ended March 31, 1997.
(b) Reports on Form 8-K:
None
13
<PAGE>
Signature
Pursuant to the requirements 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.
Dated: May 15, 1997
BELL MICROPRODUCTS INC.
By: Remo E. Canessa
-----------------------------
Remo E. Canessa, Vice President,
Chief Financial Officer, Corporate Controller and Secretary
(Principal Financial Officer and Accounting Officer)
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 3318
<SECURITIES> 0
<RECEIVABLES> 94420
<ALLOWANCES> 3461
<INVENTORY> 85900
<CURRENT-ASSETS> 185395
<PP&E> 15310
<DEPRECIATION> 5308
<TOTAL-ASSETS> 202395
<CURRENT-LIABILITIES> 74340
<BONDS> 54105
0
0
<COMMON> 8515
<OTHER-SE> 65435
<TOTAL-LIABILITY-AND-EQUITY> 202395
<SALES> 140968
<TOTAL-REVENUES> 140968
<CGS> 124820
<TOTAL-COSTS> 124820
<OTHER-EXPENSES> 10519
<LOSS-PROVISION> 632
<INTEREST-EXPENSE> 892
<INCOME-PRETAX> 4105
<INCOME-TAX> 1724
<INCOME-CONTINUING> 2381
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2381
<EPS-PRIMARY> 0.27
<EPS-DILUTED> 0.27
</TABLE>
