<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarter ended March 31, 1996
Commission file number 1-7899
BELL INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
California 95-2039211
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
11812 San Vicente Blvd., Los Angeles, California 90049-5069
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 826-2355
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
------ ------
Indicate the number of shares outstanding of the Registrant's class of common
stock, as of April 18, 1996: 7,009,074 shares.
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Bell Industries, Inc.
Consolidated Statement of Income
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended
March 31
----------------------------------------
1996 1995
<S> <C> <C>
Net sales $ 143,050 $ 126,945
------------ -------------
Costs and expenses
Cost of products sold 110,511 97,983
Selling, general and
administrative expenses 26,039 23,634
Interest expense 959 908
------------ -------------
137,509 122,525
------------ -------------
Income before income taxes 5,541 4,420
Income tax provision 2,329 1,860
------------ -------------
Net income $ 3,212 $ 2,560
============ =============
Share and per share data:
Net income $ 0.45 $ 0.36
============ =============
Weighted average
common shares outstanding 7,185 7,062
============ =============
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
<PAGE> 3
-2-
Bell Industries, Inc.
Condensed Consolidated Balance Sheet
(Dollars in thousands)
<TABLE>
<CAPTION>
Mar. 31 Dec. 31 Mar. 31
1996 1995 1995
---- ---- ----
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 10,806 $ 4,819 $ 2,661
Accounts receivable, less
allowance for doubtful accounts
of $1,812, $1,472 and $1,179 82,483 78,651 71,393
Inventories 115,377 120,153 90,325
Prepaid expenses and other 5,088 5,427 4,222
-------------- ------------- -------------
Total current assets 213,754 209,050 168,601
Properties, net 12,725 13,148 14,592
Other assets 12,088 11,684 11,637
-------------- ------------- -------------
$ 238,567 $ 233,882 $ 194,830
============== ============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 45,289 $ 42,957 $ 33,308
Accrued payroll and liabilities 17,919 20,693 12,648
Current portion of long-term
liabilities 8,948 6,918 6,686
Income taxes payable 3,663 2,255 3,034
-------------- ------------- -------------
Total current liabilities 75,819 72,823 55,676
-------------- ------------- -------------
Long-term liabilities:
Notes payable 32,571 36,514 27,714
Deferred compensation and other 6,741 6,976 7,092
-------------- ------------- -------------
Total long-term liabilities 39,312 43,490 34,806
-------------- ------------- -------------
Shareholders' equity:
Preferred stock ($1 par value
prior to June 30, 1995)
Authorized - 1,000,000 shares
Outstanding - None
Common stock ($.25 par value prior
to June 30, 1995)
Authorized - 10,000,000 shares
Outstanding - 7,008,391,
6,898,094 and 6,499,467 65,711 63,056 1,625
Other paid-in capital 54,097
Reinvested earnings 57,725 54,513 48,626
-------------- ------------- -------------
Total shareholders' equity 123,436 117,569 104,348
Commitments and contingencies
--------------- ------------- -------------
$ 238,567 $ 233,882 $ 194,830
=============== ============= =============
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
<PAGE> 4
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Bell Industries, Inc.
Consolidated Statement of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Three months ended
March 31
---------------------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,212 $ 2,560
Depreciation and amortization 1,399 1,271
Amortization of intangibles 160 142
Provision for losses on accounts receivable 521 273
Changes in assets and liabilities 3,970 4,383
-------------- --------------
Net cash provided by operating activities 9,262 8,629
-------------- --------------
Cash flows from investing activities:
Purchases of equipment and improvements (915) (336)
Purchase of business (386)
-------------- --------------
Net cash used in investing activities (1,301) (336)
-------------- --------------
Cash flows from financing activities:
Payments on Senior Notes and capital leases (5,605) (4,143)
Bank borrowings (payments), net 3,143 (5,000)
Employee stock plans and other 488 (120)
-------------- -------------
Net cash used in financing activities (1,974) (9,263)
---=---------- -------------
Net increase (decrease) in cash and cash equivalents 5,987 (970)
Cash and cash equivalents at beginning of period 4,819 3,631
-------------- --------------
Cash and cash equivalents at end of period $ 10,806 $ 2,661
============== ==============
Changes in assets and liabilities:
Accounts receivable $ (2,603) $ (2,755)
Inventories 5,863 5,585
Accounts payable 1,115 (1,397)
Accrued liabilities and deferred compensation (2,966) 294
Income taxes payable 1,408 1,751
Other 1,153 905
-------------- --------------
Net change $ 3,970 $ 4,383
============== ==============
Supplemental cash flow information:
Interest paid $ 1,874 $ 1,762
Income taxes paid $ 921 $ 109
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
<PAGE> 5
-4-
Bell Industries, Inc.
Notes to Consolidated Condensed Financial Statements
Accounting Principles
The financial information included herein has been prepared in conformity with
the accounting principles reflected in the financial statements included in the
Form 10-K filed with the Securities and Exchange Commission for the year ended
December 31, 1995.
In the opinion of management, all adjustments, consisting of normal recurring
adjustments considered necessary for a fair presentation, have been included.
The operating results for the interim periods presented are not necessarily
indicative of results for the full year.
Per Share Data
Operating results data per share is based upon the weighted average number of
common and common equivalent shares outstanding. Common equivalent shares
represent the net number which would be issued assuming the exercise of
dilutive stock options and stock warrants, reduced by the number of shares
which could be repurchased from the proceeds of such exercises.
Accounting For Stock Options
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting (SFAS) No. 123 "Accounting for Stock-Based Compensation."
The Company adopted this required statement under the disclosure method.
Accordingly, there was no impact on the reported results of operations or
financial position of the Company.
<PAGE> 6
-5-
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition
Results of operations by business segment for the three months ended March 31,
1996 and 1995 were as follows (in thousands):
<TABLE>
<CAPTION>
Three months ended
March 31
------------------------------
1996 1995
---- ----
<S> <C> <C>
Net sales
Electronics $ 113,748 $ 102,484
Graphics and Electronic Imaging 20,777 15,595
Recreational Products 8,525 8,866
------------- -------------
$ 143,050 $ 126,945
============= =============
Operating income
Electronics $ 7,560 $ 6,674
Graphics and Electronic Imaging 928 412
Recreational Products 314 494
------------- -------------
Operating income 8,802 7,580
Corporate costs (2,302) (2,252)
Interest expense (959) (908)
Income tax provision (2,329) (1,860)
------------- -------------
Net income $ 3,212 $ 2,560
============= =============
</TABLE>
For the quarter ended March 31, 1996, the Company's net sales increased 13% to
$143.1 million and operating income increased 16% to $8.8 million over the
comparable quarter in the prior year. Net income increased 25% to $3.2 million,
or $.45 per share, compared to $2.6 million, or $.36 per share, in the prior
year quarter.
Sales of the Electronics Group increased 11% to $113.7 million and operating
income increased 13% to $7.6 million. Improved performance was attributed to
stronger shipments of the group's core electronic components and increased
sales of microcomputer systems and services. While the overall growth rate of
the group moderated slightly from earlier quarters, as customers reduced their
inventories of components, the book-to- bill ratio was strong at 1.23 to 1 and
customer backlog was consistent with levels at December 31, 1995.
<PAGE> 7
-6-
Graphics and Electronic Imaging Group sales increased 33% to $20.8 million and
operating income increased 125% to $.9 million. The group's strong performance
reflected continued growth in sales of electronic imaging and graphics products
in California and recent geographic expansion into four new markets in the
Western United States.
Recreational Products Group sales decreased 4% to $8.5 million and operating
income decreased 36% to $.3 million. Lower sales and operating income were
primarily attributed to severe winter weather conditions in the upper Midwest
and costs related to expanding into Michigan.
Cost of products sold as a percentage of sales remained relatively consistent
(77.3% from 77.2%), while selling, general and administrative expenses
decreased to 18.2% of sales from 18.6%. Lower selling, general and
administrative costs, expressed as a percentage of sales, reflected ongoing
cost control efforts. The Company's income tax rate was approximately 42% for
both periods presented.
The Company's financial position remained strong at March 31, 1996 as set forth
in the table below (dollars in thousands, except per share amounts):
<TABLE>
<CAPTION>
March 31
--------
1996 1995
---- ----
<S> <C> <C>
Cash and cash equivalents $ 10,806 $ 2,661
Working capital $ 137,935 $ 112,925
Current ratio 2.8:1 3.0:1
Ratio of long-term liabilities
to total capitalization 24% 25%
Shareholders' equity per share $ 17.61 $ 15.29
Days' sales in receivables 54 52
Days' sales in inventories 95 84
</TABLE>
Net cash provided by operating activities was $9.3 million in the current
quarter compared to $8.6 million in the prior year quarter. The strengthening
of operating cash flows resulted primarily from increased profits. Financing
activity cash flows included scheduled payments on the Company's Senior Notes
and capital lease obligations, offset by proceeds from bank borrowings under
the Company's revolving line of credit. During the first quarter of 1996, the
Company acquired two graphics and electronic imaging businesses for cash and
the issuance of approximately 100,000 shares of Bell stock. Bell will continue
to seek acquisition opportunities that enhance growth.
<PAGE> 8
-7-
Subsequent to the close of the quarter, the Company substantially completed the
purchase of a building in El Segundo, California for $1.8 million cash. The
facility will enable Bell to consolidate its corporate operations and computer
center, and provide for growth and enhanced service capability.
The Company believes that sufficient cash resources exist to support short-term
requirements, including debt and lease payments, and longer term objectives,
either through available cash, bank borrowings, or cash generated from
operations.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
27. Financial Data Schedule.
(b) Reports on Form 8-K:
None
SIGNATURES
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.
BELL INDUSTRIES, INC.
By:
DATE: April 19, 1996 /s/ THEODORE WILLIAMS
---------------------
Theodore Williams,
Chairman and Chief Executive
Officer
DATE: April 19, 1996 /s/ BRUCE M. JAFFE
------------------
Bruce M. Jaffe,
President and Chief Operating
Officer
DATE: April 19, 1996 /s/ TRACY A. EDWARDS
--------------------
Tracy A. Edwards,
Vice President and Chief
Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> $10,806
<SECURITIES> 0
<RECEIVABLES> 84,295
<ALLOWANCES> 1,812
<INVENTORY> 115,377
<CURRENT-ASSETS> 213,754
<PP&E> 35,495
<DEPRECIATION> 22,770
<TOTAL-ASSETS> 238,567
<CURRENT-LIABILITIES> 75,819
<BONDS> 39,312
0
0
<COMMON> 65,711
<OTHER-SE> 57,725
<TOTAL-LIABILITY-AND-EQUITY> 238,567
<SALES> 143,050
<TOTAL-REVENUES> 143,050
<CGS> 110,511
<TOTAL-COSTS> 110,511
<OTHER-EXPENSES> 26,039
<LOSS-PROVISION> 521
<INTEREST-EXPENSE> 959
<INCOME-PRETAX> 5,541
<INCOME-TAX> 2,329
<INCOME-CONTINUING> 3,212
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,212
<EPS-PRIMARY> .45
<EPS-DILUTED> .45
</TABLE>
