Bell Industries 8-K Bell Industries Reports Second Quarter Results

CONTACT:

Exhibit 99.1

Bell Industries, Inc.
Tracy A. Edwards/Russell A. Doll
310-563-2355

PondelWilkinson MS&L
Roger S. Pondel/Angie H. Yang
323-866-6060

FOR IMMEDIATE RELEASE

BELL INDUSTRIES REPORTS SECOND QUARTER RESULTS

     El Segundo, California –August 5, 2003 –Bell Industries, Inc. (AMEX:BI) today reported financial results for the three and six-month periods ended June 30, 2003.

     Net revenues for the 2003 second quarter totaled $39.4 million, compared with $41.3 million in the prior-year period. Bell reported net income of $220,000, or $0.03 per diluted share, compared with $438,000, or $0.05 per diluted share, in the second quarter of 2002.

     Revenues at Bell’s Tech.logix Group (BTL), the company’s largest operating unit, totaled $23.6 million in the current second quarter, compared with $25.7 million a year earlier. Services revenues increased 57 percent over the second quarter last year and represented 38 percent of BTL’s total revenues, up from 22 percent a year ago. BTL recorded an operating loss for the 2003 second quarter of $235,000, compared with operating income of $247,000 a year ago.

     “The substantial growth in BTL’s services revenues underscores our strategy to move into a higher margin area in the technology sector,” said Tracy A. Edwards, chairman, president and chief executive officer of Bell Industries. “The increase was more than offset, however, by a 27 percent decline in technology product deliveries, reflecting the continued weak technology market, as well as the trend of major suppliers increasingly marketing their products directly to end-user customers.”

     “Operating results for the second quarter also were impacted by expenses in connection with infrastructure and related items to integrate new client engagements,” Edwards said. “While we remain cautious as to the near term outlook, with businesses still reserved about IT investments and services sales subject to long selling cycles, we are pleased to have won new accounts in the second quarter. We believe our efforts to build BTL’s strategic sourcing practice are beginning to show progress and we are aggressively working to further strengthen key alliances and create more opportunities, while remaining focused on improving the profitability of existing engagements.”

(more)

Bell Industries, Inc.
2-2-2

     Bell’s Recreational Products Group (RPG) posted modestly lower sales of $14.0 million for the three months ended June 30, 2003, compared with $14.1 million in the prior-year period. Operating income increased 11 percent to $941,000 from $850,000 in the 2002 second quarter, reflecting slightly reduced selling and administrative expenses during the period.

     Sales at J.W. Miller, Bell’s electronic components operation, increased on higher product demand to $1.8 million from $1.5 million in the 2002 second quarter. Operating income nearly doubled to $315,000 from $160,000 last year, primarily as a result of increased sales. In addition, in the prior year, the company increased certain inventory reserves in light of the difficult market conditions at the time.

     For the first six months of 2003, Bell recorded net sales of $71.5 million, compared with $73.5 million a year earlier. The company incurred a net loss of $692,000, or $0.08 per share, compared with $1.8 million, or $0.20 per share, for the 2002 six-month period. The 2002 results include a goodwill write-off of $2.1 million, equal to $1.3 million after tax, or $0.14 per share, in connection with the adoption of a new accounting standard.

     Bell continues to maintain a strong balance sheet with no bank debt. At June 30, 2003, Bell had net working capital of $19.6 million and cash and cash equivalents of $9.9 million. Seasonally comparable amounts at the end of last year’s second quarter were $21.9 million and $9.2 million, respectively. Shareholders’ equity totaled $24.7 million, or $2.95 per share at June 30, 2003.

     Bell’s primary business, the Tech.logix Group, provides information technology lifecycle services, including planning, product sourcing, migration, support and disposal services. Recurring support services include help desk and on-site expertise for desktop and mobile devices, business software applications and network infrastructures. Bell also distributes after-market parts and accessories to the recreational vehicle market. In addition, Bell manufactures and distributes a variety of standard and custom magnetic components used in electronic applications for computer, medical and telecommunication equipment.

     Certain matters discussed in this news release are forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from current trends. These include, but are not limited to, general business conditions and economic uncertainty, reduced technology product sales as major suppliers increasingly sell directly to end-users, decreased margins due to price competition, delays and costs associated with new client engagements, realizing business opportunities as the economy improves, and other factors described in the company’s public filings from time to time.

# # #

(Tables Follow)

Bell Industries, Inc.
Consolidated Operating Results
(In thousands, except per share data)
(Unaudited)

		Three months ended						Six months ended
		June 30						June 30
		2003			2002			2003			2002
Net revenues
	Products	$	30,398		$	35,643		$	53,966		$	62,087
	Services		8,977			5,706			17,486			11,379
			39,375			41,349			71,452			73,466
Costs and expenses
	Cost of products sold		24,721			29,410			43,728			51,453
	Cost of services provided		6,998			4,094			13,970			8,408
	Selling and administrative		7,366			7,157			14,789			14,509
	Interest, net		(44	)		(37	)		(66	)		(93	)
			39,041			40,624			72,421			74,277
Income (loss) before income taxes and cumulative effect of accounting change			334			725			(969	)		(811	)
Income tax expense (benefit)			114			287			(277	)		(319	)
Income (loss) before cumulative effect of accounting change			220			438			(692	)		(492	)
Cumulative effect of accounting change, net of income tax benefit of $836												(1,280	)
Net income (loss)		$	220		$	438		$	(692	)	$	(1,772	)
Basic and diluted share data
	Income (loss) before cumulative effect of accounting change per share	$	.03		$	.05		$	(.08	)	$	(.06	)
Net income (loss) per share		$	.03		$	.05		$	(.08	)	$	(.20	)
Weighted average common stock			8,367			8,900			8,367			8,895

OPERATING RESULTS BY BUSINESS SEGMENT

Net revenues
	Technology Solutions
		Products	$	14,652		$	20,019		$	25,961		$	35,452
		Services		8,977			5,706			17,486			11,379
				23,629			25,725			43,447			46,831
	Recreational Products			13,995			14,125			24,635			23,909
	Electronic Components			1,751			1,499			3,370			2,726
			$	39,375		$	41,349		$	71,452		$	73,466
Operating income (loss)
	Technology Solutions		$	(235	)	$	247		$	(1,220	)	$	(772	)
	Recreational Products			941			850			1,002			925
	Electronic Components			315			160			620			236
	Corporate costs			(731	)		(569	)		(1,437	)		(1,293	)
				290			688			(1,035	)		(904	)
Interest, net				44			37			66			93
Income tax benefit (expense)				(114	)		(287	)		277			319
Cumulative effect of accounting change, net													(1,280	)
Net income (loss)			$	220		$	438		$	(692	)	$	(1,772	)

Bell Industries, Inc.
Consolidated Condensed Balance Sheet
(In thousands)
(Unaudited)

			June 30,		December 31,
			2003		2002
ASSETS
	Current assets
	Cash and cash equivalents		$	9,850	$	10,079
	Accounts receivable, net			20,672		13,078
	Income tax receivable					2,400
	Inventories			10,715		12,349
	Prepaid expenses and other			2,751		3,051
		Total current assets		43,988		40,957
	Fixed assets, net			4,663		5,436
	Other assets			2,896		2,997
			$	51,547	$	49,390
LIABILITIES AND SHAREHOLDERS’ EQUITY
	Current liabilities
	Accounts payable		$	13,270	$	10,687
	Accrued payroll and liabilities			11,145		10,661
		Total current liabilities		24,415		21,348
	Long-term liabilities			2,417		2,496
	Shareholders’ equity			24,715		25,546
			$	51,547	$	49,390