(BELL MICROPRODUCTS LOGO)
CONTACT: Eli Sayegh
Director of Investor Relations
Bell Microproducts Inc.
(408) 451-1685
ir@bellmicro.com
FOR IMMEDIATE RELEASE
BELL MICROPRODUCTS REPORTS SECOND QUARTER FINANCIAL RESULTS
GENERATES IMPROVEMENT IN GROSS MARGINS AND CONTINUED
REDUCTION IN OPERATING EXPENSES
SAN JOSE, CA--(July 29, 2003)-- Bell Microproducts Inc. (Nasdaq: BELM) today
announced its financial results for the second quarter ended June 30, 2003.
Revenues for the second quarter of 2003 were $502.6 million, up 1% over last
year's second quarter revenues of $497.7 million. Net loss for the quarter ended
June 30, 2003 was $2.4 million, or $0.12 per share on 20.1 million basic shares.
This compares with the June 30, 2002 pro forma net loss, which excludes special
charges, of $4.5 million, or $0.23 per share on 19.3 million basic shares. The
second quarter 2002 results include an after-tax special charge of $1.6 million.
GAAP net loss for the second quarter of 2002 was $6.0 million or $0.31 per
share.
Sales for the first six months of the current fiscal year were $1,035.3 million,
up 1% as compared with sales of $1,020.6 million in the first six months of last
year. Pro forma net loss for the first six months ended June 30, 2003 was $5.2
million, or $0.26 per share on 20.1 million basic shares, compared with
pro-forma net loss for the first six months of 2002 of $4.1 million, or $0.22
per share on 18.7 million basic shares. Including special charges, GAAP net loss
for the six months ended June 30, 2003 was $7.3 million or $0.36 per share,
compared to GAAP net loss for the six months ended June 30, 2002 of $5.7 million
or $0.30 per share.
Commenting on the second quarter performance, Don Bell, President and Chief
Executive Officer of Bell Microproducts said, "Over the last few years we have
experienced quarterly volatility in the supply-demand equation as the worldwide
economies struggled. The second quarter was one of these quarters. Our sales in
the second quarter grew sequentially in North America, but declined in Europe
and Latin America. The quarter began with an excess supply of many of the
products we sell. Demand in April and May was weak, resulting in low sales in
these months. The month of June saw a release of pent up demand, and this
increased demand, coupled with an improved balance of channel inventory, and
fewer grey market products, resulted in June sales reaching the second highest
level of any month in the Company's history. The June upturn was evident in
Europe and the Americas."
Bell Microproducts Announces Q2 2003 Results Page 2 of 7
July 29, 2003
Mr. Bell added, "We are also pleased that the efforts we put into driving
improved gross profit margins were effective, and margins increased sequentially
both in absolute terms and as a percentage of sales. We are continuing to focus
on gross profits, with the goal to make further improvements in future
quarters."
OPERATING TRENDS
Gross profit margins increased sequentially to 7.8%. This compares to gross
profit margins of 7.1% in the first quarter of 2003, and 8.0% in the second
quarter of 2002. The increase in gross profit margins occurred in the solutions
and components product segments.
Selling, general & administrative expenses were $38.0 million for the quarter
ended June 30, 2003 as compared to $42.1 million in the second quarter of 2002
and $39.3 million in the first quarter of 2003. S, G & A expenses as a
percentage of sales were 7.6% for the quarter ended June 30, 2003 as compared to
8.5% in the second quarter of 2002 and 7.4% in the first quarter of 2002.
Interest expense for the quarter ended June 30, 2003 was $4.2 million as
compared to $4.4 million in the second quarter of 2002 and $4.0 million in the
first quarter of 2003. Total debt was $212 million at June 30, 2003 as compared
to $222 million at June 30, 2002 and $207 million at March 31, 2003.
Inventories were $203 million at June 30, 2003 as compared to $191 million at
June 30, 2002 and $194 million at March 31, 2003. This resulted in inventory
turns of 9.1 times in the second quarter of 2003, compared to 10.2 times in the
first quarter of 2003.
Accounts Receivable were $274 million at June 30, 2003 as compared to $304
million at June 30, 2002 and $265 million at March 31, 2003. Days Sales
Outstanding (DSO) was 49 at June 30, 2003 compared with 55 in the prior year and
45 at March 31, 2003. The increase in DSO at June 30, 2003 as compared to the
quarter ended March 31, 2003 was the result of the increased sales in the month
of June as compared to April and May 2003.
PROFITABILITY
"We are dedicated to improving our profitability performance in the short term",
said Mr. Bell. "We are continuing our focus on reducing expenses, improving
gross profit margins, and improving sales in strategic and profitable products.
We expect further expense reductions in the next few quarters, which will result
in additional earnings leverage as sales and gross margins improve."
MANAGEMENT DISCUSSION AND OUTLOOK
Mr. Bell concluded, "Historically, the second quarter is our weakest quarter of
the year, and the fourth quarter our strongest. We are encouraged by the short
term trends and we are optimistic that our performance will continue to improve
in the third and fourth quarter. All our divisions were profitable during Q2,
with the exception of Ideal/Europe that suffered a significant loss, and Latin
America that had a small loss. Despite a significant sequential drop in revenue,
Ideal/Europe improved gross margins in both absolute terms and as a percentage
of sales. We are taking corrective actions, and we are
Bell Microproducts Announces Q2 2003 Results Page 3 of 7
July 29, 2003
optimistic that Ideal/Europe will return to profitability during the fourth
quarter ending in December. We also believe that Latin America will be
profitable in the third quarter ending in September. Our recovery plan includes
continued focus on improving gross margins, management of our cost structure and
asset base, and persistent focus on our strategic initiatives."
CONFERENCE CALL ON THE WEB
Bell Microproducts will host a conference call to discuss second quarter results
at 11:00AM Eastern on Tuesday, July 29, 2003. A live Internet broadcast of the
Company's conference call will be available via the Company's web site at
www.bellmicro.com or through this direct link
http://www.bellmicro.com/Investor/information/Conference_Calls.htm.
ABOUT PRO FORMA PRESENTATION
In addition to our consolidated financial results prepared under generally
accepted accounting principles ("GAAP"), we use a pro forma measure of net
income or loss that is equal to GAAP adjusted to exclude certain costs and
expenses. Our pro forma presentation gives an indication of our performance
before restructuring costs and special charges that are considered by management
to be outside of our core distribution operating results. We compute pro forma
results by adjusting GAAP net income or loss with the impact of cost of sales
adjustments for discontinued product lines, and restructuring costs related to
severance and benefits for involuntary employee terminations and vacated excess
facilities. These measures are not in accordance with, or an alternative for
GAAP and may be materially different from pro forma measures used by other
companies. The presentation of this additional information should not be
considered in isolation or as a substitute for net income prepared in accordance
with GAAP.
ABOUT BELL MICROPRODUCTS
Bell Microproducts is an international, value-added provider of a wide range of
high-technology products, solutions, and services to the industrial and
commercial markets. The Company's offering includes semiconductors, computer
platforms, peripherals, and storage products of various types including desktop,
high-end computer and storage subsystems, fibre channel connectivity products,
RAID, NAS and SAN storage systems and back-up products. Bell Microproducts is an
industry-recognized specialist in storage products and is one of the world's
largest storage-centric value-added distributors.
The Company's products are available at any level of integration, from
components to subsystem assemblies and fully-integrated, tested and certified
system solutions. The Company adds value with a broad range of services
including testing, software loading, kitting, mass storage system integration,
and computer system integration. Trained and certified technical personnel
complete each of these processes at Bell Microproducts' ISO 9002 facilities.
Bell Microproducts markets and distributes more than 150 brand name product
lines, as well as its own Rorke Data storage and Trademark(R) computer brands,
to original equipment manufacturers (OEMs), contract electronic manufacturing
services (CEMS) customers, value-added resellers (VARs) and system integrators
in the Americas and Europe. More information can be found in the Company's SEC
filings, or by visiting the Bell Microproducts Web site at www.bellmicro.com.
Bell Microproducts Announces Q2 2003 Results Page 4 of 7
July 29, 2003
SAFE HARBOR STATEMENT
This release may contain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements, which reflect the Company's current views of our expected growth
rates, profitability and other future events and financial performance, involve
known and unknown risks and uncertainties which could cause actual results or
facts to differ materially from such statements for a variety of reasons
including, but not limited to: changing industry and economic conditions;
changes in product supply, pricing, and customer demand; competition; other
vagaries in the computer and electronic components markets; effects of recent
restructuring initiatives; changes in relationships with key suppliers;
availability of financing; foreign currency fluctuations and the other risks
described from time to time in the Company's reports to the Securities and
Exchange Commission (including the Company's Annual Report on Form 10-K).
Investors should take such risks into account when making investment decisions.
Shareholders and other readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date on which they
are made. The Company undertakes no obligation to update publicly or revise any
forward-looking statements.
Bell Microproducts Announces Q2 2003 Results Page 5 of 7
July 29, 2003
BELL MICROPRODUCTS INC.
Balance Sheets
(in thousands)
(unaudited)
<Table>
<Caption>
June 30, 2003 December 31, 2002
------------- -----------------
ASSETS
Current assets:
Cash $ 1,077 $ 12,025
Accounts receivable, net 273,788 277,305
Inventories 203,031 182,775
Prepaid expenses and other current assets 25,174 23,786
-------- --------
Total current assets 503,070 495,891
-------- --------
Property and equipment, net 44,290 50,761
Goodwill and other intangibles 60,306 59,809
Other assets 7,322 7,730
-------- --------
Total assets $614,988 $614,191
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $217,980 $211,881
Borrowings under lines of credit 3,455 7,919
Short-term note payable and current portion of
long-term notes payable 20,894 23,458
Other accrued liabilities 39,268 45,847
-------- --------
Total current liabilities 281,597 289,105
Borrowings under lines of credit 115,898 100,555
Long-term notes payable 72,000 75,500
Other long-term liabilities 3,021 3,182
-------- --------
Total liabilities 472,516 468,342
-------- --------
Shareholders' equity:
Common Stock 117,450 115,888
Retained earnings 18,015 25,311
Cumulative translation adjustment 7,007 4,650
-------- --------
Total shareholders' equity 142,472 145,849
-------- --------
-------- --------
Total liabilities and shareholders' equity $614,988 $614,191
======== ========
</Table>
Bell Microproducts Announces Q2 2003 Results Page 6 of 7
July 29, 2003
BELL MICROPRODUCTS INC.
PRO FORMA STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
<Table>
<Caption>
Three months ended June 30, Six months ended June 30,
2003 2002 2003 2002
----------- ----------- ----------- -----------
Net sales $ 502,638 $ 497,713 $ 1,035,291 $ 1,020,641
Cost of sales 463,430 457,715 956,914 933,222
----------- ----------- ----------- -----------
Gross profit 39,208 39,998 78,377 87,419
Operating expenses:
Selling, general and administrative expenses 37,968 42,096 77,242 84,792
Restructuring costs -- -- -- --
----------- ----------- ----------- -----------
Total operating expenses 37,968 42,096 77,242 84,792
Income (loss) from operations 1,240 (2,098) 1,135 2,627
Interest expense (4,185) (4,408) (8,204) (8,471)
----------- ----------- ----------- -----------
Loss before income taxes (2,945) (6,506) (7,069) (5,844)
Benefit from income taxes (584) (2,031) (1,909) (1,753)
----------- ----------- ----------- -----------
Net loss $ (2,361) $ (4,475) $ (5,160) $ (4,091)
=========== =========== =========== ===========
Loss per share
Basic $ (0.12) $ (0.23) $ (0.26) $ (0.22)
=========== =========== =========== ===========
Diluted $ (0.12) $ (0.23) $ (0.26) $ (0.22)
=========== =========== =========== ===========
Shares used in per share calculation
Basic 20,137 19,327 20,134 18,713
=========== =========== =========== ===========
Diluted 20,137 19,327 20,134 18,713
=========== =========== =========== ===========
</Table>
Pro forma presentation does not include restructuring and special pre tax
charges of $2,283 for the three months and six months ended June 30, 2002, and
$2,926 for the six months ended June 30, 2003.
Bell Microproducts Announces Q2 2003 Results Page 7 of 7
July 29, 2003
BELL MICROPRODUCTS INC.
STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
<Table>
<Caption>
Three months ended June 30, Six months ended June 30,
2003 2002 2003 2002
---------- ------------ ----------- -----------
Net sales $ 502,638 $ 497,713 $ 1,035,291 $ 1,020,641
Cost of sales 463,430 457,715 958,457 933,222
--------- --------- ----------- -----------
Gross profit 39,208 39,998 76,834 87,419
Operating expenses:
Selling, general and administrative expenses 37,968 42,096 77,242 84,792
Restructuring costs -- 2,283 1,383 2,283
--------- --------- ----------- -----------
Total operating expenses 37,968 44,379 78,625 87,075
Income (loss) from operations 1,240 (4,381) (1,791) 344
Interest expense (4,185) (4,408) (8,204) (8,471)
--------- --------- ----------- -----------
Loss before income taxes (2,945) (8,789) (9,995) (8,127)
benefit from income taxes (584) (2,716) (2,699) (2,438)
--------- --------- ----------- -----------
Net loss $ (2,361) $ (6,073) $ (7,296) $ (5,689)
========= ========= =========== ===========
Loss per share
Basic $ (0.12) $ (0.31) $ (0.36) $ (0.30)
========= ========= =========== ===========
Diluted $ (0.12) $ (0.31) $ (0.36) $ (0.30)
========= ========= =========== ===========
Shares used in per share calculation
Basic 20,137 19,327 20,134 18,713
========= ========= =========== ===========
Diluted 20,137 19,327 20,134 18,713
--------- --------- ----------- -----------
</Table>