[BELL MICROPRODUCTS LOGO]
CONTACT: Rob Damron
Investor Relations Representative
Bell Microproducts Inc.
(414) 224-1668
ir@bellmicro.com
FOR IMMEDIATE RELEASE
BELL MICROPRODUCTS REPORTS THIRD QUARTER FINANCIAL RESULTS
RECORD SALES OF $555 MILLION AND EPS OF $0.02
SAN JOSE, CA--(October 29, 2003)-- Bell Microproducts Inc. (Nasdaq: BELM) today
announced its financial results for the third quarter ended September 30, 2003.
Revenues for the third quarter of 2003 were $555.5 million, up 1% over last
year's third quarter revenues of $551.9 million, and up 11% from second quarter
2003 revenues of $502.6 million. Net earnings for the quarter ended September
30, 2003 were $0.4 million, or $0.02 per share on 23.1 million diluted shares.
This compares to last year's third quarter pro forma net earnings of $0.4
million or $0.02 per share on 19.7 million diluted shares. Including a $2.8
million or $0.14 per share after-tax restructuring charge, the GAAP net loss for
last year's third quarter was $2.4 million or $0.12 per share on 19.6 million
diluted shares.
Sales for the first nine months of the current fiscal year were $1.59 billion,
up 1% as compared with sales of $1.57 billion in the first nine months of last
year. Pro forma net loss for the first nine months ended September 30, 2003 was
$4.7 million, or $0.22 per share on 20.9 million diluted shares, compared with
pro-forma net loss for the first nine months of 2002 of $3.9 million, or $0.20
per share on 19.0 million diluted shares. Including special charges, GAAP net
loss for the nine months ended September 30, 2003 was $6.9 million or $0.33 per
share, compared to GAAP net loss for the nine months ended September 30, 2002 of
$8.0 million or $0.42 per share.
Commenting on the third quarter performance, Don Bell, Chairman and CEO of Bell
Microproducts said, "Our third quarter improvement in financial performance over
last year is an important accomplishment, following the longest downturn in our
industry dating back to early 2001 and continuing through the first half of this
year. During the quarter, sales increased in all of our business geographies,
especially in Europe. The sales increase was achieved in essentially all product
categories and across all regions. September was a record month. Furthermore,
our strategic initiatives in product categories such as Enterprise Storage are
resulting in continued market share gains. We kept our expenses under control
during the quarter, even though we generated approximately $53 million more in
revenue versus the second quarter of this year. Over the past six quarters we
have reduced our expenses by more than $16 million on an annualized basis."
Bell Microproducts Announces Q3 2003 Results Page 2 of 7
October 29, 2003
"Another significant event for Bell Micro in Q3", continued Mr. Bell, "was the
successful completion of a 5.75 million share public equity offering, which
raised $35 million, net to the company. We used the proceeds to pay down debt,
complete the recently announced acquisition of EBM Berny in Mexico, and to fund
a series of internal initiatives to increase our gross margins."
OPERATING TRENDS
Sales of the solutions category of products grew sequentially by over 8%, and
the components and peripherals category grew faster, increasing 12%
sequentially. This resulted in a flat gross profit percentage compared with the
second quarter of 7.8%, but higher overall gross profits. Solutions sales were
48% of total sales. Gross profits increased by $3.9 million over the second
quarter of 2003 "We were pleased that both categories of products experienced
strong growth and contributed to a significant improvement in operating
results," said Mr. Bell.
The Company held expenses flat with the prior quarter at $38.0 million, despite
the significant increase in revenue over the second quarter of 2003, and the
resulting costs associated with the volume increase. As a percent of sales, SG&A
expenses dropped to 6.8% verses 7.3% in last year's quarter and 7.6% verses the
second quarter of this year.
Because sales increased 10% sequentially, the absolute dollar amount of accounts
receivable also increased, but the days' sales in receivables declined to 47
from 49 in the prior quarter. Inventory increased to $229 million at the end of
the third quarter from $203 million at the end of the second quarter. This was
primarily due to participating in certain vendor programs that had a favorable
impact on obtaining desirable products and a positive impact on gross margin.
Based on the substantially higher sales volume in the quarter, inventory turned
at 8.9x, compared with 9.1x in the second quarter.
Due in part to the proceeds the company generated from the August equity
offering, Bell Micro's total outstanding debt declined to $192 million at the
end of Q3 2003 from $212 million at the end of Q2 2003.
MANAGEMENT DISCUSSION AND OUTLOOK
"The third quarter represented a clear improvement from our recent results",
said Mr. Bell. "Sales increased in all geographic regions and product
categories, we held our margins, we believe we gained market share, and our cost
structure remained under control. Additionally, we improved our balance sheet
with an infusion of new equity capital."
Mr. Bell concluded, "Although Q3 showed good improvement both year over year and
sequentially, obtaining forward visibility remains challenging. We believe IT
spending has entered a phase where spending will increase, but we remain
cautious relative to general market demand. We are hopeful that Q3 will prove to
be the turning point to better financial performance for our company. From a
seasonal perspective, Q4 is typically a strong quarter, and we are expecting Q4
to show sequential improvement over Q3."
Bell Microproducts Announces Q3 2003 Results Page 3 of 7
October 29, 2003
CONFERENCE CALL ON THE WEB
Bell Microproducts will host a conference call to discuss second quarter results
at 11:00AM Eastern on Wednesday, October 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 Q3 2003 Results Page 4 of 7
October 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 Q3 2003 Results Page 5 of 7
October 29, 2003
BELL MICROPRODUCTS INC.
Balance Sheets
(in thousands)
(unaudited)
September 30, December 31,
2003 2002
------------- ------------
ASSETS
Current assets:
Cash $ 169 $ 12,025
Accounts receivable, net 286,997 277,305
Inventories 229,207 182,775
Prepaid expenses and other current assets 24,619 23,786
-------- --------
Total current assets 540,992 495,891
-------- --------
Property and equipment, net 42,552 50,761
Goodwill and other intangibles 60,211 59,809
Other assets 7,322 7,730
-------- --------
Total assets $651,077 $614,191
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $242,017 $211,881
Borrowings under lines of credit 2,718 7,919
Short-term note payable and current portion of
long-term notes payable 8,266 23,458
Other accrued liabilities 34,186 45,847
-------- --------
Total current liabilities 287,187 289,105
Borrowings under lines of credit 100,190 100,555
Long-term notes payable 80,738 75,500
Other long-term liabilities 2,964 3,182
-------- --------
Total liabilities 471,079 468,342
-------- --------
Shareholders' equity:
Common Stock 153,470 115,888
Retained earnings 18,389 25,311
Cumulative translation adjustment 8,139 4,650
-------- --------
Total shareholders' equity 179,998 145,849
-------- --------
-------- --------
Total liabilities and shareholders' equity $651,077 $614,191
======== ========
Bell Microproducts Announces Q3 2003 Results Page 6 of 7
October 29, 2003
BELL MICROPRODUCTS INC.
PRO FORMA STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Excluding Restructure Excluding Restructure
-----------------------------------------------------------------------
Three Months Ended September 30, Nine Months Ended September 30,
2003 2002 2003 2002
-----------------------------------------------------------------------
Net sales $ 555,476 $ 551,895 $ 1,590,767 $ 1,572,536
Cost of sales 512,391 506,563 1,469,305 1,439,785
----------- ----------- ----------- -----------
Gross profit 43,085 45,332 121,462 132,751
Operating expenses:
Selling, general and administrative expenses 37,990 40,348 115,232 125,140
----------- ----------- ----------- -----------
Total operating expenses 37,990 40,348 115,232 125,140
Income (loss) from operations 5,095 4,984 6,230 7,611
Interest expense (4,208) (4,473) (12,412) (12,944)
----------- ----------- ----------- -----------
Income (loss) before income taxes 887 511 (6,182) (5,333)
Provision for (benefit from) income taxes 513 94 (1,484) (1,440)
----------- ----------- ----------- -----------
Net income (loss) $ 374 $ 417 $ (4,698) $ (3,893)
=========== =========== =========== ===========
Earnings (loss) per share
Basic $ 0.02 $ 0.02 $ (0.22) $ (0.20)
=========== =========== =========== ===========
Diluted $ 0.02 $ 0.02 $ (0.22) $ (0.20)
=========== =========== =========== ===========
Shares used in per share calculation
Basic 22,471 19,610 20,913 19,012
=========== =========== =========== ===========
Diluted 23,098 19,735 20,913 19,012
=========== =========== =========== ===========
Pro forma presentation does not include restructuring and special pre tax
charges of $3,405 for the three months ended September 30, 2002, and
$2,926 and $5,688 for the nine months ended September 30, 2003 and 2002,
respectively.
Bell Microproducts Announces Q3 2003 Results Page 7 of 7
October 29, 2003
BELL MICROPRODUCTS INC.
STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
-------------------------------- -------------------------------
Three Months Ended September 30, Nine Months Ended September 30,
2003 2002 2003 2002
----------- ----------- ----------- -----------
Net sales $ 555,476 $ 551,895 $ 1,590,767 $ 1,572,536
Cost of sales 512,391 506,563 1,470,848 1,439,785
----------- ----------- ----------- -----------
Gross profit 43,085 45,332 119,919 132,751
Operating expenses:
Selling, general and administrative
expenses 37,990 40,348 115,232 125,140
Restructuring costs -- 3,405 1,383 5,688
----------- ----------- ----------- -----------
Total operating expenses 37,990 43,753 116,615 130,828
Income (loss) from operations 5,095 1,579 3,304 1,923
Interest expense (4,208) (4,473) (12,412) (12,944)
----------- ----------- ----------- -----------
Income (loss) before income taxes 887 (2,894) (9,108) (11,021)
Income tax expense (benefit) 513 (538) (2,186) (2,976)
----------- ----------- ----------- -----------
Net income (loss) $ 374 $ (2,356) $ (6,922) $ (8,045)
=========== =========== =========== ===========
Earnings (loss) per share
Basic $ 0.02 $ (0.12) $ (0.33) $ (0.42)
=========== =========== =========== ===========
Diluted $ 0.02 $ (0.12) $ (0.33) $ (0.42)
=========== =========== =========== ===========
Shares used in per share calculation
Basic 22,471 19,610 20,913 19,012
=========== =========== =========== ===========
Diluted 23,098 19,610 20,913 19,012
=========== =========== =========== ===========