[BELL MICROPRODUCTS LOGO]
CONTACT: Rob Damron
Investor Relations Representative
Bell Microproducts Inc.
(414) 224-1668
ir@bellmicro.com
FOR IMMEDIATE RELEASE
BELL MICROPRODUCTS REPORTS FOURTH QUARTER AND YEAR END FINANCIAL
RESULTS
ACHIEVES RECORD QUARTERLY SALES OF $640 MILLION AND $.09 INCOME PER SHARE
SAN JOSE, CA--(February 17, 2004)-- Bell Microproducts Inc. (Nasdaq: BELM) today
announced its financial results for the fourth quarter and full year ended
December 31, 2003.
Revenues for the fourth quarter of 2003 reached a record $640 million, up 20%
over last year's fourth quarter revenues of $532 million, and up 15% from third
quarter 2003 revenues of $555 million. Net earnings for the quarter ended
December 31, 2003 were $2.4 million, or $0.09 per share on 27.7 million diluted
shares. This compares to last year's fourth quarter net earnings of $1.0 million
or $0.05 per share on 20.0 million diluted shares. In the third quarter 2003,
the company reported net earnings of $0.4 million or $0.02 per share on 23.1
million diluted shares.
Revenues for 2003 reached a record $2.23 billion, up 6% over 2002 revenues of
$2.10 billion. The 2003 pro forma net loss for the year ended December 31, 2003
was $1.9 million, or $0.09 per share on 22.3 million basic shares. This compares
to the 2002 pro forma net loss of $2.9 million, or $0.15 per share on 19.2
million basic shares. Including special charges, GAAP net loss for 2003 was $4.5
million or $0.20 per share on 22.3 million basic shares. This compares to GAAP
net loss for the year ended 2002 of $7.1 million or $0.37 per share on 19.2
million basic shares.
Commenting on the fourth quarter and 2003 financial results, Don Bell, Chairman
and CEO of Bell Microproducts said, "We are pleased to report record fourth
quarter and annual revenues. The company generated year-over-year and sequential
revenue improvement in all geographies and in all product categories. Despite
fewer selling days due to the holidays, demand remained strong throughout the
quarter. The 15% increase in revenue over Q3 enabled us to generate a
significant increase in overall gross profits, while at the same time
maintaining tight cost controls. This resulted in our ability to generate a
significant increase in our operating margins and overall profitability, as
compared to the prior quarter and the same period last year.
Bell Microproducts Announces Q4 2003 Results Page 2 of 8
December 31, 2003
During the year we continued to make progress on our three main strategic
initiatives, enhancing our leadership position in storage products, deepening
our line-card of industry leading suppliers, and expanding into new geographies.
We also improved our balance sheet during the year with the infusion of new
equity. Shareholder equity at the end of 2003 was $193 million as compared to
$145 million at the end of 2002, an increase of 33%,"
OPERATING TRENDS
Revenue increased sequentially in all geographies in both local
currency and in U.S. dollars. Revenue in the fourth quarter was split among the
Company's geographies as follows: North America 40%, Europe 49%, and Latin
America 11%. The Company has sequentially increased revenue across all major
product categories and geographies in each of the past two quarters.
Geographic Highlights:
- In North America, revenue increased 7% compared with the third
quarter of 2003 and 8% compared with the fourth quarter of 2002,
- Latin America increased 13% compared with the third quarter of
2003 and 18% compared with the fourth quarter of 2002. The
Company completed the acquisition of EBM Berny in October of
2003.
- In Europe, revenue increased 24% compared with the third quarter
of 2003 and 33% compared with the fourth quarter of 2002.
Solutions and Components and Peripherals Highlights:
- In the fourth quarter of 2003, Solutions represented 52% of the
Company's product mix and Components and Peripherals accounted
for 48% of the mix.
- The Solutions segment of the Company's business increased 23%
compared with the third quarter of 2003 and 26% compared with
the fourth quarter of 2002. Within the Solutions segment,
Software was the most rapidly growing category, increasing in
sales by 35% compared with the third quarter of 2003 and 53%
compared with the fourth quarter of 2002.
- The Components and Peripherals sector of the Company's business
increased 8% compared with the third quarter of 2003 and 14%
compared with the fourth quarter of 2002. Disk drives increased
7% compared with both the third quarter of 2003 and fourth
quarter of 2002.
Gross profit margins in the fourth quarter of 2003 decreased to 7.5%
verses 7.8% in the third quarter of 2003, and 8.6% in the fourth quarter of
2002. The sequential decline in gross profit percentage was the result of a mix
shift based on the continuing strength in software products. The company's LDi
software licensing program, launched two years ago in the UK, and now being
rolled out across Europe, is meeting with great success. This innovative
electronic commerce based tool for the sale and administration of software
licenses was awarded the Product of the Year Award in the UK during the fourth
quarter by Computer Reseller News, a VNU business publication. The Company's
software market share and sales in the UK and European markets are growing
rapidly. Although software licensing sales carry lower than average gross
margins, they have very low operating expenses and require virtually no
inventory since most of the business is conducted electronically. As a result,
this business segment makes a significant contribution to the Company's return
on invested capital. The
Bell Microproducts Announces Q4 2003 Results Page 3 of 8
December 31, 2003
overall strength in software sales, and margin associated with the product mix
in this category, resulted in the reduction in overall corporate margins in the
quarter of 0.3% percent as compared to Q3. Excluding the effect of software
sales, the corporate Q4 gross profit margin percentage was flat with Q3.
Operating expenses continue to remain under tight control. Operating
expenses of $40.5 million in the fourth quarter of 2003 were flat from the
fourth quarter of 2002, and up $2.5 million from the third quarter of 2003 due
to variable expenses related to the $84 million sequential increase in sales.
Operating expenses as a percent of sales declined to 6.3% in the fourth quarter
of 2003 from 7.6% in the fourth quarter of 2002 and were also down from 6.8% in
the third quarter of 2003.
Inventories were $257 million at December 31, 2003 as compared to $183
million at December 31, 2002 and $229 million at the end of the third quarter
2003. This resulted in inventory turns of 9.2 times in the fourth quarter of
2003 versus 10.6x in the fourth quarter of 2002 and 8.9x in the third quarter of
2003.
Accounts Receivable were $310 million at December 31, 2003 as compared
to $277 million at December 31, 2002 and $287 million at the end of the third
quarter 2003. Days sales outstanding (DSO) improved to 44 days in the fourth
quarter of 2003 versus 47 days in both the fourth quarter of 2002 and the third
quarter of 2003.
Total Debt increased to $220 million at December 31, 2003 compared with
$207 million at December 31, 2002 and $192 million at September 30, 2003. This
increase in debt occurred in the Company's working capital lines as a result of
the increase in sales both during the year overall, and in particular, the
significant increase from the end of Q3 to the end of Q4.
MANAGEMENT DISCUSSION AND OUTLOOK
Mr. Bell concluded, "Following the longest and deepest downturn in the
technology industry, dating back to early 2001 and continuing through the first
half of 2003, market conditions and Bell Microproducts' financial results
recovered in the second half of 2003. We ended the year with accelerating
business trends and are optimistic on the outlook for IT spending and Bell
Microproducts performance in 2004. Q1 is normally a seasonally softer quarter,
and although Q1 has started off with strong sales, we would expect Q1 to
experience a slight sequential decline in revenue and earnings from Q4,
primarily due to these seasonal factors.
We will continue to pursue our strategic initiatives in enterprise
storage solutions, strengthening our business partner alliances and expanding
geographically. As overall business conditions improve, we intend to leverage
these initiatives to continue to grow and gain share in the markets where we
operate. Assuming these trends continue, we expect to set another revenue record
in 2004, accompanied by a significant improvement in profitability."
CONFERENCE CALL ON THE WEB
Bell Microproducts will host a conference call to discuss second quarter results
at 4:30 PM Eastern on Tuesday, February 17, 2004. A live Internet broadcast of
the Company's conference call will be
Bell Microproducts Announces Q4 2003 Results Page 4 of 8
December 31, 2003
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.
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;
Bell Microproducts Announces Q4 2003 Results Page 5 of 8
December 31, 2003
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 Q4 2003 Results Page 6 of 8
December 31, 2003
BELL MICROPRODUCTS INC.
Balance Sheets
(in thousands)
(Unaudited)
December 31, 2003 December 31, 2002
--------------------------------- ------------------------------
ASSETS
Current assets:
Cash $ 4,904 $ 12,025
Accounts receivable, net 309,905 277,305
Inventories 256,992 182,775
Prepaid expenses and other current assets 24,398 23,786
--------------------------------- ------------------------------
Total current assets 596,199 495,891
--------------------------------- ------------------------------
Property and equipment, net 43,545 50,761
Goodwill and other intangibles 65,977 59,809
Other assets 7,278 7,730
--------------------------------- ------------------------------
Total assets $ 712,999 $ 614,191
================================= ==============================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 250,494 $ 211,881
Borrowings under lines of credit 3,009 7,919
Short-term note payable and current portion of
long-term notes payable 11,848 23,458
Other accrued liabilities 46,411 45,847
--------------------------------- ------------------------------
Total current liabilities 311,762 289,105
Borrowings under lines of credit 127,416 100,555
Long-term notes payable 77,608 75,500
Other long-term liabilities 2,803 3,182
--------------------------------- ------------------------------
Total liabilities 519,589 468,342
--------------------------------- ------------------------------
Shareholders' equity:
Common Stock 157,251 115,888
Retained earnings 20,837 25,311
Cumulative translation adjustment 15,322 4,650
--------------------------------- ------------------------------
Total shareholders' equity 193,410 145,849
--------------------------------- ------------------------------
--------------------------------- ------------------------------
Total liabilities and shareholders' equity $ 712,999 $ 614,191
================================= ==============================
Bell Microproducts Announces Q4 2003 Results Page 7 of 8
December 31, 2003
BELL MICROPRODUCTS INC.
PRO FORMA STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
Excluding Restructure
------------------------------------------------------
Twelve Months Ended December 31,
2003 2002
-------------------------- ---------------------------
Net sales $ 2,230,287 $ 2,104,922
Cost of sales 2,060,651 1,926,366
-------------------------- ---------------------------
Gross profit 169,636 178,556
Operating expenses:
Selling, general and administrative expenses 155,710 165,624
Restructuring costs - -
-------------------------- ---------------------------
Total operating expenses 155,710 165,624
Income from operations 13,926 12,932
Interest expense (16,143) (16,910)
-------------------------- ---------------------------
Loss before income taxes (2,217) (3,978)
Benefit from income taxes (288) (1,076)
-------------------------- ---------------------------
Net loss $ (1,929) $ (2,902)
========================== ===========================
Loss per share
Basic $ (0.09) $ (0.15)
========================== ===========================
Diluted $ (0.09) $ (0.15)
========================== ===========================
Shares used in per share calculation
Basic 22,324 19,201
========================== ===========================
Diluted 22,324 19,201
========================== ===========================
Pro forma presentation does not include restructuring and special pre tax
charges of $2,926 and $5,688 for the twelve months ended December 31, 2003 and
2002, respectively.
Bell Microproducts Announces Q4 2003 Results Page 8 of 8
December 31, 2003
BELL MICROPRODUCTS INC.
STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
-------------------------------------- -----------------------------------
Three Months Ended December 31, Twelve Months Ended December 31,
2003 2002 2003 2002
---------------- -------------------- ----------------- ----------------
Net sales $ 639,520 $ 532,386 $ 2,230,287 $ 2,104,922
Cost of sales 591,346 486,581 2,062,194 1,926,366
---------------- -------------------- ----------------- ----------------
Gross profit 48,174 45,805 168,093 178,556
Operating expenses:
Selling, general and administrative expenses 40,478 40,484 155,710 165,624
Restructuring costs - - 1,383 5,688
---------------- -------------------- ----------------- ----------------
Total operating expenses 40,478 40,484 157,093 171,312
Income from operations 7,696 5,321 11,000 7,244
Interest expense (3,731) (3,966) (16,143) (16,910)
---------------- -------------------- ----------------- ----------------
Income (loss) before income taxes 3,965 1,355 (5,143) (9,666)
Provision for (benefit from) income taxes 1,517 364 (669) (2,612)
---------------- -------------------- ----------------- ----------------
Net income (loss) $ 2,448 $ 991 $ (4,474) $ (7,054)
================ ==================== ================= ================
Earnings (loss) per share
Basic $ 0.09 $ 0.05 $ (0.20) $ (0.37)
================ ==================== ================= ================
Diluted $ 0.09 $ 0.05 $ (0.20) $ (0.37)
================ ==================== ================= ================
Shares used in per share calculation
Basic 26,558 19,770 22,324 19,201
================ ==================== ================= ================
Diluted 27,692 20,048 22,324 19,201
================ ==================== ================= ================