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 June 30, 1995
Commission file number 1-11471
BELL INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
California 95-4530889
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
11812 San Vicente Blvd., Los Angeles, California 90049-5069
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(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 July 17, 1995: 6,849,169 shares.
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Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Bell Industries, Inc.
Consolidated Statement of Income
(In thousands, except per share data)
Three months ended Six months ended
June 30 June 30
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1995 1994 1995 1994
---- ---- ---- ----
Net sales $141,575 $128,687 $268,520 $242,194
Cost and expenses
Cost of products sold 108,984 99,611 206,967 187,675
Selling, general and
administrative expenses 24,497 21,883 48,131 42,604
Interest expense 822 1,068 1,730 2,167
-------- -------- -------- --------
134,303 122,562 256,828 232,446
-------- -------- -------- --------
Income before income taxes 7,272 6,125 11,692 9,748
Income tax provision 3,051 2,572 4,911 4,112
-------- -------- -------- --------
Net income $ 4,221 $ 3,553 $ 6,781 $ 5,636
Net income per share $ .60 $ .51 $ .96 $ .81
======== ======== ======== ========
Weighted average common
shares outstanding 7,056 6,904 7,059 6,916
======== ======== ======== ========
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Bell Industries, Inc.
Consolidated Balance Sheet
(Dollars in thousands) June 30 December 31 June 30
1995 1994 1994
---- ---- ----
ASSETS
Current assets
Cash and cash equivalents $ 8,011 $ 3,631 $ 4,370
Accounts receivable, less allowance for
doubtful accounts of $1,450,
$1,041 and $884 71,812 68,914 65,835
Inventories 93,690 95,910 80,179
Prepaid expenses and other 4,530 5,324 6,259
----------- ----------- ---------
Total current assets 178,043 173,779 156,643
----------- ----------- ---------
Properties, at cost
Land 443 443 443
Buildings and improvements 8,555 8,857 8,750
Equipment 30,513 31,362 31,269
----------- ----------- ---------
39,511 40,662 40,462
Less accumulated depreciation (24,991) (25,722) (24,284)
----------- ----------- ---------
Total properties 14,520 14,940 16,178
Other assets 11,745 11,648 11,892
----------- ----------- ---------
$ 204,308 $ 200,367 $ 184,713
=========== =========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 41,110 $ 34,705 $ 28,885
Accrued payroll and liabilities 15,148 12,123 11,368
Current portion of long-term liabilities 6,710 9,662 7,616
Income taxes payable 1,554 1,171 1,319
----------- ----------- ---------
Total current liabilities 64,522 57,661 49,188
----------- ----------- ---------
Long-term liabilities
Notes payable 23,714 33,857 32,857
Obligations under capital leases 1,667 2,463 3,234
Deferred compensation and other 5,460 4,616 3,881
----------- ----------- ---------
Total long-term liabilities 30,841 40,936 39,972
----------- ----------- ---------
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 - 6,849,169, 6,497,557
and 6,453,412 shares 62,621 1,624 1,537
Other paid-in capital 54,080 47,167
Reinvested earnings 46,324 46,066 46,849
----------- ----------- ---------
Total shareholders' equity 108,945 101,770 95,553
Commitments and contingencies
----------- ----------- ---------
$ 204,308 $ 200,367 $ 184,713
=========== =========== =========
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Bell Industries, Inc.
Consolidated Statement of Cash Flows
(In thousands)
Six months ended
June 30
----------------------
1995 1994
---- ----
Cash flows from operating activities:
Cash received from customers $ 264,860 $ 229,854
Cash paid to suppliers and employees (239,966) (216,760)
Interest paid (1,901) (2,366)
Income taxes paid (4,401) (1,365)
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Net cash provided by operating activities 18,592 9,363
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Cash flows from investing activities:
Purchase of business (5,864)
Additions to properties and other (893) (1,519)
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Net cash used in investing activities (893) (7,383)
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Cash flows from financing activities:
Bank borrowings (payments), net (9,000) 2,000
Payments on notes payable (4,143) (5,000)
Other (176) (756)
--------- ---------
Net cash used in financing activities (13,319) (3,756)
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Net increase (decrease) in cash and cash equivalents 4,380 (1,776)
Cash and cash equivalents at beginning of period 3,631 6,146
--------- ---------
Cash and cash equivalents at end of period $ 8,011 $ 4,370
========= =========
Reconciliation of net income to net cash
provided by operating activities:
Net income $ 6,781 $ 5,636
Depreciation and amortization 2,576 2,550
Amortization of intangibles 279 293
Provision for losses on accounts receivable 761 138
Changes in assets and liabilities
Accounts receivable (3,660) (12,340)
Inventories 2,220 4,912
Accounts payable 6,405 3,454
Income taxes payable 510 2,823
Other 2,720 1,897
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$ 18,592 $ 9,363
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Bell Industries, Inc.
Notes to Consolidated 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
Transition Report on Form 10K filed with the Securities and Exchange Commission
for the transition period from July 1, 1994 to December 31, 1994.
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 of shares 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.
Stock Dividend
In May 1995, the Board of Directors declared a 5% stock dividend payable to
shareholders of record on May 26, 1995. Share and per share amounts were
adjusted to give effect to the stock dividend.
Change in State of Incorporation
At the 1995 Annual Meeting, the shareholders approved a plan to change the
Company's state of incorporation from Delaware to California. Effective June
30, 1995, the plan was completed and each share of Bell Delaware common stock
($.25 par value) was converted to one share of Bell California common stock.
This change resulted in the transfer of $60.9 million from other paid-in
capital to common stock on that date.
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Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Results of operations by business segment for the three and six months ended
June 30, 1995 and 1994 were as follows (in thousands):
Three months ended Six months ended
June 30 June 30
------------------- -------------------
1995 1994 1995 1994
---- ---- ---- ----
Net sales
Electronics $110,471 $102,162 $212,955 $194,016
Graphic Arts 19,267 15,472 34,862 29,312
Recreational Products 11,837 11,053 20,703 18,866
-------- -------- -------- --------
$141,575 $128,687 $268,520 $242,194
======== ======== ======== ========
Three months ended Six months ended
June 30 June 30
------------------- -------------------
1995 1994 1995 1994
---- ---- ---- ----
Operating income
Electronics $ 8,475 $ 7,176 $ 15,149 $ 13,085
Graphic Arts 574 560 986 926
Recreational Products 1,168 1,526 1,662 1,994
-------- -------- -------- --------
Operating income 10,217 9,262 17,797 16,005
Corporate costs (2,123) (2,069) (4,375) (4,090)
Interest expense (822) (1,068) (1,730) (2,167)
Income tax provision (3,051) (2,572) (4,911) (4,112)
-------- -------- -------- --------
Net income $ 4,221 $ 3,553 $ 6,781 $ 5,636
======== ======== ======== ========
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For the six months ended June 30, 1995, the Company's net sales increased 11%
to $268.5 million and operating income increased 11% to $17.8 million over the
comparable period in the prior year. Net income increased 20% to $6.8 million,
or $.96 per share, compared to $5.6 million, or $.81 per share, in the prior
year.
For the three months ended June 30, 1995, the Company's net sales increased 10%
to $141.6 million and operating income increased 10% to $10.2 million over the
corresponding quarter in the prior year. The Company recorded net income of
$4.2 million, or $.60 per share, compared to $3.6 million, or $.51 per share,
in the prior year quarter.
Sales of the Electronics Group for the six months increased 10% to $213.0
million and operating income increased 16% to $15.1 million. Sales for the
quarter increased 8% over the prior year quarter to $110.5 million and
operating income increased 18% to $8.5 million. The improved performance was
attributed to substantially stronger shipments of the Group's core electronic
components, partially offset by reduced sales of memory and microprocessor
products. The availability of these products, which are provided primarily by
one supplier, cannot be predicted due to capacity and allocation issues at that
supplier. In addition, the group recorded increased sales of microcomputer
systems and services. Customer bookings for electronic components continued to
be strong during the quarter.
Graphic Arts Group sales for the six months increased 19% to $34.9 million and
operating income increased 6% to $1 million. Group sales for the quarter
increased 25% to $19.3 million while operating income increased 3% to $0.6
million. Sales growth was attributed to a stronger California market for
graphic supplies, increased sales of electronic imaging equipment and
geographic expansion. Operating income growth was more limited as a result of
costs to enter new markets.
Recreational Products Group sales for the six months increased 10% to $20.7
million while operating income decreased 17% to $1.7 million. Sales for the
quarter increased 7% to $11.8 million while operating income decreased 23% to
$1.2 million. The decline in operating margins was primarily attributed to
competitive pressures on gross margins and costs incurred to penetrate new
markets. In addition, during the first quarter, mild winter weather in the
upper Midwest affected sales of higher margin snowmobile supplies and other
winter-related products.
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Cost of products sold as a percentage of sales for the six months decreased to
77.1% from 77.5% as a result of product mix changes, primarily decreased sales
of lower margin memory products, while selling, general and administrative
expenses increased slightly to 17.9% of sales from 17.6%. Corporate costs
increased over the prior year periods primarily as a result of deferred
compensation expenses. The decrease in interest expense was attributed to
reductions in long-term debt. The Company's income tax rate was approximately
42% for all periods presented.
The Company's financial position continued to be strong at June 30, 1995 as set
forth in the table below (dollars in thousands, except per share amounts):
June 30, December 31, June 30,
1995 1994 1994
-------- ------------ --------
Cash and cash equivalents $ 8,011 $ 3,631 $ 4,370
Working capital $113,521 $116,118 $107,455
Current ratio 2.8:1 3.0:1 3.2:1
Ratio of long-term liabilities
to total capitalization 22.0% 28.7% 29.5%
Shareholders' equity per share $ 15.91 $ 14.91 $ 14.10
Days' sales in receivables 47 50 47
Days' sales in inventories 78 87 73
Cash provided by operating activities totaled $18.6 million during the six
months ended June 30, 1995 compared to $9.4 million in the prior year period.
The change in operating cash flows was attributed to increased profits during
1995 and increased cash collections. Cash used in investing activities in the
prior year included the purchase of a business. Cash used in financing
activities included payments on notes payable, bank borrowings and capital
lease obligations.
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.
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PART II - OTHER INFORMATION
Items 1 through 3.
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders.
The Annual Meeting of Shareholders of Bell Industries was held
on May 9, 1995 to act on the following matters.
1. Election of Directors.
The seven incumbent directors - John J. Cost, Anthony L.
Craig, Gordon M. Graham, Bruce M. Jaffe, Charles S. Troy,
Milton Rosenberg and Theodore Williams - were re-elected.
Directors elected will serve until the next Annual Meeting of
Shareholders and until their successors are elected and have
qualified. The vote was as follows:
Votes Withhold
Directors Votes for against authority
--------- --------- ------- ---------
John J. Cost 5,565,295 -0- 39,743
Anthony L. Craig 5,563,324 -0- 41,714
Gordon M. Graham 5,566,387 -0- 38,651
Bruce M. Jaffe 5,566,387 -0- 38,651
Charles S. Troy 5,563,275 -0- 41,763
Milton Rosenberg 5,562,675 -0- 42,363
Theodore Williams 5,565,444 -0- 39,594
2. The plan to change the Company's state of incorporation from
Delaware to California received the following vote:
Votes Withhold
Votes for against authority
--------- ------- ---------
State of incorporation 4,148,469 386,678 1,069,891
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
None
(b) Reports on Form 8-K:
None
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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: July 28, 1995 THEODORE WILLIAMS
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Theodore Williams,
Chairman and
Chief Executive Officer
DATE: July 28, 1995 BRUCE M. JAFFE
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Bruce M. Jaffe,
President and
Chief Operating Officer
DATE: July 28, 1995 TRACY A. EDWARDS
- ----- ------------- ----------------------------
Tracy A. Edwards,
Vice President and
Chief Financial Officer