1
Exhibit (99.1)
Page 1 of 9
BELL INDUSTRIES, INC.
Pro Forma Financial Information
(Unaudited)
The following unaudited pro forma financial statements give effect to the sale
of EDG and distribution in an assumed amount of $55 million to shareholders.
Therefore, such statements present pro forma financial information regarding
Bell without EDG, and after the assumed distribution to shareholders. The pro
forma balance sheet assumes that the sale of EDG and the distribution to
shareholders occurred on September 30, 1998, while the pro forma statements of
operations assume that the sale of EDG and the distribution to shareholders
occurred on January 1, 1995.
The pro forma financial statements should be read in conjunction with the
historical consolidated financial statements of Bell included in the Bell
Industries, Inc., Annual Report on Form 10-K for the year ended December 31,
1997. The Company expects its corporate costs will be substantially lower
following the sale of EDG, and it will endeavor to restructure its operations
to realize these savings. The pro forma financial statements do not reflect
such cost savings, nor those expected to be achieved following the sale of
Bell's Graphics Imaging Group ("Graphics") on September 14, 1998. Accordingly,
these pro forma operating results are not indicative of operating results which
would have been achieved had the sale of EDG been consummated as of the dates
presented and should not be construed as representative of future operations.
2
Exhibit (99.1)
Page 2 of 9
BELL INDUSTRIES, INC.
UNAUDITED PRO FORMA BALANCE SHEET
SEPTEMBER 30, 1998
(IN THOUSANDS)
ELECTRONICS
DISTRIBUTION PRO FORMA
HISTORICAL GROUP(a) ADJUSTMENTS PRO FORMA
---------- ------------ ----------- ---------
ASSETS
Current assets:
Cash and cash equivalents...... $ 4,957 $ 50,372 (b) $ 329
(55,000)(c)
Accounts receivable, net....... 89,033 $ (60,328) 28,705
Net receivable from sale of
Graphics.................... 12,257 12,257
Inventories.................... 131,064 (114,936) 16,128
Prepaid expenses and other..... 11,052 (559) 10,493
-------- --------- -------
Total current assets... 248,363 (175,823) 67,912
-------- --------- -------
Properties, net.................. 35,215 (17,582) 17,633
Goodwill......................... 67,540 (65,780) 1,760
Other assets..................... 9,411 (50) 9,361
-------- --------- -------
$360,529 $(259,235) $96,666
======== ========= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable............... $ 51,799 $ (26,787) $25,012
Accrued liabilities and
payroll..................... 27,315 (4,582) 22,733
Current portion of long-term
liabilities................. 9,375 (9,375)(b)
Income taxes payable........... 9,000 (b) 9,000
-------- --------- -------
Total current
liabilities......... 88,489 (31,369) 56,745
-------- --------- -------
Long-term debt................... 114,710 (6,457) (108,253)(b)
Deferred compensation and
other.......................... 7,105 7,105
Investment in EDG................ (221,409) 221,409 (b)
Shareholders' equity............. 150,225 (62,409)(b) 32,816
(55,000)(c)
Commitments and contingencies
-------- --------- -------
$360,529 $(259,235) $96,666
======== ========= =======
See accompanying Notes to Unaudited Pro Forma Financial Statements.
3
Exhibit (99.1)
Page 3 of 9
BELL INDUSTRIES, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
ELECTRONICS
DISTRIBUTION PRO FORMA
HISTORICAL GROUP(a) ADJUSTMENTS PRO FORMA(f)
---------- ------------ ----------- ------------
Net sales..................... $521,172 $(360,337) $160,835
-------- --------- --------
Costs and expenses
Cost of products sold....... 414,982 (286,961) 128,021
Selling and
administrative........... 83,745 (55,580) 28,165
Depreciation and
amortization............. 6,995 (3,477) 3,518
Interest.................... 9,667 $(9,667)(d)
Business system and
corporate resizing
charges.................. 13,800 (3,900) 9,900
-------- --------- --------
529,189 349,918 169,604
-------- --------- --------
Loss from continuing
operations before income
taxes....................... (8,017) (10,419) (8,769)
Income tax benefit............ (1,732) (4,873) 2,922 (e) (3,683)
-------- --------- --------
Loss from continuing
operations.................. $ (6,285) $ (5,546) $ (5,086)
======== ========= ========
SHARE AND PER SHARE DATA:
Loss from continuing
operations
Basic.................. $ (0.67) $ (0.54)
======== ========
Diluted................ $ (0.67) $ (0.54)
======== ========
Weighted average shares
outstanding
Basic.................. 9,385 9,385
======== ========
Diluted................ 9,385 9,385
======== ========
See accompanying Notes to Unaudited Pro Forma Financial Statements.
4
Exhibit (99.1)
Page 4 of 9
BELL INDUSTRIES, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
ELECTRONICS
DISTRIBUTION PRO FORMA
HISTORICAL GROUP(a) ADJUSTMENTS PRO FORMA(f)
---------- ------------ ----------- ------------
Net sales........................ $559,523 $(409,324) $150,199
-------- --------- --------
Costs and expenses
Cost of products sold.......... 434,502 (317,844) 116,658
Selling and administration..... 93,255 (65,186) 28,069
Depreciation and
amortization................ 6,937 (3,265) 3,672
Interest....................... 8,810 $(8,810)(d)
Integration charge............. 4,100 (4,100)
-------- --------- --------
547,604 (390,395) 148,399
-------- --------- --------
Income from continuing operations
before income taxes............ 11,919 (18,929) 1,800
Income tax provision............. 5,715 (9,076) 4,117(e) 756
-------- --------- --------
Income from continuing
operations..................... $ 6,204 $ (9,853) $ 1,044
======== ========= ========
SHARE AND PER SHARE DATA:
Income from continuing
operations
Basic..................... $ 0.68 $ 0.11
======== ========
Diluted................... $ 0.66 $ 0.11
======== ========
Weighted average shares
outstanding
Basic..................... 9,118 9,118
======== ========
Diluted................... 9.401 9,401
======== ========
See accompanying Notes to Unaudited Pro Forma Financial Statements.
5
EXHIBIT (99.1)
Page 5 of 9
BELL INDUSTRIES, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
ELECTRONICS
DISTRIBUTION PRO FORMA
HISTORICAL GROUP(a) ADJUSTMENTS PRO FORMA(f)
---------- ------------ ----------- ------------
Net sales $734,449 $(539,808) $194,641
-------- --------- --------
Costs and expenses
Cost of products sold....... 571,344 (420,589) 150,755
Selling and
administrative........... 123,158 (85,605) 37,553
Depreciation and
amortization............. 9,196 (4,370) 4,826
Interest.................... 12,309 $ (12,309)(d)
Integration charge.......... 4,100 (4,100)
-------- --------- --------
720,107 (514,664) 193,134
-------- --------- --------
Income from continuing
operations before income
taxes....................... 14,342 (25,144) 1,507
Income tax provision.......... 6,823 (11,962) 5,772(e) 633
-------- --------- --------
Income from continuing
operations.................. $ 7,519 $ (13,182) $ 874
======== ========= ========
SHARE AND PER SHARE DATA:
Income from continuing
operations
Basic.................. $ .82 $ 0.10
======== ========
Diluted................ $ .80 $ 0.09
======== ========
Weighted average shares
outstanding
Basic.................. 9,157 9,157
======== ========
Diluted................ 9,430 9,430
======== ========
See accompanying Notes to Unaudited Pro Forma Financial Statements.
6
Exhibit (99.1)
Page 6 of 9
BELL INDUSTRIES, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
ELECTRONICS
DISTRIBUTION
HISTORICAL GROUP(a) PRO FORMA(f)
---------- ------------ ------------
Net sales.................................. $506,062 $(327,354) $178,708
-------- --------- --------
Cost and expenses
Costs of products sold................... 387,876 (250,978) 136,898
Selling and administration............... 84,924 (51,256) 33,668
Depreciation and amortization............ 5,736 (1,380) 4,356
Interest................................. 3,673 3,673
-------- --------- --------
482,209 (303,614) 178,595
-------- --------- --------
Income from continuing operations
before income taxes...................... 23,853 (23,740) 113
Income tax provision....................... 9,992 (9,945) 47
-------- --------- --------
Income from continuing operations.......... $ 13,861 $ (13,795) $ 66
======== ========= ========
SHARE AND PER SHARE DATA:
Income from continuing
operations
Basic............................... $ 1.57 $ 0.01
======== ========
Diluted............................. $ 1.52 $ 0.01
======== ========
Weighted average shares
outstanding
Basic............................... 8,852 8,852
======== ========
Diluted............................. 9,109 9,109
======== ========
See accompanying Notes to Unaudited Pro Forma Financial Statements.
7
Exhibit (99.1)
Page 7 of 9
BELL INDUSTRIES, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
ELECTRONICS
DISTRIBUTION
HISTORICAL GROUP(a) PRO FORMA(f)
---------- ------------ ------------
Net sales.................................. $490,966 $(346,087) $144,879
-------- --------- --------
Cost and expenses
Costs of products sold................... 375,168 (267,573) 107,595
Selling and administration............... 82,863 (52,048) 30,815
Depreciation and amortization............ 5,755 (1,242) 4,513
Interest................................. 3,612 3,612
Lease commitment provision............... 2,800 2,800
Gain on sale of division................. (3,050) (3,050)
-------- --------- --------
467,148 (320,863) 146,285
-------- --------- --------
Income (loss) from continuing operations
before income taxes...................... 23,818 (25,224) (1,406)
Income tax provision (benefit)............. 10,008 (10,599) (591)
-------- --------- --------
Income (loss) from continuing operations... $ 13,810 $ (14,625) $ (815)
======== ========= ========
SHARE AND PER SHARE DATA:
Income (loss) from continuing
operations
Basic............................... $ 1.56 $ (0.09)
======== ========
Diluted............................. $ 1.52 $ (0.09)
======== ========
Weighted average shares
outstanding
Basic............................... 8,852 8,852
======== ========
Diluted............................. 9,109 9,109
======== ========
See accompanying Notes to Unaudited Pro Forma Financial Statements.
8
Exhibit (99.1)
Page 8 of 9
BELL INDUSTRIES, INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
(a) Represents the elimination of the historical accounts of EDG for each of the
periods presented.
(b) Represents estimated proceeds of $185 million from the sale of EDG, the use
of proceeds to extinguish all outstanding borrowings and the payment of
approximately $17 million of estimated selling costs including severance
payments. Additionally, reflects the elimination of the investment in EDG
and records a loss of approximately $62.4 million on the sale of EDG
including estimated selling costs and taxes. The final purchase price is
subject to post closing adjustments. The loss has not been included in the
pro forma statements of income for the periods presented.
The following is a summary of the net pro forma cash entry at September 30,
1998:
Estimated gross proceeds.................................... $ 185,000
Estimated selling costs..................................... (17,000)
---------
Estimated net proceeds...................................... 168,000
Repayment of outstanding borrowings......................... (117,628)
---------
Net cash.................................................... $ 50,372
=========
(c) Represents the distribution of $55 million of cash to shareholders. The pro
forma presentation does not reflect the planned second cash distribution
that is subject to the timing and completion of the disposition of certain
real estate assets. The amount of the second distribution is estimated to be
$10 million to $15 million and is expected to be paid in late 1999.
(d) Represents the elimination of consolidated interest expense for the period
assuming the net estimated cash proceeds are utilized to reduce long-term
debt as required by Bell's borrowing agreement.
(e) Adjusts income tax expense for the effect of the pro forma adjustments based
on the effective tax rate for the period presented.
9
Exhibit (99.1)
Page (9 of 9)
BELL INDUSTRIES, INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
(f) Unaudited pro forma financial data for each of the Remaining Businesses is
as follows:
NINE MONTHS ENDED
SEPTEMBER 30 YEAR ENDED DECEMBER 31
------------------- ------------------------------
1998 1997 1997 1996 1995
-------- -------- -------- -------- --------
Net sales
Computer systems
integration.............. $110,289 $ 94,558 $124,680 $112,953 $ 73,742
Recreational products....... 37,897 36,389 46,234 43,704 42,576
Electronics manufacturing... 12,649 19,252 23,727 22,051 28,561
-------- -------- -------- -------- --------
$160,835 $150,199 $194,641 $178,708 $144,879
======== ======== ======== ======== ========
Operating income
Computer systems
integration.............. $ 5,227 $ 4,516 $ 5,933 $ 5,692 $ 2,897
Recreational products....... 2,717 2,452 2,880 3,380 3,536
Electronics manufacturing... 1,597 3,412 4,230 3,613 7,329
Corporate costs............. (8,410) (8,580) (11,536) (8,899) (8,756)
-------- -------- -------- -------- --------
1,131 1,800 1,507 3,786 5,006
Interest.................... (3,673) (3,612)
Business system and
corporate resizing
charges.................. (9,900)
Lease commitment
provision................ (2,800)
Income tax (provision)
benefit..................... 3,683 (756) (633) (47) 591
-------- -------- -------- -------- --------
Income (loss) from continuing
operations.................. $ (5,086) $ 1,044 $ 874 $ 66 $ (815)
======== ======== ======== ======== ========
The pro forma selling and administrative expenses include the historical
corporate costs for the entire Company, including those costs required to
support EDG and Graphics. The Company expects corporate costs will be
substantially lower following the sale of EDG, and will restructure its
operations to realize these savings. These anticipated savings are not
reflected in the pro forma presentation. Management expects these annual
savings to be approximately $8 million to $9 million, before tax effects,
after a restructuring of the Company's operations following the sale of
EDG to bring corporate costs in-line with the Company's smaller size.