-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PsGnwPgPUx52wCAZdE/dLeBJKIEcP23mtD8mPknAe8XRFJfsL9u5JVO5C+9Zuheg OZ+HsKv7OFP9Exj3KGJsuw== 0000950150-96-001176.txt : 19961027 0000950150-96-001176.hdr.sgml : 19961027 ACCESSION NUMBER: 0000950150-96-001176 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961024 SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BELL INDUSTRIES INC CENTRAL INDEX KEY: 0000945489 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRONIC PARTS & EQUIPMENT, NEC [5065] IRS NUMBER: 954530889 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11471 FILM NUMBER: 96647430 BUSINESS ADDRESS: STREET 1: 11812 SAN VICENTE BLVD CITY: LOS ANGELES STATE: CA ZIP: 90049-5069 BUSINESS PHONE: 3108262355 MAIL ADDRESS: STREET 1: 11812 SAN VICENTE BLVD CITY: LOS ANGELES STATE: CA ZIP: 90049-5069 FORMER COMPANY: FORMER CONFORMED NAME: CALIFORNIA BELL INDUSTRIES INC DATE OF NAME CHANGE: 19950519 10-Q 1 FORM 10-Q PERIOD ENDED SEPTEMBER 30, 1996 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 September 30, 1996 Commission file number 1-11471 BELL INDUSTRIES, INC. ------------------------------------------------------ (Exact name of Registrant as specified in its charter) California 95-2039211 ---------- ---------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 11812 San Vicente Blvd., Los Angeles, California 90049-5069 ------------------------------------------------ ---------- (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 October 15, 1996: 7,428,917 shares. 2 Part I - FINANCIAL INFORMATION Item 1. Financial Statements Bell Industries, Inc. Consolidated Statement of Income (In thousands, except per share data)
Three months ended Nine months ended September 30 September 30 ---------------------------- ---------------------------- 1996 1995 1996 1995 ---- ---- ---- ---- Net sales $164,306 $148,639 $464,065 $417,159 -------- -------- -------- -------- Cost and expenses Cost of products sold 128,594 115,548 360,770 322,515 Selling, general and administrative expenses 27,208 24,838 79,499 72,969 Interest expense 952 872 2,796 2,602 -------- -------- -------- -------- 156,754 141,258 443,065 398,086 -------- -------- -------- -------- Income before income taxes 7,552 7,381 21,000 19,073 Income tax provision 3,172 3,100 8,820 8,011 -------- -------- -------- -------- Net income $ 4,380 $ 4,281 $ 12,180 $ 11,062 ======== ======== ======== ======== Net income per share $ 0.58 $ 0.57 $ 1.61 $ 1.49 ======== ======== ======== ======== Weighted average common shares outstanding 7,542 7,486 7,567 7,437 ======== ======== ======== ========
See accompanying Notes to Consolidated Condensed Financial Statements. 3 -2- Bell Industries, Inc. Consolidated Condensed Balance Sheet (Dollars in thousands)
September 30 December 31 September 30 1996 1995 1995 ---- ---- ---- ASSETS Current assets: Cash and cash equivalents $ 4,193 $ 4,819 $ 1,102 Accounts receivable, less allowance for doubtful accounts of $1,962, $1,472 and $1,337 88,349 78,651 79,492 Inventories 117,967 120,153 108,970 Prepaid expenses and other 6,117 5,427 4,277 -------- -------- -------- Total current assets 216,626 209,050 193,841 Properties, net 20,168 13,148 14,959 Other assets 14,568 11,684 11,469 -------- -------- -------- $251,362 $233,882 $220,269 ======== ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 42,968 $ 42,957 $ 35,587 Accrued payroll and liabilities 21,372 20,693 15,968 Current portion of long-term liabilities 8,531 6,918 13,134 Income taxes payable 1,705 2,255 1,176 -------- -------- -------- Total current liabilities 74,576 72,823 65,865 -------- -------- -------- Long-term liabilities: Notes payable 36,615 36,514 33,714 Deferred compensation and other 6,762 6,976 7,044 -------- -------- -------- Total long-term liabilities 43,377 43,490 40,758 -------- -------- -------- Shareholders' equity: Preferred stock Authorized - 1,000,000 shares Outstanding - none Common stock Authorized - 35,000,000 shares Outstanding - 7,426,967, 6,898,094 and 6,878,169 shares 74,361 63,056 63,041 Reinvested earnings 59,048 54,513 50,605 -------- -------- -------- Total shareholders' equity 133,409 117,569 113,646 Commitments and contingencies -------- -------- -------- $251,362 $233,882 $220,269 ======== ======== ========
See accompanying Notes to Consolidated Condensed Financial Statements. 4 -3- Bell Industries, Inc. Consolidated Statement of Cash Flows (In thousands)
Nine months ended September 30 ---------------------------- 1996 1995 ---- ---- Cash flows from operating activities: Net income $ 12,180 $ 11,062 Depreciation and amortization 4,098 3,883 Amortization of intangibles 497 416 Provision for losses on accounts receivable 976 1,321 Changes in assets and liabilities (3,543) (18,479) -------- -------- Net cash provided by (used in) operating activities 14,208 (1,797) -------- -------- Cash flows from investing activities: Purchases of businesses (10,737) Purchases of properties (6,294) (3,796) -------- -------- Net cash used in investing activities (17,031) (3,796) -------- -------- Cash flows from financing activities: Payments on Senior Notes and capital leases (6,463) (5,274) Bank borrowings, net 7,244 7,400 Employee stock plans and other 1,416 938 -------- -------- Net cash provided by financing activities 2,197 3,064 -------- -------- Net decrease in cash and cash equivalents (626) (2,529) Cash and cash equivalents at beginning of period 4,819 3,631 -------- -------- Cash and cash equivalents at end of period $ 4,193 $ 1,102 ======== ======== Changes in assets and liabilities, net of acquisitions: Accounts receivable $ (2,182) $(11,899) Inventories 7,983 (13,060) Accounts payable (5,621) 882 Accrued liabilities and deferred compensation (1,078) 4,266 Income taxes payable (1,053) 195 Other (1,592) 1,137 -------- -------- Net change $ (3,543) $(18,479) ======== ======== Supplemental cash flow information: Interest paid $ 3,654 $ 3,464 Income taxes paid $ 9,873 $ 7,816
See accompanying Notes to Consolidated Condensed Financial Statements. 5 -4- 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 Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1995. 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 1996, the Board of Directors declared a 5% stock dividend payable to shareholders of record on May 24, 1996. Share and per share amounts were adjusted to give effect to the stock dividend. Authorized Shares At the Company's 1996 Annual Meeting, shareholders approved a proposal to increase the number of authorized shares of common stock from 10 million to 35 million. Acquisitions During the first nine months of 1996, the Company acquired four graphics and electronic imaging businesses for cash and the issuance of approximately 106,000 shares of Bell common stock. Operating results and net assets of the acquired businesses were not material. 6 -5- Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition. Results of operations by business segment for the three and nine months ended September 30, 1996 and 1995 were as follows (in thousands):
Three months ended Nine months ended September 30 September 30 --------------------- --------------------- 1996 1995 1996 1995 ---- ---- ---- ---- Net sales Electronics $116,113 $118,469 $351,060 $331,424 Graphics and Electronic Imaging 35,087 17,713 79,292 52,575 Recreational Products 13,106 12,457 33,713 33,160 -------- -------- -------- -------- $164,306 $148,639 $464,065 $417,159 ======== ======== ======== ======== Operating income Electronics $ 8,694 $ 9,104 $ 25,556 $ 24,253 Graphics and Electronic Imaging 1,017 355 2,480 1,341 Recreational Products 924 917 2,427 2,579 -------- -------- -------- -------- Operating income 10,635 10,376 30,463 28,173 Corporate costs (2,131) (2,123) (6,667) (6,498) Interest expense (952) (872) (2,796) (2,602) Income tax provision (3,172) (3,100) (8,820) (8,011) -------- -------- -------- -------- Net income $ 4,380 $ 4,281 $ 12,180 $ 11,062 ======== ======== ======== ========
For the nine months ended September 30, 1996, the Company's net sales increased 11.2% to $464.1 million and operating income increased 8.1% to $30.5 million over the comparable period in the prior year. Net income increased 10.1% to $12.2 million, or $1.61 per share, compared to $11.1 million, or $1.49 per share, in 1995. For the three months ended September 30, 1996, the Company's net sales increased 10.5% to $164.3 million and operating income increased 2.5% to $10.6 million over the corresponding quarter in the prior year. Net income increased to $4.4 million, or $.58 per share, compared to $4.3 million, or $.57 per share, in the prior year quarter. 7 -6- Sales of the Electronics Group for the nine months ended September 30, 1996 increased 5.9% to $351.1 million and operating income increased 5.4% to $25.6 million. For the quarter, sales decreased 2.0% to $116.1 million and operating income decreased 4.5% to $8.7 million over the comparable prior year quarter. Results for the nine months reflected stronger shipments of components during the first few months of 1996 and increased sales of microcomputer systems and services. Results for the quarter were impacted by protracted weakness in the electronics market and the recent termination of the Company's National Semiconductor franchise. During the quarter, the Company began receiving inventories and shipping initial orders relating to the new Samsung Semiconductor franchise. Graphics and Electronic Imaging Group sales for the nine months ended September 30, 1996 increased 50.8% to $79.3 million and operating income increased 84.9% to $2.5 million. Group sales for the quarter increased 98.1% to $35.1 million and operating income increased 186.5% to $1.0 million. These results reflected contributions from recent acquisitions, new facilities, and improved market conditions, particularly in California. Recreational Products Group sales for the nine months increased 1.7% to $33.7 million while operating income decreased 5.9% to $2.4 million. For the quarter, sales increased 5.2% to $13.1 million while operating income remained consistent with prior year results. Year-to-date operating results were impacted by severe winter weather conditions in the upper Midwest which continued throughout the first half of the year as well as costs related to expanding into Michigan. Cost of products sold as a percentage of sales for the nine months increased to 77.7% from 77.3%, while selling, general and administrative expenses decreased to 17.1% of sales from 17.5%. Lower selling, general and administrative costs, expressed as a percentage of sales, reflected ongoing cost control efforts. The Company's income tax rate was approximately 42% for all periods presented. The Company's financial position remained strong at September 30, 1996 as set forth in the table below (dollars in thousands, except per share amounts):
September 30 December 31 September 30 1996 1995 1995 ---- ---- ---- Cash and cash equivalents $ 4,193 $ 4,819 $ 1,102 Working capital $142,050 $136,227 $127,976 Current ratio 2.9:1 2.9:1 2.9:1 Long-term liabilities to total capitalization 24.5% 27.0% 26.4% Shareholders' equity per share $ 17.96 $ 16.23 $ 15.74 Days' sales in receivables 50 50 49 Days' sales in inventories 83 96 86
8 -7- Net cash provided by operating activities was $14.2 million for the nine months ended September 30, 1996 compared to net cash used in operating activities of $1.8 million for the comparable period in 1995. Cash flows from operating activities in 1996 reflected increased profits and the impact of working capital reductions related to softer market conditions. Operating cash flows in 1995 were impacted by increased investment in receivables and inventories. Cash flows were utilized for scheduled payments on the Company's Senior Notes and capital lease obligations. In addition, cash flows were used to fund property acquisitions, including the Company's newly acquired corporate office in El Segundo, California, as well as, continued investment in information systems. Additionally, during the first nine months of 1996, the Company acquired four Graphics and Electronic Imaging businesses for cash and the issuance of approximately 106,000 shares of Bell common stock. Bell will continue to seek acquisition opportunities that enhance growth. 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. PART II - OTHER INFORMATION Items 1 through 5. Not applicable Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: 4. The Third Amendment Agreement dated July 31, 1996, among Registrant and Insurance Companies named therein providing for certain amendments to the Note Purchase Agreement dated February 1, 1991. 27. Financial Data Schedule. (b) Reports on Form 8-K: None 9 -8- 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: October 24, 1996 /s/ THEODORE WILLIAMS - ----- ---------------- ---------------------------- Theodore Williams, Chairman and Chief Executive Officer DATE: October 24, 1996 /s/ BRUCE M. JAFFE - ----- ---------------- ---------------------------- Bruce M. Jaffe, President and Chief Operating Officer DATE: October 24, 1996 /s/ TRACY A. EDWARDS - ----- ---------------- --------------------------- Tracy A. Edwards, Vice President and Chief Financial Officer EX-4 2 THIRD AMMENDMENT AGREEMENT, DATED 7/31/96 1 Exhibit 4. ---------- THIRD AMENDMENT AGREEMENT THIRD AMENDMENT AGREEMENT (this "Amendment"), dated as of July 31, 1996, among BELL INDUSTRIES, INC., a California corporation (together with its successors and assigns, the "Company"), and each of the holders of Notes (as such term is defined below) whose name appears on the signature pages hereof (individually, a "Holder" and, collectively, the "Holders"). RECITALS: WHEREAS, the Company entered into separate Note Purchase Agreements (collectively, as amended to, but excluding, the date hereof, the "Existing Note Purchase Agreement," and the Existing Note Purchase Agreement, as amended by this Amendment, the "Amended Note Purchase Agreement") with each of the original purchasers of the Company's issuance of Fifty Million Dollars ($50,000,000) or 9.70% Senior Notes due February 1, 2001 (the "Notes"); WHEREAS, each of the Holders is a holder of the Notes; WHEREAS, the Company has requested the Holders to agree to the amendment of certain financial covenants thereunder; and WHEREAS, the Holders are agreeable to such amendments, on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premises and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: SECTION 1. DEFINITIONS Capitalized terms used in this Amendment and not otherwise defined herein shall have the respective meanings ascribed to them in the Existing Note Purchase Agreement. SECTION 2. AMENDMENTS 2.1. Section 7.6(c) of the Existing Note Purchase Agreement is hereby amended and restated in its entirety as follows: (c) REVOLVING CREDIT AGREEMENT. The Company agrees to use its best efforts to maintain the Union Revolving Credit Agreement (or any substantially equivalent agreement or agreements substituted therefor or in addition thereto with one or more Acceptable Banks). The Company agrees not to have owing to any single Acceptable Bank at any one time Revolving Credit Loans or other similar Debt in excess of Twenty-Five Million Dollars ($25,000,000), provided that, in any case, Revolving Credit Loans or other similar Debt owing to Union Bank and outstanding under the Union Revolving Credit Agreement may exceed, in the aggregate, Twenty-Five Million Dollars ($25,000,000) but shall not, in any case, exceed, in the aggregate, One Hundred Million Dollars ($100,000,000). 2 2.2 Section 7.7 of the Existing Note Purchase Agreement is hereby amended and restated in its entirety as follows: 7.7 FIXED CHARGE COVERAGE. The Company will not at any time permit Consolidated Net Operating Earnings Available for Fixed Charges, determined in respect of the period of four (4) consecutive fiscal quarters of the Company then most recently ended, to be less than two hundred fifty percent (250%) of Consolidated Fixed Charges, determined in respect of such period. SECTION 3. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to each of the Holders as follows: 3.1 The Company: (a) is a corporation duly organized and validly existing in good standing under the laws of the State of California; (b) has all requisite power and authority and all necessary licenses and permits to own and operate its Properties and to carry on its business as now conducted and presently proposed to be conducted; and (c) is duly qualified and is authorized to do business and is in good standing as a foreign corporation in each jurisdiction where the character of its Properties or the nature of its activities makes such qualification necessary. 3.2 The Company has the corporate power and authority to authorize, execute, deliver and enter into this Amendment and to perform its obligations under the Amended Note Purchase Agreement, the Collateral Trust Indenture, the Security Agreement, the Notes and the Warrants. 3.3 This Amendment has been duly authorized, executed and delivered by the Company. The Amended Note Purchase Agreement, the Collateral Trust Indenture, the Security Agreement, the Notes and the Warrants constitute the legal, valid and binding obligations of the Company, enforceable in accordance with their respective terms, except that the enforceability of this Agreement or thereof may be: (a) limited by bankruptcy, insolvency or other similar laws affecting the enforceability of creditors' rights generally; and (b) subject to the availability of equitable remedies. The holders of the Notes are entitled to the benefits of the Amended Note Purchase Agreement and the holders of the Warrants are entitled to the benefits of the Warrant Agreement. 3.4 The authorization, execution and delivery by the Company of this Amendment is not, and the performance by the Company of its obligations under the Amended Note Purchase Agreement will not be, inconsistent with its certificate of incorporation or by-laws, does not and BELL INDUSTRIES, INC. 2 THIRD AMENDMENT AGREEMENT 3 will not contravene any law, governmental rule or regulation, judgment or order applicable to the Company, and does not and will not contravene any provision of, or constitute a default under, any indenture, mortgage, contract or other instrument to which the Company is a party or by which any of its Property is bound. 3.5. No consent or approval of, giving of notice to, registration with, or taking of any other action in respect of or by, any federal, state or local governmental authority or agency, or other Person is required with respect to the execution and delivery by the Company of this Amendment and the performance by the Company of any of its obligations under the Amended Note Purchase Agreement, the Collateral Trust Indenture, the Security Agreement, the Notes and the Warrants. 3.6. After giving effect to this Amendment, no Default or Event of Default will exist. SECTION 4. COSTS AND EXPENSES. The Company shall pay all fees and expenses of Hebb & Gitlin in connection with the negotiation, preparation and execution of this Amendment promptly upon receipt of a statement therefor. SECTION 5. MISCELLANEOUS. 5.1. This Amendment shall become effective upon the execution and delivery hereof by the Company and the Majority Holders. 5.2. This Amendment may be executed in one or more counterparts, all of which taken together shall constitute a single instrument. 5.3. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CONNECTICUT. 5.4. Except as expressly provided herein (a) no other terms and provisions of the Existing Note Purchase Agreement shall be modified or changed by this Amendment and (b) the terms and provisions of the Existing Note Purchase Agreement, as amended by this Amendment, shall continue in full force and effect. The Company hereby acknowledges and reaffirms all of its obligations and duties under the Existing Note Purchase Agreement as modified by this Amendment and under the Notes issued thereunder. 5.5. All headings and captions preceding the text of the several paragraphs of this Amendment are intended solely for convenience of reference and shall not constitute a part of this Amendment nor shall they affect it meaning, construction or effect. [Remainder of page intentionally blank. Next page is signature page.] BELL INDUSTRIES, INC. 3 THIRD AMENDMENT AGREEMENT 4 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first above written. BELL INDUSTRIES, INC. By /s/ BRUCE M. JAFFE --------------------------------- Name: Bruce M. Jaffe Title: President and Chief Operating Officer 5 CIG & CO. By /s/ JAMES R. KUZEMCHAK --------------------------------- Name: James R. Kuzemchak Title: Partner THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY By /s/ GARY A. POLINER --------------------------------- Name: Gary A. Poliner Title: Vice President ROYAL MACCABEES LIFE INSURANCE COMPANY By /s/ LEONARD D. DAVENPORT --------------------------------- Name: Leonard D. Davenport Title: Vice President Royal Investment Management Company PROVIDENT MUTUAL LIFE INSURANCE COMPANY OF PHILADELPHIA By /s/ J.C. LANGE --------------------------------- Name: J.C. Lange Title: Vice President PAN-AMERICAN LIFE INSURANCE COMPANY By /s/ F. ANDERSON STONE --------------------------------- Name: F. Anderson Stone Title: Vice President Corporate Securities SOUTHERN FARM BUREAU LIFE INSURANCE COMPANY By --------------------------------- Name: Title: THE UNION CENTRAL LIFE INSURANCE COMPANY By /s/ GARY R. RODMAKER --------------------------------- Name: Gary R. Rodmaker Title: Second Vice President UNITED COMPANIES LIFE INSURANCE COMPANY By /s/ R. ANDREW DAVIDSON --------------------------------- Name: R. Andrew Davidson Title: Senior Vice President WASHINGTON NATIONAL INSURANCE COMPANY By /s/ C. BRUCE DUNN --------------------------------- Name: C. Bruce Dunn Title: Director of Investments NATIONAL LIFE INSURANCE COMPANY By /s/ R. SCOTT HIGGINS --------------------------------- Name: R. Scott Higgins Title: Vice President - NLIMC EX-27 3 FINANCIAL DATA SCHEDULE
5 9-MOS DEC-31-1996 SEP-30-1996 4,193 0 90,311 1,962 117,967 216,626 44,406 24,238 251,362 74,576 43,377 0 0 74,361 59,048 251,362 464,065 464,065 360,770 360,770 79,499 976 2,796 21,000 8,820 12,180 0 0 0 12,180 1.61 1.61
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