EX-99.1 3 a33160exv99w1.htm EXHIBIT 99.1 exv99w1
 

Exhibit 99.1
(BELL INDUSTRIES)
CONTACT:
Bell Industries, Inc.
Kevin Thimjon, Chief Financial Officer
317-704-6000
PondelWilkinson Inc.
Roger Pondel/Angie Yang
310-279-5980
BELL INDUSTRIES REPORTS 2007 SECOND QUARTER RESULTS
     Indianapolis, IN — August 14, 2007 — Bell Industries, Inc. (AMEX:BI) today reported financial results for its three and six-month periods ended June 30, 2007.
     Net revenues from continuing operations totaled $56.0 million and $102.1 million for the 2007 second quarter and first half, respectively. This compares with $31.2 million and $56.1 million, respectively, for the 2006 three and six-month periods.
     Included in revenues for the 2007 quarter was $23.4 million, attributable to a full three month’s contribution from SkyTel, which was acquired in January 2007 and has become the company’s largest operating unit. Including depreciation, amortization, and accretion expense totaling $1.0 million during the current second quarter, operating income equaled $9,000.
     At Bell’s Technology Solutions division, net revenues increased to $18.5 million in the 2007 second quarter from $16.7 million in the prior-year period. Product revenues were relatively stable at $9.7 million for the three months ended June 30, 2007 versus $9.8 million for the year-ago period. Services revenues rose to $8.8 million from $6.9 million in the 2006 second quarter, primarily reflecting revenues from a customer relationship management engagement with SunRocket, Inc., which commenced in the second half of 2006.
     In July 2007, Bell Industries received notification from SunRocket that it was ceasing operations and accordingly would no longer be sending customer calls to Bell’s facility in Springfield, MO. In response to the unexpected actions of the customer, Bell took immediate measures to mitigate potential losses related to the Springfield call center operations and recorded an allowance of $2.3 million for the 2007 second quarter, which fully reserves the balance owed by SunRocket at June 30, 2007. Including the $2.3 million reserve, Bell’s Technology Solutions division sustained an operating loss of $2.8 million, compared with an operating loss of $458,000 in the 2006 second quarter.
     Subsequent to SunRocket’s ceasing operations and the closure of the Springfield call center, Bell Industries reached an agreement with an unrelated company to assume the Springfield lease effective August 1, 2007, and received $900,000 in proceeds from the sale of certain assets at the facility.
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Bell Industries, Inc.
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     Net revenues at Bell’s Recreational Products Group (RPG) totaled $14.0 million for the 2007 second quarter, compared with $14.5 million in the prior-year period. Operating income for the current second quarter was impacted by higher selling, general and administrative expenses associated with the addition of business development resources and increased freight costs, and totaled $593,000. In the 2006 second quarter, RPG posted operating income of $958,000.
     Bell Industries sustained a net loss in the 2007 second quarter of $4.8 million, or $0.56 per share. This compares with net income of $5.2 million, or $0.61 per diluted share, in the prior-year second quarter, substantially all of which is attributed to a gain on the sale of the assets of J.W. Miller, its smallest business unit at the time. For the year-to-date period, the company incurred a net loss of $6.3 million, or $ 0.74 per share. In the 2006 first half, Bell reported net income of $3.9 million, or $0.45 per diluted share, which included income from discontinued operations and a gain on sale of discontinued operations, net of tax, of $5.7 million, equal to $0.67 per diluted share.
     Late in the 2007 second quarter, the company announced it had entered into stock purchase agreements with Sprint Nextel Corporation under which Sprint Nextel agreed to acquire certain assets of Bell for approximately $13.5 million in cash. The assets represent stock ownership interests in two entities that hold Federal Communications Commission (FCC) licenses, acquired by Bell as part of the SkyTel acquisition. The purchase agreements are subject to FCC approval and transfer of the licenses and are expected to close in October 2007. The company said that the assets being sold were not integral to SkyTel’s core business operations and that the transaction would not impact any services provided to SkyTel customers.
About Bell Industries, Inc.
     Bell Industries is comprised of three diversified operating units, Bell’s Technology Solutions business, SkyTel and its Recreational Products Group. The company’s Technology Solutions business offers a comprehensive portfolio of customizable and scalable technology solutions ranging from customer relationship management (CRM) and managed technology services to reverse logistics and mobile/wireless solutions. SkyTel provides nationwide wireless data and messaging services, including email, interactive two-way messaging, wireless telemetry services and traditional text and numeric paging. Recreational Products Group is a wholesale distributor of aftermarket parts and accessories for the recreational vehicles and other leisure-related vehicle market, including marine, snowmobile, cycle and ATV
Forward-Looking Statements
     This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements, including, but not limited to the company’s ability to successfully complete stock purchase agreements with Sprint Nextel Corporation, are based upon current expectations and speak only as of the date hereof. Actual results may differ materially and adversely from those expressed in any forward-looking statements as a result of various factors and uncertainties, including
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Bell Industries, Inc.
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uncertainties as to the nature of the company’s industry, including changing customer demand, the impact of competitive products and pricing, dependence on existing management and general economic conditions. Bell Industries’ Annual Report on Form 10-K, recent and forthcoming Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other SEC filings discuss some of the important risk factors that may affect the business, results of operations and financial condition. The company undertakes no obligation to revise or update publicly any forward-looking statements for any reason.
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Bell Industries, Inc.
Consolidated Operating Results
(In thousands, except per share data)
(Unaudited)
                                 
    Three months ended     Six months ended  
    June 30     June 30  
    2007     2006     2007     2006  
 
Net revenues
                                
Products
   $ 23,708     $ 24,302     $ 43,064     $ 41,395  
Services
     32,242       6,859       59,083       14,729  
 
                        
Total net revenues
     55,950       31,161       102,147       56,124  
 
                        
Costs and expenses
                                
Cost of products sold
     19,261       19,466       35,589       33,156  
Cost of services provided
     21,569       5,220       39,406       11,877  
Selling, general and administrative expenses
     19,316       7,481       34,438       14,015  
Interest expense (income), net
     624       (134 )     994       (209 )
Gain on sale of assets
     —       —       (1,976 )     —  
 
                        
Total costs and expenses
     60,770       32,033       108,451       58,839  
 
                        
 
                                
Loss from continuing operations before income taxes
     (4,820 )     (872 )     (6,304 )     (2,715 )
Income tax expense (benefit)
     8       (892 )     31       (877 )
 
                        
(Loss) income from continuing operations
     (4,828 )     20       (6,335 )     (1,838 )
 
                                
Income from discontinued operations, net of tax
     —       39       —       577  
Gain on sale of discontinued operations, net of tax
     —       5,153       —       5,153  
 
                        
Discontinued operations, net of tax
     —       5,192       —       5,730  
 
                        
 
                                
Net (loss) income
   $ (4,828 )   $ 5,212     $ (6,335 )   $ 3,892  
 
                        
 
                                
Basic and diluted share and per share data
                                
(Loss) income from continuing operations
   $ (0.56 )   $ —     $ (0.74 )   $ (0.22 )
 
                        
Discontinued operations
   $ —     $ 0.61     $ —     $ 0.67  
 
                        
Net (loss) income
   $ (0.56 )   $ 0.61     $ (0.74 )   $ 0.45  
 
                        
Weighted average common shares outstanding (basic)
     8,629       8,565       8,615       8,564  
 
                        
Weighted average common shares outstanding (diluted)
     8,629       8,593       8,615       8,590  
 
                        
 
                                
 
 
                                
OPERATING RESULTS BY BUSINESS SEGMENT
                                
Net revenues
                                
Technology Solutions
                                
Products
   $ 9,744     $ 9,803     $ 18,989     $ 16,239  
Services
     8,799       6,859       18,427       14,729  
 
                        
 
     18,543       16,662       37,416       30,968  
 
                                
SkyTel
     23,442       —       40,094       —  
Recreational Products
     13,965       14,499       24,637       25,156  
 
                        
Total net revenues
   $ 55,950     $ 31,161     $ 102,147     $ 56,124  
 
                        
 
                                
Operating (loss) income
                                
Technology Solutions
   $ (2,791 )   $ (458 )   $ (3,839 )   $ (1,325 )
SkyTel
     9       —       714       —  
Recreational Products
     593       958       214       1,216  
Corporate costs
     (2,007 )     (1,506 )     (4,375 )     (2,815 )
 
                        
Total operating loss
     (4,196 )     (1,006 )     (7,286 )     (2,924 )
 
                                
Gain on sale of assets
     —       —       (1,976 )     —  
Interest expense (income), net
     624       (134 )     994       (209 )
Income tax expense (benefit)
     8       (892 )     31       (877 )
 
                        
Loss from continuing operations
   $ (4,828 )   $ 20     $ (6,335 )   $ (1,838 )
 
                        

 

 

Bell Industries, Inc.
Consolidated Condensed Balance Sheet
(In thousands)
                 
    June 30,     December 31,  
    2007     2006  
 
    (Unaudited)          
ASSETS
                
Current assets:
                
Cash and cash equivalents
   $ 1,374     $ 3,637  
Accounts receivable
     27,069       16,835  
Inventories
     10,479       9,548  
Assets held for sale
     12,526       —  
Prepaid expenses and other
     6,925       2,761  
 
            
Total current assets
     58,373       32,781  
Fixed assets, net
     17,144       3,553  
Intangible assets, net
     2,977       —  
Other assets
     2,765       1,641  
Acquisition deposit
     —       3,450  
Acquisition related costs
     —       1,689  
 
            
Total assets
   $ 81,259     $ 43,114  
 
            
 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
 
                
Current liabilities:
                
Floor plan payables
   $ 287     $ 213  
Revolving credit facility
     12,912       —  
Accounts payable
     19,991       12,419  
Deferred revenue
     6,928       —  
Accrued payroll
     3,042       1,922  
Accrued other liabilities
     8,612       6,684  
 
            
Total current liabilities
     51,772       21,238  
 
                
Convertible note
     8,554       —  
Other long-term liabilities
     7,399       3,622  
 
            
Total liabilities
     67,725       24,860  
 
                
Commitments and contingencies
                
 
                
Shareholders’ equity
     13,534       18,254  
 
            
 
                
Total liabilities and shareholders’ equity
   $ 81,259     $ 43,114