Bell Industries Announces Second Quarter Operating Results, Proposed Sale of Graphics Imaging Group.

EL SEGUNDO, Calif.--(BUSINESS WIRE)--July 16, 1998--Bell Industries, Inc. (NYSE:BI) said today that continued soft sales in its Electronics Group impacted earnings for the second quarter ended June 30, 1998.

For the most recent three months, the company reported sales of $210 million and net income of $1.9 million, or $.20 per share on a diluted basis. Bell reported sales of $213 million and net income of $2.4 million, or $.26 per share, in the first quarter of 1998. For the 1997 second quarter, Bell's sales were $234 million and net income was $3.5 million, or $.37 per share.

For the six months ended June 30, Bell reported sales of $424 million in 1998 and $452 million in 1997; net income was $4.4 million, or $.46 per share, in 1998 and $3.6 million, or $.39 per share, in 1997. Operating results in 1997 included a special before-tax charge of $4.1 million (after-tax approximately $2.2 million, or $.24 per share), and an extraordinary charge of $675,000 ($.07 per share), both recorded during the first quarter of the prior year.

The company also announced it has signed a letter of intent to sell its Graphics Imaging Group to PrimeSource Corporation (Nasdaq NM:PSRC), a New Jersey-based distributor and systems integrator serving the printing, publishing and graphic arts industries. Terms of the proposed sale were not disclosed. The transaction is subject to customary due diligence and is anticipated to close in approximately 60 days. The Graphics Imaging Group recorded sales of approximately $156 million in 1997.

Gordon Graham, president and chief executive officer of Bell, said, "The proposed sale of the graphics business represents a significant step in our overall strategy to effect greater efficiencies throughout the company and will enable us to better focus on our core electronics distribution business. The anticipated proceeds will be used to reduce debt and for general corporate purposes."

In commenting on the electronics business, which represents approximately 75% of Bell's annual sales, Graham stated, "Worldwide market conditions in the electronics distribution industry, including fundamental changes in customer buying patterns, are impacting demand and gross margins. Accordingly, we have developed and have begun to execute a plan that will streamline our management processes, realign our customer support systems, and resize our operations in line with current industry conditions. In view of the expected sale of our Graphics Imaging Group and conditions in the electronics industry, we will be aggressively reducing overhead expenses in the areas of information systems, administration, and operations support."

Graham said that during the second quarter, Bell completed, on schedule, the consolidation of all its electronics distribution centers into a new 250,000-square-foot, state-of-the-art facility in Ontario, California. He said the new center is enabling the company to provide faster and more efficient delivery services to Bell's customers nationwide. Bell also has launched a number of new programs, including a company-wide technical sales training program, and is intensifying its sales efforts in value-added services.

At June 30, 1998, the company's working capital was $187 million; the current ratio was 2.7:1; long-term liabilities represented 50 percent of total capitalization; and shareholders' equity totaled $157 million, or $16.64 per share.

Bell Industries is a leading national distributor of products for the electronics, computer, and other industrial markets.

Certain matters discussed in this press release contain forward looking information that involves risks and uncertainties that could cause actual results to differ materially from current trends. These include, but are not limited to, the effect of industry conditions caused by changes in product supply and demand, competition, benefits to be derived from new marketing programs, and other risks. -0-

                        Bell Industries, Inc.
                    Consolidated Operating Results
                (In thousands, except per share data)
                             (Unaudited)


                           Three months ended     Six months ended
                                 June 30,              June 30,
                            1998       1997        1998       1997

Net sales                $ 210,336  $ 233,779   $ 423,751  $ 452,282
Costs and expenses -
  Cost of products sold    168,243    184,787     338,058    355,607
  Selling and
   administrative           32,528     36,940      65,491     73,747
  Depreciation and
   amortization              2,742      2,593       5,345      5,160
  Interest                   3,215      2,908       6,675      5,589
  Integration charge                                           4,100
                         =========  =========   =========  =========
                           206,728    227,228     415,569    444,203
                         =========  =========   =========  =========

Income before income
 taxes and extraordinary
 loss                        3,608      6,551       8,182      8,079
Income tax provision         1,697      3,082       3,830      3,781
Income before
 extraordinary loss          1,911      3,469       4,352      4,298
Loss on early retirement
 of debt                                                         675
Net income               $   1,911  $   3,469   $  4,352   $   3,623

SHARE AND PER SHARE DATA
Basic
  Income before
   extraordinary loss    $     .20  $     .38   $    .47   $     .47
  Net income             $     .20  $     .38   $    .47   $     .40
  Weighted average
   common shares             9,383      9,113      9,357       9,091

Diluted
  Income before
   extraordinary loss    $     .20  $     .37   $    .46   $     .46
  Net income             $     .20  $     .37   $    .46   $     .39
  Weighted average
   common shares             9,475      9,321      9.460       9,355

Operating results by
 business segment
Net sales
  Electronics            $ 158,933  $ 180,009   $ 327,424  $ 350,779
  Graphics Imaging          36,343     40,160      71,474     78,494
  Recreational Products     15,060     13,610      24,853     23,009
                         =========  =========   =========  =========
                         $ 210,336  $ 233,779   $ 423,751  $ 452,282
                         =========  =========   =========  =========
Operating income
  Electronics (1)         $  6,773  $  10,161   $  16,594  $  15,598
  Graphics Imaging           1,643      1,012       2,654      2,244
  Recreational Products      1,504      1,211       1,908      1,421
                          --------  ---------   ---------  ---------
                             9,920     12,384      21,156     19,263
Corporate costs             (3,097)    (2,925)     (6,299)    (5,595)
Interest                    (3,215)    (2,908)     (6,675)    (5,589)
Income tax provision        (1,697)    (3,082)     (3,830)    (3,781)
Income before
 extraordinary loss      $   1,911  $   3,469   $   4,352  $   4,298


NOTE:

     (1) Results for the six months ended June 30, 1997 include
before-tax special charge of $4.1 million (after-tax $2.2 million or
$.24 per share) for costs associated with the integration of Bell and
Milgray.


                        Bell Industries, Inc.
                 Condensed Consolidated Balance Sheet
                            (In thousands)
                             (Unaudited)


                                  June 30,              December 31,
                                    1998                    1997

ASSETS

Current assets:
   Cash and cash equivalents    $   10,629              $   5,377
   Accounts receivable, net        115,072                120,900
   Inventories                     157,111                173,801
   Prepaid expenses and other       11,387                  8,990
       Total current assets        294,199                309,068

Properties, net                     44,374                 42,079
Goodwill                            71,248                 72,758
Other assets                         9,395                  7,328
                                ==========              =========
                                $  419,216              $ 431,233
                                ==========              =========

Liabilities and Shareholders' Equity

Current liabilities:
   Accounts payable             $   69,625              $  67,121
   Accrued payroll and
    liabilities                     28,975                 26,435
   Current portion of
    long-term liabilities            8,750                  7,500
       Total current
        liabilities                107,350                101,056

Long-term liabilities              155,355                178,825
Shareholders' equity               156,511                151,352
                                ==========              =========
                                $  419,216              $ 431,233
                                ==========              =========

CONTACT: Bell Industries, Inc.

Gordon Graham or Tracy A. Edwards, 310/563-2300

or

Pondel Parsons & Wilkinson

Roger S. Pondel, 310/207-9300