Bell Industries Reports Fourth Quarter, 2002 Results.

Business Editors

EL SEGUNDO, Calif.--(BUSINESS WIRE)--Feb. 18, 2003

Bell Industries, Inc. (AMEX:BI) today reported fourth quarter and 2002 financial results.

Net sales for the three months ended December 31, 2002, totaled $26.9 million, compared with $32.0 million in the comparable prior-year period. Bell sustained a net loss of $1.1 million, or $0.13 per share, versus a loss of $636,000, or $0.07 per share, in the 2001 fourth quarter.

Sales at Bell's Tech.logix Group (BTL), the company's largest operating unit, fell to $17.7 million in the last quarter of 2002 primarily due to decreased technology product deliveries. This decline was the principal factor in the overall reduction in net sales for Bell. BTL recorded net sales of $22.4 million in the corresponding 2001 period. The operating loss for the 2002 fourth quarter totaled $951,000, compared with a loss of $465,000 a year ago. Results for the fourth quarter, historically BTL's weakest interim period, were also impacted by start up costs associated with strategic sourcing engagements for certain new clients.

"The economic environment and continued sluggish spending by businesses in our markets adversely affected the performance of BTL throughout 2002," said Tracy A. Edwards, chairman, president and chief executive officer of Bell Industries. "In addition, product sales have been negatively impacted as major suppliers increasingly market their products directly to end-user customers, rather than utilizing traditional distribution channels served by BTL.

"In this challenging economy, our 2002 results were dramatically impacted by the dual effects of declining contributions from technology product sales and continued costs associated with building our strategic sourcing practices," Edwards said. "These investments, which are beginning to make positive contributions to BTL's services revenue as we enter 2003, are consistent with our long term strategy to focus on technology lifecycle services. Nevertheless, we recognize continued aggressive business development efforts and strategic investments to integrate new client engagements will be required to fully leverage and optimize Bell's infrastructure and capabilities. While the cost of these initiatives will adversely impact near term operating results, we are optimistic that, long term, these measures will provide effective technology solutions for our clients and enhanced shareholder value.

"In line with the progress we've made in developing relationships and alliances that expand market opportunities for BTL, we added more than 200 employees in late 2002 and early 2003 to fulfill new outsourcing engagements," Edwards said. "While the technology market continues to be very challenging, we believe these new relationships are key steps toward BTL's long term growth objectives." Including these recent additions, BTL currently has more than 600 employees.

Sales of Bell's Recreational Products Group (RPG) totaled $7.9 million for the three months ended December 31, 2002, compared with $8.4 million in the prior-year period. RPG incurred an operating loss of $382,000 in the 2002 fourth quarter, compared with an operating loss of $266,000 in the prior-year period. As previously reported, operating results during the fourth quarter of 2002 were impacted by expenses related to a facility relocation that was completed during the quarter.

At J.W. Miller, Bell's electronics manufacturing operation, sales of $1.3 million were slightly higher than the prior-year period. However, operating income decreased to $81,000 from $223,000 last year, due to additional inventory reserves, shifts in product sales mix, and pricing pressures as a result of continued weakness in the electronics sector.

For the year ended December 31, 2002, net sales for Bell Industries totaled $140.8 million, compared with $183.6 million in 2001. The company incurred a net loss of $3.3 million, or $0.38 per share, for the 2002 year, which included a write-off of $2.1 million, equal to $1.3 million after tax, or $0.14 per share, of goodwill, following the adoption of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets." The effect of this accounting change is reflected in operating results as of January 1, 2002. For the 2001 year, Bell sustained a net loss of $1.0 million, or $0.12 per share, which included special pre-tax charges of $1.5 million.

The company continues to maintain a strong balance sheet with no bank debt. At December 31, 2002, Bell had net working capital of $19.6 million and cash of $10.1 million. Shareholders' equity totaled $25.5 million, or $3.05 per share.

Bell's primary business, the Tech.logix Group, provides information technology lifecycle services, including strategic sourcing, technology integration, and product support, principally to middle market companies. Bell also distributes after-market parts and accessories to the recreational vehicle market and manufactures specialized products for the computer and electronics industry.

Certain matters discussed in this news release are forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from current trends. These include, but are not limited to, success in developing new alliances, realizing business opportunities as the economy improves and other factors described in the company's public filings from time to time.

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

                              Three months ended      Year ended
                                  December 31,        December 31,
                                 2002     2001      2002       2001

Net sales                       $26,890  $32,022  $140,797   $183,621
Cost of sales                    21,747   26,023   115,141    152,163
Selling and administrative        7,040    7,130    29,216     32,144
Interest, net                       (36)     (80)     (200)      (460)
Special items, net(1)(2)              -        -         -      1,495
                                 28,751   33,073   144,157    185,342

Loss before income taxes and
 cumulative effect of
 accounting change               (1,861)  (1,051)   (3,360)    (1,721)
Income tax benefit                 (736)    (415)   (1,327)      (680)
Loss before cumulative effect
 of accounting change            (1,125)    (636)   (2,033)    (1,041)
Cumulative effect of
 accounting change, net of
 income tax benefit of $836           -        -    (1,280)         -
Net loss                        $(1,125)   $(636)  $(3,313)   $(1,041)

Share and per share data
Basic and diluted:
 Loss before cumulative effect
  of accounting change            $(.13)   $(.07)    $(.24)     $(.12)
 Net loss                         $(.13)   $(.07)    $(.38)     $(.12)
Weighted average common stock:
 Basic                            8,404    8,876     8,743      8,854
 Diluted                          8,404    8,876     8,743      8,854

OPERATING RESULTS BY BUSINESS SEGMENT

Net sales
 Systems Integration            $17,726  $22,377   $90,568   $130,395
 Recreational Products            7,850    8,394    44,639     46,044
 Electronics Manufacturing        1,314    1,251     5,590      7,182
                                $26,890  $32,022  $140,797   $183,621

Operating income (loss)
 Systems Integration(1)           $(951)   $(465)  $(2,204)     $(938)
 Recreational Products             (382)    (266)      819        954
 Electronics Manufacturing           81      223       489      1,590
 Special items, net(2)                -        -         -       (650)
 Corporate costs                   (645)    (623)   (2,664)    (3,137)
                                 (1,897)  (1,131)   (3,560)    (2,181)

Interest, net                        36       80       200        460
Income tax benefit                  736      415     1,327        680
Cumulative effect of
 accounting change, net               -        -    (1,280)         -
Net loss                        $(1,125)   $(636)  $(3,313)   $(1,041)

   (1) Systems Integration operating results for the year ended
December 31, 2001, include a pre-tax charge of $845,000 for staff
separation and facilities consolidation costs related to the company's
strategy implementation and realignment efforts.
   (2) Corporate related special item for the year ended December 31,
2001, represents settlement costs associated with an executive
change-in-control contract.



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

                                                       December 31,
                                                      2002     2001
ASSETS
Current assets:
 Cash and cash equivalents                           $10,079  $10,418
 Accounts receivable, net                             15,478   17,827
 Inventories                                          12,349   13,608
 Prepaid expenses and other                            3,051    3,879
  Total current assets                                40,957   45,732

Fixed assets, net                                      5,436    6,319
Goodwill                                                   -    2,116
Other assets                                           2,997    2,739
                                                     $49,390  $56,906

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
 Accounts payable                                    $10,687  $11,833
 Accrued payroll and liabilities                      10,661   12,585
  Total current liabilities                           21,348   24,418

Long-term liabilities                                  2,496    2,810

Shareholders' equity                                  25,546   29,678
                                                     $49,390  $56,906