Bell Industries Reports Improved Operating Results for 2004 First Quarter.

Business Editors

EL SEGUNDO, Calif.--(BUSINESS WIRE)--May 6, 2004

Bell Industries, Inc. (AMEX:BI) today reported improved net revenues and operating results in each of its business units for the first quarter ended March 31, 2004.

Consolidated net revenues for the quarter rose seven percent to $34.4 million from $32.1 million in the prior-year period. Bell's loss before income taxes was reduced by 46 percent to $699,000 from $1.3 million in the 2003 first quarter. Net loss for the 2004 first quarter totaled $699,000, or $0.08 per share, compared with a net loss of $912,000, or $0.11 per share, a year earlier when the company recorded an income tax benefit of $391,000.

"We are pleased to have achieved improved results at each of our business units during Bell's first quarter, which is seasonally one of the weakest periods of the year," said Tracy A. Edwards, chairman, president and chief executive officer of Bell Industries. "While results include our continuing commitment and investments to expand business development efforts and better position our operations for greater market penetration, our cost containment efforts translated to a six percent overall reduction in selling and administrative expenses compared with a year ago and helped to keep the company moving in the direction of returning to profitability."

Bell's Tech.logix Group (BTL), the company's largest operating unit, reported a five percent increase in net revenues to $20.8 million in the 2004 first quarter from $19.8 million in the year-ago period. BTL narrowed its operating loss by 43 percent for the current first quarter to $563,000 from $985,000 a year earlier.

As expected, BTL's comparative results were adversely affected by a significant deployment project in the corresponding prior-year period and the previously announced transition to end an outsourcing engagement in the current year quarter. Accordingly, services revenues in the current first quarter were lower at $8.3 million, compared with $8.5 million in the 2003 first quarter. The company said the impact on the current period was offset, in part, by new business acquired since last year's first quarter.

"While corporate expenditures on technology are still far from robust, we are starting to see more consistent IT hardware spending," Edwards said. "As the economic environment improves and more mid-sized organizations eventually move toward growth, we believe that BTL, with its strengthened leadership and sales team, is well positioned to help these corporations more effectively and efficiently manage their IT infrastructure needs."

Bell's Recreational Products Group reported an increase in net revenues of eight percent to $11.5 million for the 2004 first quarter from $10.6 million in first quarter of 2003. Increased demand, the addition of new sales people, and a stronger snow season in the northern Midwest this year contributed to the increase in revenues. Operating income improved to $106,000 from $61,000 a year earlier.

Bell's electronic components operation, J.W. Miller, achieved a 32 percent increase in sales to $2.1 million from $1.6 million a year earlier, reflecting higher industry demand for the three months ended March 31, 2004. Operating income advanced to $438,000 from $305,000 last year as a result of increased sales and gross margin contribution.

At March 31, 2004, Bell continued to maintain a strong balance sheet with no bank debt and net working capital of $17.5 million and cash of $7.2 million. Shareholders' equity totaled $20.9 million, or $2.50 per share, at March 31, 2004.

Bell's primary business, the Tech.logix Group, provides information technology lifecycle services, including planning, product sourcing, migration, support, and disposal services. Recurring support services include help desk, depot, and on-site expertise for desktop and mobile devices, business software applications, and network infrastructures. Bell also distributes after-market parts and accessories to the recreational vehicle market. In addition, Bell manufactures and distributes a variety of standard and custom magnetic components used in electronic applications for computer, medical and telecommunication equipment.

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, the prospects for a stabilizing technology market and increased corporate spending, returning BTL to profitability, decreased margins due to price competition, delays and costs associated with new client engagements, the effectiveness of business development efforts, realizing business opportunities as the economy improves, the company's ability to achieve overall profitability, the future realization of tax benefits, 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 March 31                  2004         2003
---------------------------                  ----         ----
Net revenues:
  Products                                 $26,095      $23,568
  Services                                   8,333        8,509
                                          --------     --------
                                            34,428       32,077
                                          --------     --------
Costs and expenses
  Cost of products sold                     21,415       19,007
  Cost of services provided                  6,732        6,972
  Selling and administrative                 7,010        7,423
  Interest, net                                (30)         (22)
                                          --------     --------
                                            35,127       33,380
                                          --------     --------

Loss before income taxes                      (699)      (1,303)
Income tax benefit                                         (391)
                                          --------     --------
Net loss                                     $(699)       $(912)
                                          ========     ========

Basic and diluted share data
  Net loss per share                         $(.08)       $(.11)
                                          ========     ========
  Weighted average common stock              8,371        8,367
                                          ========     ========


OPERATING RESULTS BY BUSINESS SEGMENT
Net revenues:
  Technology Solutions
     Products                              $12,442      $11,309
     Services                                8,333        8,509
                                          --------     --------
                                            20,775       19,818
  Recreational Products                     11,520       10,640
  Electronic Components                      2,133        1,619
                                          --------     --------
                                           $34,428      $32,077
                                          ========     ========

Operating income (loss):
  Technology Solutions                       $(563)       $(985)
  Recreational Products                        106           61
  Electronic Components                        438          305
  Corporate costs                             (710)        (706)
                                          --------     --------
                                              (729)      (1,325)
Interest, net                                   30           22
Income tax benefit                                          391
                                          --------     --------
Net loss                                     $(699)       $(912)
                                          ========     ========


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

                                           March 31,   December 31,
                                             2004         2003
                                             ----         ----
ASSETS

Current assets:
   Cash and cash equivalents                $7,183      $12,203
   Accounts receivable, net                 22,854       16,164
   Inventories                              12,500       11,286
   Prepaid expenses and other                  846          689
                                          --------     --------
       Total current assets                 43,383       40,342
                                          --------     --------

Fixed assets, net                            3,976        4,206
Other assets                                 1,991        2,085
                                          --------     --------
                                           $49,350      $46,633
                                          ========     ========


LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Accounts payable                        $17,229      $12,882
   Accrued payroll and liabilities           8,634        9,634
                                          --------     --------
       Total current liabilities            25,863       22,516
                                          --------     --------

Long-term liabilities                        2,573        2,520

Shareholders' equity                        20,914       21,597
                                          --------     --------

                                           $49,350      $46,633
                                          ========     ========