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SECURITIES AND EXCHANGE COMMISSION

Form 10-K

Commission file number 1-11471

Registrant’s telephone number, including area code: (310) 563-2355

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

      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, and (2) has been subject to such filing requirements for the past 90 days.     Yes þ          No o

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein.     Not Applicable þ

      As of March 15, 2002, the aggregate market value of the voting stock held by non-affiliates of the Registrant was: $18,901,873.

      As of March 15, 2002, the number of shares outstanding of the Registrant’s class of common stock was: 8,889,708.

DOCUMENT INCORPORATED BY REFERENCE

      None.

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PART I

      Bell Industries, Inc.’s (“Bell” or the “Company”) operations include computer systems integration; distribution of aftermarket products for recreational vehicles, motorcycles, snowmobiles and powerboats; and specialty electronics manufacturing. Bell employed approximately 600 people at December 31, 2001.

      The systems integration business, the Tech.logix Group (“BTL” or “Systems Integration”), (2001 sales of $130.4 million) is a provider of integrated technology solutions for middle market organizations in the Midwestern and Eastern United States. BTL is headquartered in Indiana and has offices and service facilities in the Midwest and Atlantic regions.

      BTL’s services focus on the design and management of wide scale technology infrastructure solutions. Core service areas include strategic sourcing, product services, technical support, technology integration, and project management. BTL meets clients’ needs by combining a comprehensive offering of value-added services with its expertise in sourcing and distributing microcomputers, network products, computer peripherals, and software.

      BTL’s suppliers include: Compaq, IBM, Hewlett-Packard and Sun Microsystems for personal computers and servers; Microsoft, Symantec, Lotus, Adobe Systems and Novell for software; and Cisco, Citrix, 3Com, Nortel Networks, and Veritas for network-related products. BTL has over 2,000 clients, with three clients (all Fortune 500 companies) accounting for approximately 30% of 2001 BTL revenues.

      Although there are no dominant competitors in BTL’s market due to fragmentation of the industry, BTL competes with companies such as CompuCom Systems, Pomeroy Computer Resources, and Sarcom, as well as a number of smaller regional firms in specialized services. Some of the larger competitors may have greater financial and marketing resources than BTL.

      The Recreational Products Group (“RPG”) (2001 sales of $46.0 million) is a distributor of replacement parts and accessories for recreational and other leisure-time vehicles. RPG supplies these products in the upper Midwestern United States to service departments of dealers and retail stores selling recreational vehicles, snowmobiles, motorcycles, ATV’s, marine products and apparel. RPG also sells to independent repair facilities. For all product groups, RPG operates distribution and administration facilities in Germantown, Wisconsin; St. Paul, Minnesota; and Grand Rapids, Michigan, and maintains a sales office in Brainerd, Minnesota.

      RPG supplies more than 9,000 recreational vehicle-related products, as well as over 9,500 marine items, 10,000 motorcycle and ATV items, 7,000 snowmobile items, and 1,000 apparel products. Major product lines distributed by RPG include Dunlop tires (motorcycle tires), Carefree of Colorado (awnings for RV’s and campers), Reese Products (trailer hitches for all types of vehicles), Fieldsheer Corporation (clothing apparel for cycling), and Johnson Fishing, Inc. (marine motors). RPG has over 4,800 customers, none of which accounts for over 5% of its annual sales. RPG has significant market share in the distribution of recreational vehicle replacement parts and accessories in the upper Midwestern United States.

      RPG faces significant competition from national and regional distributors of after-market products for recreational vehicles, motorcycles, snowmobiles, marine products, and apparel products.

      The J. W. Miller Division (“JWM”) of Bell Industries, located in Gardena, California (2001 sales of $7.2 million), manufactures and distributes over 5,000 different radio frequency (“RF”) standard and surface mount magnetic products. JWM’s RF magnetic products include inductors, coils, and chokes, among others.

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      JWM’s products are sold through national, regional and international distributors directly and through manufacturer’s representatives located in North America, Europe and Asia. JWM’s customers include electronic distributors and manufacturers with its four largest customers representing 47% of its total sales. The majority of JWM’s sales are derived from customers located in North America.

      In July 1999, Bell completed the sale of its Precision Metalcraft Division (“PMD”) to a privately-held company. During 1999, PMD had sales of $6.1 million. PMD, located in Mountain View, California, manufactured high quality, precision metal stamped parts. Its products were sold to original equipment manufacturers and contract manufacturers in a variety of industries including electronic components, computers and related peripheral equipment.

      In January 1999, Bell completed the sale of its Electronics Distribution Group (“EDG”) to Arrow Electronics, Inc. Under Bell’s ownership, EDG sold electronic components to approximately 10,000 customers in North America, including: semiconductors, passive components, connectors, and board-level products. EDG also provided various value-added services. EDG was based in El Segundo, California and marketed electronic components from more than 30 sales facilities located throughout the United States and Canada to a broad base of customers and markets.

      At December 31, 2001, the Company leased 18 facilities, containing approximately 353,000 square feet and owned one facility, containing approximately 20,000 square feet. The facilities utilized by each of the Company’s business segments are set forth in the following table:

      Management believes that these properties are in good condition and suitable for their present use. Generally, the Company’s facilities are fully utilized.

      The Company is involved in litigation which is incidental to its current and discontinued businesses. The resolution of this litigation is not expected to have a material effect on the Company’s financial position.

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      No matters were submitted during the fourth quarter of 2001.

      The Executive Officers of the Registrant are as follows:

(1)	Mr. Edwards was appointed President and Chief Executive Officer in February 1999. From January 1998 to February 1999, he served as Executive Vice President — Finance and Operations, and Chief Financial Officer. Prior to January 1998, Mr. Edwards was Vice President and Chief Financial Officer. He also serves as Chairman of the Board of Directors.
(2)	Mr. Doll was appointed Senior Vice President and Chief Financial Officer in February 2000. From February 1999 to February 2000, he served as Vice President and Chief Financial Officer. From April 1998 to February 1999, he served as Vice President, Finance. From November 1994 to April 1998, Mr. Doll was employed as Vice President and Chief Financial Officer of Predelivery Service Corporation, a former subsidiary of Ford Motor Company.
(3)	Mr. Troy was employed as President and Chief Executive Officer of E & S Management Corporation, a regional property management firm, for the five years prior to his appointment as Vice President in September 1997.
(4)	Mr. Rosen was appointed Vice President and Corporate Controller in May 2001. He was employed in a similar capacity with the Company from December 2000 to May 2001. Prior to December 2000, he was a senior manager with PricewaterhouseCoopers LLP.

PART II

      Bell’s common stock (ticker symbol BI) was previously listed on the New York and Pacific Stock Exchanges. Effective March 13, 2000, Bell’s shares began trading on the American Stock Exchange (AMEX) and ceased trading on the New York Stock Exchange. The following table shows the high, low and closing market prices for the Company’s common stock during the eight most recent quarters.

      Approximate number of record holders of common stock as of March 15, 2002: 1,150.

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(1)	Includes before-tax charge for staff separation and facilities consolidation ($845) and a before-tax charge for settlement costs associated with an executive change-in-control contract ($650) in 2001, before-tax gain on the disposition of a real estate asset ($2,842) and before-tax charge for facilities consolidation and staff relocation costs, asset write-downs and a corporate identity program ($2,405) in 2000, before-tax gain on the disposition of certain real estate assets ($1,497) and a before-tax loss on the disposition of an electronics manufacturing business ($455) in 1999, and before-tax business system and corporate resizing charges ($9,900) in 1998.
(2)	Includes loss on early retirement of debt ($675 or $.07 per share) in 1997.
(3)	Share and per share data have been adjusted to give effect to a 20% stock dividend declared in May 1997.
(4)	Other per share data prior to the 1999 cash distribution dates does not reflect cash distributions totaling $7.00 per share made in June 1999 ($5.70 per share) and December 1999 ($1.30 per share).

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      In addition to historical information, the following discussion and analysis of management contains forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties. The actual results may differ materially from those anticipated in these forward-looking statements.

      The Company’s discussion and analysis of its financial condition and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in accordance with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including the recoverability of tangible and intangible assets, disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. The Company bases its estimates on historical experience and on other relevant assumptions that are believed to be reasonable under the circumstances. Actual results in the future may differ from these estimates.

CRITICAL ACCOUNTING POLICIES

      The Summary of Accounting Policies within the Notes to the Consolidated Financial Statements includes the significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements. The following is a discussion of each of the Company’s critical accounting policies:

      Sales are recognized when products are shipped or when services are provided assuming no significant Company obligations remain and the collection of related receivables is probable. Revenue recognition on product sales is not subject to significant estimates as the Company has not experienced significant product returns. The Company receives volume incentives from certain vendors related to sales activity of certain products that are recognized when deemed earned.

      The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company performs ongoing credit evaluations of its customers. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. Changes in the credit worthiness of customers, general economic conditions and other factors may impact the level of future write-offs.

      The Company periodically reviews inventory items and overall stocking levels to ensure that adequate reserves exist for inventory deemed obsolete or excessive. In making this determination, the Company considers historical stocking levels, recent sales of similar items and forecasted demand for these items. Changes in factors such as customer demand, technology and other matters could affect the level of inventory obsolescence in the future.

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RESULTS OF OPERATIONS

      Results of operations by business segment were as follows (in thousands):

      A summary of comparative operating results data follows:

      Net sales for 2001 decreased 27% to $183.6 million from $251.9 million. The operating loss for 2001 was $2.2 million compared to operating income of $3.6 million in 2000. Operating results for 2001 include pre-tax charges totaling $1.5 million composed of $845,000 of costs related to the strategic repositioning of the Company’s Systems Integration Midwest operations and $650,000 in settlement costs associated with an executive change-in-control contract. Components of the repositioning charge included facilities consolidation costs and asset write-downs in connection with the opening of a new technology center and separation costs. The $845,000 repositioning charge has been included in the operating results of Systems Integration. The 2000 results include pre-tax charges totaling $2.4 million consisting of $1.8 million of realignment costs and $600,000 for costs associated with a corporate identity program. The 2000 results also include a pre-tax gain of $2.8 million from the disposition of a real estate asset related to a previously disposed business.

      Systems Integration sales decreased 31% to $130.4 million in 2001 from $188.9 million in 2000. Excluding the $845,000 repositioning charge that was allocated to this business unit, operating loss was $93,000 in 2001 compared to $1.8 million in operating income, excluding $1.8 million realignment charge allocated to this business unit in 2000. Including the charges, operating loss was $938,000 in 2001 compared to operating income of $10,000 in 2000. The decrease in sales for 2001 is primarily attributable to the challenging economic conditions in the technology sector, which has resulted in businesses curtailing and delaying

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      Recreational Products sales decreased 8% to $46.0 million in 2001 from $49.8 million in 2000 and operating income decreased to $954,000 from $1.7 million. The decrease in sales for 2001 is primarily attributable to challenging economic conditions, which resulted in reduced spending on recreational products. Also contributing to the decline in operating income and margins was a concentrated effort during 2001 to promote certain products by aggressively reducing prices.

      Electronics Manufacturing sales decreased 46% to $7.2 million in 2001 from $13.2 million in 2000 and operating income decreased to $1.6 million from $3.3 million. The decrease in sales and operating income is attributable to the weakness in demand for electronics and telecommunication components throughout the majority of 2001.

      As a percentage of sales, cost of sales for 2001 decreased to 82.9% from 85.3% in 2000. The decrease is primarily attributable to the change to the agency model on Systems Integration transactions for which no cost of sales is recognized, partially offset by lower overall margins on Recreational Products sales resulting from the aggressive price reductions on certain products. Selling and administrative expenses as a percentage of sales increased to 16.3% in 2001 from 12.9% in 2000 due to the overall reduction in sales in 2001 compared to 2000 and the existence of certain fixed costs. The Company’s effective tax rate was 39.5% in both years.

      Net sales for 2000 increased 5% to $251.9 million from $240.4 million in 1999. Operating income decreased to $3.6 million from $8.9 million in 1999. Operating results for 2000 include pre-tax charges totaling $2.4 million consisting of $1.8 million of costs associated with the realignment of the Company’s Midwest operations of its Systems Integration business and $600,000 for costs, included with special items, associated with a corporate identity program. The Midwest realignment charge included separation costs, asset write-downs and other exit costs related to the consolidation of facilities, logistics, and sales and service operations. The $1.8 million realignment charge has been included in the results of Systems Integration. Additionally, the 2000 operating results include $880,000 of costs associated with the Company’s strategic planning and realignment initiatives, included with corporate costs, and a pre-tax gain of $2.8 million, included with special items, from the disposition of a real estate asset related to a previously disposed business. The 1999 results include a pre-tax gain of $1.5 million from the disposition of real estate assets and a pre-tax loss of $455,000 on the disposition of an electronics manufacturing business.

      Systems Integration sales increased 6% to $188.9 million in 2000 from $177.5 million in 1999. Excluding the $1.8 million realignment charge that was allocated to this business unit, operating income was $1.8 million in 2000 compared to $5.7 million in 1999. Including the charge, System Integration recorded operating income of $10,000. The increase in sales during 2000 is primarily attributable to major deployment projects with a large customer during the fourth quarter. The operating results for 2000 were impacted by general economic weakness in the technology sector, as well as continued downward pressure on product margins.

      Recreational Products sales increased slightly to $49.8 million in 2000 from $49.0 million in 1999 while operating income decreased to $1.7 million from $3.0 million. Product mix, continued margin pressures, generally higher selling and administrative expenses, and increased operating costs, primarily fuel and related delivery costs, impacted the 2000 results. Additionally, the 2000 results were adversely affected by warmer weather conditions that resulted in a reduction in snow related products shipments.

      Excluding $6.1 million in sales from a business sold in July 1999, Electronics Manufacturing sales increased 69% to $13.2 million in 2000 from $7.8 million in 1999. Operating income increased to $3.3 million in 2000 from $1.8 million in 1999. The 1999 results include operating income of $485,000 from the sold

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      As a percentage of sales, cost of products sold for 2000 increased to 85.3% from 82.8% in 1999. The increase in cost of products sold as a percentage of sales reflects the continued downward pressure on gross profit margins from product sales at System Integration and Recreational Products. Selling and administrative expenses as a percentage of sales decreased to 12.9% in 2000 from 13.3% in 1999 due to a full year of reduced corporate structure costs partially offset by costs associated with the Company’s strategic planning and realignment initiatives. The Company’s effective tax rate was 39.5% in both years.

FINANCIAL CONDITION

      Selected financial condition data are set forth in the following table (dollars in thousands except per share amounts):

      Net cash provided by operating activities was $597,000 in 2001 compared with $7.0 million in 2000. The cash flow from operating activities in 2001 reflects cash collected for accounts receivable offset by payments of accounts payable. The decrease in receivables was primarily due to the 49% decline in revenues during the fourth quarter of 2001 as compared to the prior year. Accounts payable was also significantly lower as of the end of 2001 as a result of reduced inventory purchases in light of the reduced sales levels. Cash used in investing activities during 2001, totaling $4.8 million, included expenditures for a new technology center in the Midwest, a client dedicated technology support center in the Atlantic region, expenditures on information technology, and the purchase of a business.

      The cash flow from operating activities in 2000 is attributable to reduced inventory and accounts receivable. Favorable collection results during the fourth quarter of 2000 contributed to the Company’s strong cash position as of December 31, 2000. Cash flows from investing activities during 2000 included approximately $3.0 million from the sale of a real estate asset. Approximately $2.9 million in cash was also utilized to purchase 859,900 shares under the Company’s stock repurchase program during 2000.

      The Company believes that sufficient cash resources exist to support requirements for its operations and commitments through available cash, bank borrowings and cash generated from operations. Capital expenditures during 2001 were in excess of $4.0 million. The Company currently expects that its capital expenditures in 2002 will be in a range between $1.5 million and $2.0 million, at a level consistent with 1999 and 2000. The Company has a line of credit of $10.0 million with its primary lender expiring in May 2004. Management believes that this facility will be adequate to support cash requirements and believes that it has access to additional financing as necessary.

      Not applicable.

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Item 8.     Financial Statements and Supplementary Data

INDEX TO FINANCIAL STATEMENTS

      The financial data included in the financial statement schedule should be read in conjunction with the consolidated financial statements. All other schedules have been omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.

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REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and

      In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Bell Industries, Inc. and its subsidiaries at December 31, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

	PRICEWATERHOUSECOOPERS LLP

Los Angeles, California

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CONSOLIDATED STATEMENT OF OPERATIONS

See Accompanying Notes to Consolidated Financial Statements.

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CONSOLIDATED BALANCE SHEET

See Accompanying Notes to Consolidated Financial Statements.

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CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

See Accompanying Notes to Consolidated Financial Statements.

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CONSOLIDATED STATEMENT OF CASH FLOWS