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Bell Micro Completes Investigation

SAN JOSE, Calif. -- Bell Microproducts Inc.
(NASDAQ:BELM) today reported the completion of its independent investigation of historical stock option practices. As previously announced, a special committee of the Bell Microproducts Inc. board of directors was appointed to conduct an evaluation of the Company's stock option practices with the assistance of independent counsel and independent accounting consultants.

The special committee has completed its independent investigation and has reached a conclusion that available evidence does not adequately support the Company's use of some stock option grant dates, for financial accounting purposes. As a result, different measurement dates should be used to compute compensation expense for the affected grants than those that were actually used in preparing the Company's financial statements. However, the Company notes that:

  • The special committee did not conclude that there was intentional
    misconduct or fraud associated with granting and processing of stock
    options during the review period (January 1, 1996 - December 31, 2006).
  • The Board of Directors of Bell Microproducts, including the members of
    the special committee, reiterated its commitment to and support for the
    Company's current management.

    The special committee findings are currently being reviewed by the Company, and are subject to review by the Company's independent auditor. The Company has not determined the amount of noncash charges for compensation expense and related cash and non-cash tax adjustments that will be recorded. As previously announced, the Company will be restating its historical financial statements for other reasons; accounting adjustments pertaining to stock options will also be reflected in the restated financial statements. Bell Microproducts is committed to filing its periodic reports as soon as possible after the completion of the restatement.

    Bell Microproducts has received waivers until September 30, 2007 under the Company's credit agreements with Wachovia Capital Finance Corporation, Wachovia Bank, National Association and the Teachers' Retirement Systems of Alabama, with respect to the delivery of certain quarterly information and documentation to its lenders.

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