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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

        [X]       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the fiscal year ended December 31, 1999

                                       OR

        [ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
          For the transition period from ____________ to ____________.

                         Commission file number: 0-21528

                             BELL MICROPRODUCTS INC.
             (Exact name of registrant as specified in its charter)

           California                                             94-3057566
  (State or other jurisdiction                               (I.R.S. Employer
of incorporation or organization)                         Identification Number)

              1941 Ringwood Avenue, San Jose, California 95131-1721
           (Address of principal executive office, including zip code)

       Registrant's telephone number, including area code: (408) 451-9400

        Securities registered pursuant to Section 12(b) of the Act: None.

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

                          Common Stock, $.01 par value

     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  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                             Yes [X]  No [ ]

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best  of  the  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [ ]

     The aggregate  market value of the voting stock held by  non-affiliates  of
the registrant, as of March 15, 2000, was approximately  $119,432,070 based upon
the last sale price reported for such date on the Nasdaq  National  Market.  For
purposes  of this  disclosure,  shares  of Common  Stock  held by  officers  and
directors  of the  Registrant  have been  excluded  because  such persons may be
deemed to be affiliates. This determination is not necessarily conclusive.

     The number of shares of Registrant's  Common Stock  outstanding as of March
15, 2000 was 9,345,747.

                  DOCUMENTS INCORPORATED BY REFERENCE:

     Portions of the definitive Proxy Statement for the Company's Annual Meeting
of  Shareholders  to be held on May 11, 2000 are  incorporated by reference into
Part III of this Form 10-K

     Index of Exhibits appears on Pages 43, 44 and 45.

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<PAGE>
                                 PART I

ITEM 1:  Business

     Founded  in  1987,  Bell  Microproducts  Inc.  and  its  subsidiaries  (the
"Company")  markets and distributes a select group of semiconductor and computer
products to original equipment  manufacturers ("OEMs") and value-added resellers
("VARs").   Semiconductor   products  include  memory,  logic,   microprocessor,
peripheral and specialty  components.  Computer  products include disk, tape and
optical drives and subsystems,  drive  controllers,  storage systems,  monitors,
board-level  products  and  computers.  The Company  also  provides a variety of
value-added  services to its customers,  including  subsystem testing,  software
loading,  mass storage and computer systems  integration,  disk drive formatting
and  testing,  and the  packaging  of  electronic  component  kits  to  customer
specifications.

     When used in this report, the words "expects," "anticipates,"  "estimates,"
"intends"  and similar  expressions  are  intended  to identify  forward-looking
statements  within the meaning of Section 27A under the  Securities  Act of 1933
and Section  21E under the  Securities  Exchange  Act of 1934.  Such  statements
include  but are not  limited  to  statements  regarding  the  ability to obtain
favorable  product  allocations  and the ability to increase  gross profit while
controlling  expenses.  These statements are subject to risks and  uncertainties
that could cause  actual  results to differ  materially,  including  those risks
described under "Risk Factors" below.

Products and Services

Computer Products

     While a substantial  portion of the Company's sales of computer products in
1999 was attributable to hard disk drives,  the Company's computer product sales
also included tape drives, optical disk drives,  networking products,  monitors,
computers, motherboards and value-added services and solution products. Based on
a  comparison  of its product  lines with product  lines  offered by other major
industrial  electronics  distributors,  the Company believes that its breadth of
product  offerings for mass storage computer  products is among the strongest in
the industry.  The Company  distributes  these products  primarily to industrial
OEMs, hardware integrators, VARs and other resellers.

     Disk, Tape and Optical Drives.  The Company sells floppy,  hard and optical
disk and tape drives to a wide range of  customers,  including  industrial  OEMs
(some  of  which  produce  computer,   office,  medical  and  telecommunications
products),  as well as integrators and  manufacturers  of computers based on the
UNIX, DOS/Windows,  Linux and Macintosh operating systems and frequently markets
subsystems to integrators and VARs. To serve these customers, Bell Microproducts
offers a full range of products  from the industry  leaders in mass storage such
as  IBM,  Maxtor  Corporation,  Quantum  Corporation,  Seagate  Technology,  Sun
Microelectronics (a division of Sun Microsystems Inc.) and TEAC.

     Networking Products. The Company sells specialized board-level mass storage
and memory systems products  including full "plug and play" (ready for immediate
installation)  tape,  optical  (including  jukebox) and RAID (Redundant Array of
Inexpensive  Disks) solutions for OEMs, VARs and sophisticated end users.  These
solutions are configured using standard components from the Company's inventory.
The  Company  also offers one of the  industries  most  complete  lines of Fibre
Channel and  interconnectivity  products  and  believes it is one of the leading
resellers of these products.

                                       1
<PAGE>
     Computers.  The Company  delivers  standard  and custom  configurations  of
motherboards,  computers and file servers to the VAR and OEM markets,  including
medical,  commercial and test system OEMs and vertical market  integrators.  The
principal motherboard supplier is Sun Microelectronics.

Semiconductor Products

     The  Company  distributes  a broad  range  of  semiconductor,  passive  and
electromechanical products including memory, logic,  microprocessor,  peripheral
and  specialty  components.  The  products  distributed  primarily  are advanced
integrated  circuits,  critical to the  performance of the  customer's  products
utilizing these  components.  The Company's  customer base for its semiconductor
products   comprises   primarily   small  and   medium-sized   OEMs,   including
manufacturers of computer and office products,  industrial  equipment (including
machine tools, factory automation and robotic equipment), scientific and medical
instruments and  telecommunications  products. The Company's principal suppliers
of  semiconductor   products  in  1999  included  Cypress   Semiconductor,   IBM
Microelectronics,  NEC  Electronics,  OKI  Semiconductor,  Quick  Logic and Sony
Electronics.

Value-Added Services

     The Company provides the following value-added services:

     Systems  Integration.  Systems  integration is a customer  specific turnkey
solution provided by the Company which integrates such high technology  products
as motherboards,  disk, tape and optical drives with power supplies, enclosures,
interface electronics, cables and connectors to build a completed system.

     Subsystem and Device Value-Added Services. The Company provides value-added
services  to board  and mass  storage  products  to a  customer's  specification
delivering   subsystems   modified   to  meet  the   requirements   of  specific
applications.

     Bellstor.  The Company offers its own branded BellStor product line of disk
and tape  subsystems  and RAID  products  to OEMs,  VARs,  and  integrators  for
application in standard  interface computer  environments.  The Bellstor product
family ranges from a subsystem to a complete RAID ready (JBOD) storage solution,
and  extends  to  SAN  systems  and  Fibre   Channel   products   with   assured
interoperability via Bellstor's SANPower program.

     Trademark.  The  Company  offers  private-labeled  personal  computers  and
servers that are sold to  value-add  resellers  under the brand name  Trademark.
These products are based on the Windows and Linux operating systems.

     Kitting.  Kitting of customer component product requirements is provided to
a select  customer  base.  Kitting is a service  whereby the  Company  purchases
materials according to the customer's specifications and assembles them into kit
form, ready for the assembly process.

Operations

     The majority of the products sold by the Company are purchased  pursuant to
authorized   distributor   agreements.   These  agreements  generally  establish
marketing relationships with product manufacturers,  provide for joint sales and
marketing  programs  and  generally  provide the Company  price  protection  and
limited inventory rotation rights.  These agreements are typically for renewable
terms of one year, are non-exclusive,  and authorize the Company to sell through
most or all of its  sales  and  distribution  centers  all or a  portion  of the
products produced by that manufacturer.

                                       2
<PAGE>
     The Company manages the quality and quantity of its distribution  inventory
through its asset management  group,  which seeks to maximize  responsiveness to
customer requirements while optimizing inventory turns.  Inventory management is
critical to a distributor's  business.  The Company's  strategy is to focus on a
high number of resales or "turns" of existing  inventory  to reduce  exposure to
product  obsolescence,  changing  consumer demands and declining average selling
prices.  The Company's computer system facilitates the control of purchasing and
inventory,   accounts  payable,   shipping  and  receiving,  and  invoicing  and
collection  information  for the Company's  distribution  business.  Each of the
Company's  sales  centers  is  electronically  linked to the  Company's  central
computer  system which provides  fully  integrated  on-line  real-time data with
respect to the Company's  inventory levels.  Inventory turns are tracked by part
number or device type, and the Company's  inventory  management  system provides
information to assist in making future purchasing and stock rotation  decisions.
This system seeks to enable the Company to  effectively  manage its inventory so
as to respond  quickly  to  customer  requirements  while  minimizing  inventory
levels.  The asset  management  group  also  monitors  supplier  stock  rotation
programs, inventory price protection opportunities,  rejected material and other
factors related to inventory quality and quantity.

Backlog

     The  Company  does not  believe  that  information  concerning  backlog  is
material to an understanding of its business,  as the Company's  objective is to
ship orders on the same day they are received  unless the customer has requested
a specific future delivery date on an order. Additionally, it is common industry
practice  for  customers,  in most cases,  to be able to  re-schedule  or cancel
orders with future delivery dates without penalties.

Marketing and Sales

     The  semiconductor  and computer  products  industries are characterized by
rapid technological  advances and a constant flow of new products. The resulting
shorter product life cycles have necessitated  compressed design and development
cycles, more rapid production build-up and quick response to major technological
shifts.  To react to these factors,  manufacturers  are focusing on and devoting
significant  resources to their core areas of expertise  including  research and
product design and development, and are increasingly outsourcing their marketing
and manufacturing requirements.

     Over  the past two  decades  the  growth  in the  electronics  distribution
industry  reflects a gradual trend among electronics  manufacturers  towards the
use of distributors, particularly for servicing medium and smaller size OEMs and
VARs.  As a result  of  these  trends,  distributors  such as the  Company  have
expanded their customer lists and line cards and consequently achieved increased
revenues.

Strategy

     The  Company's  business  strategy is designed to benefit from the industry
trend toward increasing use of distributors. The Company's strategy includes the
following key elements:

     Focus on Select Product  Offerings.  The Company's  product  strategy is to
focus its line card on a select group of  semiconductor  and computer  products,
including a particularly strong line of mass storage products,  with the goal of
achieving a leadership  position in the major  markets for such  products.  This
approach allows the Company to provide more knowledgeable  service and technical
support to its customers than it could if it offered a more  extensive  array of
products.  The Company  also  believes  that this  approach  should  allow it to
develop close working relationships with suppliers and to strengthen its ability
to obtain favorable product allocations in times of shortage of supply.

                                       3
<PAGE>
     Expand Operating Profit. The Company seeks to maximize its operating profit
primarily  through two aspects of its sales,  marketing and product  strategies:
(i) increasing  distribution of relatively high gross margin  products,  such as
semiconductors Fibre Channel,  interconnectivity,  storage systems and its value
added products and capabilities,  and (ii) selling high volume products, thereby
enhancing  productivity  and allowing the Company to increase gross profit while
controlling operating expenses.

     Provide Major Market  Distribution.  The Company  focuses its marketing and
sales  strategy on the major markets in the Americas with the goal of maximizing
productivity  per sales office.  With the July, 1999  acquisition of Miami-based
Future Tech, Inc.,  serving US customers who primarily re-sell in Latin America,
the Company has extended its sales coverage to include all of the Americas.  The
Company  addresses what it believes  constitutes many of the largest sectors for
semiconductor  and computer products  throughout the Americas.  The Company will
continue to evaluate potential expansion into additional markets.

Employees

     At December 31, 1999, the Company had a total of 601 employees. None of the
Company's  employees  are  represented  by a labor  union.  The  Company has not
experienced any work stoppages and considers its relations with its employees to
be good.  The Company's  future  success will depend in part upon its continuing
ability to attract and retain highly qualified  personnel.  Competition for such
employees  is intense and there can be no  assurance  that the  Company  will be
successful in attracting  and retaining such  personnel.  Failure to attract and
retain highly  qualified  personnel could have a material  adverse effect on the
Company's results of operations.

Risk Factors

Potential Fluctuations in Quarterly Operating Results

     The Company's quarterly operating results have in the past and could in the
future fluctuate substantially. The Company's expense levels are based, in part,
on expectations  of future sales.  If sales in a particular  quarter do not meet
expectations,  operating results could be adversely affected.  Factors affecting
quarterly  operating  results  include the loss of key  suppliers or  customers,
price competition, problems incurred in managing inventories or receivables, the
timing or cancellation of orders from major  customers,  a change in the product
mix  sold  by the  Company,  customer  demand,  availability  of  products  from
suppliers,  management  of growth,  the  Company's  ability to collect  accounts
receivable, price decreases on inventory that is not price protected, the timing
or cancellation  of purchase  orders with or from suppliers,  the ability of the
Company to integrate  recently  acquired  companies,  managing  foreign currency
exposure,  changing  economic  conditions  in North and South  America,  and the
timing of expenditures  in anticipation of increased sales and customer  product
delivery requirements.  Price competition in the industries in which the Company
competes is intense and could result in gross margin declines,  which could have
an adverse impact on the Company's profitability. Due in part to supplier rebate
programs  and  increased  sales by the Company near the end of each  quarter,  a
significant  portion of the Company's gross profit has historically  been earned
by the Company in the third month of each quarter.  Failure to receive  products
from its suppliers in a timely manner or the  discontinuance  of rebate programs
and  marketing  development  funds could have a material  adverse  effect on the
Company's results of operations in a particular  quarter.  In various periods in
the past,  the  Company's  operating  results have been affected by all of these
factors.  In particular,  price fluctuations in the disk drive and semiconductor
industries  have affected the Company's  gross  margins in recent  periods.  The
Company's cash requirements will depend on numerous factors,  including the rate
of growth of its sales. The Company believes that its working capital, including
its  existing  credit  facility,  will  be  sufficient  to  meet  the  Company's
short-term capital  requirements.  However, the Company may seek additional debt
or equity financing to fund continued growth as well as potential acquisitions.

                                       4
<PAGE>
Management of Growth

     The Company's growth in recent years has placed,  and continues to place, a
strain on the Company's  management,  financial and operational  resources.  The
Company  intends to continue to pursue its growth  strategy  through  increasing
sales of  existing  and new product  offerings,  increasing  geographical  sales
coverage,  and possibly  through  strategic  acquisitions.  In 1999, the Company
acquired  Miami-based  Future Tech,  Inc. and in 1998, the Company  acquired the
Computer   Products   Division  of   Philadelphia-based   Almo  Corporation  and
Toronto-based  Tenex Data, a division of Axidata Inc. The  integration  of newly
acquired companies  involves the assimilation of operations and products,  which
could  divert the  attention  of the  Company's  management  team and may have a
material adverse effect on the Company's  operating  results in future quarters.
The  Company's   strategy   includes   consideration   of  possible   additional
acquisitions in the future. Such acquisitions  entail numerous risks,  including
an  inability to  assimilate  acquired  operations  and  products,  diversion of
management's  attention,  difficulties and  uncertainties  in transitioning  the
business  relationships  from the acquired entity to the Company,  difficulty in
integrating  new employees and loss of key employees of acquired  companies.  In
addition, future acquisitions by the Company may result in dilutive issuances of
equity  securities,  the incurrence of additional  indebtedness,  large one-time
expenses,  and the  creation of goodwill or other  intangible  assets that could
result  in  significant  amortization  expense.  Continued  growth  may  require
additional  equipment,  increased  personnel,  expanded  information systems and
additional  financial and  administrative  control  procedures.  There can be no
assurance  that  the  Company  will be  able to  attract  and  retain  qualified
personnel, expand information systems, or further develop accounting and control
systems to successfully  manage  expanding  operations,  including an increasing
number of supplier  and  customer  relationships  and  geographically  dispersed
locations.  Further,  there can be no assurance that the Company will be able to
sustain its recent rate of growth or continue its profitable operations.

Dependence on Suppliers

     Three suppliers  provided  products which  represented 47% of the Company's
sales in 1999.  Two suppliers  provided  products which  represented  43% of the
Company's  sales in 1998 and 1997. The Company's  distribution  agreements  with
these  suppliers are cancelable upon 90 days notice.  In the past,  distribution
arrangements with significant suppliers have been terminated and there can be no
assurance  that,  in the  future,  one or  more  of  the  Company's  significant
distributor  relationships  will not be terminated.  Three vendors accounted for
55% of the Company's  inventory purchases during 1999. Two vendors accounted for
49% and 57% of the Company's  distribution  inventory  purchases during 1998 and
1997,  respectively.  One of these  vendors has obtained a second  priority lien
against the Company's inventories to secure payment on the Company's purchase of
goods.  The loss of any  significant  supplier  or the  shortage  or loss of any
significant  product line could materially  adversely affect the Company. As the
Company  enters  into  distribution  arrangements  with  new  suppliers,   other
competitive  suppliers may terminate their  distribution  arrangements  with the
Company with minimal  notice.  To the extent that the Company is unable to enter
into or maintain distribution arrangements with leading suppliers of components,
the Company's sales and operating results could be materially adversely affected

Competition

     The  distribution  industry is highly  competitive.  In the distribution of
semiconductor and computer  products,  the Company  generally  competes for both
supplier and customer  relationships with numerous local,  regional and national
authorized and  unauthorized  distributors and for customer  relationships  with
semiconductor  and computer  product  manufacturers,  including  some of its own
suppliers.  Many of the  Company's  distribution  competitors  are larger,  more
established  and have greater  name  recognition  and  financial  and  marketing
resources  than  the  Company.   The  Company   believes  that  competition  for
distribution  customers is based on product  lines,  customer  service,  product
availability,   competitive  pricing  and  technical  information,  as  well  as

                                       5
<PAGE>
value-added  services  and  kitting.  The  Company  believes  that  it  competes
favorably with respect to these factors. Recently, with the increased acceptance
of companies  transacting  business  through the  Internet,  competition  in the
distribution  of  semiconductors,  computer  products  and  related  value-added
products is expected to  increase.  There can be no  assurance  that the Company
will be able to compete  successfully with existing or new competitors.  Failure
to do so would  have a  material  adverse  effect on the  Company's  results  of
operations.

     Value-added  services are highly competitive and are based upon technology,
quality,  service,  price and the  ability to deliver  finished  products  on an
expeditious and reliable basis. The Company believes it competes  favorably with
respect to such factors.  The Company  attempts to focus on markets where it has
advantages  in  flexibility,  service  and high  component  content of the total
price.  In this area, the Company  competes with many  distributors,  as well as
with the in-house  manufacturing  capabilities  of its  existing  and  potential
customers.  Many of the Company's  competitors are larger,  more established and
have greater name  recognition  and financial and marketing  resources  than the
Company.

     The  distribution  business  is  highly  competitive,  and  there can be no
assurance that the Company will be able to compete successfully with existing or
new  competitors.  Failure to do so could have a material  adverse effect on the
Company's operating results.

Risks Associated with Limited Price and Inventory Protection Rights

     The Company's authorized  distributor  agreements may be canceled by either
party on short notice and generally provide for a return of the inventory to the
manufacturer  upon  cancellation.  Such  agreements  also generally  provide the
Company with limited price protection and inventory protection rights. There can
be no  assurance  that  such  agreements  will not be  canceled,  or that  price
protection and inventory  rotation policies will provide complete  protection or
will not be  changed  in the  future.  From time to time the  Company  purchases
significant  amounts of products on terms that do not  include  effective  price
protection  or  inventory  rotation  rights,  the  Company  bears  the  risk  of
obsolescence  and price  fluctuation  for those  products,  which  could  have a
material adverse effect on the Company's results of operations.

Dependence on the Personal Computer Industry

     Many of the  products  the  Company  sells are used in the  manufacture  or
configuration of personal  computers.  These products are characterized by rapid
technological  change,  short  product life cycles and intense  competition  and
pricing  pressures.  The personal computer industry has experienced  significant
unit volume  growth over the past  several  years which has, in turn,  increased
demand  for  many of the  products  distributed  by the  Company.  However,  any
slowdown in the growth of the personal computer industry, or growth at less than
expected  rates,  or  significant  reductions  in gross  margins  earned  by the
Company,  could adversely  affect the Company's  ability to continue its revenue
growth and maintain or increase the Company's  profitability.  In addition, many
of the Company's  customers in the personal computer industry are subject to the
risks of  significant  shifts in demand  and  severe  price  pressures  to their
customers,  which  may  increase  the risk that the  Company  may not be able to
collect  accounts  receivable  owed by some of its customers.  To the extent the
Company is unable to collect its accounts  receivable,  the Company's results of
operations would be adversely affected.

     The Company faces certain  industry-related  risks.  To the extent that its
suppliers do not maintain  their product  leadership,  the  Company's  operating
results could be materially adversely affected. Moreover, the increasingly short
product life cycles  experienced  in the  electronics  industry may increase the
Company's exposure to inventory obsolescence and the possibility of fluctuations
in operating  results.  Other factors  adversely  affecting the semiconductor or
computer  industries in general,  including  trade barriers which may affect the

                                       6
<PAGE>
Company's supply of products from its Japanese suppliers,  could have a material
adverse effect on the Company's operating results.

Cyclical Nature of the Semiconductor and Disk Drive Industries

     Semiconductors  and disk drives have  represented a significant  portion of
the  Company's  sales and the Company  believes  they will  continue to do so in
future  periods.  Both the  semiconductor  and the disk  drive  industries  have
historically  been  characterized  by  fluctuations in product supply and demand
and,  consequently,  severe fluctuations in price. In the event of excess supply
of disk drives or  semiconductors,  the Company's gross margins may be adversely
affected. In the event of a shortage of supply of disk drives or semiconductors,
the  Company's  results  of  operations  will  depend on the  amount of  product
allocated  to the  Company  by its  suppliers  and the  timely  receipt  of such
allocations. Additionally,  technological changes that affect the demand for and
prices of the  products  distributed  by the  Company  may  further  affect  the
Company's  gross margins.  Although the Company's  agreements with its suppliers
provide the Company with limited price  protection  and certain  rights of stock
rotation,  rapid  price  declines  or a  shortfall  in demand for disk drives or
semiconductor  products could have an adverse  effect on the Company's  sales or
gross margins.

Debt

     The  Company  has raised  significant  funding  through  debt  which  bears
interest  at variable  rates.  The  Company is also  required to exceed  certain
financial  tests and other covenants on a quarterly  basis.  Changes in interest
rates may have a  significant  effect on the results of  operations.  Failure to
meet debt  covenant  requirements  may  result in the debt  providers  demanding
immediate repayment of amounts outstanding.  The Company may not be able to find
alternative  sources of finance and  liquidity and failure to do so would have a
significant  impact on the results of operations and the financial  condition of
the Company.

Foreign Currency

     Substantially  all of the  Company's  revenue  and capital  expenditure  is
transacted in US Dollars.  Transactions  in other  currencies and the associated
risks of  depreciation  of value  and  volatility  of cash  flows  have not been
material  to  date.  The  Company  is  subject  to  increased  foreign  currency
transactions  and associated  risks following the  acquisition of  Toronto-based
Tenex Data in November  1998 and Future Tech,  Inc. in July,  1999.  Future Tech
sells to Latin America based  companies or through US affiliates  for export and
to US companies that sell to their Latin America  channels.  The collection of a
substantial  portion of Future Tech's  receivables are susceptible to changes in
the Latin American economic and political environment. To the extent the Company
is unable to manage these risks,  the Company's  results and financial  position
could be materially adversely affected.

Year 2000 Compliance

     The Year 2000 issue relates to the way computer systems and programs define
calendar dates;  they could fail or make  miscalculations  due to interpreting a
date including "00" to mean 1900, not 2000. This could result in system failures
causing disruptions in operations,  including among other things,  interruptions
in processing business transactions and other normal business operations.  Also,
many   systems   and   equipment   that  are  not   typically   thought   of  as
"computer-related" (referred to as non-IT) contain embedded hardware or software
that may have a time element.

     Thus far, the Company has not experienced any significant  problems related
to year 2000 issues associated with products distributed,  or with the Company's
internal computer systems.  However,  the Company cannot guarantee that the year
2000  problem  will not  adversely  affect its  business,  operating  results or
financial condition at some point in the future.

                                       7
<PAGE>
ITEM 2:  Properties

<TABLE>
<CAPTION>
                                                                 Square
Location                   Type              Principal Use       Footage        Ownership
--------                   ----              -------------       -------        ---------
<S>                   <C>                  <C>                   <C>        <C>
San Jose, CA          Office, warehouse    Headquarters,          56,840     Leased until
                                           distribution center               December 2002.
                                           (Bldg. One)

San Jose, CA          Office               Headquarters,          15,657     Leased until 2002 with five
                                           (Bldg. Two)                       one-year options to extend.

San Jose, CA          Warehouse            Distribution center    37,797     Leased until June 2002.

New Castle, DE        Warehouse            Distribution center    51,677     Leased until May 2005.

Miami, FL             Office,              Distributon center     64,086     Leased until April 2002
                      warehouse                                              with three two-year
                                                                             options to extend.

Marlboro, MA          Office, plant &      Distribution center,   14,975     Leased until February
                      warehouse            Manufacturing                     2002.

Champlin, MN          Office, plant &      Distribution center,   26,330     Leased until April 2002.
                      warehouse            Manufacturing

Markham, Ontario      Office,              Distribution center    17,628     Leased until March 2004
                      warehouse                                              with option to extend
                                                                             five years.
</TABLE>

     The Company  also leases sales and/or  warehouse  locations in  Huntsville,
Alabama;  Phoenix,  Arizona;  Agoura  Hills,  Irvine and San Diego,  California;
Denver,  Colorado;  Altamonte  Springs and Bonita  Springs,  Florida;  Marietta,
Georgia; Chicago,  Illinois;  Columbia,  Maryland; Woburn,  Massachusetts;  Eden
Prairie,  Minnesota;  Clifton and Pine Brook, New Jersey;  Smithtown,  New York;
Beaverton,  Oregon;  Strongsville,  Ohio; Langhorne and Needmore,  Pennsylvania;
Austin, Houston and Richardson,  Texas;  Centerville,  Utah; Herndon,  Virginia;
Bellevue,  Washington;  Buenos Aires, Argentina;  Sao Paolo, Brazil;  Vancouver,
British Columbia; Montreal, Quebec; Santiago, Chile; and Mexico City, Mexico.

ITEM 3:  Legal Proceedings

     The  Company is subject to legal  proceedings  and claims that arise in the
normal course of business.  Management  believes that the ultimate resolution of
such matters will not have a material adverse affect on the Company's  financial
position or results of operations. Such litigation could in the future result in
substantial costs and diversion of management  resources.  Such litigation could
also  result  in  payment  of  substantial   damages  or  prohibitions   against
utilization of essential technologies,  and could have a material adverse effect
on our business, financial condition and results of operations.

                                       8
<PAGE>
     During 1999,  the Company  filed suit  against  American  Credit  Indemnity
("ACI"), its former credit insurer, for recovery of amounts due under claim made
by the Company.  ACI has counter  sued for  rescission  of the credit  insurance
contract for repayment of claims  previously  paid.  Management has reviewed and
investigated  the claims,  and while no  assurance  can be given  regarding  the
outcome of this matter, management believes that the final outcome of the matter
will not have a material impact on consolidated financial position or results of
operations.  However,  because  of the  nature  and  inherent  uncertainties  of
litigation, should the outcome of this matter be unfavorable, the Company may be
required to pay damages and other expenses,  which could have a material adverse
effect on its financial position and results of operations.

ITEM 4:  Submission of Matters to a Vote of Security Holders

     None.

                                 PART II

ITEM 5:  Market for Registrant's Common Equity and Related Stockholder Matters

     The Company's  Common Stock is traded on the Nasdaq  National  Market under
the symbol "BELM." The following table sets forth for the periods  indicated the
high and low sale prices of the Common Stock as reported by Nasdaq.

                                                      High              Low
                                                      ----              ---
Fiscal 1998

   First quarter                                     $ 8.75            $7.06

   Second quarter                                      8.75             6.63

   Third quarter                                       9.25             5.25

   Fourth quarter                                     11.00             5.25

Fiscal 1999

   First quarter                                     $10.44            $5.50

   Second quarter                                      8.25             5.69

   Third quarter                                      10.31             6.56

   Fourth quarter                                     11.00             6.44

Fiscal 2000

   First quarter (through March 15, 2000)            $16.50            $8.88

     On March 15,  2000,  the last sale price of the Common Stock as reported by
Nasdaq was $14.44 per share.

     As of March 15, 2000, there were approximately 272 holders of record of the
Common Stock (not including shares held in street name).

     To date,  the Company has paid no cash dividends to its  shareholders.  The
Company has no plans to pay cash  dividends  in the near future.  The  Company's
line of credit agreement  prohibits the Company's  payment of dividends or other
distributions  on any of its shares  except  dividends  payable in the Company's
capital stock.

                                       9
<PAGE>
ITEM 6: Selected Financial Data

     The selected  financial  data of the Company set forth below should be read
in  conjunction  with the  consolidated  financial  statements  of the  Company,
including the notes thereto,  and Management's  Discussion and Analysis included
elsewhere herein.

<TABLE>
<CAPTION>
                                                         (in thousands, except earnings per share data)

                                                                       Year Ended December 31,
                                                ----------------------------------------------------------------
Statement of Income Data:                         1999(1)       1998(2)        1997          1996        1995
                                                ----------     ---------     ---------     --------    ---------
<S>                                             <C>            <C>           <C>           <C>         <C>
Net sales                                       $1,058,275     $ 575,330     $ 460,516     $391,240    $ 296,633
Cost of sales                                      967,491       511,476       406,301      345,189      261,895
                                                ----------     ---------     ---------     --------    ---------
Gross profit                                        90,784        63,854        54,215       46,051       34,738
Selling, general and administrative expense         69,507        46,070        40,942       36,175       27,901
                                                ----------     ---------     ---------     --------    ---------
Income from continuing operations                   21,277        17,784        13,273        9,876        6,837
Interest expense                                     6,413         3,168         2,451        3,192        3,143
Foreign currency remeasurement gain                    647            --            --           --           --
                                                ----------     ---------     ---------     --------    ---------
Income from continuing operations before taxes      15,511        14,616        10,822        6,684        3,694
Provision for income taxes                           6,581         6,139         4,545        2,807        1,515
                                                ----------     ---------     ---------     --------    ---------
Income from continuing operations                    8,930         8,477         6,277        3,877        2,179
Income/(loss) from discontinued operations,
 net of income taxes                                (2,946)       (2,402)       (1,588)       3,985        1,823
Gain on sale of contract manufacturing segment       1,054            --            --           --           --
                                                ----------     ---------     ---------     --------    ---------
Net income                                      $    7,038     $   6,075     $   4,689     $  7,862    $   4,002
                                                ==========     =========     =========     ========    =========
Basic earnings per shares (3)
  Continuing operations                         $     0.99     $    0.96     $    0.73     $   0.46    $    0.27
  Discontinued operations                            (0.21)        (0.27)        (0.18)        0.48         0.22
                                                ----------     ---------     ---------     --------    ---------
Total                                           $     0.78     $    0.69     $    0.55     $   0.94    $    0.49
                                                ==========     =========     =========     ========    =========
Diluted earnings per share (3)
  Continuing operations                         $     0.98     $    0.95     $    0.70     $   0.46    $    0.26
  Discontinued operations                            (0.21)        (0.27)        (0.18)        0.47         0.22
                                                ----------     ---------     ---------     --------    ---------
Total                                           $     0.77     $    0.68     $    0.53     $   0.92    $    0.48
                                                ==========     =========     =========     ========    =========
Shares used in per share calculation
  Basic                                              9,042         8,792         8,562        8,359        8,173
                                                ==========     =========     =========     ========    =========
  Diluted                                            9,123         8,881         8,906        8,511        8,350
                                                ==========     =========     =========     ========    =========

                                                                       Year Ended December 31,
                                                ----------------------------------------------------------------
                                                  1999(1)       1998(2)        1997          1996        1995
Balance Sheet Data:                             ----------     ---------     ---------     --------    ---------

Working capital                                 $ 182,626      $ 167,109     $ 134,612    $ 105,958    $ 106,914
Total assets                                      360,351        285,580       205,420      175,680      157,277
Total long-term debt                              110,638        106,963        74,460       50,885       59,453
Total shareholders' equity                         96,273         86,476        77,667       71,127       62,462
</TABLE>

----------
(1)  1999 Statement of Income Data and Balance Sheet Data include the results of
     operations of Future Tech,  Inc. from the date of  acquisition  on July 21,
     1999. See Note 3 of Notes to Consolidated Financial Statements.

                                       10
<PAGE>
(2)  1998 Statement of Income Data and Balance Sheet Data include the results of
     operations  of the Computer  Products  Division of Almo  Corporation  since
     acquisition on November 13, 1998 and Tenex Data Division of Axidata Inc. on
     November  19,  1998.  See  Note  3  of  Notes  to  Consolidated   Financial
     Statements.

(3)  All per share amounts have been restated in  accordance  with  Statement of
     Financial  Accounting Standards No. 128 "Earnings Per Share". See Note 2 of
     Notes to Consolidated Financial Statements.

ITEM 7: Management's Discussion and Analysis of Financial Condition and
        Results of Operations

     For an  understanding  of  the  significant  factors  that  influenced  the
Company's  performance  during the past three years,  the  following  discussion
should be read in conjunction with the consolidated financial statements and the
other information appearing elsewhere in this report.

     When used in this report, the words "expects," "anticipates,"  "estimates,"
"intends"  and similar  expressions  are  intended  to identify  forward-looking
statements  within the meaning of Section 27A under the  Securities  Act of 1933
and Section  21E under the  Securities  Exchange  Act of 1934.  Such  statements
include  but are not  limited  to  statements  regarding  the  ability to obtain
favorable  product  allocations,  the ability to  increase  gross  profit  while
controlling  expenses,  and the costs of Year 2000 compliance.  These statements
are subject to risks and uncertainties that could cause actual results to differ
materially,  including  those risks  described  under  "Risk  Factors" in Item 1
hereof.

RESULTS OF OPERATIONS

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

     Net sales were $1,058.3 million for the year ended December 31,1999,  which
represented  an increase of $483.0  million or 84% over 1998.  Computer  Product
sales increased by $440.5 million primarily due to the expansion of the customer
base related to the  acquisitions of Future Tech  International  ("FTI") in July
1999, the Computer Products Division of Almo Corporation  ("Almo CPD") and Tenex
Data  Division of Axidata,  Inc.  ("Tenex  Data") in November  1998,  and to the
growth in unit sales in existing  product  lines and the  addition of new lines.
Semiconductor  sales increased by $42.5 million primarily due to the acquisition
of FTI,  growth in unit sales in existing  product lines and the addition of new
lines.  FTI contributed net sales of $107.9 million,  since  acquisition on July
21, 1999.

     The Company's gross profit for 1999 was $90.8 million, an increase of $26.9
million, or 42% over 1998. The increase in gross profit was primarily the result
of increased sales volume. As a percentage of sales,  overall gross margins were
8.6%  compared to 11.1% in 1998.  This  decrease was  primarily due to increased
competitive  pricing in the  industry  and the  increase  in the  proportion  of
computer product sales,  which typically have lower margins than  semiconductors
products.

     Selling, general and administrative expenses increased 51% to $69.5 million
in 1999 from $46.1  million in 1998,  but  decreased as a percentage of sales to
6.6% from 8.0%.  The increase in expenses was  attributable  to increased  sales
volume,  the  acquisitions  of FTI,  Almo CPD and Tenex  Data and the  Company's
continuing effort to strengthen its financial and administrative support.

     Interest  expense  increased  in 1999 to $6.4  million from $3.2 million in
1998,  or 100%.  The  increase in interest  expense  was due to  increased  bank
borrowings during 1999 to fund the Company's working capital needs and increases
in interest rates on outstanding  borrowings.  The average interest rate in 1999
was 7.3%,  versus  7.0% in 1998.  The  average  balance  outstanding  was $103.2
million in 1999, versus $73.6 million in 1998.

                                       11
<PAGE>
     In 1999,  the  Company  recognized  remeasurement  gains  of  approximately
$647,000  relating to the  retranslation of US dollar  denominated debt of Tenex
Data.

     The Company's effective income tax rate remained unchanged at 42% in 1999.

Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

     Net sales were $575.3  million for the year ended December  31,1998,  which
represented  an increase of $114.8 million or 25% over 1997.  Computer  products
sales  increased from 1997 primarily due to the growth of unit sales in existing
product  lines,  the addition of new lines and  expansion  of the customer  base
related to the  acquisitions  of Almo CPD and Tenex Data in November 1998.  Almo
CPD and Tenex  Data  contributed  net sales of $16.3  million  and $8.3  million
respectively in the year ended December 31, 1998. The contribution to net income
was not  material.  Semiconductor  sales  decreased  from 1997  primarily due to
industry-wide price declines.

     The Company's gross profit for 1998 was $63.9 million,  an increase of $9.6
million, or 18% over 1997. The increase in gross profit was primarily the result
of increased sales volume. As a percentage of sales,  overall gross margins were
11.1%  compared to 11.8% in 1997.  This  decrease was primarily due to increased
competitive  pricing in the  industry  and the  increase  in the  proportion  of
computer  product sales,  which typically have lower margins than  semiconductor
products.

     Selling, general and administrative expenses increased 13% to $46.1 million
in 1998 from $40.9  million in 1997,  but  decreased as a percentage of sales to
8.0% from 8.9%.  The increase in expenses was  attributable  to increased  sales
volume, the acquisitions of Almo CPD and Tenex Data and the Company's continuing
effort  to expand  its  sales  and  marketing  organization.  The  Company  also
increased  its bad debt  expenses  due to increased  sales  volumes and changing
market conditions.

     Interest  expense  increased  in 1998 to $3.2  million from $2.5 million in
1997.  The  increase in interest  expense was due to increased  bank  borrowings
during 1998 to fund the Company's  working capital needs and the acquisitions of
Almo CPD and Tenex Data.

     The Company's effective income tax rate remained unchanged at 42% in 1998.

LIQUIDITY AND CAPITAL RESOURCES

     In recent years,  the Company has funded its working  capital  requirements
principally  through  borrowings  under bank lines of  credit.  Working  capital
requirements  have included the financing of increases in inventory and accounts
receivable resulting from sales growth.

     On  December  8, 1999 and as further  amended on  December  31,  1999,  the
Company  entered into an amendment to the Third Amended and Restated  Syndicated
Credit  Agreement  arranged by California Bank & Trust, as Agent.  The amendment
increased the Company's  $130 million  revolving  line of credit to $160 million
and extended the maturity  date to May 31, 2001. At the  Company's  option,  the
borrowings  under the line of credit  will bear  interest at  California  Bank &
Trust's prime rate (8.5% at December 31, 1999) or the adjusted LIBOR rate plus a
maximum of 2.25%.  The balance  outstanding  on the revolving  line of credit at
December  31, 1999 was $110.6  million.  Obligations  of the  Company  under the
revolving  line of credit are  secured  by  substantially  all of the  Company's
assets.  The  revolving  line of credit  requires  the  Company to meet  certain
financial tests and to comply with certain other covenants on a quarterly basis,
including restrictions on incurrence of debt and liens, restrictions on mergers,
acquisitions,  asset  dispositions,  declaration  of dividends,  repurchases  of

                                       12
<PAGE>
stock, making investments and profitability.  The Company was in compliance with
its bank covenants at December 31, 1999; however, there can be no assurance that
the Company will be in compliance with its bank covenants in the future.  If the
Company  does not remain in  compliance  with the  covenants  in its Amended and
Restated  Syndicated  Credit  Agreement  and is  unable  to  obtain a waiver  of
noncompliance from its banks, the Company's  financial  condition and results of
operations  would be  materially  adversely  affected.  The  Company  intends to
utilize  its  revolving   line  of  credit  to  fund  future   working   capital
requirements. The Company evaluates potential acquisitions from time to time and
may utilize  its line of credit to acquire  complementary  businesses,  provided
consent from its banks is obtained.

     On July 21, 1999, the Company  acquired  certain assets and assumed certain
liabilities  of FTI for a purchase price of  approximately  $2.2 million in cash
including  acquisition  costs.  The  acquisition,  which was  accounted for as a
purchase,  was funded through  borrowings under the Company's  revolving line of
credit.  On June 8, 1999 the Company sold its Contract  Manufacturing  Division,
Quadrus,  for a total cash consideration of $34.7 million. On November 13, 1998,
the Company acquired the Almo CPD for approximately  $20.7 million in cash and a
stock warrant valued at $1.0 million. On November 19, 1998, the Company acquired
Tenex Data Inc. for a total consideration of approximately $5.8 million in cash.
Both the 1998 acquisitions  were funded through the Company's  revolving line of
credit.

     The  Company's  accounts  receivable  and  inventories  increased to $168.9
million  and $156.6  million at December  31,  1999,  respectively,  from $106.6
million and $105.3  million,  respectively,  as of December 31, 1998. Days sales
outstanding at December 31, 1999 were 47 days and inventory turns were 7.6 times
per year  compared to DSO of 51 days and turns of 6.0 in 1998.  These  increases
were  primarily  the  result of the  Company's  increased  sales  volume and the
purchase of accounts receivable and inventory through the Company's  acquisition
of FTI in July 1999. The Company's  accounts payable increased to $143.6 million
in 1999 from $72.0 million in 1998 due to increased  inventory purchases and the
addition of accounts payable through the Company's acquisition in 1999.

     Net cash provided by investing  activities  in 1999 totaled $27.4  million,
which was  primarily  related  to the sale of  Quadrus.  The net  amount of cash
provided by financing  activities in 1999 was $10.6  million,  principally  from
utilization of the Company's  revolving  line of credit with its banks.  The net
amount of cash used in  continuing  operating  activities  was $32.6  million in
1999.

Year 2000 Compliance

     The Year 2000 issue relates to the way computer systems and programs define
calendar dates;  they could fail or make  miscalculations  due to interpreting a
date including "00" to mean 1900, not 2000. This could result in system failures
causing disruptions in operations,  including among other things,  interruptions
in processing business transactions and other normal business operations.  Also,
many   systems   and   equipment   that  are  not   typically   thought   of  as
"computer-related" (referred to as non-IT) contain embedded hardware or software
that may have a time element.

     Thus far, the Company has not experienced any significant  problems related
to year 2000 issues associated with products distributed,  or with the Company's
internal computer systems.  However,  the Company cannot guarantee that the year
2000  problem  will not  adversely  affect its  business,  operating  results or
financial condition at some point in the future.

Recent Developments

     On February 16, 2000,  the Company  entered  into a  non-binding  letter of
intent with Rorke Data,  Incorporated  ("Rorke"),  pursuant to which the Company
would  acquire  all the  outstanding  equity  securities  of  Rorke  for a total
purchase price of $5,350,000 payable cash,  subject to certain  post-closing net
worth adjustments.

                                       13
<PAGE>
ITEM 7A: Quantitative and Qualitative Disclosures About Market Risk

     The  Company's  line of  credit  has an  interest  rate  that is  based  on
associated  rates such as LIBOR and the Prime Rate that may fluctuate  over time
based on changes in the economic environment. The Company is subject to interest
rate risk,  and could be  subjected  to  increased  interest  payments if market
interest rates  fluctuate.  An increase of 1% in such interest rate  percentages
would  increase  the  annual  interest  expense  by $1.1  million,  based on the
borrowings at December 31, 1999.

     Substantially  all of the  Company's  revenue and capital  expenditure  are
transacted in US Dollars.  Transactions  in other  currencies and the associated
risks of  depreciation  of  value  and  volatility  of  cashflows  have not been
material  to  date.  The  Company  is  subject  to  increased  foreign  currency
transactions  and associated  risks following the  acquisition of  Toronto-based
Tenex Data in November  1998 and the  acquisition  of Future Tech,  Inc. in July
1999.  To the extent the Company is unable to manage these risks,  the Company's
results and financial  position  could be  materially  adversely  affected.  The
Company does not engage in hedging  activities such as foward currency  exchange
contracts and does not invest in derivative financial instruments.

                                       14
<PAGE>
ITEM 8: Financial Statements and Supplementary Data

      Index to Consolidated Financial Statements                      Form 10-K
                                                                     Page Number
                                                                     -----------

      Report of Independent Accountants                                  16

      Consolidated Balance Sheets at December 31, 1999 and 1998          17

      Consolidated Statements of Income for the years  ended
       December 31, 1999, 1998 and 1997                                  18

      Consolidated Statements of Shareholders' Equity for the years
        ended December 31, 1999, 1998 and 1997                           19

      Consolidated Statements of Cash Flows for the years ended
        December 31, 1999, 1998 and 1997                                 20

      Notes to Consolidated Financial Statements                         21

                                       15
<PAGE>
                    REPORT OF INDEPENDENT ACCOUNTANTS


To the Shareholders and Board of Directors of
Bell Microproducts Inc.

     In our opinion,  the consolidated  financial statements listed in the index
appearing  under  Item 14 (a) (1) and  (2) on  page 36  present  fairly,  in all
material respects, the financial position of Bell Microproducts Inc. at December
31, 1999 and 1998, and the results of its operations and its cash flows for each
of the three years in the period ended  December 31, 1999,  in  conformity  with
accounting  principles  generally accepted in the United States. These financial
statements   are  the   responsibility   of  the   Company's   management;   our
responsibility  is to express an opinion on these financial  statements based on
our audits.  We conducted  our audits of these  statements  in  accordance  with
auditing standards  generally accepted in the United States,  which require that
we plan and perform the audit to obtain  reasonable  assurance about whether the
financial  statements  are  free of  material  mistatement.  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 the opinion expressed above.



PricewaterhouseCoopers LLP
San Jose, California
February 14, 2000

                                       16
<PAGE>
                             BELL MICROPRODUCTS INC.
                           CONSOLIDATED BALANCE SHEETS
                      (in thousands, except per share data)


                                                                December 31,
                                                          ----------------------
                                                            1999          1998
                                                          --------      --------
ASSETS
Current assets:
  Cash                                                    $  5,103      $  4,082
  Accounts receivable, net of allowance for doubtful
    accounts of$4,986 and $3,374                           168,857       106,609
  Inventories                                              156,648       105,330
  Prepaid expenses and other current assets                  5,458         5,226
  Assets of discontinued operations                             --        47,790
                                                          --------      --------
     Total current assets                                  336,066       269,037

Property and equipment, net                                  7,626         3,355
Goodwill and other intangibles, net of accumulated
 amortization of $2,314 and $1,518                          16,059        12,362
Other assets                                                   600           826
                                                          --------      --------
     Total assets                                         $360,351      $285,580
                                                          ========      ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                        $143,632      $ 72,002
  Other accrued liabilities                                  9,808         8,429
  Liabilities relating to discontinued operations               --        16,240
                                                          --------      --------
     Total current liabilities                             153,440        96,671

Borrowings under the line of credit                        110,600       102,400
Other long-term liabilities                                     38            33
                                                          --------      --------

     Total liabilities                                     264,078       199,104
                                                          --------      --------
Commitments and contingencies (Note 8)

Shareholders' equity:
  Preferred Stock, $0.01 par value, 10,000 shares
   authorized; none issued and outstanding                      --            --
  Common Stock, $0.01 par value, 20,000 shares
   authorized;9,251 and 8,914 shares issued and
   outstanding                                              58,527        56,181
Comprehensive income:
  Retained earnings                                         37,285        30,247
  Cumulative translation adjustment                            461            48
                                                          --------      --------
     Total shareholders' equity                             96,273        86,476
                                                          --------      --------
  Total liabilities and shareholders' equity              $360,351      $285,580
                                                          ========      ========

                 The accompanying notes are an integral part of
                    these consolidated financial statements.

                                       17
<PAGE>
                             BELL MICROPRODUCTS INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                      (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                        Year Ended December 31,
                                                           -----------------------------------------------
                                                              1999              1998              1997
                                                           -----------       -----------       -----------
<S>                                                        <C>               <C>               <C>
Net sales                                                  $ 1,058,275       $   575,330       $   460,516
Cost of sales                                                  967,491           511,476           406,301
                                                           -----------       -----------       -----------

Gross profit                                                    90,784            63,854            54,215
Selling, general and administrative expenses                    69,507            46,070            40,942
                                                           -----------       -----------       -----------
Operating income from continuing operations                     21,277            17,784            13,273
Interest expense                                                 6,413             3,168             2,451
Foreign currency remeasurement gain                                647                --                --
                                                           -----------       -----------       -----------

Income from continuing operations before income taxes           15,511            14,616            10,822
Provision for income taxes                                       6,581             6,139             4,545
                                                           -----------       -----------       -----------

Income from continuing operations                                8,930             8,477             6,277
Discontinued operations:
Loss from operations, net of tax
   benefit of $2,132, $1,739 and $1,150                         (2,946)           (2,402)           (1,588)
Gain on sale, net of tax of $763                                 1,054                --                --
                                                           -----------       -----------       -----------
Discontinued operations, net                                    (1,892)           (2,402)           (1,588)
                                                           -----------       -----------       -----------
Net income                                                       7.038             6,075             4,689
                                                           -----------       -----------       -----------
Other comprehensive income, net of tax:
  Foreign currency translation adjustments                         413                48                --
                                                           -----------       -----------       -----------
Comprehensive income                                       $     7,451       $     6,123       $     4,689
                                                           ===========       ===========       ===========
Earnings per share (Note 2)
  Basic
    Continuing operations                                  $      0.99       $      0.96       $      0.73
    Discontinued operations                                      (0.21)            (0.27)            (0.18)
                                                           -----------       -----------       -----------
    Total                                                  $      0.78       $      0.69       $      0.55
                                                           ===========       ===========       ===========
Earnings per share
  Diluted
    Continuing operations                                  $      0.98       $      0.95       $      0.71
    Discontinued operations                                      (0.21)            (0.27)            (0.18)
                                                           -----------       -----------       -----------
    Total                                                  $      0.77       $      0.68       $      0.53
                                                           ===========       ===========       ===========
Shares used in per share calculation (Note 2)
  Basic                                                          9,042             8,792             8,562
                                                           ===========       ===========       ===========
  Diluted                                                        9,123             8,881             8,906
                                                           ===========       ===========       ===========
</TABLE>

                 The accompanying notes are an integral part of
                    these consolidated financial statements.

                                       18
<PAGE>
                             BELL MICROPRODUCTS INC.
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                 (in thousands)


<TABLE>
<CAPTION>
                                                                   Comprehensive Income
                                                Common Stock       ---------------------
                                             -------------------    Retained
                                             Shares       Amount    Earnings        Other     Total
                                             ------       ------    --------        -----     -----
<S>                                         <C>         <C>        <C>              <C>     <C>
Balance at January 1, 1997                   8,445       $51,644    $19,483         $  --    $71,127
Exercise of stock options, including
  related tax benefit of $225                  147         1,117         --            --      1,117
Issuance of Common Stock under
  Stock Purchase Plan                          104           734         --            --        734
Net income                                      --            --      4,689            --      4,689
                                            ------       -------    -------         -----    -------
Balance at December 31, 1997                 8,696        53,495     24,172            --     77,667

Exercise of stock options, including
  related tax benefit of $86                   111           943         --            --        943
Issuance of Common Stock under
  Stock Purchase Plan                          107           700         --            --        700
Issuance of stock warrant (Note 3)              --         1,043         --            --      1,043
Foreign currency translation                    --            --         --            48         48
Net income                                      --            --      6,075            --      6,075
                                            ------       -------    -------         -----    -------
Balance at December 31, 1998                 8,914        56,181     30,247            48     86,476

Exercise of stock options, including
  related tax benefit of $72                   235         1,743         --            --      1,743
Issuance of Common Stock under
  Stock Purchase Plan                          102           603         --            --        603
Foreign currency translation                    --            --         --           413        413
Net income                                      --            --      7,038            --      7,038
                                            ------       -------    -------         -----    -------
Balance at December 31, 1999                 9,251       $58,527    $37,285         $ 461    $96,273
                                            ======       =======    =======         =====    =======
</TABLE>
                 The accompanying notes are an integral part of
                    these consolidated financial statements.

                                       19
<PAGE>
                             BELL MICROPRODUCTS INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                   (Increase (decrease) in cash, in thousands)

<TABLE>
<CAPTION>
                                                                     Year Ended December 31,
                                                             --------------------------------------
                                                               1999           1998           1997
                                                             --------       --------       --------
<S>                                                          <C>            <C>            <C>
Cash flows from operating activities:
  Income from continuing activities                          $  8,930       $  8,477       $  6,277
  Adjustments to reconcile net income to net
   cash (used in)/provided by operating activities:
   Depreciation and amortization                                2,254          1,132            779
   Change in allowance for doubtful accounts                    1,113          2,099         (2,885)
   Change in deferred and refundable income taxes                (148)        (1,477)         1,119
   Changes in assets and liabilities:
     Accounts receivable                                      (50,785)       (18,704)        (6,888)
     Inventories                                              (48,679)       (14,776)       (22,034)
     Prepaid expenses                                           2,721           (497)          (299)
     Other assets                                                 226           (548)           (38)
     Accounts payable                                          50,641         23,995         (1,621)
     Other accrued liabilities                                  1,175         1,289            481
                                                             --------       --------       --------
Net cash (used in)/provided by continuing
  operating activities                                        (32,552)           990        (25,109)
Net cash (used in)/provided by discontinued
  operations                                                   (4,745)        (9,261)         1,570
                                                             --------       --------       --------
Net cash used in operating activities                         (37,297)        (8,271)       (23,539)
                                                             --------       --------       --------
Cash flows from investing activities:
  Acquisition of property and equipment, net                   (4,412)        (1,308)        (1,490)
  Acquisitions of businesses (Note 3)                          (2,808)       (26,770)            --
  Proceeds from sale of business (Note 3)                      34,665             --             --
                                                             --------       --------       --------
Net cash provided by/(used in) investing activities            27,445        (28,078)        (1,490)
                                                             --------       --------       --------
Cash flows from financing activities:
  Net borrowings under line of credit                           8,200         32,400         24,100
    agreement
  proceeds from issuance of Common Stock                        2,346          1,643          1,851
  Net payments/(borrowings) under long-term liabilities             5             15           (279)
                                                             --------       --------       --------
Net cash provided by financing activities                      10,551         34,058         25,672

Effect of exchange rate changes on cash                           322             48             --
                                                             --------       --------       --------
Net increase/(decrease) in cash                                 1,021         (2,243)           643

Cash at beginning of year                                       4,082          6,325          5,682
                                                             --------       --------       --------
Cash at end of year                                          $  5,103       $  4,082       $  6,325
                                                             ========       ========       ========
Supplemental disclosures of cash flow information:
  Cash paid during the year for:
     Interest                                                $  7,523       $  5,555       $  4,641
     Income taxes                                            $  5,606       $  4,592       $  2,695
Supplemental non-cash financing activities:
     Obligations incurred under capital leases               $     --       $  2,519       $  1,333
     Stock warrant issued in connection with
      acquisition (Note 3)                                   $     --       $  1,043             --
</TABLE>
                 The accompanying notes are an integral part of
                    these consolidated financial statements.

                                       20
<PAGE>
                         BELL MICROPRODUCTS INC.

               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - THE COMPANY:

     The  Company  operates  in  one  business  segment,  as  a  distributor  of
semiconductor and computer products to original equipment  manufacturers (OEMs),
value-added  resellers (VARs) and dealers in the United States, Canada and Latin
America.   Semiconductor   products  include  memory,   logic,   microprocessor,
peripheral and specialty  components.  Computer  products include disk, tape and
optical drives and  subsystems,  drive  controllers,  computers and  board-level
products.  The Company also  provides a variety of  value-added  services to its
customers,  including  subsystem  testing,  software  loading,  mass storage and
computer  systems  integration,  disk  drive  formatting  and  testing,  and the
packaging of electronic component kits to customer specifications.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation and Basis of Preparation

     The consolidated  financial  statements  include the accounts of the parent
company and all of its wholly  owned  subsidiaries.  All  material  intercompany
transactions and balances have been eliminated on consolidation.

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

Revenue Recognition

     Revenues are recognized when products are shipped. Provisions for estimated
losses on returns and for  expected  warranty  costs are recorded at the time of
sale and are adjusted periodically to reflect changes in experience and expected
obligations.

Concentration of Credit and Other Risks

     Financial   instruments   which   potentially   subject   the   Company  to
concentrations of credit risk consist  principally of accounts  receivable.  The
Company performs ongoing credit  evaluations of its customers and generally does
not require collateral.  The Company maintains reserves for estimated collection
losses.  No  customer  accounts  for more  than 10% of sales in any of the three
years ended December 31, 1999, 1998 and 1997, or accounts receivable at December
31, 1999 and 1998.

     Three vendors accounted for 55% of the Company's inventory purchases during
1999. Two vendors accounted for 49% and 57% of the Company's inventory purchases
during  1998 and 1997,  respectively.  One such  vendor  has  obtained  a second
priority  lien  against  the  Company's  inventories  to secure  payment for the
Company's purchase of goods.

Inventories

     Distribution  inventories  are stated at the lower of cost or market,  cost
being determined by the first-in,  first-out  (FIFO) method.  Market is based on
estimated net realizable value.

                                       21
<PAGE>
Property and Equipment

     Property and equipment are recorded at cost.  Depreciation and amortization
is computed using the straight-line method based upon the estimated useful lives
of the assets  which range from three to five years.  Amortization  of leasehold
improvements is computed using the straight-line  method over the shorter of the
estimated life of the asset or the lease term.

Goodwill

     Assets and liabilities  acquired in connection  with business  combinations
accounted for under the purchase  method are recorded at their  respective  fair
values.  The  excess of the  purchase  price  over the fair  value of the assets
acquired is recorded as goodwill and amortized on a  straight-line  basis over a
fifteen year period for 1999 and 1998 acquisitions and a twenty-five year period
for prior years' business  combinations.  The Company  periodically  reviews the
recoverability of goodwill.

Impairment of Long-Lived Assets

     The Company continually monitors its long-lived assets to determine whether
any impairment of these assets has occurred.  In making such determination,  the
Company  evaluates the  performance of the underlying  businesses,  products and
product lines.  The Company  recognizes  impairment of long-lived  assets in the
event the net book value of such  assets  exceeds the future  undiscounted  cash
flows   attributable  to  such  assets.   No  material   impairments  have  been
experienced.

Income Taxes

     Deferred  income taxes are provided for temporary  differences  between the
financial  reporting  basis  and the  tax  basis  of the  Company's  assets  and
liabilities as part of the income tax provisions.

Earnings Per Share

     Basic  EPS  is  computed  by  dividing  net  income   available  to  common
shareholders  (numerator)  by the  weighted  average  number  of  common  shares
outstanding  (denominator)  during the period.  Diluted EPS gives  effect to all
dilutive  potential common shares  outstanding during the period including stock
options, using the treasury stock method, and convertible preferred stock, using
the if-converted  method.  In computing Diluted EPS, the average stock price for
the period is used in  determining  the number of shares assumed to be purchased
from the exercise of stock options.

     Following is a  reconciliation  of the numerators and  denominators  of the
Basic  and  Diluted  EPS  computations  for  the  periods  presented  below  (in
thousands, except per share data):

<TABLE>
<CAPTION>
                                                             Year Ended December 31,
                                                          ------------------------------
                                                           1999        1998        1997
                                                          ------      ------      ------
<S>                                                       <C>         <C>         <C>
Net income                                                $7,038      $6,075      $4,689
                                                          ======      ======      ======
Weighted average common shares outstanding (basic)         9,042       8,792       8,562

Effect of dilutive warrant and options                        81          89         344
                                                          ------      ------      ------
Weighted average common shares outstanding (diluted)       9,123       8,881       8,906
                                                          ======      ======      ======
Earnings Per Share:
Basic                                                     $ 0.78      $ 0.69      $ 0.55
                                                          ======      ======      ======
Diluted                                                   $ 0.77      $ 0.68      $ 0.53
                                                          ======      ======      ======
</TABLE>

                                       22
<PAGE>
     Options  and  warrant to  purchase  1,053,650  shares of common  stock at a
weighted average price of $10.08 per share were outstanding at December 31, 1999
but were not  included in the  computation  of Diluted EPS because the  exercise
prices were  greater  than the average  market  price of the common  shares.  At
December 31,  1998,  there were  1,129,100  options and warrant  outstanding  to
purchase  common stock at a weighted  average price of $9.97 per share  excluded
from the Diluted EPS  computation  due to their  anti-dilution.  At December 31,
1997,  there were 478,200  options and warrant  outstanding  to purchase  common
stock at a weighted  average price of $9.98 per share  excluded from the Diluted
EPS computation due to their anti-dilution.

Foreign Currency Translation and Transactions

     The financial  statements of the Company's foreign  subsidiary are measured
using the local currency as the functional  currency.  Assets and liabilities of
this  subsidiary  are  translated  at the rate of exchange at the balance  sheet
date.  Income and expense  items are  translated at average  quarterly  rates of
exchange prevailing during the year. The resulting  translation  adjustments are
included in accumulated other  comprehensive  income as a separate  component of
stockholders'  equity.  Gains and losses from foreign currency  transactions are
included in the statement of income.

Comprehensive Income

     Comprehensive  income is  defined  as the  change  in equity of a  business
enterprise  during a period from transactions and other events and circumstances
from non-owner sources.  For the Company,  comprehensive  income consists of its
reported net income or loss and the change in the foreign  currency  translation
adjustment during a period.

Stock-Based Compensation

     The Company accounts for stock-based compensation using the intrinsic value
method  prescribed  in  Accounting   Principles  Board  Opinion  (APB)  No.  25,
"Accounting  for Stock Issued to  Employees."  The Company's  policy is to grant
options with an exercise price equal to the quoted market price of the Company's
stock on the  date of the  grant.  Accordingly,  no  compensation  cost has been
recognized  in  the  Company's   Statements  of  Income.  The  Company  provides
additional  proforma  disclosures  as  required  under  Statement  of  Financial
Accounting   Standards  No.  123  ("SFAS  123"),   "Accounting  for  Stock-Based
Compensation."

Segment Reporting

     Financial  Accounting  Standards Board Statement No.131,  "Disclosure about
Segments of an Enterprise  and Related  Information"  ("SFAS 131") requires that
companies report  separately in the financial  statements  certain financial and
descriptive  information  about  operating  segments  profit  or  loss,  certain
specific revenue and expense items and segment assets.  Additionally,  companies
are  required  to report  information  about the  revenues  derived  from  their
products and service groups,  about  geographic areas in which the Company earns
revenues and holds assets, and about major customers (see Note 11).

Recently Issued Accounting Standards

     In June 1999, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards No. 137 ("SFAS 137"),  "Accounting
for Derivative  Instruments  and Hedging  Activities - Deferral of the Effective
Date of FASB  Statement  No.  133."  SFAS  137  amends  Statement  of  Financial
Accounting   Standards  No.  133  ("SFAS  133"),   "Accounting   for  Derivative
Instruments  and Hedging  Activities," to defer its effective date to all fiscal
quarters of all fiscal years beginning after June 15, 2000. SFAS 133 establishes
accounting  and  reporting  standards  for  derivative   instruments   including
standalone instruments, such as forward currency exchange contracts and interest
rate swaps or  embedded  derivatives  and  requires  that these  instruments  be
marked-to-market  on an ongoing basis.  These market value adjustments are to be
included either in the income  statement or stockholders'  equity,  depending on
the nature of the transaction.  The Company is required to adopt SFAS 133 in the
first quarter of its fiscal year 2001. The effect of SFAS 133 is not expected to
be material to the Company's financial statements.

                                       23
<PAGE>
NOTE 3 - ACQUISITIONS AND DIVESTITURES:

     On  July  8,  1999  the  Company   completed   the  sale  of  its  Contract
Manufacturing  Division,  Quadrus,  for a total  consideration  of approximately
$34.7  million.  The sale resulted in an after tax gain of $1.1 million or $0.11
per share. The results of Quadrus have been reported  separately as discontinued
operations in the Consolidated  Statements of Income and prior year consolidated
financial statements have been restated.

     On July 21, 1999, the Company  acquired  certain assets and assumed certain
liabilities of Future Tech International, Inc., a privately held company located
in Miami. Prior to its  reorganization in bankruptcy and subsequent  acquisition
of the Company, FTI was a leading value-added distributor of computer components
to the markets of Latin  America and the  Caribbean.  FTI  distributes  products
manufactured   by  AMD,   Canon,   Maxtor,   NEC,   Quantum  and  other  leading
manufacturers,  and manufactures and markets its proprietary  Markvision-branded
products.

     The FTI assets acquired were primarily accounts  receivable,  inventory and
fixed assets. As consideration  for the assets purchased,  the Company paid $2.2
million in cash,  including  acquisition costs and assumed certain  liabilities,
primarily  trade  accounts  payable.  The Company is  obligated  to pay up to an
additional  $4.5  million  in cash  within 21 months  of the  closing  date as a
contingent  incentive payment to be based upon earnings achieved up to the first
anniversary of the acquisition.

     The FTI purchase price was allocated to the acquired assets and liabilities
assumed based upon  management's  estimate of their fair market values as of the
acquisition date as follows (in thousands):

                Restricted cash                           $     23
                Accounts receivable                         12,576
                Inventories                                  2,639
                Equipment and  other assets                  3,947
                Goodwill                                     4,227
                Accounts payable                           (20,989)
                Other accrued liabilities                     (204)
                                                          --------
                Total consideration                       $  2,219
                                                          ========

     On November  19,  1998,  the Company  acquired  certain  assets and assumed
certain  liabilities  of Tenex Data  Division of Axidata,  Inc.,  for a purchase
price of approximately $5.8 million in cash including acquisition costs.

     On November  13,  1998,  the Company  acquired  certain  assets and assumed
certain liabilities of the Computer Products Division of Almo Corporation, for a
total consideration of approximately $21.7 million including  acquisition costs.
The Company issued to Almo a fully vested warrant to purchase  350,000 shares of
the Company's Common Stock at $12.00 per share, in consideration  for a covenant
not to compete. The warrant may be exercised at any date for a period up to five
years from the date of  acquisition.  The  warrant was  independently  valued at
$1,043,000;  significant  assumptions used were a risk free rate of 4.89%,  fair
value of Common Stock of $5.88 and an expected  life of five years.  The warrant
was  recorded as a  component  of equity and as a covenant  not to compete.  The
related charge will be amortized over a period of five years.

                                       24
<PAGE>
     The Almo CPD and Tenex Data purchase  prices were allocated to the acquired
assets and liabilities  assumed based upon  management's  estimate of their fair
market values as of the acquisition dates as follows (in thousands):

                                          Almo CPD    Tenex Data      Total
                                          --------    ----------     --------
     Accounts receivable                  $ 15,525      $ 5,365      $ 20,890
     Inventories                             5,991        2,737         8,728
     Equipment and other assets                517          177           694
     Intangibles-covenant not to compete     1,043           --         1,043
     Goodwill                                3,645        1,373         5,018
     Accounts payable                       (4,135)      (3,645)       (7,780)
     Other accrued liabilities                (929)        (186)       (1,115)
                                          --------      -------      --------
     Total consideration                  $ 21,657      $ 5,821      $ 27,478
                                          ========      =======      ========

     All acquisitions have been accounted for under the purchase method and were
funded through  borrowings  under the Company's  revolving  line of credit.  The
results  of  operations  of  the  acquired   businesses   are  included  in  the
consolidated financial statements from the dates of acquisition.

     The  following  unaudited pro forma  combined  summary of operations of the
Company give effect to the  acquisitions  of FTI,  Almo CPD, and Tenex Data,  as
though these acquisitions had occurred on January 1, 1998.

                                                         Year Ended December 31,
                                                        ------------------------
                                                              (unaudited)
                                                          1999           1998
                                                        ---------      --------
                                                              (in thousands)
     Pro forma net sales                                $1,131,003     $913,551
     Pro forma net income/(loss)                        $    3,908     $ (7,642)

     Pro forma earnings per share - continuing
      operations
        Basic                                           $     0.43     $  (0.87)
        Diluted                                         $     0.42     $  (0.86)

     Shares used in per share calculation
        Basic                                                9,190         8,792
        Diluted                                              9,289         8,881

     The pro forma  loss for 1998  includes  charges  incurred  by FTI for $13.3
million  of  unrecoverable   related  party  receivables  due  from  the  former
controlling  shareholder  and $3.1  million  of  legal  and  professional  fees.
Excluding  these  charges,  the pro forma  income  for 1998 would have been $1.9
million and pro forma earnings per share would have been $0.21 per share.

     The unaudited pro forma  combined  summary of  operations  assumes:  1) the
amortization of goodwill over a fifteen year period,  2) the amortization of the
covenant  not to  compete  over  the five  year  period,  and 3) the  additional
interest  expense on debt incurred in connection with the acquisitions as if the
debt had been outstanding from January 1, 1998.

     The unaudited pro forma combined  summary of operations does not purport to
be  indicative  of the results  which  actually  would have been obtained if the
acquisitions  had been made at the  beginning of 1998 or of those  results which
may be obtained in the future.

                                       25
<PAGE>
NOTE 4 - BALANCE SHEET COMPONENTS:

                                                            December 31,
                                                      ------------------------
                                                        1999             1998
                                                      --------         -------
                                                            (in thousands)

     Property and equipment:
       Computer and other equipment                   $  6,753         $ 3,121
       Furniture and fixtures                            2,354           1,761
       Leasehold improvements                              899             476
       Warehouse equipment                               1,412             484
                                                      --------         -------
                                                        11,418           5,842
       Less: accumulated depreciation                   (3,792)         (2,487)
                                                      --------         -------
                                                      $  7,626         $ 3,355
                                                      ========         =======

NOTE 5 - LINE OF CREDIT AND TERM LOAN:

     On December 8, 1999 and as further amended on December 31,1999, the Company
entered into an amendment to the Third  Amended and Restated  Syndicated  Credit
Agreement,  arranged  by  California  Bank &  Trust,  as  agent.  The  amendment
increased the Company's  $130 million  revolving line of credit to $160 million,
and extended its maturity  date to May 31, 2001. At the  Company's  option,  the
borrowings  under the line of credit  will bear  interest at  California  Bank &
Trust's prime rate (8.50% at December 31, 1999) or the adjusted  LIBOR rate plus
a maximum of 2.25%.  The balance  outstanding on the revolving line of credit at
December  31, 1999 was $110.6  million.  Obligations  of the  Company  under the
revolving  line of credit are  secured  by  substantially  all of the  Company's
assets.  The  revolving  line of credit  requires  the  Company to meet  certain
financial tests and to comply with certain other covenants on a quarterly basis,
including restrictions on incurrence of debt and liens, restrictions on mergers,
acquisitions,  asset  dispositions,  declaration  of dividends,  repurchases  of
stock, making investments and profitability.  The Company was in compliance with
its bank covenants at December 31, 1999; however, there can be no assurance that
the Company will be in compliance in the future.

NOTE 6 - STOCK-BASED COMPENSATION PLANS:

Stock Option Plans

     In May of 1998, the Company  adopted the 1998 Stock Plan (the "Plan") which
replaced the 1988 Amended and  Restated  Incentive  Stock Plan (the "1988 Plan")
and the 1993  Director  Stock  Option Plan (the  "Director  Plan").  All options
granted after May 1998 are granted under the 1998 Stock Plan.

     The Plan provides for the grant of stock options and stock purchase  rights
to employees,  directors and  consultants of the Company at prices not less than
the fair value of the Company's  Common Stock at the date of grant for incentive
stock  options  and prices not less than 85% of the fair value of the  Company's
Common Stock for nonstatutory stock options and stock purchase rights. Under the
Plan,  the Company has reserved for issuance a total of 856,569 shares of Common
Stock plus 181,672 shares of Common Stock which were reserved but unissued under
the 1988 Plan and 35,000 shares of Common Stock which were reserved but unissued
under the Director Plan. The maximum  aggregate number of shares of Common Stock
which may be  optioned  and sold  under the Plan is  1,073,241  shares,  plus an
annual  increase to be added on January 1 of each year beginning in 1999,  equal
to the lesser of (i) 400,000 shares,  (ii) 4% of the outstanding  shares on such
date, or (iii) a lesser amount determined by the Board of Directors,  subject to
adjustment upon changes in capitalization of the Company.  Since inception,  the
Company has reserved  3,895,322  shares of Common  Stock for issuance  under the
aggregate of all stock option plans.

     The stock options become exercisable over a vesting period as determined by
the Board of Directors  and expire over terms not  exceeding  ten years from the
date of grant. If an optionee ceases to be employed by the Company, the optionee
may,  within one month (or such other period of time, as determined by the Board
of Directors,  but not exceeding  three months)  exercise  options to the extent
vested.

                                       26
<PAGE>
     As part of the Plan, the Board of Directors adopted a Management  Incentive
Program (the  "Program")  for key  employees.  Under this  Program,  options for
140,000,  40,500 and 130,000  shares of Common Stock were granted in 1999,  1998
and 1997,  respectively.  The Program  provides for  ten-year  option terms with
vesting  at the rate of one tenth  per  year,  with  potential  for  accelerated
vesting based upon  attainment of certain  performance  objectives.  The options
lapse  ten  years  after  the  date of grant or such  shorter  period  as may be
provided for in the stock option agreement.

     Options  granted under the Director Plan prior to May 1998 and  outstanding
at December 31, 1999 total 90,000.  Under the Director Plan, 75,000 options were
granted in 1993 at an exercise price of $8.00 per share, and 20,000 options were
granted in 1996 at an exercise price of $7.00 per share. In 1997, 20,000 options
were granted at an exercise price of $12.63 per share.  In 1998,  15,000 options
were  granted at an exercise  price of $7.50 per share.  On August 5, 1999,  the
Board of Directors approved the vesting in full of all options currently held by
the  Directors  and  modified the Plan to  immediately  vest all future Board of
Directors options at the time they are granted.

     The following table presents activity under all Stock Plans:

                                                          Options Outstanding
                                                        ------------------------
                                           Options                  Weighted
                                        Available for                Average
                                            Grant       Shares    Exercise Price
                                         ----------     ------    --------------

Balance at December 31, 1996                246,843    1,304,000     $ 7.10

Increase in options available for grant     300,000           --         --
Options canceled                            280,729     (280,729)    $ 7.11
Options granted                            (649,500)     649,500     $ 9.64
Options exercised                                --     (147,312)    $ 6.48
                                         ----------   ----------     ------
Balance at December 31, 1997                178,072    1,525,459     $ 8.24

Increase in options available for grant     500,000           --         --
Options canceled                            491,050     (491,050)    $ 8.33
Options granted                            (770,800)     770,800     $ 8.14
Options exercised                                --     (110,796)    $ 7.14
                                         ----------   ----------     ------
Balance at December 31, 1998                398,322    1,694,413     $ 8.24
                                         ==========   ==========     ======

Increase in options available for grant     356,569           --         --
Options canceled                            444,588     (444,588)    $ 8.41
Canceled options not available for grant   (408,238)          --     $ 8.37
Options granted                            (715,200)     715,200     $ 6.99
Options exercised                          (234,877)                 $ 7.11
                                         ----------   ----------     ------
Balance at December 31, 1999                 76,041    1,730,138     $ 8.25
                                         ==========   ==========     ======

     At December 31, 1999,  555,475 options were exercisable  under these Plans.
Upon the adoption of the 1998 Stock Plan,  canceled  options under the 1988 Plan
are not available for future grants.

                                       27
<PAGE>
     The following table summarizes  information about stock options outstanding
for all plans at December 31, 1999:

<TABLE>
<CAPTION>
                                    OPTIONS OUTSTANDING                         OPTIONS EXERCISABLE
                    --------------------------------------------------    ----------------------------------
                     Number of
                      Options           Weighted
                    Outstanding         Average
                       As of           Remaining           Weighted        Number of Shares      Weighted
Range of Exercise    December 31,   Contractual Life        Average        Exercisable As of      Average
    Prices              1999            In Years        Exercise Price    December 31, 1999    Exercise Price
<S>                 <C>                 <C>                <C>                 <C>               <C>
$ 6.44 - $ 6.50       292,788             4.70               $6.48               87,600            $6.50
$ 6.63 - $ 7.00       211,200             5.41                6.65               47,250             6.75
$ 7.25 - $ 7.25       378,000             4.80                7.25               26,250             7.25
$ 7.50 - $ 7.88       232,500             4.66                7.67              109,825             7.69
$ 8.00 - $ 8.75       138,750             2.47                8.37               96,750             8.32
$ 8.81 - $ 8.81       235,000             3.33                8.81               70,000             8.81
$ 9.00 - $11.13       226,400             3.41               10.16              102,300            10.19
$11.50 - $12.63        15,500             6.98               12.59               15,500            12.59
                    ---------             ----               -----              -------            -----
                    1,730,138             4.29               $7.83              555,475            $8.25
                    =========             ====               =====              =======            =====
</TABLE>

Employee Stock Purchase Plan

     The Employee  Stock  Purchase Plan ("ESPP")  provides for automatic  annual
increases  in the number of shares  reserved  for  issuance on January 1 of each
year  beginning in 1999 by a number of shares equal to the lesser of (i) 150,000
shares,  (ii) 1.5% of the  outstanding  shares on such  date,  or (iii) a lesser
amount determined by the Board of Directors,  subject to adjustment upon changes
in capitalization of the Company.

     The Company has reserved 763,714 shares of Common Stock for issuance to all
eligible  employees under its ESPP.  Sales made through this plan will be at the
lower of 85% of market price at the date of purchase or on the first day of each
six-month offering period in the prior two years. A total of 537,949 shares have
been issued under this plan as of December 31, 1999.

Fair Value Disclosures

     At December 31, 1999, the Company had two stock-based compensation plans as
described above. The Company applies APB Opinion 25 and related  interpretations
in  accounting  for its  plans.  Accordingly,  no  compensation  cost  has  been
recognized for its plans,  all of which are fixed plans.  The fair value of each
option grant used for  calculating pro forma net income is estimated on the date
of  grant  using  the  Black-Scholes  multiple  option-pricing  model  with  the
following  weighted average  assumptions used for grants in 1999, 1998 and 1997,
respectively;  expected volatility of 35%; risk free interest rate of 4.9%, 5.0%
and 5.9% and expected  lives of 3.85,  3.79 and 3.92 years.  The Company has not
paid dividends and assumed no dividend yield. The weighted average fair value of
those stock options  granted in 1999,  1998 and 1997 was $2.26,  $2.64 and $3.35
per  option,  respectively.  The  fair  value  of each  ESPP  purchase  right is
estimated  on the  beginning  of the  offering  period  using the  Black-Scholes
option-pricing  model with the following  weighted  average  assumptions used in
1999,  1998 and  1997,  respectively;  expected  volatility  of 35%;  risk  free
interest  rate of 4.98%,  4.91% and 5.56% and expected  lives of 0.5 years.  The
Company  has not paid  dividends  and assumed no dividend  yield.  The  weighted
average fair value of those purchase  rights  granted in 1999,  1998 and 1997 as
defined by SFAS 123,  was $2.04,  $1.97 and $2.43 per right,  respectively.  Had
compensation  cost for the Company's  two  stock-based  compensation  plans been
determined  based on the fair value at the grant dates for awards in 1999,  1998
and  1997  under  those  plans  consistent  with  the  provisions  of  Financial

                                       28
<PAGE>
Accounting  Standards No. 123,  "Accounting for Stock-Based  Compensation",  the
Company's net income and earnings per share would have been reduced as presented
below (in thousands, except per share data):

                                      1999          1998            1997
                                     ------        ------          ------
     Net income:
       As reported                   $8,930        $6,075          $4,689
       Pro forma                      8,126         5,499           4,015
     Earnings per share
       As reported
         Basic                        0.99           0.69            0.55
         Diluted                      0.98           0.68            0.53
       Pro forma
         Basic                        0.90           0.63            0.47
         Diluted                      0.89           0.62            0.47

     Because  additional stock options and stock purchase rights are expected to
be granted each year and this pro forma presentation includes only the effect of
options granted subsequent to December 31, 1994, the above pro forma disclosures
are not  considered by management to be  representative  of pro forma effects on
reported financial results for future years.

NOTE 7 - INCOME TAXES:

     The provision for income taxes consists of the following (in thousands):

                                    1999             1998             1997
                                  -------          -------          -------
Current:
       Federal                    $ 4,264          $ 5,070          $ 1,880
       State                          747              790              396
       Foreign                        349               17               --
                                  -------          -------          -------
                                    5,360            5,877            2,276
     Deferred:
       Federal                       (697)          (1,195)             968
       State                          256             (282)             151
       Foreign                        293               --               --
                                  -------          -------          -------
                                  $ 5,212          $ 4,400          $ 3,395
                                  =======          =======          =======

     Deferred tax assets (liabilities) comprise the following (in thousands):

                                                    1999       1998       1997
                                                   ------     ------     ------
     Bad debt, sales and warranty reserves         $1,914     $1,598     $  637
     Inventory reserves and basis differences       1,860      2,347      1,605
     Compensation accruals and reserves               228        261        254
     State taxes, net of federal benefit              265        198         70
     Unrealized foreign gain                         (298)        --         --
     Other                                            322        600        805
                                                   ------     ------     ------
      Gross deferred tax assets                     4,291      5,004      3,371
                                                   ------     ------     ------

     Basis differential in assets                      --        (89)       (98)
     Depreciation                                     (71)      (843)      (678)
                                                   ------     ------     ------
      Gross deferred tax liabilities                  (71)      (932)      (776)
                                                   ------     ------     ------

      Net deferred tax asset                       $4,220     $4,072     $2,595
                                                   ======     ======     ======

                                       29
<PAGE>

     The net deferred tax asset represents temporary  differences for future tax
deductions  which can  generally be realized by  carryback to taxable  income in
prior years.  Net deferred tax assets are included in prepaid expenses and other
assets at December 31, 1999 and 1998.

     A  reconciliation  of the Federal  statutory  tax rate to the effective tax
rate follows:

                                                 1999        1998        1997
                                                 ----        ----        ----

     Federal statutory rate                      35.0%       35.0%       34.0%
     State income taxes, net of Federal tax
       benefit and credits                        4.6%        4.1%        4.2%
     Foreign tax net of FTC                       0.5%        0.0%        0.0%
     Other                                        2.3%        2.9%        3.8%
                                                 ----        ----        ----

                                                 42.4%       42.0%       42.0%
                                                 ====        ====        ====

NOTE 8 - COMMITMENTS AND CONTINGENCIES:

     The  Company  leases its  facilities  under  cancelable  and  noncancelable
operating lease agreements.  The leases expire at various times through 2006 and
contain  renewal  options.  Certain of the  leases  require  the  Company to pay
property taxes, insurance, and maintenance costs.

     The following is a summary of commitments under leases:

                                                    Operating
             Year Ending December 31,                Leases
             ------------------------                ------
                                                  (in thousands)
              2000                                   $2,753
              2001                                    2,372
              2002                                    1,841
              2003                                      861
              2004                                      546
              2005 and beyond                           135
                                                     ------

              Total minimum lease payments           $8,508
                                                     ======

     Total operating lease expense was $2,797,000, $2,920,000 and $2,508,000 for
the years ended December 31, 1999, 1998 and 1997, respectively.

     The  Company is subject to legal  proceedings  and claims that arise in the
normal course of business.  Management  believes that the ultimate resolution of
such matters will not have a material adverse effect on the Company's  financial
position or results of operations.

     During 1999,  the Company  filed suit  against  American  Credit  Indemnity
("ACI"), its former credit insurer, for recovery of amounts due under claim made
by the Company.  ACI has counter  sued for  rescission  of the credit  insurance
contract for repayment of claims  previously  paid.  Management has reviewed and
investigated  the claims,  and while no  assurance  can be given  regarding  the
outcome of this matter, management believes that the final outcome of the matter
will not have a material impact on consolidated financial position or results of
operations.  However,  because  of the  nature  and  inherent  uncertainties  of
litigation, should the outcome of this matter be unfavorable, the Company may be
required to pay damages and other expenses,  which could have a material adverse
effect on its financial position and results of operations.

                                       30
<PAGE>
NOTE 9 - TRANSACTIONS WITH RELATED PARTIES:

     The Company's  manufacturing  segment,  which was disposed of in June 1999,
had entered into  manufacturing  agreements  providing  for the  performance  of
value-added  turnkey services for Pinnacle  Systems,  Inc.  ("Pinnacle"),  Reply
Corporation  ("Reply"),  and Network Peripherals Inc.,  ("NPI").  Sales to these
parties and purchases of inventory  from these parties for the three years ended
December 31, 1999 and accounts  receivable and inventory on hand at December 31,
1999 and 1998 are summarized below:

                                                      (In thousands)
                                              -------------------------------
                                              1999          1998         1997
     Sales:                                   ----          ----         ----

                             Pinnacle        $3,645        $9,590       $2,840
                             Reply                -             -          262
                             NPI              1,446         8,241            -
     Accounts receivable:
                             Pinnacle             -         1,828
                             Reply                -             -
                             NPI                  -           984
     Inventory purchased:
                             Pinnacle         1,150         2,169        1,532
                             Reply                -             -          123
                             NPI                  -           546            -
     Inventory on hand:
                             Pinnacle             -         1,564
                             Reply                -             -
                             NPI                  -           737

     The agreements were entered into in the ordinary course of business and the
Company  believes that there were terms no less favorable than reasonably  could
have been obtained from unaffiliated  parties.  The agreement with NPI commenced
in May 1998. The agreement with Reply terminated in 1997.  Glenn E. Penisten,  a
director of the  Company,  is a director of Pinnacle,  Reply and NPI.  Gordon A.
Campbell, a director of the Company, is a director of Reply.

     The Company purchased  approximately $0 and $858,000 of inventory from 3DFX
Interactive, Inc. ("3DFX") in 1999 and 1998 respectively. The inventory on hand,
purchased  from 3DFX,  totaled $0 at December  31, 1999 and $139,000 at December
31, 1998,  respectively.  Gordon A.  Campbell,  a director of the Company,  is a
director  of  3DFX.  The  Company  sold $0 and  $1,528,000  to 3Com  Corporation
("3Com") in 1999 and 1998,  respectively.  The accounts  receivable balance from
3Com was $0 and $469,000 at December 31, 1999 and 1998, respectively.  Gordon A.
Campbell, a director of the Company, is a director of 3Com. The Company believes
that terms of these transactions were no less favorable than reasonable could be
expected to be obtained from unaffiliated parties.

NOTE 10 - SALARY SAVINGS PLAN:

     The  Company  has  a  Section   401(k)  Plan  (the  Plan)  which   provides
participating  employees an opportunity  to accumulate  funds for retirement and
hardship.  Participants  may contribute up to 15% of their eligible  earnings to
the Plan.  The  Company  may  elect to make  matching  contributions  equal to a
discretionary  percentage  of  participants'  contributions  up to the statutory
maximum  of  participants'  eligible  earnings.  The  Company  has not  made any
contributions to the Plan.

                                       31
<PAGE>
   SELECTED QUARTERLY FINANCIAL DATA FROM CONTINUING OPERATIONS (UNAUDITED):

<TABLE>
<CAPTION>
                                                       (in thousands, except per share amounts)

                                                                   Quarter Ended
                          -------------------------------------------------------------------------------------------
                           Mar. 31,    June 30,   Sept. 30,   Dec. 31,    Mar. 31,   June 30,    Sept. 30,   Dec. 31,
                            1998        1998        1998       1998        1999        1999        1999       1999
                          --------    --------    --------    --------    --------    --------    --------   --------
<S>                       <C>         <C>         <C>         <C>         <C>         <C>         <C>        <C>
Net sales ..............  $116,658    $124,402    $148,815    $185,455    $219,599    $231,627    $283,359   $323,690

Cost of ................   102,069     109,666     133,085     166,656     200,177     210,826     259,384    297,104
                          --------    --------    --------    --------    --------    --------    --------   --------
Gross profit ...........    14,589      14,736      15,730      18,799      19,422      20,801      23,975     26,586

Selling, general and
 administrative
 expenses ..............    10,991      10,847      11,373      12,859      14,955      15,926      18,253     20,373
                          --------    --------    --------    --------    --------    --------    --------   --------
Income from continuing
 operations ............     3,598       3,889       4,357       5,940       4,467       4,875       5,722      6,213
Interest ...............       781         595         748       1,044       1,224       1,556       1,676      1,957
Remeasurement gain .....        --          --          --          --          --        (358)       (123)      (166)
                          --------    --------    --------    --------    --------    --------    --------   --------
Income from continuing
 operations before
 income taxes ..........     2,817       3,294       3,609       4,896       3,243       3,677       4,169      4,422
Provision for income
 taxes .................    (1,183)     (1,383)     (1,516)     (2,057)     (1,362)     (1,544)     (1,813)    (1,862)
                          --------    --------    --------    --------    --------    --------    --------   --------
Income from continuing
 operations ............  $  1,634    $  1,911    $  2,093    $  2,839    $  1,881    $  2,133    $  2,356   $  2,560
                          ========    ========    ========    ========    ========    ========    ========   ========

Earnings per share
  Basic ................  $   0.19    $   0.22    $   0.24    $   0.32    $   0.21    $   0.24    $   0.26   $   0.28

  Diluted ..............  $   0.19    $   0.22    $   0.24    $   0.32    $   0.21    $   0.24    $   0.26   $   0.28
                          ========    ========    ========    ========    ========    ========    ========   ========
Shares used in per share
 calculation
  Basic ................     8,723       8,767       8,831       8,848       8,932       8,945       9,096      9,196
                          ========    ========    ========    ========    ========    ========    ========   ========
  Diluted ..............     8,795       8,855       8,874       8,998       9,010       8,982       9,211      9,289
                          ========    ========    ========    ========    ========    ========    ========   ========
</TABLE>

ITEM 9: Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure

     None.

                                       32
<PAGE>
                                    PART III

     Pursuant  to  Paragraph  G(3) of the  General  Instructions  to Form  10-K,
portions of the information  required by Part III of Form 10-K are  incorporated
by reference from the Company's  Proxy Statement to be filed with the Commission
in  connection  with  the  2000  Annual  Meeting  of  Shareholders  (the  "Proxy
Statement").

ITEM 10: Directors and Executive Officers of the Registrant


     (a)  Information  concerning  directors  of  the  Company  appears  in  the
          Company's Proxy Statement,  under Item 1 "Election of Directors." This
          portion of the Proxy Statement is incorporated herein by reference.

     (b)  Executive Officers Of The Registrant

          The  following   table  and   descriptions   identify  and  set  forth
          information regarding the Company's six executive officers:


                    Name           Age                Position
                    ----           ---                --------

          W. Donald Bell ........  62    President, Chief Executive Officer
                                         and Chairman of the Board

          Remo E  Canessa .......  42    Vice President of Finance and Chief
                                         Financial Officer

          Brian J  Clark ........  46    Senior Vice President of Industrial
                                         Sales

          Gary Gammon ...........  35    Senior Vice President of Computer
                                         Products Sales

          Philip M  Roussey .....  57    Senior Vice President of Computer
                                         Products Marketing

          Robert J  Sturgeon ....  46    Vice President of Operations

               W. Donald Bell has been President,  Chief  Executive  Officer and
          Chairman of the Board of the Company since its inception in 1987.  Mr.
          Bell has over thirty years of experience in the electronics  industry.
          Mr.  Bell  was  formerly  the  President  of  Ducommun  Inc.  and  its
          subsidiary,  Kierulff  Electronics  Inc., as well as Electronic Arrays
          Inc. He has also held senior management positions at Texas Instruments
          Incorporated,  American Microsystems and other electronics  companies.
          He is a member of the Board of Directors of Control Data Systems Inc.

               Remo E.  Canessa  has been Vice  President  of Finance  and Chief
          Financial  Officer since  November of 1998.  Mr.  Canessa was formerly
          Vice  President  of Finance  and Chief  Financial  Officer of Infoseek
          Corporation.  From  1993 to 1998 he was a part of Bell  Microproducts'
          management team, serving first as Corporate  Controller,  then as Vice
          President of Finance and as its Acting Chief Financial Officer. He has
          held senior management positions at Ampex Corporation, Raster Graphics
          Inc. and Geoworks Corporation.

               Brian J. Clark has been Senior Vice President of Industrial Sales
          since September of 1997. Mr. Clark has over twenty-three  years in the
          electronic business.  Mr. Clark was formerly the Vice President of the
          Northern  California Region of Arrow Electronics,  and prior to Arrow,
          he held senior management positions at Kierulff and Wyle Electronics

                                       33
<PAGE>
               Gary Gammon has been Senior Vice  President of Computer  Products
          Sales  since June of 1999.  Before  joining  Bell  Microproducts,  Mr.
          Gammon was Vice  President of Sales for  Gates/Arrow  Distributing,  a
          distributor of computer  systems,  peripherals and software.  While at
          Gates/Arrow,  he also  served  as Vice  President  for the  enterprise
          computing  business and Vice  President of technical  sales.  Prior to
          that time, Mr. Gammon was a Sales Executive with Data General.

               Philip M.  Roussey  has been Senior  Vice  President  of Computer
          Products  Marketing  since March 1993.  Prior to that time, he was the
          Company's  Vice  President of Marketing  since its  inception in 1987.
          Prior to joining the Company, Mr. Roussey was Corporate Vice President
          of Marketing  of Kierulff  Electronics  during 1987,  and from 1982 to
          1986,  Mr.  Roussey  held the  position of Vice  President of Computer
          Products at Kierulff Electronics.

               Robert J. Sturgeon has been Vice  President of  Operations  since
          1992. Mr. Sturgeon was formerly  Director of Information  Services for
          Disney Home Video from  January 1991 to February  1992.  Prior to that
          time, Mr. Sturgeon served as Management  Information  Services ("MIS")
          Director for Paramount Pictures, Home Video Division from June 1989 to
          January 1991 and as a Marketing Manager for MTI Systems, a division of
          Arrow  Electronics  Inc.,  from  January  1988  to  June  1989.  Other
          positions Mr. Sturgeon has held include Executive  Director of MIS for
          Ducommun  where  he  was  responsible  for  ten  divisions,  including
          Kierulff Electronics.

     (c)  Information concerning Compliance with Section 16(a) of the Securities
          Exchange Act of 1934 appears in the Company's Proxy  Statement,  under
          the heading  "Compliance with Section 16(a) of the Securities Exchange
          Act of 1934," and is incorporated herein by reference.

                                       34
<PAGE>
ITEM 11: Executive Compensation

     Information  concerning  executive  compensation  appears in the  Company's
Proxy Statement, under the caption "Executive Compensation," and is incorporated
herein by reference.

ITEM 12: Security Ownership of Certain Beneficial Owners and Management

     Information  concerning the security ownership of certain beneficial owners
and management appears in the Company's Proxy Statement,  under Item 1 "Election
of Directors," and is incorporated herein by reference.

ITEM 13: Certain Relationships and Related Transactions

     Information  concerning  certain  relationships  and  related  transactions
appears in the Company's Proxy Statement,  under Item 1 "Election of Directors,"
and is incorporated herein by reference.

                                     PART IV

ITEM 14: Exhibits, Financial Statement Schedules, and Reports on Form 8-K

     (a)  The following documents are filed as part of this Form 10-K:

          (1)  Consolidated Financial Statements

               The financial statements  (including the notes thereto) listed in
          the Index to Consolidated  Financial  Statement Schedule (set forth in
          Item 8 of Part II of this form 10-K) are filed as part of this  Annual
          Report on Form 10-K.

          (2)  Consolidated financial Statement Schedule

               II - Valuation and Qualifying Accounts and Reserves       page 42

     Schedules not listed above have been omitted  because they are not required
or  the  information  required  to be  set  forth  therein  is  included  in the
Consolidated Financial Statements or Notes to Consolidated Financial Statements.

                                       35
<PAGE>
          (3)  Exhibits

     Number    Description of Document


        3.1     Amended and Restated Articles of Incorporation of Registrant (2)

        3.2     Amended and Restated Bylaws of Registrant (3)

        4.1     Specimen Common Stock Certificate of the Registrant (3)

        4.2     Amended and Restated  Registration  Rights  Agreement dated June
                11, 1992 between Registrant and certain investors named therein,
                as amended (1)

        4.3     Warrant issued to Almo Corporation (7)

        10.1    1998 Stock Plan (9)

        10.2    The form of Option Agreement used under the 1998 Stock Plan (9)

        10.3    Employee Stock  Purchase  Plan, as amended  through May 21, 1998
                (9)

        10.4    The form of  Option  Agreement  used  under the  Employee  Stock
                Purchase Plan (4)

        10.5    Registrant's 401(k) Plan (3)

        10.6    Lease dated March 17, 1992 for  Registrant's  facilities at 1941
                Ringwood Avenue, Suite 100, San Jose, California (3)

        10.7    Lease dated April 15, 1993 for  Registrant's  facilities at 2350
                Lundy Place, San Jose, California (1)

        10.8    Standard Distributor Agreement dated June 1, 1990 by and between
                Quantum Corporation and Registrant (3)

        10.9    Form of Indemnification Agreement (3)

        10.10   IBM Authorized  Distributor Agreement dated May 17, 1993 between
                IBM Corporation and Registrant (3)

        10.11   Sublease dated November 12, 1996 for the Registrant's facilities
                at 2020 South Tenth Street,  San Jose,  California,  and related
                exhibits (8)

        10.12*  Employment  Agreement  dated as of December 10, 1996 between the
                Registrant and W. Donald Bell, the Registrant's  Chief Executive
                Officer (8)

        10.13   Form of Management  Retention  Agreement  between the Registrant
                and the  following  executive  officers  of the  Registrant:  W.
                Donald Bell, Bruce M. Jaffe,  Ronald H. Mabry, Philip M. Roussey
                and Robert J. Sturgeon (8)

        10.14   Third  Amendment  and  Restated  Credit  Agreement  dated  as of
                November 12, 1998 by and among the  Registrant,  the Banks named
                therein and California Bank & Trust, as Agent for the Banks (7)

                                       36
<PAGE>
        10.15   Asset  Purchase  Agreement  dated as of  November 5, 1998 by and
                between  the  Company,   Almo  Corporation,   Almo  Distributing
                Pennsylvania,  Inc.,  Almo  Distributing  Maryland,  Inc.,  Almo
                Distributing Minnesota,  Inc., Almo Distributing Wisconson, Inc.
                and Almo Distributing, Inc.

        10.16   Fourth  Amendment to Third Amended and Restated Credit Agreement
                dated  December 8, 1999 by and among the  Registrant,  the Banks
                named  therein  and  California  Bank & Trust,  as agent for the
                Banks (10)

        10.17   Fifth Amendment to Third Amended and Restated  Credit  Agreement
                dated December 31, 1999 by and among the  Registrant,  the Banks
                named  therein  and  California  Bank & Trust,  as agent for the
                Banks (10)

        10.18   Lease dated August 1, 1999 for  Registrant's  facilities at 1941
                Ringwood Avenue, Suite 200, San Jose, California (10)

        21.1    Subsidiaries of the Registrant

        23.1    Consent of PricewaterhouseCoopers LLP, independent accountants

        24.1    Power of Attorney (contained on page 21)

----------

     *    Confidential treatment has been granted for portions of this document.

     (1)  Incorporated  by  reference  to exhibit  filed  with the  Registrant's
          Report on Form 10-K for the fiscal year ended  December 31, 1993 filed
          on March 31, 1994.

     (2)  Incorporated  by reference to exhibit filed with the  Registrant's
          Registration  Statement on Form S-8 (File No.  33-66580)  filed on
          July 29, 1993.

     (3)  Incorporated  by  reference  to exhibit  filed  with the  Registrant's
          Registration  Statement on Form S-1 (File No. 33-60954) filed on April
          14, 1993 and which became effective on June 14, 1993.

     (4)  Incorporated  by reference to exhibit filed with the  Registrant's
          Registration  Statement on Form S-8 (File No.  33-83398)  filed on
          August 29, 1994.

     (5)  Incorporated  by  reference  to exhibit  filed  with the  Registrant's
          Registration  Statement  on Form S-8  (File  No.  333-10837)  filed on
          August 26, 1996.

     (6)  Incorporated  by  reference  to exhibit  filed  with the  Registrant's
          Report on Form 10Q for the quarter ended June 30, 1996.

     (7)  Incorporated  by  reference  to exhibit  filed  with the  Registrant's
          Report on Form 8-K (File No. 000-21528) filed on December 4, 1998.

     (8)  Incorporated  by  reference  to exhibit  filed  with the  Registrant's
          Report on Form 10-K for the fiscal year ended  December 31, 1996 filed
          on March 31, 1997.

     (9)  Incorporated  by  reference  to exhibit  filed  with the  Registrant's
          Report on Form S-8 (File No. 333-58053) filed on June 30, 1998.

     (10) Incorporated  by  reference  to exhibit  filed  with the  Registrant's
          Report on Form 10K for the fiscal year ended  December  31, 1999 filed
          on March 30, 2000.

     (b)  Reports on Form 8-K. Filed on October 4, 1999.

     (c)  Exhibits. See Item 14(a) above.

     (d)  Financial Statements Schedules. See Item 14(a) above.

                                       37
<PAGE>
                                                                     SCHEDULE II
<TABLE>

                             BELL MICROPRODUCTS INC.

                 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
                         ALLOWANCE FOR DOUBTFUL ACCOUNTS
                                 (in thousands)
<CAPTION>

                                                  Additions
                            Balance at           Charged to
                           Beginning of          Costs and        Deductions-      Balance at End
Year Ended December 31,       Period              Expenses         Write-offs         of Period
-----------------------       ------              --------         ----------         ---------
<S>                          <C>                   <C>              <C>                 <C>
  1999                       $3,486                $6,896           $(5,396)            $4,986

  1998                        1,331                 4,630            (2,475)             3,486

  1997                        4,228                 1,763            (4,660)             1,331
</TABLE>

                                       38
<PAGE>

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized on March 30, 2000.

                                            BELL MICROPRODUCTS INC.


                        By: /s/ Remo E. Canessa
                           -----------------------------------------------------
                           Remo E. Canessa
                           Chief Financial Officer and Vice President of Finance
                           (Principal Financial and Accounting Officer)

                                POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS,  that each person whose  signature  appears
below  constitutes  and  appoints W. Donald Bell and Remo E. Canessa and each of
them,  jointly and  severally,  his  attorneys-in-fact,  each with full power of
substitution,  for him in any and all capacities, to sign any and all amendments
to this Report on Form 10-K,  and to file the same,  with  exhibits  thereto and
other  documents  in  connection  therewith,  with the  Securities  and Exchange
Commission,   hereby   ratifying   and   confirming   all  that   each  of  said
attorneys-in-fact,  or his substitute or substitutes, may do or cause to be done
by virtue hereof.

<TABLE>

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Report on Form 10-K has been signed below by the following  persons on behalf of
the Registrant and in the capacities and on the dates indicated:
<CAPTION>

        Signature                                 Title                                        Date
        ---------                                 -----                                        ----

<S>                              <C>                                                      <C>
/s/ W. Donald Bell               Chairman of the Board, President and Chief               March 30, 2000
-----------------------------    Executive Officer (Principal Executive Officer)
(W. Donald Bell)


/s/ Remo E. Canessa              Vice President of Finance and Chief Financial Officer    March 30, 2000
-----------------------------    (Principal Financial and Accounting Officer)
(Remo E. Canessa)


/s/ Gordon A. Campbell           Director                                                 March 30, 2000
-----------------------------
(Gordon A. Campbell)


/s/ Eugene Chaiken               Director                                                 March 30, 2000
-----------------------------
(Eugene Chaiken)


/s/ Edward L. Gelbach            Director                                                 March 30, 2000
-----------------------------
(Edward L. Gelbach)


/s/ James E. Ousley              Director                                                 March 30, 2000
-----------------------------
(James E. Ousley)


/s/ Glenn E. Penisten            Director                                                 March 30, 2000
-----------------------------
 (Glenn E. Penisten)
</TABLE>

                                       39
<PAGE>
                                INDEX TO EXHIBITS


Number                        Description of Document
------                        -----------------------

3.1      Amended and Restated Articles of Incorporation of Registrant (2)

3.2      Amended and Restated Bylaws of Registrant (3)

4.1      Specimen Common Stock Certificate of the Registrant (3)

4.2      Amended and Restated  Registration Rights Agreement dated June 11, 1992
         between Registrant and certain investors named therein, as amended (1)

4.3      Warrant issued to Almo Corporation (7)

10.1     1998 Stock Plan (9)

10.2     The form of Option Agreement used under the 1998 Stock Plan (9)

10.3     Employee Stock Purchase Plan, as amended through May 21, 1998 (9)

10.4     The form of Option  Agreement  used under the Employee  Stock  Purchase
         Plan (4)

10.5     Registrant's 401(k) Plan (3)

10.6     Lease dated March 17, 1992 for Registrant's facilities at 1941 Ringwood
         Avenue, Suite 100, San Jose, California (3)

10.7     Lease dated April 15, 1993 for  Registrant's  facilities  at 2350 Lundy
         Place, San Jose, California (1)

10.8     Standard  Distributor  Agreement  dated  June 1,  1990  by and  between
         Quantum Corporation and Registrant (3)

10.9     Form of Indemnification Agreement (3)

10.10    IBM  Authorized  Distributor  Agreement  dated May 17, 1993 between IBM
         Corporation and Registrant (3)

10.11    Sublease  dated  November 12, 1996 for the  Registrant's  facilities at
         2020 South Tenth Street, San Jose, California, and related exhibits (8)

10.12*   Employment  Agreement  dated  as  of  December  10,  1996  between  the
         Registrant and W. Donald Bell, the Registrant's Chief Executive Officer
         (8)

10.13    Form of Management  Retention  Agreement between the Registrant and the
         following  executive officers of the Registrant:  W. Donald Bell, Bruce
         M. Jaffe, Ronald H. Mabry, Philip M. Roussey and Robert J. Sturgeon (8)

10.14    Third Amendment and Restated Credit  Agreement dated as of November 12,
         1998  by  and  among  the  Registrant,  the  Banks  named  therein  and
         California Bank & Trust, as Agent for the Banks (7)

10.15    Asset  Purchase  Agreement  dated as of November 5, 1998 by and between
         the Company, Almo Corporation,  Almo Distributing  Pennsylvania,  Inc.,
         Almo Distributing Maryland,  Inc., Almo Distributing  Minnesota,  Inc.,
         Almo Distributing Wisconson, Inc. and Almo Distributing, Inc.

                                       40
<PAGE>

10.16    Fourth  Amendment to Third Amended and Restated Credit  Agreement dated
         December 8, 1999 by and among the  Registrant,  the Banks named therein
         and California Bank & Trust, as agent for the Banks (10)

10.17    Fifth  Amendment to Third Amended and Restated  Credit  Agreement dated
         December 31, 1999 by and among the Registrant,  the Banks named therein
         and California Bank & Trust, as agent for the Banks (10)

10.18    Lease dated August 1, 1999 for Registrant's facilities at 1941 Ringwood
         Avenue, Suite 200, San Jose, California (10)

21.1     Subsidiaries of the Registrant

23.1     Consent of PricewaterhouseCoopers LLP, independent accountants

24.1     Power of Attorney (contained on page 21)

27       Financial Data Schedule

----------

*    Confidential treatment has been granted for portions of this document.

(1)  Incorporated by reference to exhibit filed with the Registrant's  Report on
     Form 10-K for the fiscal  year ended  December  31, 1993 filed on March 31,
     1994.

(2)  Incorporated   by  reference  to  exhibit   filed  with  the   Registrant's
     Registration  Statement on Form S-8 (File No.  33-66580)  filed on July 29,
     1993.

(3)  Incorporated   by  reference  to  exhibit   filed  with  the   Registrant's
     Registration  Statement on Form S-1 (File No.  33-60954) filed on April 14,
     1993 and which became effective on June 14, 1993.

(4)  Incorporated   by  reference  to  exhibit   filed  with  the   Registrant's
     Registration  Statement on Form S-8 (File No. 33-83398) filed on August 29,
     1994.

(5)  Incorporated   by  reference  to  exhibit   filed  with  the   Registrant's
     Registration Statement on Form S-8 (File No. 333-10837) filed on August 26,
     1996.

(6)  Incorporated by reference to exhibit filed with the Registrant's  Report on
     Form 10Q for the quarter ended June 30, 1996.

(7)  Incorporated by reference to exhibit filed with the Registrant's  Report on
     Form 8-K (File No. 000-21528) filed on December 4, 1998.

(8)  Incorporated by reference to exhibit filed with the Registrant's  Report on
     Form 10-K for the fiscal  year ended  December  31, 1996 filed on March 31,
     1997.

(9)  Incorporated by reference to exhibit filed with the Registrant's  Report on
     Form S-8 (File No. 333-58053) filed on June 30, 1998.

(10) Incorporated by reference to exhibit filed with the Registrant's  Report on
     Form 10K for the fiscal  year ended  December  31,  1999 filed on March 30,
     2000.