Back to GetFilings.com
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
for the quarterly period ended April 3, 2004 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
for the transition period from to ----- . -----
Commission file number 0-22799
B E I T E C H N O L O G I E S, I N C.
(Exact name of Registrant as specified in its charter)
Delaware 94-3274498
- ------------------------------------- -----------------------------------
(State of incorporation) (I.R.S. Employer Identification No.)
One Post Street, Suite 2500
San Francisco, California 94104
(Address of principal executive offices)
(415) 956-4477
(Registrant's telephone number)
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 whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock: $.001 Par Value, 14,752,425 shares issued and outstanding as of
April 22, 2004.
Page 1 of 24
BEI TECHNOLOGIES, INC. AND SUBSIDIARIES
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets-- April 3, 2004
and September 27, 2003 3
Condensed Consolidated Statements of Operations-- Quarter and Six Months
Ended April 3, 2004 and March 29, 2003 4
Condensed Consolidated Statements of Cash Flows-- Quarter and Six Months
Ended April 3, 2004 and March 29, 2003 5
Notes to Condensed Consolidated Financial Statements--
April 3, 2004 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 13
Item 3. Quantitative and Qualitative Disclosure About Market Risk 18
Item 4. Controls and Procedures 18
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 19
Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities 19
Item 4. Submission of Matters to Vote of Security Holders 20
Item 6. Exhibits and Reports on Form 8-K 20
(a) Exhibits
(b) Reports on Form 8-K
SIGNATURES 23
Page 2 of 24
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
BEI TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
April 3, September 27,
2004 2003
(Unaudited) (See note below)
----------------- -------------------
(in thousands)
ASSETS
Cash and cash equivalents $ 10,124 $ 9,211
Restricted investments 4,224 5,185
Trade receivables, net 37,646 37,271
Inventories, net 26,121 24,190
Deferred income taxes 8,375 8,372
Other current assets 5,484 4,543
-------- --------
Total current assets 91,974 88,772
Property, plant and equipment, net 37,480 37,123
Acquired technology 315 542
Goodwill 1,612 1,612
Other assets, net 5,368 5,404
-------- --------
$136,749 $133,453
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Trade accounts payable $ 24,812 $ 15,680
Accrued expenses and other liabilities 20,467 22,318
Income tax payable 1,000 689
Deferred compensation liability 4,224 5,185
Current portion of capital lease obligation 152 93
Current portion of long-term debt 7,104 7,024
-------- --------
Total current liabilities 57,759 50,989
Capital lease obligation, less current portion 2,297 1,958
Long-term debt, less current portion 8,424 15,536
Other liabilities 3,380 6,329
Stockholders' equity 64,889 58,641
-------- --------
$136,749 $133,453
======== ========
Note: The balance sheet at September 27, 2003 has been derived from the audited
consolidated balance sheet at that date.
See notes to condensed consolidated financial statements.
Page 3 of 24
BEI TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Quarter Ended Six Months Ended
-------------------------- -------------------------
April 3, March 29, April 3, March 29,
2004 2003 2004 2003
-------------------------- -------------------------
(in thousands except per share amounts)
-----------------------------------------------------
Net sales $ 73,531 $ 54,715 $ 142,336 $ 101,803
Cost of sales 54,963 41,958 108,621 76,731
----------- ----------- ---------- ----------
Gross profit 18,568 12,757 33,715 25,072
Selling, general, administrative and other expenses 9,560 8,694 17,888 17,298
Research, development and related expenses 3,390 4,271 6,650 8,222
----------- ----------- ---------- ----------
Income (loss) from operations 5,618 (208) 9,177 (448)
Other income 291 184 281 5,627
Interest expense (353) (488) (721) (1,010)
----------- ----------- ---------- ----------
Income (loss) before taxes 5,556 (512) 8,737 4,169
Provision (benefit) for income taxes 2,052 (191) 3,230 1,517
----------- ----------- ---------- ----------
Net income (loss) $ 3,504 $ (321) $ 5,507 $ 2,652
=========== ========== ========== ==========
BASIC EARNINGS (LOSS) PER COMMON SHARE
Net income (loss) per common share $ 0.25 $ (0.02) $ 0.39 $ 0.19
=========== ========== ========== ==========
DILUTED EARNINGS (LOSS) PER COMMON SHARE
Net income (loss) per common and common
equivalent share $ 0.24 $ (0.02) $ 0.38 $ 0.19
=========== ========== ========== ==========
Dividends per common share $ 0.01 $ 0.01 $ 0.03 $ 0.02
=========== ========== ========== ==========
See notes to condensed consolidated financial statements.
Page 4 of 24
BEI TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Quarter Ended Six Months Ended
--------------------------- ----------------------------
April 3, March 29, April 3, March 29,
2004 2003 2004 2003
--------------------------- ----------------------------
(in thousands)
--------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 3,504 $ (321) $ 5,507 $ 2,652
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 2,951 2,572 5,550 5,163
Other 1,529 4,360 1,805 (202)
------- --------- ------- ---------
Net cash provided by operating activities 7,984 6,611 12,862 7,613
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (2,514) (2,099) (4,458) (3,495)
Disposition of property, plant and equipment -- -- -- 51
Decrease (increase) in other assets 153 (2,205) (18) (3,175)
------- --------- ------- ---------
Net cash used by investing activities (2,361) (4,304) (4,476) (6,619)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt borrowings -- 17,523 2,644 30,645
Principal payments on debt and other liabilities (1,156) (18,132) (9,716) (31,062)
Proceeds from issuance of common stock 169 19 420 114
Repurchase of common stock (14) (541) (378) (820)
Payment of cash dividends (148) (146) (443) (292)
------- --------- ------- ---------
Net cash used by financing activities (1,149) (1,277) (7,473) (1,415)
------- --------- ------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,474 1,030 913 (421)
Cash and cash equivalents at beginning of period 5,650 2,967 9,211 4,418
------- --------- ------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $10,124 $ 3,997 $10,124 $ 3,997
======= ========= ======= =========
See notes to condensed consolidated financial statements.
Page 5 of 24
BEI TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by accounting principles generally
accepted in the United States for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the interim periods presented are not necessarily indicative of the
results that may be expected for the year ending October 2, 2004. For further
information, refer to the consolidated financial statements and footnotes
thereto in the Company's annual report on Form 10-K for the year ended September
27, 2003.
BEI Technologies, Inc. ("the Company" or "Technologies") is an established
manufacturer of electronic sensors, including optical encoders, motors,
actuators and motion control products used for factory and office automation,
medical equipment, military, aviation and space systems. In addition, sales to
manufacturers of transportation equipment including automobiles, trucks and
off-road equipment have become a significant addition to the Company's business
in recent years. The Company's micromachined quartz yaw rate sensors are being
used in advanced vehicle stability control systems and a significant increase in
the production of those sensors has been in progress from the middle of 1998
through fiscal 2004 except for a decrease in production in fiscal 2002 due to
increased competition. The Company has transitioned to its next generation of
automotive inertial quartz based sensor products, remotely mounted multi-sensor
clusters with Controlled Area Network Bus ("CAN Bus") and a multi-rate sensor
package suitable for incorporation into electronic systems modules. The Company
also manufactures seat-memory modules, seat recliner, pedal position and
throttle position sensors and other devices used in transportation systems.
GyroChip and MotionPak are registered trademarks of the Company.
Technologies was incorporated in Delaware in June 1997 and became publicly held
on September 27, 1997 as a result of the distribution of shares in Technologies
(the "Distribution") to all the stockholders of BEI Electronics, Inc. on
September 24, 1997. BEI Electronics, Inc. was subsequently renamed BEI Medical
Systems Company, Inc. and was acquired by Boston Scientific Corporation in 2002.
OpticNet, Inc. ("OpticNet"), formerly a majority owned subsidiary of the
Company, was separated from the Company in 2000 through a distribution to the
Company's stockholders of a portion of OpticNet's outstanding securities, with
the Company retaining approximately 24% of OpticNet's outstanding securities.
Since inception, all operating capital for OpticNet has been provided by the
Company as debt or equity financing. Originally, the Company accounted for its
investment in OpticNet under the equity method of accounting. As of March 30,
2002, the Company recognized as impaired the carrying value of its initial $1.0
million investment in OpticNet and reduced the investment to zero and fully
reserved as uncollectable its $2.7 million loan to OpticNet. Since that date the
Company has immediately expensed the $2.8 million of funding provided to
OpticNet, of which $1.0 million and $1.8 million were incurred in fiscal 2003
and 2002, respectively.
In July 2003, the Company and OpticNet entered into a merger agreement pursuant
to which a wholly owned subsidiary of the Company agreed to offer to purchase
all of the outstanding common stock of OpticNet at $0.04 per share (the "Tender
Offer") and, upon successful completion of the Tender Offer, merge with and into
OpticNet, thereby making OpticNet a wholly owned subsidiary of the Company (the
"Merger"). The Tender Offer commenced in August 2003 and was completed at
midnight on December 22, 2003, and the Merger was completed on December 23,
2003. Upon acquisition of OpticNet's
Page 6 of 24
outstanding common stock, the Company fully reserved its cost of $0.2 million in
the quarter ending January 3, 2004. OpticNet's results of operations have been
included in the Company's condensed consolidated financial statements for the
quarter and six months ended April 3, 2004. OpticNet's results of operations did
not have a material effect on the Company's financial position, results of
operations or cash flow as of and for the periods ended April 3, 2004.
USE OF ESTIMATES
The preparation of these condensed consolidated financial statements requires
management to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses and related disclosure of contingent
assets and liabilities. These estimates are based on historical experience and
on various other assumptions that management believes to be reasonable under the
circumstances. On an ongoing basis, the Company evaluates its estimates. Results
may differ from these estimates due to actual outcomes being different from
those on which the Company based its assumptions.
EQUITY INVESTMENTS
The Company records its equity investment in a private company on a cost basis
as the Company owns less than 20% of the outstanding equity of the investee
company. The Company periodically evaluates the fair market value of its equity
investment to determine if an other-than-temporary impairment in the value of
its investment has taken place. Equity investments totaling approximately $1.0
million, net, at April 3, 2004 and September 27, 2003 were included in other
assets in the accompanying consolidated balance sheets.
PRODUCT WARRANTY
The Company offers limited warranties for its products for a period that lasts
generally from one to four years. The specific terms and conditions of those
warranties vary depending upon the products sold that are specific to different
industries and customers. The Company estimates the costs that may be incurred
under its limited warranty and records a liability in the amount of such costs
at the time product revenue is recognized. Factors that affect the Company's
warranty liability include the number of installed units, historical and
anticipated rates of warranty claims, specifically known or reported product
issues and costs per claim. The Company assesses the adequacy of its recorded
warranty liabilities on a minimum of a quarterly basis and adjusts that amount
as necessary. Changes in the Company's product warranty liability during the
period are as follows (in thousands):
Balance, September 27, 2003 $1,167
Warranties issued during the period 321
Settlements made during the period (288)
Changes in liability for pre-existing warranties
during the period, including expirations 71
-------
Balance, April 3, 2004 $1,271
=======
STOCK BASED COMPENSATION
The Company's 1997 Equity Incentive Plan provides for the granting of incentive
stock options to employees and stock or options to consultants, employees and
directors. The Company accounts for stock based compensation using the intrinsic
value method prescribed in Accounting Principles Board ("APB") Opinion No. 25
whereby the options are granted at market price, and therefore no compensation
costs are recognized. The Company has elected to retain its current method of
accounting as described above and has adopted the disclosure requirements of FAS
Nos. 123 and 148. If compensation expense for the Company's stock option plan
had been determined based upon fair values at the grant dates for awards under
those plans in accordance with FAS No. 123, the Company's pro forma net
earnings, basic
Page 7 of 24
and diluted earnings per common share would have been as follows (in thousands
except per share amounts):
Quarter Ended Six Months Ended
------------- ----------------
March 29, April 3, March 29,
April 3, 2004 2003 2004 2003
--------------------------------------------------------
(in thousands except per share amounts)
Net income (loss), as reported $3,504 $ (321) $5,507 $2,652
Deduct: Total stock based employee compensation expense
determined under fair value based method for all awards,
net of related tax effects (66) (195) (160) (441)
---- ----- ----- ------
Pro forma net income (loss) $3,438 $ (516) $5,347 $2,211
EARNINGS (LOSS) PER COMMON SHARE:
Basic-as reported $ 0.25 $(0.02) $ 0.39 $ 0.19
Basic-pro forma $ 0.24 $(0.04) $ 0.37 $ 0.16
Diluted-as reported $ 0.24 $(0.02) $ 0.38 $ 0.19
Diluted-pro forma $ 0.24 $(0.04) $ 0.37 $ 0.16
NOTE 2. INVENTORIES
Inventories are carried principally at the lower of cost or fair value and do
not exceed their net realizable value. Cost is determined by the first-in,
first-out ("FIFO") method, including material, labor and factory overhead.
September 27, 2003
(Derived from the
April 3, audited consolidated
2004 balance sheet at that
(Unaudited) date)
---------------------------------------
(in thousands)
----------------------------------------
Finished products $ 5,452 $ 3,503
Work in process 5,850 5,284
Materials 14,819 15,403
-------- --------
Total inventories $26,121 $24,190
======== ========
Page 8 of 24
NOTE 3. EARNINGS PER COMMON SHARE
The following table sets forth the computation of basic and diluted earnings per
common share (in thousands except per share amounts):
Quarter Ended Six Months Ended
------------------------- ------------------------------
April 3, March 29, April 3, March 29,
2004 2003 2004 2003
------------------------- ------------------------------
(in thousands except per share amounts)
Numerator
Net income (loss) $ 3,504 $ (321) $ 5,507 $ 2,652
============ =========== ============ ==============
Denominator
Denominator for basic earnings (loss) per common share --
Weighted average shares, net of nonvested
shares (FY 2004 - 718 shares Q2, 737 shares YTD;
FY 2003 - 602 shares Q2, 624 shares YTD) 14,295 14,137 14,259 14,120
Effect of dilutive securities:
Nonvested shares 87 -- 97 28
Employee stock options 228 -- 216 106
------------ ----------- ------------ --------------
Denominator for diluted earnings (loss) per share 14,610 14,137 14,572 14,254
============ =========== ============ ==============
Basic earnings (loss) per common share $ 0.25 $ (0.02) $ 0.39 $ 0.19
============ =========== ============ ==============
Diluted earnings (loss) per common share $ 0.24 $ (0.02) $ 0.38 $ 0.19
============ =========== ============ ==============
NOTE 4. LONG-TERM DEBT
September 27,
2003
(Derived from
the audited
April 3, consolidated
2004 balance sheet at
(Unaudited) that date)
-----------------------------------
(in thousands)
-----------------------------------
6.70% Senior Notes; due in annual installments of $7,000 from
November 16, 2001 through November 16, 2005 $14,000 $21,000
Mortgage note payable; due in quarterly installments of $26 until
December 2008 when the remaining balance is due; collateralized
by certain real property 1,528 1,560
------- -------
15,528 22,560
Less current portion 7,104 7,024
------- -------
$ 8,424 $15,536
======= =======
On November 16, 1998, the Company sold $35.0 million of senior notes in a
private placement. The notes have an interest rate of 6.7% and mature in annual
installments of $7.0 million beginning November 16, 2001 up to and including
November 16, 2005. The note agreement contains covenants regarding certain
operating ratios, limitations on debt, dividend payments and minimum net worth.
The proceeds
Page 9 of 24
from the senior notes were used to repay the pre-existing senior notes and pay
down outstanding borrowings on the Company's line of credit as they matured.
On August 14, 2002, the Company established a $25.0 million line of credit,
which matures on January 17, 2006, as amended, with a bank. No borrowings were
outstanding under the line of credit as of April 3, 2004 or September 27, 2003.
During December 2003, the mortgage note payable was refinanced with a bank and
the mortgage note payable with the original lender was terminated. The mortgage
note payable bears interest either at the selected LIBOR rate plus 1.625% or the
bank's reference rate less 0.625% and matures on December 15, 2008.
NOTE 5. RELATED PARTY TRANSACTIONS
OpticNet, Inc. ("OpticNet"), formerly a majority owned subsidiary of the
Company, was separated from the Company in 2000 through a distribution to the
Company's stockholders of a portion of OpticNet's outstanding securities, with
the Company retaining approximately 24% of OpticNet's outstanding securities.
Since inception, all operating capital for OpticNet has been provided by the
Company as debt or equity financing. Originally, the Company accounted for its
investment in OpticNet under the equity method of accounting. As of March 30,
2002, the Company recognized as impaired the carrying value of its initial $1.0
million investment in OpticNet and reduced the investment to zero and fully
reserved as uncollectable its $2.7 million loan to OpticNet. Since that date the
Company has immediately expensed the $2.8 million of funding provided to
OpticNet, of which $1.0 million and $1.8 million were incurred in fiscal 2003
and 2002, respectively.
In fiscal 2003 the Company provided approximately $1.0 million of additional
funding to OpticNet for general operating expenses. This funding was expensed
during fiscal year 2003 and was included in other expense.
In July 2003, the Company and OpticNet entered into a merger agreement pursuant
to which a wholly owned subsidiary of the Company agreed to offer to purchase
all of the outstanding common stock of OpticNet at $0.04 per share and, upon
successful completion of the Tender Offer, merge with and into OpticNet, thereby
making OpticNet a wholly owned subsidiary of the Company. The Tender Offer
commenced in August 2003 and was completed at midnight on December 22, 2003 and
the Merger was completed on December 23, 2003. Upon acquisition of OpticNet's
outstanding common stock, the Company fully reserved its cost of $0.2 million in
the quarter ending January 3, 2004. OpticNet's results of operations have been
included in the Company's condensed consolidated financial statements for the
quarter and six months ended April 3, 2004. OpticNet's results of operations did
not have a material effect on the Company's financial position, results of
operations or cash flow.
NOTE 6. CONTINGENCIES AND LITIGATION
Claim against U.S. Government
The Company believed that BEI Defense Systems Company ("Defense Systems"), a
subsidiary of the Company with discontinued operations, suffered substantial
monetary damages due to actions of the U.S. Government in connection with the
parties' H70 contract in effect during the 1992-1996 timeframe. As a result,
Defense Systems filed a substantial claim against the U.S. Government in 1996.
Following attempts to negotiate a settlement, Defense Systems filed an appeal of
its claim that was heard before an Administrative Judge at the Armed Services
Board of Contract Appeals ("ASBCA"). In fiscal 2002, the Judge ruled that
Defense Systems was entitled to an "equitable reformation" of the prices on
certain rockets and motors in the H70 contract. The decision was remanded to the
parties to negotiate the amount. The parties were unable to negotiate an amount
on their own, so the parties then agreed to enter
Page 10 of 24
into a non-binding mediation of Alternate Dispute Resolution process with the
same Administrative Judge from the ASBCA who had rendered the original
entitlement decision. Effective December 2002, the parties finalized mediation
that resulted in a settlement, net of expenses, of $5.4 million. This amount was
recorded in other income for the quarter ended December 28, 2002.
Other
During fiscal 2002, Defense Systems was subject to litigation with a former
landlord regarding damages to real property formerly leased. The United States
District Court for the Western District of Arkansas entered a judgment,
including attorney's fees, of approximately $0.7 million against the Company.
The Company filed an appeal of the judgment in the United States Court of
Appeals for the Eighth Circuit. Due to the uncertainty of success in the appeal,
the Company reserved $0.7 million for this judgment during the fiscal quarter
ended June 29, 2002. In early February 2004, the appeals court issued an opinion
reversing the district court's judgment in part, and remanding one of the claims
to the district court for further consideration consistent with the appeals
court's opinion. In March 2004, the United States Court of Appeals for the Eight
Circuit denied a motion for rehearing. The case is currently under final
consideration by the United States District Court for the Western District of
Arkansas. The existing reserve will be adjusted upon determination of the final
liability.
During fiscal 2002, the Company initiated litigation against a competitor
alleging patent infringement of certain quartz technologies. Effective September
2003, the parties finalized mediation that resulted in a cash settlement, net of
expenses, of $7.6 million. This settlement included legal expense recovery
recorded as an offset to selling, general and administrative expense in the
fiscal quarter ended September 27, 2003. This legal expense recovery amounted to
approximately $3.5 million, of which $2.7 million and $0.8 million were incurred
in fiscal 2003 and 2002, respectively. An additional $2.1 million was recorded
in other income, net of other direct costs associated with the settlement, in
the quarter ended September 27, 2003. Additional favorable impacts of
approximately $1.0 million and $1.1 million will be recognized on a prorated
quarterly basis in other income during fiscal years 2004 and 2005, respectively.
Of these amounts, favorable impacts of approximately $0.3 million and $0.5
million were recognized in the quarter and six months ended April 3, 2004,
respectively.
The Company has various other pending legal actions arising in the normal course
of business. Management believes that none of the legal actions not already
recognized in the financial statements, individually or in the aggregate, will
have a material impact on the Company's business, financial condition or
operating results.
Page 11 of 24
NOTE 7. RESTRUCTURING CHARGES
In March 2002, the Company approved a plan to close a facility and relocate
manufacturing activities to a more cost effective location. As a result, the
Company accrued $2.2 million related primarily to the closure of manufacturing
facilities and administrative functions, including the accrual of remaining
payments on the facility operations lease, less future anticipated sublease
payments. Other costs included write-downs of fixed assets and inventories to
their fair value. The facility closure and relocation was completed within the
12-month period ending March 29, 2003. The Company continues to make payments
related to the facility closure and these payments are charged to the remaining
balance of the provision. Future revenues and operating income are not expected
to be impacted by the facility's closure. The detail of the Company's provision
for product line move and other related costs is as follows (in thousands):
FACILITY CLOSURE
CHARGES
----------------
Balance, September 27, 2003 $ 238
Charges --
Amounts utilized (152)
-----
Balance, January 3, 2004 86
Charges --
Amounts utilized (35)
-----
Balance, April 3, 2004 $ 51
=====
In the quarter ended March 30, 2002, the Company concluded that portions of the
assets held under leases were in excess to the Company's requirements. These
assets had been primarily used by OpticNet. This determination was a result of
OpticNet's lack of success in attracting strategic partners or third party
financing. In March 2002, the Company recorded a charge of $10.3 million for
expected future losses on the leases of the facility and production assets in
the provision for excess capacity.
In September 2003, the Company approved a plan to cease operation of its
silicon fabrication facility. To date, the Company had made significant
investments in designing a silicon rate sensor, including related equipment and
facilities. The Company's assessment is that its continuing progress with quartz
technology will remain competitive and therefore it will not continue to operate
its silicon fabrication facility. The Company recognized an impairment related
to the discontinued use of these assets of $1.2 million included in the
provision for excess capacity. Future revenues and operating income are not
expected to be impacted by the facility's closure.
The detail of the Company's provision for excess capacity is as follows (in
thousands):
EQUIPMENT LEASE FACILITY LEASE OTHER
CHARGES IMPAIRMENT CHARGES COMMITMENTS TOTAL
--------------- ------------------ ----------- --------
Balance, September 27, 2003 $4,422 $404 $222 $ 5,048
Additional charges -- -- -- --
Amounts utilized (1,144) (102) (10) (1,256)
------ ---- ---- --------
Balance, April 3, 2004 $3,278 $302 $212 $ 3,792
====== ==== ==== ========
Page 12 of 24
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Except for the historical information contained herein, the following discussion
contains forward-looking statements that involve risks and uncertainties. The
Company's actual results could differ materially from those expressed in, or
implied by, such forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
in this section, and those discussed in the Company's Form 10-K for the year
ended September 27, 2003, in particular, within the "Risk Factors" section
therein.
OVERVIEW
BEI Technologies, Inc. is a global provider of electronic devices that provide
vital sensory input and actuation for the control systems of advanced machinery
and automation systems. The Company was incorporated in Delaware in June 1997
and became publicly held on September 27, 1997 as a result of the distribution
of shares of BEI Technologies to all the stockholders of BEI Electronics, Inc.
on September 24, 1997. Technologies has served the aviation, defense, space,
commercial, industrial, medical and automotive markets for over four decades.
Currently, the Company supplies over 6,000 customers with its broad range of
sophisticated sensors, motors and subsystems.
The Company's products include gyroscopes, pressure sensors, position sensors,
optical encoders, brushless DC motors, magnetic actuators, accelerometers, rate
sensors, inertial measurement units and sensor-based systems and sub-systems.
The Company's brand names are well-recognized in their respective markets, and
the Company possesses a portfolio of unique technological capabilities that are
being renewed and expanded through ongoing research and development. As the
worldwide demand for automotive sensors for advanced safety applications has
grown significantly, the Company continues to increase production of its
MicroElectroMechanical ("MEMS") quartz yaw rate sensor, the GyroChip. Currently,
the annual production rate of the GyroChip exceeds 3 million units. Technologies
has supplied over 8.5 million units as of April 3, 2004. These sensors are
employed in vehicle dynamic control systems that help prevent spinout and reduce
the chance for rollover in a growing number of automotive platforms.
The Company generates revenue through operations that design, manufacture and
sell electronic devices for the commercial automotive, industrial and government
industries. The percentage of sales to major industries are as follows:
Quarter Ended Six Months Ended
-------------------------------- -----------------------------
April 3, March 29, April 3, March 29,
2004 2003 2004 2003
-------------------------------- -----------------------------
Commercial automotive sensors 61% 56% 61% 54%
Government 7% 10% 9% 11%
Industrial 32% 34% 30% 35%
Net sales outside North America represented approximately 57% and 53% of total
net sales for the six months ended April 3, 2004 and March 29, 2003,
respectively, and 55% and 55% of total sales for the quarter ended April 3, 2004
and March 29, 2003, respectively. In addition, one European based customer
accounted for 48% and 39% of total net sales for the six months ended April 3,
2004 and March 29, 2003, respectively, and 47% and 45% of total sales for the
quarter ended April 3, 2004 and March 29, 2003, respectively. The Company has
derived and expects to continue to derive a majority of sales from products
outside the United States. The vast majority of these sales are denominated in
US dollars. Accordingly, future sales are exposed to risks from economic
uncertainties, political instability and uncertain regulatory environments.
Page 13 of 24
During March 2004, Technologies executed a long term contract for automotive
rate sensor products with its largest customer. Under the new contract, the
parties have agreed on a substantial extension of their strategic business
relationship. The Company will supply all of the customer's rate sensor product
requirements for brake-related Electronic Stability Control ("ESC") systems. The
impact of the contract on long term revenue and gross margin depends upon
negotiated pricing, customer supplied content, projected cost reductions and
market acceptance of ESC, among other factors. The customer will continue to
take delivery on the prior contract for an aggregate of 9.3 million units for
the sensor module assembly to complete the contract, which expires in 2006. As
the Company is shifting emphasis to high volume sensor and package production,
it will sell and transfer its cluster final assembly and test line to the
customer to enable them to perform those functions.
The Company generated net sales of $142.3 million and $101.8 million for the six
months ended April 3, 2004 and March 29, 2003, respectively. The Company
recognized net income of $5.5 million and $2.7 million for the six months ended
April 3, 2004 and March 29, 2003, respectively. As of April 3, 2004,
Technologies had retained earnings of $59.3 million.
In the first two fiscal quarters of 2004, the Company generated record revenue
levels. During this period, automotive sensor sales increased 58% while
industrial and government sales increased 19% and 17% over the prior year
period, respectively.
For the remainder of fiscal 2004 and thereafter, the Company plans to focus on
lowering costs and increasing gross margin by a continued increase in
manufacturing offshore both in Mexico and Asia. The Company also plans to
strengthen its existing business by continuing to negotiate long term contracts,
adding long term business by securing production contracts for new products such
as the Non Contact Angular Position Sensor ("NCAPS") and Belt Tension Sensor
("BTS") and developing strategic relationships with larger corporate partners
for long term sales of multiple sensor product offerings.
RESULTS OF OPERATIONS
The following table sets forth, for the fiscal periods indicated, the percentage
of net sales represented by certain items in the Company's Condensed
Consolidated Statements of Operations.
Quarter Ended Six Months Ended
---------------------- --------------------------
April 3, March 29, April 3, March 29,
2004 2003 2004 2003
---------------------- --------------------------
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 74.7 76.7 76.3 75.4
-------- --------- ----------- ----------
Gross profit 25.3 23.3 23.7 24.6
Selling, general, administrative and other expenses 13.0 15.9 12.6 17.0
Research, development and related expenses 4.6 7.8 4.7 8.0
-------- --------- ----------- ----------
Income (loss) from operations 7.7 (0.4) 6.4 (0.4)
Other income 0.4 0.3 0.2 5.5
Interest expense (0.5) (0.8) (0.5) (1.0)
-------- --------- ----------- ----------
Income (loss) before taxes 7.6 (0.9) 6.1 4.1
Provision (benefit) for income taxes 2.8 (0.3) 2.3 1.5
-------- --------- ----------- ----------
Net income (loss) 4.8% (0.6)% 3.8% 2.6%
======== ========= =========== ==========
Page 14 of 24
QUARTERS ENDED APRIL 3, 2004 AND MARCH 29, 2003
Net sales for the second quarter of fiscal 2004 increased $18.8 million, or 34%,
to $73.5 million from $54.7 million during the same period in fiscal 2003.
The sales volume increase was primarily due to commercial sales to foreign and
domestic automotive customers. Automotive sensor sales increased by $13.3
million to $44.4 million in the second quarter of fiscal 2004 from $31.1 million
in the comparable period of fiscal 2003 due primarily to increased sensor module
shipments to the Company's largest customer. Sales under government contracts
remained constant as compared to the same period of fiscal 2003, while sales of
non-automotive commercial products increased by $5.4 million from the same
period of fiscal 2003 due to increased actuator shipments. Although the
Company's sales have historically been to many customers in a variety of
markets, since 1999 a growing proportion of the Company's sales have been to one
customer. During the second quarter of fiscal 2004 and fiscal 2003, this one
automotive customer accounted for approximately 47% and 45%, respectively, of
the Company's net sales. Sales volume to that one customer is subject to the
usage of the Company's sensors in that customer's stability control systems that
are impacted by trends in the automotive industry.
Cost of sales as a percentage of net sales in the second quarter of fiscal 2004
decreased 2.0 percentage points to 74.7% from 76.7% in the comparable period of
fiscal 2003 due primarily to the favorable impact of the recovery of previously
expensed scrap costs from two vendors.. There may be additional margin rate
variability in future quarters due to the introduction of new products and
related changes in average prices, changes in manufacturing processes and
volumes, changes in supplier costs and product life cycles.
Selling, general and administrative expenses as a percentage of net sales
decreased 2.9 percentage points in the second quarter of fiscal 2004 versus the
comparable period of fiscal 2003 primarily due to reduced spending on legal
proceedings and a higher revenue base. Actual selling, general and
administrative expenses increased $0.9 million from the prior fiscal year
period, primarily from additional depreciation expense on leasehold improvements
deemed to have shorter useful lives because of a pending product line asset
sale.
Research, development and related expenses as a percentage of net sales for the
second quarter of fiscal 2004 decreased by 3.2 percentage points over the
comparable period of fiscal 2003 primarily as a result of the reduced silicon
development effort. Actual research, development and related expenses decreased
$0.9 million from the prior fiscal year period.
Other income as a percentage of sales has remained constant as compared to the
same period of fiscal 2003.
Interest expense as a percentage of sales decreased 0.3 percentage points from
the same period of the prior fiscal year. This decrease is primarily due to
reduced borrowing levels on the senior notes and line of credit.
SIX MONTHS ENDED APRIL 3, 2004 AND MARCH 29, 2003
Net sales for the first six months of fiscal 2004 increased $40.5 million, or
40%, to $142.3 million from $101.8 million during the same period in fiscal
2003.
The sales volume increase was primarily due to commercial sales to foreign and
domestic automotive customers. Automotive sensor sales increased by $31.9
million to $87.0 million in the first six months of fiscal 2004 from $55.1
million in the comparable period of fiscal 2003 due primarily to increased
sensor module shipments to the Company's largest customer, improved acceptance
of stability control systems
Page 15 of 24
by customers and the launch of new platforms using GyroChip sensors in stability
control systems. Sales under government contracts increased by $1.9 million from
the same period of fiscal 2003, while sales of non-automotive commercial
products increased by $6.8 million from the same period of fiscal 2003. Although
the Company's sales have historically been to many customers in a variety of
markets, since 1999 a growing proportion of the Company's sales have been to one
customer. During the first six months of fiscal 2004 and fiscal 2003, this one
automotive customer accounted for approximately 48% and 39%, respectively, of
the Company's net sales. Sales volume to that one customer is subject to the
usage of the Company's sensors in that customer's stability-control systems that
are impacted by trends in the automotive industry.
Cost of sales as a percentage of net sales in the first six months of fiscal
2004 increased 0.9 percentage points to 76.3% from 75.4% in the comparable
period of fiscal 2003 due primarily to a higher proportion of automotive
revenue, mostly from sensor modules, with lower associated margins offset by the
favorable impact of the recovery of previously expensed scrap costs from two
vendors.
Selling, general and administrative expenses as a percentage of net sales
decreased 4.4 percentage points in the first six months of fiscal 2004 versus
the comparable period of fiscal 2003 primarily due to reduced spending on legal
proceedings and a higher revenue base. Actual selling, general and
administrative expenses increased $0.6 million from the prior fiscal year
period, primarily from additional depreciation expense on leasehold improvements
deemed to have shorter useful lives because of a pending product line asset
sale.
Research, development and related expenses as a percentage of net sales for the
first six months of fiscal 2004 decreased by 3.3 percentage points over the
comparable period of fiscal 2003 primarily as a result of the reduced silicon
development effort. Actual research, development and related expenses decreased
$1.6 million from the prior fiscal year period.
Other income as a percentage of sales decreased 5.3 percentage points over the
comparable period of fiscal 2003 as the prior year period included earnings from
a settlement of litigation with the U.S. Government in the net amount of $5.4
million.
Interest expense as a percentage of sales decreased 0.5 percentage points from
the same period of the prior fiscal year. This decrease is primarily due to
reduced borrowing levels on the senior notes and line of credit and lower
interest rates on the Company's line of credit as compared to the senior notes.
LIQUIDITY AND CAPITAL RESOURCES
During the first six months of fiscal 2004, total cash provided by operations
was $12.9 million. Cash provided by operations included the positive impact of
non-cash charges from depreciation and amortization of $4.4 million and $1.1
million, respectively. In addition, positive impacts to cash resulted from net
income of $5.5 million and increases in trade accounts payable, customer
advances, income tax payable and currency translation of $9.1 million, $0.4
million, $0.4 million and $0.3 million, respectively. These items were offset by
an increase in accounts receivable, inventories and other current assets of $0.4
million, $1.9 million and $0.9 million, respectively, and decreases in accrued
liabilities and other liabilities of $3.4 million and $1.7 million,
respectively.
Cash used by investing activities included equipment purchases of $4.5 million
mainly directed at expanding production capacity related to the Company's
automotive products. In addition, investments in the Company's deferred
compensation plan were liquidated, resulting in a $1.4 million cash inflow. $1.4
million cash was then paid out to a plan beneficiary for a net effect of zero on
cash.
Cash used by financing activities included debt payments of $9.7 million, which
consisted of $7.0 million in scheduled payments on the Company's senior notes,
payments on the line of credit of $1.1 million and $1.6 million paid to
refinance an existing mortgage note payable. Other cash used by financing
activities
Page 16 of 24
included cash purchases of the Company's stock for $0.4 million and dividend
payments of $0.4 million. These items were partially offset by proceeds from
borrowings on the Company's line of credit of $1.1 million, proceeds from the
refinanced mortgage note payable of $1.6 million and proceeds from the issuance
of common stock of $0.4 million.
While the Company believes that its available credit line of $25.0 million and
cash derived from operations will be sufficient to meet the Company's capital
requirements for the next twelve months, the Company may need to raise
additional funds through public or private financings or other arrangements. As
of April 3, 2004, the Company had no outstanding borrowings on the line of
credit and $25.0 million available for additional borrowing. The line of credit
matures on January 17, 2006. Revenue and profitability may be negatively
affected at any time, even with clear evidence of an upswing in the industrial
economy. There can be no assurance that the Company will not require additional
funding, or that such additional funding, if needed, will be available on terms
attractive to the Company, or at all. Any additional equity financing may be
dilutive to the stockholders, and debt financing, if available, may involve
restrictive covenants.
The Company has outstanding capital commitments of approximately $3.3 million in
the normal course of business to expand automotive production capacity at April
3, 2004.
EFFECTS OF INFLATION
Management believes that, for the periods presented, inflation has not had a
material effect on the Company's operations.
CRITICAL ACCOUNTING POLICIES AND THE USE OF ESTIMATES
Management's discussion and analysis of financial condition and results of
operations is based upon the Company's unaudited condensed consolidated
financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States of America. The Company
reviews the accounting policies used in reporting its financial results on a
regular basis. The preparation of these condensed consolidated financial
statements requires management to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses and related
disclosure of contingent assets and liabilities. The estimates are based on
historical experience and on various other assumptions that management believes
to be reasonable under the circumstances. On an ongoing basis, the Company
evaluates its estimates. Results may differ from these estimates due to actual
outcomes being different from those on which the Company based its assumptions.
The United States Securities and Exchange Commission ("SEC") has defined
critical accounting policies as those that are most important to the portrayal
of an issuer's financial condition and results of operations and require
management to make the most difficult and subjective judgments, often as a
result of the need to make estimates on matters that are inherently uncertain.
The Company believes the critical accounting policies described in Management's
Discussion and Analysis of Financial Condition and Results of Operations
contained in the Company's Form 10-K for the fiscal year ended September 27,
2003 reflect its more significant judgments and estimates used in the
preparation of its condensed consolidated financial statements. There has been
no significant change in the Company's critical accounting policies since its
fiscal year ended September 27, 2003.
Page 17 of 24
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company believes that there have been no material changes in the reported
market risks faced by the Company since those discussed in the Company's Form
10-K for the fiscal year ended September 27, 2003 under the heading
corresponding to that set forth above. The Company's exposure to market risk is
limited to interest income sensitivity, which is affected by changes in the
general level of U.S. interest rates, as a portion of the Company's restricted
investments are in short-term debt securities issued by corporations. The
Company's restricted investments are placed with high-quality issuers and the
Company attempts to limit the amount of credit exposure to any one issuer. Due
to the nature of the Company's short-term restricted investments, the Company
believes that it is not subject to any material market risk exposure. The
Company does not have any foreign currency or other derivative financial
instruments.
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Based on their evaluation of our disclosure controls and procedures (as defined
in the rules promulgated under the Securities Exchange Act of 1934), our chief
executive officer and our chief financial officer concluded that our disclosure
controls and procedures were effective as of the end of the period covered by
this report.
We believe that a controls system, no matter how well designed and operated, can
provide only reasonable, not absolute, assurance that the objectives of the
controls system are met. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within a company have been
detected. Our disclosure controls and procedures are designed to provide
reasonable assurance of achieving their objectives, and our chief executive
officer and our chief financial officer have concluded that these controls and
procedures are effective at the reasonable assurance level.
CHANGES IN INTERNAL CONTROLS
There was no change in the Company's internal control over financial reporting,
known to our chief executive officer or our chief financial officer, that
occurred during the period covered by this report that has materially affected,
or is reasonably likely to materially affect, the Company's internal control
over financial reporting.
Page 18 of 24
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
During fiscal 2002, Defense Systems was subject to litigation with a former
landlord regarding damages to real property formerly leased. The United States
District Court for the Western District of Arkansas entered a judgment,
including attorney's fees, of approximately $0.7 million against the Company.
The Company filed an appeal of the judgment in the United States Court of
Appeals for the Eight Circuit. Due to the uncertainty of success in the appeal,
the Company reserved $0.7 million for this judgment during the fiscal quarter
ended June 29, 2002. In early February 2004, the appeals court issued an opinion
reversing the district court's judgment in part, remanding one of the claims to
the district court for further consideration consistent with the appeals court's
opinion. In March 2004, the United States Court of Appeals for the Eight Circuit
denied a motion for rehearing. The case is currently under final consideration
by the United States District Court for the Western District of Arkansas. The
existing reserve will be adjusted upon determination of the final liability.
ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF
EQUITY SECURITIES
STOCK REPURCHASES
On August 14, 2002, the Company publicly announced that its Board of Directors
had approved the repurchase by the Company, in the open market or in privately
negotiated transactions, an additional 300,000 shares of the Company's Common
Stock. The repurchases may be made either from the Company's cash funds or from
other available sources. The program has no expiration date but may be
terminated at any time at the Board's discretion. 774 shares were purchased in
the quarter ended April 3, 2004, bringing the balance of shares available for
purchase under the program to 303,940. Since the program was announced, a total
of 1,196,060 shares have been repurchased at an aggregate cost of $12,144,757.
In accordance with the Company's 1997 Equity Incentive Plan ("1997 Plan"), any
employee, director or consultant to whom a stock award is granted may satisfy
any federal, state or local tax obligation relating to the exercise or
acquisition of stock under a stock award by authorizing the Company to withhold
shares from the shares of common stock otherwise issuable as a result of the
exercise or acquisition of stock under the stock award. Accordingly, the
following shares have been repurchased by the Company to satisfy employee,
director or consultant tax obligations relating to the exercise or acquisition
of stock under a stock award:
(c) Total number (d) Maximum
of shares number of shares
(a) Total purchased as part that may yet be
number of (b) Average of a publicly purchased under
shares price paid per announced plan or the plan or
purchased share ($) program program
------------- ----------------- ---------------------- ---------------------
January 4, 2004-January 31, 2004 128 21.11 -- --
February 1, 2004-February 28, 2004 646 19.13 -- --
February 29, 2004-April 3, 2004 -- -- -- --
------------- ----------------- ---------------------- ---------------------
Total 774 19.46 -- --
============= ================= ====================== =====================
Page 19 of 24
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Stockholders of the Company (the
"Meeting") was held on March 2, 2004. At the Meeting, Charles
Crocker and J. Lavon Morton were re-elected to the Company's
Board of Directors for a three-year term expiring at the
Company's 2007 Annual Meeting.
Shares voted:
For Withheld Broker Non-Vote
Crocker 13,284,094 369,996 --
Morton 13,489,547 164,543 --
In addition, the following directors continued in office as
directors of the Company following the Meeting: C. Joseph
Giroir Jr., Asad M. Madni and Gary D. Wrench (until the
Company's 2005 Annual Meeting); Richard M. Brooks and Dr.
William G. Howard Jr. (until the Company's 2006 Annual
Meeting).
(b) The other matter presented at the Meeting and the voting of
stockholders with respect thereto is as follows:
The stockholders ratified the Audit Committee of the Board of
Directors' selection of Ernst & Young LLP as the Company's
independent public accountants for the fiscal year ending
October 2, 2004.
Shares voted:
For Against Abstain Broker Non-Vote
13,359,176 277,970 16,944 --
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Listing of Exhibits
Exhibit Number Description Footnote
2.1 Distribution Agreement between BEI Electronics, Inc. and
BEI Technologies, Inc. i
2.2 Corporate Services Agreement between BEI Technologies, Inc.
and BEI Electronics, Inc. i
2.3 Tax Allocation and Indemnity Agreement between BEI
Electronics, Inc. and BEI Technologies, Inc. i
2.4 Assumption of Liabilities and Indemnity Agreement between i
BEI Electronics, Inc. and BEI Technologies, Inc.
2.5 Technology Transfer and License Agreement by and between
BEI Electronics, Inc. and BEI Technologies, Inc. i
Page 20 of 24
2.6 Trademark Assignment and Consent Agreement by and between
BEI Electronics, Inc. and BEI Technologies, Inc. i
2.7 Agreement Regarding Certain Representations and Covenants
by and between BEI Electronics, Inc. and BEI Technologies,
Inc. i
3.1 Certificate of Incorporation of BEI Technologies, Inc. i
3.2 Bylaws of BEI Technologies, Inc. i
3.3 Registrant's Certificate of Designation of Series A Junior
Participating Preferred Stock (filed as Exhibit 99.3
hereto) i
4.1 Specimen Common Share Certificate i
4.2 Certificate of Incorporation of BEI Technologies, Inc.
(filed as Exhibit 3.1 hereto) i
4.3 Bylaws of BEI Technologies, Inc. (filed as Exhibit 3.2
hereto) i
4.4 Registrant's Certificate of Designation of Series A Junior
Participating Preferred Stock (filed as Exhibit 99.3
hereto) i
4.5 Form of Rights Certificate (filed as Exhibit 99.4 hereto) i
10.1 * Registrant's 1997 Equity Incentive Plan and forms of
related agreements i
10.2 * Executive Change in Control Benefits Agreement between BEI
Technologies, Inc. and Certain Named Executive Officers i
10.5 Note Purchase Agreement dated November 16, 1998 by and
between BEI Technologies, Inc., BEI Sensors & Systems
Company, Inc., Connecticut General Life Insurance Company
and Allstate Life Insurance Company ii
10.6 Amendment to Tax Allocation and Indemnity Agreement
between BEI Electronics, Inc. and BEI Technologies, Inc. ii
10.9 Development and Supply Agreement, dated April 26, 2001, by
and between Systron Donner Inertial Division and
Continental Teves AG & Co. iv
10.10 Amendment to Note Purchase Agreement as amended as of
March 30, 2002, by and between BEI Technologies, Inc., BEI
Sensors & Systems Company, Inc., Connecticut General Life
Insurance Company and Allstate Life Insurance Company v
Page 21 of 24
10.11 Credit Agreement dated August 14, 2002, by and between BEI
Technologies, Inc., BEI Sensors & Systems Company, Inc.
and Union Bank of California vi
10.12 Second amendment to Note Purchase Agreement and Waiver
dated December 20, 2002, by and between BEI Technologies,
Inc., BEI Sensors & Systems Company, Inc., Connecticut
General Life Insurance Company and Allstate Life Insurance
Company vi
10.13 * Employment Agreement between BEI Technologies, Inc. and
Asad M. Madni, renewed as of October 1, 2003 vii
10.14 + Supply Agreement, dated March 2, 2004, by and between
Continental Teves AG & Co. and Systron Donner Automotive
Division
21.1 Subsidiaries of the Registrant ii
31.1 CEO Certification Pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 1934 as adopted Pursuant to
Section 302 of the Sarbanes - Oxley Act of 2002
31.2 CFO Certification Pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 1934 as adopted Pursuant to
Section 302 of the Sarbanes - Oxley Act of 2002
32.1 CEO Certification Pursuant to Rule 13a-14(b) of the
Securities Exchange Act of 1934 and 18 U.S.C. 1350 as
adopted Pursuant to Section 906 of the Sarbanes - Oxley
Act of 2002
32.2 CFO Certification Pursuant to Rule 13a-14(b) of the Securities
Exchange Act of 1934 and 18 U.S.C. 1350 as adopted Pursuant to
Section 906 of the Sarbanes - Oxley Act of 2002
99.1 BEI Technologies, Inc. Information Statement dated
September 24, 1997 ii
99.2 Rights Agreement dated as of September 11, 1997 among BEI
Technologies, Inc. and ChaseMellon Shareholder Services,
L.L.C. i
99.3 Registrant's Certificate of Designation of Series A Junior
Participating Preferred Stock i
99.4 Form of Rights Certificate i
(i) Incorporated by reference. Previously filed as an exhibit to the
Registrant's Information Statement on Form 10 (File No. 0-22799) as
filed on September 22, 1997.
(ii) Incorporated by reference. Previously filed as an exhibit to the
Form 10-K (File No. 0-22799) as filed on December 30, 1998.
(iii) Incorporated by reference. Previously filed as an exhibit to the
Form 10-Q (File No. 000-22799) as filed on February 13, 2001.
(iv) Incorporated by reference. Previously filed as an exhibit to the
Form 10-Q (File No. 000-22799) as filed on August 14, 2001.
Page 22 of 24
(v) Incorporated by reference. Previously filed as an exhibit to the
Form 10-Q (File No. 000-22799) as filed on May 13, 2002.
(vi) Incorporated by reference. Previously filed as an exhibit to the
Form 10-K (File No. 000-22799) as filed on December 23, 2002.
(vii) Incorporated by reference. Previously filed as an exhibit to the
Form 10-Q (File No. 000-22799) as filed on February 12, 2004.
* Items that are management contracts or compensatory plans or
arrangements required to be filed as an exhibit pursuant to Item
6(a) of Form 10-Q.
+ Confidential treatment has been requested for a portion of this
exhibit
(b) Reports on Form 8-K
During the quarter ended April 3, 2004, the Company filed a Report on
Form 8-K on January 30, 2004 to announce its results of operations and
financial condition for the three months ended January 3, 2004.
SIGNATURES
Pursuant to the requirements 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 May 12, 2004.
BEI Technologies, Inc.
By: /s/ Robert R. Corr
Robert R. Corr
Vice President, Treasurer, Controller and Secretary
(Chief Accounting Officer)
Page 23 of 24
INDEX TO EXHIBITS
Exhibit
Number Description
10.14 + Supply Agreement, dated May 2, 2004, by and between Continental
Teves AG & Co. and Systron Donner Automotive Division
31.1 CEO Certification Pursuant to Rule 13a-14(a) of the Securities
Exchange Act of 1934 as adopted Pursuant to Section 302 of the
Sarbanes - Oxley Act of 2002
31.2 CFO Certification Pursuant to Rule 13a-14(a) of the Securities
Exchange Act of 1934 as adopted Pursuant to Section 302 of the
Sarbanes - Oxley Act of 2002
32.1 CEO Certification Pursuant to Rule 13a-14(b) of the Securities
Exchange Act of 1934 and 18 U.S.C 1350 as adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
32.2 CFO Certification Pursuant to Rule 13a-14(b) of the Securities
Exchange Act of 1934 and 18 U.S.C. 1350 as adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
- --------------------
+ Confidential treatment has been requested for a portion of this exhibit
Page 24 of 24