-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, HeCMUl/5SlFZM/0aHR8KRSjGOP4VwgNO0X+bsx3wlng22hY/ymvAqLtmPWjWMiw4 Lf3xiai5CATJ7V1hw8jl7A== 0000950149-95-000280.txt : 19950517 0000950149-95-000280.hdr.sgml : 19950517 ACCESSION NUMBER: 0000950149-95-000280 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950401 FILED AS OF DATE: 19950516 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BEI ELECTRONICS INC CENTRAL INDEX KEY: 0000851478 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 710455756 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-17885 FILM NUMBER: 95540192 BUSINESS ADDRESS: STREET 1: ONE POST ST STREET 2: STE 2500 CITY: SAN FRANCISCO STATE: CA ZIP: 94104 BUSINESS PHONE: 4159564477 10-Q 1 FORM 10-Q FOR THE PERIOD ENDED APRIL 1, 1995 1 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 1, 1995 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 0-17885 B E I E L E C T R O N I C S, I N C. (Exact name of Registrant as specified in its charter) Delaware 71-0455756 (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 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, 6,797,884 shares as of April 25, 1995 Page 1 of 16 2 BEI ELECTRONICS , INC. AND SUBSIDIARIES INDEX PART 1. FINANCIAL INFORMATION PAGE --------------------- ---- Item 1. Financial Statements Condensed Consolidated Balance Sheets--April 1, 1995 and October 1, 3 1994 Condensed Consolidated Statements of Operations--Quarter and Six Months 4 ended April 1, 1995 and April 2, 1994 Condensed Consolidated Statements of Cash Flows--Six Months ended April 5 1, 1995 and April 2, 1994 Notes to Condensed Consolidated Financial Statements--April 1, 1995 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of 11 Operations PART II. OTHER INFORMATION ----------------- Item 4. Submission of Matters to Vote of Security Holders 15 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K were filed by the Company during the quarter ended April 1, 1995. SIGNATURES 16 ----------
Page 2 of 16 3 BEI ELECTRONICS, INC. AND SUBSIDIARIES PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONDENSED CONSOLIDATED BALANCE SHEETS
April 1, October 1, 1995 1994 (Unaudited) (Note) (dollars in thousands) - --------------------------------------------------------------------------------------------------------------- ASSETS Cash and cash equivalents $3,373 $4,197 Trade receivables - net 18,638 18,503 Inventories - net (See Note B) 32,818 33,185 Other current assets 3,714 4,903 -------- -------- Total current assets 58,543 60,788 Property, plant and equipment - net 28,475 29,270 Acquired Technology (See Note D) 8,503 5,621 Goodwill 4,979 5,156 Other assets - net 10,914 11,597 -------- -------- $111,414 $112,432 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Trade accounts payable $5,827 $7,826 Accrued expenses and other liabilities 14,485 11,951 Federal and state income taxes -- -- Current portion of long-term debt 822 822 -------- -------- Total current liabilities 21,134 20,599 Long-term debt, less current portion 30,231 30,421 Deferred income taxes and other liabilities 3,071 3,583 Stockholders' equity less treasury stock 56,978 57,829 -------- -------- $111,414 $112,432 ======== ========
See notes to condensed consolidated financial statements. Note: The balance sheet at October 1, 1994 has been derived from the audited consolidated balance sheet at that date. Page 3 of 16 4 BEI ELECTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Quarter Ended Six Months Ended ----------------------- ----------------------- April 1, April 2, April 1, April 2, 1995 1994 1995 1994 (dollars in thousands except per share amounts) - ------------------------------------------------------------------------------------------------------------- Net sales $36,531 $28,288 $73,229 $57,702 Cost of sales 27,841 19,178 54,627 39,605 ---------------------------------------------------- 8,690 9,110 18,602 18,097 Selling, general and administrative expenses 8,258 9,489 16,925 17,888 Research, development and related expenses 1,046 1,710 2,328 3,322 ---------------------------------------------------- Income (loss) from operations (614) (2,089) (651) (3,113) Interest expense 623 609 1,278 1,162 Other income 630 853 672 905 ---------------------------------------------------- Income (loss) before income taxes (607) (1,845) (1,257) (3,370) Provision (benefit) for income taxes (205) (724) (410) (1,326) ---------------------------------------------------- Net income (loss) ($402) ($1,121) ($847) ($2,044) ==================================================== Earnings (loss) per common share and common share equivalents ($0.06) ($0.17) ($0.13) ($0.31) ==================================================== Weighted average shares outstanding 6,751 6,643 6,721 6,629 ==================================================== Dividends per common share $0.02 $0.02 $0.04 $0.04 ====================================================
See notes to condensed consolidated financial statements. Page 4 of 16 5 BEI ELECTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended ------------------------------------ April 1, April 2, 1995 1994 (dollars in thousands) - ------------------------------------------------------------------------------------------------------------- Net cash provided (used) by operating activities $1,585 ($3,129) Cash flows from investing activities: Purchases of property, plant and equipment (2,140) (7,402) Decrease(Increase) in other assets (17) (849) ------ ------ Net cash used in investing activities (2,157) (8,251) Cash flows from financing activities: Borrowings from line of credit 5,500 -- Payments on line of credit (5,500) -- Proceeds from long term debt -- 12,200 Payments on long term debt (136) (1,176) Proceeds from issuance of common stock 153 268 Purchase of treasury stock -- (156) Payment of cash dividends (269) (265) ------ ------ Net cash (used) provided by financing activities (252) 10,871 ------ ------ Net decrease in cash and cash equivalents (824) (509) Cash and cash equivalents at beginning of period 4,197 1,572 ------ ------ Cash and cash equivalents at end of period $3,373 $1,063 ====== ======
See notes to condensed consolidated financial statements. Page 5 of 16 6 BEI ELECTRONICS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) April 1, 1995 NOTE A -- BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles 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 generally accepted accounting principles 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 September 30, 1995. 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 October 1, 1994. NOTE B--INVENTORIES
April 1, October 1, 1995 1994 (dollars in thousands) - ------------------------------------------------------------------------------------------------------------- Finished products $1,380 $2,515 Work in process 5,031 5,570 Materials 9,762 9,047 Costs incurred under long-term contracts, including U.S. Government contracts 31,584 36,054 Unapplied progress payments (14,939) (20,001) ------- ------- Net inventories $32,818 $33,185 ======= =======
Page 6 of 16 7 NOTE C--EARNINGS PER COMMON SHARE AND COMMON SHARE EQUIVALENTS
Quarter Ended Six Months Ended April 1, April 2, April 1, April 2, 1995 1994 1995 1994 (dollars in thousands except per share amounts) - ------------------------------------------------------------------------------------------------------------- Weighted average shares outstanding 6,751 6,643 6,721 6,629 Net effect of dilutive stock options based on the treasury stock method -- -- -- -- --------------------------------------------- Total weighted average shares outstanding 6,751 6,643 6,721 6,629 ============================================= Net income (loss) ($402) ($1,121) ($847) ($2,044) ============================================= Earnings (loss) per common share and common share equivalents ($0.06) ($0.17) ($0.13) ($0.31) =============================================
Earnings per common share and common share equivalents are computed by dividing net income by the weighted average number of shares of common stock and common stock equivalents outstanding during the period. Loss per common share is based on the weighted average number of common shares only, as any assumption of conversion of options would be antidilutive. NOTE D--CONTINGENCIES AND LITIGATION In connection with the acquisition of assets from Systron Donner Corporation during fiscal 1990, BEI Systron Donner Company assumed an obligation to pay former shareholders of General Precision Industries (GPI) $4.3 million if certain levels of confirmed orders and shipments are achieved for products developed using technology acquired from GPI in 1986 under a license agreement which expires in 2003. The technology acquired was assigned a value of $ 5.6 million for the purchase price allocation for the acquisition. In September of 1991, the Licensor of the patent on which the Company's quartz technology is based advised the Company that royalties in excess of the amounts previously paid by the Company were due. The amount of royalties involved was approximately $400,000. The Company advised the Licensor that based on its understanding of the license agreement no additional amounts were due. The Licensor alleged that nonpayment of the royalties due would give the Licensor the right to terminate the license agreement. The parties were unable to resolve these differences. Accordingly, the Company elected to exercise the provision of the license agreement which required arbitration of any disputes between the parties to the agreement. Page 7 of 16 8 In June of 1993, the Company and the Licensor filed briefs with the arbitration Panel. The Licensor alleged in its brief that the amount of royalties, milestone payments and accrued interest due as of September 30, 1992 was approximately $10.0 million (including the $4.3 million described above), and asked the arbitration Panel to rule that the license could be terminated based on noncompliance by the Company with the terms of the license agreement. The Company has asked the arbitration Panel to rule that the amounts of the royalties paid by the Company had been properly determined by the Company, that the original license agreement should be reformed to reduce the royalties due on future sales as a result of failure by the Licensor to disclose certain matters which significantly impacted the Company's timely ability to employ the licensed patent on production units and that the license was not subject to termination. The arbitration process is ongoing. The arbitration Panel bifurcated the issues in the arbitration, and issued an interim ruling in February 1995. In that interim ruling, which will become final at the close of the arbitration, the Panel concluded that the license agreement was not subject to termination, that non-recurring engineering revenues were not royalty-bearing, and that $1 million of the $4.3 million discussed above is due only if certain conditions are met in the future. The Panel also concluded that the Company is entitled to ownership of an accelerometer that the former Shareholders developed. Payment of the $3.3 million balance will depend on the Panel's ruling on the Company's request for an equitable offset and on other factors. The second phase of the arbitration will involve quantification of royalty amounts due, if any, for unit sales of product using the acquired technology, and will also involve other matters including the Company's request for an equitable offset and parties' respective claims for attorneys' fees. Management has vigorously defended its rights under the license agreement, and while the final outcome of this matter cannot be determined with certainty, management believes, taking all factors into account and after consultation with legal counsel, that this matter will not result in a material adverse impact on the financial position of the Company. During a vendor survey conducted by BEI Defense Systems Company in the first quarter of fiscal 1994, a component used in the HYDRA 70 rocket motor was identified as being produced by a process that differed from the one that the vendor had certified. Subsequent to the survey and BEI's evaluation of alternative acceptable processes, BEI's customer, the U.S. Government, was notified of the potentially non-conforming material. The customer, as required by applicable contract provisions, notified Justice Department and Defense Department investigators. Management also conducted an internal investigation to determine the facts and appropriateness of follow-up actions. Due to these investigations, delivery of certain completed rockets motors was delayed beginning in late December 1993. Subsequently, the customer agreed to accept the completed but undelivered rocket motors and the Company agreed to replace the affected parts under warranty. During the fourth quarter of fiscal 1994, the Company began rework under warranty and substantial deliveries of rocket motors were completed prior to year end. The Company has provided for the cost of warranty replacement of the affected parts in all undelivered rocket motors. For previously delivered rocket motors, the customer is in the process of conducting extensive tests on the potentially non-conforming part to determine whether required levels of performance and reliability are achieved by the affected part. Management believes the final Page 8 of 16 9 results of the customer's tests will be a determination that performance and reliability of the affected part meet applicable requirements. No provision has been made in the accompanying financial statements for any liability that may result from an adverse determination with respect to performance and reliability requirements. The outcome of the Justice Department portion of the investigation is not presently determinable. In October 1993, the State of California filed a first amended complaint against a division of the Company and fifty-two other defendants. The complaint seeks recovery of response costs incurred by the State at a waste oil recycling facility in Commerce, California (the"Site"). The State alleges that, as of October 1993, it had incurred over $2.2 million in response costs at the Site. The Company has joined a group of defendants who are potentially parties for the Site (the "PRP Group"). The PRP Group is proceeding with analysis of past work performed at the Site and preparing a Remedial Action Plan for the Site. Currently, the estimated cost of the remedial actions proposed for the Site range from $500,000 to $1,200,000. The PRP Group is also conducting settlement negotiations with the State. Since filing its First Amended Complaint, the State has disclosed that its past costs associated with the Site are $3,700,000. The division of the Company against which the claim is asserted was acquired from Systron Donner Corporation in 1990. In connection with that acquisition, Systron Donner agreed to indemnify the Company against any claims, damages and expenses in excess of $100,000 arising in connection with certain environmental matters. Management believes such indemnification will encompass this claim. While the outcome of this matter cannot be determined with certainty, management believes that the ultimate resolution will not have a material adverse impact on the financial position of the Company. In October 1993, CooperSurgical, Inc. a subsidiary of the Cooper Companies, filed a claim for unspecified damages alleging unfair competition due to actions by BEI Medical Systems and Richard Turner, its president, a former employee of the Cooper Companies, and others. On May 16, 1994, the Chancery Division for the Superior Court of New Jersey granted a partial summary judgment in favor of the plaintiff and issued an injunction against the defendants restraining them from selling certain products until June 20, 1996. In September 1994, BEI Medical Systems filed a motion to vacate the May 16, 1994 order. In October 1994, CooperSurgical filed an expert report with the court alleging $11 million in damages due plus interest. On November 28, 1994, the Court granted BEI Medical Systems' motion to vacate the May order. As a result the partial summary judgement has been reversed and the injunction has been lifted. Management has vigorously defended its rights in this action and believes after discussion with legal counsel that the CooperSurgical claims are exaggerated. Expert witnesses for BEI have prepared a formal response to the CooperSurgical damage claims which was submitted in February 1995. BEI's experts stated that if CooperSurgical were entitled to damages, those damages would total less than $100,000, and would be more than offset by BEI Medical Page 9 of 16 10 Systems' counterclaim against CooperSurgical. A pretrial conference is scheduled for June 1995 at which time counsel anticipates that a trial date may be set. While the outcome of this matter cannot be determined at this time, management believes, taking known factors into account and after consultation with legal counsel, that this matter will not result in a material adverse impact on the financial position of the Company. The Company has pending various legal actions arising in the normal course of business. None of these legal actions are expected to have a material effect on the Company's operating results or financial condition. Page 10 of 16 11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 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 Consolidated Statements of Operations.
Quarter Ended Six Months Ended --------------------- ---------------------- April 1, April 2, April 1, April 2, 1995 1994 1995 1994 - ------------------------------------------------------------------------------------------------------ Net sales 100.0% 100.0% 100.0% 100.0% Cost of sales 76.2 67.8 74.6 68.6 ----- ----- ----- ----- Gross profit 23.8 32.2 25.4 31.4 Operating expenses Selling, general and administrative expenses 22.6 33.5 23.1 31.0 Research, development and related expenses 2.9 6.1 3.2 5.8 ----- ----- ----- ----- Income (loss) from operations (1.7) (7.4) (0.9) (5.4) Interest expense 1.7 2.2 1.7 2.0 Other income 1.7 3.0 0.9 1.6 ----- ----- ----- ----- Income (loss) before income taxes (1.7) (6.6) (1.7) (5.8) Provision for income taxes (credit) (0.6) (2.6) (0.5) (2.3) ----- ----- ----- ----- Net income (loss) (1.1)% (4.0)% (1.2)% (3.5)% ===== ===== ===== =====
QUARTER ENDED APRIL 1, 1995 AND APRIL 2, 1994 Net sales for the quarter ended April 1, 1995 increased $8.2 million or 29.1% from the same period in fiscal 1994. Defense Systems segment net sales increased $6.2 million or 96.7% in the second quarter of fiscal 1995 compared to the same period in the prior year. The increase was primarily the result of lower than average shipments caused by delays in deliveries experienced in the second quarter of 1994, when certain lines of rocket motors and warheads suffered a shortfall in shipments as a result of discovery of a potentially non- conforming component during a vendor survey conducted by BEI Defense Systems Company, and due to certain then - unresolved upgrading, testing, and requalification issues. In January 1995, the Company was advised that the U.S. Army's fiscal 1996 to fiscal 1998 HYDRA 70 Systems procurement had been awarded to a competing bidder. The award has not yet been finalized due to protests by the Company's joint bidder, Alliant Techsystems, Page 11 of 16 12 and another unsuccessful bidder which are continuing. The HYDRA 70 Systems contract represented greater than 90 percent of Defense Systems segment revenue during fiscal 1994 and in the second quarter of fiscal 1995. The existing HYDRA 70 backlog of approximately $51 million which is scheduled for shipments into early fiscal 1996 represents a similar portion of the total Defense Systems backlog. As the HYDRA 70 Systems contract nears completion in early fiscal 1996, revenues of the Defense Systems segment can be expected to decline substantially unless there is a change in the Army's announced plan. Sensors & Systems segment sales volume increased $1.9 million or 9.5% from the second quarter of 1994. The higher net sales were due primarily to increases in several commercial product lines, primarily industrial and automotive products. Partially offsetting these gains in sales volume were slightly decreased sales in the government sector, reflecting the continuing impact of U.S. Government-defense related cutbacks, primarily development programs. Consolidated cost of sales as a percentage of net sales was greater in the second quarter of fiscal 1995 versus the comparable period of fiscal 1994. Defense Systems segment volume was almost double the prior year causing its high cost of sales percentage to significantly impact the consolidated results. Additionally, cost of sales as a percentage of net sales in the Sensors and Systems segment experienced an increase over the prior year due primarily to increased costs of fixed price development programs in the government sector. The Company's gross profit margins from sales to the U.S. Government for military and space products are generally lower than gross profit margins from sales of commercial and industrial products. The margins on the Defense Systems segment vary considerably. As a result, profitability from Defense Systems' revenue has varied significantly depending on the contract mix in any period. The existing backlog in the Defense Systems segment has gross margins that are similar to fiscal 1994 gross margins on similar Defense Systems products. Management is continuing measures to reduce costs for the HYDRA 70 program. Downward pressure on gross profit margins will continue, especially for military contracts. Selling, general and administrative expenses as a percentage of net sales decreased in the second quarter of fiscal 1995 versus the comparable period of fiscal 1994, due to the increased volume of total net sales as well as reduced levels of spending in all the segments, primarily Defense Systems segment and Corporate. Research, development and related expenses as a percentage of net sales for the second quarter of fiscal 1995 showed a decrease from the same period in fiscal 1994 due to increased volume of total net sales as well as reduced levels of spending, primarily in the Sensors and Systems and Defense Systems segments. Page 12 of 16 13 SIX MONTHS ENDED APRIL 1, 1995 AND APRIL 2, 1994 Net sales for the first six months of fiscal 1995 increased $15.5 million or 26.9% from the prior year. Defense Systems segment net sales for the six month period ended April 1, 1995 increased $11.6 million or 79.7% from the first six months of fiscal 1994. The increase was caused principally by delays in delivery of HYDRA 70 products in the first quarter of fiscal 1994 resulting from the discovery of a potentially non-conforming component as discussed above (see Note D to Condensed Consolidated Financial Statements). Sensors and Systems segment net sales for the six month period ended April 1, 1995 increased $3.6 million or 9.2% from the first six months of fiscal 1994. The increased net sales were due primarily to the growth of sales in commercial product lines, primarily industrial and automotive products. Partially offsetting these gains in sales volume were decreases in governmental sales, reflecting spending cutbacks by the federal government. Consolidated cost of sales as a percentage of net sales increased in the first six months of fiscal 1995 from the comparable period of fiscal 1994. Defense Systems segment volume was up more than 75% from the prior year causing its high cost of sales percentage to significantly impact the consolidated results. Additionally, cost of sales as a percentage of net sales in the Sensors and Systems segment experienced an increase over the prior year due primarily to increased costs of fixed price development programs in the government sector. Medical Systems segment cost of sales as a percentage of net sales slightly declined. Selling, general and administrative expenses as a percentage of net sales decreased in the first six months of fiscal 1995 versus the comparable period of fiscal 1994, due primarily to the increased volume of total net sales and reduced levels of spending in all the segments, primarily Defense Systems segment, the Medical Systems segment, and Corporate. Spending in the Defense Systems segment was cut back due to the anticipated decline in future HYDRA 70 systems activity. Medical Systems segment cut back spending due to continuing delays in new product introductions and to reduce operating losses. Sensors and Systems segment increased spending minimally at those commercial operations experiencing volume growth. Research, development and related expenses for the first six months of fiscal 1995 have decreased as a percentage of net sales from the same period in fiscal 1994 primarily due to the elimination of a separate Corporate Research and Development function and additional focus of development efforts in the Sensors and Systems segment, eliminating some programs while increasing emphasis on automotive sensors. Interest expense increased slightly from the first six months of fiscal 1994 due mainly to a higher borrowing base resulting from the issuance of $28.0 million of Senior Notes during late fiscal 1993 and early fiscal 1994. Page 13 of 16 14 Other income decreased for the six months ended April 1, 1995 versus the comparable period of fiscal 1994 due primarily to a decrease in royalty income from a technology licensing agreement. LIQUIDITY AND CAPITAL RESOURCES During the first six months of fiscal 1995, total cash provided by operations was $1.6 million, including the net loss of $0.8 million. Sources of cash from operations primarily consisted of the positive impact of non-cash charges to income from depreciation and amortization of $4.0 million. Cash outflows from operations included a decrease in accruals and other liabilities of $2.2 million. Cash used for investing activities of $2.2 million consisted primarily of capital expenditures in the first half of the fiscal year. In management's opinion, the level of capital expenditures for fiscal 1995 is consistent with the current volume of business. Cash flows for financing activities included the short term borrowing and repayment of $5.5 million on the Company's line of credit. The loss in the fiscal 1995 second quarter required the Company to obtain a waiver of one bank line covenant prohibiting consecutive quarterly losses. The Company and the Bank have agreed to renew the bank line effective June 1, 1995 for one year. The Company had no material capital commitments at April 1, 1995. In 1991, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("FAS") No. 107 "Disclosures About Fair Value of Financial Instruments." The Company will be required to adopt FAS 107 in fiscal year 1996. Accordingly, the Company plans to adopt FAS 107 when required, and will disclose the fair value for all of its financial instruments, if practicable. Based on the financial condition of the Company at April 1, 1995, management believes that the existing cash balances, cash generated from operations, and available lines of credit will be sufficient to meet the Company's planned needs for the foreseeable future. If the Company requires additional capital, it anticipates that such capital will be provided by bank or other borrowings, although there can be no assurances that funds will be available on terms as favorable as those applicable to the Company's currently outstanding debt. EFFECTS OF INFLATION Management believes that, for the periods presented, inflation has not had a material effect on the Company's operations. Page 14 of 16 15 BEI ELECTRONICS, INC. AND SUBSIDIARIES PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS (a) The Annual Meeting of Stockholders (the "Meeting") of the Company was held on February 28, 1995. At the meeting, Charles Crocker, George S. Brown and Michael P.W. Stone were elected to the Company's Board of Directors for a three year term expiring at the Company's 1998 Annual Meeting: In addition, the following directors continued in office as directors of the Company following the Annual Meeting: C. Joseph Giroir, Jr. and Gary D. Wrench (until the Company's 1996 Annual Meeting); and Richard M. Brooks, William G. Howard, Jr., and Peter G. Paraskos (until the Company's 1997 Annual Meeting). (b) The other matter presented at the meeting and the voting of stockholders with respect thereto is as follows: (i) Ratification of Selection of Independent Accountants The Board of Directors selected Ernst & Young LLP as the Company's independent public accountants for the fiscal year ending September 30, 1995 and such selection was submitted by the Company's management for ratification by the stockholders at the Annual Meeting. The stockholder's ratified the selection of Ernst & Young LLP. Page 15 of 16 16 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 in the City of San Francisco, County of San Francisco, State of California, on May 15, 1995. BEI ELECTRONICS, INC. By: /s/ Robert R. Corr ------------------------------ Robert R. Corr Treasurer and Controller (Principal Accounting Officer) Page 16 of 16 17 Exhibit Index Ex. 27 Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 U.S. DOLLARS 6-MOS SEP-30-1995 APR-01-1995 1 3,373 0 18,638 0 32,818 58,543 28,475 0 111,414 21,134 0 0 0 0 56,978 111,114 73,229 73,229 54,627 54,627 19,253 0 1,278 (1,257) (410) (847) 0 0 0 (847) (.13) (.13)
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