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 January 1, 2000 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
BEI TECHNOLOGIES, INC.
(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 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, 7,466,819 shares as of February 1, 2000
Page 1 of 12
<PAGE>
BEI TECHNOLOGIES, INC. AND SUBSIDIARIES
INDEX
PART 1. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Condensed Consolidated Balance Sheets--January
1, 2000 and October 2, 1999 3
Condensed Consolidated Statements of Operations
Quarter ended January 1, 2000 and January 2,
1999 4
Condensed Consolidated Statements of Cash Flows
Quarter ended January 1, 2000 and January 2,
1999 5
Notes to Condensed Consolidated Financial
Statements--January 1, 2000 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
SIGNATURES 12
Page 2 of 12
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BEI TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
January 1, October 2,
2000 1999
(Unaudited) (See note below)
(dollars in thousands)
- --------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents $ 564 $ 3,181
Investments 7,115 6,467
Trade receivables, net 29,217 29,555
Inventories, net -- Note 2 31,517 31,036
Other current assets 7,145 7,193
-------- --------
Total current assets 75,558 77,432
Property, plant and equipment, net 34,766 35,122
Acquired technology 3,814 4,054
Goodwill 2,389 2,436
Other assets, net 4,291 4,316
-------- --------
$120,818 $123,360
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Trade accounts payable $ 11,869 $ 15,484
Accrued expenses and other liabilities 17,107 17,424
Deferred compensation liability 7,115 6,467
Current portion of long-term debt 120 120
-------- --------
Total current liabilities 36,211 39,495
Long-term debt, less current portion 36,891 36,705
Other liabilities 1,322 1,317
Stockholders' equity 46,394 45,843
-------- --------
$120,818 $123,360
======== ========
Note: The balance sheet at October 2, 1999 has been derived from the audited
consolidated balance sheet at that date.
See notes to condensed consolidated financial statements.
Page 3 of 12
<PAGE>
<TABLE>
BEI TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Quarter Ended
----------------------
January 1, January 2,
2000 1999
(dollars in thousands
except per share amounts)
-------------------------
<S> <C> <C>
Net sales $ 43,728 $ 36,743
Cost of sales 32,169 25,280
-------- --------
11,559 11,463
Selling, general and administrative expenses 7,046 7,463
Research, development and related expenses 1,755 1,496
-------- --------
Income from operations 2,758 2,504
Interest expense (687) (778)
Other income 26 59
-------- --------
Income from operations before income taxes 2,097 1,785
Provision for income taxes 841 731
-------- --------
Income from operations 1,256 1,054
Extraordinary item, net of income taxes -- (326)
-------- --------
Net income $ 1,256 $ 728
-------- --------
Earnings per Common Share -- Note 4
Basic Earnings per Common Share
Income from operations $ 0.17 $ 0.15
Loss from extraordinary item, net of income taxes $ -- $ (0.05)
-------- --------
Net income per common share $ 0.17 $ 0.10
======== ========
Diluted Earnings per Common and Common Equivalent Share
Income from operations $ 0.17 $ 0.14
Loss from extraordinary item, net of income taxes $ -- $ (0.04)
-------- --------
Net income per common and common equivalent share $ 0.17 $ 0.10
======== ========
Dividends per common share $ 0.02 $ 0.02
======== ========
<FN>
See notes to condensed consolidated financial statements.
</FN>
Page 4 of 12
</TABLE>
<PAGE>
BEI TECHNOLOGIES, INC. AND SUBSIDIARIES
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Quarter Ended
----------------------
January 1, January 2,
2000 1999
(dollars in thousands)
----------------------
<S> <C> <C>
Net cash provided(used) by operating activities $ (1,114) $ (2,152)
Cash flows from investing activities:
Purchases of property, plant and equipment (2,208) (544)
Disposal of property, plant and equipment 1,576 --
Decrease in other assets (57) (239)
-------- --------
Net cash used in investing activities (689) (783)
Cash flows from financing activities:
Proceeds from debt borrowings 275 39,223
Principal payments on debt and other liabilities (201) (35,509)
Proceeds from issuance of common stock 30 --
Repurchase of common stock (769) --
Payment of cash dividends (149) (149)
Other -- 106
-------- --------
Net cash provided(used) by financing activities (814) 3,671
Net increase (decrease) in cash and cash equivalents (2,617) 736
Cash and cash equivalents at beginning of period 3,181 3,557
-------- --------
Cash and cash equivalents at end of period $ 564 $ 4,293
======== ========
<FN>
See notes to condensed consolidated financial statements.
</FN>
Page 5 or 12
</TABLE>
<PAGE>
BEI TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
January 1, 2000
NOTE 1 -- 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, 2000. 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 2, 1999.
BEI Technologies, Inc. ("Technologies") was incorporated on June 30, 1997 in the
State of Delaware, as a wholly owned subsidiary of BEI Electronics, Inc.,
subsequently renamed BEI Medical Systems Company, Inc. ("Electronics"). On
September 27, 1997, Electronics distributed to holders of Electronics common
stock one share of common stock of the Company for each share of Electronics
common stock held on September 24, 1997 (the "Distribution"). In connection with
the Distribution, Electronics transferred to Technologies all of the assets,
liabilities and operations of its BEI Sensors & Systems Company, Inc. ("Sensors
& Systems") and Defense Systems Company, Inc. ("Defense Systems") business
segments.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported results of operations during the reporting period.
Actual results could differ from those estimates.
Page 6 of 12
<PAGE>
NOTE 2--INVENTORIES
January 1, October 2,
2000 1999
(dollars in thousands)
-----------------------
Finished products $ 4,576 $ 1,521
Work in process 7,768 10,165
Materials 19,120 17,848
Costs incurred under long-term contracts,
including U.S. Government contracts 297 1,746
Unliquidated progress payments (244) (244)
-------- --------
Net inventories $ 31,517 $ 31,036
======== ========
NOTE 3--EARNINGS PER SHARE
<TABLE>
The following table sets forth the computation of basic and diluted earnings per
common share from continuing operations before extraordinary item:
<CAPTION>
Quarter Ended
------------------------
January 1, January 2,
2000 1999
(in thousands except
per share amounts)
------------------------
<S> <C> <C>
Numerator
Income from continuing operations before extraordinary item $ 1,256 $ 1,054
------- -------
Denominator
Denominator for basic earnings per share --
Weighted average shares, net of nonvested
shares (FY 2000 -- 308 shares; FY 1999 -- 266 shares) 7,180 7,130
Effect of dilutive securities:
Nonvested shares 89 91
Employee stock options 70 75
------- -------
Denominator for diluted earnings per share 7,339 7,296
======= =======
Basic earnings per share from operations before
extraordinary item $ 0.17 $ 0.15
======= =======
Diluted earnings per share from operations before
extraordinary item $ 0.17 $ 0.14
======= =======
</TABLE>
NOTE 4--CONTINGENCIES AND LITIGATION
The Company has pending various legal actions arising in the normal course of
business. None of these legal actions is expected to have a material effect on
the Company's operating results or financial condition.
Page 7 of 12
<PAGE>
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 discussed here.
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 October 2, 1999.
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
---------------------
January 1, January 2,
2000 1999
- --------------------------------------------------------------------------------
Net sales 100.0 % 100.0 %
Cost of sales 73.6 68.8
----- -----
Gross margin 26.4 31.2
Selling, general and administrative expenses 16.1 20.3
Research, development and related expenses 4.0 4.1
----- -----
Income from operations 6.3 6.8
Interest expense 1.6 2.1
Other income 0.1 0.2
----- -----
Income from operations before income taxes 4.8 4.9
Provision for income taxes 1.9 2.0
----- -----
Income from operations before extraordinary item 2.9 2.9
Extraordinary item, net of income taxes -- (0.9)
----- -----
Net income 2.9 % 2.0 %
===== =====
Quarters ended January 1, 2000 and January 2, 1999
Net sales for the first quarter of fiscal 2000, ended January 1, 2000, increased
$7.0 million to $43.7 million or 19.0% from $36.7 million during the same period
in fiscal 1999.
Sales volume increased primarily in commercial sales to the industrial and
automotive markets. The increase was primarily a result of an increase of $6.8
million in automotive sensor sales to $18.5 million in the first quarter of
fiscal 2000 from $11.7 million in the comparable period of fiscal 1999. The
increase in automotive sensor sales is a direct result of sales attributable to
the Company's GyroChip(R) sensors used in automotive stability systems.
Increases in other commercial sales of $0.6 million were offset by a decrease of
$0.4 million in government sales.
Page 8 of 12
<PAGE>
Cost of sales as a percentage of net sales in the first quarter of fiscal 2000
increased 4.8 percentage points to 73.6% from 68.8% in the comparable period of
fiscal 1999, due to the impact of increased volume of lower than average margin
automotive GyroChip sensor sales. Sales of automotive products increased from
32% in the first quarter of fiscal 1999 to 42% of net sales in the most recent
quarter. Accordingly, the total cost of sales percentage was negatively
impacted. The Company expects gross margin as a percentage of net sales will
remain lower than historic margins as automotive sensors become a larger portion
of the Company's product mix.
Selling, general and administrative expenses as a percentage of net sales
decreased in the first quarter of fiscal 2000 versus the comparable period of
fiscal 1999 due to higher sales volume.
Research, development and related expenses as a percentage of net sales for the
first quarter of fiscal 2000 decreased slightly from the comparable period of
fiscal 1999 due to higher sales volume. Spending on research, development and
related expenses increased $0.3 million to $1.8 million in the first quarter of
fiscal 2000 versus the comparable period of fiscal 1999. The increase is an
indication of management's dedication to the development of the next generation
of sensor components.
Liquidity and Capital Resources
During the first quarter of fiscal 2000, total cash used by operations was $1.1
million. Cash used by operations included net income of $1.3 million, adjusted
for the positive impact of non-cash charges to income from depreciation and
amortization of $1.4 million and $0.6 million, respectively, and increases to
other liabilities and income taxes payable of $0.2 million. Offsetting these
items were an increase in accounts receivables of $0.3 million, a decrease in
customer advances of $0.2 million, and increase in inventory of $0.5 million.
Cash used by operations also included decreases in accrued expenses and trade
payables of $3.6 million.
Cash used in investing activities consisted of equipment purchases of $2.2
million and purchases of other assets of $0.1 million. The Company also disposed
of $1.6 million of land and building for the period ending January 1, 2000.
Cash provided from financing activities consisted of proceeds from debt
borrowings of $0.3 million offset by payments on debt of $0.2 million. During
the first quarter of fiscal 2000, the Company issued common stock in the amount
of $0.8 million and dividend payments used $0.3 million in cash.
As a result of the Company's positive cash position at the end of fiscal 1999,
the company proceeded to use available cash for the company's operating,
investing and financing requirements during the first quarter of fiscal 2000.
While the Company believes that its existing cash balances, together with cash
derived from operating revenues, 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 financing or
Page 9 of 12
<PAGE>
other arrangements. 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 had no material capital commitments at January 1, 2000.
Effects of Inflation
Management believes that, for the periods presented, inflation has not had a
material effect on the Company's operations.
Page 10 of 12
<PAGE>
BEI TECHNOLOGIES, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the
Company during the quarter ended January 1,
2000.
Page 11 of 12
<PAGE>
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 February 8, 2000.
BEI Technologies, Inc.
By: /s/ Robert R. Corr
-------------------------
Robert R. Corr
Secretary, Treasurer and
Controller (Chief
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED JANUARY 1, 2000 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-03-1999
<PERIOD-END> JAN-01-2000
<CASH> 564
<SECURITIES> 0
<RECEIVABLES> 29,866
<ALLOWANCES> 649
<INVENTORY> 31,517
<CURRENT-ASSETS> 75,558
<PP&E> 75,298
<DEPRECIATION> 40,532
<TOTAL-ASSETS> 120,818
<CURRENT-LIABILITIES> 36,211
<BONDS> 0
0
0
<COMMON> 3,793
<OTHER-SE> 42,601
<TOTAL-LIABILITY-AND-EQUITY> 120,818
<SALES> 43,728
<TOTAL-REVENUES> 43,728
<CGS> 32,169
<TOTAL-COSTS> 32,169
<OTHER-EXPENSES> 8,775
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 687
<INCOME-PRETAX> 2,097
<INCOME-TAX> 841
<INCOME-CONTINUING> 1,256
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,256
<EPS-BASIC> 0.17
<EPS-DILUTED> 0.17
</TABLE>
