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 June 29, 1996 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, 7,004,882 shares as of July 12, 1996
Page 1 of 15
<PAGE>
BEI ELECTRONICS, INC. AND SUBSIDIARIES
INDEX
PART 1. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Condensed Consolidated Balance Sheets--June 29, 1996 and
September 30, 1995 3
Condensed Consolidated Statements of Operations--Quarter
and Nine Months ended June 29, 1996 and July 1, 1995 4
Condensed Consolidated Statements of Cash Flows--Nine
Months ended June 29, 1996 and July 1, 1995 5
Notes to Condensed Consolidated Financial Statements--June
29, 1996 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
(a) Exhibits
Fifth Amendment to Credit Agreement
Financial Data Schedule
(b) Reports on Form 8-K
SIGNATURES 15
Page 2 of 15
<PAGE>
BEI ELECTRONICS, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
June 29, September 30,
1996 1995
(Unaudited) (Note)
(dollars in thousands)
- --------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents $ 10,952 $ 11,690
Trade receivables - net 18,406 18,860
Inventories, net - - Note B 21,887 20,482
Other current assets 5,723 5,978
Current assets of HYDRA 70 Rocket line of
business, net - - Note C 5,781 6,820
-------- --------
Total current assets 62,749 63,830
Property, plant and equipment - net 23,489 23,457
Acquired Technology - - Note E 7,362 8,125
Goodwill 4,615 4,833
Other assets - net 10,079 10,065
Non-current assets of HYDRA 70 Rocket line
of business - - Note C 2,372 3,428
-------- --------
$110,666 $113,738
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Trade accounts payable $ 5,552 $ 8,092
Accrued expenses and other liabilities 13,552 16,602
Current portion of long-term debt 5,794 259
Current liabilities of HYDRA 70 Rocket line of
business - - Note C 2,509 2,954
-------- --------
Total current liabilities 27,407 27,907
Long-term debt, less current portion 24,398 30,157
Deferred income taxes and other liabilities 1,730 2,355
Minority interest in subsidiary 1,542 --
Stockholders' equity less treasury stock 55,589 53,319
-------- --------
$110,666 $113,738
======== ========
See notes to condensed consolidated financial statements.
Note: The balance sheet at September 30, 1995 has been derived from the audited
consolidated balance sheet at that date.
Page 3 of 15
<PAGE>
BEI ELECTRONICS, INC. AND SUBSIDIARIES
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Quarter Ended Nine Months Ended
----------------------- --------------------
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
(dollars in thousands except per share amounts)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $35,172 $36,634 $109,833 $109,863
Cost of sales 23,254 25,776 76,567 80,403
------- ------- -------- --------
11,918 10,858 33,266 29,460
Selling, general and administrative
expenses 9,100 8,335 25,643 25,260
Research, development and related
expenses 1,228 1,273 3,686 3,601
------- ------- -------- --------
Income from operations 1,590 1,250 3,937 599
Interest expense 649 612 1,965 1,890
Other income 307 141 801 813
------- ------- -------- --------
Income (loss) before income taxes 1,248 779 2,773 (478)
Provision (benefit) for income taxes 472 376 1,035 (34)
------- ------- -------- --------
Net income (loss) $776 $403 $1,738 ($444)
======= ======= ======== ========
Earnings (loss) per common share and
common share equivalents $0.11 $0.06 $0.25 ($0.07)
======= ======= ======== ========
Weighted average shares outstanding 7,215 7,017 7,082 6,746
======= ======= ======== ========
Dividends per common share $0.02 $0.02 $0.06 $0.06
======= ======= ======== ========
<FN>
See notes to condensed consolidated financial statements.
</FN>
</TABLE>
Page 4 of 15
<PAGE>
BEI ELECTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
-----------------------
June 29, July 1,
1996 1995
(dollars in thousands)
- --------------------------------------------------------------------------------
Net cash provided by operating activities $ 1,060 $8,998
Cash flows from investing activities:
Purchases of property, plant and
equipment (3,247) (2,970)
Proceeds from sale of BEI Medical
Systems, Inc. stock, net 1,475 --
Decrease in other assets 205 8
-------- -------
Net cash used in investing activities (1,567) (2,962)
Cash flows from financing activities:
Borrowings from line of credit -- 6,000
Payments on line of credit -- (6,000)
Payments on long term debt (559) (928)
Proceeds from issuance of common stock 744 178
Purchase of treasury stock -- (133)
Payment of cash dividends (416) (405)
-------- -------
Net cash used by financing activities (231) (1,288)
-------- -------
Net (decrease) increase in cash and cash
equivalents (738) 4,748
Cash and cash equivalents at beginning of
period 11,690 4,197
-------- -------
Cash and cash equivalents at end of period $10,952 $8,945
======== =======
See notes to condensed consolidated financial statements.
Page 5 of 15
<PAGE>
BEI ELECTRONICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 29, 1996
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 28, 1996. 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 30, 1995.
NOTE B--INVENTORIES
June 29, September 30,
1996 1995
(dollars in thousands)
- --------------------------------------------------------------------------------
Finished products $ 1,429 $ 1,607
Work in process 6,488 6,085
Materials 11,094 9,991
Costs incurred under long-term contracts,
including U.S. Government contracts 9,935 26,269
Unapplied progress payments (2,750) (17,621)
-------- --------
$ 26,196 $ 26,331
Inventories included in current assets of HYDRA
70 Rocket line of business, net of progress
payments of $2,750 and $17,621 4,309 5,849
-------- --------
Net inventories $ 21,887 $ 20,482
======== ========
Page 6 of 15
<PAGE>
NOTE C--HYDRA 70 ROCKET CONTRACT
In September 1995, management of the Company decided to exit the rocket
manufacturing line of business which makes up a substantial portion of the
Defense Systems segment. The principal product comprising this line of business
is the HYDRA 70 (H70) Rocket. For further information, see Note C to
Consolidated Financial Statements for the fiscal year ended September 30, 1995.
At September 30, 1995, the Company accrued a total of $1.2 million to provide
for shut down costs such as employee severance and facilities closure.
Defense Systems segment total sales of $31.5 million for the nine months ended
June 29, 1996 consisted of $28.2 million of H70 sales and $3.3 million in sales
of other products. Net sales for the comparable period in fiscal 1995 was $36.8
million, including H70 sales of $32.1 million and other sales of $4.7 million.
Operating profit for the segment was $1.4 million and $0.4 million for the nine
months ended June 29, 1996 and July 1, 1995, respectively.
NOTE D--EARNINGS PER COMMON SHARE AND COMMON SHARE EQUIVALENTS
Quarter Ended Nine Months Ended
---------------------------------------
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
(dollars in thousands except per share amounts)
- --------------------------------------------------------------------------------
Weighted average shares outstanding 6,973 6,796 6,898 6,746
Net effect of dilutive stock options
based on the treasury stock method 242 221 184 --
-----------------------------------
Total weighted average shares outstanding 7,215 7,017 7,082 6,746
===================================
Net income (loss) $776 $403 $1,738 ($444)
===================================
Earnings (loss) per common share and
common share equivalents $0.11 $0.06 $0.25 ($0.07)
===================================
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.
Page 7 of 15
<PAGE>
NOTE E--CONTINGENCIES AND LITIGATION
BEI Systron Donner Company vs. General Precision Industries, Inc. et al.
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.
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 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. Further, in
September 1995, the panel ruled that certain development costs incurred by the
Company could not be used to offset accrued royalties. As a result, in September
1995, the Company accrued $3.5 million in royalties and related costs based on
its understanding of the amounts due under the panel's September ruling. The
estimate of royalties and related amounts due under the license agreement are
based on the Company's proposal to the panel and are significantly less than
amounts proposed by the Licensor. Under the panel's February 1995 ruling, $3.3
million of the $4.3 million became due. This amount, which is considered part of
the original acquisition cost of the technology, was accrued in February 1995,
paid in October 1995, and is being amortized over the remaining term of the
license.
Page 8 of 15
<PAGE>
The second phase of the arbitration continues with further arguments having
occurred in December 1995. This phase involves the final determination of
royalty amounts due for unit sales of product using the acquired technology and
other matters including the parties' respective claims for attorneys fees. In
April 1996 the panel issued a second interim ruling which will become final at
the end of the arbitration. In the ruling the panel has asked both of the
parties to quantify royalties using guidance set forth by the panel. Both
parties requested clarification of several issues in the April decision. In July
1996, the panel issued a clarification of the April decision and management is
in the process of comparing the results of royalty calculations under the
panel's clarification with prior estimates. Both parties' estimates will be
submitted to the panel in August 1996. In the event that the arbitration panel
rules that the Company's liability is more or less than the $3.5 million
accrued, an adjustment to the September 30, 1995 estimate will be required.
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.
HYDRA 70 Rocket Contract Related Contingencies
In October 1995, the Company's Defense Systems subsidiary received notification
from the Procuring Contracting officer for the HYDRA 70 (H70) Rocket Systems
Contract that the Government considered that Defense Systems had failed to
maintain satisfactory fuze production which was endangering performance of the
subject contract. Defense Systems has continued production and deliveries under
the contract and has received payments in accordance with the contract's terms.
Based on the information available, management of the Company believes, after
consultation with legal counsel specializing in government procurement law, that
the outcome of this matter will not have a material impact on the financial
position or the results of operations of the Company.
State of California Department of Toxic Substance Control vs. Southland Oil,
Inc. et al.
In October 1993, the State of California filed a first amended complaint against
a division of the Company and fifty-two other defendants seeking recovery of
response costs incurred by the State at a waste oil recycling facility in
Commerce, California (the"Site"). The litigation with the State was settled in
principle in 1995, requiring a dismissal of the action following the payment by
defendants to the State of $2.6 million to settle all past and future response
costs at the Site (as well as all other alleged damages). The defendants filed a
third party complaint against more than 300 other potentially responsible
parties, not named in the State's complaint, which have contributed
approximately $1.5 million to the settlement. The agreed upon formula for
settlement among the potentially responsible parties, beyond the contribution by
the third party defendants, will result in the Company's share of the settlement
amount being set at less than $10,000. The lead responsible parties have
indicated they expect the settlement agreements to be executed and the payments
made before October, 1996. While the outcome of this matter cannot be determined
with certainty, management believes, after consultation with legal counsel, that
the ultimate resolution will not have a material adverse impact on the financial
position of the Company.
Page 9 of 15
<PAGE>
CooperSurgical Inc., vs. BEI Medical Systems Company, Inc. et al.
In October 1993, Cooper Surgical, Inc., a subsidiary of The Cooper Companies,
filed a complaint in the Chancery Division of the Superior Court of New Jersey
for unspecified damages alleging unfair competition due to actions by BEI
Medical Systems, Richard Turner, its president, a former employee of The Cooper
Companies, and others. On May 16, 1994, the court 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. On November 28, 1994, the court vacated the restraining order.
Management has vigorously defended its rights in this action and believes after
discussion with legal counsel that the Cooper Surgical claims are exaggerated.
Expert witnesses for BEI have prepared a formal response to the Cooper Surgical
damage claims which was submitted in February 1995. Commencement of trial
proceedings has been continued by the court until September 23, 1996. 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.
Other
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 15
<PAGE>
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 Nine Months Ended
----------------------------------------
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
- --------------------------------------------------------------------------------
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 66.1 70.4 69.7 73.2
----- ----- ----- -----
Gross profit 33.9 29.6 30.3 26.8
Operating expenses
Selling, general and administrative
expenses 25.9 22.7 23.3 23.0
Research, development and related
expenses 3.5 3.5 3.4 3.3
----- ----- ----- -----
Income from operations 4.5 3.4 3.6 0.5
Interest expense 1.9 1.7 1.8 1.6
Other income 0.9 0.4 0.7 0.7
----- ----- ----- -----
Income (loss) before income taxes 3.5 2.1 2.5 (0.4)
Provision for income taxes 1.3 1.0 0.9 0.0
----- ----- ----- -----
Net income (loss) 2.2% 1.1% 1.6% (0.4)%
===== ===== ===== =====
Quarter ended June 29, 1996 and July 1, 1995
Net sales for the quarter ended June 29, 1996 decreased $1.5 million or 4.0%
from the same period in fiscal 1995.
Defense Systems segment net sales decreased $2.1 million or 19.8% in the third
quarter of fiscal 1996 compared to the same period in the prior year. The
decrease was partially offset by Sensors & Systems segment sales which increased
$0.5 million or 2.2% from the third quarter of 1995. The higher net sales were
due primarily to increases in shipments of commercial sensors.
Consolidated cost of sales as a percentage of net sales was lower in the third
quarter of fiscal 1996 versus the comparable period of fiscal 1995. The Defense
Systems segment experienced improved margins on its non-HYDRA 70 sales and the
segment's gross profit was favorably impacted by recovery of a claim for
additional costs under a previously completed contract. The Sensors & Systems
segment and the Medical segment both experienced margin improvements in several
product lines.
Page 11 of 15
<PAGE>
Selling, general and administrative expenses as a percentage of net sales
increased in the third quarter of fiscal 1996 versus the comparable period of
fiscal 1995. The increase is primarily due to higher spending in the Medical
segment to consolidate and begin marketing a product line acquired in the
previous quarter.
Research, development and related expenses as a percentage of net sales for the
third quarter of fiscal 1996 was unchanged compared to the same period in fiscal
1995. Spending increased in the Medical segment but was offset by declines in
the Sensors & Systems segment, reflecting efforts to shift from development to
manufacturing and engineering support for new Sensors & Systems segment
products, primarily automotive sensors.
Nine months ended June 29, 1996 and July 1, 1995
Net sales for the first nine months of fiscal 1996 decreased slightly from the
prior year.
Sensors and Systems segment net sales for the nine month period ended June 29,
1996 increased $5.1 million or 7.6% from the first nine months of fiscal 1995.
The increased net sales were due to the growth of sales primarily in commercial
sensor products.
Defense Systems segment net sales for the nine month period ended June 29, 1996
decreased $5.3 million or 14.3% from the first nine months of fiscal 1995, due
to declining shipments of HYDRA 70 products as the contract is completed.
Consolidated cost of sales as a percentage of net sales decreased in the first
nine months of fiscal 1996 from the comparable period of fiscal 1995. Sensors &
Systems segment cost of sales as a percentage of net sales decreased due to
continuing improvement in margins primarily on commercial sensor products. Cost
of sales was also favorably impacted by cost reduction efforts for other sensor
products not experiencing growth. The Defense Systems segment experienced an
increase in gross profit from a claim recovery as well as margin improvements as
sales associated with the high cost HYDRA 70 contract decline as completion of
the contract nears.
Selling, general and administrative expenses as a percentage of net sales
increased minimally in the first nine months of fiscal 1996 versus the
comparable period of fiscal 1995, due primarily to spending in the Medical
segment to support the integration of marketing for a new product line.
Research, development and related expenses for the first nine months of fiscal
1996 as percentage of net sales were only slightly higher compared to the same
period in fiscal 1995 primarily due to efforts in the Medical segment to support
new products partially offset by reductions in spending in some divisions of the
Sensors & Systems segment.
Interest expense increased from the first nine months of fiscal 1995 due mainly
to interest accrued in the Sensors & Systems segment related to the arbitration
offset by a decrease in interest on short term borrowing. There was no short
term borrowing in the first nine months of fiscal 1996, compared to $6.0 million
for the same period in fiscal 1995.
Page 12 of 15
<PAGE>
Other income decreased slightly for the nine months ended June 29, 1996 versus
the comparable period of fiscal 1995 due primarily to a decrease in royalty
income from a technology licensing agreement offset partially by increased
interest income on invested cash balances.
Income taxes vary from the expected rate due primarily to the effects of state
income taxes.
Liquidity and Capital Resources
During the first nine months of fiscal 1996, total cash provided by operations
was $1.1 million. Cash from operations benefited from the positive impact of
non-cash charges to income from depreciation and amortization of $5.8 million
and a decrease in the net assets of the HYDRA 70 rocket line of business of $1.7
million. Cash decreased as a result of the overall decrease in accrued expenses
and other liabilities, which included two items connected with the ongoing
arbritration with General Precision Industries (see discussion under Note E
- --Contingencies and Litigation in the Notes to Condensed Consolidated Financial
Statements attached hereto) related to the acquisition of the quartz rate sensor
technology. A $3.3 million liability accrued in 1995 was paid during the first
nine months of 1996 and $3.0 million of estimated royalties were paid in the
third quarter of fiscal 1996 based on preliminary rulings by the arbitration
panel. Other uses of cash included increases in net inventories of $1.4 million
and accounts receivable of $0.4 million and a decrease in deferred taxes and
other long-term liabilities of $0.8 million.
Cash flows from investing activities included the sale by BEI Medical Systems
Company, Inc. (BEI Medical) of $1.5 million of its preferred stock to an
unrelated third party during the second quarter of fiscal 1996. The costs of
issuing the stock were offset against the proceeds. Investing activities also
includes $0.3 million utilized by BEI Medical to purchase a medical product
line. The Company utilized $3.2 million in cash for capital expenditures.
Management believes that the level of capital expenditures for the first nine
months of fiscal 1996 is consistent with the current volume of business.
Cash flows from financing activities consisted of $0.4 million used to pay
dividends on common stock offset by cash of $0.7 million provided by a sale of
stock through the Employee Stock Purchase Plan and the exercise of stock
options. The Company paid a $0.5 million liability from prior acquisitions. In
July 1996, the Board of Directors approved the repurchase of up to 200,000
shares of common stock on the open market. As of the date of this report, no
shares have been repurchased in connection with this program.
The Company adopted Financial Accounting Standards Board Statement ("FAS") No.
107 "Disclosures About Fair Value of Financial Instruments" and FAS No. 121
"Accounting for the Impairment of Long-lived Assets to be Disposed Of" effective
October 1, 1995. The effect of adoption of the new statements was not material.
Based on the financial condition of the Company at June 29, 1996, management
believes that the existing cash balances, cash generated from operations, and
the available line of credit will be sufficient to meet the Company's planned
needs for the foreseeable future.
Page 13 of 15
<PAGE>
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.
PART II. OTHER INFORMATION
Item 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10 Fifth Amendment to Credit Agreement
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 June 29, 1996
Page 14 of 15
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of San
Francisco, County of San Francisco, State of California, on .
BEI ELECTRONICS, INC.
By: /s/ Robert R. Corr
-----------------------------------
Robert R. Corr
Secretary, Treasurer and Controller
(Principal Accounting Officer)
Page 15 of 15
Exhibit 10
BEI ELECTRONICS, INC.
FIFTH AMENDMENT TO CREDIT AGREEMENT
This FIFTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is dated as
of June 1, 1996 and entered into by and among BEI Electronics, Inc., a Delaware
corporation, BEI Sensors & Systems Company, Inc., a Delaware corporation,
Defense Systems Company, Inc., a Delaware corporation, and BEI Medical Systems
Company, Inc., a Delaware corporation (each a "Borrower" and collectively the
"Borrowers"), the financial institutions listed on the signature pages hereof
(each a "Lender" and collectively the "Lenders"), CIBC Inc., as agent for the
Lenders (the "Agent"), and Canadian Imperial Bank of Commerce, as the Designated
Issuer, and is made with reference to that certain Credit Agreement dated as of
June 1, 1993, as amended by the First Amendment to Credit Agreement dated as of
September 3, 1993, as amended by the Second Amendment to Credit Agreement and
Limited Waiver dated as of April 1, 1994, as amended by the Third Amendment to
Credit Agreement dated as of September 30, 1994, and as amended by the Fourth
Amendment to Credit Agreement dated as of June 1, 1995 (as so amended, the
"Credit Agreement") by and among the Borrowers, the Lenders, the Agent and the
Designated Issuer. Capitalized terms used herein without definition shall have
the same meanings herein as set forth in the Credit Agreement.
RECITALS
WHEREAS, the Borrowers have requested an extension of the Maturity Date
of the Credit Agreement, and the Lenders, the Agent and the Designated Issuer
have so agreed;
WHEREAS, the Borrowers, the Lenders, the Agent and the Designated
Issuer desire to amend the Credit Agreement as set forth below;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
1. Amendments to the Credit Agreement.
1.1 Amendments to Section 1.01: Defined Terms.
1.1.1 The following definitions in Section 1.01 of
the Credit Agreement are hereby amended in to read in their entirety as follows:
"'Maturity Date': October 31, 1996, or, if earlier, the day immediately
prior to the distribution date of a tax free spin-off of any of the
Borrowers' Subsidiaries."
2. Conditions to Effectiveness.
1
<PAGE>
Exhibit 10
This Amendment shall be deemed effective as of June 1, 1996
(the "Fifth Amendment Effective Date") upon the satisfaction of all of the
following conditions precedent:
2.1 The Agent shall have received for each Lender and the
Designated Issuer counterparts hereof duly executed on behalf of the Borrowers,
the Agent and the Lenders (or notice of the approval of this Amendment by the
Lenders satisfactory to the Agent shall have been received by the Agent).
2.2 The Agent shall have received a closing fee in the amount
of $15,625.
2.3 All corporate and other proceedings taken or to be taken
in connection with the transactions contemplated hereby and all documents
incidental thereto not previously found acceptable by the Agent, acting on
behalf of the Lenders, and its counsel shall be satisfactory in form and
substance to the Agent and such counsel, and the Agent and such counsel shall
have received all such counterpart originals or certified copies of such
documents as the Agent may reasonably request.
3. Borrowers' Representations and Warranties.
In order to induce the Lenders to enter into this Amendment
and to amend the Credit Agreement in the manner provided herein, the Borrowers
represent and warrant to each Lender that the following statements are true,
correct and complete:
3.1 Corporate Power and Authority. The Borrowers have all
requisite corporate power and authority to enter into this Amendment and to
carry out the transactions contemplated by, and perform their respective
obligations under, the Credit Agreement as amended by this Amendment (the
"Amended Agreement"). The Certificate of Incorporation and Bylaws of each of the
Borrowers have not been amended since September 30, 1994, except for the bylaws
of BEI Electronics, Inc. which were amended as of April 1, 1996 (a copy of the
amended bylaws have been delivered to Agent).
3.2 Authorization of Agreements. The execution and delivery
of this Amendment and the performance of the Amended Agreement have been duly
authorized by all necessary corporate action on the part of the Borrowers.
3.3 No Conflict. The execution and delivery by the Borrowers
of this Amendment and the performance by the Borrowers of the Amended Agreement
do not and will not contravene (i) any law or regulation binding on or affecting
any of the Borrowers or any of their respective Subsidiaries, (ii) the
Certificate of Incorporation or Bylaws of any of the Borrowers, (iii) any order,
judgment or decree of any court of other agency of government binding on any of
the Borrowers or any of their respective Subsidiaries or (iv) any contractual
restriction binding on or affecting any of the Borrowers or any of their
respective Subsidiaries.
2
<PAGE>
Exhibit 10
3.4 Governmental Consents. The execution and delivery by the
Borrowers of this Amendment and the performance by the Borrowers of the Amended
Agreement do not and will not require any authorization or approval of, or other
action by, or notice to or filing with any governmental authority or regulatory
body.
3.5 Binding Obligation. This Amendment and the Amended
Agreement have been duly executed and delivered by the Borrowers and are the
binding obligations of the Borrowers, enforceable against the Borrowers in
accordance with their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or
other similar laws of general application and equitable principles relating to
or affecting creditors' rights.
3.6 Absence of Default. No event has occurred and is
continuing or will result from the consummation of the transactions contemplated
by this Amendment that would constitute an Event of Default or a Potential Event
of Default.
4. Miscellaneous.
4.1 Reference to and Effect on the Credit Agreement and
the Other Loan Documents.
4.1.1 On and after the Fifth Amendment Effective
Date, each reference in the Credit Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import referring to the Credit Agreement,
and each reference in the other Loan Documents to the "Credit Agreement",
"thereunder", "thereof" or words of like import referring to the Credit
Agreement shall mean and be a reference to the Amended Agreement.
4.1.2 Except as specifically amended by this
Amendment, the Credit Agreement and the other Loan Documents shall remain in
full force and effect and are hereby ratified and confirmed.
4.1.3 Without limiting the generality of the
provisions of Section 10.01 of the Credit Agreement, nothing in this Amendment
shall be deemed to (a) constitute a waiver of compliance by the Borrowers with
respect to any term, provision or condition of the Credit Agreement or any other
instrument or agreement referred to therein or (b) prejudice any right or remedy
that the Agent or any Lender may now have or may have in the future under or in
connection with the Credit Agreement or any other instrument or agreement
referred to therein.
4.2 Fees and Expenses. The Borrowers acknowledge that all
costs, fees and expenses as described in Section 10.05 of the Credit Agreement
incurred by the Agent and its counsel with respect to this Amendment and the
documents and transactions contemplated hereby shall be for the account of the
Borrowers.
3
<PAGE>
Exhibit 10
4.3 Headings. Section and subsection headings in this
Amendment are included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose or be given any
substantive effect.
4.4 Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
4.5 Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
BEI ELECTRONICS, INC.
By: /s/ Robert R. Corr
---------------------------------
Title: Treasurer & Controller
---------------------------------
BEI SENSORS & SYSTEMS
COMPANY, INC.
By: /s/ Robert R. Corr
---------------------------------
Title: Treasurer
---------------------------------
DEFENSE SYSTEMS COMPANY, INC
By: /s/ Robert R. Corr
---------------------------------
Title: Assistant Treasurer
---------------------------------
4
<PAGE>
Exhibit 10
BEI MEDICAL SYSTEMS COMPANY, INC.
By: /s/ Robert R. Corr
---------------------------------
Title: Treasurer
---------------------------------
CIBC INC., Individually and as Agent
By: /s/ S. Sakai
---------------------------------
Title: Director
---------------------------------
CANADIAN IMPERIAL BANK OF COMMERCE, as the
Designated Issuer
By: /s/ S. Sakai
---------------------------------
Title: Director
---------------------------------
5
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