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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
AMENDMENT TO ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 27, 1997 Commission file number 000-17885
BEI MEDICAL SYSTEMS COMPANY, INC.
(Exact name of Registrant as specified in its charter)
Delaware 71-0455756
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
83 Hobart Street, Hackensack, NJ 07601
(Address of principal executive offices, including zip code)
(201) 488-4960
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and 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 o
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in any further amendment to the Registrant's
Form 10-K. ___.
The approximate aggregate market value of the Common Stock held by
non-affiliates of the Registrant, based upon the closing price of the Common
Stock reported on the Nasdaq National Market was $24,369,434 as of December 8,
1997.
The number of shares of Common Stock outstanding as of December 8, 1997 was
7,556,534.
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<PAGE>
BEI MEDICAL SYSTEMS COMPANY, INC.
INDEX
Page No.
--------
Item 10. Directors and Executive Officers of the Registrant.............. 3
Item 11. Executive Compensation.......................................... 4
Item 12. Security Ownership of Certain Beneficial Owners and Management.. 12
Item 13. Certain Relationships and Related Transactions.................. 13
SIGNATURES ........................................................ 14
2
<PAGE>
ITEM 10. Directors and Executive Officers of the Registrant.
The executive officers and directors of the Company and their ages as of
December 1, 1997 are as follows:
Name Age Position
- - ---- --- --------
Charles Crocker (2) 58 Chairman of the Board of Directors
Richard W. Turner 51 President and Chief Executive Officer
Thomas W. Fry 53 Vice President, Finance and Administration,
Secretary and Treasurer
Samuel Dickstein (1) 57 Vice President, New Business Development
and Technology
Gary D. Wrench (1) 64 Director
Dr. Ralph M. Richart (1) 63 Director
Dr. Lawrence A. Wan (2) 59 Director
- - ----------------
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
Mr. Crocker, a founder of the Company, has served as Chairman of the Board of
Directors of the Company since October 1974, and served as President and Chief
Executive Officer of the Company from October 1995 until his resignation
immediately prior to the Distribution in September 1997. Mr. Crocker is
currently Chairman of the Board, President and Chief Executive Officer of BEI
Technologies, Inc. He served as President of Crocker Capital Corporation, a
Small Business Investment Company, from 1970 to 1985. He also served as a
general partner of Crocker Associates, a venture capital investment partnership,
from 1970 to 1990. He currently serves as a director of BEI Technologies,
Fiduciary Trust Company International, KeraVision, Inc. and Pope & Talbot, Inc.
Mr. Crocker holds a B.S. from Stanford University and an M.B.A. from the
University of California, Berkeley.
Mr. Turner began Medical in 1991 as a subsidiary of what is now BEI Medical
Systems Company, Inc. Previously President of the Healthcare Group for the
Cooper Companies, Mr. Turner has held executive leadership positions in the
medical industry for over 20 years, including President and Director of
Cooper-LaserSonics, Inc., President of CooperVision Inc., President and Chief
Executive Officer/Director for Pancretec, Inc. and President of Kay
Laboratories. Mr. Turner holds a B.S. from Old Dominion University and an M.B.A.
from Pepperdine University.
Mr. Fry served as Vice President, Finance and Administration of Medical from
October 1992 until the merger of Medical into the Company in November 1997.
Prior to that time, Mr. Fry was employed by GTE from 1970 to 1979 in various
accounting and financial roles including three years as the Controller of GTE
Sylvania in Caracas, Venezuela. Mr. Fry was employed by Cheeseborough-Ponds
International as Manager of Profit Planning and Manufacturing Controller from
1979 to 1986, by Cavitron, Inc./CUSA, a medical device, engineering and
manufacturing company, as Controller/CFO from 1986 to 1989, and by Disctronics
Ltd. as Corporate Controller from 1989 to 1992. Mr. Fry holds a B.S. from
Southeast Missouri State University and an M.B.A. with academic honors from Pace
University.
Mr. Dickstein has served as Vice President, New Business Development and
Technology, of Medical since June 1997. He served as Vice President, Operations,
from the acquisition of Meditron Devices, Inc. by Medical in 1992 until June
1997. Prior to the acquisition, Mr. Dickstein, a co-founder of Meditron Devices,
Inc., served as its Vice-President. From 1970 to 1978 Mr. Dickstein served as
Electro-Medical Engineering Manager for American Cystoscope Makers (Circon
Corp.). Mr. Dickstein holds a BSEE from the City College of New York and has
also completed graduate level studies in Electrical Engineering at both New York
University and the New Jersey Institute of Technology.
Mr. Wrench has been a director of the Company since February 1986. Mr. Wrench
has been Senior Vice President, Chief Financial Officer and a director of BEI
Technologies, Inc. since its formation in June 1997. He served as Senior Vice
President and Chief Financial Officer of the Company from July 1993 until his
resignation immediately prior to the Distribution in September 1997. From April
1985 to July 1993, he served as Vice President of the Company and President and
Chief Executive Officer of Motion Systems Company, Inc., then a wholly-owned
subsidiary of the Company that is now a part of BEI Technologies. Previous
experience includes twenty years with Hughes Aircraft Company including an
assignment as President of Spectrolab, Inc., a Hughes subsidiary. Mr. Wrench
holds a B.A. from Pomona College and a M.B.A. from the University of California,
Los Angeles.
3
<PAGE>
Dr. Richart is Professor of Pathology and Obstetrics and Gynecology at the
Columbia University College of Physicians and Surgeons and Director of
Gynecological Pathology and Cytology at the Sloane Hospital for Women in New
York City. He served as a Career Research Development Awardee at the Medical
College of Virginia before moving to Columbia-Presbyterian Medical Center in
1963. His professional interests have centered around obstetrical and
gynecological pathology and cytology with particular emphasis on the study of
cervical neoplasia and, more recently, the relationship of the human
papillomavirus to lower genital tract neoplasia. He is the past President of the
International Gynecologic Cancer Society. He received his medical training at
the University of Rochester School of Medicine and Dentistry, and completed his
pathology residency in the Harvard Hospitals system.
Dr. Wan served as Vice President and Chief Technical Officer of BEI Electronics,
Inc. from July 1990 to September 1997, and is currently Vice President and Chief
Technical Officer of BEI Technologies, Inc., and President of SiTek, Inc., a BEI
Technologies' subsidiary. From 1984 until 1990, he served as Vice President,
Engineering, of Systron Corporation, and also held various other technical and
general management positions with that company between 1979 and 1984. From 1968
through 1979, he was founder and Chief Executive Officer of Sycom, Inc., a
commercial electronics company. Prior to that, he worked for Hughes Aircraft
Company where he headed the Radar Systems Donner Section of the Hughes Ground
Systems Group. In 1962, Dr. Wan and two other professors established an
Engineering School at the University of California, Santa Barbara, where he also
taught Engineering. Dr. Wan holds B.S., M.S. and Ph.D. degrees in Engineering
and Applied Sciences from Yale University.
The Company has a classified Board of Directors, which may have the effect of
deterring hostile takeovers or delaying changes in control or management of the
Company. For purposes of determining their term of office, directors are divided
into three classes, with the term of office of the first class to expire at the
1998 annual meeting of stockholders, and the term of office of the second class
to expire at the 1999 annual meeting of stockholders and the term of office of
the third class to expire at the 2000 annual meeting of stockholders.
Class I consists of Mr. Turner; Class II consists of Mr. Crocker and Dr.
Richart; and Class III consists of Mr. Wrench and Dr. Wan. Directors elected to
succeed those directors whose term expires will be elected for a three year term
of office. All directors hold office until the next annual meeting of
stockholders, at which their term expires, and until their successors have been
duly elected and qualified. Executive officers serve at the discretion of the
Board. There are no family relationships among any of the officers and
directors.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Exchange Act requires the Company's directors and executive
officers, and persons who own more than ten percent of the Company's Common
Stock, to file with the Commission initial reports of ownership and reports of
changes in ownership of Common Stock of the Company. Officers, directors and
greater than ten percent stockholders are required by the Commission's
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended September 27, 1997, the
Company's officers, directors and greater than ten percent beneficial owners
complied with all applicable Section 16(a) filing requirements with the
exception of a former director, Mr. Peter G. Paraskos, who failed to timely file
a Form 4 report disclosing one transaction and an initial report of ownership
for Dr. Robert Mehrabian, a former director of the Company, which was filed
late.
ITEM 11. Executive Compensation.
Compensation of Directors
During fiscal 1997, each non-employee director of the Company received a
monthly fee of $1,000, with the exception of former director George Brown who
served as a consultant to the Company until the Distribution. Each non-employee
director of the Company received a fee of $500 for each Board meeting attended
and for each committee meeting attended by committee members and a fee of $250
for each telephone conference Board meeting in which such director participated.
In the fiscal year ended September 27, 1997, the total compensation paid to
non-employee directors for services as directors was $55,000. The members of the
Board are also eligible for reimbursement for their expenses incurred in
connection with attendance at Board meetings in accordance with Company policy.
4
<PAGE>
Former director Mr. Brown provided consulting services to the Company
pursuant to an agreement under which he was paid a retainer of $3,000 per month
and a fee of $750 per day of service. His agreement expired June 30, 1997. In
the fiscal year ended September 27, 1997, the Company paid Mr. Brown $33,750
under the agreement. Pursuant to his agreement the payments included $6,606 in
life and health insurance premiums paid by the Company in fiscal year 1997 on
behalf of Mr. Brown.
Dr. Richart, currently a director of the Company, provided consulting
services to the Company pursuant to an agreement under which he was paid a fee
of $1,000 per day of service. In the fiscal year ended September 27, 1997, the
Company paid Dr. Richart $30,750 under the agreement.
Compensation of Executive Officers
Summary of Compensation
The following table shows, for the fiscal years ended September 27, 1997,
September 28, 1996 and September 30, 1995, compensation awarded or paid to or
earned by the Company's Chief Executive Officer and its four other most highly
compensated executive officers for fiscal 1997 the ("Named Executive Officers")
and the compensation earned in fiscal 1997 by the three individuals who became
executive officers at the beginning of fiscal 1998 as a result of the
Distribution. Messrs. Wrench, Madni, Wan and Corr resigned as officers and
employees of the Company immediately prior to the Distribution. Mr. Crocker
resigned as President and Chief Executive Officer immediately prior to the
Distribution, but continues to serve as Chairman of the Board of Directors of
the Company. Messrs. Crocker, Wrench, Madni, Wan and Corr now work with BEI
Technologies in the same principal positions identified below.
5
<PAGE>
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation(1) Awards
Restricted Stock All Other
Name and Salary(2) Bonus Awards (3)(4) Compensation(5)
Principal Position Year ($) ($) ($) ($)
------------------ ---- --- --- --- ---
<S> <C> <C> <C> <C> <C>
Mr. Charles Crocker 1997 341,400 50,000 0 4,707
Chairman of the Board and 1996 260,775 35,000 0 3,252
Former President and Chief 1995 195,150 0 0 3,240
Executive Officer
Mr. Gary D. Wrench 1997 282,000 80,000 63,750 5,102
Former Senior Vice President and 1996 264,000 35,000 48,750 4,370
Chief Financial Officer 1995 264,000 0 0 4,223
Dr. Asad M. Madni 1997 290,239 65,000 315,000 5,823
President, Sensors & Systems 1996 239,312 95,000 65,000 5,488
Dr. Lawrence A. Wan 1997 217,043 33,000 53,125 8,463
Former Vice President, 1996 190,922 45,000 26,000 7,792
Corporate Technology 1995 182,100 45,000 15,000 6,920
Mr. Robert R. Corr 1997 159,600 45,000 31,875 4,400
Former Secretary, Treasurer 1996 149,600 16,000 13,000 3,681
and Controller 1995 139,600 12,000 7,875 3,635
Mr. Richard W. Turner 1997 229,290 0 0 7,193
Current President and
Chief Executive Officer
Mr. Thomas W. Fry 1997 149,133 13,500 0 6,912
Current Vice President,
Finance and Administration,
Treasurer and Secretary
Mr. Samuel Dickstein 1997 128,800 7,500 0 6,142
Current Vice President ,
Business Development
</TABLE>
- - ----------
(1) As permitted by rules promulgated by the Commission, no amounts are shown
for "Other Annual Compensation" because no person listed received
"perquisites" in an amount exceeding the lesser of 10 % of bonus plus
salary or $50,000.
(2) Includes annual cash payments designated as automobile allowances, which
did not exceed $11,400 for any individual in any year; also includes
amounts earned but deferred at the election of the person listed pursuant
to the Company's Retirement Savings Plan and $36,027 of accrued vacation
pay deferred by Dr. Madni.
(3) Represents the dollar value of shares awarded, calculated by multiplying
the market value based on the closing sales price on the date of grant by
the number of shares awarded. At September 27, 1997, the aggregate holdings
and value of restricted stock of the Named Executive Officers (based on the
number of shares held at fiscal year-end multiplied by the closing sales
price of the Company's Common Stock as reported on the Nasdaq National
Market on October 8,
6
<PAGE>
1997, the date on which post-Distribution regular way trading of the
Company's Common Stock began) was as follows: Mr. Wrench, 24,419 shares,
valued at $320,499; Dr. Madni, 60,267 shares, valued at $791,004; Dr. Wan,
19,250 shares, valued at $252,656; Mr. Corr, 12,700 shares, valued at
$166,688. The restrictions on awards of restricted stock lapse with respect
to 15% of the total number of shares per year on the first, second, third,
fourth and fifth anniversaries of the date of grant and with respect to the
remaining shares subject to such award on the sixth anniversary of the date
of grant. Dividends are paid on shares of restricted stock when, as and if
the Board declares dividends on the Common Stock of the Company.
(4) During the past three fiscal years, the Company did not grant any stock
options or issue any stock appreciation rights to any of the persons
listed.
(5) Includes $3,253, $3,648, $3,675, $3,884, $3,549, $3,721, $2,482 and $2,519
paid in fiscal 1997 to Messrs. Crocker, Wrench, Madni, Wan, Corr, Turner,
Fry and Dickstein respectively; $2,098, $3,000, $2,999, $3,164 and $2,988
paid in fiscal 1996 to Messrs. Crocker, Wrench, Madni, Wan and Corr, and
$2,150, $2,655, $2,796 and $2,854 paid in fiscal 1995 to Messrs. Crocker,
Wrench, Wan and Corr, respectively, as a normal contribution pursuant to
the Company's Retirement Savings Plan. The remaining sum for each of the
persons listed is attributable to premiums paid by the Company for group
term life insurance and personal commuting expense paid by the Company.
Stock Option Grants and Exercises
The Company grants options to its executive officers and key employees
under the Amended Plan. In connection with the Distribution, unexercised options
issued under the Amended Plan and outstanding at the date of the Distribution
were converted into options to purchase BEI Technologies Common Stock. Thus,
immediately after the Distribution was effective, the Company had no options
outstanding. However, on November 4, 1997, with the completion of the merger
into the Company of BEI Medical Systems Company, Inc., a subsidiary of the
Company at the time, and the substitution of options to purchase Common Stock of
the Company for options to purchase Common Stock of BEI Medical Systems Company,
Inc. outstanding at that time, options were once again outstanding. As of
January 8, 1998, options to purchase a total of 704,228 shares had been granted
and were outstanding under the Amended Plan and options to purchase 88,687
shares remained available for grant thereunder. During the fiscal year ended
September 27, 1997, there were no stock options granted to the Named Executive
Officers. No Named Executive Officer held stock options to purchase the
Company's stock at the end of fiscal 1997. The Company has not issued any stock
appreciation rights. The following table shows, for fiscal 1997, certain
information regarding options exercised.
Aggregated Option Exercises in Last Fiscal Year, and FY-End Option
Values(1)
Shares
Acquired on Exercise Value
Name (#)(2) Realized ($)
---- ------ ------------
Mr. Crocker..... 0 0
Mr. Wrench...... 33,600 253,900
Dr. Madni....... 0 0
Dr. Wan......... 20,000 212,400
Mr. Corr........ 10,000 71,250
(1) No options to purchase the Company's Common Stock were granted in fiscal
1997 or outstanding at the end of fiscal 1997.
(2) The number of shares of the Company's Common Stock received upon exercise
of underlying options.
7
<PAGE>
Management Incentive Bonus Plan
In fiscal 1997 the Company had a Management Incentive Bonus Plan under
which members of management were eligible to receive cash bonuses based on the
achievement of specific operating results established at the beginning of the
fiscal year. BEI Technologies assumed responsibility for the payment of bonuses
to the named Executives Officers who resigned their positions with the Company
immediately prior to the Distribution.
For fiscal 1998 the Company's Board adopted a revised Management Incentive
Bonus Plan (MIB Plan) for management of the Company. On the basis of goals
related to achievement of certain business development, product development,
operational improvements and financial results, the Compensation Committee will
recommend a bonus fund to consist of a combination of cash and stock awards for
individual members of management subject to final approval by the Board. At its
November 1997 meeting the Compensation Committee and the Board approved
additional goals for the Chairman, the President and the Chief Financial Officer
that relate to building the financial strength of the Company.
Employment Agreements
The employment agreement between the Company and Mr. Turner, President,
Chief Executive Officer and a director of the Company, provide that if Mr.
Turner is terminated by the Company or terminates his employment with the
Company for good reasons, as defined in the employment agreement, he will
receive from the Company his full-time then current compensation for 12 months
after such termination.
The employment agreement between the Company and Mr. Fry, Vice President,
Finance and Administration, Secretary and Treasurer of the Company, provide that
if Mr. Fry is terminated by the Company or terminates his employment with the
Company for good reasons, as defined in the employment agreement, he will
receive from the Company his full-time then current compensation for 12 months
after such termination.
Compensation Committee Interlocks and Insider Participation
As noted above, during fiscal 1997, the Compensation Committee consisted of
Messrs. Brown, Brooks and Giroir. Mr. Brown retired in July 1990 as President of
the Company and continued to serve as a consultant to the Company until June
30,1997. Mr. Giroir served as Corporate Secretary of the Company until February
1995 for which he received no compensation in addition to that received as
director's fees.
Report of the Compensation Committee of the Board of Directors
on Executive Compensation(1)
The Compensation Committee (the "Committee") is composed of two
non-employee directors. The current members of the Committee are Mr. Wrench and
Dr. Wan. The members of the Committee until their resignation in September 1997
as a result of the Distribution were Messrs. Brown, Brooks and Giroir. The
Committee is responsible for, among other things, setting the compensation of
executive officers, including any stock-based awards to such individuals under
the Amended Plan and 1992 Restricted Stock Plan (collectively, the "Plans").
Executive Compensation Principles
The Committee seeks to compensate executive officers in a manner designed
to achieve the primary goal of the Company's stockholders: increased stockholder
value. In furtherance of this goal, the Committee determines a compensation
package that takes into account both competitive and performance factors. Annual
compensation of Company executives is comprised of salary and bonus, an approach
consistent with the compensation programs of most electronics companies, which
is what the Company primarily was at that time. A substantial portion of the
cash compensation of each executive officer is contingent upon the Company's
performance. Bonuses, therefore, may be substantial, may vary significantly for
an individual from year to year, and may vary significantly among the executive
officers. In the past, another significant component of
- - ----------
(1) This Section is not "soliciting material", is not deemed "filed" with the
Commission and is not to be incorporated by reference in any filing of the
Company under the Securities Act of 1933, as amended (the "Securities Act"), or
the Exchange Act, whether made before or after the date hereof and irrespective
of any general incorporation language in any such filing.
8
<PAGE>
compensation of executive officers is restricted stock grants which vest at
approximately 15% per annum over a six year period. In the past, incentive stock
options also were a significant part of the compensation of some of the
executive officers.
Base Salary
The Committee determined salaries for fiscal 1997 in December 1996 for all
executive officers. In adjusting the base salary of the executive officers, the
Compensation Committee examines both competitive and qualitative factors
relating to corporate and individual performance. In connection with its
examination of competitive factors, because the Company was then primarily an
electronics company, the Committee reviewed an independent survey of base
salaries paid by other electronics companies of comparable size. In many
instances, assessment of qualitative factors necessarily involves a subjective
assessment by the Committee. In determining salary adjustments for executive
officers for fiscal 1997, the Committee relied primarily on the evaluation and
recommendation of Mr. Crocker of each officer's responsibilities for fiscal 1997
and performance during fiscal 1996.
At its meeting in December 1996 the Committee approved base compensation
increases effective at the beginning of fiscal 1997 for the Named Executive
Officers other than Mr. Crocker as follows: Mr. Corr by 6.9%, Dr. Madni by 8.7%,
Dr. Wan by 4.0%, Mr. Wrench by 7.1%. In a Compensation Committee meeting in
March 1997, Dr. Wan's salary was further increased by 18.0% effective April
1997. Additional base compensation increases were approved as follows: Mr.
Turner by 18.6% effective October 1996 and Mr. Fry by 3.4% and Mr. Dickstein by
9.9% effective February 1997.
Management Incentive Bonus
In fiscal 1997, the Company had a Management Incentive Bonus Plan under
which members of management were eligible to receive cash bonuses based on the
achievement of specific operating results established at the beginning of the
fiscal year. BEI Technologies assumed responsibility for the payment of bonuses
following the Distribution at the end of fiscal 1997 and no payments were made
to the "Named Executive Officers" by the Company. In November 1997 the Company's
Board awarded bonus payments to Mr. Fry of $13,500 and to Mr. Dickstein of
$7,500 for fiscal 1997.
Chief Executive Officer Compensation
In general, the factors utilized in determining Mr. Crocker's compensation
were similar to those applied to other executives officers in the manner
described in the preceding paragraphs: however, a significant percentage of his
potential earnings was subject to consistent, positive, long-term performance of
the Company.
In December 1996, Mr. Crocker's base compensation for fiscal 1997 was
increased by 4.7%. At the same time, the Company's Board of Directors approved a
separate incentive bonus plan for Mr. Crocker for fiscal 1997. Achievement of
all goals enumerated under the plan gave Mr. Crocker the opportunity to earn an
incentive bonus equal to his fiscal 1997 base pay. On September 27, 1997, as a
result of and immediately prior to the Distribution, Mr. Crocker resigned as
President and Chief Executive Officer of the Company. BEI Technologies assumed
responsibility for the payment after the end of fiscal 1997 of Mr. Crocker's
incentive bonus, as a result of the Distribution. Mr. Crocker continues to serve
as Chairman of the Board of Directors of the Company at an annual compensation
of $50,000 per year.
Long-Term Incentives
The Company uses the Plans to further align the interests of stockholders
and management by creating common incentives related to the possession by
management of a substantial economic interest in the long-term appreciation of
the Company's stock. In determining the size of a restricted stock award or
incentive stock option to be granted to an executive officer, the Committee
takes into account the officer's position, level of responsibility within the
Company, the officer's existing equity holdings, the potential reward to the
officer if the stock appreciates in the public market, the incentives to retain
the officer's services to the Company, the competitiveness of the officer's
overall compensation arrangements and the performance of the officer. Based on a
review of this mix of factors, during fiscal 1997 the Board made no grants of
incentive stock options or restricted stock to any "Named Executive Officers"
but in November 1997, the Committee awarded incentive stock options to Mr.
Turner (15,000 shares), Mr. Fry (8,750 shares) and Mr. Dickstein (7,265 shares).
9
<PAGE>
Section 162(m) of the Code limits the Company to a deduction for federal
income tax purposes of no more than $1 million of compensation paid to certain
Named Executive Officers in a taxable year. Compensation above $1 million may be
deducted if it is "performance-based compensation" within the meaning of the
Code. The Committee has determined that stock options granted under the Amended
Plan with an exercise price at least equal to the fair market value of the
Company's Common Stock on the date of grant shall be rated as "performance-based
compensation".
George S. Brown Richard M. Brooks C. Joseph Giroir, Jr.
10
<PAGE>
Performance Measurement Comparison(1)
The following graph shows the value of an investment of $100 on October 2,
1992 in cash of (i) the Company's Common Stock, (ii) the Center for Research in
Securities Prices ("CRSP") Total Return Index for the Nasdaq Stock Market (U.S.
Companies) and (iii) the CRSP Total Return Industry Index for Nasdaq
Non-Financial Companies. All values assume reinvestment of the full amount of
all dividends and are calculated as of the last trading day of the applicable
fiscal year of the Company(2):
Comparison of Five Year-Cumulative Total Returns
Performance Garph for
BEI Electronics
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Prepared by the Center for Research in Security Prices
Produced on 01/22/98 including data to 09/26/97
<TABLE>
<CAPTION>
Legend
CRSP Total Returns Index for: 10/02/92 10/01/93 09/30/94 09/29/95 09/27/96 09/26/97
- - ---------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
BEI Electronics, Inc. 100.0 113.1 69.5 102.1 156.3 202.1
Nasdaq Stock Market (US Companies) 100.0 133.6 134.8 186.1 221.6 302.6
Nasdaq Non-Financial Stocks 100.0 133.6 132.8 185.1 216.8 289.6
SIC 0100-5999, 7000-9999 US & Foreign
</TABLE>
(c)Copyright 1998
- - ----------
(1) This Section is not "soliciting material", is not deemed "filed" with the
Commission and is not to be incorporated by reference in any filing of the
Company under the Securities Act of 1933, as amended (the "Securities
Act"), or the Exchange Act, whether made before or after the date hereof
and irrespective of any general incorporation language in any such filing.
(2) Fiscal year ending on the Saturday nearest September 30.
11
<PAGE>
ITEM 12. Security Ownership Of Certain Beneficial Owners And Management.
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of January 8, 1998 by: (i) each director; (ii)
each executive officer; (iii) all executive officers and directors of the
Company as a group; and (iv) all those known by the Company to be beneficial
owners of more than five percent of its Common Stock.
<TABLE>
<CAPTION>
Beneficial Ownership(l)
Number of Percent of
Beneficial Owner Shares Total(2)
<S> <C> <C>
Mr. Charles Crocker(3) 1,557,904 20.6%
One Post Street
Suite 2500
San Francisco, CA
Brinson Partners, Inc.(4) 611,400 8.1%
209 S. LaSalle Street
Chicago, IL
So Gen International Fund, Inc.(5) 420,000 5.6%
1221 Avenue of the Americas
8th Floor
New York, NY 10020
Dimensional Fund Advisors, Inc.(6) 489,400 6.5%
1299 Ocean Avenue
Penthouse
Santa Monica, CA
Hollybank Investment, LP (7) 545,000 7.2%
One Financial Center, Suite 1600
Boston, MA
Mr. Samuel Dickstein(8) 51,644 *
Mr. Thomas W. Fry(8) 49,645 *
Dr. Ralph M. Richart(8) 55,161 *
Mr. Richard W. Turner(8) 313,730 4.0%
Dr. Lawrence A. Wan(8) 19,250 *
Mr. Gary D. Wrench(8)(9) 82,705 1.1%
All executive officers and directors
as a group (7 persons)(10) 2,130,039 26.7%
</TABLE>
* Less than one percent.
(1) This table is based upon information supplied by officers, directors and
principal stockholders of the Company and upon any Schedules 13D or 13G
filed with the Securities and Exchange Commission (the "Commission").
Unless otherwise indicated in the footnotes to this table and subject to
community property laws where applicable, the Company believes that each of
the stockholders named in this table has sole voting and investment power
with respect to the shares indicated as beneficially owned.
(2) Applicable percentages are based on 7,556,534 shares outstanding on January
8, 1998, adjusted as required by rules promulgated by the Commission.
(3) Includes 400,000 shares held by Mr. Crocker as trustee for his adult
children, as to which Mr. Crocker disclaims beneficial ownership. Also
includes 54,936 shares held in a trust of which, Mr. Crocker is beneficiary
and sole trustee. Mr. Crocker, acting alone, has the power to vote and
dispose of the shares in each of these trusts.
(4) Represents shares held by Brinson Partners, Inc. ("Partners") which has the
sole power to vote and dispose of the shares held by it and shares held by
Brinson Trust Company ("Trust") which has the sole power to vote and
dispose of the shares held by it. Trust is a wholly-owned subsidiary of
Partners which is a wholly-owned subsidiary of Brinson Holdings, Inc.
("Holdings"). Holdings may be deemed to share the power to vote and dispose
of all shares held by
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Partners and Trust, and Partners may be deemed to share the power to vote
and dispose of all shares held by itself or Trust. Therefore, both Holdings
and Partners each may be deemed a beneficial owner of all the shares held
by Partners and Trust.
(5) So Gen International Fund, Inc. shares with Societe Generale Asset
Management Corp. the power to vote and dispose of all shares held by it.
(6) Represents shares held by Dimensional Fund Advisors, Inc., DFA Investment
Dimensions Group Inc. and The DFA Investment Trust Company. Officers of
Dimensional Fund Advisors, Inc. have sole power to vote and dispose of
shares beneficially owned by it, including shares held by DFA Investment
Dimensions Group Inc. and The DFA Investment Trust Company.
(7) Represents shares held by Hollybank Investments, LP ("Hollybank") which has
the sole power to vote and dispose of the shares held by it and includes
40,000 shares held by Dorsey R. Gardner, general partner of Hollybank, who
has the sole power to vote and dispose of his shares. Mr. Gardner, as
general partner of Hollybank, may be deemed to beneficially own shares held
by Hollybank. Except to the extent of his interest as a limited partner in
Hollybank, Mr. Gardner disclaims such beneficial ownership.
(8) Includes shares which certain officers and directors have the right to
acquire within 60 days after the date of this table pursuant to outstanding
options as follows: Mr. Dickstein, 35,854 shares; Mr. Fry, 8,274 shares;
Dr. Richart, 55,161 shares; Mr. Turner, 313,730 shares; Mr. Wrench, 20,686
shares; and all executive officers and directors as a group, 433,705
shares. Also includes shares which certain officers and directors have the
right to vote pursuant to unvested portions of restricted stock awards as
follows: Dr. Wan, 18,014 shares; Mr. Wrench, 13,080 shares; and all
executive officers and directors as a group, 31,094 shares.
(9) Includes 45,276 shares held in a revocable trust of which Mr. Wrench and
his wife, Jacqueline Wrench, are beneficiaries and sole trustees. Mr. and
Mrs. Wrench, acting alone, each has the power to vote and dispose of such
shares. Also includes 16,743 shares which Mr. Wrench, acting alone, has
power to vote and dispose of.
(10) Includes the shares described in the Notes above.
ITEM 13. Certain Relationships and Related Transactions.
The Company's By-Laws provide that the Company will indemnify its directors
and executive officers and may indemnify its other officers, employees and other
agents to the extent not prohibited by Delaware law. Under the Company's
By-Laws, indemnified parties are entitled to indemnification for negligence,
gross negligence and otherwise to the fullest extent permitted by law. The
By-Laws also require the Company to advance litigation expenses in the case of
stockholder derivative actions or other actions, against an undertaking by the
indemnified party to repay such advances if it is ultimately determined that the
indemnified party is not entitled to indemnification.
Dr. Richart, a director of the Company, holds 50% of the equity in
GynHiTech Brasil Ltda ("GynHi"). In August, 1997, the Company and GynHi entered
a three-year exclusive distribution agreement allowing GynHi to market and sell
the Company's products in Brazil. Pursuant to this agreement GynHi purchased
$35,404 worth of products from the Company at wholesale prices in fiscal year
1997, and $125,876 in the first quarter of fiscal 1998.
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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.
BEI Medical Systems Company, Inc.
By: /s/ Thomas W. Fry
-------------------------------------
Thomas W. Fry
Vice President of Finance and
Administration, Secretary & Treasurer
February ___, 1998
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title
- - --------- -----
* Chairman of the Board of Directors
- - --------------------------
(Charles Crocker)
/s/ Thomas W. Fry Vice President of Finance and Administration,
- - -------------------------- Secretary and Treasurer (Principal Financial
(Thomas W. Fry) and Accounting Officer)
* Director
- - --------------------------
(Ralph M. Richart)
/s/ Richard W. Turner President, Chief Executive Officer & Director
- - -------------------------- (Principal Executive Officer)
(Richard W. Turner)
* Director
- - --------------------------
(Lawrence A. Wan)
/s/ Gary D. Wrench Director
- - --------------------------
(Gary D. Wrench)
* By: /s/ Gary D. Wench
-------------------------------
Gary D. Wrench
ATTORNEY-IN-FACT
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