BEIQ Bei Technologies (MM)

SAN FRANCISCO, Aug. 5 /PRNewswire-FirstCall/ -- BEI Technologies, Inc. (NASDAQ:BEIQ), an established manufacturer of electronic sensors and motion control products, announces third quarter 2005 revenue and earnings. Fiscal 2005 Third Quarter compared with Fiscal 2004 Third Quarter: -- Revenues increased 21.5% to $83.6 million, including automotive revenue of $49.3 million, which also increased 20.5% -- Net income increased 56.9% to $5.3 million from $3.4 million -- EPS increased 56.5% to $0.36 from $0.23 per share Quarterly Results Charles Crocker, Chairman and Chief Executive Officer stated, "Revenue for the quarter increased by $14.8 million or 21.5% compared with the prior year third quarter, with increases in all market sectors. Revenue from industrial sensors, actuators and motors increased in the quarter to $27.0 million from $21.9 million in the prior year third quarter, primarily due to the inclusion of Newall Measurement Systems' linear encoders and higher GyroChip(R) aviation sales. Government, aerospace and defense revenue increased to $7.3 million compared with $6.0 million in the prior year third quarter due to higher quartz sensor shipments. Automotive revenue increased to $49.3 million with GyroChip sensor shipments of 1.7 million units. While Systron Donner Automotive Division continues to expand production capacity, the Company's largest customer, Continental Teves (CT), has advised the Company that it engaged a second source for microgyro products beginning with model year 2008. The Company is in discussions with CT regarding the potential implications for the Company of this development." Gross margin increased to 30.0% in the fiscal 2005 third quarter from 24.8% in the prior year third quarter. Average gross margin percentages improved both in automotive products, principally as a result of the transition to sales of nuggets, and in aerospace and defense products compared with the prior year third quarter. Selling, general and administrative (SG&A) expense increased in the third quarter of 2005 to $12.3 million compared with the prior year third quarter of $8.1 million. The inclusion of Newall SG&A, accruals associated with Sarbanes-Oxley Section 404 compliance and legal expenses associated with the July 21, 2005 Agreement and Plan of Merger with Schneider Electric S.A. drove the higher spending. Research and development expense in the third quarter of 2005 increased to $4.2 million compared with $3.7 million in the prior year third quarter due to the inclusion of Newall spending and increased spending associated with gyro development. During the third quarter of 2005 Company operations generated $15.3 million in positive cash flow, which included net income of $5.3 million. Purchases of property, plant and equipment used $5.1 million, primarily to increase GyroChip production capacity at Systron Donner Automotive Division. A $9.2 million reduction of the outstanding balance under the Company's line of credit reduced the outstanding balance to $3.0 million. The cash balance at the end of the third quarter was $6.7 million. Nine Months Results For the nine month period ended July 2, 2005, the Company reported consolidated after tax net income of $13.6 million, or $0.92 per share, versus $8.9 million, or $0.61 per share, in the comparable period of fiscal 2004. Revenue in the nine month period ended July 2, 2005 was $248.4 million, compared to $211.2 million in the comparable period of the prior year. Automotive revenue increased 18.0% to $151.0 million and industrial revenue increased 20.1% to $77.6 million. Gross margin for the nine month period ended July 2, 2005 increased to 28.4% from 24.0% in the prior year period, with improved margins in all sectors. SG&A spending was $35.4 million, versus $26.0 million in the comparable period of fiscal 2004, principally due to higher activity levels and the inclusion of Newall and Sarbanes-Oxley Section 404 compliance costs. Research and development spending for the nine month period ended July 2, 2005 of $12.8 million increased from $10.4 million in the comparable prior year period as a result of higher spending associated with gyro development, commercializing licensed technologies, and the inclusion of Newall spending. About BEI Technologies, Inc. BEI Technologies, Inc. (the "Company" or "Technologies") is an established manufacturer of electronic sensors, motors, actuators, rotary optical encoders, linear encoders with associated digital readouts (DROs), and motion control products used for factory and office automation, medical equipment, military, aviation and space systems. In addition, sales to manufacturers of transportation equipment, including automobiles, trucks and off-road equipment, have become a significant addition to the Company's business in recent years. The Company's micromachined quartz rate sensors are being used in advanced vehicle stability control systems and a significant increase in the production of those sensors has been in progress from the middle of 1998 into fiscal year 2005 except for a decrease in production in fiscal 2002 due to increased competition. The Company also manufactures electronic steering wheel position sensors, seat-memory modules, throttle position sensors, inertial navigation systems, and other devices used in transportation systems. Except for historical information, this news release may be deemed to contain forward-looking statements that involve risks and uncertainties. The Company's actual results could differ materially from those discussed in this release. Factors that could cause or contribute to such differences include, but are not limited to, the Risk Factors discussed from time to time in the Company's reports to the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for fiscal 2004. BEI TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in thousands) July 2, October 2,* 2005 2004 (Unaudited) ASSETS Cash and cash equivalents $6,706 $8,218 Investments 4,436 4,299 Trade receivables, net 43,544 45,482 Inventories, net 30,538 29,897 Other current assets 11,203 17,147 Total current assets 96,427 105,043 Property, plant and equipment, net 50,481 39,905 Goodwill 8,734 1,612 Other assets, net 10,067 6,008 $165,709 $152,568 LIABILITIES AND STOCKHOLDERS' EQUITY Trade accounts payable $22,741 $33,698 Accrued expenses and other liabilities 27,445 25,450 Current portion of long-term debt 7,260 7,263 Total current liabilities 57,446 66,411 Long-term debt, less current portion 18,361 10,639 Other liabilities 2,612 2,783 Stockholders' equity 87,290 72,735 $165,709 $152,568 * Based on audited information included on Form 10-K for fiscal year ended October 2, 2004 BEI TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (dollars in thousands except per share amounts) Unaudited Quarter Ended Nine Months Ended July 2, July 3, July 2, July 3, 2005 2004 2005 2004 Net sales $83,616 $68,827 $248,379 $211,163 Cost of sales 58,491 51,726 177,820 160,347 25,125 17,101 70,559 50,816 Selling, general and administrative expenses 12,265 8,062 35,380 25,950 Research, development and related expenses 4,221 3,717 12,753 10,367 Income from operations 8,639 5,322 22,426 14,499 Other income 273 328 671 609 Interest expense (460) (295) (1,351) (1,016) Income before taxes 8,452 5,355 21,746 14,092 Provision for income taxes 3,160 1,983 8,127 5,213 Net income $5,292 $3,372 $13,619 $8,879 BASIC EARNINGS PER COMMON SHARE Net income per common share $0.36 $0.24 $0.94 $0.62 Weighted average shares outstanding 14,579 14,338 14,488 14,290 DILUTED EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE Net income per common and common equivalent share $0.36 $0.23 $0.92 $0.61 Weighted average shares outstanding 14,816 14,709 14,785 14,641 BEI TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) Unaudited Quarter Ended Nine Months Ended July 2, July 3, July 2, July 3, 2005 2004 2005 2004 Net income $5,292 $3,372 $13,619 $8,879 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,776 2,308 7,805 7,858 Other 7,257 (2,312) (1,547) (507) Net cash provided by operating activities 15,325 3,368 19,877 16,230 Net cash used by investing activities (5,091) (2,014) (28,543) (6,490) Net cash provided (used) by financing activities (9,465) 45 7,154 (7,428) Net increase (decrease) in cash and cash equivalents 769 1,399 (1,512) 2,312 Cash and cash equivalents at beginning of period 5,937 10,124 8,218 9,211 Cash and cash equivalents at end of period $6,706 $11,523 $6,706 $11,523 DATASOURCE: BEI Technologies, Inc. CONTACT: John LaBoskey, Senior Vice President/CFO of BEI Technologies, Inc., +1-415-956-4477 Web site: http://www.bei-tech.com/

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