BEIQ Bei Technologies (MM)

BEI Technologies, Inc. Reports Record First Quarter 2005 Revenue SAN FRANCISCO, Feb. 2 /PRNewswire-FirstCall/ -- BEI Technologies, Inc. (NASDAQ:BEIQ), an established manufacturer of electronic sensors and motion control products, announces record first quarter 2005 earnings. Fiscal 2005 First Quarter compared with Fiscal 2004 First Quarter: * Revenues increased 11.8% to $76.9 million with automotive revenue of $47.4 million, an increase of 11.4% * Net income increased 82.1% to $3.648 million from $2.003 million * EPS increased 78.6% to $0.25 from $0.14 Quarterly Results Charles Crocker, Chairman and Chief Executive Officer stated, "Net sales for the first quarter increased by $8.1 million compared with the prior year first quarter due primarily to a $4.9 million increase in automotive sensor sales, largely GyroChip(R) sensor shipments. In addition to the record first quarter revenue, deferred automotive revenue increased by $1.2 million during the quarter. Deferred revenue is expected to be recognized in a future quarter when all revenue recognition criteria have been met. Sales of industrial sensors, actuators and motors increased in the quarter to $24.0 million from $18.9 million in the prior year first quarter, as a result of the addition of Newall Measurement Systems' Digital Readout (DRO) and digital linear encoder sales not included in the prior year and higher quartz product sales to commercial aviation customers. Government aerospace and defense sales decreased to $5.5 million compared with $7.3 million in the prior year first quarter due to reduced quartz and encoder program sales." Gross margin increased to 27.5% in the fiscal 2005 first quarter from 22.0% in the prior year first quarter. Average gross margin percentages improved in both industrial products and automotive products compared to the prior year quarter. 1.3% of the 2005 first quarter gross margin resulted from a $1.0 million insurance recovery related to a $1.6 million settlement with a customer in the fourth quarter of fiscal 2004. The prior year first quarter was unfavorably impacted by vendor scrap issues. Crocker continued, "We are pleased with the progress Systron Donner Automotive achieved in shipping a record of 1.26 million GyroChip sensors for the quarter while increasing annual capacity to 5.0 million sensors. This was ahead of our previously stated goal of 4.5 million by December 2004. We are also gratified by the adoption of the Newall products we acquired at the beginning of the quarter which resulted in approximately $3.0 million of industrial revenue for the quarter. These products contributed to the quarter's favorable margin expansion." SG&A spending increased in the first quarter to $10.8 million compared with the prior year first quarter of $8.3 million. The inclusion of Newall SG&A added approximately $1.1 million in spending not in the prior year. The first quarter 2005 spending also included charges associated with severance, technology licensing, and sales tax totaling $0.8 million. Research and development expense in the first quarter increased to $4.2 million compared with $3.3 million in the prior year first quarter due to the inclusion of Newall spending and reduced prior year first quarter spending. During the first quarter our operations used $4.6 million in cash. Cash used by operations was primarily affected by an increase in receivables from increasing sales volumes. The acquisition of Newall for $11.0 million and the purchase of property, plant and equipment for $4.6 million, primarily to increase GyroChip production at Systron Donner Automotive, were major factors in a $17.4 million use of cash financed by borrowing from the Company's line of credit. Accordingly, cash inflow for the quarter was $26.3 million from financing partially offset by the paydown of $7.0 million of Senior Notes. The Company's cash balance at quarter end was $5.0 million, with an outstanding balance on the Company's $35.0 million line of credit of $14.3 million. Crocker concluded, "We have integrated Newall Measurement Systems into our organization and are beginning to execute plans that leverage both specific customer and market opportunities. We enhanced our financing capabilities by increasing our line of credit to $35 million. We look forward to continued execution of our plan to increase both industrial and military business through acquisition and investment, as well as organic growth." Guidance for Second Quarter 2005 Revenue for the second quarter should grow in the range of 3% to 7%. We are increasing our GyroChip automotive sensor shipments guidance from 5.0 million units to 5.6 million units for the 12 month period ending September 2005. 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 had been in progress from the middle of 1998 to FY 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) January 1, October 2,* 2005 2004 (Unaudited) ASSETS Cash and cash equivalents $4,995 $8,218 Investments 4,537 4,299 Trade receivables, net 51,565 45,482 Inventories, net 31,137 29,897 Other current assets 18,132 17,147 Total current assets 110,366 105,043 Property, plant and equipment, net 42,629 39,905 Goodwill 8,804 1,612 Other assets, net 9,972 6,008 $171,771 $152,568 LIABILITIES AND STOCKHOLDERS' EQUITY Trade accounts payable $30,302 $33,698 Accrued expenses and other liabilities 24,496 25,450 Income tax payable -- -- Current portion of long-term debt 21,610 7,263 Total current liabilities 76,408 66,411 Long-term debt, less current portion 15,781 10,639 Other liabilities 2,680 2,783 Stockholders' equity 76,902 72,735 $171,771 $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) Quarter Ended January 1, January 3, 2005 2004 (Unaudited) (Unaudited) Net sales $76,924 $68,805 Cost of sales 55,780 53,658 21,144 15,147 Selling, general and administrative expenses 10,759 8,328 Research, development and related expenses 4,201 3,260 Income from operations 6,184 3,559 Interest expense 441 368 Other income (expense) 125 (10) Income before income taxes 5,868 3,181 Provision for income taxes 2,220 1,178 Net income $3,648 $2,003 BASIC EARNINGS PER COMMON SHARE Net income per common share $0.25 $0.14 Weighted average shares outstanding 14,496 14,230 DILUTED EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE Net income per common and common equivalent share $0.25 $0.14 Weighted average shares outstanding 14,766 14,517 BEI TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) Quarter Ended January 1, January 3, 2005 2004 (Unaudited) (Unaudited) Net income $3,648 $2,003 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,604 2,599 Other (10,841) 276 Net cash provided (used) by operating activities (4,589) 4,878 Net cash used in investing activities (17,405) (2,115) Net cash provided by (used in) financing activities 18,771 (6,324) Net decrease in cash and cash equivalents (3,223) (3,561) Cash and cash equivalents at beginning of period 8,218 9,211 Cash and cash equivalents at end of period $4,995 $5,650 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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