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 March 29, 1997 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, 7,018,543 shares as of April 25, 1997

                                                                    Page 1 of 16
<PAGE>

<TABLE>
BEI ELECTRONICS , INC. AND SUBSIDIARIES

INDEX
<CAPTION>

PART 1.             FINANCIAL INFORMATION                                                                  PAGE
<S>                 <C>                                                                                     <C>
Item 1.             Financial Statements

                           Condensed Consolidated Balance Sheets--March 29, 1997 and September 28, 1996       3

                           Condensed Consolidated Statements of Operations--Quarter and Six Months            4
                           ended March 29, 1997 and March 30, 1996

                           Condensed Consolidated Statements of Cash Flows--Six Months ended March 29,        5
                           1997 and March 30, 1996

                           Notes to Condensed Consolidated Financial Statements--March 29, 1997               6

Item 2.             Management's Discussion and Analysis of Financial Condition and Results of               10
                    Operations

PART II.            OTHER INFORMATION

Item 4.                    Submission of Matters to Vote of Security Holders                                 14

Item 6.                    Exhibits and Reports on Form 8-K                                                  15

                    SIGNATURES                                                                               16
</TABLE>

                                                                    Page 2 of 16
<PAGE>


BEI ELECTRONICS, INC. AND SUBSIDIARIES

PART I.  FINANCIAL INFORMATION

Item 1.           Financial Statements
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEETS

<CAPTION>
                                                                                March 29,                September 28,
                                                                                  1997                       1996
                                                                               (Unaudited)                  (Note)
                                                                                         (dollars in thousands)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>                        <C>    
ASSETS
Cash and cash equivalents                                                        $6,347                     $17,329
Trade receivables, net                                                           19,983                      18,945
Inventories, net -- Note B                                                       25,235                      22,911
Other current assets                                                              5,451                       5,480
Current assets of HYDRA 70 Rocket line of  business, net -- Note C                   --                       4,360
                                                                               --------                   ---------
      Total current assets                                                       57,016                      69,025


Property, plant and equipment, net                                               25,322                      23,305
Acquired technology                                                               6,458                       6,939
Goodwill                                                                          4,396                       4,542
Other assets, net                                                                 9,041                       9,571
Non-current assets of HYDRA 70 Rocket line of business -- Note C                     --                       1,629
                                                                               --------                   ---------
                                                                               $102,233                    $115,011
                                                                               ========                   =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Trade accounts payable                                                           $7,928                      $6,672
Accrued expenses and other liabilities                                           11,408                      15,163
Current portion of long-term debt                                                 5,809                       5,809
Current liabilities of HYDRA 70 Rocket line of business -- Note C                    --                       3,279
                                                                               --------                   ---------
      Total current liabilities                                                  25,145                      30,923

Long-term debt, less current portion                                             18,615                      24,348
Deferred income taxes and other liabilities                                       1,491                       2,250
Minority interest in consolidated subsidiary                                      1,521                       1,518
Stockholders' equity less treasury stock                                         55,461                      55,972
                                                                               --------                   ---------
                                                                               $102,233                    $115,011
                                                                               ========                   =========
<FN>
See notes to condensed consolidated financial statements.

Note: The balance sheet at September 28, 1996 has been derived from the audited consolidated balance sheet at that
date.
</FN>
</TABLE>

                                                                    Page 3 of 16
<PAGE>


BEI ELECTRONICS, INC. AND SUBSIDIARIES

<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
                                                              Quarter Ended                 Six Months Ended
                                                        ------------------------------------------------------------

                                                         March 29,       March 30,      March 29,      March 30,
                                                           1997            1996           1997            1996

                                                             (dollars in thousands except per share amounts)
-----------------------------------------------------------------------------------------------------------------------------------


<S>                                                           <C>            <C>            <C>             <C>    
Net sales                                                     $28,524        $39,995        $55,605         $74,661
Cost of sales                                                  17,718         28,766         34,805          53,313
                                                        ------------------------------------------------------------
Gross Profit                                                   10,806         11,229         20,800          21,348


Selling, general and administrative expenses                    8,111          8,730         17,573          16,543
Research, development and related expenses                      1,538          1,238          2,866           2,458
                                                        ------------------------------------------------------------

Income from operations                                          1,157          1,261            361           2,347

Interest expense                                                  495            669            991           1,316
Other income                                                      300            382            501             494
                                                        ------------------------------------------------------------

Income (loss) before income taxes                                 962            974          (129)           1,525
Provision (benefit) for income taxes                              343            365           (38)             563
                                                        ------------------------------------------------------------

Net income (loss)                                                $619           $609          ($91)            $962
                                                         ===========================================================
Earnings (loss) per common share and
   common share equivalents -- Note D                           $0.09          $0.09        ($0.01)           $0.14
                                                         ===========================================================

Weighted average shares outstanding                             7,220          7,067          7,023           7,015
                                                         ===========================================================

Dividends per common share                                      $0.02          $0.02          $0.04           $0.04
                                                         ===========================================================

<FN>
See notes to condensed consolidated financial statements.
</FN>
</TABLE>

                                                                    Page 4 of 16
<PAGE>


BEI ELECTRONICS, INC. AND SUBSIDIARIES
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

<CAPTION>
                                                                                  Six Months Ended
                                                                           -------------------------------
                                                                           March 29,            March 30,
                                                                             1997                 1996

                                                                                 (dollars in thousands)
---------------------------------------------------------------------------------------------------------
<S>                                                                         <C>                    <C>   
Net cash used  in operating activities                                      ($1,136)               ($733)

Cash flows from investing activities:
         Purchases of property, plant and
            equipment                                                        (2,895)              (2,490)
         Proceeds from sale of BEI Medical Systems,
            Inc. stock, net                                                       --               1,475
         Purchase of other assets                                              (144)                (339)
                                                                            ---------           ---------
                Net cash used in investing activities                        (3,039)              (1,354)

Cash flows from financing activities:
         Payments on long term debt                                          (6,235)                (481)
         Proceeds from issuance of common stock                                  316                 280
         Purchase of treasury stock                                            (748)                  --
         Payment of cash dividends                                             (140)                (138)
                                                                            ---------           ---------

                Net cash used in financing activities                        (6,807)                (339)
                                                                            ---------           ---------

Net decrease in cash and cash equivalents                                   (10,982)              (2,426)

Cash and cash equivalents at beginning of period                              17,329              11,690
                                                                            ---------           ---------

Cash and cash equivalents at end of period                                    $6,347              $9,264
                                                                            =========           =========
<FN>
See notes to condensed consolidated financial statements.
</FN>
</TABLE>
                                                                    Page 5 of 16
<PAGE>


BEI ELECTRONICS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

March 29, 1997

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  adjustments)  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 27, 1997. 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 28, 1996.



NOTE B--INVENTORIES

                                                       March 29,   September 28,
                                                         1997          1996
                                                       (dollars in thousands)
--------------------------------------------------------------------------------

Finished products                                       $2,619          $1,405
Work in process                                          7,558           6,803
Materials                                               13,238          11,660
Costs incurred under long-term contracts,
   including U.S. Government contracts                   3,547           3,840
Unapplied progress payments                             (1,727)           (451)
                                                      ---------       ----------

Net inventories                                         25,235          23,257

Inventories included in current assets of HYDRA
  70 Rocket line of business, net of progress
  payments of $451.                                         --             346
                                                      ---------       ----------
                                                       $25,235         $22,911
                                                      =========       ==========


                                                                    Page 6 of 16
<PAGE>


NOTE C -- HYDRA 70 ROCKET CONTRACT

In  September  1995,  management  of the  Company  decided  to exit  the  rocket
manufacturing  line of  business  which  made up a  substantial  portion  of the
Defense Systems segment.  The principal product comprising this line of business
was the HYDRA 70 (H 70) Rocket. The Defense Systems segment was shut down at the
end of fiscal year 1996 and remaining sales of non-H 70 products,  which are not
material to the consolidated  financial statements,  are now classified with the
Sensors  &  Systems  segment.  For  further  information,  see  Note  C  to  the
Consolidated Financial Statements for the fiscal year ended September 28, 1996.

As a result of the decision to exit the rocket line of business, the Company had
recorded a reserve for employee severance and facility closure costs. At the end
of fiscal year 1996,  the balance in the reserve  account  consisted of $374,000
and $500,000 for employee  severance and facility  closure costs,  respectively.
During the first six months of fiscal 1997,  the Company  accrued an  additional
$32,000 for  employee  severance  costs.  Costs  incurred  during the period for
severance and facilities  closure of $297,000 and $235,000,  respectively,  were
charged against the reserve. The balance in the reserve at the end of the second
quarter of fiscal 1997 consisted of $109,000 for employee severance and $265,000
for facilities closure costs.  Management has indicated at this time the reserve
appears adequate to cover future shutdown costs.

<TABLE>
HYDRA 70 SHUTDOWN RESERVE
<CAPTION>
                                      September 28,      Adjustments      Costs      March 29,
                                          1996                          Incurred       1997

                                                         (dollars in thousands)
------------------------------------------------------------------------------------------------
<S>                                       <C>               <C>           <C>          <C> 
Employee Severance                        $374              $32           $297         $109
Facilities Costs                           500               --            235          265
                                     -----------------------------------------------------------
Total Reserve                             $874              $32           $532         $374
                                     ===========================================================
</TABLE>


                                                                    Page 7 of 16
<PAGE>

<TABLE>
NOTE D--EARNINGS PER COMMON SHARE AND COMMON SHARE EQUIVALENTS
<CAPTION>
                                                                      Quarter Ended                Six Months Ended
                                                                -------------------------    ---------------------------
                                                                 March 29,       March 30,      March 29,       March 30,
                                                                   1997            1996           1997            1996

                                                                   (amounts in thousands except per share data)
------------------------------------------------------------------------------------------------------------------------

<S>                                                                 <C>            <C>             <C>            <C>  
Weighted average shares outstanding                                 7,050          6,891           7,023          6,860

Net effect of dilutive stock options
   based on the treasury stock method                                 170            176              --            155
                                                               ----------------------------------------------------------

Total weighted average shares outstanding                           7,220          7,067           7,023          7,015
                                                               ==========================================================

Net income (loss)                                                    $619           $609           ($91)           $962
                                                               ==========================================================
Earnings (loss) per common share and common
  share equivalents                                                 $0.09          $0.09         ($0.01)          $0.14
                                                               ==========================================================
</TABLE>


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
exercise of options would be antidilutive.

In February 1997, the Financial  Accounting Standards Board issued Statement No.
128, Earnings per Share,  which is required to be adopted for the quarter ending
December  27,  1997.  At that time,  the Company  will be required to change the
method  currently  used to compute  earnings  per share and to restate all prior
periods. Had the Statement been implemented for the quarter and six months ended
March 29, 1997 and March 30, 1996,  respectively,  the impact on the calculation
of earnings per share would not have been material.



NOTE E--CONTINGENCIES AND LITIGATION

CooperSurgical, Inc. vs. BEI Medical Systems Company, Inc. et al.

In October 1993,  CooperSurgical,  Inc., a subsidiary  of The Cooper  Companies,
filed a claim for unspecified damages alleging unfair competition due to actions
by BEI Medical Systems and its president  Richard  Turner,  a former employee of
The Cooper Companies, and others. On May 16, 1994, the Chancery Division for the
Superior Court of New Jersey granted a partial summary  judgment in favor of the
plaintiff and issued an injunction against the defendants  restraining them from


                                                                    Page 8 of 16
<PAGE>

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 restraint  order.  On October 16, 1995 the Court clarified
that the partial  summary  judgment of its May 16, 1994 order remains in effect.
On January 31, 1996,  the Court  issued a ruling which  affirmed the legal basis
for  BEI  Medical   Systems  to  assert  a  counterclaim   for  damages  against
CooperSurgical  regarding  the  parties'  electrosurgical   generator  contract.


In June 1996, more than one year after fact and expert  discovery  closed in May
1995,  CooperSurgical's  counsel sent to BEI's  counsel a letter  purporting  to
supplement CooperSurgical's previous responses to interrogatories. The June 1996
letter indicated that CooperSurgical's  damages for one particular aspect of the
claim  were  between  $24 and $50  million  with  respect  to a claim  for which
CooperSurgical's  experts had previously  estimated damages of $3.4 million. BEI
will vigorously  oppose any  CooperSurgical  attempt  whatsoever to introduce at
trial  any  evidence  of a damage  claim  based  upon its June,  1996  purported
supplement.

Management has vigorously  defended its rights in this action and believes after
discussion with legal counsel that the CooperSurgical claims are exaggerated. In
1995  expert  witnesses  for  BEI  prepared  a  formal  response  to the  damage
computations  CooperSurgical previously submitted.  BEI's experts stated that if
CooperSurgical  were  entitled to damages,  those  damages would total less than
$100,000,  and would be more than offset by BEI Medical  Systems'  counterclaims
against   CooperSurgical,   if  BEI  Medical  Systems  were  successful  in  its
counterclaims.

The trial is currently  scheduled for June 1997.  BEI, after  consultation  with
counsel,  believes that the  additional  damage  figures stated in the June 1996
letter from CooperSurgical's counsel are exaggerated.  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 is expected to have a material  effect on
the Company's operating results or financial condition.


                                                                    Page 9 of 16
<PAGE>


Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

Except for the historical information contained herein, the following discussion
contains  forward-looking  statements that involve risks and uncertainties.  The
Company's  actual results could differ  materially  from those  discussed  here.
Factors that could cause or contribute to such differences  include, but are not
limited to, those discussed in this section.

<TABLE>
The following table sets forth, for the fiscal periods indicated, the percentage
of  net  sales   represented  by  certain  items  in  the  Company's   Condensed
Consolidated Statements of Operations.
<CAPTION>
                                                       Quarter Ended                 Six Months Ended
                                               --------------------------------------------------------------
                                                  March 29,      March 30,      March 29,       March 30,
                                                    1997            1996           1997           1996
                                               --------------------------------------------------------------

<S>                                                <C>           <C>             <C>            <C>   
Net sales                                          100.0%        100.0%          100.0 %        100.0%
Cost of sales                                       62.1          71.9            62.6           71.4
                                               ----------      --------       ---------      ---------

Gross profit                                        37.9          28.1            37.4           28.6

Selling, general and administrative                 28.5          21.8            31.6           22.2
  expenses
Research, development and related                    5.4           3.1             5.2            3.3
  expenses
                                               ----------      --------       ---------      ---------

Income from operations                               4.0           3.2             0.6            3.1

Interest expense                                     1.7           1.7             1.8            1.8
Other income                                         1.1           0.9             0.9            0.7
                                               ----------      --------       ---------      ---------
Income (loss) before income taxes                    3.4           2.4            (0.3)           2.0
Provision (benefit) for income taxes                 1.2           0.9            (0.1)           0.7
                                               ----------      --------       ---------      ---------

Net income (loss)                                    2.2%          1.5%           (0.2)%          1.3%
                                               ==========      ========       =========      =========
</TABLE>


Quarters ended March 29, 1997 and March 30, 1996

Net sales for the quarter ended March 29, 1997 decreased  $11.5 million or 28.7%
from the same period in fiscal 1996.

The  Defense  Systems  segment,  which  was  primarily  a HYDRA 70 Rocket (H 70)
business,  shut  down its major  product  line at the end of  fiscal  1996.  The
segment's sales declined from $12.8 million in the second quarter of fiscal 1996
to zero in the current  quarter of fiscal  1997.  H 70 sales  represented  $11.6
million of the decline. The remaining sales of non-H 70 products,  which are not
material to the financial  statements,  were not significantly  changed from the
comparable  period  in fiscal  1996 and are now  classified  with the  Sensors &
Systems segment.


                                                                   Page 10 of 16
<PAGE>


Sensors & Systems segment  comparable sales in the second quarter of fiscal 1997
remained at the same level as sales in the second  quarter of fiscal  1996.  The
Medical  Systems  segment  sales  increased  $0.1  million or 4.3% from the same
period in the prior fiscal year.

Consolidated  cost of sales as a percentage of net sales decreased to 62.1% from
71.9% in the second  quarter of fiscal  1997  versus  the  comparable  period of
fiscal 1996. The decrease in cost of sales as a percentage of net sales from the
shutdown of the H 70 product line was partly  offset by increases in the Sensors
& Systems  segment  cost of sales as a  percentage  of net sales.  The Sensors &
Systems  segment  incurred cost overruns on the development of some products for
aerospace applications. In addition, average costs of goods sold as a percentage
of sales for new  automotive  applications  in the  segment  are higher than for
other commercial products due to start-up efforts.

Selling,  general and administrative  expenses decreased in total, but increased
as a percentage of net sales from 21.8% in the second  quarter of fiscal 1996 to
28.5% in the second quarter of fiscal 1997.  This was mainly the result of lower
sales volume due to the shutdown of the H 70 product line in the Defense Systems
segment.  Sensors & Systems'  selling,  general  and  administrative  costs were
reduced in total and declined  slightly as a percentage of sales.  This was more
than  offset by an  increase  in the  Medical  Systems'  expenses to support new
product efforts which rose significantly as a percent of sales.

Research,  development and related expenses as a percentage of net sales for the
second  quarter of fiscal 1997 showed an increase from the same period in fiscal
1996 due to increased  spending to support sales growth and product  development
mainly in the Medical  Systems  segment and to a lesser  degree in the Sensors &
Systems segment.


Six months ended March 29, 1997 and March 30, 1996

Net sales for the first six months of fiscal  1997  decreased  $19.1  million or
25.5% from the prior year.

The Defense Systems segment, which was primarily an H 70 business, shut down its
major product line at the end of fiscal 1996. The segment's  sales declined from
$23.0  million in the first six months of fiscal 1996 to zero in the same period
of fiscal  1997.  H 70 sales  represented  $20.7  million  of the  decline.  The
remaining  sales of non-H 70 products,  which are not material to the  financial
statements, increased $0.5 million from the comparable period in fiscal 1996 and
are now classified with the Sensors & Systems segment.

Sensors & Systems  segment  comparable  sales in the first six  months of fiscal
1997 increased $1.1 million.  Sales of automotive and other commercial  products
in the segment increased $0.7 million and $1.0 million,  respectively,  but were
offset by decreases in sales to government contractors or subcontractors of $1.1
million.  The  remaining  increase in Sensors & Systems sales of $0.5 million is
from the  increase  in sales of the non-H 70 products  of Defense  Systems.  The
Medical  Systems  


                                                                   Page 11 of 16

<PAGE>

segment sales  increased $0.5 million or 11.6% from the same period in the prior
year.

Consolidated  cost of sales as a percentage of net sales decreased to 62.6% from
71.4% in the first six months of fiscal  1997 as  compared to the same period of
fiscal 1996. The decrease in cost of sales as a percentage of net sales from the
shutdown  of the H 70  product  line was  slightly  offset by  increases  in the
Sensors & Systems segment cost of sales as a percentage of net sales.  Sensors &
Systems  segment  incurred cost overruns on the development of some products for
aerospace applications. In addition, average costs of goods sold as a percentage
of sales for new  automotive  applications  in the  segment  are higher than for
other commercial  products due to start-up efforts.  The Medical Systems segment
cost of sales as a percentage of net sales decreased from 63.3% in the first six
months of fiscal 1996 to 56.3% in the first six months of fiscal 1997.

Selling,  general  and  administrative  expenses  as a  percentage  of net sales
increased  from  22.2% in the  first six  months of fiscal  1996 to 31.6% in the
first six months of fiscal  1997.  This was  mainly  the  result of lower  sales
volume due to the  shutdown  of the H 70  product  line in the  Defense  Systems
segment.  In  addition,  the  one-time  settlement  and  other  related  charges
associated with the resolution of the arbitration  with the former  shareholders
of GPI during  the first  quarter  of fiscal  1997 (see Note E to the  Condensed
Consolidated  Financial  Statements  for the quarter  ended  December  28, 1996)
increased the selling, general and administrative expense percentage to sales.

Research,  development and related expenses as a percentage of net sales for the
first six months of fiscal 1997 have increased  slightly from the same period in
fiscal  1996 due to  increased  spending  to support  sales  growth and  product
development  mainly in the Medical Systems segment and to a lesser degree in the
Sensors & Systems segment.


Liquidity and Capital Resources

During the first six months of fiscal 1997,  total cash used by  operations  was
$1.1 million,  including the net loss of $0.1  million.  Operating  cash inflows
consisted  primarily of the positive  impact of non-cash  charges to income from
depreciation  and  amortization of $3.8 million and  receivables  collections of
$2.9 million.  Offsetting the inflows were  inventory  purchases of $3.3 million
and  reductions in progress  payments on  government  contracts of $1.3 million,
resulting in net cash outflows for inventory of $2.0 million.  Payments on trade
payables and accrued expenses used an additional $5.8 million in cash, including
$5.3 million of amounts accrued either in fiscal 1996 or in the first quarter of
fiscal  1997 from the  final  settlement  of the GPI  arbitration.  For  further
information see Note E to the Condensed  Consolidated  Financial  Statements for
the quarter ended December 28, 1996.

Cash used in  investing  activities  consisted  primarily  of $2.9  million  for
capital  expenditures in the Sensors & Systems  segment,  and is consistent with
spending  in the first  six  months of the  prior  fiscal  year and the  current
business volume. Capital expenditures may increase or the Company may expand the
use of leasing to support increased product volumes.


                                                                   Page 12 of 16
<PAGE>

Cash  used in  financing  activities  consisted  primarily  of $6.2  million  in
scheduled  payments of  long-term  debt.  The Company  also used $0.7 million to
purchase treasury stock on the open market. Proceeds from the issuance of common
stock of $0.3  million  were  partially  offset  by  dividend  payments  of $0.1
million.

The Company had no material capital commitments at March 29, 1997.

The Internal  Revenue Service (IRS) is currently  auditing the Company's  income
tax returns for fiscal years 1993 through  1995.  The Company  believes  that it
will reach an agreement with the IRS in connection with the audit of these years
and, while it is anticipated that such agreement, if finalized, would not have a
material effect on the Company's results of operations for fiscal 1997, it would
result in the payment of  significant  additional  prior yearstax  liabilities
during fiscal 1997.

Based on the  financial  condition of the Company at March 29, 1997,  management
believes that the existing cash balances,  cash generated from  operations,  and
available lines of credit will be sufficient to meet the Company's planned needs
for  the  foreseeable  future.  If  the  Company  requires  additional  capital,
management  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.



                                                                   Page 13 of 16
<PAGE>


BEI ELECTRONICS, INC. AND SUBSIDIARIES

PART II.  OTHER INFORMATION

Item 4.  Submission of Matters to Vote of Security Holders

(a)      The Annual Meeting of  Stockholders  (the "meeting") of the Company was
         held on March 6, 1997.  At the meeting  Richard M.  Brooks,  William G.
         Howard,  Jr., and Peter G. Paraskos were elected to the Company's Board
         of  Directors  for a three-year  term  expiring at the  Company's  2000
         Annual Meeting.

         In addition,  the following  directors continued in office as directors
         of the Company following the Annual Meeting: Charles Crocker and George
         S. Brown (until the Company's  1998 Annual  Meeting);C.  Joseph Giroir,
         Jr, and Gary D. Wrench (until the Company's 1999 Annual Meeting).

(b)      The  other  matters   presented  at  the  meeting  and  the  voting  of
         stockholders with respect thereto are as follows:


         (i) Amendments to the Company's  1987 Incentive  Stock Option Plan were
         approved which changed the Plan's name to the Amended 1987 Stock Option
         Plan and provided that both  incentive  stock options and  nonstatutory
         stock options may be granted under the Plan,  that  consultants  to the
         Company may be granted stock options,  that the Plan's term be extended
         to January 15, 2007,  that the  aggregate  number of shares that may be
         granted  under  the Plan be  increased  by  100,000  shares,  and added
         provisions  to the Plan with respect to Section  162(m) of the Internal
         Revenue Code of 1986 and Section 16 of the  Securities  Exchange Act of
         1934, as amended.

         Shares voted:

             For           Against           Abstained         Broker Non-Votes
          ----------    ------------        -----------       ------------------
           3,578,917      1,036,714           36,325               1,408,657


         (ii)  Amendments  to the  Company's  1992  Restricted  Stock  Plan were
         approved which provided that the Plan's term be extended to January 15,
         2007, that the aggregate number of shares that may be granted under the
         Plan be increased by 350,000 shares,  and added  provisions to the Plan
         with respect to Section 162(m) of the Internal Revenue Code of 1986 and
         Section 16 of the Securities Exchange Act of 1934, as amended.


                                                                   Page 14 of 16
<PAGE>

         Shares voted:

            For            Against           Abstained         Broker Non-Votes
         ----------     ------------        -----------       ------------------
          3,989,149        569,123            36,362               1,465,979


         (iii)  The  Board  of  Directors  selected  Ernst  &  Young  LLP as the
         Company's  independent  public  accountants  for the fiscal year ending
         September 27, 1997 and such selection was ratified by the  stockholders
         at the Annual Meeting. 


Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits

         10.23 Fourth Amendment to Note Agreement, dated March 27, 1997, between
         BEI  Electronics,  Inc. and Principal  Mutual Life  Insurance  Company,
         Berkshire Life Insurance Company, and TMG Life Insurance Company

         10.24 Seventh  Amendment to Credit  Agreement,  dated February 28, 1997
         between BEI  Electronics,  Inc., BEI Sensors & Systems  Company,  Inc.,
         Defense Systems Company,  Inc., BEI Medical Systems  Company,  Inc. and
         CIBC Inc., and Canadian Imperial Bank of Commerce

         27.1   Financial Data Schedule

(b)      Reports on Form 8-K

         No  reports on Form 8-K were filed by the  Company  during the  quarter
         ended March 29, 1997.


                                                                   Page 15 of 16


<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 April 28, 1997.




                               BEI ELECTRONICS, INC.


                               By:      /s/ Robert R. Corr
                                        ----------------------------------------
                                        Robert R. Corr
                                        Secretary, Treasurer and Controller
                                        (Principal Accounting Officer)


                                                                   Page 16 of 16

<PAGE>



                       FOURTH AMENDMENT TO NOTE AGREEMENT


This Fourth Amendment to Note Agreement (the  "Agreement") is entered into as of
the  27th  day  of  March,  1997  between  BEI  Electronics,  Inc.,  a  Delaware
corporation (the "Company"),  having its principal place of business at One Post
Street Suite 2500, San Francisco,  California  94104,  and Principal Mutual Life
Insurance  Company,  Berkshire  Life  Insurance  Company and TMG Life  Insurance
Company (each a "Holder" and together the "Holders").

                                    RECITALS

The  Company  entered  into a Note  Agreement  dated as of August 15,  1993 (the
"Original  Note  Agreement")  with  the  Holders  and  Principal  National  Life
Insurance  Company.  In accordance with the terms of the Original Note Agreement
the  Company  issued its 6.73%  Series A Senior  Notes due  October 1, 2000 (the
"Notes") in the original  principal amount of $16,800,000 and its 6.73% Series B
Senior  Notes  due  November  15,  2000  in the  original  principal  amount  of
$11,200,000.  The  Holders are the owners and  registered  holders of the entire
outstanding  principal balance of Notes.  Capitalized terms used but not defined
in this Agreement have the meanings set forth in the Note Agreement.

The Original  Note  Agreement was amended by First  Amendment to Note  Agreement
dated as of April 1, 1994 (the "First  Amendment"),  by Second Amendment to Note
Agreement  dated as of September 30, 1994 (the "Second  Amendment") and by Third
Amendment  to  Note  Agreement  dated  as  of  December  19,  1995  (the  "Third
Amendment").  The Original Note Agreement as amended by the First Amendment, the
Second Amendment and the Third Amendment is hereinafter referred to as the "Note
Agreement".

The Company has requested,  and the Holders have agreed, that the Note Agreement
be amended in certain particulars as set forth in this Agreement.

NOW,  THEREFORE,  in  consideration  of the  premises  set forth  above,  and in
consideration  of the sum of $5,000 paid by the Company  ratably to the Holders,
the receipt and sufficiency of which is hereby acknowledged, the Company and the
Holders agree as follows:

1.     Recitals  Incorporated.  The  Recitals  set forth above are  incorporated
       herein by reference.

2.     Amendment  to the Note  Agreement.  Section 5.8 of the Note  Agreement is
       hereby  deleted  in its  entirety  and  the  following  inserted  in lieu
       thereof:

            Section 5.8. Fixed Charges  Coverage Ratio.  For each period of four
            consecutive  fiscal  quarters  ending on a date  listed  below,  the
            Company  shall keep and maintain  the ratio of Net Income  Available
            for Fixed  Charges  to Fixed  Charges at not less than the ratio set
            forth below:

                 March 29, 1997        2.0 to 1.0

                 June 28, 1997         2.0 to 1.0


<PAGE>

Page 2
          Beginning  with the fiscal  quarter  ending on September 27, 1997, the
          Company shall keep and maintain the ratio of Net Income  Available for
          Fixed  Charges to Fixed  Charges for each  period of four  consecutive
          fiscal quarters at not less than 2.5 to 1.0.

3.     Representations  and Warranties.  The Company  represents and warrants to
       each Holder as of the date of this Agreement that, upon execution of this
       Agreement, all of the following statements will be true and correct:

       3.1      As of the date of this Agreement, no Default or Event of Default
                under  the  Note  Agreement,  as  amended,  or under  any  other
                agreement  for  borrowed  money to which the Company is subject,
                exists or is continuing.

       3.2      Except as set forth in the  Company's  Quarterly  Report on Form
                10-Q for the  quarter  ended  December  28,  1996 filed with the
                Securities  and Exchange  Commission,  the  representations  and
                warranties of the Company referred to in Section 3.1 of the Note
                Agreement  are true and  correct and  complete  in all  material
                respects  as if made on the  date  hereof,  except  as to  those
                representations and warranties made as of a specific date, which
                are true and correct and materially complete as of such date.

       3.3      No dissolution proceedings with respect to the Company have been
                commenced  or  are  contemplated,   and,  except  as  previously
                disclosed in 10Q or 10K reports  delivered to each holder of the
                Notes,  there  has  been  no  material  adverse  change  in  the
                business,  condition or  operations  (financial or otherwise) of
                the Company, taken as a whole, since August 15, 1993.

       3.4      This Agreement has been duly authorized,  executed and delivered
                by the  Company  and  constitutes  a legal,  valid  and  binding
                obligation of the Company.

                3.5 The Company has not made any  modification  of any  material
                agreement  with any creditor of the Company,  other than by this
                Agreement,  unless the Company has  disclosed  the terms of such
                modification to each Holder in writing.

       3.6      The Company has not paid or caused to be paid,  and will not pay
                or cause to be paid,  directly or indirectly,  any remuneration,
                whether by way of  supplemental or additional  interest,  fee or
                otherwise,   to  any  Holder  as  consideration  for  or  as  an
                inducement  to entering  into by such Holder of this  Agreement,
                except as set forth herein.

4.     Effective  Date.  This  Agreement  shall become  effective as of the date
       first  written above upon receipt by each of the Holders of a counterpart
       of this Agreement duly executed by the Company and the other Holders.

5.     Miscellaneous

       5.1      Except as  specifically  amended  in this  Agreement  all of the
                terms,  conditions  and covenants of the Note  Agreement and the
                Notes shall remain unaltered and in full force

<PAGE>

Page 3


                and  effect  and  shall  be  binding  on the  Company.  The Note
                Agreement is hereby ratified, confirmed and approved.

       5.2      Except as  expressly  set forth in this  Agreement  the terms of
                this  Agreement  shall not operate as a waiver by the Holders of
                any provisions of, or otherwise prejudice the rights or remedies
                of the Holders under the Note Agreement, the Notes or applicable
                law and shall not operate as a waiver of or otherwise  prejudice
                any rights the Holders may have against any other  Person.  This
                Agreement  shall not be  construed as  establishing  a course of
                conduct on the part of the  Holders  upon which the  Company may
                rely in the future.

       5.3      All  headings  and  captions  preceding  the text of the several
                sections of this Agreement are intended  solely for  convenience
                of reference and shall not constitute a part of this  Agreement,
                nor shall they alter its meaning, construction or effect.

       5.4      This Agreement  embodies the entire agreement and  understanding
                between the  Company and the Holders  with regard to the matters
                set  forth  herein,  and  supersedes  all prior  agreements  and
                undertakings relating to such matters.

       5.5      This Agreement may be executed by the parties hereto in separate
                counterparts,  each of which when so executed shall be deemed an
                original and all of which taken  together  shall  constitute one
                and the same agreement.

       5.6      This Agreement  shall be governed by, and construed and enforced
                in accordance with the laws of the State of Illinois.

IN WITNESS  WHEREOF the parties hereto have caused this Agreement to be executed
by their authorized officers as of the date first above written.

BEI ELECTRONICS, INC.


By  /s/ Robert R. Corr
    -----------------------------------
            Tres.

By  
    -----------------------------------


PRINCIPAL MUTUAL LIFE INSURANCE COMPANY


By: /s/ Austin Ramzy
    -----------------------------------
    Austin Ramzy
    Assistant Director
    Securities Investment


By: /s/ Jon M. Davidson
    -----------------------------------
    Jon M. Davidson
    Director - Securities Investment


<PAGE>

Page 4



BERKSHIRE LIFE INSURANCE COMPANY



By:
    -----------------------------------


TMG LIFE INSURANCE COMPANY

By:  THE MUTUAL GROUP, its Agent


By:
    -----------------------------------


By:
    -----------------------------------

                                                                   

<PAGE>


                              BEI ELECTRONICS, INC.

                      SEVENTH AMENDMENT TO CREDIT AGREEMENT


         This SEVENTH AMENDMENT TO CREDIT AGREEMENT (this  "Amendment") is dated
as of February 28, 1997 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, as amended by the Fourth Amendment to Credit Agreement dated as of June 1,
1995, as amended by the Fifth Amendment to Credit  Agreement dated as of June 1,
1996 and as  amended  by the Sixth  Amendment  to Credit  Agreement  dated as of
October  31,  1996 (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  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.  The  following
                  definitions in Section 1.01 of the Credit Agreement are hereby
                  amended in to read in their entirety as follows:

                            "'Maturity Date': July 31, 1997, or, if earlier, the
                  day immediately  prior to the distribution  date of a tax free
                  spin-off of any of the Borrowers' Subsidiaries."


                                       1
<PAGE>

                            "'Revolving  Commitment':  The amount of $15,000,000
                  as such amount may be reduced  pursuant to Sections 2.1(c) and
                  2.1(d).  As of the Maturity Date,  the Lenders'  obligation to
                  make  Revolving  Loans  after such date  shall  expire and the
                  amount of the  Revolving  Commitment  shall be  reduced  to an
                  amount equal to the Letter of Credit Usage as of such date."

          1.2.    Amendments to Section 2.5:  Letters of Credit.  Subsection (a)
                  of Section  2.5 is hereby  amended to read in its  entirety as
                  follows:

                            "(a) Letters of Credit.  The  Borrowers  may request
                  from  time to time  during  the  period  from the date  hereof
                  through the Maturity  Date that the Issuing Bank issue Letters
                  of Credit for the  account of any of the  Borrowers,  provided
                  that in no event  shall the  Issuing  Bank issue any Letter of
                  Credit  having an  expiration  date beyond the Maturity  Date,
                  except for any Letters of Credit  outstanding  as February 28,
                  1997  which,  in the event  the  Lenders'  obligation  to make
                  Revolving   Loans   expires,   shall  be   immediately   cash-
                  collateralized by the Borrowers.

 2.       Conditions to Effectiveness.  This Amendment shall be deemed effective
          as of February 28, 1997 (the "Seventh 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
                  US $12,500.

          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  statement  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 


                                       2
<PAGE>


                  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.

          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 Seventh  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.


                                       3
<PAGE>


                   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.

          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 CONFLICT 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: Tres
                                       -----------------------------------------

                                       4
<PAGE>



                               BEI SENSORS & SYSTEMS
                               COMPANY, INC.


                               By:     /s/ Robert R. Corr
                                       -----------------------------------------
                               Title:  Tres
                                       -----------------------------------------


                               DEFENSE SYSTEMS COMPANY, INC.


                               By:     /s/ Robert R. Corr
                                       -----------------------------------------
                               Title:  Asst Tres
                                       -----------------------------------------


                               BEI MEDICAL SYSTEMS COMPANY, INC.


                               By:     /s/ Robert R. Corr
                                       -----------------------------------------
                               Title:  Tres
                                       -----------------------------------------


                               CIBC INC., Individually and as Agent


                               By:     /s/ Cyd Petre
                                       -----------------------------------------
                               Title:  Authorized Signatory
                                       -----------------------------------------


                               CANADIAN IMPERIAL BANK of
                               COMMERCE, as the Designated Issuer


                               By:     /s/ Cyd Petre
                                       -----------------------------------------
                               Title:  Authorized Signatory
                                       -----------------------------------------