BEI Medical Systems Reports Fiscal 2001 Fourth Quarter and Full Year Results; Sales Show Momentum for the Hydro ThermAblator.

Business Editors & Health/Medical Writers

TETERBORO, N.J.--(BW HealthWire)--Dec. 17, 2001

BEI Medical Systems Company, Inc. (Nasdaq:BMED) today reported that total revenues for the fiscal 2001 fourth quarter ended September 29, 2001 were $321,000, versus $62,000 in the comparable period of fiscal 2000, and up from $84,000 in the third quarter of fiscal 2001. The net loss for the fiscal 2001 fourth quarter was $1,472,000, or $0.18 per share, compared with a net loss of $727,000, or $0.10 per share, in the fourth quarter of fiscal 2000.

"Sales of our Hydro ThermAblator(R) (HTA) are off to an excellent start following U.S. Food and Drug Administration (FDA) approval in April," stated Richard W. Turner, president and chief executive officer. "During the quarter, we held 15 training workshops for physicians across the country. We also continued recruitment and training of our new and growing team of sales and marketing specialty organizations, which now includes more than 20 groups, and the recruitment and training of our new five-person sales management team to provide field support for the Company's outside sales representatives. We have begun to actively call on physicians and provider organizations to present the features and benefits of the HTA, and are very pleased and encouraged with their responses to date. In July 2001, we received approval from the FDA to market a portable, smaller and less-costly-to-manufacture version of the HTA Control Unit. We also made significant progress in our effort to reduce the cost of the HTA single-patient-use procedure set. As a result, we now anticipate that the initial benefits from this cost-savings program will begin to occur in the second half of fiscal 2002.

"BEI continued to achieve key milestones in the fiscal 2001 fourth quarter," Mr. Turner added. "As previously announced, in September 2001 we raised a total of $7.6 million through the private placement of common stock and warrants to purchase common stock to help the Company finance the commercialization of the HTA."

The Company noted that revenue growth for the fourth quarter of fiscal 2001 reflects initial sales of the HTA in the United States following FDA approval, compared with zero sales in the United States in the fiscal year 2000 fourth quarter, where all revenues were from international sources. The as-expected loss for the fiscal 2001 period is due to planned increases in investment spending for recruitment, sales training, sales launch, physician training and major medical convention coverage plus support of various sales management and marketing programs, somewhat offset by reduced research, development and related expenses reflecting the completion of the FDA clinical trials and PMA submission expenses.

12-Month Results

Revenues for the fiscal year ended September 29, 2001 were $476,000, versus $1,375,000 for fiscal year 2000. The fiscal year 2001 net loss was $5,600,000, or $0.72 per share, compared with a net loss of $2,947,000, or $0.39 per share, for fiscal year 2000. The results in fiscal 2000 included a $1,913,000 gain on the sale of certain product lines to CooperSurgical Acquisition Corp. The sale involved product lines utilized by gynecologists and gastroenterologists, combined sales of which accounted for approximately $1,184,000, or 86.1%, of the Company's revenues in fiscal year 2000. Revenues for fiscal year 2001 reflect initial sales of the HTA in the United States following FDA approval in April. International revenues of HTA products were $187,000 in fiscal year 2000.

About BEI Medical Systems

BEI Medical Systems Company, Inc. is a company focused on gynecology. The Company has received FDA approval to market its sole product, the Hydro ThermAblator, or HTA, a proprietary system that is intended to treat menorrhagia, or dysfunctional uterine bleeding. BEI Medical Systems(R), Hydro ThermAblator(R) and HTA(R) are registered trademarks of BEI Medical Systems Company, Inc. in the United States and certain foreign countries.

This press release contains forward-looking statements that involve risks and uncertainties. Such forward-looking statements may be deemed to include information that is not historical, including without limitation, statements based on our current expectations, assumptions, estimates and projections about our Company and our industry, including statements with respect to the timely acceptance, commercialization and pricing of our Hydro ThermAblator or HTA, the establishment of a qualified sales representative network, the impact of our cost reduction programs on the cost of the HTA procedure set, the impact of competitive products and pricing, the ability of the Company to satisfy the conditions of the FDA approval and on-going regulatory requirements and general economic conditions as they affect our customers. Readers are cautioned that the forward-looking statements reflect management's analysis only as of the date hereof, and we assume no obligation to update these statements. Actual events or results may differ materially from the results discussed in or implied by the forward-looking statements. In addition to the factors set forth elsewhere in this press release, factors that might cause such a difference include, but are not limited to, risks related to the Company's ability to raise additional capital, and those risks and uncertainties discussed from time to time in the Company's filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the period ended September 30, 2000 and the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2001.

BEI MEDICAL SYSTEMS COMPANY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Amounts in thousands except per share amounts)

                             Three Months Ended    Fiscal Year Ended
                             ------------------    -----------------
                            Sept.29,   Sept. 30,  Sept. 29,  Sept. 30,
                              2001        2000      2001       2000
                          (Unaudited) (Unaudited) (Audited)  (Audited)

Revenues                     $   321    $    62    $   476    $ 1,375
Cost of revenues                 312        190        805      1,464
                             -------    -------    -------    -------
  Gross profit (loss)              9       (128)      (329)       (89)

Selling, general and
 administrative
 expenses                      1,518        572      4,296      3,810
Research, development
 and related expenses            286        381      1,469      1,661
Gain on asset sale              --         --         --       (1,913)
                             -------    -------    -------    -------
                               1,804        953      5,765      3,558
                             -------    -------    -------    -------
  Loss from operations        (1,795)    (1,081)    (6,094)    (3,647)
Interest income                   43         72        217        299
Interest expense                  (4)         1         (7)       (49)
                             -------    -------    -------    -------
  Loss before income
   taxes and
   extraordinary item         (1,756)    (1,008)    (5,884)    (3,397)
Income tax benefit              (284)      (281)      (284)      (580)
                             -------    -------    -------    -------
  Net loss before
   extraordinary item         (1,472)      (727)    (5,600)    (2,817)

Extraordinary loss on
 extinguishment of debt         --         --         --         (130)
                             -------    -------    -------    -------

  Net loss                   ($1,472)   ($  727)   ($5,600)   ($2,947)
                             =======    =======    =======    =======

Loss per common share
Loss per common share
 before extraordinary
 loss                        ($ 0.18)   ($ 0.10)   ($ 0.72)   ($ 0.37)
                             =======    =======    =======    =======
Extraordinary loss per
 common share                   --         --         --      ($ 0.02)
                             =======    =======    =======    =======
Net loss per common
 share                       ($ 0.18)   ($ 0.10)   ($ 0.72)   ($ 0.39)
                             =======    =======    =======    =======
Weighted average
 shares outstanding            8,174      7,627      7,800      7,615
                             =======    =======    =======    =======


BALANCE SHEET HIGHLIGHTS
(Dollars in thousands)
                                       September 29,    September 30,
                                           2001             2000
                                          Audited          Audited

Cash and cash equivalents                  $ 9,846        $ 4,228
Working capital                              9,938          4,285
Total assets                                12,581          6,138
Stockholders' equity                        10,493          4,771