HEI, Inc. (Pink Sheets: HEII; http://www.heii.com) today announced its financial results for the second quarter of fiscal year 2012, which ended June 30, 2012.
Sales for the second quarter were $9,648,000, compared to $9,271,000 for the second quarter of 2011. The Company generated a net loss of ($351,000) for the second quarter of 2012 compared to net income of $339,000 for the same period in 2011. Sales for the first six months of 2012 were $18,713,000, compared to $18,994,000 for the first six months of 2011. The Company generated a year-to-date net loss of ($508,000) for 2012 compared to a net income of $524,000 for the first six months of 2011.
“We are making significant progress in ramping up the manufacturing for our Victoria operation in support of the two contracts we secured in April providing components to two government contractors for the Joint Tactical Radio Systems or JTRS program for the US military. The larger impact is expected to be seen in the third and fourth quarters of this year. In addition to these programs, overall sales for the first six months of 2012 for our Victoria operation are up 39% over the same period for 2011, as a result of increased demand from some of our other long-term customers. As a result, we are optimistic about the continued expansion in the markets and customers we serve through our Victoria plant. Our backlogs are running at higher levels than in the past 5 years, and now we need to convert that backlog into sales to take advantage of the work we have put into generating our expanded customer base.
“As noted in our previous press release, our Boulder operation was impacted by the postponement of one of our design contracts, which generated a loss in the first quarter and did not contribute to profitability in the second quarter. In addition, we had higher manufacturing sales in the prior year as a result of expanded demand in early 2011, which was not seen in 2012. Overall sales are down 29% in our Boulder operation for the first six months of 2012 compared to the same period in 2011. We have been working on our sales pipeline and anticipate success in those efforts to expand the customer base and secure new projects for our Boulder operation.
“Our Tempe operation was impacted by our plant expansion through April, which generated some operating inefficiencies during the construction. The expansion is now complete and added about 25% overall to our capacity. We are now pursuing new customers to utilize that capacity. The Tempe operation has historically been heavily dependent on the hearing business and this expansion will allow us to pursue customers in other industries as well,” commented HEI CEO, Mark B. Thomas.
HEI, Inc. designs, develops and manufactures ultra-miniature microelectronics, substrates, systems, connectivity and software solutions for customers engaged in the medical, hearing, telecommunications, military, aerospace, and industrial markets. HEI provides its customers with a single point of contact that can take an idea from inception to a fully functional and cost effective product utilizing innovative design solutions and by the application of state-of-the-art materials, processes and manufacturing capabilities.
| Corporate & HEI –Victoria (Microelectronics Contract Manufacturing and ATE) | 1495 Steiger Lake Lane, Victoria, MN 55386 | ||
| HEI – Boulder (Design and Development, Box Build and ATE) | 4801 North 63rd Street, Boulder, CO 80301 | ||
| HEI – Tempe (Quick Turn and Production High Density Interconnect Flex and Rigid-Flex) | 610 South Rockford Drive, Tempe, AZ 85281 | ||
FORWARD LOOKING INFORMATION
Information in this news
release, which is not historical, includes forward-looking statements
made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 that involve substantial risks and
uncertainties. You can identify these statements by forward-looking
words such as “may,” “will,” “expect,” “anticipate,” “believe,”
“intend,” “estimate,” “continue,” and similar words. Statements
contained in this press release, including the implementation of
business strategies, growth of specific markets, improved results and
estimated HEI revenue, cash flow and profits, are forward looking
statements. All such forward-looking statements involve risks and
uncertainties including, without limitation, adverse business and market
conditions, the ability of HEI to secure and satisfy customers, the
availability and cost of materials from HEI’s suppliers, HEI’s ability
to satisfy financial or other obligations or covenants set forth in its
financing agreements, adverse competitive developments, change in or
cancellation of customer requirements, collection of receivables and
outstanding debt, HEI’s ability to control fixed and variable operating
expenses, and other risks detailed in previous HEI SEC filings. Since
HEI is no longer reporting to the SEC, readers are cautioned to weigh
the potential for additional risk factors based on ongoing business
activities and the current economic conditions. The information set
forth herein should be read in light of such risks. We undertake no
obligation to update these statements to reflect ensuing events or
circumstances, or subsequent actual results.
| HEI, INC. | ||||||||||
| BALANCE SHEETS | ||||||||||
June 30, 2012 | December 31, 2011 | |||||||||
| (In thousands, except share and per share data) | ||||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | - | $ | - | ||||||
| Accounts receivable, net | 5,540 | 5,489 | ||||||||
| Inventories, net | 5,723 | 4,680 | ||||||||
| Deferred income taxes | 447 | 447 | ||||||||
| Other current assets | 449 | 253 | ||||||||
| Total current assets | 12,159 | 10,869 | ||||||||
| Property and equipment: | ||||||||||
| Land | 216 | 216 | ||||||||
| Building and improvements | 4,337 | 4,337 | ||||||||
| Fixtures and equipment | 27,989 | 26,676 | ||||||||
| Accumulated depreciation and amortization | (26,274 | ) | (25,788 | ) | ||||||
| Property and equipment, net | 6,268 | 5,441 | ||||||||
| Security deposit | 230 | 230 | ||||||||
| Other long-term assets | 239 | 328 | ||||||||
| Total assets | $ | 18,896 | $ | 16,868 | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 3,374 | $ | 2,151 | ||||||
| Accrued liabilities | 929 | 701 | ||||||||
| Customer deposit liabilities | 246 | 11 | ||||||||
| Current maturities of long-term liabilities | 1,108 | 927 | ||||||||
| Total current liabilities | 5,657 | 3,790 | ||||||||
| Long-term liabilities: | ||||||||||
| Deferred income taxes | 447 | 447 | ||||||||
| Other long-term liabilities, less current maturities | 2,615 | 2,443 | ||||||||
| Long-term debt, less current maturities | 6,331 | 5,933 | ||||||||
| Total long-term liabilities, less current maturities | 9,393 | 8,823 | ||||||||
| Total liabilities | 15,050 | 12,613 | ||||||||
| Commitments and contingencies | ||||||||||
| Shareholders’ equity: | ||||||||||
| Undesignated stock | - | - | ||||||||
| Convertible preferred stock, $.05 par | 2 | 2 | ||||||||
| Common stock, $.05 par | 506 | 506 | ||||||||
| Additional paid-in capital | 28,533 | 28,433 | ||||||||
| Accumulated deficit | (25,195 | ) | (24,686 | ) | ||||||
| Total shareholders’ equity | 3,846 | 4,255 | ||||||||
| Total liabilities and shareholders’ equity | $ | 18,896 | $ | 16,868 | ||||||
| Certain minor reclassifications have been made to our prior period financial information in order to conform to the current year presentation. | ||||||||||
| HEI, INC. | ||||||||||||||||||||
| STATEMENTS OF OPERATIONS | ||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| June 30, 2012 | July 2, 2011 | June 30, 2012 | July 2, 2011 | |||||||||||||||||
| (In thousands, except share and per share data) | ||||||||||||||||||||
| Net sales | $ | 9,648 | $ | 9,271 | $ | 18,713 | $ | 18,994 | ||||||||||||
| Cost of sales | 8,506 | 7,656 | 16,162 | 15,884 | ||||||||||||||||
| Gross profit | 1,142 | 1,615 | 2,551 | 3,110 | ||||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Selling, general and administrative | 1,269 | 1,094 | 2,542 | 2,185 | ||||||||||||||||
| Research, development and engineering | 140 | 106 | 356 | 249 | ||||||||||||||||
| Operating income (loss) | (267 | ) | 415 | (347 | ) | 676 | ||||||||||||||
| Interest expense, net | (85 | ) | (79 | ) | (176 | ) | (155 | ) | ||||||||||||
| Other income (expense), net | - | 3 | 14 | 3 | ||||||||||||||||
| Income (loss) before income taxes | (352 | ) | 339 | (509 | ) | 524 | ||||||||||||||
| Income tax expense | 1 | - | 1 | - | ||||||||||||||||
| Net income (loss) | $ | (351 | ) | $ | 339 | $ | (508 | ) | $ | 524 | ||||||||||
Income (loss) per common share: | ||||||||||||||||||||
| Basic | $ | (0.03 | ) | $ | 0.03 | $ | (0.05 | ) | $ | 0.05 | ||||||||||
| Diluted | $ | (0.03 | ) | $ | 0.03 | $ | (0.05 | ) | $ | 0.05 | ||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||||
| Basic | 10,120,000 | 9,885,000 | 10,120,000 | 9,878,000 | ||||||||||||||||
| Diluted | 10,120,000 | 9,885,000 | 10,120,000 | 9,878,000 | ||||||||||||||||
| Certain minor reclassifications have been made to our prior period financial information in order to conform to the current year presentation. | ||||||||||||||||||||
Contacts:
Mark B. Thomas, CEO, 952-443-7020
