HEI, INC. 
By
Net sales for the year were
"We continue to make progress in each of our three operating divisions.
We are proud of the hard work and dedication of our employees and we are
excited about the strong relationships that we are forging with our existing
and new customers. Our turnaround efforts are far from complete, but we
believe that the past year will become the foundation from which we will build
a stronger and growing HEI. We continue to invest in operational improvements
and we are very focused on our sales process and activities as we work to
expand our customer base and revenues. Our focus on speed, responsiveness and
uncompromising quality are the keys to our business philosophy," commented
HEI also announced that it will change its fiscal year end to the Saturday
closest to
HEI, Inc. designs, develops and manufactures ultra-miniature microelectronics, substrates, integrated systems and software solutions for customers engaged in the medical, hearing, telecommunications, 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.
Headquarters & Microelectronics Division PO Box 5000, 1495 Steiger Lake
Lane, Victoria, MN 55386
- Advanced Medical Division 4801 North 63rd Street,
Boulder, CO 80301
- High Density Interconnect Division 610 South Rockford Drive,
Tempe, AZ 85281
Our website is: http://www.heii.com. The information on our website is not incorporated by reference into this press release.
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 the estimated HEI revenue, cash flow
and profits, are forward looking statements. All of 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, our ability to satisfy financial or other obligations or covenants
set forth in our 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. We undertake no obligation to update these
statements to reflect ensuing events or circumstances, or subsequent actual
results. See the risk factor section in our annual report on Form 10K for year
ended
HEI, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
August 30, September 1,
2008 2007
(In thousands, except share and
per share data)
ASSETS
Current assets:
Cash and cash equivalents $7 $177
Accounts receivable, net of allowance
for doubtful accounts of $106 and
$106, respectively 6,173 4,449
Inventories, net 4,099 3,260
Deferred income taxes 528 528
Other current assets 524 321
Total current assets 11,331 8,735
Property and equipment:
Land 216 216
Building and improvements 4,327 4,302
Fixtures and equipment 22,765 21,829
Accumulated depreciation (21,828) (20,456)
Net property and equipment 5,480 5,891
Security deposit 527 526
Other long-term assets 455 550
Total assets $17,793 $15,702
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Checks issued in excess of cash in
bank $553 $191
Current maturities of long-term debt 668 848
Accounts payable 2,379 3,215
Customer deposit liabilities 892 31
Accrued liabilities 1,945 1,462
Total current liabilities 6,437 5,747
Deferred income taxes 528 528
Other long-term liabilities, less
current maturities 1,841 1,717
Long-term debt, less current
maturities 4,622 4,350
Total other long-term liabilities,
less current maturities 6,991 6,595
Total liabilities 13,428 12,342
Shareholders' equity:
Undesignated stock; 5,000,000 shares
authorized; none issued - -
Convertible preferred stock, $.05
par; 167,000 shares authorized;
32,000 shares issued and
outstanding; liquidation preference
at $26 per share (total liquidation
preference $832,000) 2 2
Common stock, $.05 par; 20,000,000
and 20,000,000 shares authorized;
10,289,000 and 9,570,000 shares
issued and 9,630,000 and 9,543,000
outstanding 482 478
Paid-in capital 27,903 27,763
Accumulated deficit (24,022) (24,883)
Total shareholders' equity 4,365 3,360
Total liabilities and shareholders'
equity $17,793 $15,702
HEI, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Fiscal Year Ended
August 30, September 1, September 2,
2008 2007 2006
(In thousands, except share and
per share data)
Net sales $41,963 $38,384 $49,061
Cost of sales 33,697 36,817 41,223
Gross profit 8,266 1,567 7,838
Operating expenses:
Selling, general and
administrative 5,613 5,653 8,429
Research, development and
engineering 1,290 2,330 4,001
Operating loss 1,363 (6,416) (4,592)
Interest expense (656) (1,312) (776)
Other income (expense), net 154 540 (34)
Loss from continuing operations
before income taxes 861 (7,188) (5,402)
Income tax provision (benefit) - - -
Loss from continuing operations 861 (7,188) (5,402)
Income (loss) from discontinued
operations - (217) (655)
Gain on sale of discontinued
operations - 1,748 -
Net income (loss) $861 $(5,657) $(6,057)
Income (loss) per common share -
basic and diluted:
Continuing operations $0.09 $(0.75) $(0.57)
Discontinued operations - 0.16 (0.07)
Net income (loss) $0.09 $(0.59) $(0.64)
Weighted average common shares
outstanding:
Basic and Diluted 9,556,000 9,522,000 9,469,000
HEI, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)
Convertible
Common Preferred
Stock Stock Convertible
Shares Common Shares Preferred
Outstanding Stock Outstanding Stock
(In thousands, except share data)
Balance August 31, 2005 9,379,000 $469 32,000 $2
Net loss - - - -
Payments on officers loans - - - -
Stock based compensation
expense - - - -
Issuance of common stock
to landlord recognized as
long-term asset 100,000 5 - -
Issuance of common shares
under stock benefit plans
and option plans 25,000 1 - -
Balance September 2, 2006 9,504,000 475 32,000 2
Net loss - - - -
Payments on former director
loan - - - -
Write-off of former director
loan - - - -
Stock based compensation
expense - - - -
Issuance of common shares
under stock benefit plans
and option plans 39,000 3 - -
Balance September 1, 2007 9,543,000 478 32,000 2
Net income - - - -
Stock based compensation
expense - - - -
Issuance of common shares
under stock benefit plans
and option plans 87,000 4 - -
Balance August 30, 2008 9,630,000 $482 32,000 $2
Related Total
Additional Party- Share-
Paid-In Accumulated Notes Holders'
Capital Deficit Receivable Equity
(In thousands, except share data)
Balance August 31, 2005 $26,701 $(13,169) $(207) $13,796
Net loss - (6,057) - (6,057)
Payments on officers loans - - 139 139
Stock based compensation
expense 503 - - 503
Issuance of common stock
to landlord recognized as
long-term asset 331 - - 336
Issuance of common shares
under stock benefit plans
and option plans 46 - - 47
Balance September 2, 2006 27,581 (19,226) (68) 8,764
Net loss - (5,657) - (5,657)
Payments on former director
loan - - 51 51
Write-off of former director
loan - - 17 17
Stock based compensation
expense 185 - - 185
Issuance of common shares
under stock benefit plans
and option plans (3) - - -
Balance September 1, 2007 27,763 (24,883) - 3,360
Net income - 861 - 861
Stock based compensation
expense 144 - - 144
Issuance of common shares
under stock benefit plans
and option plans (4) - - -
Balance August 30, 2008 $27,903 $(24,022) $- $4,365
HEI, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Fiscal Year Ended
August 30, September 1, September 2,
2008 2007 2006
(In thousands, except share and per
share data)
Cash flow from operating activities:
Net income (loss) $861 $(5,657) $(6,057)
Depreciation and amortization 1,555 1,989 2,473
Adjustments to reconcile net income
(loss) to cash flow from operating
activities:
Accounts receivable allowance
(recovery) - (18) (33)
(Gain) loss on disposal of property
and equipment and other - 4 49
Gain on sale of discontinued
operations - (1,748) -
Write off of former director loan - 17 -
Stock based compensation expense 144 185 503
Changes in operating assets and
liabilities:
Accounts receivable (1,724) 4,211 106
Inventories (839) 3,108 1,044
Other current assets (197) (25) 820
Accounts payable (836) (199) (284)
Customer Deposit Liability 861 - -
Accrued liabilities 607 (569) (1,269)
Net cash flow provided by (used in)
operating activities 432 1,298 (2,648)
Cash flow from investing activities:
Additions to property and equipment (1,056) (451) (955)
Proceeds from the sale of assets - 177 96
Additions to patents - (10) (22)
Security deposit - 24 1,030
Proceeds from sale of discontinued
operations - 2,953 -
Net cash flow provided by (used in)
investing activities (1,056) 2,693 149
Cash flow from financing activities:
Checks written in excess of cash in
bank 362 191 -
Issuance of common stock under stock
plans - - 47
Officer/former director note
repayment - 51 139
Payment of debt issuance costs - (118) -
Repayment of long-term debt (445) (1,121) (749)
Proceeds from long-term debt 537 2,457 -
Net borrowings (repayments) on line
of credit - (5,948) 3,385
Net cash flow provided by (used in)
financing activities 454 (4,488) 2,822
Net increase (decrease) in cash and
cash equivalents (170) (497) 323
Cash and cash equivalents, beginning
of year 177 674 351
Cash and cash equivalents, end of
year $7 $177 $674
Supplemental disclosures of cash flow
information:
Interest paid $615 $1,269 $799
SOURCE HEI, Inc.
