HEI, Inc. Announces Fourth Quarter and Full Year 2011 Results

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 –

Automated Test Equipment)

1495 Steiger Lake Lane, Victoria, MN  55386

HEI – Boulder (Design and Development, Box Build and ATE –

Automated Test Equipment)

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

HEI, INC.

STATEMENTS OF OPERATIONS

Three Months Ended

Twelve Months Ended

December 31,
2011

January 1,
2011

December 31,
2011

January 1,
2011

(In thousands, except share and per share data)

Net sales  

$            9,201

$       9,085

$          37,415

$     36,420

Cost of sales  

7,389

7,468

31,003

31,124

Gross profit  

1,812

1,617

6,412

5,296

Operating expenses:

   Selling, general and administrative  

1,169

1,676

4,454

4,934

   Research, development and engineering  

159

115

583

612

Operating income (loss)  

484

(174)

1,375

(250)

Interest expense, net

(119)

(56)

(364)

(286)

Other income (expense), net  

-

-

40

167

Income (loss) before income taxes  

365

(230)

1,051

(369)

Income tax expense

-

-

-

-

Net income (loss)  

$               365

$        (230)

$            1,051

$        (369)

Income (loss) per common share:

Basic

$              0.04

$       (0.02)

$              0.11

$       (0.04)

Diluted

$              0.03

$       (0.02)

$              0.10

$       (0.04)

Weighted average common shares outstanding:

Basic

10,120,023

9,870,516

9,979,516

9,766,000

Diluted

10,431,392

9,870,516

10,290,885

9,766,000

HEI, INC.

BALANCE SHEETS

December 31, 2011

January 1, 2011

(In thousands, except share and per share data)

ASSETS

Current assets:

  Cash and cash equivalents

$                            -

$                     -

  Accounts receivable, net

5,489

5,071

  Inventories, net

4,680

4,359

  Deferred income taxes

447

425

  Other current assets

253

227

Total current assets

10,869

10,082

Property and equipment:

  Land

216

216

  Building and improvements

4,337

4,337

  Fixtures and equipment

26,676

25,334

  Accumulated depreciation and amortization

(25,788)

(24,290)

Property and equipment, net

5,441

5,597

  Security deposit

230

230

  Other long-term assets

328

336

Total assets

$                     16,868

$              16,245

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

  Accounts payable

$                       2,151

$                2,737

  Accrued liabilities

701

718

  Customer deposit liabilities

11

297

  Current maturities of long-term liabilities

927

684

Total current liabilities

3,790

4,436

Long-term liabilities:

  Deferred income taxes

447

425

  Other long-term liabilities, less current maturities

2,443

1,953

  Long-term debt, less current maturities

5,933

6,431

Total long-term liabilities, less current maturities

8,823

8,809

Total liabilities

12,613

13,245

Commitments and contingencies

Shareholders’ equity:

  Undesignated stock

-

-

  Convertible preferred stock, $.05 par

2

2

  Common stock, $.05 par

506

494

  Additional paid-in capital

28,433

28,241

  Accumulated deficit

(24,686)

(25,737)

Total shareholders’ equity

4,255

3,000

Total liabilities and shareholders’ equity

$                     16,868

$              16,245

HEI, INC.

STATEMENTS OF CASH FLOWS

Fiscal Years Ended

December 31, 2011

January 1, 2011

(In thousands)

Cash flow from operating activities:

Net income (loss)

$                        1,051

$                    (369)

Adjustments to reconcile net income (loss)
to cash flow from operating activities:

    Depreciation and amortization

1,613

1,817

    Change in allowance for doubtful accounts

(18)

(77)

    (Gain) loss on disposal of property and equipment

(3)

(19)

    Stock-based compensation expense

204

153

    Changes in operating assets and liabilities:

    Accounts receivable

(401)

(1,428)

    Inventories

(321)

(1,407)

    Other current assets

(17)

219

    Accounts payable

(586)

987

    Accrued liabilities

(17)

(208)

    Customer deposit liabilities

(286)

69

Net cash flow provided by (used in) operating activities

1,219

(263)

Cash flow from investing activities:

Additions to property and equipment

(1,194)

(1,614)

Proceeds from the sale of assets

20

-

Additions to patents

(29)

(29)

Net cash flow used in investing activities

(1,203)

(1,643)

Cash flow from financing activities:

Payment of debt issuance costs

-

(23)

Repayment of long-term debt

(812)

(608)

Proceeds from long-term debt

784

716

Proceeds (repayments) of long-term debt - revolving line of credit, net

12

1,821

Net cash flow provided by (used in) financing activities

(16)

1,906

Net decrease in cash and cash equivalents

-

-

Cash and cash equivalents, beginning of year

-

-

Cash and cash equivalents, end of year

$                              -

$                        -

Supplemental disclosures of cash flow information:

Interest paid

$                           331

$                     309

Taxes paid

-

-

Supplemental disclosures of non-cash financing and investing activities:

Issuance of common stock for vested restricted stock awards

$                             12

$                         8

Security deposits utilized towards buy-out of capital leases

-

-

Capital lease assets acquired

252

-