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HEI, Inc. Announces Fourth Quarter and Fiscal Year 2013 Results
MINNEAPOLIS --(Business Wire)--
HEI (News - Alert), Inc. (Pink Sheets: HEII) (http://www.heii.com)
today announced its financial results for the fourth quarter and fiscal
year 2013, which ended December 28, 2013.
Sales for the fourth quarter of 2013 were $8,585,000, compared to
$11,426,000 for the fourth quarter of 2012. The Company generated a net
income of $601,000 in the fourth quarter of 2013, compared to a net loss
of ($245,000) in the fourth quarter of 2012.
Fourth quarter sales decreased primarily as a result of lack of follow
on orders for the military radio system components in the Victoria
division due to delays and reductions in government procurement, which
is expected to continue in 2014. Although a limited amount of follow on
orders have been received in the first quarter of 2014, no assurances
can be made as to whether or not additional orders will be received in
2014 and, if received, the volume and timing of shipments is uncertain
at this time. Fourth quarter profitability improved primarily as a
result of yield and process efficiency improvements in the Victoria
division and the Tempe division.
Sales for the full fiscal year of 2013 were $44,778,000, compared to
$40,020,000 in 2012. The Company generated a net income of $1,995,000 in
the full fiscal year of 2013, compared to a net loss of ($1,257,000) in
2012.
Annual sales increased $4,757,000, or 12% primarily as a result of
increases in the Company's Victoria division. Annual gross profit
increased to $7,085,000 in 2013 from $4,296,000 in 2012 due primarily to
increased volume in the Victoria division. Annual net cash flow provided
by operating activities increased 60% to $3,844,000 in 2013 from
$2,399,000 in 2012, primarily due to the improved profitability as well
as significant reductions in inventory as a result of improved inventory
management.
HEI, Inc. designs, develops and manufactures ultra-miniature
microelectronics, high density interconnect flexible and rigid-flex
substrates, electromechanical hardware, and embedded software with
complex user interface 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.
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Corporate & HEI - Victoria (Microelectronics Contract Manufacturing)
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1495 Steiger Lake Lane, Victoria, MN 55386
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HEI - Boulder (Design and Development, Box (News - Alert) Build and ATE)
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4801 North 63rd Street, Boulder, CO 80301
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HEI - Tempe (Quick Turn and Production High Density Interconnect
Flex and Rigid-Flex)
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610 South Rockford Drive, Tempe, AZ 85281
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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 (News - Alert) 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.
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HEI, INC.
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BALANCE SHEETS
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December 28, 2013
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December 29, 2012
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(In thousands)
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ASSETS
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Current assets:
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Accounts receivable, net of allowance for doubtful accounts of $88
and $45, respectively
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$
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4,783
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$
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4,538
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Inventories, net
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3,308
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5,454
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Other current assets
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359
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712
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Total current assets
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8,450
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10,704
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Property and equipment:
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Land
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216
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216
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Building and improvements
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4,337
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4,337
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Fixtures and equipment
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30,334
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28,554
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Accumulated depreciation and amortization
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(28,487
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)
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(27,005
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Property and equipment, net
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6,400
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6,102
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Security deposit
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230
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230
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Other long-term assets
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175
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205
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Total assets
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$
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15,255
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$
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17,241
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current liabilities:
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Revolving line of credit
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2,568
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4,003
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Accounts payable
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$
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1,458
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$
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3,129
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Accrued liabilities
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1,151
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1,019
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Customer deposits
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7
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712
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Current maturities of long-term liabilities
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1,136
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1,120
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Total current liabilities
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6,320
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9,983
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Long-term liabilities:
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Long-term lease obligation, less current maturities
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1,716
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1,845
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Long-term capital lease obligations, less current maturities
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969
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620
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Long-term debt, less current maturities
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870
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1,580
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Total long-term liabilities, less current maturities
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3,555
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4,045
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Total liabilities
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9,875
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14,028
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Shareholders' equity:
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Undesignated stock; 5,000,000 shares authorized; none issued
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-
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-
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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)
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2
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2
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Common stock, $.05 par; 20,000,000 shares authorized; 10,987,527
issued and 10,586,527 outstanding shares at December 28, 2013;
10,973,390 issued and 10,262,501 outstanding shares at December
29, 2012
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529
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513
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Additional paid-in capital
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28,797
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28,641
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Accumulated deficit
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(23,948
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(25,943
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Total shareholders' equity
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5,380
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3,213
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Total liabilities and shareholders' equity
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$
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15,255
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$
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17,241
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HEI, INC.
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STATEMENTS OF OPERATIONS
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Fiscal Years Ended
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December 28, 2013
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December 29, 2012
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December 31, 2011
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(In thousands, except share and per share data)
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Net sales
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$
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44,778
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$
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40,020
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$
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37,415
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Cost of sales
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37,693
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35,724
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31,586
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Gross profit
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7,085
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4,296
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5,829
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Operating expenses:
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Selling, general and administrative
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4,729
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5,120
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4,454
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Operating income (loss)
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2,356
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(824
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1,375
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Interest expense, net
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(324
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)
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(446
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)
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(364
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)
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Other income (expense), net
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8
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17
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40
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Income (loss) before income taxes
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2,040
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(1,253
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)
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1,051
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Income tax expense
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(45
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)
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(4
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-
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Net income (loss)
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$
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1,995
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$
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(1,257
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$
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1,051
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Income (loss) per common share:
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Basic
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$
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0.19
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$
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(0.12
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$
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0.11
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Diluted
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$
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0.18
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$
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(0.12
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$
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0.10
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Weighted average common shares outstanding:
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Basic
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10,459,153
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10,180,352
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9,979,516
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Diluted
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10,816,508
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10,180,352
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10,290,885
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HEI, INC.
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STATEMENTS OF CASH FLOWS
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Fiscal Years Ended
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December 28, 2013
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December 29, 2012
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December 31, 2011
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(In thousands)
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Cash flow from operating activities:
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Net income (loss)
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$
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1,995
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$
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(1,257
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)
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$
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1,051
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Adjustments to reconcile net income (loss) to cash flow from
operating activities:
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Depreciation and amortization
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1,714
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1,659
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1,613
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Change in allowance for doubtful accounts
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43
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10
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(18
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(Gain) loss on disposal of property and equipment
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(7
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)
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(6
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(3
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Stock-based compensation expense
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172
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215
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204
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Amortization of long-term and unfavorable lease
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(40
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)
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(39
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)
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-
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Changes in operating assets and liabilities:
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Accounts receivable
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(288
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)
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941
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(401
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)
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Inventories
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2,146
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(774
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)
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(321
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)
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Other current assets
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353
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(347
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)
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(17
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)
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Accounts payable
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(1,671
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)
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978
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(586
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)
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Accrued liabilities
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132
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|
|
|
318
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|
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|
(17
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)
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Customer deposit liabilities
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(705
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)
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701
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(286
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)
|
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Net cash flow provided by operating activities
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3,844
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|
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2,399
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|
|
1,219
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|
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Cash flow from investing activities:
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|
|
|
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Additions to property and equipment
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(1,287
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)
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(1,957
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)
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(1,194
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)
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Proceeds from the sale of assets
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|
7
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|
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|
54
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20
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Additions to patents
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-
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|
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-
|
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(29
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)
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Net cash flow used in investing activities
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(1,280
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)
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(1,903
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)
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(1,203
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)
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Cash flow from financing activities:
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Repayment of long-term debt
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(1,129
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)
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(1,047
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)
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(812
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)
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Proceeds from leases and long-term debt
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-
|
|
|
|
490
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|
784
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Net proceeds (repayments) of revolving line of credit
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|
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(1,435
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)
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|
61
|
|
|
|
12
|
|
|
Net cash flow used in financing activities
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|
|
(2,564
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)
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|
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(496
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)
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|
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(16
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)
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|
|
|
|
|
|
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|
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Net increase (decrease) in cash and cash equivalents
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|
-
|
|
|
|
-
|
|
|
|
-
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Cash and cash equivalents, beginning of year
|
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|
-
|
|
|
|
-
|
|
|
|
-
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Cash and cash equivalents, end of year
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$
|
-
|
|
|
$
|
-
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$
|
-
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Supplemental disclosures of cash flow information:
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Interest paid
|
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$
|
263
|
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$
|
428
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|
|
$
|
331
|
|
|
Taxes paid
|
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|
-
|
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|
-
|
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|
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-
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Supplemental disclosures of non-cash financing and investing
activities:
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Issuance of common stock for vested restricted stock awards
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$
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16
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|
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$
|
7
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|
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$
|
12
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|
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Security deposits utilized towards buy-out of capital leases
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
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Capital lease assets acquired
|
|
|
695
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|
|
|
400
|
|
|
|
252
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