Exhibit 99.1
HEI ANNOUNCES THIRD QUARTER FISCAL 2005 RESULTS
-- Revenues Grow 24% Over Third Quarter of Fiscal 2004
-- Year-to-Date Revenues Increase 30% Over Fiscal 2004
-- Net Income Of $273,000 In Third Quarter
MINNEAPOLIS, June 30 /PRNewswire-FirstCall/ -- HEI, Inc. (Nasdaq: HEII) (
http://www.heii.com ) today announced results for its third quarter of fiscal
2005, which ended May 28, 2005.
Net sales for the third quarter of fiscal 2005 were $13.7 million, a 24%
improvement over sales of $11.1 million reported in the third quarter of fiscal
2004. The Company reported net income of $273,000 or $0.03 per share in the
third quarter this year as compared to a loss of $1.0 million or ($0.12) per
share last year.
For the nine-month period ended May 28, 2005, net sales were $41.6 million,
an increase of 30% over the first nine months of fiscal 2004. The Company
reported net income for the first nine months of fiscal 2005 of $152,000 or
$0.02 per share compared to a loss of $5.2 million or ($0.70) per share for the
first nine months of fiscal 2004.
"This has been a quarter of important accomplishments for the Company,"
stated Mr. Traynor, President and CEO. "We have maintained our strong year-
over-year revenue growth, as well as the year-over-year improvements in gross
margins. We have also added three new customers and five new programs with
existing customers in the third quarter. Our operating expenses dropped to
(excluding non-recurring items) $2.7 million in the quarter from $3.2 million
last quarter. In addition, we successfully completed an important equity
offering which generated $3.4 million of capital to continue growing the
business. We will continue to focus the Company on our core service offerings so
as to improve sales, operating efficiencies and income."
In connection with the recently completed sale of convertible preferred
stock, the Company reported a "deemed dividend on preferred shares" in the third
quarter. This non-recurring, non-cash item is required by accounting rules when
a convertible security is issued at a discount. The amount of this "deemed
dividend" is $1,072,000 and is presented as a reduction to the Company's net
income to determine "Net income (loss) attributable to common shareholders";
however, the "deemed dividend" has no effect on total shareholders' equity of
the Company. The companies net loss attributable to common share holders was
$799,000 or ($0.10) per share for the three months ended May 28, 2005 and
$921,000 or ($0.11) per share for the nine months ended May 28, 2005.
"We are very pleased that we could end the quarter in a positive cash
position having fully repaid our line of credit," noted Mr. Traynor. "Together
with our improved operating results, our successful equity offering enabled us
to significantly strengthen our balance sheet and will allow us to generate more
business with new and existing customers. The 'deemed dividend' is a reporting
requirement associated with our offering which does not affect the Company's
improved financial position or shareholder value," concluded Mr. Traynor.
The Company will hold a conference call to discuss the Company's operating
results and business strategies on Thursday, June 30, 2005 at 4:00 p.m. Eastern
Time (3:00 p.m. Central Time). This call is being web cast and is also
accessible via telephone. To access the listen-only web cast, visit
http://www.actioncast.acttel.com and enter Event ID 28309. The conference call
can be accessed via telephone by dialing 1-800-366-7449 (outside the US, dial
303-262-2130). Specify conference reservation number 11033915.
HEI, Inc.
Consolidated Statements of Operations (Unaudited)
(In thousands, except per share data)
Three Months Ended Nine Months Ended
---------------------------- ----------------------------
May 28, 2005 May 29, 2004 May 28, 2005 May 29, 2004
------------ ------------ ------------ ------------
Net sales $ 13,755 $ 11,131 $ 41,563 $ 32,042
Cost of sales 11,185 9,980 33,170 29,376
Gross profit 2,570 1,151 8,393 2,666
Operating expenses:
Selling, general
and administrative 1,995 1,999 6,381 5,817
Research, development
and engineering 690 737 2,462 2,316
Gain on claim
settlement (300) - (300) -
Costs related to
investigation - 94 - 851
Operating income (loss) 185 (1,679) (150) (6,318)
Other income (expenses) 88 650 301 1,067
Income (loss) before
income taxes 273 (1,029) 151 (5,251)
Income taxes - - - -
Net income (loss) $ 273 $ (1,029) $ 151 $ (5,251)
Deemed dividend on
Preferred Stock $ 1,072 $ - $ 1,072 $ -
Net loss attributable
to common stock
holders $ (799) $ (1,029) $ (921) $ (5,251)
Earnings (loss) Per
Common Share:
Basic and Diluted:
Net Income (loss) $ 0.03 $ (0.12) $ 0.02 $ (0.70)
Deemed dividend on
Preferred Stock (0.13) - (0.13) -
Net loss attributable
to common stock $ (0.10) $ (0.12) $ (0.11) $ (0.70)
Weighted Average
Shares Used in
EPS Calculation
Basic: 8,381 8,310 8,365 7,533
Diluted: 8,381 8,310 8,365 7,533
HEI, Inc.
Consolidated Balance Sheets (Unaudited)
(In thousands)
May 28, August 31,
2005 2004
------------ ------------
(unaudited) (audited)
Cash and cash equivalents $ 508 $ 200
Restricted cash - 481
Accounts receivable, net 8,330 6,770
Inventories 8,315 6,787
Other current assets 950 1,8103
Total current assets 18,113 15,459
Net property and equipment 7,152 7,391
Other assets 2,194 2,262
Total assets $ 27,449 $ 25,112
Line of credit $ - $ 1,310
Current maturities of long-term debt 433 403
Accounts payable and accruals 10,421 10,332
Total current liabilities 10,854 12,045
Long-term debt, less current maturities 1,762 1,833
Other long-term liabilities 1,215 1,277
Total shareholders' equity 13,618 9,957
Total liabilities and shareholders' equity $ 27,449 $ 25,112
HEI, Inc. designs, develops and manufactures microelectronics, subsystems,
systems, connectivity and software solutions for OEMs engaged in the medical
equipment and medical device, hearing, communications, and industrial markets.
HEI provides its customers with a single point of contact that can take an idea
from inception to a fully functional, cost effective and manufacturability
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
RF Identification and Smart Card Division 1546 Lake Drive West,
Chanhassen, MN 55317
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. 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, HEI's expectations regarding continued listing of HEI's common stock on
NASDAQ, are forward-looking statements. All of such forward- looking statements
involve risks and uncertainties including, without limitation, continuing
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
banking agreements, adverse competitive developments, change in or cancellation
of customer requirements, the integration of the Advanced Medical Division,
collection of outstanding debt, HEI's ability to succeed on the merits and
defend against litigation, and other risks detailed from time to time in HEI's
SEC filings. We undertake no obligation to update these statements to reflect
ensuing events or circumstances, or subsequent actual results.
SOURCE HEI, Inc.
-0- 06/30/2005
/CONTACT: Mack V. Traynor, CEO, or Timothy Clayton, CFO, both of HEI,
Inc., +1-952-443-2500/
/Web site: http://www.heii.com /
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