HEI, Inc. Announces Fourth Quarter and Fiscal Year 2012 Results
HEI, Inc. Announces Fourth Quarter and Fiscal Year 2012 Results
MINNEAPOLIS--(BUSINESS WIRE)-- HEI, Inc. (Pink Sheets: HEII) (http://www.heii.com) today announced its financial results for the fourth quarter and fiscal year 2012, which ended December 29, 2012.
Sales for the fourth quarter of 2012 were $11,426,000 compared to $9,201,000 for the fourth quarter of 2011. The Company generated a net loss of ($245,000) for the fourth quarter of 2012 compared to a net income of $364,000 for the fourth quarter of 2011. Sales for the full fiscal year of 2012 were $40,020,000, compared to $37,415,000 for 2011. The Company generated a net loss of ($1,257,000) for the full fiscal year of 2012 compared to a net income of $1,051,000 for 2011.
Sales were up 24.2% ($2,225,000) year-over-year in the fourth quarter as a result of increases in the Company's Victoria operation which was partially offset by decreased sales in the Company's other two operating divisions. Gross margins were down on a consolidated basis with Victoria gross margins improving as a result of improved efficiencies associated with the increased sales volumes while the decline in the other two operating divisions' gross margins were a result of lower sales volumes and lower margin product mixes compared to the prior year. The net loss for fiscal 2012 included an increase to our reserve for inventory obsolescence of $889,000, which had no cash impact during the year. Net cash flow provided by operating activities was $2,399,000 for fiscal year 2012 compared to $1,219,000 for fiscal year 2011.
"The return to profitability for 2012 in our Victoria, Minnesota division was a result of the military radio systems component contracts we secured during the year, as well as strong demand from our telecom and other customers which improved our operational effectiveness. Unfortunately, Victoria's turnaround was not enough to compensate for the slowdown in both the Boulder and Tempe facilities. We are entering 2013 with strong backlogs and strong demand from our new and existing customers, along with an increased focus on sales and customer expansion," commented HEI CEO, Mark B. Thomas.
The audited financial statements for the year ended December 29, 2012 are included in the 2012 Annual Report which can be found on our website at the following link: http://www.heii.com/HEICorporate/NewsEvents/tabid/63/Default.aspx
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. | ||
Corporate & HEI -Victoria (Microelectronics Contract Manufacturing) | 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 | ||||||||
December 29, 2012 | December 31, 2011 | |||||||
(In thousands, except share and per share data) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | - | $ | - | ||||
Accounts receivable, net of allowance for doubtful accounts of $45 and $35, respectively | 4,538 | 5,489 | ||||||
Inventories, net | 5,454 | 4,680 | ||||||
Deferred income taxes | 804 | 447 | ||||||
Other current assets | 712 | 253 | ||||||
Total current assets | 11,508 | 10,869 | ||||||
Property and equipment: | ||||||||
Land | 216 | 216 | ||||||
Building and improvements | 4,337 | 4,337 | ||||||
Fixtures and equipment | 28,554 | 26,676 | ||||||
Accumulated depreciation and amortization | (27,005 | ) | (25,788 | ) | ||||
Property and equipment, net | 6,102 | 5,441 | ||||||
Security deposit | 230 | 230 | ||||||
Other long-term assets | 205 | 328 | ||||||
Total assets | $ | 18,045 | $ | 16,868 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 3,129 | $ | 2,151 | ||||
Accrued liabilities | 1,019 | 701 | ||||||
Customer deposit liabilities | 712 | 11 | ||||||
Current maturities of long-term liabilities | 1,120 | 927 | ||||||
Total current liabilities | 5,980 | 3,790 | ||||||
Long-term liabilities: | ||||||||
Deferred income taxes | 804 | 447 | ||||||
Other long-term liabilities, less current maturities | 2,465 | 2,443 | ||||||
Long-term debt, less current maturities | 5,583 | 5,933 | ||||||
Total long-term liabilities, less current maturities | 8,852 | 8,823 | ||||||
Total liabilities | 14,832 | 12,613 | ||||||
Commitments and contingencies | ||||||||
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) | 2 | 2 | ||||||
Common stock, $.05 par; 20,000,000 shares authorized; 10,973,390 issued and 10,262,501 outstanding shares at December 29, 2012; 11,155,023 issued and 10,120,023 outstanding at December 31, 2011 | 513 | 506 | ||||||
Additional paid-in capital | 28,641 | 28,433 | ||||||
Accumulated deficit | (25,943 | ) | (24,686 | ) | ||||
Total shareholders' equity | 3,213 | 4,255 | ||||||
Total liabilities and shareholders' equity | $ | 18,045 | $ | 16,868 | ||||
HEI, INC. | ||||||||||||
STATEMENTS OF OPERATIONS | ||||||||||||
Fiscal Years Ended | ||||||||||||
December 29, 2012 | December 31, 2011 | January 1, 2011 | ||||||||||
(In thousands, except share and per share data) | ||||||||||||
Net sales | $ | 40,020 | $ | 37,415 | $ | 36,420 | ||||||
Cost of sales | 35,724 | 31,586 | 31,736 | |||||||||
Gross profit | 4,296 | 5,829 | 4,684 | |||||||||
Operating expenses: | ||||||||||||
Selling, general and administrative | 5,120 | 4,454 | 4,934 | |||||||||
Operating income (loss) | (824 | ) | 1,375 | (250 | ) | |||||||
Interest expense, net | (446 | ) | (364 | ) | (286 | ) | ||||||
Other income (expense), net | 17 | 40 | 167 | |||||||||
Income (loss) before income taxes | (1,253 | ) | 1,051 | (369 | ) | |||||||
Income tax expense | (4 | ) | - | - | ||||||||
Net income (loss) | $ | (1,257 | ) | $ | 1,051 | $ | (369 | ) | ||||
Income (loss) per common share: | ||||||||||||
Basic | $ | (0.12 | ) | $ | 0.11 | $ | (0.04 | ) | ||||
Diluted | $ | (0.12 | ) | $ | 0.10 | $ | (0.04 | ) | ||||
Weighted average common shares outstanding: | ||||||||||||
Basic | 10,180,352 | 9,979,516 | 9,766,000 | |||||||||
Diluted | 10,180,352 | 10,290,885 | 9,766,000 | |||||||||
HEI, INC. | ||||||||||||
STATEMENTS OF CASH FLOWS | ||||||||||||
Fiscal Years Ended | ||||||||||||
December 29, 2012 | December 31, 2011 | January 1, 2011 | ||||||||||
(In thousands) | ||||||||||||
Cash flow from operating activities: | ||||||||||||
Net income (loss) | $ | (1,257 | ) | $ | 1,051 | $ | (369 | ) | ||||
Adjustments to reconcile net income (loss) to cash flow from operating activities: | ||||||||||||
Depreciation and amortization | 1,659 | 1,613 | 1,817 | |||||||||
Change in allowance for doubtful accounts | 10 | (18 | ) | (77 | ) | |||||||
(Gain) loss on disposal of property and equipment | (6 | ) | (3 | ) | (19 | ) | ||||||
Stock-based compensation expense | 215 | 204 | 153 | |||||||||
Amortization of long-term and unfavorable lease | (39 | ) | - | - | ||||||||
Changes in operating assets and liabilities: | ||||||||||||
Accounts receivable | 941 | (401 | ) | (1,428 | ) | |||||||
Inventories | (774 | ) | (321 | ) | (1,407 | ) | ||||||
Other current assets | (347 | ) | (17 | ) | 219 | |||||||
Accounts payable | 978 | (586 | ) | 987 | ||||||||
Accrued liabilities | 318 | (17 | ) | (208 | ) | |||||||
Customer deposit liabilities | 701 | (286 | ) | 69 | ||||||||
Net cash flow provided by (used in) operating activities | 2,399 | 1,219 | (263 | ) | ||||||||
Cash flow from investing activities: | ||||||||||||
Additions to property and equipment | (1,957 | ) | (1,194 | ) | (1,614 | ) | ||||||
Proceeds from the sale of assets | 54 | 20 | - | |||||||||
Additions to patents | - | (29 | ) | (29 | ) | |||||||
Net cash flow used in investing activities | (1,903 | ) | (1,203 | ) | (1,643 | ) | ||||||
Cash flow from financing activities: | ||||||||||||
Payment of debt issuance costs | - | - | (23 | ) | ||||||||
Repayment of long-term debt | (1,047 | ) | (812 | ) | (608 | ) | ||||||
Proceeds from leases and long-term debt | 490 | 784 | 716 | |||||||||
Proceeds (repayments) of long-term debt - revolving line of credit, net | 61 | 12 | 1,821 | |||||||||
Net cash flow provided by (used in) financing activities | (496 | ) | (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 | $ | 428 | $ | 331 | $ | 309 | ||||||
Taxes paid | - | - | - | |||||||||
