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 MINNEAPOLIS, Sept. 16 /PRNewswire/ -- HEI (NASDAQ-NMS: HEII) announced unaudited financial results for the company's fourth quarter and fiscal year ended Aug. 31, 1993.
 Income before income tax expense for fiscal year 1993 was $3,998,000, up 99 percent from $2,012,000 for 1992.
 Revenues for fiscal year 1993 were $18,893,000, up approximately 34 percent from $14,138,000 for fiscal 1992. Net income for this year was $2,538,000, or $.66 per share, compared to net income of $1,863,000, or $.54 per share on a fully diluted basis, for 1992. Net income for 1992 benefited from utilization of net operating loss carryforwards that reduced income tax expense by approximately $655,000, or $.19 per share. The company's remaining net operating loss carryforwards were fully utilized during fiscal 1993, resulting in an effective tax rate of 36.5 percent for the year, compared to a 7.4 percent rate for fiscal 1992.
 Income before income tax expense was $863,000 for the fourth quarter of fiscal 1993, up from $788,000 for the same period in 1992. The final quarter of fiscal 1993 ended with net income of $595,000, or $.15 per share, compared to net income of $749,000, or $.21 per share, for the same period last year. Revenues for the fourth quarter of 1993 were $4,818,000, compared to $3,940,000 for the fourth quarter of fiscal 1992.
 HEI reported continued strengthening of its financial position as of Aug. 31, 1993, with no bank debt, and cash and short-term investment balances of $1,973,000. The company also reported having completed a $1.6 million expansion of its design and manufacturing capabilities during fiscal 1993, including the construction of two Class 10,000 Clean Rooms. Selective professional staff additions in design, manufacturing engineering, sales and marketing were also implemented to provide needed support for future business growth, according to Jerald Mortenson, vice president of finance and administration.
 HEI reported that the increased revenues were due to strong shipments of its custom hybrid microelectronic devices and FastPoint(R) light pens. Mortenson said that shipments of microelectronic devices to IBM's AdStar operation, which accounted for 54 percent and 40 percent of HEI's revenues in fiscal 1993 and 1992, respectively, had peaked during the fourth quarter, "We experienced an extended build-up of shipments to IBM over the past two years; we now anticipate a period of substantially reduced shipments in response to recent reductions in the customer's requirements -- not uncommon in ramp-up situations," stated Mortenson. "Consequently, total company revenues for the first quarter of fiscal 1994 are likely to be in the $3.0 to $3.5 million range," he said. Beyond the first quarter of fiscal 1994, schedules for this product have not yet been established, and will depend upon a number of factors primarily determined by IBM, according to Mortenson. "We anticipate that revenues in fiscal 1994 will include new business generated as a result of our strengthened sales efforts in the disk drive market and in an expansion of HEI's traditional medical instrumentation and light pen activities," he stated. "As noted in the past, some amount of fall-off between major contracts is virtually unavoidable in the custom business; similarly, build-ups can come relatively fast," said Mortenson; "HEI can react quickly to new requirements in our area of expertise and focus.
 "We are pleased by the accomplishments of fiscal 1993," said Mortenson. "A strong financial position, enhanced capabilities in production, technical support and sales, coupled with favorable early responses to these new capabilities, give us reason to view HEI's future growth opportunities with optimism," he said.
 HEI is a Minnesota-based company specializing in the design and manufacture of ultraminiature thick film microelectronic devices, and high technology products incorporating those devices. The company's stock trades on the NASDAQ National Market System under the symbol HEII.
 Three Months Ended Year Ended
 8/31/93 8/31/92 8/31/93 8/31/92
 Net sales $4,818,390 $3,939,557 $18,892,660 $14,137,898
 Cost of sales 3,321,273 2,500,645 12,173,643 9,490,665
 Gross profit 1,497,117 1,438,912 6,719,017 4,647,233
 Operating expenses:
 Selling, general
 & administrative 453,342 476,790 2,130,308 1,963,432
 Research, development
 & engineering 172,327 123,419 613,598 565,347
 Operating income 871,448 838,703 3,975,111 2,118,454
 Interest 2,561 14,501 39,448 96,831
 Other (income)
 expense, net 5,622 36,641 (61,965) 9,586
 Income before income
 tax expense 863,265 787,561 3,997,628 2,012,037
 Current income tax
 expense 312,134 315,024 1,629,134 804,815
 Benefit arising from
 utilization of net
 operating loss
 carryforwards (43,900) (276,024) (170,000) (655,315)
 Income tax expense 268,234 39,000 1,459,134 149,500
 Net income $595,031 $748,561 $2,538,494 $1,862,537
 Net income per common share:
 Primary $.15 $.21 $.66 $.57
 Fully diluted $.15 $.21 $.66 $.54
 Weighted average number of
 common and common equivalent
 shares outstanding:
 Primary 3,860,506 3,619,038 3,821,729 3,284,725
 Fully diluted 3,863,915 3,647,813 3,826,876 3,443,235
 ASSETS 8/31/93 8/31/92
 Current assets:
 Cash and cash equivalents $1,147,919 $645,831
 Short-term investments 825,560 300,000
 Accounts receivable 2,391,220 1,644,106
 Inventories 1,090,412 1,340,534
 Prepaid expenses and other 60,346 123,391
 Total current assets 5,515,457 4,053,862
 Property and equipment:
 Land 184,163 184,163
 Building and improvements 1,368,767 1,076,699
 Fixtures and equipment 3,997,844 3,991,588
 Property under capital leases 138,330 138,330
 Accumulated depreciation
 and amortization (2,868,424) (3,594,875)
 Net property and equipment 2,820,680 1,795,905
 Total assets $8,336,137 $5,849,767
 Current liabilities:
 Current maturities of
 long-term debt -- $166,656
 Current obligations under
 capital leases 47,078 41,914
 Accounts payable 564,236 707,481
 Accrued liabilities 860,242 843,858
 Accrued income taxes 60,401 146,940
 Total current liabilities 1,531,957 1,906,849
 Long-term debt, less current
 maturities -- 222,892
 Obligations under capital leases,
 less current obligations 41,936 85,228
 Shareholders' equity:
 Undesignated shares;
 5,000,000 shares authorized,
 none issued -- --
 Common stock, $.05 par;
 10,000,000 shares authorized;
 3,633,435 and 3,177,310 shares
 issued and outstanding -- --
 Paid-in capital 5,336,568 4,770,422
 Retained earnings (accumulated
 deficit) 1,244,004 (1,294,489)
 Total shareholders' equity 6,762,244 3,634,798
 Total liabilities and
 shareholders' equity $8,336,137 $5,849,767
 -0- 9/16/93
 /CONTACT: Jerald H. Mortenson, CFO, of HEI, 612-443-2500/

CO: HEI Inc. ST: Minnesota IN: CPR SU: ERN

KH-AL -- MN003 -- 2629 09/16/93 10:59 EDT
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Publication:PR Newswire
Date:Sep 16, 1993

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