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HEI REPORTS RECORD QUARTER

 MINNEAPOLIS, June 15 /PRNewswire/ -- HEI, Inc. (NASDAQ: HEII) announced unaudited financial results for the company's third quarter ended May 28, 1993.
 Net income for the quarter was $715,000, or $.18 per share, compared to net income of $677,000, or $.20 per share, reported for the same period last year. Revenues for the third quarter of the current fiscal year were $5,193,000, compared to $4,025,000, for the third quarter last year.
 Net income reported for the first nine months of the current fiscal year was $1,943,000, or $.51 per share, on revenues of $14,074,000. This compared to net income of $1,114,000, or $.35 per share, on revenues of $10,198,000 for the first nine months of fiscal year 1992.
 Income before income tax expense for the first nine months of the current year was $3,134,000, compared to $1,224,000 for the same period of fiscal 1992. According to Jerald H. Mortenson, vice president of finance and administration. "The company's income tax expense for the current year has increased significantly compared to last year, as a result of greater profits and the full utilization of remaining net operating loss carryforwards generated in previous years." Mortenson stated that income tax expense for the first three quarters of fiscal 1993 is based on an expected effective rate of 38 percent for the full year, compared to 7 percent for fiscal year 1992.
 HEI reported that shipments reached record levels in the quarter, and that its microelectronic devices for use in high density disk drives -- specifically those manufactured for IBM's AdStaR unit -- continued at high levels through the third quarter, according to Mortenson. He also stated that the program to expand and enhance the company's thick film manufacturing facilities was on schedule and nearing completion. "We expect to finish the construction phase by the end of June, including certification of a second new Class 10,000 Clean Room," said Mortenson. "We will have separate Clean Rooms for thick film ceramics printing and for the placement, bonding and encapsulation of die," he stated. Mortenson added that the two new Clean Rooms were part of a capital expansion program under which approximately $1.8 million in new plant and equipment will be acquired by fiscal year end. HEI reported a cash and cash equivalents balance of $1,576,000 at the end of the third quarter, with total bank debt reduced to $265,000.
 "Near-term growth will be determined by our ability to attract additional customers for HEI's ultraminiature packaging solutions and FastPoint(R) light pens, and to acquire skilled personnel to support our growth, now that this expansion process is essentially behind us," said Mortenson.
 HEI is a Minnesota-based company specializing in the design and manufacture of ultra-miniature thick film microelectronic devices, and high technology products incorporating those devices. The company's stock trades on the NASDAQ Small-Cap market under the symbol HEII.
 HEI, INC. STATEMENTS OF OPERATIONS
 (Unaudited)
 Three Months Ended Nine Months Ended
 5/29/93 5/30/92 5/29/93 5/30/92
 Net sales $5,193,440 $4,025,297 $14,074,270$10,198,341
 Cost of sales 3,237,582 2,691,917 8,852,370 6,990,020
 Gross profit 1,955,858 1,333,380 5,221,900 3,208,321
 Operating expenses:
 Selling, general and
 admin. 627,114 482,101 1,676,966 1,486,642
 Research, dev. and
 engineering 150,943 130,701 441,271 441,928
 Operating income 1,177,801 720,578 3,103,663 1,279,751
 Interest 10,288 12,037 36,887 82,330
 Other income, net (46,791) (26,104) (67,587) (27,055)
 Income before income
 tax expense 1,214,304 734,645 3,134,363 1,224,476
 Current income tax
 expense 548,900 293,858 1,317,000 489,791
 Benefit arising from
 utilization of net
 operating loss carry-
 forwards (49,200) (235,858) (126,100) (379,291)
 Income tax expense 499,700 58,000 1,190,900 110,500
 Net income $714,604 $676,645 $1,943,463 $1,113,976
 Net income per common
 share $.18 $.20 $.51 $.35
 Weighted average number
 of common and common
 equivalent shares out-
 standing: 3,874,465 3,413,790 3,803,727 3,146,510
 HEI, INC. BALANCE SHEETS
 (Unaudited)
 5/29/93 8/31/92
 ASSETS
 Current assets:
 Cash and cash equivalents $757,139 $645,831
 Short-term investments 818,442 300,000
 Accounts receivable 2,681,931 1,644,106
 Inventories 1,496,121 1,340,534
 Prepaid expenses and other 143,285 123,391
 Total current assets 5,896,918 4,053,862
 Property and equipment:
 Land 184,163 184,163
 Building and improvements 1,346,324 1,076,699
 Fixtures and equipment 4,986,517 3,991,588
 Property under capital
 leases 138,330 138,330
 Accumulated depreciation
 and amortization (3,896,362) (3,594,875)
 Net property and equipment 2,758,972 1,795,905
 Total assets $8,655,890 $5,849,767
 LIABILITIES AND SHAREHOLDERS' EQUITY
 Current liabilities:
 Current maturities of
 long-term debt $166,656 $166,656
 Current obligations under
 capital leases 38,127 41,914
 Accounts payable 866,290 707,481
 Accrued liabilities 1,015,593 843,858
 Accrued income taxes 242,168 146,940
 Total current liabilities 2,328,834 1,906,849
 Long-term debt, less current
 maturities 97,900 222,892
 Obligations under capital
 leases, less current oblig-
 ations 61,942 85,228
 Shareholders' equity:
 Undesignated shares;
 5,000,000 shares author-
 ized, none issued - -
 Common stock, $.05 par;
 10,000,000 shares authorized;
 3,633,435 and 3,177,310 shares
 issued and outstanding 181,672 158,865
 Paid-in capital 5,336,568 4,770,422
 Retained earnings (accum-
 ulated deficit) 648,974 (1,294,489)
 Total shareholders' equity 6,167,214 3,634,798
 Total liabilities and share-
 holders' equity $8,655,890 $5,849,767
 -0- 6/15/93
 /CONTACT: Jerald H. Mortenson, CFO of HEI, 612-443-2500/
 (HEII)


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

MA -- MN018 -- 2391 06/15/93 18:05 EDT
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Date:Jun 15, 1993
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