-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CKc79pt9Oe/L57KvV1kvvC6pSfYtNP1HUWfJNYepq56wrNsmwFQMGwqUo+M60vD5 dJ74QR/sM8OcKKeoxqBoAw== 0000912057-96-000393.txt : 19960112 0000912057-96-000393.hdr.sgml : 19960112 ACCESSION NUMBER: 0000912057-96-000393 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951202 FILED AS OF DATE: 19960111 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEI INC CENTRAL INDEX KEY: 0000351298 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS, NEC [3679] IRS NUMBER: 410944876 STATE OF INCORPORATION: MN FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-10078 FILM NUMBER: 96502767 BUSINESS ADDRESS: STREET 1: 1495 STEIGER LAKE LN STREET 2: P O BOX 5000 CITY: VICTORIA STATE: MN ZIP: 55386 BUSINESS PHONE: 6124432500 MAIL ADDRESS: STREET 1: P O BOX 5000 STREET 2: 1495 STEIGER LAKE LANE CITY: VICTORIA STATE: MN ZIP: 55386 10QSB 1 10 QSB SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB [X] Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended DECEMBER 2, 1995 ("FIRST QUARTER, FISCAL 1996") or [ ] Transition Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to ---------------- --------------- COMMISSION FILE NUMBER 0-10078 HEI, INC. --------- (Exact name of small business issuer as specified in its charter) MINNESOTA 41-0944876 --------- ---------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) PO BOX 5000, 1495 STEIGER LAKE LANE, VICTORIA, MN 55386 ------------------------------------------------- ----- (Address of principal executive offices) (Zip Code) Issuer's Telephone number, including area code: (612) 443-2500 -------------- NONE ---- Former name, former address and former fiscal year, if changed since last report. Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] --- --- 3,801,597 Common Shares, par value $0.05, were outstanding as of December 2, 1995. This Form 10-QSB consists of 10 pages. 2 TABLE OF CONTENTS HEI, INC. - ------------------------------------------------------------------------------ Part I - Financial Information Item 1. Financial Statements Balance Sheet........................................... 3 Statement of Operations................................. 4 Statement of Cash Flows................................. 5 Notes to Financial Statements............................ 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............ 7-8 Part II - Other Information Item 6. Exhibits and Reports on Form 8-K.......................... 9 Signatures.........................................................10 Paat I - Financial Information Item 1. Financial Statements 3 HEI, INC. BALANCE SHEET (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) - -------------------------------------------------------------------------------
December 2, 1995 August 31, 1995 ---------------- --------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $1,881 $1,438 Short-term investments 3,900 3,820 ----- ------ 5,781 5,258 Accounts receivable, net 2,400 2,525 Inventories 2,099 1,851 Other, principally deferred tax assets 341 349 - ------------------------------------------------------------------------------------- Total current assets 10,621 9,983 - ------------------------------------------------------------------------------------- Property and equipment: Land 184 184 Building and improvements 1,419 1,398 Fixtures and equipment 5,626 5,475 Accumulated depreciation and amortization (4,373) (4,183) - ------------------------------------------------------------------------------------- Net property and equipment 2,856 2,874 - ------------------------------------------------------------------------------------- Total assets $13,477 $12,857 - ------------------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $704 $385 Accrued liabilities 1,014 1,043 Income taxes payable 266 175 - ------------------------------------------------------------------------------------- Total current liabilities 1,984 1,603 - ------------------------------------------------------------------------------------- Deferred tax liability 272 272 - ------------------------------------------------------------------------------------- Shareholders' equity: Undesignated stock; 5,000,000 shares authorized, none issued Common stock, $.05 par; 10,000,000 shares authorized; 3,801,597 and 3,791,597 shares issued and outstanding 190 190 Paid-in capital 6,198 6,183 Retained earnings 4,833 4,609 - ------------------------------------------------------------------------------------- Total shareholders' equity 11,221 10,982 - ------------------------------------------------------------------------------------- Total liabilities and shareholders' equity $13,477 $12,857 - -------------------------------------------------------------------------------------
See accompanying notes to unaudited financial statements. HEI, INC. STATEMENT OF OPERATIONS (UNAUDITED) 4 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) - --------------------------------------------------------------------------------
Three Months Ended Dec. 2, 1995 Nov. 26, 1994 - -------------------------------------------------------------------------------- Net sales $4,710 $5,947 Cost of sales 3,660 4,031 - -------------------------------------------------------------------------------- Gross profit 1,050 1,916 - -------------------------------------------------------------------------------- Operating expenses: Selling, general and administrative 593 638 Research, development and engineering 190 197 - -------------------------------------------------------------------------------- Operating income 267 1,081 - -------------------------------------------------------------------------------- Other, principally interest income (87) (36) - -------------------------------------------------------------------------------- Income before income taxes 354 1,117 - -------------------------------------------------------------------------------- Income taxes 130 407 - -------------------------------------------------------------------------------- Net income $224 $710 - -------------------------------------------------------------------------------- Net income per common share $.06 $.18 - -------------------------------------------------------------------------------- Weighted average number of common and common equivalent shares outstanding 4,004,541 3,879,071 - --------------------------------------------------------------------------------
See accompanying notes to unaudited financial statements. HEI, INC. STATEMENT OF CASH FLOWS (UNAUDITED) 5 (DOLLARS IN THOUSANDS) - --------------------------------------------------------------------------------
Three months ended December 2, 1995 November 26, 1994 - --------------------------------------------------------------------------------- CASH FLOW PROVIDED BY OPERATING ACTIVITIES: Net income $ 224 $710 Depreciation and amortization 190 176 - -------------------------------------------------------------------------------- CHANGES IN CURRENT OPERATING ITEMS: Accounts receivable 125 345 Inventories (248) (239) Prepaid expenses and other 8 (8) Accounts payable 319 78 Accrued liabilities (29) 87 Income taxes payable 91 242 - -------------------------------------------------------------------------------- NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES 680 1,391 - -------------------------------------------------------------------------------- CASH FLOW USED FOR INVESTING ACTIVITIES: Purchase of short-term investments (1,030) (1,951) Maturity of short-term investments 950 326 Additions to property and equipment (172) (58) - -------------------------------------------------------------------------------- NET CASH FLOW USED FOR INVESTING ACTIVITIES (252) (1,683) - -------------------------------------------------------------------------------- CASH FLOW PROVIDED BY (USED FOR) FINANCING ACTIVITIES: Principal payments for obligations under capital leases (12) Issuance of common shares 15 46 - -------------------------------------------------------------------------------- NET CASH FLOW PROVIDED BY FINANCING ACTIVITIES 15 34 - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 443 (258) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,438 1,579 - -------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $1,881 $1,321 - --------------------------------------------------------------------------------
See accompanying notes to unaudited financial statements. 6 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) HEI,INC. - -------------------------------------------------------------------------------- (1) BASIS OF FINANCIAL STATEMENT PRESENTATION The unaudited financial statements have been prepared by the Company, under the rules and regulations of the Securities and Exchange Commission. The accompanying financial statements contain all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of such financial statements. Certain information and disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted under such rules and regulations although the Company believes that the disclosures are adequate to make the information presented not misleading. The year-end balance sheet data were derived from audited financial statements, but do not include all disclosures required by generally accepted accounting principles. These unaudited financial statements should be read in conjunction with the financial statements and notes included in the Company's Annual Report to Shareholders on Form 10-KSB for the year ended August 31, 1995. Interim results of operations for the three month period ended December 2, 1995 may not necessarily be indicative of the results to be expected for the full year. (2) INVENTORIES Inventories are stated at the lower of cost or market and include materials, labor and overhead costs. The first-in, first-out cost method is used in valuing inventories. Inventories consist of the following:
(Dollars in thousands) December 2, 1995 August 31, 1995 ---------------- --------------- (Unaudited) Purchased parts $1,820 $1,670 Work in process 1,091 907 Finished goods 190 233 Allowance for excess or obsolete stock (1,002) (959) ------- ------- $2,099 $1,851 ------- ------- ------- -------
7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS HEI, INC. - -------------------------------------------------------------------------------- FINANCIAL CONDITION - LIQUIDITY AND CAPITAL RESOURCES The Company's net cash flow provided by operating activities was $680,000 for the three months ended December 2, 1995. This included net income of $224,000, non-cash depreciation and amortization of $190,000, and a net reduction of $266,000 in current operating items for the first three months of fiscal 1996. The current operating item reduction included increased accounts payable of $319,000 and decreased accounts receivable of $125,000, partially offset by increased inventories of $248,000. The inventory increase is primarily due to increased work in process toward customer scheduled build requirements. Accounts receivable average days outstanding were 46 days as of December 2, 1995 as compared to 47 days for the same period a year ago. Inventory turns were 6.7 turns for the first three months of fiscal 1996 as compared to 7.6 turns for the same period a year ago. The Company has a $3,000,000 revolving line of credit which expires in March, 1997. Borrowings under this agreement are collateralized by accounts receivable. The agreement requires compliance with certain financial covenants and restricts obtaining other borrowings. Interest on the revolving line of credit is based on the Company's option, at the lender's prime rate of interest or 2% above the lender's LIBOR rate. As of December 2, 1995, there were no borrowings under the revolving line of credit. Capital equipment expenditures for the three months ended December 2, 1995 were $172,000, primarily for production equipment, including a laser profiler for measuring thick film material. During fiscal 1996, the Company intends to expend approximately $4.3 million for a facility addition, manufacturing facility improvements and capital equipment. These additions will increase manufacturing capacity to meet anticipated requirements for continued revenue growth. It is expected that these expenditures will be funded primarily through long-term financing. 8 REVIEW OF OPERATIONS NET SALES 1996 vs. 1995: HEI, Inc's net sales for the three months ended December 2, 1995 decreased 21%, as compared to the same period a year ago. Microelectronic sales decreased 24% from the same three month period last year as a result of reduced shipments in the high density disk drive business. The reduction in disk drive business shipments was partially offset by increased shipments to medical and hearing aid accounts. As previously reported, shipments to a new disk drive account are ramping up as that model enters production volumes. The major new disk drive customer is expected to absorb much of the capacity made available as the previous largest account model phased out in the first quarter. Peripheral product sales increased 12% as compared to last year's comparable three month period. GROSS PROFIT 1996 vs. 1995: For the three months ended December 2, 1995, gross profit decreased $866,000, or 45%, from last year with the gross profit rate decreasing to 22% from 32% last year. The gross profit rate decrease is primarily due to the effect of reduced volumes on manufacturing fixed costs as well as the effect of lower margins on new business as the product mix evolves to a larger percentage of new programs bid under increasing price competition. OPERATING EXPENSES 1996 vs. 1995: Operating expenses for the three month period ended December 2, 1995 decreased 6% from last year's comparable period. The decrease in selling and general and administrative expense for the quarter was due to reduced bad debt expense. Operating expenses were 17% of net sales as compared to 14% for the first quarter of last year. The increase in the percentage to net sales is primarily due to the effect of reduced volumes on fixed costs. INCOME TAXES During each quarter of fiscal 1996, the Company is recording income tax expense based on the expected effective rate for the full year. The expected effective income tax rate for fiscal 1996 is approximately 37%, the same rate as fiscal 1995. Income tax expense for the first quarter of fiscal 1996 was $130,000 as compared to $407,000 for the same period a year ago. NET INCOME 1996 vs. 1995: The Company had net income of $224,000 for the first quarter of fiscal 1996 compared to $710,000 for the same period a year ago. The decrease in net income principally was the result of reduced sales and reduced gross profit margins. 9 PART II - OTHER INFORMATION - -------------------------------------------------------------------------------- ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits Exhibit 27 Financial Data Schedule b) Reports on Form 8-K No Reports on Form 8-K were filed during the quarter ended December 2, 1995. 10 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. HEI, INC. --------- (Registrant) Date: January 8, 1996 /s/ JERALD H. MORTENSON --------------- --------------------------------------------- Jerald H. Mortenson Vice President of Finance and Administration, Chief Financial Officer and Treasurer (a duly authorized officer) EX-27 2 EXHIBIT 27
5 1,000 3-MOS AUG-31-1996 SEP-01-1995 DEC-02-1995 1,881 0 2,400 0 2,099 10,621 7,229 4,373 13,477 1,984 0 0 0 190 11,031 13,477 4,710 4,710 3,660 3,660 696 0 0 354 130 224 0 0 0 224 .06 .06
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