8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported)            October 20, 2006           

HEI, Inc.

(Exact name of registrant as specified in its charter)

Minnesota	0-10078		41-0944876
(State or other jurisdiction of incorporation)	(Commission File Number)		(IRS Employer Identification No.)
PO Box 5000, 1495 Steiger Lake Lane, Victoria, Minnesota			55386
(Address of principal executive offices)			(Zip Code)
(Registrant’s telephone number, including area code)		(952) 443-2500
Not Applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Item 1.01 Entry into a Material Definitive Agreement.
	Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.
	Item 9.01 Financial Statements and Exhibits.
SIGNATURES
EXHIBIT INDEX
Press Release

Item 1.01 Entry into a Material Definitive Agreement.

     On October 20, 2006, HEI, Inc. (the “Company”) and its former Chief Executive Officer and President entered into a Severance and Release Agreement described in more detail in Item 5.02(b) below, which description is incorporated herein by reference.

Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

     (b) Mr. Mack V. Traynor III resigned as the Company’s Chief Executive Officer and President and as a member of the Company’s Board of Directors on October 20, 2006. Mr. Traynor’s action did not involve a disagreement with the Company on any matter relating to the Company’s operations, policies or practices or any financial or accounting matter. A Severance and Release Agreement was entered into in connection with the resignation pursuant to which, among other things, Mr. Traynor will be paid $145,000 upon the expiration of applicable statutory waiting periods.

     (c) Effective October 20, 2006, the Company appointed Mark B. Thomas as its Chief Executive Officer. Following the appointment, Mr. Thomas will act as the Company’s Chief Executive Officer and Chief Financial Officer. Mr. Thomas will be employed on a full time, at will basis at a salary for both positions equal to $18,750 per month ($225,000 on an annual basis). Mr. Thomas will also be eligible for an incentive bonus based on the performance of the Company over the next fiscal year in an amount determined by the Board of Directors, in its sole discretion. The Board of Directors will determine whether such a bonus is appropriate and the target amount of the bonus payment is twenty (20%) percent of employee’s base salary.

     Mr. Thomas (44) has served as the Chief Financial Officer of the Company since July 12, 2006. Mr. Thomas is the President of Mark Thomas Enterprises, LLC, a Minneapolis-based consulting firm founded in 2004, which focuses on turnaround and financial management for both publicly-traded and privately-held companies. From 1992 through 2004, Mr. Thomas was President, CEO, CFO and a director of Ballistic Recovery Systems, Inc., (OTCBB: BRSI), a provider of whole-aircraft emergency parachute systems to the general aviation and recreational aviation markets. Mr. Thomas is a certified public accountant and holds a bachelor’s degree in accounting from Moorhead State University.

     The Board of Directors of the Company has no present plans with respect to filling the vacancy on the Board of Directors.

     A copy of the press release announcing the above changes is attached as Exhibit 99.1 to this Current Report on Form 8-K.

Item 9.01 Financial Statements and Exhibits.

     (d) Exhibits.

[The following Exhibits are filed as a part of this Report / The following Exhibits shall be deemed furnished and not filed as a part of this Report:]

Exhibit No.	Description of Exhibit
99.1	Press Release dated October 20, 2006, announcing the resignation of Mr. Traynor and the appointment of Mr. Thomas.

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	HEI, INC.
Date: October 24, 2006
	By /s/ Mark B. Thomas
	Mark B. Thomas
	Its: Chief Executive Officer and Chief Financial Officer

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EXHIBIT INDEX

99.1 Press Release dated October 20, 2006, announcing the resignation of Mr. Traynor and the appointment of Mr. Thomas.

EX-99.1

Exhibit 99.1

NEWS RELEASE

1495 Steiger Lake Lane
Victoria, Minnesota 55386
952-443-2500

CONTACTS:                                                                                                   For Immediate Release
           Mark Thomas, CEO/CFO

HEI Inc. Names Mark B. Thomas as CEO
Additional Management and Board Changes Announced

MINNEAPOLIS, October 20, 2006 / PR Newswire — First Call / — HEI, Inc. (Nasdaq: HEII) (http://www.heii.com ) announced today that Mark Thomas, the Company’s current Chief Financial Officer, has been named Chief Executive Officer. Mr. Thomas will remain as the Company’s Chief Financial Officer. He succeeds Mack V. Traynor III who informed the Board of his desire to resign as a Board Member and Chief Executive Officer. The changes are effective immediately.

     Mr. Thomas (44) has served as the Chief Financial Officer of HEI, Inc. since July 12, 2006. Mr. Thomas is the President of Mark Thomas Enterprises, LLC, a Minneapolis-based consulting firm founded in 2004 which focuses on turnaround and financial management for both publicly-traded and privately-held companies. From 1992 through 2004, Mr. Thomas was President, CEO, CFO and a director of Ballistic Recovery Systems, Inc., a provider of whole-aircraft emergency parachute systems to the general aviation and recreational aviation markets. Mr. Thomas is a certified public accountant and holds a bachelor’s degree in accounting from Moorhead State University.

     The Board has no present plans with respect to filling the vacancy in the Board of Directors.

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. Such statements in this press release include statements regarding the implementation of business strategies, growth of specific markets, potential sales and revenue figures and operational expectations. 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, collection of outstanding debt and receivables, 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.