-----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, FdN03SA3iZJxGezXUU3FyCJid12vTHEU8+IIY8E/KSRKlexZsNq31w4/gMzDkCT0 KGkIavJ6JN5O3qhOEyVSpg== 0001047469-98-013703.txt : 19980406 0001047469-98-013703.hdr.sgml : 19980406 ACCESSION NUMBER: 0001047469-98-013703 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980228 FILED AS OF DATE: 19980403 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEI INC CENTRAL INDEX KEY: 0000351298 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 410944876 STATE OF INCORPORATION: MN FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-10078 FILM NUMBER: 98587175 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 pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended February 28, 1998. [ ] Transition report pursuant to 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 in Its Charter)
Minnesota 41-0944876 - --------- ---------- (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) P.O. 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 . --- --- State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: as of April 2, 1998, 4,083,576 shares of common stock, par value $.05. Transitional Small Business Disclosure Format (Check one): Yes No X. --- --- This Form 10-QSB consists of 12 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 . . . . . . . . . . . . . . 6-7 Report of Independent Accountants . . . . . . . . . . . . 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . 9-11 Part II - Other Information Item 4. Submission of Matters to a Vote of Security Holders . 11 Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . 11 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . 12
PART I. FINANCIAL INFORMATION 3 ITEM 1. FINANCIAL STATEMENTS
HEI, INC. BALANCE SHEET (Dollars in thousands, except per share amounts) - ----------------------------------------------------------------------------------------------------- FEBRUARY 28, 1998 August 31, 1997 - ----------------------------------------------------------------------------------------------------- ASSETS (Unaudited) Current assets: Cash and cash equivalents $ 995 $ 3,458 Short-term investments 10,267 9,175 - ----------------------------------------------------------------------------------------------------- 11,262 12,633 Accounts receivable, net 2,639 2,325 Inventories 1,593 1,575 Other, principally deferred tax assets 664 860 - ----------------------------------------------------------------------------------------------------- Total current assets 16,158 17,393 - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- Property and equipment: Land 216 216 Building and improvements 3,880 3,790 Fixtures and equipment 8,533 8,158 Accumulated depreciation (6,243) (5,558) - ----------------------------------------------------------------------------------------------------- Net property and equipment 6,386 6,606 - ----------------------------------------------------------------------------------------------------- Restricted cash 399 389 Long-term investments 1,729 - Deferred financing costs 91 123 - ----------------------------------------------------------------------------------------------------- Total assets $24,763 $24,511 - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $650 $648 Accounts payable 873 728 Accrued liabilities 1,126 1,233 Income taxes payable 316 - ----------------------------------------------------------------------------------------------------- Total current liabilities 2,965 2,609 - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- Long-term debt 4,535 4,537 Deferred tax liability 286 370 - ----------------------------------------------------------------------------------------------------- Shareholders' equity: Undesignated stock; 5,000,000 shares authorized; none issued Common stock, $.05 par; 10,000,000 shares authorized; 4,078,576 and 4,103,176 shares issued and outstanding 204 205 Paid-in capital 7,401 7,518 Retained earnings 9,372 9,272 - ----------------------------------------------------------------------------------------------------- Total shareholders' equity 16,977 16,995 - ----------------------------------------------------------------------------------------------------- Total liabilities and shareholders' equity $24,763 $24,511 - ----------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------
See accompanying notes to unaudited financial statements. 4 HEI, INC. STATEMENT OF OPERATIONS (UNAUDITED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
- ---------------------------------------------------------------------------------------------------------- Three Months Ended Six Months Ended FEB. 28, 1998 Mar. 1, 1997 FEB. 28, 1998 Mar. 1, 1997 - ---------------------------------------------------------------------------------------------------------- Net sales $4,632 $9,197 $8,712 $15,455 Cost of sales 3,640 7,568 7,183 11,443 - ---------------------------------------------------------------------------------------------------------- Gross profit 992 1,629 1,529 4,012 - ---------------------------------------------------------------------------------------------------------- Operating expenses: Selling, general and administrative 644 594 1,279 1,201 Research, development and engineering 211 226 379 439 - ---------------------------------------------------------------------------------------------------------- Operating income (loss) 137 809 (129) 2,372 - ---------------------------------------------------------------------------------------------------------- Other income, principally interest income 166 94 273 151 - ---------------------------------------------------------------------------------------------------------- Income before income taxes 303 903 144 2,523 Income taxes 99 312 44 922 - ---------------------------------------------------------------------------------------------------------- Net income $204 $591 $100 $1,601 - ---------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------- Net income per common share Basic $0.05 $0.14 $0.02 $0.39 Diluted $0.05 $0.14 $0.02 $0.37 - ---------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------- Weighted average common shares outstanding Basic 4,069,909 4,134,702 4,077,492 4,093,026 Diluted 4,194,786 4,368,206 4,175,227 4,320,144 - ---------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited financial statements. 5 HEI, INC. STATEMENT OF CASH FLOWS (UNAUDITED) (DOLLARS IN THOUSANDS)
- ----------------------------------------------------------------------------------------------------- Six Months Ended FEBRUARY 28, 1998 March 1, 1997 - ----------------------------------------------------------------------------------------------------- Cash flow provided by operating activities: Net income $100 $1,601 Depreciation 685 680 Amortization 32 32 Accounts receivable and inventory allowances 50 77 Deferred income tax benefit (119) (17) Changes in current operating items: Accounts receivable (314) (301) Inventories (68) (1,660) Other current assets 103 2 Accounts payable 145 1,929 Accrued liabilities (107) 21 Income taxes payable 316 (307) - ----------------------------------------------------------------------------------------------------- Net cash flow provided by operating activities 823 2,057 - ----------------------------------------------------------------------------------------------------- Cash flow used for investing activities: Purchases of short-term investments (8,197) (4,884) Maturities of short-term investments 7,105 3,140 Additions to property and equipment (465) (1,150) Purchase of long-term investments (1,729) - Proceeds from sales of product lines 128 45 Proceeds from sale of property and equipment - 65 (Increase) Decrease in restricted cash (10) 667 - ----------------------------------------------------------------------------------------------------- Net cash flow used for investing activities (3,168) (2,117) - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- Cash flow provided by financing activities: Issuance of common stock and other 68 720 Tax benefit of nonqualified stock options - 167 Repurchase of common shares (186) - - ----------------------------------------------------------------------------------------------------- Net cash flow (used for) provided by financing activities (118) 887 - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents (2,463) 827 Cash and cash equivalents, beginning of period 3,458 1,186 - ----------------------------------------------------------------------------------------------------- Cash and cash equivalents, end of period $995 $2,013 - ----------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------
See accompanying notes to unaudited financial statements. 6 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) HEI, INC. - -------------------------------------------------------------------------- (1) BASIS OF FINANCIAL STATEMENT PRESENTATION The unaudited interim 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, 1997. Interim results of operations for the three and six month periods ended February 28, 1998 may not necessarily be indicative of the results to be expected for the full year. The Company's quarterly periods end on the last Saturday of each quarter of its fiscal year ending August 31. (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) FEBRUARY 28, 1998 August 31, 1997 ----------------- --------------- (Unaudited) Purchased parts $1,413 $1,557 Work in process 886 556 Finished goods 101 220 Allowance for excess or obsolete stock (807) (758) ----------------- --------------- $1,593 $1,575 ----------------- --------------- ----------------- ---------------
7 (3) NET INCOME PER COMMON SHARE In the second quarter of fiscal 1998, the Company adopted Statement of Financial Accounting Standards No. 128, a new standard of computing and presenting both basic and diluted net income per common share amounts. All prior periods have been restated to conform with the new presentation. However, basic and diluted net income per share amounts are generally consistent with net income per share amounts previously reported. The computation of the basic and diluted per share amounts were as follows:
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Three Months Ended Six Months Ended FEB. 28, 1998 Mar. 1, 1997 FEB. 28, 1998 Mar. 1, 1997 ------------- ------------ ------------- ------------ Net income $ 204 $ 591 $ 100 $ 1,601 Weighted average common shares outstanding Basic (actual shares 4,069,909 4,134,702 4,077,492 4,093,026 outstanding) Effect of dilutive stock 124,877 233,504 97,735 227,118 options ---------- ---------- ---------- ---------- Diluted 4,194,786 4,368,206 4,175,227 4,320,144 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net income per common share Basic $ 0.05 $ 0.14 $ 0.02 $ 0.39 Diluted $ 0.05 $ 0.14 $ 0.02 $ 0.37 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
8 REPORT OF INDEPENDENT ACCOUNTANTS TO THE SHAREHOLDERS OF HEI, INC.: We have reviewed the accompanying balance sheet of HEI, Inc. as of February 28, 1998, and the related statements of operations and cash flows for the three- and six-month periods ended February 28, 1998 and March 1, 1997. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the balance sheet as of August 31, 1997, and the related statements of operations, changes in shareholders' equity and cash flows for the year then ended (not presented herein); and in our report dated September 26, 1997, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying balance sheet as of August 31, 1997, is fairly stated in all material respects in relation to the balance sheet from which it has been derived. /s/ Coopers & Lybrand L.L.P. Coopers & Lybrand L.L.P. Minneapolis, Minnesota March 16, 1998 9 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 $823,000 for the six months ended February 28, 1998. This primarily included net income of $100,000, non-cash depreciation and amortization of $717,000, and a net reduction of $74,000 in working capital investments during the first six months of fiscal 1998. The lower working capital investment resulted from increased income taxes payable of $316,000 and other working capital changes which more than offset increased accounts receivable of $314,000 and increased inventories of $68,000. The inventory increase is primarily due to increased work in process reflecting increased build schedules. Accounts receivable average days outstanding were 34 days as of February 28, 1998 compared to 36 days for the same period a year ago. Annualized inventory turns were 9.1 for the second quarter of fiscal 1998 compared to 11.1 turns for the same period a year ago. In April 1996, the Company received proceeds of $5,625,000 from the issuance of Industrial Development Revenue Bonds. Of these funds, approximately $1,500,000 has been used for the construction of the new addition to the Company's manufacturing facility and approximately $3,864,000 has been used for equipment purchases. The bonds related to the facility expansion require annual principal payments of $90,000 in the first year and $95,000 on April 1 of each year thereafter through 2011. The bonds related to the purchased equipment require payments over seven years from the date of purchase of the equipment through no later than April 1, 2006. In April 1997, the Company repaid $440,000 of the construction and equipment bonds and in April 1998, another $650,000 will be repaid. The bonds bear interest at a rate which varies weekly, based on comparable tax exempt issues, and is limited to a maximum rate of 10%. The interest rate at February 28, 1998 and August 31, 1997 was 3.80% and 3.75%, respectively. The bonds are collateralized by two irrevocable letters of credit and essentially all property and equipment. The letter of credit reimbursement agreement, as amended on November 27, 1997, contains certain restrictive covenants including limitations on other borrowings and maintenance of specified financial levels and ratios for net income, tangible net worth, debt to tangible net worth, cash flow and indebtedness. Restricted cash on the balance sheet represents cash advanced under the bonds which is held by the bond trustee in an interest bearing account and will be released to the Company over the next two years for equipment purchases. To the extent such funds are not expended, they will revert back to the bond holders. The Company has a $3,000,000 revolving line of credit which expires in April 1998 and is expected to be renewed at that time. As of February 28, 1998, there were no borrowings under the amended revolving line of credit. Any borrowings under this agreement are subject to the extent of and collateralized by the Company's accounts receivable. The agreement requires compliance with certain financial covenants and restricts obtaining other borrowings. Interest on the revolving line of credit is, based at the Company's option, on the lender's prime rate of interest or 2% above the lender's LIBOR rate. Capital equipment expenditures for the six months ended February 28, 1998 were $465,000, primarily for production equipment. During fiscal 1998, the Company intends to expend approximately $1.2 million for capital equipment to increase manufacturing capacity to meet anticipated requirements for continued revenue growth in non disk drive hybrid circuits. It is expected that these expenditures will be funded primarily from internally generated funds and the remaining funds available from the Industrial Development Revenue Bonds discussed above. 10 REVIEW OF OPERATIONS NET SALES 1998 VS. 1997: HEI, Inc.'s net sales for the three and six month periods ended February 28, 1998 decreased 50% and 44%, respectively, compared to the same periods a year ago reflecting the phase out during the last quarter of fiscal 1997 of volume production of a device for use in high density disk drives. In the previous fiscal year, this disk drive program accounted for 55% of total sales. However, for the current six month period, sales for the Company's other market areas (hearing and medical instruments, telecommunications and industrial applications) have collectively increased 42% compared to sales of such markets for the last six months of last year. Because the Company's sales are generally tied to the customers' projected sales and production of the related product, the Company's sales levels are subject to fluctuations outside the Company's control. To the extent that sales to any one customer represent a significant portion of the Company's sales, any change in the level of sales to that customer can have a significant impact on the Company's total sales. In addition, production for one customer may conclude while production for a new customer has not yet begun or is not yet at full volume. These factors may result in significant fluctuations in sales from quarter to quarter. GROSS PROFIT 1998 VS. 1997: For the three month and six month periods ended February 28, 1998, gross profit decreased $637,000 and $2,483,000, respectively, from the same periods last year. The gross profit rate for the six months ended February 28, 1998 decreased to 18% from 26% last year which primarily reflects the impact of a higher number of products built using customer supplied material early in fiscal 1997. The gross profit rate for the second quarter of fiscal 1998 improved to 21% from 18% for the comparable period last year primarily (about 2 margin percentage points) as a result of a non-recurring recovery for previously scrapped disk drive materials of $126,000 this fiscal year and, to a lesser extent, due to volume pricing with lower gross margin rates for sales on a high density disk drive program last fiscal year. OPERATING EXPENSES 1998 VS. 1997: Operating expenses for the three and six month periods ended February 28, 1998 increased 4% and 1%, respectively, from last year's comparable periods. Operating expenses for the three and six month periods were 18% and 19% of net sales, respectively, compared to 9% and 11% of net sales for the three and six month periods of last year primarily due to the effect of lower sales on fixed costs. INCOME TAXES 1998 VS. 1997: The Company records income tax expense for interim periods based on the expected effective rate for the full year. The expected effective income tax rate for fiscal 1998 is approximately 31% compared to the full year fiscal 1997 effective rate of 36%. Income tax expense was $99,000 and $44,000 for the three and six month periods ended February 28, 1998 compared to $312,000 and $922,000 for the same periods a year ago. The expected lower effective income tax rate this fiscal year is due to tax-exempt municipal bond interest and the reduction of the Company's accrual for prior year taxes. NET INCOME 1998 VS. 1997: The Company had net income of $204,000 and $100,000 for the three and six month periods ended February 28, 1998 compared to $591,000 and $1,601,000 for the same periods a year ago. The decrease in net income was principally the result of decreased sales along with lower gross profit rates for the first quarter of this fiscal year. 11 FORWARD-LOOKING STATEMENTS INFORMATION IN THIS DOCUMENT WHICH IS NOT HISTORICAL INCLUDES FORWARD-LOOKING STATEMENTS MADE PURSUANT TO THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. THESE STATEMENTS ARE MADE BASED ON THE COMPANY'S CURRENT ASSUMPTIONS REGARDING TECHNOLOGY, MARKETS, GROWTH AND EARNINGS EXPECTATIONS, AND ALL OF SUCH FORWARD-LOOKING STATEMENTS INVOLVE A NUMBER OF RISKS AND UNCERTAINTIES. THERE ARE CERTAIN IMPORTANT FACTORS THAT CAN CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE FORWARD-LOOKING STATEMENTS, INCLUDING WITHOUT LIMITATION, ADVERSE BUSINESS OR MARKET CONDITIONS; THE ABILITY OF THE COMPANY TO SECURE AND SATISFY CUSTOMERS, THE AVAILABILITY AND COST OF MATERIALS FROM HEI'S SUPPLIERS, ADVERSE COMPETITIVE DEVELOPMENTS AND CHANGE IN OR CANCELLATION OF CUSTOMER REQUIREMENTS. FOR FURTHER DISCUSSION OF FACTORS THAT MAY INFLUENCE THE COMPANY'S OPERATING RESULTS, PLEASE REFER TO THE COMPANY'S REPORT ON FORM 10-KSB FOR THE YEAR ENDED AUGUST 31, 1997, AND OTHER COMPANY FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON FORWARD-LOOKING STATEMENTS. HEI UNDERTAKES NO OBLIGATION TO UPDATE THESE STATEMENTS TO REFLECT ENSUING EVENTS OR CIRCUMSTANCES, OR SUBSEQUENT ACTUAL RESULTS. PART II - OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS a) The Company held its Annual Meeting of Shareholders on January 21, 1998. b) The following matters were considered: 1. Election of four Directors, each to serve a one year term. The vote was as follows for each of the nominees.
Name Affirmative Authority Withheld ---- ----------- ------------------ Robert L. Brueck 3,633,966 62,552 Eugene W. Courtney 3,636,306 60,212 William R. Franta 3,634,766 61,752 Frederick M. Zimmerman 3,634,696 61,822
2. An amendment to increase the number of shares in the Omnibus Stock Compensation Plan by 800,000. Voting on approval of the amendment was as follows: 1,250,927 shares in favor, 327,745 opposed, 26,893 abstentions, and 2,090,953 broker nonvotes. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits Exhibit 15-Letter Regarding Unaudited Interim Information Exhibit 27-Financial Data Schedule b) Reports on Form 8-K No reports on Form 8-K were filed during the three months ended February 28, 1998. 12 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: 04/02/98 /s/ Jerald H. Mortenson ---------------- ----------------------------------- Jerald H. Mortenson Vice President of Finance and Administration, Chief Financial Officer and Treasurer (a duly authorized officer) EX-15 2 EXHIBIT 15 Exhibit 15 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 We are aware that our report dated March 16, 1998 on our reviews of interim financial information of HEI, Inc. (the Company) for the three- and six-month periods ended February 28, 1998 and March 1, 1997, and included in the Company's Form 10-QSB for the quarter ended February 28, 1998, is incorporated by reference in the Company's registration statements on Form S-8 (Registration Nos. 33-33322, 33-46928 and 33-46929). Pursuant to Rule 436 (c), under the Securities Act of 1993, this report should not be considered a part of the registration statements prepared or certified by us within the meaning of Sections 7 and 11 of that Act. /s/ Coopers & Lybrand L.L.P. Coopers & Lybrand L.L.P. Minneapolis, Minnesota March 31, 1998 EX-27 3 EXHIBIT 27
5 1,000 6-MOS AUG-31-1998 SEP-01-1997 FEB-28-1998 995 0 2,639 0 1,593 16,158 12,629 6,243 24,763 2,965 4,535 0 0 204 16,773 24,763 8,712 8,712 7,183 7,183 1,280 0 105 144 44 100 0 0 0 100 .02 .02
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