-----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, ShrVOYgQ7ySUkAFHGVzn41mQ6Uk0Kr+r68dk+5FbNUCYROYWigJxmQ1uPYETeZOQ WtXmaxNTOUkz7dKQ45XxNQ== 0001047469-98-026164.txt : 19980702 0001047469-98-026164.hdr.sgml : 19980702 ACCESSION NUMBER: 0001047469-98-026164 CONFORMED SUBMISSION TYPE: DEFA14A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19980701 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: DEFA14A SEC ACT: SEC FILE NUMBER: 000-10078 FILM NUMBER: 98659253 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 DEFA14A 1 DEF14A SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant /X/ Filed by a party other than the Registrant / / Check the appropriate box: / / Preliminary Proxy Statement / / Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) / / Definitive Proxy Statement /X/ Definitive Additional Materials / / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 HEI, INC. - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): /X/ No fee required / / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11 (1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------------ (2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------ (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): ------------------------------------------------------------------------ (4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------------ (5) Total fee paid: ------------------------------------------------------------------------ / / Fee paid previously with preliminary materials. / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ------------------------------------------------------------------------ (2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------------ (3) Filing Party: ------------------------------------------------------------------------ (4) Date Filed: ------------------------------------------------------------------------ [LOGO] July 1, 1998 Dear Fellow Shareholder: You should have recently received our most recent earnings report. Please review it carefully, particularly in light of the important issues on the agenda at the August 4 Special Shareholders Meeting. We believe the very positive results for the quarter demonstrate HEI's growth potential in its current markets and we are confident that you will support the efforts of your Board to increase shareholder value by signing, dating and returning the enclosed WHITE proxy card in the postage paid envelope provided with a vote AGAINST PROPOSALS 1 AND 3 AND FOR PROPOSAL 2. The third quarter earnings report demonstrates that our strategy of diversifying into the hearing and medical instrumentation and telecommunications markets is showing results. As you will recall, we decided to exit the high-density disk drive market after our largest customer moved its manufacturing operations to its own offshore facilities. While the current competitive environment is not favorable to continuation of that line of business, keep in mind that our disk drive programs provided HEI with valuable experience and enhanced capabilities and helped build our current strong platform for growth through its significant contributions to our profits and cash. WE BELIEVE OUR NEW MARKETS HAVE THE POTENTIAL FOR SUBSTANTIAL EXPANSION AND WE HAVE BEEN VERY SUCCESSFUL SO FAR IN PURSUING THAT STRATEGY. CONSIDER THE FOLLOWING CHART THAT SHOWS OUR REVENUES, NONE OF WHICH COME FROM THE DISK DRIVE MARKET, STEADILY INCREASING THROUGH THE FIRST THREE QUARTERS OF OUR 1998 FISCAL YEAR: EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
HEI REVENUE BY QUARTER FY1998 YTD $ Millions REVENUE Qtr 1 4.1 Qtr 2 4.6 Qtr 3 6.0
Of course, our strategy is not yet complete. Your Board and management are continuing their efforts to improve operating results and to otherwise increase shareholder value. As we previously wrote you, our financial adviser, Piper Jaffray Inc., is currently exploring alternatives to maximize the value of all shareholders' shares. JUST SAY NO TO FANT'S COSTLY, OPPORTUNISTIC EFFORTS TO SEIZE CONTROL OF YOUR COMPANY AND, TO ADD INSULT TO INJURY, HAVE YOU, THE SHAREHOLDERS, PAY HIS EXPENSES We are committed to increasing shareholder value and continue to pursue that goal aggressively, despite the disruption and expense caused by Anthony Fant's opportunistic efforts and abusive tactics to seize control of your company. HEI incurred $274,000, or 4 CENTS per share, in expenses in the third quarter to respond to Fant's tender offer and proxy contest. We would not have incurred those expenses if Mr. Fant had not made his coercive partial tender offer, and then sought to remove your current independent directors and replace them with his hand-picked nominees. Among those expenses were the costs of defending the Company in what we believe is a meritless lawsuit that Mr. Fant brought against us in Alabama, a forum that we believe was deliberately picked by Fant to inconvenience your management. TO ADD INSULT TO INJURY, FANT HAS ALSO DECLARED THAT IF HE DOES SEIZE CONTROL AT THE SPECIAL MEETING, HE INTENDS TO HAVE HEI PAY HIS PROXY SOLICITATION EXPENSES, WHICH HE ESTIMATES WILL BE OVER $500,000. HE HAS STATED THAT, IF ELECTED, THOSE EXPENSES WOULD BE PAID BY HEI TO THE EXTENT PERMITTED BY LAW, WITHOUT THE APPROVAL OF HEI SHAREHOLDERS. WITHOUT THE FANT-RELATED EXPENSES, OUR EARNINGS FOR THE THIRD QUARTER WOULD HAVE BEEN 12 CENTS PER SHARE, RATHER THAN 8 CENTS. That amount, if retained in a small company like HEI, could have made a substantial contribution to building long-term shareholder value. The $274,000 spent last quarter in defense of the Fant takeover could have paid the salaries of five experienced design engineers for a full year, or could have paid for our new, state-of-the-art Laser Trimmer, or for all the utilities for our 49,000 square foot factory for nearly two years. JUST SAY NO TO FANT'S MISLEADING, OUT-OF-CONTEXT AND OUT-OF-CONTROL STATISTICS AND ASSERTIONS Mr. Fant's efforts to seize control of HEI have included misleading representations of the Company's results over the last several years. Do not be misled by his efforts to win control of your company through these distortions. Consider, instead, the facts: EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
HEI ANNUAL REVENUE FISCAL YEAR 1990-1997 $ Millions REVENUE 1990 8.5 1991 9.0 1992 14.1 1993 18.9 1994 17.3 1995 23.4 1996 20.7 1997 31.0
- - 20% ANNUAL COMPOUND REVENUE GROWTH FY 1990 TO FY1997 - - FOR THE NINE MONTHS ENDED MAY 30, 1998, REVENUES WERE $14.7 MILLION. - - AGGRESSIVE GROWTH STRATEGIES IN THE MEDICAL AND COMMUNICATIONS MARKETS RESULTED IN A 53% REVENUE GROWTH IN THESE MARKETS FOR THE FIRST NINE MONTHS OF FY 1998 COMPARED TO FY1997. EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
HEI ANNUAL PROFIT BEFORE TAX FISCAL YEAR 1990-1997 $ Millions NPBT % Return on Revenue 1990 -0.8 -9.7 1991 0.1 0.6 1992 2.0 14.2 1993 4.0 21.2 1994 2.1 12.2 1995 3.3 13.9 1996 2.8 13.7 1997 4.0 12.9
- - ANNUAL PRETAX PROFITS HAVE EXCEEDED 12% TO 13% OF REVENUE, FY 1992 THROUGH FY1997. - - FOR THE NINE MONTHS ENDED MAY 30, 1998, PROFIT BEFORE TAX WAS $647,000 AND RETURN ON REVENUE WAS 4.3%. EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
HEI YEAR END CASH AND INVESTMENTS FISCAL YEAR 1990-1997 $ Millions CASH/INV. 1990 0.0 1991 0.2 1992 0.9 1993 2.0 1994 2.3 1995 5.3 1996 6.7 1997 12.6
- - ZERO TO $13 MILLION IN SEVEN YEARS. - - STRONG FINANCIAL PLATFORM FOR GROWTH AND DIVERSIFICATION. - - AS OF MAY 30, 1998, CASH AND INVESTMENTS WERE $13.4 MILLION. EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
HEI YEAR END SHAREHOLDER EQUITY FISCAL YEAR 1990-1997 $ Millions EQUITY Book Value Per Share 1990 1.1 0.77 1991 1.6 0.56 1992 3.6 1.14 1993 6.8 1.86 1994 8.7 2.35 1995 11.0 2.90 1996 13.8 3.43 1997 17.0 4.14
- - SHAREHOLDER EQUITY: $1.1 MILLION (FY 1990) TO $17 MILLION (FY1997) - - RETAINED EARNINGS: NEGATIVE $3.1 MILLION (FY1990) TO POSITIVE $9.3 MILLION (FY1997) - - BOOK VALUE PER SHARE INCREASED FROM $0.77 (FY1990) TO $4.14 (FY1997) - - AS OF MAY 30, 1998, SHAREHOLDER EQUITY WAS $17.5 MILLION AND BOOK VALUE PER SHARE WAS $4.29. Do not be misled by Fant's outrageous assertions, misleading graphs and out-of-context statistics. The facts are that annual pre-tax earnings ranged from $100,000 in fiscal 1991 to $4,000,000 in fiscal 1993 and fiscal 1997, and subsequent to 1991, were never less than $2,000,000. Fant continues to use and abuse the one loss quarter that HEI has had during the last 29 quarters in his desperate efforts to establish a lack of growth. In his recent newspaper ads, it appears that he simply took our $4,000,000 pre-tax earnings in fiscal 1993, subtracted the earnings from the first six months of 1998, and divided by five to suggest a continuing and substantial decline in average annual earnings over the past five years. IS SOMEONE WHO PLAYS THESE KINDS OF STATISTICAL GAMES SOMEONE YOU WANT TO CONTROL YOUR COMPANY? The future of HEI is bright. Your current management team is committed to increasing shareholder value and is pursuing a diversification strategy that is producing results and is expected to accelerate in the future. Current management and the Board have many decades of pertinent experience in the high technology industry that HEI serves. Do not jeopardize the future value of your investment in HEI by turning over control to Fant and his hand-picked nominees who have no experience in HEI's business or markets. Fant's platitudes and buzzwords are no substitute for hard-earned knowledge and experience in the microelectronics business. PLEASE SIGN, DATE AND RETURN THE ENCLOSED WHITE PROXY CARD IN THE POSTAGE PAID ENVELOPE PROVIDED WITH A VOTE AGAINST FANT'S PROPOSALS 1 AND 3. PLEASE SHOW YOUR SUPPORT FOR YOUR BOARD'S EFFORTS TO MAXIMIZE VALUE FOR ALL THE SHAREHOLDERS' SHARES BY VOTING FOR THE ELECTION OF THE CURRENT DIRECTORS (PROPOSAL 2). EVEN IF YOU HAVE ALREADY VOTED FOR FANT, YOU HAVE EVERY RIGHT TO CHANGE YOUR MIND. REMEMBER, ONLY YOUR LATEST DATED, SIGNED PROXY CARD COUNTS. Thank you for your support. HEI, Inc. Board of Directors IF YOUR SHARES ARE HELD IN THE NAME OF A BANK OR BROKER, ONLY THAT ORGANIZATION CAN VOTE YOUR SHARES. PLEASE DIRECT THE PERSON RESPONSIBLE FOR YOUR ACCOUNT TO EXECUTE ON YOUR BEHALF A WHITE PROXY CARD WITH A VOTE AGAINST PROPOSALS 1 AND 3 AND FOR PROPOSAL 2. IF YOU HAVE ANY QUESTIONS OR REQUIRE ANY ASSISTANCE, PLEASE CONTACT OUR PROXY SOLICITOR: INNISFREE M&A INCORPORATED TOLL FREE--1-888-750-5834 501 MADISON AVENUE 20TH FLOOR NEW YORK, NY 10022 -----END PRIVACY-ENHANCED MESSAGE-----