-----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, NM2+GEoCzdkKgBruUV/luuibR3vJrcG0g0hLa/2M9YrSf0LQPPx/7W8iefJp60uK h6hHmH3v0EQHTeVIfoYQXA== 0001047469-98-017679.txt : 19980504 0001047469-98-017679.hdr.sgml : 19980504 ACCESSION NUMBER: 0001047469-98-017679 CONFORMED SUBMISSION TYPE: SC 14D9/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19980501 SROS: NASD SUBJECT COMPANY: 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: SC 14D9/A SEC ACT: SEC FILE NUMBER: 005-33908 FILM NUMBER: 98608162 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 FILED BY: 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: SC 14D9/A 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 SC 14D9/A 1 14D9/A - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ SCHEDULE 14D-9 SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 2) ------------------------ HEI, INC. (Name of Subject Company) ------------------------ HEI, INC. (Name of Person Filing Statement) ------------------------ COMMON STOCK, PAR VALUE $.05 PER SHARE (INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS) (Title of Class of Securities) ------------------------ 404160103 (CUSIP Number of Class of Securities) ------------------------ EUGENE W. COURTNEY PRESIDENT AND CHIEF EXECUTIVE OFFICER HEI, INC. P.O. BOX 5000 1495 STEIGER LAKE LANE VICTORIA, MINNESOTA 55386 (612) 443-2500 (Name, Address and Telephone Number of Person Authorized to Receive Notice and Communications on Behalf of the Person Filing Statement) ------------------------ COPIES TO: DEANNE M. GRECO Moss & Barnett, A Professional Association 4800 Norwest Center 90 South Seventh Street Minneapolis, Minnesota 55402-4129 (612) 347-0287 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- HEI, Inc. hereby amends and supplements its Solicitation/Recommendation Statement on Schedule 14D-9 filed with the Securities and Exchange Commission on March 20, 1998 in response to the Tender Offer Statement on Schedule 14D-1 filed by Fant Industries Inc., as set forth below. ITEM 9. MATERIAL TO BE FILED AS EXHIBITS Item 9 is hereby amended to add the following: Exhibit 5 Letter to Shareholders dated April 30, 1998, including enclosures. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. HEI, INC. By /s/ EUGENE W. COURTNEY ----------------------------------------- Eugene W. Courtney, PRESIDENT AND CHIEF EXECUTIVE OFFICER
Dated: May 1, 1998 2 EX-5 2 EXHIBIT 5 LETTER TO SHAREHOLDERS EXHIBIT 5 [LOGO] AN IMPORTANT MESSAGE CONCERNING YOUR INVESTMENT IN HEI, INC. DO NOT BE STAMPEDED BY ANTHONY FANT'S ATTEMPTS TO SEIZE CONTROL OF YOUR COMPANY! DO NOT RETURN ANY GREEN PROXY CARDS-- MR. FANT HAS NOT BOTHERED TO REQUEST A SHAREHOLDERS MEETING SO THERE IS NO REASON TO ACT NOW, AND EVERY REASON TO WAIT! April 30, 1998 Dear Shareholder: Over the past two months you may have received several communications from Anthony J. Fant or his representatives concerning his proposal to seize control of your company and its assets, including a proxy statement and green proxy card seeking your vote for a shareholders meeting he has not bothered to request. SINCE NO SHAREHOLDERS MEETING HAS BEEN REQUESTED, AS PROVIDED UNDER MINNESOTA LAW AND YOUR COMPANY'S BYLAWS, AND CONSEQUENTLY NO MEETING HAS BEEN CALLED, THERE IS NO NEED TO RETURN ANY GREEN PROXY CARDS NOW. Your Board believes that Mr. Fant is trying to stampede the shareholders into demonstrating support for him without providing the opportunity to carefully consider the issues and management's positions in the context of a duly called shareholders meeting. If Mr. Fant makes a valid request for a shareholders meeting, as provided under Minnesota law and your company's bylaws, your Board will schedule such a meeting under a timetable that allows for a full, fair and adequate discussion of these issues, which involve the future of ALL THE SHAREHOLDERS' investments in HEI. In connection with such a meeting, your Board will send you a detailed proxy statement containing our position concerning Mr. Fant, his proposals and his efforts to seize control of your company while only paying for less than 30% of the stock. Until such time, you should not return any green proxies for Mr. Fant's phantom meeting. IN THE MEANTIME, PLEASE REVIEW THE ENCLOSED FINANCIAL SUMMARY. The summary shows the progress the current management team has made in transforming HEI from an unprofitable operation in desperate financial straits in 1990 to a vibrant, profitable, focused business with greatly enhanced capabilities and financial strength. To take just two examples, over that period shareholders equity has grown from $1 million to $17 million and our mainstream business, custom microelectronics, has grown from about $3 million a year to $30 million in fiscal 1997. YOU SHOULD ALSO CONSIDER MR. FANT AND HIS TACTICS. He has launched what your Board believes is a coercive attempt to gain control of HEI, while paying for less than 30% of the stock. While your Board has tried to learn more about him and his qualifications, Mr. Fant has provided no meaningful data beyond the limited information in his proxy statement. It appears, however, that neither he nor any of his hand-picked slate of director nominees has any experience in HEI's business--the design and manufacture of microelectronic products. Yet, he wants to seize control over the future of the more than 70% of the company's stock he does not intend to buy. DO NOT BE STAMPEDED BY MR. FANT. These important issues, which affect the future value of your investment, should be decided in the proper forum, a duly called shareholders meeting for which there is adequate time for the shareholders to consider all sides. DO NOT BE MISLED BY MR. FANT. Your Board is committed to the best long-term interests of ALL the shareholders. There is no need to take any action at this time. Do not return any green proxy cards. Thank you for your past and continuing support of our efforts at HEI. Despite the distractions caused by Mr. Fant, we are continuing our efforts to increase shareholder value by growing revenues and net income. As part of those efforts, we have appointed Don Reynolds as our new President and enclose a letter from Gene Courtney concerning that appointment. If you have any questions or need assistance, please call Jerald Mortenson or Gene Courtney at HEI (612) 443-2500. Sincerely, HEI Inc. Board of Directors Robert L. Brueck Eugene W. Courtney William R. Franta Frederick M. Zimmerman The following information is provided pursuant to Section 14(a) of the Securities Exchange Act of 1934, as amended, and Rule 14a-11(b)(2) thereto. Participants in the solicitation are HEI, directors of HEI and certain senior management. Their beneficial ownership interests in HEI Common Stock are as follows: Robert L. Brueck, director, 32,000 shares, including 30,000 shares subject to options exercisable within 60 days; Eugene W. Courtney, Chief Executive Officer and director, 160,547 shares, including 75,000 shares subject to options exercisable within 60 days; William R. Franta, director, 45,211 shares, including 40,000 shares subject to options exercisable within 60 days; Jerald H. Mortenson, Vice President of Finance and Administration, 99,179 shares, including 30,000 shares subject to options exercisable within 60 days; Donald R. Reynolds, President, no shares; and Frederick M. Zimmerman, director, 30,900 shares, including 30,000 shares subject to options exercisable within 60 days. 2 Box 5000 1495 Steiger Lake Lane Victoria, MN 55386 (612) 443-2500 Fax (612) 443-2668 [LOGO] April 30, 1998 To Our Shareholders: Given the fast pace to life today, you may have missed some important recent news that means a great deal to the future of our company. I just want to take a few moments to reiterate how pleased I am with the recent announcement of our new President, Don Reynolds. Your board began a strategic planning process well over a year ago, a portion of which was directed at defining HEI's management needs for future growth. As one result, we employed an executive search firm last September to identify a top-level executive to enhance our already solid management team. The board and I felt we needed an individual with the right blend of high tech industry knowledge, innovation, leadership and personal integrity. We looked for someone who was not only technically sound, but with the management style capable of helping lead HEI to even more rapid growth, sound business innovation and diversification--building on the strong financial and technology platform we've put in place over the past eight years.* Don is that person. Don's initial responsibilities--guiding our new business development and strategic planning efforts-- will take full advantage of his professional experience and allow him to focus on growth and new market development, thereby achieving the maximum impact in the shortest possible time. Don's addition is a key step for the HEI team as we chart our course to maximize shareholder value. Don came to HEI just about a month ago, accepting the interim position of Executive Vice President, pending his appointment as President. He joins us after a distinguished 17 year career with BF Goodrich, Rosemount Aerospace where he held ever increasing responsibilities for groups such as marketing and sales, key account management, strategic business development, engineering and finance. Under his direction, Don's business unit enjoyed a yearly 25 percent revenue and income growth rate and won 80 percent of targeted new business pursuits. Personally, I am particularly pleased that Don was born, raised, and educated right here in Minnesota. I have long felt that a significant factor in HEI's success is the strong sense of loyalty and work ethic that is so much a part of this region. Don understands that kind of commitment and the key role it can play in producing solid long-term performance. In closing, I want to underscore our use of the word SHAREHOLDER. Some companies substitute the word stockholder, others use the term investor. We prefer shareholder because that is exactly how we view those who join with us in our future growth strategy. We are confident that we have the people, the plans and the opportunity to continue the positive story that is HEI. We look forward to your continued partnership in our profitable and rewarding future. As always, please feel free to contact me with questions or comments. Sincerely, /s/ Eugene W. Courtney Eugene W. Courtney CHIEF EXECUTIVE OFFICER * I've enclosed a summary fact sheet for your information. [LOGO] COMPANY BACKGROUND HEI, Inc. is a Minnesota-based company specializing in the design and manufacture of custom ultraminiature microelectronic devices, and high-technology products that incorporate those devices. HEI provides design and manufacturing services to meet the outsourcing needs and solve the size- and cost-reduction challenges of its customers in the medical, computer, industrial instrumentation and telecommunications industries. HEI's diverse capabilities include placement of bare semiconductor die and other miniature components on ceramic, laminate and flexible substrates or combinations thereof, using state-of-the-art interconnect techniques. In response to today's demand forever smaller and more complex electronic devices, HEI has enjoyed significant success in the hearing and medical instrument markets and in building devices for computer peripherals. HEI also has a growing presence in telecommunications applications for its technology. HEI is on solid financial ground with cash reserves available for future expansion and investment. The company continues to attract new business through its market position, unique design expertise, process capabilities and world-class manufacturing facility. HEI operates a 49,000 square foot facility in Victoria, Minnesota. The facility is ISO 9001 registered and contains certified clean rooms, the latest in high precision processing equipment and flexible continuous flow high volume manufacturing capabilities. The company's stock trades on the NASDAQ National Market under the symbol HEII. Its web site is www.heii.com. COMPANY FACTS (APRIL, 1998) Founded 1968 IPO 1981 Fiscal Year End August 31 FY 1997 Revenue $30,962,000* FY 1997 Net Income $2,550,000* Revenue-- Qtr. Ending 2/28/98 $4,632,000 Six Months $8,712,000 Net Income-- Qtr. Ending 2/28/98 $204,000 Six Months $100,000 1495 Steiger Lake Lane PO Box 5000 Victoria, MN 55386 (612) 443-2500 Headquarters
* Represents all-time company record [LOGO] FINANCIAL SUMMARY EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
HEI REVENUE FY 1990-1997 TOTAL REVENUE Millions 1990 $8.5 1991 $9.0 1992 $14.1 1993 $18.9 1994 $17.3 1995 $23.4 1996 $20.7 1997 $31.0 FISCAL YEAR 1990-1997 Revenues have grown from $8.5 million in 1990 to $31.0 million in 1997, a 20% compound annual growth rate.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
HEI CASH AND INVESTMENTS FY 1990-1997 CASH/INVESTMENTS Millions 1990 $0.0 1991 $0.2 1992 $0.9 1993 $2.0 1994 $2.3 1995 $5.3 1996 $6.7 1997 $12.6 FISCAL YEAR 1990-1997 Cash and Investments were just a few thousand dollars during 1990 and 1991 but by 1997 had grown to nearly $13 million.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
HEI PROFIT BEFORE TAX FY 1990-1997 NPBT % RETURN Millions 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% FISCAL YEAR 1990-1997 From a loss of nearly $1 million in 1990, profits have been solid since 1992 and have consistently exceeded 12.0% to 13.0% of revenues through 1997.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
HEI SHAREHOLDER EQUITY FY 1990-1997 EQUITY BOOK VALUE Millions 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 FISCAL YEAR 1990-1997 In 1990, shareholder equity was only $1.1M with retained earnings at a negative $3.1M. By 1997, shareholder equity increased to $17.0 M with retained earnings at a positive $9.3 M. The book value per share increased from $.77 in 1990 to $4.14 in 1997.
During the FY'90 through FY'97 period, HEI also spent $10 million on capital improvements in plant and equipment. This includes upgrading the original facility, including two class 10,000 clean rooms, more than doubling the production capacity and installing new precision, high-speed equipment. -----END PRIVACY-ENHANCED MESSAGE-----