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Nortech Systems Reports Second Quarter Results

Nortech Systems Incorporated (NASDAQ: NSYS) today reported net sales of $27.4 million for the second quarter ended June 30, 2014, up five percent sequentially from the prior quarter and compared with $28.5 million for the second quarter of 2013. Operating income for the second quarter of 2014 was $347,000 a 47 percent sequential increase from the prior quarter and compared with $373,000 for the second quarter of 2013.

The company’s net income for the second quarter of 2014 rose 32 percent to $247,000, or $0.09 per diluted common share, compared with net income of $187,000, or $0.07 per diluted common share, for the same period last year. Results for the second quarter of 2014 included a $100,000 benefit from a favorable tax audit settlement.

For the six months ended June 30, 2014, Nortech Systems reported net sales of $53.6 million, compared with $54.4 million for the same period in 2013. Net income for the six-month period ended June 30, 2014, was $333,000, or $0.12 per diluted common share, compared with $328,000, or $0.12 per diluted common share, for the same period in 2013.

“We’re encouraged by the sequential improvement in revenue and profits,” said Rich Wasielewski, Nortech Systems’ president and CEO, adding that profitability was aided by leveraging, continuous improvement activities and product mix.

He continued, “New order activity is rising and our backlog levels have posted year-over-year increases the past two quarters.” The company’s 90-day backlog rose 13 percent during the second quarter; medical and industrial customers recorded quarterly increases both sequentially and year-over-year. Defense demand was lower due to government program transitions and funding delays.

“We’re pleased with our momentum going into the second half of 2014, including our order pipeline, and the improving economic conditions,” concluded Wasielewski. “We’re dedicated to helping our customers succeed.”

Conference Call
Nortech Systems announces a conference call to be held at 10:00 a.m. (CDT) on Thursday, August 7, 2014, to discuss the company’s second quarter results. Anyone interested in participating in the conference can access the call by dialing 877-407-8031 from within the United States, or 201-689-8031 if calling internationally. An audio webcast and replay of this conference call can be accessed at the investor relations portion of Nortech Systems’ website at www.nortechsys.com or at www.investorcalendar.com. A podcast (MP3 download) will also be available. The telephone replay will be available through August 21, 2014, by dialing 877-660-6853 (from U.S.) or 201-612-7415 (International). To access the replay, the conference ID 13587192 is required.

About Nortech Systems Incorporated
Nortech Systems Incorporated (www.nortechsys.com), based in Wayzata, Minn., is a full-service electronics manufacturing services (EMS) provider of wire and cable assemblies, printed circuit board assemblies, and higher-level complete box build assemblies for a wide range of industries. Markets served include industrial equipment, aerospace/defense and medical. The company has manufacturing capabilities in the U.S. and Latin America. Nortech Systems Incorporated is traded on the NASDAQ Stock Market under the symbol NSYS.

Forward-Looking Statements
This press release contains forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. While this release is based on management’s best judgment and current expectations, actual results may differ and involve a number of risks and uncertainties. Important factors that could cause actual results to differ materially from the forward-looking statements include, without limitation: volatility in market conditions which may affect market supply of and demand for the company’s products; increased competition; changes in the reliability and efficiency of operating facilities or those of third parties; risks related to availability of labor; commodity and energy cost instability; general economic, financial and business conditions that could affect the company’s financial condition and results of operations; as well as risk factors listed from time to time in the company’s filings with the SEC.

Condensed Statements of Income

  Three months ended June 30,   Six months ended June 30,
Unaudited   Unaudited
2014   2013   2014   2013
Net Sales $27,408,467   $28,450,699 $53,557,609   $54,376,100

Income from Operations

347,177

373,105

583,398

596,727

 
Other Expense (115,476 ) (87,886 ) (215,540 ) (191,419 )
 

Income before Income Taxes

231,701

285,219

367,858

405,308

 

Income Tax Expense (Benefit)

(15,000 ) 98,000   35,000   77,000  
 

Net Income

246,701 187,219 332,858 328,308
 

Net Income Per Basic and Diluted Common Share

$0.09 $0.07 $0.12 $0.12
 

Weighted Average Number of Common Shares –

Basic

2,742,992 2,742,992 2,742,992 2,742,992
Diluted 2,746,856 2,742,992 2,747,357 2,742,992

Condensed Balance Sheets

   
June 30, 2014 Dec. 31, 2013
(Unaudited)    
Account Receivable $ 15,161,253 $ 16,030,848
Inventories 19,390,549 17,427,470
Other Current Assets 1,641,869 1,457,524
Property and Other Long-term Assets   10,993,352   11,159,579
Total Assets $ 47,187,023 $ 46,075,421
 
Line of Credit – Current $ - $ 7,234,983
Accounts Payable 9,534,593 8,185,012
Other Current Liabilities 3,639,951 3,946,543
Line of Credit – Long-Term 7,166,396 -

Long-term Debt and Other Long-Term Liabilities

4,562,814 4,773,435
Shareholders’ Equity   22,283,269   21,935,448

Total Liabilities and Shareholders’ Equity

$

47,187,023

$

46,075,421

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