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Winland Electronics, Inc. Reports Fourth Quarter, Full-Year 2010 Results

As part of the January sale of its EMS business, Nortech Systems agreed to lease for $5.25 per square foot ($304,500 annually), beginning January 1, 2011 (with Nortech receiving free rent for the 1 st year), Winland’s 58,000 square foot manufacturing warehouse and office facility in Mankato.

In 2010 Winland engaged another regional manufacturer’s representative firm, achieving its objective for complete coverage of North America for its Proprietary Products business. Winland now has a total of six manufacturing representative firms along with its eastern and western sales teams driving sales activities.

“We believe we have some of the most reliable and cost-effective solutions for monitoring critical environments available in the industry,” Lawrence said. “The completion of the EMS sale will allow our team to focus on getting in front of potential customers to increase market awareness of our propriety products.”

Conference Call Information

Due to the required focus on the sale and transition of the EMS business, the Company has not fully developed its strategic plans for 2011 and thus will not host a conference call to discuss its fourth quarter results. The Company may reinstitute its quarterly conference calls at some point in the future.

About Winland Electronics

Winland Electronics, Inc. ( www.winland.com), is an industry leader in the design and manufacture of critical condition monitoring devices. Products including EnviroAlert, WaterBug, TempAlert and Vehicle Alert, and re designed to monitor critical conditions for industries including healthcare and medical, grocery and food service, commercial and industrial, agriculture and residential. Proudly made in the USA, Winland products are compatible with any hardwire or wireless alarm system and are available worldwide. Headquartered in Mankato, MN, Winland trades on the NYSE Amex stock exchange under the symbol WEX.

Cautionary Statements

Certain statements contained in this press release and other written and oral statements made from time to time by the Company do not relate strictly to historical or current facts. As such, they are considered forward-looking statements, which provide current expectations or forecasts of future events. The statements included in this release with respect to the following matters are forward looking statements; (i) that the Company’s investment in sales and marketing continued to increase market awareness of the solutions its products offer in monitoring critical environments and (ii) that the Company has some of the most reliable and cost-effective solutions for monitoring critical environments available in the industry. These statements involve a variety of risks and uncertainties, known and unknown, including among other risks that (i) the Company’s investment in sales and marketing does not in fact increase market awareness of the solutions its products offer in monitoring critical environments and (ii) that the Company does not in fact have some of the most reliable and cost effective solutions for monitoring critical environments available in the industry. Consequently, no forward-looking statement can be guaranteed and actual results may vary materially.

 
 
WINLAND ELECTRONICS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(In Thousands, Except Share and Per Share Amounts)
(Unaudited)
         
For the Three Months Ended For the Twelve Months Ended
December 31, December 31,
2010 2009 2010 2009
Net sales $ 868 $ 819 $ 3,317 $ 3,191
Cost of sales   686     522     2,135     1,863  
Gross profit   182     297     1,182     1,328  
 
Operating expenses
General and administrative 806 427 2,143 2,064
Sales and marketing   234     154     970     1,064  
Total operating expenses   1,040     581     3,113     3,128  
 
Operating loss   (858 )   (284 )   (1,931 )   (1,800 )
 
Other income (expense)
Interest expense (99 ) (13 ) (175 ) (49 )
Other income (expense), net   (130 )   -     8     (10 )
Total other expense   (229 )   (13 )   (167 )   (59 )
 
Loss before income taxes (1,087 ) (297 ) (2,098 ) (1,859 )
 
Income tax benefit (expense)   2     632     89     481  
Loss from continuing operations (1,085 ) 335 (2,009 ) (1,378 )
Loss from discontinued operations, net of tax   (781 )   (332 )   (1,523 )   (153 )
 
Net loss $ (1,866 ) $ 3   $ (3,532 ) $ (1,531 )
 
Loss per common share data:
Basic and diluted

 

$ (0.50 ) $ 0.00 $ (0.96 ) $ (0.42 )
Loss from continuing operations per common share data:
Basic and diluted

 

$ (0.29 ) $ 0.09 $ (0.55 ) $ (0.38 )
Loss from discontinued operations per common share data:
Basic and diluted

 

$ (0.21 ) $ (0.09 ) $ (0.41 ) $ (0.04 )
Weighted-average number of common shares outstanding:
Basic and diluted

 

3,699,230 3,664,395 3,693,009 3,664,395
 
 
Winland Electronics, Inc.
Balance Sheets
December 31, 2010 and 2009
(In Thousands)
  December 31,
Assets   2010     2009
Current Assets    
Cash and cash equivalents $ 318 $ 55
Accounts receivable, less allowance for doubtful accounts of $10
and $20 as of December 31, 2010 and 2009, respectively 547 533
Refundable income taxes 277 1,023
Inventories 112 195
Prepaid expenses and other assets 87 171
Current assets of discontinued operations   4,649         5,219
Total current assets 5,990 7,196
 
Property and Equipment, at cost
Total property and equipment 3,750 4,062
Less accumulated depreciation and amortization   1,447         1,631
Net property and equipment 2,303 2,431
Property and equipment of discontinued operations, net   1,151         1,898
Total assets $ 9,444       $ 11,525
 
Liabilities and Stockholders’ Equity          
Current Liabilities
Revolving line-of-credit $ 1,249 $ 367
Current maturities of long-term debt 448 104
Accounts payable 381 116
Other short-term tax liabilities 68 -
Accrued liabilities:
Compensation 410 51
Other 35 11
Current liabilities of discontinued operations   2,084         1,648
Total current liabilities   4,675         2,297
 
Long-Term Liabilities
Long-term debt, less current maturities - 448
Deferred revenue 114 122
Other long-term tax liabilities - 258
Long-term liabilities of discontinued operations   29         251
Total long-term liabilities   143         1,079
Total liabilities   4,818         3,376
 
Stockholders’ Equity
Common stock, par value $0.01 per share; authorized 20,000,000 shares;
issued and outstanding 3,699,230 shares 2010 and 3,686,435 shares 2009 37 37
Additional paid-in capital 5,025 5,016
Retained earnings (accumulated deficit)   (436 )       3,096
Total stockholders’ equity   4,626         8,149
Total liabilities and stockholders’ equity $ 9,444       $ 11,525
 
 
Winland Electronics, Inc.
Statements of Cash Flows
Years Ended December 31, 2010 and 2009
(In Thousands)
     
    2010     2009
Cash Flows From Operating Activities
Net loss $ (3,532 ) $ (1,531 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 775 816
Non-cash stock based compensation 2 93
Decrease in allowance for doubtful accounts (29 ) 78
Loss on disposal of equipment 173 22
Changes in operating assets and liabilities:
Accounts receivable 550 1,000
Refundable income taxes 746 (428 )
Inventories 97 1,298
Prepaid expenses and other assets 105 (25 )
Accounts payable 1,021 (1,325 )
Accrued liabilities, including deferred revenue and other long-term tax liabilities   (81 )       (28 )
Net cash used in operating activities   (173 )       (30 )
 
Cash Flows From Investing Activities
Purchases of property and equipment (80 ) (264 )
Proceeds from sale of property and equipment   7         8  
Net cash used in investing activities   (73 )       (256 )
 
Cash Flows From Financing Activities
Net borrowings on revolving line-of-credit agreement 882 367
Principal payments on long-term borrowings, including capital lease obligations (380 ) (392 )
Proceeds from issuance of common stock   7         10  
Net cash provided by (used in) financing activities   509         (15 )
 
Net increase (decrease) in cash 263 (301 )
 
Cash and cash equivalents
Beginning of year   55         356  
End of year $ 318       $ 55  
 
Supplemental Disclosures of Cash Flow Information
Cash payments for interest $ 181       $ 104  
Cash receipts from income taxes $ 645       $ 183  




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