MINNEAPOLIS – Nortech Systems Incorporated (Nasdaq: NSYS), a leading provider of full-service electronics manufacturing services (EMS), today reported net sales of $25.0 million for the fourth quarter ended December 31, 2012, compared with net sales of $29.1 million for the fourth quarter of 2011. Operating income for the fourth quarter of 2012 was $485,000, compared with $466,000 for the fourth quarter of 2011. The company reported quarterly net income of $276,000, or $0.10 per diluted common share, in the fourth quarter of 2012, compared with $235,000, or $0.09 per diluted common share, for the same period of 2011.

“We finished 2012 strong – with our highest quarterly income of the year and strongest operating results in more than two years,” said Mike Degen, Nortech Systems’ chief executive officer. “As the year went on, we adjusted our cost structure to the sluggish economy and managed cash aggressively.” He cited the $5.5 million improvement in cash flow from operating activities throughout fiscal 2012, with the majority of it generated during the fourth quarter.

For the fiscal year ended December 31, 2012, the company reported net sales of $106.9 million, compared with $114.2 million reported for fiscal 2011. Nortech Systems reported $1.5 million in operating income for both fiscal 2012 and fiscal 2011. Net income for fiscal 2012 was $629,000, or $0.23 per diluted common share. This compares with $1.2 million, or $0.43 per diluted common share, reported for fiscal 2011, which included a non-operating bargain purchase gain of $528,000, or $0.19 per diluted common share, related to an acquisition.

“Throughout 2012, our medical segment sales were led by medical-device customers in particular; our medical sales rose sequentially each quarter and our year-end backlog increased by 24 percent,” continued Degen. Nortech’s industrial-market sales decreased during 2012 due to global economic uncertainty. Defense sales decreased as contractors were cautious about budget negotiations and sequestration.

From the third quarter to the fourth quarter of 2012, backlog numbers rose sequentially across all three of Nortech’s key markets – medical, industrial and defense. Degen concluded, “Despite headwinds from the economy, we’re pleased with our positive momentum and strong cash management position heading into 2013.”

Conference Call
Nortech Systems announces a conference call to be held at 10:00 a.m. (CST) on Thursday, March 7, 2013, to discuss the company’s fourth quarter and fiscal year 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 March 21, 2013, by dialing 877-660-6853 (from U.S.) or 201-612-7415 (International). To access the replay, the conference ID 409924 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 and operating partners in the U.S., Asia 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 Operations

Three months ended Dec. 31, Twelve months ended Dec. 31,
             Unaudited                 Audited
2012 2011 2012 2011

Net Sales

$25,022,165 $29,123,480 $106,937,387 $114,236,411

Income from Operations

484,910 466,432 1,460,598 1,512,366

Income before
Income Taxes

381,542 360,783 927,438 1,750,930

Income Tax Expense

106,000 126,000 298,000 561,000

Net Income

275,542 234,783 629,438 1,189,930

Net Income Per
Basic Common Share

$0.10 $0.09 $0.23 $0.43

Weighted Avg Number of Common Shares – Basic

2,742,992 2,742,992 2,742,992 2,742,392

Net Income Per Diluted Common Share

$0.10 $0.09 $0.23 $0.43

Weighted Avg
Number of Common Shares–Diluted

2,742,992 2,742,992 2,742,992 2,742,992

Condensed Balance Sheets – Audited

December 31, 2012 December 31, 2011

Current Assets

$32,691,371 $37,297,487

Property and Other Long-Term Assets

 11,823,528 9,484,656

Total Assets

$44,514,899 $46,782,14

Current Liabilities

$20,131,441 $25,012,055

Long-Term Liabilities

3,248,227 1,264,295

Shareholders’ Equity

 21,135,231 20,505,793

Total Liabilities and Shareholders’ Equity

$44,514,899 $46,782,143

Contact:
Richard Wasielewski
Nortech Systems Inc. (952) 345-2244
Warren Djerf
Brookside Communications Group
(952) 920-3908 / warren@brookcomm.net

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