Nortech Systems Reports Second Quarter Results
Sales Increase 13 Percent for Quarter, 22 Percent for Six Months

 MINNEAPOLIS – Aug. 10, 2011 – Nortech Systems Incorporated (NASDAQ: NSYS) today reported net sales of $27.8 million for the second quarter ended June 30, 2011, a 13 percent increase over net sales of $24.7 million for the second quarter of 2010.

The company reported net income of $146,000, or $0.05 per diluted common share for the second quarter of 2011, compared with $147,000, or $0.05 per diluted common share, for the second quarter of 2010.

For the six months ended June 30, 2011, Nortech Systems reported net sales of $56.8 million, compared with $46.4 million for the same period in 2010, an increase of 22 percent.

Net income for the six-month period ended June 30, 2011, was $772,000, or $0.28 per diluted common share. This compares with net income of $242,000, or $0.09 per diluted common share, reported for the same period in 2010.

“Our two newest acquisitions led the sales growth for industrial and medical customers,” said Mike Degen, Nortech Systems’ president and CEO. “Along with the immediate sales increase, these acquisitions strengthened our expertise and capabilities for the future by better positioning us to help our customers improve their products and manage their supply chains.”

For Nortech’s defense customers, Degen said the second quarter saw federal funding emerge on several key programs that had been originally scheduled for earlier in the year. During the second quarter, the company’s 90-day backlog for defense customers increased 44 percent, to $4.0 million.

Nortech’s overall 90-day backlog on June 30, 2011, was $22.8 million, up 14 percent from the start of the quarter.

Degen said the company’s core, non-acquisition revenue decreased slightly during the quarter, resulting in part from some softening in the long-term outlook for semiconductor capital equipment spending. He added that many of Nortech’s customers – across all industries – remain cautious in light of lingering economic uncertainty.

“Integrating our two recent acquisitions will continue as a significant focus the remainder of this year,” explained Degen. “Our lean manufacturing initiatives, including training and joint activities with other Nortech facilities, are helping lead the integration efforts.

“In the second quarter we again funded additional working capital and absorbed acquisition-related costs that impacted our financial results,” concluded Degen. “We are making progress with our integration activities and remain committed to achieving our long-term goals.”

Conference Call

Nortech Systems announces a conference call to be held at 10:00 a.m. (CDT) on Thurs., Aug. 11, to discuss the company’s second quarter results. Anyone interested in participating in the conference can access the call by dialing 877-407-8033 from within the United States, or 201-689-8033 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 Aug. 25, 2011, by dialing 877-660-6853 (from U.S.) or 201-612-7415 (International). To access the replay, the account number 286 and conference ID 376718 are both 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, Inc. 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
2011 2010 2011 2010

Net Sales

$27,796,576

$24,694,506

$56,794,773

$46,435,947

Income from Operations

339,134

484,970

625,796

810,752

Non-Operating Gain

0

0

791,615

0

Other Expense

(169,040)

(92,858)

(308,129)

(263,356)

Income before
Income Taxes

170,094

392,112

1,109,282

547,396

Income Tax Expense

24,000

245,000

337,000

305,000

Net Income

146,094

147,112

772,282

242,396

Net Income Per
Basic and Diluted Common Share

$0.05

$0.05

$0.28

$0.09

Weighted Average Number of Common Shares – Basic and Diluted

2,742,992

2,741,777

2,742,992

2,741,777

Condensed Balance Sheets

June 30, 2011

(Unaudited)

Dec. 31, 2010

Current Assets

$42,024,442

$33,467,996

Property and Other Long-term Assets

9,639,104

8,092,928

Total Assets

$51,663,546

$41,560,924

Current Liabilities

$30,532,546

$20,403,551

Long-term Debt

1,054,037

1,868,554

Shareholders’ Equity

20,076,963

19,288,819

Total Liabilities and Shareholders’

 Equity

 

$51,663,546

 

$41,560,924