Hi-Shear Announces Net Income up 89% During Fiscal Year 2009

Hi-Shear Technology Corporation (NYSE Amex: HSR) today announced results for its fiscal year ended May 31, 2009. Net income for the fiscal year grew 89% to $6,676,000, representing earnings of $0.98 per share, compared to the net income of $3,540,000 or $0.52 per share for the same period last year. The net income is driven by the growth in product gross margins and a favorable litigation settlement. The settlement amount was less than the amount previously accrued. This resulted in an increase to the pre-tax income of approximately $1,324,000 in the fourth quarter after costs of related legal fees and incentive compensation. Revenues recognized during fiscal year 2009 were $25,933,000 compared to the $27,628,000 of revenues recognized during fiscal year 2008. Some customer delays in releasing their requirements to the company resulted in the revenue decrease for the year. Although these orders were subsequently placed with the Company later during the fiscal year, the delays extended some recognition of revenue on those orders to fiscal year 2010.

Positive earnings supported the distribution of dividends to shareholders of $.50 per share in October 9, 2008 and $0.75 per share to be distributed in August 2009.

“We are pleased to report that improved operating profits, increased manufacturing efficiencies, and a favorable litigation settlement resulted in our positive earnings for the 2009 fiscal year. We are proud of the continuing recognition given to Hi-Shear by its customers who continually rely on the company to support their key space and defense missions,” stated George W. Trahan, President and CEO.

Hi-Shear Technology Corporation provides pyrotechnic, mechanical, and electronic products to prime aerospace customers for use in aerospace and defense markets where safety, performance and high reliability are essential. It develops and produces advanced systems and products that are primarily used worldwide in space satellites, launch vehicles, national defense, and government programs.

This release, as it relates to product announcements and other Company matters, contains forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that all forward-looking statements involve risks and uncertainties including, without limitation, risks related to market acceptance of and demand for the Company’s new products, dependence on the uncertainty of government budgetary issues, primary government contracts, and intellectual property rights.

The Company’s Form 10-KSB will be filed with the Securities and Exchange Commission on or about August 5, 2009. The 10-KSB will be available for download at www.hstc.com. For more information regarding this release or general information about the company contact Ms. Linda A. Nespole, [phone].

BALANCE SHEET

May 31, 2009

ASSETS:

        
        
           
        
        
           
        
        
           
        
      
      
        
          Current Assets:
        
        
        
        
        
        
        
      
      
        
          Cash and cash equivalents
        
        
        
        
          $
        
        
          7,502,000
        
      
      
        
          

Accounts receivable, net

        
        
        
        
        
        
          10,746,000
        
      
      
        
          

Inventories, net

        
        
        
        
        
        
          1,512,000
        
      
      
        
          

Deferred income taxes

        
        
        
        
        
        
          972,000
        
      
      
        
          Prepaid expenses and other current assets
        
        
        
        
        
        
          229,000
        
      
      
        
          

Total current assets

        
        
        
        
          $
        
        
          20,961,000
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          

Land

        
        
        
        
        
        
          846,000
        
      
      
        
          

Equipment, net

        
        
        
        
        
        
          1,977,000
        
      
      
        
          

Total assets

        
        
        
        
          $
        
        
          23,784,000
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          

LIABILITIES AND STOCKHOLDERS' EQUITY:

        
        
           
        
        
           
        
        
           
        
      
      
        
          Current Liabilities:
        
        
        
        
        
        
        
      
      
        
          Trade accounts payable
        
        
        
        
        
        
          611,000
        
      
      
        
          

Accrued liabilities

        
        
        
        
        
        
          4,353,000
        
      
      
        
          

Deferred revenue

        
        
        
        
        
        
          182,000
        
      
      
        
          

Current portion of obligations under capital leases

        
        
        
        
        
        
          40,000
        
      
      
        
          

Total current liabilities

        
        
        
        
          $
        
        
          5,186,000
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          

Deferred income taxes

        
        
        
        
        
        
          347,000
        
      
      
        
          

Obligation under capital leases (less current portion)

        
        
        
        
        
        
          23,000
        
      
      
        
          

Total liabilities

        
        
        
        
          $
        
        
          5,556,000
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          

Commitments and Contingencies

        
        
        
        
        
        
        
      
      
        
          Stockholders' Equity
        
        
        
        
        
        
        
      
      
        
          Preferred stock, $1.00 par value; 500,000 shares
        
        
        
        
        
        
        
      
      
        
          authorized; no shares issued
        
        
        
        
        
        
          0
        
      
      
        
          Common stock, $.001 par value - 25,000,000 shares
        
        
        
        
        
        
        
      
      
        
          authorized; 6,829,041 and 6,819,291 shares issued
        
        
        
        
        
        
        
      
      
        
          

and outstanding at May 31, 2009

        
        
        
        
        
        
          7,000
        
      
      
        
          Additional paid-in capital
        
        
        
        
        
        
          8,055,000
        
      
      
        
          Retained earnings
        
        
        
        
        
        
          10,166,000
        
      
      
        
          

Total stockholders' equity

        
        
        
        
          $
        
        
          18,228,000
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          

Total liabilities and stockholders' equity

        
        
        
        
          $
        
        
          23,784,000
        
      
      
        
        
        
        
        
        
        
           
        
      
    
    

STATEMENTS OF OPERATIONS

Year Ended May 31, 2009

2009

2008

Revenues

        
        
        
        
          $
        
        
          25,933,000
        
        
        
        
        
        
          $
        
        
          27,628,000
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Cost of Revenues
        
        
        
        
        
        
          12,285,000
        
        
           
        
        
        
        
        
        
          14,827,000
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          

Gross Margin

        
        
        
        
        
        
          13,648,000
        
        
        
        
        
        
        
        
          12,801,000
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Selling, General and Administrative Expenses
        
        
        
        
        
        
          2,513,000
        
        
        
        
        
        
        
        
          7,259,000
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          

Operating Income

        
        
        
        
        
        
          11,135,000
        
        
        
        
        
        
        
        
          5,542,000
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Interest Income (Expense), Net
        
        
        
        
        
        
          (40,000
        
        
          )
        
        
        
        
        
        
          44,000
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          

Income before Income Tax Expense

        
        
        
        
        
        
          11,095,000
        
        
        
        
        
        
        
        
          5,586,000
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Income Tax Expense
        
        
        
        
        
        
          4,419,000
        
        
           
        
        
        
        
        
        
          2,046,000
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          

Net Income

        
        
        
        
          $
        
        
          6,676,000
        
        
           
        
        
        
        
          $
        
        
          3,540,000
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Earnings per Common Share - Basic
        
        
        
        
          $
        
        
          0.98
        
        
           
        
        
        
        
          $
        
        
          0.52
        
      
      
        
          Earnings per Common Share - Diluted
        
        
        
        
          $
        
        
          0.98
        
        
           
        
        
        
        
          $
        
        
          0.52
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Weighted # Common Shares Outstanding:
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Basic
        
        
        
        
        
        
          6,821,000
        
        
           
        
        
        
        
        
        
          6,808,000
        
      
      
        
          Diluted
        
        
        
        
        
        
          6,834,000
        
        
           
        
        
        
        
        
        
          6,825,000