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Nortech Reports Q4

MINNEAPOLIS, Minn. — Nortech Systems Incorporated (Nasdaq: NSYS), a leading provider of full-service electronics manufacturing services (EMS), today reported net sales of $27.4 million for the fourth quarter ended December 31, 2010, a 38 percent increase over net sales of $19.8 million for the fourth quarter of 2009. Operating income was $253,248 for the fourth quarter, compared with $8,456 for the fourth quarter of 2009. The company reported quarterly net income of $137,051, or $0.05 per diluted common share, in the fourth quarter of 2010, compared with a quarterly net loss of $145,347, or $0.05 per diluted common share, for the fourth quarter of 2009.

For the fiscal year ended December 31, 2010, the company reported net sales of $99.8 million, up 25 percent from $79.9 million reported for the 2009 fiscal year. Nortech Systems reported operating income of $1.2 million for the 2010 fiscal year, compared with an operating loss of $5.5 million for the 2009 fiscal year, which included one-time restructuring charges of approximately $1.0 million. Net income for the 2010 fiscal year was $507,000, or $0.18 per diluted common share. This compares with a 2009 fiscal year net loss of $3.8 million, or $1.40 per diluted common share, and $1.18 per diluted common share before one-time restructuring charges and related tax effect.

“We made significant progress in 2010 – growing sales, returning to profitability and expanding our capabilities with two strategic acquisitions,” said Mike Degen, Nortech Systems’ president and CEO. He added that sales growth was led by medical and industrial customers, who are demonstrating increased stability and confidence.

“Our improving financial performance was aided by our increased sales volume, lean manufacturing initiative and continued cost-containment measures,” explained Degen. “Global market factors are starting to increase prices on our key commodities – particularly copper and petroleum-based products – and we’re working to offset price fluctuations.” He said the EMS industry remains extremely competitive, with consolidations and excess capacity depressing prices.

In order to better serve customers and differentiate Nortech Systems in the marketplace, the company undertook two significant acquisitions within the past year. In May, Nortech purchased an electronics manufacturer in Milaca, Minn., that specializes in medical device design and manufacturing. In November, Nortech entered into an agreement to purchase the assets and intellectual property associated with the EMS operation of Winland Electronics in Mankato, Minn. This acquisition closed on Jan. 1, 2011.

“The process of integrating these two new businesses into our operations and corporate culture is underway, and will be a major focus for us throughout 2011,” commented Degen. “The new Milaca operation promises greater penetration of the high-growth medical market,” he added. “Our Mankato operation will provide necessary capacity for printed circuit board assemblies for both industrial and medical customers.”

Degen concluded by saying that Nortech Systems’ strategic objectives for 2011 include equaling or surpassing the growth of the U.S. EMS industry. In 2010, Nortech’s revenue increased 25 percent while the six largest U.S.-traded EMS companies saw revenues increase an average of 19 percent.

Conference Call
Nortech Systems announces a conference call to be held at 10:00 a.m. (CST) on Thursday, March 10, 2011, to discuss the company’s fourth quarter results. Anyone interested in participating in the conference can access the call by dialing 877-407-8033 from within the United States, or 201-689-8031 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 or at A podcast (MP3 download) will also be available. The telephone replay will be available through March 24, 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 368293 are both required.

Nortech Systems Incorporated

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