<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
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Section240.14a-12
HEI, INC.
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<PAGE>
FROM THE DESK OF EUGENE W. COURTNEY
Dear Shareholder:
I think you will find the attached letter from our new President, Don
Reynolds, to be very informative concerning the strengths of our company and
our prospects for future growth.
For your convenience, enclosed is a proxy card and postage paid envelope to
vote at the upcoming Special Meeting. Your Board strongly urges you to
support our efforts to increase shareholder value by voting against Proposal 1
and 3 and for Proposal 2.
If you have any questions, or need any assistance, please call Innisfree M&A
at 1-888-750-5834.
Best regards,
Gene
<PAGE>
<TABLE>
<S> <C>
1495 Steiger Lake Lane
[LOGO] P.O. Box 5000
Victoria, MN 55386-5000
(612) 443-2500
(612) 443-2668 Fax
</TABLE>
Donald R. Reynolds
President
June 19, 1998
To HEI Shareholders:
I appreciate the opportunity to introduce myself as your recently appointed
President, and to talk about HEI and why I'm so excited about our future. In my
short time here, I have been able to personally verify the strong customer
relationships, the opportunity for significant growth and the solid financial
foundation that attracted me to HEI in the first place.
I have met with customers from each of our primary markets (hearing, medical
and communications). Our customers consider us to be a "key" supplier/partner,
vital to the long-term success of their company. They note that HEI has the
technology base, the world class ISO-9001 facilities and equipment, and the
highly skilled workforce dedicated to working closely with customers and
providing value-added products and services. It is so gratifying to personally
hear a customer take responsibility for selecting HEI as their partner and feel
their obvious pride in that decision.
HEI's customers also consider us to be a design partner having a vital role
in their product formulation and the technical direction of their company. I
urge you to examine the enclosed product data sheet to give you an understanding
of some of the advanced technology that HEI uses today. HEI's ability to
differentiate itself in terms of products and application expertise has been a
major factor in its success and will be even more important to our customers in
the future.
Did you know that within the next three years it is anticipated that:
- 85% of the hearing aids used in the United States will be "in the ear"
devices. Their size dictates the use of ultraminiature technology, which
is HEI's core competency.
- The defibrillator segment of the medical market will more than double.
- The fiber-optic communications market will have grown by an average of
more than 20% per year.
These seemingly unrelated bits of information are relevant to HEI because
these three large and expanding markets--hearing, medical, and
communications--use over $500 million of microelectronic products such as those
HEI designs and builds, and they are growing at incredible rates. HEI's customer
base includes leaders in each of these markets and we believe we are well
positioned for further growth.
The management team at HEI has brought this company from a financially
struggling situation to a strong position, capable of penetrating large and
growing markets. In the third quarter of this fiscal year we generated $6
million in sales to the medical, hearing and communications markets. This
represents a 53% sales growth in these markets for the first nine months of 1998
as compared to the same period in 1997.
HEI has financial strength, solid customers, an experienced management team,
dedicated employees and aggressive strategic plans focused on the growth markets
I've described above. It is easy to see why I'm enthusiastic about our future.
<PAGE>
I also believe in your Board of Directors and their significant part in
HEI's success. They understand the technologies described in the attachment, and
they have experience in the markets we serve. They continue to look for ways to
increase value for all shareholders.
Together, I believe the present HEI team--your board of directors,
management and employees--will produce an even brighter future for us all. I
look forward to meeting you at future shareholders meetings or through your
communications as we go forward. Thank you for your support.
Sincerely,
[SIG]
Donald R. Reynolds
President
<PAGE>
HEI's ISO 9001 certified
facilities provide world-
class microelectronic
packaging services using
today's most advanced bare
die packaging technology.
For more than 25 years, we
have consistently produced
leading edge solutions for
applications in Computer,
Medical, Communication,
Instrumentation, and other
industries.
[PHOTO OF VARIOUS OF HEI'S
MICROELECTRONIC PRODUCTS AND
APPLICATIONS OF MICROELECTRONIC
PACKAGING TECHNOLOGY]
ADVANCED
PACKAGING
SOLUTIONS
[NSAI LOGO]
I.S.EN ISO 9001
[LOGO]
<PAGE>
PACKAGING CAPABILITIES
[PHOTO OF MCM MULTICHIP MODULES
MULTICHIP Multichip modules from HEI - Thick film printing
MODULE] can reduce board space for .006/.006
electronic circuits that - Diffusion patterning
contain several integrated .004/.004
circuits with high I/O counts. - Fodel imaging
These high density .002/.002
modules can be manufactured - Multilayer laminate
on both ceramic and and ceramic
laminate substrates with up - Die bond pitch to
to 90% silicon coverage. .006
- Blind vias and thru
vias to .002
______________________________________________________________________________
CHIP-ON-LAMINATE
[PHOTO OF Chip on laminate in most - Chip & wire
CHIP-ON- cases is the lowest cost interconnects
LAMINATE] packaging solution for - Flip chip IC
circuit size reduction. integration
Most circuitry requiring - Multilayer laminate
less than 3 conductive designs
layers with minimal power - Aluminum, gold and
dissipation requirements palladium bonding
are ideal applications for - Leading edge SMT to
this technology. HEI can die design layout
integrate chip & wire,
flip chip, and surface
mount devices, or
combination of these
technologies to offer the
best final circuit price
and performance.
______________________________________________________________________________
CHIP-ON-FLEX
[PHOTO OF Direct chip attach and - Chip & wire flex
CHIP-ON-FLEX] interconnect on flex interconnect
circuitry can offer - Flip chip on flex
reduced size as well as IC integration
flexible interconnection - Passive component
capability. HEI can attachment
manufacture active flex - Flex design/CAD
circuitry using both chip & support
wire, and flip chip - X-ray inspection
technology. Chip-on-flex can capability
offer the most adaptable
finished product assembly.
______________________________________________________________________________
BGA/CSP/FLIP CHIP
[PHOTO OF HEI Flip Chip/BGA/CSP - Flip chip and chip &
FLIP CHIP/ technology can accommodate wire interconnects
BGA/CSP] either single chip or - Ceramic or laminate
multiple chip integration on substrates
both ceramic and laminate - Single and multiple
substrates. These high IC packages
density packages offer the - .006 - .008 die
smallest circuit outline bump pitches
with finished sizes only - Outlines as small
slightly larger than the as .008 larger than
circuit IC's IC
- Full test and X-ray
inspection
capabilities
______________________________________________________________________________
CHIP STACKING
[PHOTO OF HEI specializes in - Multilevel IC
CHIP STACKING] multilevel interconnection of interconnects
semiconductors. "Chip stacking" - Chip stacking
can be achieved by mounting - Aluminum, gold,
wire bonded IC's over flip and palladium
chip circuits, mounting IC's bonding
on top of other wire bonded - Flip chip and wire
IC's, or mounting IC's over bond combinations
passive components. Vertical - Creative package
stacking of both active and design
passive components can minimize
the finished circuit outline.
______________________________________________________________________________
BOX 5000 - 1495 STEIGER LAKE LANE - VICTORIA, MN 55386 - Phone (612) 443-2500
FAX (612) 443-2668 - INTERNET: http://www.heii.com [LOGO]
