MANKATO, MN -- Winland Electronics reported third-quarter net sales of $7 million, down 29% from 2007. Net income was $118,000, down 76%. Sales were affected by a drop in demand from two of the company’s three largest customers and the phaseout of two other programs.

For the period ended Sept. 30, gross margins were down 60 basis points year-over-year and up more than 63% sequentially to 16% and the company reported positive cash flow. Operating income was $107,000, down from $603,000. The backlog as of Sept. 30 was $16.1 million for delivery during the remainder of 2008 and early 2009, down $900,000 year-over-year but in line with the past four quarters.  

EMS segment operating income for the period totaled $553,000, down 47 percent from 2007. EMS gross margin was 11.3%, down 210 basis points, primarily the result of increased material costs and lower capacity underutilization. 

“While it’s clear that Winland still has much work to do, our third quarter results represent a variety of significant improvements on a sequential quarter by quarter basis,” said Thomas de Petra, president and chief executive.

Winland's EMS customer portfolio now includes the transportation, industrial, instrumentation, medical, telecommunication and consumer market sectors. “Our design engineering capability continues to be a significant differentiator from EMS providers similar in size,” de Petra said.