Delaware
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13-3458955
|
(State
or other jurisdiction of
incorporation
or organization)
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(I.R.S.
Employer Identification No.)
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Large
accelerated filer ¨
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Accelerated
filer ¨
|
Non-Accelerated
filer x
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Smaller
Reporting Company ¨
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Page
|
|||
Number
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PART
1
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FINANCIAL
INFORMATION
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||
Item
1.
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Financial
Statements
|
||
Consolidated
Balance Sheets as of:
|
|||
June
26, 2009(Unaudited) and September 30, 2008
|
3
|
||
Consolidated
Statements of Operations for the three months
|
|||
ended:
June 26, 2009(Unaudited) and June 27, 2008
|
|||
(Unaudited)
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4
|
||
Consolidated
Statements of Operations for the nine months
|
|||
ended:
June 26, 2009(Unaudited) and June 27, 2008
|
|||
(Unaudited)
|
5
|
||
Consolidated
Statements of Cash Flows for the nine months
|
|||
ended:
June 26, 2009(Unaudited) and June 27, 2008
|
|||
(Unaudited)
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6
|
||
Notes
to Consolidated Financial Statements (Unaudited)
|
7
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||
Item
2.
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Management's
Discussion and Analysis of
|
||
Financial
Condition and Results of Operations
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14
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||
Item
3.
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Quantitative
and Qualitative Disclosures about Market Risk
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18
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Item
4T.
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Controls
and Procedures
|
18
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PART
II
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OTHER
INFORMATION
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||
Item
1.
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Legal
Proceedings
|
19
|
|
Item
1A.
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Risk
Factors
|
19
|
|
Item
2.
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Unregistered
Sales of Equity Securities and Use of Proceeds
|
19
|
|
Item
3.
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Defaults
Upon Senior Securities
|
19
|
|
Item
4.
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Submission
of Matters to a Vote of Security Holders
|
19
|
|
Item
5.
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Other
Information
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19
|
|
Item
6.
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Exhibits
|
19
|
|
Signatures
|
|
19
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JUNE 26,
2009
|
SEPTEMBER 30,
2008
|
|||||||
|
(Unaudited)
|
|||||||
ASSETS
|
||||||||
CURRENT
ASSETS:
|
||||||||
Cash
(see note #9 page 13)
|
$ | - | $ | - | ||||
Accounts
receivable (net of allowance for doubtful Accounts of $128 and $145
respectively)
|
9,976 | 10,345 | ||||||
Inventories
|
6,592 | 6,230 | ||||||
Deferred
income taxes
|
1,908 | 1,908 | ||||||
Other
current assets
|
116 | 61 | ||||||
Total
Current Assets
|
18,592 | 18,544 | ||||||
FIXED
ASSETS:
|
||||||||
Land
and land improvements
|
742 | 742 | ||||||
Building
and improvements
|
4,339 | 4,368 | ||||||
Machinery
and equipment
|
9,846 | 8,567 | ||||||
Furniture
and fixtures
|
4,105 | 4,083 | ||||||
Sub-Total
Gross Property
|
19,032 | 17,760 | ||||||
Less
Accumulated Depreciation
|
(17,088 | ) | (16,907 | ) | ||||
Net
Fixed Assets
|
1,944 | 853 | ||||||
NON-CURRENT
ASSETS:
|
||||||||
Deferred
income taxes
|
13,557 | 14,727 | ||||||
Other
Non Current Assets
|
50 | 60 | ||||||
Total
Non-Current Assets
|
13,607 | 14,787 | ||||||
Total
Assets
|
$ | 34,143 | $ | 34,184 | ||||
LIABILITIES
AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES:
|
||||||||
Short
term borrowings
|
$ | 1,197 | $ | 1,098 | ||||
Accounts
payable
|
4,214 | 6,125 | ||||||
Accrued
payroll and related expenses
|
970 | 808 | ||||||
Other
accrued expenses
|
398 | 603 | ||||||
Customer
Deposits (see Note #2)
|
292 | 664 | ||||||
Total
current liabilities
|
7,071 | 9,298 | ||||||
Long
term debt
|
7,864 | 8,910 | ||||||
Total
Liabilities
|
14,935 | 18,208 | ||||||
SHAREHOLDERS'
EQUITY:
|
||||||||
Preferred
stock, $.01 par value, Authorized - 500,000 shares; Issued and outstanding
- none
|
- | - | ||||||
Common
stock, $.01 par value, Authorized - 50,000,000 shares; Issued - 9,549,420
and 9,326,582 shares
|
95 | 93 | ||||||
Treasury
Shares at Cost 1,012,873 and 412,873
|
(1,413 | ) | (223 | ) | ||||
Additional
paid-in capital
|
40,490 | 40,124 | ||||||
Accumulated
deficit
|
(19,964 | ) | (24,018 | ) | ||||
Total
shareholders' equity
|
19,208 | 15,976 | ||||||
Total
liabilities and shareholders’ equity
|
$ | 34,143 | $ | 34,184 |
3 MONTHS ENDED
|
3 MONTHS ENDED
|
|||||||
JUNE 26, 2009
|
JUNE 27, 2008
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Net
sales
|
$ | 17,346 | $ | 11,888 | ||||
Cost
of sales
|
14,556 | 10,475 | ||||||
Gross
profit
|
2,790 | 1,413 | ||||||
Selling
and administrative expenses
|
1,463 | 828 | ||||||
Operating
profit
|
1,327 | 585 | ||||||
Interest
and financing expense
|
90 | 106 | ||||||
Other
(Income)/Expense
|
(151 | ) | 302 | |||||
Net
Income before income taxes
|
1,388 | 177 | ||||||
Provision
for/(benefit from) income tax
|
||||||||
(see
tax expense comment page 14)
|
485 | (691 | ) | |||||
Net
Income
|
$ | 903 | $ | 868 | ||||
Net
Income per common and common equivalent share:
|
||||||||
Basic
|
$ | 0.11 | $ | 0.10 | ||||
Diluted
|
$ | 0.10 | $ | 0.09 | ||||
Weighted
average number of common and common equivalent shares
outstanding:
|
||||||||
Basic
|
8,524,317 | 8,708,537 | ||||||
Diluted
|
9,322,368 | 9,455,970 |
9 MONTHS ENDED
|
9 MONTHS ENDED
|
|||||||
JUNE 26, 2009
|
JUNE 27, 2008
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Net
sales
|
$ | 49,538 | $ | 34,988 | ||||
Cost
of sales
|
41,908 | 31,046 | ||||||
Gross
profit
|
7,630 | 3,942 | ||||||
Selling
and administrative expenses
|
4,214 | 2,580 | ||||||
Operating
profit
|
3,416 | 1,362 | ||||||
Interest
and financing expense
|
304 | 281 | ||||||
(Gain)/Loss
on disposal of fixed assets
|
(5 | ) | (2 | ) | ||||
Other
(Income)/Expense
|
(212 | ) | 301 | |||||
Net
Income before income taxes
|
3,329 | 782 | ||||||
Provision
for/(benefit from) income tax
|
||||||||
(see
tax expense comment page 15)
|
(724 | ) | (1,181 | ) | ||||
Net
Income
|
$ | 4,053 | $ | 1,963 | ||||
Net
Income per common and common equivalent share:
|
||||||||
Basic
|
$ | 0.46 | $ | 0.23 | ||||
Diluted
|
$ | 0.43 | $ | 0.21 | ||||
Weighted
average number of common and common equivalent shares
outstanding:
|
||||||||
Basic
|
8,745,240 | 8,437,789 | ||||||
Diluted
|
9,386,616 | 9,194,454 |
9 MONTHS ENDED
|
9 MONTHS ENDED
|
|||||||
JUNE 26, 2009
|
JUNE 27, 2008
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net
Income
|
$ | 4,053 | $ | 1,963 | ||||
Non-cash
adjustments:
|
||||||||
Compensation
Expense – Stock Options
|
121 | 143 | ||||||
Depreciation/Amortization
|
215 | 404 | ||||||
Issuance
of director’s fees in stock
|
27 | 15 | ||||||
(Gain)/Loss
on sales of fixed assets
|
(5 | ) | (2 | ) | ||||
Deferred
Tax Expense
|
(724 | ) | (1,181 | ) | ||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
369 | (1,337 | ) | |||||
Inventories
|
(361 | ) | (1,968 | ) | ||||
Other
assets
|
(55 | ) | 32 | |||||
Accounts
payable
|
(1,911 | ) | (812 | ) | ||||
Accrued
expenses
|
(42 | ) | 177 | |||||
Customer
Deposits
|
(373 | ) | - | |||||
Net
cash flows from operating activities
|
1,314 | (2,566 | ) | |||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Cash
investment into Subsidiary
|
- | (5,500 | ) | |||||
Cash
received from Subsidiary
|
- | 544 | ||||||
Purchases
of plant, property & equipment
|
(1,301 | ) | (1,185 | ) | ||||
Proceeds
from the sale of property
|
11 | 2,002 | ||||||
Capitalized
acquisition costs paid
|
- | (54 | ) | |||||
Net
cash flows from investing activities
|
(1,290 | ) | (4,193 | ) | ||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Repayments
under loan agreements/notes payable
|
(852 | ) | (729 | ) | ||||
Borrowings/(Payments)
Line of Credit
|
(79 | ) | 5,485 | |||||
Proceeds
from Equipment Financing
|
828 | 2,000 | ||||||
Proceeds
from exercise of stock options
|
79 | 67 | ||||||
Capitalized
financing costs paid
|
- | (64 | ) | |||||
Net
cash flows from financing activities
|
(24 | ) | 6,759 | |||||
Change
in cash and cash equivalents
|
- | - | ||||||
Cash
and cash equivalents at beginning of period
|
- | - | ||||||
Cash
and cash equivalents at end of period
|
$ | - | $ | - | ||||
Supplemental
Disclosures of Cash Flow Information:
|
||||||||
Cash
paid during the period for:
|
||||||||
Interest
|
$ | 337 | $ | 281 | ||||
Income
taxes
|
$ | 18 | $ | 2 | ||||
Supplemental
Disclosures of Non-Cash Adjustments:
|
||||||||
Seller
Notes adjusted through Deferred Tax Assets
|
||||||||
(related
to acquisition agreement)
|
$ | 844 | $ | - | ||||
Treasury
Stock Adjusted through Deferred Tax Assets
|
||||||||
(related
to settlement agreement)
|
$ | 1,050 | $ | - | ||||
$ | 140 | $ | - |
|
§
|
A
world class Technology Center that combines a dedicated prototype
manufacturing center with an on-site Materials Analysis Lab (headed by a
staff PhD) for the seamless introduction of complex
electronics
|
|
§
|
A
sophisticated Lean/Sigma continuous improvement program supported by four
certified Six Sigma Blackbelts delivering best-in-class
results
|
|
§
|
Industry-leading
Web Portal providing real-time access to a wide array of critical customer
data
|
|
§
|
In-house
custom functional test development to support complex system-level
assembly, test, troubleshoot and end-order
fulfillment
|
June 26,
2009
|
September 30,
2008
|
|||||||
Raw
Materials
|
$ | 3,611 | $ | 3,775 | ||||
Work-in-process
|
2,541 | 1,743 | ||||||
Finished
goods
|
440 | 712 | ||||||
$ | 6,592 | $ | 6,230 |
|
§
|
A
revolving credit facility up to $9.0 million, available for direct
borrowings. The facility is based on a borrowing base formula
equal to the sum of 85% of eligible receivables and 35% of eligible
inventory. As of June 26, 2009, outstanding loans under the
revolving credit facility were $4.9 million. The credit
facility matures on May 30, 2013. Interest on the revolver is
either prime or a stated rate over LIBOR, whichever is lower based on
certain ratios. Our current interest rate on our revolving line
balance is 2.49%.
|
|
§
|
A
$1.7 million term loan amortized equally over 60 months beginning June
2008. IEC’s interest rate is fixed at 6.7%. The remaining
balance as of June 26, 2009 was $0.9 million inclusive of an accelerated
payment of $0.5 million made during the fourth quarter of fiscal
2008.
|
|
§
|
An
available $1.5 million equipment line of credit. The capital
credit facility is amortized equally over 60 months and matures on May 30,
2013. Interest on the equipment line is either prime or a
stated rate over LIBOR, whichever is lower based on certain ratios at the
time of borrowing. Using this capital credit line the company
was able to secure additional interest rate subsidies from New York
State’s Linked Deposit Program and has used a total of $0.8 million of the
$1.5 million available line as of June 26, 2009. For the
quarter ended June 26, 2009 the weighted average interest rate on capital
financing was 3.26%.
|
|
§
|
A
$2.0 million Sale Leaseback of the Company’s fixed assets amortized
equally over 60 months beginning June 27, 2008. Annual payments
are fixed and are $388,800 per year with a total for the five years of
$1.9 million. At June 26, 2009 our remaining unpaid balance for the lease
was $1.5 million.
|
|
§
|
All
loans and the Sale-Leaseback are secured by a security interest in the
assets of the Company including IEC Electronics Wire and Cable,
Inc.
|
Year 1
|
Year 2
|
Year 3
|
Year 4*
|
||||||||||
$ |
1,197
|
$ | 1,197 | $ | 1,127 | $ | 5,540 |
3 Months
|
3 Months
|
YTD
|
YTD
|
|||||||||||||
JUN 26, 2009
|
JUN 27, 2008
|
JUN 26, 2009
|
JUN 27, 2008
|
|||||||||||||
Current
Tax Expense
|
||||||||||||||||
Federal
|
28 | 60 | 66 | 281 | ||||||||||||
State
/ Other
|
2 | 11 | 4 | 47 | ||||||||||||
Deferred
Tax Expense/(Benefit)
|
||||||||||||||||
Federal
|
444 | (648 | ) | (549 | ) | (1,282 | ) | |||||||||
State
/ Other
|
11 | (114 | ) | (245 | ) | (227 | ) | |||||||||
Provision
for/(Benefit from)
|
||||||||||||||||
Income
taxes
|
485 | (691 | ) | (724 | ) | (1,181 | ) |
June 26,
2009
|
September 30,
2008
|
|||||||
Net
operating loss and AMT
|
||||||||
credit
carryovers
|
$ | 14,428 | $ | 15,598 | ||||
Accelerated
depreciation
|
596 | 596 | ||||||
New
York State investment tax credits
|
3,312 | 3,312 | ||||||
Inventories
|
140 | 140 | ||||||
Other
|
301 | 301 | ||||||
18,777 | 19,947 | |||||||
Remaining
Valuation allowance
|
(3,312 | ) | (3,312 | ) | ||||
Current
and Long Term Deferred Tax Asset
|
$ | 15,465 | $ | 16,635 | * |
*
|
includes
deferred tax assets acquired in “Wire and Cable” acquisition (The cost of
the acquisition in excess of the fair value of assets acquired was
assigned to deferred tax assets.)
|
3 MO. ENDED
|
3 MO. ENDED
|
9 MO. ENDED
|
9 MO. ENDED
|
|||||||||||||
JUN 26, 2009
|
JUN 27, 2008
|
JUN 26, 2009
|
JUN 27, 2008
|
|||||||||||||
Risk
free interest rate
|
2.5 | % | 2.5 | % | 2.3 | % | 2.7 | % | ||||||||
Expected
term
|
4.9
years
|
4.9
years
|
4.7
years
|
4.7
years
|
||||||||||||
Volatility
|
63 | % | 50 | % | 54 | % | 51 | % | ||||||||
Expected
annual dividends
|
none
|
none
|
none
|
none
|
||||||||||||
Options
Granted:
|
||||||||||||||||
Wgt.Avg.
fair value per share
|
$ | 2.04 | $ | 0.91 | $ | 0.92 | $ | 0.82 | ||||||||
Aggregate
total value
|
$ | 40,800 | $ | 22,800 | $ | 71,680 | $ | 136,550 |
Fiscal Year
|
Amount
|
|||
2009
|
$ | 451,664 | ||
2010
|
451,664 | |||
2011
|
451,664 | |||
2012
|
451,664 | |||
2013
|
321,920 | |||
Total
minimum lease payments
|
$ | 2,128,576 |
Fiscal Year
|
Amount
|
|||
2009
|
$ | 176,857 | ||
2010
|
176,857 | |||
2011
|
184,578 | |||
2012
|
187,150 | |||
2013
|
46,788 | |||
Total
minimum lease payments
|
$ | 772,230 |
Sales
(dollars in millions)
|
||||||||
For
Three Months Ended
|
June
26, 2009
|
June
27, 2008
|
||||||
Net
sales
|
$ | 17.3 | $ | 11.9 |
Gross
Profit (dollars in thousands and as a % of Net Sales)
|
||||||||
For
Three Months Ended
|
June
26, 2009
|
June
27, 2008
|
||||||
Gross
profit
|
$ | 2,790 | $ | 1,413 | ||||
Gross
profit percent
|
16.1 | % | 11.9 | % |
Selling
and Administrative Expense (dollars in thousands and as a % of Net
Sales)
|
||||||||
For
Three Months Ended
|
June
26, 2009
|
June
27, 2008
|
||||||
Selling
and administrative expense
|
$ | 1,463 | $ | 828 | ||||
Selling
and administrative expense percent
|
8.4 | % | 7.0 | % |
Sales
(dollars
in millions)
|
|
|||||||
For
Nine Months Ended
|
June
26, 2009
|
June
27, 2008
|
||||||
Net
sales
|
$ | 49.5 | $ | 35.0 |
Gross
Profit (dollars
in thousands and as a % of Net Sales)
|
|
|||||||
For
Nine Months Ended
|
June
26, 2009
|
June
27, 2008
|
||||||
Gross
profit
|
$ | 7,630 | $ | 3,942 | ||||
Gross
profit percent
|
15.4 | % | 11.3 | % |
For
Nine Months Ended
|
June
26, 2009
|
June
27, 2008
|
||||||
Selling
and administrative expense
|
$ | 4,214 | $ | 2,580 | ||||
Selling
and administrative expense percent
|
8.5 | % | 7.4 | % |
Covenant
|
Requirement
|
Actual
Performance
|
|||||
▪ |
Minimum
quarterly EBITDARS
|
≥ $
350,000
|
$ | 1,693,000 | |||
▪ |
Fixed
Charge Coverage
|
≥
1.10x
|
2.73 | x | |||
▪ |
Total
Debt to EBITDARS
|
<
3.75x
|
1.96 | x |
31.1
|
Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
31.2
|
Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
32.1
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section
1350
|
IEC
ELECTRONICS CORP.
|
|
REGISTRANT
|
|
Dated:
July 23, 2009
|
/s/ W. Barry Gilbert
|
W.
Barry Gilbert
|
|
Chairman
and
|
|
Chief
Executive Officer
|
|
Dated:
July 23, 2009
|
/s/ Michael Schlehr
|
Michael
Schlehr
|
|
Vice
President and Chief Financial
Officer
|