Delaware
|
|
13-3458955
|
(State or other jurisdiction of
|
|
(I.R.S. Employer Identification No.)
|
incorporation or organization)
|
|
|
Large accelerated filer
¨
|
|
Accelerated filer
¨
|
Non-accelerated filer
¨
|
|
Smaller reporting company
x
|
|
June 27,
2014 |
|
September 30,
2013 |
||||
|
(unaudited)
|
|
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash
|
$
|
679
|
|
|
$
|
2,499
|
|
Accounts receivable, net of allowance
|
23,245
|
|
|
27,945
|
|
||
Inventories, net
|
21,152
|
|
|
21,904
|
|
||
Deferred income taxes
|
1,382
|
|
|
1,382
|
|
||
Other current assets
|
2,107
|
|
|
610
|
|
||
Total current assets
|
48,565
|
|
|
54,340
|
|
||
|
|
|
|
||||
Fixed assets, net
|
18,489
|
|
|
17,946
|
|
||
Intangible assets, net
|
2,456
|
|
|
2,647
|
|
||
Goodwill
|
2,005
|
|
|
2,005
|
|
||
Deferred income taxes
|
12,634
|
|
|
11,652
|
|
||
Other long term assets
|
238
|
|
|
345
|
|
||
|
|
|
|
||||
Total assets
|
$
|
84,387
|
|
|
$
|
88,935
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of long-term debt
|
$
|
2,908
|
|
|
$
|
2,778
|
|
Accounts payable
|
14,340
|
|
|
16,508
|
|
||
Accrued payroll and related expenses
|
2,869
|
|
|
2,464
|
|
||
Other accrued expenses
|
947
|
|
|
811
|
|
||
Customer deposits
|
928
|
|
|
187
|
|
||
Total current liabilities
|
21,992
|
|
|
22,748
|
|
||
|
|
|
|
||||
Long-term debt
|
31,578
|
|
|
34,026
|
|
||
Other long-term liabilities
|
153
|
|
|
167
|
|
||
Total liabilities
|
53,723
|
|
|
56,941
|
|
||
|
|
|
|
||||
STOCKHOLDERS' EQUITY
|
|
|
|
||||
Preferred stock, $0.01 par value:
500,000 shares authorized; none issued or outstanding |
—
|
|
|
—
|
|
||
Common stock, $0.01 par value:
Authorized: 50,000,000 shares Issued: 11,072,821 and 11,006,749 shares, respectively Outstanding: 10,053,956 and 9,991,291 shares, respectively |
111
|
|
|
110
|
|
||
Additional paid-in capital
|
44,132
|
|
|
43,802
|
|
||
Retained earnings/(accumulated deficit)
|
(12,129
|
)
|
|
(10,483
|
)
|
||
Treasury stock, at cost: 1,018,865 and 1,015,458 shares, respectively
|
(1,450
|
)
|
|
(1,435
|
)
|
||
Total stockholders' equity
|
30,664
|
|
|
31,994
|
|
||
|
|
|
|
||||
Total liabilities and stockholders' equity
|
$
|
84,387
|
|
|
$
|
88,935
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
June 27,
2014 |
|
June 28,
2013 |
|
June 27,
2014 |
|
June 28,
2013 |
||||||||
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
32,992
|
|
|
$
|
35,154
|
|
|
$
|
99,934
|
|
|
$
|
101,824
|
|
Cost of sales
|
29,112
|
|
|
29,995
|
|
|
87,675
|
|
|
89,601
|
|
||||
Gross profit
|
3,880
|
|
|
5,159
|
|
|
12,259
|
|
|
12,223
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Selling and administrative expenses
|
3,195
|
|
|
3,446
|
|
|
10,938
|
|
|
11,803
|
|
||||
Restatement and related expenses
|
102
|
|
|
1,106
|
|
|
2,516
|
|
|
1,106
|
|
||||
Operating profit/(loss)
|
583
|
|
|
607
|
|
|
(1,195
|
)
|
|
(686
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Interest and financing expense
|
558
|
|
|
10
|
|
|
1,410
|
|
|
648
|
|
||||
Other expense/(income)
|
—
|
|
|
(9
|
)
|
|
18
|
|
|
47
|
|
||||
Income/(loss) before income taxes
|
25
|
|
|
606
|
|
|
(2,623
|
)
|
|
(1,381
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Provision for/(benefit from) income taxes
|
3
|
|
|
224
|
|
|
(977
|
)
|
|
(518
|
)
|
||||
Net income/(loss)
|
$
|
22
|
|
|
$
|
382
|
|
|
$
|
(1,646
|
)
|
|
$
|
(863
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net income/(loss) per common and common equivalent share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
—
|
|
|
$
|
0.04
|
|
|
$
|
(0.17
|
)
|
|
$
|
(0.09
|
)
|
Diluted
|
—
|
|
|
0.04
|
|
|
(0.17
|
)
|
|
(0.09
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common and common equivalent shares outstanding:
|
|
|
|
|
|||||||||||
Basic
|
9,838,872
|
|
|
9,702,446
|
|
|
9,816,974
|
|
|
9,675,120
|
|
||||
Diluted
|
9,902,017
|
|
|
9,810,707
|
|
|
9,816,974
|
|
|
9,675,120
|
|
|
Common
Stock,
par $0.01
|
|
|
Additional
Paid-In
Capital
|
|
|
Retained
Earnings
(Deficit)
|
|
|
Treasury
Stock,
at cost
|
|
|
Total
Stockholders'
Equity
|
|
|||||
|
|
|
|
|
|
|
(restated)
|
|
|
|
|
|
(restated)
|
|
|||||
Balances, September 30, 2012
|
$
|
109
|
|
|
$
|
43,075
|
|
|
$
|
(953
|
)
|
|
$
|
(1,435
|
)
|
|
$
|
40,796
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net loss
|
—
|
|
|
—
|
|
|
(863
|
)
|
|
—
|
|
|
(863
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
494
|
|
|
—
|
|
|
—
|
|
|
494
|
|
|||||
Forfeitures
|
(1
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Directors' fees paid in stock
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|||||
Restricted (non-vested) stock grants
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Exercise of stock options
|
—
|
|
|
60
|
|
|
—
|
|
|
—
|
|
|
60
|
|
|||||
Shares withheld for payment of taxes upon
vesting of restricted stock |
—
|
|
|
(29
|
)
|
|
—
|
|
|
—
|
|
|
(29
|
)
|
|||||
Employee stock plan purchases
|
—
|
|
|
98
|
|
|
—
|
|
|
—
|
|
|
98
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Balances, June 28, 2013
|
$
|
109
|
|
|
$
|
43,708
|
|
|
$
|
(1,816
|
)
|
|
$
|
(1,435
|
)
|
|
$
|
40,566
|
|
|
Common
Stock,
par $0.01
|
|
|
Additional
Paid-In
Capital
|
|
|
Retained
Earnings
(Deficit)
|
|
|
Treasury
Stock,
at cost
|
|
|
Total
Stockholders'
Equity
|
|
|||||
Balances, September 30, 2013
|
$
|
110
|
|
|
$
|
43,802
|
|
|
$
|
(10,483
|
)
|
|
$
|
(1,435
|
)
|
|
$
|
31,994
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net loss
|
—
|
|
|
—
|
|
|
(1,646
|
)
|
|
—
|
|
|
(1,646
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
378
|
|
|
—
|
|
|
—
|
|
|
378
|
|
|||||
Restricted (non-vested) stock grants, net of
forfeitures |
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Exercise of stock options
|
|
|
|
32
|
|
|
—
|
|
|
(15
|
)
|
|
17
|
|
|||||
Shares withheld for payment of taxes upon
vesting of restricted stock |
—
|
|
|
(79
|
)
|
|
—
|
|
|
—
|
|
|
(79
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Balances, June 27, 2014
|
$
|
111
|
|
|
$
|
44,132
|
|
|
$
|
(12,129
|
)
|
|
$
|
(1,450
|
)
|
|
$
|
30,664
|
|
|
|
Nine Months Ended
|
||||||
|
|
June 27,
2014 |
|
June 28,
2013 |
||||
|
|
|
|
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
||||
Net income/(loss)
|
|
$
|
(1,646
|
)
|
|
$
|
(863
|
)
|
Non-cash adjustments:
|
|
|
|
|
||||
Stock-based compensation
|
|
378
|
|
|
494
|
|
||
Depreciation and amortization
|
|
3,625
|
|
|
3,574
|
|
||
Directors' fees paid in stock
|
|
—
|
|
|
10
|
|
||
Reserve for doubtful accounts
|
|
220
|
|
|
117
|
|
||
Deferred tax expense/benefit
|
|
(982
|
)
|
|
(901
|
)
|
||
Changes in assets and liabilities:
|
|
|
|
|
||||
Accounts receivable
|
|
4,480
|
|
|
132
|
|
||
Inventory
|
|
752
|
|
|
(3,974
|
)
|
||
Other current assets
|
|
(1,497
|
)
|
|
(399
|
)
|
||
Other long term assets
|
|
81
|
|
|
(288
|
)
|
||
Accounts payable
|
|
(2,634
|
)
|
|
1,436
|
|
||
Accrued expenses
|
|
541
|
|
|
(452
|
)
|
||
Customer deposits
|
|
741
|
|
|
(134
|
)
|
||
Other long term liabilities
|
|
(14
|
)
|
|
185
|
|
||
Net cash flows from operating activities
|
|
4,045
|
|
|
(1,063
|
)
|
||
|
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
||||
Purchases of fixed assets
|
|
(3,806
|
)
|
|
(4,357
|
)
|
||
Proceeds from (net cost of) disposal of fixed assets
|
|
323
|
|
|
—
|
|
||
Net cash flows from investing activities
|
|
(3,483
|
)
|
|
(4,357
|
)
|
||
|
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
||||
Advances from revolving line of credit
|
|
43,513
|
|
|
43,284
|
|
||
Repayments of revolving line of credit
|
|
(44,971
|
)
|
|
(33,825
|
)
|
||
Borrowings under other loan agreements
|
|
1,300
|
|
|
24,000
|
|
||
Repayments under other loan agreements
|
|
(2,160
|
)
|
|
(27,688
|
)
|
||
Debt issuance costs
|
|
(2
|
)
|
|
(39
|
)
|
||
Proceeds from exercise of stock options
|
|
17
|
|
|
60
|
|
||
Proceeds from employee stock plan purchases
|
|
—
|
|
|
98
|
|
||
Shares withheld for payment of taxes upon vesting of restricted stock
|
|
(79
|
)
|
|
(29
|
)
|
||
Net cash flows from financing activities
|
|
(2,382
|
)
|
|
5,861
|
|
||
|
|
|
|
|
||||
Net increase/(decrease) in cash and cash equivalents
|
|
(1,820
|
)
|
|
441
|
|
||
Cash and cash equivalents, beginning of period
|
|
2,499
|
|
|
2,662
|
|
||
Cash and cash equivalents, end of period
|
|
$
|
679
|
|
|
$
|
3,103
|
|
|
|
|
|
|
||||
Supplemental cash flow information:
|
|
|
|
|
||||
Interest paid
|
|
$
|
1,177
|
|
|
$
|
782
|
|
Income taxes paid
|
|
12
|
|
|
367
|
|
||
|
|
|
|
|
||||
Non-cash transactions
|
|
|
|
|
||||
Fixed assets purchased with extended payment terms
|
|
466
|
|
|
—
|
|
•
|
A technology center that combines dedicated prototype manufacturing with an on-site Materials Analysis Lab, enabling the seamless transition of complex electronics from design to production.
|
•
|
In-house, custom, functional testing and troubleshooting of complex system-level assemblies in support of end-order fulfillment.
|
•
|
A laboratory that enables us to assist customers in mitigating the risk of purchasing counterfeit parts through our subsidiary, Dynamic Research and Testing Laboratories, LLC (“DRTL”).
|
•
|
Build-to-print precision sheet metal and complex wire harness assemblies supporting just-in-time delivery of critical end-market, system-level electronics.
|
•
|
A Lean/Six Sigma continuous improvement program supported by a team of Six Sigma Blackbelts delivering best-in-class results.
|
•
|
Proprietary software-driven Web Portal providing customers real-time access to a wide array of operational data.
|
PP&E Lives
|
|
Estimated
Useful Lives |
|
|
(years)
|
Land improvements
|
|
10
|
Buildings and improvements
|
|
5 to 40
|
Machinery and equipment
|
|
3 to 5
|
Furniture and fixtures
|
|
3 to 7
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
Shares for EPS Calculation
|
|
June 27,
2014 |
|
June 28,
2013 |
|
June 27,
2014 |
|
June 28,
2013 |
||||
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding
|
|
9,838,872
|
|
|
9,702,446
|
|
|
9,816,974
|
|
|
9,675,120
|
|
Incremental shares
|
|
63,145
|
|
|
108,261
|
|
|
—
|
|
|
—
|
|
Diluted shares
|
|
9,902,017
|
|
|
9,810,707
|
|
|
9,816,974
|
|
|
9,675,120
|
|
|
|
|
|
|
|
|
|
|
||||
Anti-dilutive shares excluded
|
|
125,500
|
|
|
164,850
|
|
|
504,738
|
|
|
547,680
|
|
|
|
Nine Months Ended
|
||||||
Allowance for Doubtful Accounts
|
|
June 27,
2014 |
|
June 28,
2013 |
||||
(in thousands)
|
|
|
|
|
||||
Allowance, beginning of period
|
|
$
|
452
|
|
|
$
|
406
|
|
Provision for doubtful accounts
|
|
257
|
|
|
135
|
|
||
Write-offs
|
|
(37
|
)
|
|
(18
|
)
|
||
Allowance, end of period
|
|
$
|
672
|
|
|
$
|
523
|
|
Inventories
|
|
June 27,
2014 |
|
September 30,
2013 |
||||
(in thousands)
|
|
|
|
|
|
|
||
Raw materials
|
|
$
|
13,364
|
|
|
$
|
14,841
|
|
Work-in-process
|
|
8,594
|
|
|
7,564
|
|
||
Finished goods
|
|
1,376
|
|
|
1,449
|
|
||
Total inventories
|
|
23,334
|
|
|
23,854
|
|
||
Reserve for excess/obsolete inventory
|
|
(2,182
|
)
|
|
(1,950
|
)
|
||
Inventories, net
|
|
$
|
21,152
|
|
|
$
|
21,904
|
|
Fixed Assets
|
|
June 27,
2014 |
|
September 30,
2013 |
||||
(in thousands)
|
|
|
|
|
||||
Land and improvements
|
|
$
|
1,601
|
|
|
$
|
1,601
|
|
Buildings and improvements
|
|
13,192
|
|
|
11,070
|
|
||
Leasehold improvements
|
|
1,411
|
|
|
1,411
|
|
||
Machinery and equipment
|
|
26,748
|
|
|
25,963
|
|
||
Furniture and fixtures
|
|
7,035
|
|
|
6,165
|
|
||
Construction in progress
|
|
596
|
|
|
835
|
|
||
Total fixed assets, at cost
|
|
50,583
|
|
|
47,045
|
|
||
Accumulated depreciation
|
|
(32,094
|
)
|
|
(29,099
|
)
|
||
Fixed assets, net
|
|
$
|
18,489
|
|
|
$
|
17,946
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
June 27,
2014 |
|
June 28,
2013 |
|
June 27,
2014 |
|
June 28,
2013 |
||||||||
(in thousands)
|
|
|
|
|
|
|
|
|
||||||||
Depreciation expense
|
|
$
|
1,141
|
|
|
$
|
1,096
|
|
|
$
|
3,406
|
|
|
$
|
3,161
|
|
Intangible Assets
|
|
June 27,
2014 |
|
September 30,
2013 |
||||
(in thousands)
|
|
|
|
|
|
|
||
Customer relationships - SCB
|
|
$
|
5,900
|
|
|
$
|
5,900
|
|
Property tax abatement - Albuquerque
|
|
360
|
|
|
360
|
|
||
Non-compete agreement - SCB
|
|
100
|
|
|
100
|
|
||
Total intangibles
|
|
6,360
|
|
|
6,360
|
|
||
Accumulated amortization
|
|
(1,492
|
)
|
|
(1,301
|
)
|
||
Accumulated impairment - customer relationships
|
|
(2,412
|
)
|
|
(2,412
|
)
|
||
Intangible assets, net
|
|
$
|
2,456
|
|
|
$
|
2,647
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
Amortization Expense
|
|
June 27,
2014 |
|
June 28,
2013 |
|
June 27,
2014 |
|
June 28,
2013 |
||||||||
(in thousands)
|
|
|
|
|
|
|
|
|
||||||||
Intangible amortization expense
|
|
$
|
64
|
|
|
$
|
113
|
|
|
$
|
191
|
|
|
$
|
339
|
|
Future Amortization
|
|
Estimated future amortization
|
||
(in thousands)
|
|
|
|
|
Twelve months ended March 28,
|
|
|
|
|
2015
|
|
$
|
254
|
|
2016
|
|
243
|
|
|
2017
|
|
234
|
|
|
2018
|
|
234
|
|
|
2019 and thereafter
|
|
1,491
|
|
Goodwill
|
|
June 27,
2014 |
|
September 30,
2013 |
||||
(in thousands)
|
|
|
|
|
|
|
||
Goodwill
|
|
$
|
13,810
|
|
|
$
|
13,810
|
|
Accumulated impairment
|
|
(11,805
|
)
|
|
(11,805
|
)
|
||
Goodwill, net
|
|
$
|
2,005
|
|
|
$
|
2,005
|
|
|
|
Fixed/
|
|
|
|
June 27, 2014
|
|
September 30, 2013
|
||||||||||
|
|
Variable
|
|
|
|
|
|
Interest
|
|
|
|
Interest
|
||||||
Debt
|
|
Rate
|
|
Maturity Date
|
|
Balance
|
|
Rate (1)
|
|
Balance
|
|
Rate (1)
|
||||||
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
M&T credit facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revolving Credit Facility
|
|
v
|
|
1/18/2016
|
|
$
|
9,803
|
|
|
4.44
|
%
|
|
$
|
11,261
|
|
|
3.19
|
%
|
Term Loan A
|
|
f
|
|
2/1/2022
|
|
8,426
|
|
|
3.98
|
|
|
9,259
|
|
|
3.98
|
|
||
Term Loan B
|
|
v
|
|
2/1/2023
|
|
12,133
|
|
|
3.40
|
|
|
13,184
|
|
|
2.68
|
|
||
Albuquerque Mortgage Loan
|
|
v
|
|
2/1/2018
|
|
2,800
|
|
|
4.69
|
|
|
3,000
|
|
|
3.44
|
|
||
Celmet Building Term Loan
|
|
f
|
|
11/7/2018
|
|
1,224
|
|
|
4.72
|
|
|
—
|
|
|
—
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other credit facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Albuquerque Industrial Revenue Bond
|
|
f
|
|
3/1/2019
|
|
100
|
|
|
5.63
|
|
|
100
|
|
|
5.63
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total debt
|
|
|
|
|
|
34,486
|
|
|
|
|
36,804
|
|
|
|
||||
Less: current portion
|
|
|
|
|
|
(2,908
|
)
|
|
|
|
(2,778
|
)
|
|
|
||||
Long-term debt
|
|
|
|
|
|
$
|
31,578
|
|
|
|
|
$
|
34,026
|
|
|
|
a)
|
Revolving Credit Facility (“Revolver”)
: Up to
$20 million
is available through
January 18, 2016
. The Company may borrow up to the lesser of (i)
85%
of eligible receivables plus 35% of eligible inventories or (ii) $20 million. At IEC's election, another
35%
of eligible inventories may be included in the borrowing base for limited periods of time during which a higher rate of interest is charged on the Revolver. Borrowings based on inventory balances are further limited to a cap of
$3.75 million
, or when subject to the higher percentage limit,
$4.75 million.
At
June 27, 2014
, the upper limit on Revolver borrowings was
$20.0 million
. Average available balances amounted to $
10.8 million
and
$13.7 million
during the
nine
months ended
June 27, 2014
and
June 28, 2013
, respectively.
|
b)
|
Term Loan A
:
$10.0 million
was borrowed on January 18, 2013. Principal is being repaid in
108 monthly installments
of
$93 thousand
.
|
c)
|
Term Loan B:
$14.0 million
was borrowed on January 18, 2013. Principal is being repaid in
120 monthly installments
of
$117 thousand
.
|
d)
|
Albuquerque
Mortgage Loan
:
$4.0 million
was borrowed on December 16, 2009. The loan is secured by real property in Albuquerque, NM, and principal is being repaid in
monthly installments
of
$22 thousand
plus a balloon payment due at maturity.
|
e)
|
Energy Loan
:
$0.2 million
was borrowed on April 2, 2008, for which interest at a fixed rate of
2.08%
is subsidized by the State of New York. Principal was being repaid in
60 equal monthly installments
and the loan was paid in full during April 2013.
|
|
Debt to EBITDARS Ratio: (a)
|
|
|
|
2013 Credit Agreement, before 2013 Amendments:
|
|
|
|
3/31/2013 through and including 9/29/2013
|
|
< 3.00 to 1.00
|
|
9/30/2013 and thereafter
|
|
<2.75 to 1.00
|
|
|
|
|
|
2013 Credit Agreement, after First 2013 Amendment:
|
|
|
|
6/28/2013 through and including 12/27/2013
|
|
< 3.25 to 1.00
|
|
12/28/2013 through and including 3/28/2014
|
|
<3.00 to 1.00
|
|
3/29/2014 and thereafter
|
|
< 2.75 to 1.00
|
|
|
|
|
|
2013 Credit Agreement, after Second 2013 Amendment:
|
|
|
|
6/28/2013 through and including 12/27/2013
|
|
< 3.50 to 1.00
|
|
12/28/2013 through and including 3/28/2014
|
|
<3.00 to 1.00
|
|
3/29/2014 and thereafter
|
|
< 2.75 to 1.00
|
|
|
|
|
|
2013 Credit Agreement, after First 2014 Amendment:
|
|
|
|
12/13/2013 through and including 3/27/2014
|
|
< 4.50 to 1.00
|
|
3/28/2014 through and including 6/26/2014
|
|
<3.50 to 1.00
|
|
6/27/2014 through and including 9/29/2014
|
|
<3.25 to 1.00
|
|
09/30/2014 and thereafter
|
|
< 2.75 to 1.00
|
|
|
|
|
|
2013 Credit Agreement, after Second 2014 Amendment:
|
|
|
|
12/26/2014 through and including 3/26/2015
|
|
< 4.50 to 1.00
|
|
3/27/2015 through and including 6/25/2015
|
|
<3.50 to 1.00
|
|
6/26/2015 through and including 9/29/2015
|
|
<3.25 to 1.00
|
|
09/30/2015 and thereafter
|
|
< 2.75 to 1.00
|
|
|
|
|
|
Fixed Charge Coverage Ratio: (b)
|
|
|
|
|
|
|
|
2013 Credit Agreement, before 2013 Amendments:
|
|
|
|
3/31/2013 and thereafter
|
|
≥ 1.25 to 1.00
|
|
|
|
|
|
2013 Credit Agreement, after First 2013 Amendment:
|
|
|
|
6/28/2013
|
|
>0.95 to 1.00
|
|
9/30/2013
|
|
>1.00 to 1.00
|
|
12/27/2013
|
|
>1.15 to 1.00
|
|
3/28/2014 and thereafter
|
|
>1.25 to 1.00
|
|
|
|
|
|
2013 Credit Agreement, after First 2014 Amendment:
|
|
|
|
3/28/2014 through and including 6/26/2014
|
|
≥0.90 to 1.00
|
|
06/27/2014 through and including 9/29/2014
|
|
≥1.10 to 1.00
|
|
9/30/2014 and thereafter
|
|
≥1.25 to 1.00
|
|
|
|
|
|
2013 Credit Agreement, after Second 2014 Amendment:
|
|
|
|
12/26/2014 through and including 3/26/2015
|
|
≥1.00 to 1.00
|
|
03/27/2014 through and including 6/25/2015
|
|
≥1.15 to 1.00
|
|
6/26/2015 and thereafter
|
|
≥1.25 to 1.00
|
(a)
|
The ratio of debt to earnings before interest, taxes, depreciation, amortization, rent expense and non-cash stock compensation expense.
|
(b)
|
The ratio compares (i) 12 month EBITDA plus non-cash stock compensation expense minus unfinanced capital expenditures minus cash taxes paid, to (ii) the sum of interest expense, principal payments, sale-leaseback payments and dividends, if any (fixed charges).
|
•
|
Consolidation of all outstanding term debt, except the Albuquerque Mortgage Loan and the Energy Loan, and an
$8.9 million
portion of outstanding loans under the Revolver, into two new and increased term loans, described below (“Term Loan A” and “Term Loan B”);
|
•
|
Creation of a new Term Loan A in the original principal amount of
$10.0 million
, bearing interest at the fixed rate of
3.98%
per annum, payable in equal monthly principal payments of
$93 thousand
each plus accrued interest, with a final maturity date of
February 1, 2022
;
|
•
|
Creation of a new Term Loan B in the original principal amount of
$14.0 million
, bearing interest at a variable rate equal to
2.50%
above the Libor in effect from time to time, payable in equal monthly principal payments of
$117 thousand
each plus accrued interest, with a final maturity date of
February 1, 2023
. The First 2014 Amendment modified the applicable margin to
3.25%
until December 13, 2014. Thereafter, the applicable margin will revert back to the rate range defined in the 2013 Credit Agreement provided that the Company is compliant with all the covenants. If however, the Company is non-compliant with any of the covenants the applicable margin will remain fixed at
3.25%
until the Company has become compliant with all the covenants. The Second 2014 Amendment modified the applicable margin to
3.25%
until March 27, 2015. Thereafter, the applicable margin will revert back to the rate range defined in the 2013 Credit Agreement provided that the Company is compliant with all the covenants. If however, the Company is non-compliant with any of the covenants the applicable margin will remain fixed at
3.25%
until the Company has become compliant with all the covenants;
|
•
|
Extension of the maturity date of the Albuquerque Mortgage Loan from
December 16, 2014 to February 1, 2018
, with no change to the monthly principal payments of
$22 thousand
each plus accrued interest;
|
•
|
Modification of the interest rate applicable to the Albuquerque Mortgage Loan from (i) a range on the applicable quarterly adjustment date of 2.50% to 3.75% above Libor based upon the Company’s then Debt to EBITDARS Ratio (ranging from 1.75:1.00 or less to 3.25:1.00 or greater), to (ii) a range on the applicable quarterly adjustment date of 2.00% to 3.25% above Libor based upon the Company’s then Debt to EBITDARS Ratio (ranging from 0.75:1.00 or less to 2.75:1.00 or greater).
The Second 2013 Amendment modified the interest rate to a range on the applicable quarterly adjustment date of
2.25%
to
3.75%
above Libor based upon the Company’s then Debt to EBITDARS Ratio (ranging from 1.25:1.00 or less to 3.25:1.00 or greater). The First 2014 Amendment modified the applicable margin to
4.50%
until December 13, 2014. Thereafter, the applicable margin would have reverted back to the rate range defined in the Second 2013 Amendment provided that the Company was compliant with all the covenants. If however, the Company was non-compliant with any of the covenants the applicable margin would have remained fixed at
4.50%
until the Company became compliant with all the covenants. The Second 2014 Amendment modified the applicable margin to
4.50%
until March 27, 2015. Thereafter, the applicable margin will revert back to the rate range defined in the Second 2013 Amendment provided that the Company is compliant with all the covenants. If however, the Company is non-compliant with any of the covenants the applicable margin will remain fixed at
4.50%
until the Company has become compliant with all the covenants;
|
•
|
Continuation of the Revolver in
the maximum available principal amount of the lesser of $20.0 million or the amount available under the borrowing base (the formula for which, and interest rate surcharge applicable to optional over-base advances, remains unchanged)
, with an outstanding principal balance immediately after the closing of
$3.7 million
;
|
•
|
Extension of the maturity date of the Revolver from
December 17, 2013 to January 18, 2016
;
|
•
|
Modification of the interest rate applicable to the Revolver from (i)
a range on the applicable quarterly adjustment date of 2.25% to 3.50% above Libor based upon the Company’s then Debt to EBITDARS Ratio (ranging from 1.75:1.00 or less to 3.25:1.00 or greater), to (ii) a range on the applicable quarterly adjustment date of 1.75% to 3.00% above Libor based upon the Company’s then Debt to EBITDARS Ratio (ranging from 0.75:1.00 or less to 2.75:1.00 or greater). The Second 2013 Amendment modified the interest rate to a range on the applicable quarterly adjustment date of 2.00% to 3.50% above Libor based upon the Company’s then Debt to EBITDARS Ratio (ranging from 1.25:1.00 or less to 3.25:1.00 or greater)
. The First 2014 Amendment modified the applicable margin to
4.25%
until December 13, 2014. Thereafter, the applicable margin would have reverted back to the rate range defined in the Second 2013 Amendment provided that the Company was compliant with all the covenants. If however, the Company was non-compliant with any of the covenants the applicable margin would have remained fixed at
4.25%
until the Company became compliant with all the covenants. The Second 2014 Amendment modified the applicable margin to
4.25%
until March 27, 2015. Thereafter, the applicable margin will revert back to the rate range defined in the Second 2013 Amendment provided that the Company is compliant with all the covenants. If however, the Company is non-compliant with any of the covenants the applicable margin will remain fixed at
4.25%
until the Company has become compliant with all the covenants;
|
•
|
Modification of the unused fee applicable to the Revolver from (i)
a range on the applicable quarterly adjustment date of 0.125% to 0.500% based upon the Company’s then ratio of Debt to EBITDARS (ranging from 1.75:1.00 or less to 3.25:1.00 or greater), to (ii) a range on the applicable quarterly adjustment date of 0.125% to 0.500% based upon the Company’s then ratio of Debt to EBITDARS (ranging from 0.75:1.00 or less to 2.75:1.00 or greater). The Second 2013 Amendment modified the unused fee to a range on the applicable quarterly adjustment date of 0.250% to 0.500% based upon the Company’s then Debt to EBITDARS Ratio (ranging from 1.25:1.00 or less to 3.25:1.00 or greater).
The First 2014 Amendment modified the unused fee to a fixed rate of
0.50%
until December 13, 2014. Thereafter, the unused fee would have reverted back to the fee range defined in the Second 2013 Amendment provided that the Company was compliant with all the covenants. If however, the Company was non-compliant with any of the covenants the unused fee would have remained at the fixed rate of
0.50%
until the Company became compliant with all the covenants. The Second 2014 Amendment modified the unused fee to a fixed rate of
0.50%
until March 27, 2015. Thereafter, the unused fee will revert back to the fee range defined in the Second 2013 Amendment provided that the Company is compliant with all the covenants. If however, the Company is non-compliant with any of the covenants the unused fee will remain at the fixed rate of
0.50%
until the Company has become compliant with all the covenants;
|
•
|
Elimination of mandatory prepayments based upon excess cash flow;
|
•
|
Continuation, unchanged, of existing financial covenants requiring minimum quarterly EBITDARS, a maximum Debt to twelve month EBITDARS ratio, and minimum Fixed Charge Coverage Ratio, all measured at the end of each quarter commencing with the quarter ending in June 2013 (but later modified in the 2013 and 2014 Covenant Amendments); and
|
•
|
Modification of the prohibition against dividends and stock repurchases to permit an aggregate maximum of
$3.5 million
of such distributions prior to February 1, 2023 absent default at the time of the applicable payment.
|
a)
|
Revolving Credit Facility (“Revolver”):
Up to $20.0 million was available through December 17, 2013. The Company could borrow up to the lesser of (i) 85% of eligible receivables plus 35% of eligible inventories or (ii) $20.0 million. At IEC's election, another 35% of eligible inventories would be included in the borrowing base for limited periods of time during which a higher rate of interest would be charged on the Revolver. Borrowings based on inventory balances were further limited to a cap of $3.75 million, or when subject to the higher percentage limit, $4.75 million.
|
b)
|
SCB Term Loan
:
$20.0 million
was borrowed on December 17, 2010 and principal was being repaid in
60 equal monthly installments.
This loan was paid off during January 2013.
|
c)
|
Albuquerque
Term Loan
:
$5.0 million
was borrowed on December 16, 2009, and principal was being repaid in
60 equal monthly installments.
This loan was paid off during January 2013.
|
d)
|
Albuquerque
Mortgage Loan
:
$4.0 million
was borrowed on December 16, 2009. The loan is secured by real property in Albuquerque, NM, and principal was being repaid in
60 monthly installments
of
$22,000 thousand
plus a balloon payment due at maturity. The maturity date of the mortgage loan was modified from December 16, 2014 to February 1, 2018; with no change to the monthly principal payments of
$22 thousand
each plus accrued interest.
|
e)
|
Celmet Term Loan
:
$2.0 million
was borrowed on July 30, 2010, and principal was being repaid in
60 equal monthly installments.
This loan was paid off during January 2013.
|
f)
|
Equipment Line of Credit
: Up to
$1.5 million
, reduced by outstanding loans, was available through December 17, 2013. The line was available for purchases of capital equipment. Borrowings under the line were supported by individual notes that specify interest and principal repayment terms. The Company had the option to select whether the interest rate was fixed or variable. Equal payments of principal were being made over 48 months for two of the loans and over 60 months for one loan. These loans were paid off during January 2013.
|
g)
|
Energy Loan
:
$0.2 million
was borrowed on April 2, 2008 under this facility, for which interest at a fixed rate of
2.08%
was subsidized by the State of New York. Principal was being repaid in
60 equal monthly installments
and the loan was paid in full during April 2013.
|
h)
|
Seller Notes
: The May 2008 acquisition of Wire and Cable was financed in part by three promissory notes payable to the sellers totaling
$3.8 million
. These notes were subordinated to borrowings under the Credit Agreement and were being repaid in quarterly installments of
$160 thousand
, including interest. Effective October 1, 2011, the interest rate on the notes was reduced from
4.0%
to
3.0%
without altering any other terms of the borrowings. The seller notes were paid in full during June 2013.
|
i)
|
Albuquerque
Industrial Revenue Bond
: When IEC acquired Albuquerque, the Company assumed responsibility for a
$100 thousand
Industrial Revenue Bond issued by the City of Albuquerque. Interest on the bond is paid semiannually, and principal is due in its entirety at maturity.
|
Debt Repayment Schedule
|
|
Contractual
Principal Payments |
||
(in thousands)
|
|
|
|
|
Twelve months ended June 27,
|
|
|
|
|
2015
|
|
$
|
2,908
|
|
2016 (1)
|
|
12,711
|
|
|
2017
|
|
2,908
|
|
|
2018
|
|
4,641
|
|
|
2019 and thereafter
|
|
11,318
|
|
|
|
|
$
|
34,486
|
|
|
|
Nine Months Ended
|
||||||
Warranty Reserve
|
|
June 27,
2014 |
|
June 28,
2013 |
||||
(in thousands)
|
|
|
|
|
|
|
||
Reserve, beginning of period
|
|
$
|
219
|
|
|
$
|
388
|
|
Provision
|
|
235
|
|
|
(88
|
)
|
||
Warranty costs
|
|
(221
|
)
|
|
(70
|
)
|
||
Reserve, end of period
|
|
$
|
233
|
|
|
$
|
230
|
|
|
|
Nine Months Ended
|
||||||
Valuation of Options
|
|
June 27,
2014 |
|
June 28,
2013 |
||||
|
|
|
|
|
||||
Assumptions for Black-Scholes:
|
|
|
|
|
||||
Risk-free interest rate
|
|
1.31
|
%
|
|
0.55
|
%
|
||
Expected term in years
|
|
4.1
|
|
|
4.0
|
|
||
Volatility
|
|
49
|
%
|
|
49
|
%
|
||
Expected annual dividends
|
|
none
|
|
|
none
|
|
||
|
|
|
|
|
|
|
||
Value of options granted:
|
|
|
|
|
|
|
||
Number of options granted
|
|
45,500
|
|
|
50,000
|
|
||
Weighted average fair value per share
|
|
$
|
1.62
|
|
|
$
|
2.65
|
|
Fair value of options granted (000's)
|
|
$
|
74
|
|
|
$
|
133
|
|
|
|
Nine Months Ended
|
||||||||||||
|
|
June 27, 2014
|
|
June 28, 2013
|
||||||||||
Stock Options
|
|
Number
of Options |
|
Wgtd. Avg.
Exercise Price |
|
Number
of Options |
|
Wgtd. Avg.
Exercise Price |
||||||
|
|
|
|
|
|
|
|
|
||||||
Outstanding, beginning of period
|
|
246,383
|
|
|
$
|
4.38
|
|
|
280,789
|
|
|
$
|
3.81
|
|
Granted
|
|
45,500
|
|
|
4.12
|
|
|
50,000
|
|
|
6.91
|
|
||
Exercised
|
|
(18,093
|
)
|
|
1.49
|
|
|
(30,150
|
)
|
|
2.00
|
|
||
Shares withheld for payment of
taxes upon exercise of stock option |
|
(3,407
|
)
|
|
1.69
|
|
|
—
|
|
|
—
|
|
||
Forfeited
|
|
(23,283
|
)
|
|
5.71
|
|
|
(45,756
|
)
|
|
5.52
|
|
||
Expired
|
|
(2,850
|
)
|
|
5.04
|
|
|
(8,500
|
)
|
|
2.01
|
|
||
Outstanding, end of period
|
|
244,250
|
|
|
$
|
4.51
|
|
|
246,383
|
|
|
$
|
4.38
|
|
|
|
|
|
|
|
|
|
|
||||||
For options expected to vest
|
|
|
|
|
|
|
|
|
|
|
||||
Number expected to vest
|
|
220,987
|
|
|
$
|
4.49
|
|
|
233,070
|
|
|
$
|
4.28
|
|
Weighted average remaining term, in years
|
|
3.4
|
|
|
|
|
|
3.8
|
|
|
|
|
||
Intrinsic value (000s)
|
|
|
|
$
|
176
|
|
|
|
|
|
$
|
155
|
|
|
|
|
|
|
|
|
|
|
|
||||||
For exercisable options
|
|
|
|
|
|
|
|
|
|
|
||||
Number exercisable
|
|
125,650
|
|
|
$
|
3.59
|
|
|
106,783
|
|
|
$
|
2.33
|
|
Weighted average remaining term, in years
|
|
2.0
|
|
|
|
|
2.0
|
|
|
|
|
|||
Intrinsic value (000s)
|
|
|
|
$
|
166
|
|
|
|
|
|
$
|
155
|
|
|
|
|
|
|
|
|
|
|
|
||||||
For non-exercisable options
|
|
|
|
|
|
|
|
|
|
|
||||
Expense not yet recognized (000s)
|
|
|
|
$
|
171
|
|
|
|
|
|
$
|
221
|
|
|
Weighted average years to be recognized
|
|
2.6
|
|
|
|
|
2.6
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
||||||
For options exercised
|
|
|
|
|
|
|
|
|
||||||
Intrinsic value (000s)
|
|
|
|
$
|
59
|
|
|
|
|
|
$
|
131
|
|
|
|
Nine Months Ended
|
||||||||||||
|
|
June 27, 2014
|
|
June 28, 2013
|
||||||||||
Stock Options
|
|
Number
of Options |
|
Wgtd. Avg.
Grant Date
Fair Value
|
|
Number
of Options |
|
Wgtd. Avg.
Grant Date Fair Value |
||||||
|
|
|
|
|
|
|
|
|
||||||
Non-vested, beginning of period
|
|
138,350
|
|
|
$
|
2.51
|
|
|
157,150
|
|
|
$
|
2.42
|
|
Granted
|
|
45,500
|
|
|
1.62
|
|
|
50,000
|
|
|
2.65
|
|
||
Vested
|
|
(41,967
|
)
|
|
2.51
|
|
|
(21,794
|
)
|
|
2.27
|
|
||
Forfeited
|
|
(23,283
|
)
|
|
2.30
|
|
|
(45,756
|
)
|
|
2.50
|
|
||
Non-vested, end of period
|
|
118,600
|
|
|
$
|
2.20
|
|
|
139,600
|
|
|
$
|
2.51
|
|
|
|
Nine Months Ended
|
||||||||||||
|
|
June 27, 2014
|
|
June 28, 2013
|
||||||||||
Restricted (Non-vested) Stock
|
|
Number of
Non-vested
Shares
|
|
Wgtd. Avg.
Grant Date Fair Value |
|
Number of
Non-vested Shares |
|
Wgtd. Avg.
Grant Date Fair Value |
||||||
|
|
|
|
|
|
|
|
|
||||||
Outstanding, beginning of period
|
|
275,474
|
|
|
$
|
5.96
|
|
|
339,939
|
|
|
$
|
5.66
|
|
Granted
|
|
155,703
|
|
|
4.05
|
|
|
88,208
|
|
|
6.86
|
|
||
Vested
|
|
(80,971
|
)
|
|
5.74
|
|
|
(47,774
|
)
|
|
4.98
|
|
||
Shares withheld for payment of
taxes upon vesting of restricted stock |
|
(18,615
|
)
|
|
4.28
|
|
|
(4,441
|
)
|
|
4.70
|
|
||
Forfeited
|
|
(71,103
|
)
|
|
5.88
|
|
|
(74,635
|
)
|
|
5.68
|
|
||
Outstanding, end of period
|
|
260,488
|
|
|
$
|
5.15
|
|
|
301,297
|
|
|
$
|
6.12
|
|
|
|
|
|
|
|
|
|
|
||||||
For non-vested shares
|
|
|
|
|
|
|
|
|
|
|
|
|||
Expense not yet recognized (000s)
|
|
|
|
|
$
|
725
|
|
|
|
|
|
$
|
939
|
|
Weighted average remaining years for vesting
|
|
|
|
|
3.0
|
|
|
|
|
|
2.9
|
|
||
|
|
|
|
|
|
|
|
|
||||||
For shares vested
|
|
|
|
|
|
|
|
|
|
|
|
|||
Aggregate fair value on vesting dates (000s)
|
|
|
|
|
$
|
421
|
|
|
|
|
|
$
|
344
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
Income Tax Provision/Benefit
|
|
June 27,
2014 |
|
June 28,
2013 |
|
June 27,
2014 |
|
June 28,
2013 |
||||||||
(in thousands)
|
|
|
|
|
|
|
|
|
|
|||||||
Provision for/(benefit from) income taxes
|
|
$
|
3
|
|
|
$
|
224
|
|
|
$
|
(977
|
)
|
|
$
|
(518
|
)
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||
% of Sales by Sector
|
|
June 27,
2014 |
|
June 28,
2013 |
|
June 27,
2014 |
|
June 28,
2013 |
|
|
|
|
|
|
|
|
|
Aerospace & Defense (previously Military & Aerospace)
|
|
50%
|
|
47%
|
|
50%
|
|
51%
|
Medical
|
|
22%
|
|
21%
|
|
19%
|
|
19%
|
Industrial
|
|
22%
|
|
21%
|
|
25%
|
|
21%
|
Communications & Other
|
|
6%
|
|
11%
|
|
6%
|
|
9%
|
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
Future Rental Obligations
|
|
Contractual
Lease Payments |
||
(in thousands)
|
|
|
|
|
Twelve months ending June 27,
|
|
|
|
|
2015
|
|
$
|
325
|
|
2016
|
|
324
|
|
|
2017
|
|
299
|
|
|
2018
|
|
272
|
|
|
2019
|
|
71
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
Rent Expense
|
|
June 27,
2014 |
|
June 28,
2013 |
|
June 27,
2014 |
|
June 28,
2013 |
||||||||
(in thousands)
|
|
|
|
|
|
|
|
|
||||||||
Rent expense
|
|
$
|
90
|
|
|
$
|
293
|
|
|
$
|
339
|
|
|
$
|
946
|
|
|
|
Three Months Ended
|
||||||
Income Statement Data
|
|
June 27,
2014 |
|
June 28,
2013 |
||||
(in thousands)
|
|
|
|
|
||||
Net sales
|
|
$
|
32,992
|
|
|
$
|
35,154
|
|
|
|
|
|
|
|
|
||
Gross profit
|
|
3,880
|
|
|
5,159
|
|
||
Selling and administrative expenses
|
|
3,195
|
|
|
3,446
|
|
||
Restatement and related expenses
|
|
102
|
|
|
1,106
|
|
||
Interest and financing expense
|
|
558
|
|
|
10
|
|
||
Other expense/(income)
|
|
—
|
|
|
(9
|
)
|
||
Income/(loss) before income taxes
|
|
25
|
|
|
606
|
|
||
Provision for/(benefit from) income taxes
|
|
3
|
|
|
224
|
|
||
Net income/(loss)
|
|
$
|
22
|
|
|
$
|
382
|
|
|
|
Three Months Ended
|
||
% of Sales by Sector
|
|
June 27,
2014 |
|
June 28,
2013 |
|
|
|
|
|
Aerospace & Defense (previously Military & Aerospace)
|
|
50%
|
|
47%
|
Medical
|
|
22%
|
|
21%
|
Industrial
|
|
22%
|
|
21%
|
Communications & Other
|
|
6%
|
|
11%
|
|
|
100%
|
|
100%
|
|
|
Nine Months Ended
|
||||||
Income Statement Data
|
|
June 27,
2014 |
|
June 28,
2013 |
||||
(in thousands)
|
|
|
|
|
||||
Net sales
|
|
$
|
99,934
|
|
|
$
|
101,824
|
|
|
|
|
|
|
||||
Gross profit
|
|
12,259
|
|
|
12,223
|
|
||
Selling and administrative expenses
|
|
10,938
|
|
|
11,803
|
|
||
Restatement and related expenses
|
|
2,516
|
|
|
1,106
|
|
||
Interest and financing expense
|
|
1,410
|
|
|
648
|
|
||
Other expense/(income)
|
|
18
|
|
|
47
|
|
||
Income/(loss) before income taxes
|
|
(2,623
|
)
|
|
(1,381
|
)
|
||
Provision for/(benefit from) income taxes
|
|
(977
|
)
|
|
(518
|
)
|
||
Net income/(loss)
|
|
$
|
(1,646
|
)
|
|
$
|
(863
|
)
|
|
|
Nine Months Ended
|
||
% of Sales by Sector
|
|
June 27,
2014 |
|
June 28,
2013 |
|
|
|
|
|
Aerospace & Defense (previously Military & Aerospace)
|
|
50%
|
|
51%
|
Medical
|
|
19%
|
|
19%
|
Industrial
|
|
25%
|
|
21%
|
Communications & Other
|
|
6%
|
|
9%
|
|
|
100%
|
|
100%
|
|
|
Nine Months Ended
|
||||||
Cash Flow Data
|
|
June 27,
2014 |
|
June 28,
2013 |
||||
(in thousands)
|
|
|
|
|
||||
Cash and cash equivalents, beginning of period
|
|
$
|
2,499
|
|
|
$
|
2,662
|
|
Net cash flow from:
|
|
|
|
|
|
|
||
Operating activities
|
|
4,045
|
|
|
(1,063
|
)
|
||
Investing activities
|
|
(3,483
|
)
|
|
(4,357
|
)
|
||
Financing activities
|
|
(2,382
|
)
|
|
5,861
|
|
||
Net (decrease) increase in cash and cash equivalents
|
|
(1,820
|
)
|
|
441
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
679
|
|
|
$
|
3,103
|
|
|
|
Limit at
|
|
Calculated Amount At
|
|
||||||
Debt Covenant
|
|
June 27,
2014 |
|
September 30,
2013 |
|
June 27,
2014 |
|
September 30,
2013 |
|
||
Quarterly EBITDARS (000s)
|
|
Minimum $1,500
|
|
Minimum $1,500
|
|
$1,882
|
|
$
|
2,354
|
|
|
Debt to EBITDARS Ratio
|
|
Not Measured
|
|
Maximum 3.50x
|
|
Not Measured
|
|
5.20x
|
|
(a)
|
|
Fixed Charge Coverage Ratio (b)
|
|
Not Measured
|
|
Minimum 1.00x
|
|
Not Measured
|
|
0.23x
|
|
(a)
|
(a)
|
Compliance waived.
|
(b)
|
The ratio compares (i) 12-month EBITDA plus non-cash stock compensation expense, plus permitted fiscal 2013 restatement related expenses minus unfinanced capital expenditures minus cash taxes paid ("Adjusted EBITDA"), to (ii) the sum of interest expense, principal payments, sale-leaseback payments and dividends, if any (fixed charges).
|
|
|
Three Months Ended
|
||||||
|
|
June 27,
2014 |
|
September 30,
2013 |
||||
(in thousands)
|
|
|
|
|
|
|||
Net income/(loss)
|
|
$
|
22
|
|
|
$
|
(8,667
|
)
|
Restatement related expenses (a)
|
|
—
|
|
|
—
|
|
||
Asset impairment (b)
|
|
—
|
|
|
14,217
|
|
||
Provision for/(benefit from) income taxes
|
|
3
|
|
|
(5,004
|
)
|
||
Depreciation and amortization expense
|
|
1,208
|
|
|
1,219
|
|
||
Interest expense
|
|
558
|
|
|
522
|
|
||
Non-cash stock compensation
|
|
91
|
|
|
96
|
|
||
Rent expense - M&T sale-leaseback (c)
|
|
—
|
|
|
(29
|
)
|
||
EBITDARS
|
|
$
|
1,882
|
|
|
$
|
2,354
|
|
|
|
Three Months Ended
|
|
||||||
|
|
June 27,
2014 |
|
September 30,
2013 |
|
||||
(in thousands)
|
|
|
|
|
|
|
|||
Net income/(loss)
|
|
$
|
22
|
|
|
$
|
(8,667
|
)
|
|
Restatement related expenses (a)
|
|
—
|
|
|
—
|
|
|
||
Asset impairment (b)
|
|
—
|
|
|
14,217
|
|
|
||
Provision for/(benefit from) income taxes
|
|
3
|
|
|
(5,004
|
)
|
|
||
Depreciation and amortization expense
|
|
1,208
|
|
|
1,219
|
|
|
||
Interest expense
|
|
558
|
|
|
522
|
|
|
||
Non-cash stock compensation
|
|
91
|
|
|
96
|
|
|
||
Unfinanced capital expenditures
|
|
(369
|
)
|
|
(746
|
)
|
|
||
Income taxes paid
|
|
—
|
|
|
—
|
|
|
||
Adjusted EBITDA
|
|
$
|
1,513
|
|
|
$
|
1,637
|
|
|
(a)
|
Net income as defined by the 2013 Credit Agreement (as amended) is adjusted to add back up to $1.1 million of legal and accounting fees associated with the restatement (all of which were added back in the third quarter of fiscal 2013). There were no restatement related expenses added back to net income for the periods presented in the reconciliation tables above.
|
(b)
|
Net income as defined by the 2013 Credit Agreement (as amended) is adjusted to exclude the effect of any non-cash loss arising from any write-up or write-down of assets.
|
(c)
|
During the fourth quarter of fiscal 2013, we were refunded a payment charged in error during the third quarter of fiscal 2013.
|
|
IEC Electronics Corp.
|
|
(Registrant)
|
|
|
August 5, 2014
|
/s/ W. Barry Gilbert
|
|
W. Barry Gilbert
|
|
Chairman and Chief Executive Officer
|
|
|
August 5, 2014
|
/s/ Michael T. Williams
|
|
Michael T. Williams
|
|
Chief Financial Officer
|
Exhibit No.
|
|
Description
|
|
|
|
10.1*
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Employee Stock Purchase Plan Amendment 1, effective May 21, 2014, amending 2011 Employee Stock Purchase Plan filed as Appendix A to the Company's Proxy Statement on Schedule 14A on December 22, 2011.
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10.2*
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Letter terminating chief financial officer services, effective as of June 1, 2014, with Insero & Company CPAs, PC.
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31.1
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Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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31.2
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Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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32.1
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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
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101
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The following items from this Quarterly Report on Form 10-Q formatted in Extensible Business Reporting Language: (i) Consolidated Balance Sheets (unaudited), (ii) Consolidated Income Statements (unaudited), (iii) Consolidated Statements of Changes in Stockholders' Equity (unaudited), (iv) Consolidated Statements of Cash Flows (unaudited), and (v) Notes to Consolidated Financial Statements.
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1.
|
I have reviewed this report on Form 10-Q for the
nine
months ended
June 27, 2014
for IEC Electronics Corp.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and,
|
d.
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Dated: August 5, 2014
|
|
/s/ W. Barry Gilbert
|
|
|
W. Barry Gilbert
Chairman and Chief Executive Officer
|
1.
|
I have reviewed this report on Form 10-Q for the
nine
months ended
June 27, 2014
for IEC Electronics Corp.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and,
|
d.
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Dated: August 5, 2014
|
|
/s/ Michael T. Williams
|
|
|
Michael T. Williams
Chief Financial Officer
|
1.
|
The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Dated: August 5, 2014
|
|
/s/ W. Barry Gilbert
|
|
|
W. Barry Gilbert
Chairman and Chief Executive Officer
|
Dated: August 5, 2014
|
|
/s/ Michael T. Williams
|
|
|
Michael T. Williams
Chief Financial Officer
|