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
|
|
March 27,
2015 |
|
September 30,
2014 |
||||
|
(unaudited)
|
|
(restated)
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash
|
$
|
792
|
|
|
$
|
1,980
|
|
Accounts receivable, net of allowance
|
20,790
|
|
|
22,347
|
|
||
Inventories, net
|
27,237
|
|
|
22,526
|
|
||
Other current assets
|
4,048
|
|
|
3,597
|
|
||
Total current assets
|
52,867
|
|
|
50,450
|
|
||
|
|
|
|
||||
Fixed assets, net
|
17,538
|
|
|
17,850
|
|
||
Intangible assets, net
|
2,265
|
|
|
2,392
|
|
||
Goodwill
|
2,005
|
|
|
2,005
|
|
||
Other long term assets
|
52
|
|
|
299
|
|
||
|
|
|
|
||||
Total assets
|
$
|
74,727
|
|
|
$
|
72,996
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of long-term debt
|
$
|
16,940
|
|
|
$
|
2,908
|
|
Accounts payable
|
17,633
|
|
|
17,732
|
|
||
Accrued payroll and related expenses
|
2,481
|
|
|
3,203
|
|
||
Other accrued expenses
|
1,826
|
|
|
1,008
|
|
||
Customer deposits
|
3,200
|
|
|
1,553
|
|
||
Total current liabilities
|
42,080
|
|
|
26,404
|
|
||
|
|
|
|
||||
Long-term debt
|
19,595
|
|
|
28,479
|
|
||
Other long-term liabilities
|
625
|
|
|
708
|
|
||
Total liabilities
|
62,300
|
|
|
55,591
|
|
||
|
|
|
|
||||
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: 11,235,303 and 11,146,571 shares, respectively
|
|
|
|
||||
Outstanding: 10,199,431 and 10,126,767 shares, respectively
|
112
|
|
|
111
|
|
||
Additional paid-in capital
|
45,729
|
|
|
44,302
|
|
||
Retained earnings/(accumulated deficit)
|
(31,885
|
)
|
|
(25,554
|
)
|
||
Treasury stock, at cost: 1,035,872 and 1,019,804 shares, respectively
|
(1,529
|
)
|
|
(1,454
|
)
|
||
Total stockholders' equity
|
12,427
|
|
|
17,405
|
|
||
|
|
|
|
||||
Total liabilities and stockholders' equity
|
$
|
74,727
|
|
|
$
|
72,996
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
March 27,
2015 |
|
March 28,
2014 |
|
March 27,
2015 |
|
March 28,
2014 |
||||||||
|
|
|
(restated)
|
|
|
|
(restated)
|
||||||||
Net sales
|
$
|
32,889
|
|
|
$
|
34,805
|
|
|
$
|
63,832
|
|
|
$
|
66,942
|
|
Cost of sales
|
30,325
|
|
|
30,161
|
|
|
58,015
|
|
|
58,920
|
|
||||
Gross profit
|
2,564
|
|
|
4,644
|
|
|
5,817
|
|
|
8,022
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Selling and administrative expenses
|
6,705
|
|
|
3,952
|
|
|
10,308
|
|
|
7,744
|
|
||||
Restatement and related expenses
|
730
|
|
|
1,258
|
|
|
640
|
|
|
2,414
|
|
||||
Operating profit/(loss)
|
(4,871
|
)
|
|
(566
|
)
|
|
(5,131
|
)
|
|
(2,136
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Interest and financing expense
|
665
|
|
|
492
|
|
|
1,200
|
|
|
852
|
|
||||
Other expense/(income)
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
18
|
|
||||
Income/(loss) before income taxes
|
(5,536
|
)
|
|
(1,057
|
)
|
|
(6,331
|
)
|
|
(3,006
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Provision for/(benefit from) income taxes
|
—
|
|
|
13,657
|
|
|
—
|
|
|
13,040
|
|
||||
Net income/(loss)
|
$
|
(5,536
|
)
|
|
$
|
(14,714
|
)
|
|
$
|
(6,331
|
)
|
|
$
|
(16,046
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net income/(loss) per common and common equivalent share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.55
|
)
|
|
$
|
(1.50
|
)
|
|
$
|
(0.63
|
)
|
|
$
|
(1.64
|
)
|
Diluted
|
(0.55
|
)
|
|
(1.50
|
)
|
|
(0.63
|
)
|
|
(1.64
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common and common equivalent shares outstanding:
|
|
|
|
|
|||||||||||
Basic
|
10,075,719
|
|
|
9,829,964
|
|
|
9,972,692
|
|
|
9,805,841
|
|
||||
Diluted
|
10,075,719
|
|
|
9,829,964
|
|
|
9,972,692
|
|
|
9,805,841
|
|
|
Common
Stock,
par $0.01
|
|
|
Additional
Paid-In
Capital
|
|
|
Retained Earnings/ (Accumulated Deficit)
|
|
|
Treasury
Stock,
at cost
|
|
|
Total
Stockholders'
Equity
|
|
|||||
|
|
|
|
|
|
|
(restated)
|
|
|
|
|
|
|
||||||
Balances, September 30, 2013
|
$
|
110
|
|
|
$
|
43,802
|
|
|
$
|
(10,483
|
)
|
|
$
|
(1,435
|
)
|
|
$
|
31,994
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net loss
|
—
|
|
|
—
|
|
|
(16,046
|
)
|
|
—
|
|
|
(16,046
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
287
|
|
|
—
|
|
|
—
|
|
|
287
|
|
|||||
Restricted (non-vested) stock grants, net of
forfeitures |
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Exercise of stock options
|
1
|
|
|
21
|
|
|
—
|
|
|
(5
|
)
|
|
17
|
|
|||||
Shares withheld for payment of taxes upon
vesting of restricted stock |
—
|
|
|
(77
|
)
|
|
—
|
|
|
—
|
|
|
(77
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Balances, March 28, 2014, restated
|
$
|
112
|
|
|
$
|
44,032
|
|
|
$
|
(26,529
|
)
|
|
$
|
(1,440
|
)
|
|
$
|
16,175
|
|
|
Common
Stock,
par $0.01
|
|
|
Additional
Paid-In
Capital
|
|
|
Retained Earnings/ (Accumulated Deficit)
|
|
|
Treasury
Stock,
at cost
|
|
|
Total
Stockholders'
Equity
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Balances, September 30, 2014, restated
|
$
|
111
|
|
|
$
|
44,302
|
|
|
$
|
(25,554
|
)
|
|
$
|
(1,454
|
)
|
|
$
|
17,405
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net loss
|
—
|
|
|
—
|
|
|
(6,331
|
)
|
|
—
|
|
|
(6,331
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
1,954
|
|
|
—
|
|
|
—
|
|
|
1,954
|
|
|||||
Restricted (non-vested) stock grants, net of
forfeitures |
2
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Exercise of stock options
|
—
|
|
|
78
|
|
|
—
|
|
|
(75
|
)
|
|
3
|
|
|||||
Shares withheld for payment of taxes upon
vesting of restricted stock |
(1
|
)
|
|
(603
|
)
|
|
—
|
|
|
—
|
|
|
(604
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Balances, March 27, 2015
|
$
|
112
|
|
|
$
|
45,729
|
|
|
$
|
(31,885
|
)
|
|
$
|
(1,529
|
)
|
|
$
|
12,427
|
|
|
|
Six Months Ended
|
||||||
|
|
March 27,
2015 |
|
March 28,
2014 |
||||
|
|
|
|
(restated)
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
||||
Net income/(loss)
|
|
$
|
(6,331
|
)
|
|
$
|
(16,046
|
)
|
Non-cash adjustments:
|
|
|
|
|
||||
Stock-based compensation
|
|
1,954
|
|
|
287
|
|
||
Depreciation and amortization
|
|
2,372
|
|
|
2,419
|
|
||
Reserve for doubtful accounts
|
|
(172
|
)
|
|
433
|
|
||
Deferred tax expense/benefit
|
|
—
|
|
|
13,034
|
|
||
Changes in assets and liabilities:
|
|
|
|
|
||||
Accounts receivable
|
|
1,729
|
|
|
2,429
|
|
||
Inventory
|
|
(4,711
|
)
|
|
2,159
|
|
||
Other current assets
|
|
(1,149
|
)
|
|
(514
|
)
|
||
Other long term assets
|
|
242
|
|
|
(18
|
)
|
||
Accounts payable
|
|
(121
|
)
|
|
(2,009
|
)
|
||
Accrued expenses
|
|
96
|
|
|
242
|
|
||
Customer deposits
|
|
1,647
|
|
|
251
|
|
||
Other long term liabilities
|
|
(83
|
)
|
|
(9
|
)
|
||
Net cash flows from operating activities
|
|
(4,527
|
)
|
|
2,658
|
|
||
|
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
||||
Purchases of fixed assets
|
|
(1,906
|
)
|
|
(3,099
|
)
|
||
Grant proceeds from outside parties
|
|
698
|
|
|
—
|
|
||
Proceeds from (net cost of) disposal of fixed assets
|
|
—
|
|
|
323
|
|
||
Net cash flows from investing activities
|
|
(1,208
|
)
|
|
(2,776
|
)
|
||
|
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
||||
Advances from revolving line of credit
|
|
36,738
|
|
|
29,115
|
|
||
Repayments of revolving line of credit
|
|
(30,137
|
)
|
|
(30,650
|
)
|
||
Borrowings under other loan agreements
|
|
—
|
|
|
1,300
|
|
||
Repayments under other loan agreements
|
|
(1,453
|
)
|
|
(1,432
|
)
|
||
Debt issuance costs
|
|
—
|
|
|
(2
|
)
|
||
Proceeds from exercise of stock options
|
|
3
|
|
|
17
|
|
||
Shares withheld for payment of taxes upon vesting of restricted stock
|
|
(604
|
)
|
|
(77
|
)
|
||
Net cash flows from financing activities
|
|
4,547
|
|
|
(1,729
|
)
|
||
|
|
|
|
|
||||
Net increase/(decrease) in cash and cash equivalents
|
|
(1,188
|
)
|
|
(1,847
|
)
|
||
Cash and cash equivalents, beginning of period
|
|
1,980
|
|
|
2,499
|
|
||
Cash and cash equivalents, end of period
|
|
$
|
792
|
|
|
$
|
652
|
|
|
|
|
|
|
||||
Supplemental cash flow information:
|
|
|
|
|
||||
Interest paid
|
|
$
|
769
|
|
|
$
|
790
|
|
Income taxes paid
|
|
—
|
|
|
12
|
|
||
|
|
|
|
|
||||
Non-cash transactions
|
|
|
|
|
||||
Fixed assets purchased with extended payment terms
|
|
22
|
|
|
805
|
|
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
|
|
Six Months Ended
|
||||||||
Shares for EPS Calculation
|
|
March 27,
2015 |
|
March 28,
2014 |
|
March 27,
2015 |
|
March 28,
2014 |
||||
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding
|
|
10,075,719
|
|
|
9,829,964
|
|
|
9,972,692
|
|
|
9,805,841
|
|
Incremental shares
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Diluted shares
|
|
10,075,719
|
|
|
9,829,964
|
|
|
9,972,692
|
|
|
9,805,841
|
|
|
|
|
|
|
|
|
|
|
||||
Anti-dilutive shares excluded
|
|
658,905
|
|
|
564,475
|
|
|
658,905
|
|
|
564,475
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||
|
|
March 28,
2014 |
|
March 28,
2014 |
||||
(in thousands)
|
|
|
|
|
||||
Net income/(loss) - Previously reported
|
|
$
|
(569
|
)
|
|
$
|
(1,669
|
)
|
Deferred tax asset valuation allowance adjustment
|
|
(14,019
|
)
|
|
(14,019
|
)
|
||
Excess and obsolete inventory reserve adjustment
|
|
(126
|
)
|
|
(358
|
)
|
||
Net income/(loss) - Restated
|
|
$
|
(14,714
|
)
|
|
$
|
(16,046
|
)
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||
|
|
March 28, 2014
|
|
March 28, 2014
|
||||||||||||||||||||
|
|
As Reported
|
|
Adjustment
|
|
Restated
|
|
As Reported
|
|
Adjustment
|
|
Restated
|
||||||||||||
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cost of sales
|
|
$
|
30,035
|
|
|
$
|
126
|
|
|
$
|
30,161
|
|
|
$
|
58,562
|
|
|
$
|
358
|
|
|
$
|
58,920
|
|
Gross profit
|
|
4,770
|
|
|
(126
|
)
|
|
4,644
|
|
|
8,380
|
|
|
(358
|
)
|
|
8,022
|
|
||||||
Operating profit /(loss)
|
|
(440
|
)
|
|
(126
|
)
|
|
(566
|
)
|
|
(1,778
|
)
|
|
(358
|
)
|
|
(2,136
|
)
|
||||||
Income/(loss) before income
taxes |
|
(931
|
)
|
|
(126
|
)
|
|
(1,057
|
)
|
|
(2,648
|
)
|
|
(358
|
)
|
|
(3,006
|
)
|
||||||
Provision for /(benefit from)
income taxes |
|
(362
|
)
|
|
14,019
|
|
|
13,657
|
|
|
(979
|
)
|
|
14,019
|
|
|
13,040
|
|
||||||
Net income /(loss)
|
|
(569
|
)
|
|
(14,145
|
)
|
|
(14,714
|
)
|
|
(1,669
|
)
|
|
(14,377
|
)
|
|
(16,046
|
)
|
||||||
Net income /(loss) per share
|
|
$
|
(0.06
|
)
|
|
$
|
(1.44
|
)
|
|
$
|
(1.50
|
)
|
|
$
|
(0.17
|
)
|
|
$
|
(1.47
|
)
|
|
$
|
(1.64
|
)
|
|
|
Six Months Ended
|
||||||
Allowance for Doubtful Accounts
|
|
March 27,
2015 |
|
March 28,
2014 |
||||
(in thousands)
|
|
|
|
|
||||
Allowance, beginning of period
|
|
$
|
525
|
|
|
$
|
452
|
|
Provision for doubtful accounts
|
|
(114
|
)
|
|
470
|
|
||
Write-offs
|
|
(58
|
)
|
|
(37
|
)
|
||
Allowance, end of period
|
|
$
|
353
|
|
|
$
|
885
|
|
Inventories
|
|
March 27,
2015 |
|
September 30,
2014 |
||||
(in thousands)
|
|
|
|
|
(restated)
|
|||
Raw materials
|
|
$
|
19,040
|
|
|
$
|
16,769
|
|
Work-in-process
|
|
9,253
|
|
|
7,906
|
|
||
Finished goods
|
|
2,535
|
|
|
757
|
|
||
Total inventories
|
|
30,828
|
|
|
25,432
|
|
||
Reserve for excess/obsolete inventory
|
|
(3,591
|
)
|
|
(2,906
|
)
|
||
Inventories, net
|
|
$
|
27,237
|
|
|
$
|
22,526
|
|
Fixed Assets
|
|
March 27,
2015 |
|
September 30,
2014 |
||||
(in thousands)
|
|
|
|
|
||||
Land and improvements
|
|
$
|
1,601
|
|
|
$
|
1,601
|
|
Buildings and improvements
|
|
13,558
|
|
|
13,452
|
|
||
Leasehold improvements
|
|
1,487
|
|
|
1,458
|
|
||
Machinery and equipment
|
|
27,988
|
|
|
26,996
|
|
||
Furniture and fixtures
|
|
7,407
|
|
|
7,207
|
|
||
Construction in progress
|
|
982
|
|
|
381
|
|
||
Total fixed assets, at cost
|
|
53,023
|
|
|
51,095
|
|
||
Accumulated depreciation
|
|
(35,485
|
)
|
|
(33,245
|
)
|
||
Fixed assets, net
|
|
$
|
17,538
|
|
|
$
|
17,850
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
March 27,
2015 |
|
March 28,
2014 |
|
March 27,
2015 |
|
March 28,
2014 |
||||||||
(in thousands)
|
|
|
|
|
|
|
|
|
||||||||
Depreciation expense
|
|
$
|
1,066
|
|
|
$
|
1,157
|
|
|
$
|
2,239
|
|
|
$
|
2,265
|
|
Intangible Assets
|
|
March 27,
2015 |
|
September 30,
2014 |
||||
(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
|
|
(1,683
|
)
|
|
(1,556
|
)
|
||
Accumulated impairment - customer relationships
|
|
(2,412
|
)
|
|
(2,412
|
)
|
||
Intangible assets, net
|
|
$
|
2,265
|
|
|
$
|
2,392
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
Amortization Expense
|
|
March 27,
2015 |
|
March 28,
2014 |
|
March 27,
2015 |
|
March 28,
2014 |
||||||||
(in thousands)
|
|
|
|
|
|
|
|
|
||||||||
Intangible amortization expense
|
|
$
|
64
|
|
|
$
|
64
|
|
|
$
|
127
|
|
|
$
|
127
|
|
Future Amortization
|
|
Estimated future amortization
|
||
(in thousands)
|
|
|
|
|
Twelve months ended March,
|
|
|
|
|
2016
|
|
$
|
248
|
|
2017
|
|
234
|
|
|
2018
|
|
234
|
|
|
2019
|
|
233
|
|
|
2020
|
|
195
|
|
|
2021 and thereafter
|
|
1,121
|
|
Goodwill
|
|
March 27,
2015 |
|
September 30,
2014 |
||||
(in thousands)
|
|
|
|
|
|
|
||
Goodwill
|
|
$
|
13,810
|
|
|
$
|
13,810
|
|
Accumulated impairment
|
|
(11,805
|
)
|
|
(11,805
|
)
|
||
Goodwill, net
|
|
$
|
2,005
|
|
|
$
|
2,005
|
|
|
|
Fixed/
|
|
|
|
March 27, 2015
|
|
September 30, 2014
|
||||||||||
|
|
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
|
|
$
|
14,032
|
|
|
4.44
|
%
|
|
$
|
7,431
|
|
|
4.44
|
%
|
Term Loan A
|
|
f
|
|
2/1/2022
|
|
7,593
|
|
|
3.98
|
|
|
8,148
|
|
|
3.98
|
|
||
Term Loan B
|
|
v
|
|
2/1/2023
|
|
11,083
|
|
|
3.42
|
|
|
11,783
|
|
|
3.41
|
|
||
Albuquerque Mortgage Loan
|
|
v
|
|
2/1/2018
|
|
2,600
|
|
|
4.69
|
|
|
2,733
|
|
|
4.69
|
|
||
Celmet Building Term Loan
|
|
f
|
|
11/7/2018
|
|
1,127
|
|
|
4.72
|
|
|
1,192
|
|
|
4.72
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other credit facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Albuquerque Industrial Revenue Bond
|
|
f
|
|
3/1/2019
|
|
100
|
|
|
5.63
|
|
|
100
|
|
|
5.63
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total debt
|
|
|
|
|
|
36,535
|
|
|
|
|
31,387
|
|
|
|
||||
Less: current portion
|
|
|
|
|
|
(16,940
|
)
|
|
|
|
(2,908
|
)
|
|
|
||||
Long-term debt
|
|
|
|
|
|
$
|
19,595
|
|
|
|
|
$
|
28,479
|
|
|
|
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
March 27, 2015
, the upper limit on Revolver borrowings was
$20.0 million
. Average available balances amounted to $
11.2 million
and
$10.1 million
during the
six months ended
March 27, 2015
and
March 28, 2014
, 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.
|
|
Debt to EBITDARS Ratio: (a)
|
|
|
|
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, 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).
|
Debt Repayment Schedule
|
|
Contractual
Principal Payments |
||
(in thousands)
|
|
|
|
|
Twelve months ended March 27,
|
|
|
|
|
2016
(1)
|
|
$
|
16,940
|
|
2017
|
|
2,908
|
|
|
2018
|
|
4,708
|
|
|
2018
|
|
3,348
|
|
|
2020 and thereafter
|
|
8,631
|
|
|
|
|
$
|
36,535
|
|
|
|
March 27, 2015
|
|
September 30, 2014
|
||||||||
|
|
|
|
|
|
|
|
|
||||
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
||||
(in thousands)
|
|
|
|
|
|
|
|
|
||||
Term Loan A
|
|
6,608
|
|
|
7,593
|
|
|
6,924
|
|
|
8,148
|
|
Celmet Building Term Loan
|
|
992
|
|
|
1,127
|
|
|
1,035
|
|
|
1,192
|
|
|
|
Six Months Ended
|
||||||
Warranty Reserve
|
|
March 27,
2015 |
|
March 28,
2014 |
||||
(in thousands)
|
|
|
|
|
|
|
||
Reserve, beginning of period
|
|
$
|
251
|
|
|
$
|
219
|
|
Provision
|
|
204
|
|
|
178
|
|
||
Warranty costs
|
|
(161
|
)
|
|
(131
|
)
|
||
Reserve, end of period
|
|
$
|
294
|
|
|
$
|
266
|
|
|
|
Six Months Ended
|
||||||
Valuation of Options
|
|
March 27,
2015 |
|
March 28,
2014 |
||||
|
|
|
|
|
||||
Assumptions for Black-Scholes:
|
|
|
|
|
||||
Risk-free interest rate
|
|
1.30
|
%
|
|
1.49
|
%
|
||
Expected term in years
|
|
4.5
|
|
|
4.5
|
|
||
Volatility
|
|
40
|
%
|
|
58
|
%
|
||
Expected annual dividends
|
|
none
|
|
|
none
|
|
||
|
|
|
|
|
||||
Value of options granted:
|
|
|
|
|
||||
Number of options granted
|
|
447,145
|
|
|
40,500
|
|
||
Weighted average fair value per share
|
|
$
|
1.48
|
|
|
$
|
1.98
|
|
Fair value of options granted (000's)
|
|
$
|
662
|
|
|
$
|
80
|
|
|
|
Six Months Ended
|
||||||||||||
|
|
March 27, 2015
|
|
March 28, 2014
|
||||||||||
Stock Options
|
|
Number
of Options |
|
Wgtd. Avg.
Exercise Price |
|
Number
of Options |
|
Wgtd. Avg.
Exercise Price |
||||||
|
|
|
|
|
|
|
|
|
||||||
Outstanding, beginning of period
|
|
234,000
|
|
|
$
|
4.48
|
|
|
246,383
|
|
|
$
|
4.38
|
|
Granted
|
|
447,145
|
|
|
4.18
|
|
|
40,500
|
|
|
4.08
|
|
||
Exercised
|
|
(25,932
|
)
|
|
1.87
|
|
|
(14,504
|
)
|
|
1.37
|
|
||
Shares withheld for payment of exercise
price upon exercise of stock option |
|
(16,068
|
)
|
|
1.88
|
|
|
(996
|
)
|
|
1.43
|
|
||
Forfeited
|
|
(8,300
|
)
|
|
6.04
|
|
|
(14,433
|
)
|
|
5.44
|
|
||
Expired
|
|
(7,400
|
)
|
|
6.38
|
|
|
(350
|
)
|
|
4.71
|
|
||
Outstanding, end of period
|
|
623,445
|
|
|
$
|
4.40
|
|
|
256,600
|
|
|
$
|
4.50
|
|
|
|
|
|
|
|
|
|
|
||||||
For options expected to vest
|
|
|
|
|
|
|
|
|
|
|
||||
Number expected to vest
|
|
467,670
|
|
|
$
|
4.50
|
|
|
232,637
|
|
|
$
|
4.46
|
|
Weighted average remaining term, in years
|
|
3.2
|
|
|
|
|
3.6
|
|
|
|
|
|||
Intrinsic value (000s)
|
|
|
|
$
|
37
|
|
|
|
|
|
$
|
199
|
|
|
|
|
|
|
|
|
|
|
|
||||||
For exercisable options
|
|
|
|
|
|
|
|
|
|
|
||||
Number exercisable
|
|
207,300
|
|
|
$
|
5.00
|
|
|
123,250
|
|
|
$
|
3.30
|
|
Weighted average remaining term, in years
|
|
1.5
|
|
|
|
|
2.0
|
|
|
|
|
|||
Intrinsic value (000s)
|
|
|
|
$
|
37
|
|
|
|
|
|
$
|
188
|
|
|
|
|
|
|
|
|
|
|
|
||||||
For non-exercisable options
|
|
|
|
|
|
|
|
|
|
|
||||
Expense not yet recognized (000s)
|
|
|
|
$
|
600
|
|
|
|
|
|
$
|
193
|
|
|
Weighted average years to be recognized
|
|
4.0
|
|
|
|
|
2.7
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
||||||
For options exercised
|
|
|
|
|
|
|
|
|
||||||
Intrinsic value (000s)
|
|
|
|
$
|
119
|
|
|
|
|
|
$
|
43
|
|
|
|
Six Months Ended
|
||||||||||||
|
|
March 27, 2015
|
|
March 28, 2014
|
||||||||||
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
|
|
112,350
|
|
|
$
|
2.15
|
|
|
138,350
|
|
|
$
|
2.51
|
|
Granted
|
|
447,145
|
|
|
1.48
|
|
|
40,500
|
|
|
1.98
|
|
||
Vested
|
|
(135,050
|
)
|
|
2.08
|
|
|
(31,067
|
)
|
|
2.37
|
|
||
Forfeited
|
|
(8,300
|
)
|
|
2.35
|
|
|
(14,433
|
)
|
|
5.44
|
|
||
Non-vested, end of period
|
|
416,145
|
|
|
$
|
1.45
|
|
|
133,350
|
|
|
$
|
2.30
|
|
|
|
Six Months Ended
|
||||||||||||
|
|
March 27, 2015
|
|
March 28, 2014
|
||||||||||
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
|
|
322,873
|
|
|
$
|
4.97
|
|
|
275,474
|
|
|
$
|
5.96
|
|
Granted
|
|
163,655
|
|
|
5.06
|
|
|
155,703
|
|
|
4.05
|
|
||
Vested
|
|
(316,539
|
)
|
|
5.08
|
|
|
(73,878
|
)
|
|
5.75
|
|
||
Shares withheld for payment of
taxes upon vesting of restricted stock |
|
(133,329
|
)
|
|
4.53
|
|
|
(18,208
|
)
|
|
4.28
|
|
||
Forfeited
|
|
(1,200
|
)
|
|
3.91
|
|
|
(31,216
|
)
|
|
6.55
|
|
||
Outstanding, end of period
|
|
35,460
|
|
|
$
|
4.23
|
|
|
307,875
|
|
|
$
|
5.14
|
|
|
|
|
|
|
|
|
|
|
||||||
For non-vested shares
|
|
|
|
|
|
|
|
|
|
|
|
|||
Expense not yet recognized (000s)
|
|
|
|
$
|
163
|
|
|
|
|
|
$
|
924
|
|
|
Weighted average remaining years for vesting
|
|
|
|
|
2.0
|
|
|
|
|
|
3.4
|
|
||
|
|
|
|
|
|
|
|
|
||||||
For shares vested
|
|
|
|
|
|
|
|
|
|
|
|
|||
Aggregate fair value on vesting dates (000s)
|
|
|
|
|
$
|
2,062
|
|
|
|
|
|
$
|
388
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
Income Tax Provision/Benefit
|
|
March 27,
2015 |
|
March 28,
2014 |
|
March 27,
2015 |
|
March 28,
2014 |
||||||||
(in thousands)
|
|
|
|
|
(restated)
|
|
|
|
(restated)
|
|||||||
Provision for/(benefit from) income taxes
|
|
$
|
—
|
|
|
$
|
13,657
|
|
|
$
|
—
|
|
|
$
|
13,040
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||
% of Sales by Sector
|
|
March 27,
2015 |
|
March 28,
2014 |
|
March 27,
2015 |
|
March 28,
2014 |
|
|
|
|
|
|
|
|
|
Aerospace & Defense (previously Military & Aerospace)
|
|
40%
|
|
47%
|
|
42%
|
|
50%
|
Medical
|
|
30%
|
|
15%
|
|
29%
|
|
18%
|
Industrial
|
|
28%
|
|
30%
|
|
26%
|
|
26%
|
Communications & Other
|
|
2%
|
|
8%
|
|
3%
|
|
6%
|
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
•
|
A technology center that combines dedicated prototype manufacturing with an on-site laboratory capable of solving our customers' complex design and reliability issues, enabling the seamless transition concept to production.
|
•
|
An in-house engineering development team capable of designing and building custom, functional testing systems to certify the reliability of our customers' complex system-level products and support of end-order fulfillment.
|
•
|
A testing services laboratory that enables us to provide our customers with complex failure analysis of electronic components as well as component risk mitigation planning for obsolete and suspect parts utilized in life threatening and mission-critical systems.
|
•
|
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 which provides customers real-time access to their critical, project specific data.
|
|
|
Three Months Ended
|
||||||
Income Statement Data
|
|
March 27,
2015 |
|
March 28,
2014 |
||||
(in thousands)
|
|
|
|
(restated)
|
||||
Net sales
|
|
$
|
32,889
|
|
|
$
|
34,805
|
|
|
|
|
|
|
||||
Gross profit
|
|
2,564
|
|
|
4,644
|
|
||
Selling and administrative expenses
|
|
6,705
|
|
|
3,952
|
|
||
Restatement and related expenses
|
|
730
|
|
|
1,258
|
|
||
Interest and financing expense
|
|
665
|
|
|
492
|
|
||
Other expense/(income)
|
|
—
|
|
|
(1
|
)
|
||
Income/(loss) before income taxes
|
|
(5,536
|
)
|
|
(1,057
|
)
|
||
Provision for/(benefit from) income taxes
|
|
—
|
|
|
13,657
|
|
||
Net income/(loss)
|
|
$
|
(5,536
|
)
|
|
$
|
(14,714
|
)
|
|
|
Three Months Ended
|
||
% of Sales by Sector
|
|
March 27,
2015 |
|
March 28,
2014 |
|
|
|
|
|
Aerospace & Defense (previously Military & Aerospace)
|
|
40%
|
|
47%
|
Medical
|
|
30%
|
|
15%
|
Industrial
|
|
28%
|
|
30%
|
Communications & Other
|
|
2%
|
|
8%
|
|
|
100%
|
|
100%
|
|
|
Six Months Ended
|
||||||
Income Statement Data
|
|
March 27,
2015 |
|
March 28,
2014 |
||||
(in thousands)
|
|
|
|
(restated)
|
||||
Net sales
|
|
$
|
63,832
|
|
|
$
|
66,942
|
|
|
|
|
|
|
||||
Gross profit
|
|
5,817
|
|
|
8,022
|
|
||
Selling and administrative expenses
|
|
10,308
|
|
|
7,744
|
|
||
Restatement and related expenses
|
|
640
|
|
|
2,414
|
|
||
Interest and financing expense
|
|
1,200
|
|
|
852
|
|
||
Other expense/(income)
|
|
—
|
|
|
18
|
|
||
Income/(loss) before income taxes
|
|
(6,331
|
)
|
|
(3,006
|
)
|
||
Provision for/(benefit from) income taxes
|
|
—
|
|
|
13,040
|
|
||
Net income/(loss)
|
|
$
|
(6,331
|
)
|
|
$
|
(16,046
|
)
|
|
|
Six Months Ended
|
||
% of Sales by Sector
|
|
March 27,
2015 |
|
March 28,
2014 |
|
|
|
|
|
Aerospace & Defense (previously Military & Aerospace)
|
|
42%
|
|
50%
|
Medical
|
|
29%
|
|
18%
|
Industrial
|
|
26%
|
|
26%
|
Communications & Other
|
|
3%
|
|
6%
|
|
|
100%
|
|
100%
|
|
|
Six Months Ended
|
||||||
Cash Flow Data
|
|
March 27,
2015 |
|
March 28,
2014 |
||||
(in thousands)
|
|
|
|
|
||||
Cash and cash equivalents, beginning of period
|
|
$
|
1,980
|
|
|
$
|
2,499
|
|
Net cash flow from:
|
|
|
|
|
|
|
||
Operating activities
|
|
(4,527
|
)
|
|
2,658
|
|
||
Investing activities
|
|
(1,208
|
)
|
|
(2,776
|
)
|
||
Financing activities
|
|
4,547
|
|
|
(1,729
|
)
|
||
Net (decrease) increase in cash and cash equivalents
|
|
(1,188
|
)
|
|
(1,847
|
)
|
||
Cash and cash equivalents at end of period
|
|
$
|
792
|
|
|
$
|
652
|
|
|
|
Limit at
|
|
Calculated Amount At
|
|
||||||||
Debt Covenant
|
|
March 27,
2015 |
|
September 30,
2014 |
|
March 27,
2015 |
|
September 30,
2014 |
|
||||
|
|
|
|
|
|
|
|
(restated)
|
|
||||
Quarterly EBITDARS (000s)
|
|
Minimum $1,500
|
|
Minimum $1,500
|
|
$
|
(1,930
|
)
|
|
$
|
2,641
|
|
|
Debt to EBITDARS Ratio
|
|
Maximum 3.50x
|
|
Not Measured
|
|
10.1x
|
|
|
Not Measured
|
|
(a)
|
||
Fixed Charge Coverage Ratio (b)
|
|
Minimum 1.15x
|
|
Not Measured
|
|
0.03x
|
|
|
Not Measured
|
|
(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
|
||||||
|
|
March 27,
2015 |
|
September 30,
2014 |
||||
(in thousands)
|
|
|
|
(restated)
|
||||
Net income/(loss)
|
|
$
|
(5,536
|
)
|
|
$
|
1,034
|
|
Provision for/(benefit from) income taxes
|
|
—
|
|
|
(161
|
)
|
||
Depreciation and amortization expense
|
|
1,130
|
|
|
1,218
|
|
||
Interest expense
|
|
665
|
|
|
386
|
|
||
Non-cash stock compensation
|
|
1,811
|
|
|
164
|
|
||
EBITDARS
|
|
$
|
(1,930
|
)
|
|
$
|
2,641
|
|
|
|
Three Months Ended
|
|
||||||
|
|
March 27,
2015 |
|
September 30,
2014 |
|
||||
(in thousands)
|
|
|
|
(restated)
|
|
|
|||
Net income/(loss)
|
|
$
|
(5,536
|
)
|
|
$
|
1,034
|
|
|
Provision for/(benefit from) income taxes
|
|
—
|
|
|
(161
|
)
|
|
||
Depreciation and amortization expense
|
|
1,130
|
|
|
1,218
|
|
|
||
Interest expense
|
|
665
|
|
|
386
|
|
|
||
Non-cash stock compensation
|
|
1,811
|
|
|
164
|
|
|
||
Unfinanced capital expenditures
|
|
(645
|
)
|
|
(512
|
)
|
|
||
Income taxes paid
|
|
—
|
|
|
(3
|
)
|
|
||
Adjusted EBITDA
|
|
$
|
(2,575
|
)
|
|
$
|
2,126
|
|
|
3/27/2015 through and including 6/26/2015
|
<5.75 to 1.00
|
6/27/2015 through and including 9/30/2015
|
<5.75 to 1.00
|
10/1/2015 through and including 12/25/2015
|
<5.50 to 1.00
|
12/26/2015 through and including 3/25/2016
|
<5.00 to 1.00
|
3/26/2016 through and including 6/24/2016
|
<4.50 to 1.00
|
6/25/2016 through and including 9/30/2016
|
<4.00 to 1.00
|
10/1/2016 and thereafter
|
< 3.50 to 1.00
|
3/28/2015 through and including 6/26/2015
|
≥0.60 to 1.00
|
6/27/2015 through and including 9/30/2015
|
≥0.45 to 1.00
|
10/1/2015 through and including 12/25/2015
|
≥0.75 to 1.00
|
12/26/2015 through and including 3/25/2016
|
≥1.00 to 1.00
|
3/26/2016 through and including 6/24/2016
|
≥1.10 to 1.00
|
6/25/2016 and thereafter
|
≥1.25 to 1.00
|
|
|
IEC Electronics Corp.
|
|
|
(Registrant)
|
|
|
|
May 11, 2015
|
By:
|
/s/ Jeffery T. Schlarbaum
|
|
|
Jeffery T. Schlarbaum
|
|
|
Chief Executive Officer and President
|
|
|
|
May 11, 2015
|
By:
|
/s/ Michael T. Williams
|
|
|
Michael T. Williams
|
|
|
Vice President of Finance and Chief Financial Officer
|
Exhibit No.
|
|
Description
|
|
|
|
3.1
|
|
Certificate of Elimination of Series A Junior Participating Preferred Stock (incorporated by reference in Exhibit 3.1 to the Company's Current Report on Form 8-K filed March 13, 2015).
|
4.2
|
|
First Amendment to Tax Benefit Preservation Plan Rights Agreements (incorporated by reference in Exhibit 4.2 to the Company's Current Report on Form 8-K filed March 13, 2015).
|
10.1*
|
|
Employment Agreement Amendment 1, effective January 27, 2015, between IEC Electronics Corp. and Michael T. Williams
|
10.2*
|
|
Salary Continuance and Non-Competition Agreement Amendment 1, effective January 27, 2015, between IEC Electronics Corp. and Brett E. Mancini
|
10.3*
|
|
Employment Agreement, effective March 20, 2015 between IEC Electronics Corp. and Jeffrey T. Schlarbaum.
|
10.4*
|
|
Sign-On Option Award Agreement - Inducement Grant, March 20, 2015 between IEC Electronics Corp. and Jeffrey T. Schlarbaum.
|
10.5*
|
|
Sign-On Option Award Agreement - 2013 Omnibus Incentive Compensation Plan, dated March 20, 2015 between IEC Electronics Corp and Jeffrey T. Schlarbaum.
|
10.6
|
|
Sixth Amendment to Fourth Amended and Restated Credit Facility Agreement, as
of May 8, 2015,
between IEC Electronics Corp. and Manufacturers and Traders Trust Company.
|
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
|
101
|
|
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.
|
a)
|
25% (with respect to 4,036 shares) vest on March 20, 2016;
|
b)
|
an additional 25% (with respect to 4,036 shares) vest on March 20, 2017;
|
c)
|
an additional 25% (with respect to 4,036 shares) vest on March 20, 2018; and
|
d)
|
the remaining 25% (with respect to 4,037 shares) vest on March 20, 2019.
|
(a)
|
In order to exercise the Option with respect to all or any part of the shares of Stock for which the Option is at the time exercisable, Optionee (or any other person or persons exercising the Option) must take the following actions:
|
(i)
|
Execute and deliver to the Company a Notice of Exercise (“Notice”) (in the form attached to this Agreement) for the shares of Stock for which the Option is exercised, which Notice may require the Optionee to certify in a manner acceptable to the Company that Optionee is in compliance with the terms and conditions of the Plan and this Agreement; and
|
(ii)
|
Pay the aggregate Option Exercise Price for the purchased shares in one or more of the following forms:
|
(A)
|
by cash, wire transfer or check made payable to the Company;
|
(B)
|
in shares of Stock held by Optionee (or any other person or persons exercising the Option) for at least six (6) months and valued at Fair Market Value on the date of exercise; or
|
(C)
|
if permissible under applicable law at the time of exercise and to the extent allowed by the Company, through a special sale and remittance procedure pursuant to which Optionee shall concurrently provide irrevocable instructions (I) to the approved brokerage firms to effect the immediate sale of the purchased shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate Option Exercise Price payable for the purchased shares plus all applicable federal, state and local income and employment taxes required to be withheld by the Company by reason of such exercise and (II) to the Company to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sales transaction.
|
(iii)
|
Make appropriate arrangements with the Company for the satisfaction of all federal, state and local income and employment tax withholding requirements applicable to the Option exercise.
|
(b)
|
As soon as practical after the date of exercise, subject to Section 10, the Company shall issue to or on behalf of Optionee (or any other person or persons exercising the Option) a certificate for the purchased shares of Stock, with the appropriate legends, if any, affixed thereto.
|
(c)
|
In no event may the Option be exercised for any fractional shares.
|
(a)
|
Death
. If the Optionee’s Termination of Employment is on account of death, then the unvested portion of the Option shall immediately vest in full on the date of such Termination of Employment. Thereafter, the Option may be exercised, in whole or in part, by the Optionee’s Designated Beneficiary (as defined in the Plan) at any time on or before the earlier to occur of (x) the Expiration Date and (y) the first anniversary of the date of such Termination of Employment.
|
(b)
|
Disability
. If the Optionee’s Termination of Employment is on account of Disability (as defined in the Employment Agreement), then the unvested portion of the Option shall immediately vest in full on the date of such Termination of Employment. Thereafter the Option may be exercised, in whole or in part, by the Optionee at any time on or before the earlier to occur of (x) the Expiration Date and (y) the first anniversary of the date of such Termination of Employment.
|
(c)
|
For Cause or without Good Reason
. If the Optionee’s Termination of Employment is by the Company for Cause (as defined in the Employment Agreement) or by the Optionee without Good Reason (as defined in the Employment Agreement), then the unvested portion of the Option shall be forfeited on the date of such Termination of Employment. Thereafter, the vested portion of the Option may be exercised, in whole or in part, by the Optionee at any time on or before the earlier to occur of (x) the Expiration Date and (y) the date that is 30 days following the date of such Termination of Employment.
|
(d)
|
Without Cause or for Good Reason
. If the Optionee’s Termination of Employment is by the Company without Cause (as defined in the Employment Agreement) or by the Optionee for Good Reason (as defined in the Employment Agreement), then the unvested portion of the Option shall immediately vest in full on the date of such Termination of Employment. Thereafter, the Option may be exercised, in whole or in part, by the Optionee at any time on or before the Expiration Date.
|
(e)
|
Death After Termination of Employment
. If (i) the Optionee’s Termination of Employment is for any reason other than death and (ii) the Optionee dies after such Termination of Employment but before the date the Option must be exercised as set forth in the preceding subsections, then the Option, to the extent it is vested on the date of the Optionee’s death, may be exercised, in whole or in part, by the Optionee’s Designated Beneficiary at any time during the period in which the Optionee could have exercised the Option if living.
|
(a)
|
As a precondition to the Company’s execution of this Agreement and the grant of the Option hereunder, the Optionee makes the following representations to the Company:
|
(i)
|
The Optionee understands that any shares of Stock that may be acquired upon exercise of the Option have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws by reason of their issuance in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act pursuant to Section 4(2) thereof. The Optionee acknowledges that any shares of Stock acquired upon exercise of the Option must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from such registration is available. The Optionee is aware of the provisions of Rule 144 promulgated under the Securities Act that permit limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions. The Optionee acknowledges that each certificate will bear a legend referencing the foregoing restrictions.
|
(ii)
|
The Optionee is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act. The Optionee is financially able to bear the economic risk of his decision to accept the Option as compensation. The Optionee has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in any shares of Stock that may be acquired upon exercise of the Option and has had access to the Company’s periodic reports and other information filed by the Company with the Securities and Exchange Commission.
|
(iii)
|
The Optionee is acquiring any shares of Stock upon exercise of the Option for his own account and not with a view to the distribution thereof in violation of the Securities Act, and any applicable securities laws of any state.
|
(b)
|
The Optionee confirms that the Company is relying upon his representations contained in this Section 10 in connection with the issuance to him of the Option, and upon due exercise, the shares of Stock underlying the Option. The Optionee undertakes to notify the Company immediately of any change in any representation, warranty or other information relating to him set forth in this Section 10, and agrees that such representations and warranties and his agreements, undertakings and acknowledgments contained herein shall survive the exercise of the Option. In consideration of such issuance, the Optionee hereby
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
Its:
|
|
|
|
|
Optionee
|
|
|
|
|
|
Street Address
|
|
|
|
|
|
City
|
State
|
Zip Code
|
(b)
|
__________ shares of common stock of the Company owned by me for at least six months, free of any liens or encumbrances and having a fair market value of $_________.
|
(c)
|
if permissible under applicable law at the time of exercise and to the extent allowed by the Company, an authorization letter which gives irrevocable instructions to the Company to deliver the stock certificates representing the shares for which the option is being exercised directly to ______________ (name and address of broker) together with a copy of the instructions to _______________ (name of broker) to sell such shares and promptly deliver to the Company the portion of the proceeds equal to the total purchase price and withholding taxes due.
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Very truly yours,
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Optionee’s Signature
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a)
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25% (with respect to 100,000 shares) vest on March 20, 2016;
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b)
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an additional 25% (with respect to 100,000 shares) vest on March 20, 2017;
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c)
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an additional 25% (with respect to 100,000 shares) vest on March 20, 2018; and
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d)
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the remaining 25% (with respect to 100,000 shares) vest on March 20, 2019.
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(a)
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In order to exercise the Option with respect to all or any part of the shares of Stock for which the Option is at the time exercisable, Optionee (or any other person or persons exercising the Option) must take the following actions:
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(i)
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Execute and deliver to the Company a Notice of Exercise (“Notice”) (in the form attached to this Agreement) for the shares of Stock for which the Option is exercised, which Notice may require the Optionee to certify in a manner acceptable to the Company that Optionee is in compliance with the terms and conditions of the Plan and this Agreement; and
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(ii)
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Pay the aggregate Option Exercise Price for the purchased shares in one or more of the following forms:
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(A)
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by cash, wire transfer or check made payable to the Company;
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(B)
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in shares of Stock held by Optionee (or any other person or persons exercising the Option) for at least six (6) months and valued at Fair Market Value on the date of exercise; or
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(C)
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through a special sale and remittance procedure pursuant to which Optionee shall concurrently provide irrevocable instructions (I) to the approved brokerage firms to effect the immediate sale of the purchased shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate Option Exercise Price payable for the purchased shares plus all applicable federal, state and local income and employment taxes required to be withheld by the Company by reason of such exercise and (II) to the Company to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sales transaction.
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(iii)
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Make appropriate arrangements with the Company for the satisfaction of all federal, state and local income and employment tax withholding requirements applicable to the Option exercise.
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(b)
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As soon as practical after the date of exercise, the Company shall issue to or on behalf of Optionee (or any other person or persons exercising the Option) a certificate for the purchased shares of Stock, with the appropriate legends, if any, affixed thereto.
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(c)
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In no event may the Option be exercised for any fractional shares.
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(a)
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Death
. If the Optionee’s Termination of Employment is on account of death, then the unvested portion of the Option shall immediately vest in full on the date of such Termination of Employment. Thereafter, the Option may be exercised, in whole or in part, by the Optionee’s Designated Beneficiary (as defined in the Plan) at any time on or before the earlier to occur of (x) the Expiration Date and (y) the first anniversary of the date of such Termination of Employment.
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(b)
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Disability
. If the Optionee’s Termination of Employment is on account of Disability (as defined in the Employment Agreement), then the unvested portion of the Option shall immediately vest in full on the date of such Termination of Employment. Thereafter the Option may be exercised, in whole or in part, by the Optionee at any time on or before the earlier to occur of (x) the Expiration Date and (y) the first anniversary of the date of such Termination of Employment.
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(c)
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For Cause or without Good Reason
. If the Optionee’s Termination of Employment is by the Company for Cause (as defined in the Employment Agreement) or by the Optionee without Good Reason (as defined in the Employment Agreement), then the unvested portion of the Option shall be forfeited on the date of such Termination of Employment. Thereafter, the vested portion of the Option may be exercised, in whole or in part, by the Optionee at any time on or before the earlier to occur of (x) the Expiration Date and (y) the date that is 30 days following the date of such Termination of Employment.
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(d)
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Without Cause or for Good Reason
. If the Optionee’s Termination of Employment is by the Company without Cause (as defined in the Employment Agreement) or by the Optionee for Good Reason (as defined in the Employment Agreement), then the unvested portion of the Option shall immediately vest in full on the date of such Termination of Employment. Thereafter, the Option may be exercised, in whole or in part, by the Optionee at any time on or before the Expiration Date, provided, however that the Option shall not be eligible for
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(e)
|
Death After Termination of Employment
. If (i) the Optionee’s Termination of Employment is for any reason other than death and (ii) the Optionee dies after such Termination of Employment but before the date the Option must be exercised as set forth in the preceding subsections, then the Option, to the extent it is vested on the date of the Optionee’s death, may be exercised, in whole or in part, by the Optionee’s Designated Beneficiary at any time during the period in which the Optionee could have exercised the Option if living.
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IEC ELECTRONICS CORP.
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By:
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Its:
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Optionee
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Street Address
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City
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State
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Zip Code
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(b)
|
__________ shares of common stock of the Company owned by me for at least six months, free of any liens or encumbrances and having a fair market value of $_________.
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(c)
|
an authorization letter which gives irrevocable instructions to the Company to deliver the stock certificates representing the shares for which the option is being exercised directly to ______________ (name and address of broker) together with a copy of the instructions to _______________ (name of broker) to sell such shares and promptly deliver to the Company the portion of the proceeds equal to the total purchase price and withholding taxes due, if any.
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Very truly yours,
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Optionee’s Signature
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1.
|
I have reviewed this report on Form 10-Q for the
three and six
months ended
March 27, 2015
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: May 11, 2015
|
By:
|
/s/ Jeffery T. Schlarbaum
|
|
|
Jeffery T. Schlarbaum
|
|
|
Chief Executive Officer and President
|
1.
|
I have reviewed this report on Form 10-Q for the
three and six
months ended
March 27, 2015
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: May 11, 2015
|
By:
|
/s/ Michael T. Williams
|
|
|
Michael T. Williams
|
|
|
Vice President of Finance and 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: May 11, 2015
|
By:
|
/s/ Jeffery T. Schlarbaum
|
|
|
Jeffery T. Schlarbaum
|
|
|
Chief Executive Officer and President
|
Dated: May 11, 2015
|
By:
|
/s/ Michael T. Williams
|
|
|
Michael T. Williams
|
|
|
Vice President of Finance and Chief Financial Officer
|