IEC ELECTRONICS CORP (Form: 10-Q, Received: 05/11/2015 08:56:30)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 27, 2015

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ____ to ____

Commission File Number 0-6508

IEC ELECTRONICS CORP.

(Exact name of registrant as specified in its charter)



Delaware		13-3458955
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

105 Norton Street, Newark, New York 14513

(Address of Principal Executive Offices) (Zip Code)

315-331-7742

(Registrant's telephone number, including area code)

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer ¨		Accelerated filer ¨
Non-accelerated filer ¨		Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

Common Stock, $0.01 par value – 10,180,308 shares as of May 6, 2015

TABLE OF CONTENTS



Part I	FINANCIAL INFORMATION	3
Item 1.	Condensed Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	35
Part II	OTHER INFORMATION	36
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	37
Item 6.	Exhibits	38
SIGNATURES		38
INDEX TO EXHIBITS		40

Part I FINANCIAL INFORMATION

Item 1. Condensed Financial Statements

IEC ELECTRONICS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

MARCH 27, 2015 and SEPTEMBER 30, 2014

(in thousands, except share and per share data)



	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

The accompanying notes are an integral part of these condensed consolidated financial statements.

IEC ELECTRONICS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS

SIX MONTHS ENDED MARCH 27, 2015 and MARCH 28, 2014

(unaudited; in thousands, except share and per share data)



	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

The accompanying notes are an integral part of these condensed consolidated financial statements.

IEC ELECTRONICS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS of CHANGES in STOCKHOLDERS' EQUITY

SIX MONTHS ENDED MARCH 27, 2015 and MARCH 28, 2014

(unaudited; in thousands)



	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

The accompanying notes are an integral part of these condensed consolidated financial statements.

IEC ELECTRONICS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS of CASH FLOWS

SIX MONTHS ENDED MARCH 27, 2015 and MARCH 28, 2014

(unaudited; in thousands)



	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

The accompanying notes are an integral part of these condensed consolidated financial statements.

IEC ELECTRONICS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—OUR BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Our Business

Generally Accepted Accounting Principles

IEC's financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), as set forth in the Financial Accounting Standards Board's (“FASB”) Accounting Standards Codification (“ASC”).

Fiscal Calendar

The Company’s fiscal year ends on September 30th, and the first three quarters end generally on the Friday closest to the last day of the calendar quarter.

Consolidation

The consolidated financial statements include the accounts of IEC and its wholly owned subsidiaries: IEC Electronics Wire and Cable, Inc. (“Wire and Cable”); IEC Electronics Corp-Albuquerque ("Albuquerque"); Dynamic Research and Testing Laboratories, LLC (“DRTL”); and Southern California Braiding, Inc. (“SCB”). The Celmet unit ("Celmet") operates as a division of IEC. All significant intercompany transactions and accounts are eliminated in consolidation.

Unaudited Financial Statements

The accompanying unaudited financial statements for the six months ended March 27, 2015 and March 28, 2014 have been prepared in accordance with GAAP for interim financial information. In the opinion of management, all adjustments required for a fair presentation of the information have been made. The accompanying financial statements should be read in conjunction with the financial statements and notes included in the Company's Annual Report on Form 10-K/A for the fiscal year ended September 30, 2014 .

Cash and Cash Equivalents

The Company's cash and cash equivalents principally represent deposit accounts with Manufacturers and Traders Trust Company ("M&T Bank" and "M&T"), a banking corporation headquartered in Buffalo, NY.

Allowance for Doubtful Accounts

The Company establishes an allowance for doubtful accounts receivable based on the age of outstanding invoices and management's evaluation of collectability. Accounts are written off after all reasonable collection efforts have been exhausted and management concludes that likelihood of collection is remote.

Inventory Valuation

Inventories are stated at the lower of cost or market value under the first-in, first-out method. The Company regularly assesses slow-moving, excess and obsolete inventory and maintains balance sheet reserves in amounts required to reduce the recorded value of inventory to lower of cost or market.

Property, Plant and Equipment

Property, plant and equipment (“PP&E”) are stated at cost and are depreciated over various estimated useful lives using the straight-line method. Maintenance and repairs are charged to expense as incurred, while renewals and improvements are capitalized. At the time of retirement or other disposition of PP&E, cost and accumulated depreciation are removed from the accounts and any gain or loss is recorded in earnings.

Depreciable lives generally used for PP&E are presented in the table below. Leasehold improvements are amortized over the shorter of the lease term or estimated useful life of the improvement.



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

Intangible Assets

Intangible assets (other than goodwill) are those that lack physical substance and are not financial assets. Such assets held by IEC were acquired in connection with business combinations and represent economic benefits associated with acquired customer relationships, a non-compete agreement, and a property tax abatement. Values assigned to individual intangible assets are amortized using the straight-line method over their estimated useful lives.

Reviewing Long-Lived Assets for Potential Impairment

The Company tests long-lived assets (PP&E and definitive lived assets) for recoverability whenever events or circumstances indicate that the carrying amount of the asset may not be recoverable. If the carrying value of an asset exceeds the undiscounted future cash flows attributable to an asset, it is considered impaired and the excess of carrying value over fair value must be charged to earnings. No impairment charges were recorded by IEC for property, plant and equipment and definitive lived assets during the first six months of fiscal 2015 or fiscal 2014 .

Goodwill

Goodwill represents the excess of cost over fair value of net assets acquired in a business combination. Most of IEC's recorded goodwill relates to SCB acquired in December 2010, and a lesser portion relates to Celmet, which was acquired in July 2010.

Goodwill is not amortized but is reviewed for impairment at least annually or when events or circumstances indicate that carrying value may exceed fair value. The Company performs its annual impairment test for SCB goodwill during the third quarter. The Company may elect to precede a quantitative review for impairment with a qualitative assessment of the likelihood that fair value of a particular reporting unit exceeds carrying value. If the qualitative assessment leads to a conclusion that it is more than 50 percent likely that fair value of the reporting units exceeds its carrying value, then no further testing is required. In the event of a less favorable outcome, the Company is required to proceed with quantitative testing.

The quantitative process entails comparing the overall fair value of the unit to which goodwill relates to its carrying value. If the fair value of the unit exceeds its carrying value, no further assessment of potential impairment is required. If the fair value of the unit is less than its carrying value, a valuation of the unit's individual assets and liabilities is required to determine whether or not goodwill is impaired. Goodwill impairment losses are charged to earnings.

Legal Contingencies

When legal proceedings are brought or claims are made against us and the outcome is uncertain, ASC 450-10 (Contingencies) requires that we determine whether it is probable that an asset has been impaired or a liability has been incurred. If such impairment or liability is probable and the amount of loss can be reasonably estimated, the loss must be charged to earnings.

When it is considered probable that a loss has been incurred, but the amount of loss cannot be estimated, disclosure but not accrual of the probable loss is required. Disclosure of a loss contingency is also required when it is reasonably possible, but not probable, that a loss has been incurred.

Customer Deposits

Customer deposits represent amounts invoiced to customers for which the revenue has not yet been earned and therefore represent a commitment for the Company to deliver goods or services in the future. Deposits are generally short term in nature and are recognized as revenue when earned.

Grants from Outside Parties

Grants from outside parties are recorded as other long-term liabilities and are amortized over the same period during which the associated fixed assets are depreciated.

Derivative Financial Instruments

The Company actively monitors its exposure to interest rate risk and from time to time uses derivative financial instruments to manage the impact of this risk. The Company uses derivatives only for purposes of managing risk associated with underlying exposures. The Company does not trade or use instruments with the objective of earning financial gains on the interest rate, nor does the Company use derivative instruments where it does not have underlying exposures. The Company manages its hedging position and monitors the credit ratings of counterparties and does not anticipate losses due to counterparty nonperformance. Management believes its use of derivative instruments to manage risk is in the Company’s best interest. However, the Company’s use of derivative financial instruments may result in short-term gains or losses and increased earnings volatility. The Company’s instruments are recorded in the consolidated balance sheets at fair value in other assets or other long-term liabilities.

Fair Value Measurements

Under ASC 825 (Financial Instruments), the Company is required to disclose the fair value of financial instruments for which it is practicable to estimate value. The Company’s financial instruments consist of cash, accounts receivable, accounts payable, accrued liabilities, borrowings and an interest rate swap agreement. IEC believes that recorded value approximates fair value for all cash, accounts receivable, accounts payable and accrued liabilities.

ASC 820 (Fair Value Measurements and Disclosures) defines fair value, establishes a framework for measurement, and prescribes related disclosures. ASC 820 defines fair value as the price that would be received upon sale of an asset or would be paid to transfer a liability in an orderly transaction. Inputs used to measure fair value are categorized under the following hierarchy:

Level 1: Quoted prices in active markets for identical assets or liabilities that the Company can access at the measurement date.

Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations in which all significant inputs are observable market data.

Level 3: Model-derived valuations in which one or more significant inputs are unobservable.

The Company deems a transfer between levels of the fair value hierarchy to have occurred at the beginning of the reporting period. There were no such transfers during the first six months of fiscal 2015 or fiscal 2014 .

Revenue Recognition

The Company’s revenue is principally derived from the sale of electronic products built to customer specifications, but also from other value-added support services and repair work. Revenue from product sales is recognized when (i) goods are shipped or title and risk of ownership have passed, (ii) the price to the buyer is fixed or determinable, and (iii) realization is reasonably assured. Service revenue is generally recognized once the service has been rendered. For material management arrangements, revenue is generally recognized as services are rendered. Under such arrangements, some or all of the following services may be provided: design, bid, procurement, testing, storage or other activities relating to materials the customer expects to incorporate into products that it manufactures. Value-added support services revenue, including material management and repair work revenue, amounted to less than 5% of total revenue in the first six months of fiscal 2015 or fiscal 2014 .

Provisions for discounts, allowances, rebates, estimated returns and other adjustments are recorded in the period the related sales are recognized.

Stock-Based Compensation

ASC 718 (Stock Compensation) requires that compensation expense be recognized for equity awards based on fair value as of the date of grant. For stock options, the Company uses the Black-Scholes pricing model to estimate grant date fair value. Costs associated with stock awards are recorded over requisite service periods, generally the vesting period. If vesting is contingent

on the achievement of performance objectives, fair value is accrued over the period the objectives are expected to be achieved only if it is considered probable that the objectives will be achieved.

The Company also has an employee stock purchase plan ("ESPP") that provides for a discounted stock purchase price. Compensation expense related to the discount is recognized as employees contribute to the plan. On May 21, 2013, the Compensation Committee of the Company’s Board of Directors suspended operation of the ESPP indefinitely in connection with the Prior Restatement further discussed below (including unavailability of the registration statement covering shares offered under the plan due to the failure of the Company to be current in its filings with the SEC until the Company filed its Form 10-K on December 24, 2013). Operation of the ESPP was resumed effective October 1, 2014. On February 13, 2015, the Compensation Committee of the Company’s Board of Directors suspended operation of the ESPP indefinitely in connection with the 2014 Restatements described in Note 2—Restatement of Deferred Tax Asset Valuation Allowance and Excess and Obsolete Inventory Reserve (including unavailability of the registration statement covering shares offered under the plan due to the failure of the Company to be current in its filings with the SEC).

Restatement and Related Expenses

The Company restated its consolidated financial statements for the fiscal year ended September 30, 2012, and the interim fiscal quarters and year to date periods within the year ended September 30, 2012, included in the Company’s Annual Report on Form10-K/A and the fiscal quarter ended December 28, 2012, as reported in the Company’s Quarterly Report on Form 10-Q/A for that fiscal quarter (the "Prior Restatement"). The Company also restated its consolidated financial statements for the fiscal year ended September 30, 2014 and its interim financial statements for each quarterly period within the year ended September 30, 2014, included in the Company's Annual Report on Form 10-K/A to correct an error in the valuation allowance on deferred income tax assets as well as an error in the estimate of excess and obsolete inventory reserves (the "2014 Restatements"). The Prior Restatement and the 2014 Restatements together are referred to as the "Restatements".

Restatement and related expenses represents third-party expenses arising from the Restatements. These expenses include legal and accounting fees incurred by the Company from external counsel and independent accountants directly attributable to the Restatements as well as other matters arising from the Prior Restatement including those more fully described in Note 17—Litigation . The Company receives insurance reimbursement for certain expenses related to the Prior Restatement which may result in a benefit in a given period.

Income Taxes and Deferred Taxes

ASC 740 (Income Taxes) requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns, but not in both. Deferred tax assets are also established for tax benefits associated with tax loss and tax credit carryforwards. Such deferred balances reflect tax rates that are scheduled to be in effect, based on currently enacted legislation, in the years the book/tax differences reverse and tax loss and tax credit carryforwards are expected to be realized. An allowance is established for any deferred tax asset for which realization is not likely.

ASC 740 also prescribes the manner in which a company measures, recognizes, presents, and discloses in its financial statements uncertain tax positions that the Company has taken or expects to take on a tax return. The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the position will be sustained following examination by taxing authorities, based on technical merits of the position. The Company believes that it has no material uncertain tax positions.

Any interest or penalties incurred are reported as interest expense. The Company’s income tax filings are subject to audit by various tax jurisdictions and current open years are fiscal 2010 through fiscal 2013. The federal income tax audit for fiscal 2011 concluded in fiscal 2013 and did not have a material impact on the financial statements.

Earnings Per Share

Basic earnings per common share are calculated by dividing income available to common stockholders by the weighted average number of shares outstanding during each period. Diluted earnings per common share add to the denominator incremental shares resulting from the assumed exercise of all potentially dilutive stock options, as well as restricted (non-vested) stock, and anticipated issuance through the employee stock purchase plan. Options and restricted stock are primarily held by directors, officers and certain employees. A summary of shares used in earnings per share (“EPS”) calculations follows.



	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

As a result of the net loss for the three and six months ended March 27, 2015 and March 28, 2014 , the Company calculated diluted earnings per share using weighted average basic shares outstanding, as using diluted shares would be anti-dilutive to loss per share.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses and the disclosure of contingent assets and liabilities. Actual results may differ from management’s estimates.

Statements of Cash Flows

The Company presents operating cash flows using the indirect method of reporting under which non-cash income and expense items are removed from net income.

Recently Issued Accounting Standards

FASB ASU 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force),” was issued July 2013 and is effective for fiscal years beginning after December 15, 2013. ASU 2013-11 provides guidance on financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This ASU applies to all entities with unrecognized tax benefits that also have tax loss or tax credit carryforwards in the same tax jurisdiction as of the reporting date. The Company adopted this ASU in the first quarter of fiscal 2015 and there was no impact upon adoption.

FASB ASU 2014-09, "Revenue from Contracts with Customers," was issued May 2014 and updates the principles for recognizing revenue. The ASU will supersede most of the existing revenue recognition requirements in U.S. GAAP and will require entities to recognize revenue at an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. This ASU also amends the required disclosures of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance is effective for annual periods beginning after December 15, 2016, including interim periods within that period. Early adoption is not permitted under U.S. GAAP. The Company is determining its implementation approach and evaluating the potential impacts of the new standard on its existing revenue recognition policies and procedures.

FASB ASU 2014-12, "Compensation - Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period," was issued June 2014. This guidance was issued to resolve diversity in accounting for performance targets. A performance target in a share-based payment that affects vesting and that could be achieved after the requisite service period should be accounted for as a performance condition and should not be reflected in the award’s grant date fair value. Compensation cost should be recognized over the required service period, if it is probable that the performance condition will be achieved. The guidance is

effective for annual periods beginning after December 15, 2015 and interim periods within those annual periods. The Company does not anticipate a significant impact upon adoption.

FASB ASU 2014-15, “Presentation of Financial Statements-Going Concern (Subtopic 205-40) Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” which was issued September 2014. This provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company does not anticipate a significant impact upon adoption.

FASB ASU 2015-03, “Interest - Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs” was issued in April 2015. These amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The ASU applies to all entities and is effective for public business entities for annual periods ending after December 15, 2015, and interim periods thereafter, with early adoption permitted. The guidance should be applied on a retrospective basis. The Company does not anticipate a significant impact upon adoption.

NOTE 2—RESTATEMENT OF DEFERRED TAX ASSET VALUATION ALLOWANCE AND EXCESS AND OBSOLETE INVENTORY RESERVE

The Consolidated Balance Sheet at September 30, 2014 and Consolidated Statements of Income, Changes in Stockholders’ Equity and Cash Flows for the year then ended and the fiscal quarters ended December 27, 2013, March 28, 2014 and June 27, 2014 have been restated.

The summary impacts of the restatement adjustments on the Company’s previously reported consolidated net loss for the three and six months ended March 28, 2014 follows:



	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	)

The impacts of the restatement adjustments on the Company’s previously reported consolidated income statement for the three and six months ended March 28, 2014 follows:



	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	)

While closing the first quarter of fiscal 2015, the Company revisited its assessment of realizability of deferred tax assets and identified an error in interpretation of the guidance for the valuation allowance on deferred tax assets.

The Company performed a realizability assessment for the fourth quarter of fiscal 2014 and came to the conclusion that there was no additional valuation allowance required on federal deferred tax assets; however, due to a change in New York State tax laws which reduces the State tax rate for qualified manufacturers to 0% for IEC's fiscal year ended September 30, 2015, the valuation allowance was increased by $1.1 million to fully reserve for New York State deferred tax assets.

This conclusion regarding federal deferred tax assets at the time of the fourth quarter of fiscal 2014 assessment was based on the Company's evaluation of the negative and positive evidence available at that time. The Company's cumulative loss in recent years was considered; however, the Company determined that the goodwill and intangibles impairment charge taken in the fourth quarter of fiscal 2013 should be excluded when weighing the evidence. Positive evidence included taxable income each year beginning in 2004 through 2013, forecasted results and backlog. At the time of our Original 2014 Form 10-K filing, there was forecasted pre-tax income for fiscal 2015 and earnings growth was forecasted in subsequent years. The Company's Federal net operating losses ("NOLs") do not begin to expire until 2022. As aggregate future taxable income was expected to exceed Federal NOLs, it was concluded that realizability of these was more likely than not. In addition, future taxable income was expected to exceed the amount of Federal NOLs and deferred tax assets expected to reverse in future years combined. As such, there was no additional valuation allowance recorded for federal deferred tax assets.

During the process of closing the first quarter of fiscal 2015, the Company revisited its determination regarding the valuation of its deferred tax assets. After consulting applicable accounting guidance and interpretations thereof, the Company determined that the impairment charge should not have been excluded from the cumulative loss calculation. Once a cumulative three year loss is identified, it is very difficult to overcome this negative evidence. IEC does not believe there is enough positive evidence to outweigh the cumulative three year loss. Based on this interpretation, the Company is now recording a full valuation allowance beginning in the second quarter of fiscal 2014, which is when the Company first accumulated a three year loss. As such, an error in the valuation allowance on deferred income tax assets has been identified resulting in an understatement of tax expense and overstatement of deferred tax assets. The Company determined this error was material and required restatement of its consolidated financial statements for fiscal 2014 as well as the second, third and fourth quarters of fiscal 2014.

The Company also performed additional analysis related to its excess and obsolete inventory reserves. This analysis identified an error in the Albuquerque and SCB operating locations. The Company discovered that not all pertinent information was factored into the excess and obsolete inventory reserve estimates during fiscal 2014.

During fiscal 2014, given the time that has passed since SCB was acquired in December 2010, the Company should have factored in the age of SCB's inventory and its demand when estimating its excess and obsolete inventory reserve. Instead, the Company employed an approach that factored in the usage of the inventory since the SCB acquisition date and estimated a general reserve for remaining inventory. The restated excess and obsolete inventory reserve for SCB is based on an analysis that appropriately incorporates the age of SCB's inventory and its demand and involves the review of specific inventory items with a large extended value. This additional analysis was performed consistently for all items, regardless of whether they were purchased before or after the date the Company acquired SCB.

The Albuquerque excess and obsolete inventory reserve as originally reported did not take into consideration facts and circumstances related to certain customer programs. The Company's methodology was applied consistently, however, the rigor around the analysis of excess inventory did not take into account certain customer information that was available at the time. As a result, the Company concluded the inventory on hand for these customer programs was not adequately reserved for.

NOTE 3—ALLOWANCE FOR DOUBTFUL ACCOUNTS

A summary follows of activity in the allowance for doubtful accounts during the six months ended March 27, 2015 and March 28, 2014 .



	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

NOTE 4—INVENTORIES

A summary of inventory by category at period end follows:



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

The Company has restated its excess and obsolete inventory reserve for the fiscal year ended September 30, 2014 and interim quarterly periods during the fiscal year then ended. The restatement is further discussed in Note 2—Restatement of Deferred Tax Asset Valuation Allowance and Excess and Obsolete Inventory Reserve .

NOTE 5—FIXED ASSETS

A summary of fixed assets and accumulated depreciation at period end follows:



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

Depreciation expense during the three and six months ended March 27, 2015 and March 28, 2014 follows:



	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

NOTE 6—INTANGIBLE ASSETS

IEC's intangible assets (other than goodwill) were acquired in connection with purchases of SCB in the first quarter of fiscal 2011 and Albuquerque in fiscal 2010.

Among SCB’s key attributes as an acquisition candidate were the relationships established with a number of military and defense contractors. The anticipated profitability of those relationships was considered by IEC in arriving at an amount to offer for the firm and also became the basis for allocating a portion of the purchase price to a related customer relationship intangible asset. Based upon several key assumptions and a detailed analysis of value, $5.9 million was allocated to this intangible asset. The asset is being amortized over its 15 -year estimated useful life, using the straight-line method.

The Company recorded an impairment of the customer relationship intangible asset of $2.4 million in the fourth quarter of fiscal 2013. There has been no further impairment of SCB customer relationships during the first six months of fiscal 2015 or fiscal 2014 .

In connection with the SCB acquisition, IEC also allocated $100 thousand to an intangible asset representing the estimated value of a five -year, non-compete agreement entered into with SCB’s selling shareholders. This intangible asset is being amortized evenly over its contractual life, and no impairment has been taken for this asset since the SCB acquisition.

As for Albuquerque, its building and land were acquired subject to an Industrial Revenue Bond (“IRB”) that exempts the property from real estate taxes for the term of the IRB. The tax abatement was valued at $360 thousand at date of acquisition, and such value is being amortized over the 9.2 year exemption period that remained as of the acquisition date. No impairment has been taken for this asset since the Albuquerque acquisition.

A summary of intangible assets by category and accumulated amortization at period end follows:



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

Amortization expense during the three and six months ended March 27, 2015 and March 28, 2014 follows:



	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

A summary of amortization expense for the next five years follows:



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

NOTE 7—GOODWILL

Goodwill balances resulting from the acquisitions of SCB in the first quarter of fiscal 2011 and Celmet in fiscal 2010 were $13.7 million and $0.1 million , respectively, prior to the impairment described below.

Since its acquisition, SCB has operated as a reporting unit of the Company, primarily in the aerospace & defense (previously disclosed as military & aerospace) market sector. As previously disclosed, due to changing circumstances, the Company determined it was necessary to perform a quantitative assessment which resulted in a goodwill impairment charge of $11.8 million recorded in the fourth quarter of fiscal 2013.

There has been no further impairment of SCB goodwill during the first six months of fiscal 2015 or fiscal 2014 .

As for the goodwill from the Celmet acquisition, there has been no impairment since acquisition date.

A summary of the total goodwill and accumulated impairment at period end follows:



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

NOTE 8—CREDIT FACILITIES

A summary of borrowings at period end follows:



	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

(1) Rates noted are before impact of interest rate swap.

M&T Bank Credit Facilities

On January 18, 2013, the Company and M&T Bank entered into the Fourth Amended and Restated Credit Facility Agreement (“2013 Credit Agreement”), replacing a prior agreement dated December 17, 2010 (“2010 Credit Agreement”). Many of the terms, conditions and covenants remained unchanged from the 2010 Credit Agreement. For the variable rate debt, the applicable margin is the interest rate added to Libor and is based on the Debt to EBITDARS Ratio. Borrowings under the 2013 Credit Agreement are secured by, among other things, the assets of IEC and its subsidiaries.

Individual debt facilities provided under the 2013 Credit Agreement are described below:

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.

The Company incurs quarterly unused commitment fees ranging from 0.125% to 0.500% of the excess of $20.0 million over average borrowings under the Revolver. Fees incurred amounted to $30.6 thousand and $25.4 thousand during the six months ended March 27, 2015 and March 28, 2014 , respectively. The fee percentage varies based on IEC's ratio of debt to EBITDARS.


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.

The 2013 Credit Agreement permits an aggregate maximum of $3.5 million of dividends and stock repurchases prior to February 1, 2023 absent default at the time of the applicable payment.

On November 8, 2013, the Company obtained an amendment to the 2013 Credit Agreement (the “Celmet Building Amendment”) for the Celmet Building Term Loan for $1.3 million . The proceeds were used to reimburse the Company’s cost of purchasing the Rochester, New York facility.

The 2013 Credit Agreement also contains various affirmative and negative covenants including financial covenants. The Company is required to maintain (i) a minimum level of quarterly EBITDARS ("Quarterly EBITDARS") , (ii) a ratio of total debt to twelve month EBITDARS (“Debt to EBITDARS Ratio”) that is below a specified limit, and (iii) a minimum fixed charge coverage ratio (“Fixed Charge Coverage Ratio”) as described in the tables below.

On May 15, 2013 we obtained an amendment to the 2013 Credit Agreement (the “First 2013 Amendment”) which modified the Debt to EBITDARS Ratio and Fixed Charge Coverage Ratio covenants, and on August 6, 2013 we obtained a further amendment to the 2013 Credit Agreement (the “Second 2013 Amendment,” and together with the First 2013 Amendment, the “2013 Amendments”) which modified the Debt to EBITDARS Ratio, as shown in the table below. On December 13, 2013 and February 4, 2014 we obtained further amendments to the 2013 Credit Agreement (the “First 2014 Amendment” and “Second 2014 Amendment”, respectively, and together the “2014 Amendments”) which modified the ratios. Covenant Ratios in effect at March 27, 2015 are as follows:



Ÿ	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

Ÿ	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).

The Second 2013 Amendment also amended two definitions used in the calculation of the financial covenants, including: (i) the definition of net income, to add back, through the fiscal quarter ending June 27, 2014, up to $1.1 million of legal and accounting fees associated with the restatement, and (ii) the definition of interest expense as related to Rate Management Transactions (defined in the 2013 Credit Agreement), to be “the net cash cost or benefit associated with Rate Management Transactions net cash benefit or loss”.

The Second 2014 Amendment also modified the Quarterly EBITDARS covenant to be equal to or greater than $1.25 million for the fiscal quarter ending March 28, 2014, and $1.5 million for each fiscal quarter thereafter.

At March 27, 2015 and December 26, 2014, the Company was not in compliance with the Debt to EBITDARS Ratio, the Quarterly EBITDARS covenant and the Fixed Charge Coverage Ratio. At September 30, 2014 and June 27, 2014, the Company was in compliance with the Quarterly EBITDARS covenant. At March 28, 2014, the Company was not in compliance with the Quarterly EBITDARS covenant. At December 27, 2013, the Company was not in compliance with Quarterly EBITDARS covenant or the Debt to EBITDARS Ratio. The Company obtained waivers from M&T Bank with respect to each instance of noncompliance. As a result of the 2014 Restatements as described in Note 2—Restatement of Deferred Tax Asset Valuation Allowance and Excess and Obsolete Inventory Reserve , the Company was in default of the Credit Agreement for failure to deliver financial statements prepared in accordance with GAAP. The Company received a waiver from M&T regarding this event of default. The First 2014 Amendment did not require measurement of the Fixed Charge Coverage Ratio in the first quarter of fiscal 2014. The Second 2014 Amendment did not require measurement of the Debt to EBITDARS Ratio or the Fixed Charge Coverage Ratio for any quarter during fiscal 2014.

The waivers received by the Company for failure to comply with the financial covenants during the first and second quarters of fiscal 2014 did not affect the quarterly calculation of the applicable interest rate margin for the Revolver and Albuquerque Mortgage Loan and the Revolver unused fees. However, the Second 2013 Amendment modified the ranges of applicable margins and unused fees by increasing both the lower and upper limit of each range with respect to the applicable debt facility. The applicable margins are determined based on the Debt to EBITDARS Ratio. Changes to applicable margins and unused fees resulting from the Debt to EBITDARS Ratio generally become effective mid-way through the subsequent quarter. The higher Debt to EBITDARS Ratio calculated as of June 28, 2013, in conjunction with the Second 2013 Amendment resulted in an increase of 0.25% in the effective rate applicable to those two loans and the unused commitment fee for the Revolver remained unchanged. However, the First 2014 Amendment fixed the applicable margin for the Revolver at 4.25% , for the Albuquerque Mortgage Loan at 4.50% and Term Loan B at 3.25% and the unused fee at 0.50% , in each case for the period December 13, 2013 through December 13, 2014 and if the Company was not compliant with financial covenants on December 13, 2014, during the period of non-compliance. The Second 2014 Amendment further fixed the applicable margins at the rates noted in the First 2014 Amendment through March 27, 2015 and if the Company is not compliant with financial covenants on March 27, 2015, during the period of non-compliance.

Subsequent to March 27, 2015, the Company obtained an amendment to the 2013 Credit Agreement which modified certain covenants as further discussed in Note 19—Subsequent Events .

In connection with the 2013 Credit Agreement, on January 18, 2013, the Company and M&T Bank entered into an interest rate swap arrangement (“Swap Transaction”). The Swap Transaction is for a notional amount of $14.0 million with an effective date of February 1, 2013 and a termination date of February 1, 2023. The Swap Transaction is designed to reduce the variability of future interest payments with respect to Term Loan B by effectively fixing the annual interest rate payable on the loan’s outstanding principal. Pursuant to the swap transaction, the Company’s one month Libor rate is swapped for a fixed rate of 1.32% . When the swap fixed rate is added to the Term Loan B spread of 2.50% , the Company’s interest rate applicable to Term Loan B is effectively fixed at 3.82% . The 2014 Amendments temporarily modified the Term Loan B spread to 3.25% which results in an effectively fixed rate of 4.57% .

Other Credit Facilities

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.

Contractual Principal Payments

A summary of contractual principal payments under IEC's borrowings for the next five years taking into consideration the 2013 Credit Agreement follows:



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

⁽¹⁾ Includes Revolver balance of $14.0 million at March 27, 2015

NOTE 9—DERIVATIVE FINANCIAL INSTRUMENTS

Interest Rate Risk Management

In connection with the 2013 Credit Agreement, on January 18, 2013, the Company and M&T Bank entered into an interest rate swap arrangement (“Swap Transaction”). The Swap Transaction is for a notional amount of $14.0 million with an effective date of February 1, 2013 and a termination date of February 1, 2023. The Swap Transaction is designed to reduce the variability of future interest payments with respect to Term Loan B by effectively fixing the annual interest rate payable on outstanding principal of Term Loan B. Pursuant to the interest rate swap, the Company’s one month Libor rate is swapped for a fixed rate of 1.32% . As more fully described in Note 8—Credit Facilities , the applicable margin on Term Loan B is fixed at 3.25% until March 27, 2015. When the swap fixed rate is added to the Term Loan B Spread of 3.25% , the Company’s interest rate applicable to Term Loan B is effectively fixed at 4.57% .

The fair value of the interest rate swap agreement represented an asset of $17.2 thousand and $0.2 million at March 27, 2015 and September 30, 2014 and was estimated based on Level 2 inputs. The Company did not designate the swap as a cash flow hedge at inception and therefore, the gains or losses from the changes in fair value of the derivative instrument are recognized in earnings for the period ended March 27, 2015 within interest expense.

The fair value of the interest rate swap of $17.2 thousand and $0.2 million is recorded in other long term assets in the Consolidated Balance Sheet at March 27, 2015 and September 30, 2014 , respectively.

NOTE 10—FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial Instruments Carried at Fair Value

The Company’s interest rate swap agreement is recorded on the balance sheet as either an asset or a liability measured at fair value. The Company estimates the fair value of its interest rate swap agreement based on Level 2 valuation inputs, including fixed interest rates, Libor implied forward interest rates and the remaining time to maturity. At March 27, 2015 , the interest rate swap agreement was an asset with a fair value of $17.2 thousand .

Financial Instruments Carried at Historical Cost

The Company’s long-term debt is not quoted. Fair value was estimated using a discounted cash flow analysis based on Level 2 valuation inputs, including borrowing rates the Company believes are currently available to it for loans with similar terms and maturities.

The Company’s debt is carried at historical cost on the balance sheet. A summary of the fair value and carrying value of variable rate debt at period end follows:



	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

The fair value of the remainder of the Company’s debt approximated carrying value at March 27, 2015 and September 30, 2014 as it is variable rate debt.

NOTE 11—WARRANTY RESERVES

IEC generally warrants its products and workmanship for up to twelve months from date of sale. As an offset to warranty claims, the Company is sometimes able to obtain reimbursement from suppliers for warranty-related costs or losses. Based on historical warranty claims experience and in consideration of sales trends, a reserve is maintained for estimated future warranty costs to be incurred on products and services sold through the balance sheet date.

A summary of additions to and charges against IEC’s warranty reserves during the period follows:



	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

NOTE 12—DEFERRED GRANTS

The Company received grants for certain facility improvements from state and local agencies in which the Company operates. These grants reimburse the Company for a portion of the actual cost or provide in kind services in support of capital projects. Deferred grants of $0.7 million were recorded during the year ended September 30, 2014, from such grant programs.

One of the Company’s grants is a loan to grant agreement. The Company has signed a promissory note, which will be forgiven if certain employment targets at the Newark, NY facility are obtained at future dates. If the employment targets are not obtained, the Company is obligated to repay the loan with interest. As the Company intends to comply with these agreements, the Company has recorded the funds received as a deferred amount within other long-term liabilities on the balance sheet.

The Company received a government grant for the purchase of equipment upgrades to accommodate existing and anticipated business growth. Required employment targets at the Newark, NY facility for this grant have been met as of September 30, 2014.

The Company is also the recipient of matching grants from two local governmental agencies related to certain renovations for one of its operating locations. One agency is contributing in kind services and property of $0.1 million while the other is contributing cash of $0.1 million to match expenditures by the Company of at least the same amount.

The grants will be amortized over the useful lives of the related fixed assets when there is reasonable assurance that the Company will meet the employment targets. The Company recorded amortization of $82 thousand and $5 thousand for the deferred grants for the six months ended March 27, 2015 and March 28, 2014 , respectively.

NOTE 13—STOCK-BASED COMPENSATION

The 2010 Omnibus Incentive Compensation Plan (“2010 Plan”) was approved by the Company’s stockholders at the January 2011 Annual Meeting of the Shareholders. This plan replaced IEC’s 2001 Stock Option and Incentive Plan (“2001 Plan”), which expired in December 2011. The 2010 Plan, which is administered by the Compensation Committee of the Board of Directors, provides for the following types of awards: incentive stock options, nonqualified options, stock appreciation rights, restricted shares, restricted stock units, performance compensation awards, cash incentive awards, director stock and other

equity-based and equity-related awards. Awards are generally granted to certain members of management and employees, as well as directors. Under the 2010 Plan, up to 2,000,000 common shares may be issued over a term of ten years .

Stock-based awards granted through December 2011, were made under the 2001 Plan. Awards granted after December 2011, were made under the 2010 Plan and future awards will be made under the 2010 Plan.

Stock-based compensation expense recorded under the plans totaled $2.0 million and $0.3 million for the six months ended March 27, 2015 and March 28, 2014 , respectively. On February 2, 2015, the Company announced its shareholders elected all seven Vintage Opportunity Fund, LP-nominated directors to the Company’s Board of Directors. This change in the Company's Board of Directors was a change in control event which triggered automatic vesting for all awards outstanding under the 2010 and 2001 Plans. On the change in control date 390,882 shares of restricted stock and 119,500 stock options vested which resulted in stock-based compensation expense of $1.8 million.

Expenses relating to stock options that comply with certain U.S. income tax rules are neither deductible by the Company nor taxable to the employee. Further information regarding awards granted under the 2001 Plan, 2010 Plan and employee stock purchase plan is provided below.

Stock Options

When options are granted, IEC estimates the fair value of the option using the Black-Scholes option pricing model and recognizes the computed value as compensation cost over the vesting period, which is typically four years. The contractual term of options granted under the 2010 Plan is generally seven years.

Assumptions used in the Black-Scholes model and the estimated value of options granted during the six months ended March 27, 2015 and March 28, 2014 are included in the table below:



	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

A summary of stock option activity, together with other related data, follows:



	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

Changes in the number of non-vested options outstanding, together with other related data, follows:



	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

Restricted (Non-vested) Stock

Holders of IEC restricted stock have voting and dividend rights as of the date of grant, but until vested the shares may be forfeited and cannot be sold or otherwise transferred. At the end of the vesting period, which is typically four or five years ( three years in the case of directors), holders have all the rights and privileges of any other IEC common stockholder. The fair value of a share of restricted stock is its market value on the date of grant, and that value is recognized as stock compensation expense over the vesting period.

A summary of restricted stock activity, together with related data, follows:



	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

Employee Stock Purchase Plan

The Company administers an employee stock purchase plan (“ESPP”) that provides for a discounted stock purchase price. On May 21, 2013, the Compensation Committee of the Company’s Board of Directors suspended operation of the ESPP indefinitely in connection with the Prior Restatement (including unavailability of the registration statement covering shares offered under the plan due to the failure of the Company to be current in its filings with the SEC until the Company filed its Form 10-K on December 24, 2013). The ESPP was reinstated effective October 1, 2014. On February 13, 2015, the Compensation Committee of the Company’s Board of Directors suspended operation of the ESPP indefinitely in connection with the 2014 Restatements described in Note 2—Restatement of Deferred Tax Asset Valuation Allowance and Excess and Obsolete Inventory Reserve (including unavailability of the registration statement covering shares offered under the plan due to the failure of the Company to be current in its filings with the SEC).

Employees currently receive a 10% discount on stock purchases through the ESPP. Employee contributions to the plan, net of withdrawals were $8.0 thousand for the six months ended March 27, 2015 . Compensation expense recognized under the ESPP was $1.0 thousand for the six months ended March 27, 2015 . There were no employee contributions or compensation expense recognized under the ESPP during the six months ended March 28, 2014 .

Stock Issued to Board Members

In addition to annual grants of restricted stock, included in the table above, Board members may elect to have their meeting fees paid in the form of shares of the Company’s common stock. In connection with the restatement of the Company’s financial statements described herein (including unavailability of the registration statement covering shares offered under the 2010 Plan due to the failure of the Company to be current in its filings with the SEC until the Company filed its Form 10-K on December 24, 2013), the Company determined not to pay, and has not paid, any meeting fees in stock during the period since May 21, 2013.

NOTE 14—RETIREMENT PLAN

The Company administers a retirement savings plan for the benefit of its eligible employees and their beneficiaries under the provisions of Sections 401(a) and (k) of the Internal Revenue Code. Eligible employees may contribute a portion of their compensation to the plan, and the Company is permitted to make discretionary contributions as determined by the Board of Directors. During the the first six months of fiscal 2015, the Company contributed 25% of the first 6% contributed by all employees at all locations. During the first six months of fiscal 2014, for its Albuquerque operating location only, the Company contributed 25% of the first 6% contributed by employees. Contributions during the six months ended March 27, 2015 and March 28, 2014 totaled $132 thousand and $18 thousand , respectively.

NOTE 15—INCOME TAXES

Provision for income taxes during the three and six months ended March 27, 2015 and March 28, 2014 follows:



	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

The Company restated to record a full valuation allowance on all deferred tax assets during the second quarter of fiscal 2014. The restatement is further discussed in Note 2—Restatement of Deferred Tax Asset Valuation Allowance and Excess and Obsolete Inventory Reserve .

Although we have recorded a full valuation allowance for all deferred tax assets, including NOL carryforwards ("NOLs"), these NOLs remain available to the Company to offset taxable income and reduce tax payments. IEC has federal NOLs for income tax purposes of approximately $16.3 million at September 30, 2014 , expiring mainly in years 2021 through 2025, with a small portion expiring in 2034.

At September 30, 2014 , the Company also had state NOLs of $27.7 million , expiring mainly in years 2021 through 2025 and $1.2 million of New York State investment tax and other credit carryforwards, expiring in various years through 2028. The credits cannot be utilized until the New York NOL is exhausted. Recent New York state corporate tax reform has resulted in the reduction of the business income base rate for qualified manufacturers in New York state to 0% beginning in fiscal 2015 for IEC. As a result of this legislation, it is more likely than not that the New York state NOLs and credits will not be realized.

Due to the Company's NOLs, a provision for pre-tax income was not recorded in the second quarter of fiscal 2015.

NOTE 16—MARKET SECTORS AND MAJOR CUSTOMERS

A summary of sales, according to the market sector within which IEC's customers operate, follows:



	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%

Three individual customers each represented 10% or more of sales for the six months ended March 27, 2015 . One customer in the medical sector represented 14% of sales, one customer in the industrial sector represented 17% of sales and one customer in the aerospace & defense sector represented 10% of sales. Two individual customers represented 10% or more of sales for the six months ended March 28, 2014 . One customer in the Industrial sector represented 15% of sales and one customer in the Medical sector represented 10% of sales for the six months ended March 28, 2014 .

Two individual customers represented 10% or more of receivables and accounted for 21% of outstanding balances at March 27, 2015 . One individual customer represented 10% or more of receivables and accounted for 11% of the outstanding balances at March 28, 2014 .

Credit risk associated with individual customers is periodically evaluated by analyzing the entity's financial condition and payment history. Customers generally are not required to post collateral.

NOTE 17—LITIGATION

In connection with the Prior Restatement, the Audit Committee conducted an independent review of the underlying facts and circumstances, and the Company is responding to a formal investigation by the staff of the SEC relating to the Prior Restatement and other matters. The Company is unable to predict what action, if any, might be taken in the future by the SEC or its staff as a result of the investigation or what impact the cost of responding to the SEC might have on the Company’s financial position, results of operations, or cash flows.

From time to time, the Company may be involved in other legal action in the ordinary course of its business, but management does not believe that any such other proceedings commenced through the date of the financial statements included in this Form 10-Q, individually or in the aggregate, will have material adverse effect on the Company’s consolidated financial position.

NOTE 18—COMMITMENTS AND CONTINGENCIES

Purchase Commitments

During August 2011, one of IEC's operating units entered into a five -year agreement with one of its suppliers to purchase a minimum volume of materials in exchange for receiving favorable pricing on the unit's purchases. In the event the unit's cumulative purchases do not equal or exceed stated minimums, the supplier has a right to terminate the agreement and the IEC unit would be obligated to pay an early termination fee that declines from $365 thousand to zero over the term of the agreement. As of the date of this Form 10-Q, the Company expects to exceed the minimum purchase requirements under the agreement, thereby avoiding any termination fee.

NOTE 19—SUBSEQUENT EVENTS

On May 8, 2015, the Company and M&T entered into a Sixth Amendment to the 2013 Credit Agreement, as previously amended (the “Sixth Amendment”). Pursuant to the Sixth Amendment, M&T agreed to (i) modify the financial covenants related to Quarterly EBITDARS, the Debt to EBITDARS Ratio and the Fixed Coverage Charge Ratio and (ii) waive events of default arising from the Company’s non-compliance with these covenants during the fiscal quarters ended December 26, 2014 and March 27, 2015. The Sixth Amendment also amended the definition of EBITDARS under the 2013 Credit Agreement to add back a maximum amount of professional services fees and expenses incurred and paid or to be paid prior to December 25, 2015. EBITDARS as amended and restated means, for the applicable period, earnings before interest, taxes, depreciation, amortization, plus (i) payments due under the M&T sale-leaseback arrangement, (ii) non-cash stock option expense and (iii) professional services fees and expenses incurred and paid or to be paid prior to December 25, 2015, up to a maximum of (a) for the fiscal quarter ended December 26, 2014, , (b) for the fiscal quarter ending March 27, 2015, $2,625,600, (c) for the fiscal quarter ending June 26, 2015, $200,000 plus costs incurred and paid by Borrower during such Fiscal Quarter in connection with mortgages, environmental site assessments, title insurance and appraisals ("Costs") and (d) for the fiscal quarter ending September 30, 2015, $200,000, all on a consolidated basis and determined in accordance with GAAP on a consistent basis.

Additionally, the Sixth Amendment extended each facility’s applicable interest rate margin established under the Fifth Amendment to the 2013 Credit Agreement, which rates otherwise would have expired on March 27, 2015, through March 26, 2016, and thereafter if the Company is not then in compliance with its financial covenants, as follows, per annum: Revolver (4.25% above Libor), Albuquerque Mortgage Loan (4.50% above Libor) and Term Loan B (3.25% above Libor). The applicable unused line fee of 0.50% also was extended through March 26, 2016, and thereafter if the Company is not in compliance with its financial covenants.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information in this Management's Discussion and Analysis should be read in conjunction with the accompanying unaudited consolidated financial statements and notes. All references to Notes are to the accompanying consolidated financial statements and Notes included in this Quarterly Report on Form 10-Q (“Form 10-Q”).

Forward-Looking Statements

References in this report to “IEC”, the “Company”, “we”, “our”, or “us” mean IEC Electronics Corp. and its subsidiaries except where the context otherwise requires. This 10-Q contains certain statements that are, or may be deemed to be, forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934, and are made in reliance upon the protections provided by such Acts for forward-looking statements. These forward-looking statements (such as when we describe what we “believe”, “expect” or “anticipate” will occur, and other similar statements) include, but are not limited to, statements regarding future sales and operating results, future prospects, the capabilities and capacities of business operations, any financial or other guidance and all statements that are not based on historical fact, but rather reflect our current expectations concerning future results and events. The ultimate correctness of these forward-looking statements is dependent upon a number of known and unknown risks and events and is subject to various uncertainties and other factors that may cause our actual results, performance or achievements to be different from any future results, performance or achievements expressed or implied by these statements.

The following important factors, among others, could affect future results and events, causing those results and events to differ materially from those views expressed or implied in our forward-looking statements: additional information that may arise as a result of the 2014 Restatements; our ability to successfully remediate material weaknesses in our internal controls; litigation and governmental investigations or proceedings arising out of or relating to accounting and financial reporting matters; business conditions and growth or contraction in our customers' industries, the electronic manufacturing services industry and the general economy; variability of our operating results; our ability to control our material, labor and other costs; our dependence on a limited number of major customers; the potential consolidation of our customer base; availability of component supplies; dependence on certain industries; variability and timing of customer requirements; technological; engineering and other start-up issues related to new programs and products; uncertainties as to availability and timing of governmental funding for our customers; the types and mix of sales to our customers; our ability to assimilate acquired businesses and to achieve the anticipated benefits of such acquisitions; unforeseen product failures and the potential product liability claims that may be associated with such failures; the availability of capital and other economic, business and competitive factors affecting our customers, our industry and business generally; failure or breach of our information technology systems; natural disasters; and other factors that we may not have currently identified or quantified. Any one or more of such risks and uncertainties could have a material adverse effect on us or the value of our common stock.

Except as required by law, all forward looking statements included in this Form 10-Q are made only as of the date of this Form 10-Q. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. New risks and uncertainties arise from time to time and we cannot predict those events or how they may affect us. When considering these risks, uncertainties and assumptions, you should keep in mind the cautionary statements contained elsewhere in this report and in any documents incorporated herein by reference. In particular, you should consider the Risk Factors identified in Item 1 of the Company’s Annual Report on Form 10-K/A for the fiscal year ended September 30, 2014 and in the Company’s subsequently filed SEC reports. You should read this document and the documents that we incorporate by reference into this Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. All forward-looking statements attributable to us are expressly qualified by these cautionary statements.

Overview

IEC Electronics Corp. conducts business directly, as well as through its subsidiaries and divisions, Wire and Cable, Albuquerque, SCB, Celmet and DRTL described in Note 1—Our Business and Summary of Significant Accounting Policies – Our Business and Consolidation.

IEC Electronics Corp. ("IEC", "we", "our", “us”, “Company”) is a provider of electronic contract manufacturing services (“EMS”) to companies in various industries that require advanced technology for mission-critical applications. We specialize in the custom manufacture of high reliability, complex circuit board and system-level assemblies; a wide array of cable and wire harness assemblies, precision metal assemblies and provide laboratory services for advanced research and testing. We excel where quality and reliability are of paramount importance and when low-to-medium volume, high-mix production is the norm. We utilize state-of-the-art, automated circuit board assembly equipment together with a full complement of high-reliability manufacturing stress testing methods. With our customers at the center of everything we do, we have created a high-

intensity, rapid response culture capable of reacting and adapting to their ever-changing needs. Our customer-centric approach offers a high degree of flexibility while simultaneously complying with rigorous quality and on-time delivery standards. While many EMS services are viewed as commodities, we believe we set ourselves apart through an uncommon mix of capabilities including:


•	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.

We primarily serve the aerospace & defense (previously discussed as military & aerospace), medical, industrial and communications markets. We focus on developing relationships with customers who manufacture advanced technology products and who are unlikely to utilize offshore suppliers due to the proprietary nature of their products, governmental restrictions or volume considerations.

IEC is ISO 9001:2008 certified. Four of our units (IEC and Wire and Cable in Newark, NY; Albuquerque in NM; and SCB in Bell Gardens, CA) are AS9100 certified to serve the military and commercial aerospace market sector, and are ITAR registered. In addition, the Company’s locations in Newark, NY and Albuquerque, NM are Nadcap accredited for electronics manufacturing to support the most stringent quality requirements of the aerospace industry and the Newark, NY location is ISO 13485 certified to serve the medical market sector. Our Newark, NY location is also an NSA approved supplier under the COMSEC standard and its environmental systems are ISO 14001:2004 certified. DRTL in Albuquerque, NM is ISO 17025 accredited, which is the international standard covering testing and calibration laboratories. Albuquerque and SCB also perform work per NASA-STD-8739 and J-STD-001ES space standards.

Prior Restatement

The Company previously disclosed in its Annual Report on Form 10-K/A and Quarterly Report on Form 10-Q/A, both filed with the SEC on July 3, 2013, that it restated its financial statements for the periods described therein because the Company was incorrectly accounting for work-in-process inventory at one of its subsidiaries, SCB (the "Prior Restatement"). The Company restated: (i) its previously issued consolidated financial statements for the fiscal year ended September 30, 2012 (“FY 2012”), as included in the Company’s Annual Report on Form 10-K for FY 2012, as well as the unaudited interim consolidated financial statements as of and for the fiscal quarter and year-to-date periods ended December 30, 2011 (“Q1-2012”), March 30, 2012 (“Q2-2012”) and June 29, 2012 (“Q3-2012”) (collectively, the “2012 Restated Periods”) as included in its Quarterly Reports on Form 10-Q for Q-1 2012, Q-2 2012 and Q-3 2012, and (ii) its previously issued financial statements for the quarter ended December 28, 2012 (“Q1-2013”) as included in its Quarterly Report on Form 10-Q for Q1-2013.

2014 Restatements

As discussed further in this Management’s Discussion and Analysis and in Note 2—Restatement of Deferred Tax Asset Valuation Allowance and Excess and Obsolete Inventory Reserve , we restated our previously issued consolidated financial statements for fiscal year ended September 30, 2014 (“FY 2014”) and our unaudited interim financial statements for the fiscal quarters ended March 28, 2014 (“Q2-2014”) and June 27, 2014 (“Q3-2014”) due to an error in the valuation allowance on deferred income tax assets resulting in an understatement of income tax expense and a corresponding overstatement of deferred income tax assets during Q2-2014 of approximately $14.0 million. Income tax expense was overstated and deferred income tax assets were understated by $3.0 thousand and $1.8 million in Q3-2014 and the fiscal quarter ended September 30, 2014 ("Q4-2014"), respectively. In FY 2014, income tax expense was understated and deferred income tax assets were overstated by approximately $12.3 million.

In addition, we restated our previously issued consolidated financial statements for FY 2014, and the unaudited interim financial statements for Q3-2014, Q2-2014 and the fiscal quarter ended December 27, 2013 ("Q1-2014") due to an error in the estimation of the excess and obsolete inventory reserve at two operating locations, which resulted in an understatement of cost of goods sold and overstatement of inventory. Cost of goods sold was understated by approximately $0.2 million, $0.1 million, $0.1 million and $0.3 million in Q1-2014, Q2-2014, Q3-2014 and Q4-2014, respectively. Inventory was overstated by approximately $0.2 million, $0.4 million, $0.4 million and $0.7 million as of the end of Q1-2014, Q2-2014, Q3-2014 and

Q4-2014, respectively. For FY 2014, cost of goods sold was understated and inventory was overstated by approximately $0.7 million. We refer to the restatements related to the deferred tax asset valuation allowance and excess and obsolete inventory reserve as the 2014 Restatements.

Three Months Results

A summary of selected income statement amounts for the three months ended follows:



	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	)

A summary of sales, according to the market sector within which IEC's customers operate, follows:



	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%

Revenue decreased in the second quarter of fiscal 2015 by $1.9 million or 5.5% as compared to the second quarter of the prior fiscal year. Decreases in the aerospace & defense market sector, communications & other, and the industrial market sector of $3.4 million, $1.7 million and $1.3 million, respectively were partially offset by an increase of $4.5 million in the medical market sector.

Various decreases and increases for our aerospace & defense customers resulted in a net decrease of $3.4 million. Decreases of $5.2 million resulted from lower demand from several of our customers. Programs frequently fluctuate in demand or end and are replaced by new programs. Some of the decreases in demand were due to new program delays due to design and testing and some were due to delays in government funding. The decision to end certain programs with customers due primarily to lack of profitability caused an aggregate decrease of $0.4 million. The loss of two programs caused a decrease of $0.4 million and the winding down of a program caused an additional $0.2 million of the decrease. The decreases were partially offset by increases in demand from existing customers. Revenue of $1.3 million in the second quarter of fiscal 2015 was due to a program for an existing customer that did not occur in fiscal 2014 and is not expected to recur in the future. New programs and increased demand from existing customers increased revenue by $1.2 million and $0.4 million, respectively.

The net decrease in the communications & other market sector was $1.7 million compared to the second quarter of the prior fiscal year. The decision to end two customer relationships, one of which was due to lack of profitability, resulted in an aggregate decrease of $1.4 million. In addition, lower demand from one customer decreased revenue by $0.3 million.

The net decrease in the industrial market sector of $1.3 million resulted primarily from lower customer demand. Demand fluctuations from four of our customers caused a decrease of $0.9 million and $0.7 million of the decrease was due to a one

time order in the second quarter of the prior fiscal year. These decreases were partially offset by new programs from an existing customer of $0.3 million.

Revenue for the medical market sector increased $4.5 million primarily due to increases in demand. Higher demand from our medical customer that was awaiting FDA approval in fiscal 2014 caused an increase of $2.9 million in the second quarter of fiscal 2015. In the second quarter of the prior fiscal year, this customer was seeking FDA approval for modifications to its existing programs which caused the programs to be put on hold. The hold was lifted during the third quarter of fiscal 2014 and the customer's testing was completed in the fourth quarter. We began shipping production orders late in the fourth quarter of fiscal 2014 and volume continued to increase in the first half of fiscal 2015. Revenue for another medical customer increased $1.4 million due to higher demand. The remaining net increase was primarily due to new programs.

Our second quarter gross profit decreased $2.1 million to 7.8% of sales from 13.3% of sales in the second quarter of the prior fiscal year. Lower leverage of our overhead at our Albuquerque and SCB operating locations caused a decrease to gross profit of 4.3 percentage points. Additional stock-based compensation expense attributed to the change in control caused gross profit to decrease $0.7 million or 2.3 percentage points. The remaining difference can be attributed to better performance at our remaining operating locations.

Selling and administrative ("S&A") expenses are presented excluding Restatement and related expenses discussed below. S&A expense increased $2.8 million, and represented 20.4% of sales in the second quarter of fiscal 2015, compared to 11.4% of sales in the same quarter of the prior fiscal year. The increase in S&A expenses was primarily due to expenses related to the proxy contest and resulting change of control. These costs totaled $3.1 million and include stock based compensation of $1.0 million, legal and other expenses incurred by the Company and Vintage Opportunity Fund, LP of $1.2 million and severance costs of $0.8 million. Excluding these costs, S&A expenses decreased $0.3 million, and represented 11.0% of sales in the second quarter of fiscal 2014, compared to 11.4% of sales in the same quarter of the prior fiscal year. The primary reason for the decrease is lower bad debt expense due to improved collections.

Restatement and related expenses of $0.7 million in the second quarter of fiscal 2015 represent third party legal and accounting fees directly attributable to the Restatements as well as other matters arising from the Prior Restatement including those more fully described in Note 17—Litigation . Expenses attributable to the Prior Restatement are significantly lower than prior year due to the insurance reimbursement settlement that occurred in late fiscal 2014. We anticipate continued legal expenses due to the Prior Restatement and other matters (including the formal SEC investigation) for the foreseeable future. While we anticipate certain of these expenses will continue to be reimbursed, any such reimbursement for future expenses will vary with the circumstances under which such expenses are incurred and their respective amounts. $0.5 million of the restatement and related expenses relate to fees for the reaudit of fiscal 2014 due to the 2014 Restatements. We anticipate additional Restatement and related expenses during the remainder of the current fiscal year and going forward related to the 2014 Restatements.

Interest expense increased by $0.2 million compared to the same quarter of the prior fiscal year. The net impact of adjusting the interest rate swap to fair value contributed $0.1 million of higher interest expense in the first six months of the current fiscal year compared to the prior fiscal year. The weighted average interest rate on IEC's debt, excluding the impact of the interest rate swap, was 0.9% lower than in the second quarter of the prior fiscal year. Our average outstanding debt balances was $34.3 million for both the second quarter of fiscal 2015 and fiscal 2014. During the first six months of the current fiscal year there was an increase in debt covenant waiver fees compared to the same quarter of the prior fiscal year. Cash paid for interest was approximately $0.4 million for both the second quarter of fiscal 2015 and fiscal 2014. Detailed information regarding our borrowings, including a summary of modifications in the Fourth Amended and Restated Credit Facility Agreement and debt covenant compliance, is provided in Note 8—Credit Facilities .

There was no income tax expense or benefit in the second quarter of fiscal 2015 as we have net operating loss (“NOL”) carryforwards to offset any current tax expense and a full valuation on all deferred tax assets. The full valuation allowance was recorded in the second quarter of fiscal 2014.

With respect to tax payments, in the near term IEC expects to be sheltered by sizable net operating loss (“NOL”) carryforwards for federal income tax purposes. At the end of fiscal 2014, the carryforwards amounted to approximately $16.3 million. The carryforwards expire in varying amounts between 2021 and 2025, with a small portion expiring in 2034, unless utilized prior to these dates.

Six Months Results

A summary of selected income statement amounts for the six months ended follows:



	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	)

A summary of sales, according to the market sector within which IEC's customers operate, follows:



	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%

Revenue decreased in the first six months of fiscal 2015 by $3.1 million or 4.7% as compared to the first six months of the prior fiscal year. Aggregate decreases in the aerospace & defense, industrial and communications & other market sectors of $10.1 million were partially offset by increases in the medical market sector aggregating $6.9 million.

Various decreases and increases for our aerospace & defense customers resulted in a net decrease of $6.3 million. Decreases of $8.5 million resulted from lower demand from several of our customers. Programs frequently fluctuate in demand or end and are replaced by new programs. Some of the decreases in demand were due to new program delays due to design and testing and some were due to delays in government funding. The loss of four programs caused a decrease of $1.1 million and the winding down of a program caused $0.7 million of the decrease. The decision to end certain programs with customers due primarily to lack of profitability caused an aggregate decrease of $0.2 million. Supplier quality issues related to one of our customer programs further reduced revenue by $0.7 million. In addition, one time orders fulfilled in the first six months of the prior year caused a revenue decrease of $0.3 million. These decreases were partially offset by increases in demand from existing customers. Revenue of $1.3 million in the first six months of fiscal 2015 was due to a program for an existing customer that did not occur in fiscal 2014 and is not expected to recur in the future. New programs and increased demand from existing customers increased revenue by $2.9 million and $1.1 million, respectively.

The net decrease in the industrial market sector of $1.3 million primarily resulted from lower customer demand. Demand fluctuations from four of our customers caused a decrease of $1.5 million. In addition, $0.7 million of the decrease was due to a one time order in the second quarter of the prior fiscal year. These decreases were partially offset by new programs from an existing customer of $0.7 million and increased demand from one existing customer of $0.2 million.

Revenue for the communications & other market sector decreased $2.4 million. The decision to end two customer relationships, one of which was due to lack of profitability, resulted in an aggregate decrease of $2.0 million. Lower demand from one customer decreased revenue by $0.3 million. The remaining net decrease resulted from small demand fluctuations from various other customers and a new program.

The net increase in the medical market sector was $6.9 million. Higher demand from our medical customer that was awaiting FDA approval in fiscal 2014 caused an increase of $4.5 million in the first six months of fiscal 2015. In the second quarter of the prior fiscal year, this customer was seeking FDA approval for modifications to its existing programs which caused the programs to be put on hold. The hold was lifted during the third quarter of fiscal 2014 and the customer's testing was completed in the fourth quarter. We began shipping production orders late in the fourth quarter of fiscal 2014 and volume continued to increase in the first half of fiscal 2015. Revenue for another medical customer increased $2.0 million due to higher demand. New programs and fluctuations in demand caused the remaining net increase of $0.4 million.

Gross profit in the first six months of fiscal 2015 decreased $2.2 million over the first six months of the prior fiscal year, and represents 9.1% of sales compared to 12.0% of sales in the same period of the prior fiscal year. Lower leverage of our overhead at our Albuquerque and SCB operating locations caused a decrease to gross profit of 3.5 percentage points. Additional stock-based compensation attributed to the change in control caused gross profit to decrease $0.7 million or 1.1 percentage points. The remaining difference can be attributed to better performance at our remaining operating locations, primarily as a result of improved leveraging of overhead due to increased revenue mainly from our medical market sector and improved material cost reductions.

Selling and administrative ("S&A") expenses are presented excluding Restatement and related expenses discussed below. S&A expenses increased $2.6 million, and represented 16.1% of sales over the first six months of fiscal 2015, compared to 11.6% of sales in the same period in prior fiscal year. The increase in S&A expenses was primarily due to expenses related to the proxy contest and resulting change of control. These costs totaled $3.3 million and include stock based compensation of $1.1 million, legal and other expenses incurred by the Company and Vintage Opportunity Fund, LP of $1.5 million and severance costs $0.8 million. Excluding these costs, S&A expense decreased $0.7 million, and represented 11.0% of sales over the first six months of fiscal 2015, compared to 11.6% of sales in the same period of the prior fiscal year. The primary reason for the decrease is lower bad debt expense due to improved collections.

Restatement and related expenses of $0.6 million in the first six months of fiscal 2015 represent third party legal and accounting fees directly attributable to the Restatements as well as other matters arising from the Prior Restatement including those more fully described in Note 17—Litigation . Expenses attributable to the Prior Restatement were $2.2 million lower than prior year due to the insurance reimbursement settlement that occurred in late fiscal 2014. We anticipate continued legal expenses due to the Prior Restatement and other matters (including the formal SEC investigation) for the foreseeable future. While we anticipate certain of these expenses will continue to be reimbursed, any such reimbursement for future expenses will vary with the circumstances under which such expenses are incurred and their respective amounts. $0.5 million of Restatement and related expenses in fiscal 2015 were for the reaudit of fiscal 2014 due to the 2014 Restatements. We anticipate additional Restatement and related expenses during the remainder of the current fiscal year and going forward related to the 2014 Restatements.

Interest expense in the first six months of fiscal 2015 increased by $0.3 million compared to the same period of the prior fiscal year. The increase is primarily due to the net impact of adjusting the interest rate swap to fair value in the first six months of the current fiscal year compared to the prior fiscal year period. The weighted average interest rate on IEC's debt, excluding the impact of the interest rate swap, was 0.4% higher than in the first six months of the prior fiscal year. Our average outstanding debt balances declined from $35.4 million for the first six months of fiscal 2014 to $32.1 million for the first six months of fiscal 2015. Average borrowings in the first six months of fiscal 2015 were lower than the same period of the prior fiscal year due to repayments on term debt. During the first six months of the current fiscal year there was an increase in debt covenant waiver fee compared to the same period of the prior fiscal year. Cash paid for interest was approximately $0.8 million for the first six months of both fiscal 2015 and fiscal 2014. Detailed information regarding our borrowings, including a summary of modifications in the Fourth Amended and Restated Credit Facility Agreement and debt covenant compliance, is provided in Note 8—Credit Facilities .

There was no income tax expense or benefit in the first six months of fiscal 2015 as we have net operating loss carryforwards to offset any current tax expense and a full valuation on all deferred tax assets. As part of our 2014 Restatements as described in Note 2—Restatement of Deferred Tax Asset Valuation Allowance and Excess and Obsolete Inventory Reserve , a full valuation allowance was recorded in the second quarter of fiscal 2014.

With respect to tax payments, in the near term IEC expects to be sheltered by sizable NOL carryforwards for federal income tax purposes. At the end of fiscal 2014, the carryforwards amounted to approximately $16.3 million. The carryforwards expire in varying amounts between 2021 and 2025, with a small portion expiring in 2034, unless utilized prior to these dates.

Liquidity and Capital Resources

Capital Resources

As of March 27, 2015 outstanding capital expenditure commitments were $0.2 million for manufacturing equipment and building improvements. We generally fund capital expenditures with cash flow from operations and our revolving credit facility.

Summary of Cash Flows

A summary of selected cash flow amounts for the six months ended follows:



	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

Operating activities

Cash flows used by operations, before considering changes in IEC’s working capital accounts, was $2.2 million for the first six months of fiscal 2015. Cash flow provided by operations, before considering changes in working capital, in the first six months of fiscal 2014 was $0.1 million . The increase was primarily driven by an improvement in net loss of $9.7 million compared to the first six months of the prior fiscal year. Deferred tax expense increased by $13.0 million compared to fiscal 2014 due to a recording a full valuation allowance on deferred tax asset in the second quarter of fiscal 2014 as further discussed in Note 2—Restatement of Deferred Tax Asset Valuation Allowance and Excess and Obsolete Inventory Reserve . Working capital used cash flows of $2.4 million in the first six months of fiscal 2015 and provided cash flows of $2.5 million in the first six months of fiscal 2014. The change in working capital in the first six months of fiscal 2015 was primarily due to an increase in inventory of $4.7 million , partially offset by an increase in customer deposits of $1.6 million . The increase in inventory was driven by aerospace & defense customers requiring purchases of inventory in advance for testing prior to production, maintaining higher levels of finished goods for certain customers at their request and delays in some smaller programs. Further increases were due to a ramp in production for one industrial customer as well as increased demand including the ramp in production of relatively new customers in our medical market sector. A decrease in accounts receivable contributed $1.7 million to cash flow provided by operations, mainly due to lower sales volume in the first half of fiscal 2015 compared to fiscal 2014 as well as improved collection of receivables. Accrued payroll and related expenses used cash flow of $0.7 million, primarily due to the payment of deferred compensation to our former Chief Executive Officer. An increase in other current assets was offset by increased other accrued expenses, both primarily attributable to Restatement and related expenses and the partial reimbursement of those expenses.

Investing activities

Cash flows used in investing activities were $1.2 million and $2.8 million for the first six months of fiscal 2015 and 2014, respectively. Cash flows used in the first six months of fiscal 2015 primarily consisted of the purchases of equipment and, to a lesser extent, building improvements totaling $1.9 million , partially offset by cash received from a community development block grant of $0.7 million . The community development block grant was initiated in fiscal 2012 but not completed and submitted for reimbursement until September 2014. Cash used in the first six months of fiscal 2014 primarily consisted of the Celmet building purchase of $1.3 million and purchases of equipment.

Financing activities

Cash flows provided by financing activities were $4.5 million for the first six months of fiscal 2015 and cash flows used in financing activities were $1.7 million for the first six months of fiscal 2014. During the first six months of fiscal 2015, net borrowings under all credit facilities were $5.1 million , with $6.6 million of net borrowings under the revolver and repayments

of $1.5 million for term debt. In the first six months of fiscal 2014, net cash flows reduced outstanding credit facilities by $1.7 million , due to net repayments funded by operations.

Credit Facilities

At March 27, 2015 , borrowings outstanding under the revolving credit facility (“Revolver”) amounted to $14.0 million , and the maximum available was $20.0 million. Borrowings on the Revolver during the current fiscal year were used to fund working capital changes discussed above. The Company believes that its liquidity is sufficient to satisfy anticipated operating requirements during the next twelve months.

The financial covenants in the 2013 Credit Agreement include (i) a minimum level of quarterly EBITDARS ("Quarterly EBITDARS"), (ii) a ratio of total debt to twelve month EBITDARS (“Debt to EBITDARS Ratio”) that is below a specified limit, and (iii) a minimum fixed charge coverage ratio (“Fixed Charge Coverage Ratio”). EBITDARS is defined as earnings before interest, taxes, depreciation, amortization, rent expense and non-cash stock compensation expense. At March 28, 2014, the Company was not in compliance with the Quarterly EBITDARS covenant. At December 27, 2013, the Company was not in compliance with Quarterly EBITDARS covenant or the Debt to EBITDARS Ratio. At December 26, 2014, the Company was not in compliance with the Debt to EBITDARS Ratio, the Quarterly EBITDARS covenant and the Fixed Charge Coverage Ratio. As a result of the restatement as described in Note 2—Restatement of Deferred Tax Asset Valuation Allowance and Excess and Obsolete Inventory Reserve , the Company was in default of the Credit Agreement for failure to deliver financial statements prepared in accordance with GAAP at September 30, 2014. At March 27, 2015 and December 26, 2014, the Company was not in compliance with the Debt to EBITDARS Ratio, the Quarterly EBITDARS covenant and the Fixed Charge Coverage Ratio. The Company received waivers from M&T with respect to such noncompliance.

An amendment to the 2013 Credit Agreement obtained in February 2014 did not require measurement of the Debt to EBITDARS Ratio or the Fixed Charge Coverage Ratio for any quarter during fiscal 2014. Amendments to the 2013 Credit Agreement obtained in May 2013, August 2013, December 2013 and February 2014, which modified financial covenants and related definitions, are more particularly described in Note 8—Credit Facilities .

The calculation of debt covenants follows:

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

(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).

A reconciliation of EBITDARS to Net income follows:



	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

A reconciliation of Adjusted EBITDA to Net income follows:



	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

EBITDARS and Adjusted EBITDA are non-GAAP financial measures. They should not be considered in isolation or as a measure of the Company’s profitability or liquidity; are in addition to, and are not a substitute for, financial measures under GAAP. EBITDARS and Adjusted EBITDA may be different from non-GAAP financial measures used by other companies, and may not be comparable to similarly titled measures reported by other companies. Non-GAAP financial measures have limitations since they do not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with GAAP.

EBITDARS and Adjusted EBITDA do not take into account working capital requirements, capital expenditures, debt service requirements and other commitments, and accordingly, EBITDARS and Adjusted EBITDA are not necessarily indicative of amounts that may be available for discretionary use. We present EBITDARS and Adjusted EBITDA because certain covenants in our credit facilities are tied to these measures. We also view EBITDARS and Adjusted EBITDA as useful measures of operating performance given our large net operating loss carryforward and because, as supplemental measures: (i) they are a basis upon which we assess our liquidity position and performance and (ii) we believe that investors will find the data useful in assessing our ability to service and/or incur indebtedness. We believe that EBITDARS and Adjusted EBITDA, when considered with both our GAAP results and the reconciliation to net income, provide a more complete understanding of our business than could be obtained absent this disclosure.

Off-Balance Sheet Arrangements

IEC is not a party to any material off-balance sheet arrangements.

Application of Critical Accounting Policies

Our application of critical accounting policies are disclosed in our 2014 Annual Report on Form 10-K/A filed for the fiscal year ended September 30, 2014 . During the six months ended March 27, 2015 there have been no material changes to these policies.

Recently Issued Accounting Standards

See Note 1—Our Business and Summary of Significant Accounting Policies for further information concerning recently issued accounting pronouncements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a result of its financing activities, the Company is exposed to changes in interest rates that may adversely affect operating results. The Company actively monitors its exposure to interest rate risk and from time to time uses derivative financial instruments to manage the impact of this risk. The Company uses derivatives only for the purpose of managing risk associated with underlying exposure. The Company does not trade or use instruments with the objective of earning financial gains on the interest rate, nor does the Company use derivatives instruments where it does not have underlying exposure. The Company manages its hedging position and monitors the credit ratings of counterparties and does not anticipate losses due to counterparty nonperformance. Management believes its use of derivative instruments to manage risk is in the Company’s best interest. However, the Company’s use of derivative financial instruments may result in short-term gains or losses and increased volatility.

At March 27, 2015 , the Company had $36.5 million of debt, comprised of $27.7 million with variable interest rates and $8.8 million with fixed interest rates. Interest rates on variable loans are based on London interbank offered rate (“Libor”). The Company is party to a swap transaction that effectively fixes an additional $11.1 million of debt, which increased the portion of debt with effectively fixed interest rates from $8.8 million to $19.9 million at March 27, 2015 . The credit facilities and related swap transaction are more fully described in Note 8—Credit Facilities and Note 9—Derivative Financial Instruments . The rates effectively fixed by the swap transaction continue to vary due to the variable margin based on financial covenant metrics. The variable margins were modified by a December 2013 amendment to the 2013 Credit Agreement to temporarily fix the applicable margin for the twelve-month period commencing December 13, 2013, and thereafter if the Company is not in compliance with its financial covenants, with respect to the Revolver to 4.25% above LIBOR, with respect to the Albuquerque Mortgage Loan to 4.50% above LIBOR and with respect to Term Loan B to 3.25% above LIBOR. The applicable unused fee for the same period was changed to 0.50%. The February 2014 amendment to the 2013 Credit Agreement extended these temporarily fixed applicable margins and unused fee through March 27, 2015 and thereafter if the Company is not in compliance with its financial covenants. Interest rates based on Libor currently adjust daily, causing interest on such loans to vary from period to period. A sensitivity analysis as of March 27, 2015 indicates that a one-percentage point increase or decrease in our variable interest rates, which represents more than a 10% change, would increase or decrease the Company's annual interest expense by approximately $0.3 million. The rates and sensitivity analysis noted above exclude the impact of the swap transaction.

The Company is exposed to credit risk to the extent of non-performance by M&T Bank under the 2013 Credit Agreement and the Swap Transaction. M&T Bank's credit rating (reaffirmed A- by Fitch in October 2014) is monitored by the Company, and IEC expects that M&T Bank will perform in accordance with the terms of the 2013 Credit Agreement and the Swap Transaction.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures

IEC’s management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(c) and 15d-15(c) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of March 27, 2015 , the end of the period covered by this Form 10-Q. Based on that evaluation, solely as a result of the material weaknesses discussed in greater detail in our Form 10-K/A filed with the SEC on or about the date of filing of this Quarterly Report (the “2014 Form 10-K/A”), our Chief Executive Officer and Chief Financial Officer concluded that as of March 27, 2015 , the Company’s disclosure controls and procedures were not effective. To address these material weaknesses, we have implemented certain remedial measures, as described in our 2014 Form 10-K/A.

Changes in internal control over financial reporting

Management identified material weaknesses in our internal control over financial reporting related to an error in the valuation allowance on deferred income tax assets and an error in estimated excess and obsolete inventory reserves, as discussed in greater detail in Item 9A of our 2014 Form 10-K/A. To address these material weaknesses, we have implemented certain remedial measures, as described in Item 9A of our 2014 Form 10-K/A, which description is incorporated by reference herein. The material weaknesses cannot be considered fully remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Except as described above, during the six months ended March 27, 2015 , there were no changes in our internal controls that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the effectiveness of control systems

IEC’s management does not expect that our disclosure controls and internal controls will prevent all errors and fraud. Because of inherent limitations in any such control system (e.g. faulty judgments, human error, information technology system error, or intentional circumvention), there can be no assurance that the objectives of a control system will be met under all circumstances. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. The benefits of a control system also must be considered relative to the costs of the system and management’s judgments regarding the likelihood of potential events. In summary, there can be no assurance that any control system will succeed in achieving its goals under all possible future conditions, and as a result of these inherent limitations, misstatements due to error or fraud may occur and may or may not be detected.

Part II OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

There are no material changes to the risk factors described in Item 1A to Part I of our Annual Report on Form 10-K/A for the fiscal year ended September 30, 2014 , as filed with the SEC on or about the date of filing of this Quarterly Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Recent Sales of Unregistered Securities

Consistent with the Company’s existing equity compensation program for non-employee directors, on February 12, 2015, the Company granted 35,460 shares of restricted stock to the Company’s non-employee directors under the Company’s 2010 Omnibus Incentive Plan. Each of Messrs. Butler, Hadeed, Hartick, Laurence, Nowak and Singer received 5,910 shares with a grant date value of $25,000. The shares vests in equal installments on the first three anniversaries of the February 12, 2015 grant date.

On March 20, 2015, the Company granted its President and Chief Executive Officer, Jeffrey T. Schlarbaum a sign-on option to purchase up to 416,145 shares of the Company’s common stock at an exercise price of $4.10 per share. The sign-on option vests and becomes exercisable in equal installments on the first, second, third and fourth anniversaries of the March 20, 2015 grant date. The option to purchase up to 400,000 shares of common stock was granted as an incentive stock option under the Company’s 2010 Omnibus Incentive Plan, and the option to purchase up to 16,145 shares of our common stock was granted as an inducement grant in reliance on the employment inducement exception under Section 711(a) of the NYSE MKT Company Guide.

The Company issued the securities described above in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The Company concluded that it satisfied the conditions for use of the exemption in Section 4(a)(2) of the Securities Act because the issuance was to a limited number of financial sophisticated directors, including the Company’s President and Chief Executive Officer, with access to information regarding the Company.



Issuer Purchases of Equity Securities
Period (1)	Total Number of Shares Purchased (2)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs

December 27, 2014 - January 23, 2015	3,218	$	4.77	—	—
January 23, 2015 - February 20, 2015	122,738	4.48		—	—
February 21, 2015 - March 27, 2015	—	—		—	—
Total	125,956	$	4.49	—	—

(1) The reported periods conform to the Company's fiscal calendar.

(2) The total number of shares purchased in the period consists of shares withheld by the Company in
satisfaction of withholding taxes due upon the vesting of restricted stock awards granted under the 2001
Plan and 2010 Plan. Shares withheld are held as Treasury Shares and are no longer deemed outstanding.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not Applicable

Item 5. Other Information

Sixth Amendment to the 2013 Credit Agreement

On May 8, 2015, the Company and M&T entered into a Sixth Amendment to the 2013 Credit Agreement, as previously amended (the “Sixth Amendment”). Pursuant to the Sixth Amendment, M&T agreed to (i) modify the financial covenants related to Quarterly EBITDARS, the Debt to EBITDARS Ratio and the Fixed Coverage Charge Ratio and (ii) waive events of default arising from the Company’s non-compliance with these covenants during the fiscal quarters ended December 26, 2014 and March 27, 2015. The Sixth Amendment also amended the definition of EBITDARS under the 2013 Credit Agreement to add back a maximum amount of professional services fees and expenses incurred and paid or to be paid prior to December 25, 2015. EBITDARS as amended and restated means, for the applicable period, earnings before interest, taxes, depreciation, amortization, plus (i) payments due under the M&T sale-leaseback arrangement, (ii) non-cash stock option expense and (iii) professional services fees and expenses incurred and paid or to be paid prior to December 25, 2015, up to a maximum of (a) for the fiscal quarter ended December 26, 2014, $235,000, (b) for the fiscal quarter ending March 27, 2015, $2,625,600, (c) for the fiscal quarter ending June 26, 2015, $200,000 plus costs incurred and paid by Borrower during such Fiscal Quarter in connection with mortgages, environmental site assessments, title insurance and appraisals ("Costs") and (d) for the fiscal quarter ending September 30, 2015, $200,000, all on a consolidated basis and determined in accordance with GAAP on a consistent basis.

The Sixth Amendment modified the covenant relating to Quarterly EBITDARS to require minimum EBITDARS of $1,250,000 for the fiscal quarter ending June 26, 2015, and $1,500,000 for each fiscal quarter ending thereafter.

Commencing with the fiscal quarter ending June 26, 2015, the Sixth Amendment modified the Debt to EBITDARS Ratio as follows:

Debt to EBITDARS :

2013 Credit Agreement, as modified by the Sixth Amendment:



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

Commencing with the fiscal quarter ending June 26, 2015, the Sixth Amendment also modified the specified Fixed Charge Coverage Ratio as follows:

Fixed Charge Coverage :

2013 Credit Agreement, as modified by the Sixth Amendment



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

The Sixth Amendment removed provisions in the 2013 Credit Agreement that would have allowed for borrowing at an increased interest rate margin based on 85% of eligible accounts plus 70% of eligible inventories up to a maximum of $4.75 million. As amended, borrowings under the 2013 Credit Agreement are limited to 85% of eligible accounts plus 35% of eligible inventories up to a maximum of $3.75 million.

Finally, the Sixth Amendment modifies the 2013 Credit Agreement to further restrict the Company’s ability to make cash distributions in the form of dividends, repurchases or redemptions in respect to its common stock. The Company will be required to seek M&T’s consent before making any such cash distributions.

Except as so modified and waived by the Sixth Amendment, the 2013 Credit Agreement remains unchanged. The foregoing description of the Sixth Amendment is a summary of the terms of the Sixth Amendment, and is qualified in its entirety by the text of the Sixth Amendment itself, a copy of which will be filed with our quarterly report on Form 10-Q for the fiscal quarter ending March 27, 2015.

Item 6. Exhibits

For the exhibits that are filed herewith or incorporated herein by reference, see the Index to Exhibits located immediately following the signature page to this Report. The Index to Exhibits is incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		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

IEC ELECTRONICS CORP.

Form 10-Q for Quarter Ended March 27, 2015

INDEX TO EXHIBITS



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.

* Management contract or compensatory plan or arrangement.

Exhibit 10.1

EMPLOYMENT AGREEMENT

AMENDMENT 1

THIS EMPLOYMENT AGREEMENT AMENDMENT 1 (“ Amendment ”), effective January 27, 2015, is made to the Employment Agreement (“Agreement”) that was effective as of February 11, 2014 between IEC ELECTRONICS CORP. (separately and together with its subsidiaries, “ IEC ”) and MICHAEL T. WILLIAMS (“ Executive ”).

A new Section 6.11 is hereby added to the Agreement to read in its entirety as follows:

6.11 Enforcement . In the event that Executive brings any legal action to enforce any provisions of this Agreement and prevails in any such action, Executive shall be entitled, in addition to any other costs, expenses, damages, awards or other rights to which Executive may be entitled, to reimbursement from IEC of all costs and expenses, including reasonable attorneys fees, incurred by Executive in the course of enforcing this Agreement.

All other provisions of the Agreement remain in full force and effect.

This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts shall together constitute one and the same instrument. Execution of this Amendment by electronic, PDF, facsimile or similar means shall be effective.

IN WITNESS WHEREOF, the parties have executed this Amendment effective as of the date first written above.

IEC ELECTRONICS CORP.

By: /s/ W. Barry Gilbert /s/ Michael T. Williams

W. Barry Gilbert Michael T. Williams

Chairman of the Board

and Chief Executive Officer

Exhibit 10.2

SALARY CONTINUATION AND NON-COMPETITION AGREEMENT

AMENDMENT 1

THIS SALARY CONTINUATION AND NON-COMPETITION AGREEMENT AMENDMENT 1 (“ Amendment ”), effective January 27, 2015, is made to the Salary Continuation and Non-Competition Agreement (“Agreement”) that was effective as of January 29, 2014 between IEC ELECTRONICS CORP. (separately and together with its subsidiaries, “IEC”) and BRETT E. MANCINI (“Executive”).

A new Section 4.10 is hereby added to the Agreement to read in its entirety as follows:

4.10 Enforcement . In the event that Executive brings any legal action to enforce any provisions of this Agreement and prevails in any such action, Executive shall be entitled, in addition to any other costs, expenses, damages, awards or other rights to which Executive may be entitled, to reimbursement from IEC of all costs and expenses, including reasonable attorneys fees, incurred by Executive in the course of enforcing this Agreement.

All other provisions of the Agreement remain in full force and effect.

IN WITNESS WHEREOF, the parties have executed this Amendment effective as of the date first written above.

IEC ELECTRONICS CORP.

By: /s/ W. Barry Gilbert /s/ Brett E. Mancini

W. Barry Gilbert Brett E. Mancini

Chairman of the Board

and Chief Executive Officer

Exhibit 10.3

EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) is entered into and effective as of March 20, 2015 ("Effective Date"), between IEC Electronics Corp. (“Company”) and Jeffrey T. Schlarbaum ("Executive").

WHEREAS, the Company and the Executive wish for the Company to employ the Executive upon the terms and conditions as set forth in this Agreement; and

NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which the parties acknowledge mutually, the parties agree as follows:

1. Employment and Duties .

1.1 Employment by the Company . The Company agrees to employ the Executive for the Term (as defined in Section 2 below), to render exclusive and full-time services in the capacity of Chief Executive Officer ("CEO") of the Company, subject to the control and direction of the Company's Board of Directors ("Board").

1.2 Duties/Authority . The Executive shall be responsible for conducting the Company’s business and fiscal affairs and for the general supervision of and control over the Company’s assets, business interests, and agents, in each case subject to the Board’s control and direction. The Executive's duties shall be consistent with the duties, responsibilities, and authority generally incident to the position of CEO and shall include such other reasonably related duties as may be assigned to him from time to time by the Board. In performing his duties, Executive agrees to abide by all bylaws, policies, practices, procedures, and rules of the Company. After the first anniversary of the Effective Date, Executive may serve on no more than (in the aggregate) two public, private for profit, or other boards.

1.3 Corporate Opportunities . The Executive agrees that he shall not take personal advantage of any business opportunities that arise during employment that may benefit the Company. The Executive must promptly report to the Board, for the Company’s consideration, all material facts regarding such opportunities.

2. Term of Employment . The term of this Agreement shall commence on the Effective Date and continue for an initial three (3) year term, through March 19, 2018, unless sooner terminated as provided in Section 4 below. At the close of the initial term, the Executive’s employment shall continue for successive three (3) year terms unless (a) either party gives at least six (6) months’ prior written notice of its intent not to renew to the other party, or (b) the agreement is sooner terminated as provided in Section 4 below.

3. Compensation .

3.1 Salary . As consideration for services rendered, the Company shall pay the Executive during the Term an annual salary of $350,000 ("Base Salary"), payable in equal installments at such intervals as are the usual custom of the Company, but not less frequently than monthly. After the initial year, the Executive's Base Salary will be reviewed for increases by the Compensation Committee. Unless offset pursuant to Section 3.8, Executive’s Base Salary shall not be decreased.

3.2 Annual Bonus . Pursuant to the terms of the Company’s Management Incentive Plan or any successor arrangement thereto (“MIP”), the Executive shall be eligible to receive a performance bonus for each fiscal year of the Company, which shall be subject to the Executive’s continued employment with the Company and the accomplishment of the specific performance goals established by the Committee for such fiscal year (“Annual Bonus”), with a target value of at least 65% of the Executive’s Base Salary for such fiscal year. The Board or the Committee, in their sole discretion, but in consultation with the Executive, shall establish the following for the MIP for each fiscal year: (a) the applicable performance criteria and goals (“Targets”); (b) the relative weightings, if any, of the Targets; and (c) the percentage of the target Annual Bonus that the Executive will be able to earn upon achievement of certain percentages of the Targets, including the percentages of performance in excess of 100% of Target in which event a higher Annual Bonus will be earned, and which may include minimum percentages below which no Annual Bonus will be earned. The calculation of the Annual Bonus shall be determined by the Board or the Committee, in their reasonable discretion following the completion of the Company’s audit for such fiscal year, and the Annual Bonus for a given fiscal year shall be paid within 15 days of the receipt by the Company of the audited financial statements for such fiscal year, but no later than the 15th day of the third month following the end of such fiscal year. However, in fiscal 2015, contingent upon his being employed on the applicable payment dates, he will earn $47,500 payable upon successful filing of the Company’s restated Form 10-K for fiscal 2014 as well as filing Form 10-Q for both Q1 and Q2 of fiscal 2015 (all of which shall be filed not later than May 11, 2015), and $47,500 payable in the first payroll period after September 30, 2015 or if greater, a payout under terms of the MIP (65% of his base salary at target) pro rated for the portion of fiscal 2015 during which he is employed. If this Agreement terminates other than at the end of a fiscal year and if the Executive is entitled to a pro rata Annual Bonus for such partial fiscal year pursuant to Section 5 hereof, such pro rata Annual Bonus shall be equal to the Annual Bonus that the Executive would have received under the MIP, based on the Target for such fiscal year, multiplied by a fraction, the numerator of which shall be the number of days during such fiscal year he was so employed and the denominator of which shall be the number of days in such fiscal year (“Pro Rata Annual Bonus”). The Executive also may be entitled to the Annual Bonus for the fiscal year prior to the fiscal year in which the Executive is terminated, to the extent not yet paid (“Preceding Bonus”). The Executive shall be entitled to receive the Preceding Bonus and/or the Pro Rata Bonus, as applicable, at the time the Annual Bonus is payable pursuant to the terms of the MIP. The Annual Bonus shall, in all respects, be subject to the terms of the MIP.

3.3 LTIP Incentive . The Executive will be eligible to participate in the long-term incentive award program of the Company on such terms as are established by the Committee, with a target value of at least 65% of the Executive’s Base Salary for each fiscal year (“LTIP Award”).

3.4 Sign-On Award . Immediately following the commencement of the Executive’s employment with the Company and subject to the approval of the Committee, the Company shall grant to the Executive an award of a stock option to purchase the number of shares of the Company’s Common Stock that represent 4.0% of the Company’s outstanding equity on the date of grant (“Sign-On Option”). The Sign-On Option may be granted under the terms of the Company’s 2010 Omnibus Incentive

Compensation Plan of the Company (the “Plan”), or if the Committee determines it to be necessary or advisable, as an “inducement award” outside of the Plan to the extent permissible and in accordance with the NYSEMKT listing requirements. The Sign-On Option shall have an exercise price per share equal to the fair market value of a share of Common Stock as of the close of the market on the date of grant, and subject to the Executive’s continued employment with the Company. The Sign-On Option shall vest and become exercisable with respect to 25% of the number of shares of Common Stock represented by the Sign-On Option on each of the first, second, third and fourth anniversaries of the Effective Date.

3.5 Participation in Employee Benefit Plans . The Executive shall be permitted during the Term, if and to the extent eligible, to participate in any employee welfare and health benefit plans (including, but not limited to, life insurance, health and medical, dental, and disability insurance plans) and other employee benefit plans (including, but not limited to, qualified pension plans) that are available generally to other senior executives of the Company. Employee shall be required to comply with any conditions required for coverage by such plans and shall comply with and be entitled to benefits only in accordance with the terms and conditions of such plans as they may be amended from time to time.

3.5.1 Health Insurance . The Company will only pay its portion of premiums for the Executive’s health insurance regardless of whether the Executive enrolls in individual, employee plus spouse, employee plus dependents, or family coverage in amounts and on terms consistent with health care benefits paid to the Company’s employees pursuant to applicable Company employment policies.

3.6 Expenses . The Company shall pay or reimburse the Executive for all reasonable expenses (including travel expenses) actually incurred or paid by the Executive during the Term in the performance of the Executive's services under this Agreement ("Expenses"). Such reimbursement shall be paid upon presentation of supporting expense statements, receipts or such other supporting information as the Company may require, and in accordance with the Company’s reimbursement policies generally applicable to other senior executives.

3.7 Vacation . The Executive shall be entitled to four (4) weeks of vacation per calendar year.

3.8 Clawback . In the event the Company is required to prepare an accounting restatement of its financial statements due to the Company’s material noncompliance with any financial reporting requirements under the Securities Act of 1933, as amended on the Securities Exchange Act of 1934 as amended, and the accounting restatement results from the Executive willful or grossly negligent conduct or from Executive’s financial dishonesty, the Executive shall reimburse or forfeit (as the case may be) any compensation received or due Executive pursuant to Sections 3.2 and 3.3 during the three (3) year period preceding the date on which the Company is required to prepare an accounting restatement. The amount to be recovered shall be the excess of the compensation paid to the Executive pursuant to Sections 3.2 and 3.3 based on the erroneous dates over the amount of compensation pursuant to Section 3.2 and 3.3 that would have been paid to the Executive had it been based on the restated results, as determined by the Company’s Board of Directors. For purposes of this Section 3.8, “financial dishonesty” shall mean a material misstatement or material omission in the Company’s disclosure documents including but not limited to documents filed or furnished pursuant to the Securities Exchange Act of 1934 as amended, press releases or the Company’s disclosure documents filed under the Securities Act of 1933, as amended.

The Company’s Board of Directors will determine, in its sole discretion, the method for recouping compensation paid pursuant to Sections 3.2 and 3.3 hereunder which may include, without limitation:

(a) requiring reimbursement of cash incentive compensation previously paid;

(b) seeking recovery of any gain realized on the vesting, exercise, settlement, sale, transfer or other disposition of any equity-based awards;

(d)) cancelling outstanding vested or unvested equity awards; and/or

(e) taking any other remedial and recovery action permitted by law, as determined by the Board.

3.9 Controlling Document . To the extent there is any inconsistency between the terms of this Agreement and the terms of any plan or program under which compensation or benefits are provided hereunder, this Agreement shall control. Otherwise, the Executive shall be subject to the terms, conditions and provisions of the Company's plans and programs, as applicable.

4. Termination or Removal from Duties .

4.1 Termination Upon Death . This Agreement shall terminate automatically upon the Executive's death.

4.2 Removal from Position Upon Disability . If during the Term, as a result of a physical or mental incapacity or infirmity, the Executive is unable to perform the essential functions of his job with or without reasonable accommodation for a period of six (6) continuous months, the Executive shall be deemed disabled ("Disability") and the Company, by written notice to the Executive, shall have the right to remove him from his position. The Executive's status as an inactive employee of the Company shall continue after such removal for the period of time that his Disability continues. However, the Company shall have no obligation to reinstate or otherwise continue the Executive's employment if he should recover from his Disability and any such termination shall not constitute a termination without Cause or without Good Reason (as herein defined). The existence of a Disability shall be determined by a reputable, licensed physician selected by the Company in good faith, whose determination shall be final and binding on the parties.

4.3 Termination for Cause . The Company may at any time, by written notice to the Executive, terminate the Executive's employment hereunder for Cause. For purposes hereof, the term "Cause" shall mean: (A) Executive's conviction of or pleading guilty or no contest to a felony; (B) failure or refusal of the Executive in any material respect (i) to perform the duties of his employment or to follow the lawful and proper directives of the Board, provided such duties or directives are consistent with this Agreement and such duties or directives have been given to the Executive in writing, or (ii) to comply with the reasonable and substantial written policies, practices, standards or regulations of the Company (so long as same are not inconsistent with this Agreement) as may be established from time to time, if such failure or refusal under either clause (i) or clause (ii) continues uncured for a period of thirty (30) days after written notice thereof, specifying the nature of such failure or refusal and requesting that it be cured, is given by the Company to the Executive; (C) any willful or intentional act of the Executive committed for the purpose, or having the reasonably foreseeable effect, of injuring the Company, its

business or reputation, or of improperly or unlawfully converting for the Executive's own personal benefit any property of the Company, if such act or conduct is not cured or capable of cure within a period of thirty (30) days after written notice thereof, specifying the nature of such failure or refusal and requesting that it be cured, is given by the Company to the Executive; or (D) any violation or breach of the provisions of Section 7 of this Agreement.

4.4 Termination without Cause . During the Term, the Company may terminate the Executive's employment without Cause at any time.

4.5 Termination for Good Reason . With thirty (30) days’ prior written notice to the Company, Executive may terminate his employment and this Agreement. For purposes of this Agreement, "Good Reason" means: (A) non-renewal by the Company; (B) the Company’s relocation of the Executive’s work location by more than 100 miles, without the Executive’s prior consent; (C) a material change to or diminution of the Executive’s job duties; and (D) a material breach of this Agreement by the Company that is not cured within thirty (30) days’ written notice of the same to the Company. The written notice of termination for Good Reason must specify in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated, if applicable.

Any resignation pursuant to the terms of this Section shall not constitute a breach of this Agreement by either party.

5. Rights and Obligations of the Company and the Executive Upon Termination, or Removal . Upon the termination of his employment for whatever reason, Executive shall be entitled to all salary and other benefits earned and accrued through his termination date, including any Preceding Bonus that is accrued but remains unpaid. In addition, and notwithstanding the other provisions of this Agreement, but subject to Section 9.9 and to the extent permissible by Section 409A, upon the occurrence of an event described in Section 4, the parties shall have the following rights and obligations:

5.1 Death or Disability . If the Executive's employment is terminated by reason of the Executive's Death or Disability:

(A) the Company shall pay the Executive (or his estate in the event of his death), a Pro Rata Annual Bonus, which, subject to Section 9.9, shall be paid within 60 days following the date of death or disability;

(B) Executive (or his estate in the event of his death) shall be entitled to accelerated vesting of Executive’s Sign On Option, with such option to be exercised before the earlier of its expiration date and one year following the date of death/disability; and

(C) Executive (or his estate in the event of his death) shall be entitled to accelerated vesting of any outstanding LTIP Awards held by the Executive on the date of death/disability, which, subject to Section 9.9 and to the extent permissible by Section 409A, shall be paid (if applicable) within 60 days following the date of death/disability, and shall be entitled to exercise any stock options (if applicable) before the earlier of the stock option’s expiration date and one year following the date of death/disability.

In the event of Executive’s disability, his eligibility for continued enrollment in the Company’s health insurance plan shall be determined in accordance with the terms of the Company’s long-term disability policy then in effect.

5.2 Termination for Cause or without Good Reason . If the Executive's employment shall be terminated by the Company for Cause or by the Executive without Good Reason, Executive’s unvested stock options will be forfeited and Executive may exercise his vested Sign On Option before the earlier of the option expiration date and 30 days following his termination date. The terms of the Company’s equity plan and executive equity award agreement(s) will govern the vesting of Executive’s LTIP Equity Awards.

5.3 Termination without Cause or for Good Reason absent a Change-in-Control . If the Executive's employment is terminated by the Company without Cause or by the Executive with Good Reason, and without a Change-in-Control having occurred within the preceding two years, the Company shall pay (unless otherwise noted, in the normal course) to the Executive or provide the following amounts or benefits:

(i) one year's Base Salary (as in effect as of the date of such termination or resignation), payable in accordance with the Company's payroll practice;

(ii) a Pro Rata Annual Bonus;

(iii) Executive shall be entitled to accelerate vesting of Executive’s Sign On Options, with such options to be exercised any time before the option expiration date;

(iv) Executive shall be entitled to accelerate vesting of any outstanding LTIP Awards held by the Executive as of the date of his termination, with any options (if applicable) to be exercised before the earlier of the option expiration date and one year following the employment termination date;

(v) Continued coverage in under the Company’s health insurance plan for a twelve month period following his termination date with the Company paying the cost of the premiums for such period. If continued coverage under the Company’s plan would create a plan discrimination issue or is otherwise not permitted, Company will pay to executive the full cost for executive to obtain comparable health insurance coverage for the applicable period, which amount will be paid in a lump sum if permissible under 409A.

5.4 Termination without Cause or for Good Reason within 2 years of a Change-in-Control . If the Executive's employment is terminated by the Company without Cause or by the Executive with Good Reason, following a Change-in-Control within the preceding two years, the Company shall pay (unless otherwise noted, in the normal course) to the Executive or provide the following amounts or benefits:

(i) two year's Base Salary (as in effect as of the date of such termination or resignation), payable in a lump sum if permissible under 409A;

(ii) a Pro Rata Annual Bonus;;

(iii) Executive shall be entitled to accelerated vesting of Executive’s Sign On Options, with such options to be exercised any time before the option expiration date;

(iv) Executive shall be entitled to accelerated vesting of any outstanding LTIP Awards held by him as of the date of his termination, with any options (if applicable) to be exercised before the earlier of the option expiration date and one year following the employment termination date;

(v) Continued coverage in under the Company’s health insurance plan for a twenty-four (24) month period following his termination date with the Company paying the cost of the premiums for such period. If continued coverage under the Company’s plan would create a plan discrimination issue or is otherwise not permitted, the Company will pay to the Executive the full cost for executive to obtain comparable health insurance coverage for the applicable period, which amount will be paid in a lump sum if permissible under 409A.

All payments to be provided to the Executive under this Section 5 shall be subject to the Executive's compliance with the restrictions in Section 7 and execution, within sixty (60) days of the Executive's termination, of a general release and waiver of claims against the Company, its officers, directors, employees and agents, in a form acceptable to the Company, from any and all liability arising from the Executive's employment relationship with the Company (which release will include an agreement between both parties not to disparage the other) that is not revoked.

6. Change in Control .

6.1 In the event of the occurrence of a Change in Control of the Company, the Executive shall remain employed by the Company, pursuant to the terms and conditions of this Agreement and shall be entitled to accelerated vesting of his Sign On Options, with such options to be exercised any time before the option expiration date.

6.2 For purposes of this Agreement, "Change in Control" shall mean (a) the date of the acquisition by any person (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), excluding IEC or any of its subsidiaries, of beneficial ownership within the meaning of Rule 13d-3 under the Exchange Act) of 25% or more of the combined voting power of IEC’s then outstanding voting securities (“Voting Securities”); or (b) the date the individuals who constitute the board as of the effective date of this Agreement (“Incumbent Board”) cease for any reason to constitute at least one-half of the members of the board, provided that any person becoming a director subsequent to the Effective Date of this Agreement whose election, or nomination for election by IEC’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than any individual whose nomination for election to the board was not endorsed by IEC’s management prior to, or at the time of such individual’s initial nomination for election) shall be, for the purposes of this Agreement, considered as though such person were a member of the Incumbent Board; or (c) the date of consummation of a merger, consolidation, recapitalization, reorganization, sale or disposition of all or a substantial portion of IEC’s assets or the issuance of shares of stock of IEC in connection with the acquisition of the stock or assets of another entity; provided, however, that a Change in Control shall not occur under this clause (c) if consummation of the transaction would result in at least 51% of the total voting power represented by the Voting Securities of IEC (or, if not IEC, the entity that succeeds to all or substantially all of IEC’s business) outstanding immediately after such transaction being beneficially owned (within the meaning of Rule 13d-3 promulgated pursuant to the Exchange Act) by at least 51% of the holders of outstanding Voting Securities of IEC immediately prior to the transaction, with the voting power of each such continuing holder relative to other such continuing holders not substantially altered in the transaction; or (d) the date IEC files a report or proxy statement with the Securities and Exchange Commission pursuant to the Exchange Act disclosing in response to Form 8-K or Schedule 14A (or any successor schedule, form or report of item therein) that a change in control of IEC has or may have occurred, or will or may occur in the future, pursuant to any then existing contract or transaction.

7. Confidentiality and Covenant against Competition.

7.1 Non-Disclosure . The Executive shall forever hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive's employment by the Company or any of its affiliated companies and which shall not be public knowledge (other than as a result of a breach of this Section 7.1 by the Executive). The Executive shall not, without the prior written consent of the Company or except as required by law or in a judicial or administrative proceeding with subpoena powers, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it.

7.2 Non-Competition . The Executive will not, during the period of the Executive's employment with the Company, and for a period of one year thereafter, directly or indirectly, (a) engage in or contribute Employee’s knowledge and abilities to or (b) be financially interested in, any entity materially engaged in any portion of the business of the Company. For purposes of this section, the Executive may not engage in, contribute to, or be financially interested in a competing business as a principal, partner, director, officer, stockholder (except as permitted below), agent, employee, consultant or otherwise. Nothing contained herein shall prevent the Executive from owning beneficially or of record not more than five percent (5%) of the outstanding equity securities of any entity whose equity securities are registered under the Securities Act of 1933, as amended, or are listed for trading on any recognizable United States or foreign stock exchange or market.

7.3 Non-Solicitation of Employees . The Executive will not, during the period of the Executive's employment with the Company, and for a period of two years after the termination of the Executive's employment with the Company for any reason, directly or indirectly, recruit, solicit or otherwise induce or attempt to induce any employee of the Company to leave the employment of the Company, nor hire any such employee at any enterprise with which the Executive is then affiliated.

7.4 Non-Solicitation of Customers . The Executive will not, during the period of the Executive’s employment with the Company, and for a period of one year after the termination of the Executive’s employment with the Company for any reason, directly or indirectly, recruit, solicit or otherwise induce or attempt to induce any business of the type performed by the Company from any current or prospective customer, or to persuade any of the Company’s customers to cease doing business or reduce the amount of business that such customer has customarily done with the Company.

7.4 Enforceability of Provisions . If any restriction set forth in this Section 7 is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it shall be interpreted to extend only over the maximum period of time, range of activities or geographic area as to which it may be enforceable, it being understood and agreed that by the execution of this Agreement, the parties hereto regard the restrictions herein as reasonable and compatible with their respective rights.

7.5 Remedy for Breach . The Executive hereby acknowledges that the provisions of this Section 7 are reasonable and necessary for the protection of the Company and its respective subsidiaries and affiliates. In addition, the Executive further acknowledges that the Company and its respective subsidiaries and affiliates will be irrevocably damaged if such covenants are not specifically enforced. Accordingly, the Executive agrees that, in addition to any other relief to which the Company may be entitled, the Company will be entitled to seek and obtain injunctive relief (without the requirement of any bond) from a court of competent jurisdiction for the purposes of restraining the Executive from an actual

or threatened breach of such covenants. In addition, and without limiting the Company's other remedies, in the event of any breach by the Executive of such covenants, the Company will have no obligation to pay any of the amounts that remain payable by the Company in Section 5 of this Agreement.

8. Executive's Representations . The Executive represents that he is not precluded from performing this employment by reason of a pre-existing contractual restriction or physical or mental disability. Upon any breach or inaccuracy of the foregoing, the terms and benefits of this Agreement shall be null and void. The Executive shall indemnify and hold harmless the Company from and against any and all claims, liabilities, damages and reasonable costs of defense and investigation arising out of any breach or inaccuracy in any of the foregoing representations.

9. Other Provisions .

9.1 Withholdings . The Company may withhold from any amounts or benefits payable under this Agreement such Federal, state or local taxes required to be withheld pursuant to any applicable law or regulation and may take such other deductions only as permitted or required pursuant to law, rule or regulation.

9.2 Notices . Any notice or other communication required or which may be given hereunder shall be in writing and shall be delivered personally, telecopied, or sent by certified, registered or express mail, postage prepaid, to the parties at the following addresses or at such other addresses as shall be specified by the parties by like notice, and shall be deemed given when so delivered personally, telecopied or if mailed, two days after the date of mailing, as follows:

(a) if to the Company, to it at:

IEC Electronics Corp.

105 Norton Street

Newark, New York 14513

Attention: Chief Financial Officer

if to the Executive, to him at:

Jeffrey T. Schlarbaum

14 Cobble Creek Road

Victor, New York 14564

9.3 Entire Agreement . This Agreement, together with the MIP and the agreements evidencing the Sign-On Award, contains the entire understanding of the Company and the Executive with respect to the subject matter hereof.

9.4 Waivers and Amendments . This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right, power or privilege hereunder, nor any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder.

9.5 Governing Law; Jurisdiction . This Agreement shall be governed by and construed and enforced in accordance with and subject to, the laws of the State of New York applicable to

agreements made and to be performed entirely within such state. The courts of New York and the United States District Courts serving the County of Monroe, New York shall have jurisdiction over the parties with respect to any dispute or controversy between them arising under or in connection with this Agreement.

9.6 Assignment . This Agreement shall inure to the benefit of and shall be binding upon the Company and its successors. This Agreement is personal to the Executive and shall not be assignable by Executive otherwise than by will or the laws of descent and distribution. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

9.7 Headings . The headings in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

9.8 Severability . If any term, provision, covenant or restriction of this Agreement, or any part thereof, is held by a court of competent jurisdiction of any foreign, federal, state, county or local government or any other governmental, regulatory or administrative agency or authority to be invalid, void, unenforceable or against public policy for any reason, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

9.9 Section 409A . The compensation and benefits under this Agreement are intended to comply with or be exempt from the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations promulgated and other official guidance issued thereunder (collectively, “Section 409A”), and this Agreement will be interpreted in a manner consistent with that intent. For purposes of Sections 4, 5 and 6 of this Agreement, “removal,” “termination of the Executive’s employment” and words of similar import mean, to the extent necessary to comply with Section 409A, the date that the Executive first incurs a “separation from service” within the meaning of Section 409A. Each payment under this Agreement shall be designated as a “separate payment” for purposes of Section 409A. To the extent any reimbursement provided under this Agreement is includable in the Executive’s income, such reimbursements shall be paid to the Executive not later than December 31st of the year following the year in which the Executive incurs the expense and the amount of reimbursable expenses provided in one year shall not increase or decrease the amount of reimbursable expenses to be provided in a subsequent year. To the extent that any payment or acceleration of payment under this Agreement would be considered an impermissible acceleration of payment that would result in a violation of Section 409A, the Company shall delay making such period until the earliest date on which such payment may be made without violating Section 409A. Notwithstanding anything in this Agreement to the contrary, if at the time of the Executive’s separation from service with the Company, the Executive is a “specified employee” for purposes of Section 409A, and any payment payable under this Agreement as a result of such separation from service is required to be delayed by six months pursuant to Section 409A, then the Company will make such payment on the date that is six months following the Executive’s separation from service with the Company. The amount of such payment will equal the sum of the payments that would have been paid to the Executive during the six-month period immediately following the Executive’s separation from service had the payment commenced as of such date.

IN WITNESS WHEREOF, the parties have executed this Employment Agreement on

March 20, 2015.

IEC ELECTRONICS CORP.

By:

Lynn Hartrick

Chairman, Compensation Committee

JEFFREY T. SCHLARBAUM

By: ________________________________________

Jeffrey T. Schlarbaum

Exhibit 10.4

SIGN-ON OPTION AWARD AGREEMENT

INDUCEMENT GRANT

OPTION AWARD AGREEMENT (this “Agreement”), is executed as of the ____ day of March, 2015, between IEC Electronics Corp., a Delaware corporation (the “Company”), and Jeffrey T. Schlarbaum, the Chief Executive Officer of the Company (the “Optionee”).

RECITALS:

A. Pursuant to the terms of the Employment Agreement dated March 20, 2015, between the Company and Jeffrey T. Schlarbaum (the “Employment Agreement”), the Company is entering into this Agreement to grant a portion of the Sign-On Option.

B. This Option grant is an inducement grant in reliance on the employment inducement exemption under the NASDAQ Listing Rules, and is not granted under the 2010 Omnibus Incentive Compensation Plan of the Company (the “Plan”), although certain terms of the Plan are incorporated by reference pursuant to this Agreement.

C. All capitalized terms not defined in this Agreement shall have the meaning assigned to them in the Plan.

NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto agree as follows:

1. Grant of Option . The Company hereby grants to the Optionee as of March 20, 2015 (the “Date of Grant”) a Stock Option (the “Option”) to purchase up to 16,145 shares of common stock of the Company, $.01 par value, on the terms and conditions herein set forth. The Option shall be exercisable from time to time during the option term specified in Section 3 at the Option Exercise Price specified in Section 2.

2. Option Exercise Price . The option exercise price per share of common stock covered by the Option shall be $4.10.

3. Option Term . The Option shall have a term of ten (10) years measured from the Date of Grant and shall accordingly expire at 5:00 p.m. (Eastern Time) on March 20, 2025 (the “Expiration Date”), unless sooner terminated in accordance with Section 7.

4. Vesting and Exercise . Except as otherwise provided in the Plan or this Agreement, the Option shall vest and become exercisable as follows:


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.

5. Non-Transferability of Option . The Option shall be exercisable during Optionee’s lifetime only by Optionee and may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by Optionee’s will or by the laws of descent and distribution. Any attempted assignment, transfer, pledge, hypothecation, or other disposition of the Option contrary to the provisions hereof, and the levy of any execution, attachment, or similar process upon the Option, shall be null and void and without effect.

6. Manner of Exercising Option .


(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.

Except to the extent the sale and remittance procedure is utilized in connection with the Option exercise, payment of the Option Exercise Price must accompany the Notice delivered to the Company in connection with the Option exercise.

In the event the Option is exercised by any person or persons other than the Optionee, the Notice shall be accompanied by appropriate proof of the right of such person or persons to exercise the Option.


(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.

7. Termination of Employment . If the Optionee has a Termination of Employment (as defined in the Plan), the following provisions shall apply:

(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.

8. Change in Control . In the event of a Change in Control (as defined in the Employment Agreement), the Option shall be deemed to be fully vested and may be exercised, in whole or in part, by the Optionee at any time on or before the Expiration Date.

9. Cancellation and Rescission; Repayment of Gain; Set-Off . If the Optionee violates any provision of Article VIII of the Plan or does not execute the general release and waiver of claims required under Section 5.4 of the Employment Agreement, the Committee may cancel or rescind the Option and require the Optionee to pay to the Company the amount of any gain realized as a result of the exercise of a rescinded Option, and the Company shall be entitled to set-off against the amount of any such gain any amount owed to the Optionee by the Company or any Subsidiary.

10. Securities Law Matters .


(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

indemnifies and holds harmless the Company, and the officers, directors, employees and agents thereof, from and against any and all liability, losses, damages, expenses and attorneys’ fees which they may hereafter incur, suffer or be required to pay by reason of the falsity of, or his failure to comply with, any representations or agreements contained in this Section 10(b).

11. General Restriction . The Option shall be subject to the requirement that if at any time the Board in its discretion shall determine that the listing, registration or qualification of the shares subject to such Option on any securities exchange or under any state or federal law, or the consent or approval of any government regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such Option or the issuance or purchase of shares thereunder, such Option may not be exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Board.

12. Option Adjustments . In the event of a stock dividend, stock split or other change in corporate structure or capitalization affecting the common stock or any other transaction (including, without limitation, an extraordinary cash dividend) which, in the determination of the Compensation Committee (the “Committee”) of the Board, affects the common stock such that an adjustment is required in order to preserve the benefits or potential benefits intended to be made available under the Plan, then the Committee, in its sole discretion, shall equitably adjust any or all of (i) the number and kind of shares of stock subject to the Option, and (ii) the exercise price with respect to the foregoing, provided that the number of shares subject to the Option shall always be a whole number.

13. Amendment to this Agreement . The Committee may modify or amend this Agreement if it determines, in its sole discretion, that amendment is necessary or advisable in the light of any addition to or change in the Internal Revenue Code or in the regulations issued thereunder, or any federal or state securities laws or other law or regulation, which change occurs after the date of this Agreement and by its terms applies to the Option. No amendment of this Agreement, however, may, without the consent of the Optionee, make any changes which would adversely affect the rights of the Optionee.

14. Applicability of Plan Terms . The Option is subject to the terms of the Plan to the extent that such terms are not inconsistent with the Employment Agreement or this Agreement. Without limiting the generality of the foregoing, Articles VII and X of the Plan shall not apply to the Option.

15. Notices . Notices hereunder shall be in writing and if to the Company shall be delivered personally to the Secretary of the Company or mailed to its principal office, 105 Norton Street, P.O. Box 271, Newark, New York 14513, addressed to the attention of the Secretary and, if to the Optionee, shall be delivered personally or mailed to the Optionee at Optionee’s address as the same appears on the records of the Company.

16. Stockholder Rights . The Option does not confer upon the holder thereof any rights as a stockholder of the Company until such person shall have exercised the Option, paid the Option Exercise Price and become a holder of record of the purchased shares of Stock.

17. Interpretations of this Agreement . All decisions and interpretations made by the Committee with regard to any question arising hereunder or under the Plan shall be binding and conclusive on all persons having an interest in the Option. The Option granted hereunder, and the common stock which may be issued upon exercise thereof, are subject to the provisions of the Plan. In the event there is any conflict

between the provisions of this Agreement and those of the Plan, the provisions of this Agreement shall govern.

18. Successors and Assigns . This Agreement shall bind and inure to the benefit of the parties hereto and the successors and assigns of the Company and, to the extent provided in Section 7, to the personal representatives, legatees and heirs of the Optionee.

[signature page follows]

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on the day and year first above written.





	By:

	Its:

ACCEPTANCE

I, Jeffrey T. Schlarbaum, hereby certify that I have read and fully understand the foregoing Agreement. I acknowledge that the Option is a portion of the Sign-On Option described in Section 3.4 of the Employment Agreement. I hereby execute this Agreement to indicate my acceptance of the Option and my intent to comply with the terms thereof.




	Optionee


	Street Address




City	State	Zip Code

EXHIBIT A

_________________, 20__

IEC Electronics Corp.

105 Norton Street

P. O. Box 271

Newark, NY 14513

Attention: Secretary

Dear Sir:

This is to notify you that I hereby elect to exercise my option rights to shares of common stock of IEC Electronics Corp. (the “Company”) granted under the Sign-On Option Award Agreement - Inducement Grant (the “Agreement”), dated March __, 2015, issued to me subject to the provisions of the Agreement. The option exercise price pursuant to such Agreement, as adjusted, is $____________ per share or $__________ in the aggregate.

In payment of the full option exercise price, I enclose (please complete as appropriate):

(a) my check payable to IEC Electronics Corp. in the amount of $__________.


(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.

I hereby certify that I am in compliance with the terms and conditions of the Plan and the Agreement. I understand, acknowledge and agree that in the event I fail to comply with the provisions of Article VIII of the Plan, the exercise of the Option may be rescinded by the Company and I may become obligated to pay the Company the amount of any gain realized or payment received as a result of the rescinded exercise, all as set forth in Section 9 of the Agreement.



	Very truly yours,


	Optionee’s Signature

Exhibit 10.5

IEC ELECTRONICS CORP.

SIGN-ON OPTION AWARD AGREEMENT

PURSUANT TO

2010 OMNIBUS INCENTIVE COMPENSATION PLAN

RECITALS:

B. In accordance with the provisions of the 2010 Omnibus Incentive Compensation Plan of the Company (the “Plan”) and pursuant to a resolution duly adopted by the Compensation Committee of the Board of Directors of the Company on March 20, 2015, the Company is authorized to execute and deliver this Agreement on the terms and conditions herein set forth.

C. All capitalized terms not defined in this Agreement shall have the meaning assigned to them in the Plan.

NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto agree as follows:

1. Grant of Option . The Company hereby grants to the Optionee as of March 20, 2015 (the “Date of Grant”) a Stock Option (the “Option”) to purchase up to 400,000 shares of common stock of the Company, $.01 par value, on the terms and conditions herein set forth. The Option shall be exercisable from time to time during the option term specified in Section 3 at the Option Exercise Price specified in Section 2. The Option is intended to be an incentive stock option with respect to the portion of the Option that qualifies as such, and remaining portion of the Option shall be treated as a nonqualified stock option. If for any reason the Option (or any portion of the Option) does not qualify as an incentive stock option, then to the extent the Option does not so qualify, the Option (or such portion thereof) will be treated as a nonqualified stock option.

2. Option Exercise Price . The option exercise price per share of common stock covered by the Option shall be $4.10.

4. Vesting and Exercise . Except as otherwise provided in the Plan or this Agreement, the Option shall vest and become exercisable as follows:


a)	25% (with respect to 100,000 shares) vest on March 20, 2016;


b)	an additional 25% (with respect to 100,000 shares) vest on March 20, 2017;


c)	an additional 25% (with respect to 100,000 shares) vest on March 20, 2018; and


d)	the remaining 25% (with respect to 100,000 shares) vest on March 20, 2019.

6. Manner of Exercising Option .


(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)

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, 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.

7. Termination of Employment . If the Optionee has a Termination of Employment (as defined in the Plan), the following provisions shall apply:

(a)

(b)

(c)

(d)

treatment as an incentive stock option in the event such Option is exercised more than three (3) months following the date of such Termination of Employment.

(e)

10. Notice of Disposition of Shares . Within 10 days of any such disposition, the Optionee agrees to notify the Company of the disposition of any shares of Stock acquired upon exercise of the portion of the Option that is treated as an incentive stock option, including a disposition by sale, exchange, gift or transfer of legal title, if such disposition occurs (i) within two years from the Date of Grant, or (ii) within one year from the date that the Option is exercised and the shares are acquired by the Optionee.

13. Amendment to this Agreement . The Committee may modify or amend this Agreement if it determines, in its sole discretion, that amendment is necessary or advisable in the light of any addition to

or change in the Internal Revenue Code or in the regulations issued thereunder, or any federal or state securities laws or other law or regulation, which change occurs after the date of this Agreement and by its terms applies to the Option. No amendment of this Agreement, however, may, without the consent of the Optionee, make any changes which would adversely affect the rights of the Optionee.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on the day and year first above written.



	IEC ELECTRONICS CORP.

	By:

	Its:

ACCEPTANCE

I, Jeffrey T. Schlarbaum , hereby certify that I have read and fully understand the foregoing Agreement. I acknowledge that the Option is a portion of the Sign-On Option described in Section 3.4 of the Employment Agreement and that I have been apprised that it is the intent of the Company that I obtain and retain an equity interest in the Company. I hereby execute this Agreement to indicate my acceptance of the Option and my intent to comply with the terms thereof.




	Optionee


	Street Address




City	State	Zip Code

EXHIBIT A

_________________, 20__

IEC Electronics Corp.

105 Norton Street

P. O. Box 271

Newark, NY 14513

Attention: Secretary

Dear Sir:

This is to notify you that I hereby elect to exercise my option rights to shares of common stock of IEC Electronics Corp. (the “Company”) granted under the Sign-On Option Award Agreement (the “Agreement”), dated March __, 2015, issued to me subject to the provisions of the Agreement and the 2010 Omnibus Incentive Compensation Plan (the “Plan”). The option exercise price pursuant to such Agreement, as adjusted, is $____________ per share or $__________ in the aggregate.

In payment of the full option exercise price, I enclose (please complete as appropriate):

(a) my check payable to IEC Electronics Corp. in the amount of $__________.


(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)

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.



	Very truly yours,


	Optionee’s Signature

Exhibit 10.6

SIXTH AMENDMENT TO

FOURTH AMENDED AND RESTATED CREDIT FACILITY AGREEMENT

THIS SIXTH AMENDMENT TO FOURTH AMENDED AND RESTATED CREDIT FACILITY AGREEMENT (this “ Amendment ”) is made as of the 8 ^th day of May, 2015, by and between IEC ELECTRONICS CORP., a corporation formed under the laws of the State of Delaware (“ Borrower ”) and MANUFACTURERS AND TRADERS TRUST COMPANY (“ Lender ”).

W I T N E S S E T H:

WHEREAS, the parties hereto are parties to a Fourth Amended and Restated Credit Facility Agreement dated as of January 18, 2013, as amended by the First Amendment to Fourth Amended and Restated Credit Facility Agreement dated as of May 15, 2013, by the Second Amendment to Fourth Amended and Restated Credit Facility Agreement dated as of August 6, 2013, by the Third Amendment to Fourth Amended and Restated Credit Facility Agreement dated as of November 8, 2013, by the Fourth Amendment to Fourth Amended and Restated Credit Facility Agreement dated as of December 13, 2013 and by the Fifth Amendment to Fourth Amended and Restated Credit Facility Agreement dated as of February 4, 2014 (as amended, modified, supplemented or restated from time to time, the “ Credit Agreemen t ”);

WHEREAS , Section 12.1, Section 12.2 and Section 12.3 of the Credit Agreement require that the Borrower maintain certain financial covenants unless the Lender otherwise consents in writing; and

WHEREAS, Borrower has requested and the Lender has agreed to (i) waive Events of Default arising from non-compliance with (A) the aforementioned covenants in Sections 12.1, 12.2 and 12.3 of the Credit Agreement for the Fiscal Quarter ended December 26, 2014 and (B) the aforementioned covenants in Sections 12.1, 12.2 and 12.3 of the Credit Agreement for the Fiscal Quarter ended March 27, 2015, (ii) modify the covenants in Section 12.1, 12.2 and 12.3 for future Fiscal Quarters, and (iii) make certain additional amendments to the Credit Agreement, all on the terms and conditions herein set forth.

NOW, THEREFORE, for due consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. DEFINITIONS . All capitalized terms used herein and not defined shall have the meaning given such terms in the Credit Agreement.

2. AMENDMENTS . Effective as of the date of this Amendment:

(A) Section 1.1 of the Credit Agreement is hereby amended by:

(i) adding thereto, in alphabetical order, the following new definition:

“Sixth Amendment Effective Date” means May 8, 2015.

(ii) (a) amending and restating the introductory paragraph in the definition of “ Applicable Margin ” to read in its entirety as follows:

““ Applicable Margin ” means, with respect to the applicable facility, the per annum percentage points shown in the applicable column of the table below based on the applicable Debt to EBITDARS Ratio, calculated for Borrower on a consolidated basis and without duplication in accordance with GAAP ; provided, however, that for the period commencing on the Fifth Amendment Effective Date and ending on March 31, 2016, with respect to the applicable facility, the Applicable Margin shall be fixed at the following per annum percentage points: 4.25% (Revolving Line Facility), 4.50% (Mortgage Loan Facility) and 3.25% (Term Loan B Facility); provided further however, that if at the end of such period, the Borrower is non-compliant with any covenant under this Agreement, then, notwithstanding the last sentence of this definition, which shall be of no force and effect during such noncompliance following the end of such period, the Applicable Margin shall be fixed at the foregoing percentage points for so long as the Borrower is non-compliant with such covenant:”

and (b) deleting from the definition of “ Applicable Margin ” the asterisk and the following language: “* For amounts outstanding as an Overline Advance, the Applicable Margin will be the applicable level shown in the above table plus 0.50%.”

(iii) amending and restating the introductory paragraph in the definition of “ Applicable Unused Fee ” to read in its entirety as follows:

““ Applicable Unused Fee ” means the per annum rate (calculated based upon days elapsed over a 360 day year) shown in the table below based on the applicable Debt to EBITDARS Ratio, calculated for Borrower on a consolidated basis and without duplication in accordance with GAAP ; provided, however, that for the period commencing on the Fifth Amendment Effective Date and ending on March 31, 2016, the Applicable Unused Fee shall be fixed at 0.500%); provided, further however, that if at the end of such period, the Borrower is non-compliant with any covenant under this Agreement, then, notwithstanding the last sentence of this definition, which shall be of no force and effect during such noncompliance following the end of such period, the Applicable Unused Fee shall be fixed at 0.500% for so long as the Borrower is non-compliant with such covenant:”

(iv) amending the definition of “ Borrowing Base ” to delete therefrom the following language: “, or if the Inventory Overline Advance Rate has been elected pursuant to Section 2.2, 70% of the Borrower’s Eligible Inventories up to a maximum of $4,750,000”;

(v) amending and restating the definition of “ EBITDARS ” to read in its entirety as follows:

““ EBITDARS ” means, for the applicable period, EBITDA, plus (a) payments due under the M&T Sale-Leaseback, (b) non-cash stock option expense and (c) to the extent deducted in determining Net Income for such period, reasonable professional services fees and expenses incurred and paid on or prior to September 30, 2015, not to exceed, (i) for the Fiscal Quarter ended December 26, 2014, $235,112, (ii) for the Fiscal Quarter ended March 27, 2015, $2,652,659, (iii) for the Fiscal Quarter ending June 26, 2015, $200,000 plus costs incurred and paid by Borrower during such Fiscal Quarter in connection with mortgages, environmental site assessments, title insurance and appraisals (“Costs”), and (iv) for the Fiscal Quarter ending September 30, 2015, $200,000 plus Costs incurred and paid by Borrower during such Fiscal Quarter, all on a consolidated basis and determined in accordance with GAAP on a consistent basis.”; and

(vi) deleting in their entirety the definitions of “ Inventory Overline Advance Rate ” and “ Overline Advance. ”

(B) Section 2.2 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“ 2.2 Borrowing Base . Notwithstanding the provisions of Section 2.1, the aggregate principal amount of all outstanding Revolving Credit Loans shall not exceed the lesser of the Borrowing Base and the Revolving Credit Commitment.

At any time that the Borrower becomes aware or receives notice (oral or written) that the aggregate principal amount of all outstanding Revolving Credit Loans exceeds the lesser of the Borrowing Base or the Revolving Credit Commitment, the Borrower shall immediate prepay a portion of the Revolving Credit Loans that is at least the amount of such excess pursuant to Section 2.5 hereof.”

(C) Subsection 2.5(b) of the Credit Agreement is hereby deleted and Subsections (c) and (d) of Section 2.5 are hereby re-lettered to become Subsections (b) and (c) of Section 2.5 of the Credit Agreement.

(D) Subsection 10.1(c) of the Credit Agreement is hereby amended by deleting the second sentence thereof.

(E) Section 11.5 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“11.5 Distributions. Make any Distributions without the prior written consent of Lender, except Distributions from any Guarantor(s) to Borrower.”

(F) Section 12.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“12.1 Debt to EBITDARS . Commencing with the Fiscal Quarter ending June 25, 2015, maintain at all times a Debt to EBITDARS Ratio, on a consolidated basis, no greater than the following ratios for the following periods, reported at the end of each Fiscal Quarter:

3/28/15 through and including 6/26/15 < 5.75 to 1.00

6/27/15 through and including 9/30/15 < 5.75 to 1.00

10/1/15 through and including 12/25/15 < 5.50 to 1.00

12/26/15 through and including 3/25/16 < 5.00 to 1.00

3/26/16 through and including 6/24/16 < 4.50 to 1.00

6/25/16 through and including 9/30/16 < 4.00 to 1.00

10/1/16 and thereafter < 3.50 to 1.00”

(G) Section 12.2 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“12.2 Minimum Quarterly EBITDARS

. Maintain at all times minimum EBITDARS for the trailing three months, on a consolidated basis, equal to or greater than (i) for the Fiscal Quarter ending 6/26/15, $1,250,000 and (ii) thereafter, for each Fiscal Quarter, $1,500,000, in each case reported at each Fiscal Quarter end.”

(H) Section 12.3 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“12.3 Fixed Charge Coverage Ratio

. Commencing with the Fiscal Quarter ending June 25, 2015, maintain at all times a Fixed Charge Coverage Ratio, on a consolidated basis, equal to or greater than the following ratios for the following periods, reported at the end of each Fiscal Quarter

3/28/15 through and including 6/26/15 > 0.60 to 1.00

6/27/15 through and including 9/30/15 > 0.45 to 1.00

10/1/15 through and including 12/25/15 > 0.75 to 1.00

12/26/15 through and including 3/25/16 > 1.00 to 1.00

3/26/16 through and including 6/24/16 > 1.10 to 1.00

6/25/16 and thereafter > 1.25 to 1.00”

(I) Section 15.4 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“15.4 Notices . Any notice or demand upon any party hereto shall be deemed to have been sufficiently given or served for all purposes hereof when delivered in person, the Business Day after delivery to a nationally recognized overnight courier marked for next Business Day delivery, or three (3) Business Days after it is mailed certified mail postage prepaid, return receipt requested, addressed as follows:

If to Lender:

Manufacturers and Traders Trust Company

255 East Avenue

Rochester, New York 14604

Attention: J. Theodore Smith/William Bliek

Facsimile: (585) 325-5105

Email: jtsmith@mtb.com and wbliek@mtb.com

with a copy to:

Nixon Peabody LLP

40 Fountain Plaza, Suite 500

Buffalo, New York 14202

Attention: Martha M. Anderson, Esq.

Facsimile: (716) 853-8105

Email: manderson@nixonpeabody.com

If to Borrower:

IEC Electronics Corp.

105 Norton Street

Newark, New York 14513

Attention: Michael T. Williams, CFO

Facsimile: (315) 331-3547

Email: mwilliams@iec-electronics.com

with a copy to:

Harter Secrest & Emery LLP

1600 Bausch & Lomb Place

Rochester, NY 14604-2711

Attention: James M. Jenkins, Esq.

Facsimile: 585-232-2152

Email: JJenkins@hselaw.com

Any party may change, by notice in writing to the other parties, the address to which notices to it shall be sent. Email addresses are provided for convenience only and notice is not effective if given only by email unless also given by another means provided by this Section.”

3. WAIVER . Lender hereby waives any Event of Default arising under Section 14.1(b) of the Credit Agreement as a result of Borrower’s non-compliance with (A) Sections 12.1, 12.2 and 12.3 of the Credit Agreement for the Fiscal Quarter ended December 26, 2014 and (B) Sections 12.1, 12.2 and 12.3 of the Credit Agreement for the Fiscal Quarter ended March 27, 2015. Borrower acknowledges and agrees that the foregoing waiver shall not constitute a waiver of any Event of Default arising under (i) any other covenant in the Credit Agreement for any period not specified herein or (ii) any financial covenant in the Credit Agreement for any other period.

4. Representations and Warranties. Borrower hereby makes the following representations and warranties to the Lender as of the date hereof, each of which shall survive the effectiveness of this Amendment and continue in effect as of the date hereof so long as any Obligations remain unpaid:

4.1 Authorization . Borrower has full power and authority to borrow under the Credit Agreement, as amended by this Amendment, and to execute, deliver and perform this Amendment and any documents delivered in connection with it and all other related documents and transactions, all of which have been duly authorized by all proper and necessary corporate action. The execution and delivery of this Amendment by Borrower will not violate the provisions of, or cause a default under, Borrower’s Organizational Documents, any law or any agreement to which Borrower is a party or by which it or its assets are bound.

4.2 Binding Effect . This Amendment has been duly executed and delivered by Borrower, and the Credit Agreement, as amended by this Amendment, is the legal, valid and binding obligation of Borrower enforceable against Borrower in accordance with its terms, except to the extent that enforcement of any such obligations of the Borrower may be limited by bankruptcy, insolvency, reorganization or similar laws of general application affecting the rights and remedies of creditors generally.

4.3 Consents; Governmental Approvals . Except as may be specifically identified in a written agreement to which Borrower and Lender are parties, no consent, approval or authorization of, or registration, declaration or filing with, any Governmental Authority or any other Person is required in connection with the valid execution, delivery or performance of this Amendment or any other document executed and delivered by Borrower herewith or in connection with any other transactions contemplated hereby.

4.4 Representations and Warranties . The representations and warranties contained in the Credit Agreement, as amended by this Amendment, are true on and as of the date hereof with the same force and effect as if made on and as of the date hereof, except for (i) those representations and warranties that by their terms are made as of a specific date, which representations and warranties Borrower hereby remakes as of such date, (ii) the existence of actions, suits or proceedings disclosed to the Lender in writing prior to the execution and delivery of this Amendment, and (iii) the existence of Material Adverse Changes arising from the restatement of the Borrower’s financial statements for the fiscal year ended September 30, 2012

(and the fiscal quarters contained therein) and the fiscal quarter ended December 28, 2012, as disclosed in the Borrower’s amended Annual Report on Form 10-K/A for the fiscal year ended September 30, 2012 and the Borrower’s amended Quarterly Report on Form 10-Q/A for the fiscal quarter ended December 28, 2012 and as disclosed to the Lender in writing prior to the execution and delivery of this Amendment.

4.5 No Events of Default . No Default or Event of Default has occurred or is continuing, except as waived in writing by the Lender including by this Amendment.

4.6 No Material Misstatements . Neither this Amendment nor any document delivered to Lender by Borrower or any Credit Party to induce Lender to enter into this Amendment contains any untrue statement of a material fact or, taken as a whole with the other Loan Documents, omits to state a material fact necessary to make the statements herein or therein not misleading in light of the circumstances in which they were made.

5. CONDITIONS OF AMENDMENT. The Lender shall have no obligation to execute or deliver this Amendment until each of the following conditions shall have been satisfied:

5.1 Authorization . Borrower shall have taken all appropriate corporate action to authorize, and its directors, if and as required by Borrower’s Organizational Documents, shall have adopted resolutions authorizing the execution, delivery and performance of this Amendment and the taking of all other action contemplated by this Amendment, and Lender shall have been furnished with copies of all such corporate action, certified by an authorized officer of Borrower as being true and correct and in full force and effect without amendment on the date hereof, and such other corporate documents as Lender may request.

5.2 Consents . Borrower shall have delivered to Lender any and all consents, if any, necessary to permit the transactions contemplated by this Amendment.

5.3 Fees . Borrower shall have paid all reasonable fees and disbursements of Lender’s counsel and all recording fees, search fees, charges and taxes in connection with this Amendment and all transactions contemplated hereby or made other arrangements with respect to such payment as are satisfactory to Lender.

5.4 Deliveries . Borrower shall have delivered to Lender, this Amendment and such additional documents, consents, authorizations, insurance certificates, governmental consents and other instruments and agreements as Lender or its counsel may reasonably require and all documents, instruments and other legal matters in connection with the Loan Documents shall be reasonably satisfactory to Lender and its counsel.

5.5 Representations and Warranties . The representations and warranties set forth in this Amendment and in the Loan Documents (except as provided in Section 4.4 of this Amendment) shall be true, correct and complete on the date hereof, except those representations and warranties that by their terms are made as of a specific date, which representations and warranties Borrower hereby remakes as of such date.

5.6 No Event of Default . No Event of Default or Default shall have occurred and be continuing on the date hereof, except as waived by this Amendment.

5.7 No Material Misstatements . Neither this Amendment nor any document delivered to Lender by or on behalf of Borrower to induce Lender to enter into this Amendment contains any untrue statement of a material fact or, taken as a whole with the other Loan Documents, omits to state a material

fact necessary to make the statements herein or therein not misleading in light of the circumstances in which they were made.

6. MISCELLANEOUS.

6.1 Reaffirmation of Security Documents . Borrower hereby (a) acknowledges and reaffirms the execution and delivery of the Security Documents, (b) acknowledges, reaffirms and agrees that the security interests granted under the Security Documents continue in full force and effect as security for all indebtedness, obligations and liabilities under the Loan Documents, as may be amended from time to time, and (c) remakes the representations and warranties set forth in the Security Documents as of the date hereof, except those representations and warranties that by their terms are made as of a specific date, which representations and warranties Borrower hereby remakes as of such date.

6.2 Entire Agreement; Binding Effect . The Credit Agreement, as amended by this Amendment, represents the entire understanding and agreement between the parties hereto with respect to the subject matter hereof. This Amendment supersedes all prior negotiations and any course of dealing between the parties with respect to the subject matter hereof. This Amendment shall be binding upon Borrower and its successors and assigns, and shall inure to the benefit of, and be enforceable by the Lender and its successors and assigns. The Credit Agreement, as amended hereby, is in full force and effect and, as so amended, is hereby ratified and reaffirmed in its entirety.

6.3 Severability . If any provision of this Amendment shall be determined by a court to be invalid, such provision shall be deemed modified to conform to the minimum requirements of applicable law.

6.4 Headings . The section headings inserted in this Amendment are provided for convenience of reference only and shall not be used in the construction or interpretation of this Amendment.

6.5 Counterparts . This Amendment may be executed by the parties hereto in separate counterparts (including those delivered by facsimile or other electronic means), each of which, when so executed and delivered, shall be an original, but all such counterparts shall together constitute one and the same instrument.

[signature page follows]

[Sixth Amendment to Fourth Amended and Restated Credit Facility Agreement]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be signed by their duly authorized officers as of the day and year first above written.

MANUFACTURERS AND TRADERS TRUST COMPANY

By: /s/ J. Theadore Smith

Name: J. Theodore Smith

Title: Administrative Vice President

IEC ELECTRONICS CORP.

By: /s/ Michael T. Williams

Name: Michael T. Williams

Title: Chief Financial Officer

Exhibit 31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Jeffrey T. Schlarbaum, certify that:


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

Exhibit 31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Michael T. Williams, certify that:


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

Exhibit 32.1

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

In connection with the the quarterly report of IEC Electronics Corp., (the "Company") on Form 10-Q for the quarter ended March 27, 2015 as filed with the Securities and Exchange Commission on the day hereof (the "Report"), I, Jeffrey T. Schlarbaum, Chief Executive Officer and President of the Company and Michael T. Williams, Vice President of Finance and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:


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