UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported) – December 13, 2013

 

IEC ELECTRONICS CORP.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware

(State or Other Jurisdiction of Incorporation)

 

0-6508 13-3458955
(Commission File Number) (IRS Employer Identification No.)

 

1 05 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 or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

  o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
  o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

  o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
  o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 
 

 

Section 1 Registrant’s Business and Operations
Item 1.01 Entry into a Material Definitive Agreement

 

On December 13, 2013, IEC Electronics Corp. (the “Company”) and Manufacturers and Traders Trust Company (“M&T”) entered into a Fourth Amendment to Fourth Amended and Restated Credit Facility Agreement (the “Fourth Amendment”), which amended the Fourth Amended and Restated Credit Facility Agreement between M&T and the Company (a copy of which was filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed January 25, 2013) as previously amended by (i) the First Amendment to Fourth Amended and Restated Credit Facility Agreement, a copy of which was filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 29, 2013, (ii) the Second Amendment to Fourth Amended and Restated Credit Facility Agreement, a copy of which was filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 8, 2013 and (iii) the Third Amendment to Fourth Amended and Restated Credit Facility Agreement, a copy of which was filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 19, 2013 (collectively, the “2013 Credit Agreement”). Pursuant to the Fourth Amendment, M&T agreed to waive events of default arising from the Company’s non-compliance with its Debt to EBITDARS covenant and its Fixed Charge Coverage Ratio (each as defined in the 2013 Credit Agreement) for the fiscal quarter ended September 30, 2013 and for the fiscal quarters through September 30, 2013, respectively.

 

In addition, the Fourth Amendment modified the covenant requiring the Company to maintain a specified Debt to EBITDARS Ratio for future fiscal quarters as follows:

 

Debt to EBITDARS :  
   
2013 Credit Agreement, as modified by the Fourth Amendment:  
12/13/2013 through and including 3/27/2014 <4.50 to 1.00
3/28/2014 through and including 6/26/2014 <3.50 to 1.00
6/27/2014 through and including 9/29/2014 <3.25 to 1.00
9/30/2014 and thereafter < 2.75 to 1.00

 

It also modified the covenant requiring the Company to maintain a specified Fixed Charge Coverage Ratio commencing with the fiscal quarter ending March 28, 2014 as follows:

 

Fixed Charge Coverage :  
   
2013 Credit Agreement, as modified by the Fourth Amendment:  
3/28/2014 through and including 6/26/2014 ≥0.90 to 1.00
6/27/2014 through and including 9/29/2014 ≥1.10 to 1.00
9/30/2014 and thereafter ≥1.25 to 1.00

 

Additionally, the applicable interest rate margin for the twelve-month period commencing December 13, 2013, and thereafter if the Company is not in compliance with its financial covenants, was modified 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%.

 

Except as so waived and as modified by the Fourth Amendment, the 2013 Credit Agreement remains unchanged. The foregoing description of the Fourth Amendment is a summary of the terms of the Fourth Amendment, and is qualified in its entirety by the text of the Fourth Amendment itself, a copy of which is being filed with this Current Report on Form 8-K as Exhibit 10.1 and is incorporated herein by reference.

 

 
 

 

Section 2 Financial Information
Item 2.02 Results of Operations and Financial Condition

 

On December 19, 2013, the Company issued a press release announcing its financial results for the fourth quarter and fiscal year ended September 30, 2013. A copy of the press release is furnished as Exhibit 99.1 to this report.

 

The press release attached as Exhibit 99.1 references operating income excluding impairment charges; operating income excluding impairment charges after tax, per share; impairment of goodwill and other intangibles after tax, per share; SCB clawback income and SCB clawback income after tax, per share; which are non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP; Net Income, Operating Income and Diluted Earnings per Share, is provided in the attachment to the release, included in Exhibit 99.1.

 

These non-GAAP financial measures should not be considered in isolation; they are in addition to, and are not a substitute for, financial measures under GAAP, or as measures of the Company’s profitability or liquidity. These measures 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. Further, the Company may utilize other measures to illustrate performance in the future. 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.

 

Each per share measure is presented on a diluted per share basis. None of the non-GAAP measures directly depict the amount that accrues to stockholder benefit. However, the Company views these measures as useful tools for comparison of quarterly and annual operating performance. Additionally, the Company presents these as supplemental measures because: (i) each is a basis upon which the Company assesses its performance and (ii) the Company believes that investors will find the data useful in assessing its ability to service and/or incur indebtedness. The Company believes that these measures, when considered with both the Company’s GAAP results and the reconciliation to the most directly comparable financial measures, provides a more complete understanding of the Company’s business than could be obtained absent this disclosure.

 

Section 5 Corporate Governance and Management
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

 

Under the terms of an existing Employment Agreement between the Company and W. Barry Gilbert, the Company’s Chief Executive Officer (“CEO”), effective April 24, 2009, (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 30, 2009), as amended by First Amendment to Employment Agreement, effective October 1, 2010 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 1, 2010) (collectively, the “2009 Employment Agreement”), Mr. Gilbert’s term as CEO of the Company ends on December 31, 2013. As recommended by the Compensation Committee of the Company’s board of directors, on December 16, 2013 the independent directors of the Company approved an Amended and Restated Employment Agreement (the “2013 Agreement”) between Mr. Gilbert and the Company that supersedes, amends and restates in its entirety the Prior Employment Agreement.

 

The 2013 Agreement provides for Mr. Gilbert’s continued employment as IEC’s Chief Executive Officer until the Company’s board of directors (“Board”) terminates his status as CEO (the “CEO Term”). In addition, the 2013 Agreement provides that upon the expiration of the CEO Term, the Company will employ Mr. Gilbert for a twelve-month period to assist with transition matters, unless earlier terminated (the “Transition Term”). It further provides that Mr. Gilbert will render advisory services to the Board for seven years following the CEO Term (the “Advisory Term”).

 

During the CEO Term, Mr. Gilbert is entitled to receive an annual initial base salary of $350,000, which is subject to annual review for increases. In Fiscal 2014, Mr. Gilbert’s base salary is $350,000. During the Transition Term, Mr. Gilbert will continue to receive base salary at the rate in effect at the end of the CEO Term. During the Advisory Term, Mr. Gilbert is entitled to receive annual compensation of $89,286, increased annually by increases in the Consumer Price Index.

 

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During the CEO Term, Mr. Gilbert is eligible to participate in IEC’s cash and equity incentive plans and programs on the same basis as other senior executives. If the CEO Term ends other than at the end of a fiscal year, Mr. Gilbert will receive half the incentives he would have received at budget and half the incentives he would have received based on actual results, payable after the end of the fiscal year at the same time as payments to other Company executives.

 

Under the 2013 Agreement, during both the CEO and Transition Terms, Mr. Gilbert is eligible to participate in such health and other group insurance and other employee benefit plans on the same basis as other senior executives, and the Company will pay the full cost of medical insurance for Mr. Gilbert and his wife, or past age 65 the cost of Medicare supplemental insurance. In addition, through the end of the Advisory Term (or if earlier, policy expiration) the Company will maintain a life insurance policy in the amount of $400,000 expiring in 2019, and an additional policy in the amount of $750,000 expiring in 2024, each payable to Mr. Gilbert’s estate.

 

If the Board terminates Mr. Gilbert without Cause (as defined in the 2013 Agreement, Cause being deemed not to include death or disability) or Mr. Gilbert terminates his employment for Good Reason (as defined in the 2013 Agreement) prior to the end of the Transition Term, Mr. Gilbert is entitled to continue to receive the salary and benefits to which he otherwise would have been entitled through the end of the Transition Term. Additionally, if Mr. Gilbert is terminated without Cause or terminates for Good Reason after a Change in Control (as defined in the 2013 Agreement), Mr. Gilbert will continue to receive the Advisory Term payments to which he otherwise would have been entitled. Any provisions in Mr. Gilbert’s restricted stock agreements providing for forfeiture upon termination of employment also are waived and to the extent not yet vested, 50% of the remaining restricted stock will vest on each of the first and second anniversaries of his termination date.

 

The 2013 Agreement contains provisions which are customary for an executive employment agreement of this type. These include covenants relating to confidentiality, non-competition, non-solicitation of employees, and non-interference with business relationships and apply during the CEO, Transition and Advisory Terms and for a period of 36 months thereafter.

 

The foregoing summary of the 2013 Agreement does not purport to be complete and is qualified in its entirety by reference to the agreement itself, a copy of which is being filed with this Current Report on Form 8-K as Exhibit 10.2 and is incorporated herein by reference.

 

Section 7 Regulation FD
Item 7.01 Regulation FD Disclosure

 

Legal Proceedings

 

As previously reported in its Annual Report on Form 10-K/A for the fiscal year ended September 30, 2102 (“Fiscal 2012”) and its Quarterly Report on Form 10-Q/A for the fiscal quarter ended December 28, 2012 (“Q-1 2013”), the Company restated its consolidated financial statements for Fiscal 2012, the interim fiscal quarter and year to date periods within Fiscal 2012 and Q-1 2013. In connection with the restatement, the Audit Committee conducted an independent review of the underlying facts and circumstances, the Company is responding to a now formal investigation by the staff of the SEC relating to the restatement and other matters, and the Company is responding to an amended complaint in a now consolidated shareholder class action originally filed June 28, 2013 in the United States District Court for the Southern District of New York against the Company and its CEO and CFO seeking unspecified compensatory damages. While the Company believes the complaint is without merit, it is too early to determine the potential outcome.

 

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Section 9 Financial Information and Exhibits
Item 9.01 Financial Statements and Exhibits

 

(d) Exhibits.

 

Exhibit 10.1 Fourth Amendment to Fourth Amended and Restated Credit Facility Agreement
Exhibit 10.2 Amended and Restated Employment Agreement between IEC Electronics Corp. and W. Barry Gilbert
Exhibit 99.1 Press Release issued by IEC Electronics Corp. on December 19, 2013

 

The information in Items 2.02 and 7.01 of this Form 8-K and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in such filing. Neither the filing of any exhibit to this report nor the inclusion in such exhibits of a reference to the Company’s Internet address shall, under any circumstances, be deemed to incorporate the information available at such address into this report. The information available at the Company’s Internet address is not part of this report.

 

This Current Report on Form 8-K, including the Exhibits incorporated herein, 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 the Company describes what it “believes”, “expects”, or “anticipates” 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 the Company’s 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 the Company’s 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 the Company’s forward-looking statements: business conditions and growth or contraction in the Company’s customers' industries, the electronic manufacturing services industry and the general economy; variability of the Company’s operating results; the Company’s ability to control its material, labor and other costs; the Company’s dependence on a limited number of major customers; the potential consolidation of the Company’s customer base; availability of component supplies; dependence on certain industries; variability and timing of customer requirements; uncertainties as to availability and timing of governmental funding for the Company’s customers; the types and mix of sales to the Company’s customers; the Company’s 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 the Company’s customers, the Company’s industry and business generally; failure or breach of the Company’s information technology systems; natural disasters; and other factors that the Company may not have currently identified or quantified.  Additional risks and uncertainties resulting from the restatement of the Company’s financial statements included in the Company’s Annual Report on Form 10-K/A filed with the Securities and Exchange Commission (“SEC”) on July 3, 2013 (“2013 Form 10-K/A”) and in the Company’s Form 10-Q/A filed on the same date could, among others, (i) cause the Company to incur substantial additional legal, accounting and other expenses, (ii) result in additional shareholder, governmental or other actions, or adverse consequences from the now consolidated shareholder action or the now formal investigation being conducted by the SEC, (iii) cause the Company’s customers, including the government contractors with which the Company deals, to lose confidence in the Company or cause a default under its contractual arrangements, (iv) cause a default under the Company’s arrangements with M&T Bank with respect to which, if the Bank chooses to exercise its remedies, the Company may not be able to obtain replacement financing or continue its operations, (v) result in delisting of the Company’s stock from NYSE MKT (the “Exchange”) if the Company fails to meet any Exchange listing standard, or fails to comply with its listing agreement with the Exchange, during the twelve months ending July 9, 2014, or (vi) result in additional failures of the Company’s internal controls if the Company’s remediation efforts are not effective.  Any one or more of such risks and uncertainties could have a material adverse effect on the Company or the value of its common stock.  For a further list and description of various risks, relevant factors and uncertainties that could cause future results or events to differ materially from those expressed or implied in our forward-looking statements, see the "Risk Factors” and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections in the 2013 Form 10-K/A and the Company’s subsequent Quarterly Reports on Forms 10-Q/A and 10-Q.

 

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All forward-looking statements included in this Report on Form-8-K are made only as of the date of this Form 8-K.  The Company does not undertake any obligation to, and may not, publicly update or correct any forward-looking statements to reflect events or circumstances that subsequently occur or which it hereafter become aware of.  New risks and uncertainties arise from time to time and the Company cannot predict these events or how they may affect it.  When considering these risks, uncertainties and assumptions, you should keep in mind the cautionary statements contained in this Form 8-K and any documents incorporated herein by reference.  You should read this document and the documents that the Company incorporates by reference into this release completely and with the understanding that the Company’s actual future results may be materially different from what it expects.  All forward-looking statements attributable to the Company are expressly qualified by these cautionary statements.

 

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 hereunto duly authorized.

 

    IEC Electronics Corp.  
    (Registrant)  
       
Date:  December 19, 2013 By:    /s/ W. Barry Gilbert  
    W. Barry Gilbert  
    Chief Executive Officer  

 

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Exhibit 10.1

 

FOURTH AMENDMENT TO

FOURTH AMENDED AND RESTATED CREDIT FACILITY AGREEMENT

 

THIS FOURTH AMENDMENT TO FOURTH AMENDED AND RESTATED CREDIT FACILITY AGREEMENT (this “ Amendment ”) is made as of the 13th day of December, 2013, 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 ”).

 

WITNESSETH:

 

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 and by the Third Amendment to Fourth Amended and Restated Credit Facility Agreement dated as of November 8, 2013 (as amended, modified, supplemented or restated from time to time, the “ Credit Agreemen t ”);

 

WHEREAS , Section 12.1 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 the aforementioned covenant in Section 12.1 of the Credit Agreement for the Fiscal Quarter ending September 30, 2013, (ii) waive Events of Default arising from non-compliance with the aforementioned covenant in Section 12.3 of the Credit Agreement for the Fiscal Quarters prior to the date hereof through and including the Fiscal Quarter ending September 30, 2013, (iii) modify the covenants in Section 12.1 and 12.3 for future Fiscal Quarters, and (iv) 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:

 

“Fourth Amendment Effective Date” means December 13, 2013.

 

 
 

 

(ii) 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 twelve-month period commencing on the Fourth Amendment Effective Date, 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 twelve-month 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 twelve-month 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 (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 twelve-month period commencing on the Fourth Amendment Effective Date, the Applicable Unused Fee shall be fixed at 0.500%); provided, further however, that if at the end of such twelve-month 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 twelve-month period, the Applicable Unused Fee shall be fixed at 0.500% for so long as the Borrower is non-compliant with such covenant:”

 

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

 

“12.1 Debt to EBITDARS . 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:

 

Fourth Amendment Effective Date through and including 3/27/2014 < 4.50 to 1.00
   
3/28/2014 through and including 6/26/2014 < 3.50 to 1.00
   
6/27/2014 through and including 9/29/2014 < 3.25 to 1.00
   
9/30/2014 and thereafter < 2.75 to 1.00”

 

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

 

“ Fixed Charge Coverage Ratio . Commencing with the Fiscal Quarter period ending March 28, 2014, 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”

 

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3/28/2014 through and including 6/26/2014 > 0.90 to 1.00
   
6/27/2014 through and including 9/29/2014 > 1.10 to 1.00
   
9/30/2014 and thereafter > 1.25 to 1.00

  

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 Section 12.1 for the Fiscal Quarter ending September 30, 2013, and Section 12.3 of the Credit Agreement for the Fiscal Quarters prior to the date hereof through and including the Fiscal Quarter ending September 30, 2013. 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 . 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 that by their terms are made as of a specific date ., (ii) the existence of actions, suits or proceedings disclosed to the Bank 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 Bank in writing prior to the execution and delivery of this Amendment.

 

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4.5 No Events of Default . No Event of Default and no event which, with notice and/or the passage of time, would constitute an 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 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.

 

5.6 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 that by their terms are made as of a specific date.

 

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5.7 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.

 

5.8 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 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.

 

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 respective 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]

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[Fourth Amendment to 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. Theodore Smith  
  Name: J. Theodore Smith  
  Title: Vice President  
     
IEC ELECTRONICS CORP.  
     
By: /s/ Vincent A. Leo  
  Name: Vincent A. Leo  
  Title: Chief Financial Officer  

 

 

 

 

Exhibit 10.2

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED AGREEMENT (“Agreement”) dated as of December 16, 2013 (the “ Agreement ”) by and between IEC ELECTRONICS CORP. (“ IEC ”) and W. BARRY GILBERT (“ Executive ”).

 

WITNESSETH :

 

WHEREAS, Executive is currently employed as IEC’s Chief Executive Officer and has been so employed since 2002, at which time IEC was in dire financial straits; and

 

WHEREAS, during the period of Executive’s employment, he has directed the growth of IEC and returned it to profitability; and

 

WHEREAS, IEC and Executive are parties to an Employment Agreement dated as of April 24, 2009, as amended by First Amendment to Employment Agreement dated as of September 17, 2010 (the “ 2009 Agreement ”); and

 

WHEREAS, IEC greatly values Executive’s industry expertise and management skills and seeks to avail itself of his continued services for an extended period of time, and to that end IEC and Executive desire to amend the terms of the 2009 Agreement;

 

NOW, THEREFORE, in consideration of the mutual covenants herein and other valid consideration, the sufficiency of which is acknowledged, the parties hereby agree to extend, amend and restate the 2009 Agreement to read in its entirety as follows:

 

1. Employment as CEO

 

1.1. CEO Term . IEC agrees to employ Executive as Chief Executive Officer (“ CEO ”), and Executive agrees to be so employed by IEC pursuant to this Agreement for a period commencing on the date hereof (the “ Effective Date ”) and ending on such date as IEC’s Board of Directors (“ Board ”) terminates his status as CEO unless earlier terminated as provided herein (the “ CEO Term ”).

 

1.2. Duties as CEO . During the CEO Term, Executive shall serve as IEC’s CEO and shall have such other positions as an officer of IEC and its subsidiaries as Executive and the independent members of the Board mutually agree from time to time. In such positions, Executive shall perform such duties, functions and responsibilities commensurate with such positions as reasonably directed by the Board.

 

 
 

 

1.3. Exclusivity . During the CEO Term, and excluding any periods of vacation and sick leave to which Executive is entitled, Executive shall devote his full time and attention to the business and affairs of IEC, shall faithfully serve IEC, and shall in all material respects conform to and comply with the lawful and reasonable directions and instructions given to him by the Board, consistent with Section 1.2 hereof. Executive shall use his best efforts to promote and serve IEC’s interests and shall not engage in any other business activity, whether or not such activity shall be engaged in for pecuniary profit; provided , however , it shall not be a violation of this Agreement for Executive to serve on the boards of directors of other companies which do not compete with IEC and educational and charitable organizations, in both cases with the Chairman of the Board’s Compensation Committee’s prior written consent, which shall not be unreasonably withheld.

 

2. Compensation as CEO

 

2.1. CEO Salary . As compensation for the performance of Executive’s services hereunder during the CEO Term, IEC shall pay to Executive a salary at an annual rate of Three Hundred Fifty Thousand Dollars ($350,000) payable in accordance with IEC’s standard payroll policies (the “ Base Salary ”). Increases to the Base Salary shall be based upon the Board’s annual evaluation of Executive’s performance and compensation analysis.

 

2.2. Incentive Payments . If the CEO Term ends during IEC’s fiscal year, then the Executive’s incentive payments under the then existing short-term cash incentive plan and long-term stock incentive plan will be calculated as: one half the incentive payments and awards he would have been paid at Budget plus one half of the incentive payments and awards the Executive would have earned, as calculated under the plans based on actual results, had the Executive remained as CEO for the balance of the fiscal year. Such incentive payments and awards will be paid on the date on which incentives are paid to other IEC executives under the applicable incentive plans.

 

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3. Employment During the Transition Period

 

3.1. Transition Period . Immediately upon the end of the CEO Term, IEC shall employ Executive for a period of one year to assist the new CEO in assuming his/her role as CEO (“ the Transition Period ”).

 

3.2. Services to be Rendered . During the Transition Period, the Board, in consultation with the Executive and the new CEO, will determine the various duties and responsibilities of the Executive during the transition period that will ensure the smooth transfer of executive responsibilities from the Executive to the new CEO, it being understood that the level of duties may vary during the Transition Period but will be more than 20% of full-time services.

 

3.3. Duties . The Executive agrees to travel with the new CEO and make the necessary introductions to IEC management teams, lenders, institutional investors, and key customers and suppliers. In performing his duties, the Executive shall use his best efforts to promote the best interests of IEC as requested by the Board. During the Transition Period Executive may engage in other business activities, and may serve on the boards of directors of other companies which do not compete with IEC and educational and charitable organizations, in both cases with the Chairman of the Board’s Compensation Committee’s prior written consent, which shall not be unreasonably withheld, and subject to the non-competition provisions set forth in Section 12.2.

 

3.4. Compensation . Executive will receive Base Salary during the Transition Period at the same rate as the Executive’s last annual salary during the CEO Term, payable in accordance with IEC’s standard payroll policies; provided, however, in the event of a Change in Control (defined below), the full amount that would otherwise be paid during the remainder of the Transition Period shall be due and payable immediately in a lump sum even if Executive continues to perform services hereunder.

 

4. Advisory Period

 

4.1. Advisory Period . The seven years immediately following the completion of the CEO Term is defined as the “ Advisory Period .”

 

4.2. Payments During Advisory Period . During the Advisory Period the Executive will receive $89,286 per year for seven years (“ Advisory Period Payments ”); provided , however , on each annual anniversary of the Effective Date the Advisory Period Payments will be grossed up by increases in the Consumer Price Index over the most recently reported twelve-months. Advisory Period Payments will be paid in monthly installments, each equal to 1/12th of the annual amount due (as grossed up if applicable).

 

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4.3. Services During Advisory Period . During the Advisory Period, the Executive agrees to act as a consultant (except during the Transition Term when he remains an employee) to, and advise, the Board to the best of his abilities with respect to such matters involving the business and affairs of IEC as may be reasonably assigned to him by the Board and as are consistent with his knowledge, abilities and experience; provided , however , the total number of days of service required to be rendered by him shall be approximately three (3) days per month, and in any event shall be sufficient to be reasonably related to his Advisory Period Payments; and further provided the Board in its discretion may waive the requirement for advisory services during a period in which the Executive is disabled.

 

4.4. Status . During the Advisory Period after the end of the Transition Period, the Executive is not an employee of IEC, receives no benefits accruing to employees of IEC, and if he remains a member of the Board shall be deemed to be a non-employed director.

 

5. Benefits

 

5.1. Generally . During both the CEO Term and the Transition Period (but not thereafter), Executive shall be eligible to participate in such health and other group insurance and other employee benefit plans and programs of IEC as in effect from time to time on the same basis as other senior executives of IEC, including during the CEO Term but not the Transition Period executive officer cash and equity incentive plans.

 

5.2. Medical Insurance . During both the CEO Term and the Transition Period, IEC will continue to pay the full cost of medical and dental insurance for Executive and his spouse, or in the case of each of them who is 65 and eligible to participate in the Medicare program, the cost of Medicare Supplemental Insurance.

 

5.3. Life Insurance . IEC shall maintain the ING $400,000 term insurance policy and ING $750,000 term insurance policy that are in force on the Effective Date through their respective expirations in 2019 and 2024, or if earlier, the end of the Advisory Period. The death benefits under such policies shall be payable to Executive’s estate or another beneficiary designated by him.

 

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5.4. Long-Term Care Insurance . IEC shall continue payments under the long-term care insurance policies for Executive and his wife that are in force on the Effective Date through the end of their respective paid-up premium periods.

 

6. Business Expenses

 

6.1. Reimbursement . IEC shall pay or reimburse Executive for all commercially reasonable business out-of-pocket expenses that Executive incurs during both the CEO Term and the Transition Period in performing his duties under this Agreement upon presentation of documentation and in accordance with the expense reimbursement policy for IEC in effect, and as it may be modified by the Board, from time to time.

 

7. Termination of CEO Employment and Transition Period Employment

 

7.1. Termination . IEC may unilaterally terminate Executive’s employment, and Executive may voluntarily terminate his employment, at any time prior to the end of Transition Period for any reason (whether by IEC or Executive, and including due to death or disability, a “ Termination ”). Any Termination, other than a Termination by IEC for Cause, must be upon at least thirty (30) days’ prior written notice to the other party.

 

7.2. Payments on a Termination .

 

7.2.1. Accrued Amounts . Upon a Termination for any reason, Executive shall be entitled to the following: (i) any Base Salary earned but unpaid through the date of Termination, (ii) any accrued but unused vacation time, (iii) any unreimbursed business expenses in accordance with Section 6.1 hereof, and (iv) to the extent not theretofore paid or provided any other amounts or benefits required to be paid or provided under any plan (in the case of cash and equity incentive plans, as provided in Section 2.2), program, policy or practice or other contract or agreement of IEC through the date of termination (collectively, “ Accrued Amounts ”).

 

7.2.2. Other Payments .

 

(a) Upon a Termination by IEC without Cause (other than upon Executive’s death) or by Executive following a Change in Control for Good Reason, Executive shall be entitled to continue to receive Advisory Period Payments, payable as provided in Section 4.2.

 

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(b) Upon a Termination Executive shall continue to receive benefits and payments equal to the payments he would have otherwise received under Sections 3.4, 5.2, 5.3 and 5.4 when he would have otherwise received them, but in the case of Section 3.4 and 5.2 limited to through the end of the Transition Period as if it had continued or occurred, as the case may be; provided , however , all such payments and benefits under this subsection (b) shall not be required if (i) the Termination was by IEC for Cause or (ii) was by Executive without Good Reason during the CEO Term or Transition Period (termination due to death, disability or on a Change in Control not being included as voluntary termination).

 

(c) IEC’s obligation to make payments and continue benefits under this Section 7.2.2 shall be conditioned upon each of the following: (i) Executive’s continued compliance with his obligations under Sections 11, 12 and 13 of this Agreement; and (ii) Executive’s execution, delivery and non-revocation of a valid and enforceable general release of claims (the “ Release ”) in form and substance satisfactory to IEC, which must be delivered to IEC within ten (10) business days after termination and not revoked within any applicable statutory periods. In the event that Executive is shown by clear and convincing evidence to have breached any of the covenants set forth in Sections 11, 12 and 13 of this Agreement, Executive will immediately return to IEC any portion of the payments that have been paid to Executive pursuant to Section 7.2.2. Subject to any delay required for §409A compliance, payments will commence to be paid, or be paid in a lump sum as applicable, to Executive as soon as practicable following the effectiveness of the Release.

 

7.2.3. Entire Obligation . Upon a Termination, IEC shall have no obligations to Executive other than as provided in this Section 7.

 

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7.2.4. Definitions . For purposes of this Section 7, the following terms shall have the following meanings:

 

(a) “ Cause ” shall mean, as shown by clear and convincing evidence, Executive’s (i) substantial and material failure, or refusal to perform, the duties of CEO of IEC which is not cured within thirty (30) days of Executive receiving written notice of such failure, provided that a failure to meet the business plan of IEC alone, or good faith errors in judgment made by the Executive, shall not constitute grounds for termination of the Executive for Cause ; (ii) continuing failure or refusal to observe material policies generally applicable to officers or employees of IEC unless such failure is capable of being cured and is cured within thirty (30) days of Executive receiving written notice of such failure; (iii) failure to cooperate with any internal investigation of IEC; (iv) commission of any act of fraud, theft or financial dishonesty with respect to IEC; (v) conviction of any felony, an indictment of a crime or other illegal activity which is of such impropriety or magnitude that it substantially adversely affects the business or the reputation of IEC; or (vi) material violation of the provisions of this Agreement unless such violation is capable of being cured and is cured within thirty (30) days of Executive receiving written notice of such violation; or (vi) refusal to follow any legal and proper directive of the Board which is not cured within thirty (30) days of Executive receiving written notice.

 

(b) “ Change in Control ” has the meaning given to it in §409A.

 

(c) “ Good Reason ” shall mean (i) material and adverse change in Executive’s duties or responsibilities; (ii) reduction in Executive’s CEO Base Salary, or (iii) relocation of Executive’s principal place of employment by more than fifty (50) miles.

 

(d) “ §409A ” means Section 409A of the Internal Revenue Code, as amended from time to time.

 

8. Restricted Stock

 

8.1. Vesting of Restricted Stock . Except in the case of a Termination for Cause, upon termination of Executive’s employment (whether at the end of the Transition Period or upon a Termination) all provisions of any agreement covering restricted stock previously granted to Executive that provide for forfeiture upon termination of employment shall be waived and of no force and effect, and all vesting under such agreements that would occur but for termination of employment shall continue; provided , however , so long as no violation of Section 12 or 13 has occurred, to the extent not yet then vested, 50% of employee’s remaining restricted stock shall vest on the date one year after the date of termination of Executive’s employment and to the extent not yet then vested all remaining restricted stock shall vest on the date two years after the date of termination of Executive’s employment.

 

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9. Exclusive Remedy

 

9.1 Exclusive Payments . Reimbursements and payments provided under this Agreement shall constitute the exclusive payments due Executive upon a termination of his employment under this Agreement.

 

10. Resignation from Positions

 

10.1 Resignation . Upon the termination of Executive’s employment with IEC for any reason other than Cause, Executive shall be deemed to have resigned, as of the date of such termination, from all positions he then holds as an officer, employee or trustee of IEC, and as an officer, employee, director, committee member, trustee or manager of any of IEC’s affiliates. Additionally, if Executive is terminated for Cause, Executive shall be deemed to have resigned from the Board and all committees thereof.

 

11. Cooperation

 

11.1 Cooperation . Following the termination of Executive’s employment with IEC for any reason, Executive agrees to reasonably cooperate with IEC upon reasonable request of the Board and to be reasonably available to IEC with respect to matters arising out of Executive’s services to IEC, including without limitation in connection with litigation support. IEC shall pay Executive a reasonable fee for any such services and promptly reimburse Executive for expenses reasonably incurred in connection with such matters.

 

12. Restrictive Covenants

 

12.1 Unauthorized Disclosure . Executive agrees and understands that Executive is in a position of trust with IEC and has been and will be exposed to and has and will receive information relating to the confidential affairs of IEC and its affiliates, including, without limitation, technical information, intellectual property, business and marketing plans, strategies, customer information, software, other information concerning the products, promotions, development, financing, expansion plans, business policies and practices of IEC and its affiliates and other forms of information considered by IEC and its affiliates to be confidential or in the nature of trade secrets (including, without limitation, ideas, research and development, know-how, formulas, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information and business and marketing plans and proposals) (collectively, the “ Confidential Information ”). Executive agrees that at all times during Executive’s employment with IEC and thereafter, Executive shall not disclose such Confidential Information, either directly or indirectly, to any individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof (each a “ Person ”) other than in connection with Executive’s employment with IEC without IEC’s prior written consent and shall not use or attempt to use any such information in any manner other than in connection with his employment with IEC, unless required by law to disclose such information, in which case Executive shall provide IEC with written notice of such requirement as far in advance of such anticipated disclosure as possible. This confidentiality covenant has no temporal, geographical or territorial restriction. Upon termination of Executive’s employment with IEC, Executive shall promptly supply to IEC all property, keys, notes, memoranda, writings, lists, files, reports, customer lists, correspondence, tapes, disks, cards, surveys, maps, logs, machines, technical data and any other tangible product or document which has been produced by, received by or otherwise submitted to Executive during Executive’s employment with IEC, and any copies thereof in his (or capable of being reduced to his) possession; provided however , that Executive may retain his full rolodex or similar address and telephone directories.

 

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12.2 Non-Competition . By and in consideration of IEC’s entering into this Agreement and in further consideration of Executive’s exposure to the Confidential Information of IEC, Executive agrees that he shall not, during the CEO and Transition Periods and for a period of thirty-six (36) months after the end of the CEO Term (the “ Restriction Period ”), directly or indirectly, perform similar employment or consulting functions for or on behalf of any Restricted Enterprise (as defined below); provided that in no event shall ownership of one percent (1%) or less of the outstanding securities of any class of any issuer whose securities are registered under the Securities Exchange Act of 1934, as amended, standing alone, be prohibited by this Section 12.2, so long as Executive does not have, or exercise, any rights to manage or operate the business of such issuer other than rights as a stockholder thereof. For purposes of this paragraph, “ Restricted Enterprise ” shall mean any Person that is actively engaged in any geographic area in any business which is either (i) in competition with the business of IEC, or (ii) proposed to be conducted by IEC in IEC’s business plan as in effect at that time. During the Restriction Period, upon request of IEC, Executive shall notify IEC of Executive’s then current employment status. Notwithstanding the foregoing, that it shall not be a violation of this Agreement for Executive to serve on the boards of directors of other companies which do not compete with IEC and educational or charitable institutions, in both cases with the prior written consent of Board’s Compensation Committee’s Chairman, which shall not be unreasonably withheld.

 

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12.3 Non-Solicitation of Employees . During the Restriction Period, Executive shall not directly or indirectly contact, induce or solicit (or assist any Person to contact, induce or solicit) for employment, or employ, any person who is, or within thirty-six (36) prior to the date of such solicitation was, an employee of IEC or any of its affiliates.

 

12.4 Interference with Business Relationships . During the Restriction Period (other than in connection with carrying out his responsibilities for IEC and its affiliates), Executive shall not directly or indirectly contact, induce or solicit (or assist any Person to contact, induce or solicit) any customer or client of IEC or its subsidiaries to terminate its relationship or otherwise cease doing business in whole or in part with IEC or its subsidiaries, or directly or indirectly interfere with (or assist any Person to interfere with) any material relationship between IEC or its subsidiaries and any of its or their customers or clients so as to cause harm to IEC or its affiliates.

 

12.5 Extension of Restriction Period . The Restriction Period shall be tolled for any period during which Executive is in breach of any of Sections 12.2, 12.3 or 12.4 hereof.

 

12.6 Proprietary Rights . Executive shall disclose promptly to IEC any and all inventions, discoveries, and improvements (whether or not patentable or registrable under copyright or similar statutes), and all patentable or copyrightable works, initiated, conceived, discovered, reduced to practice, or made by him, either alone or in conjunction with others, during Executive’s employment with IEC and related to the business or activities of IEC and its affiliates (the “ Developments ”). Except to the extent any rights in any Developments constitute a work made for hire under the U.S. Copyright Act, 17 U.S.C. § 101 et seq . that are owned ab initio by IEC and/or its applicable affiliate, Executive assigns all of his right, title and interest in all Developments (including all intellectual property rights therein) to IEC or its nominee without further compensation, including all rights or benefits therefor, including without limitation the right to sue and recover for past and future infringement. Executive acknowledges that any rights in any Developments constituting a work made for hire under the U.S. Copyright Act, 17 U.S.C § 101 et seq. are owned upon creation by IEC and/or its applicable affiliate as Executive’s employer. Whenever requested to do so by IEC, Executive shall execute any and all applications, assignments or other instruments which IEC shall deem necessary to apply for and obtain trademarks, patents or copyrights of the United States or any foreign country or otherwise protect the interests of IEC and its affiliates therein. These obligations shall continue beyond the end of Executive’s employment with IEC with respect to inventions, discoveries, improvements or copyrightable works initiated, conceived or made by Executive while employed by IEC, and shall be binding upon Executive’s employers, assigns, executors, administrators and other legal representatives. In connection with his execution of this Agreement, Executive has informed IEC that he does not have any interest in any inventions or intellectual property rights that he holds as of the date hereof. If IEC is unable for any reason, after reasonable effort, to obtain Executive’s signature on any document needed in connection with the actions described in this Section 12.6, Executive hereby irrevocably designates and appoints IEC and its duly authorized officers and agents as Executive’s agent and attorney in fact to act for and on Executive’s behalf to execute, verify and file any such documents and to do all other lawfully permitted acts to further the purposes of this Section 12.6 with the same legal force and effect as if executed by Executive.

 

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12.7 Remedies . Executive agrees that any breach of the terms of this Section 12 would result in irreparable injury and damage to IEC for which IEC would have no adequate remedy at law. Executive therefore also agrees that in the event of said breach or any threat of breach, IEC shall be entitled to an immediate injunction and restraining order to prevent such breach and/or threatened breach and/or continued breach by Executive and/or any and all Persons acting for and/or with Executive, without having to prove damages, in addition to any other remedies to which IEC may be entitled at law or in equity, including, without limitation, the obligation of Executive to return any payments made by IEC to IEC as required by this Agreement. The terms of this subsection shall not prevent IEC from pursuing any other available remedies for any breach or threatened breach hereof, including, without limitation, the recovery of damages from Executive. The obligations to return payments and for damages under to this Section 12.7 are contingent upon breach of Section 12 being shown by clear and convincing evidence. Executive and IEC further agree that the provisions of the covenants contained in this Section 12 are reasonable and necessary to protect the businesses of IEC and its affiliates because of Executive’s access to Confidential Information and his material participation in the operation of such businesses.

 

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13. Non-Disparagement

 

13.1 Non-Disparagement . From and after the Effective Date, Executive agrees not to make any statement (other than statements made in a good faith belief that they are legally required) that is intended to become public, or that should reasonably be expected to become public, and that criticizes, ridicules, disparages or is otherwise derogatory of IEC or any of its subsidiaries, affiliates, employees, officers, directors or stockholders. IEC shall cause its officers and directors not to make any statement that criticizes, ridicules, disparages or is otherwise derogatory of Executive (other than statements made in a good faith belief that they are legally required) and further agrees that IEC will be financially responsible for any breach of this provision by its directors and executive officers .

 

14. Withholding

 

14.1 Withholding . IEC may withhold from any amounts payable under this Agreement such Federal, state local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation. Executive shall be solely responsible for the payment of all taxes relating to the payment or provision of any amounts or benefits hereunder.

 

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15. Dispute Resolution

 

15.1 Arbitration . Except with respect to an action by IEC to enforce Section 12 of this Agreement and without prejudice to the rights of IEC under Section 7.2.2(c), any dispute arising under pursuant to this Agreement will be decided by binding arbitration in Rochester, New York in accordance with the rules of the American Arbitration Association. The arbitrator shall be an individual mutually acceptable to each party. In the event that the parties cannot agree on the selection of an arbitrator, IEC shall submit a list of no less than three (3) arbitrators to Executive, and Executive shall designate the arbitrator. IEC shall reimburse Executive’s reasonable legal expenses with respect to any such dispute based on a claim by Executive, unless the arbitrator determines that Executive’s claims were brought in bad faith, in which case no such reimbursement shall be made. No reimbursement shall be made in any dispute based on a claim by IEC in which IEC prevails.

 

16. Miscellaneous

 

16.1 Indemnification . This Agreement is in addition to and does not supersede the Indemnification Agreement, dated February 22, 1993, made between Executive and IEC, which agreement is hereby ratified and which is controlling as to the subject matter thereof.

 

16.2 Amendments and Waivers . This Agreement and any of the provisions hereof may be amended, waived (either generally or in a particular instance and either retroactively or prospectively), modified or supplemented, in whole or in part, only by written agreement signed by the parties hereto; provided that, the observance of any provision of this Agreement may be waived in writing by the party that will lose the benefit of such provision as a result of such waiver. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach, except as otherwise explicitly provided for in such waiver. Except as otherwise expressly provided herein, no failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder, or otherwise available in respect hereof at law or in equity, shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy.

 

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16.3 Assignment; Rights of Estate; No Third-Party Beneficiaries . This Agreement, and Executive’s rights and obligations hereunder, may not be assigned by Executive, and any purported assignment by Executive in violation hereof shall be null and void. Nothing in this Agreement shall confer upon any Person not a party to this Agreement, or the legal representatives of such Person, any rights or remedies of any nature or kind whatsoever under or by reason of this Agreement; provided , however , except as expressly provided herein Executive’s rights to payments hereunder shall inure to the benefit of Executive’s legal representatives, estate and heirs.

 

16.4 Notices . Unless otherwise provided herein, all notices, requests, demands, claims and other communications provided for under the terms of this Agreement shall be in writing. Any notice, request, demand, claim or other communication hereunder shall be sent by (i) personal delivery (including receipted courier service); (ii) reputable commercial overnight delivery service courier marked for next business day delivery; or (iii) certified mail, return receipt requested, postage prepaid and addressed to the intended recipient as set forth below:

 

  If to IEC: Jerold Zimmerman (or current Chairman of the
    Board's Compensation Committee)
    c/o IEC Electronics Corp.
    105 North Street
    Newark, New York 14513
     
  with a copy to:
    Harris Beach PLLC
    99 Garnsey Road
    Pittsford, New York 14534
    Attention: Beth Ela Wilkens, Esq.
     
  If to Executive: to his home address as set forth in IEC's personnel records
     
  with a copy to:
    Bond Schoeneck & King, PLLC
    350 Linden Oaks Drive
    Rochester, New York 14625
    Attention: James C. Holahan, Esq.

  

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All such notices, requests, consents and other communications shall be deemed to have been given when received by personal delivery, the business day following deposit with commercial overnight delivery service marked for next day delivery, and three business days after deposit in certified mail, return receipt requested. Either party may change its address to which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other parties hereto notice in the manner then set forth.

 

16.5 Governing Law . This Agreement shall be construed and enforced in accordance with, and the rights and obligations of the parties hereto shall be governed by, the laws of the State of New York, without giving effect to the conflicts of law principles thereof.

 

16.6 Severability . Whenever possible, each provision or portion of any provision of this Agreement, including those contained in Section 12 hereof, will be interpreted in such manner as to be effective and valid under applicable law but the invalidity or unenforceability of any provision or portion of any provision of this Agreement in any jurisdiction shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of this Agreement, including that provision or portion of any provision, in any other jurisdiction. If any term or provision of this Agreement is rendered unenforceable as a matter of law or by any lawful decision or order of any court, governmental agency, or tribunal with jurisdiction and that event produces a material change in the respective rights and obligations of the parties under this Agreement, then the parties shall promptly and in good faith meet to negotiate revised terms that will both comply with the law and any lawful decision or order of any court, governmental agency or tribunal with jurisdiction and accomplish the intent and purposes of the parties underlying this Agreement. If the parties are not able to negotiate revised terms within a reasonable period of time, then either party may submit that dispute to binding arbitration, pursuant to the terms of this Agreement, with the understanding that the arbitrator assigned shall have the authority to decide whether there has been a material change and, if so, the manner and extent to which the terms of the Agreement shall be revised to both abide by the law or any lawful decision or order of any court, governmental agency, or tribunal with jurisdiction and accomplish the purpose and intent of the parties underlying this Agreement. In addition, should a court or arbitrator determine that any provision or portion of any provision of this Agreement, including those contained in Section 12 hereof, is not reasonable or valid, either in period of time, geographical area, or otherwise, the parties hereto agree that such provision should be interpreted and enforced to the maximum extent which such court or arbitrator deems reasonable or valid.

 

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16.7 Entire Agreement . This Agreement constitutes the entire agreement between the parties hereto, and supersedes all prior representations, agreements and understandings (including any prior course of dealings), both written and oral, between the parties hereto with respect to the subject matter hereof.

 

16.8 Counterparts . This Agreement 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.

 

16.9 Binding Effect . This Agreement shall inure to the benefit of, and be binding on, the successors of each of the parties, including, without limitation, Executive’s heirs and the personal representatives of Executive’s estate and any successor to all or substantially all of the business and/or assets of IEC.

 

16.10 General Interpretive Principles . The name assigned this Agreement and headings of the sections, paragraphs, subparagraphs, clauses and sub-clauses of this Agreement are for convenience of reference only and shall not in any way affect the meaning or interpretation of any of the provisions hereof. Words of inclusion shall not be construed as terms of limitation herein, so that references to “include,” “includes” and “including” shall not be limiting and shall be regarded as references to non-exclusive and non-characterizing illustrations.

 

16.11 Mitigation . Notwithstanding any other provision of this Agreement, (a) Executive will have no obligation to mitigate damages for any breach or termination of this Agreement by IEC, whether by seeking employment or otherwise; and (b) the amount of any payment or benefit due Executive after the date of such breach or termination will not be reduced or offset by any payment or benefit that Executive may receive from any other source.

 

16.12 Section 409A Compliance . This Agreement is intended to comply with §409A (to the extent applicable) and, to the extent it would not adversely impact IEC, IEC agrees to interpret, apply and administer this Agreement in the least restrictive manner necessary to comply with such requirements and without resulting in any diminution in the value of payments or benefits to Executive.

 

[Signature Page Follows]

 

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

 

  IEC ELECTRONICS CORP.
   
  By:    /s/ Jerold L. Zimmerman
    Jerold L. Zimmerman
    Chair, Compensation Committee
   
  /s/ W. Barry Gilbert
  W. Barry Gilbert, Individually

 

 

 

 

Exhibit 99.1

 

 

105 Norton Street · Newark, NY 14513 · Ph: (315) 331-7742 · Fax: (315) 331-3547 · www.iec-electronics.com

 

IEC Announces Fourth Quarter and Fiscal 2013 Results

 

Newark, NY – December 19, 2013 – IEC Electronics Corp. (NYSE MKT: IEC) announced its results for the fiscal fourth quarter and fiscal year ending September 30, 2013.

 

During the fourth quarter of fiscal 2013, the Company recorded an impairment charge of $14,217,000 related to its Southern California Braiding (SCB) operation, which significantly impacted earnings. The charge was largely related to goodwill impairment at SCB.

 

In the quarter ended September 30, 2013, the Company reported revenue of $39,122,000 and a net loss of $8,667,000 or ($0.89) per diluted share. This compares to revenue of $37,062,000 and net income of $1,586,000 or $0.16 per diluted share, for the fourth quarter in the prior year.

 

For fiscal year 2013, IEC reported revenue of $140,946,000 and a net loss of $9,530,000 or ($0.98) per diluted share as compared to revenue of $144,963,000 and net income of $6,694,000 or $0.67 per diluted share, for fiscal 2012. The year end results include the impairment charge of $14.2 million, or ($0.93) after tax per diluted share in fiscal 2013, and the year end results for fiscal 2012 included $1,096,000 from the SCB clawback or $0.07 after tax per diluted share in fiscal 2012.

 

W. Barry Gilbert, Chairman of the Board and CEO, stated, “IEC took non-cash impairments of goodwill and intangible assets at SCB after analyzing and reconfiguring the operations of SCB. We also took into account market challenges for our customers during periods of government uncertainty. The SCB acquisition has not met our expectations and has been a disappointment from a profitability, growth and cash flow perspective. We have made a number of changes at SCB, including a reduction in personnel and in other expenses. Additionally, we have moved some of the military and aerospace work from SCB to our Albuquerque business unit. We will continue evaluating our SCB operation and make the changes necessary to improve its prospects and capture the promise we anticipated when we made the acquisition. We are confident of the future; however, it remains difficult to forecast the current political environment.”

 

“This quarter’s results, absent the non-cash impairment, did improve over the third quarter. Our fourth quarter sales were $39,122,000 compared with sales of $35,154,000 for the prior quarter. The revenue for the fourth quarter was our highest quarterly revenue in over 10 years. Our operating loss was $13,149,000, but excluding the impairment our operating income would have been $1,068,000. This compares to operating income of $607,000 in the third quarter. I am pleased with our sales results given all that has transpired. We continue attracting new customers; solid, reputable companies.”

 

“During the first half of fiscal 2013 we added few new customers. Customer activity had fallen below our comfort level, so changes were made to the organization. Our core capabilities were not at risk; however, our execution was weak. The financial results for the first half of the year were sales of $66,671,000 and an operating loss of $1,292,000. In the second half of the year we added numerous new customers or additional locations for existing customers. These additions were spread across our various businesses and our key targeted markets. A number of our new customers are marquee names in their respective industries. As a result, we saw improved performance in the second half of our fiscal year with sales of $74,275,000 and an operating loss of $12,543,000, but after excluding the impairment charge operating income would have been $1,674,000. We have not completely turned the corner. The key question is when will these new accounts be monetized? As with all new customers, the benefit to the company will take time to develop and, in some cases longer than a year to reach full production.”

 

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“Going forward, we expect the first six months of fiscal 2014 to show relatively flat sales as compared to the first six months of fiscal 2013. By the end of the first quarter of fiscal 2014 we will have a clearer picture as to the impact of the operational changes we have made; however, net income is difficult to estimate due to the difficulty of forecasting additional legal and accounting costs and other factors. Complicating our thoughts is the fact that one of our large medical customers is on an FDA hold. Though the issues seem to be getting resolved this will have some effect in Q1 and Q2 of fiscal 2014. We have adjusted our workforce accordingly. We believe the issue our medical customer is facing will mitigate itself during the second half of our fiscal year.”

 

“We have grown quickly over the previous eight years, and aspects of our organizational structure did not keep pace.  This year, we made changes which we believe will help us not only resolve our current challenges, but most importantly, position us for the future and our next stage of growth.  I would like to flip a switch. This will take time. I am confident that this long run perspective is the right path to create future value for our customers and shareholders, as well as opportunities for our employees.”

 

Non-GAAP measures are reconciled to the most closely comparable GAAP measures in the attachment to this release.

 

Conference Call

IEC will host a conference call on Thursday, December 19, 2013 at 10:00 a.m. Eastern Time, to discuss its financial results for the fourth quarter and year ended September 30, 2013. The conference call may be accessed in the U.S. and Canada by dialing toll-free (877) 407-9210. International callers may access the call by dialing (201) 689-8049.

 

A replay of the teleconference will be available for 30 days after the call and may be accessed domestically by dialing (877) 660-6853 and international callers may dial (201) 612-7415. Callers must enter conference i.d. number 13573509. To access the live webcast, log onto the IEC website at http://www.iec-electronics.com. The webcast can also be accessed at http://www.InvestorCalendar.com. An online replay will be available on IEC’s website shortly after the call.

 

About IEC Electronics

IEC Electronics Corporation is a premier provider of electronic manufacturing services (“EMS”) to advanced technology companies primarily in the military and aerospace, medical, industrial and communications sectors. The Company specializes in the custom manufacture of high reliability, complex circuit cards, system level assemblies, a wide array of custom cable and wire harness assemblies, precision sheet metal products, and advanced research and testing services. As a full service EMS provider, IEC is a world-class ISO 9001:2008, AS9100 and ISO13485 certified company. The AS9100 certification enables IEC to serve the military and commercial aerospace markets. The ISO13485 certification supports the quality requirements of medical device markets. The Company is also AC7120 Nadcap accredited for electronics manufacturing to support the most stringent quality requirements of the aerospace industry, as well as ITAR registered and NSA approved under the COMSEC standard. Dynamic Research and Testing Laboratories (DRTL), the Company’s newest business unit, is an ISO 17025 accredited laboratory specializing in the testing and detection of counterfeit electronic parts, as well as component risk mitigation and advanced failure analysis. IEC Electronics is headquartered in Newark, NY (outside of Rochester) and also has operations in Rochester, NY, Albuquerque, NM and Bell Gardens, CA. Additional information about IEC can be found on its web site at www.iec-electronics.com.

 

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This release 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 the Company describes what it “believes”, “expects”, or “anticipates” 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 the Company’s 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 the Company’s actual results, performance or achievements to be different from any future results, performance or achievements expressed or implied by these statements. 

 

Specific risks and uncertainties include, but are not limited to, those set forth in the “Risk Factors” section of the Company’s latest Annual Report on Form 10-K/A and subsequent Quarterly Reports on Form 10-Q/A and Form 10-Q.  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 the Company’s forward-looking statements: business conditions and growth or contraction in the Company’s customers' industries, the electronic manufacturing services industry and the general economy; variability of the Company’s operating results; the Company’s ability to control its material, labor and other costs; the Company’s dependence on a limited number of major customers; the potential consolidation of the Company’s customer base; availability of component supplies; dependence on certain industries; variability and timing of customer requirements; uncertainties as to availability and timing of governmental funding for the Company’s customers; the types and mix of sales to the Company’s customers; the Company’s 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 the Company’s customers, the Company’s industry and business generally; failure or breach of the Company’s information technology systems; natural disasters; and other factors that the Company may not have currently identified or quantified.  Additional risks and uncertainties resulting from the restatement of the Company’s financial statements included in the Company’s Annual Report on Form 10-K/A filed with the Securities and Exchange Commission (“SEC”) on July 3, 2013 (“2013 Form 10-K/A”) and in the Company’s Form 10-Q/A filed on the same date could, among others, (i) cause the Company to incur substantial additional legal, accounting and other expenses, (ii) result in additional shareholder, governmental or other actions, or adverse consequences from the now consolidated shareholder action or the now formal investigation being conducted by the SEC, (iii) cause the Company’s customers, including the government contractors with which the Company deals, to lose confidence in the Company or cause a default under its contractual arrangements, (iv) cause a default under the Company’s arrangements with M&T Bank with respect to which, if the Bank chooses to exercise its remedies, the Company may not be able to obtain replacement financing or continue its operations, (v) result in delisting of the Company’s stock from NYSE MKT (the “Exchange”) if the Company fails to meet any Exchange listing standard, or fails to comply with its listing agreement with the Exchange, during the twelve months ending July 9, 2014, or (vi) result in additional failures of the Company’s internal controls if the Company’s remediation efforts are not effective.  Any one or more of such risks and uncertainties could have a material adverse effect on the Company or the value of its common stock.  For a further list and description of various risks, relevant factors and uncertainties that could cause future results or events to differ materially from those expressed or implied in our forward-looking statements, see the "Risk Factors” and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections in the 2013 Form 10-K/A and the Company’s subsequent Quarterly Reports on Forms 10-Q/A and 10-Q.

 

The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.

 

Contact: Vincent Leo John Nesbett or Jennifer Belodeau
     
  CFO Institutional Marketing Services
     
  IEC Electronics Corp. (203)972-9200
     
  (315)332-4308 jnesbett@institutionalms.com
     
  VLeo@iec-electronics.com jbelodeau@institutionalms.com

  

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IEC ELECTRONICS CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

SEPTEMBER 30, 2013 AND SEPTEMBER 30, 2012

(in thousands, except share and per share data)

 

    September 30, 2013     September 30, 2012  
          (restated)  
ASSETS            
Current assets                
Cash   $ 2,499     $ 2,662  
Accounts receivable, net of allowance     27,945       23,193  
Inventories, net     21,904       17,697  
Deferred income taxes     1,382       1,365  
Other current assets     610       401  
Total current assets     54,340       45,318  
                 
Fixed assets, net     17,946       17,120  
Intangible assets, net     2,647       5,511  
Goodwill     2,005       13,810  
Deferred income taxes     11,652       6,018  
Other assets     345       121  
                 
Total assets   $ 88,935     $ 87,898  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
                 
Current liabilities                
Current portion of long-term debt   $ 2,778     $ 6,533  
Accounts payable     16,508       15,697  
Accrued payroll and related expenses     2,464       2,676  
Other accrued expenses     811       946  
Customer deposits     187       146  
Total current liabilities     22,748       25,998  
                 
Long-term debt     34,026       21,104  
Other long-term liabilities     167       -  
                 
Total liabilities     56,941       47,102  
                 
STOCKHOLDERS' EQUITY                
Preferred stock, $0.01 par value:                
500,000 shares authorized; none issued or outstanding                
Common stock, $0.01 par value:     110       109  
Authorized: 50,000,000 shares                
Issued: 11,006,749 and 10,943,185 shares, respectively                
Outstanding: 9,991,291 and 9,927,727 shares, respectively                
Additional paid-in capital     43,802       43,075  
Retained earnings     (10,483 )     (953 )
Treasury shares at cost - 1,015,458 shares     (1,435 )     (1,435 )
Total stockholders' equity     31,994       40,796  
                 
Total liabilities & stockholders' equity   $ 88,935     $ 87,898  

 

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IEC ELECTRONICS CORP. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS

THREE AND TWELVE MONTH PERIODS ENDED SEPTEMBER 30, 2013 AND SEPTEMBER 30, 2012

(in thousands, except share and per share data)

 

    Three Months Ended     Twelve Months Ended  
    Sept 30,
2013 		    Sept 30,
2012 		    Sept 30,
2013 		    Sept 30,
2012 		 
          (restated)           (restated)  
                         
Sales   $ 39,122     $ 37,062     $ 140,946     $ 144,963  
Cost of sales     33,668       30,888       123,269       118,657  
Gross profit     5,454       6,174       17,677       26,306  
                                 
Operating expenses                                
Selling and administrative expenses     3,761       3,579       15,453       15,765  
Impairment of goodwill and other intangibles     14,217               14,217          
Restatement and related expenses     625       -       1,842       -  
Operating profit/(loss)     (13,149 )     2,595       (13,835 )     10,541  
                                 
Interest and financing expense     522       297       1,170       1,227  
Other (income)/expense     -       1       47       (1,050 )
Income/(loss) before provision for income taxes     (13,671 )     2,297       (15,052 )     10,364  
                                 
Provision for/ (benefit from) income tax     (5,004 )     711       (5,522 )     3,670  
Net income/(loss)   $ (8,667 )   $ 1,586     $ (9,530 )   $ 6,694  
                                 
Net income/(loss) per common and common equivalent share:                                
Basic earnings per share   $ (0.89 )   $ 0.16     $ (0.98 )   $ 0.69  
Diluted earnings per share     (0.89 )     0.16       (0.98 )     0.67  
                                 
Weighted average number of common and common equivalent shares outstanding:                                
Basic     9,739,601       9,660,253       9,711,549       9,663,865  
Diluted     9,739,601       9,982,368       9,711,549       9,969,071  

 

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IEC ELECTRONICS CORP.  AND SUBSIDIARIES

RECONCILIATION OF OPERATING PROFIT/(LOSS) TO OPERATING PROFIT EXCLUDING IMPAIRMENT

THREE AND TWELVE MONTH PERIODS ENDED SEPTEMBER 30, 2013 AND SEPTEMBER 30, 2012

(in thousands, except share and per share data)

 

    Three Months Ended     Twelve Months Ended  
    Sept 30,
2013 		    Sept 30,
2012 		    Sept 30,
2013 		    Sept 30,
2012 		 
          (restated)           (restated)  
                         
Operating profit/(loss)   $ (13,149 )   $ 2,595     $ (13,835 )   $ 10,541  
                                 
Impairment of goodwill and other intangibles     14,217       -       14,217       -  
                                 
Operating profit excluding impairment   $ 1,068     $ 2,595     $ 382     $ 10,541  

 

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IEC ELECTRONICS CORP. AND SUBSIDIARIES

RECONCILIATION OF EARNINGS PER SHARE TO IMPAIRMENT AFTER TAX, PER SHARE

THREE AND TWELVE MONTH PERIODS ENDED SEPTEMBER 30, 2013 AND SEPTEMBER 30, 2012

(in thousands, except share and per share data)

 

    Three Months Ended     Twelve Months Ended  
    Sept 30,
2013 		    Sept 30,
2012 		    Sept 30,
2013 		    Sept 30,
2012 		 
          (restated)           (restated)  
                         
Impairment of goodwill and other intangibles   $ 14,217     $ -     $ 14,217     $ -  
                                 
Effective tax rate     36.6 %     31.0 %     36.7 %     35.4 %
                                 
Tax effect of impairment of goodwill and other intangibles     5,204       -       5,216       -  
                                 
Impairment of goodwill and other intangibles, net of tax   $ 9,013     $ -     $ 9,001     $ -  
                                 
Basic earnings per share   $ (0.89 )   $ 0.16     $ (0.98 )   $ 0.69  
Basic Impairment per share     (0.93 )     -       (0.93 )     -  
                                 
Diluted earnings per share     (0.89 )     0.16       (0.98 )     0.67  
Diluted Impairment per share     (0.93 )     -       (0.93 )     -  
                                 
Earnings per share weighted average number of common and common equivalent shares outstanding:            
                                 
Basic     9,739,601       9,660,253       9,711,549       9,663,865  
Diluted     9,739,601       9,982,368       9,711,549       9,969,071  
                                 
Impairment charge per share weighted average number of common and common equivalent shares outstanding:            
                                 
Basic     9,739,601       9,660,253       9,711,549       9,663,865  
Diluted     9,739,601       9,982,368       9,711,549       9,969,071  

 

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IEC ELECTRONICS CORP. AND SUBSIDIARIES

RECONCILIATION OF EARNINGS PER SHARE TO SCB CLAWBACK AFTER TAX, PER SHARE

THREE AND TWELVE MONTH PERIODS ENDED SEPTEMBER 30, 2013 AND SEPTEMBER 30, 2012

(in thousands, except share and per share data)

 

    Three Months Ended     Twelve Months Ended  
    Sept 30,
2013 		    Sept 30,
2012 		    Sept 30,
2013 		    Sept 30,
2012 		 
          (restated)           (restated)  
                         
Other (expense)/income   $ -     $ (1 )   $ (47 )   $ 1,050  
                                 
Other (expense)/income excluding SCB clawback income     -       (1 )     (47 )     (46 )
                                 
SCB Clawback income     -               -       1,096  
                                 
Effective tax rate     36.6 %     31.0 %     36.7 %     35.4 %
                                 
Tax effect of SCB clawback income     -       -       -       388  
                                 
SCB clawback income, net of tax   $ -     $ -     $ -     $ 708  
                                 
Basic earnings per share   $ (0.89 )   $ 0.16     $ (0.98 )   $ 0.69  
Basic SCB clawback income per share     -       -       -       (0.07 )
                                 
Diluted earnings per share     (0.89 )     0.16       (0.98 )     0.67  
Diluted SCB clawback income per share     -       -       -       (0.07 )
                                 
Earnings per share weighted average number of common and common equivalent shares outstanding:            
             
Basic     9,739,601       9,660,253       9,711,549       9,663,865  
Diluted     9,739,601       9,982,368       9,711,549       9,969,071  
                                 
SCB clawback income per share weighted average number of common and common equivalent shares outstanding:            
             
Basic     9,739,601       9,660,253       9,711,549       9,663,865  
Diluted     9,739,601       9,982,368       9,711,549       9,969,071  

 

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