-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Wd/uVUHLslQyjEiemjAoXmWAHkS2A5D4bqYb+ch5vV5RDT7FpUFQd7aY7oaBe+Rm eLTCeO+l59g3Juo6QL8v5g== 0000049728-01-000002.txt : 20010205 0000049728-01-000002.hdr.sgml : 20010205 ACCESSION NUMBER: 0000049728-01-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20001229 FILED AS OF DATE: 20010131 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IEC ELECTRONICS CORP CENTRAL INDEX KEY: 0000049728 STANDARD INDUSTRIAL CLASSIFICATION: PRINTED CIRCUIT BOARDS [3672] IRS NUMBER: 133458955 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-06508 FILM NUMBER: 1520625 BUSINESS ADDRESS: STREET 1: 105 NORTON ST CITY: NEWARK STATE: NY ZIP: 14513 BUSINESS PHONE: 3153317742 MAIL ADDRESS: STREET 1: PO BOX 271 CITY: NEWARK STATE: NY ZIP: 14513 10-Q 1 0001.txt FIRST QUARTER 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange - -Act of 1934 For the quarterly period ended December 29, 2000 Commission file Number 0-6508 IEC ELECTRONICS CORP. --------------------------------------------------------- (Exact name of registrant as specified in its charter.) Delaware 13-3458955 ----------------------------- ----------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 105 Norton Street, Newark, New York 14513 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices (Zip Code) (315) 331-7742 - -------------------------------------------------------------------------------- Registrant's telephone number, including area code: Indicate by check mark whether the registrant(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date: Common Stock, $0.01 Par Value - 7,632,621 shares as of January 30, 2001. Page 1 of 12 PART 1 FINANCIAL INFORMATION Page Number Item 1. Financial Statements Consolidated Balance Sheets as of : December 29, 2000 (Unaudited) and September 30, 2000........... 3 Consolidated Statements of Operations for the three months ended: December 29, 2000 (Unaudited) and December 31, 1999(Unaudited). 4 Consolidated Statements of Cash Flows for the three months ended: December 29, 2000 (Unaudited) and December 31, 1999(Unaudited). 5 Notes to Consolidated Financial Statements (Unaudited)......................................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations..................... 9 PART II Item 1. Legal Proceedings............................................... 11 Item 2. Changes in Securities........................................... 11 Item 3. Defaults Upon Senior Securities................................. 11 Item 4. Submission of Matters to a Vote of Security Holders............. 11 Item 5. Other Information............................................... 11 Item 6. Exhibits and Reports on Form 8-K................................ 11 Signature .............................................................. 12 Page 2 of 12 IEC ELECTRONICS CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 29, 2000 AND SEPTEMBER 30, 2000 (in thousands, except share data)
DECEMBER 29, SEPTEMBER 30, 2000 2000 ------------- -------------- ASSETS (Unaudited) Current Assets: Accounts receivable $ 30,266 $ 27,915 Inventories 35,465 36,157 Other current assets 142 75 ------------- ------------ Total current assets 65,873 64,147 ------------- ------------ Property, Plant and Equipment, net 14,035 15,225 --------------- ------------ Other Assets: Cost in excess of net assets acquired, net 9,732 9,820 Other assets 268 300 -------------- ------------ 10,000 10,120 -------------- ------------- $ 89,908 $ 89,492 =============== ============= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current portion of long-term debt $ 2,105 $ 2,105 Accounts payable 30,168 25,295 Accrued payroll and related expenses 2,729 2,572 Accrued insurance 1,459 1,583 Other accrued expenses 1,811 1,663 --------------- ------------ Total current Liabilities 38,272 33,218 --------------- ------------ Long-term Debt 12,149 15,266 --------------- ------------ Shareholders' Equity: Preferred stock, par value $.01 per share Authorized - 500,000 shares Outstanding - 0 shares - - Common stock, par value $.01 per share Authorized - 50,000,000 shares Outstanding - 7,629,421 shares and 7,626,565 shares, respectively 76 76 Additional paid-in capital 38,337 38,332 Retained earnings 1,085 2,611 Treasury Stock, at cost - 573 shares (11) (11) --------------- ----------- Total shareholders' equity 39,487 41,008 --------------- ----------- $ 89,908 $ 89,492 ================ ============= The accompanying notes to unaudited consolidated financial statements are an integral part of these financial statements.
Page 3 of 12 IEC ELECTRONICS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 29, 2000 AND DECEMBER 31, 1999 (in thousands, except share data)
3 MONTHS 3 MONTHS ENDED ENDED DECEMBER DECEMBER 29, 2000 31, 1999 ----------- ---------- (Unaudited) (Unaudited) Net sales $59,655 $43,770 Cost of sales 57,886 43,741 ----------- ----------- Gross profit 1,769 29 Selling and Administrative expenses 2,813 2,906 ----------- ------------ Operating loss (1,044) (2,877) Interest expense (504) (361) Life insurance proceeds - 2,000 Other income 23 15 ----------- ------------ Loss before benefit from income taxes (1,525) (1,223) Benefit from income taxes - - ------------- ------------- Net loss ($1,525) ($1,223) ============== ============== Net loss per common and common equivalent share Basic and Diluted ($0.20) ($0.16) Weighted average number of common and common equivalent shares outstanding Basic and Diluted 7,628,277 7,565,078 ------------- ------------- The accompanying notes to unaudited consolidated financial statements are an integral part of these financial statements.
Page 4 of 12 IEC ELECTRONICS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED DECEMBER 29, 2000 AND DECEMBER 31, 1999 (in thousands)
3 MONTHS 3 MONTHS ENDED ENDED DECEMBER DECEMBER 29, 2000 31, 1999 ---------- ----------- (Unaudited) (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss ($1,525) ($1,223) Adjustments to reconcile net loss to net cash (used in) operating activities: Depreciation and amortization 1,400 1,892 Gain on sale of fixed assets (23) - Amortization of cost in excess of net assets acquired 88 88 Common stock issued under Directors Stock Plan 5 4 Changes in operating assets and liabilities: (Increase) decrease: Accounts receivable (2,352) (6,289) Inventories 692 (9,742) Income taxes receivable - 2,966 Life insurance receivable - (2,016) Other current assets (67) (256) Other assets 32 (244) Increase (decrease): Accounts payable 5,273 8,258 Accrued payroll and related expenses 157 (1,429) Accrued insurance expense (124) - Other accrued expenses 148 516 ---------- ----------- Net cash provided by (used in) operating activities 3,704 (7,475) ---------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment (210) (190) Proceeds from sales of equipment 23 52 ---------- ----------- Net cash used in investing activities (187) (138) ---------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Net decrease in drafts payable (400) - (Repayments) Borrowings under line of credit agreements (2,591) 3,871 Cost incurred to secure debt facility - (243) Principal payments on long-term debt (526) - ---------- ----------- Net cash (used in) provided by financing activities (3,517) 3,628 ---------- ----------- Net decrease in cash and cash equivalents - (3,985) Effect of exchange rate changes - (22) Cash and cash equivalents at beginning of period - 4,007 =========== =========== Cash and cash equivalents at end of period $ - $ - =========== =========== Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest $284 $330 ======== ======== Income taxes - ($2,954) ======== ======== The accompanying notes to unaudited consolidated financial statements are an integral part of these financial statements.
Page 5 of 12 IEC ELECTRONICS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 29, 2000 (1) Business and Summary of Significant Accounting Policies Business - -------- IEC Electronics Corp. (IEC) is an independent contract manufacturer of complex printed circuit board assemblies and electronic products and systems. IEC offers its customers a wide range of manufacturing and management services, on either a turnkey or consignment basis, including material procurement and control, manufacturing and test engineering support, statistical quality assurance, and complete resource management. Consolidation - ------------- The consolidated financial statements include the accounts of IEC and its wholly-owned subsidiaries, Edinburg and Arab, until January 26, 2000 when each of Edinburg and Arab merged into IEC; and also includes from August 31, 1998, Longford (collectively, the "Company"). In December 1999, the Company closed its underutilized Longford operations and transferred some of the customers served there to its other operations in New York and Texas. All significant intercompany transactions and accounts have been eliminated. Revenue Recognition - ------------------- The Company recognizes revenues upon shipment of product for both turnkey and consignment contracts. In December 1999, the United States Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin 101, "Revenues Recognition in Financial State- ments" subsequently updated by SAB 101A and SAB 101B ("SAB 101"). SAB 101 summarizes certain of the SEC's views in applying generally accepted accounting principles to revenue recognition in financial statements. The Company is required to adopt SAB 101 as of the beginning of the fourth quarter of fiscal 2001. Management is in the process of assessing the potential impact on the results of operations. Accounts Payable - ------------------------- Trade accounts payable include drafts payable of $4.0 million and $4.4 million at December 29, 2000 and September 30, 2000, respectively. Cash and Cash Equivalents - ------------------------- Cash and Cash equivalents include highly liquid investments with original maturities of three months or less. The Company's cash and cash equivalents are held and managed by institutions which follow the Company's investment policy. The fair value of the Company's financial instruments approximates carrying amounts due to the relatively short maturities and variable interest rates of the instruments, which approximate current market interest rates. Inventories - ----------- Inventories are stated at the lower of cost (first-in, first-out) or market. The major classifications of inventories are as follows at period end (in thousands): December September 29, 30, 2000 2000 ----------------------- (Unaudited) Raw materials $25,462 $23,331 Work-in-process 9,271 8,418 Finished goods 732 4,408 ======================= $35,465 $36,157 ======================= Foreign Currency Translation - ---------------------------- The assets and liabilities of the Company's foreign subsidiary are translated based on the current exchange rate at the end of the period for the balance sheet and a weighted-average rate for the period of the consolidated statement of operations. Translation adjustments are recorded as a separate component of equity. Transaction gains or losses are included in operations. Page 6 of 12 IEC ELECTRONICS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 29, 2000 Unaudited Financial Statements - ------------------------------ The accompanying unaudited financial statements as of December 29, 2000, and for the three months ended December 29, 2000 have been prepared in accordance with generally accepted accounting principles for interim financial information. In the opinion of management, all adjustments considered necessary for a fair presentation, which consist solely of normal recurring adjustments have been included. The accompanying financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's September 30, 2000 Annual Report on Form 10-K. Net Loss per Common and Common Equivalent Share - -------------------------------------------------------- (in thousands, except for share and per share data) (Loss) Shares Per Share Three Months Ended (Numerator) (Denominator) Amount - ------------------------------------------------------------------------------- December 29, 2000 Basic EPS Loss available to common Shareholders ($1,525) 7,628,277 ($0.20) ==================================== December 31, 1999 Basic EPS Loss available to common Shareholders ($1,223) 7,565,078 ($0.16) ==================================== Basic EPS was computed by dividing reported earnings available to common shareholders by weighted-average common shares outstanding during the three month period. No reconciliation is provided as the effect would be antidilutive. Page 7 of 12 IEC ELECTRONICS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 29, 2000 (2) Financing Arrangements ---------------------- On December 28, 1999, the Company entered into a three-year secured asset-based facility for $35.0 million. The credit facility consists of two components, the first a $25.0 million revolving credit facility based on eligibility criteria for receivables and inventory. Amounts borrowed are limited to 85 percent of qualified accounts receivable, 20 percent of raw materials, and 30 percent of finished goods inventory, respectively. The second component consists of a $10 million three-year term loan with monthly principal installlments based on a five-year amortization which began in April 2000. At December 29, 2000, $14.3 million was outstanding consisting of $5.8 million and $8.5 million relating to the revolving credit facility and term loan, respectively, with $16.5 million available under the revolving credit facility. The credit facility contains specific affirmative and negative covenants, including, among others, the maintenance of certain financial covenants, as well as limitations on amounts available under the lines of credit relating to the borrowing base, capital expenditures, lease payments and additional debt. The more restrictive of the covenants require the Company to maintain a minimum net worth, minimum net income after taxes, maximum debt-to-worth ratio, and minimum cash flow coverage. As of the date of this filing, the Company is in compliance with these debt covenants. (3) Life Insurance Proceeds ----------------------- The Company's President and Chief Executive Officer died suddenly on December 11, 1999. In the first quarter of fiscal 2000, the Company received non-taxable income from insurance proceeds of approximately $2.0 million (4) Litigation ----------- The Company is subject to legal proceedings and claims which arise in the ordinary course of its business. Although occasional adverse decisions (or settlements) may occur, the Company believes that the final disposition of such matters will not have a material adverse effect on the financial position or results of operations of the Company. Page 8 of 12 Management's Discussion and Analysis of Financial Condition and Results - -------------------------------------------------------------------------------- of Operations - ------------- Results of Operations - Three months ended December 29, 2000 as - -------------------------------------------------------------------------------- compared to three months ended December 31, 1999. - ------------------------------------------------- Net sales for the three month period ended December 29, 2000, were $59.7 million as compared to $43.8 million for the comparable period of the prior fiscal year, an increase of 36.3 percent. The increase in sales was primarily due to the corporate strategy to broaden its customer base, while maintaining the current level of production with its larger customers. Sales to new customers were approximately 28 percent of the sales for the quarter. Turnkey sales were 97 percent of net sales in the quarter as compared to 97 percent for the comparable period of the prior fiscal year. The gross profit was $1.8 million or 3.0 percent of sales in the three months ended December 29, 2000 versus a gross profit of $29,000 or 0.1 percent of sales in the comparable period of 1999. The increase was due to higher volumes and lower labor and overhead costs as a percent of sales. Selling and administrative expenses decreased to $2.8 million in the three months ended December 29, 2000, from $2.9 million in the comparable period of the prior fiscal year, a decrease of 3.4 percent. This decrease is primarily due to the Company's effort to contain costs while increasing sales levels. As a percentage of net sales, selling and administrative expenses decreased to 4.7 percent from 6.6 percent in the same quarter of the prior year. The Company has recorded no benefit from income tax as a result of the net loss, and accordingly, has a full valuation allowance against its net deferred tax asset including the net operating loss carry-forward. Net loss for the quarter was ($1.5) million versus ($1.2) million in the comparable quarter of the prior year. Diluted loss per share was ($.20) as compared to diluted loss per share of ($.16) per share in the comparable period of the prior fiscal year. Excluding the effects of the life insurance proceeds of $2.0 million, the net loss would have been ($3.2) million or ($0.42) per share for the 3 months ended December 31, 1999. The Company has experienced a reduction in new orders of existing products from Lucent Technologies and anticipates a significant decline in revenues from this customer during Fiscal Year 2001. However, new orders from JDS Uniphase Corp. and GenRad, Inc. are expected to generate sufficient revenue to compensate for the revenue decline from Lucent Technologies, although there can be no assurance that this will happen. Liquidity and Capital Resources - ------------------------------- Net sales for the month of December 2000 were $22.4 million, representing 38 percent of the total net sales for the three month period ending December 29, 2000. Net sales for the month of December 1999 were $23.2 million, representing 53 percent of the total net sales for the three month period ending December 31, 1999. The Company operates on a calendar quarter consisting of four weeks in the first and second months and five weeks in the third month. On December 28, 1999, the Company entered into a three-year secured asset-based facility for $35.0 million. The credit facility consists of two components. The first is a $25.0 million revolving credit facility based on eligibility criteria for receivables and inventory. Amounts borrowed are limited to 85 percent of qualified accounts receivable, 20 percent of raw materials, and 30 percent of finished goods inventory, respectively. The second component consists of a $10.0 million three-year term loan with monthly principal installments based on a five-year amortization which began in April 2000. At December 29, 2000, $14.3 million was outstanding consisting of $5.8 million and $8.5 million relating to the revolving credit facility and term loan, respectively, with $16.5 million available under the revolving credit facility. The Company believes its funds generated from operations and its existing credit facilities will be sufficient for the Company to meet its capital expenditures and working capital needs for its operations as presently conducted. As part of its overall business strategy, the Company may from time to time evaluate acquisition opportunities. The funding of these future transactions, if any, may require The Company to obtain additional sources of financing. The impact of inflation on the Company's operations has been minimal due to the fact that it is able to adjust its bids to reflect any inflationary increases in cost. Page 9 of 12 Quantitative and Qualitative Disclosures About Market Risk - ---------------------------------------------------------- Quantitative and Qualitative Disclosures about Market Risk represents the risk of loss that may impact the consolidated financial position, results of operations or cash flows of the Company due to adverse changes in financial rates. The Company is exposed to market risk in the area of interest rates. This exposure is directly related to its Term Loan and Revolving Credit bor- rowings under the Credit Agreement, due to their variable interest rate pricing. Management believes that interest rate fluctuations will not have a material impact on the Company's results of operations. Forward-Looking Statements - -------------------------- Except for historical information, statements in this quarterly report are forward-looking made pursuant to the safe harbor created by the Private Securities Litigation Reform Act of 1995 and are therefore subject to certain risks and uncertainties, including timing of orders and shipments, availability of material, product mix and general market conditions that could cause actual results to differ materially from those projected in the forward- looking statements. Investors should consider the risks and uncertainties discussed in the September 30, 2000, Form 10-K and its other filings with the Securities and Exchange Commission. Page 10 of 12 PART II. OTHER INFORMATION Item 1 -- Legal Proceedings None. Item 2 -- Changes in Securities None. Item 3 -- Defaults Upon Senior Securities None. Item 4 -- Submission of Matters to a Vote of Security Holders None. Item 5 -- Other Information None. Item 6 -- Exhibits and Reports on Form 8-K a. Exhibits None b. Reports on Form 8-K None Page 11 of 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. IEC ELECTRONICS CORP. REGISTRANT Dated:January 31, 2001 By:/s/Thomas W. Lovelock ----------------------- Thomas W. Lovelock President and Chief Executive Officer Dated:January 31, 2001 By:/s/Richard L. Weiss ----------------------- Vice President and Chief Financial Officer Page 12 of 12 EX-27 2 0002.txt
5 1000 3-MOS SEP-30-2001 DEC-29-2000 0 0 30,266 0 35,465 65,873 14,035 0 89,908 38,272 12,149 0 0 76 39,411 89,908 59,655 59,678 57,886 2,813 0 0 504 (1,525) 0 (1,525) 0 0 0 (1,525) (0.20) (0.20)
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