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 June 30, 2017

or

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

For the transition period from ____ to ____

Commission File Number 001-34376

IEC ELECTRONICS CORP.

(Exact name of registrant as specified in its charter)

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

105 Norton Street, Newark, New York   14513

(Address of Principal Executive Offices) (Zip Code)

315-331-7742

(Registrant’s telephone number, including area code)

Not Applicable

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

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

Yes x No ¨

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

Yes x No ¨

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

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the

Exchange Act. ¨

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

Yes ¨ No x

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

Common Stock, $0.01 par value – 10,320,419 shares as of August 1, 2017

TABLE OF CONTENTS

Part I	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements and Notes to Condensed Consolidated Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29
Part II	OTHER INFORMATION
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosures	31
Item 5.	Other Information	31
Item 6.	Exhibits	31
SIGNATURES		32
INDEX TO EXHIBITS		33

2

Part I     FINANCIAL INFORMATION

Item 1.  Condensed Consolidated Financial Statements

IEC ELECTRONICS CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

JUNE 30, 2017 and SEPTEMBER 30, 2016

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

	June 30, 2017			September 30, 2016
ASSETS
Current assets:
Cash	$	77		$	845
Accounts receivable, net of allowance	15,915			17,140
Inventories	18,231			15,384
Assets held for sale	—			4,611
Other current assets	944			1,214
Total current assets	35,167			39,194
Property, plant & equipment, net	16,871			10,994
Other long term assets	172			209
Total assets	$	52,210		$	50,397
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	987		$	2,908
Current portion of capital lease obligation	210			—
Accounts payable	12,868			10,864
Accrued payroll and related expenses	1,473			3,365
Other accrued expenses	405			529
Customer deposits	721			1,756
Total current liabilities	16,664			19,422
Long-term debt	15,077			16,732
Long-term capital lease obligation	5,417			—
Other long-term liabilities	1,371			379
Total liabilities	38,529			36,533
Commitments and contingencies (Note 11)
STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value:	—			—
500,000 shares authorized; none issued or outstanding
Common stock, $0.01 par value:
Authorized: 50,000,000 shares
Issued: 11,375,907 and 11,330,151 shares, respectively
Outstanding: 10,196,271 and 10,158,713 shares, respectively	102			102
Additional paid-in capital	46,796			46,305
Accumulated deficit	(31,628		)	(30,954		)
Treasury stock, at cost: 1,055,488 shares	(1,589		)	(1,589		)
Total stockholders’ equity	13,681			13,864
Total liabilities and stockholders’ equity	$	52,210		$	50,397

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

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IEC ELECTRONICS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

THREE and NINE MONTHS ENDEDJUNE 30, 2017 and JULY 1, 2016

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

	Three Months Ended					Nine Months Ended
	June 30, 2017		July 1, 2016			June 30, 2017			July 1, 2016
Net sales	$	26,489	$	32,508		$	68,833		$	98,590
Cost of sales	22,781		27,045			61,050			81,573
Gross profit	3,708		5,463			7,783			17,017
Selling and administrative expenses	2,604		3,475			7,711			11,222
Operating profit	1,104		1,988			72			5,795
Interest and financing expense	255		389			703			1,191
Income/(loss) before income taxes	849		1,599			(631		)	4,604
Provision for/(benefit from) income taxes	43		(6		)	43			(6		)
Net income/(loss)	$	806	$	1,605		$	(674	)	$	4,610
Net income/(loss) per common share:
Basic	$	0.08	$	0.16		$	(0.07	)	$	0.45
Diluted	$	0.08	$	0.16		$	(0.07	)	$	0.45
Weighted average number of shares outstanding:
Basic	10,193,200		10,211,347			10,176,626			10,210,805
Diluted	10,193,200		10,211,347			10,176,626			10,210,805

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

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IEC ELECTRONICS CORP.

CONDENSED CONSOLIDATED STATEMENT of CHANGES in STOCKHOLDERS’ EQUITY

NINE MONTHS ENDEDJUNE 30, 2017

(unaudited; in thousands)

	Common Stock, par $0.01		Additional Paid-In Capital			Accumulated Deficit			Treasury Stock, at cost			Total Stockholders’ Equity
Balances, October 1, 2016	$	102	$	46,305		$	(30,954	)	$	(1,589	)	$	13,864
Net loss	—		—			(674		)	—			(674		)
Stock-based compensation	—		468			—			—			468
Employee stock plan purchases	—		27			—			—			27
Shares withheld for payment of taxes upon     vesting of restricted stock	—		(4		)	—			—			(4		)
Balances, June 30, 2017	$	102	$	46,796		$	(31,628	)	$	(1,589	)	$	13,681

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

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IEC ELECTRONICS CORP.

CONDENSED CONSOLIDATED STATEMENTS of CASH FLOWS

NINE MONTHS ENDEDJUNE 30, 2017 and JULY 1, 2016

(unaudited; in thousands)

	Nine Months Ended
	June 30, 2017			July 1, 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income/(loss)	$	(674	)	$	4,610
Non-cash adjustments:
Stock-based compensation	468			324
Incentive compensation shares returned	—			(60		)
Depreciation and amortization	1,981			2,432
Loss on sale of property, plant and equipment	4			1
Reserve for doubtful accounts	(169		)	253
Provision for excess/obsolete inventory	(93		)	(34		)
Amortization of deferred gain on sale leaseback	(45		)	(3		)
Changes in assets and liabilities:
Accounts receivable	1,394			5,572
Inventory	(2,754		)	5,674
Other current assets	270			104
Other long term assets	7			3
Accounts payable	2,004			(4,720		)
Accrued expenses	(2,016		)	644
Customer deposits	(1,035		)	(2,575		)
Other long term liabilities	(124		)	25
Net cash flows (used in)/provided by operating activities	(782		)	12,250
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment	(2,035		)	(2,165		)
Proceeds from disposal of property, plant and equipment	5			—
Proceeds from sale-leaseback	5,750			—
Net cash flows provided by/(used in) investing activities	3,720			(2,165		)
CASH FLOWS FROM FINANCING ACTIVITIES
Advances from revolving line of credit	36,143			43,116
Repayments of revolving line of credit	(30,514		)	(50,315		)
Repayments under other loan agreements	(9,146		)	(2,456		)
Repayments under capital lease	(123		)	—
Debt issuance costs	(89		)	(241		)
Proceeds from employee stock plan purchases	27			7
Cash paid for taxes upon vesting of restricted stock	(4		)	—
Net cash flows used in financing activities	(3,706		)	(9,889		)
Net cash (decrease)/increase for the period	(768		)	196
Cash, beginning of period	845			407
Cash, end of period	$	77		$	603
Supplemental cash flow information
Interest paid	687			$	1,188
Income taxes paid	116			3
Property, plant and equipment additions financed through capital lease	5,750			—

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

6

IEC ELECTRONICS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1—OUR BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Our Business

IEC Electronics Corp. (“IEC,” “we,” “our,” “us,” the “Company”) provides electronic manufacturing services (“EMS”) to advanced technology companies that produce life-saving and mission critical products for the medical, industrial, aerospace and defense sectors. The Company specializes in delivering technical solutions for the custom manufacture of complex full system assemblies by providing on-site analytical testing laboratories, custom design and test engineering services combined with a broad array of manufacturing services encompassing electronics, interconnect solutions, and precision metalworking. As a full service EMS provider, IEC holds all appropriate certifications for the market sectors it supports including ISO 9001:2008, AS9100C, ISO 13485 and Nadcap.  IEC is headquartered in Newark, NY and also has operations in Rochester, NY and Albuquerque, NM.  Additional information about IEC can be found on its website at www.iec-electronics.com. The contents of this website are not incorporated by reference into this quarterly report.

Generally Accepted Accounting Principles

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

Fiscal Calendar

The Company’s fiscal year ends on September 30th and the first three quarters generally end on the Friday closest to the last day of the calendar quarter. For the fiscal year ending September 30, 2017 (“fiscal 2017”), the fiscal quarters ended on December 30, 2016, March 31, 2017 and June 30, 2017. For the fiscal year ended September 30, 2016 (“fiscal 2016”), the fiscal quarters ended on January 1, 2016, April 1, 2016 and July 1, 2016.

Consolidation

The consolidated financial statements include the accounts of IEC and its wholly-owned subsidiaries: IEC Electronics Wire and Cable, Inc. (“Wire and Cable”) that merged into IEC on December 28, 2016; IEC Electronics Corp-Albuquerque (“Albuquerque”); IEC Analysis & Testing Laboratory, LLC (“ATL”), formerly Dynamic Research and Testing Laboratories, LLC; and IEC California Holdings, Inc. The Rochester unit, formerly Celmet, operates as a division of IEC. All intercompany transactions and accounts are eliminated in consolidation. 

Unaudited Financial Statements

The accompanying unaudited condensed consolidated financial statements for the three and nine months endedJune 30, 2017 and July 1, 2016 have been prepared without an audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and do not include certain of the information the footnotes require by GAAP for complete financial statements.  In the opinion of management, all adjustments, consisting of normal recurring adjustments, required for a fair presentation of the information have been made.  The accompanying financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2016.

Cash

The Company’s cash represents deposit accounts with Manufacturers and Traders Trust Company (“M&T Bank”), a banking corporation headquartered in Buffalo, NY.

Allowance for Doubtful Accounts

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

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Inventory Valuation

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

Property, Plant and Equipment

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

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

PP&E Lives	Estimated Useful Lives
	(years)
Land improvements	10
Buildings and improvements	5 to 40
Machinery and equipment	3 to 5
Furniture and fixtures	3 to 7

Reviewing Long-Lived Assets for Potential Impairment

ASC 360-10 (Property, Plant and Equipment) and ASC 350-30 (Intangibles) require the Company to test long-lived assets (PP&E and definitive lived assets) for recoverability whenever events or circumstances indicate that the carrying amount may not be recoverable.  If carrying value exceeds undiscounted future cash flows attributable to an asset, it is considered impaired and the excess of carrying value over fair value must be charged to earnings.  No impairment charges were identified or recorded by IEC for PP&E or intangible assets during the three and nine months endedJune 30, 2017 and July 1, 2016.

Leases

At the inception of a lease covering equipment or real estate, the lease agreement is evaluated under criteria discussed in ASC 840-10-25 (Leases).  Leases meeting one of four key criteria are accounted for as capital leases and all others are treated as operating leases.  Under a capital lease, the discounted value of future lease payments becomes the basis for recognizing an asset and a borrowing, and lease payments are allocated between debt reduction and interest.  For operating leases, payments are recorded as rent expense.  Criteria for a capital lease include (i) transfer of ownership during the lease term; (ii) existence of a bargain purchase option under terms that make it likely to be exercised; (iii) a lease term equal to 75 percent or more of the economic life of the leased property; and (iv) minimum lease payments that equal or exceed 90 percent of the fair value of the property.

Legal Contingencies

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

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

Customer Deposits

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

8

Grants from Outside Parties

Grants from outside parties are recorded as other long-term liabilities and are amortized over the same period during which the associated PP&E are depreciated. The Company received grants for certain facility improvements and equipment from state and local agencies in which the Company operates.  These grants reimbursed the Company for a portion of the actual cost or provided in kind services in support of capital projects. 

There were no deferred grants recorded during the three and nine months endedJune 30, 2017. The outstanding grant balance was $0.2 million and $0.3 million at June 30, 2017 and September 30, 2016, respectively.

Fair Value Measurements

Under ASC 825 (Financial Instruments), the Company is required to disclose the fair value of financial instruments for which it is practicable to estimate value.  The Company’s financial instruments consist of cash, accounts receivable, accounts payable, accrued liabilities and borrowings.  IEC believes that recorded value approximates fair value for all cash, accounts receivable, accounts payable and accrued liabilities. See Note 6—Fair Value of Financial Instruments for a discussion of the fair value of IEC’s borrowings.

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

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

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

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

The Company deems a transfer between levels of the fair value hierarchy to have occurred at the beginning of the reporting period.  There were no such transfers during each of the three and nine months of fiscal 2017 or fiscal 2016.

Revenue Recognition

The Company’s revenue is principally derived from the sale of electronic products built to customer specifications, but also from other value-added support services and repair work.  Revenue from product sales is recognized when (i) goods are shipped or title and risk of ownership have passed, (ii) the price to the buyer is fixed or determinable, and (iii) realization is reasonably assured. Service revenue is generally recognized once the service has been rendered.  Service revenue, including material management, design and repair work revenue, amounted to less than 5% of total revenue in each of the three and nine months endedJune 30, 2017 and July 1, 2016.

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

Stock-Based Compensation

ASC 718 (Stock Compensation) requires that compensation expense be recognized for equity awards based on fair value as of the date of grant.  For stock options, the Company uses the Black-Scholes pricing model to estimate grant date fair value.  Costs associated with stock awards are recorded over requisite service periods, generally the vesting period.  If vesting is contingent on the achievement of performance objectives, fair value is accrued over the period the objectives are expected to be achieved only if it is considered probable that the objectives will be achieved.  The Company also has an employee stock purchase plan (“ESPP”) that provides for the purchase of Company common stock at a discounted stock purchase price. Compensation expense related to the discount is recognized as employees contribute to the plan.

9

Legal Expense Accrual

The Company records legal expenses as they are incurred, based on invoices received or estimates provided by legal counsel. Future estimated legal expenses are not recorded until incurred.

Income Taxes and Deferred Taxes

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

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

Any interest incurred is reported as interest expense. Any penalties incurred are reported as tax expense. The Company’s income tax filings are subject to audit by various tax jurisdictions and current open years are the fiscal year ended September 30, 2014 through fiscal year ended September 30, 2016. The federal income tax audit for the fiscal year ended September 30, 2013 concluded during the first nine months of fiscal 2017 and resulted in no change to reported tax.

Dividends

IEC does not pay dividends on its common stock as it is the Company’s current policy to retain earnings for use in the business.  Furthermore, the Company’s Fifth Amended and Restated Credit Facility Agreement, as amended, with M&T Bank includes certain restrictions on paying cash dividends, as more fully described in Note 5—Credit Facilities. 

Use of Estimates

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

Statements of Cash Flows

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

Recently Issued Accounting Standards Not Yet Adopted

FASB Accounting Standard Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” (“Topic 606”) was issued May 2014 and updates the principles for recognizing revenue.  This ASU will supersede most of the existing revenue recognition requirements in GAAP and will require entities to recognize revenue at an amount that reflects the consideration to which a company expects to be entitled in exchange for transferring goods or services to a customer.  This ASU also amends the required disclosures of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. FASB ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations” was issued in March 2016 and improves implementation guidance on principal versus agent considerations. FASB ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” was issued in April 2016 and adds further guidance on identifying performance obligations as well as improving licensing implementation guidance. FASB ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” was issued in June 2016 and clarifies the objective of the collectability criterion, presentation of taxes collected from customers, non-cash consideration, contract modifications at transition, completed contracts at transition and how guidance in Topic 606 is retrospectively applied. The amendments do not change the core principle of the guidance in Topic 606. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within that period.  Early adoption is permitted for annual periods beginning after December 15, 2016. The Company is continuing to evaluate the effect this guidance will have on its consolidated financial statements, including potential impacts on the amount and timing of revenue recognition and additional information that may be necessary

10

for the required expanded disclosures.  The Company has identified key personnel to evaluate the guidance and attended training, and started the process to formulate a time line to review the Company’s revenue streams, existing inventory contracts, and apply the five-step model to those contracts to evaluate the quantitative and qualitative impacts of the new standard.  The Company plans to adopt this ASU, as amended, in the first quarter of fiscal 2019.

FASB ASU 2015-11, “Simplifying the Measurement of Inventory” was issued in July 2015. This requires entities to measure most inventory “at the lower of cost and net realizable value,” thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. This ASU will not apply to inventories that are measured by using either the last-in, first-out method or the retail inventory method. For public business entities, this ASU is effective prospectively for annual periods beginning after December 15, 2016, and interim periods therein. Upon transition, entities must disclose the nature of and reason for the accounting change. The Company does not anticipate a significant impact on its financial statements upon adoption.

FASB ASU 2015-17, “Income Taxes Balance Sheet Classification of Deferred Taxes” was issued in November 2015. This requires entities to classify deferred tax liabilities and assets as noncurrent in a classified statement of financial position and applies to all entities that present a classified statement of financial position. For public entities, this update is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company does not anticipate a significant impact on its financial statements upon adoption.

FASB ASU 2016-02, “Leases” was issued in February 2016. The new guidance establishes the principles to report transparent and economically neutral information about the assets and liabilities that arise from leases. For public entities, the new guidance is effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods. Early adoption is permitted for all entities. The Company is evaluating the impact this ASU will have on its financial statements.

FASB ASU 2016-09, “Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting” was issued in March 2016. This simplifies accounting for several aspects of share-based payment including income tax consequences, classification of awards as either equity or liability and classification on the statement of cash flows. For public entities, this update is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company does not anticipate a significant impact on its financial statements upon adoption.

FASB ASU 2016-15 “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments: A Consensus of the FASB Emerging Issues Task Force” was issued in August 2016. This ASU clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. For public entities, this update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company does not anticipate a significant impact on its financial statements upon adoption.

NOTE 2—ALLOWANCE FOR DOUBTFUL ACCOUNTS

A summary of activity in the allowance for doubtful accounts during the nine months endedJune 30, 2017 and July 1, 2016 follows

	Nine Months Ended
Allowance for doubtful accounts	June 30, 2017			July 1, 2016
(in thousands)
Allowance, beginning of period	$	226		$	423
(Reversal)/provision for doubtful accounts	(169		)	253
Write-offs/recoveries	15			(298		)
Allowance, end of period	$	72		$	378

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NOTE 3—INVENTORIES

A summary of inventory by category at period end follows:

Inventories	June 30, 2017		September 30, 2016
(in thousands)
Raw materials	$	8,872	$	7,513
Work-in-process	6,681		5,932
Finished goods	2,678		1,939
Inventories	$	18,231	$	15,384

NOTE 4—PROPERTY, PLANT & EQUIPMENT

A summary of property, plant and equipment and accumulated depreciation at period end follows:

Property, Plant & Equipment	June 30, 2017			September 30, 2016
(in thousands)
Land and improvements	$	788		$	788
Buildings and improvements	8,910			8,910
Building under capital lease	5,750			—
Machinery and equipment	27,944			26,905
Furniture and fixtures	7,476			7,489
Construction in progress	3,516			3,079
Total property, plant and equipment, at cost	54,384			47,171
Accumulated depreciation	(37,513		)	(36,177		)
Property, plant and equipment, net	$	16,871		$	10,994

Depreciation expense during the three and nine months endedJune 30, 2017 and July 1, 2016 follows:

	Three Months Ended				Nine Months Ended
	June 30, 2017		July 1, 2016		June 30, 2017		July 1, 2016
(in thousands)
Depreciation expense	$	624	$	717	$	1,921	$	2,364

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NOTE 5—CREDIT FACILITIES

A summary of borrowings at period end follows:   

			June 30, 2017					September 30, 2016
Debt	Fixed/ Variable Rate	Maturity  Date	Balance			Interest Rate		Balance			Interest Rate
($ in thousands)
M&T credit facilities:
Revolving Credit Facility	v	5/5/2022	$	9,590		3.72	%	$	3,961		3.28	%
Term Loan A(1)	f	2/1/2020	—			—		3,693			3.98
Term Loan B	v	5/5/2022	5,928			3.80		8,983			3.03
Albuquerque Mortgage Loan(1)	v	2/1/2018	—			—		2,200			3.55
Celmet Building Term Loan	f	11/7/2018	834			4.72		932			4.72
Other credit facilities:
Albuquerque Industrial Revenue Bond(1)	f	3/1/2019	—			—		100			5.63
Total debt, gross			16,352					19,869
Unamortized debt issuance costs			(288		)			(229		)
Total debt, net			16,064					19,640
Less: current portion			(987		)			(2,908		)
Long-term debt			$	15,077				$	16,732

⁽¹⁾ The Albuquerque Mortgage Loan and the Albuquerque Industrial Revenue Bond were repaid in connection with the sale-leaseback transaction described in Note 12—Capital Lease. The proceeds from the transaction were also used to pay down Term Loan A, which was subsequently paid off in due course.

M&T Bank Credit Facilities

Effective as of May 5, 2017, the Company and M&T Bank entered into the Third Amendment to Fifth Amended and Restated Credit Agreement (the “Third Amendment”), that amended the Fifth Amended Credit Agreement dated as of December 14, 2015, as amended by the First Amendment to Fifth Amended and Restated Credit Facility, dated as of June 20, 2016, and the Second Amendment to Fifth Amended and Restated Credit Facility agreement dated as of November 28, 2016 (“Fifth Amended Credit Agreement”). The Third Amendment extended the Revolver termination date to May 5, 2022. In connection with the Third Amendment, the Term Loan B to M&T Bank was amended and restated. The Third Amendment revised certain covenants to provide that the Company may use Revolver proceeds to refinance existing indebtedness. As a result, the Term Loan B, which matures on May 5, 2022, now has a principal amount of $6.0 million. The Third Amendment also revised the maximum amount the Company can borrow under the Revolver to the lesser of $16.0 million or 85% of eligible receivables plus up to $7.0 million of eligible inventories. The Third Amendment also modified the definitions of Applicable Margin and Applicable Unused Fee to provide that each is calculated using the applicable Fixed Charge Coverage Ratio, as redefined by the Third Amendment. The Third Amendment established a Borrowing Base computed using monthly Borrowing Base Reports that, if inaccurate, allow M&T Bank, in its discretion, to suspend the making of or limit Revolving Credit Loans. Further, the Third Amendment provides for the Company’s repurchase of its common stock under certain circumstances without M&T Bank’s prior written consent.

Individual debt facilities provided under the Fifth Amended Credit Agreement, as amended, are described below:

a) Revolving Credit Facility (“Revolver”): Up to $16.0 million is available through May 5, 2022. The maximum amount the Company may borrow is determined based on a borrowing base calculation described below.

b) Term Loan A: $10.0 million was borrowed on January 18, 2013. Principal was being repaid in 108 equal monthly installments of $93 thousand. The proceeds of the sale-leaseback transaction described in Note 12—Capital Lease were used to pay down the loan, which was paid off January 1, 2017.

c) Term Loan B:$14.0 million was borrowed on January 18, 2013. Principal was being repaid in 120 equal monthly installments of $117 thousand. As part of the Third Amendment, the principal was modified to $6.0 million and principal is being repaid in equal monthly installments of $71 thousand.

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d) AlbuquerqueMortgage Loan: $4.0 million was borrowed on December 16, 2009. The loan was secured by real property in Albuquerque, NM, and principal was being repaid in equal monthly installments of $22 thousand. The loan was repaid in connection with the sale-leaseback transaction described in Note 12—Capital Lease.

e) Celmet Building Term Loan:$1.3 million was borrowed on November 8, 2013 pursuant to an amendment to the Fourth Amended and Restated Credit Facility Agreement dated as of January 18, 2013. The proceeds were used to reimburse the Company’s cost of purchasing its Rochester, New York facility. Principal is being repaid in 59 equal monthly installments of $11 thousand plus a balloon payment of $672 thousand due at maturity. 

Borrowing Base

Under the Fifth Amended Credit Agreement, as amended, the maximum amount the Company can borrow under the Revolver is the lesser of (i) 85% of eligible receivables plus a percentage of eligible inventories (up to a cap of $7.0 million) or (ii) $16.0 million at June 30, 2017 and $20.0 million at September 30, 2016.

At June 30, 2017 and September 30, 2016, the upper limit on Revolver borrowings was $16.0 million and $16.4 million, respectively. Average Revolver balances amounted to $5.0 million during the nine months endedJune 30, 2017.

Interest Rates

Under the Fifth Amended Credit Agreement, variable rate debt accrues interest at LIBOR plus the applicable marginal interest rate that fluctuates based on the Company’s Fixed Charge Coverage Ratio, as defined below. Under the Third Amendment, the applicable marginal interest rate was fixed on May 5, 2017 through the fiscal quarter ending March 31, 2018, as follows: 2.50% for the Revolver and 2.75% for Term Loan B.  Changes to applicable margins and unused fees resulting from the Fixed Charge Coverage Ratio generally become effective mid-way through the subsequent quarter.

The Company incurs quarterly unused commitment fees ranging from 0.250% to 0.375% of the excess of $16.0 million over average borrowings under the Revolver. Fees incurred amounted to $11.7 thousand and $21.1 thousand during the three months ended June 30, 2017 and July 1, 2016, respectively. Fees incurred amounted to $43.6 thousand and $44.9 thousand during the nine months endedJune 30, 2017 and July 1, 2016, respectively. The fee percentage varies based on the Company’s Fixed Charge Coverage Ratio, as defined below.

Financial Covenants

The Fifth Amended Credit Agreement, as amended, also contains various affirmative and negative covenants including financial covenants. Pursuant to the Third Amendment, as of March 31, 2017, certain financial covenants of the credit facility were eliminated or revised to be less complex, including the Maximum Inventory covenant, Debt to EBITDAS ratios, the Maximum Capital Expenditures limit after the fiscal year ending September 30, 2017, and future requirements of Minimum Quarterly EBITDAS except for the fiscal quarter ended June 30, 2017. The Company is required to maintain (i) for the quarter ended June 30, 2017, a minimum level of quarterly EBITDAS, as defined below (“Quarterly EBITDAS”), (ii) a minimum fixed charge coverage ratio (“Fixed Charge Coverage Ratio”), and (iii) a maximum amount of capital expenditures (“Maximum Capital Expenditures”). “EBITDAS” is defined as earnings before interest, taxes, depreciation, amortization and non-cash stock compensation expense. The Fixed Charge Coverage Ratio compares (i) EBITDAS minus unfinanced capital expenditures minus taxes paid, to (ii) the sum of interest expense, principal payments, payments on all capital lease obligations and dividends, if any (fixed charges). The Fixed Charge Coverage Ratio will initially be measured for a trailing six months ended September 30, 2017. The Maximum Capital Expenditures covenants allow for a maximum amount of capital expenditures on an annual basis for fiscal 2017.

Covenant ratios in effect at June 30, 2017, pursuant to the Fifth Amended Credit Agreement, as amended by the Third Amendment, are as follows:

Minimum Quarterly EBITDAS:
Fiscal Quarter ended 6/30/2017, using trailing twelve months	$	2,323,300
Maximum Capital Expenditures:
Measured annually	Maximum $3.5m

The Fifth Amended Credit Agreement provides for customary events of default, subject in certain cases to customary cure periods, in which the outstanding balance and any unpaid interest would become due and payable.

The Company was in compliance with all debt covenants at June 30, 2017.

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Other Borrowings

When IEC acquired Albuquerque, the Company assumed responsibility for a $0.1 million Industrial Revenue Bond issued by the City of Albuquerque. Interest on the bond was paid semiannually, and principal was due in its entirety at maturity. The Bond was repaid in connection with the sale-leaseback transaction described in Note 12—Capital Lease.

Contractual Principal Payments

A summary of contractual principal payments under IEC’s borrowings for the next five years taking into consideration the Fifth Amended Credit Agreement, as amended, follows:

Debt Repayment Schedule		Contractual Principal Payments
(in thousands)
Twelve months ended June
2018		$	987
2019	(1)	1,561
2020		857
2021		857
2022 and thereafter (2)		12,090
		$	16,352

⁽¹⁾ Includes final payment of the Celmet Building Term Loan on November 7, 2018.

⁽²⁾ Includes Revolver balance of $9.6 million at June 30, 2017.

NOTE 6—FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial Instruments Carried at Historical Cost

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

The Company's debt is carried at historical cost on the balance sheet. The fair value and carrying value of the Celmet Building Term Loan at June 30, 2017 were both $0.8 million. The fair value and carrying value of the Celmet Building Term Loan as of September 30, 2016 were both $0.9 million.

The fair value of the remainder of the Company’s debt approximated carrying value at June 30, 2017 and September 30, 2016 as it is variable rate debt.

NOTE 7—WARRANTY RESERVES

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

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

	Nine Months Ended
Warranty Reserve	June 30, 2017			July 1, 2016
(in thousands)
Reserve, beginning of period	$	180		$	399
Provision	100			126
Warranty costs	(125		)	(228		)
Reserve, end of period	$	155		$	297

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NOTE 8—STOCK-BASED COMPENSATION

The 2010 Omnibus Incentive Compensation Plan (the “2010 Plan”), was approved by the Company’s stockholders at the January 2011 Annual Meeting. The Company also has an ESPP, adopted in 2011, that provides for the purchase of Company common stock at a discounted stock purchase price. The 2010 Plan replaced IEC’s 2001 Stock Option and Incentive Plan (the “2001 Plan”), which expired in December 2011.  The 2010 Plan, which is administered by the Compensation Committee of the Board of Directors, provides for the following types of awards: incentive stock options, nonqualified options, stock appreciation rights, restricted shares, restricted stock units, performance compensation awards, cash incentive awards, director stock and other equity-based and equity-related awards.  Awards are generally granted to certain members of management and employees, as well as directors.  Under the 2010 Plan, up to 2,000,000 shares of common stock may be issued over a term of ten years.

Stock-based compensation expense recorded under the 2010 and 2001 Plans, including the ESPP, totaled $0.2 million and $0.5 million for the three and nine months endedJune 30, 2017, respectively. Stock-based compensation expense recorded under the 2010 and 2001 Plans, including the ESPP, totaled $0.2 million and $0.3 million for the three and nine months endedJuly 1, 2016, respectively. During the nine months endedJuly 1, 2016, incentive compensation shares were returned by the Company’s former CEO resulting in a reduction to compensation expense of $60.0 thousand. 

At June 30, 2017, there were 231,541 shares available to be issued under the 2010 Plan.

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

Stock Options

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

Assumptions used in the Black-Scholes model and the estimated value of options granted during the nine months endedJune 30, 2017 and July 1, 2016 are included in the table below.

	Nine Months Ended
Valuation of Options	June 30, 2017			July 1, 2016
Assumptions for Black-Scholes:
Risk-free interest rate	1.50		%	1.10		%
Expected term in years	4.0			4.0
Volatility	39		%	39		%
Expected annual dividends	none			none
Value of options granted:
Number of options granted	57,500			10,000
Weighted average fair value per share	$	1.19		$	1.40
Fair value of options granted (000s)	$	68		$	14

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

	Nine Months Ended
	June 30, 2017				July 1, 2016
Stock Options	Number of Options		Wgtd. Avg. Exercise Price		Number of Options		Wgtd. Avg. Exercise Price
Outstanding, beginning of period	759,795		$	4.43	717,645		$	4.40
Granted	57,500		3.64		10,000		4.64
Exercised	—		—		—		—
Forfeited	(33,000	)	5.58		(17,250	)	5.82
Expired	(29,750	)	5.04		—		—
Outstanding, end of period	754,545		$	4.29	710,395		$	4.37
For options expected to vest
Number expected to vest	735,846		$	4.30	686,417		$	4.38
Weighted average remaining contractual term, in years	4.7				5.2
Intrinsic value (000s)			$	—			$	74
For exercisable options
Number exercisable	326,972		$	4.44	265,286		$	4.82
Weighted average remaining contractual term, in years	4.1				4.2
Intrinsic value (000s)			$	—			$	19
For non-exercisable options
Expense not yet recognized (000s)			$	477			$	553
Weighted average years to be recognized	2.1				2.8

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

	Nine Months Ended
	June 30, 2017				July 1, 2016
Stock Options	Number of Options		Wgtd. Avg. Grant Date Fair Value		Number of Options		Wgtd. Avg. Grant Date Fair Value
Non-vested, beginning of period	489,109		$	1.43	546,145		$	1.41
Granted	57,500		1.19		10,000		1.40
Vested	(119,036	)	1.42		(111,036	)	1.43
Forfeited	—		—		—		—
Non-vested, end of period	427,573		$	1.41	445,109		$	1.41

Restricted (Non-vested) Stock

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

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

	Nine Months Ended
	June 30, 2017				July 1, 2016
Restricted (Non-vested) Stock	Number of Non-vested Shares		Wgtd. Avg. Grant Date Fair Value		Number of Non-vested Shares		Wgtd. Avg. Grant Date Fair Value
Outstanding, beginning of period	228,759		$	4.40	54,960		$	4.23
Granted	194,766		3.62		187,449		4.43
Vested	(29,948	)	4.25		(12,300	)	4.23
Shares withheld for payment of taxes upon vesting of restricted stock	(1,036	)	3.86		(150	)	4.20
Forfeited	—		—		—		—
Outstanding, end of period	392,541		$	4.02	229,959		$	4.39
For non-vested shares
Expense not yet recognized (000s)			$	1,021			$	988
Weighted average remaining years for vesting	2.1				2.4
For shares vested
Aggregate fair value on vesting dates (000s)			$	113			$	47

Stock Issued to Board Members

In addition to annual grants of restricted stock, included in the table above, Board members may elect to have their meeting fees paid in the form of shares of the Company’s common stock.   The Company has not paid any meeting fees in stock since May 21, 2013. 

NOTE 9—INCOME TAXES

Provision for income taxes during each of the three and nine months endedJune 30, 2017 and July 1, 2016 follows:

	Three Months Ended					Nine Months Ended
Income Tax Provision/Benefit	June 30, 2017		July 1, 2016			June 30, 2017		July 1, 2016
(in thousands)
Provision for/(benefit from) income taxes	$	43	$	(6	)	$	43	$	(6	)

The Company has recorded a full valuation allowance on all deferred tax assets. Although a full valuation allowance has been recorded for all deferred tax assets, including net operating loss carryforwards (“NOLs”), these NOLs remain available to the Company to offset future taxable income and reduce cash tax payments. IEC had federal gross NOLs for income tax purposes of approximately $31.7 million at September 30, 2016, expiring mainly in years 2022 through 2025 and 2034 through 2035. The Company also has additional state NOLs available in several jurisdictions in which it files state tax returns.

Recent New York state corporate tax reform has resulted in the reduction of the business income base rate for qualified manufactures in New York State to 0% beginning in fiscal 2015 for IEC. At September 30, 2016, the Company had $1.2 million of New York State investment tax and other credit carryforwards, expiring in various years through 2030.  The credits cannot be utilized unless the New York state tax rate is no longer 0%.

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NOTE 10—MARKET SECTORS AND MAJOR CUSTOMERS

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

	Three Months Ended		Nine Months Ended
% of Sales by Sector	June 30, 2017	July 1, 2016	June 30, 2017	July 1, 2016
Aerospace & Defense	53%	43%	49%	39%
Medical	30%	39%	30%	44%
Industrial	15%	16%	18%	15%
Communications & Other	2%	2%	3%	2%
	100%	100%	100%	100%

Two individual customers each represented 10% or more of sales for the nine months endedJune 30, 2017. One customer was from the Medical sector and represented 15% of sales, while the other was from the Aerospace & Defense sector and represented 12% of sales for the nine months endedJune 30, 2017. Two individual customers each represented 10% or more of sales for the nine months endedJuly 1, 2016.  Both customers were from the Medical sector, and represented 17% of sales each.

Three individual customers represented 10% or more of receivables and accounted for 39% of the outstanding balance at June 30, 2017. Four individual customers represented 10% or more of receivables and accounted for 44% of the outstanding balances at July 1, 2016.

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

NOTE 11—LITIGATION

From time to time, the Company may be involved in legal action in the ordinary course of its business, but management does not believe that any such proceedings, individually or in the aggregate, will have a material effect on the Company’s condensed consolidated financial statements.

NOTE 12—CAPITAL LEASE

Leases

On November 18, 2016, the Company entered into a sale-leaseback agreement, pursuant to the terms of the Purchase and Sale Agreement (the “PSA”), with Store Capital Acquisitions, LLC, a Delaware limited liability company (the “Purchaser”), for the sale of certain property, including the manufacturing facility located in Albuquerque, New Mexico (the “Property”). Albuquerque (the “Seller”) completed the sale of the Property to the Purchaser for an aggregate purchase price of approximately $5.8 million including a $0.1 million holdback held subject to a holdback of funds agreement. The net book value of assets sold was $4.6 million and the value of the assets acquired under the lease is $5.8 million. The Company recorded a deferred gain of $1.1 million related to the transaction, which is recorded in other long-term liabilities section of the condensed consolidated balance sheet. The proceeds from the transaction were used to pay off the Albuquerque Mortgage Loan and pay down Term Loan A. As part of the transaction, a Lease Agreement dated as of November 18, 2016 was entered into between the Seller and the Purchaser (the “Lease”). Pursuant to the Lease, the Seller is leasing the Property for an initial term of 15 years, with two renewal options of five years each. The initial base annual rent is approximately $0.5 million and is subject to an annual increase equal to the lesser of two percent or 1.25 times the change in the Consumer Price Index. Late payments incur a charge of 5% and bear interest at a rate of 18% or the highest rate permitted by law. If an event of default occurs under the terms of the Lease, among other things, all rental amounts accelerate and become due and owing, subject to certain adjustments.

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A summary of capital lease payments for the next five years follows:

Capital Lease Payment Schedule	Contractual Principal Payments
(in thousands)
Twelve months ended June
2018	$	480
2019	490
2020	499
2021	509
2022 and thereafter	6,016
Total capital lease payments	7,994
Less: amounts representing interest	(2,367		)
Present value of minimum lease payment	$	5,627

NOTE 13—EARNINGS (LOSS) PER SHARE

The Company applies the two-class method to calculate and present net income (loss) per share. Certain of the Company's restricted (non-vested) share awards contain non-forfeitable rights to dividends and are considered participating securities for purposes of computing net income (loss) per share pursuant to the two-class method. Under the two-class method, net earnings are reduced by the amount of dividends declared (whether paid or unpaid) and the remaining undistributed earnings are then allocated to common stock and participating securities, based on their respective rights to receive dividends. As the Company incurred a net loss for the nine months ended June 30, 2017 and losses are not allocated to participating securities under the two-class method, such method is not applicable for the aforementioned interim reporting period.

Basic earnings per common share are calculated by dividing income available to common stockholders by the weighted average number of shares outstanding during each period.  Diluted earnings per common share add to the denominator incremental shares resulting from the assumed exercise of all potentially dilutive stock options, as well as restricted stock and restricted stock units.  Options, restricted stock and restricted stock units are primarily held by directors, officers and certain employees. 

A summary of shares used in the earnings per share (“EPS”) calculations follows:

	Three Months Ended						Nine Months Ended
Earnings Per Share	June 30, 2017			July 1, 2016			June 30, 2017			July 1, 2016
Basic net income (loss) per share:
Net income (loss)	$	806		$	1,605		$	(674	)	$	4,610
Less: Income attributable to non-vested shares	(10		)	(18		)	—			(52		)
Net income (loss) available to common stockholders	$	796		$	1,587		$	(674	)	$	4,558
Weighted average common shares outstanding	10,193,200			10,211,347			10,176,626			10,210,805
Basic net income (loss) per share	$	0.08		$	0.16		$	(0.07	)	$	0.45
Diluted net income (loss) per share:
Net income (loss)	$	806		$	1,605		$	(674	)	$	4,610
Shares used in computing basic net income (loss) per share	10,193,200			10,211,347			10,176,626			10,210,805
Dilutive effect of non-vested shares	—			—			—			—
Shares used in computing diluted net income (loss) per share	10,193,200			10,211,347			10,176,626			10,210,805
Diluted net income (loss) per share	$	0.08		$	0.16		$	(0.07	)	$	0.45

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The diluted weighted average share calculations do not include the following securities, which are not dilutive to the EPS calculations.

	Three Months Ended		Nine Months Ended
	June 30, 2017	July 1, 2016	June 30, 2017	July 1, 2016
Anti-dilutive shares excluded	1,147,086	940,354	1,147,086	940,354

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

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

Cautionary Note Regarding Forward-Looking Statements

References in this report to “IEC,” the “Company,” “we,” “our,” or “us” mean IEC Electronics Corp. and its subsidiaries except where the context otherwise requires. This Form 10-Q contains forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. These forward-looking statements include, but are not limited to, statements regarding future sales and operating results, future prospects, the capabilities and capacities of business operations, any financial or other guidance and all statements that are not based on historical fact, but rather reflect our current expectations concerning future results and events. The ultimate correctness of these forward-looking statements is dependent upon a number of known and unknown risks and events and is subject to various uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements.

The following important factors, among others, could affect future results and events, causing those results and events to differ materially from those views expressed or implied in our forward-looking statements: business conditions and growth or contraction in our customers’ industries, the electronic manufacturing services industry and the general economy; variability of our operating results; our ability to control our material, labor and other costs; our dependence on a limited number of major customers; the potential consolidation of our customer base; availability of component supplies; dependence on certain industries; variability and timing of customer requirements; technological, engineering and other start-up issues related to new programs and products; uncertainties as to availability and timing of governmental funding for our customers; the impact of government regulations, including FDA regulations; the types and mix of sales to our customers; litigation and governmental investigations or proceedings arising out of or relating to accounting and financial reporting matters; intellectual property litigation; our ability to maintain effective internal controls over financial reporting; unforeseen product failures and the potential product liability claims that may be associated with such failures; the availability of capital and other economic, business and competitive factors affecting our customers, our industry and business generally; failure or breach of our information technology systems; and natural disasters. Any one or more of such risks and uncertainties could have a material adverse effect on us or the value of our 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 this Form 10-Q, our Annual Report on Form 10-K for the fiscal year ended September 30, 2016, and our other filings with the Securities and Exchange Commission (the “SEC”).

All forward-looking statements included in this Form-10-Q are made only as of the date indicated or as of the date of this Form 10-Q. We do 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 we hereafter become aware of, except as required by law. New risks and uncertainties arise from time to time and we cannot predict these events or how they may affect us and cause actual results to differ materially from those expressed or implied by our forward-looking statements. Therefore, you should not rely on our forward-looking statements as predictions of future events. When considering these risks, uncertainties and assumptions, you should keep in mind the cautionary statements contained in this report and any documents incorporated herein by reference. You should read this document and the documents that we reference in this Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. All forward-looking statements attributable to us are expressly qualified by these cautionary statements.

Overview

IEC Electronics Corp. (“IEC,” “we,” “our,” “us,” the “Company”) conducts business directly, as well as through its subsidiaries, IEC Electronics Wire and Cable, Inc (“Wire and Cable”) that merged into IEC on December 28, 2016, IEC Electronics Corp-Albuquerque (“Albuquerque”), IEC Analysis & Testing Laboratory, LLC (“ATL”) and IEC California Holdings, Inc. The Rochester unit, formerly Celmet, operates as a division of IEC.

We are a premier provider of electronic manufacturing services (“EMS”) to advanced technology companies that produce life-saving and mission critical products for the medical, industrial, aerospace and defense sectors. We specialize in delivering

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technical solutions for the custom manufacturing, product configuration, and verification testing of highly engineered complex products that require a sophisticated level of manufacturing to ensure quality and performance.

Within the EMS sector, we have unique capabilities which allow our customers to rely on us to solve their complex challenges, minimize their supply chain risk and deliver full system solutions for their supply chain. These capabilities include, among others:

• Our engineering services include the design, development, and fabrication of customized stress testing platforms to simulate a product’s end application, such as thermal cycling and vibration, in order to ensure reliable performance and avoid catastrophic failure when the product is placed in service.

• Our vertical manufacturing model offers customers the ability to simplify their supply chain by utilizing a single supplier for their critical components including complex printed circuit board assembly (“PCBA”), precision metalworking, and interconnect solutions. This service model allows us to control the cost, lead time, and quality of these critical components which are then integrated into full system assemblies and minimizes our customers’ supply chain risk.

• We provide direct order fulfillment services for our customers by integrating with their configuration management process to obtain their customer orders, customize the product to the specific requirements, functionally test the product and provide verification data, and direct ship to their end customer in order to reduce time, cost, and complexity within our customers’ supply chain.

• We are the only EMS provider with an on-site laboratory that has been approved by the Defense Logistics Agency (“DLA”) for their Qualified Testing Supplier List (“QTSL”) program which deems the site suitable to conduct various QTSL and military testing standards including counterfeit component analysis. In addition, this advanced laboratory is utilized for complex design analysis and manufacturing process development to solve challenges and accelerate our customers’ time to market.

We are a 100% U.S. manufacturer which attracts customers who are unlikely to utilize offshore suppliers due to the proprietary nature of their products, governmental restrictions or volume considerations. Our locations include:

• Newark, New York - Located approximately one hour east of Rochester, New York, our Newark location is our corporate headquarters and is the largest manufacturing location providing complex circuit board manufacturing, interconnect solutions, and system-level assemblies along with an on-site material analysis laboratory for advanced manufacturing process development.

• Rochester, New York - Focuses on precision metalworking services including complex metal chassis and assemblies.

• Albuquerque, New Mexico - Specializes in the aerospace and defense markets with complex circuit board and system-level assemblies along with a state of the art analysis and testing laboratory which conducts counterfeit component analysis and complex design analysis.

We excel at complex, highly engineered products that require sophisticated manufacturing support where quality and reliability are of paramount importance. With our customers at the center of everything we do, we have created a high-intensity, rapid response culture capable of reacting and adapting to their ever-changing needs.  Our customer-centric approach offers a high degree of flexibility while simultaneously complying with rigorous quality and on-time delivery standards. 

We proactively invest in areas we view as important for our continued long-term growth. All of our locations are ISO 9001:2008 certified and ITAR registered. We are Nadcap accredited and AS9100C certified at our Newark and Albuquerque locations to support the stringent quality requirements of the aerospace industry. Our Newark location is ISO 13485 certified to serve the medical market sector and is an approved supplier by the National Security Agency (“NSA”) under the COMSEC standard regarding communications security. ATL in Albuquerque is ISO 17025 accredited, an IPC-approved Validation Services test Laboratory, and is the only on-site EMS laboratory that has been approved by the DLA for their QTSL program which deems the site suitable to conduct various QTSL and military testing standards including counterfeit component analysis. Albuquerque also performs work per NASA-STD-8739 and J-STD-001ES space standards.

The technical expertise of our experienced workforce enables us to build some of the most advanced electronic, wire and cable, interconnect solutions, and precision metal systems sought by original equipment manufacturers (“OEMs”).

Employees are our single greatest resource. IEC’s total employees numbered 595, all of which are full time employees, at June 30, 2017. We decreased by 39 employees during fiscal 2017, mainly driven by lower volumes in fiscal 2017. Some of our full-time employees are temporary employees. We make a concerted effort to engage our employees in initiatives that improve our business and provide opportunities for growth, and we believe that our employee relations are good. We have access to large and technically qualified workforces in close proximity to our operating locations in Rochester, NY and Albuquerque, NM.

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Three Months Results

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

	Three Months Ended
Income Statement Data	June 30, 2017		July 1, 2016
(in thousands)
Net sales	$	26,489	$	32,508
Gross profit	3,708		5,463
Selling and administrative expenses	2,604		3,475
Interest and financing expense	255		389
Income before income taxes	849		1,599
Provision for/(benefit from) income taxes	43		(6		)
Net income	$	806	$	1,605

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

	Three Months Ended
% of Sales by Sector	June 30, 2017	July 1, 2016
Aerospace & Defense	53%	43%
Medical	30%	39%
Industrial	15%	16%
Communications & Other	2%	2%
	100%	100%

Revenue decreased in the third quarter of fiscal 2017 by $6.0 million or 18.5% as compared to the third quarter of the prior fiscal year. The medical market sector decreased $4.9 million, the industrial market sector decreased $1.1 million offset by aerospace & defense market sector increase of $0.2 million.

Revenue for the medical market sector decreased primarily due to a decrease in demand from one customer. The lower demand was due to a decline in their end market demand as well as their inventory position. We anticipate this customer will not increase their demand until early fiscal 2018. We had several other medical customers with higher demand during the third quarter of fiscal 2017 but these increases were offset by others with lower demand.

Various increases and decreases for our aerospace & defense customers resulted in a net increase of $0.2 million in the third quarter of fiscal 2017. Programs frequently fluctuate in demand or end and are replaced by new programs. Aggregate decreases of $4.0 million in the quarter were partially offset by $2.4 million in increases from other customers. Another $0.4 million decrease was due to our decision to disengage with a customer due to lack of profitability. Two new customers increased revenue by $2.3 million.

The net decrease in demand in the industrial market sector of $1.1 million resulted primarily from decreased demand from multiple customers whose end market has softened.

Gross profit for the third quarter of fiscal 2017 decreased to 14.0% of sales versus 16.8% in the third quarter of the prior fiscal year. The reduction in revenue year over year had the most significant impact on gross profit. Reductions in overhead costs lessened the impact of the lower revenue.

Selling and administrative (“S&A”) expense decreased $0.9 million and represented 9.8% of sales in the third quarter of fiscal 2017 compared to 10.7% of sales in the same quarter of the prior fiscal year. The decrease in S&A expense was primarily due to lower wage and related expenses of $0.6 million driven by headcount reductions. Also, other professional expenses were lower in the third quarter of fiscal 2017 by $0.2 million compared to the third quarter of fiscal 2016.

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Interest expense decreased by $0.1 million in the third quarter of fiscal 2017 compared to the same quarter of the prior fiscal year. The net impact of adjusting the interest rate swap to fair value contributed $0.1 million to the expense in the third quarter of the prior fiscal year compared to this fiscal year. The weighted average interest rate on IEC’s debt, excluding the impact of the interest rate swap, was 0.17% higher during the third quarter of fiscal 2017 than in the third quarter of the prior fiscal year. Our average outstanding debt balances decreased by $8.5 million in the third quarter of fiscal 2017 compared to the third quarter of fiscal 2016 because of the repayment of Term Loan A and the Albuquerque Mortgage Loan, offset by higher balances on the Revolving Credit Facility. In the third quarter of fiscal 2017, we incurred approximately $69.5 thousand of interest related to the sale-leaseback obligation for the Albuquerque, New Mexico facility. Cash paid for interest on credit facility debt was approximately $0.2 million and $0.4 million for the third quarter of fiscal 2017 and fiscal 2016, respectively. Detailed information regarding our borrowings is provided in Note 5—Credit Facilities.

There was no material income tax expense or benefit in the third quarter of fiscal 2016 as we have net operating loss (“NOL”) carryforwards to offset any current tax expense and a full valuation on all deferred tax assets.

With respect to tax payments, in the near term IEC expects to be largely sheltered by sizable NOL carryforwards for federal income tax purposes. In the first nine months of fiscal 2017, we paid $0.1 million in taxes. At the end of fiscal 2016, the NOL carryforwards amounted to approximately $31.7 million. The NOL carryforwards expire in varying amounts between 2022 and 2035, unless utilized prior to these dates.

Nine Months Results

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

	Nine Months Ended
Income Statement Data	June 30, 2017			July 1, 2016
(in thousands)
Net sales	$	68,833		$	98,590
Gross profit	7,783			17,017
Selling and administrative expenses	7,711			11,222
Interest and financing expense	703			1,191
Income/(loss) before income taxes	(631		)	4,604
Provision for/(benefit from) income taxes	43			(6		)
Net income/(loss)	$	(674	)	$	4,610

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

	Nine Months Ended
% of Sales by Sector	June 30, 2017	July 1, 2016
Aerospace & Defense	49%	39%
Medical	30%	44%
Industrial	18%	15%
Communications & Other	3%	2%
	100%	100%

Revenue decreased in the first nine months of fiscal 2017 by $29.8 million or 30.2% as compared to the first nine months of the prior fiscal year. Revenues from all three major market sectors decreased year over year. The medical market sector decreased $22.1 million, the aerospace & defense market sector decreased $4.7 million and the industrial market sector decreased $2.7 million.

Revenue for the medical market sector decreased $22.1 million primarily due to decreases in demand from two of our larger customers. The lower demand was due to a decline in their end market demand as well as their inventory position. One of these customers resumed sales in the third quarter of fiscal 2017, while we believe the other customer will not increase their demand until early fiscal 2018. One other customer had a decrease of $1.3 million due to the discontinuation of their program.

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Various increases and decreases for our aerospace & defense customers resulted in a net revenue decrease of $4.7 million in the first nine months of fiscal 2017. Programs frequently fluctuate in demand or come to an end and are replaced by new programs. Aggregate decreases of $8.1 million were partially offset by $3.1 million in increases from other customers. The ending of one customer relationship due to low profitability caused an additional decrease of $1.7 million. However, five new customers added $2.1 million in revenue year over year.

The net revenue decrease in demand in the industrial market sector of $2.7 million resulted primarily from decreases in demand due to the softness of the railroad industry. The decreases were partially offset by increased demand from one new customer of $0.4 million.

The gross profit for the first nine months of fiscal 2017 decreased to 11.3% of sales versus 17.3% in the first nine months of the prior fiscal year. The reduction in revenue year over year had the most significant impact on gross profit. Reductions in overhead costs lessened the impact of the lower revenue.

Selling and administrative (“S&A”) expense decreased $3.5 million and represented 11.2% of sales in the first nine months of fiscal 2017 compared to 11.4% of sales in the first nine months of the prior fiscal year. The decrease in S&A expense was primarily due to lower wage and related expenses of $2.4 million driven by headcount reductions and severance costs incurred in the first nine months of the prior fiscal year of $0.5 million. Lower bad debt expense of $0.4 million was due to better cash collections and reduced accounts receivable aging. Also, legal and other professional expenses were $0.5 million lower in fiscal 2017 compared to fiscal 2016.

Interest expense decreased by $0.5 million in the first nine months of fiscal 2017 compared to the first nine months of the prior fiscal year. The net impact of adjusting the interest rate swap to fair value contributed $0.1 million to the expense in the first nine months of the prior fiscal year compared to this fiscal year. The weighted average interest rate on IEC’s debt, excluding the impact of the interest rate swap, was 0.07% lower during the first nine months of fiscal 2017 than in the first nine months of the prior fiscal year. Our average outstanding debt balances decreased by $12.5 million in the first nine months of fiscal 2017 compared to the first nine months of fiscal 2016 because of the repayment of Term Loan A and the Albuquerque Mortgage Loan as well as lower balances on the Revolving Credit Facility. In the first nine months of fiscal 2017, we incurred approximately $0.2 million of interest related to the sale-leaseback obligation for the Albuquerque, New Mexico facility. Cash paid for interest on credit facility debt was approximately $0.5 million and $1.2 million for the first nine months of fiscal 2017 and fiscal 2016, respectively. Detailed information regarding our borrowings is provided in Note 5—Credit Facilities.

There was no material income tax expense or benefit in the first nine months of fiscal 2016 as we have net operating loss (“NOL”) carryforwards to offset any current tax expense and a full valuation on all deferred tax assets.

With respect to tax payments, in the near term IEC expects to be largely sheltered by sizable NOL carryforwards for federal income tax purposes. In the first nine months of fiscal2017, we paid $0.1 million in taxes. At the end of fiscal 2016, the NOL carryforwards amounted to approximately $31.7 million. The NOL carryforwards expire in varying amounts between 2022 and 2035, unless utilized prior to these dates.

Liquidity and Capital Resources

Capital Resources

As of June 30, 2017, there were $0.3 million of outstanding capital expenditure commitments for manufacturing equipment.  We generally fund capital expenditures with cash flow from operations and our revolving credit facility.

26

Summary of Cash Flows

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

	Nine Months Ended
Cash Flow Data	June 30, 2017			July 1, 2016
(in thousands)
Cash, beginning of period	$	845		$	407
Net cash flow from:
Operating activities	(782		)	12,250
Investing activities	3,720			(2,165		)
Financing activities	(3,706		)	(9,889		)
Net (decrease) increase in cash and cash equivalents	(768		)	196
Cash and cash equivalents at end of period	$	77		$	603

Operating activities

Cash flows provided by operations, before considering changes in IEC’s working capital accounts, was $1.5 million and $7.5 million for the first nine months of fiscal2017 and 2016, respectively. Net loss of $0.7 million in the first nine months of fiscal2017 compared to net income of $4.6 million during the first nine months of the prior fiscal year was the largest component of the change.

Working capital used cash flows of $2.3 million in the first nine months of fiscal2017. Working capital provided cash flows of $4.7 million in the first nine months of fiscal2016. The change in working capital in the first nine months of fiscal2017 was primarily due to decreases in accounts receivable of $1.4 million and increases in accounts payable of $2.0 million. These increases to cash flow were offset by uses of cash related to an increase in inventory of $2.8 million and decrease in accrued expenses and customer deposits of $2.0 million and $1.0 million, respectively. Accounts receivable decreases were primarily due to lower sales. The increase in accounts payable was due primarily to an increase of inventory purchases, as well as timing of purchases and payments.

Investing activities

Cash flows provided by investing activities were $3.7 million for the first nine months of fiscal2017 and used $2.2 million for the first nine months of fiscal2016, respectively.  Cash flows provided in the first nine months of fiscal2017 consisted of proceeds from the Albuquerque sale-leaseback, partially offset by the purchases of equipment and capitalized software costs resulting from the ongoing implementation of a new enterprise resource planning (“ERP”) system. Cash flows used in the first nine months of fiscal 2016 consisted of purchases of equipment and capitalized ERP costs.

Financing activities

Cash flows used in financing activities were $3.7 million and $9.9 million for the first nine months of fiscal2017 and 2016, respectively.  During the first nine months of fiscal2017, net repayments under all credit facilities were $3.5 million, with $5.6 million of net borrowings under the Revolver, as defined below, and repayments of $9.1 million for term debt, due largely to the Albuquerque sale-leaseback transaction and the May 5, 2017 bank amendment, discussed below. During the first nine months of fiscal 2016, net repayments under all credit facilities were $9.7 million, with $7.2 million of net repayments under the revolver and repayments of $2.5 million for term debt.

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Credit Facilities

At June 30, 2017, borrowings outstanding under the revolving credit facility (the “Revolver”) under the Third Amendment to Fifth Amended and Restated Credit Facility Agreement effective as of May 5, 2017 (the “Third Amendment”), that amended the Fifth Amended and Restated Credit Facility Agreement dated as of December 14, 2015, as amended by the First Amendment to Fifth Amended and Restated Credit Facility, dated as of June 20, 2016, and the Second Amendment to Fifth Amended and Restated Credit Facility Agreement, dated as of November 28, 2016 (the “Second Amendment”) (collectively, the “Fifth Amended Credit Agreement”) amounted to $9.6 million, and the maximum available was $16.0 million.  We believe that our liquidity is sufficient to satisfy anticipated operating requirements during the next twelve months.

The Third Amendment extended the Revolver termination date to May 5, 2022. In connection with the Third Amendment, the Term Loan B to M&T Bank was amended and restated. The Third Amendment revised certain covenants to provide that the we may use Revolver proceeds to refinance existing indebtedness. As a result, the Term Loan B, which matures on May 5, 2022, now has a principal amount of $6.0 million. The Third Amendment also revised the maximum amount we can borrow under the Revolver to the lesser of $16.0 million or 85% of eligible receivables plus up to $7.0 million of eligible inventories. The Third Amendment also modified the definitions of Applicable Margin and Applicable Unused Fee to provide that each is calculated using the applicable Fixed Charge Coverage Ratio, as redefined by the Third Amendment. The Third Amendment established a Borrowing Base computed using monthly Borrowing Base Reports that, if inaccurate, allow M&T Bank, in its discretion, to suspend the making of or limit Revolving Credit Loans. Further, the Third Amendment provides for the repurchase of our common stock under certain circumstances without M&T Bank’s prior written consent.

The Fifth Amended Credit Agreement, as amended, also contains various affirmative and negative covenants including financial covenants. Pursuant to the Third Amendment, as of March 31, 2017, certain financial covenants of the credit facility were eliminated or revised to be less complex, including the Maximum Inventory covenant, Debt to EBITDAS ratios, the Maximum Capital Expenditures limit after the fiscal year ending September 30, 2017, and future requirements of Minimum Quarterly EBITDAS except for the fiscal quarter ended June 30, 2017. We are required to maintain (i) for the quarter ended June 30, 2017, a minimum level of quarterly EBITDAS, as defined below (“Quarterly EBITDAS”), (ii) a minimum fixed charge coverage ratio (“Fixed Charge Coverage Ratio”), and (iii) a maximum amount of capital expenditures (“Maximum Capital Expenditures”). “EBITDAS” is defined as earnings before interest, taxes, depreciation, amortization and non-cash stock compensation expense. The Fixed Charge Coverage Ratio compares (i) EBITDAS minus unfinanced capital expenditures minus taxes paid, to (ii) the sum of interest expense, principal payments, payments on all capital lease obligations and dividends, if any (fixed charges). The Fixed Charge Coverage Ratio will initially be measured for a trailing six months ended September 30, 2017. The Maximum Capital Expenditures covenants allow for a maximum amount of capital expenditures on an annual basis for fiscal 2017.

We were in compliance with all debt covenants at June 30, 2017.

The calculation of financial covenants at June 30, 2017 follows:

Debt Covenant	Limit	Calculated Amount
EBITDAS (000s)	Minimum $2,323, using trailing twelve months	$3,715
Fixed Charge Coverage Ratio	Minimum 1.10x	Measured at September 30, 2017, using trailing six month
Maximum Capital Expenditures	Maximum $3.5m annually	Measured Annually

A reconciliation of EBITDAS to Net income follows:

Trailing Twelve Months EBITDAS	June 30, 2017
(in thousands)
Net income/(loss)	$	(498	)
Provision for income taxes	119
Depreciation and amortization expense	2,603
Interest expense	904
Non-cash stock compensation	587
EBITDAS	$	3,715

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We present EBITDAS because certain covenants in our credit facilities are tied to this measure. EBITDAS is not a measure of financial performance under GAAP and is not calculated through the application of GAAP. As such, it should not be considered a substitute or alternative for the GAAP measure of net income and, therefore, should not be used in isolation of, but in conjunction with, the GAAP measure. EBITDAS as presented, may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies.

Off-Balance Sheet Arrangements

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

Application of Critical Accounting Policies

Our application of critical accounting policies are disclosed in our Annual Report on Form 10-K filed for the fiscal year ended September 30, 2016.  During the nine months ended June 30, 2017, there have been no material changes to these policies.

Recently Issued Accounting Standards

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

Item 3.    Quantitative and Qualitative Disclosures About Market Risk

As a result of its financing activities, the Company is exposed to changes in interest rates that may adversely affect operating results. The Company actively monitors its exposure to interest rate risk and from time to time may use derivative financial instruments to manage the impact of this risk.  The Company may use derivatives only for the purpose of managing risk associated with underlying exposures.  The Company does not trade or use instruments with the objective of earning financial gains on the interest rate nor does the Company use derivatives instruments where it does not have underlying exposure.  The Company did not have any derivative financial instruments at June 30, 2017 or September 30, 2016.

At June 30, 2017, the Company had $16.4 million of debt, comprised of $15.5 million with variable interest rates and $0.8 million with fixed interest rates.  Interest rates on variable loans are based on London interbank offered rate (“LIBOR”). The credit facilities are more fully described in Note 5—Credit Facilities.  Interest rates based on LIBOR currently adjust daily, causing interest on such loans to vary from period to period.  A sensitivity analysis as of June 30, 2017 indicates that a one-percentage point increase or decrease in our variable interest rates, which represents more than a 10% change, would increase or decrease the Company’s annual interest expense by approximately $0.2 million.

The Company is exposed to credit risk to the extent of non-performance by M&T Bank under the Fifth Amended Credit Agreement, as amended.  M&T Bank’s credit rating (reaffirmed A by Fitch in October 2016) is monitored by the Company, and IEC expects that M&T Bank will perform in accordance with the terms of the Fifth Amended Credit Agreement, as amended.

Item 4.    Controls and Procedures

Evaluation of disclosure controls and procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of June 30, 2017, the end of the period covered by this Form 10-Q.  Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2017, our disclosure controls and procedures were effective.

Changes in internal control over financial reporting

Our management carried out an evaluation of the internal controls over financial reporting to determine whether any change occurred during the quarter ended June 30, 2017. Based on such evaluation, there has been no change in our internal control over financial reporting that occurred during the most recently completed fiscal quarter ended June 30, 2017 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the effectiveness of control systems

IEC’s management does not expect that our disclosure controls and internal controls will prevent all errors and fraud. Because of inherent limitations in any such control system (e.g. faulty judgments, human error, information technology system error, or

29

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

30

Part II         OTHER INFORMATION

Item 1.    Legal Proceedings

From time to time, the Company may be involved in legal actions in the ordinary course of its business, but management does not believe that any such proceedings, individually or in the aggregate, will have a material effect on the Company’s condensed consolidated financial statements.

Item 1A.   Risk Factors

There have been no material changes from the risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended September 30, 2016 filed with the SEC on December 16, 2016.

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

None

Item 3.    Defaults Upon Senior Securities

None

Item 4.    Mine Safety Disclosures

Not Applicable

Item 5.    Other Information

None

Item 6.    Exhibits

For the exhibits that are filed herewith or incorporated herein by reference, see the Index to Exhibits located immediately following the signature page to this Form 10-Q.  The Index to Exhibits is incorporated herein by reference.

31

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)
August 9, 2017	By:	/s/ Jeffrey T. Schlarbaum
		Jeffrey T. Schlarbaum
		President & Chief Executive Officer
		(Principal Executive Officer)
August 9, 2017	By:	/s/ Michael T. Williams
		Michael T. Williams
		Chief Financial Officer
		(Principal Financial Officer)

32

IEC ELECTRONICS CORP.

Form 10-Q for Quarter Ended June 30, 2017

INDEX TO EXHIBITS

Exhibit No.	Description
10.1	Third Amendment to Fifth Amended and Restated Credit Facility Agreement effective as of May 5, 2017 (incorporated herein by reference from Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017)
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
101	The following items from this Quarterly Report on Form 10-Q formatted in Extensible Business Reporting Language: (i) Consolidated Balance Sheets (unaudited), (ii) Consolidated Income Statements (unaudited), (iii) Consolidated Statements of Changes in Stockholders’ Equity (unaudited), (iv) Consolidated Statements of Cash Flows (unaudited), and (v) Notes to Consolidated Financial Statements.

33

EX-31.1

Exhibit 31.1

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

I, Jeffrey T. Schlarbaum, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the three and nine months ended June 30, 2017 for IEC Electronics Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be

designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: August 9, 2017	By:	/s/ Jeffrey T. Schlarbaum
		Jeffrey T. Schlarbaum
		President & Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

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

I, Michael T. Williams, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the three and nine months ended June 30, 2017 for IEC Electronics Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: August 9, 2017	By:	/s/ Michael T. Williams
		Michael T. Williams
		Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

Exhibit 32.1

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

In connection with the the quarterly report of IEC Electronics Corp., (the "Company") on Form 10-Q for the quarter ended

June 30, 2017 as filed with the Securities and Exchange Commission on the day hereof (the "Report"), I, Jeffrey T. Schlarbaum, President and Chief Executive Officer of the Company and Michael T. Williams, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 9, 2017	By:	/s/ Jeffrey T. Schlarbaum
		Jeffrey T. Schlarbaum
		President & Chief Executive Officer

Dated: August 9, 2017	By:	/s/ Michael T. Williams
		Michael T. Williams
		Chief Financial Officer

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Document And Entity Information - shares	9 Months Ended
	Jun. 30, 2017	Aug. 01, 2017
Document And Entity Information [Abstract]
Entity Registrant Name	IEC ELECTRONICS CORP
Entity Central Index Key	0000049728
Current Fiscal Year End Date	--09-30
Entity Filer Category	Smaller Reporting Company
Trading Symbol	IEC
Entity Common Stock, Shares Outstanding		10,320,419
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2017
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2017

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2017	Sep. 30, 2016
Current assets:
Cash	$ 77	$ 845
Accounts receivable, net of allowance	15,915	17,140
Inventories	18,231	15,384
Assets held for sale	0	4,611
Other current assets	944	1,214
Total current assets	35,167	39,194
Property, plant & equipment, net	16,871	10,994
Other long term assets	172	209
Total assets	52,210	50,397
Current liabilities:
Current portion of long-term debt	987	2,908
Current portion of capital lease obligation	210	0
Current portion of capital lease obligation	12,868	10,864
Accounts payable	1,473	3,365
Accrued payroll and related expenses	405	529
Customer deposits	721	1,756
Total current liabilities	16,664	19,422
Long-term debt	15,077	16,732
Long-term capital lease obligation	5,417	0
Other long-term liabilities	1,371	379
Total liabilities	38,529	36,533
STOCKHOLDERS’ EQUITY
Commitments and contingencies (Note 11)	0	0
Common stock, $0.01 par value: Authorized: 50,000,000 shares; Issued: 11,372,111 and 11,330,151 shares, respectively; Outstanding: 10,316,623 and 10,274,663 shares, respectively	102	102
Additional paid-in capital	46,796	46,305
Accumulated deficit	(31,628)	(30,954)
Treasury stock, at cost: 1,055,488 shares	(1,589)	(1,589)
Total stockholders’ equity	13,681	13,864
Total liabilities and stockholders’ equity	$ 52,210	$ 50,397

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CONDENSED CONSOLIDATED BALANCE SHEETS [Parenthetical] - $ / shares	Jun. 30, 2017	Sep. 30, 2016
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	500,000	500,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	11,372,111	11,330,151
Common stock, shares outstanding	10,313,623	10,274,663
Treasury stock, shares	1,055,488	1,055,488

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CONDENSED CONSOLIDATED INCOME STATEMENTS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2017	Jul. 01, 2016	Jun. 30, 2017	Jul. 01, 2016
Income Statement [Abstract]
Stock Issued During Period, Value, Stock Options Exercised			$ 0
Net sales	$ 26,489	$ 32,508	68,833	$ 98,590
Cost of sales	22,781	27,045	61,050	81,573
Gross profit	3,708	5,463	7,783	17,017
Selling and administrative expenses	2,604	3,475	7,711	11,222
Operating profit	1,104	1,988	72	5,795
Interest and financing expense	255	389	703	1,191
Income/(loss) before income taxes	849	1,599	(631)	4,604
Provision for/(benefit from) income taxes	43	(6)	43	(6)
Net Income (Loss) Attributable to Parent, Diluted	806	1,605	(674)	4,610
Net income/(loss)	$ 806	$ 1,605	$ (674)	$ 4,610
Weighted average number of shares outstanding:
Basic (in shares)	10,193,200	10,211,347	10,176,626	10,210,805
Diluted (in shares)	10,193,200	10,211,347	10,176,626	10,210,805
Earnings Per Share, Basic	$ 80	$ 160	$ (70)	$ 450
Diluted net income (loss) per share (in usd per share)	$ 80	$ 160	$ (70)	$ 450

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CONDENSED CONSOLIDATED STATEMENTS of CHANGES in STOCKHOLDERS' EQUITY - 9 months ended Jun. 30, 2017 - USD ($)	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings/ (Accumulated Deficit) [Member]	Treasury Stock, at cost [Member]
Beginning Balance at Sep. 30, 2016	$ 13,864,000	$ 102,000	$ 46,305,000	$ (30,954,000)	$ (1,589,000)
Net income (loss)	(674,000)
Stock-based compensation	468,000		468,000
Restricted (non-vested) stock grants, net of forfeitures	0	0	0
Stock Issued During Period, Value, Stock Options Exercised	0
Employee stock plan purchases	27,000		27,000
Return of incentive compensation shares	(60,000)
Shares withheld for payment of taxes upon vesting of restricted stock	(4,000)		(4,000)
Ending Balance at Jun. 30, 2017	$ 13,681,000	$ 102,000	$ 46,796,000	$ (31,628,000)	$ (1,589,000)

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CONDENSED CONSOLIDATED STATEMENTS of CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2017	Jul. 01, 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income/(loss)	$ (674)	$ 4,610
Non-cash adjustments:
Stock-based compensation	468	324
Incentive compensation shares returned		(60)
Depreciation and amortization	1,981	2,432
Loss on sale of property, plant and equipment	(93)	(34)
Reserve for doubtful accounts	(45)	(3)
Provision for excess/obsolete inventory
Deferred tax expense/benefit	1,394	5,572
Conversion of grant to loan	(2,754)	5,674
Amortization of deferred gain on sale leaseback	270	104
Other long term assets	7	3
Changes in assets and liabilities:	2,004	(4,720)
Accounts receivable	(2,016)	644
Inventory	(1,035)	(2,575)
Other current assets	(124)	25
Accrued expenses
Customer deposits	(2,035)	(2,165)
Other long term liabilities	5,750	0
Payments for (Proceeds from) Productive Assets	5
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment	36,143	43,116
Disposition of property, plant and equipment	(30,514)	(50,315)
Proceeds from disposal of property, plant and equipment	(9,146)	(2,456)
Proceeds from sale-leaseback	(123)	0
Net cash flows provided by/(used in) investing activities	(89)	(241)
Proceeds from employee stock plan purchases	27	7
Proceeds from disposal of property, plant and equipment	(4)	0
Cash and Cash Equivalents, Period Increase (Decrease)	(768)	196
Repayments under other loan agreements	845	407
Debt issuance costs
Proceeds from exercise of stock options		1,188
Proceeds from employee stock plan purchases	116	3
Cash paid for taxes upon vesting of restricted stock	5,750	0
Gain (Loss) on Sale of Properties	(4)	(1)
reserve for doubtful accounts, net of writeoffs	$ (169)	$ 253

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OUR BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

OUR BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1—OUR BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Our Business

IEC Electronics Corp. (“IEC,” “we,” “our,” “us,” the “Company”) provides electronic manufacturing services (“EMS”) to advanced technology companies that produce life-saving and mission critical products for the medical, industrial, aerospace and defense sectors. The Company specializes in delivering technical solutions for the custom manufacture of complex full system assemblies by providing on-site analytical testing laboratories, custom design and test engineering services combined with a broad array of manufacturing services encompassing electronics, interconnect solutions, and precision metalworking. As a full service EMS provider, IEC holds all appropriate certifications for the market sectors it supports including ISO 9001:2008, AS9100C, ISO 13485 and Nadcap.  IEC is headquartered in Newark, NY and also has operations in Rochester, NY and Albuquerque, NM.  Additional information about IEC can be found on its website at www.iec-electronics.com. The contents of this website are not incorporated by reference into this quarterly report.

Generally Accepted Accounting Principles

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

Fiscal Calendar

The Company’s fiscal year ends on September 30th and the first three quarters generally end on the Friday closest to the last day of the calendar quarter. For the fiscal year ending September 30, 2017 (“fiscal 2017”), the fiscal quarters ended on December 30, 2016, March 31, 2017 and June 30, 2017. For the fiscal year ended September 30, 2016 (“fiscal 2016”), the fiscal quarters ended on January 1, 2016, April 1, 2016 and July 1, 2016.

Consolidation

The consolidated financial statements include the accounts of IEC and its wholly-owned subsidiaries: IEC Electronics Wire and Cable, Inc. (“Wire and Cable”) that merged into IEC on December 28, 2016; IEC Electronics Corp-Albuquerque (“Albuquerque”); IEC Analysis & Testing Laboratory, LLC (“ATL”), formerly Dynamic Research and Testing Laboratories, LLC; and IEC California Holdings, Inc. The Rochester unit, formerly Celmet, operates as a division of IEC. All intercompany transactions and accounts are eliminated in consolidation. 

Unaudited Financial Statements

The accompanying unaudited condensed consolidated financial statements for the three and nine months endedJune 30, 2017 and July 1, 2016 have been prepared without an audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and do not include certain of the information the footnotes require by GAAP for complete financial statements.  In the opinion of management, all adjustments, consisting of normal recurring adjustments, required for a fair presentation of the information have been made.  The accompanying financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2016.

Cash

The Company’s cash represents deposit accounts with Manufacturers and Traders Trust Company (“M&T Bank”), a banking corporation headquartered in Buffalo, NY.

Allowance for Doubtful Accounts

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

Inventory Valuation

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

Property, Plant and Equipment

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

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

PP&E Lives	Estimated Useful Lives
	(years)
Land improvements	10
Buildings and improvements	5 to 40
Machinery and equipment	3 to 5
Furniture and fixtures	3 to 7

Reviewing Long-Lived Assets for Potential Impairment

ASC 360-10 (Property, Plant and Equipment) and ASC 350-30 (Intangibles) require the Company to test long-lived assets (PP&E and definitive lived assets) for recoverability whenever events or circumstances indicate that the carrying amount may not be recoverable.  If carrying value exceeds undiscounted future cash flows attributable to an asset, it is considered impaired and the excess of carrying value over fair value must be charged to earnings.  No impairment charges were identified or recorded by IEC for PP&E or intangible assets during the three and nine months endedJune 30, 2017 and July 1, 2016.

Leases

At the inception of a lease covering equipment or real estate, the lease agreement is evaluated under criteria discussed in ASC 840-10-25 (Leases).  Leases meeting one of four key criteria are accounted for as capital leases and all others are treated as operating leases.  Under a capital lease, the discounted value of future lease payments becomes the basis for recognizing an asset and a borrowing, and lease payments are allocated between debt reduction and interest.  For operating leases, payments are recorded as rent expense.  Criteria for a capital lease include (i) transfer of ownership during the lease term; (ii) existence of a bargain purchase option under terms that make it likely to be exercised; (iii) a lease term equal to 75 percent or more of the economic life of the leased property; and (iv) minimum lease payments that equal or exceed 90 percent of the fair value of the property.

Legal Contingencies

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

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

Customer Deposits

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

Grants from Outside Parties

Grants from outside parties are recorded as other long-term liabilities and are amortized over the same period during which the associated PP&E are depreciated. The Company received grants for certain facility improvements and equipment from state and local agencies in which the Company operates.  These grants reimbursed the Company for a portion of the actual cost or provided in kind services in support of capital projects. 

There were no deferred grants recorded during the three and nine months endedJune 30, 2017. The outstanding grant balance was $0.2 million and $0.3 million at June 30, 2017 and September 30, 2016, respectively.

Fair Value Measurements

Under ASC 825 (Financial Instruments), the Company is required to disclose the fair value of financial instruments for which it is practicable to estimate value.  The Company’s financial instruments consist of cash, accounts receivable, accounts payable, accrued liabilities and borrowings.  IEC believes that recorded value approximates fair value for all cash, accounts receivable, accounts payable and accrued liabilities. See Note 6—Fair Value of Financial Instruments for a discussion of the fair value of IEC’s borrowings.

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

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

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

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

The Company deems a transfer between levels of the fair value hierarchy to have occurred at the beginning of the reporting period.  There were no such transfers during each of the three and nine months of fiscal 2017 or fiscal 2016.

Revenue Recognition

The Company’s revenue is principally derived from the sale of electronic products built to customer specifications, but also from other value-added support services and repair work.  Revenue from product sales is recognized when (i) goods are shipped or title and risk of ownership have passed, (ii) the price to the buyer is fixed or determinable, and (iii) realization is reasonably assured. Service revenue is generally recognized once the service has been rendered.  Service revenue, including material management, design and repair work revenue, amounted to less than 5% of total revenue in each of the three and nine months endedJune 30, 2017 and July 1, 2016.

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

Stock-Based Compensation

ASC 718 (Stock Compensation) requires that compensation expense be recognized for equity awards based on fair value as of the date of grant.  For stock options, the Company uses the Black-Scholes pricing model to estimate grant date fair value.  Costs associated with stock awards are recorded over requisite service periods, generally the vesting period.  If vesting is contingent on the achievement of performance objectives, fair value is accrued over the period the objectives are expected to be achieved only if it is considered probable that the objectives will be achieved.  The Company also has an employee stock purchase plan (“ESPP”) that provides for the purchase of Company common stock at a discounted stock purchase price. Compensation expense related to the discount is recognized as employees contribute to the plan.

Legal Expense Accrual

The Company records legal expenses as they are incurred, based on invoices received or estimates provided by legal counsel. Future estimated legal expenses are not recorded until incurred.

Income Taxes and Deferred Taxes

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

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

Any interest incurred is reported as interest expense. Any penalties incurred are reported as tax expense. The Company’s income tax filings are subject to audit by various tax jurisdictions and current open years are the fiscal year ended September 30, 2014 through fiscal year ended September 30, 2016. The federal income tax audit for the fiscal year ended September 30, 2013 concluded during the first nine months of fiscal 2017 and resulted in no change to reported tax.

Dividends

IEC does not pay dividends on its common stock as it is the Company’s current policy to retain earnings for use in the business.  Furthermore, the Company’s Fifth Amended and Restated Credit Facility Agreement, as amended, with M&T Bank includes certain restrictions on paying cash dividends, as more fully described in Note 5—Credit Facilities. 

Use of Estimates

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

Statements of Cash Flows

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

Recently Issued Accounting Standards Not Yet Adopted

FASB Accounting Standard Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” (“Topic 606”) was issued May 2014 and updates the principles for recognizing revenue.  This ASU will supersede most of the existing revenue recognition requirements in GAAP and will require entities to recognize revenue at an amount that reflects the consideration to which a company expects to be entitled in exchange for transferring goods or services to a customer.  This ASU also amends the required disclosures of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. FASB ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations” was issued in March 2016 and improves implementation guidance on principal versus agent considerations. FASB ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” was issued in April 2016 and adds further guidance on identifying performance obligations as well as improving licensing implementation guidance. FASB ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” was issued in June 2016 and clarifies the objective of the collectability criterion, presentation of taxes collected from customers, non-cash consideration, contract modifications at transition, completed contracts at transition and how guidance in Topic 606 is retrospectively applied. The amendments do not change the core principle of the guidance in Topic 606. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within that period.  Early adoption is permitted for annual periods beginning after December 15, 2016. The Company is continuing to evaluate the effect this guidance will have on its consolidated financial statements, including potential impacts on the amount and timing of revenue recognition and additional information that may be necessary for the required expanded disclosures.  The Company has identified key personnel to evaluate the guidance and attended training, and started the process to formulate a time line to review the Company’s revenue streams, existing inventory contracts, and apply the five-step model to those contracts to evaluate the quantitative and qualitative impacts of the new standard.  The Company plans to adopt this ASU, as amended, in the first quarter of fiscal 2019.

FASB ASU 2015-11, “Simplifying the Measurement of Inventory” was issued in July 2015. This requires entities to measure most inventory “at the lower of cost and net realizable value,” thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. This ASU will not apply to inventories that are measured by using either the last-in, first-out method or the retail inventory method. For public business entities, this ASU is effective prospectively for annual periods beginning after December 15, 2016, and interim periods therein. Upon transition, entities must disclose the nature of and reason for the accounting change. The Company does not anticipate a significant impact on its financial statements upon adoption.

FASB ASU 2015-17, “Income Taxes Balance Sheet Classification of Deferred Taxes” was issued in November 2015. This requires entities to classify deferred tax liabilities and assets as noncurrent in a classified statement of financial position and applies to all entities that present a classified statement of financial position. For public entities, this update is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company does not anticipate a significant impact on its financial statements upon adoption.

FASB ASU 2016-02, “Leases” was issued in February 2016. The new guidance establishes the principles to report transparent and economically neutral information about the assets and liabilities that arise from leases. For public entities, the new guidance is effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods. Early adoption is permitted for all entities. The Company is evaluating the impact this ASU will have on its financial statements.

FASB ASU 2016-09, “Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting” was issued in March 2016. This simplifies accounting for several aspects of share-based payment including income tax consequences, classification of awards as either equity or liability and classification on the statement of cash flows. For public entities, this update is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company does not anticipate a significant impact on its financial statements upon adoption.

FASB ASU 2016-15 “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments: A Consensus of the FASB Emerging Issues Task Force” was issued in August 2016. This ASU clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. For public entities, this update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company does not anticipate a significant impact on its financial statements upon adoption.

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ALLOWANCE FOR DOUBTFUL ACCOUNTS

9 Months Ended

Jun. 30, 2017

Receivables [Abstract]

ALLOWANCE FOR DOUBTFUL ACCOUNTS

NOTE 2—ALLOWANCE FOR DOUBTFUL ACCOUNTS

A summary of activity in the allowance for doubtful accounts during the nine months endedJune 30, 2017 and July 1, 2016 follows

	Nine Months Ended
Allowance for doubtful accounts	June 30, 2017			July 1, 2016
(in thousands)
Allowance, beginning of period	$	226		$	423
(Reversal)/provision for doubtful accounts	(169		)	253
Write-offs/recoveries	15			(298		)
Allowance, end of period	$	72		$	378

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INVENTORIES

9 Months Ended

Jun. 30, 2017

Inventory Disclosure [Abstract]

INVENTORIES

NOTE 3—INVENTORIES

A summary of inventory by category at period end follows:

Inventories	June 30, 2017		September 30, 2016
(in thousands)
Raw materials	$	8,872	$	7,513
Work-in-process	6,681		5,932
Finished goods	2,678		1,939
Inventories	$	18,231	$	15,384

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PROPERTY, PLANT & EQUIPMENT

9 Months Ended

Jun. 30, 2017

Property, Plant and Equipment [Abstract]

PROPERTY, PLANT & EQUIPMENT

NOTE 4—PROPERTY, PLANT & EQUIPMENT

A summary of property, plant and equipment and accumulated depreciation at period end follows:

Property, Plant & Equipment	June 30, 2017			September 30, 2016
(in thousands)
Land and improvements	$	788		$	788
Buildings and improvements	8,910			8,910
Building under capital lease	5,750			—
Machinery and equipment	27,944			26,905
Furniture and fixtures	7,476			7,489
Construction in progress	3,516			3,079
Total property, plant and equipment, at cost	54,384			47,171
Accumulated depreciation	(37,513		)	(36,177		)
Property, plant and equipment, net	$	16,871		$	10,994

Depreciation expense during the three and nine months endedJune 30, 2017 and July 1, 2016 follows:

	Three Months Ended				Nine Months Ended
	June 30, 2017		July 1, 2016		June 30, 2017		July 1, 2016
(in thousands)
Depreciation expense	$	624	$	717	$	1,921	$	2,364

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CREDIT FACILITIES

9 Months Ended

Jun. 30, 2017

Debt Disclosure [Abstract]

CREDIT FACILITIES

NOTE 5—CREDIT FACILITIES

A summary of borrowings at period end follows:   

			June 30, 2017					September 30, 2016
Debt	Fixed/ Variable Rate	Maturity  Date	Balance			Interest Rate		Balance			Interest Rate
($ in thousands)
M&T credit facilities:
Revolving Credit Facility	v	5/5/2022	$	9,590		3.72	%	$	3,961		3.28	%
Term Loan A(1)	f	2/1/2020	—			—		3,693			3.98
Term Loan B	v	5/5/2022	5,928			3.80		8,983			3.03
Albuquerque Mortgage Loan(1)	v	2/1/2018	—			—		2,200			3.55
Celmet Building Term Loan	f	11/7/2018	834			4.72		932			4.72
Other credit facilities:
Albuquerque Industrial Revenue Bond(1)	f	3/1/2019	—			—		100			5.63
Total debt, gross			16,352					19,869
Unamortized debt issuance costs			(288		)			(229		)
Total debt, net			16,064					19,640
Less: current portion			(987		)			(2,908		)
Long-term debt			$	15,077				$	16,732

⁽¹⁾ The Albuquerque Mortgage Loan and the Albuquerque Industrial Revenue Bond were repaid in connection with the sale-leaseback transaction described in Note 12—Capital Lease. The proceeds from the transaction were also used to pay down Term Loan A, which was subsequently paid off in due course.

M&T Bank Credit Facilities

Effective as of May 5, 2017, the Company and M&T Bank entered into the Third Amendment to Fifth Amended and Restated Credit Agreement (the “Third Amendment”), that amended the Fifth Amended Credit Agreement dated as of December 14, 2015, as amended by the First Amendment to Fifth Amended and Restated Credit Facility, dated as of June 20, 2016, and the Second Amendment to Fifth Amended and Restated Credit Facility agreement dated as of November 28, 2016 (“Fifth Amended Credit Agreement”). The Third Amendment extended the Revolver termination date to May 5, 2022. In connection with the Third Amendment, the Term Loan B to M&T Bank was amended and restated. The Third Amendment revised certain covenants to provide that the Company may use Revolver proceeds to refinance existing indebtedness. As a result, the Term Loan B, which matures on May 5, 2022, now has a principal amount of $6.0 million. The Third Amendment also revised the maximum amount the Company can borrow under the Revolver to the lesser of $16.0 million or 85% of eligible receivables plus up to $7.0 million of eligible inventories. The Third Amendment also modified the definitions of Applicable Margin and Applicable Unused Fee to provide that each is calculated using the applicable Fixed Charge Coverage Ratio, as redefined by the Third Amendment. The Third Amendment established a Borrowing Base computed using monthly Borrowing Base Reports that, if inaccurate, allow M&T Bank, in its discretion, to suspend the making of or limit Revolving Credit Loans. Further, the Third Amendment provides for the Company’s repurchase of its common stock under certain circumstances without M&T Bank’s prior written consent.

Individual debt facilities provided under the Fifth Amended Credit Agreement, as amended, are described below:

a) Revolving Credit Facility (“Revolver”): Up to $16.0 million is available through May 5, 2022. The maximum amount the Company may borrow is determined based on a borrowing base calculation described below.

b) Term Loan A: $10.0 million was borrowed on January 18, 2013. Principal was being repaid in 108 equal monthly installments of $93 thousand. The proceeds of the sale-leaseback transaction described in Note 12—Capital Lease were used to pay down the loan, which was paid off January 1, 2017.

c) Term Loan B:$14.0 million was borrowed on January 18, 2013. Principal was being repaid in 120 equal monthly installments of $117 thousand. As part of the Third Amendment, the principal was modified to $6.0 million and principal is being repaid in equal monthly installments of $71 thousand.

d) AlbuquerqueMortgage Loan: $4.0 million was borrowed on December 16, 2009. The loan was secured by real property in Albuquerque, NM, and principal was being repaid in equal monthly installments of $22 thousand. The loan was repaid in connection with the sale-leaseback transaction described in Note 12—Capital Lease.

e) Celmet Building Term Loan:$1.3 million was borrowed on November 8, 2013 pursuant to an amendment to the Fourth Amended and Restated Credit Facility Agreement dated as of January 18, 2013. The proceeds were used to reimburse the Company’s cost of purchasing its Rochester, New York facility. Principal is being repaid in 59 equal monthly installments of $11 thousand plus a balloon payment of $672 thousand due at maturity. 

Borrowing Base

Under the Fifth Amended Credit Agreement, as amended, the maximum amount the Company can borrow under the Revolver is the lesser of (i) 85% of eligible receivables plus a percentage of eligible inventories (up to a cap of $7.0 million) or (ii) $16.0 million at June 30, 2017 and $20.0 million at September 30, 2016.

At June 30, 2017 and September 30, 2016, the upper limit on Revolver borrowings was $16.0 million and $16.4 million, respectively. Average Revolver balances amounted to $5.0 million during the nine months endedJune 30, 2017.

Interest Rates

Under the Fifth Amended Credit Agreement, variable rate debt accrues interest at LIBOR plus the applicable marginal interest rate that fluctuates based on the Company’s Fixed Charge Coverage Ratio, as defined below. Under the Third Amendment, the applicable marginal interest rate was fixed on May 5, 2017 through the fiscal quarter ending March 31, 2018, as follows: 2.50% for the Revolver and 2.75% for Term Loan B.  Changes to applicable margins and unused fees resulting from the Fixed Charge Coverage Ratio generally become effective mid-way through the subsequent quarter.

The Company incurs quarterly unused commitment fees ranging from 0.250% to 0.375% of the excess of $16.0 million over average borrowings under the Revolver. Fees incurred amounted to $11.7 thousand and $21.1 thousand during the three months ended June 30, 2017 and July 1, 2016, respectively. Fees incurred amounted to $43.6 thousand and $44.9 thousand during the nine months endedJune 30, 2017 and July 1, 2016, respectively. The fee percentage varies based on the Company’s Fixed Charge Coverage Ratio, as defined below.

Financial Covenants

The Fifth Amended Credit Agreement, as amended, also contains various affirmative and negative covenants including financial covenants. Pursuant to the Third Amendment, as of March 31, 2017, certain financial covenants of the credit facility were eliminated or revised to be less complex, including the Maximum Inventory covenant, Debt to EBITDAS ratios, the Maximum Capital Expenditures limit after the fiscal year ending September 30, 2017, and future requirements of Minimum Quarterly EBITDAS except for the fiscal quarter ended June 30, 2017. The Company is required to maintain (i) for the quarter ended June 30, 2017, a minimum level of quarterly EBITDAS, as defined below (“Quarterly EBITDAS”), (ii) a minimum fixed charge coverage ratio (“Fixed Charge Coverage Ratio”), and (iii) a maximum amount of capital expenditures (“Maximum Capital Expenditures”). “EBITDAS” is defined as earnings before interest, taxes, depreciation, amortization and non-cash stock compensation expense. The Fixed Charge Coverage Ratio compares (i) EBITDAS minus unfinanced capital expenditures minus taxes paid, to (ii) the sum of interest expense, principal payments, payments on all capital lease obligations and dividends, if any (fixed charges). The Fixed Charge Coverage Ratio will initially be measured for a trailing six months ended September 30, 2017. The Maximum Capital Expenditures covenants allow for a maximum amount of capital expenditures on an annual basis for fiscal 2017.

Covenant ratios in effect at June 30, 2017, pursuant to the Fifth Amended Credit Agreement, as amended by the Third Amendment, are as follows:

Minimum Quarterly EBITDAS:
Fiscal Quarter ended 6/30/2017, using trailing twelve months	$	2,323,300
Maximum Capital Expenditures:
Measured annually	Maximum $3.5m

The Fifth Amended Credit Agreement provides for customary events of default, subject in certain cases to customary cure periods, in which the outstanding balance and any unpaid interest would become due and payable.

The Company was in compliance with all debt covenants at June 30, 2017.

Other Borrowings

When IEC acquired Albuquerque, the Company assumed responsibility for a $0.1 million Industrial Revenue Bond issued by the City of Albuquerque. Interest on the bond was paid semiannually, and principal was due in its entirety at maturity. The Bond was repaid in connection with the sale-leaseback transaction described in Note 12—Capital Lease.

Contractual Principal Payments

A summary of contractual principal payments under IEC’s borrowings for the next five years taking into consideration the Fifth Amended Credit Agreement, as amended, follows:

Debt Repayment Schedule		Contractual Principal Payments
(in thousands)
Twelve months ended June
2018		$	987
2019	(1)	1,561
2020		857
2021		857
2022 and thereafter (2)		12,090
		$	16,352

⁽¹⁾ Includes final payment of the Celmet Building Term Loan on November 7, 2018.

⁽²⁾ Includes Revolver balance of $9.6 million at June 30, 2017.

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FAIR VALUE OF FINANCIAL INSTRUMENTS

9 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 6—FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial Instruments Carried at Historical Cost

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

The Company's debt is carried at historical cost on the balance sheet. The fair value and carrying value of the Celmet Building Term Loan at June 30, 2017 were both $0.8 million. The fair value and carrying value of the Celmet Building Term Loan as of September 30, 2016 were both $0.9 million.

The fair value of the remainder of the Company’s debt approximated carrying value at June 30, 2017 and September 30, 2016 as it is variable rate debt.

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WARRANTY RESERVES

9 Months Ended

Jun. 30, 2017

Product Warranties Disclosures [Abstract]

WARRANTY RESERVES

NOTE 7—WARRANTY RESERVES

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

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

	Nine Months Ended
Warranty Reserve	June 30, 2017			July 1, 2016
(in thousands)
Reserve, beginning of period	$	180		$	399
Provision	100			126
Warranty costs	(125		)	(228		)
Reserve, end of period	$	155		$	297

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STOCK-BASED COMPENSATION

9 Months Ended

Jun. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK-BASED COMPENSATION

NOTE 8—STOCK-BASED COMPENSATION

The 2010 Omnibus Incentive Compensation Plan (the “2010 Plan”), was approved by the Company’s stockholders at the January 2011 Annual Meeting. The Company also has an ESPP, adopted in 2011, that provides for the purchase of Company common stock at a discounted stock purchase price. The 2010 Plan replaced IEC’s 2001 Stock Option and Incentive Plan (the “2001 Plan”), which expired in December 2011.  The 2010 Plan, which is administered by the Compensation Committee of the Board of Directors, provides for the following types of awards: incentive stock options, nonqualified options, stock appreciation rights, restricted shares, restricted stock units, performance compensation awards, cash incentive awards, director stock and other equity-based and equity-related awards.  Awards are generally granted to certain members of management and employees, as well as directors.  Under the 2010 Plan, up to 2,000,000 shares of common stock may be issued over a term of ten years.

Stock-based compensation expense recorded under the 2010 and 2001 Plans, including the ESPP, totaled $0.2 million and $0.5 million for the three and nine months endedJune 30, 2017, respectively. Stock-based compensation expense recorded under the 2010 and 2001 Plans, including the ESPP, totaled $0.2 million and $0.3 million for the three and nine months endedJuly 1, 2016, respectively. During the nine months endedJuly 1, 2016, incentive compensation shares were returned by the Company’s former CEO resulting in a reduction to compensation expense of $60.0 thousand. 

At June 30, 2017, there were 231,541 shares available to be issued under the 2010 Plan.

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

Stock Options

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

Assumptions used in the Black-Scholes model and the estimated value of options granted during the nine months endedJune 30, 2017 and July 1, 2016 are included in the table below.

	Nine Months Ended
Valuation of Options	June 30, 2017			July 1, 2016
Assumptions for Black-Scholes:
Risk-free interest rate	1.50		%	1.10		%
Expected term in years	4.0			4.0
Volatility	39		%	39		%
Expected annual dividends	none			none
Value of options granted:
Number of options granted	57,500			10,000
Weighted average fair value per share	$	1.19		$	1.40
Fair value of options granted (000s)	$	68		$	14

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

	Nine Months Ended
	June 30, 2017				July 1, 2016
Stock Options	Number of Options		Wgtd. Avg. Exercise Price		Number of Options		Wgtd. Avg. Exercise Price
Outstanding, beginning of period	759,795		$	4.43	717,645		$	4.40
Granted	57,500		3.64		10,000		4.64
Exercised	—		—		—		—
Forfeited	(33,000	)	5.58		(17,250	)	5.82
Expired	(29,750	)	5.04		—		—
Outstanding, end of period	754,545		$	4.29	710,395		$	4.37
For options expected to vest
Number expected to vest	735,846		$	4.30	686,417		$	4.38
Weighted average remaining contractual term, in years	4.7				5.2
Intrinsic value (000s)			$	—			$	74
For exercisable options
Number exercisable	326,972		$	4.44	265,286		$	4.82
Weighted average remaining contractual term, in years	4.1				4.2
Intrinsic value (000s)			$	—			$	19
For non-exercisable options
Expense not yet recognized (000s)			$	477			$	553
Weighted average years to be recognized	2.1				2.8

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

	Nine Months Ended
	June 30, 2017				July 1, 2016
Stock Options	Number of Options		Wgtd. Avg. Grant Date Fair Value		Number of Options		Wgtd. Avg. Grant Date Fair Value
Non-vested, beginning of period	489,109		$	1.43	546,145		$	1.41
Granted	57,500		1.19		10,000		1.40
Vested	(119,036	)	1.42		(111,036	)	1.43
Forfeited	—		—		—		—
Non-vested, end of period	427,573		$	1.41	445,109		$	1.41

Restricted (Non-vested) Stock

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

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

	Nine Months Ended
	June 30, 2017				July 1, 2016
Restricted (Non-vested) Stock	Number of Non-vested Shares		Wgtd. Avg. Grant Date Fair Value		Number of Non-vested Shares		Wgtd. Avg. Grant Date Fair Value
Outstanding, beginning of period	228,759		$	4.40	54,960		$	4.23
Granted	194,766		3.62		187,449		4.43
Vested	(29,948	)	4.25		(12,300	)	4.23
Shares withheld for payment of taxes upon vesting of restricted stock	(1,036	)	3.86		(150	)	4.20
Forfeited	—		—		—		—
Outstanding, end of period	392,541		$	4.02	229,959		$	4.39
For non-vested shares
Expense not yet recognized (000s)			$	1,021			$	988
Weighted average remaining years for vesting	2.1				2.4
For shares vested
Aggregate fair value on vesting dates (000s)			$	113			$	47

Stock Issued to Board Members

In addition to annual grants of restricted stock, included in the table above, Board members may elect to have their meeting fees paid in the form of shares of the Company’s common stock.   The Company has not paid any meeting fees in stock since May 21, 2013.

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INCOME TAXES

9 Months Ended

Jun. 30, 2017

Income Tax Disclosure [Abstract]

INCOME TAXES

Provision for income taxes during each of the three and nine months endedJune 30, 2017 and July 1, 2016 follows:

	Three Months Ended					Nine Months Ended
Income Tax Provision/Benefit	June 30, 2017		July 1, 2016			June 30, 2017		July 1, 2016
(in thousands)
Provision for/(benefit from) income taxes	$	43	$	(6	)	$	43	$	(6	)

The Company has recorded a full valuation allowance on all deferred tax assets. Although a full valuation allowance has been recorded for all deferred tax assets, including net operating loss carryforwards (“NOLs”), these NOLs remain available to the Company to offset future taxable income and reduce cash tax payments. IEC had federal gross NOLs for income tax purposes of approximately $31.7 million at September 30, 2016, expiring mainly in years 2022 through 2025 and 2034 through 2035. The Company also has additional state NOLs available in several jurisdictions in which it files state tax returns.

Recent New York state corporate tax reform has resulted in the reduction of the business income base rate for qualified manufactures in New York State to 0% beginning in fiscal 2015 for IEC. At September 30, 2016, the Company had $1.2 million of New York State investment tax and other credit carryforwards, expiring in various years through 2030.  The credits cannot be utilized unless the New York state tax rate is no longer 0%.

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MARKET SECTORS AND MAJOR CUSTOMERS

9 Months Ended

Jun. 30, 2017

Risks and Uncertainties [Abstract]

MARKET SECTORS AND MAJOR CUSTOMERS

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

	Three Months Ended		Nine Months Ended
% of Sales by Sector	June 30, 2017	July 1, 2016	June 30, 2017	July 1, 2016
Aerospace & Defense	53%	43%	49%	39%
Medical	30%	39%	30%	44%
Industrial	15%	16%	18%	15%
Communications & Other	2%	2%	3%	2%
	100%	100%	100%	100%

Two individual customers each represented 10% or more of sales for the nine months endedJune 30, 2017. One customer was from the Medical sector and represented 15% of sales, while the other was from the Aerospace & Defense sector and represented 12% of sales for the nine months endedJune 30, 2017. Two individual customers each represented 10% or more of sales for the nine months endedJuly 1, 2016.  Both customers were from the Medical sector, and represented 17% of sales each.

Three individual customers represented 10% or more of receivables and accounted for 39% of the outstanding balance at June 30, 2017. Four individual customers represented 10% or more of receivables and accounted for 44% of the outstanding balances at July 1, 2016.

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

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LITIGATION

9 Months Ended

Jun. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

LITIGATION

From time to time, the Company may be involved in legal action in the ordinary course of its business, but management does not believe that any such proceedings, individually or in the aggregate, will have a material effect on the Company’s condensed consolidated financial statements.

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CAPITAL LEASE

9 Months Ended

Jun. 30, 2017

Leases [Abstract]

CAPITAL LEASE

Leases

On November 18, 2016, the Company entered into a sale-leaseback agreement, pursuant to the terms of the Purchase and Sale Agreement (the “PSA”), with Store Capital Acquisitions, LLC, a Delaware limited liability company (the “Purchaser”), for the sale of certain property, including the manufacturing facility located in Albuquerque, New Mexico (the “Property”). Albuquerque (the “Seller”) completed the sale of the Property to the Purchaser for an aggregate purchase price of approximately $5.8 million including a $0.1 million holdback held subject to a holdback of funds agreement. The net book value of assets sold was $4.6 million and the value of the assets acquired under the lease is $5.8 million. The Company recorded a deferred gain of $1.1 million related to the transaction, which is recorded in other long-term liabilities section of the condensed consolidated balance sheet. The proceeds from the transaction were used to pay off the Albuquerque Mortgage Loan and pay down Term Loan A. As part of the transaction, a Lease Agreement dated as of November 18, 2016 was entered into between the Seller and the Purchaser (the “Lease”). Pursuant to the Lease, the Seller is leasing the Property for an initial term of 15 years, with two renewal options of five years each. The initial base annual rent is approximately $0.5 million and is subject to an annual increase equal to the lesser of two percent or 1.25 times the change in the Consumer Price Index. Late payments incur a charge of 5% and bear interest at a rate of 18% or the highest rate permitted by law. If an event of default occurs under the terms of the Lease, among other things, all rental amounts accelerate and become due and owing, subject to certain adjustments.

A summary of capital lease payments for the next five years follows:

Capital Lease Payment Schedule	Contractual Principal Payments
(in thousands)
Twelve months ended June
2018	$	480
2019	490
2020	499
2021	509
2022 and thereafter	6,016
Total capital lease payments	7,994
Less: amounts representing interest	(2,367		)
Present value of minimum lease payment	$	5,627

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SUBSEQUENT EVENTS

9 Months Ended

Jun. 30, 2017

Subsequent Events [Abstract]

EARNINGS PER SHARE

The Company applies the two-class method to calculate and present net income (loss) per share. Certain of the Company's restricted (non-vested) share awards contain non-forfeitable rights to dividends and are considered participating securities for purposes of computing net income (loss) per share pursuant to the two-class method. Under the two-class method, net earnings are reduced by the amount of dividends declared (whether paid or unpaid) and the remaining undistributed earnings are then allocated to common stock and participating securities, based on their respective rights to receive dividends. As the Company incurred a net loss for the nine months ended June 30, 2017 and losses are not allocated to participating securities under the two-class method, such method is not applicable for the aforementioned interim reporting period.

Basic earnings per common share are calculated by dividing income available to common stockholders by the weighted average number of shares outstanding during each period.  Diluted earnings per common share add to the denominator incremental shares resulting from the assumed exercise of all potentially dilutive stock options, as well as restricted stock and restricted stock units.  Options, restricted stock and restricted stock units are primarily held by directors, officers and certain employees. 

A summary of shares used in the earnings per share (“EPS”) calculations follows:

	Three Months Ended						Nine Months Ended
Earnings Per Share	June 30, 2017			July 1, 2016			June 30, 2017			July 1, 2016
Basic net income (loss) per share:
Net income (loss)	$	806		$	1,605		$	(674	)	$	4,610
Less: Income attributable to non-vested shares	(10		)	(18		)	—			(52		)
Net income (loss) available to common stockholders	$	796		$	1,587		$	(674	)	$	4,558
Weighted average common shares outstanding	10,193,200			10,211,347			10,176,626			10,210,805
Basic net income (loss) per share	$	0.08		$	0.16		$	(0.07	)	$	0.45
Diluted net income (loss) per share:
Net income (loss)	$	806		$	1,605		$	(674	)	$	4,610
Shares used in computing basic net income (loss) per share	10,193,200			10,211,347			10,176,626			10,210,805
Dilutive effect of non-vested shares	—			—			—			—
Shares used in computing diluted net income (loss) per share	10,193,200			10,211,347			10,176,626			10,210,805
Diluted net income (loss) per share	$	0.08		$	0.16		$	(0.07	)	$	0.45

The diluted weighted average share calculations do not include the following securities, which are not dilutive to the EPS calculations.

	Three Months Ended		Nine Months Ended
	June 30, 2017	July 1, 2016	June 30, 2017	July 1, 2016
Anti-dilutive shares excluded	1,147,086	940,354	1,147,086	940,354

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Earnings Per Share (Notes)

9 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

EARNINGS PER SHARE

The Company applies the two-class method to calculate and present net income (loss) per share. Certain of the Company's restricted (non-vested) share awards contain non-forfeitable rights to dividends and are considered participating securities for purposes of computing net income (loss) per share pursuant to the two-class method. Under the two-class method, net earnings are reduced by the amount of dividends declared (whether paid or unpaid) and the remaining undistributed earnings are then allocated to common stock and participating securities, based on their respective rights to receive dividends. As the Company incurred a net loss for the nine months ended June 30, 2017 and losses are not allocated to participating securities under the two-class method, such method is not applicable for the aforementioned interim reporting period.

Basic earnings per common share are calculated by dividing income available to common stockholders by the weighted average number of shares outstanding during each period.  Diluted earnings per common share add to the denominator incremental shares resulting from the assumed exercise of all potentially dilutive stock options, as well as restricted stock and restricted stock units.  Options, restricted stock and restricted stock units are primarily held by directors, officers and certain employees. 

A summary of shares used in the earnings per share (“EPS”) calculations follows:

	Three Months Ended						Nine Months Ended
Earnings Per Share	June 30, 2017			July 1, 2016			June 30, 2017			July 1, 2016
Basic net income (loss) per share:
Net income (loss)	$	806		$	1,605		$	(674	)	$	4,610
Less: Income attributable to non-vested shares	(10		)	(18		)	—			(52		)
Net income (loss) available to common stockholders	$	796		$	1,587		$	(674	)	$	4,558
Weighted average common shares outstanding	10,193,200			10,211,347			10,176,626			10,210,805
Basic net income (loss) per share	$	0.08		$	0.16		$	(0.07	)	$	0.45
Diluted net income (loss) per share:
Net income (loss)	$	806		$	1,605		$	(674	)	$	4,610
Shares used in computing basic net income (loss) per share	10,193,200			10,211,347			10,176,626			10,210,805
Dilutive effect of non-vested shares	—			—			—			—
Shares used in computing diluted net income (loss) per share	10,193,200			10,211,347			10,176,626			10,210,805
Diluted net income (loss) per share	$	0.08		$	0.16		$	(0.07	)	$	0.45

The diluted weighted average share calculations do not include the following securities, which are not dilutive to the EPS calculations.

	Three Months Ended		Nine Months Ended
	June 30, 2017	July 1, 2016	June 30, 2017	July 1, 2016
Anti-dilutive shares excluded	1,147,086	940,354	1,147,086	940,354

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OUR BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Our Business

Our Business

IEC Electronics Corp. (“IEC,” “we,” “our,” “us,” the “Company”) provides electronic manufacturing services (“EMS”) to advanced technology companies that produce life-saving and mission critical products for the medical, industrial, aerospace and defense sectors. The Company specializes in delivering technical solutions for the custom manufacture of complex full system assemblies by providing on-site analytical testing laboratories, custom design and test engineering services combined with a broad array of manufacturing services encompassing electronics, interconnect solutions, and precision metalworking. As a full service EMS provider, IEC holds all appropriate certifications for the market sectors it supports including ISO 9001:2008, AS9100C, ISO 13485 and Nadcap.  IEC is headquartered in Newark, NY and also has operations in Rochester, NY and Albuquerque, NM.  Additional information about IEC can be found on its website at www.iec-electronics.com.

Generally Accepted Accounting Principles

Generally Accepted Accounting Principles

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

Fiscal Calendar

Fiscal Calendar

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

Consolidation

Consolidation

The consolidated financial statements include the accounts of IEC and its wholly-owned subsidiaries: IEC Electronics Wire and Cable, Inc. (“Wire and Cable”) that merged into IEC on December 28, 2016; IEC Electronics Corp-Albuquerque (“Albuquerque”); IEC Analysis & Testing Laboratory, LLC (“ATL”), formerly Dynamic Research and Testing Laboratories, LLC; and IEC California Holdings, Inc. The Rochester unit, formerly Celmet, operates as a division of IEC. All intercompany transactions and accounts are eliminated in consolidation. 

Unaudited Financial Statements

Unaudited Financial Statements

The accompanying unaudited condensed consolidated financial statements for the three and nine months endedJune 30, 2017 and July 1, 2016 have been prepared without an audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and do not include certain of the information the footnotes require by GAAP for complete financial statements.  In the opinion of management, all adjustments, consisting of normal recurring adjustments, required for a fair presentation of the information have been made.  The accompanying financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2016.

Cash

Cash

The Company’s cash represents deposit accounts with Manufacturers and Traders Trust Company (“M&T Bank”), a banking corporation headquartered in Buffalo, NY.

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

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

Inventory Valuation

Inventory Valuation

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

Property, Plant and Equipment

Property, Plant and Equipment

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

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

PP&E Lives	Estimated Useful Lives
	(years)
Land improvements	10
Buildings and improvements	5 to 40
Machinery and equipment	3 to 5
Furniture and fixtures	3 to 7

Reviewing Long-Lived Assets for Potential Impairment

Reviewing Long-Lived Assets for Potential Impairment

ASC 360-10 (Property, Plant and Equipment) and ASC 350-30 (Intangibles) require the Company to test long-lived assets (PP&E and definitive lived assets) for recoverability whenever events or circumstances indicate that the carrying amount may not be recoverable.  If carrying value exceeds undiscounted future cash flows attributable to an asset, it is considered impaired and the excess of carrying value over fair value must be charged to earnings.

Leases

Leases

At the inception of a lease covering equipment or real estate, the lease agreement is evaluated under criteria discussed in ASC 840-10-25 (Leases).  Leases meeting one of four key criteria are accounted for as capital leases and all others are treated as operating leases.  Under a capital lease, the discounted value of future lease payments becomes the basis for recognizing an asset and a borrowing, and lease payments are allocated between debt reduction and interest.  For operating leases, payments are recorded as rent expense.  Criteria for a capital lease include (i) transfer of ownership during the lease term; (ii) existence of a bargain purchase option under terms that make it likely to be exercised; (iii) a lease term equal to 75 percent or more of the economic life of the leased property; and (iv) minimum lease payments that equal or exceed 90 percent of the fair value of the property.

Legal Contingencies

Legal Contingencies

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

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

Customer Deposits

Customer Deposits

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

Grants from Outside Parties

Grants from Outside Parties

Grants from outside parties are recorded as other long-term liabilities and are amortized over the same period during which the associated PP&E are depreciated. The Company received grants for certain facility improvements and equipment from state and local agencies in which the Company operates.  These grants reimbursed the Company for a portion of the actual cost or provided in kind services in support of capital projects. 

Fair Value Measurements

Fair Value Measurements

Under ASC 825 (Financial Instruments), the Company is required to disclose the fair value of financial instruments for which it is practicable to estimate value.  The Company’s financial instruments consist of cash, accounts receivable, accounts payable, accrued liabilities and borrowings.  IEC believes that recorded value approximates fair value for all cash, accounts receivable, accounts payable and accrued liabilities. See Note 6—Fair Value of Financial Instruments for a discussion of the fair value of IEC’s borrowings.

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

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

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

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

The Company deems a transfer between levels of the fair value hierarchy to have occurred at the beginning of the reporting period.

Revenue Recognition

Revenue Recognition

The Company’s revenue is principally derived from the sale of electronic products built to customer specifications, but also from other value-added support services and repair work.  Revenue from product sales is recognized when (i) goods are shipped or title and risk of ownership have passed, (ii) the price to the buyer is fixed or determinable, and (iii) realization is reasonably assured. Service revenue is generally recognized once the service has been rendered.  Service revenue, including material management, design and repair work revenue, amounted to less than 5% of total revenue in each of the three and nine months endedJune 30, 2017 and July 1, 2016.

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

Stock-Based Compensation

Stock-Based Compensation

ASC 718 (Stock Compensation) requires that compensation expense be recognized for equity awards based on fair value as of the date of grant.  For stock options, the Company uses the Black-Scholes pricing model to estimate grant date fair value.  Costs associated with stock awards are recorded over requisite service periods, generally the vesting period.  If vesting is contingent on the achievement of performance objectives, fair value is accrued over the period the objectives are expected to be achieved only if it is considered probable that the objectives will be achieved.  The Company also has an employee stock purchase plan (“ESPP”) that provides for the purchase of Company common stock at a discounted stock purchase price. Compensation expense related to the discount is recognized as employees contribute to the plan

Legal Expenses Accrual

Legal Expense Accrual

The Company records legal expenses as they are incurred, based on invoices received or estimates provided by legal counsel. Future estimated legal expenses are not recorded until incurred.

Income Taxes and Deferred Taxes

Income Taxes and Deferred Taxes

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

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

Any interest incurred is reported as interest expense. Any penalties incurred are reported as tax expense.

Dividends

Dividends

IEC does not pay dividends on its common stock as it is the Company’s current policy to retain earnings for use in the business.

Use of Estimates

Use of Estimates

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

Statements of Cash Flows

Statements of Cash Flows

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

Recently Issued Accounting Standards

Recently Issued Accounting Standards Not Yet Adopted

FASB Accounting Standard Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” (“Topic 606”) was issued May 2014 and updates the principles for recognizing revenue.  This ASU will supersede most of the existing revenue recognition requirements in GAAP and will require entities to recognize revenue at an amount that reflects the consideration to which a company expects to be entitled in exchange for transferring goods or services to a customer.  This ASU also amends the required disclosures of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. FASB ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations” was issued in March 2016 and improves implementation guidance on principal versus agent considerations. FASB ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” was issued in April 2016 and adds further guidance on identifying performance obligations as well as improving licensing implementation guidance. FASB ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” was issued in June 2016 and clarifies the objective of the collectability criterion, presentation of taxes collected from customers, non-cash consideration, contract modifications at transition, completed contracts at transition and how guidance in Topic 606 is retrospectively applied. The amendments do not change the core principle of the guidance in Topic 606. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within that period.  Early adoption is permitted for annual periods beginning after December 15, 2016. The Company is continuing to evaluate the effect this guidance will have on its consolidated financial statements, including potential impacts on the amount and timing of revenue recognition and additional information that may be necessary for the required expanded disclosures.  The Company has identified key personnel to evaluate the guidance and attended training, and started the process to formulate a time line to review the Company’s revenue streams, existing inventory contracts, and apply the five-step model to those contracts to evaluate the quantitative and qualitative impacts of the new standard.  The Company plans to adopt this ASU, as amended, in the first quarter of fiscal 2019.

FASB ASU 2015-11, “Simplifying the Measurement of Inventory” was issued in July 2015. This requires entities to measure most inventory “at the lower of cost and net realizable value,” thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. This ASU will not apply to inventories that are measured by using either the last-in, first-out method or the retail inventory method. For public business entities, this ASU is effective prospectively for annual periods beginning after December 15, 2016, and interim periods therein. Upon transition, entities must disclose the nature of and reason for the accounting change. The Company does not anticipate a significant impact on its financial statements upon adoption.

FASB ASU 2015-17, “Income Taxes Balance Sheet Classification of Deferred Taxes” was issued in November 2015. This requires entities to classify deferred tax liabilities and assets as noncurrent in a classified statement of financial position and applies to all entities that present a classified statement of financial position. For public entities, this update is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company does not anticipate a significant impact on its financial statements upon adoption.

FASB ASU 2016-02, “Leases” was issued in February 2016. The new guidance establishes the principles to report transparent and economically neutral information about the assets and liabilities that arise from leases. For public entities, the new guidance is effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods. Early adoption is permitted for all entities. The Company is evaluating the impact this ASU will have on its financial statements.

FASB ASU 2016-09, “Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting” was issued in March 2016. This simplifies accounting for several aspects of share-based payment including income tax consequences, classification of awards as either equity or liability and classification on the statement of cash flows. For public entities, this update is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company does not anticipate a significant impact on its financial statements upon adoption.

FASB ASU 2016-15 “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments: A Consensus of the FASB Emerging Issues Task Force” was issued in August 2016. This ASU clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. For public entities, this update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company does not anticipate a significant impact on its financial statements upon adoption.

Earnings Per Share

The Company applies the two-class method to calculate and present net income (loss) per share. Certain of the Company's restricted (non-vested) share awards contain non-forfeitable rights to dividends and are considered participating securities for purposes of computing net income (loss) per share pursuant to the two-class method. Under the two-class method, net earnings are reduced by the amount of dividends declared (whether paid or unpaid) and the remaining undistributed earnings are then allocated to common stock and participating securities, based on their respective rights to receive dividends. As the Company incurred a net loss for the nine months ended June 30, 2017 and losses are not allocated to participating securities under the two-class method, such method is not applicable for the aforementioned interim reporting period.

Basic earnings per common share are calculated by dividing income available to common stockholders by the weighted average number of shares outstanding during each period.  Diluted earnings per common share add to the denominator incremental shares resulting from the assumed exercise of all potentially dilutive stock options, as well as restricted stock and restricted stock units.  Options, restricted stock and restricted stock units are primarily held by directors, officers and certain employees. 

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OUR BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Property, Plant and Equipment

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

PP&E Lives	Estimated Useful Lives
	(years)
Land improvements	10
Buildings and improvements	5 to 40
Machinery and equipment	3 to 5
Furniture and fixtures	3 to 7

A summary of property, plant and equipment and accumulated depreciation at period end follows:

Property, Plant & Equipment	June 30, 2017			September 30, 2016
(in thousands)
Land and improvements	$	788		$	788
Buildings and improvements	8,910			8,910
Building under capital lease	5,750			—
Machinery and equipment	27,944			26,905
Furniture and fixtures	7,476			7,489
Construction in progress	3,516			3,079
Total property, plant and equipment, at cost	54,384			47,171
Accumulated depreciation	(37,513		)	(36,177		)
Property, plant and equipment, net	$	16,871		$	10,994

Depreciation expense during the three and nine months endedJune 30, 2017 and July 1, 2016 follows:

	Three Months Ended				Nine Months Ended
	June 30, 2017		July 1, 2016		June 30, 2017		July 1, 2016
(in thousands)
Depreciation expense	$	624	$	717	$	1,921	$	2,364

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ALLOWANCE FOR DOUBTFUL ACCOUNTS (Tables)

9 Months Ended

Jun. 30, 2017

Receivables [Abstract]

Allowance for Credit Losses on Financing Receivables

A summary of activity in the allowance for doubtful accounts during the nine months endedJune 30, 2017 and July 1, 2016 follows

	Nine Months Ended
Allowance for doubtful accounts	June 30, 2017			July 1, 2016
(in thousands)
Allowance, beginning of period	$	226		$	423
(Reversal)/provision for doubtful accounts	(169		)	253
Write-offs/recoveries	15			(298		)
Allowance, end of period	$	72		$	378

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INVENTORIES (Tables)

9 Months Ended

Jun. 30, 2017

Inventory Disclosure [Abstract]

Schedule of Inventory

A summary of inventory by category at period end follows:

Inventories	June 30, 2017		September 30, 2016
(in thousands)
Raw materials	$	8,872	$	7,513
Work-in-process	6,681		5,932
Finished goods	2,678		1,939
Inventories	$	18,231	$	15,384

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PROPERTY, PLANT & EQUIPMENT (Tables)

9 Months Ended

Jun. 30, 2017

Property, Plant and Equipment [Abstract]

Summary of Property, Plant and Equipment

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

PP&E Lives	Estimated Useful Lives
	(years)
Land improvements	10
Buildings and improvements	5 to 40
Machinery and equipment	3 to 5
Furniture and fixtures	3 to 7

A summary of property, plant and equipment and accumulated depreciation at period end follows:

Property, Plant & Equipment	June 30, 2017			September 30, 2016
(in thousands)
Land and improvements	$	788		$	788
Buildings and improvements	8,910			8,910
Building under capital lease	5,750			—
Machinery and equipment	27,944			26,905
Furniture and fixtures	7,476			7,489
Construction in progress	3,516			3,079
Total property, plant and equipment, at cost	54,384			47,171
Accumulated depreciation	(37,513		)	(36,177		)
Property, plant and equipment, net	$	16,871		$	10,994

Depreciation expense during the three and nine months endedJune 30, 2017 and July 1, 2016 follows:

	Three Months Ended				Nine Months Ended
	June 30, 2017		July 1, 2016		June 30, 2017		July 1, 2016
(in thousands)
Depreciation expense	$	624	$	717	$	1,921	$	2,364

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CREDIT FACILITIES (Tables)

9 Months Ended

Jun. 30, 2017

Debt Disclosure [Abstract]

Schedule of Debt

A summary of borrowings at period end follows:   

			June 30, 2017					September 30, 2016
Debt	Fixed/ Variable Rate	Maturity  Date	Balance			Interest Rate		Balance			Interest Rate
($ in thousands)
M&T credit facilities:
Revolving Credit Facility	v	5/5/2022	$	9,590		3.72	%	$	3,961		3.28	%
Term Loan A(1)	f	2/1/2020	—			—		3,693			3.98
Term Loan B	v	5/5/2022	5,928			3.80		8,983			3.03
Albuquerque Mortgage Loan(1)	v	2/1/2018	—			—		2,200			3.55
Celmet Building Term Loan	f	11/7/2018	834			4.72		932			4.72
Other credit facilities:
Albuquerque Industrial Revenue Bond(1)	f	3/1/2019	—			—		100			5.63
Total debt, gross			16,352					19,869
Unamortized debt issuance costs			(288		)			(229		)
Total debt, net			16,064					19,640
Less: current portion			(987		)			(2,908		)
Long-term debt			$	15,077				$	16,732

⁽¹⁾ The Albuquerque Mortgage Loan and the Albuquerque Industrial Revenue Bond were repaid in connection with the sale-leaseback transaction described in Note 12—Capital Lease. The proceeds from the transaction were also used to pay down Term Loan A, which was subsequently paid off in due course.

Schedule of Debt Covenant

Covenant ratios in effect at June 30, 2017, pursuant to the Fifth Amended Credit Agreement, as amended by the Third Amendment, are as follows:

Minimum Quarterly EBITDAS:
Fiscal Quarter ended 6/30/2017, using trailing twelve months	$	2,323,300
Maximum Capital Expenditures:
Measured annually	Maximum $3.5m

Schedule of Maturities of Long-term Debt

A summary of contractual principal payments under IEC’s borrowings for the next five years taking into consideration the Fifth Amended Credit Agreement, as amended, follows:

Debt Repayment Schedule		Contractual Principal Payments
(in thousands)
Twelve months ended June
2018		$	987
2019	(1)	1,561
2020		857
2021		857
2022 and thereafter (2)		12,090
		$	16,352

⁽¹⁾ Includes final payment of the Celmet Building Term Loan on November 7, 2018.

⁽²⁾ Includes Revolver balance of $9.6 million at June 30, 2017

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WARRANTY RESERVES (Tables)

9 Months Ended

Jun. 30, 2017

Product Warranties Disclosures [Abstract]

Schedule of Product Warranty Liability

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

	Nine Months Ended
Warranty Reserve	June 30, 2017			July 1, 2016
(in thousands)
Reserve, beginning of period	$	180		$	399
Provision	100			126
Warranty costs	(125		)	(228		)
Reserve, end of period	$	155		$	297

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STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Jun. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

Assumptions used in the Black-Scholes model and the estimated value of options granted during the nine months endedJune 30, 2017 and July 1, 2016 are included in the table below.

	Nine Months Ended
Valuation of Options	June 30, 2017			July 1, 2016
Assumptions for Black-Scholes:
Risk-free interest rate	1.50		%	1.10		%
Expected term in years	4.0			4.0
Volatility	39		%	39		%
Expected annual dividends	none			none
Value of options granted:
Number of options granted	57,500			10,000
Weighted average fair value per share	$	1.19		$	1.40
Fair value of options granted (000s)	$	68		$	14

Changes in Number of Options Outstanding with Other Related Data

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

	Nine Months Ended
	June 30, 2017				July 1, 2016
Stock Options	Number of Options		Wgtd. Avg. Exercise Price		Number of Options		Wgtd. Avg. Exercise Price
Outstanding, beginning of period	759,795		$	4.43	717,645		$	4.40
Granted	57,500		3.64		10,000		4.64
Exercised	—		—		—		—
Forfeited	(33,000	)	5.58		(17,250	)	5.82
Expired	(29,750	)	5.04		—		—
Outstanding, end of period	754,545		$	4.29	710,395		$	4.37
For options expected to vest
Number expected to vest	735,846		$	4.30	686,417		$	4.38
Weighted average remaining contractual term, in years	4.7				5.2
Intrinsic value (000s)			$	—			$	74
For exercisable options
Number exercisable	326,972		$	4.44	265,286		$	4.82
Weighted average remaining contractual term, in years	4.1				4.2
Intrinsic value (000s)			$	—			$	19
For non-exercisable options
Expense not yet recognized (000s)			$	477			$	553
Weighted average years to be recognized	2.1				2.8

Schedule of Nonvested Stock Options Activity

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

	Nine Months Ended
	June 30, 2017				July 1, 2016
Stock Options	Number of Options		Wgtd. Avg. Grant Date Fair Value		Number of Options		Wgtd. Avg. Grant Date Fair Value
Non-vested, beginning of period	489,109		$	1.43	546,145		$	1.41
Granted	57,500		1.19		10,000		1.40
Vested	(119,036	)	1.42		(111,036	)	1.43
Forfeited	—		—		—		—
Non-vested, end of period	427,573		$	1.41	445,109		$	1.41

Changes in Number of Restricted Non-vested Stock Outstanding with Other Related Data

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

	Nine Months Ended
	June 30, 2017				July 1, 2016
Restricted (Non-vested) Stock	Number of Non-vested Shares		Wgtd. Avg. Grant Date Fair Value		Number of Non-vested Shares		Wgtd. Avg. Grant Date Fair Value
Outstanding, beginning of period	228,759		$	4.40	54,960		$	4.23
Granted	194,766		3.62		187,449		4.43
Vested	(29,948	)	4.25		(12,300	)	4.23
Shares withheld for payment of taxes upon vesting of restricted stock	(1,036	)	3.86		(150	)	4.20
Forfeited	—		—		—		—
Outstanding, end of period	392,541		$	4.02	229,959		$	4.39
For non-vested shares
Expense not yet recognized (000s)			$	1,021			$	988
Weighted average remaining years for vesting	2.1				2.4
For shares vested
Aggregate fair value on vesting dates (000s)			$	113			$	47

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INCOME TAXES (Tables)

9 Months Ended

Jun. 30, 2017

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit)

Provision for income taxes during each of the three and nine months endedJune 30, 2017 and July 1, 2016 follows:

	Three Months Ended					Nine Months Ended
Income Tax Provision/Benefit	June 30, 2017		July 1, 2016			June 30, 2017		July 1, 2016
(in thousands)
Provision for/(benefit from) income taxes	$	43	$	(6	)	$	43	$	(6	)

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MARKET SECTORS AND MAJOR CUSTOMERS (Tables)

9 Months Ended

Jun. 30, 2017

Risks and Uncertainties [Abstract]

Schedules of Concentration of Risk, by Risk Factor

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

	Three Months Ended		Nine Months Ended
% of Sales by Sector	June 30, 2017	July 1, 2016	June 30, 2017	July 1, 2016
Aerospace & Defense	53%	43%	49%	39%
Medical	30%	39%	30%	44%
Industrial	15%	16%	18%	15%
Communications & Other	2%	2%	3%	2%
	100%	100%	100%	100%

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CAPITAL LEASE (Tables)

9 Months Ended

Jun. 30, 2017

Leases [Abstract]

Schedule of Future Minimum Lease Payments for Capital Leases

A summary of capital lease payments for the next five years follows:

Capital Lease Payment Schedule	Contractual Principal Payments
(in thousands)
Twelve months ended June
2018	$	480
2019	490
2020	499
2021	509
2022 and thereafter	6,016
Total capital lease payments	7,994
Less: amounts representing interest	(2,367		)
Present value of minimum lease payment	$	5,627

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Earnings Per Share (Tables)

9 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

A summary of shares used in the earnings per share (“EPS”) calculations follows:

	Three Months Ended						Nine Months Ended
Earnings Per Share	June 30, 2017			July 1, 2016			June 30, 2017			July 1, 2016
Basic net income (loss) per share:
Net income (loss)	$	806		$	1,605		$	(674	)	$	4,610
Less: Income attributable to non-vested shares	(10		)	(18		)	—			(52		)
Net income (loss) available to common stockholders	$	796		$	1,587		$	(674	)	$	4,558
Weighted average common shares outstanding	10,193,200			10,211,347			10,176,626			10,210,805
Basic net income (loss) per share	$	0.08		$	0.16		$	(0.07	)	$	0.45
Diluted net income (loss) per share:
Net income (loss)	$	806		$	1,605		$	(674	)	$	4,610
Shares used in computing basic net income (loss) per share	10,193,200			10,211,347			10,176,626			10,210,805
Dilutive effect of non-vested shares	—			—			—			—
Shares used in computing diluted net income (loss) per share	10,193,200			10,211,347			10,176,626			10,210,805
Diluted net income (loss) per share	$	0.08		$	0.16		$	(0.07	)	$	0.45

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OUR BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipment (Details)	9 Months Ended
	Jun. 30, 2017
Land improvements [Member]
Estimated useful lives	10 years
Buildings and improvements [Member] | Minimum [Member]
Estimated useful lives	5 years
Buildings and improvements [Member] | Maximum [Member]
Estimated useful lives	40 years
Machinery and equipment [Member] | Minimum [Member]
Estimated useful lives	3 years
Machinery and equipment [Member] | Maximum [Member]
Estimated useful lives	5 years
Furniture and fixtures [Member] | Minimum [Member]
Estimated useful lives	3 years
Furniture and fixtures [Member] | Maximum [Member]
Estimated useful lives	7 years

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OUR BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) - USD ($)	3 Months Ended	9 Months Ended		12 Months Ended
	Jun. 30, 2017	Jun. 30, 2017	Jul. 01, 2016	Sep. 30, 2016
Accounting Policies [Abstract]
Asset impairment charges		$ 0
Deferred grants recorded	$ 0			$ 0
Outstanding grant balance	$ 200,000	$ 200,000		$ 300,000
Material Management [Member]
Maximum percentage of total revenue		5.00%	5.00%

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OUR BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Earnings Per Share (Details) - shares	3 Months Ended		9 Months Ended
	Jun. 30, 2017	Jul. 01, 2016	Jun. 30, 2017	Jul. 01, 2016
Accounting Policies [Abstract]
Basic (in shares)	10,193,200	10,211,347	10,176,626	10,210,805
Shares used in computing diluted net income (loss) per share	10,193,200	10,211,347	10,176,626	10,210,805

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ALLOWANCE FOR DOUBTFUL ACCOUNTS (Details) - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2017	Jul. 01, 2016
Allowance for Doubtful Accounts Receivable [Roll Forward]
Allowance, beginning of period	$ 226	$ 423
(Reversal)/provision for doubtful accounts	(169)	253
Write-offs/recoveries	15	(298)
Allowance, end of period	$ 72	$ 378

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INVENTORIES (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Sep. 30, 2016
Inventory Disclosure [Abstract]
Raw materials	$ 8,872	$ 7,513
Work-in-process	6,681	5,932
Finished goods	2,678	1,939
Inventories	$ 18,231	$ 15,384

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PROPERTY, PLANT & EQUIPMENT - Summary of Fixed Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Sep. 30, 2016
Property, Plant and Equipment [Abstract]
Land and improvements	$ 788	$ 788
Buildings and improvements	8,910	8,910
Building under capital lease	5,750	0
Machinery and equipment	27,944	26,905
Furniture and fixtures	7,476	7,489
Construction in progress	3,516	3,079
Total property, plant and equipment, at cost	54,384	47,171
Accumulated depreciation	(37,513)	(36,177)
Property, plant and equipment, net	$ 16,871	$ 10,994

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PROPERTY, PLANT & EQUIPMENT - Depreciation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2017	Jul. 01, 2016	Jun. 30, 2017	Jul. 01, 2016
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 624	$ 717	$ 1,921	$ 2,364

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CREDIT FACILITIES - Summary of Borrowings (Details) - USD ($) $ in Thousands		9 Months Ended
		Jun. 30, 2017	Sep. 30, 2016
Total debt, net		$ 16,064	$ 19,640
Long-term Debt, Gross		16,352	19,869
Unamortized Debt Issuance Expense		(288)	(229)
Less: current portion		(987)	(2,908)
Long-term debt		$ 15,077	$ 16,732
Term Loan A [Member]
Fixed/Variable Rate		Fixed Interest Rate
Maturity Date	[1]	Feb. 01, 2020
Interest Rate	[1]	0.00%	3.98%
Total debt, net	[1]	$ 0	$ 3,693
Term Loan B [Member]
Fixed/Variable Rate		Variable Interest Rate
Maturity Date		May 05, 2022
Interest Rate		3.80%	3.03%
Total debt, net		$ 5,928	$ 8,983
Albuquerque Mortgage Loan [Member]
Fixed/Variable Rate		Variable Interest Rate
Maturity Date	[1]	Feb. 01, 2018
Interest Rate	[1]	0.00%	3.55%
Total debt, net	[1]	$ 0	$ 2,200
Celmet Building Term Loan [Member]
Fixed/Variable Rate		Fixed Interest Rate
Maturity Date		Nov. 07, 2018
Interest Rate		4.72%	4.72%
Total debt, net		$ 834	$ 932
Albuquerque Industrial Revenue Bond [Member]
Fixed/Variable Rate		Fixed Interest Rate
Maturity Date	[1]	Mar. 01, 2019
Interest Rate	[1]	0.00%	5.63%
Total debt, net	[1]	$ 0	$ 100
Revolving Credit Facility [Member]
Fixed/Variable Rate		Variable Interest Rate
Maturity Date		May 05, 2022
Interest Rate		3.72%	3.28%
Total debt, net		$ 9,590	$ 3,961

[1] The Albuquerque Mortgage Loan and the Albuquerque Industrial Revenue Bond were repaid in connection with the sale-leaseback transaction described in Note 12—Capital Lease. The proceeds from the transaction were also used to pay down Term Loan A, which was subsequently paid off in due course.

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CREDIT FACILITIES - Narrative (Details) - USD ($)		1 Months Ended				9 Months Ended
	Dec. 14, 2015	Nov. 30, 2013	Jan. 31, 2013	Dec. 31, 2009	May 31, 2008	Jun. 30, 2017	Jul. 01, 2016	May 05, 2017	Sep. 30, 2016	Nov. 08, 2013	Jan. 18, 2013	Dec. 16, 2009
Line of Credit Facility [Line Items]
Maximum borrowing capacity						$ 16,000,000
Repayments of long-term debt						16,064,000			$ 19,640,000
Average borrowing capacity						5,000,000
Albuquerque [Member]
Line of Credit Facility [Line Items]
Liabilities assumed						0
Credit Agreement 2013 [Member] | Term Loan A [Member]
Line of Credit Facility [Line Items]
Long-term line of credit											$ 10,000,000
Repayment monthly installments			108 equal monthly installments
Line of credit facility, periodic payment, principal			$ 93,000
Credit Agreement 2013 [Member] | Term Loan B [Member]
Line of Credit Facility [Line Items]
Long-term line of credit								$ 6,000,000			$ 14,000,000
Repayment monthly installments			120 equal monthly installments
Line of credit facility, periodic payment, principal			$ 117,000		$ 71,000
Credit Agreement 2013 [Member] | Albuquerque Mortgage Loan [Member]
Line of Credit Facility [Line Items]
Repayment monthly installments		59 equal monthly installments		monthly installments
Credit Agreement 2013 [Member] | Celmet Term Loan [Member]
Line of Credit Facility [Line Items]
Debt instrument, periodic payment, principal		$ 11,000
Fifth Amendment [Member] | Term Loan B [Member] | London Interbank Offered Rate (LIBOR) [Member]
Line of Credit Facility [Line Items]
Basis spread on variable rate	2.75%
Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity						$ 16,000,000.0			20,000,000
Maturity date						May 05, 2022
Repayments of long-term debt						$ 9,590,000			3,961,000
Maximum borrowing capacity as percentage of eligible receivables						85.00%
Maximum borrowing capacity based on eligible inventories						$ 7,000,000.0
Current borrowing capacity						$ 16,000,000.0			$ 16,400,000
Revolving Credit Facility [Member] | Minimum [Member]
Line of Credit Facility [Line Items]
Unused capacity, commitment fee percentage						0.25%
Revolving Credit Facility [Member] | Maximum [Member]
Line of Credit Facility [Line Items]
Unused capacity, commitment fee percentage							0.375%
Revolving Credit Facility [Member] | Credit Agreement 2013 [Member]
Line of Credit Facility [Line Items]
Average borrowing capacity						$ 16,000,000
Commitment fee amount							$ 44,900
Revolving Credit Facility [Member] | Fifth Amendment [Member] | London Interbank Offered Rate (LIBOR) [Member]
Line of Credit Facility [Line Items]
Basis spread on variable rate	2.50%
Albuquerque Mortgage Loan [Member] | Credit Agreement 2013 [Member]
Line of Credit Facility [Line Items]
Long-term line of credit												$ 4,000,000
Debt instrument, periodic payment, principal				$ 22,000
Celmet Term Loan [Member] | Third Amendment [Member]
Line of Credit Facility [Line Items]
Face amount										$ 1,300,000

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CREDIT FACILITIES - Covenant Ratios (Details) - Fifth Amendment [Member]	9 Months Ended
	Jun. 30, 2017 USD ($)
Minimum Quarterly EBITDAS:
Maximum Capital Expenditures:	$ 4,500,000
Fiscal Quarter Ending December 30, 2016 [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Covenant Compliance, Debt To EBITDARS Ratio	0.0470
Debt Instrument, Covenant Compliance, Fixed Charge Coverage Ratio	0.0030
Minimum Quarterly EBITDAS:
Net earnings before interest,taxes, depreciation and amortization	$ 2,323,300

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CREDIT FACILITIES - Long-term Debt Maturities (Details) - USD ($) $ in Thousands		9 Months Ended
		Jun. 30, 2017	Sep. 30, 2016
Debt Instrument [Line Items]
2017		$ 987
2018	[1]	1,561
2019		857
2020		857
2022 and thereafter (2)		12,090
Total debt, net		$ 16,352	$ 19,869
Celmet Term Loan [Member]
Debt Instrument [Line Items]
Maturity date		Nov. 07, 2018
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Maturity date		May 05, 2022

[1] Includes Revolver balance of $9.6 million at June 30, 2017.

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands		Jun. 30, 2017	Sep. 30, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying Value		$ 16,064	$ 19,640
Term Loan A [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying Value	[1]	0	3,693
Celmet Building Term Loan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying Value		$ 834	$ 932

[1] The Albuquerque Mortgage Loan and the Albuquerque Industrial Revenue Bond were repaid in connection with the sale-leaseback transaction described in Note 12—Capital Lease. The proceeds from the transaction were also used to pay down Term Loan A, which was subsequently paid off in due course.

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WARRANTY RESERVES (Details) - Warranty Reserves [Member] - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2017	Jul. 01, 2016
Warranty Reserve
Reserve, beginning of period	$ 180	$ 399
Provision	100	126
Warranty costs	(125)	(228)
Reserve, end of period	$ 155	$ 297

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STOCK-BASED COMPENSATION - Narrative (Details) - USD ($)	3 Months Ended	9 Months Ended
	Jul. 01, 2016	Jun. 30, 2017	Jul. 01, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated share-based compensation expense	$ 200,000	$ 200,000
Reduction to compensation expense		$ 60,000
Number of options granted (in shares)		57,500	10,000
Compensation expense		$ 468,000	$ 324,000
Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period		3 years
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period		4 years
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period		5 years
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period		4 years
2010 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum number of common shares that may be issued (in shares)		2,000,000
Common shares, issuance term		10 years
Shares available for issuance (in shares)		231,541
2010 Plan [Member] | Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award expiration period		7 years

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STOCK-BASED COMPENSATION - Valuation Assumptions (Details) - USD ($)	9 Months Ended
	Jun. 30, 2017	Jul. 01, 2016
Assumptions for Black-Scholes:
Risk-free interest rate	1.50%	1.10%
Expected term in years	4 years	4 years
Volatility	39.00%	39.00%
Expected annual dividends	$ 0	$ 0
Value of options granted:
Number of options granted (in shares)	57,500	10,000
Weighted average fair value per share (in dollars per share)	$ 1.19	$ 1.40
Fair value of options granted (000s)	$ 68,000	$ 14,000

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STOCK-BASED COMPENSATION - Summary of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Jun. 30, 2017	Jul. 01, 2016
Number of Options
Outstanding, beginning of period (in shares)	759,795	717,645
Granted (in shares)	57,500	10,000
Exercised (in shares)	0	0
Forfeited (in shares)	(33,000)	(17,250)
Expired (in shares)	(29,750)	0
Outstanding, end of period (in shares)	754,545	710,395
Wgtd. Avg. Exercise Price
Outstanding, beginning of period (in dollars per share)	$ 4.43	$ 4.40
Granted (in dollars per share)	3.64	4.64
Exercised (in dollars per share)	0.00	0.00
Forfeited (in dollars per share)	5.58	5.82
Expired (in dollars per share)	5.04	0
Outstanding, end of period (in dollars per share)	$ 4.29	$ 4.37
For options expected to vest
Number expected to vest (in shares)	735,846	686,417
Number expected to vest (in dollars per share)	$ 4.30	$ 4.38
Weighted average remaining term, in years	4 years 8 months 20 days	5 years 2 months 15 days
Intrinsic value (000s)	$ 0	$ 74
For exercisable options
Number exercisable (in shares)	326,972	265,286
Number exercisable (in dollars per share)	$ 4.44	$ 4.82
Weighted average remaining term, in years	4 years 1 month 10 days	4 years 2 months 12 days
Intrinsic value (000s)	$ 0	$ 19
For non-exercisable options
Expense not yet recognized (000s)	$ 477	$ 553
Weighted average years to be recognized	2 years 25 days	2 years 9 months 18 days

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STOCK-BASED COMPENSATION - Changes in Non-Vested Options Outstanding (Details) - $ / shares	9 Months Ended
	Jun. 30, 2017	Jul. 01, 2016
Number of Options
Non-vested, beginning of period (in shares)	489,109	546,145
Granted (in shares)	57,500	10,000
Vested (in shares)	(119,036)	(111,036)
Forfeited (in shares)	0	0
Non-vested, end of period (in shares)	427,573	445,109
Wgtd. Avg. Grant Date Fair Value
Non-vested, beginning of period (in dollars per share)	$ 1.43	$ 1.41
Granted (in dollars per share)	1.19	1.40
Vested (in dollars per share)	1.42	1.43
Forfeited (in dollars per share)	0.00	0.00
Non-vested, end of period (in dollars per share)	$ 1.41	$ 1.41

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STOCK-BASED COMPENSATION - Summary of Restricted Stock Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Jun. 30, 2017	Jul. 01, 2016
Number of Non-vested Shares [Roll Forward]
Vested (in shares)	(29,948)
Wgtd. Avg. Grant Date Fair Value [Roll Forward]
Granted (in dollars per share)	$ 3.62
Restricted Stock [Member]
Number of Non-vested Shares [Roll Forward]
Outstanding, beginning of period (in shares)	228,759	54,960
Granted (in shares)	194,766	187,449
Vested (in shares)		(12,300)
Shares withheld for payment of taxes upon vesting of restricted stock (in shares)	(1,036)	(150)
Forfeited (in shares)	0	0
Outstanding, end of period (in shares)	392,541	229,959
Wgtd. Avg. Grant Date Fair Value [Roll Forward]
Outstanding, beginning of period (in dollars per share)	$ 4.40	$ 4.23
Granted (in dollars per share)		4.43
Vested (in dollars per share)	4.25	4.23
Shares withheld for payment of taxes upon vesting of restricted stock (in dollars per share)	3.86	4.20
Forfeited (in dollars per share)	0.00	0.00
Outstanding, end of period (in dollars per share)	$ 4.02	$ 4.39
For non-vested shares
Expense not yet recognized (000s)	$ 1,021	$ 988
Weighted average remaining years for vesting	2 years 1 month 10 days	2 years 4 months 24 days
For shares vested
Aggregate fair value on vesting dates (000s)	$ 113	$ 47

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INCOME TAXES - Tax Provision/Benefit (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2017	Jul. 01, 2016	Jun. 30, 2017	Jul. 01, 2016
Income Tax Disclosure [Abstract]
Provision for/(benefit from) income taxes	$ 43	$ (6)	$ 43	$ (6)

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INCOME TAXES - Narrative (Details) - USD ($) $ in Millions	Jun. 30, 2017	Sep. 30, 2016
Base tax rate	0.00%
Domestic Tax Authority [Member]
Operating loss carryforwards		$ 31.7
State and Local Jurisdiction [Member]
Operating loss carryforwards		$ 1.2

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MARKET SECTORS AND MAJOR CUSTOMERS - Summary of Sales (Details) - Sales Revenue, Segment [Member]	3 Months Ended		9 Months Ended
	Jun. 30, 2017	Jul. 01, 2016	Jun. 30, 2017	Jul. 01, 2016
Concentration Risk [Line Items]
Percentage of Sales by Sector	100.00%	100.00%	100.00%	100.00%
Aerospace & Defense [Member]
Concentration Risk [Line Items]
Percentage of Sales by Sector	53.00%	43.00%	49.00%	39.00%
Medical [Member]
Concentration Risk [Line Items]
Percentage of Sales by Sector	30.00%	39.00%	30.00%	44.00%
Industrial [Member]
Concentration Risk [Line Items]
Percentage of Sales by Sector	15.00%	16.00%	18.00%	15.00%
Communications & Other [Member]
Concentration Risk [Line Items]
Percentage of Sales by Sector	2.00%	2.00%	3.00%	2.00%

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MARKET SECTORS AND MAJOR CUSTOMERS - Narrative (Details) - customer	9 Months Ended
	Jun. 30, 2017	Jul. 01, 2016
Concentration Risk [Line Items]
Concentration risk, number of customers	2	2
Customer Concentration Risk [Member] | Sales [Member] | Industrial [Member]
Concentration Risk [Line Items]
Concentration risk, percentage		17.00%
Customer Concentration Risk [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Concentration risk, number of customers	3	4
Concentration risk, percentage	39.00%	44.00%
Customer Number Two [Member] | Customer Concentration Risk [Member] | Sales [Member] | Aerospace and Defense [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	15.00%
Customer Number Two [Member] | Customer Concentration Risk [Member] | Sales [Member] | Medical [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	12.00%

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CAPITAL LEASE - Narrative (Details) $ in Millions	Nov. 18, 2016 USD ($) renewal_option
Sale Leaseback Transaction [Line Items]
Aggregate purchase price	$ 5.8
Holdback amount	0.1
Net book value of assets sold	4.6
Value of assets acquired under the lease	$ 5.8
Initial term of lease	15 years
Number of lease renewal options | renewal_option	2
Term of renewal options (in years)	5 years
Annual rental payment	$ 0.5
Late payment fee (percent)	5.00%
Interest rate (percent)	18.00%
Maximum [Member]
Sale Leaseback Transaction [Line Items]
Annual percentage increase	2.00%
Minimum [Member]
Sale Leaseback Transaction [Line Items]
Consumer pricing index multiplier (lesser of)	1.25
Other Noncurrent Liabilities [Member]
Sale Leaseback Transaction [Line Items]
Deferred gain recorded	$ 1.1

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CAPITAL LEASE - Summary of Future Minimum Payments on Capital Leases (Details) $ in Thousands	Jun. 30, 2017 USD ($)
Leases [Abstract]
2018	$ 480
2019	490
2020	499
2021	509
2022 and thereafter	6,016
Total capital lease payments	7,994
Less: amounts representing interest	(2,367)
Present value of minimum lease payment	$ 5,627

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SUBSEQUENT EVENTS (Details) - USD ($)	Jun. 30, 2017	Sep. 30, 2016
Subsequent Event [Line Items]
Maximum borrowing capacity	$ 16,000,000
Revolving Credit Facility [Member]
Subsequent Event [Line Items]
Maximum borrowing capacity	$ 16,000,000.0	$ 20,000,000
Maximum borrowing capacity as percentage of eligible receivables	85.00%
Maximum borrowing capacity based on eligible inventories	$ 7,000,000.0

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Earnings Per Share Earnings Per Share - Summary of Shares Used in EPS Calculation (Details) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2017	Jul. 01, 2016	Jun. 30, 2017	Jul. 01, 2016
Basic net income (loss) per share:
Net income (loss)	$ 806,000	$ 1,605,000	$ (674,000)	$ 4,610,000
Less: Income attributable to non-vested shares	(10,000)	(18,000)	0	(52,000)
Net income (loss) available to common stockholders	$ 796,000	$ 1,587,000	$ (674,000)	$ 4,558,000
Basic (in shares)	10,193,200	10,211,347	10,176,626	10,210,805
Basic net income (loss) per share (in usd per share)	$ 80	$ 160	$ (70)	$ 450
Diluted net income (loss) per share:
Net income (loss)	$ 806,000	$ 1,605,000	$ (674,000)	$ 4,610,000
Shares used in computing basic net income (loss) per share(in shares)	10,193,200	10,211,347	10,176,626	10,210,805
Dilutive effect of non-vested shares	$ 0	$ 0	$ 0	$ 0
Shares used in computing diluted net income (loss) per share	10,193,200	10,211,347	10,176,626	10,210,805
Diluted net income (loss) per share (in usd per share)	$ 80	$ 160	$ (70)	$ 450
Anti-dilutive shares excluded (in shares)	1,147,086	940,354	1,147,086	940,354