-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JuMGP2TQvGxBtjuoqjWDyL/tQoNPJlIQaJv376CdTMGazV+hwL8fSlpWhe/yCEPY KXF3wWPcg2z6JiHypxtdlg== 0000049728-96-000005.txt : 20030213 0000049728-96-000005.hdr.sgml : 20030213 19960821143716 ACCESSION NUMBER: 0000049728-96-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960628 FILED AS OF DATE: 19960812 DATE AS OF CHANGE: 19960812 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: IEC ELECTRONICS CORP CENTRAL INDEX KEY: 0000049728 STANDARD INDUSTRIAL CLASSIFICATION: PRINTED CIRCUIT BOARDS [3672] IRS NUMBER: 160920982 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-06508 FILM NUMBER: 96618598 BUSINESS ADDRESS: STREET 1: 105 NORTON ST CITY: NEWARK STATE: NY ZIP: 14513 BUSINESS PHONE: 3153317742 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 28, 1996 Commission file Number 0-6508 IEC ELECTRONICS CORP. (Exact name of registrant as specified in its charter.) Delaware 13-3458955 _______________________________ _______________ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 105 Norton Street, Newark, New York 14513 _______________________________________ __________ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (315) 331-7742 ___________________________________________________ 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 [ ] (APPLICABLE ONLY TO ISSUERS INVOLVED IN BACKRUPTCY PROCEEDING DURING THE PRECEEDING FIVE YEARS) Applicable _____________ Not Applicable______X________ (APPLICABLE ONLY TO CORPORATE ISSUERS) Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date: 7,391,945 shares of $.01 Par Value Common Stock outstanding as of August 12,1996 Part I. - FINANCIAL INFORMATION Item I. - FINANCIAL STATEMENTS IEC ELECTRONICS CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS JUNE 28,1996 AND SEPTEMBER 30, 1995
JUNE 28, SEPTEMBER 30, 1996 1995 ________ _____________ (unaudited) ASSETS Current Assets: Cash and cash equivalents $ 2,973,668 $ 8,639,803 Accounts receivable 21,061,927 17,378,065 Inventories 27,963,443 24,096,765 Income taxes receivable 831,688 _ Other current assets 360,720 451,444 ____________ ____________ 53,191,446 50,566,077 ____________ ____________ Property, Plant and Equipment,net 39,703,836 38,227,647 Other Assets: Cost in excess of net assets acquired,net 12,937,135 13,289,205 Note receivable from officer 355,519 355,519 Other assets 9,309 9,309 ____________ ____________ 13,301,963 13,654,033 ____________ _____________ $106,197,245 $102,447,757 ============ =============
LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Borrowing under lines of credit 8,530,000 3,540,000 Current portion of long term debt 3,768,506 3,018,497 Accounts payable 15,758,999 16,971,184 Accrued payroll and related expenses 2,588,956 3,047,203 Accrued income taxes - 1,246,680 Other accrued expenses 344,581 234,713 ___________ ____________ 30,981,042 28,058,277 ___________ ____________ Deferred income taxes 2,633,557 2,633,557 ___________ _____________ Long-Term Debt 7,208,546 6,857,403 ____________ _____________ Shareholders' Equity: Preferred stock, par value $.01 per share Authorized-500,000 shares Outstanding-0 shares Common stock, par value $.01 per share Authorized-15,000,000 shares Outstanding-7,391,945 and 7,387,366 shares repectively 73,919 73,874 Additional paid in capital 36,936,402 36,913,553 Retained Earnings 28,363,779 27,911,093 ____________ ____________ Total shareholder's equity 65,374,100 64,898,520 ____________ _____________ $106,197,245 $102,447,757 ============ ============== The accompanying notes to unaudited consolidated finanical statements are an integral part of these balance sheets.
IEC ELECTRONICS CORP. CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED JUNE 28, 1996 AND 1995
3 MONTHS ENDED 3 MONTHS ENDED June 28, 1996 JUNE 30, 1995 _______________ _______________ (unaudited) (unaudited) Net sales $ 43,351,935 $ 32,550,107 Cost of sales 42,683,056 26,197,671 ____________ ___________ Gross profit 668,879 6,352,436 Selling, general and administrative expenses 3,115,715 2,936,627 (exclusive of amortization expense shown below) Amortization expense 118,490 119,038 ____________ ___________ Operating(loss)income (2,565,326) 3,296,771 Interest expense (442,700) (252,528) Other income,net 107,352 137,092 _____________ ____________ Net(Loss) income before Taxes (2,900,674) 3,181,335 Income taxes (1,021,000) 1,275,000 _____________ ___________ Net(loss)income (1,879,674) 1,906,335 ============= =========== Net (loss)income per common and common equivalent shares $(0.25) $ 0.25 _____________ ____________ Common and common equivalent shares 7,446,168 7,476,065 _____________ ____________ The accompanying notes to unaudited consolidated financial statements are an integral part of these financial statements.
IEC ELECTRONICS CORP. CONSOLIDATED STATEMENTS OF INCOME FOR THE NINE MONTHS ENDED JUNE 28,1996 AND JUNE 30, 1995
9 MONTHS ENDED 9 MONTHS ENDED JUNE 28, 1996 JUNE 30, 1995 _______________ ______________ (unaudited) (unaudited) Net sales $134,719,082 $ 89,537,727 Cost of sales 123,193,470 77,224,818 ___________ ___________ Gross profit 11,525,612 12,312,909 Selling and adminstrative expense 9,271,420 7,386,807 (Exclusive of amortization expense shown below) Amortization expense 355,469 335,340 ____________ ____________ Operating income 1,898,723 4,590,762 Interest expense (1,190,743) (870,064) Other income,net 332,706 453,360 ____________ _____________ Net income before income taxes 1,040,686 4,237,058 Income taxes 588,000 1,695,000 ____________ _____________ Net income 452,686 2,542,058 ============ ============= Net income per common and common equivalent share $0.06 $0.34 _____________ ______________ Common and common equivalent shares 7,466,617 7,440,024 _____________ _______________ The accompanying notes to unaudited consolidated finanical statements are an integral part of these finanical statements.
IEC ELECTRONICS CORP. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED SEPTEMBER 30, 1995 AND 1994 AND THE NINE MONTHS ENDED JUNE 28, 1996
Total Common Stock Additional Retained Shareholders' _________________ Capital Earnings Equity Shares Amount ________ ______ __________ ____________ ____________ Balance, September 30, 1993 7,140,000 $ 71,400 $34,811,101 $12,262,899 $47,145,400 Exercise of stock options and re- lated income tax benefit 46,250 463 349,463 349,463 Net income 10,959,846 10,959,846 _________ _________ ___________ ___________ ___________ Balance, September 30, 1994 7,186,250 71,863 35,160,564 23,222,745 58,455,172 Issuance of Stock Purchase of Accutek 201,116 2,011 1,752,989 1,755,000 Net income 4,688,348 4,688,348 __________ __________ ____________ ___________ ___________ Balance, September 30,1995 7,387,366 73,874 36,913,553 27,911,093 64,898,520 Excise of stock options 4,579 45 22,849 22,849 Net income for thenine months ended June 28, 1996 (unaudited) 452,686 452,686 Balance, June 28,1996 (unaudited) 7,391,945 73,919 $36,936,402 $28,363,779 $65,374,100 ========= ============ ============ =========== =========== The accompanying notes to unaudited consolidated finanical statements are an integral part of these finanical statements.
IEC ELECTRONICS CORP. STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED JUNE 28, 1996 AND JUNE 30, 1995
9 MONTHS ENDED 9 MONTHS ENDED JUNE 28, 1996 JUNE 30,1995 _______________ ______________ (unaudited) (unaudited) Cash Flow From Operating Activities: Net Income $ 452,686 $ 2,542,058 Adjustments to reconcile net income to net cash (used in) provided by operating activities Depreciation 6,383,880 5,549,208 Increase in other assets _ 43.561 Gain on sale of fixed assets (8,750) (60,000) Amortization of cost in excess of net assets acquired 355,469 335,340 Changes in operating assets and liabilities: Increase accounts receivables (3,683,862) (914,719) (Increase) decrease inventories (3,866,678) (1,010,767) (Increase) decrease in income taxes receivable (831,688) 1,366,056 (Increase) decrease in other current assets 90,724 (44,452) Decrease in accounts payable (1,212,185) (1,960,604) Decrease in accrued payroll and related expenses (458,247) (680,501) (Increase) decrease in accrued income taxes (1,246,680) 858,568 Increase in other accrued expenses 99,868 102,053 ___________ _____________ Net cash used in operating activities $ (3,925,463) $ 8,145,335 Cash Flow From Investing Activities: Purchases property, plant and equipment (7,860,072) (5,706,216) Purchase of Accutek, net of cash acquired _ (1,751,832) Merger related costs (3,397) (855) Proceeds from exercise of options 22,895 _ Proceeds from sale of fixed assets 8,750 62,000 ___________ ____________ Net cash used in investing activities $ (7,831,824) $ (7,396,903) Cash Flow From Financing Activities: Net borrowing under line of Credit agreements 5,100,000 1,991,000 Proceeds from long term debt 3,970,000 _ Principal payments on long term debt (2,978,848) (1,154,723) ___________ __________ Net cash provided from financing activities $ 6,091,152 $ 836,277 ____________ __________ Net(Decrease) Increase in cash and cash equivalents (5,666,135) 1,584,709 Cash and cash equivalents at beginning of period $ 8,639,803 $ 6,859,073 ___________ ___________ Cash and cash equivalents at end of period $ 2,973,668 $ 8,443,782 =========== =========== Supplemental Disclosures for Cash Flow Information: Cash paid during period for: Interest $ 1,190,743 $ 870,064 =========== ============== Income taxes $ 2,509,680 $ 10,775 =========== ============== Cash received during the period: Income taxes - 555,843 =========== ============= Non cash investing activities: Issuance of Common stock for purchase of Accutek Inc. - 1,755,000 ============ ============ Liabilities assumed - 2,356,162 ============ ============ The accompanying notes to unaudited consolidated financial statements are an intgeral part of these financial statements.
IEC ELECTRONICS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 28, 1996 Note 1. Business and Summary of Significant Accounting Policies Business ________ IEC Electronics Corp. (IEC)is an independent contract manufacturer of complex printed circuit board assemblies and electronic products and systems. IEC offers its customers a wide range of manufacturing services, on either a turnkey or consignment basis, including material procurement and control, manufacturing and test engineering support, statistical quality assurance and complete resource mangement. Consolidation ______________ The consolidated finanical statements include the accounts of IEC and its wholly-owned subsidiaries, Calidad Electronics, Inc. (Calidad) and Accutek,Inc. (Accutek)(collectively, the Company). All significant intercompany transactions and accounts have been eliminated. Effective November 21, 1994, the Company acquired all of the outstanding common stock of Accutek, a contract contract electronics manufacturer for approximately $4 million in cash and common stock. The acquistion has been accounted for using the purchase method of accounting, and accordngly, Acutek's net assets and results of operations are included in the consolidated financial statements since the date of acquistion. The purchase price has been allocated to the assets acquired and liabilities assumed based on estimated fair values at the date of acquistion. Cost in excess of net assets acquired related to the acquistion is being amortized on a straight line basis over a period of 15 years. The following unaudited pro forma summary presents the consolidated results of operations as if the acquistion had occurred on October 1, 1994, after giving effect to certain adjustments, including related income tax effects. These pro forma results have been prepared for comparative purposes only and do not purport to be indicative of what could have occurred had the acquistion been made at the beginning of fiscal 1995 or of results which may occur in the future. Furthermore, no effect has been given in the pro forma information for anticipated operating and synergistic benefits. IEC ELECTRONICS CORP. NOTES TO CONSOLIDATED FINANICAL STATEMENTS JUNE 28, 1996 3 Months 9 Months Ended Ended June 28, 1995 June 30, 1995 ______________ _____________ (Unaudited) (Unaudited) Net Sales 32,550,107 91,368,342 ______________ _____________ Net Income 1,906,335 2,713,710 ______________ ______________ Net Income per common and common share equivalent $0.25 $0.36 ______________ _____________ Revenue Recognition ___________________ The Company recognizes revenues upon shipment of product for both turnkey and consignment contracts. Inventories ___________ Inventories are stated at the lower of cost(first-in, first-out) or market. The major classifications of inventories are as follows at period end: June 28, September 30, 1996 1995 ______________ __________________ (unaudited) Raw Materials 22,621,057 18,502,374 Work-in-process 5,342,386 5,594,391 ______________ __________________ Total $ 27,963,443 $ 24,096,765 ============== =================== Unaudited Finanical Statements ______________________________ The accompanying unaudited finanical statements as of June 28, 1996, and for the nine months ended June 28, 1996 and June 30, 1995 have been prepared in accordance with generally accepted accounting principles for interm financial information. In the opinion of management, all adjustments considered necessary for a fair presentation, which consist solely of normal recurring adjustments have been included. The accompanying financial statements should be read in conjuction with the finanical statements and notes thereto included in the Company's September 30, 1995 Annual Report on Form 10-K. IEC ELECTRONICS CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS JUNE 28, 1996 Financing Arrangements ______________________ At June 28, 1996, $8,500,000 and $9,451,163, is outstanding on the working capital and equipment line of credit repectively. Amounts borrowed under the equipment line of credit are repayable monthly from date of borrowing over a term of 60 months. Legal Matters _____________ In March 1994, the Company and certain of its officers were named as defendants in three separate complaints filed by certain shareholders who claim to represent a class of shareholders (the Class), alleging that the defendants violated the federal securities laws. In March 1995 these three action into a single action in which it is alleged that the plaintiffs and the Class purchased common stock of the Company at inflated prices in reliance upon statements made by the defendants and that they were thereby damaged. An answer in which the defendants denied all wrongdoing was served in January 1996. To date, No documents have been produced and no depositions have been taken. Plaintiff's motion for class certification was withdrawn in July 1996. The amount of the alleged damages, if any, has not been quantified. While the outcome can not be predicated with certainty, it is the opinion of mangement following a review with counsel that the allegations are without merit and the ultimate resolution of this ligation will not have a material adverse effect on the Company's financial position or results of operations. The Company is also involved with other legal matters in the ordinary course of business, including certain employment matters. The outcomes of these matters are also uncertain at this time and related loss contingencies, if any, are currently not estimable. Management believes these matters to be without merit and believes that resolution of these matters will likewise not have a material adverse effect on the Company's financial position or results of operations. Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND _______________________________________________________________ RESULTS OF OPERATIONS _____________________ Results of Operations-Three months ended June 28, 1996, as compared to the _______________________________________________________________________________ three months ended June 30, 1995. _________________________________ Net sales for the three month period ended June 28, 1996, were $43,351,935 as compared to $32,550,107 for the comparable period of the prior fiscal year, a increase of 33.2% The increase in sales is primarily due to sales to new customers and an increase in turnkey sales to 92%, as compared to 57% for the prior fiscal year. While the shortages of components has eased, certain specific shortages and customer rescheduling, especially in the computer and telecommunication segments, continue to impact both sales and earnings. Gross profit as a percentage of sales decreased to 1.5% in the three months ended June 28, 1996, from 19.5% in the comparable period of the prior year. The decrease in gross profit as a percentage of sales is primarily due to higher material content in the cost of goods sold and excess overhead expense caused by underutilized manufacturing capacity. Selling and administrative expense increased to $3,115,715 in the three months ended June 28,1996, from $2,936,627 in the comparable period of the prior fiscal year. This increase is primarily due to an increase in salaries and related costs and an increase in commission expense related to the increased sales. As a percentage of net sales, selling and general adminstrative expenses decreased to 7.2% in the current fiscal quarter from 9.0% of net sales in the same quarter of the prior fiscal year. Net Income for the quarter decreased from $1,906,335 in the prior fiscal year to a net loss of $1,879,674 in the current quarter. The current quarter loss per share was $.25 as compared to earnings per share of $.25 in the prior fiscal year quarter. Results of Operations-Nine months ended June 28, 1996, as compared to the nine ______________________________________________________________________________ months ended June 30, 1995. __________________________ Net sales for the frist nine months of the fiscal year 1996 were $134,719,082 as compared to $89,537,727 for the same period of the prior fiscal year. Sales for the nine months period increased 50.5% from those in the same period of fiscal year 1995. The increase is primarily due to sales to new customers and continued sales to existing customers. Turnkey sales were 84% of net sales in the nine months ended June 28, 1996, as compared to 63% for the comparable period of the prior fiscal year. As a result of the substantial increase in net turnkey sales and the resultant increase in material content and manufacturing inefficencies, gross profit decreased to 8.6% in the nine months ended June 28, 1996, from 13.8% in the same period of fiscal year 1995. Selling and adminstrative expenses increased to $9,271,420 in the frist nine months of fiscal year 1996, from $7,386,807 in the frist nine months of fiscal year 1995. The increase is primarily due to increases in salaries and related costs and increases in commission expense related to increased sales. As a percentage of net sales, selling and adminstrative expenses decreased to 6.9% to 6.9% in the current fiscal year from 8.2% of the net sales in the prior year. Net income for the frist nine months of fiscal year 1996 decreased to $452,686 from $2,542,686 in the same period of fiscal year 1995. Earings per share were $.06 for the nine months as compared to $.34 per share in the same period of the fiscal year 1995. In the contract electronics industry, business is managed by job on a customer basis. The cost of goods and resulting gross profit as a percentage of sales can vary widely amoung different jobs within both turnkey and consignment sales and are affected by a number of factors including the mix of consignment sales and turnkey contracts, the percentage of material content, the percentage of labor content, quantities ordered, complexity of the assemblies, the degree of automation utilized in the assembly process and the efficiencies achieved by the Company in managing material procurement costs, inventory levels and manufacturing processes. The Company has experienced component shortages eariler in the year which cause inefficiencies due to frequent customer rescheduling, short manufacturing lot sizes, production interruptions and restarts, set-up duplication and production line downtime. Other rescheduling has been the result of customers adjusting to their current business conditions. All of these factors are continually changing and are interrelated. The effect of each factor cannot be separately determined. Certain specific components shortages are expected to continue in future months and will continue to have an impact on the Company's results. However, the scope and magnitude of their aggregate effects on sales and profits cannot be determined until close to the end of a given quarter when it becomes known that the short material in question will not arrive before quarter end and therefore will have a determinable effect on the resultant mix of production and delivery schedules. Accordingly, these factors may result in quarter to quarter fluctuations in both revenue and earnings. Liquidity and Capital Resources Net sales for the month of June 1996 were $18,018,711, representing 42% of the total net sales for the three month period ending June 28, 1996. The Company operates on a calendar quarter consisting of four weeks in the first and second months and five weeks in the third month. At June 28,1996, approximately $8,500,000 and $9,451,000 is outstanding on the working capital and equipment line of credit, respectively. Amounts borrowed under the equipment line of credit are repayable monthly from the date of borrowing over a term of 60 months. At June 28, 1996, approximately $15,050,000 was available for borrowing under these existing lines of credit. Delivery schedules continue to be paced by certain specific component shortages and long lead times which adversely affect operations and working capital utilization. The Company believes that its cash balances, funds generated from operations and its existing credit facilities will be sufficient for the Company to meet its capital expenditures and working capital needs for its operations as presently conducted. As part of its overall business strategy, the Company may from time to time evaluate acquistion opportunities. The funding for these future transactions, if any, may require the Company to obtain additional sources of financing. The impact of inflation on the Company's operations has been minimal due to the fact that it is able to adjust its bids to reflect any inflationary increases in cost. PART II - OTHER INFORMATION Item 1 Legal Proceedings _________________ On March 23, 1994,three class action complaints were filed against the Company and certain of its officers and directors in the United States District Court for the Western District of New York located in Rochester, New York. The respective plainiffs are Jacqueline Bowkey, Jeffrey Sadler and Maude Thompson and the defendants in each action are the Company, Roger E. Main (now deceased), the former Chairman and Chief Executive Officer of the Company, Timothy J. Kennedy, Vice President, Secretary, Treasurer and Chief Financial Officer of the Company, Russell E. Stingel, President of the Company, and Edward Butka, Vice President of the Company. In each action the plainiff, claiming to represent a class of shareholders who purchased common stock of the Company between January 24,1994 and March 22, 1994 (the "Class"), alleges (1) that defendants violated the federal securities laws by making mispresentations regarding the future earnings and business propects of the Company and (2) that Plantiff and the Class purchased common stock of the Company at artificially inflated prices in reliance upon said statements and that they were damaged thereby. In each action, plainiff seeks unspecified damages. The three actions were consolidated in March 1995. An answer, in which defendants denied all allegations of wrongdoing, was served in January 1996. To date, no documents have been produced and no depositions have been taken. A motion for class certification made by plainiffs, returnable July 11, 1996, was withdrawn and accordingly no class has been certified. Counsel for plainiffs have stated that they intend to voluntarily discontinue the action if the details of such dismissal can be agreed upon. Such a discontinuance would not involve any payment by the Company. At this time there is no way in which the Company can quantify its monetary exposure since, even if the action is not voluntarily discontinued and even if a Class is certified,the Company has no way of knowing how many people will be in the Class or what almount their claimed losses may aggregate. The defendants believe that the claims are totally without merit and will continue to defend the actions vigorously. Item 2. Changes in Securities _____________________ None. Item 3. Defaults Upon Senior Securities _______________________________ None. Item 4. Submission of Matters to a Vote of Securities Holders. _____________________________________________________ None. Item 5. Other Information _________________ On July 8, 1996, Roger E. Main, the Company's Chief Executive Officer and a director of the Company, died. Russell E. Stingel, the Company's President and Chief Operating Officer is acting Chief Executive Officer. Item 6 Exhibits and Reports on Form 8-K ________________________________ (a) Exhibits None. (b) Reports on Form 8-K None. IEC ELECTRONICS CORP. SIGNATURES Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly cause this report to be signed on its behalf by the undersigned thereunto duly authorized. IEC ELECTRONICS CORP. Registrant August 12, 1996 By:/s/Russell E. Stingel Date ______________________ Russell E. Stingel President, Chief Operating Officer and Acting Chief Executive Officer August 12, 1996 By:/s/Timothy J. Kennedy ____________________ Date Timothy J. Kennedy Vice President, Treasurer, Secretary and Chief Finanical Chief -----END PRIVACY-ENHANCED MESSAGE-----