-----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, Jt5k1I3TR+gCRmOkEGxB/y8dfuPmhf+3T5ieWu2CFpxyBmWCQVweNRVp2EEIPlBD xYBkZGMAK1ixH1PDMW/5fw== 0000049728-97-000003.txt : 19970221 0000049728-97-000003.hdr.sgml : 19970221 ACCESSION NUMBER: 0000049728-97-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970210 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: 97521526 BUSINESS ADDRESS: STREET 1: 105 NORTON ST CITY: NEWARK STATE: NY ZIP: 14513 BUSINESS PHONE: 3153317742 10-Q 1 FRIST QUARTER 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange - Act of 1934 For the quarterly period ended December 27, 1996 Commission file Number 0-6508 IEC ELECTRONICS CORP ----------------------------------------------------- (Exact name of registrant as specified in its charter.) Delware 13-3458955 ----------------------------- ----------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 105 Norton Street, Newark, New York 14513 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices (Zip Code) (315) 331-7742 - -------------------------------------------------------------------------------- Registrant's telephone number, including area code: Indicate by check mark whether the registrant(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date: Common Stock, $0.01 Par Value - 7,415,070 shares as of February 10, 1997. Page 1 of 14 IEC ELECTRONICS CORP INDEX PART 1 FINANCIAL INFORMATION Page Number Item 1. Financial Statements Consolidated Balance Sheets as of : December 27, 1996 (Unaudited) and September 30, 1996....... 4 Consolidated Statements of Income for the three months ended: December 27, 1996 (Unaudited) and December 29, 1995(Unaudited)................................ 5 Consolidated Statement of Cash Flows for the three months ended: December 27, 1996 (Unaudited) and December 29, 1995(Unaudited)................................ 6 Consolidated Statement of Changes in Shareholders' Equity for the years ended September 30, 1996 and 1995 and for the three months ended December 27, 1996 (Unaudited)............ 7 Notes to Consolidated Financial Statements (Unaudited) ...................................... 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ................ 11 PART II Item 1. Legal Proceedings............................................ 13 Item 2. Changes in Securities........................................ 13 Page 2 of 13 Item 3. Defaults Upon Senior Securities.............................. 13 Item 4. Submission of Matters to a Vote of Security Holders.......... 13 Item 5. Other Information............................................ 13 Item 6. Exhibits and Reports on Form 8-K............................. 13 Signature ........................................................... 14 Page 3 of 14 IEC ELECTRONICS CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 27, 1996 AND SEPTEMBER 30, 1996
DECEMBER 27,1996 SEPTEMBER 30,1996 ---------------- ------------------ ASSETS (Unaudited) Current Assets: Cash and cash equivalents $2,066,330 $1,481,694 Accounts receivable 28,643,442 28,210,567 Inventories 28,642,442 26,006,235 Income taxes receivable 0 756,879 Deferred income taxes 702,192 702,192 Other current assets (63,467) 165,446 ------------- ------------- Total current assets 59,990,939 57,323,013 ------------- ------------- Property, Plant and Equipment, net 38,748,165 39,014,104 ------------ ------------- Other Assets: Cost in excess of net assets acquired, net 12,700,156 12,818,645 Note receivable from officer 393,464 355,519 Other assets 9,309 9,309 ------------ ------------ 13,102,929 13,183,473 ------------ ------------ $111,842,033 $109,520,590 ============ ============= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Borrowings under lines of credit $8,530,000 $8,530,000 Current portion of long-term debt 2,753,464 2,781,517 Accounts payable 19,537,263 16,974,916 Accrued payroll and related expenses 2,208,391 2,772,330 Accrued income taxes 259,121 0 Other accrued expenses 211,910 305,237 ------------ ------------- Total current liabilities 33,500,149 31,364,000 ------------ ------------- Deferred Income Taxes 3,290,749 3,290,749 ------------ ------------- Long-Term Debt 6,682,102 7,409,076 ------------ ------------- 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 - 7,415,070 shares 74,151 74,151 Additional paid-in capital 36,973,633 36,973,633 Retained earnings 31,321,249 30,408,981 ------------ ------------ Total shareholders' equity 68,369,033 67,456,765 ------------ ------------ $111,842,033 $109,520,590 ============ ============ The accompanying notes to unaudited consolidated financial statements are an integral part of these balance sheets
Page 4 of 14 IEC ELECTRONICS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED DECEMBER 27, 1996 AND DECEMBER 29, 1995
3 MONTHS ENDED 3 MONTHS ENDED DECEMBER 27,1996 DECEMBER 29, 1995 ---------------- ----------------- (Unaudited) (Unaudited) Net sales $50,522,239 $46,982,183 Cost of sales 45,814,201 40,402,751 ---------- ---------- Gross profit 4,708,038 6,579,432 Selling and administrative expenses (exclusive of amortization expense shown below) 2,733,673 3,076,093 Amortization expense 118,490 118,490 ---------- ---------- Operating income 1,855,875 3,384,849 Interest expense (390,209) (336,519) Other income, net 95,602 122,203 ---------- ---------- Net income before income 1,561,268 3,170,533 taxes Income taxes 649,000 1,257,000 ---------- ---------- Net Income $912,268 $1,913,533 ========== =========== Net income per common and common equivalent share $0.12 $0.26 ---------- ---------- Common and common equivalent shares 7,503,400 7,475,073 ---------- ---------- The accompanying notes to unaudited consolidated financial statements are an integral part of these financial statements.
Page 5 of 14 IEC ELECTRONICS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED DECEMBER 27, 1996 AND DECEMBER 29, 1995
3 MONTHS 3 MONTHS ENDED ENDED DECEMBER 27, 1996 DECEMBER 29,1995 ----------------- ---------------- (Unaudited) (Unaudited) Cash Flows from Operating Activities: Net Income $912,268 $1,913,533 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 2,351,760 1,935,960 Increase in other assets (37,945) - Gain on sale of fixed assets (14,000) - Amortization of cost in excess of net assets acquired 118,490 118,490 Changes in operating assets and liabilities: (Increase)in accounts receivable (432,875) (4,420,049) (Increase)in inventories (2,636,207) (2,930,220) Decrease in income taxes receivable 756,879 - Decrease in other current assets 228,913 204,962 Increase (Decrease) in accounts payable 2,562,347 960,701 Decrease in accrued payroll and related expenses (563,939) (884,854) Decrease in accrued income taxes 259,121 (95,240) (Decrease)Increase in other accrued expenses (93,327) 135,688 ------------ ----------- Net cash provided by (used in) operating activities 3,411,485 (3,061,029) ------------ ----------- Cash Flows from Investing Activities: Purchases of property, plant and equipment (2,085,822) (2,788,522) Proceeds from sale of property 14,000 - Merger related costs - (3,285) ------------ ----------- Net cash used in investing activities (2,071,822) (2,791,807) ------------ ----------- Cash Flows from Financing Activities: Net borrowings under line of credit - 4,000,000 agreements Proceeds from long-term borrowings - 2,398,000 Principal payments on long-term debt (755,027) (888,210) ----------- ----------- Net cash (used in)provided by financing activities (755,027) 5,509,790 ------------ ----------- Net Increase (Decrease) in cash and cash equivalents 584,636 (343,046) Cash and cash equivalents at beginning of period 1,481,694 8,639,803 Cash and cash equivalents at end of period $2,066,330 $8,296,757 =========== =========== Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest $390,209 $336,519 ======== ========== Income taxes $ - $1,352,240 ======== ========== Cash received during the period for: Income taxes $367,000 $ - ======== ========= The accompanying notes to unaudited consolidated financial statements are an integral partof these financial statements.
Page 6 of 14 IEC ELECTRONICS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED SEPTEMBER 30, 1995 AND 1996 AND THE THREE MONTHS ENDED DECEMBER 27, 1996
Total Common Stock Additional Retained Shareholders' ----------------- Shares Amount Capital Earnings Equity ------------------------------------------------ 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 Exercise of stock options 27,704 277 60,080 - 60,357 Net income - - - 2,497,888 2,497,888 ---------------------------------------------------- Balance,September 30, 1996 7,415,070 74,151 36,973,633 30,408,981 67,456,765 Net income for the three months ended December 27, 1996 - - - 912,268 912,268 (unaudited) ===================================================== Balance,December 27, 1996 7,415,070 $74,151 $36,973,633 $31,321,249 $68,369,033 (unaudited) ===================================================== The accompanying notes to unaudited consolidated financial statements are an integral part of these financial statements.
Page 7 of 14 IEC ELECTRONICS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 27, 1996 (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 management. Consolidation ------------- The consolidated financial 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 electronics manufacturer for approximately $4 million in cash and common stock. The acquisition has been accounted for using the purchase method of accounting, and accordingly, Accutek's net assets and results of operations are included in the consolidated financial statements since the date of acquisition. The purchase price has been allocated to the assets acquired and liabilities assumed based on estimated fair values at the date of acquisition. Cost in excess of net assets acquired related to the acquisition is being amortized on a straight-line basis over a period of 15 years. Page 8 of 14 IEC ELECTRONICS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 27, 1996 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: December 27, September 30, 1996 1996 ---------------- ---------------- (Unaudited) Raw materials $23,775,299 $20,914,619 Work-in-process 4,867,143 5,091,616 ---------------- ---------------- $28,642,442 $26,006,235 ================ ================ Unaudited Finanical Statements ------------------------------ The accompanying unaudited financial statements as of December 27, 1996, and for the three months ended December 27, 1996 have been prepared in accordance with generally accepted accounting principles for interim financial information. In the opinion of management, all adjustments considered necessary for a fair presentation, which consist solely of normal recurring adjustments have been included. The accompanying financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's September 30, 1996 Annual Report on Form 10-K. Page 9 of 14 IEC ELECTRONICS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 27, 1996 (2) Financing Arrangements At December 27, 1996, $8,500,000 and $8,179,000 is outstanding on the working capital and equipment line of credit, respectively. Amounts borrowed under the equipment line of credit are repayable monthly from date of borrowing over a term of 60 months. (3) Legal Matters The Company is involved with various legal matters in the ordinary course of business, including certain employment matters. The outcomes of these matters are 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 not have a material adverse effect on the Company's financial position or results of operations. Page 10 of 14 Item 2:Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations --------------------- Results of Operations - Three months ended December 27, 1996 as --------------------------------------------------------------- compared to three months ended December 29,1995. ------------------------------------------------ Net sales for the three month period ended December 27, 1996, were $50,522,239 as compared to $46,982,183 for the comparable period of the prior fiscal year, an increase of 7.5%. The increase in sales is primarily due to sales to new customers, offset by a decrease in sales to some existing customers. Turnkey sales were 91% of net sales in the three months ended December 27,1996, as compared to 76% for the comparable period of the prior year. Customer reschedules and the resulting material shortages impacted both sales and earnings for the quarter. Gross profit as a percentage of sales was 9.3% in the three months ended December 27, 1996, down from 14% in the comparable period of the prior year. This decrease is primarily due to the increased raw material value in the cost of sales and underutilized manufacturing capacity. This underutilization is primarily the effect of customer rescheduling which, in turn, causes production interruption and restarts, set-up expense and production downtime resulting in direct labor inefficiency. All of these factors are continually changing and are interrelated. The effect of each factor cannot be separately determined. While component shortages have eased, certain component shortages also affected operating results. Accordingly, these factors may result in quarter-to-quarter fluctuations in both future revenues and earnings. The cost of sales and resulting gross profit as a percentage of sales can vary widely among different jobs within both turnkey and consignment sales and are affected by a number of factors including the mix of consignment 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. Selling and administrative expenses decreased to $2,733,673 in the three months ended December 27, 1996, from $3,076,093 in the comparable period of the prior fiscal year. This decrease can be attributed primarily to decreased commission expense related to an increase in sales of non-commission accounts and decrease in sales of commission accounts. As a percentage of net sales, selling and administrative expenses decreased to 5.4% from 6.5% in the same quarter of the prior year. Net income for the quarter decreased to $912,268 from $1,913,533 in the first quarter of fiscal year 1996. Earnings per share were $.12 as compared to $.26 per share in the comparable period of fiscal 1996. Page 11 of 14 Liquidity and Capital Resources Net sales for the month of December 1996 were $19,363,836, representing 38% of the total net sales for the three month period ending December 27, 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 December 27, 1996, $8,500,000 and $8,179,000 is outstanding on the working capital and equipment line of credit, respectively. Amounts borrowed under the equipment line of credit are repayable monthly from date of borrowing over a term of 60 months. At December 27, 1996, approximately $16,321,000 was available for borrowing under these existing lines of credit. 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 acquisition 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. Page 12 of 14 PART II. OTHER INFORMATION Item 1 -- Legal Proceedings None. Item 2 -- Changes in Securities None. Item 3 -- Defaults Upon Senior Securities None. Item 4 -- Submission of Matters to a Vote of Security Holders None. Item 5 -- Other Information None. Item 6 -- Exhibits and Reports on Form 8-K a. Exhibits None. b. Reports on Form 8-K None. Page 13 of 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. IEC ELECTRONICS CORP. REGISTRANT Dated: February 10, 1997 By:/s/Russell E. Stingel ------------------------------ Russell E. Stingel President, Chief Executive Officer Dated: February 10, 1997 By:/s/Timothy J. Kennedy ------------------------------ Timothy J. Kennedy Vice President, Treasurer, Secretary and Chief Finanical Officer Page 14 of 14 EX-27 2 12/31/96 FINANCIALS
5 1 3-MOS SEP-30-1996 OCT-01-1996 DEC-31-1996 2,066,330 0 28,643,442 0 28,642,442 59,288,747 66,355,210 33,282,863 111,139,841 33,500,000 6,682,102 0 0 74,151 68,294,882 111,139,841 50,582,237 50,617,841 45,814,201 2,733,673 0 0 390,209 1,679,758 649,000 0 0 0 0 912,268 0.120 0.120
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