-----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, MQW2UisEsthmENtS7i+e847gz52RJcj/F5nycrwOHHpjhHghozNlcITzIy4gos+/ 7wGbHLRAuvSvy8kDAxImQw== 0000049728-98-000004.txt : 19980210 0000049728-98-000004.hdr.sgml : 19980210 ACCESSION NUMBER: 0000049728-98-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971226 FILED AS OF DATE: 19980209 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: SEC FILE NUMBER: 000-06508 FILM NUMBER: 98526398 BUSINESS ADDRESS: STREET 1: 105 NORTON ST CITY: NEWARK STATE: NY ZIP: 14513 BUSINESS PHONE: 3153317742 10-Q 1 FIRST QUARTER 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange - - - Act of 1934 For the quarterly period ended December 26, 1997 Commission file Number 0-6508 IEC ELECTRONICS CORP. ----------------------------------------------------- (Exact name of registrant as specified in its charter.) Delaware 13-3458955 ----------------------------- ----------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 105 Norton Street, Newark, New York 14513 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices (Zip Code) (315) 331-7742 - -------------------------------------------------------------------------------- Registrant's telephone number, including area code: Indicate by check mark whether the registrant(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date: Common Stock, $0.01 Par Value - 7,557,701 shares as of Feburary 9, 1998. Page 1 of 12 PART 1 FINANCIAL INFORMATION Page Number Item 1. Financial Statements Consolidated Balance Sheets as of : December 26, 1997 (Unaudited) and September 30, 1997.......... 4 Consolidated Statements of Income for the three months ended: December 26, 1997 (Unaudited) and September 30, 1997............................................ 5 Consolidated Statement of Cash Flows for the three months ended: December 26, 1997 (Unaudited) and December 27, 1996............................................. 6 Notes to Consolidated Financial Statements (Unaudited)......................................... 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations..................... 9 PART II Item 1. Legal Proceedings.............................................. 11 Item 2. Changes in Securities.......................................... 11 Page 2 of 12 Item 3. Defaults Upon Senior Securities................................ 11 Item 4. Submission of Matters to a Vote of Security Holders............ 11 Item 5. Other Information.............................................. 11 Item 6. Exhibits and Reports on Form 8-K............................... 11 Signature ............................................................. 12 Page 3 of 12 IEC ELECTRONICS CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 26, 1997 AND SEPTEMBER 30, 1997 (in thousands, except for share and per share data)
DECEMBER 26,1997 SEPTEMBER 30,1997 ---------------- ------------------ ASSETS (Unaudited) Current Assets: Cash and cash equivalents $146 $3,921 Accounts receivable 55,569 49,045 Inventories 41,545 45,360 Deferred income taxes 1,900 1,900 Other current assets 121 98 --------- ---------- Total current assets 99,281 100,324 --------- ---------- Property, Plant and Equipment, net 40,788 39,391 ---------- ---------- Other Assets: Cost in excess of net assets acquired, net 12,227 12,346 Other assets 9 9 ----------- ---------- $152,305 $152,070 =========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Borrowings under lines of credit $21,030 $10,530 Current portion of long-term debt 3,658 3,291 Accounts payable 32,365 43,904 Accrued payroll and related expenses 3,733 5,611 Accrued income taxes 1,612 1,887 Other accrued expenses 517 479 ------- ------- Total current liabilities 62,915 65,702 ------- ------- Deferred Income Taxes 3,919 3,919 ------- ------- Long-Term Debt 7,648 6,988 ------- ------ 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 - 7,557,701 shares and 7,552,201 shares 76 75 Additional paid-in capital 38,464 38,430 Retained earnings 39,694 37,367 Treasury Stock, at cost - 20,573 shares -411 -411 ------- ------- Total shareholders' equity 77,823 75,461 ------- -------- $152,305 $152,070 ======== ======== The accompanying notes to unaudited consolidated financial statements are an integral part of these balance sheets
Page 4 of 12 IEC ELECTRONICS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED DECEMBER 26, 1997 AND DECEMBER 27, 1996 (in thousands, except per share data)
3 MONTHS ENDED 3 MONTHS ENDED DECEMBER 26, 1997 DECEMBER 27, 1996 -------------- ------------------ (Unaudited) (Unaudited) Net sales $94,115 $50,522 Cost of sales 85,427 45,814 ------- ------- Gross profit 8,688 4,708 Selling and administrative expenses 4,300 2,852 ------- ------- Operating income 4,388 1,856 Interest expense (648) (390) Other income, net 44 95 ------- ------- income before income taxes 3,784 1,561 Income taxes 1,457 649 ------- ------- Net Income $2,327 $912 ======= ======= Net income per share: Basic $0.31 $0.12 Diluted $0.30 $0.12 Weighted average number of shares: Basic 7,534 7,415 Diluted 7,784 7,786 The accompanying notes to unaudited consolidated financial statements are an integral part of these financial statements.
Page 5 of 12 IEC ELECTRONICS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED DECEMBER 26, 1997 AND DECEMBER 27, 1996 (in thousands)
3 MONTHS 3 MONTHS ENDED ENDED DECEMBER 26, DECEMBER 27, 1997 1996 ------------ ------------ (Unaudited) (Unaudited) Cash Flows from Operating Activities: Net Income $2,327 $912 Adjustments to reconcile net income to net cash provided by(used in)operating activities: Depreciation and amortization 2,450 2,351 Increase in other assets - (37) Gain on sale of fixed assets - (14) Amortization of cost in excess of net assets acquired 118 118 Changes in operating assets and liabilities: Increase in accounts receivable (6,523) (432) Decrease (Increase) in inventories 3,815 (2,636) Decrease in income taxes receivable - 757 Decrease (Increase)in other current assets (22) 229 Increase (Decrease) in accounts payable (11,539) 2,562 Decrease in accrued payroll and related expenses (1,878) (564) Increase (Decrease)in accrued income taxes (275) 259 Increase (Decrease) in other accrued expenses 37 (93) ------- ------- Net cash provided by (used in)operating activities (11,490) 3,411 ------- ------- Cash Flows from Investing Activities: Purchases of property, plant and equipment (3,847) (2,086) Proceeds from sale of property - 14 ------- -------- Net cash used in investing activities (3,847) (2,072) ------- -------- Cash Flows from Financing Activities: Exercise of stock options 34 - Net borrowings under line of credit agreements 12,500 - Principal payments on long-term debt (972) (755) -------- --------- Net cash provided by financing activities 11,562 (755) -------- --------- Net increase(decrease)in cash and cash equivalents (3,775) 584 Cash and cash equivalents at beginning of period 3,921 1,482 -------- --------- Cash and cash equivalents at end of period $146 $2,066 ========== ========== Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest $648 $390 Income taxes $1,745 $ - ========== ========== Cash received during the period for: Income taxes $ - $367 - ========== ========== The accompanying notes to unaudited consolidated financial statements are an integral part of these financial statements.
Page 6 of 12 IEC ELECTRONICS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 26, 1997 Dollar amounts are presented in thousands of dollars (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, IEC-Edinburg, Texas Inc. (previously Calidad Electronics Inc.)and IEC-Arab, Alabama Inc. (previously Accutek, Inc.) (collectively, the Company). All significant intercompany transactions and accounts have been eliminated. Revenue Recognition - ------------------- The Company recognizes revenues upon shipment of product for both turnkey and consignment contracts. Cash and Cash Equivalents - ------------------------- Cash and cash equivalents include money market and bank account balances. The Company's cash and cash equivlents are held and managed by institutions which follow the Company's investment policy. The fair value of the Company's finanical instruments approximates carrying amounts due to the relatively short maturies and variable interest rates of the instruments, which approximate current market interest rates. Inventories - ----------- Inventories are stated at the lower of cost (first-in, first-out) or market. The major classifications of inventories are as follows at period end: December 26, September 30, 1997 1997 ---------------- ---------------- (Unaudited) Raw materials $33,064 $38,209 Work-in-process 8,481 7,151 ---------------- ---------------- $41,545 $45,360 ================ ================ Unaudited Finanical Statements - ------------------------------ The accompaning unaudited finanical statements as of December 26, 1997, and for the three months ended December 27, 1996 have been prepared in accordance with generally accepted accounting princples for the interm finanica1 information. In the opinion management, all adjustments considered necessary for a fair presenation, which consist solely of normal recurring adjustments have been included. The accompaning finanical statements should be read in conjuction with the financial statements and notes thereto included in the Company's September 30, 1997 Annual Report on Form 10-K. Page 7 of 12 IEC ELECTRONICS CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 26, 1997 Dollar amounts are presented in thousands of dollars New Pronouncements - ------------------ The Company adopted, Financial Accounting Standards Board Statement of Financial Accounting Standards No. 128 "Earnings per Share" (SFAS No.128), during the quarter ended December 26, 1997 and restated previously reported earnings per share. Basic earnings per common share were computed by dividing net income by the weighted average number of shares of common stock outstanding during the three month periods ending December 26, 1997 and December 27, 1996. Diluted earnings earnings per share were computed by the weighted number of common shares outstanding and common stock equivalents using the treasury stock method for the three month periods ending December 26, 1997 and December 27, 1996. All references to net income per share should be assumed to have been calculated under SFAS No. 128. (2) Financing Arrangements At December 26, 1997, $21,000 and $10,504 were 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 life term of 60 months. On January 23, 1998, the Company received a commitment from Chase Manhattan Bank to underwrite and to act as adminstative agent for a $75 million senior credit facility. The commitment is subject to customary conditions including the execution of a definitive Credit Agreement, which is expected to close in late February 1998. (3) Legal Matters There are no material legal proceedings pending to which the Company or any of its subsidiaries is a party or to which any of the Company's or subsidiaries' property is subject. To the Company's knowledge, there are no material legal proceedings to which any director, officer or affiliate of the Company, or any beneficial owner of more than 5 percent (5%) of Common Stock, or any associate of any of the foregoing, is a party adverse to the Company or any of its subsidiaries. Page 8 of 12 Management's Discussion and Analysis of Financial Condition and - --------------------------------------------------------------- Results of Operations - --------------------- Results of Operations - Three months ended December 26, 1997 as - --------------------------------------------------------------- compared to three months ended December 27, 1996. - ------------------------------------------------ Net sales for the three month period ended December 26, 1997, were $94,115 as compared to $50,522 for the comparable period of the prior fiscal year, an increase of 86.3%. The increase in sales is primarily due to increases in demand and a further shift to turnkey sales, which represented 98% and 91% of net sales in the first quarter of 1998 and 1997, respectively. This quarter was also affected by the unusally high material content of a large job. Gross profit as a percentage of sales was 9.2% in the three months ended December 26, 1997, down from 9.3% in the comparable period of the prior year. This decrease is primarily due to the high material content noted in the sales discussion. The cost of sales 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 and turnkey contracts, the percentage of material content, the percentage of labor content, quantities ordered, and the 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 selling and administrative expenses increased to $4,300 in the three months ended December 26, 1997, from $2,734 in the comparable period of the prior fiscal year. This increase can be attributed primarily to staff additions, increases in salaries, bonuses and related costs and to increases in commission expenses related to higher net sales. As a percentage of net sales, selling and administrative expenses decreased to 4.6% from 5.4% in the same quarter of the prior year. Interest expense of $648 for the three months ended December 26, 1997 was substantially higher than the $390 of interest expense in the comparable period last year as a result of higher average borrowing levels during the current period. Net income for the quarter increased to $2,327 from $912 in the first quarter of fiscal year 1997. Earnings per share were $.31 as compared to $.12 per share in the comparable period of fiscal 1997. Page 9 of 12 Liquidity and Capital Resources - ------------------------------- Net sales for the month of December 1997 were $37,730, representing 40% of the total net sales for the three month period ending December 26, 1997. The Company operates on a fiscal quarter consisting of four weeks in the first and second months and five weeks in the third month. At December 26, 1997, $21,000 and $10,504 was 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 26, 1997, approximately $1,496 was available for borrowing under these existing lines of credit. On January 23, 1998, the Company received a commitment from Chase Manhattan Bank to underwrite and to act as adminstative agent for a $75 million senior credit facility. The commitment is subject to customary conditions including the execution of a definitive Credit Agreement, which is expected to close in late February 1998. 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. Forward-Looking Statements - -------------------------- Except for historical information, statements in this quarterly report are forward-looking made pursuant to the safe harbor created by the Private Securities Litigation Reform Act of 1995 and are therefore subject to certain risks and uncertainties including timing of orders and shipments, availability of material, product mix and general market conditions that could cause actual results to differ materially from those projected in the forward looking statements. Investors should consider the risks and uncertainites discussed in the September 30, 1997, Form 10K and its other filings with the Securities and Exchange Commission. Page 10 of 12 PART II. OTHER INFORMATION Item 1 -- Legal Proceedings None. Item 2 -- Changes in Securities None. Item 3 -- Defaults Upon Senior Securities None. Item 4 -- Submission of Matters to a Vote of Security Holders None. Item 5 -- Other Information None. Item 6 -- Exhibits and Reports on Form 8-K a. Exhibits None. b. Reports on Form 8-K None. Page 11 of 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. IEC ELECTRONICS CORP. REGISTRANT Dated: February 9, 1998 /s/Russell E. Stingel ----------------------------- Russell E. Stingel Chief Executive Officer Dated: February 9, 1998 /s/Diana R. Kurty ------------------------------ Diana R. Kurty Vice President of Finance, Chief Finanical Officer and Treasurer Page 12 of 12 EX-27 2
5 1000 3-MOS SEP-30-1998 DEC-26-1997 146 0 55,569 0 41,545 99,281 40,788 0 152,305 62,915 7,648 0 0 76 77,823 152,305 94,115 94,159 85,427 4,300 0 0 648 3,874 1,457 1,457 0 0 0 2,327 0.31 0.30
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