NOTE 3. ADJUSTMENT OF PRIOR YEAR CASH FLOW INFORMATION

As permitted by ASC 805-10-25-14, IEC continued to analyze and revise SCB's opening balance sheet values during the twelve months following the December 2010 acquisition date. Balances reported in earlier periods were subsequently superseded based on appraisals, valuations and other updated information. Since the ASC requires such revisions to be reflected in the Company's financial statements on a retrospective basis, comparative balances being presented in current period financial statements may differ from the amounts originally reported. That is the case with respect to comparative cash flow information displayed in IEC's December 30, 2011 financial statements. A summary follows of adjustments made to year-ago cash flow information in order to incorporate the effects of final acquisition-date asset and liability values for SCB. Based on the immateriality of expense adjustments attributable to prior periods, all such adjustments were recorded currently as they were determined and no income statement revision is required. The table that follows also presents certain balance sheet reclassifications that affect December 2010 cash flows.

	Cash inflows						Effect of
Adjustments to Cash Flows	(outflows),			Effect of SCB			balance sheet			Cash inflows
for Three Months Ended	as originally			purchase price			reclassif-			(outflows),
December 31, 2010	reported			adjustment (i)			ications (ii)			as adjusted
(thousands)
Changes in current assets and liabilities:
Accounts receivable	$	(920	)	$	-		$	(27	)	$	(947	)
Other current assets		59			(248	)		(954	)		(1,143	)

Acquisition of SCB, cash portion		(27,011	)		248			981			(25,782	)
Totals	$	(27,872	)	$	-		$	-		$	(27,872	)

(i)	Represents refund received from sellers of SCB on May 19, 2011, based on post-closing analysis of working capital balances. This entry establishes a receivable for the refund.

(ii)	Reclassifies to "other current assets" $981 thousand paid at SCB closing and refunded shortly thereafter. Also shows the effect of $27 thousand of "miscellaneous receivables" reclassified as of September 30, 2010 from accounts receivable to "other current assets."