CREDIT FACILITIES

12 Months Ended

Sep. 30, 2012

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

NOTE 9. CREDIT FACILITIES

A summary of borrowings as of September 30, 2012 and September 30, 2011 follows:

	Fixed/				Interest Rate				Balances
	Variable				September 30,		September 30,		September 30,			September 30,
Debt	Rate		Maturity		2012		2011		2012			2011
					(percents)				(thousands)
M&T borrowings:
Revolving credit facility		v		12/17/13		3.00		3.25	$	6,588		$	7,198
SCB term loan		v		12/17/15		3.25		3.50		13,000			17,000
Albuquerque term loan		v		12/16/14		3.25		3.50		2,250			3,250
Albuquerque mortgage loan		v		12/16/14		3.25		3.50		3,267			3,533
Celmet term loan		v		07/30/15		3.25		3.50		1,166			1,533
Equipment loans (2)		v		12/17/13		3.25		3.25		672			945
Equipment loans (3)		f		11/01/12		2.93		3.05		108			315
Wire and Cable term loan		f		01/01/12				6.70		-			95
Energy loan		f		04/02/13		2.08		2.08		23			64
Other borrowings:
Seller notes, Wire and Cable		f		06/01/13		3.00		4.00		463			1,076
Albuquerque industrial revenue bond		f		03/01/19		5.63		5.63		100			100
Total debt										27,637			35,109
Less: current portion										(6,533	)		(6,896	)
Long-term debt									$	21,104		$	28,213

Note: Sale-leaseback agreement with M&T is accounted for as an operating lease, and therefore is not included above.

M&T Credit Facilities

On December 17, 2010, IEC entered into the Third Amended and Restated Credit Facility Agreement (“Credit Agreement”) with M&T, replacing a prior agreement dated July 30, 2010. This Credit Agreement added a $20.0 million term loan used for the SCB acquisition; increased the limit on the revolving credit facility from $15.0 million to $20.0 million; and eliminated a minimum threshold for variable interest tied to London interbank offered rate (“Libor”). The basic structure of the agreement and many of the terms and conditions remained unchanged from the prior agreement. Except as otherwise noted below, the revolving credit facility and term loan borrowings under the Credit Agreement bear interest at Libor plus a margin that varies between 2.25% and 3.75% based on the Company's ratio of debt to EBITDARS (earnings before interest, taxes, depreciation, amortization, rent payments and non-cash stock option expense).

The Credit Agreement was modified on November 17, 2011 by a letter agreement that extended the equipment line to December 17, 2013 and made all loans under such line due and payable no later than that date. The Credit Agreement required prepayments of term loans equal to 50% of excess cash flow for fiscal years ending after September 30, 2010 and the letter agreement changed that requirement to fiscal years ending after September 30, 2011. The Company obtained a waiver of the excess cash flow prepayment requirement for the fiscal years ended September 30, 2012 and September 30, 2011.

Individual debt facilities provided under the Credit Agreement are described below:

(a) Revolving Credit Facility (“Revolver”): Up to $20.0 million is available through December 17, 2013. The Company may borrow up to the lesser of (i) 85% of eligible receivables plus 35% of eligible inventories or (ii) $20.0 million. At IEC's election, another 35% of eligible inventories will be included in the borrowing base for limited periods of time during which a higher rate of interest is charged on the Revolver. Borrowings based on inventory balances are further limited to a cap of $3.75 million, or when subject to a higher percentage rate limit, $4.75 million. At September 30, 2012, the upper limit on Revolver borrowings was $20.0 million. Average available balances amounted to $12.9 million and $11.7 million during the fiscal years ended September 30, 2012 and September 30, 2011, respectively.

The Company incurs quarterly unused commitment fees approximating 0.375% of the excess of $20.0 million over average borrowings under the Revolver. Fees incurred amounted to $33 thousand and $19 thousand during the fiscal years ended September 30, 2012 and September 30, 2011, respectively. The fee percentage varies based on IEC's ratio of debt to EBITDARS.

(b) SCB Term Loan: $20.0 million was borrowed on December 17, 2010 and principal is being repaid in 60 equal monthly installments.

(c) Albuquerque Term Loan: $5.0 million was borrowed on December 16, 2009, and principal is being repaid in 60 equal monthly installments.

(d) Albuquerque Mortgage Loan: $4.0 million was borrowed on December 16, 2009. The loan is effectively secured by real property in Albuquerque, NM, and principal is being repaid in 60 monthly installments of $22 thousand plus a balloon payment due at maturity.

(e) Celmet Term Loan: $2.0 million was borrowed on July 30, 2010, and principal is being repaid in 60 equal monthly installments.

(f) Equipment Line of Credit: Up to $1.5 million, reduced by outstanding loans, is available through December 17, 2013. The line is available for purchases of capital equipment. Borrowings under the line are supported by individual notes that specify interest and principal repayment terms. The Company has the option to select whether the interest rate is fixed or variable. Equal payments of principal are being made over 48 months for four of the loans and over 60 months for one loan.

(g) Wire and Cable Term Loan: $1.7 million was borrowed on May 30, 2008, and principal was repaid in monthly installments of $28 thousand. The loan's original repayment period of 60 months was reduced as a result of a $0.5 million prepayment in the fourth quarter of fiscal 2008. The interest rate on this loan was fixed at 6.70%. This loan was paid in full in January 2012.

(h) Energy Loan (also referred to as the "NYSERDA” loan): $0.2 million was borrowed on April 2, 2008 under this facility, for which interest at a fixed rate of 2.08% is subsidized by the State of New York. Principal is being repaid in 60 equal monthly installments.

Other Credit Facilities

(i) Seller Notes: The May 2008 acquisition of Wire and Cable was financed in part by three promissory notes payable to the sellers and totaling $3.8 million. These notes are subordinated to borrowings under the Credit Agreement and are being repaid in 20 quarterly installments of $160 thousand, including interest. Effective October 1, 2011, the interest rate on the notes was reduced from 4.0% to 3.0% without altering any other terms of the borrowings.

(j) Albuquerque Industrial Revenue Bond: When IEC acquired Albuquerque, the Company assumed responsibility for a $100 thousand Industrial Revenue Bond issued by the City of Albuquerque. Interest on the bond is paid semiannually, and principal is due in its entirety at maturity.

Borrowings under the M&T Credit Agreement are secured by, among other things, the assets of IEC and its subsidiaries. The Credit Agreement also contains various affirmative and negative covenants including financial covenants. The Company is required to maintain (i) a minimum level of quarterly EBITDARS, (ii) a ratio of debt to twelve-month EBITDARS that is below a specified limit, and (iii) a minimum fixed charge coverage ratio, all as described in the table below. The Company was in compliance with these three covenants at September 30, 2012 and September 30, 2011.

For the purpose of calculating compliance with the covenants, IEC's operating lease obligation to M&T for certain equipment sold to M&T on June 27, 2008 and leased back for a period of five years, is treated as debt. Rental payments for such equipment total $389 thousand per year. Rental payments for the remainder of the lease term, which ends May 2013, total $227 thousand.

Aggregate contractual principal payments under IEC's borrowings for the next four years are summarized below:

	Contractual
	Principal
Debt Repayment Schedule	Payments
	(thousands)
Twelve months ending September 30,
2013	$	6,533
2014*		12,528
2015		5,009
2016		3,567
	$	27,637

*Includes Revolver balance of $6,588 as of September 30, 2012.