Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Jun. 26, 2015 | Jul. 31, 2015 | |
Document Information [Line Items] | ||
Entity Registrant Name | IEC ELECTRONICS CORP | |
Entity Central Index Key | 49,728 | |
Current Fiscal Year End Date | --09-30 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | IEC | |
Entity Common Stock, Shares Outstanding | 10,188,308 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 26, 2015 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,015 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 26, 2015 | Sep. 30, 2014 |
Current assets: | ||
Cash | $ 290 | $ 1,980 |
Accounts receivable, net of allowance | 21,024 | 22,347 |
Inventories, net | 27,434 | 22,526 |
Other current assets | 1,952 | 3,597 |
Total current assets | 50,700 | 50,450 |
Fixed assets, net | 16,956 | 17,850 |
Intangible assets, net | 144 | 2,392 |
Goodwill | 101 | 2,005 |
Other long term assets | 161 | 299 |
Total assets | 68,062 | 72,996 |
Current liabilities: | ||
Current portion of long-term debt | 14,148 | 2,908 |
Accounts payable | 17,695 | 17,732 |
Accrued payroll and related expenses | 2,177 | 3,203 |
Other accrued expenses | 1,075 | 1,008 |
Customer deposits | 5,070 | 1,553 |
Total current liabilities | 40,165 | 26,404 |
Long-term debt | 18,867 | 28,479 |
Other long-term liabilities | 584 | 708 |
Total liabilities | 59,616 | 55,591 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, $0.01 par value: 500,000 shares authorized; none issued or outstanding | 0 | 0 |
Outstanding: 10,187,808 and 10,126,767 shares, respectively | 112 | 111 |
Additional paid-in capital | 45,765 | 44,302 |
Retained earnings/(accumulated deficit) | (35,902) | (25,554) |
Treasury stock, at cost: 1,019,804 shares | (1,529) | (1,454) |
Total stockholders' equity | 8,446 | 17,405 |
Total liabilities and stockholders' equity | $ 68,062 | $ 72,996 |
CONSOLIDATED BALANCE SHEETS _Pa
CONSOLIDATED BALANCE SHEETS [Parenthetical] - $ / shares | Jun. 26, 2015 | Sep. 30, 2014 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 500,000 | 500,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 11,207,612 | 11,146,571 |
Common stock, shares outstanding | 10,187,808 | 10,126,767 |
Treasury stock, shares | 1,019,804 | 1,019,804 |
CONSOLIDATED INCOME STATEMENTS
CONSOLIDATED INCOME STATEMENTS - Scenario, Unspecified [Domain] - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 26, 2015 | Jun. 27, 2014 | Jun. 26, 2015 | Jun. 27, 2014 | |
Net sales | $ 34,444 | $ 32,992 | $ 98,276 | $ 99,934 |
Cost of sales | 29,741 | 29,197 | 87,757 | 88,118 |
Gross profit | 4,703 | 3,795 | 10,519 | 11,816 |
Selling and administrative expenses | 4,049 | 3,195 | 14,346 | 10,938 |
Goodwill and Intangible Asset Impairment | 4,057 | 0 | 4,057 | 0 |
Restatement and related expenses | 298 | 102 | 948 | 2,516 |
Operating profit/(loss) | (3,701) | 498 | (8,832) | (1,638) |
Interest and financing expense | 316 | 558 | 1,516 | 1,410 |
Other expense/(income) | 0 | 0 | 0 | 18 |
Income/(loss) before income taxes | (4,017) | (60) | (10,348) | (3,066) |
Provision for/(benefit from) income taxes | 0 | 0 | 0 | 13,039 |
Net income/(loss) | $ (4,017) | $ (60) | $ (10,348) | $ (16,105) |
Net income/(loss) per common and common equivalent share: | ||||
Basic (in dollars per share) | $ (0.39) | $ (0.01) | $ (1.03) | $ (1.64) |
Diluted (in dollars per share) | $ (0.39) | $ (0.01) | $ (1.03) | $ (1.64) |
Weighted average number of common and common equivalent shares outstanding: | ||||
Basic (in shares) | 10,199,431 | 9,838,872 | 10,049,395 | 9,816,974 |
Diluted (in shares) | 10,199,431 | 9,838,872 | 10,049,395 | 9,816,974 |
CONSOLIDATED STATEMENTS of CHAN
CONSOLIDATED STATEMENTS of CHANGES in STOCKHOLDERS' EQUITY - 9 months ended Jun. 26, 2015 - USD ($) $ in Thousands | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings (Deficit) [Member] | Treasury Stock [Member] |
Balances at Sep. 30, 2014 | $ 17,405 | $ 111 | $ 44,302 | $ (25,554) | $ 1,454 |
Net income/(loss) | (10,348) | 0 | 0 | (10,348) | 0 |
Stock-based compensation | 1,990 | 0 | 1,990 | 0 | 0 |
Restricted (non-vested) stock grants, net of forfeitures | 0 | 2 | (2) | 0 | 0 |
Exercise of stock options | 3 | 0 | 78 | 0 | (75) |
Shares withheld for payment of taxes upon vesting of restricted stock | (604) | (1) | (603) | 0 | 0 |
Balances at Jun. 26, 2015 | $ 8,446 | $ 112 | $ 45,765 | $ (35,902) | $ (1,529) |
CONSOLIDATED STATEMENTS of CASH
CONSOLIDATED STATEMENTS of CASH FLOWS - Scenario, Unspecified [Domain] - USD ($) $ in Thousands | 9 Months Ended | |
Jun. 26, 2015 | Jun. 27, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income/(loss) | $ (10,348) | $ (16,105) |
Non-cash adjustments: | ||
Stock-based compensation | 1,990 | 378 |
Depreciation and amortization | 3,488 | 3,625 |
Goodwill and Intangible Asset Impairment | 4,057 | 0 |
Reserve for doubtful accounts | (87) | 220 |
Deferred tax expense/benefit | 0 | 13,034 |
Changes in assets and liabilities: | ||
Accounts receivable | 1,410 | 4,480 |
Inventory | (4,908) | 1,195 |
Other current assets | 947 | (1,497) |
Other long term assets | 130 | 81 |
Accounts payable | (59) | (2,634) |
Accrued expenses | (959) | 541 |
Customer deposits | 3,517 | 741 |
Other long term liabilities | (124) | (14) |
Net cash flows from operating activities | (946) | 4,045 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of fixed assets | (2,469) | (3,806) |
Deferred Revenue, Revenue Recognized | 698 | |
Proceeds from (net cost of) disposal of fixed assets | 0 | 323 |
Net cash flows from investing activities | (1,771) | (3,483) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Advances from revolving line of credit | 49,578 | 43,513 |
Repayments of revolving line of credit | (45,769) | (44,971) |
Borrowings under other loan agreements | 0 | 1,300 |
Repayments under other loan agreements | (2,181) | (2,160) |
Debt issuance costs | 0 | (2) |
Proceeds from exercise of stock options | 3 | 17 |
Shares withheld for payment of taxes upon vesting of restricted stock | (604) | (79) |
Net cash flows from financing activities | 1,027 | (2,382) |
Net increase/(decrease) in cash and cash equivalents | (1,690) | (1,820) |
Cash and cash equivalents, beginning of period | 1,980 | 2,499 |
Cash and cash equivalents, end of period | 290 | |
Supplemental cash flow information: | ||
Interest paid | 1,177 | |
Income taxes paid | 0 | 12 |
Non-cash transactions | ||
Fixed assets purchased with extended payment terms | $ 22 | $ 466 |
OUR BUSINESS AND SUMMARY OF SIG
OUR BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Jun. 26, 2015 | |
Accounting Policies [Abstract] | |
Contingencies Disclosure [Text Block] | In connection with the Prior Restatement, the Audit Committee conducted an independent review of the underlying facts and circumstances, and the Company is responding to a formal investigation by the staff of the SEC relating to the Prior Restatement and other matters. The Company is unable to predict what action, if any, might be taken in the future by the SEC or its staff as a result of the investigation or what impact the cost of responding to the SEC might have on the Company’s financial position, results of operations, or cash flows. From time to time, the Company may be involved in other legal action in the ordinary course of its business, but management does not believe that any such other proceedings commenced through the date of the financial statements included in this Form 10-Q, individually or in the aggregate, will have material adverse effect on the Company’s consolidated financial position. |
OUR BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Our Business IEC Electronics Corp. ("IEC", "we", "our", “us”, “Company”) is a provider of electronic contract manufacturing services (“EMS”) to companies in various industries that require advanced technology. We specialize in the custom manufacture of high reliability, complex circuit boards and system-level assemblies; a wide array of cable and wire harness assemblies capable of withstanding extreme environments; and precision metal components. Generally Accepted Accounting Principles IEC's financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), as set forth in the Financial Accounting Standards Board's (“FASB”) Accounting Standards Codification (“ASC”). Fiscal Calendar The Company’s fiscal year ends on September 30th, and the first three quarters end generally on the Friday closest to the last day of the calendar quarter. Consolidation The consolidated financial statements include the accounts of IEC and its wholly owned subsidiaries: IEC Electronics Wire and Cable, Inc. (“Wire and Cable”); IEC Electronics Corp-Albuquerque ("Albuquerque"); Dynamic Research and Testing Laboratories, LLC (“DRTL”); and Southern California Braiding, Inc. (“SCB”). The Celmet unit ("Celmet") operates as a division of IEC. All significant intercompany transactions and accounts are eliminated in consolidation. Unaudited Financial Statements The accompanying unaudited financial statements for the nine months ended June 26, 2015 and June 27, 2014 have been prepared in accordance with GAAP for interim financial information. In the opinion of management, all adjustments required for a fair presentation of the information have been made. The accompanying financial statements should be read in conjunction with the financial statements and notes included in the Company's Annual Report on Form 10-K/A for the fiscal year ended September 30, 2014 . Cash and Cash Equivalents The Company's cash and cash equivalents principally represent deposit accounts with Manufacturers and Traders Trust Company ("M&T Bank" and "M&T"), a banking corporation headquartered in Buffalo, NY. Allowance for Doubtful Accounts The Company establishes an allowance for doubtful accounts receivable based on the age of outstanding invoices and management's evaluation of collectability. Accounts are written off after all reasonable collection efforts have been exhausted and management concludes that likelihood of collection is remote. Inventory Valuation Inventories are stated at the lower of cost or market value under the first-in, first-out method. The Company regularly assesses slow-moving, excess and obsolete inventory and maintains balance sheet reserves in amounts required to reduce the recorded value of inventory to lower of cost or market. Property, Plant and Equipment Property, plant and equipment (“PP&E”) are stated at cost and are depreciated over various estimated useful lives using the straight-line method. Maintenance and repairs are charged to expense as incurred, while renewals and improvements are capitalized. At the time of retirement or other disposition of PP&E, cost and accumulated depreciation are removed from the accounts and any gain or loss is recorded in earnings. Depreciable lives generally used for PP&E are presented in the table below. Leasehold improvements are amortized over the shorter of the lease term or estimated useful life of the improvement. PP&E Lives Estimated (years) Land improvements 10 Buildings and improvements 5 to 40 Machinery and equipment 3 to 5 Furniture and fixtures 3 to 7 Intangible Assets Intangible assets (other than goodwill) are those that lack physical substance and are not financial assets. Such assets held by IEC were acquired in connection with business combinations and represent economic benefits associated with acquired customer relationships, a non-compete agreement, and a property tax abatement. Values assigned to individual intangible assets are amortized using the straight-line method over their estimated useful lives. Reviewing Long-Lived Assets for Potential Impairment The Company tests long-lived assets (PP&E and definitive-lived assets) for recoverability whenever events or circumstances indicate that the carrying amount of the asset may not be recoverable. If the carrying value of an asset exceeds the undiscounted future cash flows attributable to an asset, it is considered impaired and the excess of carrying value over fair value must be charged to earnings. Goodwill Goodwill represents the excess of cost over fair value of net assets acquired in a business combination. Historically, most of IEC's recorded goodwill related to SCB, which was acquired in December 2010. A lesser portion relates to Celmet, which was acquired in July 2010. Goodwill is not amortized but is reviewed for impairment at least annually or when events or circumstances indicate that carrying value may exceed fair value. The Company performs its annual impairment test for SCB goodwill during the third quarter. The Company may elect to precede a quantitative review for impairment with a qualitative assessment of the likelihood that fair value of a particular reporting unit exceeds carrying value. If the qualitative assessment leads to a conclusion that it is more than 50 percent likely that fair value of the reporting units exceeds its carrying value, then no further testing is required. In the event of a less favorable outcome, the Company is required to proceed with quantitative testing. The quantitative process entails comparing the overall fair value of the unit to which goodwill relates to its carrying value. If the fair value of the unit exceeds its carrying value, no further assessment of potential impairment is required. If the fair value of the unit is less than its carrying value, a valuation of the unit's individual assets and liabilities is required to determine whether or not goodwill is impaired. Goodwill impairment losses are charged to earnings. Legal Contingencies When legal proceedings are brought or claims are made against us and the outcome is uncertain, ASC 450-10 (Contingencies) requires that we determine whether it is probable that an asset has been impaired or a liability has been incurred. If such impairment or liability is probable and the amount of loss can be reasonably estimated, the loss must be charged to earnings. When it is considered probable that a loss has been incurred, but the amount of loss cannot be estimated, disclosure but not accrual of the probable loss is required. Disclosure of a loss contingency is also required when it is reasonably possible, but not probable, that a loss has been incurred. Customer Deposits Customer deposits represent amounts invoiced to customers for which the revenue has not yet been earned and therefore represent a commitment for the Company to deliver goods or services in the future. Deposits are generally short term in nature and are recognized as revenue when earned. Grants from Outside Parties Grants from outside parties are recorded as other long-term liabilities and are amortized over the same period during which the associated fixed assets are depreciated. Derivative Financial Instruments The Company actively monitors its exposure to interest rate risk and from time to time uses derivative financial instruments to manage the impact of this risk. The Company uses derivatives only for purposes of managing risk associated with underlying exposures. The Company does not trade or use instruments with the objective of earning financial gains on the interest rate, nor does the Company use derivative instruments where it does not have underlying exposures. The Company manages its hedging position and monitors the credit ratings of counterparties and does not anticipate losses due to counterparty nonperformance. Management believes its use of derivative instruments to manage risk is in the Company’s best interest. However, the Company’s use of derivative financial instruments may result in short-term gains or losses and increased earnings volatility. The Company’s instruments are recorded in the consolidated balance sheets at fair value in other assets or other long-term liabilities. Fair Value Measurements Under ASC 825 (Financial Instruments), the Company is required to disclose the fair value of financial instruments for which it is practicable to estimate value. The Company’s financial instruments consist of cash, accounts receivable, accounts payable, accrued liabilities, borrowings and an interest rate swap agreement. IEC believes that recorded value approximates fair value for all cash, accounts receivable, accounts payable and accrued liabilities. ASC 820 (Fair Value Measurements and Disclosures) defines fair value, establishes a framework for measurement, and prescribes related disclosures. ASC 820 defines fair value as the price that would be received upon sale of an asset or would be paid to transfer a liability in an orderly transaction. Inputs used to measure fair value are categorized under the following hierarchy: Level 1: Quoted prices in active markets for identical assets or liabilities that the Company can access at the measurement date. Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations in which all significant inputs are observable market data. Level 3: Model-derived valuations in which one or more significant inputs are unobservable. The Company deems a transfer between levels of the fair value hierarchy to have occurred at the beginning of the reporting period. There were no such transfers during the first nine months of fiscal 2015 or fiscal 2014 . Revenue Recognition The Company’s revenue is principally derived from the sale of electronic products built to customer specifications, but also from other value-added support services and repair work. Revenue from product sales is recognized when (i) goods are shipped or title and risk of ownership have passed, (ii) the price to the buyer is fixed or determinable, and (iii) realization is reasonably assured. Service revenue is generally recognized once the service has been rendered. For material management arrangements, revenue is generally recognized as services are rendered. Under such arrangements, some or all of the following services may be provided: design, bid, procurement, testing, storage or other activities relating to materials the customer expects to incorporate into products that it manufactures. Value-added support services revenue, including material management and repair work revenue, amounted to less than 5% of total revenue in the first nine months of fiscal 2015 or fiscal 2014 . Provisions for discounts, allowances, rebates, estimated returns and other adjustments are recorded in the period the related sales are recognized. Stock-Based Compensation ASC 718 (Stock Compensation) requires that compensation expense be recognized for equity awards based on fair value as of the date of grant. For stock options, the Company uses the Black-Scholes pricing model to estimate grant date fair value. Costs associated with stock awards are recorded over requisite service periods, generally the vesting period. If vesting is contingent on the achievement of performance objectives, fair value is accrued over the period the objectives are expected to be achieved only if it is considered probable that the objectives will be achieved. The Company also has an employee stock purchase plan ("ESPP") that provides for a discounted stock purchase price. Compensation expense related to the discount is recognized as employees contribute to the plan. On May 21, 2013, the Compensation Committee of the Company’s Board of Directors suspended operation of the ESPP indefinitely in connection with the Prior Restatement further discussed below (including unavailability of the registration statement covering shares offered under the plan due to the failure of the Company to be current in its filings with the SEC until the Company filed its Form 10-K on December 24, 2013). Operation of the ESPP was resumed effective October 1, 2014. On February 13, 2015, the Compensation Committee of the Company’s Board of Directors suspended operation of the ESPP indefinitely in connection with the 2014 Restatements described in Note 2—Restatement of Deferred Tax Asset Valuation Allowance and Excess and Obsolete Inventory Reserve (including unavailability of the registration statement covering shares offered under the plan due to the failure of the Company to be current in its filings with the SEC). Restatement and Related Expenses The Company restated its consolidated financial statements for the fiscal year ended September 30, 2012, and the interim fiscal quarters and year to date periods within the year ended September 30, 2012, included in the Company’s Annual Report on Form10-K/A and the fiscal quarter ended December 28, 2012, as reported in the Company’s Quarterly Report on Form 10-Q/A for that fiscal quarter (the "Prior Restatement"). The Company also restated its consolidated financial statements for the fiscal year ended September 30, 2014 and its interim financial statements for each quarterly period within the year ended September 30, 2014, included in the Company's Annual Report on Form 10-K/A to correct an error in the valuation allowance on deferred income tax assets as well as an error in the estimate of excess and obsolete inventory reserves (the "2014 Restatements"). The Prior Restatement and the 2014 Restatements together are referred to as the "Restatements". Restatement and related expenses represents third-party expenses arising from the Restatements. These expenses include legal and accounting fees incurred by the Company from external counsel and independent accountants directly attributable to the Restatements as well as other matters arising from the Prior Restatement including those more fully described in Note 17—Litigation . The Company receives insurance reimbursement for certain expenses related to the Prior Restatement which may result in a benefit in a given period. Income Taxes and Deferred Taxes ASC 740 (Income Taxes) requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns, but not in both. Deferred tax assets are also established for tax benefits associated with tax loss and tax credit carryforwards. Such deferred balances reflect tax rates that are scheduled to be in effect, based on currently enacted legislation, in the years the book/tax differences reverse and tax loss and tax credit carryforwards are expected to be realized. An allowance is established for any deferred tax asset for which realization is not likely. ASC 740 also prescribes the manner in which a company measures, recognizes, presents, and discloses in its financial statements uncertain tax positions that the Company has taken or expects to take on a tax return. The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the position will be sustained following examination by taxing authorities, based on technical merits of the position. The Company believes that it has no material uncertain tax positions. Any interest or penalties incurred are reported as interest expense. The Company’s income tax filings are subject to audit by various tax jurisdictions and current open years are fiscal 2010 through fiscal 2014. The federal income tax audit for fiscal 2011 concluded in fiscal 2013 and did not have a material impact on the financial statements. Earnings Per Share Basic earnings per common share are calculated by dividing income available to common stockholders by the weighted average number of shares outstanding during each period. Diluted earnings per common share add to the denominator incremental shares resulting from the assumed exercise of all potentially dilutive stock options, as well as restricted (non-vested) stock, and anticipated issuance through the employee stock purchase plan. Options and restricted stock are primarily held by directors, officers and certain employees. A summary of shares used in earnings per share (“EPS”) calculations follows. Three Months Ended Nine Months Ended Shares for EPS Calculation June 26, June 27, June 26, June 27, Weighted average shares outstanding 10,199,431 9,838,872 10,049,395 9,816,974 Incremental shares — — — — Diluted shares 10,199,431 9,838,872 10,049,395 9,816,974 Anti-dilutive shares excluded 734,605 504,738 734,605 504,738 As a result of the net loss for the three and nine months ended June 26, 2015 and June 27, 2014 , the Company calculated diluted earnings per share using weighted average basic shares outstanding, as using diluted shares would be anti-dilutive to loss per share. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses and the disclosure of contingent assets and liabilities. Actual results may differ from management’s estimates. Statements of Cash Flows The Company presents operating cash flows using the indirect method of reporting under which non-cash income and expense items are removed from net income. Recently Issued Accounting Standards FASB ASU 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force),” was issued July 2013 and is effective for fiscal years beginning after December 15, 2013. ASU 2013-11 provides guidance on financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This ASU applies to all entities with unrecognized tax benefits that also have tax loss or tax credit carryforwards in the same tax jurisdiction as of the reporting date. The Company adopted this ASU in the first quarter of fiscal 2015 and there was no impact upon adoption. |
Restatement of deferred Tax Ass
Restatement of deferred Tax Asset Valuation Allowance and Obsolete Inventory Reserve | 9 Months Ended |
Jun. 26, 2015 | |
Accounting Changes and Error Corrections [Abstract] | |
Restatement of deferred Tax Asset Valuation Allowance and Obsolete Inventory Reserve | NOTE 2—RESTATEMENT OF DEFERRED TAX ASSET VALUATION ALLOWANCE AND EXCESS AND OBSOLETE INVENTORY RESERVE The Consolidated Balance Sheet at September 30, 2014 and Consolidated Statements of Income, Changes in Stockholders’ Equity and Cash Flows for the year then ended and the fiscal quarters ended December 27, 2013, March 28, 2014 and June 27, 2014 have been restated. The summary impacts of the restatement adjustments on the Company’s previously reported consolidated net loss for the three and nine months ended June 27, 2014 follows: Three Months Ended Nine Months Ended June 27, June 27, (in thousands) Net income/(loss) - Previously reported $ 22 $ (1,646 ) Deferred tax asset valuation allowance adjustment 3 (14,016 ) Excess and obsolete inventory reserve adjustment (85 ) (443 ) Net income/(loss) - Restated $ (60 ) $ (16,105 ) The impacts of the restatement adjustments on the Company’s previously reported consolidated income statement for the three and nine months ended June 27, 2014 follows: Three Months Ended Nine Months Ended June 27, 2014 June 27, 2014 As Reported Adjustment Restated As Reported Adjustment Restated (in thousands, except per share data) Cost of sales $ 29,112 $ 85 $ 29,197 $ 87,675 $ 443 $ 88,118 Gross profit 3,880 (85 ) 3,795 12,259 (443 ) 11,816 Operating profit /(loss) 583 (85 ) 498 (1,195 ) (443 ) (1,638 ) Income/(loss) before income 25 (85 ) (60 ) (2,623 ) (443 ) (3,066 ) Provision for /(benefit from) 3 (3 ) — (977 ) 14,016 13,039 Net income /(loss) 22 (82 ) (60 ) (1,646 ) (14,459 ) (16,105 ) Net income /(loss) per share $ — $ (0.01 ) $ (0.01 ) $ (0.17 ) $ (1.47 ) $ (1.64 ) While closing the first quarter of fiscal 2015, the Company revisited its assessment of realizability of deferred tax assets and identified an error in interpretation of the guidance for the valuation allowance on deferred tax assets. The Company performed a realizability assessment for the fourth quarter of fiscal 2014 and came to the conclusion that there was no additional valuation allowance required on federal deferred tax assets; however, due to a change in New York State tax laws which reduces the State tax rate for qualified manufacturers to 0% for IEC's fiscal year ended September 30, 2015, the valuation allowance was increased by $1.1 million to fully reserve for New York State deferred tax assets. This conclusion regarding federal deferred tax assets at the time of the fourth quarter of fiscal 2014 assessment was based on the Company's evaluation of the negative and positive evidence available at that time. The Company's cumulative loss in recent years was considered; however, the Company determined that the goodwill and intangibles impairment charge taken in the fourth quarter of fiscal 2013 should be excluded when weighing the evidence. Positive evidence included taxable income each year beginning in 2004 through 2013, forecasted results and backlog. At the time of our Original 2014 Form 10-K filing, there was forecasted pre-tax income for fiscal 2015 and earnings growth was forecasted in subsequent years. The Company's Federal net operating losses ("NOLs") do not begin to expire until 2022. As aggregate future taxable income was expected to exceed Federal NOLs, it was concluded that realizability of these was more likely than not. In addition, future taxable income was expected to exceed the amount of Federal NOLs and deferred tax assets expected to reverse in future years combined. As such, there was no additional valuation allowance recorded for federal deferred tax assets. During the process of closing the first quarter of fiscal 2015, the Company revisited its determination regarding the valuation of its deferred tax assets. After consulting applicable accounting guidance and interpretations thereof, the Company determined that the impairment charge should not have been excluded from the cumulative loss calculation. Once a cumulative three year loss is identified, it is very difficult to overcome this negative evidence. IEC did not believe there was enough positive evidence to outweigh the cumulative three year loss. Based on this interpretation, the Company recorded a full valuation allowance beginning in the second quarter of fiscal 2014, which is when the Company first accumulated a three year loss. As such, an error in the valuation allowance on deferred income tax assets was identified resulting in an understatement of tax expense and overstatement of deferred tax assets. The Company determined this error was material and required restatement of its consolidated financial statements for fiscal 2014 as well as the second, third and fourth quarters of fiscal 2014. The Company also performed additional analysis related to its excess and obsolete inventory reserves. This analysis identified an error in the Albuquerque and SCB operating locations. The Company discovered that not all pertinent information was factored into the excess and obsolete inventory reserve estimates during fiscal 2014. During fiscal 2014, given the time that had passed since SCB was acquired in December 2010, the Company should have factored in the age of SCB's inventory and its demand when estimating its excess and obsolete inventory reserve. Instead, the Company employed an approach that factored in the usage of the inventory since the SCB acquisition date and estimated a general reserve for remaining inventory. The restated excess and obsolete inventory reserve for SCB is based on an analysis that appropriately incorporates the age of SCB's inventory and its demand and involves the review of specific inventory items with a large extended value. This additional analysis was performed consistently for all items, regardless of whether they were purchased before or after the date the Company acquired SCB. The Albuquerque excess and obsolete inventory reserve as originally reported did not take into consideration facts and circumstances related to certain customer programs. The Company's methodology was applied consistently, however, the rigor around the analysis of excess inventory did not take into account certain customer information that was available at the time. As a result, the Company concluded the inventory on hand for these customer programs was not adequately reserved for. |
ALLOWANCE FOR DOUBTFUL ACCOUNTS
ALLOWANCE FOR DOUBTFUL ACCOUNTS | 9 Months Ended |
Jun. 26, 2015 | |
Receivables [Abstract] | |
ALLOWANCE FOR DOUBTFUL ACCOUNTS | A summary follows of activity in the allowance for doubtful accounts during the nine months ended June 26, 2015 and June 27, 2014 . Nine Months Ended Allowance for Doubtful Accounts June 26, June 27, (in thousands) Allowance, beginning of period $ 525 $ 452 Provision for doubtful accounts (23 ) 257 Write-offs (64 ) (37 ) Allowance, end of period $ 438 $ 672 |
INVENTORIES
INVENTORIES | 9 Months Ended |
Jun. 26, 2015 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | A summary of inventory by category at period end follows: Inventories June 26, September 30, (in thousands) (restated) Raw materials $ 21,147 $ 16,769 Work-in-process 8,163 7,906 Finished goods 2,149 757 Total inventories 31,459 25,432 Reserve for excess/obsolete inventory (4,025 ) (2,906 ) Inventories, net $ 27,434 $ 22,526 The Company has restated its excess and obsolete inventory reserve for the fiscal year ended September 30, 2014 and interim quarterly periods during the fiscal year then ended. The restatement is further discussed in Note 2—Restatement of Deferred Tax Asset Valuation Allowance and Excess and Obsolete Inventory Reserve . |
FIXED ASSETS
FIXED ASSETS | 9 Months Ended |
Jun. 26, 2015 | |
Property, Plant and Equipment [Abstract] | |
FIXED ASSETS | A summary of fixed assets and accumulated depreciation at period end follows: Fixed Assets June 26, September 30, (in thousands) Land and improvements $ 1,601 $ 1,601 Buildings and improvements 14,008 13,452 Leasehold improvements 1,487 1,458 Machinery and equipment 27,967 26,996 Furniture and fixtures 7,571 7,207 Construction in progress 952 381 Total fixed assets, at cost 53,586 51,095 Accumulated depreciation (36,534 ) (33,245 ) Accumulated impairment - building and improvements $ (96 ) $ — Fixed assets, net $ 16,956 $ 17,850 Depreciation expense during the three and nine months ended June 26, 2015 and June 27, 2014 follows: Three Months Ended Nine Months Ended June 26, June 27, June 26, June 27, (in thousands) Depreciation expense $ 1,049 $ 1,141 $ 3,289 $ 3,406 During the third quarter of fiscal 2015, the Company received an offer to purchase substantially all the assets and assume certain liabilities of the SCB reporting unit for approximately $2.5 million. At June 26, 2015 , the Company was actively considering options regarding SCB which included rehabilitating, selling or shutting down operations. The Company's SCB assets did not meet the criteria to be deemed held for sale as of the end of the third quarter as there was not an approved plan to sell such assets. However, the willingness to accept the offer is considered to be an indication of fair value and as such, an impairment charge of $0.1 million was taken to adjust the reporting unit's fixed assets to fair value. Further information regarding the agreement to sell certain assets and liabilities of the SCB reporting unit (the "Asset Purchase Agreement") is disclosed in Note 19—Subsequent Events . |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 9 Months Ended |
Jun. 26, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | IEC's intangible assets (other than goodwill) were acquired in connection with purchases of SCB in the first quarter of fiscal 2011 and Albuquerque in fiscal 2010. Among SCB’s key attributes as an acquisition candidate were the relationships established with a number of military and defense contractors. The anticipated profitability of those relationships was considered by IEC in arriving at an amount to offer for SCB and also became the basis for allocating a portion of the purchase price to a related customer relationship intangible asset. Based upon several key assumptions and a detailed analysis of value, $5.9 million was allocated to this intangible asset. The asset was being amortized over its 15 -year estimated useful life, using the straight-line method. The Company recorded an impairment of the customer relationship intangible asset of $2.4 million in the fourth quarter of fiscal 2013 and a further impairment charge of $2.0 million in the third quarter of fiscal 2015. In connection with the SCB acquisition, IEC also allocated $100 thousand to an intangible asset representing the estimated value of a five -year, non-compete agreement entered into with SCB’s selling shareholders. This intangible asset was being amortized evenly over its contractual life, however the remaining balance was impaired in the third quarter of fiscal 2015. During the third quarter of fiscal 2015, the Company received an offer to purchase substantially all the assets and assume certain liabilities of SCB for approximately $2.5 million . At June 26, 2015 , the Company was actively considering options regarding SCB which included rehabilitating, selling or shutting down operations. The Company's SCB assets did not meet the criteria to be deemed held for sale as of the end of the third quarter as there was not an approved plan to sell such assets. However, the Company's willingness to accept the offer is considered to be an indication of fair value and as such, impairment charges were taken to adjust SCB's assets to fair value. Further information regarding the agreement to sell certain assets and liabilities of SCB (the "Asset Purchase Agreement") is disclosed in Note 19—Subsequent Events . As for Albuquerque, its building and land were acquired subject to an Industrial Revenue Bond (“IRB”) that exempts the property from real estate taxes for the term of the IRB. The tax abatement was valued at $360 thousand at the date of acquisition, and such value is being amortized over the 9.2 year exemption period that remained as of the acquisition date. No impairment has been taken for this asset since the Albuquerque acquisition. A summary of intangible assets by category and accumulated amortization at period end follows: Intangible Assets June 26, September 30, (in thousands) Customer relationships - SCB $ 5,900 $ 5,900 Property tax abatement - Albuquerque 360 360 Non-compete agreement - SCB 100 100 Total intangibles 6,360 6,360 Accumulated amortization (1,747 ) (1,556 ) Accumulated impairment - customer relationships (4,460 ) (2,412 ) Accumulated impairment - Non-compete agreement (9 ) — Intangible assets, net $ 144 $ 2,392 Amortization expense during the three and nine months ended June 26, 2015 and June 27, 2014 follows: Three Months Ended Nine Months Ended Amortization Expense June 26, June 27, June 26, June 27, (in thousands) Intangible amortization expense $ 64 $ 64 $ 191 $ 191 A summary of amortization expense for the next five years follows: Future Amortization Estimated future amortization (in thousands) Twelve months ended March, 2016 $ 39 2017 39 2018 39 2019 27 2020 — 2021 and thereafter — |
GOODWILL
GOODWILL | 9 Months Ended |
Jun. 26, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL | Goodwill balances resulting from the acquisitions of SCB in the first quarter of fiscal 2011 and Celmet in fiscal 2010 were $13.7 million and $0.1 million , respectively, prior to the impairments described below. Since its acquisition, SCB has operated as a reporting unit of the Company, primarily in the aerospace & defense (previously disclosed as military & aerospace) market sector. As previously disclosed, due to changing circumstances, the Company determined it was necessary to perform a quantitative assessment which resulted in a goodwill impairment charge of $11.8 million recorded in the fourth quarter of fiscal 2013. A further impairment charge of $1.9 million was recorded in the third quarter of fiscal 2015 to reduce the value of the goodwill to zero . During the third quarter of fiscal 2015, the Company received an offer to purchase substantially all the assets and assume certain liabilities of SCB for approximately $2.5 million . At June 26, 2015 , the Company was actively considering options regarding SCB which included rehabilitating, selling or shutting down operations. The Company's SCB assets did not meet the criteria to be deemed held for sale as of the end of the third quarter as there was not an approved plan to sell such assets. However, the Company's willingness to accept the offer is considered to be an indication of fair value and as such, impairment charges were taken to adjust SCB's assets to fair value. Further information regarding the Asset Purchase Agreement is disclosed in Note 19—Subsequent Events . As for the goodwill from the Celmet acquisition, there has been no impairment since acquisition date. A summary of the total goodwill and accumulated impairment at period end follows: Goodwill June 26, September 30, (in thousands) Goodwill $ 13,810 $ 13,810 Accumulated impairment (13,709 ) (11,805 ) Goodwill, net $ 101 $ 2,005 |
CREDIT FACILITIES
CREDIT FACILITIES | 9 Months Ended |
Jun. 26, 2015 | |
Debt Disclosure [Abstract] | |
CREDIT FACILITIES | 0.60 to 1.00 6/27/15 through and including 9/30/15 > 0.45 to 1.00 10/1/15 through and including 12/25/15 > 0.75 to 1.00 12/26/15 through and including 3/25/16 > 1.00 to 1.00 3/26/16 through and including 6/24/16 > 1.10 to 1.00 6/ /25/16 and thereafter > 1.25 to 1.00 The Sixth Amendment also modified the Quarterly EBITDARS covenant to be equal to or greater than $1.25 million for the fiscal quarter ending June 26, 2015, and $1.5 million for each fiscal quarter thereafter. A summary of financial covenant compliance follows: Quarterly EBITDARS Debt to EBITDARS Ratio Fixed Charge Coverage Ratio Fiscal Quarters Third 2015 Compliant Compliant Compliant Second 2015 Waived Waived Waived First 2015 Waived Waived Waived Fourth 2014 Compliant Not Measured Not Measured Third 2014 Compliant Not Measured Not Measured Second 2014 Waived Not Measured Not Measured First 2014 Waived Not Measured Not Measured As a result of the 2014 Restatements as described in Note 2—Restatement of Deferred Tax Asset Valuation Allowance and Excess and Obsolete Inventory Reserve , the Company was in default of the Credit Agreement for failure to deliver financial statements prepared in accordance with GAAP. The Company received a waiver from M&T regarding this event of default. Other Borrowings 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. Contractual Principal Payments A summary of contractual principal payments under IEC's borrowings for the next five years taking into consideration the 2013 Credit Agreement follows: Debt Repayment Schedule Contractual (in thousands) Twelve months ended March 27, 2016 (1) $ 14,148 2017 2,908 2018 4,641 2019 3,315 2020 and thereafter 8,003 $ 33,015 (1) Includes Revolver balance of $11.2 million at June 26, 2015" id="sjs-B4" xml:space="preserve"> A summary of borrowings at period end follows: Fixed/ June 26, 2015 September 30, 2014 Variable Interest Interest Debt Rate Maturity Date Balance Rate (1) Balance Rate (1) (in thousands) M&T credit facilities: Revolving Credit Facility v 1/18/2016 $ 11,240 4.44 % $ 7,431 4.44 % Term Loan A f 2/1/2022 7,315 3.98 8,148 3.98 Term Loan B v 2/1/2023 10,733 3.43 11,783 3.41 Albuquerque Mortgage Loan v 2/1/2018 2,533 4.69 2,733 4.69 Celmet Building Term Loan f 11/7/2018 1,094 4.72 1,192 4.72 Other credit facilities: Albuquerque Industrial Revenue Bond f 3/1/2019 100 5.63 100 5.63 Total debt 33,015 31,387 Less: current portion (14,148 ) (2,908 ) Long-term debt $ 18,867 $ 28,479 (1) Rates noted are before impact of interest rate swap. M&T Bank Credit Facilities On January 18, 2013, the Company and M&T Bank entered into the Fourth Amended and Restated Credit Facility Agreement (“2013 Credit Agreement”), replacing a prior agreement dated December 17, 2010. Variable rate debt under the 2013 Credit Agreement accrues interest at Libor plus the applicable marginal interest rate that fluctuates based on the Company's Debt to EBITDARS Ratio, as defined below. Borrowings under the 2013 Credit Agreement are secured by, among other things, the assets of IEC and its subsidiaries. The 2013 Credit Agreement as amended prohibits the Company from paying dividends or repurchasing or redeeming its common stock without first obtaining the consent of M&T Bank. Individual debt facilities provided under the 2013 Credit Agreement as amended by the first two amendments, both of which occurred prior to fiscal 2014, are described below: a) Revolving Credit Facility (“Revolver”) : Up to $20 million is available through January 18, 2016 . The maximum amount the Company may borrow is determined based on a borrowing base calculation as defined in the 2013 Credit Agreement as described below. b) Term Loan A : $10.0 million was borrowed on January 18, 2013. Principal is being repaid in 108 monthly installments of $93 thousand . c) Term Loan B: $14.0 million was borrowed on January 18, 2013. Principal is being repaid in 120 monthly installments of $117 thousand . d) Albuquerque Mortgage Loan : $4.0 million was borrowed on December 16, 2009. The loan is secured by real property in Albuquerque, NM, and principal is being repaid in monthly installments of $22 thousand plus a balloon payment due at maturity. e) Celmet Building Term Loan: $1.3 million was borrowed on November 8, 2013 pursuant to an amendment to the 2013 Credit Agreement. The proceeds were used to reimburse the Company’s cost of purchasing the Rochester, New York facility. Principal is being repaid in 59 monthly installments of $11 thousand plus a balloon payment due at maturity. Borrowing Base The maximum amount the Company may borrow under the Revolver is the lesser of (i) 85% of eligible receivables plus 35% of eligible inventories or (ii) $20 million. At the Company's election, another 35% of eligible inventories may 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 the higher percentage limit, $4.75 million . The Sixth Amendment removed the provision in the 2013 Credit Agreement that allowed for borrowing at an increased interest rate margin based on 85% of eligible accounts plus 70% of eligible inventories up to a maximum of $4.75 million. At June 26, 2015 , the upper limit on Revolver borrowings was $19.5 million . Average available balances on the Revolver amounted to $9.9 million and $10.8 million during the nine months ended June 26, 2015 and June 27, 2014 , respectively. Interest Rates For the variable rate debt, the interest rate is Libor plus the applicable margin interest rate that is based on the Company's Debt to EBITDARS Ratio, as defined below. Changes to applicable margins and unused fees resulting from the Debt to EBITDARS Ratio generally become effective mid-way through the subsequent quarter. The Second Amendment to the 2013 Credit Agreement entered into on August 6, 2013 (the "Second Amendment") modified the ranges of applicable margins and unused fees by increasing both the lower and upper limit of each range with respect to the applicable debt facility. The higher Debt to EBITDARS Ratio calculated as of June 28, 2013, in conjunction with the Second Amendment resulted in an increase of 0.25% in the effective rate applicable to Term Loan B and Albuquerque Mortgage Loan and the unused commitment fee for the Revolver remained unchanged. The Fourth Amendment to the 2013 Credit Agreement (the "Fourth Amendment") fixed the applicable margin for the Revolver at 4.25% , for the Albuquerque Mortgage Loan at 4.50% and Term Loan B at 3.25% and the unused fee at 0.50% , in each case for the period December 13, 2013 through December 13, 2014 and if the Company was not compliant with financial covenants on December 13, 2014, during the period of non-compliance. The Fifth Amendment further fixed the applicable margins at the rates noted in the Fourth Amendment through March 27, 2015 and if the Company was not compliant with financial covenants on March 27, 2015, during the period of non-compliance. Additionally, the Sixth Amendment to the 2013 Credit Agreement entered into on May 8, 2015 (the "Sixth Amendment") further fixed each facility’s applicable margin at the rates established under the Fourth and Fifth Amendments through March 31, 2016, and thereafter if the Company is not then in compliance with its financial covenants. The applicable unused line fee of 0.50% also was extended through March 31, 2016, and thereafter if the Company is not in compliance with its financial covenants. The Company incurs quarterly unused commitment fees ranging from 0.125% to 0.500% of the excess of $20.0 million over average borrowings under the Revolver. Fees incurred amounted to $38.2 thousand and $40.5 thousand during the nine months ended June 26, 2015 and June 27, 2014 , respectively. The fee percentage varies based on the Company's Debt to EBITDARS Ratio, as defined below. Interest Rate Swap In connection with the 2013 Credit Agreement, on January 18, 2013, the Company and M&T Bank entered into an interest rate swap arrangement (“Swap Transaction”). The Swap Transaction is for a notional amount of $14.0 million with an effective date of February 1, 2013 and a termination date of February 1, 2023. The Swap Transaction is designed to reduce the variability of future interest payments with respect to Term Loan B by effectively fixing the annual interest rate payable on the loan’s outstanding principal. Pursuant to the Swap Transaction, the Company’s one month Libor rate is swapped for a fixed rate of 1.32% . When the swap fixed rate is added to the Term Loan B spread of 2.50% , the Company’s interest rate applicable to Term Loan B is effectively fixed at 3.82% . The Fourth Amendment and Fifth Amendment temporarily modified the Term Loan B spread to 3.25% which results in an effectively fixed rate of 4.57% . Financial Covenants The 2013 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 ("Quarterly EBITDARS"), (ii) a ratio of total debt to twelve month EBITDARS (“Debt to EBITDARS Ratio”) that is below a specified limit, and (iii) a minimum fixed charge coverage ratio (“Fixed Charge Coverage Ratio”). The Debt to EBITDARS Ratio is the ratio of debt to earnings before interest, taxes, depreciation, amortization, rent expense and non-cash stock compensation expense. The Fixed Charge Coverage Ratio compares (i) 12 month EBITDA plus non-cash stock compensation expense minus unfinanced capital expenditures minus cash taxes paid, to (ii) the sum of interest expense, principal payments, sale-leaseback payments and dividends, if any (fixed charges). On May 15, 2013 we obtained an amendment to the 2013 Credit Agreement (the “First Amendment”) which modified the Debt to EBITDARS Ratio and Fixed Charge Coverage Ratio covenants. The Second Amendment, obtained on August 6, 2013 modified the Debt to EBITDARS Ratio. On December 13, 2013 we obtained the Fourth Amendment and on February 4, 2014 we obtained a further amendment to the 2013 Credit Agreement (the “Fifth Amendment”) which further modified the ratios. The Second Amendment also amended two definitions used in the calculation of the financial covenants, including: (i) the definition of net income, to add back, through the fiscal quarter ending June 27, 2014, up to $1.1 million of legal and accounting fees associated with the restatement, and (ii) the definition of interest expense as related to Rate Management Transactions (defined in the 2013 Credit Agreement), to be “the net cash cost or benefit associated with Rate Management Transactions net cash benefit or loss”. Pursuant to the Sixth Amendment, M&T agreed to (i) modify the financial covenants related to Quarterly EBITDARS, the Debt to EBITDARS Ratio and the Fixed Coverage Charge Ratio and (ii) waive events of default arising from the Company’s non-compliance with these covenants during the fiscal quarters ended December 26, 2014 and March 27, 2015. The Sixth Amendment also amended the definition of EBITDARS under the 2013 Credit Agreement to add back a maximum amount of professional services fees and expenses incurred and paid or to be paid prior to September 30, 2015. EBITDARS as amended and restated means, for the applicable period, earnings before interest, taxes, depreciation, amortization, plus (i) payments due under the M&T sale-leaseback arrangement, (ii) non-cash stock option expense and (iii) professional services fees and expenses incurred and paid or to be paid prior to September 30, 2015, up to a maximum of (a) for the fiscal quarter ended December 26, 2014, $235,112, (b) for the fiscal quarter ending March 27, 2015, $2,652,659, (c) for the fiscal quarter ending June 26, 2015, $200,000 plus costs incurred and paid by Borrower during such Fiscal Quarter in connection with mortgages, environmental site assessments, title insurance and appraisals ("Costs") and (d) for the fiscal quarter ending September 30, 2015, $200,000 plus costs incurred and paid by Borrower during such Fiscal Quarter, all on a consolidated basis and determined in accordance with GAAP on a consistent basis. Covenant Ratios in effect at June 26, 2015, after the 6th Amendment, are as follows: Debt to EBITDARS Ratio: 2013 Credit Agreement, after Sixth Amendment: 3/28/15 through and including 6/26/15 < 5.75 to 1.00 6/27/15 through and including 9/30/15 < 5.75 to 1.00 10/1/15 through and including 12/25/15 < 5.50 to 1.00 12/26/15 through and including 3/25/16 < 5.00 to 1.00 3/26/16 through and including 6/24/16 < 4.50 to 1.00 6/25/16 through and including 9/30/16 < 4.00 to 1.00 10/1/16 and thereafter < 3.50 to 1.00 Fixed Charge Coverage Ratio: 2013 Credit Agreement, after Sixth Amendment: 3/28/15 through and including 6/26/15 > 0.60 to 1.00 6/27/15 through and including 9/30/15 > 0.45 to 1.00 10/1/15 through and including 12/25/15 > 0.75 to 1.00 12/26/15 through and including 3/25/16 > 1.00 to 1.00 3/26/16 through and including 6/24/16 > 1.10 to 1.00 6/ /25/16 and thereafter > 1.25 to 1.00 The Sixth Amendment also modified the Quarterly EBITDARS covenant to be equal to or greater than $1.25 million for the fiscal quarter ending June 26, 2015, and $1.5 million for each fiscal quarter thereafter. A summary of financial covenant compliance follows: Quarterly EBITDARS Debt to EBITDARS Ratio Fixed Charge Coverage Ratio Fiscal Quarters Third 2015 Compliant Compliant Compliant Second 2015 Waived Waived Waived First 2015 Waived Waived Waived Fourth 2014 Compliant Not Measured Not Measured Third 2014 Compliant Not Measured Not Measured Second 2014 Waived Not Measured Not Measured First 2014 Waived Not Measured Not Measured As a result of the 2014 Restatements as described in Note 2—Restatement of Deferred Tax Asset Valuation Allowance and Excess and Obsolete Inventory Reserve , the Company was in default of the Credit Agreement for failure to deliver financial statements prepared in accordance with GAAP. The Company received a waiver from M&T regarding this event of default. Other Borrowings 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. Contractual Principal Payments A summary of contractual principal payments under IEC's borrowings for the next five years taking into consideration the 2013 Credit Agreement follows: Debt Repayment Schedule Contractual (in thousands) Twelve months ended March 27, 2016 (1) $ 14,148 2017 2,908 2018 4,641 2019 3,315 2020 and thereafter 8,003 $ 33,015 (1) Includes Revolver balance of $11.2 million at June 26, 2015 |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 9 Months Ended |
Jun. 26, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE FINANCIAL INSTRUMENTS | Interest Rate Risk Management As described in Note 8—Credit Facilities , we are party to the Swap Transaction. The fair value of the Swap Transaction represented an asset of $0.1 million and $0.2 million at June 26, 2015 and September 30, 2014 , respectively, and was estimated based on Level 2 inputs. The Company did not designate the Swap Transaction as a cash flow hedge at inception and therefore, the gains or losses from the changes in fair value of the derivative instrument are recognized in earnings for the period ended June 26, 2015 within interest expense. The fair value of the Swap Transaction of $0.1 million and $0.2 million is recorded in other long term assets in the Consolidated Balance Sheet at June 26, 2015 and September 30, 2014 , respectively. |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 9 Months Ended |
Jun. 26, 2015 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | Financial Instruments Carried at Fair Value The Company’s Swap Transaction is recorded on the balance sheet as either an asset or a liability measured at fair value. The Company estimates the fair value of its Swap Transaction based on Level 2 valuation inputs, including fixed interest rates, Libor implied forward interest rates and the remaining time to maturity. At June 26, 2015 , the Swap Transaction was an asset with a fair value of $0.1 million . Financial Instruments Carried at Historical Cost The Company’s long-term debt is not quoted. Fair value was estimated using a discounted cash flow analysis based on Level 2 valuation inputs, including borrowing rates the Company believes are currently available to it for loans with similar terms and maturities. The Company’s debt is carried at historical cost on the balance sheet. A summary of the fair value and carrying value of fixed rate debt at period end follows: June 26, 2015 September 30, 2014 Fair Value Carrying Value Fair Value Carrying Value (in thousands) Term Loan A 6,309 7,315 6,924 8,148 Celmet Building Term Loan 966 1,094 1,035 1,192 The fair value of the remainder of the Company’s debt approximated carrying value at June 26, 2015 and September 30, 2014 as it is variable rate debt. |
WARRANTY RESERVES
WARRANTY RESERVES | 9 Months Ended |
Jun. 26, 2015 | |
Product Warranties Disclosures [Abstract] | |
WARRANTY RESERVES | IEC generally warrants its products and workmanship for up to twelve months from date of sale. As an offset to warranty claims, the Company is sometimes able to obtain reimbursement from suppliers for warranty-related costs or losses. Based on historical warranty claims experience and in consideration of sales trends, a reserve is maintained for estimated future warranty costs to be incurred on products and services sold through the balance sheet date. A summary of additions to and charges against IEC’s warranty reserves during the period follows: Nine Months Ended Warranty Reserve June 26, June 27, (in thousands) Reserve, beginning of period $ 251 $ 219 Provision 287 235 Warranty costs (237 ) (221 ) Reserve, end of period $ 301 $ 233 |
DEFERRED GRANTS
DEFERRED GRANTS | 9 Months Ended |
Jun. 26, 2015 | |
Deferred Grants [Abstract] | |
DEFERRED GRANTS | The Company received grants for certain facility improvements from state and local agencies in which the Company operates. These grants reimburse the Company for a portion of the actual cost or provide in kind services in support of capital projects. There were no deferred grants recorded in fiscal 2015 and $0.7 million of deferred grants recorded during the year ended September 30, 2014, from such grant programs. One of the Company’s grants is a loan to grant agreement. The Company has signed a promissory note in the principal amount of $0.1 million , which will be forgiven if certain employment targets at the Newark, NY facility are obtained at future dates. If the employment targets are not obtained, the Company is obligated to repay a portion of the loan with interest. As the Company intends to comply with these agreements, the Company has recorded the funds received as a deferred amount within other long-term liabilities on the balance sheet. The Company received a government grant in the amount of $0.7 million for the purchase of equipment upgrades to accommodate existing and anticipated business growth. Required employment targets at the Newark, NY facility for this grant were met as of September 30, 2014 and the Company has no further obligations under this grant. The Company is also the recipient of matching grants from two local governmental agencies related to certain renovations for one of its operating locations. One agency is contributing in kind services and property of $0.1 million while the other is contributing cash of $0.1 million to match expenditures by the Company of at least the same amount. The grants will be amortized over the useful lives of the related fixed assets when there is reasonable assurance that the Company will meet the employment targets. The Company recorded amortization of $123 thousand and $14 thousand for the deferred grants for the nine months ended June 26, 2015 and June 27, 2014 , respectively. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended |
Jun. 26, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | The 2010 Omnibus Incentive Compensation Plan (“2010 Plan”) was approved by the Company’s stockholders at the January 2011 Annual Meeting of the Shareholders. This plan replaced IEC’s 2001 Stock Option and Incentive Plan (“2001 Plan”), which expired in December 2011. The 2010 Plan, which is administered by the Compensation Committee of the Board of Directors, provides for the following types of awards: incentive stock options, nonqualified options, stock appreciation rights, restricted shares, restricted stock units, performance compensation awards, cash incentive awards, director stock and other equity-based and equity-related awards. Awards are generally granted to certain members of management and employees, as well as directors. Under the 2010 Plan, up to 2,000,000 common shares may be issued over a term of ten years . Stock-based awards granted through December 2011, were made under the 2001 Plan. Awards granted after December 2011, were made under the 2010 Plan and future awards will be made under the 2010 Plan. Stock-based compensation expense recorded under the plans totaled $2.0 million and $0.4 million for the nine months ended June 26, 2015 and June 27, 2014 , respectively. At June 26, 2015 there were 907,389 shares available to be issued from the 2010 Plan. On February 2, 2015, the Company announced its shareholders elected all seven Vintage Opportunity Fund, LP-nominated directors to the Company’s Board of Directors. This change in the Company's Board of Directors was a change in control event which triggered automatic vesting for all awards outstanding under the 2010 and 2001 Plans. On the change in control date 390,882 shares of restricted stock and 119,500 stock options vested which resulted in stock-based compensation expense of $1.8 million. Expenses relating to stock options that comply with certain U.S. income tax rules are neither deductible by the Company nor taxable to the employee. Further information regarding awards granted under the 2001 Plan, 2010 Plan and employee stock purchase plan is provided below. Stock Options When options are granted, IEC estimates the fair value of the option using the Black-Scholes option pricing model and recognizes the computed value as compensation cost over the vesting period, which is typically four years. The contractual term of options granted under the 2010 Plan is generally seven years. Assumptions used in the Black-Scholes model and the estimated value of options granted during the nine months ended June 26, 2015 and June 27, 2014 are included in the table below: Nine Months Ended Valuation of Options June 26, June 27, Assumptions for Black-Scholes: Risk-free interest rate 1.29 % 1.31 % Expected term in years 4.5 4.1 Volatility 40 % 49 % Expected annual dividends none none Value of options granted: Number of options granted 517,145 45,500 Weighted average fair value per share $ 1.44 $ 1.62 Fair value of options granted (000's) $ 745 $ 74 A summary of stock option activity, together with other related data, follows: Nine Months Ended June 26, 2015 June 27, 2014 Stock Options Number Wgtd. Avg. Number Wgtd. Avg. Outstanding, beginning of period 234,000 $ 4.48 246,383 $ 4.38 Granted 517,145 4.14 45,500 4.12 Exercised (25,932 ) 1.87 (18,093 ) 1.49 Shares withheld for payment of exercise (16,068 ) 1.88 (3,407 ) 1.69 Forfeited (8,300 ) 6.04 (23,283 ) 5.71 Expired (9,200 ) 6.06 (2,850 ) 5.04 Outstanding, end of period 691,645 $ 4.35 244,250 $ 4.51 For options expected to vest Number expected to vest 519,399 $ 4.44 220,987 $ 4.49 Weighted average remaining term, in years 5.5 3.4 Intrinsic value (000s) $ 213 $ 176 For exercisable options Number exercisable 205,500 $ 5.01 125,650 $ 3.59 Weighted average remaining term, in years 3.6 2.0 Intrinsic value (000s) $ 70 $ 166 For non-exercisable options Expense not yet recognized (000s) $ 660 $ 171 Weighted average years to be recognized 3.8 2.6 For options exercised Intrinsic value (000s) $ 119 $ 59 Changes in the number of non-vested options outstanding, together with other related data, follows: Nine Months Ended June 26, 2015 June 27, 2014 Stock Options Number Wgtd. Avg. Fair Value Number Wgtd. Avg. Non-vested, beginning of period 112,350 $ 2.15 138,350 $ 2.51 Granted 517,145 1.44 45,500 1.62 Vested (135,050 ) 2.08 (41,967 ) 2.51 Forfeited (8,300 ) 2.35 (23,283 ) 2.30 Non-vested, end of period 486,145 $ 1.42 118,600 $ 2.20 Restricted (Non-vested) Stock Holders of IEC restricted stock have voting and dividend rights as of the date of grant, but until vested the shares may be forfeited and cannot be sold or otherwise transferred. At the end of the vesting period, which is typically four or five years ( three years in the case of directors), holders have all the rights and privileges of any other IEC common stockholder. The fair value of a share of restricted stock is its market value on the date of grant, and that value is recognized as stock compensation expense over the vesting period. A summary of restricted stock activity, together with related data, follows: Nine Months Ended June 26, 2015 June 27, 2014 Restricted (Non-vested) Stock Number of Shares Wgtd. Avg. Number of Wgtd. Avg. Outstanding, beginning of period 322,873 $ 4.97 275,474 $ 5.96 Granted 171,155 5.02 155,703 4.05 Vested (316,539 ) 5.08 (80,971 ) 5.74 Shares withheld for payment of (133,329 ) 4.53 (18,615 ) 4.28 Forfeited (1,200 ) 3.91 (71,103 ) 5.88 Outstanding, end of period 42,960 $ 4.22 260,488 $ 5.15 For non-vested shares Expense not yet recognized (000s) $ 180 $ 725 Weighted average remaining years for vesting 2.1 3.0 For shares vested Aggregate fair value on vesting dates (000s) $ 2,062 $ 421 Employee Stock Purchase Plan The Company administers an employee stock purchase plan (“ESPP”) that provides for a discounted stock purchase price. On May 21, 2013, the Compensation Committee of the Company’s Board of Directors suspended operation of the ESPP indefinitely in connection with the Prior Restatement (including unavailability of the registration statement covering shares offered under the plan due to the failure of the Company to be current in its filings with the SEC until the Company filed its Form 10-K on December 24, 2013). The ESPP was reinstated effective October 1, 2014. On February 13, 2015, the Compensation Committee of the Company’s Board of Directors suspended operation of the ESPP indefinitely in connection with the 2014 Restatements described in Note 2—Restatement of Deferred Tax Asset Valuation Allowance and Excess and Obsolete Inventory Reserve (including unavailability of the registration statement covering shares offered under the plan due to the failure of the Company to be current in its filings with the SEC). Employees currently receive a 10% discount on stock purchases through the ESPP. Employee contributions to the plan, net of withdrawals were $8.0 thousand for the nine months ended June 26, 2015 . Compensation expense recognized under the ESPP was $1.0 thousand for the nine months ended June 26, 2015 . There were no employee contributions or compensation expense recognized under the ESPP during the nine months ended June 27, 2014 . Stock Issued to Board Members In addition to annual grants of restricted stock, included in the table above, Board members may elect to have their meeting fees paid in the form of shares of the Company’s common stock. In connection with the restatement of the Company’s financial statements described herein (including unavailability of the registration statement covering shares offered under the 2010 Plan due to the failure of the Company to be current in its filings with the SEC until the Company filed its Form 10-K on December 24, 2013), the Company determined not to pay, and has not paid, any meeting fees in stock during the period since May 21, 2013 through the third quarter of fiscal 2015. |
RETIREMENT PLAN
RETIREMENT PLAN | 9 Months Ended |
Jun. 26, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
RETIREMENT PLAN | The Company administers a retirement savings plan for the benefit of its eligible employees and their beneficiaries under the provisions of Sections 401(a) and (k) of the Internal Revenue Code. Eligible employees may contribute a portion of their compensation to the plan, and the Company is permitted to make discretionary contributions as determined by the Board of Directors. During the the first nine months of fiscal 2015, the Company contributed 25% of the first 6% contributed by all employees at all locations. During the first nine months of fiscal 2014, for its Albuquerque operating location only, the Company contributed 25% of the first 6% contributed by employees. Contributions during the nine months ended June 26, 2015 and June 27, 2014 totaled $200 thousand and $27 thousand , respectively. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Jun. 26, 2015 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | Provision for income taxes during the three and nine months ended June 26, 2015 and June 27, 2014 follows: Three Months Ended Nine Months Ended Income Tax Provision/Benefit June 26, June 27, June 26, June 27, (in thousands) (restated) (restated) Provision for/(benefit from) income taxes $ — $ — $ — $ 13,039 The Company restated to record a full valuation allowance on all deferred tax assets during the second quarter of fiscal 2014. The restatement is further discussed in Note 2—Restatement of Deferred Tax Asset Valuation Allowance and Excess and Obsolete Inventory Reserve . Although we have recorded a full valuation allowance for all deferred tax assets, including net operating loss carryforwards ("NOLs"), these NOLs remain available to the Company to offset taxable income and reduce tax payments. IEC has federal NOLs for income tax purposes of approximately $16.3 million at September 30, 2014 , expiring mainly in years 2021 through 2025, with a small portion expiring in 2034. At September 30, 2014 , the Company also had state NOLs of $27.7 million , expiring mainly in years 2021 through 2025 and $1.2 million of New York State investment tax and other credit carryforwards, expiring in various years through 2028. The credits cannot be utilized until the New York NOL is exhausted. Recent New York state corporate tax reform has resulted in the reduction of the business income base rate for qualified manufacturers in New York state to 0% beginning in fiscal 2015 for IEC. As a result of this legislation, it is more likely than not that the New York state NOLs and credits will not be realized. Due to the Company's NOLs, a provision for pre-tax income was not recorded in the second quarter of fiscal 2015. |
MARKET SECTORS AND MAJOR CUSTOM
MARKET SECTORS AND MAJOR CUSTOMERS | 9 Months Ended |
Jun. 26, 2015 | |
Risks and Uncertainties [Abstract] | |
MARKET SECTORS AND MAJOR CUSTOMERS | A summary of sales, according to the market sector within which IEC's customers operate, follows: Three Months Ended Nine Months Ended % of Sales by Sector June 26, June 27, June 26, June 27, Aerospace & Defense (previously Military & Aerospace) 35% 50% 40% 50% Medical 32% 22% 30% 19% Industrial 30% 22% 27% 25% Communications & Other 3% 6% 3% 6% 100% 100% 100% 100% Three individual customers each represented 10% or more of sales for the nine months ended June 26, 2015 . One customer in the industrial sector represented 18% of sales, two customers in the medical sector represented 13% and 11% of sales. Two individual customers represented 10% or more of sales for the nine months ended June 27, 2014 . One customer in the Industrial sector represented 15% of sales and one customer in the Medical sector represented 12% of sales for the nine months ended June 27, 2014 . Three individual customers represented 10% or more of receivables and accounted for 43% of outstanding balances at June 26, 2015 . Three individual customers represented 10% or more of receivables and accounted for 37% of the outstanding balances at June 27, 2014 . |
LITIGATION
LITIGATION | 9 Months Ended |
Jun. 26, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
LITIGATION | In connection with the Prior Restatement, the Audit Committee conducted an independent review of the underlying facts and circumstances, and the Company is responding to a formal investigation by the staff of the SEC relating to the Prior Restatement and other matters. The Company is unable to predict what action, if any, might be taken in the future by the SEC or its staff as a result of the investigation or what impact the cost of responding to the SEC might have on the Company’s financial position, results of operations, or cash flows. From time to time, the Company may be involved in other legal action in the ordinary course of its business, but management does not believe that any such other proceedings commenced through the date of the financial statements included in this Form 10-Q, individually or in the aggregate, will have material adverse effect on the Company’s consolidated financial position. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Jun. 26, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Purchase Commitments During August 2011, one of IEC's operating units entered into a five -year agreement with one of its suppliers to purchase a minimum volume of materials in exchange for receiving favorable pricing on the unit's purchases. The agreement was subsequently amended to extend through September 30, 2018. In the event the unit's cumulative purchases do not equal or exceed stated minimums, the supplier has a right to terminate the agreement and the IEC unit would be obligated to pay an early termination fee that declines from $365 thousand to zero over the term of the agreement. As of the date of this Form 10-Q, the Company expects to exceed the minimum purchase requirements under the agreement, thereby avoiding any termination fee. |
SUBSEQUENT EVENT (Notes)
SUBSEQUENT EVENT (Notes) | 9 Months Ended |
Jun. 26, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | Subsequent to third quarter of fiscal 2015, the Company sold its Southern California Braiding Company, Inc. (SCB) business to DCX-Chol Enterprises, Inc. ("DCX"), a provider of engineered high performance interconnect products, for a purchase price of approximately $2.5 million. As previously disclosed, Southern California Braiding, Inc., a wholly owned subsidiary of the Company, entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”), effective as of July 9, 2015, by and between SCB and DCX, whereby DCX purchased the multi-conductor stranded copper cable and harness assemblies manufacturing and servicing business previously operated by SCB. Prior to this transaction, there was not a material relationship between the Company and DCX or between DCX and any officer, director or affiliate of the Company. Pursuant to the Asset Purchase Agreement, SCB sold substantially all of its assets to DCX for a net cash payment of $2.3 million and the assumption by DCX of certain obligations and liabilities of SCB. The cash payment is net of certain pro rations and transaction costs. The Asset Purchase Agreement contains indemnification obligations of each party with respect to breaches of representations, warranties and covenants and certain other specified matters. The Company is still evaluating whether SCB will be reported as discontinued operations in subsequent periods. A summary of SCB's operating results and total assets follows: Three Months Ended Nine Months Ended June 26, June 27, June 26, June 27, (unaudited) (restated) (unaudited) (restated) Net sales 1,867 3,819 5,215 10,698 Gross profit 14 663 (583 ) 1,632 Income/(loss) before income taxes (4,389 ) 286 (5,727 ) (33 ) June 26, September 30, (unaudited) (restated) Total Assets 3,584 9,567 |
OUR BUSINESS AND SUMMARY OF S26
OUR BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Jun. 26, 2015 | |
Accounting Policies [Abstract] | |
Our Business | Our Business IEC Electronics Corp. ("IEC", "we", "our", “us”, “Company”) is a provider of electronic contract manufacturing services (“EMS”) to companies in various industries that require advanced technology. We specialize in the custom manufacture of high reliability, complex circuit boards and system-level assemblies; a wide array of cable and wire harness assemblies capable of withstanding extreme environments; and precision metal components. |
Generally Accepted Accounting Principles | Generally Accepted Accounting Principles IEC's financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), as set forth in the Financial Accounting Standards Board's (“FASB”) Accounting Standards Codification (“ASC”). |
Fiscal Calendar | Fiscal Calendar The Company’s fiscal year ends on September 30th, and the first three quarters end generally on the Friday closest to the last day of the calendar quarter. |
Consolidation | Consolidation The consolidated financial statements include the accounts of IEC and its wholly owned subsidiaries: IEC Electronics Wire and Cable, Inc. (“Wire and Cable”); IEC Electronics Corp-Albuquerque ("Albuquerque"); Dynamic Research and Testing Laboratories, LLC (“DRTL”); and Southern California Braiding, Inc. (“SCB”). The Celmet unit ("Celmet") operates as a division of IEC. All significant intercompany transactions and accounts are eliminated in consolidation. |
Unaudited Financial Statements | Unaudited Financial Statements The accompanying unaudited financial statements for the nine months ended June 26, 2015 and June 27, 2014 have been prepared in accordance with GAAP for interim financial information. In the opinion of management, all adjustments required for a fair presentation of the information have been made. The accompanying financial statements should be read in conjunction with the financial statements and notes included in the Company's Annual Report on Form 10-K/A for the fiscal year ended September 30, 2014 . |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company's cash and cash equivalents principally represent deposit accounts with Manufacturers and Traders Trust Company ("M&T Bank" and "M&T"), a banking corporation headquartered in Buffalo, NY. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company establishes an allowance for doubtful accounts receivable based on the age of outstanding invoices and management's evaluation of collectability. Accounts are written off after all reasonable collection efforts have been exhausted and management concludes that likelihood of collection is remote. |
Inventory Valuation | Inventory Valuation Inventories are stated at the lower of cost or market value under the first-in, first-out method. The Company regularly assesses slow-moving, excess and obsolete inventory and maintains balance sheet reserves in amounts required to reduce the recorded value of inventory to lower of cost or market. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment (“PP&E”) are stated at cost and are depreciated over various estimated useful lives using the straight-line method. Maintenance and repairs are charged to expense as incurred, while renewals and improvements are capitalized. At the time of retirement or other disposition of PP&E, cost and accumulated depreciation are removed from the accounts and any gain or loss is recorded in earnings. Depreciable lives generally used for PP&E are presented in the table below. Leasehold improvements are amortized over the shorter of the lease term or estimated useful life of the improvement. PP&E Lives Estimated (years) Land improvements 10 Buildings and improvements 5 to 40 Machinery and equipment 3 to 5 Furniture and fixtures 3 to 7 |
Intangible Assets | Intangible Assets Intangible assets (other than goodwill) are those that lack physical substance and are not financial assets. Such assets held by IEC were acquired in connection with business combinations and represent economic benefits associated with acquired customer relationships, a non-compete agreement, and a property tax abatement. Values assigned to individual intangible assets are amortized using the straight-line method over their estimated useful lives. |
Reviewing Long-Lived Assets for Potential Impairment | Reviewing Long-Lived Assets for Potential Impairment The Company tests long-lived assets (PP&E and definitive-lived assets) for recoverability whenever events or circumstances indicate that the carrying amount of the asset may not be recoverable. If the carrying value of an asset exceeds the undiscounted future cash flows attributable to an asset, it is considered impaired and the excess of carrying value over fair value must be charged to earnings. |
Goodwill | Goodwill Goodwill represents the excess of cost over fair value of net assets acquired in a business combination. Historically, most of IEC's recorded goodwill related to SCB, which was acquired in December 2010. A lesser portion relates to Celmet, which was acquired in July 2010. Goodwill is not amortized but is reviewed for impairment at least annually or when events or circumstances indicate that carrying value may exceed fair value. The Company performs its annual impairment test for SCB goodwill during the third quarter. The Company may elect to precede a quantitative review for impairment with a qualitative assessment of the likelihood that fair value of a particular reporting unit exceeds carrying value. If the qualitative assessment leads to a conclusion that it is more than 50 percent likely that fair value of the reporting units exceeds its carrying value, then no further testing is required. In the event of a less favorable outcome, the Company is required to proceed with quantitative testing. The quantitative process entails comparing the overall fair value of the unit to which goodwill relates to its carrying value. If the fair value of the unit exceeds its carrying value, no further assessment of potential impairment is required. If the fair value of the unit is less than its carrying value, a valuation of the unit's individual assets and liabilities is required to determine whether or not goodwill is impaired. Goodwill impairment losses are charged to earnings. |
Leases | |
Legal Contingencies | Legal Contingencies When legal proceedings are brought or claims are made against us and the outcome is uncertain, ASC 450-10 (Contingencies) requires that we determine whether it is probable that an asset has been impaired or a liability has been incurred. If such impairment or liability is probable and the amount of loss can be reasonably estimated, the loss must be charged to earnings. When it is considered probable that a loss has been incurred, but the amount of loss cannot be estimated, disclosure but not accrual of the probable loss is required. Disclosure of a loss contingency is also required when it is reasonably possible, but not probable, that a loss has been incurred. |
Customer Deposits | Customer Deposits |
Grants from Outside Parties | Grants from Outside Parties Grants from outside parties are recorded as other long-term liabilities and are amortized over the same period during which the associated fixed assets are depreciated. |
Derivative Financial Instruments | Derivative Financial Instruments The Company actively monitors its exposure to interest rate risk and from time to time uses derivative financial instruments to manage the impact of this risk. The Company uses derivatives only for purposes of managing risk associated with underlying exposures. The Company does not trade or use instruments with the objective of earning financial gains on the interest rate, nor does the Company use derivative instruments where it does not have underlying exposures. The Company manages its hedging position and monitors the credit ratings of counterparties and does not anticipate losses due to counterparty nonperformance. Management believes its use of derivative instruments to manage risk is in the Company’s best interest. However, the Company’s use of derivative financial instruments may result in short-term gains or losses and increased earnings volatility. The Company’s instruments are recorded in the consolidated balance sheets at fair value in other assets or other long-term liabilities. |
Fair Value Measurements | Fair Value Measurements Under ASC 825 (Financial Instruments), the Company is required to disclose the fair value of financial instruments for which it is practicable to estimate value. The Company’s financial instruments consist of cash, accounts receivable, accounts payable, accrued liabilities, borrowings and an interest rate swap agreement. IEC believes that recorded value approximates fair value for all cash, accounts receivable, accounts payable and accrued liabilities. ASC 820 (Fair Value Measurements and Disclosures) defines fair value, establishes a framework for measurement, and prescribes related disclosures. ASC 820 defines fair value as the price that would be received upon sale of an asset or would be paid to transfer a liability in an orderly transaction. Inputs used to measure fair value are categorized under the following hierarchy: Level 1: Quoted prices in active markets for identical assets or liabilities that the Company can access at the measurement date. Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations in which all significant inputs are observable market data. Level 3: Model-derived valuations in which one or more significant inputs are unobservable. The Company deems a transfer between levels of the fair value hierarchy to have occurred at the beginning of the reporting period. There were no such transfers during the first nine months of fiscal 2015 or fiscal 2014 . |
Revenue Recognition | Revenue Recognition The Company’s revenue is principally derived from the sale of electronic products built to customer specifications, but also from other value-added support services and repair work. Revenue from product sales is recognized when (i) goods are shipped or title and risk of ownership have passed, (ii) the price to the buyer is fixed or determinable, and (iii) realization is reasonably assured. Service revenue is generally recognized once the service has been rendered. For material management arrangements, revenue is generally recognized as services are rendered. Under such arrangements, some or all of the following services may be provided: design, bid, procurement, testing, storage or other activities relating to materials the customer expects to incorporate into products that it manufactures. Value-added support services revenue, including material management and repair work revenue, amounted to less than 5% of total revenue in the first nine months of fiscal 2015 or fiscal 2014 . Provisions for discounts, allowances, rebates, estimated returns and other adjustments are recorded in the period the related sales are recognized. |
Stock-Based Compensation | Stock-Based Compensation ASC 718 (Stock Compensation) requires that compensation expense be recognized for equity awards based on fair value as of the date of grant. For stock options, the Company uses the Black-Scholes pricing model to estimate grant date fair value. Costs associated with stock awards are recorded over requisite service periods, generally the vesting period. If vesting is contingent on the achievement of performance objectives, fair value is accrued over the period the objectives are expected to be achieved only if it is considered probable that the objectives will be achieved. The Company also has an employee stock purchase plan ("ESPP") that provides for a discounted stock purchase price. Compensation expense related to the discount is recognized as employees contribute to the plan. On May 21, 2013, the Compensation Committee of the Company’s Board of Directors suspended operation of the ESPP indefinitely in connection with the Prior Restatement further discussed below (including unavailability of the registration statement covering shares offered under the plan due to the failure of the Company to be current in its filings with the SEC until the Company filed its Form 10-K on December 24, 2013). |
Restatement and Related Expenses | Restatement and Related Expenses The Company restated its consolidated financial statements for the fiscal year ended September 30, 2012, and the interim fiscal quarters and year to date periods within the year ended September 30, 2012, included in the Company’s Annual Report on Form10-K/A and the fiscal quarter ended December 28, 2012, as reported in the Company’s Quarterly Report on Form 10-Q/A for that fiscal quarter (the "Prior Restatement"). The Company also restated its consolidated financial statements for the fiscal year ended September 30, 2014 and its interim financial statements for each quarterly period within the year ended September 30, 2014, included in the Company's Annual Report on Form 10-K/A to correct an error in the valuation allowance on deferred income tax assets as well as an error in the estimate of excess and obsolete inventory reserves (the "2014 Restatements"). The Prior Restatement and the 2014 Restatements together are referred to as the "Restatements". Restatement and related expenses represents third-party expenses arising from the Restatements. These expenses include legal and accounting fees incurred by the Company from external counsel and independent accountants directly attributable to the Restatements as well as other matters arising from the Prior Restatement including those more fully described in Note 17—Litigation . |
Income Taxes and Deferred Taxes | Income Taxes and Deferred Taxes ASC 740 (Income Taxes) requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns, but not in both. Deferred tax assets are also established for tax benefits associated with tax loss and tax credit carryforwards. Such deferred balances reflect tax rates that are scheduled to be in effect, based on currently enacted legislation, in the years the book/tax differences reverse and tax loss and tax credit carryforwards are expected to be realized. An allowance is established for any deferred tax asset for which realization is not likely. ASC 740 also prescribes the manner in which a company measures, recognizes, presents, and discloses in its financial statements uncertain tax positions that the Company has taken or expects to take on a tax return. The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the position will be sustained following examination by taxing authorities, based on technical merits of the position. The Company believes that it has no material uncertain tax positions. Any interest or penalties incurred are reported as interest expense. The Company’s income tax filings are subject to audit by various tax jurisdictions and current open years are fiscal 2010 through fiscal 2014. The federal income tax audit for fiscal 2011 concluded in fiscal 2013 and did not have a material impact on the financial statements. |
Earnings Per Share | Earnings Per Share Basic earnings per common share are calculated by dividing income available to common stockholders by the weighted average number of shares outstanding during each period. Diluted earnings per common share add to the denominator incremental shares resulting from the assumed exercise of all potentially dilutive stock options, as well as restricted (non-vested) stock, and anticipated issuance through the employee stock purchase plan. Options and restricted stock are primarily held by directors, officers and certain employees. A summary of shares used in earnings per share (“EPS”) calculations follows. Three Months Ended Nine Months Ended Shares for EPS Calculation June 26, June 27, June 26, June 27, Weighted average shares outstanding 10,199,431 9,838,872 10,049,395 9,816,974 Incremental shares — — — — Diluted shares 10,199,431 9,838,872 10,049,395 9,816,974 Anti-dilutive shares excluded 734,605 504,738 734,605 504,738 As a result of the net loss for the three and nine months ended June 26, 2015 and June 27, 2014 , the Company calculated diluted earnings per share using weighted average basic shares outstanding, as using diluted shares would be anti-dilutive to loss per share. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses and the disclosure of contingent assets and liabilities. Actual results may differ from management’s estimates. |
Statements of Cash Flows | Statements of Cash Flows The Company presents operating cash flows using the indirect method of reporting under which non-cash income and expense items are removed from net income. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards FASB ASU 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force),” was issued July 2013 and is effective for fiscal years beginning after December 15, 2013. ASU 2013-11 provides guidance on financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This ASU applies to all entities with unrecognized tax benefits that also have tax loss or tax credit carryforwards in the same tax jurisdiction as of the reporting date. The Company adopted this ASU in the first quarter of fiscal 2015 and there was no impact upon adoption. |
OUR BUSINESS AND SUMMARY OF S27
OUR BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Jun. 26, 2015 | |
Accounting Policies [Abstract] | |
Property, Plant and Equipment | Depreciable lives generally used for PP&E are presented in the table below. Leasehold improvements are amortized over the shorter of the lease term or estimated useful life of the improvement. PP&E Lives Estimated (years) Land improvements 10 Buildings and improvements 5 to 40 Machinery and equipment 3 to 5 Furniture and fixtures 3 to 7 |
Schedule of Weighted Average Number of Shares | A summary of shares used in earnings per share (“EPS”) calculations follows. Three Months Ended Nine Months Ended Shares for EPS Calculation June 26, June 27, June 26, June 27, Weighted average shares outstanding 10,199,431 9,838,872 10,049,395 9,816,974 Incremental shares — — — — Diluted shares 10,199,431 9,838,872 10,049,395 9,816,974 Anti-dilutive shares excluded 734,605 504,738 734,605 504,738 |
Restatement of deferred Tax A28
Restatement of deferred Tax Asset Valuation Allowance and Obsolete Inventory Reserve (Tables) | 9 Months Ended |
Jun. 26, 2015 | |
Accounting Changes and Error Corrections [Abstract] | |
Impact of Restatement of Deferred Tax Asset Valuation and Inventory Reserve | The summary impacts of the restatement adjustments on the Company’s previously reported consolidated net loss for the three and nine months ended June 27, 2014 follows: Three Months Ended Nine Months Ended June 27, June 27, (in thousands) Net income/(loss) - Previously reported $ 22 $ (1,646 ) Deferred tax asset valuation allowance adjustment 3 (14,016 ) Excess and obsolete inventory reserve adjustment (85 ) (443 ) Net income/(loss) - Restated $ (60 ) $ (16,105 ) The impacts of the restatement adjustments on the Company’s previously reported consolidated income statement for the three and nine months ended June 27, 2014 follows: Three Months Ended Nine Months Ended June 27, 2014 June 27, 2014 As Reported Adjustment Restated As Reported Adjustment Restated (in thousands, except per share data) Cost of sales $ 29,112 $ 85 $ 29,197 $ 87,675 $ 443 $ 88,118 Gross profit 3,880 (85 ) 3,795 12,259 (443 ) 11,816 Operating profit /(loss) 583 (85 ) 498 (1,195 ) (443 ) (1,638 ) Income/(loss) before income 25 (85 ) (60 ) (2,623 ) (443 ) (3,066 ) Provision for /(benefit from) 3 (3 ) — (977 ) 14,016 13,039 Net income /(loss) 22 (82 ) (60 ) (1,646 ) (14,459 ) (16,105 ) Net income /(loss) per share $ — $ (0.01 ) $ (0.01 ) $ (0.17 ) $ (1.47 ) $ (1.64 ) |
ALLOWANCE FOR DOUBTFUL ACCOUN29
ALLOWANCE FOR DOUBTFUL ACCOUNTS (Tables) | 9 Months Ended |
Jun. 26, 2015 | |
Receivables [Abstract] | |
Allowance for Credit Losses on Financing Receivables | A summary follows of activity in the allowance for doubtful accounts during the nine months ended June 26, 2015 and June 27, 2014 . Nine Months Ended Allowance for Doubtful Accounts June 26, June 27, (in thousands) Allowance, beginning of period $ 525 $ 452 Provision for doubtful accounts (23 ) 257 Write-offs (64 ) (37 ) Allowance, end of period $ 438 $ 672 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Jun. 26, 2015 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current | A summary of inventory by category at period end follows: Inventories June 26, September 30, (in thousands) (restated) Raw materials $ 21,147 $ 16,769 Work-in-process 8,163 7,906 Finished goods 2,149 757 Total inventories 31,459 25,432 Reserve for excess/obsolete inventory (4,025 ) (2,906 ) Inventories, net $ 27,434 $ 22,526 |
FIXED ASSETS (Tables)
FIXED ASSETS (Tables) | 9 Months Ended |
Jun. 26, 2015 | |
Property, Plant and Equipment [Abstract] | |
Fixed Assets Schedule And Accumulated Depreciation Disclosure | A summary of fixed assets and accumulated depreciation at period end follows: Fixed Assets June 26, September 30, (in thousands) Land and improvements $ 1,601 $ 1,601 Buildings and improvements 14,008 13,452 Leasehold improvements 1,487 1,458 Machinery and equipment 27,967 26,996 Furniture and fixtures 7,571 7,207 Construction in progress 952 381 Total fixed assets, at cost 53,586 51,095 Accumulated depreciation (36,534 ) (33,245 ) Accumulated impairment - building and improvements $ (96 ) $ — Fixed assets, net $ 16,956 $ 17,850 Depreciation expense during the three and nine months ended June 26, 2015 and June 27, 2014 follows: Three Months Ended Nine Months Ended June 26, June 27, June 26, June 27, (in thousands) Depreciation expense $ 1,049 $ 1,141 $ 3,289 $ 3,406 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Jun. 26, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Indefinite-Lived Intangible Assets (Excluding Goodwill) | A summary of intangible assets by category and accumulated amortization at period end follows: Intangible Assets June 26, September 30, (in thousands) Customer relationships - SCB $ 5,900 $ 5,900 Property tax abatement - Albuquerque 360 360 Non-compete agreement - SCB 100 100 Total intangibles 6,360 6,360 Accumulated amortization (1,747 ) (1,556 ) Accumulated impairment - customer relationships (4,460 ) (2,412 ) Accumulated impairment - Non-compete agreement (9 ) — Intangible assets, net $ 144 $ 2,392 |
Schedule of Amortization Expense | Amortization expense during the three and nine months ended June 26, 2015 and June 27, 2014 follows: Three Months Ended Nine Months Ended Amortization Expense June 26, June 27, June 26, June 27, (in thousands) Intangible amortization expense $ 64 $ 64 $ 191 $ 191 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | A summary of amortization expense for the next five years follows: Future Amortization Estimated future amortization (in thousands) Twelve months ended March, 2016 $ 39 2017 39 2018 39 2019 27 2020 — 2021 and thereafter — |
GOODWILL (Tables)
GOODWILL (Tables) | 9 Months Ended |
Jun. 26, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | A summary of the total goodwill and accumulated impairment at period end follows: Goodwill June 26, September 30, (in thousands) Goodwill $ 13,810 $ 13,810 Accumulated impairment (13,709 ) (11,805 ) Goodwill, net $ 101 $ 2,005 |
CREDIT FACILITIES (Tables)
CREDIT FACILITIES (Tables) | 9 Months Ended |
Jun. 26, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | A summary of borrowings at period end follows: Fixed/ June 26, 2015 September 30, 2014 Variable Interest Interest Debt Rate Maturity Date Balance Rate (1) Balance Rate (1) (in thousands) M&T credit facilities: Revolving Credit Facility v 1/18/2016 $ 11,240 4.44 % $ 7,431 4.44 % Term Loan A f 2/1/2022 7,315 3.98 8,148 3.98 Term Loan B v 2/1/2023 10,733 3.43 11,783 3.41 Albuquerque Mortgage Loan v 2/1/2018 2,533 4.69 2,733 4.69 Celmet Building Term Loan f 11/7/2018 1,094 4.72 1,192 4.72 Other credit facilities: Albuquerque Industrial Revenue Bond f 3/1/2019 100 5.63 100 5.63 Total debt 33,015 31,387 Less: current portion (14,148 ) (2,908 ) Long-term debt $ 18,867 $ 28,479 (1) Rates noted are before impact of interest rate swap. |
Schedule of Debt Covenant | On December 13, 2013 we obtained the Fourth Amendment and on February 4, 2014 we obtained a further amendment to the 2013 Credit Agreement (the “Fifth Amendment”) which further modified the ratios. |
Schedule of Maturities of Long-term Debt | A summary of contractual principal payments under IEC's borrowings for the next five years taking into consideration the 2013 Credit Agreement follows: Debt Repayment Schedule Contractual (in thousands) Twelve months ended March 27, 2016 (1) $ 14,148 2017 2,908 2018 4,641 2019 3,315 2020 and thereafter 8,003 $ 33,015 (1) Includes Revolver balance of $11.2 million at June 26, 2015 |
FAIR VALUE OF FINANCIAL INSTR35
FAIR VALUE OF FINANCIAL INSTRUMENTS FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Jun. 26, 2015 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value Carrying Value of Variable Rate Debt | A summary of the fair value and carrying value of fixed rate debt at period end follows: June 26, 2015 September 30, 2014 Fair Value Carrying Value Fair Value Carrying Value (in thousands) Term Loan A 6,309 7,315 6,924 8,148 Celmet Building Term Loan 966 1,094 1,035 1,192 |
WARRANTY RESERVES (Tables)
WARRANTY RESERVES (Tables) | 9 Months Ended |
Jun. 26, 2015 | |
Product Warranties Disclosures [Abstract] | |
Schedule of Product Warranty Liability | A summary of additions to and charges against IEC’s warranty reserves during the period follows: Nine Months Ended Warranty Reserve June 26, June 27, (in thousands) Reserve, beginning of period $ 251 $ 219 Provision 287 235 Warranty costs (237 ) (221 ) Reserve, end of period $ 301 $ 233 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Jun. 26, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | Assumptions used in the Black-Scholes model and the estimated value of options granted during the nine months ended June 26, 2015 and June 27, 2014 are included in the table below: Nine Months Ended Valuation of Options June 26, June 27, Assumptions for Black-Scholes: Risk-free interest rate 1.29 % 1.31 % Expected term in years 4.5 4.1 Volatility 40 % 49 % Expected annual dividends none none Value of options granted: Number of options granted 517,145 45,500 Weighted average fair value per share $ 1.44 $ 1.62 Fair value of options granted (000's) $ 745 $ 74 |
Changes in Number of Options Outstanding with Other Related Data | A summary of stock option activity, together with other related data, follows: Nine Months Ended June 26, 2015 June 27, 2014 Stock Options Number Wgtd. Avg. Number Wgtd. Avg. Outstanding, beginning of period 234,000 $ 4.48 246,383 $ 4.38 Granted 517,145 4.14 45,500 4.12 Exercised (25,932 ) 1.87 (18,093 ) 1.49 Shares withheld for payment of exercise (16,068 ) 1.88 (3,407 ) 1.69 Forfeited (8,300 ) 6.04 (23,283 ) 5.71 Expired (9,200 ) 6.06 (2,850 ) 5.04 Outstanding, end of period 691,645 $ 4.35 244,250 $ 4.51 For options expected to vest Number expected to vest 519,399 $ 4.44 220,987 $ 4.49 Weighted average remaining term, in years 5.5 3.4 Intrinsic value (000s) $ 213 $ 176 For exercisable options Number exercisable 205,500 $ 5.01 125,650 $ 3.59 Weighted average remaining term, in years 3.6 2.0 Intrinsic value (000s) $ 70 $ 166 For non-exercisable options Expense not yet recognized (000s) $ 660 $ 171 Weighted average years to be recognized 3.8 2.6 For options exercised Intrinsic value (000s) $ 119 $ 59 |
Schedule of Nonvested Stock Options Activity | Changes in the number of non-vested options outstanding, together with other related data, follows: Nine Months Ended June 26, 2015 June 27, 2014 Stock Options Number Wgtd. Avg. Fair Value Number Wgtd. Avg. Non-vested, beginning of period 112,350 $ 2.15 138,350 $ 2.51 Granted 517,145 1.44 45,500 1.62 Vested (135,050 ) 2.08 (41,967 ) 2.51 Forfeited (8,300 ) 2.35 (23,283 ) 2.30 Non-vested, end of period 486,145 $ 1.42 118,600 $ 2.20 |
Changes in Number of Restricted Non-vested Stock Outstanding with Other Related Data | A summary of restricted stock activity, together with related data, follows: Nine Months Ended June 26, 2015 June 27, 2014 Restricted (Non-vested) Stock Number of Shares Wgtd. Avg. Number of Wgtd. Avg. Outstanding, beginning of period 322,873 $ 4.97 275,474 $ 5.96 Granted 171,155 5.02 155,703 4.05 Vested (316,539 ) 5.08 (80,971 ) 5.74 Shares withheld for payment of (133,329 ) 4.53 (18,615 ) 4.28 Forfeited (1,200 ) 3.91 (71,103 ) 5.88 Outstanding, end of period 42,960 $ 4.22 260,488 $ 5.15 For non-vested shares Expense not yet recognized (000s) $ 180 $ 725 Weighted average remaining years for vesting 2.1 3.0 For shares vested Aggregate fair value on vesting dates (000s) $ 2,062 $ 421 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 9 Months Ended |
Jun. 26, 2015 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | Provision for income taxes during the three and nine months ended June 26, 2015 and June 27, 2014 follows: Three Months Ended Nine Months Ended Income Tax Provision/Benefit June 26, June 27, June 26, June 27, (in thousands) (restated) (restated) Provision for/(benefit from) income taxes $ — $ — $ — $ 13,039 |
MARKET SECTORS AND MAJOR CUST39
MARKET SECTORS AND MAJOR CUSTOMERS (Tables) | 9 Months Ended |
Jun. 26, 2015 | |
Risks and Uncertainties [Abstract] | |
Schedules of Concentration of Risk, by Risk Factor | A summary of sales, according to the market sector within which IEC's customers operate, follows: Three Months Ended Nine Months Ended % of Sales by Sector June 26, June 27, June 26, June 27, Aerospace & Defense (previously Military & Aerospace) 35% 50% 40% 50% Medical 32% 22% 30% 19% Industrial 30% 22% 27% 25% Communications & Other 3% 6% 3% 6% 100% 100% 100% 100% |
OUR BUSINESS AND SUMMARY OF S40
OUR BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 9 Months Ended |
Jun. 26, 2015 | |
Land improvements [Member] | |
Estimated Useful Lives | 10 years |
Buildings and improvements [Member] | Minimum [Member] | |
Estimated Useful Lives | 5 years |
Buildings and improvements [Member] | Maximum [Member] | |
Estimated Useful Lives | 40 years |
Machinery and equipment [Member] | Minimum [Member] | |
Estimated Useful Lives | 3 years |
Machinery and equipment [Member] | Maximum [Member] | |
Estimated Useful Lives | 5 years |
Furniture and fixtures [Member] | Minimum [Member] | |
Estimated Useful Lives | 3 years |
Furniture and fixtures [Member] | Maximum [Member] | |
Estimated Useful Lives | 7 years |
OUR BUSINESS AND SUMMARY OF S41
OUR BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - shares | 3 Months Ended | 9 Months Ended | ||
Jun. 26, 2015 | Jun. 27, 2014 | Jun. 26, 2015 | Jun. 27, 2014 | |
Accounting Policies [Abstract] | ||||
Weighted average shares outstanding | 10,199,431 | 9,838,872 | 10,049,395 | 9,816,974 |
Incremental shares | 0 | 0 | 0 | 0 |
Diluted shares | 10,199,431 | 9,838,872 | 10,049,395 | 9,816,974 |
Anti-dilutive shares excluded | 734,605 | 504,738 | 734,605 | 504,738 |
OUR BUSINESS AND SUMMARY OF S42
OUR BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual) | 9 Months Ended | 12 Months Ended |
Jun. 26, 2015 | Sep. 30, 2013 | |
Material Management [Member] | ||
Maximum percentage of total revenue | 5.00% | 5.00% |
Impact of Restatement of deferr
Impact of Restatement of deferred Tax Asset Valuation Allowance and Obsolete Inventory Reserve(Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Jun. 26, 2015 | Jun. 27, 2014 | Jun. 26, 2015 | Jun. 27, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Cost of sales | $ 29,741 | $ 29,197 | $ 87,757 | $ 88,118 | ||
Gross profit | 4,703 | 3,795 | 10,519 | 11,816 | ||
Operating profit /(loss) | (3,701) | 498 | (8,832) | (1,638) | ||
Income/(loss) before income taxes | (4,017) | (60) | (10,348) | (3,066) | ||
Provision for/(benefit from) income taxes | 0 | 0 | 0 | 13,039 | ||
NetIncomeLoss | $ (4,017) | $ (60) | $ (10,348) | $ (16,105) | ||
Net income /(loss) per share | $ (10) | $ (1,640) | ||||
Valuation Allowance, Deferred Tax Asset, Change in Amount | $ 1,100 | |||||
Previously Reported | ||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Cost of sales | $ 29,112 | $ 87,675 | ||||
Gross profit | 3,880 | 12,259 | ||||
Operating profit /(loss) | 583 | (1,195) | ||||
Income/(loss) before income taxes | 25 | (2,623) | ||||
Provision for/(benefit from) income taxes | 3 | (977) | ||||
NetIncomeLoss | $ 22 | $ (1,646) | ||||
Net income /(loss) per share | $ 0 | $ (170) | ||||
Adjustment | ||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Cost of sales | $ 85 | $ 443 | ||||
Gross profit | (85) | (443) | ||||
Operating profit /(loss) | (85) | (443) | ||||
Income/(loss) before income taxes | (85) | (443) | ||||
Provision for/(benefit from) income taxes | (3) | 14,016 | ||||
NetIncomeLoss | $ (82) | $ (14,459) | ||||
Net income /(loss) per share | $ (10) | $ (1,470) | ||||
Deferred tax asset valuation allowance adjustment | Adjustment | ||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Valuation allowances and reserves adjustments | $ 3 | $ (14,016) | ||||
Excess and obsolete inventory reserve adjustment | Adjustment | ||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Valuation allowances and reserves adjustments | $ (85) | $ (443) | ||||
State and Local Jurisdiction [Member] | Scenario, Forecast [Member] | ||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Effective Income Tax Rate Reconciliation, Percent | 0.00% |
ALLOWANCE FOR DOUBTFUL ACCOUN44
ALLOWANCE FOR DOUBTFUL ACCOUNTS (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Jun. 26, 2015 | Jun. 27, 2014 | |
Allowance for Doubtful Accounts Receivable [Roll Forward] | ||
Allowance, beginning of period | $ 525 | $ 452 |
Provision for doubtful accounts | (23) | 257 |
Write-offs | (64) | $ (37) |
Allowance, end of period | $ 438 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Jun. 26, 2015 | Sep. 30, 2014 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 21,147 | $ 16,769 |
Work-in-process | 8,163 | 7,906 |
Finished goods | 2,149 | 757 |
Total inventories | 31,459 | 25,432 |
Reserve for excess/obsolete inventory | (4,025) | (2,906) |
Inventories, net | $ 27,434 | $ 22,526 |
FIXED ASSETS (Details)
FIXED ASSETS (Details) - USD ($) | Jun. 26, 2015 | Sep. 30, 2014 | Jun. 27, 2014 |
Property, Plant and Equipment [Abstract] | |||
Land and improvements | $ 1,601,000 | $ 1,601,000 | |
Buildings and improvements | 14,008,000 | 13,452,000 | |
Leasehold improvements | 1,487,000 | 1,458,000 | |
Machinery and equipment | 27,967,000 | 26,996,000 | |
Furniture and fixtures | 7,571,000 | 7,207,000 | |
Construction in progress | 952,000 | 381,000 | |
Total fixed assets, at cost | 53,586,000 | 51,095,000 | |
Accumulated depreciation | (36,534,000) | (33,245,000) | |
FiniteLivedTangibleAssetAccumulatedImpairment | (96,000) | $ 0 | |
Fixed assets, net | $ 16,956,000 | $ 17,850,000 |
FIXED ASSETS (Details 1)
FIXED ASSETS (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 26, 2015 | Dec. 28, 2012 | Jun. 26, 2015 | Jun. 27, 2014 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 1,049 | $ 1,141 | $ 3,289 | $ 3,406 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Jun. 26, 2015 | Sep. 30, 2014 | Dec. 31, 2010 | Sep. 30, 2010 | |
Document Period End Date | Jun. 26, 2015 | |||
Total intangibles | $ 6,360 | $ 6,360 | ||
Accumulated amortization | (1,747) | (1,556) | ||
IntangibleAssetsCustomerRelationshipAccumulatedImpairment | 4,460 | 2,412 | ||
IntangibleAssetsNonCompeteAccumulatedImpairment | (9) | 0 | ||
Intangible assets, net | 144 | 2,392 | ||
Customer relationships [Member] | SCB [Member] | ||||
Total intangibles | 5,900 | 5,900 | $ 5,900 | |
Property tax abatement [Member] | Albuquerque [Member] | ||||
Total intangibles | 360 | 360 | ||
Non-compete agreement [Member] | SCB [Member] | ||||
Total intangibles | $ 100 | $ 100 | $ 100 |
INTANGIBLE ASSETS (Details 1)
INTANGIBLE ASSETS (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 26, 2015 | Jun. 27, 2014 | Jun. 26, 2015 | Jun. 27, 2014 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Document Period End Date | Jun. 26, 2015 | |||
Intangible amortization expense | $ 64 | $ 64 | $ 191 | $ 191 |
INTANGIBLE ASSETS (Details 2)
INTANGIBLE ASSETS (Details 2) $ in Thousands | Jun. 26, 2015USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2,015 | $ 39 |
2,016 | 39 |
2,017 | 39 |
2,018 | 27 |
Finite-Lived Intangible Assets, Amortization Expense, Year Five | 0 |
2021 and thereafter | $ 0 |
INTANGIBLE ASSETS (Details Text
INTANGIBLE ASSETS (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Jun. 26, 2015 | Sep. 30, 2013 | Jun. 26, 2015 | Sep. 30, 2014 | Dec. 31, 2010 | Sep. 30, 2010 | |
Amount allocated to intangibles | $ 6,360 | $ 6,360 | $ 6,360 | |||
Asset Impairment Charges | (2,000) | $ (2,400) | ||||
Proceeds from Divestiture of Businesses | 2,500 | |||||
Document Period End Date | Jun. 26, 2015 | |||||
Customer relationships [Member] | SCB [Member] | ||||||
Amount allocated to intangibles | $ 5,900 | $ 5,900 | 5,900 | $ 5,900 | ||
Estimated useful life | 15 years | |||||
Non-compete agreement [Member] | SCB [Member] | ||||||
Amount allocated to intangibles | $ 100 | 100 | 100 | $ 100 | ||
Estimated useful life | 5 years | |||||
Property tax abatement [Member] | Albuquerque [Member] | ||||||
Amount allocated to intangibles | $ 360 | $ 360 | $ 360 | |||
Estimated useful life | 9 years 2 months 12 days |
GOODWILL (Details)
GOODWILL (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Jun. 26, 2015 | Sep. 30, 2014 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Document Period End Date | Jun. 26, 2015 | |
Goodwill | $ 13,810 | $ 13,810 |
Accumulated impairment | (13,709) | (11,805) |
Goodwill, net | $ 101 | $ 2,005 |
GOODWILL (Details Textual)
GOODWILL (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2010 | Sep. 30, 2010 | Jun. 26, 2015 | Sep. 30, 2014 | |
Goodwill, Impaired, Accumulated Impairment Loss | $ 13,709 | $ 11,805 | ||
SCB [Member] | ||||
Goodwill from acquisitions | $ 13,700 | |||
Celmet [Member] | ||||
Goodwill from acquisitions | $ 100 |
CREDIT FACILITIES (Details)
CREDIT FACILITIES (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Jun. 26, 2015 | Sep. 30, 2014 | ||
Total debt | $ 33,015 | $ 31,387 | |
Less: current portion | (14,148) | (2,908) | |
Long-term debt | $ 18,867 | $ 28,479 | |
Term Loan A [Member] | |||
Debt Instrument, Interest Rate Terms | Fixed Interest Rate | ||
Maturity Date | Feb. 1, 2022 | ||
Interest Rate | [1] | 3.98% | 3.98% |
Total debt | $ 7,315 | $ 8,148 | |
Term Loan B [Member] | |||
Debt Instrument, Interest Rate Terms | Variable Interest Rate | ||
Maturity Date | Feb. 1, 2023 | ||
Interest Rate | [1] | 3.43% | 3.41% |
Total debt | $ 10,733 | $ 11,783 | |
Albuquerque Mortgage Loan [Member] | |||
Debt Instrument, Interest Rate Terms | Variable Interest Rate | ||
Maturity Date | Feb. 1, 2018 | ||
Interest Rate | [1] | 4.69% | 4.69% |
Total debt | $ 2,533 | $ 2,733 | |
Celmet Building Term Loan [Member] | |||
Debt Instrument, Interest Rate Terms | Fixed Interest Rate | ||
Maturity Date | Nov. 7, 2018 | ||
Interest Rate | [1] | 4.72% | 4.72% |
Total debt | $ 1,094 | $ 1,192 | |
Albuquerque Industrial Revenue Bond [Member] | |||
Debt Instrument, Interest Rate Terms | Fixed Interest Rate | ||
Maturity Date | Mar. 1, 2019 | ||
Interest Rate | [1] | 5.63% | 5.63% |
Total debt | $ 100 | $ 100 | |
Revolving Credit Facility [Member] | |||
Debt Instrument, Interest Rate Terms | Variable Interest Rate | ||
Maturity Date | Jan. 18, 2016 | ||
Interest Rate | [1] | 4.44% | 4.44% |
Total debt | $ 11,240 | $ 7,431 | |
[1] | Rates noted are before impact of interest rate swap. |
CREDIT FACILITIES (Details 2)
CREDIT FACILITIES (Details 2) - USD ($) $ in Thousands | Jun. 26, 2015 | Sep. 30, 2014 | |
Debt Disclosure [Abstract] | |||
2,015 | $ 14,148 | ||
2,016 | [1] | 2,908 | |
2,017 | 4,641 | ||
2,018 | 3,315 | ||
2020 and thereafter | 8,003 | ||
Total debt | $ 33,015 | $ 31,387 | |
[1] | Includes Revolver balance of $11.2 million at June 26, 2015 |
CREDIT FACILITIES (Details Text
CREDIT FACILITIES (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
Nov. 30, 2013 | Jan. 31, 2013 | Dec. 31, 2009 | Jun. 26, 2015 | Mar. 27, 2015 | Jun. 26, 2015 | Jun. 27, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Nov. 08, 2013 | Jan. 18, 2013 | Dec. 16, 2009 | ||
Maximum borrowing capacity | $ 20,000,000 | $ 20,000,000 | |||||||||||
Average borrowing capacity | 9,900,000 | 9,900,000 | $ 10,800,000 | ||||||||||
Maximum legal and accounting fees associated with the restatement | 1,100,000 | ||||||||||||
Basis spread on variable rate | 1.32% | ||||||||||||
Notional amount | $ 14,000,000 | ||||||||||||
Long-term debt | 33,015,000 | 33,015,000 | $ 31,387,000 | ||||||||||
Amendment 2014 [Member] | |||||||||||||
Net earnings before interest,taxes, depreciation and amortization | 1,250,000 | $ 1,500,000 | |||||||||||
Celmet Term Loan [Member] | Credit Agreement 2013 [Member] | |||||||||||||
Debt instrument, periodic payment, principal | $ 11,000 | ||||||||||||
Term Loan A [Member] | Credit Agreement 2013 [Member] | |||||||||||||
Long-term line of credit | 10,000,000 | ||||||||||||
Repayment monthly installments | 108 monthly installments | ||||||||||||
Line of credit facility, periodic payment, principal | $ 93,000 | ||||||||||||
Term Loan B [Member] | |||||||||||||
Increase in interest rate | 4.57% | ||||||||||||
Basis spread on variable rate | 2.50% | ||||||||||||
Interest rate, effective percentage | 3.82% | ||||||||||||
Term Loan B [Member] | Credit Agreement 2013 [Member] | |||||||||||||
Long-term line of credit | $ 14,000,000 | ||||||||||||
Repayment monthly installments | 120 monthly installments | ||||||||||||
Line of credit facility, periodic payment, principal | $ 117,000 | ||||||||||||
Term Loan B [Member] | Amendment 2014 [Member] | |||||||||||||
Interest rate, effective percentage | 3.25% | ||||||||||||
Albuquerque Mortgage Loan [Member] | Credit Agreement 2013 [Member] | |||||||||||||
Repayment monthly installments | 59 monthly installments | monthly installments | |||||||||||
Albuquerque [Member] | |||||||||||||
Liabilities assumed | 100,000 | $ 100,000 | |||||||||||
Albuquerque Mortgage Loan [Member] | Credit Agreement 2013 [Member] | |||||||||||||
Long-term line of credit | $ 4,000,000 | ||||||||||||
Debt instrument, periodic payment, principal | $ 22,000 | ||||||||||||
Revolving Credit Facility [Member] | |||||||||||||
Maturity date | Jan. 18, 2016 | ||||||||||||
Current borrowing capacity | $ 19,500,000 | $ 19,500,000 | |||||||||||
Interest rate, stated percentage | [1] | 4.44% | 4.44% | 4.44% | |||||||||
Long-term debt | $ 11,240,000 | $ 11,240,000 | $ 7,431,000 | ||||||||||
Revolving Credit Facility [Member] | Credit Agreement 2013 [Member] | |||||||||||||
Average borrowing capacity | $ 20,000,000 | 20,000,000 | |||||||||||
Commitment fee amount | $ 38,200 | $ 40,500 | |||||||||||
Revolving Credit Facility [Member] | Minimum [Member] | |||||||||||||
Unused capacity, commitment fee percentage | 0.125% | ||||||||||||
Revolving Credit Facility [Member] | Maximum [Member] | |||||||||||||
Unused capacity, commitment fee percentage | 0.50% | ||||||||||||
Celmet Term Loan [Member] | Third Amendment [Member] | |||||||||||||
Face amount | $ 1,300,000 | ||||||||||||
[1] | Rates noted are before impact of interest rate swap. |
DERIVATIVE FINANCIAL INSTRUME57
DERIVATIVE FINANCIAL INSTRUMENTS (Details Textual) - USD ($) $ in Millions | Jun. 26, 2015 | Sep. 30, 2014 | Jan. 18, 2013 |
Notional amount | $ 14 | ||
Fixed interest rate | 1.32% | ||
Interest Rate Swap [Member] | |||
Fair value of interest rate swap asset | $ 0.1 | $ 0.2 |
FAIR VALUE OF FINANCIAL INSTR58
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details Textual) - USD ($) $ in Thousands | Jun. 26, 2015 | Sep. 30, 2014 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt, carrying value | $ 33,015 | $ 31,387 |
Term Loan A [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt, fair value | 6,309 | 6,924 |
Long-term debt, carrying value | 7,315 | 8,148 |
Celmet Term Loan [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt, fair value | 966 | 1,035 |
Long-term debt, carrying value | 1,094 | 1,192 |
Interest Rate Swap [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate swap asset | $ 100 | $ 200 |
WARRANTY RESERVES (Details)
WARRANTY RESERVES (Details) - Warranty Reserves [Member] - USD ($) $ in Thousands | 9 Months Ended | |
Jun. 26, 2015 | Jun. 27, 2014 | |
Reserve, beginning of period | $ 251 | $ 219 |
Provision | 287 | 235 |
Warranty costs | (237) | $ (221) |
Reserve, end of period | $ 301 |
DEFERRED GRANTS (Details Textua
DEFERRED GRANTS (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 26, 2015 | Jun. 27, 2014 | |
Amortization of deferred grants | $ 123 | $ 14 |
Local Government Agency One [Member] | ||
Grant proceeds | 100 | |
Local Government Agency Two [Member] | ||
Grant proceeds | $ 100 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - USD ($) | 9 Months Ended | |
Jun. 26, 2015 | Jun. 27, 2014 | |
Assumptions for Black-Scholes: | ||
Risk-free interest rate | 1.29% | 1.31% |
Expected term in years | 4 years 5 months 20 days | 4 years 1 month |
Volatility | 40.00% | 49.00% |
Expected annual dividends | $ 0 | $ 0 |
Value of options granted: | ||
Number of options granted (in shares) | 517,145 | 45,500 |
Weighted average fair value per share (in dollars per share) | $ 1.44 | $ 1.62 |
Fair value of options granted (000's) | $ 745,000 | $ 74,000 |
STOCK-BASED COMPENSATION (Det62
STOCK-BASED COMPENSATION (Details 1) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | ||
Jun. 26, 2015 | Jun. 27, 2014 | Mar. 28, 2014 | |
Number of Options [Roll Forward] | |||
Outstanding, beginning of period (in shares) | 234,000 | 246,383 | |
Granted (in shares) | 517,145 | 45,500 | |
Exercised (in shares) | (25,932) | (18,093) | |
Shares withheld for payment of taxes upon exercise of stock option (in shares) | (16,068) | (3,407) | |
Forfeited (in shares) | (8,300) | (23,283) | |
Expired (in shares) | (9,200) | (2,850) | |
Outstanding, end of period (in shares) | 691,645 | ||
Wgtd. Avg. Exercise Price [Roll Forward] | |||
Outstanding, beginning of period (in dollars per share) | $ 4.48 | $ 4.38 | |
Granted (in dollars per share) | 4.14 | 4.12 | |
Exercised (in dollars per share) | 1.87 | 1.49 | |
Shares withheld for payment of taxes upon exercise of stock option (in dollars per share) | 1.88 | 1.69 | |
Forfeited (in dollars per share) | 6.04 | 5.71 | |
Expired (in dollars per share) | 6.06 | $ 5.04 | |
Outstanding, end of period (in dollars per share) | $ 4.35 | ||
For options expected to vest | |||
Number expected to vest (in shares) | 519,399 | 220,987 | |
Number expected to vest (in dollars per share) | $ 4.44 | $ 4.49 | |
Weighted average remaining term, in years | 3 years 4 months 15 days | ||
Intrinsic value (000s) | $ 213 | $ 176 | |
For exercisable options | |||
Number exercisable (in shares) | 205,500 | 125,650 | |
Number exercisable (in dollars per share) | $ 5.01 | $ 3.59 | |
Weighted average remaining term, in years | 2 years | ||
Intrinsic value (000s) | $ 70 | $ 166 | |
For non-exercisable options | |||
Expense not yet recognized (000s) | $ 660 | $ 171 | |
Weighted average years to be recognized | 3 years 9 months | 2 years 7 months 10 days | |
For options exercised, Intrinsic value (000s) | $ 119 | $ 59 |
STOCK-BASED COMPENSATION (Det63
STOCK-BASED COMPENSATION (Details 2) - $ / shares | 9 Months Ended | |
Jun. 26, 2015 | Jun. 27, 2014 | |
Number of Options [Roll Forward] | ||
Non-vested, beginning of period (in shares) | 112,350 | 138,350 |
Granted (in shares) | 517,145 | 45,500 |
Vested (in shares) | (135,050) | (41,967) |
Forfeited (in shares) | (8,300) | (23,283) |
Non-vested, end of period (in shares) | 486,145 | |
Wgtd. Avg. Grant Date Fair Value [Roll Forward] | ||
Non-vested, beginning of period (in dollars per share) | $ 2.15 | $ 2.51 |
Granted (in dollars per share) | 1.44 | 1.62 |
Vested (in dollars per share) | 2.08 | 2.51 |
Forfeited (in dollars per share) | 2.35 | $ 2.30 |
Non-vested, end of period (in dollars per share) | $ 1.42 |
STOCK-BASED COMPENSATION (Det64
STOCK-BASED COMPENSATION (Details 3) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | ||
Jun. 26, 2015 | Jun. 27, 2014 | Mar. 28, 2014 | |
Number of Non-vested Shares [Roll Forward] | |||
Shares withheld for payment of taxes upon vesting of restricted stock (in shares) | (16,068) | (3,407) | |
Wgtd. Avg. Grant Date Fair Value [Roll Forward] | |||
Shares withheld for payment of taxes upon vesting of restricted stock (in dollars per share) | $ 1.88 | $ 1.69 | |
Restricted (Non-vested) Stock [Member] | |||
Number of Non-vested Shares [Roll Forward] | |||
Outstanding, beginning of period (in shares) | 322,873 | 275,474 | |
Granted (in shares) | 171,155 | 155,703 | |
Vested (in shares) | (316,539) | (80,971) | |
Shares withheld for payment of taxes upon vesting of restricted stock (in shares) | (133,329) | (18,615) | |
Forfeited (in shares) | (1,200) | (71,103) | |
Outstanding, end of period (in shares) | 42,960 | ||
Wgtd. Avg. Grant Date Fair Value [Roll Forward] | |||
Outstanding, beginning of period (in dollars per share) | $ 4.97 | $ 5.96 | |
Granted (in dollars per share) | 5.02 | 4.05 | |
Vested (in dollars per share) | 5.08 | 5.74 | |
Shares withheld for payment of taxes upon vesting of restricted stock (in dollars per share) | 4.53 | 4.28 | |
Forfeited (in dollars per share) | 3.91 | $ 5.88 | |
Outstanding, end of period (in dollars per share) | $ 4.22 | ||
For non-vested shares | |||
Expense not yet recognized (000s) | $ 180 | $ 725 | |
Weighted average remaining years for vesting | 2 years 1 month | 3 years | |
For shares vested | |||
Aggregate fair value on vesting dates (000s) | $ 2,062 | $ 421 |
STOCK-BASED COMPENSATION (Det65
STOCK-BASED COMPENSATION (Details Textual) - USD ($) | 9 Months Ended | |
Jun. 26, 2015 | Jun. 27, 2014 | |
Stock-based compensation | $ 1,990,000 | $ 378,000 |
Compensation expense | $ 1,990,000 | 378,000 |
2010 Plan [Member] | ||
Maximum number of common shares that may be issued | 2,000,000 | |
Common shares, issuance term | 10 years | |
ESPP [Member] | ||
Employee contributions | $ 8,000 | |
Compensation expense | 1,000 | |
Additional Paid-in Capital [Member] | ||
Stock-based compensation | $ 1,990,000 | $ 378,000 |
Director [Member] | ||
Award vesting period | 3 years | |
Vesting One [Member] | ||
Award vesting period | 4 years | |
Vesting Two [Member] | ||
Award vesting period | 5 years |
RETIREMENT PLAN (Details Textua
RETIREMENT PLAN (Details Textual) - USD ($) $ in Thousands | 9 Months Ended | |
Jun. 26, 2015 | Jun. 27, 2014 | |
Compensation and Retirement Disclosure [Abstract] | ||
Contributions by employer, percentage | 0.00% | 6.00% |
Defined Benefit Plan, Contributions by Employer | $ 200 | $ 27 |
Defined Contribution Plan, Employer Matching Contribution, Percent of Match | 25.00% |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 26, 2015 | Jun. 27, 2014 | Jun. 26, 2015 | Jun. 27, 2014 | |
Income Tax Disclosure [Abstract] | ||||
Benefit from income taxes | $ 0 | $ 0 | $ 0 | $ 13,039 |
INCOME TAXES (Details Textual)
INCOME TAXES (Details Textual) - USD ($) $ in Millions | Jun. 26, 2015 | Sep. 30, 2014 | Sep. 30, 2013 |
Business Income Base Rate, Tax, Percentage | 0.00% | ||
Investment Tax Credit Carryforward [Member] | |||
Operating loss carryforwards | $ 1.2 | ||
Domestic Tax Authority [Member] | |||
Operating loss carryforwards | $ 16.3 | ||
State and Local Jurisdiction [Member] | |||
Operating loss carryforwards | $ 27.7 |
MARKET SECTORS AND MAJOR CUST69
MARKET SECTORS AND MAJOR CUSTOMERS (Details) - Sales Revenue, Segment [Member] | 3 Months Ended | 9 Months Ended | ||
Jun. 26, 2015 | Jun. 27, 2014 | Jun. 26, 2015 | Jun. 27, 2014 | |
% of Sales by Sector | 100.00% | 100.00% | 100.00% | 100.00% |
Aerospace & Defense [Member] | ||||
% of Sales by Sector | 35.00% | 50.00% | 40.00% | 50.00% |
Medical [Member] | ||||
% of Sales by Sector | 32.00% | 22.00% | 30.00% | 19.00% |
Industrial [Member] | ||||
% of Sales by Sector | 30.00% | 22.00% | 27.00% | 25.00% |
Communications & Other [Member] | ||||
% of Sales by Sector | 3.00% | 6.00% | 3.00% | 6.00% |
MARKET SECTORS AND MAJOR CUST70
MARKET SECTORS AND MAJOR CUSTOMERS (Details Textual) - customer | 9 Months Ended | |
Jun. 26, 2015 | Jun. 27, 2014 | |
Concentration risk, number of customers | 3 | |
Customer Concentration Risk [Member] | Sales [Member] | Industrial [Member] | ||
Concentration risk, number of customers | 2 | 1 |
Concentration risk, percentage | 13.00% | 15.00% |
Customer Concentration Risk [Member] | Sales [Member] | Medical [Member] | ||
Concentration risk, number of customers | 1 | |
Concentration risk, percentage | 18.00% | |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | ||
Concentration risk, number of customers | 3 | 3 |
Concentration risk, percentage | 43.00% | 37.00% |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Textual) - Aug. 31, 2011 - USD ($) $ in Thousands | Total |
Long-term purchase commitment, period | 5 years |
Maximum [Member] | |
Early termination fee | $ 365 |
Minimum [Member] | |
Early termination fee | $ 0 |
SUBSEQUENT EVENT (Details)
SUBSEQUENT EVENT (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Jun. 26, 2015 | Jun. 27, 2014 | Jun. 26, 2015 | Jun. 27, 2014 | Sep. 30, 2014 | |
Subsequent Event [Line Items] | |||||
Revenue, Net | $ 34,444 | $ 32,992 | $ 98,276 | $ 99,934 | |
Gross profit | 4,703 | 3,795 | 10,519 | 11,816 | |
Total Assets | 68,062 | 68,062 | $ 72,996 | ||
Scb [Member] | |||||
Subsequent Event [Line Items] | |||||
Revenue, Net | 1,867 | 3,819 | |||
Net sales | 5,215 | 10,698 | |||
Gross profit | 14 | 663 | (583) | 1,632 | |
Income/(loss) before income taxes | (4,389) | $ 286 | (5,727) | $ (33) | |
Total Assets | $ 3,584 | $ 3,584 | $ 9,567 |
Uncategorized Items - iec-20150
Label | Element | Value |
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures | us-gaap_StockIssuedDuringPeriodValueRestrictedStockAwardNetOfForfeitures | $ 0 |
Deferred Revenue, Revenue Recognized | us-gaap_DeferredRevenueRevenueRecognized | 0 |
Goodwill and Intangible Asset Impairment | us-gaap_GoodwillAndIntangibleAssetImpairment | 0 |
Goodwill and Intangible Asset Impairment | us-gaap_GoodwillAndIntangibleAssetImpairment | $ 4,057 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | us-gaap_ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber | 244,250 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares | us-gaap_SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedNumberOfShares | 118,600 |
Stock Issued During Period, Value, Stock Options Exercised | us-gaap_StockIssuedDuringPeriodValueStockOptionsExercised | $ 17 |
Allowance for Doubtful Accounts Receivable, Current | us-gaap_AllowanceForDoubtfulAccountsReceivableCurrent | $ 672 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price | us-gaap_ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice | $ 4.51 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value | us-gaap_SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedWeightedAverageGrantDateFairValue | $ 2.20 |
Interest Paid | us-gaap_InterestPaid | $ 1,184 |
Cash | us-gaap_Cash | 679 |
Adjustments To Additional Paid In Capital Shares With Held For Payment Of Taxes Upon Vesting Of Restricted Stock | iec_AdjustmentsToAdditionalPaidInCapitalSharesWithHeldForPaymentOfTaxesUponVestingOfRestrictedStock | (79) |
Warranty Reserves [Member] | ||
Product Warranty Accrual | us-gaap_ProductWarrantyAccrual | 233 |
Additional Paid-in Capital [Member] | ||
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures | us-gaap_StockIssuedDuringPeriodValueRestrictedStockAwardNetOfForfeitures | (1) |
Net Income (Loss) Attributable to Parent | us-gaap_NetIncomeLoss | 0 |
Stock Issued During Period, Value, Stock Options Exercised | us-gaap_StockIssuedDuringPeriodValueStockOptionsExercised | 32 |
Adjustments To Additional Paid In Capital Shares With Held For Payment Of Taxes Upon Vesting Of Restricted Stock | iec_AdjustmentsToAdditionalPaidInCapitalSharesWithHeldForPaymentOfTaxesUponVestingOfRestrictedStock | (79) |
Stockholders' Equity Attributable to Parent | us-gaap_StockholdersEquity | 43,802 |
Stockholders' Equity Attributable to Parent | us-gaap_StockholdersEquity | 44,132 |
Common Stock [Member] | ||
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition | us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue | 0 |
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures | us-gaap_StockIssuedDuringPeriodValueRestrictedStockAwardNetOfForfeitures | 1 |
Net Income (Loss) Attributable to Parent | us-gaap_NetIncomeLoss | 0 |
Stock Issued During Period, Value, Stock Options Exercised | us-gaap_StockIssuedDuringPeriodValueStockOptionsExercised | 0 |
Adjustments To Additional Paid In Capital Shares With Held For Payment Of Taxes Upon Vesting Of Restricted Stock | iec_AdjustmentsToAdditionalPaidInCapitalSharesWithHeldForPaymentOfTaxesUponVestingOfRestrictedStock | 0 |
Stockholders' Equity Attributable to Parent | us-gaap_StockholdersEquity | 110 |
Stockholders' Equity Attributable to Parent | us-gaap_StockholdersEquity | 111 |
Retained Earnings [Member] | ||
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition | us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue | 0 |
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures | us-gaap_StockIssuedDuringPeriodValueRestrictedStockAwardNetOfForfeitures | 0 |
Net Income (Loss) Attributable to Parent | us-gaap_NetIncomeLoss | (16,105) |
Stock Issued During Period, Value, Stock Options Exercised | us-gaap_StockIssuedDuringPeriodValueStockOptionsExercised | 0 |
Adjustments To Additional Paid In Capital Shares With Held For Payment Of Taxes Upon Vesting Of Restricted Stock | iec_AdjustmentsToAdditionalPaidInCapitalSharesWithHeldForPaymentOfTaxesUponVestingOfRestrictedStock | 0 |
Stockholders' Equity Attributable to Parent | us-gaap_StockholdersEquity | (10,483) |
Stockholders' Equity Attributable to Parent | us-gaap_StockholdersEquity | (26,588) |
Treasury Stock [Member] | ||
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition | us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue | 0 |
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures | us-gaap_StockIssuedDuringPeriodValueRestrictedStockAwardNetOfForfeitures | 0 |
Net Income (Loss) Attributable to Parent | us-gaap_NetIncomeLoss | 0 |
Stock Issued During Period, Value, Stock Options Exercised | us-gaap_StockIssuedDuringPeriodValueStockOptionsExercised | (15) |
Adjustments To Additional Paid In Capital Shares With Held For Payment Of Taxes Upon Vesting Of Restricted Stock | iec_AdjustmentsToAdditionalPaidInCapitalSharesWithHeldForPaymentOfTaxesUponVestingOfRestrictedStock | 0 |
Stockholders' Equity Attributable to Parent | us-gaap_StockholdersEquity | (1,435) |
Stockholders' Equity Attributable to Parent | us-gaap_StockholdersEquity | $ (1,450) |
Restricted Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | us-gaap_ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsNonvestedNumber | 260,488 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | us-gaap_ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsNonvestedWeightedAverageGrantDateFairValue | $ 5.15 |