Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Dec. 30, 2016 | Feb. 01, 2017 | |
Document And Entity Information [Abstract] | ||
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 | 10,277,047 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Dec. 30, 2016 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,017 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 30, 2016 | Sep. 30, 2016 |
Current assets: | ||
Cash | $ 444 | $ 845 |
Accounts receivable, net of allowance | 11,426 | 17,140 |
Inventories, net | 14,486 | 15,384 |
Assets held for sale | 0 | 4,611 |
Other current assets | 1,002 | 1,214 |
Total current assets | 27,358 | 39,194 |
Property, plant & equipment, net | 16,781 | 10,994 |
Intangible assets, net | 85 | 95 |
Goodwill | 100 | 101 |
Other long term assets | 10 | 13 |
Total assets | 44,335 | 50,397 |
Current liabilities: | ||
Current portion of long-term debt | 1,578 | 2,908 |
Current portion of capital lease | 203 | 0 |
Current portion of capital lease | 8,969 | 10,864 |
Accounts payable | 1,351 | 3,365 |
Accrued payroll and related expenses | 410 | 529 |
Customer deposits | 1,164 | 1,756 |
Total current liabilities | 13,675 | 19,422 |
Long-term debt | 10,425 | 16,732 |
Long-term capital lease | 5,514 | 0 |
Other long-term liabilities | 1,576 | 379 |
Total liabilities | 31,190 | 36,533 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, $0.01 par value: 500,000 shares authorized; none issued or outstanding | 0 | 0 |
Retained earnings/(accumulated deficit) | (31,819) | (30,954) |
Treasury stock, at cost: 1,055,488 shares | 1,589 | 1,589 |
Total stockholders' equity | 13,145 | 13,864 |
Total liabilities and stockholders' equity | $ 44,335 | $ 50,397 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS [Parenthetical] - $ / shares | Dec. 30, 2016 | Sep. 30, 2016 |
Statement of Financial Position [Abstract] | ||
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 | 11,332,535 | 11,330,151 |
Common stock, shares outstanding | 10,277,047 | 10,274,663 |
Treasury stock, shares | 1,055,488 | 1,055,488 |
CONDENSED CONSOLIDATED INCOME S
CONDENSED CONSOLIDATED INCOME STATEMENTS - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 30, 2016 | Jan. 01, 2016 | |
Income Statement [Abstract] | ||
Net sales | $ 20,976 | $ 32,933 |
Cost of sales | 19,181 | 27,116 |
Gross profit | 1,795 | 5,817 |
Selling and administrative expenses | 2,441 | 3,985 |
Operating profit/(loss) | (646) | 1,832 |
Interest and financing expense | 219 | 289 |
Income/(loss) before income taxes | (865) | 1,543 |
Provision for/(benefit from) income taxes | 0 | 0 |
Net income/(loss) | $ (865) | $ 1,543 |
Net income/(loss) per common and common equivalent share: | ||
Basic (in dollars per share) | $ (0.09) | $ 0.15 |
Diluted (in dollars per share) | $ (0.09) | $ 0.15 |
Weighted average number of common and common equivalent shares outstanding: | ||
Diluted (in shares) | 10,163,291 | 10,216,587 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS of CHANGES in STOCKHOLDERS' EQUITY - USD ($) | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings/ (Accumulated Deficit) [Member] | Treasury Stock, at cost [Member] |
Beginning Balance at Sep. 30, 2015 | $ 8,688,000 | $ 112,000 | $ 45,845,000 | $ (35,740,000) | $ (1,529,000) |
Net income (loss) | 1,543,000 | 1,543,000 | |||
Stock-based compensation | 54,000 | 54,000 | |||
Return of incentive compensation shares | (60,000) | ||||
Ending Balance at Jan. 01, 2016 | 10,225,000 | 112,000 | 45,899,000 | (34,197,000) | $ (1,589,000) |
Common Stock, Value, Issued | 113,000 | ||||
Additional Paid in Capital | 46,294,000 | ||||
Beginning Balance at Sep. 30, 2016 | 13,864,000 | ||||
Net income (loss) | (865,000) | $ (865,000) | |||
Stock-based compensation | 135,000 | 135,000 | |||
Employee stock plan purchases | 13,000 | 13,000 | |||
Shares withheld for payment of taxes upon vesting of restricted stock | (2,000) | (2,000) | |||
Return of incentive compensation shares | (60,000) | ||||
Ending Balance at Dec. 30, 2016 | $ 13,145,000 | ||||
Common Stock, Value, Issued | $ 113,000 | ||||
Additional Paid in Capital | $ 46,440,000 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS of CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 30, 2016 | Jan. 01, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income/(loss) | $ (865) | $ 1,543 |
Non-cash adjustments: | ||
Stock-based compensation | 135 | 54 |
Incentive compensation shares returned | 0 | (60) |
Depreciation and amortization | 664 | 855 |
Reserve for doubtful accounts | (162) | 277 |
Provision for excess/obsolete inventory | 6 | 498 |
Amortization of Other Deferred Charges | (12) | |
Amortization of deferred gain on sale leaseback | 0 | |
Changes in assets and liabilities: | ||
Accounts receivable | 5,876 | 4,576 |
Inventory | 892 | (922) |
Other current assets | 212 | (315) |
Other long term assets | 3 | (63) |
Accounts payable | (2,098) | (5,016) |
Accrued expenses | (2,133) | 427 |
Customer deposits | (592) | (176) |
Other long term liabilities | 48 | (74) |
Net cash flows from operating activities | 1,974 | 1,604 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property, plant and equipment | 457 | 685 |
Proceeds from sale-leaseback | 5,750 | 0 |
Net cash flows from investing activities | 5,293 | (685) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Advances from revolving line of credit | 10,807 | 16,816 |
Repayments of revolving line of credit | (12,125) | (17,128) |
Repayments under other loan agreements | (6,328) | (727) |
Repayments under capital lease | 33 | 0 |
Debt issuance costs | 0 | (202) |
Proceeds from employee stock plan purchases | 13 | 0 |
Repayments under other loan agreements | (2) | 0 |
Net cash flows from financing activities | (7,668) | (1,241) |
Net cash flows for the period | (401) | (322) |
Cash, beginning of period | 845 | 407 |
Cash, end of period | 444 | 85 |
Supplemental cash flow information | ||
Interest paid | 209 | 365 |
Income taxes paid | 79 | 0 |
Borrowings under capital lease | $ 5,750 | $ 0 |
OUR BUSINESS AND SUMMARY OF SIG
OUR BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Dec. 30, 2016 | |
Accounting Policies [Abstract] | |
OUR BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1—OUR BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Our Business IEC Electronics Corp. (“IEC,” “we,” “our,” “us,” the “Company”) provides electronic manufacturing services (“EMS”) to advanced technology companies that produce life-saving and mission critical products for the medical, industrial, aerospace and defense sectors. The Company specializes in delivering technical solutions for the custom manufacture of complex full system assemblies by providing on-site analytical testing laboratories, custom design and test engineering services combined with a broad array of manufacturing services encompassing electronics, interconnect solutions, and precision metalworking. As a full service EMS provider, IEC holds all appropriate certifications for the market sectors it supports including ISO 9001:2008, AS9100C, ISO 13485, Nadcap and IPC QML. IEC is headquartered in Newark, NY and also has operations in Rochester, NY and Albuquerque, NM. Additional information about IEC can be found on its website at www.iec-electronics.com . The contents of this website are not incorporated by reference into this quarterly report. 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”); IEC Analysis & Testing Laboratory, LLC (“ATL”), formerly Dynamic Research and Testing Laboratories, LLC; and IEC California Holdings, Inc. The Rochester unit, formerly 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 three months ended December 30, 2016 and January 1, 2016 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 for the fiscal year ended September 30, 2016 (“fiscal 2016”). Reclassifications Prior year financial statement amounts are reclassified as necessary to conform to the current year presentation. There was no impact on net income or accumulated deficit as a result of the reclassification. Cash The Company’s cash represents deposit accounts with Manufacturers and Traders Trust Company (“M&T Bank”), 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 the 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 or represent economic benefits associated with 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 ASC 360-10 (Property, Plant and Equipment) and ASC 350-30 (Intangibles) require the Company to test long-lived assets (PP&E and definitive lived assets) for recoverability whenever events or circumstances indicate that the carrying amount may not be recoverable. If carrying value exceeds 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. No impairment charges were identified or recorded by IEC for PP&E or intangibles during the three months ended December 30, 2016 . Goodwill Goodwill represents the excess of cost over fair value of net assets acquired in a business combination. Under ASC 350, 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 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 exceeds carrying value, 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 carrying value. If fair value exceeds carrying value, no further assessment of potential impairment is required. If fair value of the unit is less than 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. IEC’s remaining goodwill as of December 30, 2016 of $0.1 million relates to its acquisition of the Rochester division in July 2010. There has been no impairment for this goodwill since the acquisition date. Leases At the inception of a lease covering equipment or real estate, the lease agreement is evaluated under criteria discussed in ASC 840-10-25 (Leases). Leases meeting one of four key criteria are accounted for as capital leases and all others are treated as operating leases. Under a capital lease, the discounted value of future lease payments becomes the basis for recognizing an asset and a borrowing, and lease payments are allocated between debt reduction and interest. For operating leases, payments are recorded as rent expense. Criteria for a capital lease include (i) transfer of ownership during the lease term; (ii) existence of a bargain purchase option under terms that make it likely to be exercised; (iii) a lease term equal to 75 percent or more of the economic life of the leased property; and (iv) minimum lease payments that equal or exceed 90 percent of the fair value of the property. 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 PP&E are depreciated. The Company received grants for certain facility improvements and equipment from state and local agencies in which the Company operates. These grants reimbursed the Company for a portion of the actual cost or provided in kind services in support of capital projects. There were no deferred grants recorded during the three months ended December 30, 2016 or the fiscal year ended September 30, 2016 . The outstanding grant balance was $0.2 million and $0.3 million at December 30, 2016 and September 30, 2016 , respectively. Derivative Financial Instruments The Company actively monitors its exposure to interest rate risk and from time to time may use 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 did not have any derivative financial instruments at December 30, 2016 or September 30, 2016 . 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 and borrowings. IEC believes that recorded value approximates fair value for all cash, accounts receivable, accounts payable and accrued liabilities. See Note 7—Fair Value of Financial Instruments for discussion of the fair value of IEC's borrowings. 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 each of the first three months of fiscal 2017 or fiscal 2016 . 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 each of the first three months of fiscal 2017 and fiscal 2016 . 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 the purchase of Company common stock at a discounted stock purchase price. Compensation expense related to the discount is recognized as employees contribute to the plan. During fiscal 2015 and the first quarter of fiscal 2016, the ESPP was suspended in connection with the 2014 restatements of the Company's financial statements. The ESPP was reinstated as of the beginning of the second quarter of fiscal 2016. Legal Expense Accrual The Company records legal expenses as they are incurred, based on invoices received or estimates provided by legal counsel. Future estimated legal expenses are not recorded until incurred. 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 a 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 incurred is reported as interest expense. Any penalties incurred is reported as tax expense. The Company’s income tax filings are subject to audit by various tax jurisdictions and current open years are fiscal 2010 through fiscal 2015. The federal income tax audit for the fiscal year ended September 30, 2013 concluded during the first three months of fiscal 2017 and resulted in no change to reported tax. 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, restricted stock units (“RSUs”) and anticipated issuances under the ESPP. Options, restricted stock and RSUs are primarily held by directors, officers and certain employees. A summary of shares used in earnings per share (“EPS”) calculations follows. Three Months Ended Shares for EPS Calculation December 30, January 1, Weighted average shares outstanding 10,163,291 10,216,587 Incremental shares — — Diluted shares 10,163,291 10,216,587 Anti-dilutive shares excluded 1,006,304 757,105 As a result of the net loss and incremental shares being negative for the three months ended December 30, 2016 , 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. As a result of the incremental shares being negative for the three months ended and January 1, 2016 , the Company calculated diluted earnings per share using weighted average basic shares outstanding, as using diluted shares would be anti-dilutive. Dividends IEC does not pay dividends on its common stock as it is the Company’s current policy to retain earnings for use in the business. Furthermore, the Company’s Fifth Amended and Restated Credit Facility Agreement, as amended, with M&T Bank includes certain restrictions on paying cash dividends, as more fully described in Note 6—Credit Facilities . Use of Estimates The preparation of financial statements in conformity with 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 Accounting Standard Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” (“Topic 606”) was issued May 2014 and updates the principles for recognizing revenue. The ASU will supersede most of the existing revenue recognition requirements in GAAP and will require entities to recognize revenue at an amount that reflects the consideration to which a company expects to be entitled in exchange for transferring goods or services to a customer. This ASU also amends the required disclosures of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. FASB ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations” was issued in March 2016 and improves implementation guidance on principal versus agent considerations. FASB ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” was issued in April 2016 and adds further guidance on identifying performance obligations as well as improving licensing implementation guidance. FASB ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” was issued in June 2016 and clarifies the objective of the collectability criterion, presentation of taxes collected from customers, non-cash consideration, contract modifications at transition, completed contracts at transition and how guidance in Topic 606 is retrospectively applied. The amendments do not change the core principle of the guidance in Topic 606. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within that period. Early adoption is permitted for annual periods beginning after December 15, 2016. The Company is identifying key personnel to evaluate the guidance and determine the transition method, while also formulating a time line to review the potential impact of the new standard on its existing revenue recognition policies and procedures. Although Management has not completed its evaluation of all the issued guidance under ASC No. 606, the Company does not currently expect the guidance to have a material effect on its financial position, results of operations or cash flows. FASB ASU 2014-12, “Compensation - Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period” was issued in June 2014. This guidance was issued to resolve diversity in accounting for performance targets. A performance target in a share-based payment that affects vesting and that could be achieved after the requisite service period should be accounted for as a performance condition and should not be reflected in the award’s grant date fair value. Compensation cost should be recognized over the required service period, if it is probable that the performance condition will be achieved. The guidance became effective for annual periods beginning after December 15, 2015 and interim periods within those annual periods. This update did not have a significant impact on the Company's financial statements upon adoption. FASB ASU 2014-15, “Presentation of Financial Statements-Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” was issued in September 2014. This provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. This update did not have a significant impact on the Company's financial statements upon adoption. FASB ASU 2015-03, “Interest - Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs” was issued in April 2015. These amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The ASU applies to all entities and is effective for public business entities for annual periods beginning after December 15, 2015, and interim periods thereafter, with early adoption permitted. The guidance should be applied on a retrospective basis. This update did not have a significant impact on the Company's financial statements upon adoption. FASB ASU 2015-11, “Simplifying the Measurement of Inventory” was issued in July 2015. This requires entities to measure most inventory “at the lower of cost and net realizable value,” thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. The ASU will not apply to inventories that are measured by using either the last-in, first-out method or the retail inventory method. For public business entities, the ASU is effective prospectively for annual periods beginning after December 15, 2016, and interim periods therein. Upon transition, entities must disclose the nature of and reason for the accounting change. The Company does not anticipate a significant impact on its financial statements upon adoption. FASB ASU 2015-15, “Interest—Imputation of Interest: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements” was issued in August 2015 and permits an entity to report deferred debt issuance costs associated with a line-of-credit arrangement as an asset and to amortize such costs over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings under the credit line. The ASU applies to all entities and is effective for public business entities for annual periods beginning after December 15, 2015, and interim periods thereafter, with early adoption permitted. The guidance should be applied on a retrospective basis. This update did not have a significant impact on the Company's financial statements upon adoption. FASB ASU 2015-17, “Income Taxes Balance Sheet Classification of Deferred Taxes” was issued in November 2015. This requires entities to classify deferred tax liabilities and assets as noncurrent in a classified statement of financial position and applies to all entities that present a classified statement of financial position. For public entities, this update is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company does not anticipate a significant impact on its financial statements upon adoption. FASB ASU 2016-02, “Leases" was issued in February 2016. The new guidance establishes the principles to report transparent and economically neutral information about the assets and liabilities that arise from leases. For public entities, the new guidance is effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods. Early adoption is permitted for all entities. The Company is evaluating the impact the ASU will have on its financial statements. FASB ASU 2016-09, “Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting” was issued in March 2016. This simplifies accounting for several aspects of share-based payment including income tax consequences, classification of awards as either equity or liability and classification on the statement of cash flows. For public entities, this update is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company does not anticipate a significant impact on its financial statements upon adoption. |
ALLOWANCE FOR DOUBTFUL ACCOUNTS
ALLOWANCE FOR DOUBTFUL ACCOUNTS | 3 Months Ended |
Dec. 30, 2016 | |
Receivables [Abstract] | |
ALLOWANCE FOR DOUBTFUL ACCOUNTS | NOTE 2—ALLOWANCE FOR DOUBTFUL ACCOUNTS A summary of activity in the allowance for doubtful accounts during the three months ended December 30, 2016 and January 1, 2016 follows: Three Months Ended Allowance for Doubtful Accounts December 30, January 1, (in thousands) Allowance, beginning of period $ 226 $ 423 Provision for doubtful accounts (162 ) 277 Write-offs/recoveries 13 (155 ) Allowance, end of period $ 77 $ 545 |
INVENTORIES
INVENTORIES | 3 Months Ended |
Dec. 30, 2016 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | NOTE 3—INVENTORIES A summary of inventory by category at period end follows: Inventories December 30, September 30, (in thousands) Raw materials $ 9,118 $ 9,138 Work-in-process 5,610 5,932 Finished goods 1,389 1,939 Total inventories 16,117 17,009 Reserve for excess/obsolete inventory (1,631 ) (1,625 ) Inventories, net $ 14,486 $ 15,384 |
PROPERTY, PLANT & EQUIPMENT
PROPERTY, PLANT & EQUIPMENT | 3 Months Ended |
Dec. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT & EQUIPMENT | NOTE 4—PROPERTY, PLANT & EQUIPMENT A summary of property, plant and equipment and accumulated depreciation at period end follows: Property, Plant & Equipment December 30, September 30, (in thousands) Land and improvements $ 788 $ 788 Buildings and improvements 8,910 8,910 Building under capital lease 5,750 — Machinery and equipment 27,583 26,905 Furniture and fixtures 7,503 7,489 Construction in progress 3,047 3,079 Total property, plant and equipment, at cost 53,581 47,171 Accumulated depreciation (36,800 ) (36,177 ) Property, plant and equipment, net $ 16,781 $ 10,994 Depreciation expense during the three months ended December 30, 2016 and January 1, 2016 follows: Three Months Ended December 30, January 1, (in thousands) Depreciation expense $ 645 $ 840 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 3 Months Ended |
Dec. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 5—INTANGIBLE ASSETS IEC's intangible assets (other than goodwill) were acquired in connection with the purchase of Albuquerque during the fiscal year ended September 30, 2010. Albuquerque's building and land were acquired subject to an Industrial Revenue Bond (“IRB”) that exempted 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 was being amortized over the 9.2 year exemption period that remained as of the acquisition date. No impairment was taken for this asset since the Albuquerque acquisition. The IRB was paid off in connection with the sale-leaseback transaction described in Note 14—Capital Lease . A summary of intangible assets by category and accumulated amortization at period end follows: Intangible Assets December 30, September 30, (in thousands) Property tax abatement - Albuquerque $ 360 $ 360 Accumulated amortization (275 ) (265 ) Intangible assets, net $ 85 $ 95 Amortization expense during the three months ended December 30, 2016 and January 1, 2016 follows: Three Months Ended Amortization Expense December 30, January 1, (in thousands) Intangible amortization expense $ 10 $ 10 A summary of amortization expense for the next five years follows: Future Amortization Estimated future amortization (in thousands) Twelve months ended December, 2017 $ 39 2018 39 2019 and thereafter 7 |
CREDIT FACILITIES
CREDIT FACILITIES | 3 Months Ended |
Dec. 30, 2016 | |
Debt Disclosure [Abstract] | |
CREDIT FACILITIES | NOTE 6—CREDIT FACILITIES A summary of borrowings at period end follows: December 30, 2016 September 30, 2016 Debt Fixed/ Variable Maturity Balance Interest Rate Balance Interest Rate ($ in thousands) M&T credit facilities: Revolving Credit Facility v 1/18/2018 $ 2,643 5.02 % $ 3,961 3.28 % Term Loan A (1) f 2/1/2020 48 3.98 3,693 3.98 Term Loan B v 2/1/2023 8,633 3.87 8,983 3.03 Albuquerque Mortgage Loan (1) v 2/1/2018 — — 2,200 3.55 Celmet Building Term Loan f 11/7/2018 899 4.72 932 4.72 Other credit facilities: Albuquerque Industrial Revenue Bond (1) f 3/1/2019 — — 100 5.63 Total debt, gross 12,223 19,869 Unamortized debt issuance costs (220 ) (229 ) Total debt, net 12,003 19,640 Less: current portion (1,578 ) (2,908 ) Long-term debt $ 10,425 $ 16,732 (1) The Albuquerque Mortgage Loan and the Albuquerque Industrial Revenue Bond were repaid in connection with the sale-leaseback transaction described in Note 14—Capital Lease . The proceeds from the transaction were also used to pay down Term Loan A. M&T Bank Credit Facilities On November 28, 2016 , the Company and M&T Bank entered into the Second Amendment to Fifth Amended and Restated Credit Facility Agreement (the “Second Amendment”), that amended the Fifth Amended and Restated Credit Facility Agreement dated as of December 14, 2015, as amended by the First Amendment to the Fifth Amended and Restated Credit Facility, dated as of June 20, 2016 (“Fifth Amended Credit Agreement”). The Second Amendment reduced M&T Bank’s revolving credit commitment to $16.0 million and modified the trigger for maintenance of the cash management system. The Second Amendment also modified the level adjustment dates for the Applicable Margin and the Applicable Unused Fee, as such terms are defined under the Fifth Amended Credit Agreement. In addition, the Second Amendment amended the covenants regarding the Company's Debt to EBITDAS Ratio, Minimum Quarterly EBITDAS amounts and the Fixed Charge Coverage Ratio, as such terms are defined under the Fifth Amended Credit Agreement. The Fifth Amended Credit Agreement 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 Fifth Amended Credit Agreement, as amended, are described below: a) Revolving Credit Facility (“Revolver”) : Up to $16 million is available through January 18, 2018 . The maximum amount the Company may borrow is determined based on a borrowing base calculation described below. b) Term Loan A : $10.0 million was borrowed on January 18, 2013. Principal was being repaid in 108 equal monthly installments of $93 thousand . The proceeds of the sale-leaseback transaction described in Note 14—Capital Lease were used to paydown the loan. The Company repaid the remaining $48 thousand balance of the loan during January 2017. c) Term Loan B: $14.0 million was borrowed on January 18, 2013. Principal is being repaid in 120 equal monthly installments of $117 thousand . d) Albuquerque Mortgage Loan : $4.0 million was borrowed on December 16, 2009. The loan was secured by real property in Albuquerque, NM, and principal was being repaid in equal monthly installments of $22 thousand . The loan was repaid in connection with the sale-leaseback transaction described in Note 14—Capital Lease . e) Celmet Building Term Loan: $1.3 million was borrowed on November 8, 2013 pursuant to an amendment to the Fourth Amended and Restated Credit Facility Agreement dated as of January 18, 2013. The proceeds were used to reimburse the Company’s cost of purchasing its Rochester, New York facility. Principal is being repaid in 59 equal monthly installments of $11 thousand plus a balloon payment due at maturity. Borrowing Base Under the Fifth Amended Credit Agreement, the maximum amount the Company can borrow under the Revolver is the lesser of (i) 85% of eligible receivables plus 35% of eligible inventories (up to a cap of $3.75 million ) or (ii) $16.0 million at December 30, 2016 and $20.0 million at September 30, 2016 . At December 30, 2016 and September 30, 2016 , the upper limit on Revolver borrowings was $11.5 million and $16.4 million , respectively. Average Revolver balances amounted to $2.8 million during the three months ended December 30, 2016 . Interest Rates Under the Fifth Amended Credit Agreement, variable rate debt accrues interest at LIBOR plus the applicable marginal interest rate that fluctuates based on the Company's Debt to EBITDAS Ratio, as defined below. Under the Second Amendment, the applicable marginal interest rate was fixed on November 28, 2016 through the fiscal quarter ending September 30, 2017, as follows: 4.25% for the Revolver and 3.25% for Term Loan B. Beginning October 1, 2017, variable rate debt will again accrue interest at LIBOR plus the applicable margin interest rate that is based on the Company's Debt to EBITDAS Ratio. Changes to applicable margins and unused fees resulting from the Debt to EBITDAS Ratio generally become effective mid-way through the subsequent quarter. Prior to December 14, 2015, the Sixth Amendment fixed each facility’s applicable margin through March 31, 2016 as follows: 4.25% for the Revolver, 4.50% for the Albuquerque Mortgage Loan and 3.25% for the Term Loan B. 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 0.250% to 0.500% of the excess of $16.0 million over average borrowings under the Revolver. Fees incurred amounted to $15.7 thousand and $8.7 thousand during the three months ended December 30, 2016 and January 1, 2016 , respectively. The fee percentage varies based on the Company's Debt to EBITDAS Ratio, as defined below. Financial Covenants The Fifth Amended Credit Agreement also contains various affirmative and negative covenants including financial covenants. The Company is required to maintain (i) a minimum level of quarterly EBITDAS, as defined below (“Quarterly EBITDAS”), (ii) a ratio of total debt to twelve month EBITDAS (“Debt to EBITDAS Ratio”) that is below a specified limit, (iii) a minimum fixed charge coverage ratio (“Fixed Charge Coverage Ratio”), (iv) a maximum level of inventory (“Maximum Inventory”), and (v) a maximum amount of capital expenditures (“Maximum Capital Expenditures”). The Debt to EBITDAS Ratio is the ratio of debt to earnings before interest, taxes, depreciation, amortization and non-cash stock compensation expense (“EBITDAS”). “Adjusted EBITDA” means, for the applicable period, EBITDAS less unfinanced capital expenditures and cash paid for taxes, all on a consolidated basis. The Fixed Charge Coverage Ratio compares (i) 12 month Adjusted EBITDA plus non-cash stock compensation expense minus unfinanced capital expenditures minus taxes paid, to (ii) the sum of interest expense, principal payments and dividends, if any (fixed charges). The Maximum Inventory covenant allows for specific levels of inventory as defined by the agreement. The Maximum Capital Expenditures covenants allow for a maximum amount of capital expenditures on an annual basis. Covenant ratios in effect at December 30, 2016 , pursuant to the Fifth Amended Credit Agreement, as amended by the Second Amendment, are as follows: Debt to EBITDAS Ratio: 9/30/2016 through and including 12/30/16 < 3.00 to 1.00 Minimum Quarterly EBITDAS: Fiscal Quarter ending December 30, 2016 $ (500,000 ) Fixed Charge Coverage Ratio: 9/30/16 through and including 12/30/16 > 0.72 to 1.00 Maximum Inventory: As of December 30, 2016 $ 26.0 m Maximum Capital Expenditures: Measured annually; maximum $4.5m The Company was in compliance with all debt covenants at December 30, 2016 . Other Borrowings 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 was paid semiannually, and principal was due in its entirety at maturity. The Bond was paid off in connection with the sale-leaseback transaction described in Note 14—Capital Lease . Contractual Principal Payments A summary of contractual principal payments under IEC's borrowings for the next five years taking into consideration the Fifth Amended Credit Agreement, as amended, follows: Debt Repayment Schedule Contractual (in thousands) Twelve months ended December 2017 $ 1,578 2018 (1) 4,812 2019 1,400 2020 1,400 2021 and thereafter 3,033 $ 12,223 (1) Includes Revolver balance of $2.6 million at December 30, 2016 and final payment of Celmet Building Term Loan on November 7, 2018 . |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 3 Months Ended |
Dec. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | NOTE 7—FAIR VALUE OF FINANCIAL INSTRUMENTS 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: December 30, 2016 September 30, 2016 Fair Value Carrying Value Fair Value Carrying Value (in thousands) Term Loan A $ 48 $ 48 $ 3,489 $ 3,693 Celmet Building Term Loan 835 899 864 932 The fair value of the remainder of the Company’s debt approximated carrying value at December 30, 2016 and September 30, 2016 as it is variable rate debt. |
WARRANTY RESERVES
WARRANTY RESERVES | 3 Months Ended |
Dec. 30, 2016 | |
Product Warranties Disclosures [Abstract] | |
WARRANTY RESERVES | NOTE 8—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: Three Months Ended Warranty Reserve December 30, January 1, (in thousands) Reserve, beginning of period $ 180 $ 399 Provision 29 133 Warranty costs (34 ) (130 ) Reserve, end of period $ 175 $ 402 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Dec. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | The 2010 Omnibus Incentive Compensation Plan (the “2010 Plan”), was approved by the Company’s stockholders at the January 2011 Annual Meeting. The Company also has an ESPP, adopted in 2011, that provides for the purchase of Company common stock at a discounted stock purchase price. The 2010 Plan replaced IEC’s 2001 Stock Option and Incentive Plan (the “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 shares of common stock may be issued over a term of ten years . Stock-based compensation expense recorded under the 2010 and 2001 Plans as well as the ESPP totaled $135.0 thousand and $54.0 thousand for the three months ended December 30, 2016 and January 1, 2016 , respectively. During the three months ended January 1, 2016 , incentive compensation shares were returned by the Company's former CEO resulting in a reduction to compensation expense of $60.0 thousand . At December 30, 2016 , there were 470,082 shares available to be issued under the 2010 Plan. 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 ESPP 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 three months ended December 30, 2016 are included in the table below. There were no options granted during the three months ended January 1, 2016 . Three Months Ended Valuation of Options December 30, Assumptions for Black-Scholes: Risk-free interest rate 1.48 % Expected term in years 4.0 Volatility 40 % Expected annual dividends none Value of options granted: Number of options granted 50,000 Weighted average fair value per share $ 1.18 Fair value of options granted (000's) $ 59 A summary of stock option activity, together with other related data, follows: Three Months Ended December 30, 2016 January 1, 2016 Stock Options Number Wgtd. Avg. Number Wgtd. Avg. Outstanding, beginning of period 759,795 $ 4.43 717,645 $ 4.40 Granted 50,000 3.60 — — Exercised — — — — Forfeited (17,500 ) 5.30 (15,500 ) 5.99 Expired (12,250 ) 5.06 — — Outstanding, end of period 780,045 $ 4.35 702,145 $ 4.37 For options expected to vest Number expected to vest 755,142 $ 4.35 539,756 $ 4.45 Weighted average remaining term, in years 5.0 5.5 Intrinsic value (000s) $ — $ — For exercisable options Number exercisable 240,936 $ 4.76 156,000 $ 5.33 Weighted average remaining term, in years 3.9 3.6 Intrinsic value (000s) $ — $ — For non-exercisable options Expense not yet recognized (000s) $ 588 $ 672 Weighted average years to be recognized 2.5 3.3 For options exercised Intrinsic value (000s) $ — $ — Changes in the number of non-vested options outstanding, together with other related data, follows: Three Months Ended December 30, 2016 January 1, 2016 Stock Options Number Wgtd. Avg. Number Wgtd. Avg. Non-vested, beginning of period 489,109 $ 1.43 546,145 $ 1.41 Granted 50,000 1.18 — — Vested — — — — Forfeited — — — — Non-vested, end of period 539,109 $ 1.41 546,145 $ 1.41 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: Three Months Ended December 30, 2016 January 1, 2016 Restricted (Non-vested) Stock Number of Wgtd. Avg. Number of Wgtd. Avg. Outstanding, beginning of period 228,759 $ 4.40 54,960 $ 4.23 Granted — — — — Vested (1,917 ) 3.60 — — Shares withheld for payment of (583 ) 3.60 — — Forfeited — — — — Outstanding, end of period 226,259 $ 4.40 54,960 $ 4.23 For non-vested shares Expense not yet recognized (000s) $ 682 $ 200 Weighted average remaining years for vesting 2.0 2.0 For shares vested Aggregate fair value on vesting dates (000s) $ 9 $ — Employee Stock Purchase Plan The Company administers an ESPP that provides for a discounted stock purchase price. 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 of the Company's financial statements. The Compensation Committee of the Company's Board of Directors reinstated the ESPP on December 2, 2015; however, participants were not able to contribute to the ESPP until January 2016. Employees currently receive a 10% discount on stock purchases through the ESPP. Employee contributions to the plan, net of withdrawals were $8.7 thousand for the three months ended December 30, 2016 . Compensation expense recognized under the ESPP was $1.0 thousand for the three months ended December 30, 2016 . There were no employee contributions to the plan or compensation expense recognized for the three months ended January 1, 2016. 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. The Company has not paid any meeting fees in stock since May 21, 2013. |
RETIREMENT PLAN
RETIREMENT PLAN | 3 Months Ended |
Dec. 30, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
RETIREMENT PLAN | NOTE 10—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. The Company contributes 25% of the first 6% contributed by all employees at all locations. Company contributions during the three months ended December 30, 2016 and January 1, 2016 totaled $70 thousand and $67 thousand , respectively. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Dec. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 11—INCOME TAXES Provision for income taxes during each of the three months ended December 30, 2016 and January 1, 2016 follows: Three Months Ended Income Tax Provision/Benefit December 30, January 1, (in thousands) Provision for/(benefit from) income taxes $ — $ — The Company has recorded a full valuation allowance on all deferred tax assets. 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 had federal NOLs for income tax purposes of approximately $31.7 million at September 30, 2016 , expiring mainly in years 2022 through 2025 and 2034 through 2035. The Company also has additional state NOLs available in several jurisdictions in which it files state tax returns. Recent New York state corporate tax reform has resulted in the reduction of the business income base rate for qualified manufactures in New York state to 0% beginning in fiscal 2015 for IEC. At September 30, 2016 , the Company had $1.2 million of New York State investment tax and other credit carryforwards, expiring in various years through 2030. The credits cannot be utilized unless the New York state tax rate is no longer 0%. |
MARKET SECTORS AND MAJOR CUSTOM
MARKET SECTORS AND MAJOR CUSTOMERS | 3 Months Ended |
Dec. 30, 2016 | |
Risks and Uncertainties [Abstract] | |
MARKET SECTORS AND MAJOR CUSTOMERS | NOTE 12—MARKET SECTORS AND MAJOR CUSTOMERS A summary of sales, according to the market sector within which IEC's customers operate, follows: Three Months Ended % of Sales by Sector December 30, January 1, Aerospace & Defense 50% 40% Medical 28% 41% Industrial 20% 16% Communications & Other 2% 3% 100% 100% Two individual customers each represented 10% or more of sales for the three months ended December 30, 2016 . One customer was from the Aerospace & Defense sector and represented 14% of sales, while the other was from the Industrial sector and represented 10% of sales. Two individual customers represented 10% or more of sales for the three months ended January 1, 2016 . Both customers were from the Medical sector, with one representing 18% of sales, while the other customer represented 15% of sales, for the three months ended January 1, 2016 . One individual customer represented 11% of the outstanding receivable balance at December 30, 2016 . Two individual customers represented 10% or more of receivables and accounted for 25% of the outstanding balances at January 1, 2016 . Credit risk associated with individual customers is periodically evaluated by analyzing the entity’s financial condition and payment history. Customers generally are not required to post collateral. |
LITIGATION
LITIGATION | 3 Months Ended |
Dec. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
LITIGATION | NOTE 13—LITIGATION From time to time, the Company may be involved in legal action in the ordinary course of its business, but management does not believe that any such proceedings commenced through the date of the financial statements included in this Form 10-Q, individually or in the aggregate, will have a material adverse effect on the Company’s consolidated financial position. |
CAPITAL LEASE
CAPITAL LEASE | 3 Months Ended |
Dec. 30, 2016 | |
Leases [Abstract] | |
CAPITAL LEASE | NOTE 14—CAPITAL LEASE Leases On November 18, 2016 , the Company entered into a sale-leaseback agreement, pursuant to the terms of the Purchase and Sale Agreement (the “PSA”), with Store Capital Acquisitions, LLC, a Delaware limited liability company (the “Purchaser”), for the sale of certain property, including the manufacturing facility located in Albuquerque, New Mexico (the “Property”). Albuquerque (the “Seller”) completed the sale of the Property to the Purchaser for an aggregate purchase price of approximately $5.75 million including a $120.0 thousand holdback held subject to a holdback of funds agreement. The net book value of assets sold was $4.6 million and the value of the assets acquired under the lease is $5.75 million . The Company recorded a deferred gain of $1.1 million related to the transaction, which is recorded in other long-term liabilities section of the consolidated balance sheet. The proceeds from the transaction were used to payoff the Albuquerque Mortgage Loan and pay down Term Loan A. As part of the transaction, a Lease Agreement dated as of November 18, 2016 was entered into between the Seller and the Purchaser (the “Lease”). Pursuant to the Lease, the Seller is leasing the Property for an initial term of 15 years , with two renewal options of five years each. The initial base annual rent is approximately $474.0 thousand and is subject to an annual increase equal to the lesser of two percent or 1.25 times the change in the Consumer Price Index. Late payments incur a charge of 5% and bear interest at a rate of 18% or the highest rate permitted by law. If an event of default occurs under the terms of the Lease, among other things, all rental amounts accelerate and become due and owing, subject to certain adjustments. In addition, the Company entered into a separate payment and performance guaranty with the Purchaser with respect to the Lease. A summary of capital lease payments for the next five years follows: Capital Lease Payment Schedule Contractual (in thousands) Twelve months ended December 2017 $ 476 2018 485 2019 495 2020 505 2021 and thereafter 6,228 Total capital lease payments $ 8,189 Less: amounts representing interest (2,472 ) Present value of minimum lease payment 5,717 |
OUR BUSINESS AND SUMMARY OF S21
OUR BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Dec. 30, 2016 | |
Accounting Policies [Abstract] | |
Our Business | Our Business IEC Electronics Corp. (“IEC,” “we,” “our,” “us,” the “Company”) provides electronic manufacturing services (“EMS”) to advanced technology companies that produce life-saving and mission critical products for the medical, industrial, aerospace and defense sectors. The Company specializes in delivering technical solutions for the custom manufacture of complex full system assemblies by providing on-site analytical testing laboratories, custom design and test engineering services combined with a broad array of manufacturing services encompassing electronics, interconnect solutions, and precision metalworking. As a full service EMS provider, IEC holds all appropriate certifications for the market sectors it supports including ISO 9001:2008, AS9100C, ISO 13485, Nadcap and IPC QML. IEC is headquartered in Newark, NY and also has operations in Rochester, NY and Albuquerque, NM. Additional information about IEC can be found on its website at www.iec-electronics.com . |
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”); IEC Analysis & Testing Laboratory, LLC (“ATL”), formerly Dynamic Research and Testing Laboratories, LLC; and IEC California Holdings, Inc. The Rochester unit, formerly 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 three months ended December 30, 2016 and January 1, 2016 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 for the fiscal year ended September 30, 2016 (“fiscal 2016”). |
Reclassifications | Reclassifications |
Cash and Cash Equivalents | 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 the 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 or represent economic benefits associated with 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 ASC 360-10 (Property, Plant and Equipment) and ASC 350-30 (Intangibles) require the Company to test long-lived assets (PP&E and definitive lived assets) for recoverability whenever events or circumstances indicate that the carrying amount may not be recoverable. If carrying value exceeds 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. No impairment charges were identified or recorded by IEC for PP&E or intangibles during the three months ended December 30, 2016 . |
Goodwill | Goodwill Goodwill represents the excess of cost over fair value of net assets acquired in a business combination. Under ASC 350, 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 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 exceeds carrying value, 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 carrying value. If fair value exceeds carrying value, no further assessment of potential impairment is required. If fair value of the unit is less than 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 | Leases At the inception of a lease covering equipment or real estate, the lease agreement is evaluated under criteria discussed in ASC 840-10-25 (Leases). Leases meeting one of four key criteria are accounted for as capital leases and all others are treated as operating leases. Under a capital lease, the discounted value of future lease payments becomes the basis for recognizing an asset and a borrowing, and lease payments are allocated between debt reduction and interest. For operating leases, payments are recorded as rent expense. Criteria for a capital lease include (i) transfer of ownership during the lease term; (ii) existence of a bargain purchase option under terms that make it likely to be exercised; (iii) a lease term equal to 75 percent or more of the economic life of the leased property; and (iv) minimum lease payments that equal or exceed 90 percent of the fair value of the property. |
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 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 Grants from outside parties are recorded as other long-term liabilities and are amortized over the same period during which the associated PP&E are depreciated. The Company received grants for certain facility improvements and equipment from state and local agencies in which the Company operates. These grants reimbursed the Company for a portion of the actual cost or provided in kind services in support of capital projects. There were no deferred grants recorded during the three months ended December 30, 2016 or the fiscal year ended September 30, 2016 . The outstanding grant balance was $0.2 million and $0.3 million at December 30, 2016 and September 30, 2016 , respectively. |
Derivative Financial Instruments | Derivative Financial Instruments The Company actively monitors its exposure to interest rate risk and from time to time may use 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 did not have any derivative financial instruments at December 30, 2016 or September 30, 2016 . |
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 and borrowings. IEC believes that recorded value approximates fair value for all cash, accounts receivable, accounts payable and accrued liabilities. See Note 7—Fair Value of Financial Instruments for discussion of the fair value of IEC's borrowings. 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. |
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 each of the first three months of fiscal 2017 and fiscal 2016 . 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 the purchase of Company common stock at a discounted stock purchase price. Compensation expense related to the discount is recognized as employees contribute to the plan. |
Legal Expenses Accrual | Legal Expense Accrual The Company records legal expenses as they are incurred, based on invoices received or estimates provided by legal counsel. Future estimated legal expenses are not recorded until incurred. |
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 a 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. |
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, restricted stock units (“RSUs”) and anticipated issuances under the ESPP. Options, restricted stock and RSUs are primarily held by directors, officers and certain employees. |
Dividends | Dividends IEC does not pay dividends on its common stock as it is the Company’s current policy to retain earnings for use in the business. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with 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 Accounting Standard Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” (“Topic 606”) was issued May 2014 and updates the principles for recognizing revenue. The ASU will supersede most of the existing revenue recognition requirements in GAAP and will require entities to recognize revenue at an amount that reflects the consideration to which a company expects to be entitled in exchange for transferring goods or services to a customer. This ASU also amends the required disclosures of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. FASB ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations” was issued in March 2016 and improves implementation guidance on principal versus agent considerations. FASB ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” was issued in April 2016 and adds further guidance on identifying performance obligations as well as improving licensing implementation guidance. FASB ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” was issued in June 2016 and clarifies the objective of the collectability criterion, presentation of taxes collected from customers, non-cash consideration, contract modifications at transition, completed contracts at transition and how guidance in Topic 606 is retrospectively applied. The amendments do not change the core principle of the guidance in Topic 606. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within that period. Early adoption is permitted for annual periods beginning after December 15, 2016. The Company is identifying key personnel to evaluate the guidance and determine the transition method, while also formulating a time line to review the potential impact of the new standard on its existing revenue recognition policies and procedures. Although Management has not completed its evaluation of all the issued guidance under ASC No. 606, the Company does not currently expect the guidance to have a material effect on its financial position, results of operations or cash flows. FASB ASU 2014-12, “Compensation - Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period” was issued in June 2014. This guidance was issued to resolve diversity in accounting for performance targets. A performance target in a share-based payment that affects vesting and that could be achieved after the requisite service period should be accounted for as a performance condition and should not be reflected in the award’s grant date fair value. Compensation cost should be recognized over the required service period, if it is probable that the performance condition will be achieved. The guidance became effective for annual periods beginning after December 15, 2015 and interim periods within those annual periods. This update did not have a significant impact on the Company's financial statements upon adoption. FASB ASU 2014-15, “Presentation of Financial Statements-Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” was issued in September 2014. This provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. This update did not have a significant impact on the Company's financial statements upon adoption. FASB ASU 2015-03, “Interest - Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs” was issued in April 2015. These amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The ASU applies to all entities and is effective for public business entities for annual periods beginning after December 15, 2015, and interim periods thereafter, with early adoption permitted. The guidance should be applied on a retrospective basis. This update did not have a significant impact on the Company's financial statements upon adoption. FASB ASU 2015-11, “Simplifying the Measurement of Inventory” was issued in July 2015. This requires entities to measure most inventory “at the lower of cost and net realizable value,” thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. The ASU will not apply to inventories that are measured by using either the last-in, first-out method or the retail inventory method. For public business entities, the ASU is effective prospectively for annual periods beginning after December 15, 2016, and interim periods therein. Upon transition, entities must disclose the nature of and reason for the accounting change. The Company does not anticipate a significant impact on its financial statements upon adoption. FASB ASU 2015-15, “Interest—Imputation of Interest: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements” was issued in August 2015 and permits an entity to report deferred debt issuance costs associated with a line-of-credit arrangement as an asset and to amortize such costs over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings under the credit line. The ASU applies to all entities and is effective for public business entities for annual periods beginning after December 15, 2015, and interim periods thereafter, with early adoption permitted. The guidance should be applied on a retrospective basis. This update did not have a significant impact on the Company's financial statements upon adoption. FASB ASU 2015-17, “Income Taxes Balance Sheet Classification of Deferred Taxes” was issued in November 2015. This requires entities to classify deferred tax liabilities and assets as noncurrent in a classified statement of financial position and applies to all entities that present a classified statement of financial position. For public entities, this update is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company does not anticipate a significant impact on its financial statements upon adoption. FASB ASU 2016-02, “Leases" was issued in February 2016. The new guidance establishes the principles to report transparent and economically neutral information about the assets and liabilities that arise from leases. For public entities, the new guidance is effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods. Early adoption is permitted for all entities. The Company is evaluating the impact the ASU will have on its financial statements. FASB ASU 2016-09, “Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting” was issued in March 2016. This simplifies accounting for several aspects of share-based payment including income tax consequences, classification of awards as either equity or liability and classification on the statement of cash flows. For public entities, this update is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company does not anticipate a significant impact on its financial statements upon adoption. |
OUR BUSINESS AND SUMMARY OF S22
OUR BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Dec. 30, 2016 | |
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 Shares for EPS Calculation December 30, January 1, Weighted average shares outstanding 10,163,291 10,216,587 Incremental shares — — Diluted shares 10,163,291 10,216,587 Anti-dilutive shares excluded 1,006,304 757,105 |
ALLOWANCE FOR DOUBTFUL ACCOUN23
ALLOWANCE FOR DOUBTFUL ACCOUNTS (Tables) | 3 Months Ended |
Dec. 30, 2016 | |
Receivables [Abstract] | |
Allowance for Credit Losses on Financing Receivables | A summary of activity in the allowance for doubtful accounts during the three months ended December 30, 2016 and January 1, 2016 follows: Three Months Ended Allowance for Doubtful Accounts December 30, January 1, (in thousands) Allowance, beginning of period $ 226 $ 423 Provision for doubtful accounts (162 ) 277 Write-offs/recoveries 13 (155 ) Allowance, end of period $ 77 $ 545 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
Dec. 30, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | A summary of inventory by category at period end follows: Inventories December 30, September 30, (in thousands) Raw materials $ 9,118 $ 9,138 Work-in-process 5,610 5,932 Finished goods 1,389 1,939 Total inventories 16,117 17,009 Reserve for excess/obsolete inventory (1,631 ) (1,625 ) Inventories, net $ 14,486 $ 15,384 |
PROPERTY, PLANT & EQUIPMENT (Ta
PROPERTY, PLANT & EQUIPMENT (Tables) | 3 Months Ended |
Dec. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Fixed Assets Schedule And Accumulated Depreciation Disclosure | A summary of property, plant and equipment and accumulated depreciation at period end follows: Property, Plant & Equipment December 30, September 30, (in thousands) Land and improvements $ 788 $ 788 Buildings and improvements 8,910 8,910 Building under capital lease 5,750 — Machinery and equipment 27,583 26,905 Furniture and fixtures 7,503 7,489 Construction in progress 3,047 3,079 Total property, plant and equipment, at cost 53,581 47,171 Accumulated depreciation (36,800 ) (36,177 ) Property, plant and equipment, net $ 16,781 $ 10,994 Depreciation expense during the three months ended December 30, 2016 and January 1, 2016 follows: Three Months Ended December 30, January 1, (in thousands) Depreciation expense $ 645 $ 840 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Dec. 30, 2016 | |
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 December 30, September 30, (in thousands) Property tax abatement - Albuquerque $ 360 $ 360 Accumulated amortization (275 ) (265 ) Intangible assets, net $ 85 $ 95 |
Schedule of Amortization Expense | Amortization expense during the three months ended December 30, 2016 and January 1, 2016 follows: Three Months Ended Amortization Expense December 30, January 1, (in thousands) Intangible amortization expense $ 10 $ 10 |
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 December, 2017 $ 39 2018 39 2019 and thereafter 7 |
CREDIT FACILITIES (Tables)
CREDIT FACILITIES (Tables) | 3 Months Ended |
Dec. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | A summary of borrowings at period end follows: December 30, 2016 September 30, 2016 Debt Fixed/ Variable Maturity Balance Interest Rate Balance Interest Rate ($ in thousands) M&T credit facilities: Revolving Credit Facility v 1/18/2018 $ 2,643 5.02 % $ 3,961 3.28 % Term Loan A (1) f 2/1/2020 48 3.98 3,693 3.98 Term Loan B v 2/1/2023 8,633 3.87 8,983 3.03 Albuquerque Mortgage Loan (1) v 2/1/2018 — — 2,200 3.55 Celmet Building Term Loan f 11/7/2018 899 4.72 932 4.72 Other credit facilities: Albuquerque Industrial Revenue Bond (1) f 3/1/2019 — — 100 5.63 Total debt, gross 12,223 19,869 Unamortized debt issuance costs (220 ) (229 ) Total debt, net 12,003 19,640 Less: current portion (1,578 ) (2,908 ) Long-term debt $ 10,425 $ 16,732 (1) The Albuquerque Mortgage Loan and the Albuquerque Industrial Revenue Bond were repaid in connection with the sale-leaseback transaction described in Note 14—Capital Lease . The proceeds from the transaction were also used to pay down Term Loan A. |
Schedule of Debt Covenant | Covenant ratios in effect at December 30, 2016 , pursuant to the Fifth Amended Credit Agreement, as amended by the Second Amendment, are as follows: Debt to EBITDAS Ratio: 9/30/2016 through and including 12/30/16 < 3.00 to 1.00 Minimum Quarterly EBITDAS: Fiscal Quarter ending December 30, 2016 $ (500,000 ) Fixed Charge Coverage Ratio: 9/30/16 through and including 12/30/16 > 0.72 to 1.00 Maximum Inventory: As of December 30, 2016 $ 26.0 m Maximum Capital Expenditures: Measured annually; maximum $4.5m |
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 Fifth Amended Credit Agreement, as amended, follows: Debt Repayment Schedule Contractual (in thousands) Twelve months ended December 2017 $ 1,578 2018 (1) 4,812 2019 1,400 2020 1,400 2021 and thereafter 3,033 $ 12,223 (1) Includes Revolver balance of $2.6 million at December 30, 2016 and final payment of Celmet Building Term Loan on November 7, 2018 . |
FAIR VALUE OF FINANCIAL INSTR28
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 3 Months Ended |
Dec. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value and Carrying Value of Variable Rate Debt | A summary of the fair value and carrying value of fixed rate debt at period end follows: December 30, 2016 September 30, 2016 Fair Value Carrying Value Fair Value Carrying Value (in thousands) Term Loan A $ 48 $ 48 $ 3,489 $ 3,693 Celmet Building Term Loan 835 899 864 932 |
WARRANTY RESERVES (Tables)
WARRANTY RESERVES (Tables) | 3 Months Ended |
Dec. 30, 2016 | |
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: Three Months Ended Warranty Reserve December 30, January 1, (in thousands) Reserve, beginning of period $ 180 $ 399 Provision 29 133 Warranty costs (34 ) (130 ) Reserve, end of period $ 175 $ 402 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended |
Dec. 30, 2016 | |
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 three months ended December 30, 2016 are included in the table below. There were no options granted during the three months ended January 1, 2016 . Three Months Ended Valuation of Options December 30, Assumptions for Black-Scholes: Risk-free interest rate 1.48 % Expected term in years 4.0 Volatility 40 % Expected annual dividends none Value of options granted: Number of options granted 50,000 Weighted average fair value per share $ 1.18 Fair value of options granted (000's) $ 59 |
Changes in Number of Options Outstanding with Other Related Data | A summary of stock option activity, together with other related data, follows: Three Months Ended December 30, 2016 January 1, 2016 Stock Options Number Wgtd. Avg. Number Wgtd. Avg. Outstanding, beginning of period 759,795 $ 4.43 717,645 $ 4.40 Granted 50,000 3.60 — — Exercised — — — — Forfeited (17,500 ) 5.30 (15,500 ) 5.99 Expired (12,250 ) 5.06 — — Outstanding, end of period 780,045 $ 4.35 702,145 $ 4.37 For options expected to vest Number expected to vest 755,142 $ 4.35 539,756 $ 4.45 Weighted average remaining term, in years 5.0 5.5 Intrinsic value (000s) $ — $ — For exercisable options Number exercisable 240,936 $ 4.76 156,000 $ 5.33 Weighted average remaining term, in years 3.9 3.6 Intrinsic value (000s) $ — $ — For non-exercisable options Expense not yet recognized (000s) $ 588 $ 672 Weighted average years to be recognized 2.5 3.3 For options exercised Intrinsic value (000s) $ — $ — |
Schedule of Nonvested Stock Options Activity | Changes in the number of non-vested options outstanding, together with other related data, follows: Three Months Ended December 30, 2016 January 1, 2016 Stock Options Number Wgtd. Avg. Number Wgtd. Avg. Non-vested, beginning of period 489,109 $ 1.43 546,145 $ 1.41 Granted 50,000 1.18 — — Vested — — — — Forfeited — — — — Non-vested, end of period 539,109 $ 1.41 546,145 $ 1.41 |
Changes in Number of Restricted Non-vested Stock Outstanding with Other Related Data | A summary of restricted stock activity, together with related data, follows: Three Months Ended December 30, 2016 January 1, 2016 Restricted (Non-vested) Stock Number of Wgtd. Avg. Number of Wgtd. Avg. Outstanding, beginning of period 228,759 $ 4.40 54,960 $ 4.23 Granted — — — — Vested (1,917 ) 3.60 — — Shares withheld for payment of (583 ) 3.60 — — Forfeited — — — — Outstanding, end of period 226,259 $ 4.40 54,960 $ 4.23 For non-vested shares Expense not yet recognized (000s) $ 682 $ 200 Weighted average remaining years for vesting 2.0 2.0 For shares vested Aggregate fair value on vesting dates (000s) $ 9 $ — |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 3 Months Ended |
Dec. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | Provision for income taxes during each of the three months ended December 30, 2016 and January 1, 2016 follows: Three Months Ended Income Tax Provision/Benefit December 30, January 1, (in thousands) Provision for/(benefit from) income taxes $ — $ — |
MARKET SECTORS AND MAJOR CUST32
MARKET SECTORS AND MAJOR CUSTOMERS (Tables) | 3 Months Ended |
Dec. 30, 2016 | |
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 % of Sales by Sector December 30, January 1, Aerospace & Defense 50% 40% Medical 28% 41% Industrial 20% 16% Communications & Other 2% 3% 100% 100% |
CAPITAL LEASE (Tables)
CAPITAL LEASE (Tables) | 3 Months Ended |
Dec. 30, 2016 | |
Leases [Abstract] | |
Schedule of Future Minimum Lease Payments for Capital Leases | A summary of capital lease payments for the next five years follows: Capital Lease Payment Schedule Contractual (in thousands) Twelve months ended December 2017 $ 476 2018 485 2019 495 2020 505 2021 and thereafter 6,228 Total capital lease payments $ 8,189 Less: amounts representing interest (2,472 ) Present value of minimum lease payment 5,717 |
OUR BUSINESS AND SUMMARY OF S34
OUR BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipment (Details) | 3 Months Ended |
Dec. 30, 2016 | |
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 S35
OUR BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) - USD ($) | 3 Months Ended | ||
Dec. 30, 2016 | Jan. 01, 2016 | Sep. 30, 2016 | |
Accounting Policies [Abstract] | |||
Asset impairment charges | $ 0 | ||
Goodwill | 100,000 | $ 101,000 | |
Goodwill impairment | 0 | ||
Deferred grants recorded | 0 | ||
Outstanding grant balance | $ 200,000 | $ 300,000 | |
Material Management [Member] | |||
Maximum percentage of total revenue | 5.00% | 5.00% |
OUR BUSINESS AND SUMMARY OF S36
OUR BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Earnings Per Share (Details) - shares | 3 Months Ended | |
Dec. 30, 2016 | Jan. 01, 2016 | |
Accounting Policies [Abstract] | ||
Incremental shares (in shares) | 0 | 0 |
Diluted shares (in shares) | 10,163,291 | 10,216,587 |
Anti-dilutive shares excluded (in shares) | 1,006,304 | 757,105 |
ALLOWANCE FOR DOUBTFUL ACCOUN37
ALLOWANCE FOR DOUBTFUL ACCOUNTS (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 30, 2016 | Jan. 01, 2016 | |
Allowance for Doubtful Accounts Receivable [Roll Forward] | ||
Allowance, beginning of period | $ 226 | $ 423 |
Provision for doubtful accounts | (162) | (277) |
Allowance for Doubtful Accounts Receivable, Recoveries | 13 | |
Write-offs/recoveries | (155) | |
Allowance, end of period | $ 77 | $ 545 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Dec. 30, 2016 | Sep. 30, 2016 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 9,118 | $ 9,138 |
Work-in-process | 5,610 | 5,932 |
Finished goods | 1,389 | 1,939 |
Total inventories | 16,117 | 17,009 |
Reserve for excess/obsolete inventory | (1,631) | (1,625) |
Inventories, net | $ 14,486 | $ 15,384 |
PROPERTY, PLANT & EQUIPMENT - S
PROPERTY, PLANT & EQUIPMENT - Summary of Fixed Assets (Details) - USD ($) $ in Thousands | Dec. 30, 2016 | Sep. 30, 2016 |
Property, Plant and Equipment [Abstract] | ||
Land and improvements | $ 788 | $ 788 |
Buildings and improvements | 8,910 | 8,910 |
Building under capital lease | 5,750 | 0 |
Machinery and equipment | 27,583 | 26,905 |
Furniture and fixtures | 7,503 | 7,489 |
Construction in progress | 3,047 | 3,079 |
Total property, plant and equipment, at cost | 53,581 | 47,171 |
Accumulated depreciation | (36,800) | (36,177) |
Property, plant and equipment, net | $ 16,781 | $ 10,994 |
PROPERTY, PLANT & EQUIPMENT - D
PROPERTY, PLANT & EQUIPMENT - Depreciation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 30, 2016 | Jan. 01, 2016 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 645 | $ 840 |
INTANGIBLE ASSETS - Narrative (
INTANGIBLE ASSETS - Narrative (Details) - Property tax abatement [Member] - Albuquerque [Member] - USD ($) | 3 Months Ended | |
Dec. 30, 2016 | Sep. 30, 2016 | |
Amount allocated to intangibles | $ 360,000 | $ 360,000 |
Estimated useful life | 9 years 2 months 12 days | |
Impairment of intangible assets | $ 0 |
INTANGIBLE ASSETS - Summary of
INTANGIBLE ASSETS - Summary of Intangibles (Details) - USD ($) $ in Thousands | Dec. 30, 2016 | Sep. 30, 2016 |
Accumulated amortization | $ (275) | $ (265) |
Intangible assets, net | 85 | 95 |
Property tax abatement [Member] | Albuquerque [Member] | ||
Property tax abatement - Albuquerque | $ 360 | $ 360 |
INTANGIBLE ASSETS - Amortizatio
INTANGIBLE ASSETS - Amortization Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 30, 2016 | Jan. 01, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Intangible amortization expense | $ 10 | $ 10 |
INTANGIBLE ASSETS - Amortizat44
INTANGIBLE ASSETS - Amortization Expense Maturity Schedule (Details) $ in Thousands | Dec. 30, 2016USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2,017 | $ 39 |
2,018 | 39 |
2,019 | $ 7 |
CREDIT FACILITIES - Summary of
CREDIT FACILITIES - Summary of Borrowings (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Dec. 30, 2016 | Sep. 30, 2016 | Jan. 01, 2016 | ||
Long-term Debt, Gross | $ 12,223 | $ 19,869 | ||
Unamortized Debt Issuance Expense | (220) | $ (229) | ||
Total debt, net | 12,003 | 19,640 | ||
Less: current portion | (1,578) | (2,908) | ||
Long-term debt | $ 10,425 | $ 16,732 | ||
Term Loan A [Member] | ||||
Fixed/Variable Rate | Fixed Interest Rate | |||
Maturity Date | [1] | Feb. 1, 2020 | ||
Interest Rate | [1] | 3.98% | 3.98% | |
Total debt, net | [1] | $ 48 | $ 3,693 | |
Term Loan B [Member] | ||||
Fixed/Variable Rate | Variable Interest Rate | |||
Maturity Date | Feb. 1, 2023 | |||
Interest Rate | 3.87% | 3.03% | ||
Total debt, net | $ 8,633 | $ 8,983 | ||
Albuquerque Mortgage Loan [Member] | ||||
Fixed/Variable Rate | Variable Interest Rate | |||
Maturity Date | [1] | Feb. 1, 2018 | ||
Interest Rate | [1] | 0.00% | 3.55% | |
Total debt, net | [1] | $ 0 | $ 2,200 | |
Celmet Building Term Loan [Member] | ||||
Fixed/Variable Rate | Fixed Interest Rate | |||
Maturity Date | Nov. 7, 2018 | |||
Interest Rate | 4.72% | 4.72% | ||
Total debt, net | $ 899 | $ 932 | ||
Albuquerque Industrial Revenue Bond [Member] | ||||
Fixed/Variable Rate | Fixed Interest Rate | |||
Maturity Date | [1] | Mar. 1, 2019 | ||
Interest Rate | [1] | 0.00% | 5.63% | |
Total debt, net | [1] | $ 0 | $ 100 | |
Revolving Credit Facility [Member] | ||||
Fixed/Variable Rate | Variable Interest Rate | |||
Maturity Date | Jan. 18, 2018 | |||
Interest Rate | 5.02% | 3.28% | ||
Total debt, net | $ 2,643 | $ 3,961 | ||
[1] | The Albuquerque Mortgage Loan and the Albuquerque Industrial Revenue Bond were repaid in connection with the sale-leaseback transaction described in Note 14—Capital Lease. The proceeds from the transaction were also used to pay down Term Loan A. |
CREDIT FACILITIES - Narrative (
CREDIT FACILITIES - Narrative (Details) - USD ($) | Dec. 14, 2015 | Nov. 30, 2013 | Jan. 31, 2013 | Dec. 31, 2009 | Dec. 30, 2016 | Jan. 01, 2016 | Sep. 30, 2016 | Nov. 08, 2013 | Jan. 18, 2013 | Dec. 16, 2009 |
Maximum borrowing capacity | $ 16,000,000 | |||||||||
Repayments of long-term debt | 12,003,000 | $ 19,640,000 | ||||||||
Average borrowing capacity | $ 2,800,000 | |||||||||
Unused capacity, commitment fee percentage | 0.50% | |||||||||
Albuquerque [Member] | ||||||||||
Liabilities assumed | $ 100,000 | |||||||||
Credit Agreement 2013 [Member] | Term Loan A [Member] | ||||||||||
Long-term line of credit | $ 10,000,000 | |||||||||
Repayment monthly installments | 108 equal monthly installments | |||||||||
Line of credit facility, periodic payment, principal | $ 93,000 | |||||||||
Credit Agreement 2013 [Member] | Term Loan B [Member] | ||||||||||
Long-term line of credit | $ 14,000,000 | |||||||||
Repayment monthly installments | 120 equal monthly installments | |||||||||
Line of credit facility, periodic payment, principal | $ 117,000 | |||||||||
Credit Agreement 2013 [Member] | Albuquerque Mortgage Loan [Member] | ||||||||||
Repayment monthly installments | 59 equal monthly installments | monthly installments | ||||||||
Credit Agreement 2013 [Member] | Celmet Term Loan [Member] | ||||||||||
Debt instrument, periodic payment, principal | $ 11,000 | |||||||||
Sixth Amendment [Member] | Term Loan B [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||||||||||
Basis spread on variable rate | 3.25% | |||||||||
Fifth Amendment [Member] | Term Loan B [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||||||||||
Basis spread on variable rate | 3.25% | |||||||||
Revolving Credit Facility [Member] | ||||||||||
Maximum borrowing capacity | $ 16,000,000 | 20,000,000 | ||||||||
Maturity date | Jan. 18, 2018 | |||||||||
Repayments of long-term debt | $ 2,643,000 | 3,961,000 | ||||||||
Maximum borrowing capacity as percentage of eligible receivables | 85.00% | |||||||||
Maximum borrowing capacity as percentage of eligible inventory | 35.00% | |||||||||
Maximum borrowing capacity based on eligible inventories | $ 3,750,000 | |||||||||
Current borrowing capacity | $ 11,500,000 | $ 16,400,000 | ||||||||
Revolving Credit Facility [Member] | Minimum [Member] | ||||||||||
Unused capacity, commitment fee percentage | 0.25% | |||||||||
Revolving Credit Facility [Member] | Maximum [Member] | ||||||||||
Unused capacity, commitment fee percentage | 0.50% | |||||||||
Revolving Credit Facility [Member] | Credit Agreement 2013 [Member] | ||||||||||
Average borrowing capacity | $ 16,000,000 | |||||||||
Commitment fee amount | $ 15,700 | $ 8,700 | ||||||||
Revolving Credit Facility [Member] | Sixth Amendment [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||||||||||
Basis spread on variable rate | 4.25% | |||||||||
Revolving Credit Facility [Member] | Fifth Amendment [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||||||||||
Basis spread on variable rate | 4.25% | |||||||||
Albuquerque Mortgage Loan [Member] | Credit Agreement 2013 [Member] | ||||||||||
Long-term line of credit | $ 4,000,000 | |||||||||
Debt instrument, periodic payment, principal | $ 22,000 | |||||||||
Albuquerque Mortgage Loan [Member] | Sixth Amendment [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||||||||||
Basis spread on variable rate | 4.50% | |||||||||
Celmet Term Loan [Member] | Third Amendment [Member] | ||||||||||
Face amount | $ 1,300,000 |
CREDIT FACILITIES - Covenant Ra
CREDIT FACILITIES - Covenant Ratios (Details) - Fifth Amendment [Member] | 3 Months Ended |
Dec. 30, 2016USD ($) | |
Maximum Inventory: | |
Maximum Capital Expenditures: | $ 4,500,000 |
As of December 30, 2016 [Member] | |
Maximum Inventory: | |
Inventory | $ 26,000,000 |
Fiscal Quarter Ending December 30, 2016 [Member] | |
Debt to EBITDAS Ratio: | |
Debt to EBITDAS ratio | 0.0300 |
Minimum Quarterly EBITDAS: | |
Net earnings before interest,taxes, depreciation and amortization | $ (500,000) |
Fixed Charge Coverage Ratio: | |
Fixed charge coverage ratio | 0.0072 |
CREDIT FACILITIES - Long-term D
CREDIT FACILITIES - Long-term Debt Maturities (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Dec. 30, 2016 | Sep. 30, 2016 | ||
Debt Instrument [Line Items] | |||
2,017 | $ 1,578 | ||
2,018 | [1] | 4,812 | |
2,019 | 1,400 | ||
2,020 | 1,400 | ||
2021 and thereafter | 3,033 | ||
Total debt, net | $ 12,223 | $ 19,869 | |
Celmet Term Loan [Member] | |||
Debt Instrument [Line Items] | |||
Maturity date | Nov. 7, 2018 | ||
Revolving Credit Facility [Member] | |||
Debt Instrument [Line Items] | |||
Maturity date | Jan. 18, 2018 | ||
[1] | Includes Revolver balance of $2.6 million at December 30, 2016 and final payment of Celmet Building Term Loan on November 7, 2018. |
FAIR VALUE OF FINANCIAL INSTR49
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands | Dec. 30, 2016 | Sep. 30, 2016 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Carrying Value | $ 12,003 | $ 19,640 | |
Term Loan A [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Fair Value | 48 | 3,489 | |
Carrying Value | [1] | 48 | 3,693 |
Celmet Building Term Loan [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Fair Value | 835 | 864 | |
Carrying Value | $ 899 | $ 932 | |
[1] | The Albuquerque Mortgage Loan and the Albuquerque Industrial Revenue Bond were repaid in connection with the sale-leaseback transaction described in Note 14—Capital Lease. The proceeds from the transaction were also used to pay down Term Loan A. |
WARRANTY RESERVES (Details)
WARRANTY RESERVES (Details) - Warranty Reserves [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 30, 2016 | Jan. 01, 2016 | |
Warranty Reserve | ||
Reserve, beginning of period | $ 180 | $ 399 |
Provision | 29 | 133 |
Warranty costs | (34) | (130) |
Reserve, end of period | $ 175 | $ 402 |
STOCK-BASED COMPENSATION - Narr
STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) | 3 Months Ended | |
Dec. 30, 2016 | Jan. 01, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation | $ 135,000 | $ 54,000 |
Reduction to compensation expense | $ 60,000 | |
Shares vested (in shares) | 0 | 0 |
Compensation expense | $ 135,000 | $ 54,000 |
Director [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 3 years | |
Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 4 years | |
Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 5 years | |
Employee Stock Option [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 4 years | |
2010 Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Maximum number of common shares that may be issued (in shares) | 2,000,000 | |
Common shares, issuance term | 10 years | |
Shares available for issuance (in shares) | 470,082 | |
2010 Plan [Member] | Employee Stock Option [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award expiration period | 7 years | |
ESPP [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Employee stock purchase discount (percent) | 10.00% | |
Employee contributions | $ 8,700 | |
Compensation expense | $ 1,000 |
STOCK-BASED COMPENSATION - Valu
STOCK-BASED COMPENSATION - Valuation Assumptions (Details) - USD ($) | 3 Months Ended | |
Dec. 30, 2016 | Jan. 01, 2016 | |
Assumptions for Black-Scholes: | ||
Risk-free interest rate | 1.48% | |
Expected term in years | 4 years | |
Volatility | 40.00% | |
Expected annual dividends | $ 0 | |
Value of options granted: | ||
Number of options granted (in shares) | 50,000 | 0 |
Weighted average fair value per share (in dollars per share) | $ 1.18 | $ 0 |
Fair value of options granted (000's) | $ 59,000 |
STOCK-BASED COMPENSATION - Summ
STOCK-BASED COMPENSATION - Summary of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Dec. 30, 2016 | Jan. 01, 2016 | |
Number of Options | ||
Outstanding, beginning of period (in shares) | 759,795 | 717,645 |
Granted (in shares) | 50,000 | 0 |
Exercised (in shares) | 0 | 0 |
Forfeited (in shares) | (17,500) | (15,500) |
Expired (in shares) | (12,250) | 0 |
Outstanding, end of period (in shares) | 780,045 | 702,145 |
Wgtd. Avg. Exercise Price | ||
Outstanding, beginning of period (in dollars per share) | $ 4.43 | $ 4.40 |
Granted (in dollars per share) | 3.60 | 0 |
Exercised (in dollars per share) | 0 | 0 |
Forfeited (in dollars per share) | 5.30 | 5.99 |
Expired (in dollars per share) | 5.06 | 0 |
Outstanding, end of period (in dollars per share) | $ 4.35 | $ 4.37 |
For options expected to vest | ||
Number expected to vest (in shares) | 755,142 | 539,756 |
Number expected to vest (in dollars per share) | $ 4.35 | $ 4.45 |
Weighted average remaining term, in years | 5 years 11 days | 5 years 6 months |
Intrinsic value (000s) | $ 0 | $ 0 |
For exercisable options | ||
Number exercisable (in shares) | 240,936 | 156,000 |
Number exercisable (in dollars per share) | $ 4.76 | $ 5.33 |
Weighted average remaining term, in years | 3 years 10 months 10 days | 3 years 7 months |
Intrinsic value (000s) | $ 0 | $ 0 |
For non-exercisable options | ||
Expense not yet recognized (000s) | $ 588 | $ 672 |
Weighted average years to be recognized | 2 years 6 months 3 days | 3 years 4 months |
For options exercised, Intrinsic value (000s) | $ 0 | $ 0 |
STOCK-BASED COMPENSATION - Chan
STOCK-BASED COMPENSATION - Changes in Non-Vested Options Outstanding (Details) - $ / shares | 3 Months Ended | |
Dec. 30, 2016 | Jan. 01, 2016 | |
Number of Options | ||
Non-vested, beginning of period (in shares) | 489,109 | 546,145 |
Granted (in shares) | 50,000 | 0 |
Vested (in shares) | 0 | 0 |
Non-vested, end of period (in shares) | 539,109 | 546,145 |
Wgtd. Avg. Grant Date Fair Value | ||
Non-vested, beginning of period (in dollars per share) | $ 1.43 | $ 1.41 |
Granted (in dollars per share) | 1.18 | 0 |
Vested (in dollars per share) | $ 0 | $ 0 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested Options Forfeited, Number of Shares | 0 | 0 |
Forfeited (in dollars per share) | $ 0 | $ 0 |
Non-vested, end of period (in dollars per share) | $ 1.41 | $ 1.41 |
STOCK-BASED COMPENSATION - Su55
STOCK-BASED COMPENSATION - Summary of Restricted Stock Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Dec. 30, 2016 | Jan. 01, 2016 | |
Number of Non-vested Shares [Roll Forward] | ||
Vested (in shares) | (1,917) | |
Wgtd. Avg. Grant Date Fair Value [Roll Forward] | ||
Granted (in dollars per share) | $ 0 | |
Restricted Stock [Member] | ||
Number of Non-vested Shares [Roll Forward] | ||
Outstanding, beginning of period (in shares) | 228,759 | 54,960 |
Granted (in shares) | 0 | 0 |
Vested (in shares) | 0 | |
Shares withheld for payment of taxes upon vesting of restricted stock (in shares) | (583) | 0 |
Forfeited (in shares) | 0 | 0 |
Outstanding, end of period (in shares) | 226,259 | 54,960 |
Wgtd. Avg. Grant Date Fair Value [Roll Forward] | ||
Outstanding, beginning of period (in dollars per share) | $ 4.40 | $ 4.23 |
Granted (in dollars per share) | 0 | |
Vested (in dollars per share) | 3.60 | 0 |
Shares withheld for payment of taxes upon vesting of restricted stock (in dollars per share) | 3.60 | 0 |
Forfeited (in dollars per share) | 0 | 0 |
Outstanding, end of period (in dollars per share) | $ 4.40 | $ 4.23 |
For non-vested shares | ||
Expense not yet recognized (000s) | $ 682 | $ 0 |
Weighted average remaining years for vesting | 1 year 11 months 16 days | 2 years |
For shares vested | ||
Aggregate fair value on vesting dates (000s) | $ 9 | $ 0 |
RETIREMENT PLAN (Details)
RETIREMENT PLAN (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 30, 2016 | Jan. 01, 2016 | |
Compensation and Retirement Disclosure [Abstract] | ||
Contributions by employer, percentage | 25.00% | |
Employer matching contribution, percentage | 6.00% | |
Contributions by employer | $ 70 | $ 67 |
INCOME TAXES - Tax Provision_Be
INCOME TAXES - Tax Provision/Benefit (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 30, 2016 | Jan. 01, 2016 | |
Income Tax Disclosure [Abstract] | ||
Provision for/(benefit from) income taxes | $ 0 | $ 0 |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) $ in Millions | Sep. 30, 2016USD ($) |
Domestic Tax Authority [Member] | |
Operating loss carryforwards | $ 31.7 |
State and Local Jurisdiction [Member] | |
Operating loss carryforwards | $ 1.2 |
MARKET SECTORS AND MAJOR CUST59
MARKET SECTORS AND MAJOR CUSTOMERS - Summary of Sales (Details) - Sales Revenue, Segment [Member] | 3 Months Ended | |
Dec. 30, 2016 | Jan. 01, 2016 | |
Percentage of Sales by Sector | 100.00% | 100.00% |
Aerospace & Defense [Member] | ||
Percentage of Sales by Sector | 50.00% | 40.00% |
Medical [Member] | ||
Percentage of Sales by Sector | 28.00% | 41.00% |
Industrial [Member] | ||
Percentage of Sales by Sector | 20.00% | 16.00% |
Communications & Other [Member] | ||
Percentage of Sales by Sector | 2.00% | 3.00% |
MARKET SECTORS AND MAJOR CUST60
MARKET SECTORS AND MAJOR CUSTOMERS - Narrative (Details) - customer | 3 Months Ended | |
Dec. 30, 2016 | Jan. 01, 2016 | |
Concentration risk, number of customers | 2 | 2 |
Customer Concentration Risk [Member] | Sales [Member] | Industrial [Member] | ||
Concentration risk, percentage | 18.00% | |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | ||
Concentration risk, number of customers | 1 | 2 |
Concentration risk, percentage | 11.00% | 25.00% |
Customer Number Two [Member] | Customer Concentration Risk [Member] | Sales [Member] | Medical [Member] | ||
Concentration risk, percentage | 14.00% | |
Customer Number One [Member] | Customer Concentration Risk [Member] | Sales [Member] | Medical [Member] | ||
Concentration risk, percentage | 15.00% |
CAPITAL LEASE - Narrative (Deta
CAPITAL LEASE - Narrative (Details) | Nov. 18, 2016USD ($)renewal_option |
Sale Leaseback Transaction [Line Items] | |
Aggregate purchase price | $ 5,750,000 |
Holdback amount | 120,000 |
Net book value of assets sold | 4,600,000 |
Value of assets acquired under the lease | $ 5,750,000 |
Initial term of lease | 15 years |
Number of lease renewal options | renewal_option | 2 |
Term of renewal options (in years) | 5 years |
Annual rental payment | $ 474,000 |
Late payment fee (percent) | 5.00% |
Interest rate (percent) | 18.00% |
Maximum [Member] | |
Sale Leaseback Transaction [Line Items] | |
Annual percentage increase | 2.00% |
Minimum [Member] | |
Sale Leaseback Transaction [Line Items] | |
Consumer pricing index multiplier (lesser of) | 1.25 |
Other Noncurrent Liabilities [Member] | |
Sale Leaseback Transaction [Line Items] | |
Deferred gain recorded | $ 1,100,000 |
CAPITAL LEASE CAPITAL LEASE - S
CAPITAL LEASE CAPITAL LEASE - Summary of Future Minimum Payments on Capital Leases (Details) $ in Thousands | Dec. 30, 2016USD ($) |
Leases [Abstract] | |
2,017 | $ 476 |
2,018 | 485 |
2,019 | 495 |
2,020 | 505 |
2021 and thereafter | 6,228 |
Total capital lease payments | 8,189 |
Less: amounts representing interest | (2,472) |
Present value of minimum lease payment | $ 5,717 |