-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CiZ1Hj/8zL75oKIqFqBB/YX8MeQjyt+PBqNLET9CcBWt9y+2DT//0W83JwAvih+2 EW0oU7tdE6PSK/G5Ns+9gg== 0000914317-96-000301.txt : 19960826 0000914317-96-000301.hdr.sgml : 19960826 ACCESSION NUMBER: 0000914317-96-000301 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960823 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: IEH CORPORATION CENTRAL INDEX KEY: 0000050292 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC CONNECTORS [3678] IRS NUMBER: 135549345 STATE OF INCORPORATION: NY FISCAL YEAR END: 0330 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-05278 FILM NUMBER: 96619943 BUSINESS ADDRESS: STREET 1: 140 58TH ST BLDG B UNIT 8E CITY: BROOKLYN STATE: NY ZIP: 11220 BUSINESS PHONE: 7184924440 MAIL ADDRESS: STREET 1: 369 LEXINGTON AVE CITY: NEW YORK STATE: NY ZIP: 10017 FORMER COMPANY: FORMER CONFORMED NAME: INDUSTRIAL ELECTRONIC HARDWARE CORP DATE OF NAME CHANGE: 19890123 FORMER COMPANY: FORMER CONFORMED NAME: INDUSTRIAL HEAT TREATING CO INC DATE OF NAME CHANGE: 19670926 10QSB 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------- FORM 10-QSB [ ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 ---------------------- [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to _______________ Commission File No. 0-5258 IEH CORPORATION (Exact name of registrant as specified in its charter) New York 1365549348 - ------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 140 58th Street, Suite 8E, Brooklyn, New York 11220 --------------------------------------------------- (Address of principal executive office) Registrant's telephone number, including area code: (718) 492-4440 --------------- ________________________________________________________________________________ Former name, former address and former fiscal year, if changed since last report. Check whether the Issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ ] No [ X ] 2,303,502 shares of Common Shares, par value $.50 per share, were outstanding as of August 10, 1996. IEH CORPORATION CONTENTS PART 1 - FINANCIAL INFORMATION: ITEM 1 - FINANCIAL STATEMENTS Balance Sheets June 28, 1996 (Unaudited) and March 29, 1996 Statement of Operations (Unaudited) for the three months ended June 28, 1996 and June 30, 1995 Statement of Cash Flows (Unaudited) for the three months ended June 28, 1996 and June 30, 1995 Notes to Financial Statements (Unaudited) ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS PART II - OTHER INFORMATION
IEH CORPORATION BALANCE SHEETS As of June 28, 1996 and March 29, 1996 June 28, March 29, 1996 1996 ---------- ---------- ( Unaudited ) ( Note 1 ) ASSETS CURRENT ASSETS: Cash ................................................ $ 47,629 $ 3,416 Accounts receivable, less allowance for doubtful accounts of $10,062 at June 28, 1996 and March 29, 1996 in 1993 ............................................ 843,530 861,103 Inventories (Note 2 ) ............................... 1,066,961 1,016,272 Prepaid expenses and other current assets(Note 3) ... 37,530 54,000 Other receivables ................................... 23,519 61,410 ---------- ---------- Total current assets ............................. 2,019,169 1,996,201 ---------- ---------- PROPERTY, PLANT AND EQUIPMENT, less accumulated depreciation and amortization of $4,043,799 at June 28, 1996 and $3,967,899 at March 29, 1996 ..... 1,525,993 1,537,973 ---------- ---------- OTHER ASSETS: Prepaid pension cost (Note 6) ....................... 43,949 43,949 Other assets ........................................ 48,136 48,510 ---------- ---------- 92,085 92,549 ---------- ---------- Total assets ..................................... $3,637,247 $3,626,633 ========== ========== See accompanying notes to financial statements
IEH CORPORATION BALANCE SHEETS As of June 28, 1996 and March 29, 1996 June 28, March 29, 1996 1996 ----------- ----------- ( Unaudited ) ( Note 1 ) LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts receivable financing .................................... $ 641,970 $ 643,380 Notes payable, current portion ................................... 4,457 4,542 Loan payable, current portion (Note 5) ........................... 43,818 43,528 Accrued corporate income taxes ................................... 33,116 29,064 Union pension and health and welfare,current portion(Note 6) ..... 120,000 120,000 Accounts payable ................................................. 1,086,257 1,097,924 Other current liabilities (Note 4) ............................... 109,092 155,775 ----------- ----------- Total current liabilities ..................................... 2,038,710 2,094,213 ----------- ----------- LONG-TERM LIABILITIES: Pension plan payable (Note 6) .................................... 582,455 516,966 Loan payable, less current portion (Note 5) ...................... 267,508 278,680 Union pension and health and welfare, less current portion(Note 6) 262,989 283,101 ----------- ----------- 1,112,952 1,078,747 ----------- ----------- Total liabilities ............................................. 3,151,662 3,172,960 ----------- ----------- STOCKHOLDERS' EQUITY: Common stock, $.50 par value: 10,000,000 shares authorized; 2,303,502 shares issued and outstanding .......................... 1,151,751 1,151,751 Capital in excess of par value ................................... 1,615,874 1,615,874 Retained earnings(Deficit) ....................................... (2,282,040) (2,313,952) Total stockholders' equity .................................... 485,585 453,673 ----------- ----------- Total liabilities and stockholders' equity .................... $ 3,637,247 $ 3,626,633 =========== =========== See accompanying notes to financial statements
IEH CORPORATION STATEMENT OF OPERATIONS (Unaudited) Three Months Ended ----------------------------- June 28, June 30, 1996 1995 ----------- ----------- REVENUES, net sales ....................... $ 1,152,385 $ 1,031,647 ----------- ----------- COSTS AND EXPENSES: Cost of products sold .................... 819,993 811,315 Selling, general and administrative ....................... 178,294 198,095 Interest ................................. 39,278 37,716 Depreciation and amortization ......................... 77,100 66,450 ----------- ----------- 1,114,665 1,113,576 ----------- ----------- OPERATING INCOME (LOSS) ................... 37,720 (81,929) ----------- ----------- OTHER INCOME .............................. 627 289 ----------- ----------- INCOME (LOSS) BEFORE INCOME TAXES ......... 38,347 (81,640) ----------- ----------- PROVISION FOR INCOME TAXES ................ 6,436 6,300 ----------- ----------- NET INCOME (LOSS) ......................... $ 31,911 $ (87,940) =========== =========== NET INCOME (LOSS) PER COMMON SHARE ............................. $ .014 $ (.038) =========== =========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (in thousands) ........................... 2,304 2,304 =========== =========== See accompanying notes to financial statements
IEH CORPORATION STATEMENTS OF CASH FLOWS Increase (Decrease) in Cash (Unaudited) Three Months Ended ---------------------- June 28, June 30, 1996 1995 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income(loss) ........................................ $ 31,911 $ (87,940) --------- --------- Adjustments to reconcile net income(loss) to net cash used in operating activities: Depreciation and amortization ......................... 77,100 66,450 Changes in assets and liabilities: (Increase) decrease in accounts receivable ............ 17,573 155,710 (Increase) decrease in inventories .................... (50,689) (3,291) (Increase) decrease in prepaid expenses and other current assets ........................... 16,470 9,679 (Increase) decrease in other receivables .............. 37,891 (2,925) (Increase) decrease in other assets ................... 464 375 (Decrease) increase in accounts payable ............... (11,667) 122,702 (Decrease) increase in other current liabilities ...... (46,683) 14,307 Increase in accrued corporate income taxes payable .... 4,052 7,928 Increase in due to union pension and health and welfare (20,112) (16,052) (Decrease) increase in pension plan payable ........... 65,489 24,911 --------- --------- Total adjustments ............................ 89,888 379,794 --------- --------- NET CASH USED IN OPERATING ACTIVITIES ..................... 121,799 291,854 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment .............. (65,209) (98,930) --------- --------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES .................................. (65,209) (98,930) --------- --------- See accompanying notes to financial statements
IEH CORPORATION STATEMENTS OF CASH FLOWS (CONTINUED) Increase (Decrease) in Cash (Unaudited) Three Months Ended --------------------- June 28, June 30, 1996 1995 --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on notes payable ................. $ (85) $ (8,403) Proceeds from accounts receivable financing ......... -- -- Principal payments on accounts receivable financing . (1,410) (131,710) Principal payments on loan payable .................. (10,882) (52,811) --------- --------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES .............................. (12,377) (192,924) --------- --------- INCREASE (DECREASE) IN CASH .......................... 44,213 -- CASH, beginning of period ............................ 3,416 300 --------- --------- CASH, end of period .................................. $ 47,629 $ 300 ========= ========= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION, cash paid during the nine months for: Interest ......................................... $ 39,278 $ 37,716 ========= ========= Income Taxes ..................................... $ 6,436 $ 6,300 ========= ========= See accompanying notes to financial statements
IEH CORPORATION NOTES TO FINANCIAL STATEMENTS (Unaudited) Note 1- FINANCIAL STATEMENTS: The accompanying financial statements of IEH Corporation("The Company") for the three months ended June 28, 1996 and June 30, 1995 have been prepared in accordance with the instructions to Form 10-QSB and do not include all of the information and footnotes required by generally accepted accounting principles. The financial statements have been prepared by management from the books and records of the Company and reflect, in the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the financial position, results of operations, and cash flows of the Company. These statements should be read in conjunction with the financial statements and notes thereto included in the Company's annual report Form 10- KSB for the fiscal year ended March 29, 1996. The balance sheet at March 29, 1996 has been taken from the audited financial statements of that date. The Company's fiscal quarters end on the last Friday of each quarter, and its fiscal year ends on the last Friday of March of each calendar year. Note 2- INVENTORIES: Inventories are comprised of the following: June 28, March 29, 1996 1996 ---- ---- (Unaudited) Raw materials $ 637,898 $ 607,593 Work in process 118,961 113,309 Finished goods 310,102 295,370 --------- ----------- $1,066,961 $ 1,016,272 ========== =========== Inventories are priced at the lower of cost (first-in, first -out method) or market. During the current fiscal year, the Company established a reserve for obsolescence to reflect net realizable value. The balance of this reserve as of June 28, 1996 was $60,000. Inventories at June 28, 1996 are recorded net of this reserve. IEH CORPORATION NOTES TO FINANCIAL STATEMENTS (Unaudited) Note 3- PREPAID EXPENSES AND OTHER CURRENT ASSETS: Prepaid expenses and other current assets are comprised of the following: June 28, March 29, 1996 1996 ---- ---- ( Unaudited ) Prepaid insurance $ 37,530 $ 54,000 Other current assets - - -------- -------- $ 37,530 $ 54,000 ======== ======== Note 4- OTHER CURRENT LIABILITIES: Other current liabilities are comprised of the following: June 28, March 29, 1996 1996 ---- ---- (Unaudited) Payroll and vacation accruals $ 30,900 $ 5,590 Sales commissions 6,363 6,074 Pension plan payable - 65,389 Other 71,829 78,722 --------- --------- $ 109,092 $ 155,775 ========= ========= Note 5- LOAN PAYABLE: On July 22, 1992, the Company obtained a loan of $435,000 from the New York State Urban Development Corporation, ("UDC") collateralized by machinery and equipment. The loan is payable over ten years, with interest rates progressively increasing from 4% to 7%. The balance remaining at June 28, 1996 was $311,326. IEH CORPORATION NOTES TO FINANCIAL STATEMENTS (Unaudited) Note 5- LOAN PAYABLE (continued): Aggregate future principal payments are as follows: Fiscal Year Ending March: 1997 $ 32,646 1998 45,710 1999 48,529 2000 50,694 Thereafter 133,747 ---------- $ 311,326 ========== As of June 28, 1996, the Company had failed to meet one of the financial covenants of the loan agreement; namely that the "Company shall be obligated to maintain a tangible net worth of not less than $1,300,000 and the Company shall be obligated to maintain a ratio of current assets to current liabilities of 1.1 to 1.0. The Company reported tangible net worth of $485,585. The ratio of current assets to current liabilities at June 28, 1996 was .99 to 1. The Company had previously received a waiver of this covenant from the UDC through the period ending July 8, 1993 and had subsequently received an additional waiver of this covenant through the period ending March 31, 1994. There are no assurances that the Company will receive any additional waivers of this covenant. Should the Company not receive any additional waivers, then it will be deemed to be in default of this loan obligation to the UDC and the entire loan plus interest will become due and payable. IEH CORPORATION NOTES TO FINANCIAL STATEMENTS (Unaudited) Note 6- COMMITMENTS: The Company has, with the United Auto Workers of America, Local 259, a collective bargaining multi-employer pension plan. Contributions are made in accordance with a negotiated labor contract and are based on the number of covered employees employed per month. With the passage of the Multi-Employer Pension Amendments Act of 1980 ("The Act"), the Company may become subject to liabilities in excess of contributions made under the collective bargaining agreement. Generally, these liabilities are contingent upon the termination, withdrawal, or partial withdrawal from the Plan. The Company has not taken any action to terminate, withdraw or partially withdraw from the Plan nor does it intend to do so in the future. Under the Act, liabilities would be based upon the Company's proportional share of the Plan's unfunded vested benefits which is currently not available. The amount of accumulated benefits and net assets of such Plan also is not currently available to the Company. Total contributions charged to operations under this pension plan were $9,889 for the three months ended June 28, 1996. In December, 1993, the Company and Local 259 entered into a verbal agreement whereby the Company would satisfy this debt by the following payment schedule: The sum of $10,000 will be paid by the Company each month in satisfaction of the current arrears until this total debt has been paid. Under this agreement, the projected payment schedule for arrears will satisfy the total debt in 49 months. Additionally, both parties have agreed that current obligatory funding by the Company will be made on a timely current basis. Effective February 1, 1995, the Company withdrew from the union's health and welfare plan,and offered and provided its employees an alternative health insurance plan. As of June 28, 1996, the Company reported arrears with respect to its past contributions to the union's health and welfare plan and contributions to the pension plan. The amount due the health and welfare plan was $164,889 and the amount due the pension plan was $218,100, for a total of $382,989. The total amount due of $382,989 is reported on the accompanying balance sheet in two components; $120,000 reported as a current liability and $262,989 as a long-term liability. IEH CORPORATION NOTES TO FINANCIAL STATEMENTS (Unaudited) Note 6- COMMITMENTS (continued): On June 30, 1995, the Company applied to the Pension Benefit Guaranty Corporation ("PBGC") to have the PBGC assume all of the Company's responsibilities and liabilities under its Salaries Pension Plan. On April 26, 1996, the PBGC determined that the Salaried Pension Plan did not have sufficient assets available to pay benefits which were and are currently due under the terms of the Plan. The PBGC further determined that pursuant to the provisions of the Employment Retirement Income Security Act of 1974, as amended ("ERISA") that the Plan must be terminated in order to protect the interests of the Plan's participants. Accordingly, the PBGC intends to proceed pursuant to ERISA to have the Plan terminated and the PBGC appointed as statutory trustee, and to have July 31, 1995 established as the Plan's termination date. Note 7- CONTINGENCIES: In 1979, the Company entered into an agreement with Brevetron S.A. for the manufacture and sale of certain electrical connectors. The agreement was a so-called "hybrid" agreement involving a license under both patent rights and know-how. The license was non-exclusive, and in fact the Company encountered licensed competition in the United States in the sale of these products known as the "Hypertac" socket. The last of these patents expired in 1992. The Company, however, had continued to pay licensing fees to Brevetron S.A. and thru the year ended March 31, 1995 had recorded a licensing fee liability of $75,417. For the six months ended September 30, 1995, the Company had recorded an additional $31,783 in license fees. Upon having outside counsel conduct a review of the agreement, the Company has advised Brevetron that it believes that there is no legal obligation for the Company to pay any further licensing fees. It is the opinion of counsel that the agreement has been unenforceable since January 7, 1992, the date of expiration of the latest patent. Accordingly, the Company had reversed the accrual of license fees of $31,783 that were recorded in the period ending September 30, 1995. The remaining liability of $75,417 representing the amount of licensing fees recorded as a liability as of March 31, 1995 was reversed as of March 29, 1996. Note 8- CHANGES IN STOCKHOLDERS' EQUITY: Retained earnings increased by $31,911 which represents the net income for the three months ended June 28, 1996. Item 2- Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations: The following table sets forth for the periods indicated, sales revenues and percentages for certain items in the financial data as such items bear to the revenues of the Company:
Three Months Ended ------------------------- June 28, June 30, 1996 1995 -------- -------- Revenues, net sales(in thousands) ............ $ 1,152 $ 1,032 -------- -------- Costs and Expenses: (as a percentage of revenues) Cost of products sold ....................... 71.2% 78.6% Selling,general and administrative .......... 15.5% 19.2% Interest expense ............................ 3.4% 3.7% Depreciation and amortization ............... 6.7% 6.4% -------- -------- Total costs and expenses ............ 96.8% 107.9% -------- -------- Operating income (loss) ..................... 3.2% (7.9%) -------- -------- Other income ................................ .1% .0% -------- -------- Income (loss) before income taxes ........... 3.3% (7.9%) -------- -------- Provision for income taxes .................. (.5%) (.6%) -------- -------- Net income (loss) ........................... 2.8% (8.5%) ======== ========
Comparative Analysis: Operating revenues for the three month period ending June 28, 1996 amounted to $1,152,385 reflecting an 11.7% increase versus the prior three month period ending June 30, 1995 of $1,031,647. The increase in revenues in this comparative period reflects the Company's efforts to redirect its sales efforts to commercial electronic sales. Comparative Analysis (continued) Cost of products sold amounted to $819,993 for the three months ended June 28, 1996 or 71.2% of revenues. This reflected an increase of 1% in the cost of products sold from $811,315 or 78.6% of revenues from the comparative three month period ended June 30, 1995. This increase is primarily due to the increase in revenue and resultant costs associated with production. Selling, general and administrative expenses were $178,294 or 15.5% of revenues, compared to $198,095 or 19.2% of revenues for the comparative three month period ending June 30, 1995. This decrease of 10.0% was attributed to management's efforts to better control costs and expenses. Interest expense was $39,278 or 3.4% of revenues as compared to $37,716 or 3.7% of revenues for the prior three month period ending June 30, 1995. The increase in interest expense of 4.1% reflects the higher rates prevailing in the current fiscal year as compared to the prior year. Depreciation and amortization of $77,100 or 6.7% was reported for the three months ended June 28, 1996 as compared to $66,450 or 6.4% of revenues for the prior three month period ending June 30, 1995. This expense as a percentage of revenues increased as a result of an increase in the acquisition of machinery and equipment during the three month period ended June 30, 1995. The Company reported net income of $31,911 for the three month period ended June 28,1996, representing net income of $.014 per common share as compared to a net loss of $.038 per common share for the three months ended June 30,1995. This comparative increase for the current three month period is due to an overall increase in revenues during this period. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 27. Financial Data Schedule (b) Reports on Form 8-K during Quarter None SIGNATURES In accordance with the requirements of the Exchange Act, the Registrant has duly cause this report to be signed on its behalf by the undersigned, thereunto duly authorized. IEH CORPORATION (Registrant) August 23, 1996 /s/Michael Offerman ------------------ Michael Offerman President August 23, 1996 /s/Robert Knoth ------------------ Robert Knoth Chief Financial Officer EX-27 2
5 3-MOS MAR-29-1996 JUN-28-1996 47,629 0 843,530 0 1,066,961 2,019,169 5,569,792 4,043,799 3,637,247 2,038,710 311,326 0 0 1,151,751 1,615,874 3,637,247 1,152,385 1,153,012 819,993 1,075,387 0 0 39,278 38,347 6,436 31,911 0 0 0 31,911 .014 0
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