NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
and
2016
Note 1—OUR BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Our Business
IEC Electronics Corp. (“IEC,” or “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. 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 web site at
www.iec-electronics.com
. The contents of this website are not incorporated by reference into this annual 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 generally end on the Friday closest to the last day of the calendar quarter. For the fiscal year ended
September 30, 2017
(“fiscal 2017”), the fiscal quarters ended on
December 30, 2016
,
March 31, 2017
and
June 30, 2017
. For the fiscal year ended
September 30, 2016
(“fiscal 2016”), the fiscal quarters ended on
January 1, 2016
April 1, 2016
and
July 1, 2016
.
Consolidation
The consolidated financial statements include the accounts of IEC and its wholly-owned subsidiaries: IEC Electronics Wire and Cable, Inc. (“Wire and Cable”) that merged into IEC on December 28, 2016; 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 intercompany transactions and accounts are eliminated in consolidation.
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 reclassifications.
Cash
The Company’s cash represents deposit accounts with Manufacturers and Traders Trust Company (“M&T Bank”), a banking corporation headquartered in Buffalo, NY. The Company's cash management system provides for the funding of the disbursement accounts on a daily basis as checks are presented for payment. Under this system, outstanding checks in excess of the bank balance create a book overdraft. Book overdrafts are presented in accounts payable in the consolidated balance sheets. Changes in the book overdrafts are presented within net cash flows provided by operating activities within the consolidated statements of cash flows.
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 the likelihood of collection is remote.
Inventory Valuation
Inventories are stated at the lower of cost or market value under the first-in, first-out method. The Company regularly assesses slow-moving, excess and obsolete inventory and maintains balance sheet reserves in amounts required to reduce the recorded value of inventory to lower of cost or market.
Property, Plant and Equipment
Property, plant and equipment (“PP&E”) are stated at cost and are depreciated over various estimated useful lives using the straight-line method. Maintenance and repairs are charged to expense as incurred, while renewals and improvements are capitalized. At the time of retirement or other disposition of PP&E, cost and accumulated depreciation are removed from the accounts and any gain or loss is recorded in earnings.
Depreciable lives generally used for PP&E are presented in the table below. Leasehold improvements are amortized over the shorter of the lease term or estimated useful life of the improvement.
|
|
|
|
PP&E Lives
|
|
Estimated
Useful Lives
|
|
|
(years)
|
Land improvements
|
|
10
|
Buildings and improvements
|
|
5 to 40
|
Machinery and equipment
|
|
3 to 5
|
Furniture and fixtures
|
|
3 to 7
|
Software
|
|
3 to 10
|
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 recorded by IEC for long-lived assets in
fiscal
2017
and
2016
.
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 the Company and the outcome is uncertain, ASC 450-10 (Contingencies) requires that the Company to 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 property, plant and equipment 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
new deferred grants recorded during fiscal 2017 or 2016. The outstanding grant balance was
$0.2 million
and
$0.4 million
at
September 30, 2017
and
2016
, respectively.
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 6—Fair Value of Financial Instruments
for a 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
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 man
ufactures. Value-added support services revenue, including material management and repair work revenue, amounted to less than
5%
of total revenue in
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.
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 tax balances reflect tax rates that are scheduled to be in effect, based on currently enacted legislation, in the years the book/tax differences reverse and tax loss and tax credit carryforwards are expected to be realized. An allowance is established for any deferred tax asset for which realization is not likely.
ASC 740 also prescribes the manner in which a company measures, recognizes, presents, and discloses in its financial statements uncertain tax positions that the Company has taken or expects to take on a tax return. The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the position will be sustained following examination by taxing authorities, based on technical merits of the position. The Company believes that it has no material uncertain tax positions.
Any interest incurred is reported as interest expense. Any penalties incurred are reported as tax expense. The Company’s income tax filings are subject to audit by various tax jurisdictions and current open years are the fiscal year ended September 30, 2014 through fiscal year ended September 30, 2016. The federal income tax audit for the fiscal year ended September 30, 2013 concluded during fiscal 2017 and resulted in no change to reported tax.
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 with M&T Bank includes certain restrictions on paying cash dividends as more fully described in
Note 5—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. Significant items subject to such estimates include: allowance for doubtful accounts, excess and obsolete inventory, warranty reserves and the valuation of deferred income tax assets. 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.
Segments
The Company’s results of operations for the years ended September 30, 2017 and 2016 represent a single operating and reporting segment, referred to as contract manufacturing within the EMS industry. The Company strategically directs production between its various manufacturing facilities based on a number of considerations to best meet its customers’ requirements. The Company shares resources for sales, marketing, engineering, supply chain, information services, human resources, payroll and corporate accounting functions. Consolidated financial information is available that is evaluated regularly by the chief operating decision maker in assessing performance and allocating resources. The Company’s operations as a whole reflect the level at which the business is managed and how the Company’s chief operating decision maker assesses performance internally.
Recently Issued Accounting Standards Not Yet Adopted
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. This ASU will supersede most of the existing revenue recognition requirements in GAAP. Under the new standard, revenue will be recognized when control of the promised goods or services is transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods and services. The standard creates a five-step model that will generally require companies to use more judgment and make more estimates than under current guidance when considering the terms of contracts along with all relevant facts and circumstances. These include the identification of customer contracts and separating performance obligations, the determination of transaction price that potentially includes an estimate of variable consideration, allocating the transaction price to each separate performance obligation, and recognizing revenue in line with the pattern of transfer. Additionally, disclosures required for revenue recognition will include qualitative and quantitative information about contracts with customers, significant judgments and changes in judgments, and assets recognized from costs to obtain or fulfill a contract. Such disclosures are more extensive than what is required under existing GAAP.
The new standard will become effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Companies have the option of using either a full or modified retrospective approach in applying this standard. During fiscal 2016, the FASB issued three additional updates which further clarify the guidance provided in ASU 2014-09.
The guidance is effective for the Company beginning in the first quarter of fiscal year 2019. The Company has identified key personnel to evaluate the guidance and approve a transition method. The Company has assessed that the impact of the new guidance may result in a change of the Company's revenue recognition model for electronics manufacturing services from "point in time" upon physical delivery to an "over time" model and believes this transition may have a material impact on the Company's consolidated financial statements upon adoption primarily as it recognizes an increase in contract assets for unbilled receivables with a corresponding reduction in inventories. The Company has commenced implementation in accordance with the planned effective date. The new guidance allows for two transition methods in application - (i) retrospective to each prior reporting period presented, or (ii) prospective with the cumulative effect of adoption recognized on October 1, 2018, the first day of the Company's fiscal year 2019. The Company has not yet concluded upon its selection of the transition method.
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. This 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, this 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 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 this ASU will have on its financial statements.
Note 2—ALLOWANCE FOR DOUBTFUL ACCOUNTS
A summary follows of activity in the allowance for doubtful accounts during the
years ended
September 30, 2017
and
2016
follows:
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
|
Allowance for doubtful accounts
|
|
September 30,
2017
|
|
September 30,
2016
|
(in thousands)
|
|
|
|
|
Allowance, beginning of period
|
|
$
|
226
|
|
|
$
|
423
|
|
Change in provision for doubtful accounts
|
|
(144
|
)
|
|
96
|
|
Write-offs
|
|
(7
|
)
|
|
(293
|
)
|
Allowance, end of period
|
|
$
|
75
|
|
|
$
|
226
|
|
Note 3—INVENTORIES
A summary of inventory by category at period end follows:
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
September 30,
2017
|
|
September 30,
2016
|
(in thousands)
|
|
|
|
|
Raw materials
|
|
$
|
8,964
|
|
|
$
|
7,513
|
|
Work-in-process
|
|
5,080
|
|
|
5,932
|
|
Finished goods
|
|
1,561
|
|
|
1,939
|
|
Total inventories
|
|
$
|
15,605
|
|
|
$
|
15,384
|
|
Note 4—PROPERTY, PLANT AND EQUIPMENT, NET
A summary of property, plant and equipment and accumulated depreciation at period end follows:
|
|
|
|
|
|
|
|
|
|
Property, Plant and Equipment
|
|
September 30,
2017
|
|
September 30,
2016
|
(in thousands)
|
|
|
|
|
Land and improvements
|
|
$
|
788
|
|
|
$
|
788
|
|
Buildings and improvements
|
|
8,910
|
|
|
8,910
|
|
Building under capital lease
|
|
5,750
|
|
|
—
|
|
Machinery and equipment
|
|
27,947
|
|
|
26,905
|
|
Furniture and fixtures
|
|
7,520
|
|
|
7,489
|
|
Construction in progress
|
|
4,968
|
|
|
3,079
|
|
Total property, plant and equipment, at cost
|
|
55,883
|
|
|
47,171
|
|
Accumulated depreciation
|
|
(38,106
|
)
|
|
(36,177
|
)
|
Property, plant and equipment, net
|
|
$
|
17,777
|
|
|
$
|
10,994
|
|
Depreciation expense during the
years ended
September 30, 2017
and
2016
follows:
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
|
|
|
September 30,
2017
|
|
September 30,
2016
|
(in thousands)
|
|
|
|
|
Depreciation expense
|
|
$
|
2,515
|
|
|
$
|
3,050
|
|
Note 5—CREDIT FACILITIES
A summary of borrowings at period end follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed/
|
|
|
|
September 30, 2017
|
|
September 30, 2016
|
|
|
Variable
|
|
|
|
|
|
Interest
|
|
|
|
Interest
|
Debt
|
|
Rate
|
|
Maturity Date
|
|
Balance
|
|
Rate
|
|
Balance
|
|
Rate
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
M&T credit facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving Credit Facility
|
|
v
|
|
5/5/2022
|
|
$
|
8,769
|
|
|
3.73
|
%
|
|
$
|
3,961
|
|
|
3.28
|
%
|
Term Loan A
(1)
|
|
f
|
|
2/1/2020
|
|
—
|
|
|
3.98
|
|
|
3,693
|
|
|
3.98
|
|
Term Loan B
|
|
v
|
|
5/5/2022
|
|
5,714
|
|
|
3.99
|
|
|
8,983
|
|
|
3.03
|
|
Albuquerque Mortgage Loan
(1)
|
|
v
|
|
2/1/2018
|
|
—
|
|
|
—
|
|
|
2,200
|
|
|
3.55
|
|
Celmet Building Term Loan
|
|
f
|
|
11/7/2018
|
|
802
|
|
|
4.72
|
|
|
932
|
|
|
4.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other credit facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Albuquerque Industrial Revenue Bond
(1)
|
|
f
|
|
3/1/2019
|
|
—
|
|
|
—
|
|
|
100
|
|
|
5.63
|
|
Total debt, gross
|
|
|
|
|
|
15,285
|
|
|
|
|
19,869
|
|
|
|
Unamortized debt issuance costs
|
|
|
|
|
|
(275
|
)
|
|
|
|
(229
|
)
|
|
|
Total debt, net
|
|
|
|
|
|
15,010
|
|
|
|
|
19,640
|
|
|
|
Less: current portion
|
|
|
|
|
|
(987
|
)
|
|
|
|
(2,908
|
)
|
|
|
Long-term debt
|
|
|
|
|
|
$
|
14,023
|
|
|
|
|
$
|
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 12—Capital Lease
. The proceeds from the transaction were also used to pay down Term Loan A, which was subsequently paid off in due course.
M&T Bank Credit Facilities
Effective as of
May 5, 2017
, the Company and M&T Bank entered into the Third Amendment to Fifth Amended and Restated Credit Agreement (the “Third Amendment”), that amended the Fifth Amended and Restated Credit Agreement dated as of December 14, 2015, as amended by the First Amendment to Fifth Amended and Restated Credit Facility, dated as of June 20, 2016, and the Second Amendment to Fifth Amended and Restated Credit Facility agreement dated as of November 28, 2016 (“Fifth Amended Credit Agreement”). The Third Amendment extended the Revolver termination date to May 5, 2022. In connection with the Third Amendment, the Term Loan B to M&T Bank was amended and restated. The Third Amendment revised certain covenants to provide that the Company may use Revolver proceeds to refinance existing indebtedness. As a result, the Term Loan B, which matures on May 5, 2022, now has a principal amount of
$6.0 million
, of which
$5.7 million
was outstanding as of
September 30, 2017
. The Third Amendment also revised the maximum amount the Company can borrow under the Revolver to the lesser of
$16.0 million
or
85%
of eligible receivables plus up to
$7.0 million
of eligible inventories. The Third Amendment also modified the definitions of Applicable Margin and Applicable Unused Fee to provide that each is calculated using the applicable Fixed Charge Coverage Ratio, as redefined by the Third Amendment. The Third Amendment established a Borrowing Base computed using monthly Borrowing Base Reports that, if inaccurate, allow M&T Bank, in its discretion, to suspend the making of or limit Revolving Credit Loans. Further, the Third Amendment provides for the Company’s repurchase of its common stock under certain circumstances without M&T Bank’s prior written consent.
Individual debt facilities provided under the Third Amendment, are described below:
|
|
a)
|
Revolving Credit Facility (“Revolver”)
: Up to
$16.0 million
is available through
May 5, 2022
. 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 is being repaid in
108 equal monthly installments
of
$93 thousand
. The proceeds of the sale-leaseback transaction described in
Note 12—Capital Lease
were used to pay down the loan, which was paid off in due course on January 1, 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
. As part of the Third Amendment, the principal was modified from $8.0 million to $6.0 million and principal is being repaid in equal monthly installments of $71 thousand plus a balloon payment of
$1.6 million
. The maturity date of the loan is
May 5, 2022
.
|
|
|
d)
|
Albuquerque
Mortgage Loan
:
$4.0 million
was borrowed on December 16, 2009. The loan is secured by real property in Albuquerque, NM, and principal was being repaid in equal
monthly installments
of
$22 thousand
plus a balloon payment of
$1.8 million
due at maturity. The loan was repaid in connection with the sale-leaseback transaction described in
Note 12—Capital Lease
.
|
|
|
e)
|
Celmet Building Term Loan:
$1.3 million
was borrowed on November 8, 2013 pursuant to an amendment to the 2013 Credit Agreement. The proceeds were used to reimburse the Company’s cost of purchasing its Rochester, New York facility. Principal is being repaid in
59 equal monthly installments
of
$11 thousand
plus a balloon payment of $672 thousand due at maturity on
November 7, 2018
.
|
The Credit Facility is secured by a general security agreement covering the assets of the Company and its subsidiaries, a pledge of the Company’s equity interest in its subsidiaries, a negative pledge on the Company’s real property, and a guarantee by the Company’s subsidiaries, all of which restrict use of these assets to support other financial instruments.
Borrowing Base
Under the Third Amendment, the maximum amount the Company can borrow under the Revolver is the lesser of (i)
85%
of eligible receivables plus a percentage of eligible inventories (up to a cap of
$7.0 million
) or (ii) $
16.0 million
at
September 30, 2017
and
$20.0 million
at
September 30, 2016
.
At
September 30, 2017
, the upper limit on Revolver borrowings was
$16.0 million
, with
$7.2 million
available. At
September 30, 2016
, the upper limit on Revolver borrowings was
$16.4 million
with
$12.4 million
available. Average Revolver balances amounted to
$6.1 million
and
$8.3 million
during the
years ended
September 30, 2017
and
September 30, 2016
, respectively.
Interest Rates
Under the Third Amendment, variable rate debt accrues interest at LIBOR plus the applicable marginal interest rate that fluctuates based on the Company’s Fixed Charge Coverage Ratio, as defined below. Under the Third Amendment, the applicable marginal interest rate was fixed on May 5, 2017 through the fiscal quarter ending March 31, 2018, as follows:
2.50%
for the Revolver and
2.75%
for Term Loan B. Changes to applicable margins and unused fees resulting from the Fixed Charge Coverage Ratio generally become effective mid-way through the subsequent quarter.
The Company incurs quarterly unused commitment fees ranging from
0.250%
to
0.375%
of the excess of
$16.0 million
over average borrowings under the Revolver. Fees incurred amounted to
$50.0 thousand
and
$57.7 thousand
during the
years ended
September 30, 2017
and
September 30, 2016
, respectively. The fee percentage varies based on the Company’s Fixed Charge Coverage Ratio, as defined below.
Financial Covenants
The Third Amendment, also contains various affirmative and negative covenants including financial covenants. Pursuant to the Third Amendment, as of March 31, 2017, certain financial covenants of the credit facility were eliminated or revised to be less complex, including the Maximum Inventory covenant, Debt to EBITDAS ratios, and the Maximum Capital Expenditures limit after the fiscal year ending September 30, 2017. The Company is required to maintain a minimum fixed charge coverage ratio (“Fixed Charge Coverage Ratio”) that compares (i) EBITDAS minus unfinanced capital expenditures minus taxes paid, to (ii) the sum of interest expense, principal payments, payments on all capital lease obligations and dividends, if any (fixed charges). “EBITDAS” is defined as earnings before interest, taxes, depreciation, amortization and non-cash stock compensation expense. The Fixed Charge Coverage Ratio is generally measured quarterly on a rolling twelve month basis but was initially measured for a trailing six months ended September 30, 2017 and will be measured for a trailing nine months ending December 31, 2017. Additionally, pursuant to the Third Amendment, the Company was required to maintain a maximum amount of capital expenditures on an annual basis for fiscal 2017 that was eliminated for future periods.
Covenant ratios in effect at
September 30, 2017
, pursuant to the Fifth Amended Credit Agreement, as amended by the Third Amendment, are as follows:
|
|
|
|
Debt Covenant
|
|
Limit
|
|
|
|
Fixed Charge Coverage Ratio
|
|
Minimum 1.10x
|
Maximum Capital Expenditures
|
|
Maximum $3.5 million annually
|
The Third Amendment provides for customary events of default, subject in certain cases to customary cure periods, in which the outstanding balance and any unpaid interest would become due and payable.
The Company was in compliance with all financial debt covenants at
September 30, 2017
.
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 is paid semiannually and principal is due in its entirety at maturity. The Bond was repaid in connection with the sale-leaseback transaction described in
Note 12—Capital Lease
.
Contractual Principal Payments
A summary of contractual principal payments under IEC’s borrowings at
September 30, 2017
for the next five years taking into consideration the Fifth Amended Credit Agreement, as amended, follows:
|
|
|
|
|
|
|
|
|
Debt Repayment Schedule
|
|
Contractual
Principal
Payments
|
(in thousands)
|
|
|
|
|
Twelve months ended September 30,
|
|
|
2018
|
|
|
|
|
$
|
987
|
|
2019
|
(1)
|
|
|
|
1,529
|
|
2020
|
|
|
|
|
857
|
|
2021
|
|
|
|
|
857
|
|
2022 and thereafter
|
(2)
|
|
|
11,055
|
|
|
|
|
|
|
$
|
15,285
|
|
(1)
Includes final payment of the Celmet Building Term Loan on
November 7, 2018
.
(2)
Includes Revolver balance of
$8.8 million
at
September 30, 2017
, maturing on May 5, 2022.
Note 6—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. The fair value and carrying value of the Celmet Building Term Loan at
September 30, 2017
were both
$0.8 million
. The fair value and carrying value of the Celmet Building Term Loan as of
September 30, 2016
were both
$0.9 million
. The fair value and carrying value of the Term Loan A at
September 30, 2016
were
$3.5 million
and
$3.7 million
, respectively.
The fair value of the remainder of the Company’s debt approximated carrying value at
September 30, 2017
and
September 30, 2016
as it is variable rate debt.
Note 7—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. The warranty reserve is included in other accrued expenses on the consolidated balance sheet.
A summary of additions to and charges against IEC’s warranty reserves during the period follows:
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
|
Warranty Reserve
|
|
September 30,
2017
|
|
September 30,
2016
|
(in thousands)
|
|
|
|
|
|
|
Reserve, beginning of period
|
|
$
|
180
|
|
|
$
|
399
|
|
Provision
|
|
137
|
|
|
54
|
|
Warranty costs
|
|
(164
|
)
|
|
(273
|
)
|
Reserve, end of period
|
|
$
|
153
|
|
|
$
|
180
|
|
Note 8—STOCK-BASED COMPENSATION
The 2010 Omnibus Incentive Compensation Plan (“2010 Plan”) was approved by the Company’s stockholders at the January 2011 Annual Meeting. The Company also has an employee stock purchase plan (“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
common shares may be issued over a term of
ten years
.
Stock compensation expense recorded under the 2010 and 2001 Plans, including the ESPP totaled
$0.5 million
and
$0.4 million
for the
years ended
September 30, 2017
and
2016
, respectively. During the
year ended
September 30, 2016
, incentive compensation shares were returned by the Company's former CEO resulting in a reduction to compensation expense of
$60.0 thousand
.
At
September 30, 2017
, there were
371,434
remaining 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 fair value 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 plan is generally
seven
years. The volatility rate is based on the historical volatility of IEC's common stock.
Assumptions used in the Black-Scholes model and the estimated value of options granted during the
years ended
September 30, 2017
and
2016
follows:
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
|
Valuation of Options
|
|
September 30,
2017
|
|
September 30,
2016
|
|
|
|
|
|
Assumptions for Black-Scholes:
|
|
|
|
|
Risk-free interest rate
|
|
1.50
|
%
|
|
1.00
|
%
|
Expected term in years
|
|
4.0
|
|
|
4.0
|
|
Volatility
|
|
39
|
%
|
|
39
|
%
|
Expected annual dividends
|
|
none
|
|
|
none
|
|
|
|
|
|
|
|
Value of options granted:
|
|
|
|
|
|
Number of options granted
|
|
57,500
|
|
|
60,000
|
|
Weighted average fair value per share
|
|
$
|
1.19
|
|
|
$
|
1.62
|
|
Fair value of options granted (000s)
|
|
$
|
68
|
|
|
$
|
97
|
|
A summary of stock option activity, together with other related data, follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
|
|
|
September 30, 2017
|
|
September 30, 2016
|
Stock Options
|
|
Number
of Options
|
|
Wgtd. Avg. Exercise Price
|
|
Number
of Options
|
|
Wgtd. Avg. Exercise Price
|
|
|
|
|
|
|
|
|
|
Outstanding, beginning of period
|
|
759,795
|
|
|
$
|
4.43
|
|
|
717,645
|
|
|
$
|
4.40
|
|
Granted
|
|
57,500
|
|
|
3.64
|
|
|
60,000
|
|
|
5.15
|
|
Exercised
|
|
—
|
|
|
—
|
|
|
(600
|
)
|
|
4.08
|
|
Forfeited
|
|
(44,500
|
)
|
|
$
|
5.67
|
|
|
(17,250
|
)
|
|
5.82
|
|
Expired
|
|
(29,750
|
)
|
|
5.04
|
|
|
—
|
|
|
—
|
|
Outstanding, end of period
|
|
743,045
|
|
|
$
|
4.27
|
|
|
759,795
|
|
|
$
|
4.43
|
|
|
|
|
|
|
|
|
|
|
For options expected to vest
|
|
|
|
|
|
|
|
|
|
|
Number expected to vest
|
|
727,403
|
|
|
$
|
4.29
|
|
|
735,561
|
|
|
$
|
4.43
|
|
Weighted average remaining term, in years
|
|
4.6
|
|
|
|
|
5.0
|
|
|
|
|
Intrinsic value (000s)
|
|
|
|
$
|
545
|
|
|
|
|
|
$
|
388
|
|
|
|
|
|
|
|
|
|
|
For exercisable options
|
|
|
|
|
|
|
|
|
|
|
Number exercisable
|
|
332,472
|
|
|
$
|
4.40
|
|
|
270,686
|
|
|
$
|
4.81
|
|
Weighted average remaining term, in years
|
|
4.1
|
|
|
|
|
3.8
|
|
|
|
|
Intrinsic value (000s)
|
|
|
|
$
|
229
|
|
|
|
|
|
$
|
108
|
|
|
|
|
|
|
|
|
|
|
For non-exercisable options
|
|
|
|
|
|
|
|
|
|
|
Expense not yet recognized (000s)
|
|
|
|
$
|
416
|
|
|
|
|
|
$
|
585
|
|
Weighted average years to be recognized
|
|
1.8
|
|
|
|
|
2.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For options exercised
|
|
|
|
|
|
|
|
|
Intrinsic value (000s)
|
|
|
|
$
|
—
|
|
|
|
|
|
$
|
1
|
|
Restricted (Non-vested) Stock
Certain 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 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
|
|
|
September 30, 2017
|
|
September 30, 2016
|
Restricted (Non-vested) Stock
|
|
Number of Non-vested Shares
|
|
Wgtd. Avg. Grant Date Fair Value
|
|
Number of Non-vested Shares
|
|
Wgtd. Avg. Grant Date Fair Value
|
|
|
|
|
|
|
|
|
|
Outstanding, beginning of period
|
|
115,950
|
|
|
$
|
4.16
|
|
|
54,960
|
|
|
$
|
4.23
|
|
Granted
|
|
39,576
|
|
|
3.79
|
|
|
74,640
|
|
|
4.12
|
|
Vested
|
|
(31,559
|
)
|
|
4.25
|
|
|
(13,310
|
)
|
|
4.23
|
|
Shares withheld for payment of
taxes upon vesting of restricted stock
|
|
(1,825
|
)
|
|
4.27
|
|
|
(340
|
)
|
|
4.25
|
|
Forfeited
|
|
(12,447
|
)
|
|
4.03
|
|
|
—
|
|
|
3.91
|
|
Outstanding, end of period
|
|
109,695
|
|
|
$
|
4.01
|
|
|
115,950
|
|
|
$
|
4.16
|
|
|
|
|
|
|
|
|
|
|
For non-vested shares
|
|
|
|
|
|
|
|
|
|
|
|
Expense not yet recognized (000s)
|
|
|
|
$
|
328
|
|
|
|
|
|
$
|
385
|
|
Weighted average remaining years for vesting
|
|
|
|
|
1.7
|
|
|
|
|
2.3
|
|
|
|
|
|
|
|
|
|
|
For shares vested
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate fair value on vesting dates (000s)
|
|
|
|
|
$
|
123
|
|
|
|
|
|
$
|
53
|
|
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.
Restricted Stock Units
Holders of IEC restricted stock units do not have voting and dividend rights as of the date of grant, until vested, the shares may be forfeited and cannot be sold or otherwise transferred. At the end of the vesting period, which is typically three years, holders have all the rights and privileges of any other common stockholder. The fair value of a restricted stock unit 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 unit activity, together with related data, follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
|
|
|
September 30, 2017
|
|
September 30, 2016
|
Restricted Stock Units
|
|
Number of Non-vested Shares
|
|
Wgtd. Avg. Grant Date Fair Value
|
|
Number of Non-vested Shares
|
|
Wgtd. Avg. Grant Date Fair Value
|
|
|
|
|
|
|
|
|
|
Outstanding, beginning of period
|
|
112,809
|
|
|
$
|
4.64
|
|
|
—
|
|
|
$
|
—
|
|
Granted
|
|
155,190
|
|
|
3.58
|
|
|
112,809
|
|
|
4.64
|
|
Vested
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Forfeited
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Outstanding, end of period
|
|
267,999
|
|
|
4.03
|
|
|
112,809
|
|
|
4.64
|
|
|
|
|
|
|
|
|
|
|
For non-vested shares
|
|
|
|
|
|
|
|
|
|
|
|
Expense not yet recognized (000s)
|
|
|
|
$
|
329
|
|
|
|
|
|
$
|
376
|
|
Weighted average remaining years for vesting
|
|
|
|
|
2.0
|
|
|
|
|
2.1
|
|
Note 9—INCOME TAXES
Provision for income taxes during the
years ended
September 30, 2017
and
2016
follows:
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
|
Income Tax Provision
|
|
September 30, 2017
|
|
September 30, 2016
|
(in thousands)
|
|
|
|
|
Current tax:
|
|
|
|
|
State
|
|
$
|
53
|
|
|
$
|
4
|
|
Federal
|
|
9
|
|
|
66
|
|
|
|
|
|
|
Deferred tax:
|
|
|
|
|
State
|
|
—
|
|
|
—
|
|
Federal
|
|
—
|
|
|
—
|
|
Provision for income taxes
|
|
$
|
62
|
|
|
$
|
70
|
|
Differences between the federal statutory rate and IEC’s effective tax rates for fiscal
2017
and fiscal
2016
are explained by the following reconciliation.
|
|
|
|
|
|
|
|
|
|
Years Ended
|
Taxes as Percent of Pretax Income
|
|
September 30, 2017
|
|
September 30, 2016
|
|
|
|
|
|
Federal statutory rate
|
|
34.0
|
%
|
|
34.0
|
%
|
|
|
|
|
|
Decrease in valuation allowance
|
|
(164.4
|
)
|
|
(36.5
|
)
|
Deferred tax adjustment
|
|
65.8
|
|
|
—
|
|
Decrease in state deferred tax rate
|
|
—
|
|
|
1.2
|
|
State income taxes, net of federal benefit
|
|
26.8
|
|
|
0.1
|
|
Increase in AMT credit
|
|
—
|
|
|
1.4
|
|
Stock-based compensation
|
|
57.6
|
|
|
1.2
|
|
Non-deductible expenses
|
|
23.5
|
|
|
0.1
|
|
|
|
|
|
|
Income tax provision as percent of pretax income
|
|
43.3
|
%
|
|
1.5
|
%
|
The following table displays deferred tax assets by category:
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
|
(in thousands)
|
|
September 30,
2017
|
|
September 30,
2016
|
|
|
|
|
|
Deferred tax assets:
|
|
|
|
|
Federal and state net operating loss carryforward
|
|
$
|
11,367
|
|
|
$
|
10,973
|
|
Alternative minimum tax credit carryforward
|
|
1,010
|
|
|
1,010
|
|
Depreciation and fixed assets
|
|
289
|
|
|
999
|
|
Amortization and impairment of intangibles
|
|
28
|
|
|
14
|
|
New York State investment tax & other credits
|
|
1,186
|
|
|
1,186
|
|
Inventories
|
|
585
|
|
|
602
|
|
Deferred gain on sale-leaseback
|
|
271
|
|
|
—
|
|
Other
|
|
412
|
|
|
599
|
|
Total before allowance
|
|
15,148
|
|
|
15,383
|
|
Valuation allowance
|
|
(15,148
|
)
|
|
(15,383
|
)
|
Deferred tax assets, net
|
|
—
|
|
|
—
|
|
|
|
|
|
|
Net deferred income taxes (current and deferred)
|
|
$
|
—
|
|
|
$
|
—
|
|
The Company has recorded a full valuation allowance on all deferred tax assets. Although a full valuation allowance has been recorded for all deferred tax assets, including net operating loss carryforwards (“NOLs”), these NOLs remain available to the Company to offset future taxable income and reduce cash tax payments. IEC had federal gross NOLs for income tax purposes of approximately
$32.9 million
at
September 30, 2017
, 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 manufacturers in New York State to 0% beginning in fiscal 2016 for IEC. The credits cannot be utilized unless the New York State tax rate is no longer 0%.
The Company will continue to monitor and evaluate the positive and negative evidence considered in arriving at the above conclusion, in order to assess whether such conclusion remains appropriate in future periods, given our current operating results in fiscal 2017 and forecasted operating results in fiscal 2018.
Note 10—MARKET SECTORS AND MAJOR CUSTOMERS
A summary of sales, according to the market sector within which IEC’s customers operate, follows:
|
|
|
|
|
|
|
|
Years Ended
|
% of Sales by Sector
|
|
September 30,
2017
|
|
September 30,
2016
|
|
|
|
|
|
Aerospace and Defense
|
|
52%
|
|
40%
|
Medical
|
|
28%
|
|
42%
|
Industrial
|
|
18%
|
|
16%
|
Other
|
|
2%
|
|
2%
|
|
|
100%
|
|
100%
|
Two
individual customers represented
10%
or more of sales for the
year ended
September 30, 2017
.
One
customer in the Medical market sector totaled
14%
, while the other customer in the Aerospace and Defense market sector totaled
13%
. In the prior fiscal year,
two
customers in the Medical sector each represented
15%
of sales.
Three
individual customers represented
10%
or more of receivables and accounted for
42%
of outstanding balances at
September 30, 2017
. At
September 30, 2016
,
three
individual customers represented
10%
or more of receivables and accounted for
40%
of such outstanding balances.
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.
Note 11—COMMITMENTS AND CONTINGENCIES
Litigation
From time to time, the Company may be involved in legal actions in the ordinary course of its business, but management does not believe that any such proceedings, individually or in the aggregate, will have a material effect on the Company’s consolidated financial statements.
Note 12—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
$5.8 million
including a
$0.1 million
holdback held subject to a holdback of funds agreement, on or before March 2019. The net book value of assets sold was
$4.6 million
and the value of the assets acquired under the lease is
$5.8 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, and associated amortization is recorded in the interest expense section of the consolidated statement of operations. The proceeds from the transaction were used to pay off 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
$0.5 million
and is subject to an annual increase equal to the lesser of
2%
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.
A summary of capital lease payments for the next five years follows:
|
|
|
|
|
|
Capital Lease Payment Schedule
|
|
Contractual
Principal
Payments
|
(in thousands)
|
|
|
|
Twelve months ended September 30,
|
|
|
|
2018
|
|
$
|
482
|
|
2019
|
|
492
|
|
2020
|
|
502
|
|
2021
|
|
512
|
|
2022 and thereafter
|
|
5,887
|
|
Total capital lease payments
|
|
7,875
|
|
Less: amounts representing interest
|
|
(2,298
|
)
|
Present value of minimum lease payment
|
|
$
|
5,577
|
|
Note 13—EARNINGS PER SHARE
The Company applies the two-class method to calculate and present net income per share. Certain of the Company's restricted (non-vested) share awards contain non-forfeitable rights to dividends and are considered participating securities for purposes of computing net income per share pursuant to the two-class method. Under the two-class method, net earnings are reduced by the amount of dividends declared (whether paid or unpaid) and the remaining undistributed earnings are then allocated to common stock and participating securities, based on their respective rights to receive dividends.
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 stock and restricted stock units. Options, restricted stock and restricted stock units are primarily held by directors, officers and certain employees.
The Company uses the two-class method to calculate net income per share as both classes share the same rights in dividends. Therefore, basic and diluted earnings per share (“EPS”) are the same for both classes of ordinary shares.
The diluted weighted average share calculations do not include the following securities, which are not dilutive to the EPS calculations.
|
|
|
|
|
|
|
|
|
|
Years Ended
|
|
|
September 30,
2017
|
|
September 30,
2016
|
Anti-dilutive shares excluded
|
|
1,120,739
|
|
|
988,554
|
|
Note 14—QUARTERLY FINANCIAL DATA (UNAUDITED)
The accompanying unaudited financial information for the three month periods specified below 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.
Note that quarterly amounts are rounded separately and as a result the sum of the quarterly amounts may not equal the computed amount for the full year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
Gross Profit
|
|
Net Income/(Loss)
|
|
Basic and Diluted Earnings/(Loss) Per Share
|
(Unaudited; in thousands, except per share data)
|
|
|
|
|
|
|
Fiscal Quarters
|
|
|
|
|
|
|
|
|
Fourth 2017
|
|
$
|
27,623
|
|
|
$
|
3,475
|
|
|
$
|
755
|
|
|
$
|
0.07
|
|
Third 2017
|
|
26,489
|
|
|
3,708
|
|
|
794
|
|
|
0.08
|
|
Second 2017
|
|
21,368
|
|
|
2,279
|
|
|
(603
|
)
|
|
(0.06
|
)
|
First 2017
|
|
20,976
|
|
|
1,795
|
|
|
(865
|
)
|
|
(0.09
|
)
|
|
|
|
|
|
|
|
|
|
Fourth 2016
|
|
$
|
28,420
|
|
|
$
|
3,270
|
|
|
$
|
176
|
|
|
$
|
0.02
|
|
Third 2016
|
|
32,508
|
|
|
5,463
|
|
|
1,605
|
|
|
0.16
|
|
Second 2016
|
|
33,148
|
|
|
5,736
|
|
|
1,461
|
|
|
0.14
|
|
First 2016
|
|
32,933
|
|
|
5,817
|
|
|
1,543
|
|
|
0.15
|
|