<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange -
- -
Act of 1934
For the quarterly period ended March 31, 2000
Commission file Number 0-6508
IEC ELECTRONICS CORP.
-----------------------------------------------------
(Exact name of registrant as specified in its charter.)
Delaware 13-3458955
----------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
105 Norton Street, Newark, New York 14513
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices (Zip Code)
(315) 331-7742
- --------------------------------------------------------------------------------
Registrant's telephone number, including area code:
Indicate by check mark whether the registrant(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 [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:
Common Stock, $0.01 Par Value - 7,600,048 shares as of May 9, 2000.
Page 1 of 14
<PAGE>
PART 1 FINANCIAL INFORMATION
Page
Number
Item 1. Financial Statements
Consolidated Balance Sheets as of :
March 31, 2000 (Unaudited) and September 30, 1999............. 3
Consolidated Statements of Operations for the three months
ended: March 31, 2000 (Unaudited) and March 26, 1999
(Unaudited)................................................... 4
Consolidated Statements of Operations for the six months ended:
March 31, 2000 (Unaudited) and March 26, 1999 (Unaudited)..... 5
Consolidated Statement of Cash Flows for the six months ended:
March 31, 2000 (Unaudited) and March 26, 1999 (Unaudited)..... 6
Notes to Consolidated Financial Statements (Unaudited)........ 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.................... 10
PART II
Item 1. Legal Proceedings.............................................. 13
Item 2. Changes in Securities.......................................... 13
Item 3. Defaults Upon Senior Securities................................ 13
Item 4. Submission of Matters to a Vote of Security Holders............ 13
Item 5. Other Information.............................................. 13
Item 6. Exhibits and Reports on Form 8-K............................... 13
Signature ............................................................. 14
Page 2 of 14
<PAGE>
<TABLE>
IEC ELECTRONICS CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000 AND SEPTEMBER 30, 1999
(in thousands, except for share data)
<CAPTION>
MARCH 31,2000 SEPTEMBER 30,1999
---------------- ------------------
ASSETS (Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ - $ 4,007
Accounts receivable 37,401 23,734
Inventories 37,069 30,728
Income taxes receivable - 2,966
Other current assets 533 516
--------- ----------
Total current assets 75,003 61,951
--------- ----------
Property, Plant and Equipment, net 17,451 21,778
---------- ----------
Other Assets:
Cost in excess of net assets acquired, net 9,996 10,173
Other assets 304 17
----------- ----------
Total other assets 10,300 10,190
----------- ----------
$ 102,754 $ 93,919
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt 2,103 1,053
Accounts payable 29,688 21,819
Accrued payroll and related expenses 2,745 3,867
Accrued insurance 1,406 798
Other accrued expenses 1,232 990
-------- -------
Total current liabilities 37,174 28,527
-------- -------
Long-Term Debt 18,459 16,547
-------- -------
Shareholders' Equity:
Preferred stock, par value $.01 per share
Authorized - 500,000 shares
Outstanding - 0 shares - -
Common stock, par value $.01 per share
Authorized - 50,000,000 shares
Outstanding - 7,600,048 shares and
7,583,965 shares, respectively 76 76
Additional paid-in capital 38,679 38,566
Retained earnings 8,812 10,642
Accumulated other comprehensive income -
Cumulative translation adjustment (35) (28)
Treasury Stock, at cost - 20,573 shares (411) (411)
--------- ---------
Total shareholders' equity 47,121 48,845
--------- ---------
$ 102,754 $ 93,919
======== =========
<FN>
The accompanying notes to unaudited consolidated financial statements
are an integral part of these balance sheets
</FN>
</TABLE>
Page 3 of 14
<PAGE>
<TABLE>
IEC ELECTRONICS CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND MARCH 26, 1999
(in thousands, except share data)
<CAPTION>
3 MONTHS ENDED 3 MONTHS ENDED
MARCH 31, 2000 MARCH 26, 1999
-------------- ------------------
(Unaudited) (Unaudited)
<S> <C> <C>
Net sales $64,338 $34,854
Cost of sales 61,971 34,380
------- -------
Gross profit 2,367 474
Selling and administrative expenses 3,281 2,775
Reversal of restructuring charges (857) -
------- -------
Operating loss (57) (2,301)
Interest expense (553) (122)
Other (expense)income, net (1) 4
------- -------
Loss before benefit
from income taxes (611) (2,419)
Benefit from income taxes (5) (659)
------- -------
Net Loss $ (606) ($1,760)
======= =======
Net loss per common and common equivalent share:
Basic ($0.08) ($0.23)
Diluted ($0.08) ($0.23)
Weighted average number of common and common equivalent shares outstanding:
Basic 7,581,720 7,562,503
Diluted 7,581,720 7,562,503
<FN>
The accompanying notes to unaudited consolidated financial statements
are an integral part of these financial statements.
</FN>
</TABLE>
Page 4 of 14
<PAGE>
<TABLE>
IEC ELECTRONICS CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2000 AND MARCH 26, 1999
(in thousands, except share data)
<CAPTION>
6 MONTHS ENDED 6 MONTHS ENDED
MARCH 31, 2000 MARCH 26, 1999
-------------- ------------------
(Unaudited) (Unaudited)
<S> <C> <C>
Net sales $108,108 $71,135
Cost of sales 105,712 71,263
------- --------
Gross profit(loss) 2,396 (128)
Selling and administrative expenses 6,188 5,372
Reversal of restructuring charges (857) -
------- --------
Operating loss (2,935) (5,500)
Interest expense (914) (276)
Life insurance proceeds 2,000 -
Other income(expense), net 14 (9)
------- --------
Loss before benefit
from income taxes (1,835) (5,785)
Benefit from Income taxes (5) (1,720)
------- --------
Net loss $(1,830) $(4,065)
======= ========
Net loss per common and equivalent share:
Basic ($0.24) ($0.54)
Diluted ($0.24) ($0.54)
Weighted average number of common and common equivalent shares outstanding:
Basic 7,581,720 7,562,503
Diluted 7,581,720 7,562,503
<FN>
The accompanying notes to unaudited consolidated financial statements
are an integral part of these financial statements.
</FN>
</TABLE>
Page 5 of 14
<PAGE>
<TABLE>
IEC ELECTRONICS CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 2000 AND MARCH 26, 1999
(in thousands)
<CAPTION>
6 MONTHS 6 MONTHS
ENDED ENDED
MARCH 31, MARCH 26,
2000 1999
----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,830) ($4,065)
Adjustments to reconcile net loss
to net cash (used in)provided by operating activities:
Depreciation and amortization 3,795 5,178
Amortization of cost in excess of net assets acquired 177 241
Common stock issued under Directors Stock Plan 11 -
Changes in operating assets and liabilities:
(Increase) decrease
Accounts receivable (13,667) 4,442
Inventories (6,341) (1,029)
Income taxes receivable 2,966 (1,865)
Other current assets (17) (816)
Other assets (294) 24
Increase (Decrease)
Accounts payable 7,869 592
Accrued payroll and related expenses (1,122) (1,468)
Accrued income taxes - -
Accrued insurance 608 (389)
Other accrued expenses 344 (123)
------- --------
Net cash (used in)provided by operating activities (7,501) 722
------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (529) (961)
Proceeds from sale of building - 220
Proceeds from sale of equipment 1,134 -
-------- --------
Net cash provided by(used in) investing activities 604 (741)
-------- --------
Cash Flows from Financing Activities:
Borrowings under line of credit agreements 80,705 (2,000)
(Repayments)under line of credit agreements (77,743)
Principal payments on long-term debt - (158)
-------- ---------
Net cash provided by(used in) financing activities 2,962 (2,158)
-------- ---------
Net decrease in cash and cash equivalents (3,935) (2,177)
Effect of exchange rate changes (72) (23)
Cash and cash equivalents at beginning of period 4,007 2,278
-------- ---------
Cash and cash equivalents at end of period - $78
======== =========
Supplemental Disclosures of Cash Flow Information:
Cash paid(received)during the period for:
Interest $ 914 $307
======== =========
Income taxes ($2,954) $144
======== =========
Supplemental Disclosures of Noncash Information:
During the six monthd ended March 31, 2000, the Company issued shares of its
common stock in the amount $102 in the settlement of an accrued
liability.
<FN>
The accompanying notes to unaudited consolidated financial statements
are an integral part of these financial statements.
</FN>
</TABLE>
Page 6 of 14
<PAGE>
IEC ELECTRONICS CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(1) Business and Summary of Significant Accounting Policies
Business
- --------
IEC Electronics Corp. (IEC) is an independent contract manufacturer of complex
printed circuit board assemblies and electronic products and systems. IEC offers
its customers a wide range of manufacturing services, on either a turnkey or
consignment basis, including material procurement and control, manufacturing and
test engineering support, statistical quality assurance and complete resource
management.
Consolidation
- -------------
The consolidated financial statements include the accounts of IEC Electronics
Corp.,and its wholly-owned subsidiaries, IEC Electronics-Edinburg, Texas Inc.
(Edinburg), IEC Arab, Alabama Inc.(Arab) until January 26, 2000 when each of
Edinburg and Arab merged into IEC and also includes from August 31, 1998, IEC
Electronics-Ireland Ltd(Longford), (collectively, the Company). In December
1999, the Company closed its underutilized Longford operations and transferred
some of the customers served there to its other operations in New York and
Texas. In August 1998, the Company announced plans to close its Arab operations
and to transfer many of the customers served in that facility to the Company's
other operations in New York and Texas. All significant intercompany
transactions and accounts have been eliminated.
Revenue Recognition
- -------------------
The Company recognizes revenues upon shipment of product.
Cash and Cash Equivalents
- -------------------------
Cash and cash equivalents include money market and bank account balances. The
Company's cash and cash equivalents are held and managed by institutions which
follow the Company's investment policy. The fair value of the Company's
financial instruments approximates carrying amounts due to the relatively short
maturities and variable interest rates of the instruments, which approximate
current market interest rates.
Inventories
- -----------
Inventories are stated at the lower of cost (first-in, first-out) or market. The
major classifications of inventories are as follows at period end (in
thousands):
March 31, 2000 September 30, 1999
---------------- ----------------
(Unaudited)
Raw materials $25,526 $23,226
Work-in-process 11,543 7,502
---------------- ----------------
$37,059 $30,728
================ ================
Foreign Currency Translation
- ----------------------------
The assets and liabilities of the Company's foreign subsidiary are translated
based on the current exchange rate at the end of the period for the balance
sheet and a weighted-average rate for the period of the consolidated statement
of operations. Translation adjustments are recorded as a separate component of
equity. Transaction gains or losses are included in operations.
Page 7 of 14
<PAGE>
IEC ELECTRONICS CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
Unaudited Financial Statements
- ------------------------------
The accompanying unaudited financial statements as of March 31, 2000, and for
the three and six months ended March 31, 2000 have been prepared in accordance
with generally accepted accounting principles for the interim financia1
information. In the opinion of management, all adjustments considered necessary
for a fair presentation, which consist solely of normal recurring adjustments
have been included. The accompanying financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's September 30, 1999 Annual Report on Form 10-K.
Net Loss per Common and Common Equivalent Share
- ------------------------------------------------
(in thousands, except for share and per share data)
(Loss)Income Shares Per Share
Three Months Ended (Numerator) (Denominator) Amount
- -------------------------------------------------------------------------------
March 31, 2000
Basic EPS
Loss available to common Shareholders ($606) 7,581,720 ($0.08)
====================================
March 26, 1999
Basic EPS
Loss available to common Shareholders ($1,760) 7,562,503 ($0.23)
====================================
(Loss)Income Shares Per Share
Six Months Ended (Numerator) (Denominator) Amount
- -------------------------------------------------------------------------------
March 31, 2000
Basic EPS
Loss available to common Shareholders ($1,830) 7,581,720 ($0.24)
====================================
March 26, 1999
Basic EPS
Loss available to common Shareholders
and assumed conversions ($4,065) 7,562,503 ($0.54)
====================================
Basic EPS was computed by dividing reported earnings available to common
shareholders by weighted-average common shares outstanding during the three and
six month periods. No reconciliation is provided as the effect would be
antidilutive.
Page 8 of 14
<PAGE>
IEC ELECTRONICS CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(2) Comprehensive Income
--------------------
The Company adopted Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income"(SFAS No. 130)on October 1, 1998. SFAS No. 130
requires comprehensive income and its components to be presented in the
financial statements. Comprehensive income, which includes net (loss) income
and foreign currency translation adjustments, was as follows for the three
and six months ended March 31, 2000 and March 26, 1999.(in thousands):
3 MONTHS 3 MONTHS
ENDED ENDED
March 31, March 26,
2000 1999
---------- -----------
(Unaudited) (Unaudited)
Net loss $ (606) $ (1,760)
Other comprehensive income:
Foreign currency translation adjustments (283) (160)
---------- -----------
Comprehensive loss $ (889) $ (1,920)
========== ===========
6 MONTHS 6 MONTHS
ENDED ENDED
March 31, March 26,
2000 1999
---------- -----------
(Unaudited) (Unaudited)
Net loss $ (1,830) $ (4,065)
Other comprehensive income:
Foreign currency translation adjustments (7) (186)
---------- -----------
Comprehensive loss $ (1,837) $ (4,251)
========== ===========
(3) Financing Arrangements
----------------------
On December 28, 1999, the Company refinanced its existing credit facility with a
new bank group. As amended on March 30, 2000, the new agreement is a three year
secured asset based facility for $35.0 million. The credit facility consists of
two components, the first a $25.0 million revolving credit facility based on
eligibility criteria for receivables and inventory. Amounts borrowed are limited
to 85 percent of qualified accounts receivable, 20 percent of raw materials,
and 30 percent of finished goods inventory, respectively. The second component
consists of a $10 million three-year term loan with monthly principal
installments based on a five year amortization beginning in April 2000. At
March 31, 2000, $20.6 million was outstanding with $13.2 million available
under the new three year secured asset based facility
(4) Life Insurance Proceeds
-----------------------
The Company's President and Chief Executive Officer died suddenly on December
11, 1999. In the second quarter of fiscal 2000, the Company received non-taxable
income from insurance proceeds of approximately $2.0 million
Page 9 of 14
<PAGE>
IEC ELECTRONICS CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(5) Litigation
-----------
The Company is subject to legal proceedings and claims which arise in the
ordinary course of its business. Although occasional adverse decisions (or
settlements) may occur, the Company believes that the final disposition of such
matters will not have a material adverse effect on the financial position or
results of operations of the Company.
(6) ACCOUNTING PRONOUNCEMENTS:
-------------------------
In June 1999, the Financial Accounting Standards Board issued SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities - Deferral of
Effective Date of FASB Statement No. 133 for one year". With issuance of SFAS
No. 137, the Company is required to adopt SFAS No. 133 on a prospective basis
for interim periods and fiscal years beginning March 1, 2001. The Company
believes that the effect of adoption of SFAS No. 133 will not be material based
on the Company's current risk management strategies.
(7) Longford Operations
-------------------
On February 2000, a third party purchased from the Company certain assets of
Longford and assumed the lease of the Longford facility. This resulted in a
benefit of $857 thousand from the reversal of a previously established
restructuring reserve.
Management's Discussion and Analysis of Financial Condition and Results
- ------------------------------------------------------------------------
of Operations
- ------------------------------------
Results of Operations - Three Months Ended March 31, 2000, Compared to the
- --------------------------------------------------------------------------
Three Months Ended March 26, 1999.
- ----------------------------------
Net sales for the three month period ended March 31, 2000, were $64.3 million,
compared to $34.8 million for the comparable period of the prior year, an
increase of 84.7 percent. The increase in sales is primarily due to an increase
in demand from the Company's two largest customers. Turnkey sales were 97
percent of net sales in the quarter as compared to 96 percent for the comparable
period of the prior year.
Gross profit was $2.4 million or 3.7 percent of sales for the three month period
ended March 31, 2000 versus $474 thousand or 1.4 percent of sales in the
comparable period of the prior year. The increase was due to higher sales volume
and greater absorption of fixed manufacturing overhead costs.
Selling and administrative expenses increased to $3.3 million in the three
months ended March 31, 2000, from $2.8 million in the comparable period of the
prior fiscal year. This increase is primarily due to increases in sales
commissions, salary and other expenses. As a percentage of net sales, selling
and administrative expenses decreased to 5.1 percent from 8.0 percent in the
same quarter of the prior year.
Net loss for the quarter was ($606) thousand versus ($1.8) million in the
comparable quarter of the prior year. Diluted loss per share was ($0.08)as
compared to diluted loss per share of ($0.23) in the comparable period of the
prior fiscal year. Excluding the reversal of the previously established
restructuring charge for the closure of the Longford facility of $857 thousand,
the net loss would have been ($1.5) million or ($0.19) per share in the current
period.
Higher accounts receivable levels are reflective of the increased volume of
sales.
At quarter-end the inventory level was $37.1 million, up from $30.7 million
since the beginning of the fiscal year. This represents annualized turnover of
5.7. Inventory growth versus expected increasing production levels is currently
a major focus item at IEC.
Page 10 of 14
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results
- ------------------------------------------------------------------------
of Operations
- ------------------------------------
Results of Operations - Six Months Ended March 31, 2000, Compared to Six
- ------------------------------------------------------------------------
Months Ended March 26, 1999.
- ----------------------------
Net sales for the six month period ended March 31, 2000, were $108.1 million,
compared to $71.1 million for the comparable period of the prior year, an
increase of 52.0%. Turnkey sales were 97 percent of net sales in the six month
period as compared to 95 percent for the comparable period of the prior year.
Turnkey sales for the six months were affected by the unusually high material
content of a large job.
Gross profit was $2.4 million or 2.2 percent of sales for the six month period
ended March 31, 2000 versus a loss of $128 thousand or (0.2) percent of sales
in the comparable period of the prior year. The increase was due to higher sales
volume and greater absorption of fixed manufacturing overhead and direct labor
productivity gains.
Selling and administrative expenses increased to $6.2 million in the six months
ended March 31, 2000, from $5.4 million in the comparable period of the prior
fiscal year. This increase is primarily due to increases in sales commissions,
salary and other expenses. As a percentage of sales, selling and administrative
expenses decreased to 5.7 percent from 7.6 percent in the same period of the
prior year.
Net loss for the six month period was ($1.8) million versus ($4.1) million in
the comparable period of the prior year. Diluted loss per share was ($0.24) as
compared to diluted loss per share of ($0.54) in the comparable period of the
prior fiscal year. Excluding the reversal of the previously established
restructuring charge for the closure of the Longford facility of $857 thousand,
and the life insurance proceeds of $2.0 million, the net loss would have been
($4.7) million or ($0.62) per share in the current period.
Higher accounts receivable levels are reflective of the increased volume of
sales.
Liquidity and Capital Resources
- -------------------------------
Net sales for the month of March 2000 were $28.4 million, representing 44.2
percent of the total net sales for the three month period ending March 31, 2000.
Net sales for the month of March 1999 were $14.0 million, representing 40% of
the total net sales for the three month period ending March 26, 1999. The
Company operates on a fiscal quarter consisting of four weeks in the first and
second months and five weeks in the third month.
On December 28, 1999, the Company refinanced its existing credit facility with a
new bank group. As amended on March 30, 2000, the new agreement is a three year
secured asset based facility for $35.0 million. The credit facility consists of
two components, the first a $25.0 million revolving credit facility based on
eligibility criteria for receivables and inventory. Amounts borrowed are limited
to 85 percent of qualified accounts receivable, 20 percent of raw materials,
and 30 percent of finished goods inventory, respectively. The second component
consists of a $10 million three-year term loan with monthly principal
installments based on a five year amortization beginning in April 2000. At
March 31, 2000, $20.6 million was outstanding with $13.2 million available
under the new three year secured asset based facility
The Company believes that its funds generated from operations and its existing
credit facilities will be sufficient for the Company to meet its capital
expenditure and working capital needs for its operations as presently conducted.
As part of its overall business strategy, the Company may from time to time
evaluate acquisition opportunities. The funding of these future transactions, if
any, may require the Company to obtain additional sources of financing.
The impact of inflation on the Company's operations has been minimal due to the
fact that it is able to adjust its bids to reflect any inflationary increases in
cost.
Page 11 of 14
<PAGE>
Year 2000 Conversion
- --------------------
The Company has completed its Year 2000 Project ("Y2K") as scheduled, including
addressing leap year calendar date calculation concerns. The possibility of
significant interruptions of normal operations has been reduced. As of March 31,
2000, the Company's products, computing, and communications infrastructure
systems have operated without Y2K related problems and appear to be Y2K ready.
The Company is not aware that any of its major customers or third-party
suppliers have experienced significant Y2K related problems.
The Company believes that all of its critical systems are Y2K ready. However,
this is not a guarantee that the Company has discovered all possible failure
points. Specific factors contributing to this uncertainty include failure to
identify all systems, non-ready third parties whose systems and operations
impact the Company, and other similar uncertainties.
Contingency plans are complete and will be implemented if required. Should a
significant problem occur, the Company would revert to standard manual
contingency procedures to continue operation until the problem is corrected.
To date, the Company has spent an estimated $500,000 on this project. The
funding for this project comes from operations and working capital. None of the
Company's other mission critical information projects have been delayed due to
the implementation of the Y2K project.
Recently Issued Accounting Standards
- ------------------------------------
In June 1998, Statement of Financial Accounting Standards No.137, "Accounting
for Derivative Instruments and Hedging Activities - Deferral of Effective Date
of FASB Statement No. 133",was issued. With issuance of SFAS No.137, the Company
is required to adopt SFAS No. 133 on a propective basis for interim periods and
fiscal years beginning March 1, 2001. The Company believes that the effect of
adoption of SFAS No.133 will not be material based on the Company's current risk
management strategies.
Forward-looking Statements
- --------------------------
Except for historical information, statements in this quarterly report are
forward-looking made pursuant to the safe harbor created by the Private
Securities Litigation Reform Act of 1995 and are therefore subject to certain
risks and uncertainties including timing of orders and shipments, availability
of material, product mix and general market conditions that could cause actual
results to differ materially from those projected in the forward looking
statements. Investors should consider the risks and uncertainties discussed in
the September 30, 1999, Form 10K and its other filings with the Securities and
Exchange Commission.
Page 12 of 14
<PAGE>
PART II. OTHER INFORMATION
Item 1 -- Legal Proceedings
During fiscal 1999, the Company received a Notice of Infringement, along
with an offer of a license from the Lemelson Medical, Educational and Research
Foundation, Limited Partnership ("Lemelson Foundation"). The Notice alleged that
the Company had infringed certain patents of the Lemelson Foundation relating to
machine vision and bar code technology. In February 2000, the Company settled
the infringement claim and received a paid-up license.
Item 2 -- Changes in Securities
(c) During the fiscal quarter ending March 31, 2000, the Company issued
securities without registration under the Securities Act as follows: On February
29, 2000, the Company issued 35,000 restricted shares of the Company's common
stock. None of the restricted shares may be sold in quantities exceeding 5,000
in any calendar quarter. Exemption from registration was claimed under Section 4
(2) of the Securities Act regarding transactions by an issuer not involving any
public offering.
Item 3 -- Defaults Upon Senior Securities
None.
Item 4 -- Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Stockholders was held on Febuary 23, 2000
(b) The names of the directors elected at the Annual Meeting are as follows:
David J. Beaubien
Thomas W. Folger
W. Barry Gilbert
Robert P.B. Kidd
Eben S. Moulton
James C. Rowe
Russell E. Stingel
Justin L. Vigdor
(c)(i) At the Annual Meeting, the tabulation of the votes with respect to
each nominee was as follows:
Nominee Votes FOR Authority Withheld
------- --------- ------------------
David J. Beaubien 6,235,035 158,841
Thomas W. Folger 6,236,635 157,241
W. Barry Gilbert 6,235,335 158,041
Robert P.B. Kidd 6,235,835 158,041
Eben S. Moulton 6,237,335 156,541
James C. Rowe 6,234,535 159,341
Russell E. Stingel 6,235,085 158,791
Justin L. Vigdor 6,234,735 159,141
Item 5 -- Other Information
None.
Item 6 -- Exhibits and Reports on Form 8-K
a. Exhibits
10.1 Amendment No. 1 dated as of March 30, 2000 to Loan and Security
Agreement originally dated as of December 28, 1999 among IEC ELECTRONICS
CORP. ("IEC") and IEC ELECTRONICS-EDINBURG, TEXAS INC. ("IEC-Edinburg")
(collectively, "Debtor") and HSBC BANK USA, as Agent ("Agent") and HSBC
BANK USA ("HSBC Bank") and GENERAL ELECTRIC CAPITAL CORPORATION ("GE
Capital") as Lenders.
10.2 Retirement and Deferred Compensation Agreement dated September 30, 1999
between Russell E. Stingel and IEC Electronics Corp.
b. Reports on Form 8-K
None.
Page 13 of 14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IEC ELECTRONICS CORP.
REGISTRANT
Dated: May 9, 2000 /s/Russell E. Stingel
-----------------------------
Russell E. Stingel
Chairman of the Board and
Interim Chief Executive Officer
Dated: May 9, 2000 /s/Richard L. Weiss
------------------------------
Richard L. Weiss
Vice President and
Chief Financial Officer
Page 14 of 14
<PAGE>
AMENDMENT NO. 1
TO
LOAN AND SECURITY AGREEMENT
Amendment No. 1 dated as of March 30, 2000 to Loan and Security
Agreement originally dated as of December 28, 1999 among IEC ELECTRONICS CORP.
("IEC") and IEC ELECTRONICS-EDINBURG, TEXAS INC. ("IEC-Edinburg") (collectively,
"Debtor") and HSBC BANK USA, as Agent ("Agent") and HSBC BANK USA ("HSBC Bank")
and GENERAL ELECTRIC CAPITAL CORPORATION ("GE Capital") as Lenders.
BACKGROUND
1. Debtor, Agent and Secured Party entered into a Loan and Security
Agreement dated as of December 28, 1999 ("Agreement"). All capitalized terms not
otherwise defined herein shall have the meanings set forth in the Agreement.
2. Since the date of the Agreement, IEC-Edinburg merged into IEC with IEC
being the surviving entity and becoming the sole "Debtor" under the Agreement..
3. Debtor has requested that the Maximum Limit and the sub-limit for the
IEC Inventory Borrowing Base be raised to $25,000,000 and $5,000,000
respectively, and has requested that Agent and the Lenders amend certain
financial covenants in the Agreement, and make certain additional changes to the
Agreement. In response to Debtor's request and subject to all of the terms and
conditions set forth herein, the Agent and the Lenders are willing to make those
amendments and additional changes to the Agreement as set forth below.
NOW, THEREFORE, Debtor, the Agent and the Lenders for good and
valuable consideration, receipt of which is hereby acknowledged, and in
contemplation of the foregoing, hereby agree as follows:
A. Conditions. The amendments contained herein shall be
granted upon satisfaction of the following terms and conditions:
1. Debtor shall have paid to Agent for the benefit of
the Lenders an amendment fee of $25,000 in consideration of the
agreements herein.
2. Debtor shall have executed, and shall have caused IEC-Mexico and
IEC-FSC to have executed, this Agreement, and four executed duplicate originals
thereof shall have been delivered to Agent.
<PAGE>
- 6 -
B. Amendments. Debtor and Secured Party agree that upon
fulfillment of the conditions set forth in Section A above, the
Agreement and the Schedule are amended in the following respects:
1. The existing Section 2.1(a) of the Agreement is
deleted in its entirety as of the date hereof and replaced by the
following:
"2.1. (a) REVOLVING CREDIT. Each Lender
severally, but not jointly, agrees, subject to the
terms of this Agreement to lend their Pro-Rata
Share of the maximum amount of Advances ("Maximum
Limit") at any one time outstanding as set forth
below ("Revolving Credit"):
(i) From the date hereof, the Maximum Limit shall be
$25,000,000 which, if fully advanced, would be apportioned
between the Lenders as follows:
HSBC Bank - $13,750,000
GE Capital - $11,250,000".
2. The existing Section 11.1(r) of the Agreement is
deleted in its entirety as of the date hereof and replaced by the
following:
"(r) Lock Box. If any Debtor shall (i) notify or otherwise
direct its Account Debtors to remit payments directly to such
Debtor, to any party other than Agent, or to a lock box other
than the Lock Box Numbers 2953 and 2843 located at the United
States Post Office at 1200 William Street, Buffalo, New York
("Lock Box"); or (ii) revoke Agent's power of agency or
otherwise preclude Agent's access to the Lock Box; or (iii) the
letter agreement between Debtors and Agent dated of even date
herewith related to the Lock Box and/or agreements attached
thereto terminate or cease to be in full force and effect."
3. Item 1 of the Schedule to the Agreement is hereby
deleted in its entirety as of the date hereof and replaced by the
following:
"1. Borrowing Capacityss.1.1(e))
Borrowing Capacity at any time shall be the net amount
determined by taking the lesser of the following amounts:
(A) The applicable Maximum Limit of $25,000,000;
or
<PAGE>
(B) The amount equal to the sum of the IEC
Borrowing Capacity (as defined below)
and subtracting from the lesser of (A) and (B) above, the sum of
(a) banker's acceptances, plus (b) letters of guaranty, plus (c)
Letters of Credit.
`IEC Borrowing Capacity' at any time shall be the amount
equal to the sum of:
(i) up to 85% of the IEC Receivables
Borrowing Base; and
(ii) the amount of the IEC Inventory Borrowing Base;
provided however, for calculation purposes, in no
event shall the amount of the IEC Inventory Borrowing
Base be greater than $4,000,000 prior to the date when
Debtor has improved its Inventory reporting
capabilities so as to be able to report raw material
Inventory on a segmented basis in a manner
satisfactory to Lenders, and on and after such date in
no event shall the amount of the IEC Inventory
Borrowing Base be greater than $5,000,000.
The Maximum Limit is subject to reduction on the terms
hereafter set forth:
(i) Debtor shall only be permitted to elect a reduction by
giving Agent 20 days prior written notice.
(ii) Debtor may exercise the election to reduce the Maximum
Limit only twice during each calendar year during the
term of this Agreement.
(iii)The amount of each elected reduction must equal
$500,000 or a whole multiple thereof as selected by
Debtor, and the aggregate amount of all reductions
cannot exceed $5,000,000 in any one calendar year.
(iv) The reduction of the Maximum Limit shall be effective
on the first day of the month following the end of the
twenty day prior notice period, provided Debtor has
paid on or before such anticipated effective date a
reduction fee equal to 1/8% of the amount of the
reduction."
<PAGE>
4. The Pricing Grids set forth in item 18(g) of the Schedule to the
Agreement under the heading "PRICING AFTER A PRICING EVENT" are deleted in their
entirety as of the date hereof and replaced with the following new Pricing
Grids:
"PRICING AFTER A PRICING EVENT
A. ADVANCES
Consolidated
Debt-to-Worth
Ratio Prime Rate Option
Libor Rate Option
<= 1.00 Prime Rate
Libor Rate plus
185 BP
=> 1.01 and <= 1.25 Prime Rate
Libor Rate plus
200 BP
=> 1.26 and <= 1.50 Prime Rate plus 1/4%
Libor Rate plus
300 BP
=> 1.51 and <= 2.00 Prime Rate plus 1/2%
Libor Rate plus
325 BP
=> 2.01 Prime Rate plus 3/4%
Libor Rate plus
350 BP
A. TERM LOAN
Debt-to-Worth
Ratio Prime Rate Option
Libor Rate Option
<= 1.00 Prime Rate plus 1/8%
Libor Rate plus
200 BP
=> 1.01 and <= 1.25 Prime Rate plus 1/8%
Libor Rate plus
215 BP
=> 1.26 and <= 1.50 Prime Rate plus 1/2%
Libor Rate plus
325 BP
=> 1.51 and <= 2.00 Prime Rate plus 3/4%
Libor Rate plus
350 BP
=> 2.01 Prime Rate plus 1%
Libor Rate plus
375 BP".
5. Item 30(c) of the Schedule to the Agreement is hereby deleted in
its entirety as of the date hereof and replaced with the following new text:
<PAGE>
"(c) Maximum Debt to Tangible Net Worth: Debtor shall maintain a
ratio (`Debt-to-Worth Ratio') of total consolidated
liabilities (excluding the principal balance of any debt
that is subordinated to the Indebtedness in a manner
satisfactory to Agent) to consolidated Tangible Net Worth
(as defined above) of no greater than the ratio set forth
below during the time periods set forth below:
Ratio Time Period(s)
2.15 3/30, 6/30 and 9/30, 2000
2.00 12/31, 2000 and 3/30, 6/30 and
9/30, 2001
1.75 12/31, 2001 and 3/30, 6/30 and 9/30,
2002 and thereafter".
6. Item 30(d) of the Schedule to the Agreement is
hereby deleted in its entirety as of the date hereof and replaced
with the following:
"(d) Minimum Net Income Before Taxes: Debtor
shall maintain consolidated Net Income Before
Taxes of at least the amount set forth below
as of the dates set forth below:
Amount (000's omitted) Date
($2,250) 9/30/00
$ 700 9/30/01
$ 1,000 9/30/02".
C. Reaffirmations.
1. The Agreement, except as specifically modified hereby, shall
remain in full force and effect and Debtor hereby reaffirms the Agreement, as
modified by this Amendment, and all documents executed and delivered to Agent
and the Lenders in connection with the Agreement.
2. IEC-Mexico and IEC-FSC, by their execution hereof, reaffirm the
execution and delivery of their respective Guaranties dated December 28, 1999
and each agrees that its respective guaranty shall continue in full force and
effect and shall be applicable to all indebtedness, obligations and liabilities
of Debtor to Agent and the Lenders, including without limitation, all
indebtedness evidenced by or arising under the Agreement, as modified by this
Amendment.
D. Other Provisions.
1. Debtor agrees to pay on demand by Agent all expenses of Agent,
including without limitation, fees and disbursements of counsel for Agent, in
connection with the transactions contemplated by this Amendment, the
negotiations for and preparation of this Amendment and any other documents
related hereto, and the enforcement of the rights of Agent and the Lenders under
the Agreement as amended by this Amendment.
<PAGE>
2. This Amendment shall be governed by and construed under the
internal laws of the State of New York, as the same may from time to time be in
effect, without regard to principles of conflicts of law.
Agreed to as of the date first set forth above.
IEC ELECTRONICS CORP. HSBC BANK USA, as Agent
as Debtor and Guarantor
By:
By:________________________________
Richard L. Weiss, Vice President Douglas D.
Smith
and Chief Financial Officer Vice President
(6964)
GENERAL ELECTRIC CAPITAL HSBC BANK USA, as a Lender
CORPORATION, as a Lender
By:_______________________________
By:
Name:____________________________ Douglas D. Smith
Duly Authorized Signatory Vice President
(6964)
CONSENTED TO AND AGREED AS OF THIS ___ DAY OF MARCH, 2000
IEC ELECTRONICOS, S. de R.L. de C.V. IEC ELECTRONICS FOREIGN
SALES
as Guarantor CORPORATION, as Guarantor
By:________________________________
By:________________________________
Lawrence W. Swol, Chairman Richard L. Weiss,
Vice President
and Chief Financial
Officer
BFLO Doc # 987189.3
<PAGE>
7
RETIREMENT
AND
DEFERRED COMPENSATION
AGREEMENT
THIS RETIREMENT AND DEFERRED COMPENSATION AGREEMENT ("Agreement"), dated
as of September 30, 1999, sets forth the terms of the agreement between Russell
E. Stingel ("Executive"), residing at 102 Grandview Avenue, Fairport, New York
14450, and IEC Electronics Corp. ("Company"), located at 105 Norton Street,
Newark, New York 14513, relating to the cessation of Executive's employment with
the Company and to the payments to Executive upon retirement.
WHEREAS, Executive has been associated with the Company for 22 years, most
recently as Chief Executive Officer; and
WHEREAS, Executive desires to retire as an officer and
employee on
September 30, 1999; and
WHEREAS, the parties wish to enter into this Agreement for the purpose of
addressing all issues relating to Executive's termination of employment with the
Company.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
described, and the good and valuable consideration to which Executive is not
otherwise entitled, Company and Executive agree as follows:
1. Retirement and Cessation of Employment. The parties
hereby agree that Executive's voluntary retirement and
the termination of his employment and all positions and
offices with the Company and its subsidiaries, except
as a member of the Boards of Directors of the Company
and its subsidiaries, will become effective as of the
close of business on September 30, 1999 ("Employment
Termination Date").
2. Board of Directors of the Company. Executive shall
continue to serve as a director on the Company's Board
of Directors until the next Annual Meeting of
Stockholders and shall continue to serve as a director
thereafter if elected by the stockholders, subject,
however, to the provisions of Article III of the
Company's By-laws relating to the election of directors
and to other corporate governance policies governing
nominations and qualifications applicable to all
directors. Until a successor is elected, Executive
shall also continue to serve as Chairman of the Board
of Directors of the Company and shall have such duties
and powers as may be assigned to him by the By-laws of
the Company or by the Board of Directors. As a
director, Executive shall be entitled to the same
rights, privileges and remuneration as other
non-employee directors.
3. Retirement Benefits. The Company hereby agrees to pay
or provide to Executive the following benefits in
consideration of the agreements contained in Sections
5, 6, 7, 8 and 9 of this Agreement:
(a) The Company will provide Executive with 30 days paid vacation,
over and beyond any accrued and unused vacation to which he is
otherwise entitled.
(b) The Company will transfer to Executive the First
Transamerica Life Policy (# 76004445) which the
Company owns on Executive's life in the face amount
of $1,000,000 and the Company will make a one-time
payment of premiums in the amount of approximately
$50,000, which action will provide Executive with a
paid-up life insurance policy in the amount of
$250,000.
(c) The Company will pay all premiums to allow Executive to continue
to receive health insurance coverage upon the same terms and
conditions as immediately prior to the Employment Termination
Date, subject to any changes to the Company's coverage generally
provided to Company's employees. Such coverage shall continue
until October 1, 2002.
(d) The Company will transfer to Executive the ownership of the
Company-owned automobile currently used by Executive and the
Company will continue to pay all operating costs associated with
the automobile, in a manner consistent with Company policy, until
October 1, 2000.
(e) The Company will forgive the loan made to Executive on August 21,
1998 in the amount of $37,462.50 and will forgive all interest
accrued thereon and shall return to Executive the shares of
common stock of the Company deposited as collateral security.
(f) Executive heretofore has been granted stock options as set
forth on the attached Exhibit A (the "Options"),
which by their terms will expire three months after
the Employment Termination Date. Some of the
Options have not fully vested. In consideration of
Executive's agreement to release the Company as
described in Section 5, not to disclose
confidential information as described in Section 6
and not to compete as described in Section 7, to
provide advisory services as described in Section 8
and to provide continuing cooperation as described
in Section 9, the Board of Directors of the Company
will cause all unvested Options to immediately
vest, and shall extend the expiration date on the
Options to allow Executive to exercise any or all
such Options at their set option prices anytime on
or before the normal expiration dates set forth in
the respective Options. However, as the result of
extending the period in which Executive may
exercise the options, Executive acknowledges that
the Company has advised him that the incentive
stock options will become non-qualified stock
options. There is no income recognition on the
exercise of an incentive stock option but, on the
exercise of a non-qualified stock option, Executive
would have to recognize as taxable income in the
year of exercise an amount equal to the difference
between the fair market value of Company stock on
the date of exercise and the exercise price
Executive pays.
(g) Except as specifically provided in this Agreement, all
employee benefits shall be discontinued as of the
Employment Termination Date and, except as
specifically provided in this Agreement and except
as may otherwise be paid to him as a member of the
Board of Directors of the Company, Executive shall
not be entitled to any other compensation, bonuses,
benefits or perquisites from the Company. Nothing
contained in this Agreement, however, shall affect
Executive's entitlement to vested benefits under
the Company's 401(k) plan (the "Plan") based upon
Executive's accrued service with the Company.
4. Deferred Compensation.
(a) In recognition and appreciation of Executive's important and
valuable role in the Company's history and his long-term
employment with the Company, the Company shall pay Executive a
bonus for past services in the amount of $131,250, which shall be
payable as follows:
(i) from October 1, 1999 through March 31, 2000,
the aggregate sum of $87,500; and
(ii) from April 1, 2000 through September 30, 2000, the aggregate
sum of $43,750.
Payments of the foregoing amounts shall be made in installments on
the normal payroll dates for the Company.
(b) If Executive should die before he receives the entire sum of
$131,250, the Company shall pay the balance remaining to his
estate in the same manner and at the same times as it would have
been paid to Executive.
(c)
<PAGE>
In the event that the Executive breaches any of the agreements
contained in Sections 6, 7, 8 and 9 of this Agreement, he shall
forfeit all rights to all amounts of deferred compensation
remaining unpaid upon the date of any such breach.
5. Release. Executive agrees that the terms set forth in
his Agreement are in full satisfaction of all
obligations the Company has to Executive, known and
unknown. Except for breaches of this Agreement,
Executive does hereby irrevocably and unconditionally
release the Company, its affiliates, officers,
directors, employees, agents, representatives,
successors and assigns from any and all claims, demands
and liabilities whatsoever, including but not limited
to any claims in contract or tort and any claims in
connection with Executive's employment with the
Company, the termination of that employment, or
pursuant to any federal, state or local employment
laws, regulations, executive orders or other
requirements, as well as the common law, including the
Age Discrimination in Employment Act. In exchange for
the benefits being accorded to Executive under this
Agreement, it is Executive's intent to provide to the
Company the broadest release of claims and liabilities
that may be provided by law. This Agreement shall not
be construed as an admission by the Company that it has
acted wrongfully with respect to the Executive.
6. Confidentiality. The Executive acknowledges that as an
officer and employee of the Company he has had access
to proprietary confidential information that directly
or indirectly relates to the business of the Company.
The Executive represents and agrees that he has not and
that he will not, without the prior written consent of
the Company, (a) disclose to any person any proprietary
confidential information obtained or developed by him
while employed by the Company with respect to the
Company's business, except information which at the
time is available to others in the business or
generally known or available to the public other than
as a result of disclosure by him not permitted
hereunder, or lawfully acquired from a third party who
is not obligated to the Company to maintain such
information in confidence ("Confidential Information")
or (b) take with him any documents or papers relating
to any Confidential Information or any property of the
Company.
7. Noncompetition/Non-Solicitation. As further
consideration for the benefits provided in this
Agreement and in light of the special and unique
services that have been and will be furnished to the
Company by Executive, and the Confidential Information
that has been disclosed to Executive by the Company
during Executive's relationship with the Company,
Executive agrees that for a period of three (3) years
from the Employment Termination Date, or for so long as
he is a member of the Board of Directors of the
Company, whichever period is longer, (the
"Non-Competition Period") Executive will not, without
the written consent of the Company, directly or
indirectly, whether as a principal, agent, officer,
director, consultant, employee, partner, stockholder,
or owner of or in any capacity with any corporation,
partnership, business, firm, individual, company, or
any other entity, engage in, or assist another to
engage in, any work or activity in any way competitive
with the Business of the Company (as hereinafter
defined) in North America, Central America and Europe.
However, nothing herein shall prevent Executive from
owning not more than five percent (5%) of the
outstanding publicly traded shares of common stock of a
corporation, as to which corporation Executive has no
relationship other than stockholder. In addition,
during the Non-Competition Period, Executive will not,
directly or indirectly, (a) induce or attempt to induce
any officer or employee of the Company to leave the
employ of the Company, or in any way interfere with the
relationship between the Company and any officer,
employee, director or stockholder thereof, or (b) hire
directly or through another entity any person who was
an employee of the Company on the Employment
Termination Date, or (c) induce or attempt to induce
any customer, dealer, supplier or licensee to cease
doing business with the Company, or in any way
interfere with the relationship between any such
customer, dealer, supplier or licensee and the Company.
Executive specifically agrees that because of Executive's special
expertise and the special and unique services that Executive has been
and will be furnishing the Company, and because the Confidential
Information that has been acquired by Executive or has been disclosed
to Executive during the Executive's employment, the above stated
geographic areas and time period during which Executive will not
compete are reasonable in scope and duration and are necessary to
afford the Company just and adequate protection against the
irreparable damage which would result to the Company from any
activities prohibited by this section.
For purposes of this section, the "Business of the Company" is that
of a contract manufacturer offering its customers manufacturing and
management services, including material procurement and control,
engineering services, manufacturing and test engineering support,
statistical quality assurance and resource management.
8. Advisory Services. Executive agrees that for a period
of one year from the Employment Termination Date he
shall provide advisory services to the Company, on an
"as needed" basis, as may be reasonably requested from
time to time by the Chief Executive Officer or Board of
Directors. Such consultations shall be at such
reasonable and convenient times and places as the
parties may mutually agree upon.
9. Continued Cooperation. Executive agrees to cooperate with the Company
with respect to matters that arose during or related to his
employment, including but not limited to, cooperation in connection
with any litigation or governmental investigation or regulatory or
other proceeding which may have arisen or which may arise following
the execution of this Agreement.
10. Arbitration of Claims. Any controversy or claim arising out of
relating to this Agreement, or the breach thereof, shall be settled
by final and binding arbitration initiated by either party in
accordance with the Rules of the American Arbitration Association,
and judgment upon the award rendered by the arbitration may be
entered in any court with jurisdiction. Either party may apply to any
court with jurisdiction to seek injunctive relief to maintain the
status quo until the matter is resolved by the arbitrator. The
arbitration shall be conducted in Rochester, New York by an
arbitrator selected from a panel of arbitrators of the American
Arbitration Association. All fees and expenses of the arbitration
shall be borne by the parties equally, and each party shall bear the
expense of their own counsel, experts, witnesses and the preparation
and presentation of proof in any arbitration. In view of the nature
of Executive's employment, the Confidential Information which
Executive received during the course of his employment, and his
position with the Company, Executive agrees that Company would be
irreparably harmed by any violation or threatened violation of this
Agreement, or any of the terms thereof, and therefore, in addition to
any other remedies which may be available to it, Company shall be
entitled to any injunction, without the necessity of posting bond,
prohibiting Executive from committing any violation or threatened
violation of this Agreement in a proceeding in either the Supreme
Court of the State of New York sitting in Monroe County or in the
U.S. District Court for the Western District of New York and
Executive hereby consents to the jurisdiction of said tribunals.
11. Notices. All notices given in connection with this Agreement shall be
in writing and shall be delivered either by personal delivery, by
telegram, telex, telecopy or similar facsimile means, by certified or
registered mail, return receipt requested, or by express courier or
delivery services, addressed to the parties hereto at the following
addresses:
To Executive: To IEC Electronics Corp.:
Russell E. Stingel IEC Electronics
Corp.
102 Grandview Avenue 105 Norton Street
Fairport, NY 14450 P.O. Box 271
Newark, NY 14513
Attn: Chief Executive
Officer
FAX: (315) 331-8185
or at such other address and number as either party shall have
previously designated by written notice given to the other party in
the manner hereinabove set forth. Notice shall be deemed given when
received, if sent by telegram, telex, telecopy or similar facsimile
means (confirmation of such receipt by confirmed facsimile
transmission being deemed receipt of communications sent by telex,
telecopy or other facsimile means); and when delivered and receipted
for (or upon the date of attempted delivery where delivery is
refused), if hand-delivered, sent by express courier or delivery
services, or sent by certified or registered mail, return receipt
requested.
12. Nonassignability. Executive's rights and benefits
under this Agreement are personal to him, and no such
right or benefit shall be subject to voluntary or
involuntary alienation, assignment or transfer.
13. Construction, Severability and Applicable Law.
(a) All understandings and agreements previously made by and between
the parties are merged in this Agreement, which fully and
completely expresses the agreement of the parties. This Agreement
may not be changed or terminated and none of its provisions may
be modified or waived, except in writing signed by both parties
to this Agreement.
(b) If any covenant or provision or part thereof contained in this
Agreement is determined to be void or unenforceable in whole or
in part, it shall not be deemed to affect or impair the validity
of any other covenant or part thereof or provision of this
Agreement. To the extent any provision is held invalid or
unenforceable for being too broad or extensive, it is the
intention of the parties that the court enforce such provision to
the limits of proper scope or breadth. Each of the provisions
contained herein is hereby declared to be a separate and distinct
covenant severable one from the other, and Company shall be
entitled to enforce each such covenant to the fullest extent
permitted by law, in equity or otherwise, notwithstanding that
any other or others of such covenants may not be enforceable, and
in all other respects, this Agreement shall remain in fully force
and effect.
(c) This Agreement shall be governed and construed in accordance with
the laws of New York State.
14. Review and Revocation Periods. Executive acknowledges and agrees that
he has been advised to seek the advice of legal counsel before
executing this Agreement, that he fully understands the terms of this
Agreement, that he has entered into this Agreement knowingly,
voluntarily, and without threat or duress, that he has the right to
consider this Agreement for a period of up to twenty-one (21) days
prior to signing it, and that he may revoke this Agreement in writing
within seven (7) days from the date that he signs it.
15. Miscellaneous. The following provisions shall apply to
this Agreement:
(a) The section headings contained in this Agreement have been
prepared for convenience of reference only and shall not control,
affect the meaning, or be taken as an interpretation of any
provision of this Agreement.
(b) Several copies of this Agreement may be executed by the parties,
each of which shall be deemed an original for all purposes, and
all of which together shall constitute but one and the same
instrument.
(c) If in one or more instances either party fails to insist that the
other party perform any of the terms of this Agreement, this
failure shall not be construed as a waiver by such party of any
past, present, or future right granted under this Agreement, and
the obligations of both parties under this Agreement shall
continue in fully force and effect.
16. Binding Effect. This Agreement shall be binding upon
and will inure to the benefit of the parties, their
heirs, distributees, legal representatives,
transferees, successors, and assigns.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement on
the date set forth above..
IEC Electronics Corp.
By:
W. Barry Gilbert, Chairman Russell E. Stingel,
Executive
Compensation Committee
<PAGE>
EXHIBIT A
RUSSELL E. STINGEL
OPTION SCHEDULE
Date of Grant No. of Shares Vesting Dates Exercise Expiration
Price Date
1/18/99 1125 1/18/00 $3.875 1/18/06
1125 1/18/01 $3.875 1/18/06
1125 1/18/02 $3.875 1/18/06
1125 1/18/03 $3.875 1/18/06
4500
5/16/97 5000 5/16/98 $9.75 5/16/04
5000 5/16/99 $9.75 5/16/04
5000 5/16/00 $9.75 5/16/04
5000 5/16/01 $9.75 5/16/04
20,000
10/31/96 6250 10/31/97 $6.25 10/31/03
6250 10/31/98 $6.25 10/31/03
6250 10/31/99 $6.25 10/31/03
6250 10/31/00 $6.25 10/31/03
25,000
5/3/94 4000 5/3/95 $12.75 5/3/02
4000 5/3/96 $12.75 5/3/02
4000 5/3/97 $12.75 5/3/02
4000 5/3/98 $12.75 5/3/02
16,000
5/3/94 1000 5/3/95 $12.75 5/3/02
1000 5/3/96 $12.75 5/3/02
1000 5/3/97 $12.75 5/3/02
1000 5/3/98 $12.75 5/3/02
4,000
Total:
69,500
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-2000
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 37,401
<ALLOWANCES> 0
<INVENTORY> 37,069
<CURRENT-ASSETS> 75,003
<PP&E> 17,451
<DEPRECIATION> 0
<TOTAL-ASSETS> 102,754
<CURRENT-LIABILITIES> 37,174
<BONDS> 18,459
0
0
<COMMON> 76
<OTHER-SE> 47,045
<TOTAL-LIABILITY-AND-EQUITY> 102,754
<SALES> 108,108
<TOTAL-REVENUES> 110,117
<CGS> 105,712
<TOTAL-COSTS> 5,331
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 914
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</TABLE>
