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<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 10-QSB
---- QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
---- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
---- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
---- SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to _______________
Commission File No. O-5258
------
IEH CORPORATION
-------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 1365549348
------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
140 58th Street, Suite 8E, Brooklyn, New York 11220
-------------------------------------------------------------------------------
(Address of principal executive office)
Registrant's telephone number, including area code: (718) 492-4440
-------------------------------------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report.
Check whether the Issuer: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
2,303,502 shares of Common Shares, par value $.50 per share, were
outstanding as of August 15, 1995.
<PAGE> 2
IEH CORPORATION
CONTENTS
Page
Number
------
PART 1 - FINANCIAL INFORMATION:
ITEM 1 - FINANCIAL STATEMENTS
Balance Sheets
June 30, 1995 (Unaudited)
and March 31, 1995 3
Statement of Operations
(Unaudited) for the three months
ended June 30, 1995 and
July 1, 1994 5
Statement of Cash Flows (Unaudited)
for the three months ended June 30, 1995
and July 1, 1994 6
Notes to Financial Statements
(Unaudited) 7
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 12
PART II - OTHER INFORMATION 14
-2-
<PAGE> 3
IEH CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, March 31,
1995 1995
--------- ---------
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash $ 300 $ 300
Accounts receivable, less allowance for
doubtful accounts of $10,062 at June 30, 1995,
and March 31, 1995 637,373 793,083
Inventories (Notes 2) 1,023,600 1,020,309
Prepaid expenses and other current assets (Note 3) 79,322 89,001
Other receivables 38,696 35,771
----------- ----------
Total current assets 1,779,291 1,938,464
----------- ----------
PROPERTY, PLANT AND EQUIPMENT, less accumulated
depreciation and amortization of $4,771,030 at
June 30, 1995 and $4,704,880 at March 31, 1995 1,626,692 1,630,362
----------- ----------
OTHER ASSETS:
Prepaid pension cost 160,656 160,652
Other 48,632 49,007
----------- ----------
209,284 209,659
----------- ----------
Total assets $43,651,267 $3,778,485
=========== ==========
</TABLE>
See accompanying notes to financial statements
-3-
<PAGE> 4
IEH CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, March 31,
1995 1995
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Accounts receivable financing $ 453,920 $ 585,620
Notes payable, current portion 8,771 15,706
Loan payable, current portion (Note 5) 42,727 43,604
Accrued corporate income taxes 21,722 13,794
Union pension and health and welfare, current portion (Note 6) 120,000 120,000
Accounts payable 1,076,084 953,532
Other current liabilities (Note 4) 277,199 262,892
------------ ------------
Total current liabilities 2,000,413 1,995,148
------------ ------------
LONG-TERM LIABILITIES:
Pension plan payable 463,562 438,651
Notes payable, less current portion 3,282 4,750
Loan payable, less current portion (Note 5) 268,599 320,533
Union pension and health and welfare, long-term (Note 6) 309,895 325,947
------------ ------------
1,045,338 1,089,881
------------ ------------
Total liabilities 3,045,751 3,085,029
------------ ------------
STOCKHOLDERS' EQUITY:
Common stock, $.50 par value:
10,000,000 shares authorized;
2,303,502 shares issued and outstanding 1,151,751 1,151,751
Capital in excess of par value 1,615,874 1,615,874
Retained earnings, (Deficit) (2,162,109) (2,074,169)
------------ ------------
Total stockholders' equity 605,516 693,456
------------ ------------
Total liabilities and stockholders' equity $ 3,651,267 $ 3,778,485
============ ============
</TABLE>
See accompanying notes to financial statements
-4-
<PAGE> 5
IEH CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------
June 30, July 1,
1995 1994
---------- ---------
<S> <C> <C>
REVENUES:
Net sales $ 1,031,647 $ 1,319,394
-------------- -------------
COSTS AND EXPENSES:
Cost of products sold 811,315 987,341
Selling, general and administrative 198,395 231,006
Interest 37,716 30,571
Depreciation and amortization 66,150 51,150
-------- ---------
1,113,576 1,300,068
--------- ---------
OPERATING INCOME (LOSS) ( 81,929) 19,326
---------- --------
OTHER INCOME 289 -
-------- ---------
INCOME (LOSS) BEFORE INCOME TAXES ( 81,640) 19,326
PROVISION FOR INCOME TAXES ( 6,300) ( 6,000)
---------- ---------
NET INCOME (LOSS) $ ( 87,940) $ 13,326
========== =========
INCOME (LOSS) PER COMMON SHARE
BEFORE INCOME TAXES $ ( .04) $ .008
=========== ==========
NET INCOME (LOSS) PER
COMMON SHARE(Note 1) $ ( .04) $ .006
========== ==========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 2,303,502 2,303,502
========= ==========
</TABLE>
See accompanying notes to financial statements
-5-
<PAGE> 6
IEH CORPORATION
STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash
<TABLE>
<CAPTION>
Three Months Ended
-----------------------
June 30, July 1,
1995 1994
----------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income(loss) $ ( 87,940 ) $ 13,326
------------ -----------
Adjustments to reconcile net income(loss)
to net cash used in operating activities:
Depreciation and amortization 66,150 66,750
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 155,710 32,446
(Increase) decrease in inventories ( 3,291 ) ( 6,427 )
(Increase) decrease in prepaid expenses
and other current assets 9,679 18,874
(Increase) decrease in other receivables ( 2,925 ) ( 5,048 )
(Increase) decrease in other assets 375 ( 7,293 )
(Increase) decrease in prepaid and refundable
income taxes - 271
(Decrease) increase in accounts payable 122,552 34,305
(Decrease) increase in other current liabilities 14,307 4,772
Increase in accrued corporate income taxes payable 7,928 5,729
Increase in due to union pension and health and welfare ( 16,052 ) ( 33,196 )
(Decrease) increase in pension plan payable 24,911 ( 30,113 )
-------- ----------
Total adjustments 379,344 81,070
--------- --------
NET CASH USED IN OPERATING ACTIVITIES 291,404 94,396
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment ( 98,930 ) ( 60,695 )
---------- ----------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES ( 98,930 ) ( 60,695 )
---------- ----------
</TABLE>
See accompanying notes to financial statements
-6-
<PAGE> 7
IEH CORPORATION
STATEMENTS OF CASH FLOWS (CONTINUED)
Increase (Decrease) in Cash
<TABLE>
<CAPTION>
Three Months Ended
-------------------
June 30, July 1,
1995 1994
------- ---------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on notes payable $ ( 8,403 ) $( 1,751 )
Proceeds from loan payable - -
Proceeds from accounts receivable financing - -
Principal payments on accounts receivable financing ( 131,710 ) ( 27,779 )
Principal payments on loan payable ( 52,811 ) ( 10,780 )
--------- ---------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES ( 192,924 ) ( 40,310 )
--------- ---------
INCREASE (DECREASE) IN CASH ( - ) ( 6,609 )
CASH, beginning of year 300 8,173
--------- ---------
CASH, end of year $ 300 $ 1,564
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION, cash paid during the year for:
Interest $ 37,716 $ 30,571
========= =========
Income taxes $ 6,300 $ 6,000
========= =========
</TABLE>
See accompanying notes to financial statements
-7-
<PAGE> 8
IEH CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1- FINANCIAL STATEMENTS:
The accompanying financial statements of IEH Corporation("The Company")
for the three months ended June 30, 1995 and July 1, 1994 have been
prepared in accordance with the instructions to Form 10-QSB and do not
include all of the information and footnotes required by generally
accepted accounting principles. The financial statements have been
prepared by management from the books and records of the Company and
reflect, in the opinion of management, all adjustments (consisting of
normal recurring accruals) necessary for a fair presentation
of the financial position, results of operations, and cash flows of the
Company. These statements should be read in conjunction with the
financial statements and notes thereto included in the Company's annual
report Form 10-KSB for the fiscal year ended March 31, 1995. The
balance sheet at March 31, 1995 has been taken from the audited
financial statements of that date.
NOTE 2- INVENTORIES:
Inventories are comprised of the following:
<TABLE>
<CAPTION>
June 30, March 31,
1995 1995
----------- ---------
(Unaudited)
<S> <C> <C>
Raw materials $ 577,000 $ 575,144
Work in process 115,440 115,070
Finished goods 331,160 330,095
----------- ---------
$ 1,023,600 $ 1,020,309
=========== ===========
</TABLE>
Inventories are priced at the lower of cost (first-in, first-out
method) or market. As of June 30, 1995, the Company established a
reserve for obsolescence of $12,000 to reflect net realizable value.
Inventories at June 30, 1995 are recorded net of this reserve.
-8-
<PAGE> 9
IEH CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 3- PREPAID EXPENSES AND OTHER CURRENT ASSETS:
Prepaid expenses and other current assets are comprised of the
following:
<TABLE>
<CAPTION>
June 30, March 31,
1995 1995
----------- ---------
(Unaudited)
<S> <C> <C>
Prepaid insurance $ 13,062 $ 20,843
Other current assets 66,260 68,158
-------- --------
$ 79,322 $ 89,001
======== ========
</TABLE>
NOTE 4- OTHER CURRENT LIABILITIES:
Other current liabilities are comprised of the following:
<TABLE>
<CAPTION>
June 30, March 31,
1995 1995
------------ ---------
(Unaudited)
<S> <C> <C>
Payroll and vacation accruals $ 38,225 $ 15,075
Sales commissions 8,550 7,315
License fees 96,513 75,417
Pension plan payable 35,049 35,049
Other 98,862 130,036
--------- ---------
$ 277,199 $ 262,892
========= =========
</TABLE>
NOTE 5- LOAN PAYABLE:
On July 22, 1992, the Company obtained a loan of $435,000 from the New
York State Urban Development Corporation, ("UDC") collateralized by
machinery and equipment. The loan is payable over ten years, with
interest rates progressively increasing from 3% to 7%. On May 25, 1995
the UDC increased the rate of interest 1% to 5% per annum retroactive
to March 31, 1995. The balance remaining at June 30, 1995 was
$311,326.
-9-
<PAGE> 10
IEH CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 5- LOAN PAYABLE (CONTINUED):
Aggregate future principal payments are as follows:
Fiscal Year Ending March:
1995 $ 42,727
1995 43,603
1996 44,543
1997 46,314
Thereafter 134,139
---------
$ 311,326
=========
As of June 30, 1995, the Company had failed to meet one of the
financial covenants of the loan agreement; namely that the "Company
shall be obligated to maintain a tangible net worth of not less than
$1,000,000 for the duration of the loan". The Company reported
tangible net worth of $605,516 at June 30, 1995. The inability of the
Company to meet this covenant is ascribed to the reported net loss of
$637,899 for the year ended March 26, 1993 which reduced tangible net
worth from $1,467,280 as reported at March 27, 1992.
The Company had previously received a waiver of this covenant from the
UDC through the period ending March 31, 1994. The UDC is presently
reviewing the financial statements of the Company for the year ended
March 31, 1995 with respect to consideration of the granting of an
additional waiver of this covenant.
There are no assurances that the Company will receive any additional
waivers of this covenant through the period ending June 30, 1995.
Should the Company not receive any additional waivers of this
covenant, then it will be deemed to be in default of this loan
obligation to the UDC and the entire loan plus interest will become
due and payable.
-10-
<PAGE> 11
IEH CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 6- COMMITMENTS:
The Company has, with the United Auto Workers of America, Local 259, a
collective bargaining multi-employer pension plan. Contributions are
made in accordance with a negotiated labor contract and are based on
the number of covered employees employed per month. With the passage
of the Multi-Employer Pension Amendments Act of 1980 ("The Act"), the
Company may become subject to liabilities in excess of contributions
made under the collective bargaining agreement. Generally, these
liabilities are contingent upon the termination, withdrawal, or
partial withdrawal from the Plan. The Company has not taken any
action to terminate, withdraw or partially withdraw from the Plan nor
does it intend to do so in the future. Under the Act, liabilities
would be based upon the Company's proportional share of the Plan's
unfunded vested benefits which is currently not available. The amount
of accumulated benefits and net assets of such Plan also is not
currently available to the Company. Total contributions charged to
operations under this pension plan were $13,934 for the three months
ended June 30, 1995.
As of June 30, 1995, the Company was in arrears with respect to its
contributions to the union's health and welfare and pension plans. The
amount due the health and welfare plan was $204,889 and the amount due
the pension plan was $225,006, for a total of $429,895.
In December, 1993, the Company and Local 259 entered into a verbal
agreement whereby the Company would satisfy this debt by the following
payment schedule:
The sum of $10,000 will be paid by the Company each month in
satisfaction of the current arrears until this total debt has
been paid. Under this agreement, the projected payment schedule
for arrears will satisfy the total debt in 49 months.
Additionally, both parties have agreed that current obligatory
funding by the Company will be made on a timely current basis.
The total amount due of $429,895 is reported on the
accompanying balance sheet in two components; $120,000 reported
as a current liability and $309,895 as a long-term liability.
NOTE 7- CHANGES IN STOCKHOLDERS' EQUITY:
Retained earnings decreased by $87,940 which represents the
net loss for the three months ended June 30, 1995.
-11-
<PAGE> 12
ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
The following table sets forth for the periods indicated, sales revenues and
percentages for certain items in the financial data as such items of the
Company:
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------
June 30, July 1,
1995 1994
-------- ---------
<S> <C> <C>
Revenues, net sales(in thousands) $ 1,032 $ 1,319
-------- --------
Costs and Expenses:
(as a percentage of revenues)
Cost of products sold 78.6% 74.8%
Selling,general and administrative 19.2% 17.5%
Interest expense 3.7% 2.3%
Depreciation and amortization 6.4% 3.9%
-------- --------
Total costs and expenses 107.9% 98.5%
-------- --------
Income (loss) before income taxes ( 7.9%) 1.5%
-------- --------
Provision for income taxes ( .6%) (.5%)
-------- --------
Net income (loss) (8.5%) 1.0%
======== ========
</TABLE>
COMPARATIVE ANALYSIS:
Operating revenues for the three month period ending June 30, 1995 amounted to
$1,031,647 reflecting a 21.8% decrease versus the prior three month period
ending July 1, 1994 of $1,319,394. The decrease in revenues in this comparative
period reflects a continued decrease in governmental and military procurement
and the Company's efforts to redirect its sales efforts to commercial
electronic sales.
-12-
<PAGE> 13
COMPARATIVE ANALYSIS (continued)
Cost of products sold amounted to $811,315 for the three months ended June 30,
1995, or 78.6% of revenues. This reflected a increase of 3.8% in the cost of
products sold from $987,341 or 74.8% of revenues from the comparative three
month period ended July 1, 1994. This increase is primarily due to the
decrease in revenues as a result of decreased governmental and military
procurement.
Selling, general and administrative expenses were $198,395 or 19.2% of
revenues, compared to $231,006 or 17.5% of revenues for the comparative three
month period ending July 1, 1994. This increase of 1.7% was attributed to
certain fixed costs remaining constant despite a decline in sales during this
period.
Interest expense was $37,716 or 3.7% of revenues as compared to $30,571 or 2.3%
of revenues for the prior nine month period ending December 24, 1993. The
increase in interest expense of 1.4% reflects the increase in the interest
rates in fiscal 1995 as compared to the prior year.
Depreciation and amortization of $66,150 or 3.9% was reported for the three
months ended June 30, 1995 This reflects an increase of 2.5% over the prior
three month period ending July 1, 1994 of $51,150 or 3.9% of revenues. This
expense as a percentage of revenues increased as a result of decreased revenues
as well as an increase in the acquisition of machinery and equipment during the
three month period ended June 30, 1995.
The Company reported a net loss of $87,940 for the three month period ended
June 30, 1995, representing a loss of $.04 per common share as compared to net
income of $.006 per common share for the three months ended June 30, 1995. This
comparative decrease for the three month periods is due to an overall decrease
in revenues during this period.
-13-
<PAGE> 14
Item 6. Exhibits and Reports on Form 8-K
Exhibit 27. Financial Data Schedule
-14-
<PAGE> 15
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant has duly cause this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
IEH CORPORATION
(Registrant)
August 15, 1995 s/Michael Offerman
----------------- ------------------
Michael Offerman
President
August 15, 1995 s/Robert Knoth
----------------- ------------------
Robert Knoth
Chief Financial Officer
-15-
<PAGE> 16
EXHIBIT INDEX
-------------
Exhibit 27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 300
<SECURITIES> 0
<RECEIVABLES> 647,435
<ALLOWANCES> 10,062
<INVENTORY> 1,023,600
<CURRENT-ASSETS> 1,779,291
<PP&E> 6,397,722
<DEPRECIATION> 4,771,030
<TOTAL-ASSETS> 3,651,261
<CURRENT-LIABILITIES> 2,000,413
<BONDS> 323,379
<COMMON> 1,151,751
0
0
<OTHER-SE> (546,235)
<TOTAL-LIABILITY-AND-EQUITY> 3,651,267
<SALES> 1,031,647
<TOTAL-REVENUES> 1,031,936
<CGS> 811,315
<TOTAL-COSTS> 1,009,710
<OTHER-EXPENSES> 110,166
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37,716
<INCOME-PRETAX> (81,640)
<INCOME-TAX> 6,300
<INCOME-CONTINUING> (87,940)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (87,940)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
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