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