SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 26, 1998
[ ] 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 [ X ] No [ ]
2,303,502 shares of Common Shares, par value $.50 per share, were
outstanding as of November 9, 1998.
<PAGE>
IEH CORPORATION
CONTENTS
PART 1- FINANCIAL INFORMATION
ITEM 1- FINANCIAL STATEMENTS
er
Balance Sheets as of September 25, 1998(Unaudited)
and March 27, 1998
Statement of Operations (Unaudited) for the three and six
months ended September 25, 1998 and September 26, 1997
Statement of Cash Flows (Unaudited) for the six months ended
September 25, 1998 and September 26, 1997
Notes to Financial Statements (Unaudited)
ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
PART II- OTHER INFORMATION
Item 5: Other Information
Item 6: Exhibits and Form 8-K
<PAGE>
<TABLE>
<CAPTION>
IEH CORPORATION
BALANCE SHEETS
As of September 25, 1998 and March 27, 1998
Sept 25, March 27,
1998 1998
---------- ----------
(Unaudited) (Note 1)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash ..................................................... $ 12,677 $ 19,454
Accounts receivable, less allowance for
doubtful accounts of $10,062 at Sept 25, 1998
and March 27, 1998 .................................... 956,252 838,721
Inventories (Note 2) .................................... 870,205 949,282
Prepaid expenses and other current assets (Note 3) 9,772 38,224
Other receivables ....................................... 4,900 --
---------- ----------
Total current assets ............................ 1,853,806 1,845,681
PROPERTY, PLANT AND EQUIPMENT, less
accumulated depreciation and amortization of
$4,641,427 at Sept 25, 1998 and $ 4,504,267
at March 27, 1998 ..................................... 1,419,443 1,405,625
---------- ----------
OTHER ASSETS:
Prepaid pension cost (Note 8) .......................... 43,949 43,949
Other assets ........................................... 48,710 47,429
92,659 91,378
---------- ----------
Total assets ............................................. $3,365,908 $3,342,684
========== ==========
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
IEH CORPORATION
BALANCE SHEETS
As of September 25, 1998 and March 27, 1998
Sept 25, March 27,
1998 1998
---------- ----------
(Unaudited) (Note 1)
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Accounts receivable financing ......................... $ 808,167 $ 656,015
Notes payable, equipment, current portion (Note 7) .... 10,198 --
Notes payable, current portion (Note 6) ............... 58,350 56,000
Loans payable, current portion (Note 5) ............... 49,896 48,530
Accrued corporate income taxes ........................ 22,532 15,332
Union pension and health & welfare,
current portion (Note 8) ......................... 120,000 120,000
Accounts payable ....................................... 622,943 722,957
Other current liabilities (Note 4) ..................... 139,463 124,026
---------- ----------
Total current liabilities ........................ 1,831,549 1,742,860
---------- ----------
LONG-TERM LIABILITIES:
Pension plan payable (Note 8) ........................ 516,966 516,966
Notes payable, equipment, less current portion (Note 7) 37,922 --
Notes payable, less current portion (Note 6) .......... 102,783 132,558
Loan payable, less current portion (Note 5) ........... 159,311 184,440
Union pension & health & health & welfare,
less current portion (Note 8) ..................... 62,827 110,827
---------- ----------
Total long-term liabilities ................... 879,809 944,791
---------- ----------
Total liabilities .......................... 2,711,358 2,687,651
---------- ----------
STOCKHOLDERS' EQUITY:
Common stock, $.50 par value;
10,000,000 shares authorized, 2,303,468 shares
issued and outstanding at Sept 25, 1998 and 2,303,502
shares issued and outstanding at March 27, 1998
(Note 9) 1,151,734 1,151,751
Capital in excess of par value 1,615,891 1,615,874
Retained earnings (Deficit) (2,113,075) (2,112,592)
---------- ----------
Total stockholders' equity 654,550 655,033
---------- ----------
Total liabilities and stockholders' equity $3,365,908 $3,342,684
========== ==========
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
IEH CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
Six Months Ended Three Months Ended
---------------------------- ----------------------------
Sept 25, Sept 26, Sept 25, Sept 26,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUE, net sales ................ $ 2,321,344 $ 2,545,736 $ 1,087,695 $ 1,254,888
COSTS AND EXPENSES:
Cost of products sold ............. 1,688,136 1,769,481 808,837 884,917
Selling, general and administrative 421,972 437,995 207,487 217,856
Interest expense .................. 66,362 52,373 33,730 30,763
Depreciation and amortization ..... 137,160 139,680 68,590 69,840
----------- ----------- ----------- -----------
2,313,630 2,399,529 1,118,644 1,203,376
----------- ----------- ----------- -----------
OPERATING INCOME (LOSS) ........... 7,714 146,207 (30,949) 51,512
OTHER INCOME ...................... 203 659 -- 659
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE
INCOME TAXES .................. 7,917 146,866 (30,949) 52,171
PROVISION FOR INCOME TAXES ........ 8,400 6,900 4,200 4,200
----------- ----------- ----------- -----------
NET INCOME(LOSS) .................. $ (483) $ 139,966 $ (35,149) $ 47,971
=========== =========== =========== ===========
BASIC AND DILUTED
EARNINGS (LOSS) PER SHARE ..... $ (.0002) $ .06 $ (.015) $ .02
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING ...... 2,303 2,304 2,303 2,304
=========== =========== =========== ===========
(in thousands)
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
IEH CORPORATION
STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash
For the Six Months Ended September 25, 1998 and September 26, 1997
(Unaudited)
Sept 25, Sept 26,
1998 1997
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .................................. $ (483) $ 139,966
--------- ---------
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization ...................... 137,160 139,680
Changes in assets and liabilities:
(Increase) decrease in accounts receivable .......... (117,531) (218,188)
(Increase) decrease in inventories .................. 79,077 184,300
(Increase) decrease in prepaid expenses and
other current assets ............................ 28,452 34,509
(Increase) decrease in other receivables ............ (4,900) 21,285
(Increase) decrease in other assets ................. (1,281) 91
(Decrease) increase in accounts payable ............. (100,014) (441,015)
(Decrease) increase in other current liabilities .... 15,437 (17,859)
Increase in accrued corporate income taxes .......... 7,200 5,170
(Decrease) in due to union pension & health & welfare (48,000) (36,727)
--------- ---------
Total adjustments ..................................... (4,400) (328,754)
--------- ---------
NET CASH PROVIDED( USED) BY
OPERATING ACTIVITIES ............................... (4,883) (188,788)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of fixed assets ........................... (150,961) (111,431)
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES ................. (150,961) (111,431)
--------- ---------
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash
For The Three Months Ended September 25, 1998 and September 26, 1997
(Unaudited)
Sept 25, Sept 26,
1998 1997
--------- ---------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Retirement of common shares ........................ $ (17) $ --
Principal payments on notes payable ................ (29,775) --
Increase in notes payable .......................... 50,470 213,089
Proceeds from accounts receivable financing ........ 152,152 146,812
Principal payments on loan payable ................. (23,763) (29,749)
--------- ---------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES .............................. 149,067 330,152
--------- ---------
INCREASE (DECREASE) IN CASH .......................... (6,777) 29,933
CASH, beginning of period ............................ 19,454 15,274
--------- ---------
CASH, end of period .................................. $ 12,677 $ 45,207
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION, cash paid during the six months for:
Interest ........................................ $ 66,362 $ 52,373
========= =========
Income Taxes .................................... $ 8,400 $ 6,900
========= =========
</TABLE>
See accompanying notes to financial statements
<PAGE>
IEH CORPORATION
NOTES TO FINANCIAL STATEMEMTS
(Unaudited)
Note 1- FINANCIAL STATEMENTS:
The accompanying financial statements of IEH Corporation ("The
Company") for the six months ended September 25, 1998 have been prepared in
accordance with the instructions for 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 for the six months ended September 25, 1998. These statements are
not necessarily indicative of the results to be expected for the full fiscal
year. 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 27, 1998 as filed with the Securities and
Exchange Commission.
The balance sheet at March 27, 1998 has been taken from the
audited financial statements of that date.
Note 2- INVENTORIES:
Inventories are comprised of the following:
Sept 25, March 27,
1998 1998
-------- --------
Raw materials . $597,600 $651,975
Work in process 91,200 99,523
Finished goods 181,405 197,784
-------- --------
$870,205 $949,282
======== ========
Inventories are priced at the lower of cost (first-in,
first-out method) or market, whichever is lower. The Company has established a
reserve for obsolescence to reflect net realizable inventory value. The balance
of this reserve as of September 25, 1998 was $25,200. At March 27, 1998, the
balance of this reserve was $50,400.
Inventories at September 25, 1998 and March 27, 1998 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:
Sept 25, March 27,
1998 1998
------- -------
Prepaid insurance .. $ 5,428 $34,356
Other current assets 4,344 3,868
------- -------
$ 9,772 $38,224
======= =======
Note 4- OTHER CURRENT LIABILITIES:
Other current liabilities are comprised of the following:
Sept 25, March 27,
1998 1998
-------- --------
Payroll and vacation accruals $ 13,660 $ 28,300
Sales commissions ........... 18,095 9,574
Pension plan payable ........ 65,489 65,489
Other ....................... 42,219 20,663
-------- --------
$139,463 $124,026
======== ========
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% per annum.
The balance remaining at September 25, 1998 was $209,207.
Aggregate future principal payments are as follows:
Fiscal Year Ending March:
1999 $ 24,688
2000 50,693
2001 54,289
2002 58,795
Thereafter 20,742
-------
$209,207
========
<PAGE>
IEH CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 5- LOAN PAYABLE (continued):
In April 1997, the Company was informed by the UDC that the
loan was sold and conveyed to WAMCO XXIV, Ltd. All the terms and conditions of
the loan remained in effect.
As of September 25, 1998, 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 $654,550. The ratio
of current assets to current liabilities was 1.01 to 1.0.
The Company had previously received a waiver of this covenant
from the UDC through the period ending March 31, 1994 and has applied for
additional waivers of this covenant. Neither the UDC or WAMCO XXIV, Ltd. has
acted on these requests.
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 and the entire loan plus interest will become due and payable.
Note 6- NOTES PAYABLE:
The Company was in arrears in the amount of $236,000 to the
New York City Economic Development Corporation ("NYCEDC") for rent due for its
offices and manufacturing facilities.
In May 1997, the Company and the NYCEDC negotiated an
agreement for the Company to pay off its indebtedness over a 48 month period by
the Company issuing notes payable to NYCEDC.
The notes bear interest at the rate of 8.25% per annum. The
balance remaining at June 26, 1998 was $174,987.
Note 7- NOTES PAYABLE, EQUIPMENT:
The Company financed the acquisition of new computer equipment
and software with notes payable. The notes are payable over a sixty month
period. The balance remaining at September 30, amounted to $48,120.
Aggregate future principal payments are as follows:
1999 $10,198
2000 10,198
2001 10,198
2002 10,198
2003 7,328
-------
$48,120
<PAGE>
IEH CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 8- 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. The total
contributions charged to operations under this pension plan were $19,861 for the
six months ended September 25, 1998.
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.
Additionally, both parties agreed that current obligatory
funding by the Companywill be made on a timely current basis.
Effective February 1, 1995, the Company withdrew from the
Union's health and welfare plan and offered its employees an alternative health
insurance plan.
As of September 25, 1998, the Company reported 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 $155,189 and the amount
due the pension plan was $27,638
The total amount due of $182,827 is reported on the
accompanying balance sheet in two components; $120,000 reported as a current
liability and $27,638 as a long-term liability.
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 Salaried 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 proceeded 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.
<PAGE>
IEH CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 8- COMMITMENTS (continued):
At September 25, 1998 and March 28, 1998, $65,489 of the
pension liability is included in other current liabilities, with the balance of
$516,966 shown as a long-term liability.On those dates, the long-term portion
includes $226,041, which represents the recognition of additional minimum
liability to comply with the requirements of Statement of Financial Standards
No. 87.
In August 1998, the Company was notified by the PBGC that the
Company is liable to the PBGC for the following amounts as of September 1, 1998:
$456,418 representing the amount of unfunded benefit
liabilities of the Plan
$242,097 representing funding liability
$ 2,931 representing the premium liability
The total amount claimed by the PBGC amounts to $701,446.
The amount claimed is being contested by the Company and the
PBGC has granted the
Company an extension of time until December 9, 1998 in which to file an appeal.
Note 9- CHANGES IN STOCKHOLDERS' EQUITY:
The Company retired 34 shares of its issued and outstanding
common stock during the quarter ended September 30, 1998.
Retained earnings (deficit) increased by $483 which represents
the net loss for the six months ended September 25, 1998.
Note 10- YEAR 2000 COMPUTER ISSUE:
The Company does not believe that the impact of the year 2000 computer
issue will have a significant impact on its operations or financial position.
The Company has allocated approximately $100,000 to upgrade its computer
operations to obviate any potential problems that might arise as a result of the
impact of the year 2000. To date the Company has acquired new computer equipment
at a cost of $65,847. However, if internal systems do not correctly recognize
date information when the year changes to 2000, there could be an adverse impact
on the Company's operations. Furthermore, there can be no assurance that another
entity's failure to ensure year 2000 capability would not have an adverse effect
on the Company.
<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, percentages for
certain items reflected in the financial data as such items bear to the revenues
of the Company:
<TABLE>
<CAPTION>
Six Months Ended
-------------------------
Sept 25, Sept 26,
1998 1997
-------- --------
<S> <C> <C>
Operating Revenues (in thousands) .............. $ 2,321 $ 2,546
Operating Expenses:
(As a percentage of Operating Revenues)
Cost of Products Sold ......................... 72.7% 69.5%
Selling, General and Administrative ........... 18.2% 17.2%
Interest Expense .............................. 2.9% 2.1%
Depreciation and Amortization ................. 5.9% 5.5%
-------- --------
Total Costs and Expenses ..... 99.7% 94.3%
======== ========
Operating Income ............................... 0.3% 5.7%
======== ========
Other Income ................................... -- --
======== ========
Income Before Income Taxes ..................... 0.3% 5.7%
======== ========
Income Taxes ................................... .3% .2%
======== ========
Net Income ..................................... 0.0% 5.5%
======== ========
</TABLE>
<PAGE>
Comparative Analysis:
Operating revenues for the six months ended September 25, 1998 amounted to
$2,321,344, reflecting a 8.8% decrease versus the comparative six months
operating revenues of $2,545,736. The decrease is a direst result of
management's to redirect its dependence on governmental and military sales to
developing new market sales in the commercial electronic sector.
Cost of products sold amounted to $1,688,136 for the six months ended September
25, 1998 or 72.7% of operating revenues. This reflected a decrease of $81,345 or
4.6% in the cost of products sold of $1,769,481
for the six months ended September 26, 1997. This decrease is primarily due to
reduced production costs inherent in producing new products. Cost of products
sold increased as a percentage of revenues in the comparative periods.
Selling, general and administrative expenses were $421,972 or 18.2% of revenues
compared to $437,995 or 17.2% of revenues for the comparable three month period
ended September 26, 1997. This reflected a decrease of 3.7% and reflects
management's efforts to better control expenses.
Interest expense was $66,362 or 2.9% of revenues as compared to $52,373 or 2.1%
of revenues in the six month period ended September 26, 1997. This increase of
26.7% reflects the increase in borrowing by the Company in the current fiscal
period.
Depreciation and amortization of $137,160 or 5.9% of revenues was reported for
the six month period ended September 25, 1998. This reflects a decrease of 0.2%
from the comparable six month period ended September 26, 1997 of $139,680 or
5.5% of revenues. The decrease is a result of decreased depreciation levels on
fixed assets during the six month period ended September 25, 1998.
The Company reported a net loss of $483 for the six months ended September 25,
1998, representing basic loss per common share of $.0002 as compared to basic
income of $139,966 or $.06 per common share for the six months ended September
25, 1997.
The resultant decrease in net income can be attributed to reduced sales in the
commercial sector in the current six month period ending September 25, 1998.
<PAGE>
Results of Operations
The following table sets forth for the periods indicated, percentages for
certain items reflected in the financial data as such items bear to the revenues
of the Company:
<TABLE>
<CAPTION>
Three Months Ended
Sept 25, Sept 26,
-----------------------
1998 1997
-------- --------
<S> <C> <C>
Operating Revenues (in thousands) ............................... $ 1,088 $ 1,255
Operating Expenses:
(As a percentage of Operating Revenues)
Cost of Products Sold .......................................... 74.3% 71.0%
Selling, General and Administrative ............................ 19.2% 17.0%
Interest Expense ............................................... 3.0% 2.0%
Depreciation and Amortization .................................. 6.3% 5.9%
-------- --------
Total Costs and Expenses ...................... 102.8% 95.9%
======== ========
Operating Income (loss) ......................................... (2.8%) 4.1%
======== ========
Other Income .................................................... -- --
======== ========
Income (loss) Before Income Taxes ............................... (2.8%) 4.1%
======== ========
Income Taxes .................................................... .4% .3%
======== ========
Net Income(loss) ................................................ (3.2%) 3.8%
======== ========
</TABLE>
Comparative Analysis:
Operating revenues for the three months ended September 25, 1998 amounted to
$1,087,695, reflecting a 13.3% decrease versus the comparative three months
operating revenues of $1,254,888. The decrease is a direst result of
management's to redirect its dependence on governmental and military sales to
developing new market sales in the commercial electronic sector.
Cost of products sold amounted to $808,837 for the three months ended September
25, 1998 or 74.3% of operating revenues. This reflected a decrease of $76,080 or
8.6% in the cost of products sold of $884,917 for the three months ended
September 26, 1997. This decrease is primarily due to reduced production costs
inherent in producing new products. Cost of products sold increased as a
percentage of revenues in the comparative periods.
<PAGE>
Selling, general and administrative expenses were $207,487 or 19.2% of revenues
compared to $217,856 or 17.0% of revenues for the comparable three month period
ended September 26, 1997. This reflected a decrease of 4.8% and reflects
management's efforts to better control expenses.
Interest expense was $33,730 or 3.0% of revenues as compared to $30,763 or 2.0%
of revenues in the three month period ended September 26, 1997. This increase of
9.6% reflects the increase in borrowing by the Company in the current fiscal
period.
Depreciation and amortization of $68,590 or 6.3% of revenues was reported for
the three month period ended September 25, 1998. This reflects a decrease of
0.2% from the comparable three month period ended September 26, 1997 of $69,840
or 5.9% of revenues. The decrease is a result of decreased depreciation levels
on fixed assets during the three month period ended September 25, 1998.
The Company reported a net loss of $35,149 for the three months ended September
25, 1998, representing basic loss per common share of $.015 as compared to basic
income of $47,971 or $.02 per common share for the three months ended September
25, 1997.
The resultant decrease in net income can be attributed to reduced sales in the
commercial sector in the current three month period ending September 25, 1998.
<PAGE>
IEH CORPORATION
Item 5: Other Information
In 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 Salaried Pension Plan. On April 26,
1996, the Company was notified that the PBGC had granted the Company's request
and agreed to assume the Company's obligations under the Salaried Pension Plan.
In August, 1998 the PBGC notified of its accounting and order with
respect to the Salaried Pension Plan. The PBGC determined that the Company owed
approximately (i) $456,000 representing unfunded benefit liabilities and (ii)
$242,000 representing funding liability. The Company is reviewing the analysis
and order of the PBGC and intends to submit a proposal to the PBGC regarding
repayment terms. The Company does not have funds available to repay the
liabilities in a single payment. There can be no assurance that the Company will
be able to negotiate repayment terms upon terms acceptable to it. The PBGC may
require significant periodic payments which may affect the Company's cash flow
and ability to use funds to operate and expand the business. In addition, the
PBGC may place a lien upon the Company's assets which could impact the Company's
ability to obtain financing from third parties.
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 on Form 10QSB to be signed on its behalf by the
undersigned, thereunto duly authorized.
IEH CORPORATION
(Registrant)
November 9, 1998 /s/Michael Offerman
-------------------
Michael Offerman
President
November 9, 1998 /s/Robert Knoth
---------------
Robert Knoth
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-26-1999
<PERIOD-END> SEP-26-1998
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0
0
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</TABLE>
