U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] Annual report under Section 13 or 15(d) of the Securities Exchange Act of
1934 (Fee required)
For the fiscal year ended April 2, 1999
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 (No fee required)
For the transition period from to
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Commission file number 0-5278
IEH CORPORATION
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(Name of Small Business Issuer in Its Charter)
New York 13-5549348
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
140 58th Street, Suite 8E, Brooklyn, New York 11220
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(Address of Principal Executive Offices) (Zip Code)
(718) 492-4448
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(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) ofthe Exchange Act:
Name of Each Exchange on Which
Title of Each Class Registered
None None
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None None
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Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.50 Par Value
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(Title of Class)
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Indicated by check mark whether the Registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the preceding 12 months (or for such shorter period that the
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Registrant was required to file such reports),and (2) has been subject to such
filing requirements for past 90 days.
Yes X No
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Indicate by check mark if disclosure of delinquent filers in response
to Item 405 of Regulation S-B is not contained in this form, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.
The Registrant's revenues for its most recent fiscal year ended April
2, 1999 were $4,334,477.
On June 21, 1999, the aggregate market value of the voting stock of
Registrant held by non-affiliates of Registrant (consisting of Common Stock,
$.50 par value) computed by reference to the closing bid price at which the
stock was sold on such date ($.5/16) was approximately $323,182.
APPLICABLE ONLY TO CORPORATE REGISTRANTS
On June 21, 1999, there were 2,303,468 shares of Common Stock, $.50 par
value, issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
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IEH CORPORATION
PART I
Item I. Business
IEH Corporation (hereinafter referred to as the "Company") was
organized under the laws of the State of New York on March 22, 1943
under the name Industrial Heat Treating Company, Inc. On March 15,
1989, the Company changed its name to its current name. The Company's
executive offices and manufacturing facilities are located at 140 58th
Street, Suite 8E, Brooklyn, New York 11220. The Company's telephone
number is (718) 492-4448, its email address is [email protected].
The Industry in Which the Company is Engaged
The Company is engaged in the design, development, manufacture and
distribution of high performance electronic printed circuit connectors
and specialized interconnection devices. Electronic connectors and
interconnection devices are used to provide connections between
electronic component assemblies. The Company develops and manufactures
connectors which are designed for a variety of high technological and
high performance applications. These connectors are primarily utilized
by those users who require highly efficient and dense (the space
between connection pins within the connector) electrical connections.
Printed circuit boards in computers contain the components necessary to
perform specific system sub-functions. These functions require
connections which relayed information between electronic components and
circuit boards, enabling the commands that are input by the user to be
performed. Electronic connectors, in essence, enable circuit boards and
electronic components to communicate with each other, via direct
electrical connection. Connectors also are fundamental to modular
construction of electronic assemblies enabling the disconnection and
removal of circuit boards and other electronic components for testing,
repair, and replacement.
Connectors may be designed and manufactured in various shapes, sizes
and specifications to meet specific customer requirements and
applications. High performance connectors are designed to meet various
density and pin count (the number of individual connection points
within each connector) criteria and to provide low forces (the amount
of pressure needed to make the connection) and electrically efficient
connections.
Constant advances in the design of solid state devices have resulted in
significantly denser component packaging configurations on circuit
boards. Historically, a 5" X 8" circuit board may have consisted of
thousands of circuits with 10 to 30 lines of communication. Under those
conditions, an insertion force of one pound per contact for each of the
communication lines formed a common and acceptable standard in
connection devices. As a result of technological developments in recent
years, the same 5" X 8" circuit board may contain hundreds of thousands
of circuits with hundreds of communication lines, and an insertion
force of one (1) ounce per contact as the standard in the industry.
The Company's Product Line
The Company primarily manufactures printed circuit board connectors
that meet military or individual customer specifications. Certain of
the Company's manufacturing and sales involve the competitive
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bidding process because of the military and/or government status of
customers. The Company also manufactures a line of standard universal
connectors which have common usage in the high technology and
commercial electronics industries. The Company serves both the
commercial and military marketplace, manufacturing connectors for
avionics, electronics, satellite, radar systems, test equipment,
medical electronic and related industries.
The Company is continuously redesigning and adapting its connectors to
keep pace with developments in the electronics industry, and has, for
example, developed connectors for use with flex-circuits which are used
in aerospace programs, computers, air-borne communication systems,
testing systems and other areas. The Company also provides engineering
services to its customers to assist in the development and design of
connectors to meet specific product requirements.
The Company's electronic printed circuit connectors are sold to
original equipment manufacturers and distributors. The Company supplies
its connectors to manufacturers who principally produce and distribute
finished products as well as to distributors who resell the Company's
products. Prior to the decrease in military and government spending
over the last five (5) years, the Company's sales were made primarily
to the government, military defense contractors and aerospace
companies. However, since the decrease in military and government
spending the Company has modified its product line so as to concentrate
its sales efforts to commercial electronics companies. The Company
still continues to market its connectors for use in government and
military computers; military defense equipment and information systems;
terrestrial, airborne and aerospace communications products; avionics
and guidance systems and instrumental and electronic testing equipment.
With the continuing downturn in government contracts over the last few
years, the Company has been striving the past several years to develop
commercial accounts.
Management has instituted several steps to increase productivity and
increase sales such as downsizing the labor force, implementing
material changes to make the Company's products more competitive and
developing machinery and equipment to increase production rates.
Management believes these initiatives have decreased costs and will
continue to do so in the near future.
For the fiscal year ended April 2, 1999, the Company's principal
customers included manufacturers of commercial electronics products,
military defense contractors and distributors who service these
markets. Sales to the commercial electronics and military defense
markets comprised 25% and 74%, respectively, of the Company's net sales
for the year ended April 2,1999. Approximately 1% of the Company's net
sales for the year April 2,1999, were made internationally.
New Product Development
The Company maintains a program to increase the efficiency and
performance of its connectors to meet anticipated and specific market
needs. Computer and electronics technology is continuously changing and
requires the redesign and development of connectors to adapt to these
changes. Primarily, new technology has dictated a decrease in the size
of solid state electronic components and smaller and denser high
performance connectors. Management believes that a key ingredient to
the Company's success is its ability to assist customers with a new
design effort and prepare necessary drawing packages in a short period
of time. After the customer approves the design, prototypes are built,
approved by the customer and production is released. As an example, six
new connectors have been introduced to a major commercial account. The
Company's design effort on this product line began
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mid-year 1994 and was recently completed. The new development process
with this commercial client has lead to substantial repeat business in
the past fiscal year. The Company now has the ability to introduce this
line to other commercial accounts.
The Company has also recently commenced production of two new
connectors for the aerospace industry. To date early orders for
pre-production units have been completed and the Company is awaiting
commencement of production.
One of the nation's leading radar system manufacturers has contracted
with the Company for six new designs. The design work is complete,
approvals have been obtained, and the Company is now in small-scale
production. The Company anticipates full-scale production when the
radar system is released for sale by the customer. During the fiscal
year 1996, the Company's business with this customer doubled from the
previous fiscal year.
Several years ago, the Company designed and developed a form of
compliant termination connector, which is named, "COMTAC". This
product, which utilizes technology known as "Solderless Pin
Technology", does not require the soldering of connector pins, but
instead utilizes a spring type locking system in attaching the
connector to the printed circuit board. This technology was patented in
the United States under patent No. 4,720,268 and assigned to the
Company on January 19, 1988. During fiscal year ended April 2, 1999
sales of the COMTAC connectors accounted for over 10% of the Company's
total sales. The Company has sent to certain of its customers and
potential customers pre-production units for evaluation. Although there
can be no assurance of future sales, the Company is optimistic that
this new technology will lead to an increase in sales.
Commitments
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 8% per annum.
The balance remaining at April 2, 1999 was $184,440.
Aggregate future principal payments are as follows:
Fiscal Year Ending March:
2000 $50,693
2001 54,289
2002 58,795
2003 20,663
------
$184,440
========
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 April 2, 1999, 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.
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The Company reported tangible net worth of $502,192. The ratio of
current assets to current liabilities was .9 to 1.0.
The Company has applied for additional waivers of this covenant.
Neither the UDC or WAMCO XXIV 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 loan
plus interest will become due and payable.
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 Plan Amendments Act of 1990 ("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 $35,640 for the year ended April 2, 1999
and $40,176 for the year ended March 27, 1998.
As of April 2, 1999, 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 $3,638.
The total amount due of $158,827 is reported on the accompanying
balance sheet in two components; $96,000 reported as a current
liability and $62,827 as a long-term liability.
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 $8,000 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 20 months. Additionally, both parties
have agreed that current obligatory funding for the Pension Plan will
be made on a timely current basis.
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.
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At April 2, 1999 and March 27, 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 the additional minimum liability to
comply with the requirements of Statement of Financial Accounting
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 $ 2,230 representing
the premium liability
The total amount claimed by the PBGC amounts to $700,745.
The amount claimed is being contested by the Company, and the PBGC
granted the Company an extension of time until February 22, 1999 in
which to file an appeal. The Company did file an appeal and is
presently awaiting a response from the PBGC.
Marketing and Sales
The market for connectors and interconnection devices, domestic and
worldwide, is highly fragmented as a result of the manufacture by many
companies of a multitude of different types and varieties of
connectors. For example, connectors include: printed circuit,
rectangular I/O, circular, planar (IOC) RF coax, IC socket and fiber
optic. The Company has been servicing a niche in the market by
manufacturing HYPERTAC (TM) connectors and innovative Company-designed
printed circuit connectors such as the COMTAC connectors. Previously,
the Company was one of only three licensed manufacturers of the
HYPERTAC (TM) design in the United States. In the fiscal year 1996, the
Company learned that the other two licensees had merged. Moreover, the
Company, based upon advice of counsel, determined that the HYPERTAC
technology was no longer protected by a patent, and therefore was in
the public domain. As a result, the Company notified the licensor that
it would no longer be bound by the terms of its license agreement and
the Company ceased making license payments. See Financial Statements
and Notes thereto. The Company has received a brief notice from the
licensor that it disputed the Company's interpretations and demanded
return of certain equipment. No legal proceedings have been instituted
by the licensor and the Company has not received any further notices.
The Company does not anticipate manufacturing other types of connectors
in the immediate future. The Company is continuously experimenting with
innovative connection designs, which may cause it to alter its
marketing plans in the future if a market should develop for any of its
current or future innovative designs.
The Company's products are marketed to original equipment manufacturers
directly and through distributors serving primarily the government,
military, aerospace and commercial electronics markets. The Company is
also involved in developing new connectors for specific uses which
result from changes in technology. This includes the COMTAC connectors.
The Company assists customers in the development and design of
connectors for specific customer applications. This service is marketed
to customers who require the development of connectors and
interconnection devices specially designed to accommodate the customers
own products.
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The Company is primarily a manufacturer and its products are
essentially basic components of larger assemblies of finished goods.
Approximately 95% of the Company's net sales for the years ended April
2, 1999 and March 27, 1998, respectively, were made directly to
manufacturers of finished products with the balance of the Company's
products sold to distributors. Distributors often purchase connectors
for customers who do not require large quantities of connectors over a
short period of time but rather require small allotments of connectors
over an extended period of time.
Two (2) of the Company's customers accounted for 38% and 30% of the
Company's net sales for the years ended April 2, 1999 and March 27,
1998, respectively. One of the Company's customers accounted for 31%
and 12% of the Company's sales for the years ended April 2, 1999 and
March 27, 1998 respectively.
The Company currently employs 16 independent sales representatives to
market its products in all regions in the United States. These
independent sales representatives also promote the product lines of
other electronics manufacturers; however, they do not promote the
product lines of competitors which compete directly with the Company's
products. These sales representatives accounted for approximately 94%
of Company sales (with the balance of Company sales being generated via
direct customer contact) for the year ended April 2, 1999.
International sales accounted for less than 1% of sales for the years
ended April 2, 1999 and March 27, 1998.
Backlog of Orders/Capital Requirements
The backlog of orders for the Company's products amounted to
approximately $1,400,000 at April 2, 1999, as compared to $1,300,000 at
March 28, 1998. A significant portion of these orders are subject to
cancellation or postponement of delivery dates and, therefore, no
assurance can be given that actual sales will result from these orders.
The estimated funds required to manufacture the current backlog of
orders is estimated at $550,000. The Company does not foresee any
problems which would prevent it from fulfilling its orders.
Competition
The design, development, manufacture and distribution of electrical
connectors and interconnection devices is a highly competitive field.
The Company principally competes with companies who produce high
performance connectors in printed circuits and wireboards for high
technology application which includes Hypertronics Corporation and
Si-Tac Connectors, Inc. The Company competes with respect to their
abilities to adapt certain technologies to meet specific product
applications; in producing connectors cost-effectively; and in
production capabilities. In addition, there are many companies who
offer connectors with designs similar to those utilized by the Company
and are direct competitors of the Company.
The primary basis upon which the Company competes is product
performance and production capabilities. The Company usually receives
job orders after submitting bids pursuant to customer-issued
specifications. The Company also offers engineering services to its
customers in designing and developing connectors for specialized
products and specific customer applications. This enables the Company
to receive a competitive advantage over those companies who basically
manufacture
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connectors based solely or primarily on cataloged specifications. Many
of the Company's competitors have greater financial resources, market
penetration and experience than the Company and no assurances can be
given that the Company will be able to compete effectively with these
companies in the future.
Suppliers of Raw Materials and Component Parts
The Company utilizes a variety of raw materials and manufactured
component parts which it purchases from various suppliers. These
materials and components are available from numerous sources and the
Company does not believe that it will have a problem obtaining such
materials in the future. However, any delay in the Company's ability to
obtain necessary raw materials and component parts may affect its
ability to meet customer production needs. In anticipation of such
delays, the Company carries an inventory of raw materials and component
parts to avoid shortages and to insure continued production.
Engineering/Research & Development
The Company provides personalized engineering services to its customers
by designing connectors for specific customer applications. The
employment of electromechanical engineers is the anticipated
cornerstone of the Company's future growth. The Company maintains a
testing laboratory where its engineers experiment with new connector
designs based on changes in technology and in an attempt to create
innovative, more efficient connector designs.
The Company expended an estimated $69,600 and $69,500 for the years
ended April 2, 1999 and March 27, 1998, respectively, on Company
sponsored research and development activities relating to the
development of new designs, techniques and the improvement of existing
designs. In addition, the Company received revenues of $96,200 and
$103,800 for the years ended April 2, 1999 and March 27, 1998,
respectively, pursuant to customer sponsored research activities.
Employees
The Company presently employs approximately 65 people, four (4) of whom
are executive officers; three (3) are engaged in management activities;
three (3) provide general and administrative services and approximately
55 are employed in manufacturing and testing activities. The employees
engaged in manufacturing and testing activities are covered by a
collective bargaining agreement with the United Auto Workers of
America, Local 259 (the "Union") which expired on March 31, 1999 and
was extended until April 30, 1999. On April 15, 1999, the Union and the
Company negotiated a new contract which expires on March 31, 2002. The
Company believes that it has a good relationship with its employees and
the Union.
Patents and Licenses
Electrical connectors and interconnection devices are usually the
subject of standard designs, therefore, only innovations of standards
designs or the discovery of a new form of connector are patentable. The
Company is continuously attempting to develop new forms of connectors
or adaptations of current connector designs in an attempt to increase
performance and decrease per unit costs. The Company has developed and
designed the COMTAC connector which was patented on January 19, 1988,
at which time the patent was assigned to the Company.
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Governmental Regulations
The Company is subject to federal regulations under the Occupational
Safety and Health Act ("OSHA") and the Defense Electrical Supply
Command ("DESC"). OSHA provides federal guidelines and specifications
to companies in order to insure the health and safety of employees.
DESC oversees the quality and specifications of products and components
manufactured and sold to the government and the defense industry.
Although DESC continuously requires suppliers to meet changing
specifications, the Company has not encountered any significant
problems meeting such specifications and its products have, in the
past, been approved. The Company is unaware of any changes in the
government's regulations which are expected to materially affect the
Company's business.
Item 2. Properties
On December 1, 1998 the Company amended its lease on its premises by
surrendering a portion of its rented premises back to the landlord.
Accordingly, the base monthly rent was reduced to $ 10,397 or $121,765
per annum through December 1999 and to $9,397 or $112,765 per annum
through the conclusion of the lease which ends August 23, 2001.
The Company is obligated under this lease through August 23, 2001, at
minimum annual rentals as follows:
Fiscal year ending:
-------------------
2000 $121,765
2001 112,765
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$234,530
========
The Company leases approximately 20,400 feet of space, of which it
estimates; 6,000 square feet are used as executive, sales and
administrative offices, 14,400 square feet are used for its
manufacturing and plating.
The net rental expense for the year ended April 2, 1999 for this lease
was $180,979. In addition to the base rent, the Company pays real
estate taxes, insurance premiums and utility charges relating to the
use of the premises. The Company considers its present facilities to be
adequate for its present and anticipated future needs. See "Legal
Proceedings" for certain matters involving the Company's operating
facility and offices.
Item 3. Legal Proceedings
The Company is not a party to or aware of any pending or threatened
legal proceedings which would result in any material adverse effect on
its operations or its financial condition.
As previously reported, the Company reached an agreement with its
landlord, the New York Urban Development Corporation ("NYUDC") to
settle certain matters related to the lease of its principal offices
located in Brooklyn, New York, including a lawsuit brought by the NYUDC
against the Company. The lawsuit, entitled New York City Economic
Development Corporation against IEH
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Corporation, had been commenced in the Civil Court of the City of New
York, Kings County (Index No. L&T 88890/97).
The NYUDC claimed that IEH had not paid the proper rent due under its
lease for the period from September 1, 1992 through April 1997. The
NYUDC claimed damages of $236,000 plus interest of approximately
$41,000.
The Company determined it was in its best interest to settle the
lawsuit. The parties agreed to a settlement, effective as of May, 1997
whereby the Company agreed to a repayment schedule for the amount due
payable with interest at 8.25% per year. The monthly installments equal
approximately $5,790 per month. The settlement provides for the entity,
following notice and a cure period, of a default judgement by the NYUDC
in the event the Company fails to timely pay amounts due under the
lease and the settlement.
Item 4. Submission of Matters to Vote of Security Holders
No matters were submitted to shareholders during the fourth quarter for
the fiscal year ended April 2, 1999.
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PART II
Item 5. Market for Common Equity and Related Stockholder Matters
Principal Market
The Common Stock of the Registrant (the "Common Stock") is traded in
the Over-The-Counter Market Bulletin Board under the symbol "IEHC"). On
January 11, 1993, the Company's Common Stock was deleted from listing
on the NASDAQ SmallCap Market System because of the Company's failure
to maintain the minimum asset and shareholders equity requirements. On
January 12, 1993, the Company's Common Stock was first quoted over the
Electronic Bulletin Board (OTCBB).
Market Information
The range of high and low bid prices for the Company's Common Stock,
for the periods indicated as set forth below. For the period to October
29, 1991, the Company was listed on the NASDAQ National Market System.
On October 29, 1991, the Company's Common Stock was delisted from the
NASDAQ National Market System and from October 29, 1991 to January 11,
1993, the Company's Common Stock was listed on the NASDAQ SmallCap
Market System. On January 11, 1993, the Company's Common Stock was
delisted from the NASDAQ SmallCap Market System and on January 13,
1993, the Company's Common Stock was first quoted over the Electronic
Bulletin Board (OTCBB). Set forth below is a table indicating the high
and low bid prices of the Common Stock during the periods indicated.
Year High Low
Fiscal Year ended April 2, 1999 (1)
1st Quarter .6875 .3281
2nd Quarter .3438 .2812
3rd Quarter .3125 .2812
4th Quarter .25 .25
Fiscal Year ended March 27,1998 (1)
1st Quarter .1565 .15625
2nd Quarter .25 .15625
3rd Quarter .25 .25
4th Quarter .3125 .25
(1) As reported by the OTCBB.
The above quotations, as reported, represent prices between dealers and
do not include retail mark-ups, mark-downs or commissions. Such
quotations do not necessarily represent actual transactions.
On June 21, 1999 the high bid and the low bid was 5/16.
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Dividends
The Company has not paid any cash dividends on its Common Stock during
the last five (5) fiscal years. At present, the Company does not
anticipate issuing any cash dividends on its Common Stock in the
foreseeable future by reason of its contemplated future financial
requirements and business plans. The Company will retain earnings, to
the extent that there are any, to finance the development of its
business.
Approximated Number of Equity Security Holders
The number of record holders of the Company's Common Stock as of June
19, 1999 was approximately 1,252. Such number of record owners was
determined from the Company's stockholder records, and does not include
the beneficial owners of the Company's Common Stock whose shares are
held in the names of various security holders, dealers and clearing
agencies.
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Item 6. 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:
Relationship to Total Revenues
<TABLE>
<CAPTION>
April 2, March 27,
1999 1998
------------ --------------
<S> <C> <C>
Operating Revenues (in thousands) $4,334 $4,750
------ ------
Operating Expenses:
(as a percentage of Operating Revenues)
Costs of Products Sold 74.2% 72.1%
Selling, General and Administrative 19.5% 17.6%
Interest Expense 3.2% 2.4%
Depreciation and amortization 6.3% 5.6%
---- ----
TOTAL COSTS AND EXPENSES 103.2% 97.7%
Operating Income (loss) (3.2%) 2.3%
Other Income 0% 0%
-- --
Income (loss) before Income Taxes (3.2%) 2.3%
Income Taxes (.3%) (.3%)
Net Income (loss) (3.5%) 2.0%
====== ====
</TABLE>
Year End Results: April 2, 1999 Compared to March 27, 1998
Operating revenues for the year ended April 2, 1999 amounted to
$4,334,477 reflecting a 8.7% decrease versus prior year 1998 revenues
for of $4,750,099. The decrease in revenues is a direct result of the
Company's continuing efforts to redirect its sales efforts to the
commercial electronic market and away from the governmental and
military procurement sector.
Cost of products sold amounted to $3,214,927 for the fiscal year ended
April 2, 1999, or 74.2% of operating revenues. This reflected a
decrease of 6.1% in the cost of products sold from $3,424,932 or 72% of
operating revenues for the fiscal year ended March 27, 1998. This
decrease, though marginal, is primarily due to management's efforts to
control manufacturing costs.
Selling, general and administrative expenses were $847,358 and $835,025
or 19.5% and 17.6% of operating revenues for the fiscal years ended
April 2, 1999 and March 27, 1998, respectively. This
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category of expense increased 1.5% from the prior year. The increase
can be attributed to increased variable expenses.
Interest expense was $137,766 for the fiscal year ended April 2, 1999
or 3.2% of operating revenues. For the fiscal year ended March 27,
1998, interest expense was $116,104 or 2.4% of operating revenues. The
increase of 18.7% reflects additional equipment loans obtained during
the year.
Depreciation and amortization of $273,029 or 6.3% of operating revenues
was reported for the fiscal year ended April 2, 1999. This reflects an
increase of 1.8% from the prior year ended March 27, 1998 of $268,173
or 5.6% of operating revenues. The increase is a result of additional
acquisitions of new plant and equipment and computers.
The Company reported a net loss of $152,824 for the year ended April 2,
1999 representing basic loss of $.066 per share as compared to net
income of $95,651 or $0.42 per share for the year ended March 27, 1998.
The net income decrease for the current year can, in part, be
attributed to an increase in the costs of products sold and interest
expense.
Liquidity and Capital Resources
The Company reported working capital deficit of $188,877 as compared to
a working capital of $102,821 at March 27, 1998. The decrease in
working capital of $291,698 was attributable to the following items:
Net income (loss) (excluding depreciation and amortization)
$120,205
Capital expenditures
(306,137)
Other transactions
(105,766)
As a result of the above, the current ratio (current assets to current
liabilities) was .9 to 1 at April 2, 1999 as compared to 1.1 to 1 at
March 27, 1998. Current liabilities at April 2, 1999 were $1,955,702
compared to $1,742,860 at March 27, 1998. This decrease in the current
ratio is primarily reflective of a decrease in accounts receivable as
well as an increase in accounts payable and in accounts receivable
financed.
The Company expensed $306,137 in capital expenditures in fiscal 1999
against depreciation of $273,029 for the year ended April 2, 1999.
The net loss of $152,824 for the year ended April 2, 1999 decreased
stockholders' equity to $502,192 as compared to stockholders' equity of
$655,033 at March 27, 1998.
The Company has an accounts receivable financing agreement with a
factor which bears interest at 2.5% above prime with a maximum of 12%
per annum. At April 2, 1999 the amount outstanding was $759,330 as
compared to $656,015 at March 27, 1998.
As of April 2, 1999 and as of March 27, 1998, the Company failed to
meet the tangible net worth covenant contained in its loan agreement
with the Urban Development Corporation ("UDC"). The
15
<PAGE>
Company has not been in compliance with this ratio since fiscal year
1994. The Company received a waiver of this covenant from the UDC for
the period ending March 31, 1994. The Company has requested a continued
waiver from the UDC. To date, the UDC has not declared an event of
default. The Company has been notified that the loan was recently sold
by UDC to a third party. There are no assurances that the Company will
receive any additional waivers of this covenant and therefore, the
Company may be deemed to be in noncompliance with its loan obligation
to the UDC.
Effects of Inflation
The Company does not view the effects of inflation to have a material
effect upon its business. Increases in costs of raw materials and labor
costs have been offset by increases in the price of the Company's
products, as well as reductions in costs of production, reflecting
management's efforts in this area. While the Company has in the past
increased its prices to customers, it has maintained its relative
competitive price position. However, significant decreases in
government, military subcontractor spending has provided excess
production capacity in the industry which in turn has tightened pricing
margins.
16
<PAGE>
Item 7. Financial Statements
See Index to Financial Statements attached hereto.
Item 8. Changes in and Disagreements with Accountants on Accounting
Financial Disclosure.
The Company had no disagreements with its accountants during the last
two fiscal years.
17
<PAGE>
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16 (a) of the Exchange Act
The executive officers and directors of the Company are as follows:
Name Age Office
Michael Offerman 58 Chairman of the Board of Directors and President
Ralph Acello 62 Vice-President - Production and Director
Robert Knoth 57 Secretary and Treasurer
Murray Sennet 76 Director
Allen Gottlieb 58 Director
Robert Pittman 74 Director
Joan Prideaux 66 Vice-President - Sales and Marketing
All directors serve for a term of two years and until their successors
are duly elected. All officers serve at the discretion of the Board of
Directors.
Executive Officers and Directors
Michael Offerman has been a member of the Board of Directors since
1973. In May, 1987, Mr. Offerman was elected President of the Company
and has held that position since that date. Prior to his becoming
President, Mr. Offerman served as Executive Vice-President of the
Company.
Ralph Acello has been a member of the Board of Directors since 1988. In
August, 1984, Mr. Acello was elected the Company's Vice-President of
Production and has held the position since that date.
Robert Knoth joined the Company as Controller in January, 1990 and was
elected treasurer of the Company in March, 1990. Mr. Knoth was elected
as Secretary of the Company in September 1992 and Mr. Knoth has held
these positions since said dates. From 1986 to January, 1990, Mr. Knoth
was employed as controller by G&R Preuss, Inc., a company engaged in
the business of manufacturing truck bodies and accessories.
Murray Sennet has been a member of the Company's Board of Directors
since 1970. Mr. Sennet was the Secretary and the Treasurer of the
Company at the time of his retirement in April, 1986.
Allen Gottlieb has been a member of the Company's Board of Directors
since 1992. Mr. Gottlieb has been an attorney in private practice for
over five (5) years.
Robert Pittman has been a member of the Board of Directors since 1987.
Mr. Pittman retired in October 1992, at which time he had held the
position of Vice-President of Engineering and Secretary of the Company.
18
<PAGE>
Joan Prideaux joined the Company in July, 1995 as National Sales
Manager. Prior to such time Ms. Prideaux was employed as an account
executive of Viking Connectors for the previous five years.
Significant Employees
Thomas Hunt is the director of Quality Control, a position he has held
since October, 1992. Mr. Hunt joined the Company in 1987 as the
laboratory director and senior inspector and held such positions until
his promotion in October, 1992.
Stephen Reich is the Director of Purchasing, a position he has held
since July 1995. Prior to joining the Company, Mr. Reich owned and
operated a retail business. Lawrence Schwartz is the Quality Control
manager, a position he has held since July 1997. Mr. Schwartz was
employed by Precision International a manufacturing company of
automotive parts.
Certain Reports
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and officers and persons who own, directly or
indirectly, more than 10% of a registered class of the Corporation's
equity securities, to file with the Securities and Exchange Commission
("SEC") reports of ownership and reports of changes in ownership of
Common Stock of the Corporation. Officers, directors and greater than
10% shareholders are required to furnish the Company with copies of all
Section 16(a) reports that they file. Based solely on review of the
copies of such reports received by the Company, the Company believes
that filing requirements applicable to officers, directors and 10%
shareholders were complied with during the fiscal year.
19
<PAGE>
Item 10. Executive Compensation
The following table sets forth below the summary compensation paid or accrued by
the Corporation during the fiscal years ended April 2, 1999, March 27, 1998, and
March 28, 1997 for the Corporation's Chief Executive Officer:
<TABLE>
<CAPTION>
Other Annual
Name and Principal Position Year Salary Bonus Compensation
<S> <C> <C> <C> <C>
Michael Offerman, Chief Executive officer,
President (1) April 2, 1999 $97,961 - 0
March 27, 1998 100,000 - 0
March 29, 1997 92,404 - 0
</TABLE>
(1) During the years ended April 2, 1999, March 27, 1998 and March 28,
1997, the Corporation provided automobile allowances to Mr. Offerman.
This does not include the aggregate incremental cost to the Corporation
of such automobile or automobile allowances. The Corporation is unable
to determine without unreasonable effort and expense the specific
amount of such benefit, however, the Corporation has concluded that the
aggregate amounts of such personal benefit for Mr. Offerman does not
exceed $25,000 or 10% of the compensation reported as total salary and
bonus reported. Effective January 1, 1995, Mr. Offerman entered into an
employment agreement with the Company to increase his salary to
$100,000 per annum. Mr. Offerman agreed that, not withstanding the
terms of his new employment agreement, he was paid at the rate of
$97,961 for fiscal 1999.
See "Employment Agreements". No other officer of the Corporation
received compensation (salary and bonus) in excess of $100,000 during
the fiscal years ended April 2, 1999 or March 27, 1998 or March 28,
1997.
Pension/Benefit Incentive Plan
In 1964, the Corporation's Shareholders and Board of Directors adopted a
contributory pension plan (the "Salaried Pension Plan") effective April 1, 1964,
for salaried employees of the Corporation. The Salaried Pension Plan as revised
on April 1, 1987, provides for retirement benefits for qualified employees upon
or prior to retirement. For early retirement, employees are eligible to receive
a portion of their retirement benefits, starting 10 years prior to the employees
anticipated normal retirement age (age 65), if the employee has completed 15
years of service to the Corporation. The employee is eligible to receive reduced
retirement benefits based on an actuarial table for a period not exceeding ten
(10) years of his lifetime. In no event would benefits exceed $12,000 per year.
For normal retirement at the age of sixty-five (65) the employee is entitled to
receive full retirement benefits for a period not exceeding ten (10) years of
his lifetime. If the employee should die prior to the ten year period, his
beneficiaries will continue to receive the full benefit for the remainder of the
ten year term. In no event will benefits exceed $12,000 per year.
If payment is made on the "joint and survivor basis" as elected by the employee,
benefits will be provided to both the employee and spouse on a reduced basis
over the life of both the employee and his spouse. If the employee should die
prior to the guaranteed ten year period, the spouse will receive the employee
benefit for
20
<PAGE>
the remainder of the term, after which, the spouse will received the reduced
spousal benefit for the life of the spouse. In no event will the benefits
pursuant to the joint and survivor basis exceed $12,000 per year.
In June, 1995, the Company applied to the Pension Benefit Guarantee Corporation
for a distress termination of the Salaried Pension Plan. The PBGC has notified
the Company that it has agreed to take over the Salaried Pension Plan. The PBGC
has not issued its final order and may require that the Company enter into an
agreement to make future payments to the PBGC.
Under an agreement dated June 16, 1978, the Corporation entered into a
retirement compensation agreement with Michael Offerman, which provides that
upon reaching the age of 65, or the earlier of death, total disability, or
employment termination by mutual consent, Michael Offerman or his beneficiary
would be entitled to retirement payments of $30,000 per year for a period of
five years.
Employment Agreements
In August, 1995, the Board of Directors approved the terms of an employment
agreement with Michael Offerman, its President and Chairman of the Board.
Effective as of January 1, 1995, the terms of he Employment Agreement provide
that Mr. Offerman's salary will be $100,000 per year and that he will be
employed as President of the Company until a term expiring on December 31, 1999.
Mr. Offerman agreed to defer the increase in his salary from the previous year's
rate of compensation ($86,875) until October 20, 1995 and further agreed to
receive on $92,404 in salary for the fiscal year ended April 2,1998. Commencing
in September 1997, Mr. Offerman began receiving compensation at the rate of
$100,000 per year in accordance with his employment agreement. As further
provided under the terms of the Employment Agreement, the Company will provide
certain benefits such as health benefits and the use of a full size automobile
during the term. The Company also agreed to pay the premium for a $150,000 term
life insurance policy payable to Mr. Offerman's beneficiary. In the event the
Company declines to enter into a new employment agreement with Mr. Offerman at
the expiration of his term, the Company has agreed to pay Mr. Offerman the sum
of $75,000. Additionally, in the event there occurs a "change of control" of the
Company, and within the one (1) year period thereafter Mr. Offerman's employment
is terminated or he resigns, then Mr. Offerman will be entitled to receive a sum
equal to the balance of his base salary for the remainder of the term plus
$75,000. A "change of control" is defined to mean (i) a person becomes the
holder of 30% or more of the combined voting power of the Company's outstanding
securities, (ii) the stockholders of the Company approve a merger or
consolidation whereby the Company's voting securities fail to represent, after
such merger or consolidation, at least 50.1% of the voting securities of the
surviving entity. Additionally, in the event the Company relocates outside of
the New York City Metropolitan area, it has agreed to pay Mr. Offerman the sum
of $75,000.
In August, 1995, the Board of Directors approved the terms of an employment
agreement with Ralph Acello, its Vice-President-Production. Effective as of
January 1, 1995, the terms of the Employment Agreement provide that Mr. Acello's
salary will be $61,300 per year and that he will be employed as Vice
President-Production of the Company until a term expiring on December 31, 1999.
As further provided under the terms of the Employment Agreement, the Company
will provide certain benefits such as health benefits and the use of a full size
automobile during the term. The Company also agreed to pay the premium of a
$150,000 term life insurance policy payable to Mr. Acello's beneficiary. In the
event the Company declines to enter into a new employment agreement with Mr.
Acello at the expiration of his term, the Company has agreed to pay Mr. Acello
the sum of $45,975. Additionally, in the event there occurs a "change of
control" of the Company, and within the one (1) year period thereafter Mr.
Acello's employment is terminated or he resigns, then Mr. Acello will be
entitled to receive a sum equal to the balance of his base salary for the
remained of his term plus $45,975. A "change of control" is defined to mean (i)
a person becomes the holder of 30% or more of the combined voting power of the
Company's outstanding securities, (ii) the stockholders of the Company approve
21
<PAGE>
a merger or consolidation whereby the Company's voting securities fail to
represent, after such merger or consolidation, at least 50.1% of the voting
securities of the surviving entity. Additionally, in the event the Company
relocates outside of the New York City Metropolitan area, it has agreed to pay
Mr. Acello the sum of $45,975.
In August, 1995, the Board of Directors approved the terms of an employment
agreement with Robert Knoth. Effective as of January 1, 1995, the terms of the
Employment Agreement provide that Mr. Knoth's salary will be $59,500 per year
and that he will be employed as Secretary and Treasurer until a term expiring on
December 31, 1999. As further provided under the terms of the Employment
Agreement, the Company will provide certain benefits such as health benefits.
The Company also agreed to pay the premium of a $150,000 term life insurance
policy payable to Mr. Knoth's beneficiary. In the event the Company declines to
enter into a new employment agreement with Mr. Knoth at the expiration of his
term, the Company has agreed to pay Mr. Knoth the sum of $44,625. Additionally,
in the event there occurs a "change of control" of the Company, and within the
one (1) year period thereafter Mr. Knoth's employment is terminated or he
resigns, then Mr. Knoth will be entitled to receive a sum equal to the balance
of his base salary for the remainder of the term plus $44,625. A "change of
control" is defined to mean (i) a person becomes the holder of 30% or more of
the combined voting power of the Company's outstanding securities, (ii) the
stockholders of the Company approve a merger or consolidation whereby the
Company's voting securities fail to represent, after such a merger or
consolidation, at least 50.1% of the voting securities of the surviving entity.
Additionally, in the event the Company relocates outside of the New York City
Metropolitan area, it has agreed to pay Mr. Knoth the sum of $44,625.
In December 1997, the Board of Directors approved the terms of an employment
agreement with Joan Prideaux. The terms of the employment agreement provide that
Ms. Prideaux's salary will be $57,000 per year and that she will be employed as
Vice President-Sales and Marketing. The agreement is for a period of five years.
As further provided under the terms of the employment agreement, the Company
will provide certain benefits such as health benefits. The Company also agreed
to pay the premium of a $150,000 term life insurance policy payable to Ms.
Prideaux's beneficiary. In the event the Company declines to enter into a new
employment agreement with Ms. Prideaux at the expiration of the term, the
Company has agreed to pay Ms. Prideaux the sum of $42,750. Additionally, in the
event there occurs a "change of control" of the Company, and within the one (1)
year period thereafter Ms. Prideaux's employment is terminated or he resigns,
then she will be entitled to receive a sum equal to the balance of her base
salary for the remainder of the term plus $42,750. A "change of control" is
defined to mean (i) a person becomes the holder of 30% or more of the combined
voting power of the Company's outstanding securities, (ii) the stockholders of
the Company approve a merger or consolidation whereby the Company's voting
securities fail to represent, after such a merger or consolidation, at least
50.1% of the voting securities of the surviving entity. Additionally, in the
event the Company relocates outside of the New York City Metropolitan area, it
has agreed to pay Ms. Prideaux the sum of $42,750.
Cash Bonus Plan
In 1987, the Company adopted a cash bonus plan ("Cash Bonus Plan") for Executive
Officers. Contributions to the Bonus Plan are made by the Company only after
pre-tax operating profits exceed $150,000 for a fiscal year, and then to the
extent of 10% of the excess of the greater of $150,000 of 25% of pre-tax
operating profits. There were no contributions to the Bonus Plan for the fiscal
years ended April 2, 1999, March 27, 1998, March 28, 1997.
22
<PAGE>
Item 11. Security Ownership of Certain Beneficial
Owners and Management
----------------------------------------
The following table sets forth certain information as of June 25, 1999
with respect to (i) the persons (including any "group" as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934), known by the Company
to be the beneficial owner of more than five percent (5%) of any class of the
Company's voting securities; (ii) each Executive Officer and Director who owns
Common Stock in the Company; and (iii) all Executive Officers and Directors as a
group. As of June 25, 1999, there were 2,303,468 shares of Common Stock issued
and outstanding.
24
<PAGE>
<TABLE>
<CAPTION>
Amount of and Nature
Name and Address of of Beneficial
Title of Class Beneficial Owner Ownership Percentage of Class
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock $.50 Michael Offerman 399,784 17.4%
Par Value 140 58th Street
Brooklyn, NY 11220(1)
Murray Sennet 24,500 1.1%
1900 Manor Lane
Plano, TX 75093
Allen Gottlieb 0 0
325 Coral Way
Ft. Lauderdale. FL
33301
Robert Pittman 20,000 *
45 Ocean Avenue
Monmouth Bch, NJ
07750
Gerard Deiss
16 Rue De La Mart 547,000 23.7%
Chartreuil
6-68 490
Mere Par Montfort
L'Amaury, France (2)
David Lopez and 278,000 12.1%
Nancy Lopez
Edge of Woods
P.O. Box 323
Southampton, NY
11968
All Officers & 444,284 19.3%
Directors as a Group
(4 in number)
</TABLE>
- ----------
* Less than 1%.
1 43,600 shares of Common Stock are jointly owned by Mr. Offerman and his
wife, Gail Offerman.
2 These shares are beneficially owned by Mr. Deiss through a Liechtenstein
trust.
All shares set forth above are directly by the named individual unless otherwise
stated.
25
<PAGE>
Item 12. Certain Relationships and Related Transactions
See "Executive Compensation-Employment Agreements" for a discussion of the
employment agreements between the Company and management.
Item 13. Exhibits, Lists and Reports on Form on Form 8-K
(a) Exhibits filed with Form 10-KBS:
See Exhibit List Annexed
(b) Reports on Form 8-K
The Company did not file any Reports on Form 8-K during the last quarter of the
period covered by this Report.
26
<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) 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.
IEH CORPORATION
By: /s/ Michael Offerman
---------------------------
Michael Offerman, President
Dated: June 29, 1999
Pursuant to the requirements of the Securities Exchange Act of l934, this Report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
/s/ Michael Offerman June 29, 1999
- ------------------------------------
Michael Offerman, Chairman of the
Board and President
/s/ Ralph Acello June 29, 1999
- ------------------------------------
Ralph Acello
Vice President and Director
/s/ Robert Knoth June 29, 1999
- ------------------------------------
Robert Knoth, Secretary and
Treasurer
/s/ Murray Sennet June 29, 1999
- ------------------------------------
Murray Sennet, Director
/s/ Robert Pittman June 29, 1999
- ------------------------------------
Robert Pittman, Director
/s/ Alan Gottlieb June 29, 1999
- ------------------------------------
Alan Gottlieb, Director
27
<PAGE>
Contents
April 2, 1999 and March 27, 1998
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
Report of Independent Certified Public Accountant 21
Financial Statements:
Balance Sheets as of April 2, 1999 and March 27, 1998 22-23
Statement of Operations for the twelve months ended April 2, 1999
and March 27, 1998 24
Statement of Stockholders' Equity as of April 2, 1999 and March 27, 1998 25
Statement of Cash Flows for the years ended April 2, 1999 and March 27, 1998 26-27
Notes to Financial Statements 28-36
</TABLE>
28
<PAGE>
Report of Independent Certified Public Accountant
Board of Directors
IEH Corporation
We have audited the accompanying balance sheets of IEH Corporation as of April
2, 1999 and March 27, 1998 and the related statements of operations,
stockholders' equity and cash flows for each of the two years in the period
ended April 2, 1999 and March 27, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based upon our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of IEH Corporation as of April 2,
1999 and March 27, 1998 and the results of its operations and its cash flows for
each of the two years in the period ended April 2, 1999 and March 27, 1998 in
conformity with generally accepted accounting principals.
Jerome Rosenberg, CPA, P.C.
29
<PAGE>
IEH CORPORATION
BALANCE SHEETS
As of April 2, 1999 and March 27, 1998
<TABLE>
<CAPTION>
April 2, March 27,
1999 1998
(Note1)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash $15,120 $19,454
Accounts receivable, less allowances for doubtful accounts
of $10,062 at April 2, 1999 and March 27, 1998 810,551 838,721
Inventories (Note 2) 926,471 949,282
Prepaid expenses and other current assets (Note 3) 14,683 38,224
------ ------
Total current assets 1,766,825 1,845,681
--------- ---------
PROPERTY, PLANT AND EQUIPMENT, less accumulated depreciation and amortization of
$4,777,296 at April 2, 1999
and $4,504,267 at March 27, 1998 (Note 4) 1,438,733 1,405,625
--------- ---------
OTHER ASSETS:
Prepaid pension cost (Note 10) 43,949 43,949
Other assets 46,622 47,429
------ ------
90,571 91,378
------ ------
Total assets $3,296,129 $3,342,684
========== ==========
</TABLE>
See accompanying notes to financial statements
30
<PAGE>
IEH CORPORATION
BALANCE SHEETS
AS of April 2, 1999 and March 27, 1998
<TABLE>
<CAPTION>
April 2, March 27,
1999 1998
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Accounts receivable financing (Note 5) $759,330 $656,015
Notes payable, equipment, current portion (Note 8) 25,333
0
Notes payable, current portion (Note 7) 60,798 56,000
Loans payable, current portion (Note 9) 50,693 48,530
Accrued corporate income taxes 15,352 15,332
Union pension and health & welfare, current portion (Note 11) 96,000 120,000
Accounts payable 769,893 722,957
Other current liabilities (Note 6) 178,303 124,026
------- -------
Total current liabilities 1,955,702 1,742,860
--------- ---------
LONG-TERM LIABILITIES:
Pension Plan payable (Note 11) 516,966 516,966
Notes payable, equipment, less current portion (Note 8) 52,936 0
Notes payable, less current portion (Note 7) 71,759 132,558
Loan payable, less current portion (Note 9) 133,747 184,440
Union pension & health & health & welfare, less current
portion (Note 12) 62,827 110,827
------ -------
Total long-term liabilities 838,235 944,791
-------- -------
Total liabilities 2,793,937 2,687,651
--------- ---------
STOCKHOLDERS' EQUITY:
Common stock, $.50 par value; 10,000,000 shares authorized, 2,303,468 shares
issued and outstanding at April 2, 1999 and 2,303,502 shares issued and
outstanding at March 27, 1998
Note 13) 1,151,734 1,151,751
Capital in excess of par value 1,615,874 1,615,874
Retained earnings (Deficit) (2,265,416) (2,112,592)
----------- -----------
Total stockholders' equity 502,192 655,033
------- -------
Total liabilities and stockholders' equity $3,296,129 $3,342,684
========= =========
</TABLE>
See accompanying notes to financial statements
31
<PAGE>
IEH CORPORATION
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended
April 2, March 27,
1999 1998
----------------- -----------------
<S> <C> <C> <C>
REVENUE, net sales (Note 15) $4,334,477 $4,750,099
--------- ---------
COSTS AND EXPENSES:
Cost of products sold 3,214,927 3,424,932
Selling, general and administrative 847,358 835,025
Interest expense 137,766 116,104
Depreciation and amortization 273,029 268,173
------- -------
4,473,080 4,644,234
--------- ---------
OPERATING INCOME (LOSS) (138,603) 105,865
OTHER INCOME 810 1,131
INCOME (LOSS) BEFORE INCOME TAXES (137,793) 106,996
PROVISION FOR INCOME TAXES 15,031 11,345
------ ------
NET INCOME (LOSS) $(152,824) $95,651
========= ======
Basic and Diluted Earnings per common share (Note 1) $(.066) $.042
====== ====
Weighted average number of common shares
outstanding (in thousands) 2,303 2,303
===== =====
</TABLE>
See accompanying notes to financial statements
32
<PAGE>
IEH CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
For the Years Ended April 2, 1999 and March 27,1998
<TABLE>
<CAPTION>
Capital in Excess Retained Earnings
Common Stock of Par Value (Deficit)
---------------------------------- -------------------- -------------------
Shares Amount
--------------- ---------------
<S> <C> <C> <C> <C>
Balances, March 28, 1997 2,303,502 $1,151,751 $1,615,874 $(2,208,243)
Net Income: Year ended March 27,1998
95,651
--------------- --------------- -------------------- -------------------
Balances, March 27, 1998 2,303,502 1,151,751 1,615,874 (2,112,592)
Retirement of common stock at September
25, 1998
(34) (17)
Net Loss: Year ended April 2, 1999
(152,824)
--------------- --------------- -------------------- -------------------
Balances, April 2, 1999 2,303,468 $1,151,734 $1,615,874 $(2,265,416)
========== ========= =========
</TABLE>
See accompanying notes to financial statements
33
<PAGE>
IEH CORPORATION
STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash
For the Twelve Months Ended April 2, 1999 and March 27,1998
<TABLE>
<CAPTION>
Years Ended
----------------------------------
April 2, March 27,
1999 1998
---------------- -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(152,824) $95,651
Adjustments to reconcile net income to net cash used in
operating activities
Depreciation and amortization 273,029 268,173
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 28,170 (186,848)
(Increase) decrease inventories 22,811 157,818
(Increase) decrease in prepaid expenses and other current assets 23,541 14,405
(Increase) decrease in other receivables 0 30,492
(Increase) decrease in other assets 807 369
(Decrease) increase in accounts payable 46,937 (351,946)
(Decrease) increase in other current liabilities 54,277 (7,809)
Increase in accrued corporate income taxes 20 7,115
(Decrease) in due to union pension & health & welfare (72,000) (83,664)
-------- --------
Total adjustments 377,592 (151,895)
------- ---------
NET CASH PROVIDED BY (USED) FOR OPERATING ACTIVITIES 224,768 (56,244)
------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment (306,137) (192,957)
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES $(306,137) $(192,957)
--------- ---------
</TABLE>
See accompanying notes to financial statements
34
<PAGE>
IEH CORPORATION
STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash
For the Twelve Months Ended April 2, 1999 and March 27, 1998
<TABLE>
<CAPTION>
April 2, March 27,
1999 1998
------------------- ----------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Retirement of common shares $ (17) $ 0
Principal payments on notes payable (49,231) (63,928)
Increase in notes payable 86,195 236,000
Proceeds from accounts receivable financing 103,315 119,558
Principal payments on loan payable (48,530) (52,946)
-------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
77,035 253,381
-------- --------
INCREASE (DECREASE) IN CASH (4,334) 4,180
CASH, beginning of period 19,454 15,274
-------- --------
CASH, end of period $ 15,120 $ 19,454
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION, cash paid during the nine
months for:
Interest $ 137,766 $116,104
========= ========
Income Taxes $ 15,031 $ 11,345
========= ========
</TABLE>
See accompanying notes to financial statements
35
<PAGE>
IEH CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Description of Business:
The Company is engaged in the design, development, manufacture
and distribution of high performance electronic printed
circuit connectors and specialized interconnection devices.
Electronic connectors and interconnection devices are used in
providing electrical connections between electronic component
assemblies. The Company develops and manufactures connectors
which are designed for a variety of high technology and high
performance applications, and are primarily utilized by those
users who require highly efficient and dense (the space
between connection pins with the connector) electrical
connections.
The Company is continuously redesigning and adapting its
connectors to meet and keep pace with developments in the
electronics industry and has, for example, developed
connectors for use with flex-circuits now being used in
aerospace programs, computers, air-borne communications
systems, testing systems and other areas. The Company also
services its connectors to meet specified product
requirements.
Accounting Period:
The Company maintains an accounting period based upon a 52-53
week year which ends on the nearest Friday in business days to
March 31st. The year ended April 2, 1999 was comprised of 53
weeks and the year ended March 27, 1998 was comprised of 52
weeks.
Revenue Recognition:
Revenues are recognized at the shipping date of the Company's
products.
Inventories:
Inventories are stated at cost, on a first-in, first-out
basis, which does not exceed market value.
Concentration of Credit Risk:
The Company maintains cash balances at one bank. Amounts on
deposit are insured by the Federal Deposit Insurance
Corporation up to $100,000 in aggregate. There were no
uninsured balances at either April 2, 1999 or March 27, 1998.
Property, Plant and Equipment:
Property, plant and equipment is stated at cost less
accumulated depreciation and amortization. The Company
provides for depreciation and amortization using the
straight-line method over the estimated useful lives (3-10
years) of the related assets.
36
<PAGE>
IEH CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):
Maintenance and repair expenditures are charged to operations,
and renewals and betterments are capitalized. Items of
property, plant and equipment which are sold, retired or
otherwise disposed of are removed from the asset and
accumulated depreciation or amortization account. Any gain or
loss thereon is either credited or charged to operations.
Income Taxes:
The Company follows the policy of treating investment tax
credits as a reduction in the provision for federal income tax
in the year in which the credit arises or may be utilized.
Deferred income taxes arise from temporary differences
resulting from different depreciation methods used for
financial and income tax purposes. The Company has adopted
Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes".
Net Income Per Share:
The Company has adopted the provisions of SFAS No. 128,
"Earnings Per Share", which requires the disclosure of "basic"
and "diluted" earnings (loss) per share. Basic earnings per
share is computed by dividing net income by the weighted
average number of common shares outstanding during each
period. Diluted earnings per share is similar to basic
earnings per share except that the weighted average number of
common shares outstanding is increased to reflect the dilutive
effect of potential common shares, such as those issuable upon
the exercise of stock or warrants, as if they had been issued.
For the years ended April 2, 1999 and March 27, 1998, there
were no differences between basic and diluted earnings per
share.
Fair Value of Financial Instruments:
The carrying value of the Company's financial instruments,
consisting of accounts receivable, accounts payable, and
borrowings, approximate their fair value.
Use of Estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities, revenues and expenses, and
disclosure of contingent assets and liabilities at the date of
the financial statements.
Actual amounts could differ from those estimates.
Impairment of Long-Lived Assets:
SFAS No. 121, "Accounting For The Impairment of Long-Lived
Assets To Be Disposed Of", requires that long-lived assets and
certain identifiable intangibles to be held and used by an
entity be reviewed for impairment whenever events or changes
in circumstances indicate that the
37
<PAGE>
IEH CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):
Impairment of Long-Lived Assets: (continued)
carrying amount of an asset may not be recoverable. The
Company has adopted SFAS No. 121 effective April 2, 1999.
There was no impact of such adoption on the Company's
financial condition and results of operations.
Reporting Comprehensive Income:
The Company has adopted the provisions of SFAS No. 130,
"Reporting Comprehensive Income". This statement established
standards for reporting and display of comprehensive income
and its components (revenues, expenses, gains and losses) in
an entity's financial statements. This Statement requires an
entity to classify items of other comprehensive income by
their nature in a financial statement and display the
accumulated balance of other comprehensive income separately
from retained earnings and additional paid-in capital in the
equity section of a statement of financial position. The
adoptions of SFAS No. 130 did not significantly impact on the
Company's reported net income (loss).
Segment Information:
The Company has adopted the provisions of SFAS No. 131,
"Disclosures About Segment of An Enterprise and Related
Information". This Statement requires public enterprises to
report financial and descriptive information about its
reportable operating segments and establishes standards for
related disclosures about product and services, geographic
areas, and major customers. The adoption of SFAS No. 131 did
not affect the results of operations or financial position.
The disclosure of major customers is reported in Note 15.
Sales outside of the United States accounted for less than one
percent (1%) of total revenue.
Effect of New Accounting Pronouncements:
During 1998 the American Institute of Certified Public
Accountants issued Statement of Position (SOP) 98-1,
"Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use". The Statement requires the
capitalization of internal use computer software costs if
certain criteria are met. The capitalized software costs will
be amortized on a straight-line basis over the useful life of
the software. The Company will adopt the Statement as of April
3, 1999. The adoption of the Statement is not expected to have
a material impact on the Company's financial statements.
In April 1998, the American Institute of Certified Public
Accountants Accounting Standards Executive Committee issued
Statement of Position (SOP) 98-5, "Reporting On The Costs Of
Start-Up Activities". The SOP, which is effective for fiscal
years beginning after
38
<PAGE>
IEH CORPORATION
NOTES TO FINANCIAL STATEMENTS
December 15, 1998, requires entities to expense start-up costs
and organization costs for establishing new operations.
Management does not expect this Statement to significantly
impact the Company's financial statements.
Note 2 - INVENTORIES:
Inventories are comprised of the following:
April 2, March 27,
1999 1998
------------- --------------
Raw materials $702,176 $651,975
Work in progress 122,606 99,523
Finished goods 101,689 197,784
------- -------
$926,471 $949,282
======== ========
Note 3 - PREPAID EXPENSES AND OTHER CURRENT ASSETS:
Prepaid expenses and other current assets are comprised of the
following:
April 2, March 27,
1999 1998
------------ -----------------
Prepaid insurance $14,077 $34,356
Other current assets 606 3,868
--- -----
$14,683 $38,224
======= =======
39
<PAGE>
IEH CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 4 - PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment are as follows:
<TABLE>
<CAPTION>
April 2, March 27,
1999 1998
---------------- -----------------
<S> <C> <C>
Computers $161,896 $53,590
Leasehold improvements 583,206 568,006
Machinery and equipment 3,854,973 3,757,381
Tools and dies 1,455,938 1,370,899
Furniture and fixture 148,770 148,770
Transportation equipment 11,246 11,246
------ ------
6,216,029 5,909,892
Less: accumulated depreciation and
amortization 4,777,296 4,504,267
--------- ---------
$1,438,733 $1,405,625
========== ==========
</TABLE>
Note 5 - ACCOUNTS RECEIVABLE FINANCING:
The Company entered into an accounts receivable financing
agreement whereby it can borrow up to eighty percent of its
eligible receivables (as defined in the agreement) at an
interest rate of 2 1/2 % above The Chase Manhattan Bank's
publicly announced rate (8.75%) at April 2, 1999, with a
maximum of 12% per annum. The agreement has an initial term of
one year and will automatically renew for successive one year
terms, unless terminated by the Company or Lender upon
receiving sixty days prior notice. The loan is secured by the
Company's accounts receivable and inventories.
40
<PAGE>
IEH CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 6 - OTHER CURRENT LIABILITIES:
Other current liabilities are comprised of the following:
April 2, March 27,
1999 1998
------------- --------------
Payroll and vacation accruals $77,787 $28,300
Sales commissions 21,178 9,574
Pension plan payable 65,489 65,489
Other 13,849 20,663
------------- --------------
$178,303 $124,026
======== ========
Note 7 - 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
note bears interest at the rate of 8.25% per annum. The
balance remaining at April 2, 1999 was $132,557, with $60,798
being reported as a current liability and the remainder being
reported as a long-term liability. (See Note 12 - relating to
lease reduction)
Note 8 - 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 April 2, 1999
amounted to $78,269.
Aggregate future principal payments are as follows:
2000 $15,597
2001 15,597
2002 15,597
2003 15,597
Thereafter 15,881
------
$78,269
Note 9 - 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 8% per annum.
41
<PAGE>
IEH CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 9 - LOAN PAYABLE (continued):
The balance remaining at April 2, 1999 was $184,440.
Aggregate future principal payments are as follows:
Fiscal Year Ending March:
2000 $50,693
2001 54,289
2002 58,795
2003 20,663
------
$184,440
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 April 2, 1999, 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 $502,192. The ratio
of current assets to current liabilities was .9 to 1.0.
The Company has applied for additional waivers of this
covenant. Neither the UDC or WAMCO XXIV 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 loan
plus interest will become due and payable.
Note 10 - INCOME TAXES:
The Company has available at April 2, 1999, for federal income
tax purposes, a net operating loss carryforward of
approximately $2,150,000 of which approximately $1,300,000
will expire in 2007 with the balance in 2010. In addition, the
Company has unused investment tax credits of approximately
$86,000 which expire between 1999 and 2002.
Note 11 - PENSION PLAN-SALARIED PERSONEL:
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
42
<PAGE>
IEH CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 11 - PENSION PLAN - SALARIED PERSONNEL (continued):
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.
At April 2, 1999 and March 27, 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 the additional minimum liability
to comply with the requirements of Statement of Financial
Accounting 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:
o $ 456,418 representing the amount of unfunded benefit
liabilities of the Plan
o $242,097 representing funding liability
o $2,230 representing the premium liability
The total amount claimed by the PBGC amounts to $700,745.
The amount claimed is being contested by the Company, and the
PBGC granted the Company an extension of time until February
22, 1999 in which to file an appeal. The Company did file an
appeal and is presently awaiting a response from the PBGC.
Note 12 - COMMITMENTS:
The Company had entered into employment agreements with
certain of its officers. The agreements provided for
retirement compensation of $30,000 per annum for a period of
five years upon reaching either age 65, death, total
disability or employment terminated by mutual consent between
the Company and the respective officer. Prior to March 26,
1993, all but one of these agreements had expired. The
remaining agreement is with the President of the Company.
On December 1, 1998 the Company amended its lease on its
premises by surrendering a portion of its rented premises back
to the landlord. Accordingly, the base monthly rent was
reduced to
43
<PAGE>
IEH CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 12 - COMMITMENTS:
$ 10,397 or $121,765 per annum through December 1999 and to
$9,397 or $112,765 per annum through the conclusion of the
lease which ends August 23, 2001.
The Company is obligated under this lease through August 23,
2001, at minimum annual rentals as follows:
Fiscal year ending:
2000 $121,765
2001 112,765
-------
$234,530
========
The net rental expense for the year ended April 2, 1999 for
this lease was $180,979.
(See Note 7-Notes Payable relating to rent arrears agreement)
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 Plan Amendments Act of 1990 ("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 $35,640 for
the year ended April 2, 1999 and $40,176 for the year ended
March 27, 1998.
As of April 2, 1999, 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 $3,638.
The total amount due of $158,827 is reported on the
accompanying balance sheet in two components; $96,000 reported
as a current liability and $62,827 as a long-term liability.
44
<PAGE>
IEH CORPORATION
NOTES TO FINANCIAL STATEMENTS
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 $8,000 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 20 months.
Additionally, both parties have agreed that current obligatory
funding for the Pension Fund will be made on a timely current
basis.
Note 13 - CHANGES IN STOCKHOLDERS' EQUITY:
The Company retired 34 shares of its issued and outstanding
common stock during the quarter ended September 25, 1998.
Retained earnings (deficit) increased by $152,824, which
represents the net loss for the twelve months ended April 2,
1999.
Note 14 - YEAR 2000 COMPUTER ISSUE:
The Company does not believe that the year 2000 computer issue
will have a significant impact on its operations or financial
position. The Company has allocated approximately $110,000 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 $108, 306. 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 assurances
that another entity's failure to ensure year 2000 capability
would not have an adverse effect on the Company.
Note 15 - REVENUES FROM MAJOR CUSTOMERS:
In the fiscal year ended April 2, 1999, more than 31% of the
Company's total revenues were earned from one customer. Total
sales to this customer were approximately $1,307,000.
42
<PAGE>
Exhibits
The following Exhibits have previously been filed with the Securities
and Exchange Commission and, pursuant to 17 C.F.R. Secs. 201.24 and 240.12b-32,
are incorporated by reference to the document referenced in brackets following
the descriptions of such Exhibits. Those Exhibits designated by an asterisk (*)
are filed herewith.
Exhibit No. Description
- ----------- -----------
3.1 Amended and Restated Certificate of Incorporation
of the Company [Exhibit C-4 to Current Report
filed on From 8-K, dated February 27, 1991].
3.2 By-Laws of the Company Filed as Exhibit 3.2 on
Report on Form 10-KSB for the fiscal year ended
March 27, 1994.
4.1 Form of Common Stock Certificate of Company. Filed
as Exhibit 4.1 on Report on Form 10-KSB for the
fiscal year ended March 27, 1994.
4.2 Form of Secured Promissory Note payable, New York
State Urban Development Corporation [Exhibit 10B
to Current Report on Form 8-K, dated July 22,
1992].
10.1 License Agreement between the Company and
Brevetron, S.A., Lugano, Switzerland, dated
January 1, 1979. Filed as Exhibit 10.1 on Report
on Form 10-KSB for the fiscal year ended March 27,
1994.
10.2 Amendment to License Agreement between the Company
and Brevetron, S.A. dated September 28, 1982.
Filed as Exhibit 10.2 on Report on Form 10-KSB for
the fiscal year ended March 27, 1994.
10.3 Amendment to License Agreement between the Company
and Brevetron, S.A. dated September 20, 1991.
Filed as Exhibit 10.3 on Report on Form 10-KSB for
the fiscal year ended March 27, 1994.
10.4 Lease for premises 140 58th Street, Brooklyn, New
York 11220 [Exhibit A to Current Report filed on
Form 8-K, dated August 23, 1991].
10.5 Form of Loan Agreement between the Company and the
New York State Urban Development Corporation
[Exhibit 10A to Current Report filed on Form 8-K,
dated July 22, 1992].
45
<PAGE>
10.6 Form of Security Agreement between the Registrant
and New York State Urban Development Corporation
[Exhibit 10C to Current Report filed on Form 8-K,
dated July 22, 1992].
10.7 Form of financing agreement between the Company
and Milberg Factors, Inc. [Exhibit C-1 to the
Current Report filed on Form 8-K, dated March 1,
1990].
10.8 Form of Collective Bargaining Agreement between
Company and Local 259 of the United Auto Workers
Union, dated October 1, 1991.
10.9 Form of Employment Agreement between Company and
Michael Offerman together with Amendment No. 1
dated November 27,1997. [filed as Exhibit 10.9 to
Form 10KSB for the fiscal year ended March 28,
1997]
10.10 Form of Employment Agreement between the Company
and Ralph Acello together with Amendment No. 1
dated November 27,1997.[filed as Exhibit 10.10 to
Form 10KSB for the fiscal year ended March 28,
1997]
10.11 Form of Employment Agreement between the Company
and Robert Knoth together with Amendment No. 1
dated November 27,1997.[filed as Exhibit 10.11 to
Form 10KSB for the fiscal year ended March 28,
1997]
10.12 Form of Employment Agreement between the Company
and Joan Prideaux. [filed as Exhibit 10.12 to Form
10KSB for the fiscal year ended March 28, 1997]
11. Statement re:Computation of per share earnings
21. Subsidiaries: None
23.1* Consent of Jerome Rosenberg CPA, independent
auditor of the Company
27* EDGAR Financial Date Schedule
46
<PAGE>
99.1 Stipulation and Escrow Agreement dated December
18, 1997 between the Company and New York Urban
Development Corporation together with Stipulation,
Consent and Final Judgement.[filed as Exhibit 99.1
to Form 10-QSB for the quarter ended December 26,
1997]
-----------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-2-1999
<PERIOD-END> APR-2-1999
<CASH> 15,120
<SECURITIES> 0
<RECEIVABLES> 810,551
<ALLOWANCES> 10,062
<INVENTORY> 926,471
<CURRENT-ASSETS> 1,766,825
<PP&E> 6,216,029
<DEPRECIATION> 4,777,296
<TOTAL-ASSETS> 3,296,129
<CURRENT-LIABILITIES> 1,955,702
<BONDS> 0
0
0
<COMMON> 1,151,734
<OTHER-SE> (649,542)
<TOTAL-LIABILITY-AND-EQUITY> 3,296,129
<SALES> 4,334,477
<TOTAL-REVENUES> 4,335,287
<CGS> 3,214,927
<TOTAL-COSTS> 3,214,927
<OTHER-EXPENSES> 1,120,387
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 137,766
<INCOME-PRETAX> (137,793)
<INCOME-TAX> 15,031
<INCOME-CONTINUING> (152,824)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (152,824)
<EPS-BASIC> (0.66)
<EPS-DILUTED> (0.66)
</TABLE>
