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 December 25, 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 February 4, 1999.
<PAGE>
IEH CORPORATION
CONTENTS
Part I - FINANCIAL INFORMATION
ITEM 1- FINANICAL STATEMENTS
Balance Sheets as of December 25, 1998 (Unaudited) and March 27, 1998
Statement of Operations (Unaudited) for the three and nine months ended
December 25, 1998 and December 26, 1997
Statement of Cash Flows (Unaudited) for the nine months ended December
25, 1998 and December 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
<PAGE>
<TABLE>
<CAPTION>
IEH CORPORATION
BALANCE SHEETS
As of December 25, 1998 and March 27, 1998
Dec. 25 March 27
1998 1998
---------- ----------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash .......................................................... $ 3,000 $ 19,454
Accounts receivable, less allowances for doubtful accounts
of $10,062 at December 25, 1998 and March 27, 1998 ......... 827,860 838,721
Inventories (Note 2) .......................................... 908,494 949,282
Prepaid expenses and other current assets (Note 3) ............ 24,997 38,224
---------- ----------
Total current assets ................................ 1,764,351 1,845,681
---------- ----------
PROPERTY, PLANT AND EQUIPMENT, less accumulated
depreciation and amortization of $4,710,007 at Dec. 25, 1998
and $4,504,267 at March 27, 1998 .......................... 1,405,870 1,405,625
---------- ----------
OTHER ASSETS:
Prepaid pension cost (Note 8) ............................... 43,949 43,949
Other assets ................................................ 46,320 47,429
---------- ----------
90,269 91,378
---------- ----------
---------- ----------
Total assets .................................................. $3,260,490 $3,342,684
========== ==========
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
IEH CORPORATION
BALANCE SHEETS
As of December 25, 1998 and March 27, 1998
Dec. 25 March 27
1998 1998
(Unaudited) (Note 1)
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Accounts receivable financing .......................................... $ 745,066 $ 656,015
Notes payable, equipment, current portion (Note 7) ..................... 10,198 --
Notes payable, current portion (Note 6) ................................ 59,562 56,000
Loans payable, current portion (Note 5) ................................ 50,190 48,530
Accrued corporate income taxes ......................................... 15,193 15,332
Union pension and health & welfare, current portion (Note 8) ........... 120,000 120,000
Accounts payable ....................................................... 712,143 722,957
Other current liabilities (Note 4) ..................................... 141,672 124,026
------------ ------------
Total current liabilities .................................... 1,854,024 1,742,860
LONG-TERM LIABILITIES:
Pension Plan payable (Note 8) .......................................... 516,966 516,966
Notes payable, equipment, less current portion (Note 7) ................ 45,372 --
Notes payable, less current portion (Note 6) ........................... 87,430 132,558
Loan payable, less current portion (Note 5) ............................ 146,856 184,440
Union pension & health & health & welfare, less current portion (Note 8) 38,827 110,827
------------ ------------
Total long-term liabilities .................................. 835,451 944,791
------------ ------------
Total liabilities ............................................ 2,689, 475 2,687,651
------------ ------------
STOCKHOLDERS' EQUITY:
Common stock, $.50 par value; 10,000,000 shares authorized,
2,303,468 shares issued and outstanding at Dec. 25, 1998 and
2,303,502 shares issued and outstanding 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) ............................................ (2,196,610) (2,112,592)
------------ ------------
Total stockholders' equity ................................... 571,015 655,033
------------ ------------
Total liabilities and stockholders' equity ................... $ 3,260,490 $ 3,342,684
============ ============
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
IEH CORPORATION
STATEMENT OF OPERATIONS
(Unaudited)
Nine Months Ended Three Months Ended
---------------------------- ----------------------------
Dec. 25, Dec. 26, Dec. 25, Dec. 26,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUE, net sales ................ $ 3,294,571 $ 3,646,250 $ 973,227 $ 1,100,515
COSTS AND EXPENSES
Cost of products sold ............. 2,416,580 2,476,456 728,445 787,221
Selling, general and administrative 644,255 777,804 222,283 259,564
Interest expense .................. 99,650 86,370 33,288 33,997
Depreciation and amortization ..... 205,740 209,520 68,580 69,840
----------- ----------- ----------- -----------
3,366,225 3,550,150 1,052,596 1,150,622
----------- ----------- ----------- -----------
OPERATING INCOME (LOSS) ........... (71,654) 96,100 (79,369) (50,107)
OTHER INCOME ...................... 236 902 33 243
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES . (71,418) 97,002 (79,336) (49,864)
PROVISION FOR INCOME TAXES ........ 12,600 12,100 4,200 5,200
----------- ----------- ----------- -----------
NET INCOME (LOSS) ................. $ (84,018) $ 84,902 $ (83,536) $ (55,064)
=========== =========== =========== ===========
BASIC AND DILUTED EARNINGS (LOSS)
PER SHARE ...................... $ (.036) $ .037 $ (.036) $ (.024)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES
OUTSTANDING (in thousands) 2,303 2,304 2,303 2,304
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
IEH CORPORATION
STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash
For the Nine Months Ended December 25, 1998 and December 26, 1997
(Unaudited)
Dec. 25, Dec. 26,
1998 1997
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .............................................. $ (84,018) $ 84,902
--------- ---------
Adjustments to reconcile net income to net cash used in
operating activities
Depreciation and amortization .................................. 205,740 209,520
Changes in assets and liabilities:
(Increase) decrease in accounts receivable ..................... 10,861 (174,995)
(Increase) decrease inventories ................................ 40,788 196,900
(Increase) decrease in prepaid expenses and other current assets 13,227 23,986
(Increase) decrease in other receivables ....................... -- 21,827
(Increase) decrease in other assets ............................ 1,109 223
(Decrease) increase in accounts payable ........................ (10,805) (331,484)
(Decrease) increase in other current liabilities ............... 17,646 27,571
Increase in accrued corporate income taxes ..................... (139) 7,870
(Decrease) in due to union pension & health & welfare .......... (72,000) (60,727)
--------- ---------
Total adjustments .................................... 206,427 (79,309)
--------- ---------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
122,409 5,593
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of fixed assets ...................................... (205,977) (150,587)
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES .......................... (205,977) (150,587)
--------- ---------
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
IEH CORPORATION
STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash
For the Nine Months Ended December 25, 1998 and December 26, 1997
(Unaudited)
Dec. 25, Dec. 26,
1998 1997
--------- ---------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Retirement of common shares ....................... $ (17) $ --
Principal payments on notes payable ............... -- --
Increase in notes payable ......................... 14,004 200,064
Proceeds from accounts receivable financing ....... 89,051 50,171
Principal payments on loan payable ................ (35,924) (41,242)
--------- ---------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
67,114 208,993
--------- ---------
INCREASE (DECREASE) IN CASH ....................... (16,454) 63,999
CASH, beginning of period ......................... 19,454 15,274
--------- ---------
CASH, end of period ............................... $ 3,000 $ 79,273
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION, cash paid during the nine months for:
Interest ..................................... $ 99,650 $ 86,370
========= =========
Income Taxes ................................. $ 12,600 $ 12,100
========= =========
</TABLE>
See accompanying notes to financial statements
<PAGE>
IEH CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1 - FINANCIAL STATEMENTS:
The accompanying financial statements of IEH Corporation ("The
Company") for the nine months ended December 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 nine months ended December 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:
Dec. 25 March 27,
1998 1998
----------- -----------
Raw materials $ 686,809 $ 651,975
Work in progress 104,840 99,523
Finished goods 116,845 197,784
----------- -----------
$ 908,494 $ 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
December 25, 1998 was $37,800. At March 27, 1998, the balance
of this reserve was $50,400.
Inventories at December 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:
Dec. 25 March 27,
1998 1998
------------ ------------
Prepaid insurance $ 20,565 $ 34,356
Other current assets 4,432 3,868
------------ ------------
$ 24,997 $ 38,224
============ ============
Note 4 - OTHER CURRENT LIABILITIES:
Other current liabilities are comprised of the following:
<TABLE>
<CAPTION>
Dec. 25 March 27,
1998 1998
-------- ---------
<S> <C> <C>
Payroll and vacation accruals $ -- $ 28,300
Sales commissions ........... 14,456 9,574
Pension Plan payable ........ 65,489 65,489
Other ....................... 61,727 20,663
-------- --------
$141,672 $124,026
======== ========
</TABLE>
Note 5 - LOAN PAYABLE:
On July 22, 1992, the Company obtained a loan of $435,000 from
the New York State Urban Development Corporation ("UDC")
collateralized by machinery and equipment. The loan is payable
over ten years, with interest rates progressively increasing
from 4% to 7% annum.
The balance remaining at December 25, 1998 was $197,046.
Aggregate future principal payments are as follows:
Fiscal Year Ending March:
1999 $ 50,190
2000 53,217
2001 57,634
2002 36,005
---------
$ 197,046
=========
<PAGE>
IEH CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
In April 1997, the Company was informed by the UDC that the
loan was sold and conveyed to WAMCO XXIV, Ltd. All of the
terms and conditions of the loan remained in effect.
As of December 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.
Note 5 - LOAN PAYABLE (continued)
The Company reported tangible net worth of $571,015. The ratio
of current assets to current liabilities was .95 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 XXVI, 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 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 note bears
interest at the rate of 8.25% per annum. The balance remaining
at December 25, 1998 was $146,992.
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 December 25,
amounted to $55,570.
Aggregate future principal payments are as follows:
1999 $ 10,198
2000 10,198
2001 10,198
2002 10,198
2003 10,198
Thereafter 4,580
-----------
$ 55,570
==========
<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 $28,186 for the
nine months ended December 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 Company
will be made on a timely 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 December 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 $3,638.
The total amount due of $158,827 is reported on the accompanying
balance sheet in two components; $120,000 reported as a current liability and
$38,827 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 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 December 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 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
February 22, 1999 in which to file an appeal. The Company has
retained outside counsel in order to respond to this claim.
On December 1, 1998, the Company amended its lease on its
premises by surrendering a portion of its rented premises back
to its landlord. Accordingly, the base monthly rent was
reduced to $9,397.11 or $112,765.29 per annum through the
conclusion of the lease which ends August 23, 2001.
Note 9 - 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 $84,018, which
represents the net loss for the nine months ended December 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 assurances that another entity's failure to ensure year
2000 capability would not have an adverse effect on the
Company.
<PAGE>
IEH CORPORATION
NOTES TO FINANICAL STATEMENTS
(Unaudited)
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, the
percentages for certain items reflected in the financial data
as such items bear to the revenues of the Company:
<TABLE>
<CAPTION>
Nine Months Ended
-----------------------
Dec. 25 Dec. 26,
1998 1997
-------- --------
<S> <C> <C>
Operating Revenues (in thousands) ........................ $ 3,295 $ 3,646
Operating Expenses: (as a percentage of operating revenues
Cost of Products Sold .................................... 73.4% 67.9%
Selling, General and Administrative ...................... 19.6% 21.2%
Interest Expense ......................................... 3.0% 2.5%
Depreciation and Amortization ............................ 6.2% 5.8%
-------- --------
Total Costs and Expenses ....................... 102.2% 97.4%
======== ========
Operating Income (Loss) .................................. (2.2)% 2.6%
======== ========
Other Income ............................................. -- --
-------- --------
Income (Loss) Before Income Taxes ........................ (2.2)% 2.6%
======== ========
Income Taxes ............................................. .3% .3%
-------- --------
Net Income ............................................... (2.5)% 2.3%
======== ========
</TABLE>
<PAGE>
IEH CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
COMPARATIVE ANALYSIS:
Operating revenues for the nine months ended December 25, 1998
amounted to $3,294,571, reflecting a 9.6% decrease versus the
comparative nine months operating revenues of $3,646,250. The
decrease is a direct result of management's effort to redirect
its dependence on government and military sales to developing
new market sales in the commercial electronic sector.
Cost of products sold amounted to $2,416,580 for the nine
months ended December 25, 1998 or 73.4% of operating revenues.
This reflected a decrease of $59,876 or 2.4% in the cost of
products sold of $2,476,456 for the nine months ended December
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 $644,255 or
19.6% of revenues compared to $777,804 or 21.2% of revenues
for the comparable nine month period ended December 26, 1997.
This reflected a decrease of 17.2% and reflects management's
efforts to better control expenses.
Interest expense was $99,650 or 3.0% of revenues as compared
to $86,370 or 2.5% of revenues in the nine month period ended
December 26, 1997. This increase of 15.4% reflects the
increase in borrowing by the Company in the current fiscal
period.
Depreciation and amortization of $205,740 or 6.2% of revenues
was reported for the nine month period ended December 25,
1998. This reflects a decrease of 0.2% from the comparable
nine month period ended December 26, 1997 of $209,520 or 5.8%
of revenues. The decrease is a result of decreased
depreciation levels on fixed assets during the nine month
period ended December 25, 1998.
The Company reported a net loss of $84,018 for the nine months
ended December 25, 1998, representing basic loss per share of
$.036 as compared to basic income of $84,902 or $.037 per
common share for the nine months ended December 26, 1997.
The resultant decrease in net income can be attributed to
reduced sales in the commercial sector in the current nine
month period ending December 25, 1998.
<PAGE>
IEH CORPORATION
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>
Three Months Ended
----------------------
Dec. 25, Dec. 26,
1998 1997
------ ---------
<S> <C> <C>
Operating Revenues (in thousands) ....................... $ 973 $ 1,101
Operating Expenses: (as a percentage of operating revenues)
Cost of Products Sold ..................................... 74.9% 71.5%
Selling, General and Administrative ....................... 22.9% 23.7%
Interest Expense .......................................... 3.4% 3.1%
Depreciation and Amortization ............................. 7.0% 6.3%
------ --------
Total Costs and Expenses ........................ 108.2% 104.6%
Operating Income (loss) ................................... (8.2)% (4.6)%
Other Income .............................................. -- --
------ --------
Income (loss) before Income Taxes ......................... (8.2)% (4.6)%
Income Taxes .............................................. .4% .4%
------ --------
Net Income (loss) ......................................... (8.6)% (5.0)%
</TABLE>
COMPARATIVE ANALYSIS
Operating revenues for the three months ended December 25, 1998 amounted to
$973,227, reflecting a 11.6% decrease versus the comparative three months
operating revenues of $1,100,515. The decrease is a direct result of
management's to redirect its dependence on government and military sales to
developing new market sales in the commercial electronic sector.
Cost of products sold amounted to $728,445 for the three months ended
December 25, 1998 or 74.9% of operating revenues. This reflected a decrease of
$58,776 or 7.5% of the cost of products sold of $787,221 for the three months
ended December 26, 1997. This decrease is primarily due to reduced production
costs inherent in producing new products. Costs of products sold increased as a
percentage of revenues in the comparative periods.
<PAGE>
Selling, general and administrative expenses were $222,283 or 22.9% of
revenues compared to $259,564 or 23.7% of revenues for the comparable three
month period ended December 26, 1997. This reflected a decrease of 14.3% and
reflects management's efforts to better control expenses.
Interest expense was $33,288 or 3.4% of revenues as compared to $33,997
or 3.1% of revenues in the three month period ended December 26, 1997. This
decrease of 2.1% reflects this decrease in borrowing by the Company in the
current fiscal period.
Depreciation and amortization of $68,580 or 7.0% of revenues was
reported for the three month period ended December 25, 1998. This reflects a
decrease of .02% from the comparable three month period ended December 26, 1997
of $69,840 or 6.3% of revenues. The decrease is a result of decreased
depreciation levels on fixed assets during the three month period ended December
25, 1998.
The Company reported a net loss of $83,536 for the three months ended
December 25, 1998, representing basic loss per common share of $.36 as compared
to a basic loss of $55,064 or $.024 per common share for the three months ended
December 25, 1998.
The resultant decrease in net income can be attributed to reduced sales
in the commercial sector in the current three month period ending December 25,
1998.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K during Quarter
None
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
has duly cause this Report on Form 10QSB to be signed on its behalf by the
undersigned, thereunto duly authorized.
IEH CORPORATION
(Registrant)
February 5, 1999 /s/Michael Offerman
-------------------
Michael Offerman
President
February 5, 1999 /s/Robert Knoth
---------------
Robert Knoth
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-26-1999
<PERIOD-END> DEC-25-1998
<CASH> 3,000
<SECURITIES> 0
<RECEIVABLES> 827,860
<ALLOWANCES> 10,062
<INVENTORY> 908,494
<CURRENT-ASSETS> 1,764,351
<PP&E> 6,115,877
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