U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Amendment No. 1
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED MARCH 27, 2009.
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from ______ to _____.
Commission File Number 0-5278
IEH CORPORATION
(Name of Small Business Issuer in Its Charter)
NEW YORK 13-5549348
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
In Company)
140 58th Street, Suite 8E
140 58th Street, Suite 8E
Brooklyn, NY 11220 (718) 492-9673
(Address of Principal Executive Offices) (Issuer's Telephone Number,
Including Area Code)
Securities registered under Section 12(b) of the Exchange Act: NONE
Securities registered under Section 12(g) of the Act: Common Stock, $.01 Par
Value Per Share
Indicate by check mark if Registrant is a well-known seasoned issuer, as defined
in Rule 405 of the Securities Act. Yes |_| No |X|
Indicate by check mark if the Registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Securities Exchange Act.
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") 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. |_|
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (check one):
Large accelerated filer |_| Accelerated filer |_|
Non-accelerated filer |_| Smaller reporting company |X|
(do not check if a smaller reporting company)
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Indicate by check mark if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B contained in this form and no disclosure
will 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-K
or any amendment to this Form 10-K |X|
Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes |_| No |X|
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common equity, as of
the last business day of the Registrant's most recently completed second fiscal
quarter (September 26, 2008): $3,924,900.60.
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Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date: On July 10, 2009, the
Registrant had 2,303,468 shares of common stock issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the Part
of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(e) under the Securities Act of 1933.
None
EXPLANATORY NOTE
We are filing this Amendment No. 1 ("Amendment No. 1") to our Annual
Report on Form 10-K for the year ended March 27, 2009 ("Original Form 10-K"), as
filed with the Securities and Exchange Commission ("SEC") on July 10, 2009, in
order to amend and correct certain typographical errors in Item 7. Management's
Discussion and Analysis or Plan of Operation and specifically the section
therein entitled "Results of Operation - Year End Results: March 27, 2009 vs.
March 28, 2008 - Liquidity and Capital Resources" as follows:
(i) The Company's working capital reported in the Original Form
10-K as $3,115,072 as of March 27, 2009 should be corrected
to $2,715,072.
(ii) The increase in working capital reported in the Original
Form 10-K as $1,224,350 as of March 27, 2009 should be
corrected to $824,350.
(iii) The amount of "Other Transactions" reported in the Original
Form 10-K as $468,228 as of March 27, 2009 should be
corrected to $68,228.
(iv) The current ratio (current assets to current liabilities)
reported in the Original Form 10-K as 3.69 to 1 at March
27, 2009 should be corrected to 2.74 to 1.
(v) Current liabilities at March 27, 2009 reported in the
Original Form 10-K as $1,158,972 should be corrected to
$1,558,972.
The remainder of Item 7 remains the same as previously reported in the
Original Form 10-K.
The foregoing changes have no effect on and will not result in any
changes to the Company's audited financial statements or the Notes to the
Financial Statements thereto for the year ended March 27, 2009 previously
reported in the Original Form 10K.
This Amendment No. 1 is limited in scope to the items identified above
and should be read in conjunction with the Original Form 10-K and our other
filings with the SEC.
This Amendment No. 1 does not reflect events occurring after the filing
of the Original Form 10-K or modify or update those disclosures affected by
subsequent events. Consequently, all other information is unchanged and reflects
the disclosures made at the time of the filing of the Original Form 10-K. With
this Amendment No. 1, the principal executive officer and principal financial
officer of the Company have reissued their certifications required by Sections
302 and 906 of the Sarbanes-Oxley Act of 2002, included in Part IV, Item 15.
Exhibits, Financial Statement Schedules, furnished herewith.
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Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Statements contained in this report, which are not historical facts,
may be considered forward looking information with respect to plans,
projections, or future performance of the Company as defined under
the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are subject to risks and uncertainties,
which could cause actual results to differ materially form those
projected. The words "anticipate," "believe", "estimate", "expect,"
"objective," and "think" or similar expressions used herein are
intended to identify forward-looking statements. The forward-looking
statements are based on the Company's current views and assumptions
and involve risks and uncertainties that include, among other things,
the effects of the Company's business, actions of competitors,
changes in laws and regulations, including accounting standards,
employee relations, customer demand, prices of purchased raw material
and parts, domestic economic conditions, including housing starts and
changes in consumer disposable income, and foreign economic
conditions, including currency rate fluctuations. Some or all of the
facts are beyond the Company's control.
The following discussion and analysis should be read in conjunction
with our audited financial statements and related footnotes included
elsewhere in this report, which provide additional information
concerning the Company's financial activities and condition.
Critical Accounting Policies
The financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of
America, which require the Company to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the
date of the financial statements, and revenues and expenses during
the periods reported. Actual results could differ from those
estimates. The Company believes the following are the critical
accounting policies, which could have the most significant effect on
the Company's reported results and require the most difficult,
subjective or complex judgments by management.
o Impairment of Long-Lived Assets:
The Company reviews its long-lived assets for impairment
whenever events or circumstances indicate that the carrying
amount of an asset may not be recoverable. If the sum of the
expected cash flows, undiscounted and without interest, is
less than the carrying amount of the asset, an impairment loss
is recognized as the amount by which the carrying amount of
the asset exceeds its fair value. The Company makes estimates
of its future cash flows related to assets subject to
impairment review.
o Inventory Valuation:
Raw materials and supplies are valued at the lower of
first-in, first-out cost or market. Finished goods and work in
process are valued at the lower of actual cost, determined on
a specific identification basis, or market. The Company
estimates which materials may be obsolete and which products
in work in process or finished goods may be sold at less than
cost, and adjusts their inventory value accordingly. Future
periods could include either income or expense items if
estimates change and for differences between the estimated and
actual amount realized from the sale of inventory.
o Income Taxes:
The Company records a liability for potential tax assessments
based on its estimate of the potential exposure. Due to the
subjectivity and complex nature of the underlying issues,
actual payments or assessments may differ from estimates.
Income tax expense in future periods could be adjusted for the
difference between actual payments and the Company's recorded
liability based on its assessments and estimates.
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o Revenue Recognition:
Revenues are recognized at the shipping date of the Company's
products. The Company has historically adopted the shipping
terms that title merchandise passes to the customer at the
shipping point (FOB Shipping Point). At this juncture, title
has passed, the Company has recognized the sale, inventory has
been relieved, and the customer has been invoiced. The Company
does not offer any discounts, credits or other sales
incentives.
The Company's policy with respect to customer returns and
allowances as well as product warranty is as follows:
The Company will accept a return of defective product within
one year from shipment for repair or replacement at the
Company's option. If the product is repairable, the Company at
its own cost will repair and return it to the customer. If
unrepairable, the Company will either offer an allowance
against payment or will reimburse the customer for the total
cost of the product.
Most of the Company's products are custom ordered by customers
for a specific use. The Company provides engineering services
as part of the relationship with its customers in developing
the custom product. The Company is not obligated to provide
such engineering service to its customers. The Company does
not charge separately for these services.
o 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 $0 and $15,000 for the years ended March 27,
2009 and March 28, 2008, respectively, on customer sponsored research
and development activities relating to the development of new
designs, techniques and the improvement of existing designs. The
Company was fully reimbursed by its customers for this research.
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
March 27, March 28,
2009 2008
--------- ---------
Operating Revenues (in thousands) $ 10,718 $ 7,805
--------- ---------
Operating Expenses:
(as a percentage of Operating Revenues)
Costs of Products Sold 69.3% 70.8%
Selling, General and Administrative 15.3% 16.4%
Interest Expense .6% 2.3%
Depreciation and amortization 1.6% 2.5%
--------- ---------
TOTAL COSTS AND EXPENSES 86.8% 92.0%
--------- ---------
Operating Income (loss) 13.2% 8.0%
Other Income -- --
--------- ---------
Income (loss) before Income Taxes 13.2% 8.0%
Income Taxes (6.0%) (.3%)
--------- ---------
Net Income (loss) 7.2% 7.7%
========= =========
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Year End Results: March 27, 2009 vs. March 28, 2008
Operating revenues for the year ended March 27, 2009 amounted to
$10,717,543 reflecting a 37.3% increase versus the year ended March
28, 2008 revenues of $7,805,443. The increase in revenues is a direct
result of an increase in defense and commercial sales.
The Company is primarily a manufacturer and its products are
essentially basic components of larger assemblies of finished goods.
Approximately 96% of the Company's net sales for the fiscal years
ended March 27, 2009 and March 28, 2008, 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.
For the fiscal year ended March 27, 2009, three of the Company's
customers accounted for approximately 26% of total sales. Each of
those customer accounted for approximately 9% of sales.
The Company currently employs 15 independent sales representatives to
market its products in all regions of the United States. These sales
representatives accounted for approximately 94% of the Company's
sales, with the balance of sales being generated by direct customer
contact.
For the fiscal year ended March 27, 2009, the Company's principal
customers included manufacturers of commercial electronic products,
military defense contractors and distributors who service these
markets. Sales to the commercial electronic and government markets
comprised 30% and 69%, respectively, of the Company's net sales for
the year ended March 27, 2009 and 28% and 71% for the year ended
March 28, 2008 respectively. Approximately 1% of net sales were made
to international customers.
Cost of products sold amounted to $7,425,771 for the fiscal year
ended March 27, 2009, or 69.3% of operating revenues. This reflected
a $1,899,296 or 34.4% increase in the cost of products sold from
$5,526,475 or 70.8% of operating revenues for the fiscal year ended
March 28, 2008. This increase is due primarily to the increased cost
of production associated with the increase in defense and commercial
sales.
Selling, general and administrative expenses were $1,643,083 and
$1,277,924 or 15.3% and 16.4% of operating revenues for the fiscal
years ended March 27, 2009 and March 28, 2008, respectively. This
category of expense increased by $365,159 or 28.6% from the prior
year. The increase can be attributed to an increase in salaries,
commissions and travel. Additionally a workers compensation
assessment of $101,362 was recorded during the current fiscal year.
Interest expense was $66,681 for the fiscal year ended March 27, 2009
or .6% of operating revenues. For the fiscal year ended March 28,
2008, interest expense was $177,675 or 2.3% of operating revenues.
The decrease of $110,994 or 62.5% reflects the interest payments made
during the year ended March 28, 2008, as part of the settlement with
the UAW Local 259 pension fund which amounted to $85,052.
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Depreciation and amortization of $172,658 or 1.6% of operating
revenues was reported for the fiscal year ended March 27, 2009. This
reflects a decrease of $25,242 or 12.8% from the prior year ended
March 28, 2008 of $197,900 or 2.5% of operating revenues. The
decrease is due primarily to capital assets being fully depreciated
over the current fiscal year.
The Company reported net income of $768,003 for the year ended March
27, 2009 representing basic earnings of $.33 per share as compared to
net income of $603,865 or $.26 per share for the year ended March 28,
2008. The increase in net income for the current year can be
attributed primarily to the reported increase in defense and
commercial sales.
Liquidity and Capital Resources
The Company reported working capital of $2,715,072 as of March 27,
2009 compared to a working capital of $1,890,722 as of March 28,
2008. The increase in working capital of $824,350 was attributable to
the following items:
Net income $ 768,003
Depreciation and amortization 172,658
Capital expenditures (184,539)
Other transactions 68,228
-----------
$ 824,350
===========
As a result of the above, the current ratio (current assets to
current liabilities) was 2.74 to 1 at March 27, 2009 as compared to
2.42 to 1.0 at March 28, 2008. Current liabilities at March 27, 2009
were $1,558,972 compared to $1,329,138 at March 28, 2008.
The Company reported $184,539 in capital expenditures for the year
ended March 27, 2009 and reported depreciation of $172,658 for the
year ended March 27, 2009.
The net income of $768,003 for the year ended March 27, 2009 resulted
in an increase in stockholders' equity to $3,855,888 as compared to
stockholders' equity of $3,087,885 at March 28, 2008.
The Company has an accounts receivable financing agreement with a
factor, which bears interest at 2.5% above prime with a minimum of
12% per annum. At March 27, 2009 the amount outstanding with the
factor was $454,723 as compared to $513,378 at March 28, 2008. The
loan is secured by the Company's accounts receivables and
inventories. The factor provides discounted funds based upon the
Company's accounts receivables, these funds provide the primary
source of working capital for operations.
In the past two fiscal years, management has been reviewing its
collection practices and policies for outstanding receivables and has
revised its collection procedures to a more aggressive collection
policy. As a consequence of this new policy the Company's experience
is that its customers have been remitting payments on a more
consistent and timely basis. The Company reviews the collectability
of all accounts receivable on a monthly basis. The reserve is less
than 2% of average gross accounts receivable and is considered to be
conservatively adequate.
One of the Company's officers has periodically loaned the Company
money on a non-interest bearing basis in order to finance working
capital requirements. As of March 28, 2008, the amount due this
officer was $17,000.
During the year ended March 27, 2009 the Company had repaid the
remaining balance due to this officer.
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The Company has a collective bargaining multi-employer plan
("Multi-Employer Plan") with the United Auto Workers of America,
Local 259. 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 1990 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
Multi-Employer Plan. The Company has not taken any action to
terminate, withdraw or partially withdraw from the Multi-Employer
Plan nor does it intend to do so in the future. Under the 1990 Act,
liabilities would be based upon the Company's proportional share of
such 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 such Plan were $101,695 for
the year ended March 27, 2009 and $80,667 for the year ended March
28, 2008.
On September 15, 2008, the Company was notified by the State of New
York Workers' Compensation Board (the "Board") that the Trade
Industry Workers' Compensation Trust for Manufacturers (the "Trust")
had defaulted. As a member of this self-insured group, the Company
was assessed on an estimated basis by the Board for its allocable
share necessary to discharge all liabilities of the Trust.
The assessed amount for the years 2002 through 2006 was $101,362. The
assessed amount for each year is detailed as follows:
2002 $ 16,826
2003 24,934
2004 31,785
2005 14,748
2006 13,069
--------
$101,362
========
The Company did have the option of paying this assessment as a lump
sum amount or paying off the assessment over a 60 month period. The
Company has elected the deferral option, and is making monthly
payments of $1,689 for 59 months, and $1,711 for the 60th and final
month. The Company has recorded this assessment as a charge to Cost
of Sales in the quarter ended December 26, 2008. As of March 27,
2009, the current portion of this assessment liability was $20,268
and the long-term portion was $67,579.
The estimated assessment pertains to the years 2002 through 2006. The
Company was advised that there may be an additional assessment for
the year 2007 and that the estimated assessments for the year 2002
through 2006 are subject to additional review and adjustment.
On September 21, 2001 the Company's shareholders approved the
adoption of the Company's 2002 Employees Stock Option Plan to provide
for the grant of options to purchase up to 750,000 shares of the
Company's common stock to all employees, including senior management.
No options have been granted under the Employee Option Plan to date.
Options granted to employees under this plan may be designated as
options which qualify for incentive stock option treatment under
Section 422A of the Internal Revenue Code, or option which do not so
qualify. Under this plan, the exercise price of an option designated
as an Incentive Stock Option shall not be less than the fair market
value of the Company's common stock on the day the option is granted.
In the event an option designated as an incentive stock option is
granted to a ten percent (10%) share holder, such exercise price
shall be at least 110 percent (110%) of the fair market value or the
Company's common stock and the option must not be exercisable after
the expiration of five years from the day of the grant. Exercise
prices of non-incentive stock options may be less than the fair
market value of the Company's common stock. The aggregate fair market
value of shares subject to options granted to its participants, which
are designated as incentive stock options, and which become
exercisable in any calendar year, shall not exceed $100,000. As of
March 27, 2009, no options had been granted under the Employee Option
Plan.
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In 1987, the Company adopted a cash bonus plan ("Cash Bonus Plan")
for Executive Officers. Contributions to the Cash 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 or 25% of pre-tax operating profits. For the year
ended March 27, 2009, the contribution was $121,000. For the year
ended March 28, 2008, the contribution was $59,500.
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
relatively competitive price position. However, significant decreases
in government and military subcontractor spending, has provided
excess production capacity in the industry, which in turn has
tightened pricing margins.
Off Balance Sheet Arrangements
The Company does not have any off balance sheet arrangements within
the meaning of Item 303 of Regulation S-B.
PART IV
Item 15. Exhibits
Exhibits filed with Form 10-K:
31.1 Certifications of Chief Executive Officer pursuant to Section 17
CFR 240.13a-14(a) or 17 CFR 240.15d-14(a) pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
31.2 Certifications of Chief Accounting Officer pursuant to Section
17 CFR 240.13a-14(a) or 17 CFR 240.15d-14(a) pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
32.1 Certifications by Chief Executive Officer and Chief Financial
Officer, pursuant to 17 CFR 240.13a-14(b) or 17 CFR 240.15d-14(b) and
Section 1350 of Chapter 63 of Title 18 of the United States Code
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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IEH CORPORATION
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 and Chief Executive Officer
Dated: August 6, 2009
Pursuant to the requirements of the Securities Exchange Act of 1934,
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 August 6, 2009
---------------------------------
Michael Offerman, Chairman of the
Board, Chief Executive Officer and
President
/s/ Robert Knoth August 6, 2009
---------------------------------
Robert Knoth, Secretary and
Treasurer; Chief Financial Officer,
Controller and Principal Accounting
Officer
/s/ Murray Sennet August 6, 2009
---------------------------------
Murray Sennet, Director
/s/ Alan Gottlieb August 6, 2009
---------------------------------
Alan Gottlieb, Director
/s/ Gerald E. Chafetz August 6, 2009
---------------------------------
Gerald E. Chafetz
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