IEC Announces Preliminary Estimated Second Quarter Results; Company Provides Update on Status of Restatements

IEC Announces Preliminary Estimated Second Quarter Results; Company Provides 
Update on Status of Restatements 
NEWARK, NY -- (Marketwired) -- 05/20/13 --  IEC Electronics Corp.
(NYSE MKT: IEC) announced preliminary estimated results for the
quarter ended March 29, 2013 and provided an update on the status of
its restatements. 
Status of Financial Statement Restatements
 As reported on May 1,
2013, the Audit Committee of the Board of Directors of IEC
Electronics Corp. (the "Company") determined that the financial
statements for the Company's fiscal year ended September 30, 2012, as
well as the unaudited interim consolidated financial statements for
the fiscal quarter and year-to-date periods ended December 30, 2011,
March 30, 2012, June 29, 2012 and December 28, 2012 (the "Restated
Periods"), require restatement.  
Due to the continuing review of these matters, the Company has been
unable to finalize its financial statements for the quarter ended
March 29, 2013 ("Q2-2013") or to file its Quarterly Report on Form
10-Q for that period (the "Q2-2013 10-Q") with the SEC. On May 13,
2013, the Company filed a Notification of Late Filing with the SEC
extending the filing deadline for the Q2-2013 10-Q from May 13, 2013
to May 20, 2013. At the time the Company filed the Notification, it
anticipated meeting the extended filing deadline for the Q2-2013
10-Q. However, despite the significant work to date, the Audit
Committee has determined further review of the facts and
circumstances giving rise to the restatement is necessary before the
Company's financial statements are finalized and filed. Accordingly,
the Company will not meet the extended filing deadline and the
Company's Q2-2013 10-Q will not be filed on a timely basis. The
Company will continue to dedicate significant resources toward the
process of completing the restatement and its financial statements as
soon as possible, and currently anticipates that within the next 45
days its restatements and the Q2-2013 10-Q will be filed. 
The Company's estimates for the restatement adjustment to the
Company's consolidated financial statements as previously reported
have not changed. The estimated adjustment is provided in the Current
Report on Form 8-K filed by the Company on May 1, 2013 (the
"Restatement 8-K") whic
h is available on the IEC website at
http://www.iec-electronics.com.  
The Company cautions that additional information could be discovered
as a result of the preparation of the restated financial statements
and the further review referred to above that could cause the Company
to have to make additional adjustments to its previously reported
financial information or changes to the information contained in the
Restatement 8-K or to the preliminary estimated results for Q2-2013
set forth and discussed herein. 
Preliminary Estimated Results of Quarter Ended March 29, 2013  
As indicated above, the Company's Q2-2013 10-Q will not be filed on a
timely basis, and the Company has not finalized its financial
statements for Q2-2013. However, the Company's preliminary estimated
financial results (unaudited in thousands) for Q2-2013 are as
follows: 


 
Net Sales                                    $33,681 
Gross Profit                                 $2,899  
Operating Loss                               ($1,412)
Loss Before Benefit From Income Taxes        ($1,827)
Net Loss                                     ($1,144)
                                                     
Total Current Assets                         $42,982 
Total Assets                                 $87,035 
Total Current Liabilities                    $19,071 
Total Liabilities                            $47,054 
Stockholders' Equity                         $39,981 

 
Borrowings under our credit facilities, less cash, decreased on March
29, 2013 compared to December 28, 2012 by approximately $1 million. 
Revenue decreased in Q2-2013 by $4.3 million as compared to the
second quarter of fiscal 2012 ("Q2-2012"). Aggregate revenue
decreases in the medical, industrial and communications & other
market sectors of $5.1 million were partially offset by increased
revenue in the military & aerospace market sector of $0.8 million.
Revenue for the medical market sector decreased $1.5 million
primarily due to decreased demand from a customer upon completion of
a recall program. Revenue for the industrial market sector decreased
$2.4 million primarily due to a strategic decision by a customer to
dual source product to mitigate risk. Revenue for the communications
& other market sector also decreased by $1.2 million primarily due to
decreased demand from two customers, one of which has moved some
production in house, partially offset by revenue from a new customer.
Military & aerospace revenue increased $1.2 million due primarily to
revenue related to new programs from existing customers, revenue from
a new customer and releases in military funding. These increases were
partially offset by a $0.4 million decrease in revenue from one of
the Company's aerospace customers that discontinued outsourcing a
product to IEC and used its excess capacity, created by decreased
end-customer demand, to manufacture the product in house.  
Q2-2013 gross profit decreased $5.2 million to 8.6% of sales from
21.3% of sales in Q2-2012. Lower sales volume and unfavorable changes
in product mix at some locations were partially offset by higher
sales volume and favorable changes in product mix at others. Lower
than anticipated sales volumes at some locations reduced leverage on
fixed manufacturing costs. In addition, higher labor costs were
incurred as a result of anticipated higher revenue volumes which did
not materialize in Q2-2013, particularly in the Southern California
Braiding operation. The Company's gross profit was also negatively
impacted in the quarter by costs of resolving technical problems for
a telecom customer. Lastly, during Q2-2013 the Company realigned
manufacturing at its Newark, New York location from one large to
three smaller operations focused on specific end markets, and the
costs of realignment negatively impacted profitability in the
quarter. 
SG&A increased for the quarter primarily as a result of severance for
former employees. The decrease in gross profit and increase in SG&A
primarily resulted in the Company incurring a net loss of $1.1
million in Q2-2013, compared to net income of $2.5 million in
Q2-2012. In response, the Company initiated reductions in labor,
overhead and SG&A costs.  
W. Barry Gilbert, Chief Executive Officer of the Company, commented
"Operationally, this was a very difficult quarter. While revenues
were slightly higher than the first quarter, we realized lower
revenue compared to last year coupled with higher costs.
Unfortunately, this quarter coincided with the need to restate our
financial statements. We currently expect the restatement to be
complete within approximately 45 days, and our estimates for the
restatement adjustment to the Company's consolidated financial
statements as previously reported have not changed. We understand the
importance of remaining focused on the growth and profitability of
the business as we complete the work related to the restatement
process, and are encouraged that during Q2-2013, the Company added
new customers." 
Quarterly Investor Call Cancelled 
Since the Company is not filing its Quarterly Report on Form 10-Q for
the quarter ended March 29, 2013 and has not completed the
restatement process, the conference call scheduled for May 21, 2013
at 10:00 a.m. East
ern time has been cancelled. The Company will not
further discuss its financial results until the filing of its
restated financial statements and financial statement for the second
quarter of fiscal 2013. 
This release contains certain statements that are, or may be deemed
to be, forward-looking statements within the meaning of section 27A
of the Securities Act of 1933 and section 21E of the Securities
Exchange Act of 1934, and are made in reliance upon the protections
provided by such Acts for forward-looking statements. These
forward-looking statements (such as when we describe what we
"expect," "anticipate" or "estimate" will occur, and other similar
statements) include, but are not limited to, all statements that are
not based on historical fact, but rather reflect our current
expectations concerning future results and events. The ultimate
correctness of these forward-looking statements is dependent upon a
number of known and unknown risks and events and is subject to
various uncertainties and other factors that may cause our actual
results, performance or achievements to be different from any future
results, performance or achievements expressed or implied by these
statements. Specific risks and uncertainties include, but are not
limited to, those set forth in the "Risk Factors" section of the
Company's latest Annual Report on Form 10-K and subsequent Quarterly
Reports on Form 10-Q. Additional risks and uncertainties resulting
from the existence, timing and outcome of the Company's restatement
(including further review of the facts and circumstances giving rise
to it) could, among others, (i) result in additional changes to the
financial information previously provided by the Company or included
herein, (ii) result in delisting of the Company's stock from NYSE
MKT, (iii) cause the Company to incur substantial additional legal,
accounting and other expenses, (iv) cause the Company's independent
registered public accounting firm to withdraw their opinion regarding
the financial statements for the Restated Periods, (v) cause a
default under the Company's credit arrangements with M&T Bank with
respect to which, if the bank chooses to exercise its remedies, the
Company may not be able to obtain replacement financing or continue
its operations, (vi) result in shareholder, governmental or other
actions, (vii) cause the Company's customers, including the
government contractors with which it deals, to lose confidence in the
Company or cause a default under the Company's contractual
arrangements or (viii) affect the ability of the Company to remediate
the existing material weakness in the Company's internal controls
over financial reporting or lead to the identification of new or
additional deficiencies or material weaknesses. Any one or more of
such risks and uncertainties could have a material adverse effect on
the Company or the value of its common stock. 
We undertake no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events, or
otherwise. 
About IEC Electronics
 IEC Electronics Corporation is a premier
provider of electronic manufacturing services ("EMS") to advanced
technology companies primarily in the military and aerospace,
medical, industrial and communications sectors. The Company
specializes in the custom manufacture of high reliability, complex
circuit cards, system level assemblies, a wide array of custom cable
and wire harness assemblies, precision sheet metal products, and
advanced research and testing services. As a full service EMS
provider, IEC is a world-class ISO 9001:2008, AS9100 and ISO13485
certified company. The AS9100 certification enables IEC to serve the
military and commercial aerospace markets. The ISO13485 certification
supports the quality requirements of medical device markets. The
Company is also AC7120 Nadcap accredited for electronics
manufacturing to support the most stringent quality requirements of
the aerospace industry, as well as ITAR registered and NSA approved
under the COMSEC standard. Dynamic Research and Testing Laboratories
(DRTL), the Company's newest business unit, is an ISO 17025
accredited laboratory specializing in the testing and detection of
counterfeit electronic parts, as well as component risk mitigation
and advanced failure analysis. IEC Electronics is headquartered in
Newark, NY (outside of Rochester) and also has operations in
Rochester, NY, Albuquerque, NM and Bell Gardens, CA. Additional
information about IEC can be found on its web site at
www.iec-electronics.com.  
Contact:
John Nesbett/Jennifer Belodeau
Institutional Marketing Services (IMS)
(203) 972-9200
jnesbett@institutionalms.com