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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange -
- -
Act of 1934
For the quarterly period ended December 26, 2003
Commission file Number 0-6508
IEC ELECTRONICS CORP.
-----------------------------------------------------
(Exact name of registrant as specified in its charter.)
Delaware 13-3458955
----------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
105 Norton Street, Newark, New York 14513
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices (Zip Code)
(315) 331-7742
- --------------------------------------------------------------------------------
Registrant's telephone number, including area code:
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 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 an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
YES [ ] NO [X]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:
Common Stock, $0.01 Par Value - 8,067,820 shares as of January 28, 2004.
Page 1 of 12
PART 1 FINANCIAL INFORMATION
Page
Number
Item 1. Financial Statements
Consolidated Balance Sheets as of:
December 26, 2003 (Unaudited) and September 30, 2003.......... 3
Consolidated Statements of Operations for the three months
ended: December 26, 2003 (Unaudited) and December 27, 2002
(Unaudited)................................................... 4
Consolidated Statements of Cash Flows for the three months
ended: December 26, 2003 (Unaudited) and December 27, 2002
(Unaudited)................................................... 5
Notes to Consolidated Financial Statements (Unaudited)........ 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.................... 9
Item 3. Quantitative and Qualitative Disclosures about Market Risk....... 11
Item 4. Controls and Procedures.......................................... 11
PART II OTHER INFORMATION
Item 1. Legal Proceedings.............................................. 12
Item 2. Changes in Securities.......................................... 12
Item 3. Defaults Upon Senior Securities................................ 12
Item 4. Submission of Matters to a Vote of Security Holders............ 12
Item 5. Other Information.............................................. 12
Item 6. Exhibits and Reports on Form 8-K............................... 12
Page 2 of 12
PART 1 FINANCIAL INFORMATION
Item 1 -- Financial Statements
IEC ELECTRONICS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 26, 2003 AND SEPTEMBER 30, 2003
(in thousands)
DECEMBER 26,2003 SEPTEMBER 30,2003
---------------- -----------------
ASSETS (Unaudited)
CURRENT ASSETS:
Cash $ 496 $ 793
Accounts receivable 3,140 4,004
Inventories 1,876 1,633
Deferred income taxes 250 250
Other current assets 118 329
Current assets-discontinued operations 54 121
---------- ----------
Total current assets 5,934 7,130
---------- ----------
FIXED ASSETS:
Land and land improvements 768 768
Building and improvements 3,995 3,995
Machinery and equipment 43,461 46,702
Furniture and fixtures 5,870 5,870
---------- ----------
SUB-TOTAL GROSS PROPERTY 54,094 57,335
LESS ACCUMULATED DEPRECIATION (51,182) (54,161)
---------- ----------
2,912 3,174
OTHER NON-CURRENT ASSETS 180 202
---------- ----------
$ 9,026 $ 10,506
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank borrowings and current portion of
long-term debt $ 1,222 $ 1,277
Accounts payable 1,598 2,740
Accrued payroll and related expenses 624 794
Other accrued expenses 696 675
Other current liabilities -
discontinued operations 210 216
---------- ----------
Total current liabilities 4350 5,702
---------- ----------
LONG TERM VENDOR NOTES 371 456
LONG TERM BANK DEBT 758 934
---------- ----------
TOTAL LIABILITIES 5,479 7,092
---------- ----------
SHAREHOLDERS' EQUITY:
Preferred stock, par value $.01 per share
Authorized - 500,000 shares;
Issued and outstanding - none - -
Common stock, par value $.01 per share
Authorized - 50,000,000 shares
Issued - 8,052,710 and 8,021,960 shares,
respectively (net of 573 treasury shares) 69 69
Additional paid-in capital 38,480 38,479
Accumulated deficit (34,910) (35,042)
Accumulated other comprehensive loss -
Cumulative translation adjustments (92) (92)
---------- ----------
Total shareholders' equity 3,547 3,414
---------- ----------
$ 9,026 $ 10,506
========== ==========
The accompanying notes are an integral part of these financial statements
Page 3 of 12
IEC ELECTRONICS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 26, 2003 AND DECEMBER 27, 2002
(in thousands, except share and per share data)
3 MONTHS ENDED 3 MONTHS ENDED
DECEMBER 26, 2003 DECEMBER 27, 2002
-------------- ------------------
(Unaudited) (Unaudited)
Net sales $ 6,519 $ 9,601
Cost of sales 5,948 8,612
------- -------
Gross profit 570 989
------- -------
Selling and administrative expenses 579 753
Restructuring benefit - (63)
------- -------
Operating (loss) profit (9) 299
Interest and financing expense (90) (197)
Forgiveness of accounts payable - 245
Other income, net 231 96
------- -------
Net income before income taxes 132 443
Income taxes - -
------- -------
Net income from continuing
operations 132 443
--------- ----------
Net income $ 132 $ 443
========= ==========
Net income per common and common equivalent share:
Basic and Diluted
Income available to common
shareholders $ 0.02 $ 0.06
Weighted average number of common and common equivalent shares outstanding:
Basic 8,042,188 7,691,188
Diluted 8,764,870 7,838,870
The accompanying notes are an integral part of these financial statements.
Page 4 of 12
IEC ELECTRONICS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 26, 2003 AND DECEMBER 27, 2002
(in thousands)
3 MONTHS 3 MONTHS
ENDED ENDED
DECEMBER 26, DECEMBER 27,
2003 2002
----------- ------------
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 132 $ 443
Depreciation 290 414
Gain on sale of fixed assets (215) (50)
Changes in operating assets and liabilities:
Accounts receivable 864 902
Inventories (243) 565
Other current assets 211 (19)
Accounts payable (1,143) 8
Accrued payroll and related expenses (170) (147)
Other accrued expenses 21 (333)
-------- --------
Net cash flows from operating activities (253) 1,783
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property 215 547
Purchases of plant, property & equipment (7) -
-------- -------
Net cash flows from investing activities 208 547
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments under line of credit agreements (315) (1,479)
Debt issuance costs - (139)
Proceeds from exercise of stock options 2 -
-------- ---------
Net cash flows from financing activities (313) (1,618)
-------- ---------
Cash from (used in) discontinued operations 61 (712)
-------- ---------
Change in cash and cash equivalents (297) -
Cash and cash equivalents at beginning of period 793 -
-------- ---------
Cash and cash equivalents at end of period $ 496 $ -
======== =========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ 90 $ 127
======== =========
Income taxes $ - $ -
======== =========
Conversion of accounts payable to long-term payable $ - $ 736
======== =========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Conversion of accounts payable to debt $ - $ 1,211
======== =========
The accompanying notes are an integral part of these financial statements.
Page 5 of 12
IEC ELECTRONICS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 26, 2003
(1) Business and Summary of Significant Accounting Policies
Business
- --------
IEC Electronics Corp. ("IEC", "the Company") is an independent electronics
manufacturing services ("EMS") provider of complex printed circuit board
assemblies and electronic products and systems. The Company provides high
quality electronics manufacturing services with state-of-the-art manufacturing
capabilities and production capacity. Utilizing computer controlled
manufacturing and test machinery and equipment, the Company provides
manufacturing services employing surface mount technology ("SMT") and
pin-through-hole ("PTH") interconnection technologies. As an independent
full-service EMS provider, the Company offers its customers a wide range of
manufacturing and management services, on either a turnkey or consignment basis,
including design, prototype, material procurement and control, manufacturing and
test engineering support, statistical quality assurance, complete resource
management and distribution. The Company's strategy is to cultivate strong
manufacturing relationships with established and emerging original equipment
manufacturers ("OEMs").
Consolidation
- -------------
The consolidated financial statements include the accounts of IEC and its
wholly-owned subsidiary, IEC Electronicos de Mexico ("Mexico"), (collectively,
"IEC"). Operations in Texas and Mexico were closed in July 2002. All significant
intercompany transactions and accounts have been eliminated.
Revenue Recognition
- -------------------
The Company recognizes revenue upon shipment of product for both turnkey
and consignment contracts.
Cash and Cash Equivalents
- -------------------------
Cash and cash equivalents include highly liquid investments with original
maturities of three months or less. The Company's cash and cash equivalents are
held and managed by institutions which follow the Company's investment policy.
The fair value of the Company's financial instruments approximates carrying
amounts due to the relatively short maturities and variable interest rates of
the instruments, which approximate current market interest rates.
Inventories
- -----------
Inventories are stated at the lower of cost (first-in, first-out) or
market. The major classifications of inventories are as follows at period end
(in thousands):
December 26, 2003 September 30, 2003
---------------- ------------------
(Unaudited)
Raw materials $ 857 $1,128
Work-in-process 946 498
Finished goods 73 7
---------------- ----------------
$1,876 $1,633
================ ================
Page 6 of 12
IEC ELECTRONICS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 26, 2003
Unaudited Financial Statements
- -------------------------------
The accompanying unaudited financial statements as of December 26, 2003,
and for the three months ended December 26, 2003 have been prepared in
accordance with generally accepted accounting principles for interim financia1
information. In the opinion of management, all adjustments considered necessary
for a fair presentation, which consist solely of normal recurring adjustments
have been included. The accompanying financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's September 30, 2003 Annual Report on Form 10-K.
Earnings Per Share
- ------------------
Net income per share is computed in accordance with Statement of Financial
Accounting Standards No. 128, "Earnings Per Share". Basic earnings per share is
calculated by dividing income available to common shareholders by the
weighted-average number of shares outstanding for each period. Diluted earnings
per common share is calculated by adjusting the weighted-average shares
outstanding assuming conversion of all potentially dilutive stock options.
New Pronouncements
- ------------------
In November 2002, the EITF reached a consensus on issue 00-21, "Revenue
Arrangements with Multiple Deliverables" (EITF 00-21). EITF 00-21 addresses
revenue recognition on arrangements encompassing multiple elements that are
delivered at different points in time, defining criteria that must be met for
elements to be considered to be a separate unit of accounting. If an element is
determined to be a separate unit of accounting, the revenue for the element is
recognized at the time of delivery. EITF 00-21 is effective for revenue
arrangements entered into in fiscal periods beginning after June 15, 2003. The
Company adopted this standard as of OCtober 1, 2003 with no material impact on
its financial position, results of operations or cash flows.
(2) Discontinued Operations
- ---------------------------
On June 18, 2002, the Company signed an Asset Purchase Agreement to sell
substantially all of the assets of IEC-Mexico to Electronic Product Integration
Corporation (EPI) for $730,000 plus payments of an Earn-out Amount. No earn-out
amounts were received. Under the terms of a related agreement, the Company and
IEC-Mexico were also released of all of their lease obligations to the landlord
of the Mexican facility. The Company recorded an after-tax loss on the sale of
the business of approximately $3.1 million in fiscal 2002. The reserve balance
at December 26, 2003 was $211,000.
On February 28, 2003, the Company sold its Edinburg, Texas facility for
$875,000 and completed its restructuring initiative. The Company recorded a
$184,000 restructuring benefit during Q2 2003 due to certain facility payments
accrued in a prior fiscal year that will no longer be paid out.
Assets and liabilities of discontinued operations consisted of the
following:
December 26, 2003 September 30, 2003
----------------- ------------------
(Unaudited)
Current assets $ 54 $ 121
Accrued expenses 210 216
------- --------
Net assets of discontinued operations $ (156) $ (95)
========== ==========
Page 7 of 12
IEC ELECTRONICS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 27, 2002
(3) Stock Option Plans
- ----------------------
The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees", and related interpretations in accounting for
its stock option plans. Accordingly, no compensation expense has been recognized
for its stock option plans. SFAS No. 123, "Accounting for Stock-Based
Compensation", as amended by SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure", requires disclosure of pro forma net
income per share as if the fair valued-based method had been applied in
measuring compensation cost for the stock-based awards. The following table
illustrates the effect on net earnings and earnings per share had the Company
adopted the fair value based method of accounting for stock-based employee
compensation for all periods presented.
3 MONTHS ENDED 3 MONTHS ENDED
DECEMBER 26, 2003 DECEMBER 27, 2002
(Unaudited) (Unaudited)
----------------- -----------------
Net earnings, as reported $ 132 $ 443
Pro forma net earnings 116 443
Earnings per share:
Basic - as reported $ 0.02 $ 0.06
Basic - pro forma $ 0.01 $ 0.06
Diluted - as reported $ 0.02 $ 0.06
Diluted - pro forma $ 0.01 $ 0.06
(4) Litigation
- --------------
Except as set forth below, there are no material legal proceedings pending
to which the Company or any of its subsidiaries is a party or to which any of
the Company's or subsidiaries' property is subject. To our knowledge, there are
no material legal proceedings to which any director, officer or affiliate of the
Company, or any beneficial owner of more than 5 percent (5%) of Common Stock, or
any associate of any of the foregoing, is a party adverse to the Company or any
of its subsidiaries.
An action was commenced in United States District Court for the Southern
Division of Texas against the Company and several other corporate defendants, on
August 12,2002. The plaintiffs allege a "toxic tort" action against the
defendants, for exposure to lead, lead dust, chemicals and other substances used
in the manufacture of products by various defendants. The essence of the
complaint relates to alleged "in utero" exposure to the circulatory system of
the then unborn children, resulting in alleged tissue toxicity through the
mothers, causing damage to the central nervous system, brain and other organs of
the fetus. The complaint alleges theories of negligence, gross negligence,
strict liability, breach of warranty and fraud/negligent misrepresentation, and
claims unspecified damages for pain and suffering, a variety of special damages,
punitive damages and attorneys' fees. Royal & Sunalliance Insurance Company has
agreed to provide a defense of the claims with a reservation of rights, but has
expressly excluded any coverage for the claim for punitive damages. The Company
has denied liability and the case is still in the discovery phase. A trial is
tentatively scheduled for March 2004.
On August 13, 2003 an action was commenced by General Electric Company
("GE"), in the state of Connecticut against the Company and Vishay
Intertechnology, Inc. The action alleges causes of action for breach of a
manufacturing services contract which had an initial value of $4.4 million,
breach of express warranty, breach of implied warranty and a violation of the
Connecticut Unfair Trade Practices Act. Vishay supplied a component that the
Company used to assemble printed circuit boards for GE that GE contends failed
to function properly requiring a product recall. GE claims damages "in excess of
$15,000" plus interest and attorneys' fees. The Company has made a motion to
dismiss the action in Connecticut for lack of jurisdiction and the motion is
pending. The position of the Company is that the contract with GE was
substantially completed and that it has meritorious defenses and a cross claim
against Vishay.
Page 8 of 12
Item 2 -- Management's Discussion and Analysis of Financial Condition
and Results of Operations
-----------------------------------------------------------
Results of Operations - Three Months Ended December 26, 2003,
Compared to the Three Months Ended December 27, 2002.
-----------------------------------------------------------
Net sales for the three month period ended December 26, 2003, were $6.5
million, compared to $9.6 million for the comparable period of the prior fiscal
year, a decrease of 32 percent. The decrease in sales is due to a decline in
orders from one of our major customers, and a variety of design and material
issues that resulted in shipment delays to another large customer. Turnkey sales
were 82 percent of net sales in the quarter as compared to 92 percent for the
comparable period of the prior year.
Five customers accounted for 86% of our sales for the quarter ended
December 26, 2003.
Gross profit was $0.6 million or 8.7 percent of sales for the three month
period ended December 26, 2003, versus $1.0 million or 10.3 percent of sales in
the comparable period of the prior fiscal year. The decrease in gross profit
percentage is primarily due to fixed overhead costs being spread over fewer
sales dollars.
Selling and administrative expenses decreased to $0.6 million for the three
month period ended December 26, 2003, from $0.8 million in the comparable period
of the prior fiscal year, a decrease of 23 percent. This decrease is primarily
due to lower sales commissions. As a percentage of net sales, selling and
administrative expenses increased to 8.9 percent from 7.8 percent in comparison
to the same quarter of the prior fiscal year. The increase is due to fixed costs
being spread over fewer sales dollars.
We recorded a benefit from restructuring of $63,000 in the three months
ended December 27, 2002. This was due to certain severance payments accrued in
the 2002 fiscal year that were not paid out.
We had other income of $231,000 for the three months ended December 26,
2003. Of the other income, $215,000 was related to a gain on the sale of excess
equipment.
We recorded approximately $184,000 of special charges in the three months
ended December 27, 2002, due to bank and consulting fees incurred to comply with
new bank requirements under the then current amendment to the banking agreement,
of which $102,000 was included in interest and financing expense.
We have recorded no benefit from income tax as a result of our cumulative
net losses, and accordingly, has a large valuation allowance against our net
deferred tax asset including the net operating loss carry-forward.
Net income for the three months ended December 26, 2003 was $0.1 million
versus a net income of $0.4 million in the comparable quarter of the prior
fiscal year.
Diluted income per share was $0.02 as compared to diluted income per share
of $0.06 in the comparable quarter of the prior fiscal year.
Liquidity and Capital Resources
- -------------------------------
As reflected in the Consolidated Statements of Cash Flows for the three
months ending December 26, 2003, net cash was provided by: operating activities
($0.2 million) and investing activities ($0.2 million). Net cash was used to pay
down bank debt ($0.3 million). Depreciation for the three month periods ending
December 26, 2003 and December 27, 2002 was $0.3 million and $0.4 million,
respectively. Lower sales vs. the prior quarter resulted in a $0.9 million
reduction in accounts receivable. Inventory levels increased by $0.2 million due
to customer design and material issues that caused shipment delays to a large
customer.
We currently have a $4,450,000 Senior Secured Facility (the "Facility") and
a $2,200,000 Secured Term Loan (the "Term Loan"). The Facility, which matures on
January 14, 2006, bears interest at the rate of prime plus 2%. It involves a
revolving line of credit for up to $3,850,000 based upon advances on eligible
accounts receivable and inventory and a term loan of $600,000, secured by
machinery and equipment, to be amortized over a 36 month period. The Term Loan
is secured by a general security agreement, and indirectly by the assignment of
a certain promissory note and a first mortgage on the IEC plant in Newark, New
York. It is payable with interest at prime plus 1.5% in monthly installments
over a period of 3 years, maturing on January 14, 2006. The availability under
the revolver was $1.4 million on December 26, 2003.
Page 9 of 12
$0, $417,000, and $1,042,000 were outstanding at December 26, 2003 under
the revolving line of credit with Keltic, the term loan with Keltic and the
SunTrust loan, respectively.
The financing agreements contain various affirmative and negative covenants
including, among others, limitations on the amount available under the revolving
line of credit relative to the borrowing base, capital expenditures, fixed
charge coverage ratios, and minimum earnings before interest, taxes,
depreciation and amortization (EBITDA). We are in compliance with these
covenants.
Application of Critical Accounting Policies
- -------------------------------------------
Our financial statements and accompanying notes are prepared in accordance
with generally accepted accounting principles in the United States. Preparing
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenue, and expenses. These
estimates and assumptions are affected by management's application of accounting
policies. Critical accounting policies for us include revenue recognition,
impairment of long-lived assets, accounting for legal contingencies and
accounting for income taxes.
We recognize revenue in accordance with Staff Accounting Bulletin No.101,
"Revenue Recognition in Financial Statements." Sales are recorded when products
are shipped to customers. Provisions for discounts and rebates to customers,
estimated returns and allowances and other adjustments are provided for in the
same period the related sales are recorded.
We evaluate our long-lived assets for financial impairment on a regular
basis in accordance with Statement of Financial Accounting Standards No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets." We evaluate
the recoverability of long-lived assets not held for sale by measuring the
carrying amount of the assets against the estimated discounted future cash flows
associated with them. At the time such evaluations indicate that the future
discounted cash flows of certain long-lived assets are not sufficient to recover
the carrying value of such assets, the assets are adjusted to their fair values.
We are subject to various legal proceedings and claims, the outcomes of
which are subject to significant uncertainty. Statement of Financial Accounting
Standards No. 5, "Accounting for Contingencies", requires that an estimated loss
from a loss contingency should be accrued by a charge to income if it is
probable that an asset has been impaired or a liability has been incurred and
the amount of the loss can be reasonably estimated. Disclosure of a contingency
is required if there is at least a reasonable possibility that a loss has been
incurred. We evaluate, among other factors, the degree of probability of an
unfavorable outcome and the ability to make a reasonable estimate of the amount
of loss. Changes in these factors could materially impact our financial position
or our results of operations.
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," establishes financial accounting and reporting standards for the effect
of income taxes. The objectives of accounting for income taxes are to recognize
the amount of taxes payable or refundable for the current year and deferred tax
liabilities and assets for the future tax consequences of events that have been
recognized in an entity's financial statements or tax returns. Judgment is
required in assessing the future tax consequences of events that have been
recognized in our financial statements or tax returns. Fluctuations in the
actual outcome of these future tax consequences could materially impact our
financial position or our results of operations.
Impact of Inflation
- -------------------
The impact of inflation on our operations has been minimal due to the fact
that we are able to adjust its bids to reflect any inflationary increases in
cost.
Page 10 of 12
New Pronouncements
- ------------------
In November 2002, the EITF reached a consensus on issue 00-21, "Revenue
Arrangements with Multiple Deliverables" ("EITF 00-21"). EITF 00-21 addresses
revenue recognition on arrangements encompassing multiple elements that are
delivered at different points in time, defining criteria that must be met for
elements to be considered to be a separate unit of accounting. If an element is
determined to be a separate unit of accounting, the revenue for the element is
recognized at the time of delivery. EITF 00-21 is effective for revenue
arrangements entered into in fiscal periods beginning after June 15, 2003. We
adopted this standard on October 1, 2003 with no impact on our financial
position, results of operations or cash flow.
Item 3 -- Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
Quantitative and Qualitative Disclosures about Market Risk represents the
risk of loss that may impact the consolidated financial position, results of
operations or cash flows of IEC due to adverse changes in financial rates. We
are exposed to market risk in the area of interest rates. One exposure is
directly related to its Term Loan and Revolving Credit borrowings under the
Credit Agreement, due to their variable interest rate pricing. Management
believes that interest rate fluctuations will not have a material impact on
IEC's results of operations.
Item 4 -- Controls and Procedures
-----------------------
An evaluation was performed under the supervision and with the
participation of our management, including our acting Chief Executive Officer
and Chief Financial Officer, of the effectiveness of the design and operation of
our disclosure controls and procedures as of the end of the period covered by
this Quarterly Report on Form 10-Q as required by Rule 13a-15 under the
Securities Exchange Act of 1934 (the "Exchange Act"). Based on that evaluation,
our acting Chief Executive Officer and Chief Financial Officer concluded that
the Company's disclosure controls and procedures were effective as of the end of
the period covered by the Quarterly Report on 10-Q to provide reasonable
assurance that information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time period specified in the SEC rules and
forms.
In connection with the evaluation described above, our management,
including our acting Chief Executive Officer and Chief Financial Officer,
identified no change in our internal control over financial reporting that
occurred during our fiscal quarter ended December 26, 2003, and that has
materially affected, or is reasonably likely to materially affect, our internal
controls over financial reporting.
Forward-looking Statements
- --------------------------
Forward-looking statements in this Form 10-Q include, without limitation,
statements relating to the Company's plans, future prospects, strategies,
objectives, expectations, intentions and adequacy of resources and are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. These statements may be identified by their use of words
like "plans", "expects", "aims", "believes", "projects", "anticipates",
"intends", "estimates", "will", "should", "could", and other expressions that
indicate future events and trends. These forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievement of the Company to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. These factors include, among others,
the following: general economic and business conditions, the timing of orders
and shipments, availability of material, product mix, changes in customer
requirements and in the volume of sales to principal customers, competition and
technological change, the ability of the Company to control manufacturing and
operating costs, and satisfactory relationships with vendors. The Company's
actual results of operations may differ significantly from those contemplated by
such forward-looking statements as a result of these and others factors,
including factors set forth in the Company's Annual Report on Form 10-K for the
year ended September 30, 2003 and in other filings with the Securities and
Exchange Commission.
Page 11 of 12
PART II. OTHER INFORMATION
Item 1 -- Legal Proceedings
The description of our legal proceedings set forth in Item 3 of our Annual
Report on Form 10-K for the fiscal year ended September 30, 2003 is incorporated
herein by reference.
Item 2 -- Changes in Securities
None.
Item 3 -- Defaults Upon Senior Securities
None.
Item 4 -- Submission of Matters to a Vote of Security Holders
None.
Item 5 -- Other Information
None.
Item 6 -- Exhibits and Reports on Form 8-K
a. Exhibits
The following documents are filed as exhibits to this Report:
31.1 Certification of Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
32.2 Certification of Principal Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
b. Reports on Form 8-K
(ii) A current report on Form 8-K was filed with the Securities and
Exchange Commission on October 29, 2003. It announced earnings for the three
months and fiscal year ended September 30, 2003 and a press release relating to
the earnings was attached thereto.
Page 12 of 12