UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) - August 24, 2005
IEC ELECTRONICS CORP.
(Exact Name of Registrant as Specified in its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
0-6508 13-3458955
(Commission File Number) (IRS Employer Identification No.)
105 Norton Street, Newark, New York 14513
(Address of principal executive offices)(Zipcode)
(315) 331-7742
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
On August 24, 2005, the Board of Directors of IEC Electronics Corp. ("IEC"
or the "Company") approved the acceleration of vesting of most out-of-the-money,
unvested stock options held by executive officers, directors and employees. The
accelerated options were issued under the Company's 2001 Stock Option and
Incentive Plan. An option was considered out-of-the-money if the stated option
exercise price was $0.90 or higher. As a result, options to purchase 184,000
shares of IEC common stock became exercisable immediately. None of these options
had economic value as of August 24, 2005, based on the closing price of $0.65 on
that date.
An out-of-the-money option held by an officer with vesting based on
performance was not accelerated by the Board as it believed that the existing
stated performance criteria should be met before any of such options were
accelerated. Shares received upon the exercise of accelerated options held by
directors, officers and certain other senior managers may not be sold prior to
the earlier of the original vesting date set forth in the option or their
termination of employment or service.
The table below summarizes the outstanding options subject to accelerated
vesting.
Summary of Options Subject to Acceleration
Aggregate Number of Shares Issuable Weighted Average
Upon Accelerated Stock Options Exercise Price Per Share
------------------------------ ------------------------
Executive Officers 135,000 $1.10
All Other Employees 24,000 $1.12
Directors 25,000 $1.29
------------------------------ -----------------------
Total (1) 184,000 $1.13
(1) The accelerated options represent 12% of the Company's currently
outstanding stock options.
Under the recently revised Financial Accounting Standards Board Statement
No. 123, "Share-based Payment" ("FAS 123(R)"), IEC will be required to recognize
the expense associated with its outstanding unvested stock options beginning in
the first quarter of fiscal year 2006. As a result of the acceleration, the
Company expects to reduce the stock option expense it otherwise would have been
required to record in connection with the accelerated options by approximately
$46,000 in fiscal 2006, 2007 and 2008.
In making the decision to accelerate these options, thereby avoiding
recognizing compensation expense in future financial statements, the Board of
Directors considered the interest of the stockholders in not having earnings
materially affected. In addition, because these options have exercise prices in
excess of current market values, they are not fully achieving their original
objectives of incentive compensation and employee retention. It is possible the
acceleration may have a beneficial effect on employee morale and retention. The
Board of Directors believes that the acceleration of the out-of-the-money
options is in the best interest of the Company and its stockholders.
This current report on Form 8-K contains certain 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 such statements are made
in reliance upon the protections provided by such Acts for forward-looking
statements. These forward-looking statements, including statements regarding
reduction in stock option expense as a result of the option acceleration,
involve risks and uncertainties. Actual results could differ materially from the
results projected, expressed or implied by these forward-looking statements.
Factors that could cause or contribute to such differences include, but are not
limited to, changes in accounting pronouncements or additional interpretations
of accounting pronouncements that may change the currently proposed treatment of
options as described in FAS 123(R) and those risk factors discussed from time to
time in IEC's filings with the Securities and Exchange Commission. Many of these
risk factors are outside of IEC's control, and as such, they involve risks which
are not currently known to IEC that could cause actual results to differ
materially from those discussed or implied herein. The forward-looking
statements in this Report on Form 8-K are made as of the date hereof and IEC
does not undertake to update its forward-looking statements.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
IEC Electronics Corp.
-------------------------------------
(Registrant)
Date: September 30, 2005 By: /s/ W. Barry Gilbert
--------------------------------
W. Barry Gilbert
Chairman, Chief Executive Officer