UNITED
STATES SECURITIES AND EXCHANGE COMMISSION


Washington,
D.C. 20549


FORM
10-K





(Mark
One)


x Annual Report pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934


For the
fiscal year ended September 30, 2010 or


 ̈ 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 0-6508





IEC
ELECTRONICS CORP.


(Exact
name of registrant as specified in its charter)





Delaware
            13-3458955(State
      or other jurisdiction of
            (IRS
      Employer ID No.)incorporation
      or organization)





105
Norton Street, Newark, New York 14513


(Address
of principal executive offices, including zip code)





Registrant's
telephone number, including area code: 315-331-7742





Securities
registered pursuant to Section 12(b) of the Act:


Common
      Stock, $.01 par value
                  
                  NYSE
      Amex(Title
      of Class)
                  
                  (Name
      of each exchange on which
registered)





Securities registered pursuant to
Section 12(g) of the Act:None





Indicate
by check mark if the 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 Section 15(d) of the Act.


Yes   ̈     No  x





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 has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).


Yes   ̈    No   ̈





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not 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.    ̈





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 the 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
              x Smaller reporting
      company





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).


Yes   ̈       No  x




At March
26, 2010, the last business day of the registrant’s most recently completed
second fiscal quarter, the aggregate market value of the shares of common stock
held by non-affiliates for the registrant was $40,802,628 (based on the closing
price of the registrant’s common stock on NYSE Amex on such date). Shares of
common stock held by each executive officer and director and by each person and
entity who beneficially owns more than 10% of the outstanding common stock have
been excluded in that such person or entity under certain circumstances may be
deemed to be an affiliate. Such exclusion should not be deemed a determination
or admission by registrant that such individuals or entities are, in fact,
affiliates of the registrant.





As
of November 15, 2010, there were 9,109,324 shares of Common Stock
outstanding.





Documents
incorporated by reference:





Portions
of IEC Electronics Corp.'s definitive Proxy Statement for the 2011 Annual
Meeting of Stockholders are incorporated by reference into Part III of this Form
10-K.









TABLE
OF CONTENTS





PagePART
      IItem
      1
                      
                      Business
                      
                      4Item
      1A
                      
                      Risk
      Factors
                      
                      8Item
      1B
                      
                      Unresolved
      Staff Comments
                      
                      12Item
      2
                      
                      Properties
                      
                      12Item
      3
                      
                      Legal
      Proceedings
                      
                      13Item
      4
                      
                      (Removed
      and Reserved)
                      
                      13Executive
      Officers of Registrant
                      
                      14PART
      IIItem
      5
                      
                      Market
      for Registrant's Common Equity, Related Stockholder Matters, and Issuer
      Purchases of Equity Securities
                      
                      15Item
      6
                      
                      Selected
      Consolidated Financial Data
                      
                      17Item
      7
                      
                      Management's
      Discussion and Analysis of FinancialCondition and Results of
      Operations
                      
                      18Item
      7A
                      
                      Quantitative
      and Qualitative Disclosures about Market Risk
                      
                      22Item
      8
                      
                      Financial
      Statements and Supplementary Data
                      
                      22Item
      9
                      
                      Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
                      
                      22Item
      9A
                      
                      Controls
      and Procedures
                      
                      22Item
      9B
                      
                      Other
      Information
                      
                      23PART
      IIIItem
      10
                      
                      Directors,
      Executive Officers, and Corporate Governance
                      
                      23Item
      11
                      
                      Executive
      Compensation
                      
                      24Item
      12
                      
                      Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
                      
                      24Item
      13
                      
                      Certain
      Relationships and Related Transactions and Director
      Independence
                      
                      24Item
      14
                      
                      Principal
      Accountant Fees and Services
                      
                      24PART
      IVItem
      15
                      
                      Exhibits
      and Financial Statement Schedules
                      
                      25




2





"SAFE
HARBOR" CAUTIONARY STATEMENT UNDER THE


PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995





References
in this report to “IEC”, the “Company”, “we”, “our”, or “us” mean IEC
Electronics Corp. and its subsidiaries except where the context otherwise
requires. This Annual Report on Form 10-K 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 “believe”, “expect” or “anticipate” will occur, and other
similar statements) include, but are not limited to, statements regarding future
sales and operating results, future prospects, the capabilities and capacities
of business operations, any financial or other guidance and 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. The following important factors, among others, could affect future
results and events, causing those results and events to differ materially from
those expressed or implied in our forward-looking statements: business
conditions and growth in our customers' industries, the electronic manufacturing
services industry and the general economy, variability of operating results, our
dependence on a limited number of major customers, the potential consolidation
of our customer base, availability of components, dependence on certain
industries, variability of customer requirements, our ability to assimilate
acquired businesses and to achieve the anticipated benefits of such
acquisitions, unforeseen product failures and the potential product liability
claims that may be associated with such failures, the availability of capital
and other economic, business and competitive factors affecting our customers,
our industry and business generally and other factors that we may not have
currently identified or quantified. For a further list and description of
various risks, relevant factors and uncertainties that could cause future
results or events to differ materially from those expressed or implied in our
forward-looking statements, see the "Risk Factors” and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" sections
elsewhere in this document. All forward-looking statements included in this
Report on Form-10-K are made only as of the date of this Report on Form 10-K. We
do not undertake any obligation to, and may not, publicly update or correct any
forward-looking statements to reflect events or circumstances that subsequently
occur or which we hereafter become aware of. You should read this document and
the documents that we incorporate by reference into this Annual Report on
Form-10-K completely and with the understanding that our actual future results
may be materially different from what we expect. All forward-looking statements
attributable to us are expressly qualified by these cautionary
statements.




3





PART
I


ITEM
1.  BUSINESS





Overview


IEC
Electronics Corp. ("IEC", "we", "our", “us”, the “Company”) is a premier
provider of electronic manufacturing services (“EMS”) to advanced technology
companies. We specialize in the custom manufacture of high reliability, complex
circuit cards, system level assemblies, a wide array of custom cable and wire
harness assemblies, and precision sheet metal.  We excel where quality
and reliability are of paramount importance and when low to medium volume,
high-mix production is the norm.  We utilize state-of-the art,
automated circuit card assembly equipment together with a full complement of
high reliability manufacturing stress testing methods.  With our
customers at the center of everything we do, we have created a high intensity,
rapid, responsive culture capable of reacting and adapting to their
ever-changing needs.  Our customer centric approach offers a high
degree of flexibility while simultaneously complying with rigorous quality and
on-time delivery standards.  As a true extension of our customers'
operation, we have applied industry-leading Six Sigma and Lean Manufacturing
principles to eliminate waste and reduce our customers’ total cost of ownership.
While many EMS services are viewed as commodities, we believe we set ourselves
apart through an uncommon mix of capabilities, including:




Ø
            A
      world class Technology Center that combines dedicated prototype
      manufacturing with an on-site Materials Analysis Lab (headed by two staff
      PhD’s), enabling the seamless transition of complex electronics from
      design to production




Ø
            In-house
      custom, functional test development supporting complex system-level
      assembly, test, troubleshooting and end-order
  fulfillment




Ø
            An
      authentic Lean/Six Sigma continuous improvement program supported by five
      certified Six Sigma Blackbelts delivering best-in-class
      results




Ø
            An
      industry-leading Web Portal providing customers real-time access to a wide
      array of critical data




IEC
Electronics Corp., a Delaware corporation, is the successor by merger in 1990 to
IEC Electronics Corp., a New York corporation, which was originally organized in
1966.





On July 30, 2010the Companyacquired the assets of Celmet Co.,
Inc.(“Celmet”),a privately held manufacturer of
metalchassis and
assemblies located in Rochester, New York.IEC outsources millions of dollars of
chassisassemblies annually, at times
encountering quality and delivery issues.The acquisition of thiswell managed,small business, serving customers
similar to those of IEC in the military andindustrial markets enables us to extend our
capabilities in terms of the products and services we can offer to ourcustomers, as well as assuring flawless quality
and improved assurance of supply for a key purchased commodity.This business is now operating as a
division of IEC known as Celmet, an IEC Company.





On
December 16, 2009 the Company acquired all of the stock of General Technology
Corporation (“GTC”) from Crane International Holdings, Inc. The acquired
business employs complementary technologies and serves markets similar to IEC’s.
GTC occupies an important niche in the military and defense market, helping its
customers manage their legacy products and programs. The acquisition, located in
Albuquerque, New Mexico, broadens IEC’s product mix and further diversifies our
customer base.





On
May 30, 2008, IEC acquired all of the stock of Val-U-Tech Corp., a wire and
cable-harness interconnect business, located in Victor, New York. Val-U-Tech was
renamed IEC Electronics Wire and Cable, Inc. (“Wire and Cable”) during 2009. IEC
Electronics Wire and Cable, Inc. is a premier cable and wire harness
manufacturer specializing in high-reliability applications for companies in the
military, medical, industrial and transportation market sectors. The company
manufactures a diverse portfolio of custom cable and wire harness assemblies,
mechanical sub-assemblies, circuit card assemblies and box builds with an
emphasis on perfect quality delivered precisely on time.





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 the
medical device markets. We are also ITAR registered and NSA approved under the
COMSEC standard. Our manufacturing processes encompass the best aspects of Lean
Manufacturing and Six Sigma Principles. Many customers consider these
certifications crucial when qualifying an EMS provider. Our state-of-the-art
Technology Center includes prototype assembly, design engineering services, and
an Advanced Materials Technology Laboratory.


4




We
continually evaluate emerging technologies and maintain a technology road map to
ensure that relevant processes and advances in new equipment are available to
our customers when commercial and design factors so indicate. The current
generation of interconnection technologies includes chip scale packaging and
ball grid array (BGA) assembly techniques. We have placed millions of plastic
and ceramic BGA's since 1994. Future advances will be directed by our Technology
Center, which combines Prototype and Pilot Build Services with the capabilities
of our Advanced Materials Technology Laboratory and our Design Engineering
Group.





Our
experienced workforce has a high level of technical expertise.  Our
emphasis is on building the most challenging and complex advanced electronics
and wire & cable technology systems serving original equipment manufacturers
(“OEMs”).





Our
executive offices are located at 105 Norton Street, Newark, New York
14513.  Our telephone number is (315)331-7742, and our Internet
address is www.iec-electronics.com.





The
Electronics Manufacturing Services Industry


The EMS
industry specializes in providing the program management, technical support and
manufacturing expertise required to take a product from the early design and
prototype stages through volume production and distribution. Primarily as a
response to rapid technological change and increased competition in the
electronics industry, OEMs have recognized that by utilizing EMS providers they
can improve their competitive position, realize an improved return on investment
and concentrate on their core competencies such as research, product design and
development and marketing. In addition, EMS providers allow OEMs to bring new
products to market more rapidly and to adjust more quickly to fluctuations in
product demand; avoid additional investment in plant, equipment and personnel;
reduce inventory and other overhead costs; and determine known unit costs over
the life of a contract. Many OEMs now consider EMS providers valued partners in
execution of their business and manufacturing strategy.





OEMs
increasingly require EMS providers to provide complete turnkey manufacturing and
material handling services, rather than working on a consignment basis, in which
the OEM supplies all materials and the EMS provider supplies labor. Turnkey
contracts involve design, manufacturing and engineering support, the procurement
of all materials, and sophisticated in-circuit and functional testing and
distribution.





IEC's
Strategy


Our
strategy is to cultivate strong manufacturing partnerships with established and
emerging OEMs that require high reliability final assemblies in the industrial,
communications, medical, homeland security, military, and aerospace industries.
These long-term business partnerships involve the joint development of
manufacturing and support strategies with OEM customers and promote customer
satisfaction. In implementing this strategy, we offer our customers a full range
of manufacturing solutions through flexibility in production, high quality and
fast-turnaround manufacturing services and computer-aided testing.


We
generally enter into formal agreements with our OEM customers. These agreements
with significant customers can provide fixed pricing for one year, subject to
customer changes that impact cost of labor or material, and rolling forecasts of
customer requirements. After establishing an OEM relationship, we provide our
customers consultation services with respect to the manufacturability and
testability of the product design. Our objective is to maximize our customer’s
value proposition by identifying design changes to reduce their total cost of
ownership and improve the quality and reliability of their finished
assemblies.





Products and
Services


We
manufacture a wide range of assemblies, which are incorporated into many
different products. We provide electronic manufacturing services primarily for
wireless communication systems, military and defense systems, transportation
products, and medical systems and instrumentation.  During the fiscal
year ended September 30, 2010, we provided electronics and cable harness
manufacturing services to approximately 90 different customers. We support
multiple divisions and product lines for many of our customers and typically
manufacture successive generations of product for our customers.  In
some cases, we are the sole contract manufacturer for the customer site or
division, providing all services, prototype through final assembly and
functional testing.





Materials
Management


We
generally procure material to meet specific contract requirements.  In
addition, many of our agreements with significant customers provide for
reimbursement of costs incurred by us as a result of a customer's cancellation
of contracted quantities. Our internal systems provide controls for all
materials, whether purchased by us or provided by a customer, through all stages
of the manufacturing process, from receiving to final shipment.


5




Availability of
Components


Our
net sales are principally derived from turnkey manufacturing services in which
we provide both materials procurement and assembly services.  We are
well positioned with supplier relationships and material procurement expertise
to acquire needed materials.  However, availability of
customer-consigned parts and unforeseen shortages of components on the world
market are beyond our control and could adversely affect revenue levels and
operating efficiencies.





Suppliers


We
view our key distribution suppliers as strategic partners.  As such,
we have developed automated trading methodologies with them
that  provide benefits such as better payment terms, consignment or
bonded inventories, reduced procurement lead-time, competitive pricing, reduced
quotation processing time, some protection during periods of supply allocation
and access to global resources.  We also have preferred supplier
partnership agreements in place for custom commodities such as printed circuit
boards.





Marketing and
Sales


Our
sales increased during 2010, due to the addition of several new customers,
increased market share with existing customers, and the acquisitions of GTC and
Celmet.  We utilize a direct sales force as well as a nationwide
network of Manufacturers Representatives.  Through this hybrid sales
approach, we execute a focused sales strategy targeting those customers whose
product profiles are aligned with our core areas of expertise.  For
example, we focus on customers developing complex, advanced technology products
for a wide array of market sectors ranging from satellite communications to
medical, military and ruggedized industrial products.





Typically,
the demand profiles associated with these customers are in the low to moderate
volume range with high variability of quantity and mix requirements for end-item
configurations.  These products often represent emerging technologies
requiring high-intensity manufacturing support to transfer them from the early
product development stage through prototyping and on to volume manufacturing. As
these products exit the development phase, specialized capabilities are required
to support rapid response prototyping requirements in a dynamic engineering
environment.  As a result, these customers rarely rely on the more
common industry outsourcing model associated with lower cost labor
regions.





The
Company made progress during 2010 in its efforts to reduce dependency on large
customers as shown in the market sector and customer data below.





Year
      ended September 30,Industry
      Sectors and Large Customers
                            
                            2010
                            
                            
                            2009% of Sales by SectorMilitary
      & Aerospace
                            
                            58%
                            
                            
                            55%Industrial
      & Communications
                            
                            29%
                            
                            
                            37%Medical
      & Other
                            
                            13%
                            
                            
                            8%100%
                            
                            
                            100%Customers Representing Over 10% of
      SalesGeneral
      Electric
                            
                            14%
                            
                            
                            15%Ultralife
                            
                            <
      10%
                            
                            
                            13%ViaSat,
      Inc.
                            
                            <
      10%
                            
                            
                            12%Percent
      of 9/30 receivables owed by customerswith balances exceeding 10%
      of total
                            
                            11%
                            
                            
                            24%





Backlog


During
fiscal 2010 our backlog more than doubled, an excellent result given the
continuing economic challenges of the last year.  We closed the year
with backlog of $91.4 million as compared to a fiscal 2009 closing backlog of
$41.4 million.  Backlog consists of two categories: purchase orders
and firm forecasted commitments.  In addition to working through the
backlog, in the ordinary course we also receive orders during a quarter, to ship
within the same period.  These intra-quarter orders and shipments will
not appear in our backlog reports.   Variations in the magnitude
and duration of contracts as well as customer delivery requirements may result
in fluctuations in backlog from period to period.  In general, the
majority of our current backlog is expected to be shipped within our current
fiscal year, though a small portion of orders may be expected to ship out into
2014.





Governmental
Regulation


Our
operations are subject to certain United States government regulations that
control the export and import of defense-related articles and services, as well
as federal, state and local regulatory requirements relating to environmental,
waste management, health and safety matters.  Management believes that
our business is operated in substantial compliance with all applicable laws and
governmental regulations.  Current costs of compliance are not
material to us.  However, new or modified requirements, not at present
anticipated, could create additional expense for us if adopted.


6




Employees


Our
employees are our single greatest resource, and the Company added 199 during
fiscal 2010. IEC's employees numbered 567 at September 30, 2010, including 476
employees engaged in manufacturing and manufacturing support, 57 in engineering,
and 34 in administrative and marketing functions.  None of our
employees are covered by a collective bargaining agreement, nor have we
experienced any work stoppages.  We make a concerted effort to engage
our employees in initiatives that improve our business and their contributions
to it, and believe that our employee relations are good.  We have
access to a large and technically qualified work force in our three northeast
locations between Rochester and Syracuse, two upstate New York industrial
cities, as well as our location in Albuquerque, New Mexico.





Patents and
Trademarks


We
do not hold any patents related to electronics manufacturing services, but do
employ various registered trademarks.  We do not believe that either
patent or trademark protection is material to the operation of our
business.


7


ITEM
1A. RISK FACTORS





OUR
OPERATING RESULTS MAY FLUCTUATE FROM PERIOD TO PERIOD.  Our
annual and quarterly operating results may vary significantly depending on
various factors, many of which may be beyond our control.  These
factors may include, but are not necessarily limited to:




Ø
            adverse
      changes in general economic
conditions




Ø
            the
      level and timing of customer orders and the accuracy of their
      forecasts




Ø
            the
      level of capacity utilization of our manufacturing facilities and
      associated fixed costs




Ø
            price
      competition




Ø
            market
      acceptance of our customers'
products




Ø
            business
      conditions in our customers' end
markets




Ø
            our
      level of experience manufacturing a particular
  product




Ø
            change
      in the sales mix of our customers




Ø
            the
      efficiencies achieved in managing inventories and fixed
    assets




Ø
            fluctuations
      in cost and availability of
materials




Ø
            the
      timing of expenditures in anticipation of future
  orders




Ø
            changes
      in cost and availability of labor and
components




Ø
            our
      effectiveness in managing the manufacturing
  process.





The
EMS industry is affected by the condition of the United States and global
economies, both of which are influenced by world events.  An economic
slowdown, particularly in the industries we serve, may result in our customers
reducing their forecasts.  The demand for our services could weaken,
which in turn could substantially influence our sales, capacity utilization,
margins and financial results.  Historically, we have seen periods,
such as in fiscal 2002-2003, when EMS industry sales were adversely affected by
a slowdown in wireless/networking and wireless infrastructure sectors as a
result of reduced end-market demand and in 2008-2010 when reduced availability
of capital to fund existing and emerging technologies forced some firms to
contract and some industry consolidation.





WE DEPEND
ON A RELATIVELY SMALL NUMBER OF CUSTOMERS, AND IF WE LOSE ANY OF THESE CUSTOMERS
OUR SALES AND OPERATING RESULTS COULD DECLINE SIGNIFICANTLY.  A relatively small number of customers is responsible for a
significant portion of our net sales.  During fiscal 2010, 2009 and
2008, our five largest customers accounted for 45%, 55% and 62% of net sales,
respectively.  During fiscal 2010, 2009 and 2008, our single largest
customer in each year accounted for 14%, 15% and 21% of net sales,
respectively.   The percentage of IEC's sales to its major
customers may fluctuate from period to period, and our principal customers have
varied from period to period.  Going forward our principal customers
may not continue to purchase services from us at the current
levels.





WE DEPEND
ON THE ELECTRONICS INDUSTRY, WHICH HISTORICALLY PRODUCES TECHNOLOGICALLY
ADVANCED PRODUCTS WITH SHORT LIFE CYCLES.  Factors affecting
the electronics industry in general could seriously harm our customers and, as a
result, us.  These factors may include, but may not be limited
to:




Ø
            the
      inability of our customers to adapt to rapidly changing technology and
      evolving industry standards, which result in short product life
      cycles




Ø
            the
      inability of our customers to develop and market their products, some of
      which are new and untested




Ø
            the
      potential that our customers' products may become obsolete or the failure
      of our customers' products to gain widespread commercial
      acceptance




Ø
            periods
      of significantly decreased demand in our customers'
  markets




8




OUR
RESULTS OF OPERATIONS AND FINANCIAL CONDITION MAY BE ADVERSELY AFFECTED BY
GLOBAL ECONOMIC AND FINANCIAL MARKET CONDITIONS.Current global economic
and financial market conditions, including the continued threat of disruption in
the credit markets and the potential for a lagging recovery from the global
economic recession, may materially and adversely affect our results of
operations and financial condition.  These conditions may also
materially impact our customers and suppliers.  Economic and financial
market conditions that adversely affect our customers may cause them to
terminate existing purchase orders or to reduce the volume of products they
purchase from us in the future.  We may have significant balances
owing from customers that operate in cyclical industries and under leveraged
conditions that may impair the collectability of those
receivables.  Failure to collect a significant portion of those
receivables could have a material adverse effect on our results of operations
and financial condition.  Adverse economic and financial credit terms
extended to us by our suppliers, such as shortening the required payment period
for outstanding accounts payable or reducing the maximum amount of trade credit
available to us could significantly affect our liquidity and therefore have an
adverse effect on our results of operations and financial
condition.  If we are unable to successfully anticipate changing
economic and financial market conditions, we may be unable to effectively plan
for and respond to those changes, and our operating results could be adversely
affected.





FAILURE
TO MANAGE GROWTH AND CONTRACTION, IF ANY, MAY ADVERSELY AFFECT OUR
BUSINESS.  Since late 2006, we have been focused on expanding
our operations and have added many new employees.  These actions have
resulted in additional costs and start-up inefficiencies.  If we are
unable to effectively manage the currently anticipated growth or if the
anticipated net sales are not realized, our operating results could be adversely
affected.





ENERGY
PRICE INCREASES MAY NEGATIVELY IMPACT OUR RESULTS OF
OPERATIONS.  Certain of the components used in our
manufacturing activities are petroleum-based.  In addition, we, along
with our suppliers and customers, rely on various energy sources (including oil)
in our transportation activities.  Over the past several years, energy
prices have experienced significant volatility.  Increasing energy
prices have resulted in an increase to our raw material costs and transportation
costs.  In addition, the transportation costs of certain of our
suppliers and customers have increased, and some of these increased costs may be
passed along to us.  We may not be able to increase our product prices
enough to offset these increased costs.  In addition, any increase in
our product prices may reduce our future customer orders and
profitability.





START-UP
COSTS AND INEFFICIENCIES RELATED TO NEW OR TRANSFERRED PROGRAMS CAN ADVERSELY
AFFECT OUR OPERATING RESULTS AND MAY NOT BE
RECOVERABLE.  Start-up costs, the management of labor and
equipment resources in connection with establishing new programs and new
customer relationships, the need to estimate required resources, and the timing
of obtaining those resources in advance of production, can adversely affect our
operating results. If new programs or new customer relationships are terminated
or delayed, our operating results may be adversely affected, particularly in the
near term, as we may not be able to recoup our start-up costs or quickly replace
anticipated new program revenues.





MOST OF
THE CUSTOMERS IN OUR INDUSTRY DO NOT COMMIT TO LONG-TERM PRODUCTION SCHEDULES,
WHICH CAN MAKE IT DIFFICULT FOR US TO SCHEDULE PRODUCTION.  Customers may cancel their orders, change production
quantities or delay production for any number of reasons that are beyond our
control.  Cancellations, reductions or delay by a significant customer
or by a group of customers could adversely affect our operating results and
working capital levels.  Such cancellations, reductions or delays have
occurred and may occur again.  The volume and timing of sales to our
customers may vary due to:




Ø
            variation
      in demand for our customers' products in their end
  markets




Ø
            actions
      taken by our customers to manage their
inventory




Ø
            product
      design changes by our customers




Ø
            changes
      in our customers' manufacturing
strategy




Ø
            reduced
      demand for our customers' products




Due
in part to these factors, most of our customers do not commit to firm, long-term
production schedules. We make significant decisions based on our estimates of
customer requirements, including:




Ø
            deciding
      on the levels of business that we will
seek




Ø
            production
      schedules




Ø
            component
      procurement commitments




Ø
            equipment
      requirements




Ø
            personnel
      needs




Ø
            other
      resource requirements


9




The
short-term nature of our customers’ commitments and the possibility of rapid
changes in demand for their products reduce our ability to accurately estimate
and forecast the future requirements of those customers. Since many of our costs
and operating expenses are relatively fixed, a reduction in customer demand can
adversely affect our revenue and operating results.





INCREASED
COMPETITION MAY RESULT IN DECREASED DEMAND OR REDUCED PRICES FOR OUR PRODUCTS
AND SERVICES.The EMS industry is
highly fragmented and characterized by intense competition.  We may be
operating at a cost disadvantage compared to other EMS providers who have
greater direct buying power from component suppliers, distributors and raw
material suppliers or who have lower cost structures as a result of their
geographic location.  As a result, other EMS providers may have a
competitive advantage.  Our manufacturing processes are generally not
subject to significant proprietary protection, and companies with greater
resources or a greater market presence may enter our market or increase their
competition with us. We also expect our competitors to continue to improve the
performance of their current products or services, to reduce the price of their
products or services and to introduce new products or services that may offer
greater performance and improved pricing.  Any of these may cause a
decline in our sales, loss of market acceptance of our products or services,
profit margin compression, or loss of market share.





THE
INTEGRATION OF ACQUIRED OPERATIONS MAY POSE DIFFICULTIES FOR
US.  We completed acquisitions of GTC and Celmet in December
2009 and July 2010, respectively.  We may continue to acquire
additional businesses in the future.  These acquisitions and future
acquisitions involve risks, which may include, but not be limited
to:


Ø
              integration
      and management of operations




Ø
            retention
      of key personnel




Ø
            integration
      of information systems, internal procedures, accounts receivable as well
      as management, financial and operational
  controls




Ø
            retention
      of customer base of acquired
businesses




Ø
            diversion
      of management’s attention from other ongoing business
    concerns




Ø
            exposure
      to unanticipated liabilities of acquired
  companies





These and
other factors could harm our ability to achieve expected levels of profitability
or realize other anticipated benefits of an acquisition and could adversely
affect our operating results.





IF WE DO
NOT MANAGE OUR BUSINESS EFFECTIVELY, OUR PROFITABILITY COULD
DECLINE.  To manage our business effectively we must
continually improve our operational, financial and management information
systems; develop the skills of our managers and supervisors; and train, motivate
and manage our other employees.  Our failure to effectively do so
could adversely affect our operating results.





WE DEPEND
ON A LIMITED NUMBER OF SUPPLIERS FOR COMPONENTS THAT ARE CRITICAL TO OUR
MANUFACTURING PROCESSES.  A SHORTAGE OF THESE COMPONENTS OR AN
INCREASE IN THEIR PRICE COULD INTERRUPT OUR OPERATIONS AND ADVERSELY AFFECT OUR
OPERATING RESULTS.  Much of our net revenue is derived from
turnkey manufacturing for which we provide materials
procurement.  Some of our customer agreements permit periodic
adjustments to pricing based on increases or decreases in component prices and
other factors.  However, we typically bear the risk of component price
increases that occur between any such re-pricing dates or, if such re-pricing is
not permitted, during the balance of the term of a particular customer
agreement.  As a result, certain component price increases could
adversely affect our operating results.





Many
of the products we manufacture require one or more components that are available
from a limited number of suppliers. In response to supply shortages, some of
these components are from time to time subject to allocation limits. In some
cases, supply shortages or delayed deliveries could substantially curtail
production of those assemblies requiring a limited component which could
contribute to an increase in our inventory levels.  There have been
times when component shortages have been prevalent in our industry, and such
shortages may recur.  An increase in economic activity could result in
shortages if manufacturers of components do not adequately anticipate increased
order volume or have previously cut back their production capabilities
excessively in response to reduced activity.  World events, armed
conflict, governmental regulation and epidemics could also affect our supply
chain, leading to an inability to obtain sufficient components on a timely
basis, adversely affecting relationships with our customers.


10




In
addition, due to the specialized nature of some components and our customers’
products specifications, we may be required to use sole source suppliers for
certain components.  Such sole source suppliers may encounter
financial difficulties, which could preclude them from delivering components on
time, or at all.





OUR
TURNKEY MANUFACTURING SERVICES INVOLVE INVENTORY RISK.   Most
of our services are provided on a turnkey basis, whereby we purchase some or all
of the materials required for product assembly and manufacturing. These services
involve greater resource investment and inventory risk management than
consignment services, where the customer provides materials. For example, in our
turnkey operations, we must frequently order parts and supplies in minimum lot
sizes that may be larger than the quantity of product ultimately ordered for our
customers. Customers' cancellation or reduction of orders could result in
additional expense to us. While most of our customer agreements typically
include provisions which require customers to reimburse us for excess inventory
specifically ordered to meet their forecasts, if we are not reimbursed, we could
have excess inventory and/or cancellation or return charges from our suppliers.
Accordingly, for turnkey products various component price increases and
inventory obsolescence could adversely affect our operating
results.





In
addition, we provide inventory management programs for some of our customers
under which we reduced required to hold and manage finished goods
inventories.  This inventory management program may lead to higher
finished goods inventory levels, reduced inventory turns and increased financial
exposure to some customers.  These customers will generally have
contractual obligations to purchase such managed inventories from us, however,
we may remain subject to the risk of enforcing those obligations.





PRODUCTS
WE MANUFACTURE MAY CONTAIN DEFECTS IN WORKMANSHIP, WHICH COULD RESULT IN REDUCED
DEMAND FOR OUR SERVICES AND PRODUCT LIABILITY CLAIMS AGAINST
US.  We manufacture products to our customers' specifications,
which are highly complex and may contain design or manufacturing errors or
failures.  Despite our quality control and quality assurance efforts,
defects may occur. Defects in the products we manufacture, whether caused by a
customer design, workmanship or component failure or error, may result in
delayed shipments to customers or reduced or cancelled customer orders and we
may suffer adverse reputational effects as a result of these
circumstances.  In addition, these defects may result in product
liability claims against us.  Even if customers or component suppliers
are responsible for the defects, they may be unwilling or unable to assume
responsibility for any costs associated with product failure.





WE MAY
NOT BE ABLE TO MAINTAIN OUR ENGINEERING, TECHNOLOGICAL AND MANUFACTURING
COMPETITVE ADVANTAGE.  The markets for our manufacturing and
engineering services are characterized by rapidly changing technology and
evolving process development.  The continued success of our business
will depend upon our ability to:




Ø
            hire
      and retain qualified engineering and technical
  personnel




Ø
            maintain
      and enhance our technological
leadership




Ø
            develop
      and market manufacturing services that meet changing customer
      needs





Although
we believe that our operations provide the assembly and testing technologies,
equipment and processes that are currently required by our customers, there is
no certainty that we will develop the capabilities required by our customers in
the future.  The emergence of new technology, industry standards or
customer requirements may render our equipment, inventory or processes obsolete
or uncompetitive; or we may have to acquire new assembly and testing
technologies and equipment to remain competitive.  The acquisition and
implementation of new technologies and equipment may require significant expense
or capital investment, which could adversely affect our operating results, as
could our failure to anticipate and adapt to our customers' changing
technological requirements.





FAILURE
TO ATTRACT AND RETAIN KEY PERSONNEL AND OTHER SKILLED EMPLOYEES COULD ADVERSELY
AFFECT OUR BUSINESS.Our continued success
depends to a large extent on our ability to recruit, train, and retain skilled
employees, particularly executive management and technical
employees.  The competition for these individuals is significant;
hence the loss of the services of certain of these key employees or an inability
to attract or retain qualified employees could negatively impact
us.  We have employment agreements with W. Barry Gilbert, our Chief
Executive Officer, Jeffrey T. Schlarbaum, our President and Donald S. Doody, our
Executive Vice President. We do not have employment agreements or
non-competition agreements with any of our other key employees.


11




THE
FAILURE TO COMPLY WITH CURRENT AND FUTURE GOVERNMENTAL REGULATIONS COULD IMPARE
OUR OPERATIONS OR CAUSE US TO INCUR SIGNIFICANT EXPENSE.  We
are subject to a variety of United States government regulations that control
the export and import of defense-related articles and services, as well as
federal, state and local regulatory requirements relating to conflict metals and
environmental, waste management, health and safety matters relating to the use,
storage, discharge and disposal of hazardous chemicals used in our manufacturing
process.  If we fail to comply with any present and future
regulations, we could be subject to future liabilities or the suspension of
production.  While we are not currently aware of any violations, such
regulations could restrict our ability to expand our facilities or could require
us to acquire costly equipment, or to incur other significant compliance related
expenses.





IF WE ARE
UNABLE TO MAINTAIN EFFECTIVE INTERNAL CONTROL OVER OUR FINANCIAL REPORTING,
INVESTORS COULD LOSE CONFIDENCE IN THE RELIABILITY OF OUR FINANCIAL STATEMENTS,
WHICH COULD ADVERSELY AFFECT THE VALUE OF OUR COMMON
STOCK.  Under the provisions of Section 404(a) of the
Sarbanes-Oxley Act of 2002, as amended by the Dodd Frank Wall Street Reform and
Consumer Protection Act of 2010, the SEC adopted rules requiring public
companies to perform an evaluation of Internal Control over Financial Reporting
(ICFR) and to report our evaluation on effectiveness in Form 10-K.





We
continue our ongoing efforts to comply with Section 404(a) of the Sarbanes-Oxley
Act.  If we are unable to maintain effective internal control over
financial reporting, this could lead to a loss of confidence in the reliability
of our financial statements, adversely affecting the value of our common
stock.





THE
AGREEMENTS GOVERNING OUR DEBT CONTAIN VARIOUS COVENANTS THAT IMPACT THE
OPERATION OF OUR BUSINESS.  The agreements and instruments governing
our secured bank credit facility and other existing debt contain various
restrictive covenants that, among other things, require us to comply with or
maintain certain financial tests and ratios including, among others, limitations
on the amount available under our Revolver relative to the borrowing base,
limits on capital expenditures, and minimum earnings before interest, taxes,
depreciation and amortization, rent payments and stock compensation expense
(“EBITDARS”) and restrict our ability to:




Ø
            incur
      debt




Ø
            incur
      or maintain liens




Ø
            make
      acquisitions of businesses or
entities




Ø
            make
      investments, including loans, guarantees and
  advances




Ø
            engage
      in mergers, consolidations or certain sales of
  assets




Ø
            engage
      in transactions with affiliates




Ø
            pay
      dividends or engage in stock redemptions or
  repurchases





Our
bank credit facilities are secured by a general security agreement attached to
the assets of the Company and its subsidiaries, a pledge of the Company’s equity
interest in its subsidiaries, a negative pledge on the Company’s real property,
and a guarantee by the Company’s subsidiaries.





Our
ability to comply with covenants contained in our secured bank credit facilities
and other existing debt may be affected by events beyond our control, including
prevailing economic, financial and industry conditions.  While we are
currently in compliance with all of our debt covenants, our failure to comply in
the future could result in an acceleration of our primary indebtedness and
cross-defaults under subordinate indebtedness, causing a material adverse effect
on our financial condition.





OUR STOCK
PRICE MAY BE VOLATILE DUE TO FACTORS BEYOND OUR CONTROL.  Our
common stock is traded on the NYSE Amex.  The market price of our
common stock has fluctuated substantially in the past and could fluctuate
substantially in the future, based on a variety of factors, including future
announcements concerning us or our key customers or competitors, government
regulations, litigation, fluctuations in quarterly operating results, or general
conditions in the EMS industry.





ITEM
1B. UNRESOLVED STAFF COMMENTS





Not
Applicable





ITEM
2.  PROPERTIES





We
own or lease properties in four locations that together house our administrative
offices (“AO”), engineering (“E”), manufacturing (“M”), warehouse (“W”) and
distribution (“D”) capabilities, as follows:


12




Location
                                    
                                    Principal Use
                                    
                                    Building SF
                                    
                                    Owned/Leased
                                    
                                    Lease ExpirationNewark,
      New York
                                    
                                    AO,E,M,W,D
                                    
                                    235,000
                                    
                                    OwnedVictor,
      New York
                                    
                                    M,W,D
                                    
                                    19,000
                                    
                                    Leased
                                    
                                    December
      31, 2012Rochester,
      New York
                                    
                                    M,W,D
                                    
                                    47,500
                                    
                                    Leased
                                    
                                    July
      30, 2014Albuquerque,
      New Mexico
                                    
                                    AO,M,W,D
                                    
                                    72,000
                                    
                                    Owned





We
believe that our properties are generally in good condition, well maintained,
and are suitable and adequate for our business.





ITEM
3.  LEGAL PROCEEDINGS





The
Company is involved in an arbitration proceeding being conducted to resolve
IEC's claim that the price paid for GTC should be reduced by $238
thousand.  The claim relates to the value assigned by the seller to
certain current assets acquired.  We are unable to predict the outcome
of the arbitration.





With
the exception of the claim discussed in the preceding paragraph, there are no
legal proceedings pending to which IEC or its subsidiaries are a party or of
which any of their property is subject.  To our knowledge, there are
no material legal proceedings to which any director, officer or affiliate of
IEC, or any beneficial owner of more than five percent of common stock, or any
associate of any of the foregoing, is a party adverse to IEC or its
subsidiaries.





ITEM
4.  (Removed and Reserved)


13




EXECUTIVE
OFFICERS OF THE REGISTRANT





IEC's
executive officers as of September 30, 2010, were as follows:





AgeW.
      Barry Gilbert
                          
                          64
                          
                          Chief
      Executive Officer and Chairman of the BoardJeffrey
      T. Schlarbaum
                          
                          44
                          
                          Executive
      Vice PresidentDonald
      S. Doody
                          
                          43
                          
                          Senior
      Vice PresidentSusan
      E. Topel-Samek
                          
                          52
                          
                          Vice
      President and Chief Financial
Officer





W.
Barry Gilbert has served as Chief Executive Officer since June
2002.  He has been a director of IEC since February 1993, and Chairman
of the Board since February 2001. He is an adjunct faculty member at the William
E. Simon Graduate School of Business Administration of the University of
Rochester. Mr. Gilbert previously held the position of President of the Thermal
Management Group of Bowthorpe (now known as Spirent) and was corporate Vice
President and President of the Analytical Products Division of Milton Roy
Company, a manufacturer of analytical instrumentation.  He holds an
MBA from the University of Rochester in Applied Economics and
Finance.





Jeffrey
T. Schlarbaum served as Executive Vice President of IEC until October 1, 2010
when he was promoted to President of the Company.  He joined IEC in
May 2004 as Vice President of Sales and Marketing, in November 2006 he was
appointed Executive Vice President of Sales and Marketing, and was promoted to
Executive Vice President and President of IEC Contract Manufacturing in May
2008.  Before joining IEC, Mr. Schlarbaum had over 15 years of
progressive sales management experience in the electronics
industry.  Most recently, he served as Regional Vice President of
Sales for Plexus Corp., a contract manufacturer of electronics products, in
Neenah, Wisconsin.  Prior to that, he worked as Vice President of
Sales, Eastern Region for MCMS as well as holding various senior sales and
marketing management positions with MACK Technologies and Conner Peripherals. He
holds an MBA from Pepperdine University.





Donald
S. Doody served as Senior Vice President of IEC until October 1, 2010 when he
was named Executive Vice President of Operations.  He joined IEC in
November 2004 as Vice President of Operations, and was appointed Senior Vice
President of Operations in May 2008.  Before joining IEC, Mr. Doody
had more than 8 years of experience in the contract electronics manufacturing
industry. He began his career with GE Transportation and Industrial Systems and
became a Master Black Belt/Supplier Quality Engineer.  He was a senior
manufacturing engineer at Plexus Corporation, then became Vice President and
General Manager of MCMS’s North Carolina facility. When Plexus acquired MCMS,
Mr. Doody was appointed to lead Lean Manufacturing and Six Sigma initiatives
throughout the company.  Mr. Doody holds an M.S. degree in Industrial
Sciences from Colorado State University.





Susan
E. Topel-Samek joined IEC in June 2010 as Vice President and Chief Financial
Officer.  Prior to joining the Company, Ms. Topel-Samek held a variety
of positions of increasing responsibility at Bausch & Lomb, including most
recently Vice President & Treasurer.  Prior to that she had served
as Vice President of Treasury Operations where Ms. Topel-Samek had
responsibility for global oversight of the company’s risk management/insurance,
real estate, environment health & safety organizations.  Ms.
Topel-Samek holds an MBA from the Simon School at the University of Rochester,
and is a member of the Beta Gamma Sigma Honor
Society.


14





PART
II




ITEM
5.  MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES





(a)  Market
Information





IEC's
Common Stock began trading on the NYSE Amex on June 9, 2009 under the symbol
"IEC".  Prior to that, IEC's Common Stock was traded on the
Over-the-Counter Bulletin Board ("OTCBB") under the symbol
"IECE.OB".





The
following table sets forth, for the fiscal quarters indicated, the high and low
closing sales prices for IEC's common stock as reported on the OTCBB or NYSE
Amex.  The quotations on the OTCBB reflect inter-dealer prices,
without mark-up, mark-down or commission, and may not represent actual
transactions.





IEC Stock Prices
                          
                          Low
                          
                          
                          HighFiscal QuartersFirst
      2009
                          
                          $1.40
                          
                          
                          $1.90Second
      2009
                          
                          1.19
                          
                          
                          1.60Third
      2009
                          
                          1.35
                          
                          
                          3.98Fourth
      2009
                          
                          3.30
                          
                          
                          7.45First
      2010
                          
                          $3.42
                          
                          
                          $5.55Second
      2010
                          
                          4.15
                          
                          
                          6.18Third
      2010
                          
                          4.30
                          
                          
                          5.49Fourth
      2010
                          
                          4.57
                          
                          
                          5.26





IEC's
closing price on the NYSE Amex on November 15, 2010, was $5.80 per
share.





(b)  Holders





As
of November 15, 2010, there were approximately 185 holders of record of IEC's
common stock, which does not include shareholders whose stock is held through
securities position listings.  Many of our common shares are held in
street name by brokers and other institutions for which we are unable to
estimate the number of beneficial stockholders.





(c)  Dividends





IEC
does not pay dividends on its common stock.  It is the current policy
of the Board of Directors to retain earnings for use in our business, and
certain covenants set forth in IEC's loan agreement restrict the Company from
paying cash dividends.  We do not anticipate paying cash dividends on
our common stock in the foreseeable future.





(d)  Securities
Authorized for Issuance under Equity Compensation Plans





The
table that follows sets forth information concerning IEC's equity compensation
plans as of September 30, 2010.  Under the 2001 Stock Option and
Incentive Plan, the following types of equity awards have been made: stock
options; share-based compensation for outside directors; restricted stock; and
other stock-based awards.  In addition, stock purchase programs have
been administered.


15





SharesStockPlanShares
                      
                      Shares to be
                      
                      
                      Wgtd average
                      
                      
                      available for(as of September 30, 2010)
                      
                      issued under
                      
                      
                      exercise price
                      
                      
                      issuance underoutstanding
                      
                      
                      of outstanding
                      
                      
                      equity compen-Category
                      
                      options
                      
                      
                      options
                      
                      
                      sationplans(a,b)Under
      plans approved by shareholders (c)
                      
                      
                      764,595
                      
                      
                      
                      1.66
                      
                      
                      
                      461,106Under
      plans not approved by shareholders
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Total
                      
                      
                      764,595
                      
                      
                      
                      
                      
                      
                      
                      461,106Total
      shares authorized under the plan (d)
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      3,100,000Shares
      issued under plan through 9/30/10
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      1,874,299





(a)
            Excluding
      shares reflected in first column of this
table.


(b)
            These
      shares may be issued in the form of stock options, restricted stock,
      performance shares or other share-based
  awards.


(c)
            IEC's
      2001 Stock Option and Incentive Plan was approved by shareholders in
      February 2002.


(d)
            Includes
      plan amendments through September 30,
2010.





(e)  Issuance
of Unregistered Securities





Not
Applicable





(f)
Repurchases of IEC Securities





The
Company did not repurchase any shares during the fiscal year ended September 30,
2010.


16





ITEM
6.  SELECTED CONSOLIDATED FINANCIAL DATA





Years ended September 30,(amounts in thousands,
                
                2010
                
                
                2009
                
                
                2008
                
                
                2007
                
                
                2006except per share)
                
                (b)
                
                
                
                
                
                (a)Net
      sales
                
                $
                96,674
                
                
                $
                67,811
                
                
                $
                51,092
                
                
                $
                40,914
                
                
                $
                22,620Gross
      profit
                
                
                16,263
                
                
                
                10,826
                
                
                
                6,217
                
                
                
                3,877
                
                
                
                2,753Operating
      income
                
                
                7,687
                
                
                
                4,820
                
                
                
                2,392
                
                
                
                985
                
                
                
                598Income
      before taxes
                
                
                7,055
                
                
                
                4,718
                
                
                
                1,634
                
                
                
                503
                
                
                
                215Tax
      provision/(benefit)
                
                
                2,400
                
                
                
                (238
                )
                
                
                (8,843
                )
                
                
                (372
                )
                
                
                -Net
      income
                
                $
                4,655
                
                
                $
                4,956
                
                
                $
                10,477
                
                
                $
                875
                
                
                $
                215Gross
      margin
                
                
                16.8
                %
                
                
                16.0
                %
                
                
                12.2
                %
                
                
                9.5
                %
                
                
                12.2
                %Operating
      income as % of sales
                
                
                8.0
                %
                
                
                7.1
                %
                
                
                4.7
                %
                
                
                2.4
                %
                
                
                2.6
                %Income
      before taxes, per share:Basic
                
                $
                0.78
                
                
                $
                0.54
                
                
                $
                0.19
                
                
                $
                0.06
                
                
                $
                0.03Diluted
                
                
                0.73
                
                
                
                0.49
                
                
                
                0.18
                
                
                
                0.06
                
                
                
                0.03Net
      income per share:Basic
                
                $
                0.52
                
                
                $
                0.57
                
                
                $
                1.22
                
                
                $
                0.11
                
                
                $
                0.03Diluted
                
                
                0.48
                
                
                
                0.52
                
                
                
                1.12
                
                
                
                0.10
                
                
                
                0.03Common
      and equivalent shares:Basic
                
                
                8,990.2
                
                
                
                8,728.9
                
                
                
                8,553.6
                
                
                
                8,114.5
                
                
                
                7,973.2Diluted
                
                
                9,608.2
                
                
                
                9,553.5
                
                
                
                9,337.1
                
                
                
                8,895.8
                
                
                
                8,276.0Working
      capital (c)
                
                $
                17,712
                
                
                $
                11,390
                
                
                $
                9,246
                
                
                $
                3,985
                
                
                $
                5,775Total
      assets (d)
                
                
                55,682
                
                
                
                34,469
                
                
                
                34,184
                
                
                
                12,344
                
                
                
                11,894Long-term
      debt (c)
                
                
                15,999
                
                
                
                6,600
                
                
                
                8,910
                
                
                
                1,441
                
                
                
                3,972Shareholders'
      equity
                
                
                25,419
                
                
                
                20,254
                
                
                
                15,976
                
                
                
                4,163
                
                
                
                3,092





(a)
            IEC
      acquired Val-U-Tech Corp. (now IEC Electronics Wire and Cable) on May 30,
      2008.


(b)
            IEC
      acquired General Technology Corporation on December 16, 2009, and
      purchased assets of Celmet Co., Inc. on July 30,
  2010.


(c)
            Revolver
      borrowings for 2006 and 2007, originally reported as current liabilities,
      have been reclassified to long term based on maturity date stated in
      loan agreement.


(d)
            Customer
      deposits for 2006-2008, originally reported as inventory reserves, have
      been reclassified to current
liabilities.


17


ITEM
      7.
            MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS 0F
      OPERATIONS





The
information in this Management's Discussion & Analysis should be read in
conjunction with the accompanying financial statements, the related Notes to
Consolidated Financial Statements and the five-year summary of Selected
Financial Data.  Forward-looking statements in this Management's
Discussion and Analysis are qualified by the cautionary statement preceding Item
1 of this Form 10-K and the risk factors identified in Item 1A.





Overview





Since
2004, we have focused our efforts on developing relationships with customers who
manufacture advanced technology products that are unlikely to migrate to
offshore suppliers due to proprietary technology content, governmental
restriction or volume considerations.  We have continued to expand our
business by adding new customers and markets, and our customer base is stronger
and more diverse than ever.  We continue to invest in areas we view as
important for our continued growth.  IEC is ISO 9001:2008 registered;
a NSA approved supplier under the COMSEC standard; and ISO 13485 certified to
service the medical market sector.  Three units of our consolidated
group, IEC in Newark, Wire and Cable in Victor (our cable harness and
interconnect business), and GTC in Albuquerque, are AS9100 certified to service
the military and commercial aerospace market sector.  Celmet is ISO
9001:2008 registered.





We
have identified and gained entry into advantageous markets by leveraging our
ability to provide products of the highest quality and reliability, including
significantly complex, low-run volume assemblies.  Currently, the
markets we serve include military, aerospace, communications, medical, and a
variety of industrial sectors.





During
fiscal 2010, our backlog more than doubled, an excellent result given the
continuing economic challenges of last year.  We closed the year with
backlog of $91.4 million as compared to a fiscal 2009 closing backlog of $41.4
million.  Backlog consists of two categories: purchase orders and firm
forecasted commitments.  In addition to working through the backlog,
in the ordinary course we also receive orders during a quarter to ship within
the same period.  These intra-quarter orders and shipments will not
appear in our backlog reports.   Variations in the magnitude and
duration of contracts received by us, and customer delivery requirements may
result in fluctuations in backlog from period to period.





We
continue to improve our internal bench strength and employee skills, our
reliability testing capabilities and our machinery and equipment infrastructure
to optimize production performance and effectively manage the steady growth in
volume and complexity that we are experiencing.   Despite a weak
economy, based upon cautiously optimistic comments from our customers in the
military, aerospace, and medical sectors, we anticipate continued growth in both
revenue and profitability during fiscal 2011.





Analysis of
Operations





A
summary of information from IEC's 2010 income statement
follows:


18





Year ended September 30,
                        
                        
                        % IncreaseSummaryIncomeStatementData
                        
                        2010
                        
                        
                        2009
                        
                        
                        (Decrease)($ in thousands)Net
      sales
                        
                        $
                        96,674
                        
                        
                        $
                        67,811
                        
                        
                        
                        42.6%Gross
      profit
                        
                        
                        16,263
                        
                        
                        
                        10,826
                        
                        
                        
                        50.2%Selling
      & administrative expense
                        
                        
                        8,576
                        
                        
                        
                        6,006
                        
                        
                        
                        42.8%Interest
      & financing expense
                        
                        
                        814
                        
                        
                        
                        389
                        
                        
                        
                        109.3%Other
      (income)/expense
                        
                        
                        (182
                        )
                        
                        
                        (287
                        )
                        
                        
                        (36.6%)Income
      before taxes
                        
                        
                        7,055
                        
                        
                        
                        4,718
                        
                        
                        
                        49.5%Provision
      (benefit) for income taxes
                        
                        
                        2,400
                        
                        
                        
                        (238
                        )
                        
                        nmNet
      income
                        
                        $
                        4,655
                        
                        
                        $
                        4,956
                        
                        
                        
                        (6.1%)Gross
      margin
                        
                        
                        16.8
                        %
                        
                        
                        16.0
                        %S&A
      expense as % of sales
                        
                        
                        8.9
                        %
                        
                        
                        8.9
                        %Pretax
      income as % of sales
                        
                        
                        7.3
                        %
                        
                        
                        7.0
                        %Income
      taxes as % of pretax income
                        
                        
                        34.0
                        %
                        
                        
                        (5.0
                        %)Net
      income as % of sales
                        
                        
                        4.8
                        %
                        
                        
                        7.3
                        %nm
      - not meaningful.





IEC
continues to experience strong top-line growth.  2010 revenue has
increased 43% over 2009 and 89% over the sales achieved in
2008.  While the current fiscal year included nine months of GTC
revenues and two months of Celmet revenues that were not present in the prior
fiscal year, the Company also enjoyed a healthy 15% growth in its core
business.  This significant growth has been fueled by the expansion of
product offerings and by market segment diversification as previously
discussed.  As a result of our emphasis on “absolutely positively
perfect” execution, our customers have rewarded us with ongoing programs and
additional business.  The ongoing programs represent a stable core of
our business, and our most significant revenue growth in recent years has come
from the aerospace, medical and industrial market sectors. The industrial sector
has declined as a percentage of our total sales this year, as aerospace and
medical have continued to ramp.  However, in absolute dollars our 2010
industrial sector sales continued to improve over the prior year.





IEC
continues to realize increasing gross profit measured as a percentage of net
sales.  Compared with the prior year, fiscal 2010 gross profit as a
percentage of net sales improved to 16.8% from 16.0%.  Since fiscal
2007 when we began to focus on transitioning from low volume prototype work to
new programs with higher volumes, the Company has increased its gross profit as
a percentage of net sales by over 700 basis points, from 9.5% to
16.8%.  This consistent trend of increasing gross profit as a
percentage of net sales, at significantly higher revenue levels, further
demonstrates the strength of our Company.    We have
continued to focus on improving labor efficiency through effective training of
production employees, investments in capital equipment that serve to modernize
some processes, and through ongoing implementation of continuous improvement and
lean manufacturing principles.  As a result, our workforce has
expanded in size and in capability.  Our continued increases in
productivity and excellence in execution have resulted in further penetration
into profitable market sectors.





Selling
and administrative expenses as a percentage of sales were held constant in
fiscal 2010 at 8.9%, in spite of the increasing size and scope of our
organization and the integration of two acquired companies.  We also
invested in initiatives to strengthen our sales and marketing team, as would be
expected with our continuing efforts to expand into new markets.





Interest
expense was $0.8 million for the year ended September 30, 2010, up from $0.4
million for fiscal 2009.  Higher interest expense in 2010 reflects new
borrowings of $15 million to fund the GTC acquisition in the first quarter and
$2.0 million to fund the Celmet acquisition in the fourth quarter, as well as a
2009 interest rate on IEC’s former revolving line of credit that was more
favorable than the Company's current borrowing rate.  We continue to
focus on managing working capital to maximize cash flow, thereby reducing debt
and interest expense, and apart from the acquisition related borrowings we
repaid approximately $6.2 million of debt during the year.  We reduced
outstanding balances on our term loans and notes by $2.2 million, and paid down
$4.0 million of Revolver borrowings used to fund the purchase of
GTC.  Total cash available to reduce debt was offset by $2.2 million
of capital investments made during the year.  Further information
regarding borrowings and applicable interest rates is provided in the Credit
Facilities note to the consolidated financial statements referenced in Item 8 of
this report.


19





We
had Other Income of $0.2 million during fiscal 2010 versus $0.3 million in
fiscal 2009.  Other Income for the current year is principally
comprised of a $0.4 million gain on our acquisition of GTC, partially offset by
$0.2 million of costs related to our GTC and Celmet acquisitions.  The
$0.3 million of Other Income in 2009 is primarily associated with a refund of
sales tax, penalties and accrued interest received in settlement of a dispute
over a previous Alabama sales tax assessment.





Our
2010 income tax expense increased to $2.4 million from a tax benefit of ($0.2)
million in the prior year.  This increase is principally attributable
to growth in the Company’s pretax earnings, which grew 50% from fiscal 2009 to
fiscal 2010.  However, as a result of our net operating loss
carryforwards, actual tax payments are expected to be only a modest percentage
of our related financial statement expense for some time into the
future.  Our 2009 tax benefit included a $1.9 million reversal of the
valuation allowance maintained for IEC's deferred tax assets.  (See
Income Taxes note to the consolidated financial statements referenced in Item 8
of this report).





Liquidity and Capital
Resources





Cash
Flow provided by operating activities was $7.8 million for the fiscal year ended
September 30, 2010, compared to $3.0 million for fiscal 2009.  The
principal drivers of this $4.8 million improvement were a $2.3 million increase
in income before taxes and more favorable trends in the components of working
capital which contributed $2.0 million.  Improved cash flows from
growth in payables were partially offset by higher receivables and
inventories.





Cash
Flow used in investing activities was $19.0 million for the fiscal year ending
September 30, 2010, compared with $1.8 million for fiscal
2009.  2010’s investing activities included the cash investments in
GTC and Celmet as well as $2.2 million that we principally invested in new
production equipment to improve efficiency and capacity.  During
fiscal 2009 we invested $1.8 million in new production equipment.





Cash
Flow provided by financing activities in 2010 was $11.2 million compared with
cash used in financing activities of $1.2 million during fiscal
2009.  During fiscal 2010 we borrowed $17 million in connection with
our acquisitions of GTC and Celmet, which was partially offset by debt
repayments of $6.2 million as mentioned in the above discussion of interest
expense. In 2009 we reduced our term and revolver debt by an aggregate total of
$2.2 million, which was partially offset by $0.8 million borrowed in capital
equipment loans.





At
September 30, 2010, the Company had $5.8 million of borrowings outstanding under
its Revolver, with an additional $9.2 million of undrawn borrowing capacity
available.  The maximum borrowing under this credit facility is
limited to the lesser of (i) $15.0 million or (ii) an amount equal to the sum of
85% of the receivables borrowing base and 35% of the inventory borrowing
base.  Based on that metric, at September 30, 2010 the maximum
borrowing limit under the Revolver was $15.0 million.  The Company
believes it has adequate liquidity to support its operating requirements for the
next 12 months.





The
Company’s financing agreements contain various affirmative and negative
covenants, including financial covenants.  The Company is required to
maintain quarterly and annual minimum EBITDARS (defined as net income plus
interest expense, tax expense, depreciation, amortization of intangible assets,
sale-leaseback rent payments, and non-cash stock option expense, minus cash
taxes paid) thresholds, a maximum debt to EBITDARS ratio, and a minimum fixed
charge coverage ratio.  These are calculated on a three and twelve
month trailing basis as applicable.  The Company was in compliance
with all these covenants as of September 30, 2010.  The table below
provides details on the Company’s performance relative to each of the four
covenants:





Type
                        
                        
                        
                        
                        Actual atCovenant
                        
                        oflimit
                        
                        Limit
                        
                        
                        September30,2010($ in thousands)Fourth
      quarter EBITDARS
                        
                        Lower
                        
                        $
                        1,000
                        
                        
                        $
                        3,208Annual
      EBITDARS
                        
                        Lower
                        
                        $
                        5,000
                        
                        
                        $
                        10,629Total
      debt to EBITDARS
                        
                        Upper
                        
                        
                        3.00x
                        
                        
                        
                        1.88xFixed
      charge coverage
                        
                        Lower
                        
                        
                        1.25x
                        
                        
                        
                        1.98x




20





Our
credit facilities are described in detail in the related note to the
consolidated financial statements referenced in Item 8 of this
report.





Off-Balance Sheet
Arrangements





IEC is
not a party to any material off-balance sheet arrangements.





Application of Critical
Accounting Policies





Our
financial statements and accompanying notes are prepared in accordance with
generally accepted accounting principles in the United States of America as
presented in the Accounting Standards Codification.  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, provisions for doubtful accounts, provisions for inventory
obsolescence, impairment of long-lived assets, accounting for legal
contingencies and accounting for income taxes, all of which are discussed
below.





Under
FASB ASC 605-10 ("Revenue Recognition"), revenue from sales is recognized when
(a) goods are shipped or title and risk of ownership have passed, (b) the price
to the buyer is fixed or determinable, and (c) realization is reasonably
assured.  Service revenues are recognized when services are
rendered.  Provisions for discounts and rebates to customers,
estimated returns and allowances and other adjustments are recorded in the
period the related sales are recognized.





FASB
ASC 310-10-35 ("Receivables") requires us to establish allowances for doubtful
accounts when it is probable that losses have been incurred in the collection of
accounts receivable and the amount of loss can reasonably be
estimated.  If losses are probable and estimable, they are to be
accrued even though the particular customer accounts on which losses will be
incurred cannot yet be identified.





FASB
ASC 330-10-35 ("Inventory") requires us to reduce the carrying value of
inventory when there is evidence that the utility of goods will be less than
cost, whether due to physical deterioration, obsolescence, changes in price
levels or other causes.  Inventory balances are generally reduced to
the lower of cost or market value by means of reserves.





FASB
ASC 360-10 ("Property, Plant and Equipment") requires that we evaluate our
long-lived assets for financial impairment on a regular basis.  We
evaluate the recoverability of long-lived assets not held for sale by measuring
the carrying amount of the assets against the estimated undiscounted future cash
flows associated with the assets.  If carrying value exceeds
undiscounted cash flows, we are required to reduce carrying value to fair value,
often determined by analyzing discounted cash flows.





FASB
ASC 450-10 ("Contingencies") requires that when, from time to time, we are
subject to various legal proceedings and claims, the outcomes of which are
subject to significant uncertainty, an estimated loss 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
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 results of operations.





FASB
ASC 740 ("Income Taxes") establishes financial accounting and reporting
standards for the effect of income taxes.  The objective is to
recognize (a) the amount of taxes payable or refundable for the current year and
(b) deferred tax assets and liabilities for the future tax consequences of
events that have been reported in an entity's financial statements or tax
returns.  Significant judgments are required.  Variations in
the actual outcomes could impact our financial position or results of
operations.





Recently Issued Accounting
Standards





FASB
Accounting Standards Update 2010-20, "Disclosures about the Credit Quality of
Financing Receivables and the Allowance for Credit Losses" was issued in July
2010.  The update requires entities to describe methods used to
estimate the allowance for doubtful accounts; disclose policies for charging off
uncollectible receivables; and present a summary of provisions, charge offs and
recoveries recorded in the allowance during each period.  No changes
in accounting methods are required.  Period-end disclosures must be
provided beginning in IEC's first fiscal quarter of 2011, and
transaction-oriented disclosures are required in subsequent
periods.  IEC has implemented the requirements of this update as of
September 30, 2010.


21





FASB
ASC 805 (“Business Combinations”) establishes principles and requirements for
the manner in which an acquirer: recognizes and measures in its financial
statements the identifiable assets acquired, liabilities assumed, and any
non-controlling interest in the acquiree; recognizes and measures the goodwill
acquired or the gain from bargain purchase; and provides disclosures designed to
enable financial statement users to evaluate the nature and financial effects of
the combination.  FASB ASC 805 was effective for fiscal years, as well
as interim periods within those fiscal years, beginning on or after
December 15, 2008. The Company adopted this standard at the beginning of
the current fiscal year and accounted for both 2010 acquisitions in accordance
with the new rules.








ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





The
Company, as a result of its financing activities, is exposed to changes in
interest rates that may adversely affect its operating results.  As of
September 30, 2010, the Company had $18.9 million of debt.  Interest
rates are fixed for $2.8 million of that debt and variable for the remaining
$16.1 million.  However, the Credit Agreement prescribes a minimum
threshold for the LIBOR component of interest.  That minimum threshold
is above the current market level of LIBOR rates, and as a result variable
interest rates do not at present fluctuate with a change in
LIBOR.  However, at any time that market LIBOR is above the minimum
threshold prescribed in our Credit Agreement, interest rates will vary with the
market.  A sensitivity analysis to measure the potential impact that a
change in interest rates would have on the Company's net income indicates that,
providing the market LIBOR rate is sufficiently above the LIBOR threshold in our
Credit Agreement, a one-percentage point increase or decrease in interest rates,
which represents a greater than 10% change, would increase or decrease the
Company's annual net financing expense by approximately $161 thousand as of
September 30, 2010.





The
Company is exposed to credit risk to the extent of non-performance by
Manufacturers and Traders Trust Company ("M&T") under the Credit Agreement.
As such, the credit rating of M&T is monitored by the
Company.  Credit loss arising from M&T non-performance is not
anticipated.





ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA





The
information required by this item is incorporated herein by reference to the
page numbers provided in response to Item 15(a)(1) and (2) of this Form
10-K.





ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE





Not
applicable.





ITEM 9A.
CONTROLS AND PROCEDURES





Evaluation
of disclosure controls and procedures.An evaluation was
performed under the supervision and with the participation of IEC's management,
including our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of the disclosure controls and
procedures as of the end of the period covered by this Annual Report on Form
10-K as required by Rule 13a-15 under the Securities Exchange Act of 1934 (the
"Exchange Act").  Based on that evaluation, our Chief Executive
Officer and Chief Financial Officer have concluded that the business has
disclosure controls and procedures that were effective as of the end of the
period covered by this Annual Report on Form 10-K to provide reasonable
assurance that information required to be disclosed by IEC 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 and
that such information is accumulated and communicated to our management
(including the Chief Executive Officer and Chief Financial Officer) to allow
timely decisions regarding disclosures.





Management's Report on Internal
Control over Financial Reporting.Our management is
responsible for establishing and maintaining adequate internal control over
financial reporting. Our internal control system was designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles in the United States of
America.  The Company’s internal control over financial reporting
includes those policies and procedures that:


22





(i)
            pertain
      to the maintenance of records that, in reasonable detail, accurately and
      fairly reflect the transactions and dispositions of assets of the
      Company,





(ii)
            provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with generally accepted
      accounting principles, and that receipts and expenditures of the Company
      are being made only in accordance with authorizations of management and
      directors of the Company, and





(iii)
            provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use or disposition of the Company’s assets that
      could have a material effect on financial
  statements.





An
evaluation of the effectiveness of the design and operation of our procedures
and internal control over financial reporting, based on the framework entitled
“Internal Controls - Integrated Framework” issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO), was performed under the
supervision and with the participation of our management, including the Chief
Executive Officer and the Chief Financial Officer.  Based on this
evaluation, our management, including the Chief Executive Officer and the Chief
Financial Officer, concluded that our internal control over financial reporting
was effective in providing reasonable assurance regarding the reliability of
financial reporting and the preparation of our financial statements for external
purposes in accordance with generally accepted accounting principles, as of
September 30, 2010.  The GTC and Celmet units acquired during fiscal
2010 were excluded from this evaluation.





This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting because as a
smaller reporting company we are not subject to attestation by our independent
registered public accounting firm pursuant to rules of the Securities and
Exchange Commission that permit us to provide only management's report in this
annual report.





Inherent Limitations of Internal
Controls.  In designing and evaluating our internal control
system, we recognize that any controls and procedures, no matter how well
designed and operated, can provide only reasonable, and not absolute, assurance
of achieving the desired control objectives.  The effectiveness of any
such control system has inherent limitations including, but not limited to: the
possibility of human error and the intentional circumvention or overriding of
controls and procedures. Management, including the Chief Executive Officer and
the Chief Financial Officer, is required to apply judgment in evaluating the
cost-benefit relationship of possible controls and procedures. Because of the
inherent limitations in a cost-effective control system, internal control over
financial reporting may not prevent or detect misstatements. Although we
consider it unlikely, misstatements due to error or fraud may occur and may not
be detected in a timely manner.





Changes
in internal control over financial reporting.   In
connection with the evaluation described above, our management, including our
Chief Executive Officer and Chief Financial Officer, identified no change in our
internal control over financial reporting that occurred during our fiscal year
ended September 30, 2010, that materially affected, or is reasonably likely to
materially affect, our internal controls over financial reporting.





ITEM
9B.  OTHER INFORMATION





Not
applicable.





PART
III





ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE





The
information required by this item is presented under the captions entitled
"Election of Directors” and “Section 16(a) Beneficial Ownership Reporting
Compliance” contained in the definitive proxy statement issued in connection
with the 2011 Annual Meeting of Stockholders and is incorporated in this report
by reference thereto.  The information regarding Executive Officers of
the Registrant is found in Part I of this report.





IEC
has adopted a Code of Business Conduct and Ethics (the “Code”), which applies to
all of its directors, officers (including IEC’s Chief Executive Officer, Chief
Financial Officer, and other senior officers), and employees.  The
Code, a copy of which was filed as Exhibit 14 to IEC’s Current Report on Form
8-K filed on September 1, 2004, may be viewed on IEC’s website, www.iec-electronics.com,
under its “Investor Relations – Corporate Governance” captions, and is available
in print (free of charge) to any person upon request to Chief Financial Officer,
IEC Electronics Corp., 105 Norton Street, Newark, NY  14513, telephone
(315) 331-7742.  Any amendment to, or waiver of, a provision of the
Code which applies to IEC’s Chief Executive Officer, Chief Financial Officer, or
other senior officers and relates to the elements of a “code of ethics” as
defined by the Securities and Exchange Commission will also be posted on the
website.


23





ITEM 11.
EXECUTIVE COMPENSATION





The
information required by this item is presented under the captions entitled
"Compensation of Named Executive Officers and Directors” and “Election of
Directors - Compensation Committee Interlocks and Insider Participation”
contained in the definitive proxy statement issued in connection with the 2011
Annual Meeting of Stockholders and is incorporated in this report by reference
thereto, except, however, the section entitled “Compensation Committee Report”
shall not be deemed to be “soliciting material” or to be filed with the
Commission or subject to Regulation 14A or 14C, or to the liabilities of Section
18 of the Exchange Act of 1934, as amended.





ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS





The
information required by this item is presented under the caption entitled
"Security Ownership of Certain Beneficial Owners and Management" contained in
the definitive proxy statement issued in connection with the 2011 Annual Meeting
of Stockholders and is incorporated in this report by reference
thereto.  Information relating to Equity Compensation Plans is found
in Item 5 of Part II of this report.





ITEM
13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE





The
information required by this item is presented under the captions “Certain
Relationships and Related Person Transactions” and “Election of Directors”
contained in the definitive proxy statement issued in connection with the 2011
Annual Meeting of Stockholders and is incorporated in this report by reference
thereto.





ITEM
14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES





The
information required by this item is presented under the caption "Ratification
of Selection of Independent Registered Public Accounting Firm” contained in the
definitive proxy statement issued in connection with the 2011 Annual Meeting of
Stockholders and is incorporated in this report by reference
thereto.


24


PART
IV





ITEM
15.  EXHIBITS AND CONSOLIDATED FINANCIAL STATEMENT
SCHEDULES





(a)  The
following documents are filed as part of this report and in response to Item
8:





(1)  Consolidated
Financial Statements and Supplementary Schedules


PageReport
      of Independent Registered Public Accounting Firm
                    
                    29Consolidated
      Balance Sheets as of September 30, 2010 and 2009
                    
                    30Consolidated
      Income Statements for the years ended September 30, 2010 and
      2009
                    
                    31Consolidated
      Statements of Comprehensive Income and Shareholders' Equity for the years
      ended September 30, 2010 and  2009
                    
                    32Consolidated
      Statements of Cash Flows for the years ended September 30, 2010 and
      2009
                    
                    33Notes
      to Consolidated Financial Statements
                    
                    34





(2)  Financial
Statement Schedules required to be filed by Item 8 of this Form
10-K:


None





(3)  Exhibits





Exhibit
                          No.
                        
                        Title
                        
                        Page2.1
                        
                        Agreement
      and Plan of Merger by and among IEC Electronics Corp., VUT Merger Corp.
      and Val-U-Tech Corp. dated as of May 23, 2008 (incorporated by reference
      to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the
      quarter ended June 27, 2008)2.2
                        
                        Stock
      Purchase Agreement, dated December 16, 2009, by and among IEC Electronics
      Corp, Crane International Holdings, Inc. and General Technology
      Corporation (incorporated by reference to Exhibit 2.1 to the Company's
      Current Report on Form 8-K filed December 23, 2009)3.1
                        
                        Amended
      and Restated Certificate of Incorporation of DFT Holdings Corp.
      (incorporated by reference to Exhibit 3.1 to the Company's Registration
      Statement on Form S-1, Registration No. 33-56498)3.2
                        
                        Amended
      and Restated By-Laws of the Company as of October 1, 2010 (incorporated by
      reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed
      October 7, 2010)3.3
                        
                        Agreement
      and Plan of Merger of IEC Electronics into DFT Holdings Corp.
      (incorporated by reference to Exhibit 3.3 to the Company's Registration
      Statement on Form S-1, Registration No. 33-56498)3.4
                        
                        Certificate
      of Merger of IEC Electronics Corp. into DFT Holdings Corp. - New York.
      (incorporated by reference to Exhibit 3.4 to the Company's Registration
      Statement on Form S-1, Registration No. 33-56498)3.5
                        
                        Certificate
      of Ownership and Merger merging IEC Electronics Corp. into DFT Holdings
      Corp. - Delaware (incorporated by reference to Exhibit 3.5 to the
      Company's Registration Statement on Form S-1, Registration No.
      33-56498)3.6
                        
                        Certificate
      of Merger of IEC Acquisition Corp. into IEC Electronics Corp.
      (incorporated by reference to Exhibit 3.6 to the Company’s Registration
      Statement on Form S-1, Registration No. 33-56498)3.7
                        
                        Certificate
      of Amendment of Certificate of Incorporation of IEC Electronics Corp.
      filed with the Secretary of State of the State of Delaware on Feb. 26,
      1998 (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly
      Report on Form 10-Q for the Quarter ended March 27, 1998)




25





Exhibit No.
                      
                      Title
                      
                      Page3.8
                      
                      Certificate
      of Designations of the Series A Preferred Stock of IEC Electronics Corp.
      filed with the Secretary of State of the State of Delaware on June 3, 1998
      (incorporated by reference to Exhibit 3.8 of the Company's Annual Report
      on Form 10-K for the year ended September 30, 1998)4.1
                      
                      Specimen
      of Certificate for Common Stock (incorporated by reference to Exhibit 4.1
      to the Company's Registration Statement on Form S-1, Registration No.
      33-56498)10.1
                      
                      Credit
      Facility Agreement dated as of May 30, 2008 by and among IEC Electronics
      Corp. and Manufacturers and Traders Trust Company (incorporated by
      reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q
      for the quarter ended June 27, 2008)10.2
                      
                      First
      Amendment to Credit Facility Agreement made July 29, 2008 to be effective
      as of May 30, 2008 between IEC Electronics Corp. and Manufacturers and
      Traders Trust Company (incorporated by reference to Exhibit 10.8 to the
      Company's Annual Report on Form 10-K for the year ended September 30,
      2008)10.3
                      
                      Amended
      and Restated Credit Facility Agreement, dated as of December 16, 2009, by
      and among IEC Electronics Corp. and Manufacturers and Traders Trust
      Company (incorporated by reference to Exhibit 10.1 to the Company's
      Current Report on Form 8-K filed December 23, 2009)10.4
                      
                      Amendment
      1, dated as of February 26, 2010, to the Amended and Restated Credit
      Facility Agreement, dated as of December 16, 2009, by and among IEC
      Electronics Corp. and Manufacturers and Traders Trust Company
      (incorporated by reference to Exhibit 10.1 to the Company's Quarterly
      Report on Form 10-Q for the quarter ended March 26, 2010)10.5
                      
                      Second
      amended and Restated Credit Facility Agreement, dated as of July 30, 2010,
      by and among IEC Electronics Corp. and Manufacturers and Traders Trust
      Company (incorporated by reference to Exhibit 10.1 to the Company's
      Current Report on Form 8-K filed August 5, 2010)10.6*
                      
                      Form
      of Indemnity Agreement between the Company and its directors and executive
      officers. (incorporated by reference to Exhibit 10.2 to the Company's
      Quarterly Report on Form 10-Q for the quarter ended July 2,
      1993)10.7*
                      
                      IEC
      Electronics Corp. 2001 Stock Option and Incentive Plan, as amended on
      February 4, 2009 (incorporated by reference to Exhibit 10.4 to the
      Company's Annual Report on Form 10-K for the year ended September 30,
      2009)10.8*
                      
                      Form
      of Incentive Stock Option Agreement pursuant to 2001 Stock Option and
      Incentive Plan (incorporated by reference to Exhibit 10.5 to the Company's
      Annual Report on Form 10-K for the year ended September 30,
      2009)10.9*
                      
                      Form
      of Outside Director Stock Option Agreement pursuant to 2001 Stock Option
      and  Incentive Plan (incorporated by reference to Exhibit 10.6
      to the Company's Annual Report on Form 10-K for the year ended September
      30, 2009)10.10*
                      
                      Form
      of Restricted Stock Award Agreement pursuant to 2001 Stock Option and
      Incentive Plan (incorporated by reference to Exhibit 10.7 to the Company's
      Annual Report on Form 10-K for the year ended September 30,
      2009)10.11*
                      
                      Form
      of Challenge Award Option Agreement granted to senior management in Fiscal
      2005 (incorporated by reference to Exhibit 10.14 to the Company’s Annual
      Report on Form 10-K for the year ended September 30, 2005)10.12*
                      
                      Form
      of First Amendment to Challenge Award Option Agreement dated as of
      September 29, 2006 (incorporated by reference to Exhibit 10.16 to the
      Company's Annual Report on Form 10-K for the year ended September 30,
      2007)10.13*
                      
                      Form
      of Second Amendment to Challenge Award Option Agreement dated as of
      January 23, 2008 (incorporated by reference to Exhibit 10.11 to the
      Company's Annual Report on Form 10-K for the year ended September 30,
      2008)10.14*
                      
                      Restricted
      Stock Award Agreement between the Company and Jeffrey T. Schlarbaum dated
      as of May 14, 2008 (incorporated by reference to Exhibit 10.15 to the
      Company's Annual Report on Form 10-K for the year ended September 30,
      2008)10.15*
                      
                      Restricted
      Stock Award Agreement between the Company and Donald S. Doody dated as of
      May 14, 2008 (incorporated by reference to Exhibit 10.16 to the Company's
      Annual Report on Form 10-K for the year ended September 30,
      2008)10.16*
                      
                      Separation
      Agreement between the Company and Brian Davis dated February 15, 2008
      (incorporated by reference to Exhibit 10.17 to the Company's Annual Report
      on Form 10-K for the year ended September 30, 2008)




26





Exhibit
                        No.
                      
                      Title
                      
                      Page10.17*
                      
                      Independent
      Consulting Agreement between the Company and Brian Davis dated February
      15, 2008 (incorporated by reference to Exhibit 10.18 to the Company's
      Annual Report on Form 10-K for the year ended September 30,
      2008)10.18*
                      
                      Separation
      Agreement between the Company and Michael Schlehr dated May 24, 2010 and
      Appendix A thereto (Independent Consulting Agreement) (incorporated by
      reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
      for the quarter ended June 25, 2010)10.19*
                      
                      Employment
      Agreement between the Company and W. Barry Gilbert, effective April 24,
      2009 (incorporated by reference to Exhibit 10.1 to the Company's Current
      Report on Form 8-K filed April 30, 2009)10.20*
                      
                      First
      Amendment, dated September 17, 2010 and effective October 1, 2010, to the
      Employment Agreement, dated April 24, 2009 between the Company and W.
      Barry Gilbert (incorporated by reference to Exhibit 10.1 to the Company's
      Current Report on Form 8-K filed October 1, 2010)10.21*
                      
                      Offer
      of Employment Letter Agreement between the Company and Susan E.
      Topel-Samek dated May 19, 2010 (incorporated by reference to Exhibit 10.2
      to the Company's Quarterly Report on Form 10-Q for the quarter ended June
      25, 2010)10.22*
                      
                      Salary
      Continuation and Non-Competition Agreement dated and effective as of
      October 1, 2010 between the Company and Jeffrey T.
    Schlarbaum10.23*
                      
                      Salary
      Continuation and Non-Competition Agreement dated and effective as of
      October 1, 2010 between the Company and Donald S. Doody10.24*
                      
                      Summary
      of the Company's 2010 Management Incentive Plan10.25*
                      
                      Summary
      of the Company's 2010 Long-Term Incentive Plan10.26*
                      
                      IEC
      Electronics Corp. Management Deferred Compensation Plan, effective January
      1, 2009 (incorporated by reference to Exhibit 10.21 to the Company's
      Annual Report on Form 10-K for the year ended September 30,
      2009)10.27*
                      
                      IEC
      Electronics Corp. Board of Directors Deferred Compensation Plan, effective
      January 1, 2009 (incorporated by reference to Exhibit 10.22 to the
      Company's Annual Report on Form 10-K for the year ended September 30,
      2009)10.28
                      
                      Settlement
      Agreement dated March 17, 2009 by and among the Company, Val-U-Tech Corp.,
      Kathleen Brudek, Michael Brudek and Nicholas Vaseliv (incorporated by
      reference to Exhibit 10.1 to the Company's Current Report on Form 8-K
      filed on March 23, 2009)14
                      
                      Code
      of Business Conduct and Ethics (incorporated by reference to Exhibit 14 to
      the Company’s Current Report on Form 8-K filed on September 1,
      2004)21.1
                      
                      Subsidiaries
      of IEC Electronics Corp.23.1
                      
                      Consent
      of Independent Registered Public Accounting Firm31.1
                      
                      Certification
      of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act of 200231.2
                      
                      Certification
      of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act of 200232.1
                      
                      Certification
      of Chief Executive Officer and Chief Financial Officer Pursuant to Section
      906 of the Sarbanes-Oxley Act of 2002





*Management
contract or compensatory plan or arrangement


27





SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.





Dated:
November 19, 2010





IEC
      Electronics Corp.By: /s/ W. Barry GilbertW.
      Barry GilbertChief
      Executive Officer and Chairman of the
Board





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.





Signature
                                                      
                                                      Title
                                                      
                                                      Date/s/
      W. Barry Gilbert
                                                      
                                                      Chief
      Executive Officer and
                                                      
                                                      November
      19, 2010W.
      Barry Gilbert
                                                      
                                                      Chairman
      of the Board(Principal
      executive officer and Director)/s/
      Susan E. Topel-Samek
                                                      
                                                      Vice
      President and
                                                      
                                                      November
      19, 2010Susan
      E. Topel-Samek
                                                      
                                                      Chief
      Financial Officer(Principal
      financial and accounting officer)/s/
      Eben S. Moulton
                                                      
                                                      Director
                                                      
                                                      November
      19, 2010Eben
      S. Moulton/s/
      James C. Rowe
                                                      
                                                      Director
                                                      
                                                      November
      19, 2010James
      C. Rowe/s/
      Carl E. Sassano
                                                      
                                                      Director
                                                      
                                                      November
      19, 2010Carl
      E. Sassano/s/
      Amy L. Tait
                                                      
                                                      Director
                                                      
                                                      November
      19, 2010Amy
      L. Tait/s/
      Jerold L. Zimmerman
                                                      
                                                      Director
                                                      
                                                      November
      19, 2010Jerold
      L. Zimmerman




28





ITEM
8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA





REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the
Board of Directors and


IEC
Electronics Corp.





We
have audited the accompanying consolidated balance sheets of IEC Electronics
Corp. and Subsidiaries as of September 30, 2010 and 2009, and the related
consolidated statements of income, comprehensive income and shareholders'
equity, and cash flows for each of the years in the two-year period ended
September 30, 2010.  IEC Electronics Corp.’s management is responsible
for these consolidated financial statements.  Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.





We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  The
company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting.  Our audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the company's
internal control over financial reporting.  Accordingly, we express no
such opinion.  An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis
for our opinion.





In
our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of IEC Electronics
Corp. and Subsidiaries as of September 30, 2010 and 2009, and the results of its
operations and its cash flows for each of the years in the two-year period
ended September 30, 2010 in conformity with accounting principles generally
accepted in the United States of America.





/s/ EFP
Rotenberg, LLP





EFP
Rotenberg, LLP


Rochester,
New York


November
19, 2010


29





IEC
ELECTRONICS CORP. AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS


SEPTEMBER
30, 2010 and 2009


(in
thousands, except share and per share data)





September 30,2010
                  
                  
                  2009ASSETSCurrent
      assets:Cash
      (see Cash note)
                  
                  $
                  -
                  
                  
                  $
                  -Accounts
      receivable, net
                  
                  
                  16,315
                  
                  
                  
                  10,354Inventories
                  
                  
                  12,068
                  
                  
                  
                  6,491Deferred
      income taxes
                  
                  
                  3,359
                  
                  
                  
                  2,050Other
      current assets
                  
                  
                  234
                  
                  
                  
                  110Total
      current assets
                  
                  
                  31,976
                  
                  
                  
                  19,005Fixed
      assets:Land
      and improvements
                  
                  
                  1,556
                  
                  
                  
                  742Buildings
      and improvements
                  
                  
                  9,581
                  
                  
                  
                  4,339Machinery
      and equipment
                  
                  
                  15,434
                  
                  
                  
                  10,335Furniture
      and fixtures
                  
                  
                  4,833
                  
                  
                  
                  4,131Total
      fixed assets, at cost
                  
                  
                  31,404
                  
                  
                  
                  19,547Less:
      Accumulated depreciation
                  
                  
                  (18,306
                  )
                  
                  
                  (17,156
                  )Net
      fixed assets
                  
                  
                  13,098
                  
                  
                  
                  2,391Intangible
      asset (net of $29 amortization)
                  
                  
                  331
                  
                  
                  
                  -Deferred
      income taxes
                  
                  
                  10,113
                  
                  
                  
                  13,026Other
      assets (Goodwill: $58 in 2010, none in 2009)
                  
                  
                  164
                  
                  
                  
                  47Total
      assets
                  
                  $
                  55,682
                  
                  
                  $
                  34,469LIABILITIES
      AND SHAREHOLDERS' EQUITYCurrent
      liabilities:Current
      portion of long-term debt
                  
                  $
                  2,899
                  
                  
                  $
                  1,147Accounts
      payable
                  
                  
                  8,145
                  
                  
                  
                  4,183Accrued
      payroll and related expenses
                  
                  
                  2,279
                  
                  
                  
                  1,564Other
      accrued expenses
                  
                  
                  941
                  
                  
                  
                  531Customer
      deposits
                  
                  
                  -
                  
                  
                  
                  190Total
      current liabilities
                  
                  
                  14,264
                  
                  
                  
                  7,615Long-term
      debt
                  
                  
                  15,999
                  
                  
                  
                  6,600Total
      liabilities
                  
                  
                  30,263
                  
                  
                  
                  14,215SHAREHOLDERS'
      EQUITYPreferred
      stock, $.01 par value: 500,000  shares authorized; Issued and
      outstanding-none
                  
                  
                  -
                  
                  
                  
                  -Common
      Stock, $.01 par value: 50,000,000 shares authorized; 10,100,589 and
      9,747,283 shares issued
                  
                  
                  101
                  
                  
                  
                  97Treasury
      stock, at cost: 1,012,873 shares
                  
                  
                  (1,413
                  )
                  
                  
                  (1,413
                  )Additional
      paid-in capital
                  
                  
                  41,138
                  
                  
                  
                  40,632Accumulated
      deficit
                  
                  
                  (14,407
                  )
                  
                  
                  (19,062
                  )Total
      shareholders' equity
                  
                  
                  25,419
                  
                  
                  
                  20,254Total
      liabilities and shareholders' equity
                  
                  $
                  55,682
                  
                  
                  $
                  34,469





The
accompanying notes are an integral part of these consolidated financial
statements.


30





IEC
ELECTRONICS CORP. AND SUBSIDIARIES


CONSOLIDATED
INCOME STATEMENTS


FOR YEARS
ENDED SEPTEMBER 30, 2010 and 2009


(in
thousands, except share and per share data)





Year ended September 30,2010
                            
                            
                            2009Net
      sales
                            
                            $
                            96,674
                            
                            
                            $
                            67,811Cost
      of sales
                            
                            
                            80,411
                            
                            
                            
                            56,985Gross
      profit
                            
                            
                            16,263
                            
                            
                            
                            10,826Selling
      and administrative expenses
                            
                            
                            8,576
                            
                            
                            
                            6,006Operating
      profit
                            
                            
                            7,687
                            
                            
                            
                            4,820Interest
      and financing expense
                            
                            
                            814
                            
                            
                            
                            389Other
      (income)/expense
                            
                            
                            (182
                            )
                            
                            
                            (287
                            )Income
      before provision for income taxes
                            
                            
                            7,055
                            
                            
                            
                            4,718Provision
      (benefit) for income taxes:Currently
      payable
                            
                            
                            249
                            
                            
                            
                            97Tax
      expense (offset by NOL carryforwards)
                            
                            
                            2,151
                            
                            
                            
                            (335
                            )Total
      provision (benefit) for income taxes
                            
                            
                            2,400
                            
                            
                            
                            (238
                            )Net
      income
                            
                            $
                            4,655
                            
                            
                            $
                            4,956Net
      income per common and common equivalent share:Basic
                            
                            $
                            0.52
                            
                            
                            $
                            0.57Diluted
                            
                            
                            0.48
                            
                            
                            
                            0.52Weighted
      average number of common and common equivalent shares
      outstanding:Basic
                            
                            
                            8,990,180
                            
                            
                            
                            8,728,930Diluted
                            
                            
                            9,608,174
                            
                            
                            
                            9,553,526





The
accompanying notes are an integral part of these consolidated financial
statements.


31





IEC
ELECTRONICS CORP. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS of COMPREHENSIVE INCOME and SHAREHOLDERS' EQUITY


FOR YEARS
ENDED SEPTEMBER 30, 2010 and 2009


(thousands,
except per share)





Common
                        
                        
                        Treasury
                        
                        
                        Additional
                        
                        
                        Retained
                        
                        
                        TotalStock,
                        
                        
                        Stock,
                        
                        
                        Paid-In
                        
                        
                        Earnings
                        
                        
                        Shareholders'par
      $.01
                        
                        
                        at
      cost
                        
                        
                        Capital
                        
                        
                        (Deficit)
                        
                        
                        EquityBalances,
      September 30, 2008
                        
                        $
                        93
                        
                        
                        $
                        (223
                        )
                        
                        $
                        40,124
                        
                        
                        $
                        (24,018
                        )
                        
                        $
                        15,976Stock
      compensation accruals
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        131
                        
                        
                        
                        
                        
                        
                        
                        131Directors'
      fees paid in stock
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        44
                        
                        
                        
                        
                        
                        
                        
                        44Restricted
      (non-vested) stock grants
                        
                        
                        -
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        -Exercise
      of stock options
                        
                        
                        4
                        
                        
                        
                        
                        
                        
                        
                        333
                        
                        
                        
                        
                        
                        
                        
                        337Acquisition
      of treasury shares
                        
                        
                        
                        
                        
                        
                        (1,190
                        )
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (1,190
                        )Net
      income/ Comprehensive income
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        4,956
                        
                        
                        
                        4,956Balances,
      September 30, 2009
                        
                        
                        97
                        
                        
                        
                        (1,413
                        )
                        
                        
                        40,632
                        
                        
                        
                        (19,062
                        )
                        
                        
                        20,254Stock
      compensation accruals
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        282
                        
                        
                        
                        
                        
                        
                        
                        282Directors'
      fees paid in stock
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        32
                        
                        
                        
                        
                        
                        
                        
                        32Restricted
      (non-vested) stock grants
                        
                        
                        1
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        1Exercise
      of stock options
                        
                        
                        3
                        
                        
                        
                        
                        
                        
                        
                        192
                        
                        
                        
                        
                        
                        
                        
                        195Net
      income/ Comprehensive income
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        4,655
                        
                        
                        
                        4,655Balances,
      September 30, 2010
                        
                        $
                        101
                        
                        
                        $
                        (1,413
                        )
                        
                        $
                        41,138
                        
                        
                        $
                        (14,407
                        )
                        
                        $
                        25,419





The
accompanying notes are an integral part of these consolidated financial
statements.


32





IEC
ELECTRONICS CORP. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS


FOR YEARS
ENDED SEPTEMBER 30, 2010 and 2009


(thousands)





Year
      ended September 30,2010
                      
                      
                      2009CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income
                      
                      $
                      4,655
                      
                      
                      $
                      4,956Non-cash
      adjustments:Stock-based
      compensation
                      
                      
                      282
                      
                      
                      
                      131Depreciation
      and amortization
                      
                      
                      1,224
                      
                      
                      
                      282Directors'
      fees paid in stock
                      
                      
                      32
                      
                      
                      
                      44(Gain)/loss
      on sale of fixed assets
                      
                      
                      (8
                      )
                      
                      
                      (5
                      )Gain
      on corporate acquisition
                      
                      
                      (418
                      )
                      
                      
                      -Deferred
      tax expense (benefit)
                      
                      
                      2,151
                      
                      
                      
                      (335
                      )Changes
      in current assets and liabilities:Accounts
      receivable
                      
                      
                      (1,453
                      )
                      
                      
                      (9
                      )Inventories
                      
                      
                      (937
                      )
                      
                      
                      (260
                      )Other
      current assets
                      
                      
                      (32
                      )
                      
                      
                      (46
                      )Accounts
      payable
                      
                      
                      2,620
                      
                      
                      
                      (1,942
                      )Accrued
      expenses
                      
                      
                      (96
                      )
                      
                      
                      685Customer
      deposits
                      
                      
                      (190
                      )
                      
                      
                      (475
                      )Net
      cash flows from operating activities
                      
                      
                      7,830
                      
                      
                      
                      3,026CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchases
      of fixed assets
                      
                      
                      (2,173
                      )
                      
                      
                      (1,816
                      )Proceeds
      from sale of fixed assets
                      
                      
                      10
                      
                      
                      
                      11Acquisition
      of GTC (see Acquisitions note)
                      
                      
                      (14,932
                      )
                      
                      
                      -Acquisition
      of Celmet (see Acquisitions note)
                      
                      
                      (1,898
                      )
                      
                      
                      -Net
      cash flows from investing activities
                      
                      
                      (18,993
                      )
                      
                      
                      (1,805
                      )CASH
      FLOWS FROM FINANCING ACTIVITIES:Increase
      (decrease) in borrowings under revolving line *
                      
                      
                      1,942
                      
                      
                      
                      (1,110
                      )Borrowings
      under other loan agreements
                      
                      
                      11,316
                      
                      
                      
                      828Repayments
      under loan agreements and notes
                      
                      
                      (2,207
                      )
                      
                      
                      (1,135
                      )Proceeds
      from exercise of stock options
                      
                      
                      196
                      
                      
                      
                      196Financing
      costs capitalized
                      
                      
                      (84
                      )
                      
                      
                      -Net
      cash flows from financing activities
                      
                      
                      11,163
                      
                      
                      
                      (1,221
                      )Net
      cash flows for the period
                      
                      
                      0
                      
                      
                      
                      0Cash
      and cash equivalents, beginning of period
                      
                      
                      0
                      
                      
                      
                      0Cash
      and cash equivalents, end of period
                      
                      $
                      0
                      
                      
                      $
                      0Supplemental
      disclosure of cash flow information:Cash
      paid during the period for:Interest
                      
                      $
                      769
                      
                      
                      $
                      419Income
      taxes
                      
                      
                      297
                      
                      
                      
                      26Supplemental
      disclosure of non-cash adjustments:Deferred
      tax adjustment relating to seller notes
                      
                      $
                      -
                      
                      
                      $
                      844Deferred
      tax adjustment relating to shares returned
                      
                      
                      -
                      
                      
                      
                      1,050Stock
      option exercise paid for by delivering common shares
                      
                      
                      -
                      
                      
                      
                      140





*  Revolver
borrowings of $5,932 were utilized to partially fund December 2009 purchase of
GTC.





The
accompanying notes are an integral part of these consolidated financial
statements.


33


IEC
ELECTRONICS CORP. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER
30, 2010 AND 2009





NOTE
      1.
            OUR
      BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
  POLICIES





Our
Business





IEC
Electronics Corp. ("IEC", "we", "our", “us”, “Company”) is a premier provider of
electronic manufacturing services (“EMS”) to advanced technology
companies.  We specialize in the custom manufacture of high
reliability, complex circuit cards, system level assemblies, a wide array of
custom cable and wire harness assemblies, and precision sheet
metal.  We excel where quality and reliability are of paramount
importance and when low to medium volume, high mix production is the
norm.  We utilize state-of-the art, automated circuit card assembly
equipment together with a full complement of high-reliability manufacturing
stress testing methods.  With our customers at the center of
everything we do, we have created a high-intensity, rapid, responsive culture
capable of reacting and adapting to their ever-changing needs.  Our
customer centric approach offers a high degree of flexibility while
simultaneously complying with rigorous quality and on-time delivery
standards.  As a true extension of our customers' operations, we have
applied industry-leading Six Sigma and Lean Manufacturing principles to
eliminate waste and reduce our customers’ total cost of
ownership.  While many EMS services are viewed as commodities, we
believe we set ourselves apart through an uncommon mix of capabilities,
including:


§
            A
      world class Technology Center that combines dedicated prototype
      manufacturing with an on-site Materials Analysis Lab (headed by two staff
      PhD’s) enabling the seamless transition of complex electronics from design
      to production.


§
            In-house
      custom, functional test development supporting complex system-level
      assembly, test, troubleshooting and end-order
  fulfillment.


§
            An
      authentic Lean/Six Sigma continuous improvement program supported by five
      certified Six Sigma Blackbelts delivering best-in-class
      results.


§
            An
      industry-leading Web Portal providing customers real-time access to a wide
      array of critical data.





Fiscal
Calendar





The
Company’s fiscal year begins on October 1st and each quarter ends on the Friday
closest to the end of the final month of the quarter, with the exception of the
fourth quarter, which ends on September 30th.





Consolidation





The
consolidated financial statements include the accounts of IEC and its wholly
owned subsidiaries, IEC Electronics Wire and Cable, Inc. (“Wire and Cable”) and
since December 16, 2009, General Technology Corporation ("GTC").  The
Celmet unit acquired on July 30, 2010 operates as a division of
IEC.  All significant intercompany transactions and accounts have been
eliminated.





Reclassifications





Certain
amounts in prior year financial statements are reclassified, as appropriate, to
conform to the current year presentation.





Cash
and Cash Equivalents





The
Company's cash and cash equivalents are maintained principally in deposit and
highly liquid investment accounts with Manufacturers and Traders Trust Company
("M&T").  Cash receipts are generally applied on a daily basis to
IEC's revolving credit borrowing, resulting in minimal cash balances at period
end.





Allowance
for Doubtful Accounts





The
Company establishes an allowance for doubtful accounts receivable based on the
age of outstanding invoices and management's evaluation of
collectability.  Accounts are written off after all reasonable efforts
to collect have been exhausted and management concludes that likelihood of
collection is remote.


34





Inventory
Valuation


Inventories
are stated at the lower of cost or market (first-in, first-out).  The
Company regularly assesses slow-moving, excess and obsolete inventory and
maintains balance sheet reserves in amounts required to reduce the recorded
value of inventory to lower of cost or market.





Property,
Plant and Equipment





Property,
plant and equipment are stated at cost and are depreciated over various
estimated useful lives using the straight-line method.  Maintenance
and repairs are charged to expense as incurred; renewals and improvements are
capitalized.  At the time of retirement or other disposition of
property, plant and equipment, the cost and accumulated depreciation are removed
from the accounts and any gain or loss is reflected in other
income.





Depreciable
lives generally used for PP&E are presented in the table
below.  Leasehold improvements are amortized over the shorter of the
lease term or estimated useful life of the improvement.





EstimatedUseful
      Lives(years)Land
      improvements
                      
                      10Buildings
      and improvements
                      
                      5
      to 40Machinery
      and equipment
                      
                      3
      to 5Furniture
      and fixtures
                      
                      3
      to 7





Leases





At
the inception of a lease covering equipment or real estate, the Company
evaluates the lease under criteria discussed in FASB ASC 840-10-25
("Leases").  Leases meeting one of the four key criteria are accounted
for as capital leases and all others are treated as operating
leases.  Under a capital lease, the discounted value of future lease
payments becomes the basis for recognizing an asset and a borrowing, and lease
payments are allocated between debt reduction and interest.  Under
operating leases, payments are recorded as rent expense.  Criteria for
a capital lease include (i) transfer of ownership during the lease term; (ii)
existence of a bargain purchase option under terms that make it likely to be
exercised; (iii) a lease term equal to 75 percent or more of the economic life
of the leased property; and (iv) minimum lease payments that equal at least 90
percent of fair value of the property.





In
June 2008, IEC entered into a sale-leaseback arrangement with M&T under
which fixed assets with a net book value of $2.0 million and an original cost of
$15.6 million were sold to M&T at a minimal loss and were leased back under
a five year operating lease.  The sold assets were removed from the
accounts and minimal loss on the transaction is being amortized over the lease
term.





Intangible
Asset





GTC’s
building and land were acquired subject to an Industrial Revenue Bond
("IRB") that exempts the property from real estate taxes for the term of
the IRB.  At date of acquisition, the $360 thousand estimated value of
tax abatement was recorded as an intangible asset that is being amortized on a
straight-line basis to March 1, 2019, the maturity date of the
bond.





Goodwill





Goodwill
represents the excess of cost over the fair value of net assets acquired in
business combinations.  Goodwill is reviewed for impairment at least
annually or when events or changes in circumstances indicate the carrying value
of the goodwill might exceed the fair value.  The goodwill recorded
during 2010 relates to the July 30, 2010 Celmet acquisition (see Acquisitions
note), for which no impairment has occurred at September 30, 2010.





Long-Lived
Assets





FASB
ASC 360-10 ("Property, Plant and Equipment”) requires the Company to test
long-lived assets for recoverability whenever events or circumstances indicate
that carrying amount may not be recoverable. No impairment charges were recorded
during 2010 or 2009.


35





Fair
Value of Financial Assets and Liabilities





Under
FASB ASC 825 ("Financial Instruments”), the Company is required to disclose the
fair value of financial instruments for which it is practicable to estimate
value.  The Company’s financial instruments consist of cash, accounts
receivable, accounts payable, accrued liabilities and debt.  IEC
believes that carrying amounts approximate fair value for all such
instruments.





FASB
ASC 820 (“Fair Value Measurements and Disclosures”) defines fair value,
establishes a framework for measurement, and expands disclosure about fair value
measurements.  ASC 820 defines fair value as the price that would be
received upon sale of an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date (referred to as
the exit price).  Inputs used to measure fair value are categorized
under the following hierarchy:





Level 1:   Quoted prices
for identical assets or liabilities in active markets.


Level
2:   Quoted market prices for similar assets or liabilities in
active markets; quoted prices for identical or similar assets or liabilities in
markets that are not active; and model-derived valuations whose inputs are
observable or whose significant value drivers are observable.


Level
3:   Model-derived valuations using inputs that are not
observable, including situations in which there is little or no market
activity.





Fair
values assigned to fixed assets in the GTC and Celmet acquisitions were
determined using Level 2 inputs; GTC’s intangible asset was based on Level 3
inputs.  Subsequent to the Company's initial valuation, the only
change related to the intangible asset was amortization as detailed in the
Intangible Asset note.  Inputs used to determine fair value require
significant management judgment.





Revenue
Recognition





The
Company’s net revenue is principally derived from the sale of electronic
products built to customer specifications. IEC also derives revenue from design
services and repair work. Revenue from sales is recognized when (a) goods are
shipped or title and risk of ownership have passed, (b) the price to the buyer
is fixed or determinable, and (c) realization is reasonably assured. Service
revenues are recognized when services are rendered. Provisions for discounts and
rebates to customers, estimated returns and allowances and other adjustments are
recorded in the period the related sales are recognized.





Stock-Based
Compensation





FASB
ASC 718 ("Stock Compensation”) requires that measurement of the cost of employee
services received in exchange for an award of equity instruments be based on the
grant-date fair value of the award.  Such costs are recorded over the
periods employees render services in exchange for the
awards.  Compensation cost relating to awards of stock options and
restricted (non-vested) stock is credited directly to the common stock and
paid-in capital accounts.





Income
Tax/Deferred Tax Policy





FASB
ASC 740 ("Income Taxes”) requires recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been
included in the financial statements or tax returns, but not in
both.  Deferred tax assets are also established for tax benefits
associated with tax loss and tax credit carryforwards.  Such deferred
balances reflect tax rates that are scheduled to be in effect, based on
currently enacted tax laws, in the years the book/tax differences reverse and
tax loss and tax credit carryforwards are expected to be realized.  An
allowance is established for any deferred tax asset that is not expected to be
realized.





FASB
ASC 740 also prescribes a comprehensive model for how a company should measure,
recognize, present, and disclose in its financial statements uncertain tax
positions that the company has taken or expects to take on a tax
return.  The Company recognizes the tax benefits from uncertain tax
positions only if it is more likely than not that the tax position will be
sustained following examination by taxing authorities, based on technical merits
of the position.





Tax
benefits recognized in the financial statements from uncertain positions would
equal the largest amount that has a greater than 50% likelihood of ultimately
being realized.  Interest and penalties, if incurred, are included in
interest expense.  The Company’s income tax filings are subject to
audit by various tax jurisdictions, and open years run from fiscal 2007 through
2009.  The Company believes that it has no material uncertain tax
positions.


36





Earnings
Per Share





Basic
earnings per common share are calculated by dividing income available to common
shareholders by the weighted-average number of shares outstanding for each
period.  Diluted earnings per common share are calculated by adding to
weighted-average shares outstanding the incremental shares resulting from the
assumed exercise of all potentially dilutive stock options, those with an
exercise price below the average market price during the
period.  Restricted (non-vested) shares are reported as outstanding
from date of grant.  A summary of shares used in the earnings per
share calculations follows.





Year
      ended September 30,Shares for EPS Calculation
                        
                        2010
                        
                        
                        2009Weighted
      avg. shares outstanding
                        
                        
                        8,990,180
                        
                        
                        
                        8,728,930Incremental
      shares from assumed exercise of stock options
                        
                        
                        617,994
                        
                        
                        
                        824,596Diluted
      shares
                        
                        
                        9,608,174
                        
                        
                        
                        9,553,526Options
      excluded from diluted shares due to exercise price being higher
      than average market price
                        
                        
                        34,000
                        
                        
                        
                        20,000





Dividends





Since
it is the Company's current policy to retain earnings for use in the business,
IEC does not pay dividends on its common stock.  Furthermore, certain
covenants in IEC's Credit Agreement restrict the Company from paying cash
dividends.  The Company does not expect to pay cash dividends on
common stock in the foreseeable future.





Use
of Estimates





The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities, and the reported amounts of revenues and
expenses during the reporting period.  Actual results may differ from
management’s estimates.





Statement
of Cash Flows





The
Company prepares the Consolidated Statement of Cash Flows utilizing the
indirect method of reporting.  Amounts reported in net cash
flows from operating activities reflect the impact of assets acquired
and liabilities assumed as a result of business acquisitions
transacted during the period (see Acquisitions note).  The resulting
net changes as presented reflect activity subsequent to the acquisitions,
combined with annual activity for the recurring operations.  The
effects due to the acquisitions of these assets and liabilities are
reported under investing activities.





Recently
Issued Accounting Standards





FASB
Accounting Standards Update 2010-20, "Disclosures about the Credit Quality of
Financing Receivables and the Allowance for Credit Losses" was issued in July
2010.  The update requires entities to describe methods used to
estimate the allowance for doubtful accounts; disclose policies for charging off
uncollectible receivables; and present a summary of provisions, charge offs and
recoveries recorded in the allowance during each period.  No changes
in accounting methods are required.  Period-end disclosures must be
provided beginning in IEC's first fiscal quarter of 2011, and
transaction-oriented disclosures are required in subsequent
periods.  IEC has implemented the requirements of this update as of
September 30, 2010.





FASB
ASC 805 (“Business Combinations”) establishes principles and requirements for
the manner in which an acquirer: recognizes and measures in its financial
statements the identifiable assets acquired, liabilities assumed, and any
non-controlling interest in the acquiree; recognizes and measures the goodwill
acquired or the gain from bargain purchase; and provides disclosures designed to
enable financial statement users to evaluate the nature and financial effects of
the combination.  FASB ASC 805 was effective for fiscal years, as well
as interim periods within those fiscal years, beginning on or after
December 15, 2008. The Company adopted these standards at the beginning of
the current fiscal year and accounted for both 2010 acquisitions in accordance
with the new rules.


37





NOTE
      2.
            ACQUISITIONS





On
December 16, 2009, the Company acquired all of the stock of General Technology
Corporation from Crane International Holdings, Inc.  The acquired
business, located in Albuquerque, New Mexico, employs complementary technologies
and serves markets similar to IEC’s.





The
purchase price of $14.9 million, funded entirely with senior bank debt, may be
reduced if IEC's $238 thousand claim is upheld in an arbitration
proceeding.  The claim relates to the value assigned by the seller to
certain current assets acquired.  We are unable to predict the outcome
of the arbitration.





Under
the acquisition method of accounting, the Company is required to measure and
record the fair value of assets acquired and liabilities assumed.  If
the purchase price is greater than the value of net assets acquired, the
difference is recorded as goodwill.  If the net asset value exceeds
the amount paid, the excess is recorded in other income as a
gain.  The GTC acquisition resulted in a gain of $418
thousand.





Fair
values of GTC's assets and liabilities on the acquisition date are summarized as
follows:





GTC Opening Balance Sheet
                                
                                December
      16, 2009(thousands)Accounts
      receivable, net
                                
                                $
                                3,931Inventories
                                
                                
                                4,276Other
      current assets
                                
                                
                                69Land
                                
                                
                                813Building
                                
                                
                                5,074Equipment
                                
                                
                                2,761Intangible
      asset
                                
                                
                                360Deferred
      income taxes
                                
                                
                                485Total
      assets acquired
                                
                                
                                17,769Accounts
      payable
                                
                                $
                                1,128Accruals
      and other liabilities
                                
                                
                                1,191Gain
      on acquisition
                                
                                
                                418Long-term
      debt
                                
                                
                                100Total
      liabilities assumed
                                
                                
                                2,837Net
      assets acquired/purchase price
                                
                                $
                                14,932(Purchase
      price funded with bank debt)





On
July 30, 2010, the Company acquired certain assets and assumed certain
liabilities of Celmet, a privately held, precision sheet metal fabrication,
component assembly and metal stamping company located in Rochester, New
York.  The acquired business is being operated as the Celmet division
of IEC.





The
purchase price for the Celmet acquisition was $1.9 million, subject to
adjustment for final acquisition-date values of certain acquired assets and
liabilities.  The purchase was funded with senior bank
debt.  Concurrent with the acquisition, the Company entered into a 48
month operating lease for the operating premises of the
business.  Annual base rent for the Celmet leased premises is $190
thousand.





Fair
values of the assets acquired and liabilities assumed in connection with the
Celmet acquisition are summarized below.  The price paid exceeded the
fair value of net assets acquired, so a goodwill asset of $58 thousand was
recorded.


38





Celmet Division Opening Balance
      Sheet
                                  
                                  July
      30, 2010(thousands)Accounts
      receivable, net
                                  
                                  $
                                  577Inventories
                                  
                                  
                                  364Other
      current assets
                                  
                                  
                                  23Equipment
                                  
                                  
                                  1,058Goodwill
                                  
                                  
                                  58Deferred
      income taxes
                                  
                                  
                                  62Total
      assets acquired
                                  
                                  
                                  2,142Accounts
      payable
                                  
                                  $
                                  214Accruals
      and other liabilities
                                  
                                  
                                  30Total
      liabilities assumed
                                  
                                  
                                  244Net
      assets acquired/purchase price
                                  
                                  $
                                  1,898(Purchase
      price funded with bank debt)





The
table that follows presents the combined revenue and earnings of GTC and Celmet
from the respective dates the businesses were acquired through the end of fiscal
2010.  Such amounts are included in IEC's consolidated income
statement.





In
addition, the summary below shows IEC's unaudited pro forma consolidated results
as if the two acquisitions had occurred at the beginning of each
year.  These pro forma results have been prepared by adjusting IEC's
historical results to include GTC and Celmet's pre-merger operations as well as
incremental depreciation and interest resulting from the mergers.  The
pro forma results do not include cost savings or additional sales that may
result from the combination of IEC, GTC and Celmet.  The pro forma
results are not necessarily equivalent to those that would have been obtained by
consummating the acquisitions at the beginning of the periods, nor are they
necessarily indicative of future results.





GTC and Celmet Actual 2010
      Resultsand IEC Pro Forma Results for 2010 and
      2009
                            
                            Year
      ended September 30,2010
                            
                            
                            2009(in
      thousands, except share and per share data)Acquiree results from dates of
      acquistionNet
      sales
                            
                            $
                            18,537
                            
                            
                            $
                            -Income
      before income taxes
                            
                            
                            2,437
                            
                            
                            
                            -Net
      income
                            
                            
                            1,502
                            
                            
                            
                            -IEC results, as if acquisitions on October
      1
                            
                            (Unaudited)Net
      sales
                            
                            $
                            104,877
                            
                            
                            $
                            96,934Income
      before income taxes
                            
                            
                            7,133
                            
                            
                            
                            6,365Net
      income
                            
                            
                            4,696
                            
                            
                            
                            5,975Earnings
      per share:Basic
                            
                            $
                            0.52
                            
                            
                            $
                            0.68Diluted
                            
                            
                            0.49
                            
                            
                            
                            0.63Weighted
      average common and common equivalent shares:Basic
                            
                            
                            8,990,180
                            
                            
                            
                            8,728,930Diluted
                            
                            
                            9,608,174
                            
                            
                            
                            9,553,526


39


NOTE
      3.
              ALLOWANCE
      FOR DOUBTFUL ACCOUNTS
 
 A summary
follows of activity in the allowance for doubtful accounts during the two most
recent years:
  Year ended September 30,Allowance for Doubtful Accounts
                              
                              2010
                              
                              
                              2009(thousands)Allowance, beginning of
      year
                              
                              $
                              85
                              
                              
                              $
                              145Allowances of acquired
      companies
                              
                              
                              17
                              
                              
                              
                              -Provision for doubtful
      accounts
                              
                              
                              254
                              
                              
                              
                              15Write-offs
                              
                              
                              (106
                              )
                              
                              
                              (75
                              )Recoveries
                              
                              
                              -
                              
                              
                              
                              -Allowance, end of
      year
                              
                              $
                              250
                              
                              
                              $
                              85
  NOTE
      4.
                INVENTORIES
 
 The major
classifications of inventory at period end are as follows:
  September 30,Inventories
                                      
                                      2010
                                      
                                      
                                      2009(thousands)Raw
      materials
                                      
                                      $
                                      7,993
                                      
                                      
                                      $
                                      3,944Work-in-process
                                      
                                      
                                      3,974
                                      
                                      
                                      
                                      2,555Finished
      goods
                                      
                                      
                                      1,012
                                      
                                      
                                      
                                      571Total
      inventories
                                      
                                      
                                      12,979
                                      
                                      
                                      
                                      7,070Reserve
      for excess andobsolete
    inventory
                                      
                                      
                                      (911
                                      )
                                      
                                      
                                      (579
                                      )Inventories,
      net
                                      
                                      $
                                      12,068
                                      
                                      
                                      $
                                      6,491
 NOTE
      5.
                CREDIT
      FACILITIES
 
 A summary
of IEC's outstanding borrowings follows:
  Fixed/
                                                        
                                                        
                                                        
                                                        Interest RateVariable
                                                        
                                                        
                                                        
                                                        September 30,
                                                        
                                                        
                                                        September 30,Debt
                                                        
                                                        Rate
                                                        
                                                        Maturity
                                                        
                                                        2010
                                                        
                                                        
                                                        2009
                                                        
                                                        
                                                        2010
                                                        
                                                        
                                                        2009(percents)
                                                        
                                                        
                                                        (thousands)M&T
      borrowingsRevolving
      credit facility
                                                        
                                                        v
                                                        
                                                        12/16/12
                                                        
                                                        
                                                        3.50
                                                        
                                                        
                                                        
                                                        1.75
                                                        
                                                        
                                                        $
                                                        5,823
                                                        
                                                        
                                                        $
                                                        3,881GTC
      term loan
                                                        
                                                        v
                                                        
                                                        12/16/14
                                                        
                                                        
                                                        3.75
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        4,250Mortgage
      loan
                                                        
                                                        v
                                                        
                                                        12/16/14
                                                        
                                                        
                                                        3.75
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        3,800Celmet
      term loan
                                                        
                                                        v
                                                        
                                                        07/30/15
                                                        
                                                        
                                                        3.75
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        1,933Equipment
      loan, variable
                                                        
                                                        v
                                                        
                                                        12/16/12
                                                        
                                                        
                                                        3.75
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        273Equipment
      loans (3), fixed
                                                        
                                                        f
                                                        
                                                        11/01/12
                                                        
                                                        
                                                        3.07
                                                        
                                                        
                                                        
                                                        3.08
                                                        
                                                        
                                                        
                                                        521
                                                        
                                                        
                                                        
                                                        728Term
      loan
                                                        
                                                        f
                                                        
                                                        01/01/12
                                                        
                                                        
                                                        6.70
                                                        
                                                        
                                                        
                                                        6.70
                                                        
                                                        
                                                        
                                                        435
                                                        
                                                        
                                                        
                                                        775Energy
      loan
                                                        
                                                        f
                                                        
                                                        04/02/13
                                                        
                                                        
                                                        2.08
                                                        
                                                        
                                                        
                                                        2.08
                                                        
                                                        
                                                        
                                                        105
                                                        
                                                        
                                                        
                                                        146Other
      borrowingsSeller
      notes, Wire & Cable
                                                        
                                                        f
                                                        
                                                        06/01/13
                                                        
                                                        
                                                        4.00
                                                        
                                                        
                                                        
                                                        4.00
                                                        
                                                        
                                                        
                                                        1,658
                                                        
                                                        
                                                        
                                                        2,217GTC
      industrial revenue bond
                                                        
                                                        f
                                                        
                                                        03/01/19
                                                        
                                                        
                                                        5.63
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        100Total
      debt
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        18,898
                                                        
                                                        
                                                        
                                                        7,747Less:
      current portion
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        (2,899
                                                        )
                                                        
                                                        
                                                        (1,147
                                                        )Long-term
      debt
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        $
                                                        15,999
                                                        
                                                        
                                                        $
                                                        6,600
 Note:
Sale-leaseback agreement with M&T is treated as an operating
lease.
 40
  M&T
Credit Facilities
 
 On
December 16, 2009 the Company entered into an Amended and Restated Credit
Facility Agreement with M&T, a New York banking corporation, under which
M&T agreed to provide $25.5 million in aggregate senior secured credit
facilities.  The agreement modified and replaced the prior revolving
credit facility and the prior equipment line, while continuing the term debt
outstanding.  The facilities and term debt were in addition to the
existing energy loan, term loan and sale-leaseback as outlined in the original
Credit Facility Agreement dated May 30, 2008.
 
 On July
30, 2010, IEC entered into the Second Amended and Restated Credit Facility
Agreement under which M&T agreed to provide the Company with a new term loan
in the principal amount of $2.0 million to be used primarily to fund the Celmet
acquisition.  The new loan was added to the $25.5 million facility
described above, and the related agreement was amended and restated in its
entirety.  Key terms and conditions were carried over unchanged from
the December agreement.
 
 The
following summarizes the various tranches of the Senior Secured Credit
Facilities:
 
 (a) A $15
million Revolving Credit Facility (the “Revolver”) available for direct
borrowings.  Borrowings under the Revolver cannot exceed the lesser of
the Borrowing Base or $15 million.  The Borrowing Base is the sum of
85% of eligible receivables plus 35% of eligible inventories, as those terms are
defined in the Credit Agreement, and the limit is $15.0 million at September 30,
2010.  Average balances outstanding under the Revolver amounted to
$6.2 million in 2010 and $4.8 million in 2009.
 
 Borrowings
under the Revolver bear interest at LIBOR plus the Applicable Margin, which
varies based on the Company's ratio of Debt to EBITDARS (as that ratio is
defined in the Credit Agreement; EBITDARS is defined in a paragraph
below).  The Credit Agreement prescribes a minimum threshold for the
LIBOR component of interest that is above the current market level of
LIBOR.  As a result, variable interest rates paid by the Company do
not at present fluctuate with a decrease in LIBOR interest rates.  The
Company incurs a small quarterly commitment fee based on the unused portion of
the Revolver.
 
 (b) A $5
million Term Loan (the “GTC Term Loan”) amortized over 60 months beginning
December 16, 2009.  The principal amount of the term loan is being
repaid in equal monthly installments of $83,333.  Borrowings under the
GTC Term Loan bear interest at LIBOR plus an Applicable Margin that varies based
on the Company's ratio of Debt to EBITDARS, as discussed above.
 
 (c) A $4
million Commercial Mortgage Term Loan (the “Mortgage Loan”) effectively secured
by GTC property in Albuquerque, NM.  The principal amount of the
Mortgage Loan is being repaid in 60 equal monthly installments of $22,222, plus
a balloon payment due at maturity.  Similar to the other secured
M&T credit facilities, borrowings under the Mortgage Loan bear interest at
LIBOR plus an Applicable Margin that varies based on the Company's ratio of Debt
to EBITDARS.
 
 (d) A $2
million Term Loan (the “Celmet Term Loan”) amortized over 60 months beginning
July 30, 2010.  The principal amount of the term loan is being repaid
in equal monthly installments of $33,333.  Borrowings under this loan
too bear interest at LIBOR plus an Applicable Margin that varies based on the
ratio of Debt to EBITDARS.
 
 (e) A
$1.5 million Equipment Line of Credit (the “Equipment
Line”).  Borrowings under this facility are available to the Company
at the discretion of the Lender until December 16, 2010 or such later date as
may be agreed upon by the Company and M&T.  Borrowings under the
Equipment Line cannot exceed $1.5 million in the aggregate, including any
borrowings under the prior credit agreement.  As of September 30,
2010, the Company had three borrowings outstanding under the prior agreement,
totaling $521 thousand, and one borrowing under the current agreement amounting
to $273 thousand.  The three notes under the prior agreement are being
repaid in 48 equal monthly installments plus interest, and the newest note is
due in 60 equal installments plus interest.  Any new borrowings under
the Equipment Line would currently bear interest at 3.75% and would mature on
December 16, 2012.
 
 In
addition to the Senior Secured Credit Facilities, the Company’s other
outstanding credit facilities with M&T are summarized as
follows:
 
 (f) A
$1.7 million term loan amortized in equal monthly installments over 60 months
beginning June 2008.  The interest rate is fixed at
6.70%.
 
 41
  (g) A
$0.2 million energy loan (the "NYSERDA Loan") at an interest rate that is
subsidized by New York State.  It is subject to the same
financial covenants as those contained in the Credit
Agreement.
 
 (h) A
$2.0 million sale-leaseback pertaining to a portion of the Company’s fixed
assets.  The five-year lease originated on June 27, 2008, requiring
annual rental payments of $0.39 million.  At September 30, 2010,
aggregate remaining lease payments totaled $1.0 million.  While this
agreement is reported as an operating lease in the Company’s financial
statements, it is treated as debt for purposes of calculating covenant
compliance under the Senior Secured Credit Facilities.
 
 The
Credit Agreement is secured by, among other things, a security interest in the
assets of the Company, including Wire and Cable, GTC and Celmet, and a mortgage
encumbering GTC property, as mentioned above.  The Agreement also
contains various affirmative and negative covenants including financial
covenants.  For covenants based on EBITDARS, the term is defined as:
net income plus interest expense, tax expense, depreciation, amortization of
intangible assets, sale-leaseback rent payments, and non-cash stock option
expense, minus cash taxes paid.
 
 The
Company is required to maintain (a) minimum quarterly EBITDARS, (b) minimum
trailing, twelve-month EBITDARS, (c) a maximum debt-to-EBITDARS ratio, and (d) a
minimum fixed charge coverage ratio.  The Company was in compliance
with these covenants at September 30, 2010, as shown in the table that
follows.
  Type
                                        
                                        
                                        
                                        
                                        Actual atCovenant
                                        
                                        of limit
                                        
                                        Limit
                                        
                                        
                                        September30,2010($ in
      thousands)Fourth quarter
      EBITDARS
                                        
                                        Lower
                                        
                                        $1,000
                                        
                                        
                                        $3,208Annual
    EBITDARS
                                        
                                        Lower
                                        
                                        $5,000
                                        
                                        
                                        $10,629Total debt to
      EBITDARS
                                        
                                        Upper
                                        
                                        3.00x
                                        
                                        
                                        1.88xFixed charge
      coverage
                                        
                                        Lower
                                        
                                        1.25x
                                        
                                        
                                        1.98x
  Other
Credit Facilities
 
 (i) A
portion of the May 2008 acquisition of Wire and Cable was financed by three
subordinated promissory notes ("Seller Notes") in the aggregate principal amount
of $3.8 million.  The Seller Notes are being repaid in quarterly
installments of $0.16 million, including interest, through June 1,
2013.  Each of the Seller Notes is subordinated to indebtedness of the
Company under the Credit Agreement.
  (j) As
part of the GTC purchase, the Company assumed responsibility for an Industrial
Revenue Bond issued by the City of Albuquerque.  Principal is due in
full at maturity.
 
 Aggregate
debt maturities for the five twelve-month periods subsequent to September 30,
2010 are summarized below.
  Years
      ending
                                      
                                      DebtSeptember
      30,
                                      
                                      Maturities(thousands)2011
                                      
                                      $
                                      2,8992012
                                      
                                      
                                      2,6782013*
                                      
                                      
                                      8,1542014
                                      
                                      
                                      1,7302015
                                      
                                      
                                      3,437*Includes Revolver
      balance of $5,823 as
      of September 30,
      2010.
 NOTE
      6.
                      INCOME
      TAXES
 
 The
provision (benefit) for income taxes for the years ended September 30, 2010 and
2009 is summarized below.
  42
 Income Tax Provision
                                  
                                  Year ended September 30,2010
                                  
                                  
                                  2009Current tax
      expense:
                                  
                                  (thousands)State
                                  
                                  $
                                  107
                                  
                                  
                                  $
                                  2Federal
                                  
                                  
                                  142
                                  
                                  
                                  
                                  95Deferred tax expense
      (benefit):State
                                  
                                  
                                  (20
                                  )
                                  
                                  
                                  (10
                                  )Federal
                                  
                                  
                                  2,171
                                  
                                  
                                  
                                  (325
                                  )Total income tax provision
      (benefit)
                                  
                                  $
                                  2,400
                                  
                                  
                                  $
                                  (238
                                  )
  The
differences between the federal statutory rate and IEC's effective rates of tax
for 2010 and 2009 are explained by the following reconciliation.
 Year
      ended September 30,Taxes
      as Percent of Pretax Income
                                      
                                      2010
                                      
                                      
                                      2009Federal
      statutory rate
                                      
                                      
                                      34.0
                                      %
                                      
                                      
                                      34.0
                                      %State
      income taxes, net of federal benefit
                                      
                                      
                                      0.8
                                      
                                      
                                      
                                      1.0Untaxed
      gain on corporate acquisition
                                      
                                      
                                      (2.0
                                      )Reduction
      in deferred tax valuation allowance
                                      
                                      
                                      
                                      
                                      
                                      
                                      (40.0
                                      )Other
                                      
                                      
                                      1.2Income
      tax provision (benefit)as percent of pretax
      income
                                      
                                      
                                      34.0
                                      %
                                      
                                      
                                      (5.0
                                      )%
 The
following table displays deferred tax assets by category as of September 30,
2010 and 2009.  Recorded amounts are affected by deferred tax
provisions and the establishment of deferred taxes for acquired companies (see
Acquisitions note).
  September
    30,Deferred Tax
      Assets
                                                          
                                                          2010
                                                          
                                                          
                                                          2009(thousands)Net operating loss
      carryover
                                                          
                                                          $
                                                          11,862
                                                          
                                                          
                                                          $
                                                          13,702Alternative minimum tax credit
      carryover
                                                          
                                                          
                                                          373
                                                          
                                                          
                                                          
                                                          238Depreciation and fixed
      assets
                                                          
                                                          
                                                          287
                                                          
                                                          
                                                          
                                                          546New York State investment tax
      & other credits
                                                          
                                                          
                                                          1,765
                                                          
                                                          
                                                          
                                                          3,265Inventories
                                                          
                                                          
                                                          367
                                                          
                                                          
                                                          
                                                          140Other
                                                          
                                                          
                                                          583
                                                          
                                                          
                                                          
                                                          292Total before
      allowance
                                                          
                                                          
                                                          15,237
                                                          
                                                          
                                                          
                                                          18,183Valuation
      allowance
                                                          
                                                          
                                                          (1,765
                                                          )
                                                          
                                                          
                                                          (3,107
                                                          )Deferred tax asset (current and
      deferred)
                                                          
                                                          $
                                                          13,472
                                                          
                                                          
                                                          $
                                                          15,076
  IEC has a
net operating loss carryforward for income tax purposes of approximately $33.2
million, expiring mainly in years 2020 through 2025.  It is estimated
that the NOL carryforward will produce future tax benefits totaling $11.9
million on the Company's income tax returns.  Those estimated benefits
have been fully recognized in IEC's financial statements.
 
 In
addition, $1.8 million of New York State investment tax and other credits are
available to the Company as carryforwards, expiring in various years through
2017.  Since these credits cannot be utilized until the New York net
operating loss carryforward is exhausted, they are fully reserved for in the
Company's deferred tax valuation allowance.  Expiring credits resulted
in a $1.5 million reduction in related deferred tax assets and a $1.3 million
decrease in the valuation allowance during 2010.
  43
  NOTE
      7.
                          WARRANTY
      RESERVES
 
 IEC
provides warranties covering its products and workmanship, generally for up to
twelve months from date of shipment.  As an offset, the Company is
sometimes able to file claims with suppliers of component parts and obtain
reimbursement for warranty-related costs or losses.  Based on
historical warranty claims experience and in consideration of sales trends, a
reserve is maintained for estimated future warranty costs to be incurred on
products shipped through the balance sheet date.  An analysis of
activity through IEC's warranty reserve during the last two years is provided
below.
  Year ended September
      30,Warranty
      Reserve
                                                                        
                                                                        2010
                                                                        
                                                                        
                                                                        2009(thousands)Reserve, beginning of
      year
                                                                        
                                                                        $
                                                                        111
                                                                        
                                                                        
                                                                        $
                                                                        198Reserves of acquired
      companies
                                                                        
                                                                        
                                                                        376
                                                                        
                                                                        
                                                                        
                                                                        -Provision for warranty
      obligations
                                                                        
                                                                        
                                                                        21
                                                                        
                                                                        
                                                                        
                                                                        54Warranty
    costs
                                                                        
                                                                        
                                                                        (205
                                                                        )
                                                                        
                                                                        
                                                                        (141
                                                                        )Reserve, end of
      year
                                                                        
                                                                        $
                                                                        303
                                                                        
                                                                        
                                                                        $
                                                                        111
 NOTE
      8.
                            STOCK-BASED
      COMPENSATION
 
 Under
IEC's 2001 Stock Option and Incentive Plan, officers, key employees, directors
and other key individuals may be granted stock options, restricted (non-vested)
stock and other types of equity awards.  The plan was approved by shareholders
in February 2002.  As the plan has been amended from time to time, a
total of 3,100,000 common shares have been authorized for
issuance.  Shares remaining available for grant totaled 461,106 and
602,786 at September 30, 2010 and 2009, respectively.
  Stock
Options
 
 When
options are granted, IEC estimates fair value using the Black-Scholes model and
then subsequently amortizes that value as compensation cost over the vesting
period.  A summary follows of grants during the two most recent years
and the weighted average assumptions utilized in the model.
  Valuation
      of Options
                                  
                                  Year ended September
      30,2010
                                  
                                  
                                  2009Assumptions for
      Black-Scholes:Risk-free interest
      rate
                                  
                                  2.16%
                                  
                                  
                                  2.25Expected term in
      years
                                  
                                  4.9
                                  
                                  
                                  4.5Volatility
                                  
                                  54%
                                  
                                  
                                  51Expected annual
      dividends
                                  
                                  none
                                  
                                  
                                  noneValue of options
      granted:Number of options
      granted
                                  
                                  128,682
                                  
                                  
                                  78,000Weighted average fair
      value/share
                                  
                                  $2.24
                                  
                                  
                                  $0.92Fair value of options
      granted
                                  
                                  $288,248
                                  
                                  
                                  $71,760
 A
summary follows of options outstanding at the end of 2010 and 2009, together
with activity during the years and the number exercisable at year
end.
 44
  Year ended September
      30,2010
                                        
                                        
                                        2009Wgtd Avg
                                        
                                        
                                        
                                        
                                        
                                        Wgtd AvgNumber
                                        
                                        
                                        Exercise
                                        
                                        
                                        Number
                                        
                                        
                                        ExerciseStock
    Options
                                        
                                        of Options
                                        
                                        
                                        Price
                                        
                                        
                                        of Options
                                        
                                        
                                        PriceOutstanding at beginning of
      year
                                        
                                        
                                        973,722
                                        
                                        
                                        $
                                        1.10
                                        
                                        
                                        
                                        1,411,937
                                        
                                        
                                        $
                                        0.97Granted
                                        
                                        
                                        128,682
                                        
                                        
                                        
                                        4.69
                                        
                                        
                                        
                                        78,000
                                        
                                        
                                        
                                        1.80Exercised
                                        
                                        
                                        (231,467
                                        )
                                        
                                        
                                        0.82
                                        
                                        
                                        
                                        (378,583
                                        )
                                        
                                        
                                        0.82Forfeited
                                        
                                        
                                        (106,342
                                        )
                                        
                                        
                                        2.02
                                        
                                        
                                        
                                        (137,632
                                        )
                                        
                                        
                                        0.97Outstanding at end of
      year
                                        
                                        
                                        764,595
                                        
                                        
                                        $
                                        1.66
                                        
                                        
                                        
                                        973,722
                                        
                                        
                                        $
                                        1.10For exercisable options at year
      end:Number
      exercisable
                                        
                                        
                                        474,868
                                        
                                        
                                        $
                                        0.80
                                        
                                        
                                        
                                        622,734
                                        
                                        
                                        $
                                        0.71Wgtd. avg. remaining term, in
      years
                                        
                                        
                                        2.7
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        3.0
  Restricted
(Non-vested) Stock
 
 Restricted
stock is granted subject to a vesting period at the end of which the holder has
all the rights and privileges of any other IEC common
shareholder.  The fair value of shares granted is amortized as
compensation cost over the vesting period.  A summary of restricted
shares outstanding at the end of 2010 and 2009 follows, together with activity
during the years and the amount of compensation cost yet to be
recognized.
 Year ended September
      30,2010
                                  
                                  
                                  2009Number of
                                  
                                  
                                  Wgtd Avg
                                  
                                  
                                  Number of
                                  
                                  
                                  Wgtd AvgNon-vested
                                  
                                  
                                  Grant Date
                                  
                                  
                                  Non-vested
                                  
                                  
                                  Grant DateRestricted (Non-vested)
      Stock
                                  
                                  Shares
                                  
                                  
                                  Fair Value
                                  
                                  
                                  Shares
                                  
                                  
                                  Fair ValueOutstanding at beginning of
      year
                                  
                                  
                                  10,000
                                  
                                  
                                  $
                                  3.41
                                  
                                  
                                  
                                  27,000
                                  
                                  
                                  $
                                  2.10Granted
                                  
                                  
                                  145,351
                                  
                                  
                                  
                                  4.10
                                  
                                  
                                  
                                  10,000
                                  
                                  
                                  
                                  3.41Vesting
                                  
                                  
                                  -
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  (27,000
                                  )
                                  
                                  
                                  2.10Forfeited
                                  
                                  
                                  (33,253
                                  )
                                  
                                  
                                  3.63
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Outstanding at end of
      year
                                  
                                  
                                  122,098
                                  
                                  
                                  $
                                  4.10
                                  
                                  
                                  
                                  10,000
                                  
                                  
                                  $
                                  3.41For non-vested shares at year
      end:Compensation not yet recognized
      (000s)
                                  
                                  
                                  
                                  
                                  
                                  $
                                  395
                                  
                                  
                                  
                                  
                                  
                                  
                                  $
                                  34Wgtd. avg. remaining years for
      vesting
                                  
                                  
                                  
                                  
                                  
                                  
                                  3.5
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  3.8
 NOTE
      9.
                                MAJOR
      CUSTOMERS AND CREDIT RISK
 
 A
summary follows indicating the percentage of our sales by industry sector and
the percentage of our sales made to customers representing at least 10% of each
year's total sales.  Management of credit risk associated with all
customers includes ongoing evaluations of payment history and customer financial
condition.  IEC generally does not require customers to post
collateral.
  45
  Industry
      Sectors and Large Customers
                                                    
                                                    Year ended September
      30,2010
                                                    
                                                    
                                                    2009% of Sales by
      SectorMilitary &
      Aerospace
                                                    
                                                    
                                                    58%
                                                    
                                                    
                                                    
                                                    55%Industrial &
      Communications
                                                    
                                                    
                                                    29%
                                                    
                                                    
                                                    
                                                    37%Medical &
      Other
                                                    
                                                    
                                                    13%
                                                    
                                                    
                                                    
                                                    8%100%
                                                    
                                                    
                                                    
                                                    100%Customers Representing Over 10% of
      SalesGeneral
      Electric
                                                    
                                                    
                                                    14%
                                                    
                                                    
                                                    
                                                    15%Ultralife
                                                    
                                                    < 10%
                                                    
                                                    
                                                    
                                                    13%ViaSat,
Inc.
                                                    
                                                    < 10%
                                                    
                                                    
                                                    
                                                    12%Percent of 9/30 receivables owed
      by customerswith balances exceeding 10% of
      total
                                                    
                                                    
                                                    11%
                                                    
                                                    
                                                    
                                                    24%
  NOTE
      10.
                                  LITIGATION
 
 With the
exception of the arbitration proceeding mentioned in the Acquisitions note,
there are no legal proceedings pending to which IEC or its subsidiaries are a
party or of which any of their property is subject.  To our knowledge,
there are no material legal proceedings to which any director, officer or
affiliate of IEC, or any beneficial owner of more than five percent of common
stock, or any associate of any of the foregoing, is a party adverse to IEC or
its subsidiaries.
 
 NOTE
      11.
                                  COMMITMENTS
      AND CONTINGENCIES
 
 The
Company is obligated under non-cancelable operating leases, primarily for
manufacturing equipment, buildings, and office equipment.  The Wire
and Cable buildings are leased under a non-cancelable operating lease that
expires in December 2012, and the Celmet lease expires in July
2014.  These operating leases generally contain renewal options and
provide for payment of executory costs by the lessee (the
Company).  Executory costs typically include taxes, maintenance and
insurance.  Approximate annual minimum lease obligations are as
follows, together with rent expense incurred during the two most recent
years.
  Year ending
                                            
                                            Annual leaseSeptember30,
                                            
                                            obligations(thousands)2011
                                            
                                            $
                                            9532012
                                            
                                            
                                            9532013
                                            
                                            
                                            6192014
                                            
                                            
                                            2102015
                                            
                                            
                                            6Total minimum lease
      obligation
                                            
                                            $
                                            2,741Total rent
      expense:2009
                                            
                                            $
                                            7072010
                                            
                                            
                                            774
  NOTE
      12.
                                    RETIREMENT
      PLAN
 
 The
Company administers a retirement savings plan, established pursuant to Sections
401(a) and 401(k) of the Internal Revenue Code.  This plan is for the
exclusive benefit of its eligible employees and
beneficiaries.  Eligible employees may elect to contribute a portion
of their compensation to the plan.  The plan allows the Company to
make discretionary contributions as determined by the Board of
Directors.  Company contributions in 2010 were $0.03 million for GTC
employees under the terms of the acquisition agreement.  There were no
discretionary contributions in 2009.
 
 46
 
 NOTE
      13.
                                    SELECTED
      QUARTERLY FINANCIAL DATA
(Unaudited)
 
 Selected
quarterly financial information for IEC is presented below.  Since
earnings per share are calculated separately for each quarter and are rounded to
the nearest cent, the sum of the quarterly amounts may not equal full year
earnings per share.
  Basic
                                                                    
                                                                    
                                                                    DilutedGross
                                                                    
                                                                    
                                                                    Net
                                                                    
                                                                    
                                                                    Earnings
                                                                    
                                                                    
                                                                    EarningsNetsales
                                                                    
                                                                    
                                                                    Profit
                                                                    
                                                                    
                                                                    Income
                                                                    
                                                                    
                                                                    PerShare
                                                                    
                                                                    
                                                                    PerShare(in thousands, except per
      share)Fiscal
    QuartersFirst 2009
                                                                    
                                                                    $
                                                                    15,857
                                                                    
                                                                    
                                                                    $
                                                                    2,233
                                                                    
                                                                    
                                                                    $
                                                                    532
                                                                    
                                                                    
                                                                    $
                                                                    0.06
                                                                    
                                                                    
                                                                    $
                                                                    0.06Second 2009
                                                                    
                                                                    
                                                                    16,335
                                                                    
                                                                    
                                                                    
                                                                    2,607
                                                                    
                                                                    
                                                                    
                                                                    2,618
                                                                    
                                                                    
                                                                    
                                                                    0.30
                                                                    
                                                                    
                                                                    
                                                                    0.29Third 2009
                                                                    
                                                                    
                                                                    17,346
                                                                    
                                                                    
                                                                    
                                                                    2,790
                                                                    
                                                                    
                                                                    
                                                                    903
                                                                    
                                                                    
                                                                    
                                                                    0.11
                                                                    
                                                                    
                                                                    
                                                                    0.10Fourth 2009
                                                                    
                                                                    
                                                                    18,273
                                                                    
                                                                    
                                                                    
                                                                    3,196
                                                                    
                                                                    
                                                                    
                                                                    903
                                                                    
                                                                    
                                                                    
                                                                    0.10
                                                                    
                                                                    
                                                                    
                                                                    0.09First 2010
                                                                    
                                                                    $
                                                                    18,060
                                                                    
                                                                    
                                                                    $
                                                                    2,813
                                                                    
                                                                    
                                                                    $
                                                                    753
                                                                    
                                                                    
                                                                    $
                                                                    0.09
                                                                    
                                                                    
                                                                    $
                                                                    0.08Second 2010
                                                                    
                                                                    
                                                                    25,232
                                                                    
                                                                    
                                                                    
                                                                    4,018
                                                                    
                                                                    
                                                                    
                                                                    1,036
                                                                    
                                                                    
                                                                    
                                                                    0.12
                                                                    
                                                                    
                                                                    
                                                                    0.11Third 2010
                                                                    
                                                                    
                                                                    26,095
                                                                    
                                                                    
                                                                    
                                                                    4,656
                                                                    
                                                                    
                                                                    
                                                                    1,238
                                                                    
                                                                    
                                                                    
                                                                    0.14
                                                                    
                                                                    
                                                                    
                                                                    0.13Fourth 2010
                                                                    
                                                                    
                                                                    27,287
                                                                    
                                                                    
                                                                    
                                                                    4,776
                                                                    
                                                                    
                                                                    
                                                                    1,628
                                                                    
                                                                    
                                                                    
                                                                    0.18
                                                                    
                                                                    
                                                                    
                                                                    0.17
  47