Exhibit 99.1
SigmaTron International, Inc. Reports Year End Financial Results for Fiscal 2005
ELK GROVE VILLAGE, Ill.--(BUSINESS WIRE)--July 15, 2005--SigmaTron
International, Inc. (NASDAQ:SGMA), an electronic manufacturing services company,
today reported revenues and earnings for the fiscal year ended April 30, 2005.
Revenues increased 5.6 percent to $106.1 million in fiscal 2005 from $100.5
million in the prior year. Net income decreased to $4.7 million in fiscal 2005
compared to $5.4 million in fiscal 2004. Diluted earnings per share for the year
ended April 30, 2005 was $1.23 compared to $1.53 in fiscal 2004.
Diluted earnings per share for the fourth quarter 2005 were $0.24 per share
as compared to $0.29 per share for the fourth quarter of fiscal 2004. Revenues
decreased to $24.4 million for the fourth quarter of fiscal 2005 compared to
$25.2 million for the same quarter in the prior year.
Commenting on SigmaTron's full-year results, Gary R. Fairhead, President
and Chief Executive Officer, said, "The Company's sales increased in the
fitness, industrial electronics and appliance marketplaces during fiscal 2005 as
compared to the prior year. The increase in sales volume in the fitness and
appliance industries was partially offset by price reductions to customers, and
we anticipate that these pricing pressures will continue in fiscal 2006. Sales
in the gaming industry decreased during the year. Subsequent to the recent
fiscal year end we sold the Las Vegas operation, which primarily serviced the
gaming industry. Even with the sale of the L.V. operation, we will continue to
sell to the gaming marketplace from our remaining operations products and
services that do not compete with the business we sold."
Selling and administrative expenses increased in fiscal 2005 to $10.9
million or 10.3 percent of net sales compared to $9.7 million or 9.6 percent of
net sales in fiscal 2004. The increase is due to additional personnel in the
sales and purchasing departments, advertising expenditures and increased legal
fees. The increase in selling and administrative expenses is partially offset by
a reduction in bonus expense. The Company anticipates it will continue to incur
additional professional fees related to compliance with the Sarbanes-Oxley Act,
specifically Section 404, Internal Control Over Financial Reporting.
Interest expense increased to $283,000 in fiscal 2005 compared to $239,000
in fiscal 2004. The increase is due to additional borrowings under the Company's
lines of credit, additional capital leases for machinery and equipment, and
issuance of notes payable in connection with the acquisition of SMTU and the
purchase of the Company's corporate and manufacturing facility in Elk Grove
Village, Illinois.
"In 2005 we made several strategic decisions that will be important to our
plans going forward," commented Fairhead. "These decisions included acquiring
the portion of SMT Unlimited L.P. that we did not already own, selling our Las
Vegas operation and acquiring Able Electronics. While all three decisions were
important to the Company's future, the Able Electronics acquisition directly
achieves one of SigmaTron's strategic goals of diversifying our markets served
and our customer base as well as expanding the range of services we offer."
Commenting on operations, Fairhead continued, "Domestically, during fiscal
year 2005 Elk Grove Village's operating results were strong, with revenue and
operating results growing 50 percent. We continue to add new customers,
capabilities and lead-free assembly capabilities in fiscal 2006. At Fremont, our
high-tech leader and recently ISO 13485 (medical) - certified facility, we
acquired the balance of the operation that we did not own during fiscal 2005, we
see solid growth opportunities. Additionally, we will be combining the Fremont
operation into the Hayward, California, location of Able Electronics during
fiscal 2006, a move that we expect to provide both synergies and economies of
scale."
"Internationally, our China operation had its first production during
fiscal 2005, making a positive contribution to SigmaTron's margins while
continuing to ramp up sales. We believe that several of Able Electronics'
customers will be interested in doing business with us in China, which could
provide incremental revenue growth. Our Mexican operation's exceptional
performance continued in fiscal 2005. We added several new customers and have
started to provide higher-level box-build capabilities. Given the continued
growth in demand we have seen for services to be provided out of Mexico, we
believe we are in a good position to continue to grow the operation."
Fairhead concluded, "We currently expect our earnings for the first quarter
of fiscal 2006 to be down compared to the first quarter of fiscal 2005. The
causes of the weaker earnings are a decrease in revenues, increased overhead and
continuing pricing pressures. Despite this we believe we enter fiscal 2006
well-positioned for mid to long term growth."
Headquartered in Elk Grove Village, IL, SigmaTron International, Inc. is an
electronic manufacturing services company that provides printed circuit board
assemblies and completely assembled electronic products. SigmaTron
International, Inc. operates manufacturing facilities in Elk Grove Village,
Illinois, Las Vegas, Nevada, Acuna, Mexico, Fremont, California and
Suzhou-Wujiang, China. SigmaTron International, Inc. maintains engineering and
materials sourcing offices in Taipei, Taiwan.
Note: To the extent any statements in this press release statement may be
deemed to be forward looking, such statements should be evaluated in the context
of the risks and uncertainties inherent in the Company's business, including the
Company's continued dependence on certain significant customers; the continued
market acceptance of products and services offered by the Company and its
customers; the activities of competitors, some of which may have greater
financial or other resources than the Company; the variability of the Company's
operating results; the availability and cost of necessary components; the
Company's ability to manufacture lead-free assemblies by mid - 2006; regulatory
compliance; the continued availability and sufficiency of the Company's credit
arrangements; changes in U.S., Mexican, Chinese or Taiwanese regulations
affecting the Company's business; the continued stability of the U.S., Mexican,
Chinese and Taiwanese economic, labor and political conditions; currency
fluctuations; and the ability of the Company to manage its growth, including its
expansion into China and its integration of the Able Electronics operations.
These and other factors which may affect the Company's future business and
results of operations are identified throughout the Company's Annual Report on
Form 10-K, and may be detailed from time to time in the Company's filings with
the Securities and Exchange Commission. These statements speak as of the date of
this press release and the Company undertakes no obligation to update or revise
such statements in light of new information, future events or otherwise.
CONSOLIDATED STATEMENTS OF OPERATION
Year Ended
April 30, April 30,
2005 2004
------------- -------------
Net sales $106,076,965 $100,494,122
Cost of products sold 87,509,391 81,378,192
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Gross profit 18,567,574 19,115,930
Operating expenses 10,919,006 9,664,903
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Operating income 7,648,568 9,451,027
Other (income) deductions-net (267,133) 232,292
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Income before income tax expense and
minority interest in affiliate 7,915,701 9,218,735
Income tax expense 3,082,568 3,550,038
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Income before minority interest in
affiliate 4,833,133 5,668,697
Minority interest in affiliate 134,334 262,965
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Net income $4,698,799 $5,405,732
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Net income per common share - assuming
dilution $1.23 $1.53
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Weighted average number of common
equivalent shares outstanding -
assuming dilution 3,815,549 3,541,297
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CONSOLIDATED BALANCE SHEET
April 30, April 30,
2005 2004
------------- -------------
Current assets $37,709,388 $35,973,957
Machinery and equipment-net 26,689,940 25,707,901
Other assets 2,143,729 1,316,814
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Total assets 66,543,057 62,998,672
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Liabilities and shareholders' equity
Current liabilities 13,116,078 13,086,206
Long-term obligations 7,494,885 8,269,923
Minority interest in affiliate - 439,787
Stockholders' equity 45,932,094 41,202,756
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Total liabilities and stockholders'
equity $66,543,057 $62,998,672
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CONTACT: SigmaTron International, Inc.
Linda K. Blake, 800-700-9095