Exhibit 99.1
SigmaTron International, Inc. Reports
First-Quarter Financial Results for Fiscal 2006
ELK GROVE VILLAGE, Ill.--(BUSINESS WIRE)--Sept. 13,
2005--SigmaTron International, Inc. (NASDAQ:SGMA), an electronic
manufacturing services company, today reported revenues and earnings
for the fiscal quarter ended July 31, 2005.
Revenues decreased to $21.3 million in first quarter fiscal 2006
from $21.5 million in the prior-year period. Net income decreased to
$165,067 in the 2006 period compared to $1.0 million in the fiscal
2005 period. Diluted earnings per share for the quarter ended July 31,
2005, were $0.04 compared to $0.27 for the same quarter in fiscal
2005.
Commenting on SigmaTron's first quarter fiscal 2006 results, Gary
R. Fairhead, president and chief executive officer, said, "During the
first quarter we completed two strategic initiatives, both of which we
previously announced. The first was the sale of our Las Vegas
operation to Grand Products, which was effective May 30, 2005. It was
an asset sale. The net effect of the sale after taking reserves plus
the operating loss for the quarter was a loss of $24,731 after taxes.
The sale has freed up approximately $4.5 million in working capital to
date and avoided future capital expenditures of at least $1.5 million
related to future compliance for RoHS, which is a European Union
mandate on the restriction of the use of hazardous substances.
"The second initiative was the acquisition of all the outstanding
stock of Able Electronics in July 2005. It was a stock purchase
acquisition. The Able acquisition will help achieve three of our
strategic objectives, namely, the diversification of our markets
served, the broadening of our customer base, and the expansion of the
range of services offered.
"Our first quarter financial results were driven by several
factors. The primary driver was a softening of sales during the summer
from our existing customer base. Additional factors were continuing
margin pressures from both pricing to customers and increasing costs
of manufacturing supplies and components. Finally, Able Electronics
had a very soft July, which created an operating loss for it in July.
"During the quarter we saw production levels at our China facility
continue to grow," Fairhead continued. "Our Elk Grove Village facility
had a very weak quarter, as many of its customers lowered their
inventory levels. Our Fremont operation had a good quarter, primarily
driven by the resolution of a process problem for a new customer.
"We remain encouraged about the opportunities we believe the Able
acquisition will bring us. Able's customer base has been very
supportive of the acquisition and has welcomed the benefits the
combination will bring them.
"Our plans call for the complete integration of Able into
SigmaTron, including the relocation of our Fremont operation into the
Hayward facility of Able, to be completed before the end of fiscal
2006. We believe that the integration will provide significant
operating synergies for our California operations.
"Going forward we continue to face several challenges," Fairhead
concluded. "RoHS compliance as mandated by the European community will
create significant issues for our customers, vendors and us.
Continuing regulatory pressures are negatively affecting our financial
performance. The pricing pressures we face show no sign of abating.
However, we remain optimistic that we are well positioned in a growing
market because of our international footprint and fully expect our
longer-term performance to improve."
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, Acuna and Tijuana, Mexico,
Fremont and Hayward, California and Suzhou-Wujiang, China. SigmaTron
International, Inc. maintains engineering and materials sourcing
offices in Taipei, Taiwan.
Note: This press release contains forward-looking statements.
Words such as "continue," "will," "expects," "believe," "plans," and
similar expressions identify forward-looking statements. These
forward-looking statements are based on the current expectations of
SigmaTron (including its subsidiaries). Because these forward-looking
statements involve risks and uncertainties, SigmaTron's plans, actions
and actual results could differ materially. Such statements should be
evaluated in the context of the risks and uncertainties inherent in
SigmaTron's business, including our continued dependence on certain
significant customers; the continued market acceptance of products and
services offered by the Company and its customers; pricing pressures
from our customers and the market; the activities of competitors, some
of which may have greater financial or other resources than SigmaTron;
the variability of our operating results; the variability of our
customers' requirements; the availability and cost of necessary
components and materials; SigmaTron's ability to be in compliance with
RoHS by mid-2006; the ability of SigmaTron and our customers to keep
current with technological changes within our industries; regulatory
compliance; the continued availability and sufficiency of our credit
arrangements; changes in U.S., Mexican, Chinese or Taiwanese
regulations affecting SigmaTron's business; the continued stability of
the Mexican, Chinese and Taiwanese economic systems, labor and
political conditions; and the ability of SigmaTron to manage its
growth, including its expansion into China and its integration of the
Able operation acquired in July 2005. These and other factors which
may affect SigmaTron's future business and results of operations are
identified throughout the Company's Annual Report on Form 10-K and
risk factors contained therein and may be detailed from time to time
in SigmaTron's filings with the Securities and Exchange Commission.
These statements speak as of the date of this report and SigmaTron
undertakes no obligation to update such statements in light of future
events or otherwise.
Financial tables to follow...
Consolidated Statements of Operations
Three Months Three Months
Ended July 31, Ended July 31,
2005 2004
--------------------------------
Net sales $21,312,693 $21,460,858
Cost of products sold 18,771,008 17,117,850
--------------- ---------------
Gross profit 2,541,685 4,343,008
Selling and administrative expenses 2,136,281 2,712,075
--------------- ---------------
Operating income 405,404 1,630,933
Other (income) deductions-net 94,240 66,683
--------------- ---------------
Income from continuing operations
before income tax and interest
of affiliate 311,164 1,564,250
Income tax expense 121,366 573,780
--------------- ---------------
Income from continuing operations
before minority interest in
affiliate 189,798 990,470
Minority interest in affiliate - 123,680
--------------- ---------------
Income from continuing operations 189,798 866,790
(Loss) income from operations of
discontinued Las Vegas location (40,542) 282,690
Income tax (benefit) expense (15,811) 112,511
--------------- ---------------
(Loss) income on discontinued
operation (24,731) 170,179
--------------- ---------------
Net income $165,067 $1,036,969
=============== ===============
Net income per common share -
assuming dilution $0.04 $0.27
=============== ===============
Weighted average number of common
equivalent shares outstanding -
assuming dilution 3,822,577 3,787,597
=============== ===============
Consolidated Balance Sheet
July 31, April 30,
2005 2005
--------------- ---------------
Current assets $45,312,816 $37,709,388
Machinery and equipment-net 26,682,238 26,689,940
Other assets 13,272,028 2,143,729
--------------- ---------------
Total assets 85,267,082 66,543,057
=============== ===============
Liabilities and shareholders' equity
Current liabilities 15,557,013 13,116,078
Long-term obligations 23,612,908 7,494,885
Stockholders' equity 46,097,161 45,932,094
--------------- ---------------
Total liabilities and stockholders'
equity $85,267,082 $66,543,057
=============== ===============
CONTACT: SigmaTron International, Inc.
Linda K. Blake, 1-800-700-9095