Sigmatron International Inc. is an independent provider of electronic manufacturing services which includes printed circuit board assemblies and completely assembled electronic products. Included among the wide range of services the company offers its customers are automatic and manual assembly and testing of products material sourcing and procurement design manufacturing and test engineering support warehousing and shipment services and assistance in obtaining product approvals from governmental and other regulatory bodies. Sigmatron International Inc. has a market cap of $11.9 million; its shares were traded at around $3.096 with a P/E ratio of 6.1 and P/S ratio of 0.1.
Highlight of Business Operations:Selling and administrative expenses decreased to $2,576,841 or 9.8% of net sales for the three month period ended July 31, 2009 compared to $3,192,503 or 8.3% of net sales in the same period last year. The decrease in total dollars for the three month period ended July 31, 2009, is primarily due to a decrease in bonus expense, accounting, IT, and office salaries, and accounting fees and amortization expense, which was approximately $341,000. The decrease in total dollars was partially offset by an increase in legal fees and insurance expense compared to the same period in the prior fiscal year, which was approximately $50,000. The increase in selling and administrative expenses as a percent of net sales for the three month period ended July 31, 2009 compared to the prior period is due to the 32% decrease in net sales.
The Company recorded a net loss from operations of $402,475 for the three month period ended July 31, 2009 compared to a net income of $579,324 for the same period in the prior year. Basic and diluted loss per share for the first fiscal quarter of 2010 were $0.11, compared to basic and diluted earnings per share of $0.15 for the same period in the prior year.
During the first quarter of fiscal year 2010, the Company purchased approximately $700,000 in machinery and equipment to be used in the ordinary course of business. The Company expects to make additional machinery and equipment purchases of approximately $1,000,000 during the balance of fiscal year 2010. During the first quarter of fiscal year 2009, the Company purchased approximately $274,000 in machinery and equipment in the ordinary course of business. The Company decided to postpone the planned expansion of the China facility announced in July 2008 in response to the current economic conditions.
The Company has a revolving credit facility under which the Company may borrow up to the lesser of (i) $32 million or (ii) an amount equal to the sum of 85% of the receivable borrowing base and the lesser of $16 million or a percentage of the inventory borrowing base. In June 2008, the Company amended the revolving credit facility to extend the term of the agreement until September 30, 2010 from September 30, 2009 and to amend certain financial covenants. As of July 31, 2009, $17,819,119 was outstanding under the revolving credit facility. There was approximately $8.6 million of unused availability under the revolving credit facility as of July 31, 2009.
On November 19, 2003, the Company purchased the property that serves as the Companys corporate headquarters and its Midwestern manufacturing facility. The Company executed a note and mortgage with LaSalle Bank N.A. (now Bank of America) in the amount of $3,600,000. The Company refinanced the property on April 30, 2008. The new note bears a fixed interest rate of 5.59% and is payable in sixty monthly installments. A final payment of approximately $2,115,438 is due on or before April 30, 2013. The outstanding balances were $2,626,375 and $2,766,625 at July 31, 2009 and July 31, 2008, respectively.
Cash used in financing activities was $1,460,757 for the first quarter ended July 31, 2009, compared to $1,354,319 for the same period in the prior fiscal year. Cash used in financing activities was primarily the result of net payments made to reduce the balance outstanding under the Companys revolving credit facility by $927,577. Cash used in financing activities also was due to payments under the Companys lease agreements, term loan, and building mortgage obligations.
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