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SigmaTron International Inc. Reports Operating Results (10-Q)

December 15, 2009 | About:
10qk

10qk

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SigmaTron International Inc. (SGMA) filed Quarterly Report for the period ended 2009-10-31.

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 $19.8 million; its shares were traded at around $5.17 with a P/E ratio of 20.7 and P/S ratio of 0.1.

Highlight of Business Operations:

Gross profit decreased during the three month period ended October 31, 2009 to $3,283,296 or 10.7% of net sales, compared to $5,911,379 or 14.4% of net sales for the same period in the prior fiscal year. Gross profit decreased for the six month period ended October 31, 2009 to $5,543,149 or 9.7% of net sales, compared to $10,560,577 or 13.3% of net sales for the same period in the prior fiscal year. The decrease in gross margin in total dollars and as a percent of sales for the three and six month periods ended October 31, 2009 compared to the prior periods is due to decreased revenue levels and decreased plant capacity utilization.

Selling and administrative expenses decreased to $2,368,409 or 7.8% of net sales for the three month period ended October 31, 2009 compared to $3,469,956 or 8.4% of net sales in the same period last year. Selling and administration expenses decreased to $4,945,250 or 8.7% of net sales for the six month period ended October 31, 2009 compared to $6,662,459 or 8.4% of net sales in the same period in the prior fiscal year. The decrease in total dollars for the three and six month periods ended October 31, 2009, was approximately $824,000 and $1,200,000, respectively, and is primarily due to a decrease in bonus expense, accounting, IT, and office salaries, accounting fees and amortization expense. The decrease in total dollars for the six months ended October 31, 2009 was partially offset by an increase in legal fees and insurance expense of $20,000 compared to the same period in the prior fiscal year.

Net income from operations decreased to $517,298 for the three month period ended October 31, 2009 compared to $1,505,316 for the same period in the prior year. Net income from operations decreased to $114,823 for the six months ended October 31, 2009 compared to $2,084,640 in the same period last year. Basic and diluted earnings per share for the second fiscal quarter of 2010 were $0.14 and $0.13, respectively, compared to basic and diluted earnings per share of $0.39 for the same period in the prior year. Basic and diluted earnings per share for the six months ended October 31, 2009 were $0.03 and $0.02, respectively, compared to basic and diluted earnings per share of $0.55 and $0.54, respectively, for the same period in the prior year.

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 Bank of America in the amount of $3,600,000. The note bears a fixed interest rate of 5.59% per year and is payable in sixty monthly installments. A final payment of approximately $2,115,000 is due on or before April 30, 2013. The outstanding balances were $2,591,313 and $2,731,562 at October 31, 2009 and October 31, 2008, respectively. The Company anticipates it will initially repay this debt using the proceeds from the senior secured revolving credit facility from Wells Fargo/HSBC Trade Bank and the Company plans to enter into a mortgage agreement with Wells Fargo/HSBC Trade Bank in the third quarter of fiscal 2010 to re-finance the property.

As of October 31, 2009, $14,897,291 was outstanding under the revolving credit facility with Bank of America. There was approximately $8.7 million of unused availability under the revolving credit facility as of October 31, 2009. At October 31, 2009 the long term portion of debt related to the Bank of America revolving credit facility, mortgage and leases in the amount of $15,397,291, $2,451,063 and $857,798, respectively, were reclassified to short term debt.

Cash used in financing activities was $4,923,833 for the second quarter ended October 31, 2009, compared to $704,103 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 $3,849,405. Cash used in financing activities of $1,074,428 was used for payments under the Companys lease agreements, term loan, and building mortgage obligations.

Read the The complete ReportSGMA is in the portfolios of Chuck Royce of ROYCE & ASSOCIATES.

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