SigmaTron International, Inc. Reports First-Quarter Financial Results for Fiscal 2006.ELK GROVE VILLAGE Elk Grove Village, village (1990 pop. 33,429), Cook and Du Page counties, NE Ill., a suburb of Chicago; inc. 1956. With a population of c.100 at the time of its establishment on open farmland, the village has grown dramatically and steadily, largely because of its , Ill. -- SigmaTron International, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :SGMA SGMA Sporting Goods Manufacturers Association SGMA Southern Gospel Music Association SGMA Sierpinski Gasket Monopole Antenna ), an electronic manufacturing services company, today reported revenues and earnings for the fiscal quarter ended July July: see month. 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 diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of 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 Gary, city (1990 pop. 116,646), Lake co., NW Ind., a port of entry on Lake Michigan; inc. 1909. Gary was founded by the U.S. Steel Corporation, which purchased the land in 1905 and landscaped it for a city. 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 Las Vegas (läs vā`gəs), city (1990 pop. 258,295), seat of Clark co., S Nev.; inc. 1911. It is the largest city in Nevada and the center of one of the fastest-growing urban areas in the United States. 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 operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. 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 European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community 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 Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. 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 softening /sof·ten·ing/ (sof´en-ing) malacia. softening a change of consistency, with loss of firmness or hardness. 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 RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a 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 California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). operations. "Going forward we continue to face several challenges," Fairhead concluded. "RoHS compliance as mandated by the European community European Community: see European Union. European Community (EC) Organization formed in 1967 with the merger of the European Economic Community, European Coal and Steel Community, and European Atomic Energy 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 op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that we are well positioned in a growing market because of our international footprint The amount of geographic space covered by an object. A computer footprint is the desk or floor surface it occupies. A satellite's footprint is the earth area covered by its downlink. See form factor. 1. 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 as·sem·ble v. as·sem·bled, as·sem·bling, as·sem·bles v.tr. 1. To bring or call together into a group or whole: assembled the jury. 2. electronic products. SigmaTron International, Inc. operates manufacturing facilities in Elk Grove Village, Illinois Elk Grove Village is a municipality located in northeastern Illinois adjacent to O'Hare International Airport and the City of Chicago. Elk Grove Village encompasses 10.9 square miles in land area with 10.5 square miles located in Cook County and 0. , Acuna and Tijuana, Mexico, Fremont and Hayward, California Hayward is a city located in the East Bay in Alameda County. The sixth largest city in the San Francisco Bay Area, it is one of the larger suburbs of Oakland. As of the 2000 census, the city population was 140,030. The estimated population in 2007 is 155,312. and Suzhou-Wujiang, China. SigmaTron International, Inc. maintains engineering and materials sourcing offices in Taipei, Taiwan. Note: This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . 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- mid- pref. Middle: midbrain. 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 Mexican named after or originating in Mexico. Mexican axolotl see ambystomamexicanum. Mexican beaded lizard (Heloderma horridum , 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 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
=============== ===============
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