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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the fiscal year ended April 30, 2010.
 Or
 o
    
    Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the transition period from  to .
 Commission file number 0-23248
 SIGMATRON INTERNATIONAL, INC.
  Delaware
    
    36-3918470(State or other jurisdiction 
of incorporation or organization)
    
    (I.R.S. Employer
Identification Number)2201 Landmeier Rd., Elk Grove Village, IL
    
    60007(Address of principal executive offices)
    
    (Zip Code)
 
 Title of each class
    
    Name of each exchange on which registeredCommon Stock $0.01 par value per share
    
    The Nasdaq Capital Market
  o þ
 o þ
 þ o
 o o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



PART IITEM 1.
    
    BUSINESS
    
    
    3ITEM 1A.
    
    RISK FACTORS
    
    
    8ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS
    
    
    12ITEM 2.
    
    PROPERTIES
    
    
    12ITEM 3.
    
    LEGAL PROCEEDINGS
    
    
    13ITEM 4.
    
    RESERVED
    
    
    13PART IIITEM 5.
    

MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    14ITEM 6.
    
    SELECTED FINANCIAL DATA
    
    
    15ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    
    
    15ITEM 7A.
    

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISKS
    
    
    20ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    20ITEM 9.
    

CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    20ITEM 9A(T).
    
    CONTROLS AND PROCEDURES
    
    
    21ITEM 9B.
    
    OTHER INFORMATION
    
    
    21PART IIIITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    21ITEM 11.
    
    EXECUTIVE COMPENSATION
    
    
    21ITEM 12.
    

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    22ITEM 13.
    

CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND
DIRECTOR INDEPENDENCE
    
    
    22ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    22PART IVITEM 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    22SIGNATURES
    
    
    
    
    25EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2
  2




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PART 1
 
 ITEM 1.
    
    BUSINESS
 CAUTIONARY NOTE:
  Overview
    3




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Products and Services
  Supply Chain Management
  Assembly and Manufacturing
  Manufacturing and Related Services
 4




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Product Testing
 Warehousing and Distribution
 Markets and Customers
   Percent of Net SalesFiscal
    
    FiscalTypical
    
    2009
    
    2010Markets
    
    OEM Application
    
    %
    
    %Appliances
    
    Household appliance controls
    
    
    40.9
    
    
    
    47.5Industrial Electronics
    
    Motor controls, power supplies
    
    
    27.1
    
    
    
    23.2Fitness
    
    Treadmills, exercise bikes, cross trainers
    
    
    18.2
    
    
    
    13.9Telecommunications
    
    Routers
    
    
    6.5
    
    
    
    7.9Gaming
    
    Slot machines, lighting displays
    
    
    2.4
    
    
    
    3.2Life Sciences
    
    Clinical diagnostic systems and instruments
    
    
    1.7
    
    
    
    1.8Semiconductor Equipment
    
    Process control and yield management
equipment for semiconductor productions
    
    
    2.2
    
    
    
    2.3Consumer Electronics
    
    Battery backup sump pumps, electric bikes
    
    
    1.0
    
    
    
    0.2Total
    
    
    
    
    100
    %
    
    
    100
    %
  5




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Sales and Marketing
    Mexico and China Operations
    6




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Competition
  Consolidation
  Governmental Regulations
  Backlog
  Employees
  7




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Executive Officers of the Registrants
 Name
    
    Age
    
    PositionGary R. Fairhead
    
    
    58
    
    
    President and Chief Executive
Officer. Gary R. Fairhead has
been the President of the
Company since January 1990.
Gary R. Fairhead is the brother
of Gregory A. Fairhead.Linda K. Frauendorfer
    
    
    49
    
    
    Chief Financial Officer, Vice
President Finance, Treasurer
and Secretary since February
1994.Gregory A. Fairhead
    
    
    54
    
    
    Executive Vice President and
Assistant Secretary. Gregory
A. Fairhead has been Executive
Vice President since February
2000 and Assistant Secretary
since 1994. Mr. Fairhead was
Vice President  Acuna
Operations for the Company from
February 1990 to February 2000.
Gregory A. Fairhead is the
brother of Gary R. Fairhead.John P. Sheehan
    
    
    49
    
    
    Vice President, Director of
Supply Chain and Assistant
Secretary since February 1994.Daniel P. Camp
    
    
    61
    
    
    Vice President, Acuna
Operations since 2007. Vice
President  China Operations
from 2003 to 2007. General
Manager / Vice President of
Acuna Operations from 1994 to
2003.Rajesh B. Upadhyaya
    
    
    55
    
    
    Executive Vice President, West
Coast Operations since 2005.
Mr. Upadhyaya was the Vice
President of the Fremont
Operation from 2001 until 2005.Hom-Ming Chang
    
    
    50
    
    
    Vice President, China Operation
since 2007. Vice President 
Hayward Materials / Test / IT
from 2005  2007. Vice
President of Fremont Operation
from 2001 to 2005.
 
 ITEM 1A.
    
    RISK FACTORS
  8




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The Companys ability to secure and maintain sufficient credit arrangements is key to its continued
operations
  The financial crisis and global economic slowdown could negatively impact the Companys business,
results of operations and financial condition.
  The Company experiences variable operating results.
   
    
    changes in sales mix to customers
    
    changes in availability and cost of components
    
    volume of customer orders relative to capacity
    
    market demand and acceptance of our customers products
    
    price erosion within the EMS marketplace
    
    capital equipment requirements needed to remain technologically competitive
    
    volatility of the global economy and financials markets
 The Companys customer base is concentrated.
   9




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Most of the Companys customers do not commit to long-term production schedules, which makes it
difficult to schedule production and achieve maximum efficiency at its manufacturing facilities and
to manage inventory levels.
  
    
    customers attempts to manage their inventory
    
    variation in demand for the Companys customers products
    
    design changes, or
    
    acquisitions of or consolidations among customers
  The Company and its customers may be unable to keep current with the industrys technological
changes.
  The Company faces intense industry competition and downward pricing pressures.
   The Company has foreign operations that may pose additional risks.
    10




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The Company may be unable to manage its growth.
  Disclosure and internal controls may not detect all errors or fraud.
  There is a risk of fluctuation of various currencies integral to the Companys operations.
  The availability of raw components may affect the Companys operations.
  The Company is dependent on key personnel.
  Favorable labor relations are important to the Company.
  11




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Failure to comply with environmental regulations could subject the Company to liability.
  The price of the Companys stock is volatile.
  An adverse change in the interest rates for our borrowings could adversely affect our results of
operations.
  Inadequate internal control over financing reporting.
  
 ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS
  
 ITEM 2.
    
    PROPERTIES
  12




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Square
    
    
    
    Owned/Location
    
    Feet
    
    Services Offered
    
    LeasedSuzhou-Wujiang, China
    
    
    147,500
    
    
    High volume assembly, and testing of PTH and SMT, box-build, BGA
    
    *Hayward, CA
    
    
    103,000
    
    
    Assembly and testing of PTH, SMT and BGA, box-build, prototyping,
warehousing
    
    LeasedElk Grove Village, IL
    
    
    118,000
    
    
    Corporate headquarters, assembly and testing of PTH, SMT and BGA,
box-build, prototyping, warehousing
    
    OwnedAcuna, Mexico
    
    
    115,000
    
    
    High volume assembly, and testing of PTH and SMT, box-build
    
    Owned
**Del Rio, TX
    
    
    44,000
    
    
    Warehousing, portion of which is bonded
    
    LeasedTijuana, Mexico
    
    
    67,700
    
    
    High volume assembly, and testing of PTH and SMT, box-build
    
    LeasedTaipei, Taiwan
    
    
    4,685
    
    
    Materials procurement, alternative sourcing assistance and quality control
    
    Leased
 
 *
    
    The Companys Suzhou-Wujiang, China building is owned by the Company and the land is leased
from the Chinese government for a 50 year term.**
    
    A portion of the facility is leased.  
 ITEM 3.
    
    LEGAL PROCEEDINGS
   
 ITEM 4.
    
    RESERVED
 13




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PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
 Market Information
  
 Period
    
    High
    
    
    LowFiscal 2010:Fourth Quarter
    
    $
    7.44
    
    
    $
    5.44Third Quarter
    
    
    6.85
    
    
    
    3.15Second Quarter
    
    
    3.79
    
    
    
    2.05First Quarter
    
    
    2.44
    
    
    
    1.41Fiscal 2009:Fourth Quarter
    
    $
    2.60
    
    
    $
    1.27Third Quarter
    
    
    3.48
    
    
    
    1.58Second Quarter
    
    
    7.15
    
    
    
    2.82First Quarter
    
    
    7.29
    
    
    
    5.00
  Dividend Information
  Equity Compensation Plan Information
  14




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ITEM 6.
    
    SELECTED FINANCIAL DATA
  
 ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
  Overview
   15




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Critical Accounting Policies:
 Management Estimates and Uncertainties
 Revenue Recognition
 Inventories
 16




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Impairment of Long-Lived Assets
 New Accounting Standards:
   Results of Operations:
 
    17




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Liquidity and Capital Resources:
 Operating Activities.
   18




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Investing Activities.
    Financing Activities.
  Debt:
    19




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Off-balance Sheet Transactions:
  Contractual Obligations and Commercial Commitments:
  
 ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
  
 ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 ITEM 9.
    
    CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
  20




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ITEM 9A(T).
    
    CONTROLS AND PROCEDURES
    
 ITEM 9B.
    
    OTHER INFORMATION
  
 PART III
 
 ITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  
 ITEM 11.
    
    EXECUTIVE COMPENSATION
  21




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ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
  
 ITEM 13.
    
    CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND
DIRECTOR INDEPENDENCE
  
 ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
  
 PART IV
 
 ITEM 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a) 1
    
    The financial statements are listed in the Index to Financial Statements filed as part of
this Annual Report on Form 10-K beginning on Page F-1.
 22




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Index to Exhibits
  3.1
    
    Certificate of Incorporation of the Company, incorporated herein by reference to Exhibit 3.1
to Registration Statement on Form S-1, File No. 33-72100, dated February 9, 1994.3.2
    
    Amended and Restated By-laws of the Company, adopted on September 24, 1999, incorporated
herein by reference to Exhibit 3.2 to the Companys Form 10-K for the fiscal year ended April
30, 2000.10.1
    
    Form of 1993 Stock Option Plan, incorporated herein by reference to Exhibit 10.4 to the
Companys Registration Statement on Form S-1, File No. 33-72100.*10.2
    
    Form of Incentive Stock Option Agreement for the Companys 1993 Stock Option Plan ,
incorporated herein by reference to Exhibit 10.5 to the Companys Registration Statement on
Form S-1, File No. 33-72100.*10.3
    
    Form of Non-Statutory Stock Option Agreement for the Companys 1993 stock Option Plan,
incorporated herein by reference to Exhibit 10.6 to the Companys Registration Statement on
Form S-1, File No. 33-72100.*10.4
    
    2000 Outside Directors Stock Option Plan, incorporated herein by reference to Appendix 1
to the Companys 2000 Proxy Statement filed on August 21, 2000.*10.5
    
    2004 Directors Stock Option Plan, incorporated herein by reference to Appendix C to the
Companys 2004 Proxy Statement filed on August 16, 2004.*10.6
    
    2004 Employee Stock Option Plan, incorporated herein by reference to Appendix B to the
Companys 2004 Proxy Statement filed on August 16, 2004. *10.7
    
    Change in Control Plan dated May 30, 2002, incorporated herein by reference to Exhibit 10.15
to the Companys Form 10-K for the fiscal year ended April 30, 2005.*10.8
    
    Credit Agreement between SigmaTron International, Inc. and Wells Fargo International Banking
and Trade Solutions (IBTS), dated January 8, 2010, incorporated herein by reference to Exhibit
10.1 to the Companys Form 8-K filed on January 14, 2010.10.9
    
    Revolving Line of Credit Note issued by SigmaTron International, Inc. to Wells Fargo
International Banking and Trade Solutions (IBTS), dated January 8, 2010 incorporated herein by
reference to Exhibit 10.2 to the Companys Form 8-K filed on January 14, 2010.10.10
    
    Promissory Note issued by SigmaTron International, Inc. to Wells Fargo International Banking
and Trade Solutions (IBTS), dated January 8, 2010, incorporated herein by reference to Exhibit
10.3 to the Companys Form 8-K filed on January 14, 2010.21.0
    
    Subsidiaries of the Registrant, incorporated herein by reference to the Companys Form 10-K
for the fiscal year ended April 30, 2007, filed on July 24, 2007.23.1
    
    Consent of BDO USA, LLP.**24.0
    
    Power of Attorney of Directors and Executive Officers (included on the signature page of this
Form 10-K for the fiscal year ended April 30, 2010).**31.1
    
    Certification of Principal Executive Officer of the Company Pursuant to Rule 13a-14(a) under
the Exchange Act, as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.**
 23




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31.2
    
    Certification of Principal Financial Officer of the Company Pursuant to Rule 13a-14(a) under
the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.**32.1
    
    Certification by the Principal Executive Officer of SigmaTron International, Inc. Pursuant to
Rule 13a-14(b) under the Exchange Act and Section 906 of the Sarbanes-Oxley Act of 2002 (18
U.S.C. 1350).**32.2
    
    Certification by the Principal Financial Officer of SigmaTron International, Inc. Pursuant to
Rule 13a-14(b) under the Exchange Act and Section 906 of the Sarbanes-Oxley Act of 2002 (18
U.S.C. 1350).**99.1
    
    Forbearance Agreement, dated December 11, 2009, by and between SigmaTron International, Inc.
and Bank of America, incorporated herein by reference to Exhibit 99.1 to the Companys Form
10-Q filed on December 15, 2009.
 
 *
    
    Indicates management contract or compensatory plan.**
    
    Filed herewith(c)
    
    Exhibits  24




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SIGNATURES
  SIGMATRON INTERNATIONAL, INC.By:
    /s/ Gary R. FairheadGary R. Fairhead, President and Chief Executive Officer,Principal Executive Officer and Director
Dated:  July 16, 2010   Signature
    
    Title
    
    Date/s/ John P. Chen
    
    Chairman of the Board of Directors
    
    July 16, 2010John P. Chen/s/ Gary R. Fairhead
    
    President and Chief Executive Officer,
    
    July 16, 2010Gary R. Fairhead
    
    (Principal
Executive Officer) and Director/s/ Linda K. Frauendorfer
    
    Chief Financial Officer, Secretary and Treasurer
    
    July 16, 2010Linda K. Frauendorfer
    
    (Principal
Financial Officer and Principal
Accounting Officer)/s/ Thomas W. Rieck
    
    Director
    
    July 16, 2010Thomas W. Rieck/s/ Dilip S. Vyas
    
    Director
    
    July 16, 2010Dilip S. Vyas/s/ Carl A. Zemenick
    
    Director
    
    July 16, 2010Carl A. Zemenick
 25




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INDEX TO FINANCIAL STATEMENTS
 PageSigmaTron International, Inc. and SubsidiariesREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    
    
    F-2CONSOLIDATED FINANCIAL STATEMENTSCONSOLIDATED BALANCE SHEETSASSETS
    
    
    F-3LIABILITIES AND STOCKHOLDERS EQUITY
    
    
    F-4CONSOLIDATED STATEMENTS OF INCOME
    
    
    F-5CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS EQUITY
    
    
    F-6CONSOLIDATED STATEMENTS OF CASH FLOWS
    
    
    F-7NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    
    
    F-8
  F-1




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 Board of Directors and Stockholders
SigmaTron International, Inc.
Elk Grove, Illinois
    
 F-2




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SigmaTron International, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS
April 30,
 
 ASSETS
 2010
    
    
    2009CURRENT ASSETSCash and cash equivalents
    
    $
    4,052,572
    
    
    $
    3,781,252Accounts receivable, less allowance for doubtful
accounts of $150,000 and $167,788 at
April 30, 2010 and 2009, respectively
    
    
    24,929,972
    
    
    
    16,785,079Inventories, net
    
    
    37,406,056
    
    
    
    36,230,555Prepaid expenses and other assets
    
    
    928,551
    
    
    
    923,911Deferred income taxes
    
    
    1,844,188
    
    
    
    1,560,425Other receivables
    
    
    171,593
    
    
    
    341,310Total current assets
    
    
    69,332,932
    
    
    
    59,622,532PROPERTY, MACHINERY AND EQUIPMENT, NET
    
    
    25,176,664
    
    
    
    26,200,578LONG-TERM ASSETSOther assets
    
    
    822,341
    
    
    
    699,379Intangible assets, net of amortization of
$2,406,329 and $2,161,113 at April 30, 2010 and
2009, respectively
    
    
    363,671
    
    
    
    608,887Total long-term assets
    
    
    1,186,012
    
    
    
    1,308,266TOTAL ASSETS
    
    $
    95,695,608
    
    
    $
    87,131,376
  F-3




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SigmaTron International, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS  CONTINUED

April 30,
 
 LIABILITIES AND STOCKHOLDERS EQUITY
 2010
    
    
    2009CURRENT LIABILITIESTrade accounts payable
    
    $
    20,479,495
    
    
    $
    10,531,553Accrued expenses
    
    
    1,786,360
    
    
    
    1,602,913Accrued payroll
    
    
    2,475,552
    
    
    
    1,555,736Income taxes payable
    
    
    1,288,617
    
    
    
    272,750Notes payable  bank
    
    
    
    
    
    
    1,000,000Notes payable  buildings
    
    
    99,996
    
    
    
    140,250Notes payable  other
    
    
    160,994
    
    
    
    Capital lease obligations
    
    
    874,116
    
    
    
    951,983Total current liabilities
    
    
    27,165,130
    
    
    
    16,055,185NOTES PAYABLE  BANK,
LESS CURRENT PORTION
    
    
    15,125,058
    
    
    
    19,746,696NOTES PAYABLE  BUILDINGS,
LESS CURRENT PORTION
    
    
    2,375,005
    
    
    
    2,521,188NOTES PAYABLE  OTHER,
LESS CURRENT PORTION
    
    
    187,826
    
    
    
    CAPITAL LEASE OBLIGATIONS,
LESS CURRENT PORTION
    
    
    569,240
    
    
    
    1,490,773DEFERRED INCOME TAXES
    
    
    2,610,142
    
    
    
    1,915,649Total liabilities
    
    
    48,032,401
    
    
    
    41,729,491COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITYPreferred stock, $.01 par value; 500,000 shares
authorized, none issued and outstanding
    
    
    
    
    
    
    Common stock, $.01 par value; 12,000,000 shares
authorized, 3,822,556 shares issued and outstanding
at April 30, 2010 and 2009
    
    
    38,226
    
    
    
    38,226Capital in excess of par value
    
    
    19,647,359
    
    
    
    19,630,580Retained earnings
    
    
    27,977,622
    
    
    
    25,733,079Total stockholders equity
    
    
    47,663,207
    
    
    
    45,401,885TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY
    
    $
    95,695,608
    
    
    $
    87,131,376
  F-4




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SigmaTron International, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
Years ended April 30,
 2010
    
    
    2009Net sales
    
    $
    122,476,340
    
    
    $
    133,744,642Cost of products sold
    
    
    108,719,103
    
    
    
    117,769,739Gross profit
    
    
    13,757,237
    
    
    
    15,974,903Selling and administrative expenses
    
    
    10,826,880
    
    
    
    11,591,440Operating income
    
    
    2,930,357
    
    
    
    4,383,463Other income
    
    
    (1,256,235
    )
    
    
    (219,479
    )Interest expense
    
    
    821,263
    
    
    
    1,710,817Income before income tax expense
    
    
    3,365,329
    
    
    
    2,892,125Income tax expense
    
    
    1,120,786
    
    
    
    936,278NET INCOME
    
    $
    2,244,543
    
    
    $
    1,955,847Earnings per common shareBasic
    
    $
    0.59
    
    
    $
    0.51Diluted
    
    $
    0.58
    
    
    $
    0.51Weighted-average shares of common
stock outstandingBasic
    
    
    3,822,556
    
    
    
    3,822,556Diluted
    
    
    3,863,505
    
    
    
    3,859,526
  F-5




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SigmaTron International, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
Two years ended April 30, 2010 and 2009
 Capital in
    
    
    
    
    
    
    TotalPreferred
    
    
    Common
    
    
    excess of par
    
    
    Retained
    
    
    stockholdersstock
    
    
    stock
    
    
    value
    
    
    earnings
    
    
    equityBalance at April 30, 2008
    
    $
    
    
    
    $
    38,226
    
    
    $
    19,599,501
    
    
    $
    23,777,232
    
    
    $
    43,414,959Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    31,079
    
    
    
    
    
    
    
    31,079Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,955,847
    
    
    
    1,955,847Balance at April 30, 2009
    
    
    
    
    
    
    38,226
    
    
    
    19,630,580
    
    
    
    25,733,079
    
    
    
    45,401,885Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    16,779
    
    
    
    
    
    
    
    16,779Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,244,543
    
    
    
    2,244,543Balance at April 30, 2010
    
    $
    
    
    
    $
    38,226
    
    
    $
    19,647,359
    
    
    $
    27,977,622
    
    
    $
    47,663,207
  F-6




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries


CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended April 30,
 2010
    
    
    2009Cash flows from operating activitiesNet income
    
    $
    2,244,543
    
    
    $
    1,955,847Adjustments to reconcile net income to net
cash provided by operating activitiesDepreciation and amortization
    
    
    4,007,026
    
    
    
    4,035,804Stock-based compensation
    
    
    16,779
    
    
    
    31,079Provision for doubtful accounts
    
    
    
    
    
    
    17,788Provision for inventory obsolescence
    
    
    182,800
    
    
    
    157,000Deferred income tax expense (benefit)
    
    
    410,730
    
    
    
    (518,981
    )Amortization of intangible assets
    
    
    245,216
    
    
    
    349,182Amortization of financing fees
    
    
    40,511
    
    
    
    Insurance gain
    
    
    (1,233,830
    )
    
    
    Loss from disposal or sale of machinery and equipment
    
    
    38,493
    
    
    
    279,521Changes in operating assets and liabilitiesAccounts receivable
    
    
    (8,144,893
    )
    
    
    9,944,685Inventories
    
    
    (1,358,301
    )
    
    
    5,759,215Prepaid expenses and other assets
    
    
    1,604
    
    
    
    147,945Trade accounts payable
    
    
    9,491,228
    
    
    
    (9,898,407
    )Accrued expenses and wages
    
    
    1,103,263
    
    
    
    (1,722,331
    )Income taxes
    
    
    1,015,867
    
    
    
    (401,867
    )Net cash provided by operating activities
    
    
    8,061,036
    
    
    
    10,136,480Cash flows from investing activitiesProceeds from insurance
    
    
    1,233,830
    
    
    
    Proceeds from sale of machinery and equipment
    
    
    
    
    
    
    18,052Purchases of machinery and equipment
    
    
    (2,578,873
    )
    
    
    (820,705
    )Net cash used in investing activities
    
    
    (1,345,043
    )
    
    
    (802,653
    )Cash flows from financing activitiesPayments of financing fees
    
    
    (243,073
    )
    
    
    Proceeds under capital lease obligations
    
    
    1,287,407
    
    
    
    Payments under capital lease obligations
    
    
    (2,286,807
    )
    
    
    (1,637,494
    )Payments under other notes payable
    
    
    (93,912
    )
    
    
    Proceeds under building notes payable
    
    
    2,500,000
    
    
    
    Payments under building notes payable
    
    
    (2,686,437
    )
    
    
    (326,934
    )Payments under term loan
    
    
    (2,000,000
    )
    
    
    (1,000,000
    )Net payments under lines of credit
    
    
    (3,621,638
    )
    
    
    (7,129,559
    )Change in bank overdraft
    
    
    699,787
    
    
    
    707,785Net cash used in financing activities
    
    
    (6,444,673
    )
    
    
    (9,386,202
    )INCREASE (DECREASE) IN CASH
    
    
    271,320
    
    
    
    (52,375
    )Cash and cash equivalents at beginning of year
    
    
    3,781,252
    
    
    
    3,833,627Cash and cash equivalents at end of year
    
    $
    4,052,572
    
    
    $
    3,781,252Supplementary disclosures of cash flow informationCash paid for interest
    
    $
    818,453
    
    
    $
    1,810,000Cash paid for income taxes, net of (refunds)
    
    
    (548,028
    )
    
    
    1,560,243Purchase of machinery and equipment financed
under capital lease obligations
    
    
    
    
    
    
    358,627Non Cash Financing Activity:The Company financed a licensing agreement
through a note payable
    
    $
    442,732
    
    
    
    
  F-7




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 April 30, 2010 and 2009
 NOTE A  DESCRIPTION OF THE BUSINESS
  NOTE B  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Consolidation Policy
  Use of Estimates
  F-8




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
 April 30, 2010 and 2009
 NOTE B  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Continued
 Cash and Cash Equivalents
  Accounts Receivable
  Allowance for Doubtful Accounts
  Inventories
  F-9




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
 April 30, 2010 and 2009
 NOTE B  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Continued
 Inventory Policies
  Property, Machinery and Equipment
  Buildings
    
    20 yearsMachinery and equipment
    
    5-12 yearsOffice equipment and software
    
    3-5 yearsTools and dies
    
    12 monthsLeasehold improvements
    
    term of lease
 Deferred Financing Costs
  Income Taxes
  Earnings per Share
  F-10




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
 April 30, 2010 and 2009
 NOTE B  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Continued
  Revenue Recognition
  Shipping and Handling Costs
  Fair Value of Financial Instruments
  F-11




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
 April 30, 2010 and 2009
 NOTE B  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Continued
 Impairment of Long-Lived Assets
  Intangibles Assets
  CustomerRelationshipBalance as of April 30, 2008
    
    $
    958,069Amortization expense 2009
    
    
    (349,182
    )Balance as of April 30, 2009
    
    
    608,887Amortization expense 2010
    
    
    (245,216
    )Balance as of April 30, 2010
    
    $
    363,671Amortization period
    
    8 years
 F-12




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
 April 30, 2010 and 2009
 NOTE B  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Continued
 Intangibles Assets  Continued
  Years Ended April 30,2011
    
    $
    163,9982012
    
    
    112,7462013
    
    
    75,8502014
    
    
    11,0772015
    
    
    $
    363,671
  Stock Incentive Plans
  New Accounting Standards
  F-13




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2010 and 2009
 NOTE B  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Continued
 New Accounting Standards  Continued
  NOTE C  ALLOWANCE FOR DOUBTFUL ACCOUNTS
  2010
    
    
    2009Beginning balance
    
    $
    167,788
    
    
    $
    213,000Bad debt expense
    
    
    
    
    
    
    17,788Write-offs
    
    
    (17,788
    )
    
    
    (63,000
    )$
    150,000
    
    
    $
    167,788
 F-14




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2010 and 2009
 NOTE D  INVENTORIES
  2010
    
    
    2009Finished products
    
    $
    8,364,010
    
    
    $
    11,644,129Work in process
    
    
    1,925,880
    
    
    
    2,391,559Raw materials
    
    
    29,013,486
    
    
    
    23,993,72739,303,376
    
    
    
    38,029,415Less obsolescence reserve
    
    
    1,897,320
    
    
    
    1,798,860$
    37,406,056
    
    
    $
    36,230,555
  2010
    
    
    2009Beginning balance
    
    $
    1,798,860
    
    
    $
    1,723,019Provision for obsolescence
    
    
    182,800
    
    
    
    157,000Write-offs
    
    
    (84,340
    )
    
    
    (81,159
    )$
    1,897,320
    
    
    $
    1,798,860
 F-15




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2010 and 2009
 NOTE E  PROPERTY, MACHINERY AND EQUIPMENT, NET
  2010
    
    
    2009Land and buildings
    
    $
    12,145,447
    
    
    $
    12,021,913Machinery and equipment
    
    
    41,724,734
    
    
    
    38,670,381Office equipment and software
    
    
    4,541,291
    
    
    
    3,947,899Tools and dies
    
    
    295,095
    
    
    
    288,598Leasehold improvements
    
    
    3,345,106
    
    
    
    3,089,065Equipment under capital leases
    
    
    3,748,580
    
    
    
    4,899,53965,800,253
    
    
    
    62,917,395Less accumulated depreciation and
amortization, including amortization of
assets under capital leases of $1,126,162 and
$1,218,393 at April 30, 2010 and 2009,
respectively
    
    
    40,623,589
    
    
    
    36,716,817Property, machinery and equipment, net
    
    $
    25,176,664
    
    
    $
    26,200,578
  F-16




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2010 and 2009
 NOTE F
 LONG  TERM DEBT
 Note Payable  Bank
   Capital Lease Obligations
  F-17




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2010 and 2009
 NOTE F  LONG TERM DEBT  Continued
 Capital Lease Obligations  Continued
  Note Payable  Buildings
  Other Debt
  F-18




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2010 and 2009
 NOTE F  LONG TERM DEBT  Continued
 Other Debt  Continued
  Fiscal Year2011
    
    $
    260,9902012
    
    
    15,386,0482013
    
    
    126,8282014
    
    
    99,9962015
    
    
    2,075,017Thereafter
    
    
    $
    17,948,879
 NOTE G  ACCRUED EXPENSES AND WAGES
  2010
    
    
    2009Wages
    
    $
    1,800,552
    
    
    $
    1,555,736Bonuses
    
    
    675,000
    
    
    
    Interest payable
    
    
    55,831
    
    
    
    41,101Commissions
    
    
    45,339
    
    
    
    36,514Professional fees
    
    
    247,287
    
    
    
    228,161Foreign payroll accruals
    
    
    870,080
    
    
    
    708,433Other
    
    
    567,823
    
    
    
    588,704$
    4,261,912
    
    
    $
    3,158,649
 F-19




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2010 and 2009
 NOTE H  INCOME TAXES
  2010
    
    
    2009CurrentFederal
    
    $
    393,250
    
    
    $
    1,037,422State
    
    
    67,007
    
    
    
    179,311Foreign
    
    
    249,799
    
    
    
    238,526DeferredFederal
    
    
    358,076
    
    
    
    (452,450
    )State
    
    
    52,654
    
    
    
    (66,531
    )$
    1,120,786
    
    
    $
    936,278
  2010
    
    
    2009Income tax atFederal rate
    
    $
    1,144,212
    
    
    $
    983,322State income tax, net of federal
    
    
    55,108
    
    
    
    51,814Differential in foreign and federal tax rates
    
    
    (124,734
    )
    
    
    (113,246
    )Other, net
    
    
    46,200
    
    
    
    14,388$
    1,120,786
    
    
    $
    936,278
 F-20




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2010 and 2009
 NOTE H  INCOME TAX  Continued
  2010
    
    
    2009U.S.
    
    $
    2,263,760
    
    
    $
    1,857,492Foreign
    
    
    1,101,569
    
    
    
    1,034,633Total
    
    $
    3,365,329
    
    
    $
    2,892,125
  2010
    
    
    2009Allowance for doubtful accounts
    
    $
    58,499
    
    
    $
    65,436Inventory obsolescence reserve
    
    
    739,945
    
    
    
    701,546Accruals not currently deductible
    
    
    732,673
    
    
    
    461,619Inventory
    
    
    381,834
    
    
    
    402,765Current deferred tax asset
    
    
    1,912,951
    
    
    
    1,631,366Prepaid insurance
    
    
    (68,763
    )
    
    
    (70,941
    )Current deferred tax liability
    
    
    (68,763
    )
    
    
    (70,941
    )Net current deferred tax asset
    
    $
    1,844,188
    
    
    $
    1,560,425
 2010
    
    
    2009Intangible assets
    
    $
    (141,830
    )
    
    $
    (237,463
    )Machinery and equipment
    
    
    (2,517,676
    )
    
    
    (1,670,023
    )Other
    
    
    49,364
    
    
    
    (8,163
    )Net long-term deferred tax liability
    
    $
    (2,610,142
    )
    
    $
    (1,915,649
    )
 F-21




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2010 and 2009
 NOTE H  INCOME TAX  Continued
   2010
    
    
    2009Balance at May 1,
    
    $
    72,115
    
    
    $
    145,591Additions based on tax positions related to current year
    
    
    
    
    
    
    Additions for tax positions in prior years
    
    
    1,672
    
    
    
    2,248Reductions for tax positions of prior years
    
    
    (23,749
    )
    
    
    (75,724
    )Balance at April 30,
    
    $
    50,038
    
    
    $
    72,115
   F-22




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2010 and 2009
 NOTE H  INCOME TAX  Continued
  NOTE I  401(k) RETIREMENT SAVINGS PLAN
  NOTE J  OTHER INCOME
  F-23




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2010 and 2009
 NOTE K  MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK
  NOTE L  LEASES
   Capital
    
    
    OperatingYears ending April 30,
    
    leases
    
    
    leases2011
    
    $
    931,310
    
    
    $
    1,493,5202012
    
    
    579,907
    
    
    
    1,173,1852013
    
    
    
    
    
    
    503,1512014
    
    
    
    
    
    
    87,4442015
    
    
    
    
    
    
    87,444Thereafter
    
    
    
    
    
    
    7,2001,511,217
    
    
    $
    3,351,944Less amounts representing interest
    
    
    67,8611,443,356Less current portion
    
    
    874,116$
    569,240
  F-24




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2010 and 2009
 NOTE M  STOCK OPTIONS
    2010
    
    
    2009Expected dividend yield
    
    
    N/A
    
    
    
    0
    %Expected stock price volatility
    
    
    N/A
    
    
    
    .750Average risk-free interest rate
    
    
    N/A
    
    
    
    1.70
    %Weighted-average expected life of options
    
    
    N/A
    
    
    6.5 years
  F-25




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2010 and 2009
 NOTE M  STOCK OPTIONS  Continued
  Number ofWeighted-
    
    
    optionsaverage
    
    
    exercisableNumber of
    
    
    exercise
    
    
    at endoptions
    
    
    price
    
    
    of yearOutstanding at April 30, 2008
    
    
    498,707
    
    
    $
    7.92
    
    
    
    477,847Options granted during 2009
    
    
    5,000
    
    
    
    5.40Outstanding at April 30, 2009
    
    
    503,707
    
    
    
    7.89
    
    
    
    496,671Options expired during 2010
    
    
    (1,670
    )
    
    
    5.63Outstanding at April 30, 2010
    
    
    502,037
    
    
    
    7.90
    
    
    
    498,910
  F-26




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2010 and 2009
 NOTE M  STOCK OPTIONS  Continued
  Options outstandingNumber
    
    
    Weighted-average
    
    
    Weighted-outstanding at
    
    
    remaining
    
    
    averageRange of exercise prices
    
    April 30, 2010
    
    
    contractual life
    
    
    exercise price$2.20  5.40
    
    
    106,845
    
    
    2.92 years
    
    $
    2.609.17  11.56
    
    
    395,192
    
    
    5.82 years
    
    
    9.34502,037
    
    
    
    
    
    
    $
    7.90
 Options exercisableNumber
    
    
    Weighted-exercisable at
    
    
    averageRange of exercise prices
    
    April 30, 2010
    
    
    exercise price$2.20  5.40
    
    
    104,345
    
    
    $
    2.539.17  11.56
    
    
    394,565
    
    
    
    9.18498,910
    
    
    $
    7.79
   F-27




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2010 and 2009
 NOTE N  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
  First
    
    
    Second
    
    
    Third
    
    
    Fourthquarter
    
    
    quarter
    
    
    quarter
    
    
    quarter2010Net sales
    
    $
    26,330,054
    
    
    $
    30,564,267
    
    
    $
    30,599,499
    
    
    $
    34,982,520(Loss) income before
income tax expense
    
    
    (638,781
    )
    
    
    821,021
    
    
    
    664,360
    
    
    
    2,518,729Net (loss) income
    
    
    (402,475
    )
    
    
    517,298
    
    
    
    415,468
    
    
    
    1,714,252(Loss) earnings per shareBasic
    
    $
    (0.11
    )
    
    $
    0.14
    
    
    $
    0.11
    
    
    $
    0.45(Loss) earnings per
share-Diluted
    
    $
    (0.11
    )
    
    $
    0.13
    
    
    $
    0.12
    
    
    $
    0.44Total sharesBasic
    
    
    3,822,556
    
    
    
    3,822,556
    
    
    
    3,822,556
    
    
    
    3,822,556Total sharesDiluted
    
    
    3,822,556
    
    
    
    3,851,395
    
    
    
    3,873,531
    
    
    
    3,883,645
 F-28




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2010 and 2009
 NOTE N  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)  Continued
  First
    
    
    Second
    
    
    Third
    
    
    Fourthquarter
    
    
    quarter
    
    
    quarter
    
    
    quarter2009Net sales
    
    $
    38,478,118
    
    
    $
    41,132,728
    
    
    $
    26,970,927
    
    
    $
    27,162,869Income (loss) before
income tax expense
    
    
    977,903
    
    
    
    2,070,389
    
    
    
    (160,585
    )
    
    
    4,418Net income (loss)
    
    
    579,324
    
    
    
    1,505,316
    
    
    
    (265,458
    )
    
    
    136,665Earnings (loss) per shareBasic
    
    $
    0.15
    
    
    $
    0.39
    
    
    $
    (0.07
    )
    
    $
    0.04Earnings (loss) per
shareDiluted
    
    $
    0.15
    
    
    $
    0.39
    
    
    $
    (0.07
    )
    
    $
    0.04Total sharesBasic
    
    
    3,822,556
    
    
    
    3,822,556
    
    
    
    3,822,556
    
    
    
    3,822,556Total sharesDiluted
    
    
    3,884,075
    
    
    
    3,874,643
    
    
    
    3,822,556
    
    
    
    3,822,556
 F-29




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2010 and 2009
 NOTE O  LITIGATION
   F-30