##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 (Mark One)
 þ
    
    Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the fiscal year ended April 30, 2008.
 Or
 o
    
    Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the transition period fromto.
 Commission file number 0-23248
 SIGMATRON INTERNATIONAL, INC.
  Delaware
    
    36-3918470(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification Number)
 2201 Landmeier Rd., Elk Grove Village, IL
    
    60007(Address of principal executive offices)
    
    (Zip Code)
 
 Common Stock $0.01 par value per share
 o þ
 o þ
 þ o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(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
    
    
    9ITEM 1B. UNRESOLVED STAFF COMMENTS
    
    
    13ITEM 2. PROPERTIES
    
    
    13ITEM 3. LEGAL PROCEEDINGS
    
    
    14ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    14PART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    15ITEM 6. SELECTED FINANCIAL DATA
    
    
    17ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    
    
    17ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
    
    
    26ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    27ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    28ITEM 9A(T). CONTROLS AND PROCEDURES
    
    
    28ITEM 9B. OTHER INFORMATION
    
    
    28PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    28ITEM 11. EXECUTIVE COMPENSATION
    
    
    29ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    29ITEM 13. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
    
    
    29ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    29PART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    29SIGNATURES
    
    
    32Amended and Restated Mortgage NoteSixteenth Amendment to Loan and Security AgreementConsent of BDO Seidman, LLP302 Certification of Principal Executive Officer302 Certification of Principal Financial Officer906 Certification of Principal Executive Officer906 Certification of Principal Financial Officer
  2




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PART 1
 
 ITEM 1. BUSINESS
 CAUTIONARY NOTE:
  Overview
    3




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Products and Services
  Supply Chain Management
  4




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Assembly and Manufacturing
  Manufacturing and Related Services
 Product Testing
 Warehousing and Distribution
 Markets and Customers
  5




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Percent of Net SalesTypical
    
    Fiscal
    
    Fiscal
    
    FiscalMarkets
    
    OEM Application
    
    2006
    
    2007
    
    2008Appliances
    
    Household appliance controls
    
    
    37.6
    %
    
    
    37.6
    %
    
    
    35.8
    %Industrial Electronics
    
    Motor controls, power supplies
    
    
    18.8
    
    
    
    23.9
    
    
    
    27.3Fitness
    
    Treadmills, exercise bikes
    
    
    20.0
    
    
    
    16.7
    
    
    
    20.6Telecommunications
    
    Routers
    
    
    11.1
    
    
    
    6.3
    
    
    
    6.1Gaming
    
    Slot machines, lighting displays
    
    
    2.3
    
    
    
    5.7
    
    
    
    2.9Life Sciences
    
    Clinical diagnostic systems and instruments
    
    
    5.0
    
    
    
    4.2
    
    
    
    3.7Semiconductor Equipment
    
    Process control and yield management
solutions for semiconductor productions
    
    
    3.9
    
    
    
    4.1
    
    
    
    2.6Consumer Electronics
    
    Carbon monoxide alarms, sprinkler systems,
battery backup sump pumps, electric bikes
    
    
    1.1
    
    
    
    0.8
    
    
    
    0.7Automotive
    
    Automobile interior lighting
    
    
    0.2
    
    
    
    0.7
    
    
    
    0.3Total
    
    
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
  Sales and Marketing
   6




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Mexico and China Operations
     Competition
    7




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Consolidation
   Governmental Regulations
  Backlog
  Employees
   8




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Executive Officers of the Registrants
 Name
    
    Age
    
    PositionGary R. Fairhead
    
    
    56
    
    
    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. Blake
    
    
    47
    
    
    Chief Financial Officer, Vice President 
Finance, Treasurer and Secretary since
February 1994.Gregory A. Fairhead
    
    
    52
    
    
    Executive Vice President  Elk Grove Village
and Acuna Operations and Assistant Secretary.
Gregory A. Fairhead has been Executive Vice
President since February 2000 and Assistant
Secretary since 1994. Mr. Fairhead was Vice
President  Mexican Operations for the
Company from February 1990 to February 2000.
Gregory A. Fairhead is the brother of Gary R.
Fairhead.John P. Sheehan
    
    
    47
    
    
    Vice President  Director of Materials and
Assistant Secretary since February 1994.Daniel P. Camp
    
    
    59
    
    
    Vice President  Acuna Operation since 2007.
Vice President  China Operations from 2003
to 2007. General Manager / Vice President of
Acuna Operations from 1994 to 2003.Raj B. Upadhyaya
    
    
    53
    
    
    Executive Vice President  Hayward / Tijuana
since 2005. Mr. Upadhyaya was the Vice
President of the Fremont Operation (SMTU)
from 2001 until 2005.Hom-Ming Chang
    
    
    48
    
    
    Vice President  China Operation since 2007.
Vice President  Hayward Materials / Test /IT
from 2005  2007. Vice President of
Fremont Operation (SMTU) from 2001 to 2005.
 
 ITEM 1 A. RISK FACTORS
  The Companys ability to secure and maintain sufficient credit arrangements is key to its continued
operations
  9




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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
 The Companys customer base is concentrated.
  There is variability in the requirements of the Companys customers.
  The Company and its customers may be unable to keep current with the industrys technological
changes.
   10




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The Company faces intense industry competition and downward pricing pressures.
   The Company has foreign operations that may pose additional risks.
    The Company may be unable to manage its growth.
  Disclosure and internal controls.
  11




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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.
  Failure to comply with environmental regulations could subject the Company to liability.
  The price of the Companys stock is volatile.
  Being a public company increases the Companys administrative costs.
  12




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ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
   Square
    
    
    
    Owned/Location
    
    Feet
    
    Services Offered
    
    LeasedSuzhou-Wujiang, China
    
    
    147,500
    
    
    High volume assembly, and testing of PTH and SMT, box-build
    
    *Hayward, CA
    
    
    126,000
    
    
    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, transformers
    
    Owned
**Las Vegas, NV
    
    
    38,250
    
    
    N/A
    
    Leased
***Del Rio, TX
    
    
    36,000
    
    
    Warehouse, portion of which is bonded
    
    LeasedTijuana, Mexico
    
    
    67,700
    
    
    High volume assembly, and testing of PTH and SMT, box-build
    
    LeasedTaipei, Taiwan
    
    
    2,900
    
    
    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.***
    
    During fiscal year 2006 the Las Vegas operation was sold. The Company continues to be obligated
under the primary lease agreement for the facility and sublets the property to other occupants.  13




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ITEM 3. LEGAL PROCEEDINGS
   
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  14




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PART II
 
 ITEM 5.  MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
  
 Period
    
    High
    
    
    LowFiscal 2008:Fourth Quarter
    
    $
    7.85
    
    
    $
    5.25Third Quarter
    
    
    12.50
    
    
    
    6.88Second Quarter
    
    
    13.37
    
    
    
    8.44First Quarter
    
    
    11.64
    
    
    
    8.95Fiscal 2007:Fourth Quarter
    
    $
    10.95
    
    
    $
    7.90Third Quarter
    
    
    11.00
    
    
    
    8.56Second Quarter
    
    
    10.94
    
    
    
    7.32First Quarter
    
    
    10.19
    
    
    
    7.11
   15




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Stock Price Performance Graph
   
 Total Return To Shareholders
(Includes reinvestment of dividends)
 ANNUAL RETURN PERCENTAGEYears EndingCompany Name / Index
    
    
    Apr 04
    
    
    
    Apr 05
    
    
    
    Apr 06
    
    
    
    Apr 07
    
    
    
    Apr 08SigmaTron International, Inc.
    
    
    
    75.83
    
    
    
    
    6.13
    
    
    
    
    (11.46
    )
    
    
    
    (0.65
    )
    
    
    
    (41.20
    )Nasdaq Index
    
    
    
    30.82
    
    
    
    
    0.33
    
    
    
    
    21.41
    
    
    
    
    9.08
    
    
    
    
    (5.49
    )New Peer Group
    
    
    
    111.53
    
    
    
    
    (8.26
    )
    
    
    
    26.26
    
    
    
    
    18.64
    
    
    
    
    (23.89
    )Old Peer Group
    
    
    
    118.60
    
    
    
    
    (10.70
    )
    
    
    
    22.61
    
    
    
    
    41.92
    
    
    
    
    (31.96
    )
 INDEXED RETURNSYears EndingBasePeriodCompany Name / Index
    
    
    Apr 03
    
    
    
    Apr 04
    
    
    
    Apr 05
    
    
    
    Apr 06
    
    
    
    Apr 07
    
    
    
    Apr 08SigmaTron International, Inc.
    
    
    
    100
    
    
    
    
    175.83
    
    
    
    
    186.61
    
    
    
    
    165.22
    
    
    
    
    164.14
    
    
    
    
    96.52Nasdaq Index
    
    
    
    100
    
    
    
    
    130.82
    
    
    
    
    131.25
    
    
    
    
    159.36
    
    
    
    
    173.83
    
    
    
    
    164.29New Peer Group
    
    
    
    100
    
    
    
    
    211.53
    
    
    
    
    194.05
    
    
    
    
    245.01
    
    
    
    
    290.68
    
    
    
    
    221.24Old Peer Group
    
    
    
    100
    
    
    
    
    218.60
    
    
    
    
    195.21
    
    
    
    
    239.34
    
    
    
    
    339.68
    
    
    
    
    231.12
 New Peer Group Companies
    
    Old Peer Group CompaniesIEC ELECTRONICS CORP
    
    IEC ELECTRONICS CORPKEY TRONIC CORP
    
    NORTECH SYSTEMS INCNORTECH SYSTEMS INC
    
    SIMCLAR INCSIMCLAR INC
    
    SMTEK INTERNATIONAL INC (Included through 2004. Acquired by CTS Corp 2/2005)
 16




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ITEM 6. SELECTED FINANCIAL DATA
 Years Ended April 30(In thousands except per share data)*2008
    
    
    2007
    
    
    **2006
    
    
    2005
    
    
    2004Net sales
    
    $
    167,811
    
    
    $
    165,909
    
    
    $
    124,786
    
    
    $
    94,312
    
    
    $
    84,178(Loss) income before
income tax expense
(benefit) and
discontinued operation
    
    
    (4,801
    )
    
    
    2,595
    
    
    
    2,862
    
    
    
    8,150
    
    
    
    8,446Net (loss) income from
continuing operations
    
    
    (6,456
    )
    
    
    1,698
    
    
    
    1,926
    
    
    
    4,840
    
    
    
    4,934Net income (loss) from
discontinued operation
    
    
    
    
    
    
    
    
    
    
    (44
    )
    
    
    (141
    )
    
    
    467Net (loss) income
    
    
    (6,456
    )
    
    
    1,698
    
    
    
    1,882
    
    
    
    4,699
    
    
    
    5,406Earnings (loss) per
share-basic Continuing
operations
    
    
    (1.69
    )
    
    
    0.45
    
    
    
    0.51
    
    
    
    1.29
    
    
    
    1.44Discontinued operation
    
    
    (0.00
    )
    
    
    (0.00
    )
    
    
    (0.01
    )
    
    
    (0.04
    )
    
    
    0.14Total
    
    $
    (1.69
    )
    
    $
    0.45
    
    
    $
    0.50
    
    
    $
    1.25
    
    
    $
    1.58Earnings (loss) per
share-diluted
Continuing operations
    
    
    (1.69
    )
    
    
    0.44
    
    
    
    0.49
    
    
    
    1.27
    
    
    
    1.39Discontinued operation
    
    
    (0.00
    )
    
    
    (0.00
    )
    
    
    (0.01
    )
    
    
    (0.04
    )
    
    
    0.14Total
    
    $
    (1.69
    )
    
    $
    0.44
    
    
    $
    0.48
    
    
    $
    1.23
    
    
    $
    1.53Total assets
    
    
    106,606
    
    
    
    109,402
    
    
    
    98,940
    
    
    
    66,543
    
    
    
    62,998Long-term debt and
capital lease
obligations (including
current maturities)
    
    
    35,586
    
    
    
    36,551
    
    
    
    30,396
    
    
    
    7,194
    
    
    
    7,025
 
 *
    
    The financial data for 2008 includes a goodwill impairment charge of $9,298,945.**
    
    The financial data for 2006 includes the Hayward and Tijuana operations, since their acquisition
in July 2005. 
 ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
  17




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Overview
      18




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Critical Accounting Policies:
 Management Estimates and Uncertainties
 Revenue Recognition
 Inventories
 Impairment of Long-Lived Assets
 Goodwill and Other Intangibles
 19




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New Accounting Standards:
 Accounting for Certain Hybrid Instruments
   Balance at May 1, 2007
    
    
    
    
    
    $
    153,900Additions based on tax positions related to current year
    
    
    
    
    
    
    Additions for tax positions in prior year
    
    
    
    
    
    
    6,494Reductions for tax positions of prior year
    
    
    
    
    
    
    (14,803
    )Balance at April 30, 2008
    
    
    
    
    
    $
    145,591
 20




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The Fair Value Options for Financial Assets
and Financial Liabilities
   Results of Operations:
 
   21




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Non-Gaap ReconciliationThree Months
    
    
    Twelve MonthsEnded
    
    
    EndedApril 30, 2008
    
    
    April 30, 2008Income (loss) Reconciliation:Net income before goodwill impairment
    
    $
    1,009,383
    
    
    $
    2,842,109Goodwill impairment charge
    
    
    9,298,945
    
    
    
    9,298,945Net loss
    
    
    ($8,289,562
    )
    
    
    ($6,456,836
    )EPS Reconciliation:Net income per common share  assuming dilution
before goodwill impairment
    
    $
    0.26
    
    
    $
    0.74Goodwill impairment
    
    
    ($2.43
    )
    
    
    ($2.43
    )Net loss per common share  assuming dilution
    
    
    ($2.17
    )
    
    
    ($1.69
    )Weighted average number of common equivalent
shares outstanding  assuming dilution
    
    
    3,822,536
    
    
    
    3,811,832
 22




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Results of Operations:
 
        23




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Liquidity and Capital Resources:
 Operating Activities.
   Investing Activities.
      24




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Financing Activities.
         25




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Off-balance Sheet Transactions:
  Contractual Obligations and Commercial Commitments
  Payment ObligationsLess than
    
    
    
    
    
    
    
    
    
    
    After 5Total
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    YearsNotes payable,
including current
maturities
    
    $
    3,688,134
    
    
    $
    485,560
    
    
    $
    838,526
    
    
    $
    2,364,048
    
    
    $
    0Capital leases,
including current
maturities
    
    
    4,131,437
    
    
    
    1,804,657
    
    
    
    2,209,413
    
    
    
    117,367
    
    
    
    0Operating leases
    
    
    3,060,569
    
    
    
    1,445,508
    
    
    
    1,575,461
    
    
    
    39,600
    
    
    
    0Bank debt
    
    
    29,175,377
    
    
    
    2,164,383
    
    
    
    27,010,994
    
    
    
    0
    
    
    
    0Total contractual
cash obligations
    
    $
    40,055,517
    
    
    $
    5,900,108
    
    
    $
    31,634,394
    
    
    $
    2,521,015
    
    
    $
    0
  
 ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
    26




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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  27




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ITEM 9.
    
    CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A (T). CONTROLS AND PROCEDURES
    
 ITEM 9B OTHER INFORMATION
  
 PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  28




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ITEM 11. EXECUTIVE COMPENSATION
  
 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)
    
    Exhibits:Exhibit 10.15  Amended and Restated Mortgage Note between SigmaTron International, Inc.
and LaSalle Bank National Association, dated April 30, 2008, filed as Exhibit 10.15.Exhibit 10.16  Sixteenth Amendment to Loan and Security Agreement between SigmaTron
International, Inc. and LaSalle Bank National Association, dated March 7, 2008, filed as
Exhibit 10:16.
  The financial statements, including required supporting schedule, are listed in the index
to Financial Statements and Financial Schedule filed as part of this Annual Report on Form
10-K beginning on Page F-1.
  29




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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, filed as Exhibit
3.2 to the Companys Form 10-K for the fiscal year ended April 30, 2000, and hereby
incorporated by reference.10.1
    
    Form of 1993 Stock Option Plan  filed as Exhibit 10.4 to the Companys Registration
Statement on Form S-1, File No. 33-72100, and hereby incorporated by reference. *10.2
    
    Form of Incentive Stock Option Agreement for the Companys 1993 Stock Option Plan  filed as
Exhibit 10.5 to the Companys Registration Statement on Form S-1, File No. 33-72100, and
hereby incorporated by reference. *10.3
    
    Form of Non-Statutory Stock Option Agreement for the Companys 1993 stock Option Plan  filed
as Exhibit 10.6 to the Companys Registration Statement on Form S-1, File No. 33-72100, and
hereby incorporated by reference. *10.4
    
    2000 Outside Directors Stock Option Plan and hereby incorporated by reference  filed as
Appendix 1 to the Companys 2000 Proxy Statement filed on August 21, 2000.10.5
    
    Loan and Security Agreement between SigmaTron International, Inc. and LaSalle National Bank
dated August 25, 1999, filed as Exhibit 10.26 to the Companys Form 10-Q for the quarter ended
October 31, 1999, and hereby incorporated by reference.10.6
    
    2004 Directors Stock Option Plan and hereby incorporated by reference  filed as Appendix C
to the Companys 2004 Proxy Statement filed on August 16, 2004. *10.7
    
    2004 Employee Stock Option Plan and hereby incorporated by reference  filed as Appendix B to
the Companys 2004 Proxy Statement filed on August 16, 2004. *10.8
    
    Change in Control Plan dated May 30, 2002, filed as Exhibit 10.15 to the Companys Form 10-K
for the fiscal year ended April 30, 2005, and hereby incorporated by reference.10.9
    
    Tenth Amendment to Loan and Security Agreement between SigmaTron International, Inc. and
LaSalle Bank National Association, dated July 14, 2005, filed as Exhibit 10.18 to the
Companys Form 10-Q for the quarter ended October 31, 2005, and hereby incorporated by
reference.10.10
    
    Eleventh Amendment to Loan and Security Agreement between SigmaTron International, Inc. and
LaSalle Bank National Association, dated September 12, 2005, filed as Exhibit 10.19 to the
Companys Form 10-Q for the quarter Ended October 31, 2005, and hereby incorporated by
reference.10.11
    
    Lease Agreement , Number 12, between SigmaTron International, Inc. and General Electric
Capital Corporation, dated November 22, 2005, filed as Exhibit 10.20 to the Companys Form
10-Q for the quarter ended January 31, 2006, and hereby incorporated by reference.10.12
    
    Twelfth Amendment to Loan and Security Agreement between SigmaTron International, Inc. and
LaSalle Bank National Association, dated July 31, 2006, filed as Exhibit 10.21 to the
Companys Form 10-Q for the quarter ended July 31, 2006, and hereby incorporated by reference.10.13
    
    Thirteen Amendment to Loan and Security Agreement between SigmaTron International, Inc. and
LaSalle Bank National Association, dated October 20, 2006, filed as Exhibit 10.22 to the
Companys Form 10-Q for the quarter ended October 31, 2006, and hereby incorporated by
reference.
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10.14
    
    Fourteenth Amendment to Loan and Security Agreement between SigmaTron International, Inc.
and LaSalle Bank National Association, dated January 2007, filed as Exhibit 10.23 to the
Companys Form 10-Q for the quarter ended January 31, 2007, and hereby incorporated by
reference.10.15
    
    Amended and Restated Mortgage Note between SigmaTron International, Inc. and LaSalle Bank
National Association dated April 30, 2008.**10.16
    
    Sixteenth Amendment to Loan and Security Agreement between SigmaTron International, Inc. and
LaSalle Bank National Association, dated March 7, 2008.**21.0
    
    Subsidiaries of the Registrant to the Companys Form 10-K for the fiscal year ended April 30,
2007, and hereby incorporated by reference.23.1
    
    Consent of BDO Seidman, LLP.**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.**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).**
 
 *
    
    Indicates management contract or compensatory plan.**
    
    Filed herewith (c)
    
    ExhibitsThe Company hereby files as exhibits to this Report the exhibits listed in
Item 15(a)(3) above, which are attached hereto or incorporated herein.
 31




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##### Table of Contents



SIGNATURES
  SIGMATRON INTERNATIONAL, INC.By:
    
    /s/ Gary R. FairheadGary R. Fairhead, President and Chief Executive Officer,Principal Executive Officer and DirectorDated: July 18, 2008
   Signature
    
    Title
    
    Date/s/ Franklin D. Sove

Franklin D. Sove
    
    Chairman of the Board of Directors
    
    July 18, 2008/s/ Gary R. Fairhead

Gary R. Fairhead
    
    President and Chief Executive Officer,
(Principal Executive Officer) and Director
    
    July 18, 2008/s/ Linda K. Blake

Linda K. Blake
    
    Chief Financial Officer, Secretary and Treasurer
(Principal Financial Officer and Principal
Accounting Officer)
    
    July 18, 2008/s/ John P. Chen

John P. Chen
    
    Director
    
    July 18, 2008/s/ Thomas W. Rieck

Thomas W. Rieck
    
    Director
    
    July 18, 2008/s/ Dilip S. Vyas

Dilip S. Vyas
    
    Director
    
    July 18, 2008/s/ Carl Zemenick

Carl Zemenick
    
    Director
    
    July 18, 2008
 32




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##### Table of Contents



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 OPERATIONS
    
    
    F-5CONSOLIDATED STATEMENT 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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##### Table of Contents



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




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
 
 CONSOLIDATED BALANCE SHEETS
April 30,
 
 ASSETS
 2008
    
    
    2007CURRENT ASSETSCash and cash equivalents
    
    $
    3,833,627
    
    
    $
    2,769,653Accounts receivable, less allowance for doubtful
accounts of $213,000 and $150,000 at April 30,
2008 and 2007, respectively
    
    
    26,747,552
    
    
    
    20,279,874Inventories, net
    
    
    42,146,770
    
    
    
    40,849,791Prepaid expenses and other assets
    
    
    1,039,607
    
    
    
    1,289,207Deferred income taxes
    
    
    1,453,007
    
    
    
    1,251,241Other receivables
    
    
    38,783
    
    
    
    224,189Total current assets
    
    
    75,259,346
    
    
    
    66,663,956PROPERTY, MACHINERY AND EQUIPMENT, NET
    
    
    29,354,623
    
    
    
    30,971,107LONG-TERM ASSETSOther assets
    
    
    1,034,155
    
    
    
    1,006,126Intangible assets, net of amortization of $1,811,931
and $1,308,228 at April 30, 2008 and 2007,
respectively
    
    
    958,069
    
    
    
    1,461,772Goodwill
    
    
    
    
    
    
    9,298,945Total long-term assets
    
    
    1,992,224
    
    
    
    11,766,843TOTAL ASSETS
    
    $
    106,606,193
    
    
    $
    109,401,906
  F-3




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS  CONTINUED
April 30,
 
 LIABILITIES AND STOCKHOLDERS EQUITY
 2008
    
    
    2007CURRENT LIABILITIESTrade accounts payable
    
    $
    19,722,175
    
    
    $
    15,473,660Accrued expenses
    
    
    2,297,601
    
    
    
    2,613,636Accrued payroll
    
    
    2,583,379
    
    
    
    2,241,287Income taxes payable
    
    
    555,380
    
    
    
    243,596Notes payable  bank
    
    
    1,000,000
    
    
    
    1,000,000Notes payable  buildings
    
    
    326,935
    
    
    
    528,092Capital lease obligations
    
    
    1,595,931
    
    
    
    1,690,437Total current liabilities
    
    
    28,081,401
    
    
    
    23,790,708NOTES PAYABLE  BANKS,
LESS CURRENT PORTION
    
    
    27,876,255
    
    
    
    27,219,015NOTES PAYABLE  BUILDINGS,
LESS CURRENT PORTION
    
    
    2,661,437
    
    
    
    2,988,372CAPITAL LEASE OBLIGATIONS,
LESS CURRENT PORTION
    
    
    2,125,692
    
    
    
    3,125,297DEFERRED INCOME TAXES
    
    
    2,446,449
    
    
    
    2,537,493Total liabilities
    
    
    63,191,234
    
    
    
    59,660,885COMMITMENTS 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 and 3,794,956 shares issued and
outstanding at April 30, 2008 and 2007, respectively
    
    
    38,226
    
    
    
    37,950Capital in excess of par value
    
    
    19,599,501
    
    
    
    19,315,104Retained earnings
    
    
    23,777,232
    
    
    
    30,387,967Total stockholders equity
    
    
    43,414,959
    
    
    
    49,741,021TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY
    
    $
    106,606,193
    
    
    $
    109,401,906
  F-4




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended April 30,
 2008
    
    
    2007
    
    
    2006Net sales
    
    $
    167,810,994
    
    
    $
    165,909,106
    
    
    $
    124,786,476Cost of products sold
    
    
    148,247,604
    
    
    
    148,150,350
    
    
    
    109,986,377Gross profit
    
    
    19,563,390
    
    
    
    17,758,756
    
    
    
    14,800,099Selling and administrative expenses
    
    
    12,375,458
    
    
    
    12,872,353
    
    
    
    10,925,646Goodwill impairment charge
    
    
    9,298,945
    
    
    
    
    
    
    
    Operating (loss) income
    
    
    (2,111,013
    )
    
    
    4,886,403
    
    
    
    3,874,453Other expense (income)
    
    
    22,832
    
    
    
    (282,280
    )
    
    
    (408,889
    )Interest expense
    
    
    2,667,473
    
    
    
    2,574,180
    
    
    
    1,421,455(Loss) income from continuing operations before income tax expense
    
    
    (4,801,318
    )
    
    
    2,594,503
    
    
    
    2,861,887Income tax expense
    
    
    1,655,518
    
    
    
    896,179
    
    
    
    935,589(Loss) income from continuing operation
    
    
    (6,456,836
    )
    
    
    1,698,324
    
    
    
    1,926,298Discontinued operationGain on sale of Las Vegas operation
    
    
    
    
    
    
    
    
    
    
    (310,731
    )Loss from operations of discontinued Las Vegas location
    
    
    
    
    
    
    
    
    
    
    383,134Income tax benefit
    
    
    
    
    
    
    
    
    
    
    (28,237
    )Loss on discontinued operation
    
    
    
    
    
    
    
    
    
    
    (44,166
    )NET (LOSS) INCOME
    
    $
    (6,456,836
    )
    
    $
    1,698,324
    
    
    $
    1,882,132Earnings (loss) per share  basicContinuing operations
    
    
    ($1.69
    )
    
    $
    0.45
    
    
    $
    0.51Discontinued operation
    
    
    0.00
    
    
    
    0.00
    
    
    
    (0.01
    )Total
    
    $
    (1.69
    )
    
    $
    0.45
    
    
    $
    0.50Earnings (loss) per share  dilutedContinuing operations
    
    
    ($1.69
    )
    
    $
    0.44
    
    
    $
    0.49Discontinued operation
    
    
    0.00
    
    
    
    0.00
    
    
    
    (0.01
    )Total
    
    $
    (1.69
    )
    
    $
    0.44
    
    
    $
    0.48Weighted-average shares of common
stock outstandingBasic
    
    
    3,811,832
    
    
    
    3,791,077
    
    
    
    3,756,804Diluted
    
    
    3,811,832
    
    
    
    3,879,155
    
    
    
    3,894,731
  F-5




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
 
 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
Three years ended April 30, 2008, 2007 and 2006
 Capital in
    
    
    
    
    
    
    TotalPreferred
    
    
    Common
    
    
    excess of par
    
    
    Retained
    
    
    stockholdersstock
    
    
    stock
    
    
    value
    
    
    earnings
    
    
    equityBalance at May 1, 2005
    
    $
    
    
    
    $
    37,554
    
    
    $
    19,087,020
    
    
    $
    26,807,511
    
    
    $
    45,932,085Exercise of options
    
    
    
    
    
    
    316
    
    
    
    80,269
    
    
    
    
    
    
    
    80,585Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,882,132
    
    
    
    1,882,132Balance at April 30, 2006
    
    
    
    
    
    
    37,870
    
    
    
    19,167,289
    
    
    
    28,689,643
    
    
    
    47,894,802Tax benefit of exercise of options
    
    
    
    
    
    
    
    
    
    
    96,000
    
    
    
    
    
    
    
    96,000Exercise of options
    
    
    
    
    
    
    80
    
    
    
    17,520
    
    
    
    
    
    
    
    17,600Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    34,295
    
    
    
    
    
    
    
    34,295Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,698,324
    
    
    
    1,698,324Balance at April 30, 2007
    
    
    0
    
    
    
    37,950
    
    
    
    19,315,104
    
    
    
    30,387,967
    
    
    
    49,741,021Adjustment to initially apply FIN
48,
Accounting for Uncertainty in
Income
Taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (153,900
    )
    
    
    (153,900
    )Exercise of options
    
    
    
    
    
    
    276
    
    
    
    252,816
    
    
    
    
    
    
    
    253,092Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    31,581
    
    
    
    
    
    
    
    31,581Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,456,836
    )
    
    
    (6,456,836
    )Balance at April 30, 2008
    
    $
    
    
    
    $
    38,226
    
    
    $
    19,599,501
    
    
    $
    23,777,232
    
    
    $
    43,414,959
  F-6




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended April 30,
 2008
    
    
    2007
    
    
    2006Cash flows from operating activitiesNet (loss) income
    
    $
    (6,456,836
    )
    
    $
    1,698,324
    
    
    $
    1,882,132Adjustments to reconcile net (loss) income to net
cash provided by (used in) operating activitiesDepreciation and amortization
    
    
    4,004,108
    
    
    
    4,033,619
    
    
    
    3,635,643Goodwill impairment charge
    
    
    9,298,945
    
    
    
    
    
    
    
    Stock-based compensation
    
    
    31,581
    
    
    
    34,295
    
    
    
    Provision for doubtful accounts
    
    
    63,000
    
    
    
    17,107
    
    
    
    296,918Provision for inventory obsolescence
    
    
    477,719
    
    
    
    475,763
    
    
    
    390,087Deferred income taxes
    
    
    (490,787
    )
    
    
    (215,438
    )
    
    
    (358,435
    )Amortization of intangibles
    
    
    503,703
    
    
    
    724,578
    
    
    
    595,900Gain on sale of discontinued operation
    
    
    
    
    
    
    
    
    
    
    (310,731
    )Changes in operating assets and liabilities, net of acquisitionAccounts receivable
    
    
    (6,530,677
    )
    
    
    (2,549,567
    )
    
    
    (559,175
    )Inventories
    
    
    (1,774,698
    )
    
    
    (10,075,504
    )
    
    
    (6,121,916
    )Prepaid expenses and other assets
    
    
    406,977
    
    
    
    1,166,790
    
    
    
    (146,594
    )Refundable income taxes
    
    
    
    
    
    
    
    
    
    
    (476,000
    )Trade accounts payable
    
    
    4,248,515
    
    
    
    2,028,732
    
    
    
    3,207,340Accrued expenses and wages
    
    
    26,057
    
    
    
    948,296
    
    
    
    (469,753
    )Income taxes
    
    
    355,862
    
    
    
    (595,842
    )
    
    
    431,728Net cash provided by (used in) operating activities
    
    
    4,163,469
    
    
    
    (2,308,847
    )
    
    
    1,997,144Cash flows from investing activitiesAcquisition of Able, net of cash acquired
    
    
    
    
    
    
    
    
    
    
    (16,771,755
    )Proceeds from sale of machinery and equipment
    
    
    12,396
    
    
    
    
    
    
    
    182,244Proceeds from sale of Las Vegas operation
    
    
    
    
    
    
    
    
    
    
    1,705,695Purchases of machinery and equipment
    
    
    (2,400,020
    )
    
    
    (2,298,240
    )
    
    
    (6,372,467
    )Net cash used in investing activities
    
    
    (2,387,624
    )
    
    
    (2,298,240
    )
    
    
    (21,256,283
    )Cash flows from financing activitiesProceeds from exercise of options
    
    
    253,092
    
    
    
    17,600
    
    
    
    80,587Payments under building notes payable
    
    
    (528,092
    )
    
    
    (504,624
    )
    
    
    (482,740
    )Payments from other notes payable
    
    
    
    
    
    
    
    
    
    
    (300,000
    )Proceeds under sale lease back agreements
    
    
    615,855
    
    
    
    
    
    
    
    2,720,415Payments under capital lease obligations
    
    
    (1,709,966
    )
    
    
    (1,559,276
    )
    
    
    (1,322,154
    )Proceeds under term loan
    
    
    
    
    
    
    1,250,000
    
    
    
    3,000,000Payments under term loan
    
    
    (1,000,000
    )
    
    
    (250,000
    )
    
    
    Tax benefit from exercise of stock options
    
    
    
    
    
    
    96,000
    
    
    
    Net proceeds under lines of credit
    
    
    1,657,240
    
    
    
    5,057,115
    
    
    
    18,648,942Net cash (used in) provided by
financing activities
    
    
    (711,871
    )
    
    
    4,106,815
    
    
    
    22,345,050INCREASE (DECREASE) IN CASH
    
    
    1,063,974
    
    
    
    (500,272
    )
    
    
    3,085,911Cash and cash equivalents at beginning of year
    
    
    2,769,653
    
    
    
    3,269,925
    
    
    
    184,014Cash and cash equivalents at end of year
    
    $
    3,833,627
    
    
    $
    2,769,653
    
    
    $
    3,269,925Supplementary disclosures of cash flow informationCash paid for interest
    
    $
    2,512,453
    
    
    $
    1,890,947
    
    
    $
    886,652Cash paid for income taxes, net of (refunds)
    
    
    1,594,771
    
    
    
    1,415,033
    
    
    
    1,135,078Purchase of machinery and equipment financed
under capital lease obligations
    
    
    
    
    
    
    2,162,179
    
    
    
    Purchase of machinery and equipment financed
under sale lease back agreements
    
    
    615,855
    
    
    
    
    
    
    
    2,720,415
  F-7




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2008, 2007 and 2006
 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, 2008, 2007 and 2006
 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, 2008, 2007 and 2006
 NOTE B  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Continued
 Inventory Policies
  Property, Machinery and Equipment
  Buildings
    
    20 yearsMachinery and equipment
    
    5-12 yearsOffice equipment
    
    5 yearsTools and dies
    
    12 monthsLeasehold improvements
    
    term of lease
 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, 2008, 2007 and 2006
 NOTE B  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Continued
 Revenue Recognition
   Shipping and Handling Costs
  Fair Value of Financial Instruments
  Long-Lived Assets
  F-11




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2008, 2007 and 2006
 NOTE B  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Continued
 Long-Lived
Assets  Continued
  Goodwill and Other Intangibles
   F-12




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2008, 2007 and 2006
 NOTE B  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Continued
 Goodwill and Other Intangibles  Continued
 GoodwillMay 1, 2005
    
    $
    756,959Able acquisition
    
    
    8,541,986April 30, 2006 and April 30, 2007
    
    $
    9,298,945Goodwill Impairment Charge
    
    
    (9,298,945
    )April 30, 2008
    
    $
    
  Internally
    
    
    Non-Developed
    
    
    competes and
    
    
    CustomerSoftware
    
    
    Backlog
    
    
    Relationships
    
    
    TotalBalance as of May 1, 2005
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Able acquisition
    
    
    115,000
    
    
    
    260,000
    
    
    
    2,395,000
    
    
    
    2,770,000Amortization expense 2006
    
    
    (115,000
    )
    
    
    (219,170
    )
    
    
    (249,480
    )
    
    
    (583,650
    )Balance as of April 30, 2006
    
    
    
    
    
    
    40,830
    
    
    
    2,145,520
    
    
    
    2,186,350Amortization expense 2007
    
    
    
    
    
    
    (35,004
    )
    
    
    (689,574
    )
    
    
    (724,578
    )Balance as of April 30, 2007
    
    
    
    
    
    
    5,826
    
    
    
    1,455,946
    
    
    
    1,461,772Amortization expense 2008
    
    
    
    
    
    
    (5,826
    )
    
    
    (497,877
    )
    
    
    (503,703
    )Balance as of April 30, 2008
    
    $
    
    
    
    $
    
    
    
    $
    958,069
    
    
    $
    958,069Amortization period
    
    
    1 year
    
    
    
    2 years
    
    
    
    8 years
    
    
    
    N/A
 F-13




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2008, 2007 and 2006
 NOTE B  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Continued
 Goodwill and Other Intangibles  Continued
  Years Ended April 30,2009
    
    $
    349,1862010
    
    
    245,2162011
    
    
    163,9982012
    
    
    112,7462013
    
    
    75,850Thereafter
    
    
    11,073$
    958,069
 Stock Incentive Plans
    F-14




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2008, 2007 and 2006
 NOTE B  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Continued
 Stock Incentive Plans  Continued
  2006Net income as reported
    
    $
    1,882,132Add total stock-based employee compensation expense recorded
in the period
    
    
    5,248Deduct total stock-based employee compensation expense
determined under fair value-based method for awards granted,
modified, or settled, net of related tax effects
    
    
    (2,342,955
    )Pro forma net loss
    
    $
    (455,575
    )
  F-15




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SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2008, 2007 and 2006
 NOTE B  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Continued
 Stock Incentive Plans  Continued
 2006Earnings per shareBasic  as reported
    
    $
    0.50Basic  pro forma
    
    
    (.12
    )Diluted  as reported
    
    
    0.48Diluted  pro forma
    
    
    (.12
    )
 New Accounting Standards
 Accounting
for Certain Hybrid Instruments (SFAS 155).
  F-16




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2008, 2007 and 2006
 NOTE B  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Continued
 New Accounting Standards  Continued
  Balance at May 1, 2007
    
    $
    153,900Additions based on tax positions related to current year
    
    
    Additions for tax positions in prior year
    
    
    6,494Reductions for tax positions of prior year
    
    
    (14,803
    )Balance at April 30, 2008
    
    $
    145,591
    The Fair Value Options for Financial Assets and
Financial Liabilities
 F-17




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2008, 2007 and 2006
 NOTE B  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Continued
 New
Accounting Standards  Continued
   NOTE C  DISCONTINUED OPERATIONS
  F-18




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2008, 2007 and 2006
 NOTE C  DISCONTINUED OPERATIONS  Continued
  2006Sales
    
    $
    522Loss before tax benefit
    
    
    (383
    )Net loss from discontinued operation
    
    
    355Gain on sale of business
    
    
    311Net loss from discontinued operation
    
    $
    (44
    )
 NOTE D  ALLOWANCE FOR DOUBTFUL ACCOUNTS
  2008
    
    
    2007
    
    
    2006Beginning balance
    
    $
    150,000
    
    
    $
    268,917
    
    
    $
    120,000Bad debt expense
    
    
    63,000
    
    
    
    17,107
    
    
    
    296,918Write-offs
    
    
    
    
    
    
    (136,024
    )
    
    
    (148,001
    )$
    213,000
    
    
    $
    150,000
    
    
    $
    268,917
 F-19




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2008, 2007 and 2006
 NOTE E  INVENTORIES
  2008
    
    
    2007Finished products
    
    $
    18,735,846
    
    
    $
    10,359,223Work in process
    
    
    2,542,762
    
    
    
    3,002,970Raw materials
    
    
    22,591,181
    
    
    
    28,732,89843,869,789
    
    
    
    42,095,091Less obsolescence reserve
    
    
    1,723,019
    
    
    
    1,245,300$
    42,146,770
    
    
    $
    40,849,791
  2008
    
    
    2007
    
    
    2006Beginning balance
    
    $
    1,245,300
    
    
    $
    769,536
    
    
    $
    379,449Provision for obsolescence
    
    
    477,719
    
    
    
    475,764
    
    
    
    390,087Write-offs
    
    
    
    
    
    
    
    
    
    
    $
    1,723,019
    
    
    $
    1,245,300
    
    
    $
    769,536
 F-20




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2008, 2007 and 2006
 NOTE F  PROPERTY, MACHINERY AND EQUIPMENT, NET
  2008
    
    
    2007Land and buildings
    
    $
    11,920,435
    
    
    $
    11,418,021Machinery and equipment
    
    
    36,046,726
    
    
    
    34,648,320Office equipment
    
    
    3,764,374
    
    
    
    3,597,142Tools and dies
    
    
    288,598
    
    
    
    284,070Leasehold improvements
    
    
    3,019,545
    
    
    
    3,006,914Equipment under capital leases
    
    
    7,445,202
    
    
    
    7,359,81762,484,880
    
    
    
    60,314,284Less accumulated depreciation and
amortization, including amortization of
assets under capital leases of $1,631,488 and
$1,100,311 at April 30, 2008 and 2007,
respectively
    
    
    33,130,257
    
    
    
    29,343,177Property, machinery and equipment, net
    
    $
    29,354,623
    
    
    $
    30,971,107
  F-21




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2008, 2007 and 2006
 NOTE G  LONG TERM DEBT
 Note Payable  Bank
    Notes Payable  Buildings
  F-22




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2008, 2007 and 2006
 NOTE G  LONG TERM DEBT  Continued
 Note
Payable  Buildings  Continued
   Fiscal Year2009
    
    $
    1,326,9352010
    
    
    2,140,2502011
    
    
    26,016,5052012
    
    
    140,2502013
    
    
    2,240,687$
    31,864,627
 NOTE H  ACCRUED EXPENSES AND WAGES
  2008
    
    
    2007Wages
    
    $
    1,638,659
    
    
    $
    1,505,077Bonuses
    
    
    944,720
    
    
    
    736,210Interest payable
    
    
    144,046
    
    
    
    481,812Commissions
    
    
    42,298
    
    
    
    83,474Professional fees
    
    
    335,202
    
    
    
    426,296Foreign payroll accruals
    
    
    734,790
    
    
    
    794,201Other
    
    
    1,021,265
    
    
    
    827,853$
    4,880,980
    
    
    $
    4,854,923
 F-23




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2008, 2007 and 2006
 NOTE I  STRATEGIC TRANSACTIONS
   F-24




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2008, 2007 and 2006
 NOTE I  STRATEGIC TRANSACTIONS  Continued
  AmountCash
    
    $
    40Trade receivables, net
    
    
    3,210Inventories
    
    
    4,049Other current assets
    
    
    139Property and equipment
    
    
    2,707Deferred tax asset
    
    
    688Goodwill
    
    
    8,542Intangible assets
    
    
    2,770Other assets
    
    
    207Accounts payable and accrued expenses
    
    
    (3,407
    )Obligations under capital leases
    
    
    (938
    )Deferred tax liability
    
    
    (1,235
    )Total consideration
    
    $
    16,772
 NOTE J  INCOME TAXES
  2008
    
    
    2007
    
    
    2006CurrentFederal
    
    $
    1,707,890
    
    
    $
    761,278
    
    
    $
    892,477State
    
    
    242,740
    
    
    
    153,914
    
    
    
    226,551Foreign
    
    
    195,675
    
    
    
    196,425
    
    
    
    174,996DeferredFederal
    
    
    (438,236
    )
    
    
    (187,819
    )
    
    
    (304,670
    )State
    
    
    (52,551
    )
    
    
    (27,619
    )
    
    
    53,765
    )$
    1,655,518
    
    
    $
    896,179
    
    
    $
    935,589
 F-25




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2008, 2007 and 2006
 NOTE J  INCOME TAXES  Continued
  2008
    
    
    2007
    
    
    2006Income tax atFederal rate
    
    $
    (1,632,448
    )
    
    $
    882,131
    
    
    $
    973,042State income tax, net of federal
    
    
    (143,867
    )
    
    
    111,647
    
    
    
    89,475Goodwill impairment
    
    
    3,626,589
    
    
    
    
    
    
    
    Benefit of Chinese tax holiday
    
    
    
    
    
    
    (24,993
    )
    
    
    (66,197
    )Other, net
    
    
    (194,756
    )
    
    
    (72,606
    )
    
    
    (60,731
    )$
    1,655,518
    
    
    $
    896,179
    
    
    $
    935,589
 F-26




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2008, 2007 and 2006
 NOTE J  INCOME TAX  Continued
  2008
    
    
    2007Allowance for doubtful accounts
    
    $
    83,069
    
    
    $
    58,499Inventory obsolescence reserve
    
    
    671,969
    
    
    
    485,661Net
operating loss carry-forward  from Able acquisition
    
    
    
    
    
    
    127,998Accruals not currently deductible
    
    
    325,478
    
    
    
    300,278Inventory
    
    
    402,539
    
    
    
    371,390Current deferred tax asset
    
    
    1,483,055
    
    
    
    1,343,826Prepaid insurance
    
    
    (30,048
    )
    
    
    (92,585
    )Current deferred tax liability
    
    
    (30,048
    )
    
    
    (92,585
    )Net current deferred tax asset
    
    $
    1,453,007
    
    
    $
    1,251,241
 2008
    
    
    2007Intangible
assets  Able acquisition
    
    $
    (373,642
    )
    
    $
    (570,084
    )Machinery and equipment
    
    
    (2,072,807
    )
    
    
    (1,967,409
    )Net long-term deferred tax liability
    
    $
    (2,446,449
    )
    
    $
    (2,537,493
    )
  F-27




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2008, 2007 and 2006
 NOTE K  401(k) RETIREMENT SAVINGS PLAN
  NOTE L  MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK
  F-28




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2008, 2007 and 2006
 NOTE M  LEASES
   Capital
    
    
    OperatingYears ending April 30,
    
    leases
    
    
    leases2009
    
    $
    1,804,657
    
    
    $
    1,445,5082010
    
    
    1,005,257
    
    
    
    1,096,7822011
    
    
    773,677
    
    
    
    436,0072012
    
    
    430,479
    
    
    
    42,6722013
    
    
    117,367
    
    
    
    10,800Thereafter
    
    
    0
    
    
    
    28,8004,131,437
    
    
    $
    3,060,569Less amounts representing interest
    
    
    409,8143,721,623Less current portion
    
    
    1,595,931$
    2,125,692
  F-29




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2008, 2007 and 2006
 NOTE N  STOCK OPTIONS
    2008
    
    2007
    
    2006Expected dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Expected stock price volatility
    
    
    .750
    
    
    
    .750
    
    
    
    .750Average risk-free interest rate
    
    
    3.91
    %
    
    
    5.11
    %
    
    
    3.37
    %Weighted-average expected life of options
    
    6.5 years
    
    
    6.5 years
    
    
    5 years
  F-30




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2008, 2007 and 2006
 NOTE N  STOCK OPTIONS  Continued
  Number ofWeighted-
    
    
    optionsaverage
    
    
    exercisableNumber of
    
    
    exercise
    
    
    at endoptions
    
    
    price
    
    
    of yearOutstanding at April 30, 2005
    
    
    176,153
    
    
    $
    10.88
    
    
    
    169,485Options granted during 2006
    
    
    390,700
    
    
    
    9.17Options exercised during 2006
    
    
    (31,537
    )
    
    
    2.39Options forfeited during 2006
    
    
    (12,009
    )
    
    
    9.17Outstanding at April 30, 2006
    
    
    523,307
    
    
    $
    9.33
    
    
    
    523,307Options granted during 2007
    
    
    16,000
    
    
    
    9.47Options exercised during 2007
    
    
    (8,000
    )
    
    
    2.20Outstanding at April 30, 2007
    
    
    531,307
    
    
    $
    8.00
    
    
    
    502,701Options granted during 2008
    
    
    2,500
    
    
    
    11.56Options exercised during 2008
    
    
    (27,600
    )
    
    
    9.17Options forfeited during 2008
    
    
    (4,400
    )
    
    
    9.17Options expired during 2008
    
    
    (3,100
    )
    
    
    12.25Outstanding at April 30, 2008
    
    
    498,707
    
    
    $
    7.92
    
    
    
    477,847
  F-31




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2008, 2007 and 2006
 NOTE N  STOCK OPTIONS  Continued
  Options outstandingNumber
    
    
    Weighted-average
    
    
    Weighted-outstanding at
    
    
    remaining
    
    
    averageRange of exercise prices
    
    April 30, 2008
    
    
    contractual life
    
    
    exercise price$2.20  5.63
    
    
    103,515
    
    
    3.60 years
    
    $
    2.519.17  11.56
    
    
    395,192
    
    
    7.82 years
    
    
    9.34498,707
    
    
    
    
    
    
    $
    7.92
 Options exercisableNumber
    
    
    Weighted-exercisable at
    
    
    averageRange of exercise prices
    
    April 30, 2008
    
    
    exercise price$2.20  5.63
    
    
    103,515
    
    
    $
    2.519.17  11.56
    
    
    374,332
    
    
    
    9.27477,847
    
    
    $
    7.81
  F-32




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2008, 2007 and 2006
 NOTE O  EARNINGS PER SHARE
  2008
    
    
    2007
    
    
    2006Net (loss) income
    
    $
    (6,456,836
    )
    
    $
    1,698,324
    
    
    $
    1,882,132Weighted-average sharesBasic
    
    
    3,811,832
    
    
    
    3,791,077
    
    
    
    3,756,804Effect of dilutive stock options
    
    
    
    
    
    
    88,078
    
    
    
    137,927Diluted
    
    
    3,811,832
    
    
    
    3,879,155
    
    
    
    3,894,731Basic (loss) earnings per share
    
    $
    (1.69
    )
    
    $
    0.45
    
    
    $
    0.50Diluted (loss) earnings per share
    
    $
    (1.69
    )
    
    $
    0.44
    
    
    $
    0.48
  F-33




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2008, 2007 and 2006
 NOTE P  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
  First
    
    Second
    
    Third
    
    Fourth2008
    
    quarter
    
    quarter
    
    quarter
    
    quarterNet sales
    
    $
    39,843,813
    
    
    $
    42,815,107
    
    
    $
    41,131,744
    
    
    $
    44,020,330Income (loss) before
income tax expense
    
    
    1,276,100
    
    
    
    1,070,014
    
    
    
    517,023
    
    
    
    (7,664,455
    )Net income (loss)
    
    
    826,988
    
    
    
    693,274
    
    
    
    312,464
    
    
    
    (8,289,562
    )Earnings (loss) per share-Basic
    
    $
    0.22
    
    
    $
    0.18
    
    
    $
    0.08
    
    
    $
    (2.17
    )Earnings (loss) per
share-Diluted
    
    $
    0.21
    
    
    $
    0.18
    
    
    $
    0.08
    
    
    $
    (2.17
    )Total shares-Basic
    
    
    3,794,956
    
    
    
    3,807,492
    
    
    
    3,822,556
    
    
    
    3,822,556Total shares-Diluted
    
    
    3,889,274
    
    
    
    3,962,531
    
    
    
    3,897,314
    
    
    
    3,822,556
 F-34




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2008, 2007 and 2006
 NOTE P  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)  Continued
 First
    
    Second
    
    Third
    
    Fourth2007
    
    quarter
    
    quarter
    
    quarter
    
    quarterNet sales
    
    $
    36,959,865
    
    
    $
    44,858,662
    
    
    $
    44,584,513
    
    
    $
    39,506,066Income before income tax
expense
    
    
    381,086
    
    
    
    1,203,671
    
    
    
    125,509
    
    
    
    884,238Net income
    
    
    258,669
    
    
    
    708,011
    
    
    
    76,572
    
    
    
    655,072Earnings per share-Basic
    
    $
    0.07
    
    
    $
    0.19
    
    
    $
    0.02
    
    
    $
    0.17Earnings per share-Diluted
    
    $
    0.07
    
    
    $
    0.18
    
    
    $
    0.02
    
    
    $
    0.17Total shares-Basic
    
    
    3,786,956
    
    
    
    3,787,251
    
    
    
    3,794,956
    
    
    
    3,794,956Total shares-Diluted
    
    
    3,866,783
    
    
    
    3,872,654
    
    
    
    3,895,939
    
    
    
    3,885,055
 F-35




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##### Table of Contents



SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED
April 30, 2008, 2007 and 2006
 NOTE Q  LITIGATION
   F-36