<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
Form 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the period ended July 31, 1995
OR
_____ 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 0-15047
CIRCUIT SYSTEMS, INC.
(Exact name of registrant as specified in charter)
Illinois 36-2663010
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2350 E. Lunt Ave., Elk Grove Village, Illinois 60007
(Address of principal executive offices) (Zip Code)
(708) 439-1999
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No _____.
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes _____ No _____.
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date: August 31, 1995 5,321,973.
<PAGE> 2
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
Number
<S> <C>
PART I. FINANCIAL INFORMATION
1. Financial Statements
Consolidated Condensed Balance Sheets 3
Consolidated Condensed Statements of Earnings 4
Consolidated Condensed Statements of Cash Flows 5
Notes to Consolidated Condensed Financial
Statements 6
2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
</TABLE>
- 2 -
<PAGE> 3
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS 4/30/95 7/31/95
------------ ------------
CURRENT ASSETS
<S> <C> <C>
CASH AND CASH EQUIVALENTS...................................... $ 127,865 $ 156,717
ACCOUNTS RECEIVABLE, LESS
ALLOWANCE OF $350,000....................................... 10,007,174 9,935,203
INVENTORIES
RAW MATERIAL................................................. 1,424,571 1,858,273
WORK IN PROCESS............................................. 2,348,590 2,944,168
FINISHED GOODS............................................... 308,864 801,993
----------- -----------
4,082,025 5,604,434
DEFERRED INCOME TAXES........................................... 376,000 376,000
PREPAID EXPENSES................................................. 253,026 252,963
----------- -----------
TOTAL CURRENT ASSETS.................................... 14,846,090 16,325,317
INVESTMENT IN AFFILIATES.............................................. 2,109,225 2,195,261
PROPERTY, PLANT AND EQUIPMENT-AT COST
BUILDING AND IMPROVEMENTS....................................... 7,376,273 7,687,181
MACHINERY AND EQUIPMENT......................................... 23,288,271 24,302,969
AUTOMOTIVE EQUIPMENT............................................ 93,272 64,789
----------- -----------
30,757,816 32,054,939
LESS ACCUMULATED DEPRECIATION.............................. 12,869,112 13,692,629
----------- -----------
17,888,704 18,362,310
LAND............................................................. 2,351,703 2,351,703
----------- -----------
20,240,407 20,714,013
OTHER ASSETS
DEPOSITS AND SUNDRY............................................. 2,215,328 2,205,997
----------- -----------
2,215,328 2,205,997
----------- -----------
$39,411,050 $41,440,588
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
CURRENT MATURITIES OF L/T OBLIGATIONS......................... $ 2,230,310 $ 2,917,798
ACCOUNTS PAYABLE................................................. 4,952,287 4,654,477
ACCRUED LIABILITIES.............................................. 1,019,843 1,543,058
INCOME TAXES PAYABLE............................................ 208,709 669,649
----------- -----------
TOTAL CURRENT LIABILITIES................................... 8,411,149 9,784,982
LONG-TERM OBLIGATIONS.................................................. 11,622,365 11,222,998
DEFERRED INCOME TAXES................................................. 1,259,000 1,368,000
SHAREHOLDERS' EQUITY
COMMON STOCK..................................................... 3,002,599 3,002,599
RETAINED EARNINGS................................................ 15,115,937 16,062,009
----------- -----------
18,118,536 19,064,608
----------- -----------
$39,411,050 $41,440,588
=========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
- 3 -
<PAGE> 4
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------
7/31/94 7/31/95
----------- ------------
<S> <C> <C>
NET SALES........................................................... $ 14,736,870 $ 16,982,260
COST OF GOODS SOLD.................................................. 11,840,833 14,064,641
------------- ------------
GROSS PROFIT.................................................... 2,896,037 2,917,619
SALES AND MARKETING EXPENSES........................................ 691,037 782,713
ADMINISTRATIVE EXPENSES............................................. 612,643 511,426
------------- ------------
1,303,680 1,294,139
------------- ------------
OPERATING INCOME................................................ 1,592,357 1,623,480
OTHER (INCOME) DEDUCTIONS
INTEREST EXPENSE................................................ 219,400 355,324
EQUITY IN EARNINGS OF
UNCONSOLIDATED AFFILIATE..................................... (98,193) (86,036)
RENTAL INCOME................................................... (103,500) (167,300)
SUNDRY.......................................................... (630) (29,580)
------------- ------------
17,077 72,408
------------- ------------
EARNINGS BEFORE INCOME TAXES.................................... 1,575,280 1,551,072
INCOME TAXES........................................................ 629,000 605,000
------------- ------------
NET EARNINGS................................................... $ 946,280 $ 946,072
============= ============
PER SHARE DATA
NET EARNINGS PER SHARE.......................................... $0.18 $0.18
============= ============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING............................................. 5,329,405 5,321,973
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
4
<PAGE> 5
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------
7/31/94 7/31/95
----------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET EARNINGS............................................................. $ 946,280 $ 946,072
ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
DEPRECIATION......................................................... 711,000 852,000
GAIN ON SALE OF EQUIPMENT......................................... --- (18,600)
DEFERRED INCOME TAXES.............................................. 131,000 109,000
EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATE.................. (98,193) (86,036)
CHANGES IN ASSETS AND LIABILITIES
ACCOUNTS RECEIVABLE................................................. (342,252) 71,971
INVENTORIES.......................................................... (172,707) (1,522,409)
PREPAID EXPENSES.................................................... (23,072) 63
OTHER ASSETS........................................................ 82,995 9,331
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES......................... (408,629) 686,345
----------- -----------
TOTAL ADJUSTMENTS.............................................. (119,858) 101,665
----------- -----------
NET CASH PROVIDED BY OPERATIONS............................. 826,422 1,047,737
CASH FLOWS FROM INVESTING ACTIVITIES
CAPITAL EXPENDITURES..................................................... (1,220,531) (992,818)
PROCEEDS FROM SALE OF EQUIPMENT....................................... --- 18,600
PROCEEDS FROM SALE OF COMMON STOCK OF AFFILIATE.................... 51,052 ---
REPAYMENT OF LOAN FROM AFFILIATE...................................... 55,000 ---
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES...................... (1,114,479) (974,218)
CASH FLOWS FROM FINANCING ACTIVITIES
NET BORROWINGS UNDER LINE OF CREDIT.................................. 1,150,138 (2,472,885)
PROCEEDS FROM LONG-TERM OBLIGATIONS.................................... --- 3,169,077
PAYMENTS ON LONG-TERM OBLIGATIONS...................................... (774,404) (740,859)
----------- -----------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES..................................... 375,734 (44,667)
----------- -----------
INCREASE IN CASH.............................................. 87,677 28,852
CASH AT BEGINNING OF PERIOD................................................ 33,324 127,865
----------- -----------
CASH AT END OF PERIOD...................................................... $ 121,001 $ 156,717
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD FOR:
INTEREST............................................................. $ 208,685 $ 350,560
INCOME TAXES........................................................ 150,000 35,060
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
ISSUANCE OF CAPITAL STOCK IN SATISFACTION OF
ACCRUED COMPENSATION AND BENEFITS............................... $ 357,750 $ ---
CAPITAL LEASES FOR NEW EQUIPMENT.................................. --- 332,788
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
5
<PAGE> 6
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. These interim Consolidated Condensed Financial Statements should be read in
conjunction with the Consolidated Financial Statements and notes included in
the Company's April 30, 1995 Annual Report and Form 10-K.
2. In the opinion of the Company, the accompanying unaudited condensed
consolidated financial information reflects all adjustments (consisting only
of normal recurring accruals) necessary for a fair presentation of the
statements contained herein.
3. These consolidated statements are presented in accordance with the
requirements of Form 10-Q and consequently may not include all disclosures
normally required by generally accepted accounting principles normally made
in the Company's Annual Report and Form 10-K.
- 6 -
<PAGE> 7
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Net sales for the quarter ended July 31, 1995, were $16,982,000, increasing by
15.2% when compared to $14,737,000 for the same quarter last year. The sales
increase was not as a result of price increases but as a result of a general
pickup in business activity within the customer base. Net sales to four
individual unaffiliated customers represented approximately 46% of net sales
for the quarter ended July 31, 1995. No individual customer exceeded 10% of
sales for the quarter ended July 31, 1994.
Gross profit for the quarter was $2,918,000 or 17.2% of net sales, compared to
$2,896,000 or 19.7% of net sales for the same quarter last year. The lower
gross margin is attributed to continuation of very competitive pricing within
the industry, increases in material and supply prices, depreciation expense and
labor costs which were partially offset by a decrease in overhead expenses as a
percentage of sales.
Sales and marketing, and administrative expenses for the quarter were
$1,294,000 or 7.6% of net sales, compared to $1,304,000 or 8.8% of net sales
for the same quarter last year. Commissions increased due to the higher volume
of sales which was partially offset by decreases in executive salaries and
professional fees.
The other (income) deductions-net was an expense of $72,000 for the current
quarter compared to an expense of $17,000 for the same quarter last year.
Interest expense increased to $355,000 for the quarter, from $219,000 in the
prior year, due to increased borrowings. The equity in the earnings of the
unconsolidated affiliate SigmaTron International, Inc., amounted to $86,000 for
the current quarter compared to $98,000 for the same period last year. Rental
income for the quarter increased to $167,000 compared to $104,000 for the same
period last year, as a result of an existing lease on the newly acquired
facility.
The effective income tax rate for the quarter ended July 31, 1995, is 39.0%,
and is comparable to the 1994 rate of 39.9%.
The net earnings and earnings per share for the quarter ended July 31, 1995
were $946,000 and $.18, respectively, compared to $946,000 and $.18,
respectively, for the same period last year.
- 7 -
<PAGE> 8
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company's financial requirements were met through cash generated from
operations and increases in long-term obligations.
For the quarter ended July 31, 1995, the decrease in line of credit of
$2,473,000, the increase in inventories of $1,522,000, and capital expenditures
of $993,000, were funded by operating income, proceeds from long-term
obligations of $3,169,000, and an increase in accounts payable and accrued
liabilities of $686,000.
The Company has purchase commitments as of July 31, 1995 of approximately
$6,500,000 for future deliveries of machinery and equipment and $800,000 for
building improvements at the 2400 E. Lunt Ave. location which will commence
during the third quarter of this year. The Company intends to finance such
purchases through collateralized borrowings, installment loans, and existing
cash flow.
The Company's backlog at July 31, 1995, is approximately $13,703,000 compared
to $7,036,000 at July 31, 1994. The majority of July 31, 1995 backlog is
scheduled to be shipped within 4 months. The reliability of backlog as an
indicator of future sales varies substantially with the make-up of customers'
orders and the Company's scheduled production and delivery dates. Backlog is
considered adequate for the current sales level of the Company.
- 8 -
<PAGE> 9
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
PART 2 - OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits
Exhibit 11 - Calculation of Primary and Fully Diluted Per Share
Earnings
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the quarter ended
July 31, 1995.
- 9 -
<PAGE> 10
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, registrant's principal financial officer, thereunto duly
authorized.
Circuit Systems, Inc.
(registrant)
/s/ Dilip S. Vyas
----------------------------
Dilip S. Vyas
(Principal Financial Officer)
September 8, 1995
- 10 -
<PAGE> 1
EXHIBIT 11
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------
7/31/94 7/31/95
------------ -------------
<S> <C> <C>
PRIMARY EPS
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING DURING THE PERIOD.............................................. 5,302,995 5,321,973
NET ADDITIONAL SHARES ASSUMING DILUTIVE
STOCK OPTIONS EXERCISED AND PROCEEDS
USED TO PURCHASE TREASURY SHARES AT
AVERAGE FAIR MARKET VALUE.......................................................... 26,410 ---
---------- ----------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
AND COMMON EQUIVALANT SHARES OUTSTANDING.......................................... 5,329,405 5,321,973
========== ==========
NET EARNINGS......................................................................... $ 946,280 $ 946,072
========== ==========
PRIMARY EARNINGS PER SHARE......................................................... $0.18 $0.18
========== ===========
FULLY DILUTED EPS
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING DURING THE PERIOD.............................................. 5,302,995 5,321,973
NET ADDITIONAL SHARES ASSUMING DILUTIVE
STOCK OPTIONS EXERCISED AND PROCEEDS
USED TO PURCHASE TREASURY SHARES AT
FAIR MARKET VALUE AT END OF PERIOD.............................................. 26,410 ---
---------- ---------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
AND COMMON EQUIVALANT SHARES OUTSTANDING.......................................... 5,329,405 5,321,973
========== =========
NET EARNINGS......................................................................... $ 946,280 $ 946,072
========== =========
FULLY DILUTED EARNINGS PER SHARE.................................................. $ 0.18 $ 0.18
========== =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> JUL-31-1995
<EXCHANGE-RATE> 1
<CASH> 156,717
<SECURITIES> 0
<RECEIVABLES> 10,285,203
<ALLOWANCES> 350,000
<INVENTORY> 5,604,434
<CURRENT-ASSETS> 16,325,317
<PP&E> 34,406,642
<DEPRECIATION> 13,692,629
<TOTAL-ASSETS> 41,440,588
<CURRENT-LIABILITIES> 9,784,982
<BONDS> 11,222,998
<COMMON> 3,002,599
0
0
<OTHER-SE> 16,062,009
<TOTAL-LIABILITY-AND-EQUITY> 41,440,588
<SALES> 16,982,260
<TOTAL-REVENUES> 16,982,260
<CGS> 14,064,641
<TOTAL-COSTS> 14,064,641
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 355,324
<INCOME-PRETAX> 1,551,072
<INCOME-TAX> 605,000
<INCOME-CONTINUING> 946,072
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 946,072
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0.18
</TABLE>
