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, 1996.
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 0-15407
Circuit Systems, Inc.
(Exact name of registrant as specified in charter)
Illinois 36-2663010
------------------------------- --------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2350 East Lunt Avenue, Elk Grove Village, Illinois 60007
--------------------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
(847) 439 - 1999
---------------------------------- ----------------------------
(Registrant's telephone number, (Former name, former address
and including area code) 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, 1996 5,321,973.
<PAGE>
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
1. Financial Statements
Consolidated Condensed Balance Sheets.................. 3
Consolidated Condensed Statements of Earnings ......... 4
Consolidated Condensed Statement 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
<PAGE>
<TABLE>
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
<S> <C> <C>
4/30/96 7/31/96
ASSETS ---------- ----------
CURRENT ASSETS
CASH AND CASH EQUIVALENTS ......... $ 243,269 $ 225,322 $
ACCOUNTS RECEIVABLE, LESS ALLOWANCE
OF $475,000 AND $550,000 8,119,134 7,652,081
INVENTORIES
RAW MATERIALS .............. 3,909,818 3,247,905
WORK IN PROCESS .......... 2,094,047 2,159,058
FINISHED GOODS ............ 1,596,777 1,320,366
---------- ----------
7,600,642 6,727,329
DEFERRED INCOME TAXES 408,000 408,000
PREPAID EXPENSES ............ 193,137 182,239
---------- ----------
TOTAL CURRENT ASSETS 16,564,182 15,194,971
INVESTMENT IN AFFILIATES 2,587,609 2,719,457
PROPERTY, PLANT, AND EQUIPMENT - AT COST
BUILDING AND IMPROVEMENTS 8,397,345 8,511,588
MACHINERY AND EQUIPMENT ..... 29,971,227 30,325,115
AUTOMOTIVE EQUIPMENT ......... 64,789 64,789
---------- ----------
38,433,361 38,901,492
LESS ACCUMULATED DEPRECIATION 15,894,629 16,824,629
---------- ----------
22,538,732 22,076,863
LAND .......................... 2,351,703 2,351,703
---------- ----------
24,890,435 24,428,566
OTHER ASSETS ---------- ----------
DEPOSITS AND SUNDRY ......... 1,774,028 1,851,941
---------- ----------
$ 45,816,254 $ 44,194,935
========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
STATEMENTS
<PAGE>
<TABLE>
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
CURRENT MATURITIES OF L/T OBLIGATIONS $ 3,523,979 $ 3,660,065
ACCOUNTS PAYABLE ............. 3,659,482 3,284,199
ACCRUED LIABILITIES .......... 1,012,121 1,152,734
INCOME TAXES PAYABLE ........ 322,432 332,432
---------- ----------
TOTAL CURRENT LIABILITIES 8,518,014 8,429,430
LONG - TERM OBLIGATIONS ......... 14,535,823 12,759,326
DEFERRED INCOME TAXES .......... 1,560,000 1,579,600
STOCKHOLDERS' EQUITY
COMMON STOCK .................... 3,002,599 3,002,599
RETAINED EARNINGS ............... 18,199,818 18,423,980
---------- ----------
21,202,417 21,426,579
---------- ----------
$ 45,816,254 $ 44,194,935
========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
STATEMENTS
<PAGE>
<TABLE>
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(UNAUDITED)
--THREE MONTHS ENDED--
7/31/95 7/31/96
---------- ----------
<S> <C> <C>
NET SALES.................... $16,982,260 $14,335,410
COST OF GOODS SOLD........... 14,064,641 12,378,521
---------- ----------
GROSS PROFIT............... 2,917,619 1,956,889
SALES AND MARKETING EXPENSES. 782,713 689,674
ADMINISTRATIVE EXPENSES .... 511,426 750,841
---------- ----------
1,294,139 1,440,515
OPERATING INCOME......... 1,623,480 516,374
OTHER (INCOME) DEDUCTIONS
INTEREST EXPENSE........... 355,324 368,645
EQUITY IN EARNINGS OF
UNCONSOLIDATED AFFILIATE.. (86,036) (131,848)
RENTAL INCOME.............. (167,300) (78,000)
SUNDRY..................... (29,580) (6,185)
---------- ----------
72,408 152,612
EARNINGS BEFORE INCOME TAXES 1,551,072 363,762
---------- ----------
INCOME TAXES............. 605,000 139,600
---------- ----------
NET EARNINGS $ 946,072 $ 224,162
========== ==========
PER SHARE DATA :
NET EARNINGS PER SHARE $0.18 $0.04
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 5,321,973 5,385,257
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
STATEMENTS
<PAGE>
<TABLE>
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
--THREE MONTHS ENDED--
7/31/95 7/31/96
---------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET EARNINGS.............................. $ 946,072 $ 224,162 $
ADJUSTMENTS TO RECONCILE NET EARNINGS TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
DEPRECIATION............................ 852,000 930,000
GAIN ON SALE OF EQUIPMENT........... (18,600) --
DEFERRED INCOME TAXES................. 109,000 19,600
EQUITY IN EARNINGS OF
UNCONSOLIDATED AFFILIATE............. (86,036) (131,848)
CHANGES IN ASSETS AND LIABILITIES
ACCOUNTS RECEIVABLE..................... 71,971 467,053
INVENTORIES.............................. (1,522,409) 873,313
PREPAID EXPENSES........................ 63 10,898
OTHER ASSETS............................ 9,331 (77,913)
ACCOUNTS PAYABLE AND
ACCRUED LIABILITIES.................... 686,345 (224,670)
--------- ---------
TOTAL ADJUSTMENTS.................. 101,665 1,866,433
--------- ---------
NET CASH PROVIDED BY OPERATIONS 1,047,737 2,090,595
CASH FLOWS FROM INVESTING ACTIVITIES
CAPITAL EXPENDITURES.................... (992,818) (468,131)
PROCEEDS FROM SALE OF EQUIPMENT...... 18,600 --
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (974,218) (468,131)
CASH FLOWS FROM FINANCING ACTIVITIES
NET BORROWINGS UNDER LINE OF CREDIT (2,472,885) (2,140,735)
PROCEEDS FROM LONG-TERM OBLIGATIONS 3,169,077 1,500,000
PAYMENTS ON LONG-TERM OBLIGATIONS (740,859) (999,676)
--------- ---------
NET CASH USED IN FINANCING ACTIVITIES (44,667) (1,640,411)
INCREASE (DECREASE) IN CASH 28,852 (17,947)
CASH AT THE BEGINNING OF THE PERIOD.... 127,865 243,269
--------- ---------
CASH AT THE END OF THE PERIOD $ 156,717 $ 225,322
========= =========
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD FOR:
INTEREST............................. $ 350,560 $ 365,291
INCOME TAXES........................ 35,060 110,000
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:
CAPITAL LEASES FOR NEW EQUIPMENT..... $ 332,788 $ -- $
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
<PAGE>
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, 1996
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.
<PAGE>
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, 1996, were $14,335,000,
decreasing by 15.6% when compared to $16,982,000 for the same
quarter last year. The sales decrease was the result of a slowdown
within the industry which has continued from the fourth quarter of
fiscal 1996. Net sales to three unaffiliated customers represented
approximately 49% of net sales for the quarter ended July 31, 1996,
compared to four customers representing approximately 46% for the
same quarter last year.
Gross profit for the quarter was $1,957,000 or 13.7% of net sales,
compared to $2,918,000 or 17.2% of net sales for the same quarter
last year. The lower gross profit is attributed to the lower sales
volume and a cost structure set for a higher volume of sales.
Labor costs, depreciation and overhead expense increased as a
percentage of sales, while material and supplies expense decreased
as a percentage of sales.
Sales and marketing, and administrative expenses for the quarter
were $1,441,000 or 10.1% of net sales, compared to $1,294,000 or
7.6% of net sales for same quarter last year. The increase as a
percentage of sales is due to a lower sales volume and increases in
salaries, professional fees and bad debts expense.
Other deductions-net was $193,000 for the current quarter compared
to $72,000 for the same quarter last year. Interest increased to
$369,000 for the quarter, from $355,000 in the prior year, due to
increased borrowings. The equity in the earnings of the
unconsolidated affiliate SigmaTron International, Inc., amounted to
$132,000 for the current quarter compared to $86,000 for the same
period last year. Rental income for the quarter decreased to
$78,000 compared to $167,000 for the same period last year. The
decrease is due to the renovation of 2400 E. Lunt Ave. location
into a production facility and vacancy of the 2450 E. Lunt Ave.
location in the current quarter.
The effective income tax rate for the quarter ended July 31, 1996,
is 38.4% which is comparable to the 1995 rate of 39.0%.
The net earnings and earnings per share for the quarter ended July
31, 1996 were $224,000 and $.04, respectively, compared to
$946,000 and $.18, respectively, for the same period last year.
<PAGE>
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 an increase in long-term obligations.
For the quarter ended July 31, 1996, the decrease in line of credit
of $2,141,000, payments on long-term obligations of $1,000,000,
capital expenditures of $468,000 and the decrease in accounts
payable and accrued liabilities of $225,000, were funded by
operating income, proceeds from long-term obligations of
$1,500,000, decrease in inventories of $873,000 and accounts
receivable of $467,000.
The Company has purchase commitments as of July 31, 1996 of
approximately $3,700,000 for future deliveries of machinery and
equipment and $150,000 for building improvements at the 2400 E.
Lunt Ave. location. The Company intends to finance such purchases
through collateralized borrowings, installment loans and existing
cash flow.
The Company's backlog at July 31, 1996, is approximately
$15,004,000 compared to $13,703,000 at July 31, 1995. Backlog
represents orders scheduled to be shipped within approximately six
months, but most of which is shipped in four months or less. The
reliability of backlog as an indicator of future sales varies
substantially with the make-up of customer orders and the Company's
scheduled production and delivery dates.
<PAGE>
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
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the quarter
ended July 31, 1996.
<PAGE>
<TABLE> Exhibit 11
CIRCUIT SYSTEMS, INC.
AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
<S> <C> <C>
PRIMARY EPS THREE MONTHS ENDED
7/31/95 7/31/96
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING DURING THE PERIOD... 5,321,973 5,321,973
NET ADDITIONAL SHARES ASSUMING DILUTIVE
STOCK OPTIONS EXERCISED AND PROCEEDS
USED TO PURCHASE TREASURY SHARES AT
AVERAGE FAIR MARKET VALUE............... --- 63,285
--------- ---------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
AND COMMON EQUIVALENT SHARES OUTSTANDING 5,321,973 5,385,258
========= =========
NET EARNINGS............................... $ 946,072 $ 224,162
========= =========
PRIMARY EARNINGS PER SHARE ..... $ 0.18 $ 0.04
========= =========
FULLY DILUTED EPS
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING DURING THE PERIOD 5,321,973 5,321,973
NET ADDITIONAL SHARES ASSUMING DILUTIVE
STOCK OPTIONS EXERCISED AND PROCEEDS
USED TO PURCHASE TREASURY SHARES AT
FAIR MARKET VALUE (OR AVERAGE FAIR MARKET
VALUE IF HIGHER).......................... --- 63,285
--------- ---------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
AND COMMON EQUIVALENT SHARES OUTSTANDING 5,321,973 5,385,258
========= =========
NET EARNINGS .................... $ 946,072 $ 224,162
========= =========
FULLY DILUTED EARNINGS PER SHARE $ 0.18 $ 0.04
========= =========
</TABLE>
<PAGE>
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 6, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> JUL-31-1997
<CASH> 225,322
<SECURITIES> 0
<RECEIVABLES> 8,202,081
<ALLOWANCES> 550,000
<INVENTORY> 6,727,329
<CURRENT-ASSETS> 15,194,971
<PP&E> 41,253,195
<DEPRECIATION> 16,824,629
<TOTAL-ASSETS> 44,194,935
<CURRENT-LIABILITIES> 8,429,430
<BONDS> 12,759,326
0
0
<COMMON> 3,002,599
<OTHER-SE> 18,423,980
<TOTAL-LIABILITY-AND-EQUITY> 44,194,935
<SALES> 14,335,410
<TOTAL-REVENUES> 14,335,410
<CGS> 12,378,521
<TOTAL-COSTS> 12,378,521
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 75,000
<INTEREST-EXPENSE> 368,645
<INCOME-PRETAX> 363,762
<INCOME-TAX> 139,600
<INCOME-CONTINUING> 224,162
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 224,162
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
