<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended April 30, 2000
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:0-23248
SIGMATRON INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 36-3918470
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2201 LANDMEIER ROAD, ELK GROVE VILLAGE, ILLINOIS 60007
(Address of principal executive offices)
(847) 956-8000
(Registrant's telephone number, including area code)
----------------------------
Securities registered pursuant to Section 12(b) of the Act:
Names of each exchange
Title of Each Class on which registered
------------------- ----------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 Par Value
----------------------------
Indicate by check mark whether the Registrant (l) 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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
<PAGE> 2
PURPOSE OF AMENDMENT
The registrant has determined to furnish the information required by the SEC in
its annual report on Form 10-K for the fiscal year ended April 30, 2000. The
registrant hereby amends its annual report on Form 10-K as follows to include
separate audited financial statements for SMTU for 2000, 1999 and 1998. The
remainder of registrant's annual report on Form 10-K for the fiscal year ended
April 30, 2000 shall remain unaffected by this amendment.
CONSOLIDATED FINANCIAL STATEMENTS
The Form 10-K is hereby amended to include the audited financial statements for
SMT Unlimited L.P. for the years ended April 30, 2000, 1999 and 1998 at the end
of the presently filed Consolidated Financial Statements and Financial Schedules
filed as part of the Form 10-K beginning on page F-1.
<PAGE> 3
SMT Unlimited L.P.
Financial Statements
Contents
<TABLE>
<S> <C>
Report of Independent Auditors......................................................................FA - 1
Financial Statements
Balance Sheets at April 30, 2000 and 1999...........................................................FA - 2
Statements of Operations for the Years Ended April 30, 2000, 1999, and 1998.........................FA - 3
Statements of Partners' Deficit for the Years Ended April 30, 2000, 1999, and 1998..................FA - 4
Statements of Cash Flows for the Years Ended April 30, 2000, 1999, and 1998.........................FA - 5
Notes to Financial Statements.......................................................................FA - 6
Schedule II
Valuation and Qualifying Accounts..................................................................FA - 11
</TABLE>
Financial statement schedules not listed above are omitted because they are not
applicable or required.
<PAGE> 4
Report of Independent Auditors
Partners
SMT Unlimited L.P.
We have audited the accompanying balance sheets of SMT Unlimited L.P. as of
April 30, 2000 and 1999, and the related statements of operations, partners'
deficit, and cash flows for each of the three years in the period ended April
30, 2000. Our audits also included the financial statement schedule listed in
the index at Item 14(a). These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of SMT Unlimited L.P. at April 30,
2000 and 1999, and the results of its operations and its cash flows for each of
the three years in the period ended April 30, 2000, in conformity with
accounting principles generally accepted in the United States. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly in all
material respects, the information set forth therein.
Chicago, Illinois
June 29, 2000
FA-1
<PAGE> 5
SMT Unlimited L.P.
Balance Sheets
<TABLE>
<CAPTION>
April 30
2000 1999
-----------------------------------
<S> <C> <C>
Assets
Current assets:
Cash $ 2,500 $ 402
Accounts receivable 3,681,486 3,334,924
Inventories 7,017,811 3,445,737
Prepaid expenses 180,289 39,595
-----------------------------------
Total current assets 10,882,086 6,820,658
Machinery and equipment, net 5,031,221 5,259,551
Intangible assets, net of amortization of $95,238 and $66,002 at
April 30, 2000 and 1999, respectively 44,260 8,708
Deposits 17,004 14,093
-----------------------------------
Total assets $ 15,974,571 $ 12,103,010
===================================
Liabilities and partners' deficit Current liabilities:
Trade accounts payable $ 4,061,756 $ 3,024,008
Accrued expenses 678,982 145,010
Accrued expenses - Related parties 1,364,783 1,898,516
Capital lease obligations 110,660 68,858
Capital lease obligations - Related party 2,381,888 2,774,825
Subordinated debentures - Related parties - 1,300,000
Notes payable - Bank - 932,969
-----------------------------------
Total current liabilities 8,598,069 10,144,186
Notes payable-Bank 4,657,570 -
Subordinated notes payable - Related parties - 1,000,000
Capital lease obligations, less current portion 92,895 94,459
Subordinated debentures - Related party,
less current portion 2,100,000 800,000
Capital lease obligations - Related party,
less current portion 930,483 1,436,027
-----------------------------------
Total liabilities 16,379,017 13,474,672
Partners' deficit:
Partners' capital 100,000 100,000
Accumulated deficit (504,446) (1,471,662)
-----------------------------------
Total partners' deficit (404,446) (1,371,662)
-----------------------------------
Total liabilities and partners' deficit $ 15,974,571 $ 12,103,010
===================================
</TABLE>
See accompanying notes.
FA-2
<PAGE> 6
SMT Unlimited L.P.
Statements of Operations
<TABLE>
<CAPTION>
Year ended April 30
2000 1999 1998
--------------------------------------------------
<S> <C> <C> <C>
Net sales $ 25,318,719 $ 14,239,561 $ 5,574,343
Cost of sales 21,018,770 11,653,183 4,303,976
--------------------------------------------------
4,299,949 2,586,378 1,270,367
Selling and administrative expenses 2,261,965 1,514,640 1,150,366
--------------------------------------------------
Operating income 2,037,984 1,071,738 120,001
Other income 1,183 27,409 23,474
Interest expense - Bank notes and
capital lease obligations (385,174) (170,930) (110,192)
Interest expense - Related parties (686,777) (604,834) (541,826)
--------------------------------------------------
Net income (loss) $ 967,216 $ 323,383 $ (508,543)
==================================================
</TABLE>
See accompanying notes.
FA-3
<PAGE> 7
SMT Unlimited L.P.
Statements of Partners' Deficit
Total
Partners' Accumulated Partners'
Capital Deficit Deficit
----------------------------------------------
Balance at April 30, 1997 $ 100,000 $(1,286,502) $(1,186,502)
Net loss - (508,543) (508,543)
----------------------------------------------
Balance at April 30, 1998 100,000 (1,795,045) (1,695,045)
Net income - 323,383 323,383
----------------------------------------------
Balance at April 30, 1999 100,000 (1,471,662) (1,371,662)
Net income - 967,216 967,216
----------------------------------------------
Balance at April 30, 2000 $ 100,000 $ (504,446) $ (404,446)
==============================================
See accompanying notes.
FA-4
<PAGE> 8
SMT Unlimited L.P.
Statements of Cash Flows
<TABLE>
<CAPTION>
Year ended April 30
2000 1999 1998
-------------------------------------------------
<S> <C> <C> <C>
Operating activities
Net income (loss) $ 967,216 $ 323,383 $ (508,543)
Adjustments to reconcile net income (loss) to
net cash (used in) provided by operating
activities:
Depreciation and amortization 677,607 557,333 495,923
Changes in operating assets and liabilities:
Accounts receivable (346,562) (2,281,106) (419,302)
Inventories (3,572,074) (3,135,961) (16,838)
Prepaid expenses (140,694) (19,379) (13,984)
Deposits (2,911) 36,058 (35,527)
Trade accounts payable 1,037,748 3,288,946 137,971
Accrued expenses 533,972 53,540 (10,073)
Accrued expenses - Related parties (533,733) 338,461 483,676
-------------------------------------------------
Net cash (used in) provided by operating
activities (1,379,431) (838,725) 113,303
Investing activities
Purchases of machinery and equipment (282,215) (247,335) (186,276)
-------------------------------------------------
Net cash used in investing activities (282,215) (247,335) (186,276)
Financing activities
Deferred financing costs (64,787) - -
Payments under capital lease obligations (996,070) (84,965) (336,850)
Proceeds from (payment of) subordinated notes payable
- Related parties - 1,000,000 -
Payment of subordinated notes payable - Related
parties (1,000,000) - -
Net proceeds under note payable - Bank 3,724,601 169,016 411,057
-------------------------------------------------
Net cash provided by financing activities 1,663,744 1,084,051 74,207
-------------------------------------------------
Change in cash 2,098 (2,009) 1,234
Cash at beginning of period 402 2,411 1,177
-------------------------------------------------
Cash at end of period $ 2,500 $ 402 $ 2,411
=================================================
Supplementary disclosure of cash flow
information
Cash paid for interest $ 887,203 $ 558,491 $ 451,601
=================================================
Acquisition of machinery and equipment financed under
capital leases $ 137,827 $ 994,133 $ 1,111,918
=================================================
</TABLE>
See accompanying notes.
FA-5
<PAGE> 9
SMT Unlimited L.P.
Notes to Financial Statements
1. Description of the Business and Basis of Presentation
SMT Unlimited L.P. (the Company) was formed as an Illinois limited partnership
on September 15, 1994, by the Patel Group (Patel), SigmaTron International,
Inc., (SigmaTron), and a minority partner and is located in Fremont, California.
The Company provides surface-mount technology assembly services, primarily to
electronic original-equipment manufacturers. Patel and SigmaTron each
contributed capital of $49,500 in exchange for 45% ownership of the Company and,
additionally, Patel and SigmaTron formed a new corporation, SMT Unlimited Inc.
(SMT, Inc.), which is the general partner of the Company. SMT, Inc. contributed
capital of $1,000 in exchange for a 1% ownership interest. The minority partner
vested in the remaining ownership equally over the following five years. During
fiscal 1997, Patel and SigmaTron each sold 2.5% of their interest to key
employees of the Company.
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined by the
first in, first out (FIFO) method.
Machinery and Equipment
Machinery and equipment are stated at cost. The Company provides for
depreciation and amortization using the straight-line method over the useful
life of the asset which ranges from 5 to 15 years.
Income Taxes
The Company makes no provision for income taxes as the partners include their
respective shares of the results of the operations on their tax returns.
2. Summary of Significant Accounting Policies (continued)
Intangible Assets
Intangible assets consist primarily of deferred financing costs which are being
amortized by the straight-line method over the estimated useful life of the
assets, which is two years.
Revenue Recognition
The Company's net sales are comprised of product sales and service revenue
earned from engineering and design services. Revenue from product sales is
recognized upon shipment of goods. Service revenue is recognized as the services
are performed.
3. Inventories
FA-6
<PAGE> 10
Inventories consist of the following:
April 30
2000 1999
-----------------------------
Finished goods $ 84,019 $ 262,134
Work in process 1,351,996 222,075
Raw material, less inventory reserve of
$150,000 in 2000 5,581,796 2,961,528
-----------------------------
$ 7,017,811 $ 3,445,737
=============================
4. Machinery and Equipment
Machinery and equipment consist of the following:
April 30
2000 1999
-----------------------------
Machinery and equipment $ 1,005,188 $ 905,584
Office equipment 374,820 333,440
Leasehold improvements 47,425 30,441
Equipment under capital leases 6,061,177 5,799,103
-----------------------------
7,488,610 7,068,568
Accumulated depreciation and amortization,
including amortization of assets under
capital leases of $1,910,060 and $1,425,335
at April 30, 2000 and 1999, respectively (2,457,389) (1,809,017)
-----------------------------
$ 5,031,221 $ 5,259,551
=============================
FA-7
<PAGE> 11
5. Debt
The Company has $1,300,000 of 8% subordinated debentures and $800,000 of 12%
subordinated debentures due May 1, 2002, to SigmaTron and Patel. Interest on the
debentures is due quarterly beginning January 1, 2001. The payment of principal
and interest on the subordinated debentures is subordinated in right of payment
to the prior payment in full of the revolving line of credit.
The Company has a Loan and Security Agreement (Agreement) covering the Company's
revolving line-of-credit facility. Under the terms of the Agreement, the maximum
borrowing limit is the lesser of: (i) $5,500,000, or (ii) an amount equal to the
sum of up to 85% of the receivables borrowing base and the lesser of $2,750,000
or up to 50% of the inventory borrowing base. The amended revolving line of
credit matures on November 30, 2001. Borrowings under the revolving line of
credit bear interest at the bank's prime plus 1% (10% at April 30, 2000). The
Company is obligated to pay an annual commitment fee of 1/4 of 1% on the average
daily unused portion of the revolving line of credit. Available borrowings at
April 30, 2000 , were $179,476.
The Agreement is collateralized by substantially all of the assets of the
Company and contains certain financial covenants, including specific covenants
pertaining to the maintenance of tangible net worth and net income before
partnership distributions. The Agreement also provides for letters of credit up
to $500,000. There were no outstanding letters of credit at April 30, 2000.
In August 1999, SigmaTron entered into a guaranty agreement with the Company's
lender to guaranty the obligation of the Company under its revolving line of
credit to a maximum of $2,000,000, plus interest and related costs associated
with the enforcement of the guaranty. In connection with the guaranty agreement,
one of the limited partners of SMTU and the Chairman of SMTU have each executed
a guaranty to the lender to reimburse SigmaTron for up to $500,000 of payments
made by SigmaTron under its guaranty to the lender in excess of $1,000,000. In
addition, the limited partner has agreed to indemnify SigmaTron for 50% of all
the Company's payments to the lender. The limited partner's obligation to
SigmaTron under the indemnity is reduced dollar for dollar to the extent the
limited partner would otherwise be obligated to pay more than $1,000,000 as a
result of his guaranty to the lender.
FA-8
<PAGE> 12
5. Debt (continued)
Principal maturities of long-term debt as of April 30, 2000, are as follows:
2001 $ -
2002 4,657,570
2003 2,100,000
-------------
$ 6,757,570
=============
6. Leases
The Company leases its facilities under an operating lease agreement expiring
September 2004. The Company also has various capital lease agreements with
SigmaTron and one capital lease agreement with a third party to acquire
machinery and equipment.
Future minimum lease payments under leases with terms of one year or more are as
follows at April 30, 2000:
Capital Operating
Leases Leases
-----------------------------
2001 $3,055,902 $ 253,517
2002 573,622 259,524
2003 332,084 267,935
2004 236,547 273,942
2005 19,366 114,142
Thereafter - -
-----------------------------
4,217,521 $1,169,060
===============
Less: Amounts representing interest 701,595
------------
3,515,926
Less: Current portion 2,492,548
------------
$1,023,378
============
Rent expense, including maintenance, property taxes, and insurance incurred
under an operating lease, was approximately $298,000, $250,000, $219,000 for the
years ended April 30, 2000, 1999, and 1998, respectively.
FA-9
<PAGE> 13
7. Related Party Transactions
The Company is involved in transactions with SigmaTron. SigmaTron charges the
Company a minimum of $12,500 per month in administrative fees for various
services. The Company paid SigmaTron $375,000, $0 and $75,000 in administrative
fees for the years ended April 30, 2000, 1999 and 1998, respectively. At April
30, 2000 and 1999, the Company has accrued $0 and $225,000, respectively, for
administrative fees not paid by year-end. The Company also paid approximately
$1,214,000 and $0 in principal and interest in connection with its capital lease
agreements with SigmaTron in 2000 and 1999, respectively. At April 30, 2000, the
Company was approximately 22 months delinquent in its lease payments to
SigmaTron and has accrued overdue interest of approximately $402,000 in
connection with these lease payments. At April 30, 2000, the accrued interest
related to these lease payments was $514,000. SigmaTron and Patel have equally
guaranteed the Company's operating lease obligation for the manufacturing
facility.
8. Major Customers and Concentration of Credit Risks
For the year ended April 30, 2000, five customers accounted for 66% of net sales
of the Company and 66% of accounts receivable at April 30, 2000.
For the year ended April 30, 1999, seven customers accounted for 66% of net
sales of the Company and 71% of accounts receivable at April 30, 1999.
For the year ended April 30, 1998, two customers accounted for 43% of net sales
of the Company and 51% of accounts receivable at April 30, 1998.
SMT Unlimited L.P.
FA-10
<PAGE> 14
Schedule II - Valuation and Qualifying Accounts
<TABLE>
<CAPTION>
Balance at Charges to Charges to Balance at
Beginning Costs and Other End of
Description of Period Expenses Accounts Deductions Period
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended April 30, 2000:
Reserves and allowance deducted from asset
accounts:
Allowance for doubtful accounts $ - $ 60,000 - - $ 60,000
Reserve for obsolete inventory - 150,000 - - 150,000
Year ended April 30, 1999:
Reserves and allowance deducted from asset
accounts:
Allowance for doubtful accounts - - - - -
Reserve for obsolete inventory - - - - -
Year ended April 30, 1998:
Reserves and allowance deducted from asset
accounts:
Allowance for doubtful accounts - - - - -
Reserve for obsolete inventory - - - - -
</TABLE>
FA-11
<PAGE> 15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to its
Annual Report on Form 10-K to be signed on its behalf by the undersigned,
thereunto duly authorized.
SIGMATRON INTERNATIONAL, INC.
By: /s/ Gary R. Fairhead
-------------------------------------
Gary R. Fairhead
President and Chief Executive Officer
Dated: December 15, 2000
FA-12
