10-K/A 1 c59129a1e10-ka.txt AMENDMENT #1 TO ANNUAL REPORT 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. [ ] 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. 3 SMT Unlimited L.P. Financial Statements Contents 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
Financial statement schedules not listed above are omitted because they are not applicable or required. 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 5 SMT Unlimited L.P. Balance Sheets
April 30 2000 1999 ----------------------------------- 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 ===================================
See accompanying notes. FA-2 6 SMT Unlimited L.P. Statements of Operations
Year ended April 30 2000 1999 1998 -------------------------------------------------- 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) ==================================================
See accompanying notes. FA-3 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 8 SMT Unlimited L.P. Statements of Cash Flows
Year ended April 30 2000 1999 1998 ------------------------------------------------- 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 =================================================
See accompanying notes. FA-5 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 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 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 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 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 14 Schedule II - Valuation and Qualifying Accounts
Balance at Charges to Charges to Balance at Beginning Costs and Other End of Description of Period Expenses Accounts Deductions Period ----------------------------------------------------------------------------------------------------------------------------------- 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 - - - - -
FA-11 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