SigmaTron International Inc. Annual Report 2008

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FY2008 Annual Report · SigmaTron International Inc.

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www.sgmaintl.com

appliances • industrial and consumer electronics

SIGMATRON INTERNATIONAL
2008 Annual Report

ﬁtness and gaming • telecommunications • life sciences

CORPORATE OFFICES
2201 Landmeier Road
Elk Grove Village, IL 60007

Tel 847.956.8000
Fax 847.956.9801
Investor Relations 800.700.9095

GLOBAL FOOTPRINT | BOX-BUILD | INTERNATIONAL PROCUREMENT | SUPPLY CHAIN SOLUTIONS

PROTOTYPE TO HIGH VOLUME | REWORK AND REPAIR | HIGH-TECH /BGA LOW-TECH/THRU-HOLE | DFM /DFT

TEST | CLEAN ROOM | LCD INTEGRATION | CONFORMAL COATING PARYLENE COATING | REPAIR DEPOT

OUR STRATEGIC LOCATIONS:

Acuna,

MEXICO

S I G M A T R O N I N T E R N A T I O N A L I N C .

• 2 0 0 8 A N N U A L R E P O R T

S I G M A T R O N I N T E R N A T I O N A L I N C .

• 2 0 0 8 A N N U A L R E P O R T

SIGMATRON INTERNATIONAL:

CORPORATE INFORMATION

Suzhou–Wujiang,

CHINA

Hayward,

California, U.S.A.

Elk Grove Village,

Illinois, U.S.A.

Tijuana,

MEXICO

Taipei,

TAIWAN

Del Rio, Texas,

U.S.A.

WHERE GLOBAL MANUFACTURING

AND SERVICE MEET.

GLOBAL PRESENCE
A global approach, a single source. What does that mean for
our customers? Our expanding number of strategic locations
in the U.S., Mexico and Asia strengthen their supply chain.
Yet they work with just one partner, SigmaTron.

FLEXIBLE MANUFACTURING
Versatility counts. SigmaTron’s flexible, global locations
support everything from prototype and short-run to high-
volume. Manufacturing is transferred with ease to the best
facility for the job.

INTERNATIONAL PROCUREMENT
Led by our international purchasing office in Taiwan,
SigmaTron’s worldwide procurement network from various
locations delivers world-class quality, reduced costs and
accelerated time-to-market.

MARKETS SERVED
Diverse and growing, that’s our customer base. Appliances,
industrial and consumer electronics, ﬁtness and gaming as well
as telecommunications and life sciences – each are industries
that rely on SigmaTron for electronic manufacturing services.

DESIGN
Creative solutions? You bet. In fact, our expanding in-house
design capabilities, along with strong, long-term outside
engineering relationships, mean more and better alternatives
to design services.

PERSONAL SERVICE
Everyone says it. We mean it. It started on day one,
and has never changed. We have worldwide operations,
but we’re still structured regionally, with a local Project
Manager for every account. It’s the best of both worlds.

Quality, Delivery and Price.

That’s just the beginning…

…SigmaTron delivers more.

OFFICERS

Gary R. Fairhead*
President and
Chief Executive Ofﬁcer

Linda K. Blake*
Chief Financial Ofﬁcer, Vice
President Finance,
Treasurer and Secretary

Gregory A. Fairhead*
Executive Vice President,
Operations and Assistant Secretary

John P. Sheehan*
Vice President,
Director of Materials and
Assistant Secretary

Daniel P. Camp*
Vice President,
Acuna Operations

Rajesh B. Upadhyaya*
Executive Vice President,
Hayward and Tijuana Operations

Hom-Ming Chang
Vice President,
China Operation

Curtis Campbell
Vice President, Sales
West Coast

Yousef M. Heidari
Vice President, Engineering
Hayward Operations

Donald G. Madsen
Vice President, Customer Service
Hayward Operations

Dennis P. McNamara
Vice President, Engineering
Acuna Operations

Stephen H. McNulty
Vice President,
Sales

Thomas F. Rovtar
Vice President,
Information Technology

Keith D. Wheaton
Vice President, Customer Service
Hayward and Tijuana Operations

* Executive Ofﬁcers

BOARD OF DIRECTORS

Franklin D. Sove1
Chairman of the Board,
SigmaTron International, Inc.;
Former Vice President,
Tang Industries, Inc.

Gary R. Fairhead
President and Chief Executive Ofﬁcer,
SigmaTron International, Inc.

John P. Chen2,3
President
SKD Automotive Group

Carl A. Zemenick2,3
Former President and CEO,
GF Ofﬁce Furniture, LTD LP

Thomas W. Rieck1,2
Partner,
Rieck and Crotty, P.C.

Dilip S. Vyas1,3
Independent consultant

1 Member of the Audit Committee

2 Member of the Compensation

Committee

3 Member of the Nominating Committee

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SEC Counsel
Seyfarth Shaw LLP
131 South Dearborn Street
Chicago, Illinois 60603

Corporate Counsel
Defrees & Fiske LLC
200 South Michigan Avenue
Chicago, Illinois 60604

Independent Public Accountants
BDO Seidman, LLP
233 North Michigan Avenue
Chicago, Illinois 60601

Form 10-K
If you would like a free copy
of the Form 10-K report ﬁled
with the Securities and
Exchange Commission,
please call Linda K. Blake at
the SigmaTron corporate ofﬁce,
1.800.700.9095.

Stock Transfer Agent

and Registrar
American Stock Transfer
& Trust Company
59 Maiden Lane
New York, New York 10038

Stock Information
The Company’s common stock
has been trading on the Nasdaq
System under the symbol SGMA
since the Company’s initial
public offering in February 1994.
The Company has more than
3.9 million shares of common
stock outstanding.

The Company has not paid cash
dividends on its common stock
since completing its February
1994 initial public offering and
does not intend to pay any dividends
in the foreseeable future.

OUR STRATEGIC LOCATIONS:

Acuna,

MEXICO

S I G M A T R O N I N T E R N A T I O N A L I N C .

• 2 0 0 8 A N N U A L R E P O R T

S I G M A T R O N I N T E R N A T I O N A L I N C .

• 2 0 0 8 A N N U A L R E P O R T

SIGMATRON INTERNATIONAL:

CORPORATE INFORMATION

Suzhou–Wujiang,

CHINA

Hayward,

California, U.S.A.

Elk Grove Village,

Illinois, U.S.A.

Tijuana,

MEXICO

Taipei,

TAIWAN

Del Rio, Texas,

U.S.A.

WHERE GLOBAL MANUFACTURING

AND SERVICE MEET.

Quality, Delivery and Price.

That’s just the beginning…

…SigmaTron delivers more.

OFFICERS

Gary R. Fairhead*
President and
Chief Executive Ofﬁcer

Linda K. Blake*
Chief Financial Ofﬁcer, Vice
President Finance,
Treasurer and Secretary

Gregory A. Fairhead*
Executive Vice President,
Operations and Assistant Secretary

John P. Sheehan*
Vice President,
Director of Materials and
Assistant Secretary

Daniel P. Camp*
Vice President,
Acuna Operations

Rajesh B. Upadhyaya*
Executive Vice President,
Hayward and Tijuana Operations

Hom-Ming Chang
Vice President,
China Operation

Curtis Campbell
Vice President, Sales
West Coast

Yousef M. Heidari
Vice President, Engineering
Hayward Operations

Donald G. Madsen
Vice President, Customer Service
Hayward Operations

Dennis P. McNamara
Vice President, Engineering
Acuna Operations

Stephen H. McNulty
Vice President,
Sales

Thomas F. Rovtar
Vice President,
Information Technology

Keith D. Wheaton
Vice President, Customer Service
Hayward and Tijuana Operations

* Executive Ofﬁcers

BOARD OF DIRECTORS

Franklin D. Sove1
Chairman of the Board,
SigmaTron International, Inc.;
Former Vice President,
Tang Industries, Inc.

Gary R. Fairhead
President and Chief Executive Ofﬁcer,
SigmaTron International, Inc.

John P. Chen2,3
President
SKD Automotive Group

Carl A. Zemenick2,3
Former President and CEO,
GF Ofﬁce Furniture, LTD LP

Thomas W. Rieck1,2
Partner,
Rieck and Crotty, P.C.

Dilip S. Vyas1,3
Independent consultant

1 Member of the Audit Committee

2 Member of the Compensation

Committee

3 Member of the Nominating Committee

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A
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M
R
I
F

SEC Counsel
Seyfarth Shaw LLP
131 South Dearborn Street
Chicago, Illinois 60603

Corporate Counsel
Defrees & Fiske LLC
200 South Michigan Avenue
Chicago, Illinois 60604

Independent Public Accountants
BDO Seidman, LLP
233 North Michigan Avenue
Chicago, Illinois 60601

Form 10-K
If you would like a free copy
of the Form 10-K report ﬁled
with the Securities and
Exchange Commission,
please call Linda K. Blake at
the SigmaTron corporate ofﬁce,
1.800.700.9095.

Stock Transfer Agent

and Registrar
American Stock Transfer
& Trust Company
59 Maiden Lane
New York, New York 10038

The Company has not paid cash
dividends on its common stock
since completing its February
1994 initial public offering and
does not intend to pay any dividends
in the foreseeable future.

www.sgmaintl.com

appliances • industrial and consumer electronics

SIGMATRON INTERNATIONAL
2008 Annual Report

ﬁtness and gaming • telecommunications • life sciences

CORPORATE OFFICES
2201 Landmeier Road
Elk Grove Village, IL 60007

Tel 847.956.8000
Fax 847.956.9801
Investor Relations 800.700.9095

GLOBAL FOOTPRINT | BOX-BUILD | INTERNATIONAL PROCUREMENT | SUPPLY CHAIN SOLUTIONS

PROTOTYPE TO HIGH VOLUME | REWORK AND REPAIR | HIGH-TECH /BGA LOW-TECH/THRU-HOLE | DFM /DFT

TEST | CLEAN ROOM | LCD INTEGRATION | CONFORMAL COATING PARYLENE COATING | REPAIR DEPOT

To Our Stockholders

In fiscal year 2008, SigmaTron International, Inc. improved its operational performance
despite a difficult environment overall. We continue to pursue one of our most important
strategic objectives —diversifying our customer base. New customers are presenting
exciting opportunities and helping us set the stage for future growth.

Our fiscal year-end press release and 2008 Form IO-K reported that during the fourth
quarter we determined that the goodwill on our balance sheet, related primarily to our
2005 acquisition of Able Electronics, was impaired. Writing off this non-cash expense
resulted in a significant loss for the fourth quarter and fiscal year. In spite of this setback
and the less-than-robust business climate, SigmaTron’s financial progress improved
significantly over fiscal 2007. Nevertheless, challenges remain. Commodity prices
continue to increase, inflationary pressures abound, exchange rates are volatile, and the
economy is slowing. Our management team continuously monitors each of our
operations and their associated variable costs. Because our business depends on
leveraging fixed costs, we can only hope that the economy will regain momentum.

We have much positive news. A number of promising start-up companies have chosen
SigmaTron as their manufacturing partner for an array of new products. Electric bicycles,
hydrogen fuel cells, LED lamps, and two innovative security devices are only a few of
the products we are working on with these new partners. Each start-up has solid
financial backing and all are aiming at markets that have great potential.

Two strategic reasons for our acquisition of Able Electronics were to enhance our
presence in Mexico and to increase our complex box-build skill set. A business trend we
experienced during fiscal 2008 involved customer requests for vertical integration,
leading to more box-build business. In the process, several of our existing and potential
customers moved away from China and turned to Mexico out of concern for theft of
intellectual property, increasing transportation costs, and the necessity of shortening the
supply chain. It has been interesting to watch this trend and to see certain customers
look to Mexico as their ideal location for assembly in the supply chain. Nevertheless, we
believe that China holds great opportunity for SigmaTron.

We have good news to report from our various plants:

Elk Grove Village, Illinois
Our Elk Grove Village plant had a good year as it worked with customers to launch new
products and transition production to SigmaTron, confirming that a global presence is
important to our future. In addition, a major Elk Grove domestic customer reaffirmed its
partnership with us, supporting our belief that the Elk Grove plant will continue to be a
valuable domestic gateway for new products.

Acuña, Mexico and Del Rio, Texas
Acuña continues to be our largest operation and strongest financial performer. It has
added new technology and increased its box-build business, and we expect it to benefit
as production and revenue migrate from Asia.

Wujiang–Suzhou, China
During fiscal year 2008, our Wujiang plant added to its management staff and enhanced
its skill set in order to increase its box-build capabilities and launch products that will
originate in Wujiang. To make sure that we are positioned to pursue new opportunities,
we recently announced plans to increase our Wujiang plant during fiscal 2009.

Hayward, California
Our Hayward plant had an excellent fiscal year 2008, evidence that we are beginning to
reap the benefits of our acquisition of Able Electronics, specifically our Hayward plant.
Existing and new customers have spurred revenue growth. Although we expect some of
the Hayward business to migrate to Tijuana during fiscal 2009, we foresee new
opportunities as replacement

Tijuana, Mexico
Tijuana’s financial performance remains a challenge, and the missing element is volume.
In response, we have reorganized the management team and have reason to expect
improvement.

Taipei, Taiwan
Our International purchasing office in Taiwan continues to be critical to our success.
Because of the demand for commodities, we need to offer a supply chain that is
responsive, flexible, and cost-competitive. In this regard, Taiwan remains our model.

This report would not be complete without acknowledging our bank, Bank of America, for
its support and responsiveness as we resolved the issue of goodwill impairment. We
thank our employees, our Board of Directors, our supply chain, and, most importantly,
our customers, who are helping us master the challenges of the current economy. We
look forward to moving ahead with our current customers, and to welcoming new ones
on the horizon. We appreciate the continuing support of our stockholders and assure
them that, overall, we are optimistic.

Sincerely,

Gary R. Fairhead
President and Chief Executive Officer

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934.

For the fiscal year ended April 30, 2008.

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

(State or other jurisdiction
of incorporation or organization)

2201 Landmeier Rd., Elk Grove Village, IL

(Address of principal executive offices)

36-3918470

(I.R.S. Employer
Identification Number)

60007

(Zip Code)

Registrant’s telephone number, including area code: 847-956-8000
Securities registered pursuant to Section 12(g) of the Act:

Common Stock $0.01 par value per share
Title of each class

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o
Yes þ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. o
Yes þ No

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. þ Yes o 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. þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting
company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated
filer o

Accelerated filer o

Non-accelerated filer þ

Smaller reporting company o

(Do not check if a smaller reporting company)

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Act.) o Yes þ No

The aggregate market value of the voting common equity held by non-affiliates of the registrant as of October 31, 2007
(the last business day of the registrant’s most recently completed second fiscal quarter) was $44,418,101 based on the
closing sale price of $11.62 per share as reported by Nasdaq Capital Market as of such date.

The number of outstanding shares of the registrant’s Common Stock, as of July 13, 2008, was 3,822,556.

DOCUMENTS INCORPORATED BY REFERENCE

Those sections or portions of the definitive proxy statement of SigmaTron International, Inc., for use in connection with its
2008 annual meeting of stockholders, which the Company intends to file within 120 days of the fiscal year ended April 30,
2008, are incorporated by reference into Part III of this Form 10-K.

TABLE OF CONTENTS

PART I

ITEM 1. BUSINESS
ITEM 1A. RISK FACTORS
ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 2. PROPERTIES
ITEM 3. LEGAL PROCEEDINGS
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER

MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

ITEM 6. SELECTED FINANCIAL DATA
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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
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

SIGNATURES
Amended and Restated Mortgage Note
Sixteenth Amendment to Loan and Security Agreement
Consent of BDO Seidman, LLP
302 Certification of Principal Executive Officer
302 Certification of Principal Financial Officer
906 Certification of Principal Executive Officer
906 Certification of Principal Financial Officer

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Table of Contents

ITEM 1. BUSINESS

CAUTIONARY NOTE:

PART 1

In addition to historical financial information, this discussion of the business of SigmaTron International, Inc., its
wholly-owned subsidiaries Standard Components de Mexico S.A., and AbleMex S.A. de C.V., its wholly-owned foreign
enterprise Wujiang SigmaTron Electronics Co., Ltd. (“SigmaTron China”), and its procurement branch SigmaTron Taiwan
(collectively, the “Company”) and other items in this Annual Report on Form 10-K contain forward-looking statements
concerning the Company’s business or results of operations. Words such as “continue,” “anticipate,” “will,” “expect,”
“believe,” “plan,” and similar expressions identify forward-looking statements. These forward-looking statements are
based on the current expectations of the Company. Because these forward-looking statements involve risks and
uncertainties, the Company’s plans, actions and actual results could differ materially. Such statements should be evaluated
in the context of the risks and uncertainties inherent in the Company’s business including the Company’s continued
dependence on certain significant customers; the continued market acceptance of products and services offered by the
Company and its customers; pricing pressures from our customers, suppliers and the market; the activities of competitors,
some of which may have greater financial or other resources than the Company; the variability of the Company’s
operating results; the variability of our customers’ requirements; the availability and cost of necessary components and
materials; the ability of the Company and our customers to keep current with technological changes within our industries;
regulatory compliance; the continued availability and sufficiency of our credit arrangements; changes in U.S., Mexican,
Chinese or Taiwanese regulations affecting the Company’s business; the continued stability of the U.S., Mexican, Chinese
and Taiwanese economic systems, labor and political conditions; and the ability of the Company to manage its growth.
These and other factors which may affect the Company’s future business and results of operations are identified
throughout the Company’s Annual Report on Form 10-K as risk factors and may be detailed from time to time in the
Company’s filings with the Securities and Exchange Commission. These statements speak as of the date of this report, and
the Company undertakes no obligation to update such statements in light of future events or otherwise.

Overview

The Company operates in one business segment as an independent provider of electronic manufacturing services
(“EMS”), which includes printed circuit board assemblies and completely assembled (box-build) electronic products. In
connection with the production of assembled products, the Company also provides services to its customers, including
(1) automatic and manual assembly and testing of products; (2) material sourcing and procurement; (3) design,
manufacturing and test engineering support; (4) warehousing and shipment services; and (5) assistance in obtaining
product approval from governmental and other regulatory bodies. The Company provides these manufacturing services
through an international network of facilities located in the United States, Mexico, China and Taiwan.

The Company provides manufacturing and assembly services ranging from the assembly of individual components to
the assembly and testing of box-build electronic products. The Company has the ability to produce assemblies requiring
mechanical as well as electronic capabilities. The products assembled by the Company are then incorporated into finished
products sold in various industries, particularly appliance, consumer electronics, gaming, fitness, industrial electronics, life
sciences, semiconductor, telecommunications and automotive.

In July 2005, the Company closed on the purchase of all of the outstanding stock of Able, a company headquartered in
Hayward, California, and its wholly-owned subsidiary, AbleMex S.A. de C.V., located in Tijuana, Mexico. Able is an ISO
9001:2000 certified EMS company serving Original Equipment Manufacturers (“OEMs”) in the life sciences,
telecommunications and industrial electronics industries. The

Table of Contents

acquisition of Able has allowed the Company to make strides towards achieving four objectives: (1) diversifying markets,
capabilities and customer base, (2) adding a third low-cost manufacturing facility (Tijuana, Mexico), (3) creating an
opportunity to consolidate the California operations into one facility, and (4) generating incremental revenue from Able’s
customers as they become familiar with the Company’s broader array of services. The effective date of the transaction was
July 1, 2005. Able was merged into the Company on November 1, 2005 and operates as a division of the Company. The
purchase price was approximately $16,800,000 and was recorded as a stock purchase transaction in the first quarter of
fiscal year 2006. The transaction was financed by the Company’s amended credit facility and resulted in an increase of
approximately $8,500,000 in goodwill. The goodwill was subsequently impaired and the total amount was written off in
the fourth quarter of fiscal year 2008.

In June 2005, the Company closed on the sale of its Las Vegas, Nevada operation. The Las Vegas facility operated as a
complete EMS center specializing in the assembly of electronic products and cables for a broad range of customers
primarily in the gaming industry. The effective date of the transaction was May 30, 2005. The transaction was structured
as an asset purchase, and included a $2,000,000 cash payment to the Company for the buyer’s purchase of the machinery,
equipment and other assets of the Las Vegas operation. The transaction was recorded by the Company in the first quarter
of fiscal year 2006 and included a gain on the transaction of approximately $311,000. The gain was offset by a loss of
approximately $383,000 from discontinued operations for the Las Vegas operation for the period ended April 30, 2006.

The Company operates manufacturing facilities in Elk Grove Village, Illinois; Hayward, California; Acuna and
Tijuana, Mexico; and Suzhou-Wujiang, China. The Company maintains materials sourcing offices in Elk Grove Village,
Illinois; Hayward, California; and Taipei, Taiwan. The Company also has a warehouse in Del Rio, Texas.

The Company is a Delaware corporation, which was organized on November 16, 1993, and commenced operations
when it became the successor to all of the assets and liabilities of SigmaTron L.P., an Illinois limited partnership, through a
reorganization on February 8, 1994.

Products and Services

The Company provides a broad range of manufacturing related outsourcing solutions for its customers on both a
turnkey basis (material purchased by the Company) and consignment basis (material provided by the customer). These
solutions incorporate the Company’s knowledge and expertise in the EMS industry to provide its customers with advanced
manufacturing technologies and high quality, responsive and flexible manufacturing services. The Company’s EMS
solutions provide services from product inception through the ultimate delivery of a finished good. Such technologies and
services include the following:

Supply Chain Management. The Company is primarily a turnkey manufacturer and directly sources all, or a substantial
portion, of the components necessary for its product assemblies, rather than receiving the raw materials from its customers
on consignment. Turnkey services involve a greater investment in resources and an increased inventory risk compared to
consignment services. Supply chain management includes the purchasing, management, storage and delivery of raw
components required for the manufacture or assembly of a customer’s product based upon the customer’s orders. The
Company procures components from a select group of vendors which meet its standards for timely delivery, high quality
and cost effectiveness, or as directed by its customers. Raw materials used in the assembly and manufacture of printed
circuit boards and electronic assemblies are generally available from several suppliers, unless restricted by the customer.
The Company does not enter into purchase agreements with the majority of its major or single-source suppliers. The
Company believes ad-hoc negotiations with its suppliers provides the flexibility needed to source inventory based on the
needs of its customers.

The Company believes that its ability to source and procure competitively priced, quality components is critical to its
ability to effectively compete. In addition to obtaining materials in North America, the Company uses its Taiwanese
procurement office and agents to source materials from the Far East. The Company believes this office allows it to more
effectively manage its relationships with key suppliers in the Far East by permitting it to respond more quickly to changes
in market dynamics, including fluctuations in price, availability and quality.

Table of Contents

Assembly and Manufacturing. The Company’s core business is the assembly of printed circuit board assemblies
through the automated and manual insertion of components onto raw printed circuit boards. The Company offers its
assembly services using both pin-through-hole (“PTH”) and surface mount (“SMT”) interconnect technologies at all of its
manufacturing locations. SMT is an assembly process which allows the placement of a higher density of components
directly on both sides of a printed circuit board. The SMT process is an advancement over the mature PTH technology,
which normally permits electronic components to be attached to only one side of a printed circuit board by inserting the
component into holes drilled through the board. The SMT process allows OEMs to use advanced circuitry, while at the
same time permitting the placement of a greater number of components on a printed circuit board without having to
increase the size of the board. By allowing increasingly complex circuits to be packaged with the components in closer
proximity to each other, SMT greatly enhances circuit processing speed, and, thus, board and system performance.

The Company performs PTH assembly both manually and with automated component insertion and soldering
equipment. Although SMT is a more sophisticated interconnect technology, the Company intends to continue providing
PTH assembly services for its customers as the Company’s customers continue to require both PTH and SMT capabilities.
The Company is also capable of assembling fine pitch and ball grid array (“BGA”) components. BGA is used for more
complex circuit boards required to perform at higher speeds.

Manufacturing and Related Services. The Company offers RoHS compliant assembly services in order to comply with
the European Union environmental mandate that became effective in 2006 and is currently performing RoHS compliant
assembly services at each of its manufacturing locations. The Company also provides quick turnaround, turnkey prototype
services at all of its locations. In Elk Grove Village, the Company offers touch screen / LCD assembly services in a clean
room environment. In Acuna, Mexico, the Company offers parylene coating services. In Tijuana, Mexico, the Company
offers diagnostic, repair and rework services for power supplies. In all locations, the Company offers box-build services,
which integrate its printed circuit board and other manufacturing and assembly technologies into higher level
sub-assemblies and end products. Finally, the Company designs and manufactures DC to AC inverters.

Product Testing. The Company has the ability to perform both in-circuit and functional testing of its assemblies and
finished products. In-circuit testing verifies that the correct components have been properly inserted and that the electrical
circuits are complete. Functional testing determines if a board or system assembly is performing to customer
specifications. The Company seeks to provide customers with highly sophisticated testing services that are at the forefront
of current test technology.

Warehousing and Distribution. In response to the needs of select customers, the Company has the ability to provide
in-house warehousing, shipping and receiving and customer brokerage services in Del Rio, Texas for goods manufactured
or assembled in Acuna, Mexico. The Company also has the ability to provide custom-tailored delivery schedules and
services to fulfill the just-in-time inventory needs of its customers.

Markets and Customers

The Company’s customers are in the appliance, gaming, industrial electronics, fitness, life sciences, semiconductor,
telecommunications, consumer electronics and automotive industries. As of April 30, 2008, the Company had
approximately 120 active customers ranging from Fortune 500 companies to small, privately held enterprises.

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The following table shows, for the periods indicated, the percentage of net sales to the principal end-user markets it
serves.

Markets
Appliances
Industrial Electronics
Fitness
Telecommunications
Gaming
Life Sciences

Semiconductor Equipment

Consumer Electronics

Automotive
Total

Typical
OEM Application

Household appliance controls
Motor controls, power supplies
Treadmills, exercise bikes
Routers
Slot machines, lighting displays
Clinical diagnostic systems and
instruments
Process control and yield
management solutions for
semiconductor productions
Carbon monoxide alarms, sprinkler
systems,
battery backup sump pumps, electric
bikes

Automobile interior lighting

Fiscal
2006

37.6%
18.8
20.0
11.1
2.3

Percent of Net Sales
Fiscal
2007

37.6%
23.9
16.7
6.3
5.7

5.0

4.2

Fiscal
2008
35.8%
27.3
20.6
6.1
2.9

3.7

3.9

4.1

2.6

1.1
0.2
100%

0.8
0.7
100%

0.7
0.3
100%

For the fiscal year ended April 30, 2008, Spitfire Controls, Inc. and Life Fitness accounted for 23.0% and 20.6%,
respectively, of the Company’s net sales. For the fiscal year ended April 30, 2007, Spitfire Controls, Inc. and Life Fitness
accounted for 24.8% and 16.9%, respectively, of the Company’s net sales. For the fiscal year ended April 30, 2006,
Spitfire Controls, Inc. and Life Fitness accounted for 30.1% and 19.7%, respectively, of the Company’s net sales.
Although the Company does not have long term contracts with these two customers, the Company expects that these
customers will continue to account for a significant percentage of the Company’s net sales, although the individual
percentages may vary from period to period.

Sales and Marketing

The Company markets its services through 11 independent manufacturers’ representative organizations that together
currently employ approximately 37 sales personnel in the United States and Canada. Independent manufacturers’
representative organizations receive variable commissions based on orders received by the Company and are assigned
specific accounts, not territories. The members of the Company’s senior management are actively involved in sales and
marketing efforts, and the Company has 4 direct sales employees.

Sales can be a misleading indicator of the Company’s financial performance. Sales levels can vary considerably among
customers and products depending on the type of services (consignment and turnkey) rendered by the Company and the
demand by customers. Consignment orders require the Company to perform manufacturing services on components and
other materials supplied by a customer, and the Company charges only for its labor, overhead and manufacturing costs,
plus a profit. In the case of turnkey orders, the Company provides, in addition to manufacturing services, the components
and other materials used in assembly. Turnkey contracts, in general, have a higher dollar volume of sales for each given
assembly, owing to inclusion of the cost of components and other materials in net sales and cost of goods sold. Variations
in the number of turnkey orders compared to consignment orders can lead to significant fluctuations in the Company’s
revenue levels. However, the Company does not believe that such variations are a meaningful indicator of the Company’s
gross

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margins. Consignment orders accounted for less than 5% of the Company’s revenues for each of the fiscal years ended
April 30, 2008, 2007 and 2006, respectively.

In the past, the timing and rescheduling of orders has caused the Company to experience significant quarterly
fluctuations in its revenue and earnings; such fluctuations may continue.

Mexico and China Operations

The Company’s wholly-owned subsidiary, Standard Components de Mexico, S.A, a Mexican corporation, is located in
Acuna, Coahuila Mexico, a border town across the Rio Grande River from Del Rio, Texas, and is 155 miles west of San
Antonio. Standard Components de Mexico, S.A. was incorporated and commenced operation in 1968. The Company’s
wholly-owned subsidiary, AbleMex S.A. de C.V., a Mexican corporation, is located in Tijuana, Mexico, a border town
south of San Diego, California. AbleMex S.A. de C.V. was incorporated and commenced operations in 2000. The
Company believes that one of the key benefits to having operations in Mexico is its access to cost-effective labor resources
while having geographic proximity to the United States.

In May 2002, the Company acquired a plant in Acuna, Mexico through seller financing. The loan of $1,950,000 is
payable in equal monthly installments of approximately $31,000 over six and a half years at a rate of 7% interest per
annum. Prior to acquiring that plant, the Company rented the facility. At April 30, 2008, approximately $183,400 was
outstanding in connection with the financing of that facility.

The Company’s wholly-owned foreign enterprise, SigmaTron China, is located in Wujiang, China. Wujiang is located
approximately 15 miles south of Suzhou, China and 60 miles west of Shanghai, China. The Company has entered into an
agreement with governmental authorities in the economic development zone of Wujiang, Jiangsu Province, Peoples
Republic of China, pursuant to which the Company became the lessee of a parcel of land of approximately 100 Chinese
acres. The term of the land lease is 50 years. The Company built a manufacturing plant, office space and dormitories on
this site during 2004. The manufacturing plant and office space is approximately 80,000 square feet, which can be
expanded if conditions require. SigmaTron China operates at this site as the Company’s wholly-owned foreign enterprise.
At April 30, 2008, this operation had 223 employees.

The Company provides funds for salaries, wages, overhead and capital expenditure items as necessary to operate its
wholly-owned Mexican and Chinese subsidiaries. The Company provides funding to its Mexican and Chinese subsidiaries
in U.S. dollars, which are exchanged for Pesos and Renminbi as needed. The fluctuation of currencies from time to time,
without an equal or greater increase in inflation, has not had a material impact on the financial results of the Company. In
fiscal year 2008, the Company’s U.S. operations paid approximately $18,600,000 to its foreign subsidiaries for services
provided.

Competition

The EMS industry is highly competitive and subject to rapid change. Furthermore, both large and small companies
compete in the industry, and many have significantly greater financial resources, more extensive business experience and
greater marketing and production capabilities than the Company. The significant competitive factors in this industry
include price, quality, service, timeliness, reliability, the ability to source raw components, and manufacturing and
technological capabilities. The Company believes it can competitively provide all of these services.

In addition, the Company may be operating at a cost disadvantage compared to manufacturers who have greater direct
buying power with component suppliers or who have lower cost structures. Current and prospective customers continually
evaluate the merits of manufacturing products internally and will from time to time offer manufacturing services to third
parties in order to utilize excess capacity. During downturns in the electronics industry, OEMs may become more price
sensitive.

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or significant pricing pressures from its customers could adversely affect the Company’s business, financial condition, and
results of operations, as would the introduction of new technologies which render the Company’s manufacturing process
technology less competitive or obsolete.

Consolidation

The consolidated financial statements include the accounts and transactions of the Company, its wholly-owned
subsidiaries, Standard Components de Mexico, S.A. and AbleMex S.A. de C.V., its wholly-owned foreign enterprise
Wujiang SigmaTron Electronics Co., Ltd. and its procurement branch, SigmaTron Taiwan. The functional currency of the
Mexican subsidiaries, Chinese foreign enterprise and Taiwanese procurement branch is the U.S. dollar.

As a result of consolidation and other transactions involving competitors and other companies in the Company’s
markets, the Company occasionally reviews potential transactions relating to its business, products and technologies. Such
transactions could include mergers, acquisitions, strategic alliances, joint ventures, licensing agreements, co-promotion
agreements, financing arrangements or other types of transactions. The Company completed one such transaction in July
2005 with the acquisition of Able. In the future, the Company may choose to enter into other transactions at any time
depending on available sources of financing, and such transactions could have a material impact on the Company, its
business or operations. Recent transactions are disclosed in Footnote I of the financial statements included with this
Annual Report on Form 10-K.

Governmental Regulations

The Company’s operations are subject to certain foreign, federal, state and local regulatory requirements relating to
environmental, waste management, labor and health and safety matters. Management believes that the Company’s
business is operated in material compliance with all such regulations. To date, the cost to the Company of such compliance
has not had a material impact on the Company’s business, financial condition or results of operations. However, there can
be no assurance that violations will not occur in the future as a result of human error, equipment failure or other causes.
Further, the Company cannot predict the nature, scope or effect of environmental legislation or regulatory requirements
that could be imposed or how existing or future laws or regulations will be administered or interpreted. Compliance with
more stringent laws or regulations, as well as more vigorous enforcement policies of regulatory agencies, could require
substantial expenditures by the Company and could have a material impact on the Company’s business, financial condition
and results of operations. In addition, effective mid-2006, the Company’s customers were required to be in compliance
with the European Standard of RoHS directive for all of their products that ship to the European marketplace. The
Company has RoHS-dedicated manufacturing capabilities at all of its manufacturing operations.

Backlog

The Company’s backlog as of April 30, 2008, was approximately $49,100,000. The Company currently expects to ship
substantially all of the April 30, 2008 backlog by the end of the 2009 fiscal year. Backlog as of April 30, 2007, totaled
approximately $47,680,000. Variations in the magnitude and duration of contracts and purchase orders received by the
Company and delivery requirements generally may result in substantial fluctuations in backlog from period to period.
Because customers may cancel or reschedule deliveries, backlog may not be a meaningful indicator of future revenue.

Employees

The Company employed approximately 2,140 people as of April 30, 2008, including 124 engaged in engineering or
engineering related services, 1,721 in manufacturing and 295 in administrative and marketing functions.

The Company has a labor contract with Production Workers Union Local No. 10, AFL-CIO, covering the Company’s
workers in Elk Grove Village, Illinois which expires on November 30, 2009. The Company’s Mexican subsidiary,
Standard Components de Mexico S.A., has a labor contract with Sindicato De

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Trabajadores de la Industra Electronica, Similares y Conexos del Estado de Coahuila, C.T.M. covering the Company’s
workers in Acuna, Mexico which expires on January 15, 2009.

Since the time the Company commenced operations, it has not experienced any union-related work stoppages. The
Company believes its relations with both unions and its other employees are good.

Executive Officers of the Registrants

Name
Gary R. Fairhead

Linda K. Blake

Gregory A. Fairhead

Age
56

Position
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.

Chief Financial Officer, Vice President – Finance, Treasurer and Secretary since
February 1994.

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

Vice President – Director of Materials and Assistant Secretary since February 1994.

Daniel P. Camp

Raj B. Upadhyaya

Hom-Ming Chang

ITEM 1 A. RISK FACTORS

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.

Executive Vice President – Hayward / Tijuana since 2005. Mr. Upadhyaya was the
Vice President of the Fremont Operation (SMTU) from 2001 until 2005.

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.

The following risk factors should be read carefully in connection with evaluating our business and the forward-looking
information contained in this Annual Report on Form 10-K. Any of the following risks could materially adversely affect
our business, operations, industry or financial position or our future financial performance. While the Company believes it
has identified and discussed below the key risk factors affecting its business, there may be additional risks and
uncertainties that are not presently known or that are not currently believed to be significant that may adversely affect its
business, operations, industry, financial position and financial performance in the future.

The Company’s ability to secure and maintain sufficient credit arrangements is key to its continued operations.

The Company has a revolving credit facility under which the Company may borrow up to the lesser of (i) $32 million
or (ii) an amount equal to the sum of 85% of the receivable borrowing base and the lesser of $16 million or a percentage of
the inventory base. As of April 30, 2008, $25,876,255 was outstanding under the revolving credit facility. There was
approximately $4.6 million of unused availability under the revolving credit facility as of April 30, 2008. The revolving
credit facility requires the Company to maintain certain financial covenants which the Company was in compliance with
as of April 30, 2008. In June 2008, the Company amended the revolving credit facility to extend the term of the agreement
until September 30, 2010 from September 30, 2009 and to amend certain financial covenants.

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The Company also has a term loan with an outstanding balance of $3 million as of April 30, 2008 with quarterly
principal payments of $250,000 due each quarter through the quarter ending June 30, 2011 and interest payable monthly
throughout the term of the loan.

The Company anticipates credit facilities, cash flow from operations and leasing resources will be adequate to meet its
working capital requirements in fiscal year 2009. In the event the business grows rapidly or the Company considers an
acquisition, additional financing resources could be necessary in the current or future fiscal years. There is no assurance
that the Company will be able to obtain equity or debt financing at acceptable terms in the future.

The Company experiences variable operating results.

The Company’s results of operations have varied and may continue to fluctuate significantly from period to period,
including on a quarterly basis. Consequently, results of operations in any period should not be considered indicative of the
results for any future period, and fluctuations in operating results may also result in fluctuations in the price of the
Company’s common stock.

The Company’s quarterly and annual results may vary significantly depending on numerous factors, many of which are
beyond the Company’s control. These factors include:

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.

Sales to the Company’s five largest customers accounted for 63%, 56% and 64% of net sales for the fiscal years ended
April 30, 2008, 2007 and 2006, respectively. Further, the Company’s two largest customers accounted for 23.0% and
20.6% of net sales, for the fiscal year ended April 30, 2008. Significant reduction in sales to any of the Company’s major
customers or the loss of a major customer could have a material impact on the Company’s operations. If the Company
cannot replace canceled or reduced orders, sales will decline, which could have a material impact on the results of
operations. There can be no assurance that the Company will retain any or all of its large customers. This risk may be
further complicated by pricing pressures and intense competition prevalent in our industry.

There is variability in the requirements of the Company’s customers.

The Company does not generally obtain long-term purchase contracts. The timing of purchase orders placed by the
Company’s customers is affected by a number of factors, including variation in demand for the customers’ products,
regulatory changes affecting customer industries, customer attempts to manage inventory, changes in the customers’
manufacturing strategies and customers’ technical problems or issues. Many of these factors are outside the control of the
Company. If the Company cannot replace canceled or reduced orders, sales will decline, which could have a material
impact on the results of operations.

The Company and its customers may be unable to keep current with the industry’s technological changes.

The market for the Company’s manufacturing services is characterized by rapidly changing technology and continuing
product development. The future success of the Company’s business will depend in large part upon its customers’ ability
to maintain and enhance their technological capabilities, develop and market manufacturing services which meet changing
customer needs and successfully anticipate or respond to technological changes in manufacturing processes on a
cost-effective and timely basis.

Effective mid-2006, the Company’s customers were required to be in compliance with the European Standard of RoHS
for all products shipped to the European marketplace. The purpose of the directive is to

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restrict the use of hazardous substances in electrical and electronic equipment and to contribute to the environmentally
sound recovery and disposal of electrical and electronic equipment waste. In addition, electronic component manufacturers
must produce electronic components which are lead-free. The Company relies on numerous third-party suppliers for
components used in the Company’s production process. Customers’ specifications may require the Company to obtain
components from a single source or a small number of suppliers. The inability to utilize any such suppliers could have a
material impact on the Company’s results of operations.

The Company faces intense industry competition and downward pricing pressures.

The EMS industry is highly fragmented and characterized by intense competition. Many of the Company’s competitors
have substantially greater experience, as well as greater manufacturing, purchasing, marketing and financial resources than
the Company.

There can be no assurance that competition from existing or potential competitors will not have a material adverse
impact on the Company’s business, financial condition or results of operations. The introduction of lower priced
competitive products, significant price reductions by the Company’s competitors or significant pricing pressures from its
customers could adversely affect the Company’s business, financial condition, and results of operations.

The Company has foreign operations that may pose additional risks.

A substantial part of the Company’s manufacturing operations is based in Mexico. Therefore, the Company’s business
and results of operations are dependent upon numerous related factors, including the stability of the Mexican economy, the
political climate in Mexico and Mexico’s relations with the United States, prevailing worker wages, the legal authority of
the Company to own and operate its business in Mexico, and the ability to identify, hire, train and retain qualified
personnel and operating management in Mexico.

The Company has an operation in China. Therefore, the Company’s business and results of operations are dependent
upon numerous related factors, including the stability of the China economy, the political climate in China and China’s
relations with the United States, prevailing worker wages, the legal authority of the Company to own and operate its
business in China, and the ability to identify, hire, train and retain qualified personnel and operating management in China.

The Company obtains many of its materials and components through its office in Taipei, Taiwan and, therefore, the
Company’s access to these materials and components is dependent on the continued viability of its Asian suppliers.

The Company may be unable to manage its growth.

The Company may not effectively manage its growth and successfully integrate the management and operations of its
acquisitions. Acquisitions involve significant financial and operating risks that could have a material adverse effect on the
Company’s results of operations.

Disclosure and internal controls.

The Company’s management, including the Chief Executive Officer and Chief Financial Officer, do not believe that its
disclosure controls and internal controls will prevent all errors and all fraud. Controls can provide only reasonable
assurance that the procedures will meet the control objectives. Controls are limited in their effectiveness by human error,
including faulty judgments in decision-making. Further, controls can be circumvented by collusion of two or more people
or by management override of controls. Because of the limitations of a cost effective control system, error and fraud may
occur and not be detected. In July 2007, the Company amended its Code of Conduct policy to include a fraud prevention
policy, requiring diligence and reporting to senior management any suspected fraud activity. In addition, the Company has
a number of internal control policies designed to discover and deal with potential fraud activities.

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There is a risk of fluctuation of various currencies integral to the Company’s operations.

The Company purchases some of its material components and funds some of its operations in foreign currencies. From
time to time the currencies fluctuate against the U.S. dollar. Such fluctuations could have a measurable impact on the
Company’s results of operations and performance. These fluctuations are expected to continue. The Company does not
utilize derivatives or hedge foreign currencies to reduce the risk of such fluctuations.

The availability of raw components may affect the Company’s operations.

The Company is dependent on key personnel.

The Company depends significantly on its President and Chief Executive Officer, Gary R. Fairhead, and on other
executive officers. The loss of the services of any of these key employees could have a material impact on the Company’s
business and results of operations. In addition, despite significant competition, continued growth and expansion of the
Company’s EMS business will require that it attract, motivate and retain additional skilled and experienced personnel. The
inability to satisfy such requirements could have a negative impact on the Company’s ability to remain competitive in the
future.

Favorable labor relations are important to the Company.

The Company currently has labor union contracts with its employees constituting approximately 58% of its workforce.
Although the Company believes its labor relations are good, any labor disruptions, whether union-related or otherwise,
could significantly impair the Company’s business, substantially increase the Company’s costs or otherwise have a
material impact on the Company’s results of operations.

Failure to comply with environmental regulations could subject the Company to liability.

The Company is subject to a variety of environmental regulations relating to the use, storage, discharge and disposal of
hazardous chemicals used during its manufacturing process. Any failure by the Company to comply with present or future
regulations could subject it to future liabilities or the suspension of production which could have a material negative
impact on the Company’s results of operations.

The price of the Company’s stock is volatile.

The price of the Company’s common stock historically has experienced significant volatility due to fluctuations in the
Company’s revenue and earnings, other factors relating to the Company’s operations, the market’s changing expectations
for the Company’s growth, overall equity market conditions and other factors unrelated to the Company’s operations. In
addition, the limited float of the Company’s common stock and the limited number of market makers also affect the
volatility of the Company’s common stock. Such fluctuations are expected to continue in the future.

Being a public company increases the Company’s administrative costs.

The Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), as well as rules subsequently implemented by the Securities and
Exchange Commission and listing requirements subsequently adopted by Nasdaq in response to Sarbanes-Oxley, have
required changes in corporate governance practices, internal control policies and audit committee practices of public
companies. These rules, regulations, and requirements have increased the Company’s legal expenses, financial compliance
and administrative costs, made many other activities more

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time consuming and costly and diverted the attention of senior management. These rules and regulations could also make
it more difficult for us to attract and retain qualified members for our board of directors, particularly to serve on our audit
committee. In addition, if the Company receives a qualified opinion on the adequacy of its internal control over financial
reporting, shareholders and the Company’s lenders could lose confidence in the reliability of the Company’s financial
statements. This could have a material adverse impact on the value of the Company’s stock and the Company’s liquidity.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

At April 30, 2008, the Company had manufacturing facilities located in Elk Grove Village, Illinois, Hayward,
California, Acuna and Tijuana, Mexico and Suzhou-Wujiang, China. In addition, the Company provides inventory
management services through its Del Rio, Texas, warehouse facilities and materials procurement services through its Elk
Grove Village, Illinois; Acuna, Mexico; Hayward, California; and Taipei, Taiwan offices.

Certain information about the Company’s manufacturing, warehouse and purchasing facilities is set forth below:

Location
Suzhou-Wujiang, China

Hayward, CA

Square
Feet

147,500
126,000

Elk Grove Village, IL

118,000

Acuna, Mexico

Las Vegas, NV

Del Rio, TX
Tijuana, Mexico

Taipei, Taiwan

115,000

38,250

36,000
67,700

2,900

Services Offered

High volume assembly, and testing of PTH and SMT,
box-build
Assembly and testing of PTH, SMT and BGA, box-build,
prototyping, warehousing
Corporate headquarters, assembly and testing of PTH,
SMT and BGA, box-build, prototyping, warehousing
High volume assembly, and testing of PTH and SMT,
box-build, transformers
N/A

Warehouse, portion of which is bonded

High volume assembly, and testing of PTH and SMT,
box-build
Materials procurement, alternative sourcing assistance
and quality control

Owned/
Leased
*

Leased

Owned

Owned
**
Leased
***
Leased
Leased

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.

The Hayward, California and Tijuana, Mexico properties and a portion of the Del Rio, Texas property are occupied
pursuant to leases of the premises. The lease agreements for the Nevada, Texas and California properties expire
October 2009, December 2015 and September 2010, respectively. The Tijuana, Mexico leases expire June 2009. The
Company’s manufacturing facilities located in Acuna, Mexico and Elk Grove Village, Illinois are owned by the Company,
except for a portion of the facility in Mexico, which is leased. The properties in Acuna, Mexico and Illinois are financed
under separate mortgage agreements, which mature in November 2008 and April 2013, respectively. The Company,
through an agent, leases the purchasing and

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engineering office in Taipei, Taiwan to coordinate Far East purchasing and design activities. The Company believes its
current facilities are adequate to meet its current needs. In addition, the Company believes it can find alternative facilities
to meet its needs in the future, if required.

ITEM 3. LEGAL PROCEEDINGS

Since the beginning of the 2008 fiscal year, neither the Company nor any of its property was a party to any material
legal proceedings.

From time to time the Company is involved in legal proceedings, claims or investigations that are incidental to the
conduct of the Company’s business. In future periods, the Company could be subjected to cash cost or non-cash charges to
earnings if any of these matters is resolved on unfavorable terms. However, although the ultimate outcome of any legal
matter cannot be predicted with certainty, based on present information, including our assessment of the merits of the
particular claim, the Company does not expect that these legal proceedings or claims will have any material adverse
impact on its future consolidated financial position or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of security holders in the fourth quarter of fiscal year 2008.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES

The Company’s common stock is traded on the Nasdaq Capital Market System under the symbol SGMA. The
following table sets forth the range of quarterly high and low sales price information for the common stock for the periods
ended April 30, 2008, and 2007.

Common Stock as Reported
by Nasdaq

Period
Fiscal 2008:
Fourth Quarter
Third Quarter
Second Quarter
First Quarter

Fiscal 2007:
Fourth Quarter
Third Quarter
Second Quarter
First Quarter

High

Low

$ 7.85
12.50
13.37
11.64

$ 10.95
11.00
10.94
10.19

$ 5.25
6.88
8.44
8.95

$ 7.90
8.56
7.32
7.11

As of July 13, 2008, there were approximately 64 holders of record of the Company’s common stock, which does not
include shareholders whose stock is held through securities position listings. The Company estimates there to be
approximately 2,146 beneficial owners of the Company’s common stock.

The Company has not paid cash dividends on its common stock since completing its February 1994 initial public
offering and does not intend to pay any dividends in the foreseeable future. So long as any indebtedness remains unpaid
under the Company’s revolving loan facility, the Company is prohibited from paying or declaring any dividends on any of
its capital stock, except stock dividends, without the written consent of the lender under the facility.

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Stock Price Performance Graph

The following performance graph compares the percentage change in the cumulative total stockholder return on the
Company’s Common Stock during the period from May 2004 through April 2008 with the cumulative total return on (i) a
group consisting of the Company’s peer corporations on a line-of-business (the “Peer Group”) and (ii) the Nasdaq
Composite Index (Total Return). The comparison assumes $100 was invested on May 1, 2002 in the Company’s Common
Stock, the Peer Group (allocated equally among each of the Peer Group members), and the Nasdaq Composite Index and
assumes reinvestment of dividends, if any. The Peer Group consists of IEC Electronics Corp., Nortech Systems, Inc., Key
Tronic Corp., and Simclar, Inc. (formerly known as Techdyne, Inc.)

Comparison of five year cumulative total among SigmaTron International, Inc., the Peer Group, and the Nasdaq
Composite Index (Total Return).

Total Return To Shareholders
(Includes reinvestment of dividends)

Company Name / Index
SigmaTron International, Inc.
Nasdaq Index
New Peer Group
Old Peer Group

Apr 04
75.83
30.82
111.53
118.60

ANNUAL RETURN PERCENTAGE
Years Ending
Apr 06
(11.46)
21.41
26.26
22.61

Apr 05
6.13
0.33
(8.26)
(10.70)

Apr 07
(0.65)
9.08
18.64
41.92

Apr 08
(41.20)
(5.49)
(23.89)
(31.96)

Company Name / Index
SigmaTron International, Inc.
Nasdaq Index

Base
Period
Apr 03
100
100

Apr 04
175.83
130.82

Apr 05
186.61
131.25

Apr 06
165.22
159.36

Apr 07
164.14
173.83

Apr 08
96.52
164.29

INDEXED RETURNS
Years Ending

New Peer Group
Old Peer Group

100
100

211.53
218.60

194.05
195.21

245.01
239.34

290.68
339.68

221.24
231.12

New Peer Group Companies
IEC ELECTRONICS CORP
KEY TRONIC CORP
NORTECH SYSTEMS INC
SIMCLAR INC

Old Peer Group Companies
IEC ELECTRONICS CORP
NORTECH SYSTEMS INC
SIMCLAR INC
SMTEK INTERNATIONAL INC (Included
through 2004. Acquired by CTS Corp 2/2005)

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ITEM 6. SELECTED FINANCIAL DATA

Net sales

(Loss) income before income tax expense
(benefit) and discontinued operation

Net (loss) income from continuing

operations

Net income (loss) from discontinued

operation

Net (loss) income

Earnings (loss) per share-basic Continuing

operations
Discontinued operation

Years Ended April 30
(In thousands except per share data)

*2008
$167,811

2007
$165,909

**2006
$124,786

2005
$94,312

2004
$84,178

(4,801)

2,595

2,862

8,150

8,446

(6,456)

1,698

1,926

4,840

4,934

—

(44)

(141)

467

(6,456)

1,698

1,882

4,699

5,406

(1.69)
(0.00)

0.45
(0.00)

0.51
(0.01)

1.29
(0.04)

1.44
0.14

Total

(1.69)

0.45

0.50

1.25

1.58

Earnings (loss) per share-diluted Continuing

operations
Discontinued operation

Total

Total assets

(1.69)
(0.00)

0.44
(0.00)

0.49
(0.01)

1.27
(0.04)

1.39
0.14

(1.69)

0.44

0.48

1.23

1.53

106,606

109,402

98,940

66,543

62,998

Long-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

forward-looking statements involve risks and uncertainties, the Company’s plans, actions and actual results could differ
materially. Such statements should be evaluated in the context of the risks and uncertainties inherent in the Company’s
business including the Company’s continued dependence on certain significant customers; the continued market
acceptance of products and services offered by the Company and its customers; pricing pressures from our customers,
suppliers and the market; the activities of competitors, some of which may have greater financial or

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other resources than the Company; the variability of our operating results; the results of goodwill impairment testing; the
variability of our customers’ requirements; the availability and cost of necessary components and materials; the ability of
the Company and our customers to keep current with technological changes within our industries; regulatory compliance;
the continued availability and sufficiency of our credit arrangements; changes in U.S., Mexican, Chinese or Taiwanese
regulations affecting the Company’s business; the continued stability of the U.S., Mexican, Chinese and Taiwanese
economic systems, labor and political conditions; and the ability of the Company to manage its growth. These and other
factors which may affect the Company’s future business and results of operations are identified throughout the Company’s
Annual Report on Form 10-K and as risk factors and may be detailed from time to time in the Company’s filings with the
Securities and Exchange Commission. These statements speak as of the date of this report, and the Company undertakes
no obligation to update such statements in light of future events or otherwise.

Overview

The Company operates in one business segment as an independent provider of EMS, which includes printed circuit
board assemblies and completely assembled (box-build) electronic products. In connection with the production of
assembled products, the Company also provides services to its customers, including (1) automatic and manual assembly
and testing of products; (2) material sourcing and procurement; (3) design, manufacturing and test engineering support;
(4) warehousing and shipment services; and (5) assistance in obtaining product approval from governmental and other
regulatory bodies. The Company provides these manufacturing services through an international network of facilities
located in the United States, Mexico, China and Taiwan.

The Company relies on numerous third-party suppliers for components used in the Company’s production process.
Certain of these components are available only from single sources or a limited number of suppliers. In addition, a
customer’s specifications may require the Company to obtain components from a single source or a small number of
suppliers. The loss of any such suppliers could have a material impact on the Company’s results of operations, and the
Company may be required to operate at a cost disadvantage compared to competitors who have greater direct buying
power from suppliers. The Company does not enter into purchase agreements with major or single-source suppliers. The
Company believes that ad-hoc negotiations with its suppliers provides flexibility, given that the Company’s orders are
based on the needs of its customers, which constantly change.

Pricing for components and commodities has escalated significantly and may continue to increase in the future periods.
The impact of these price increases could have a negative effect on the Company’s gross margins and operating results.

The Sarbanes-Oxley Act, as well as rules subsequently implemented by the Securities and Exchange Commission and
listing requirements subsequently adopted by Nasdaq in response to Sarbanes-Oxley, have required changes in corporate
governance practices, internal control policies and audit committee practices of public companies. These rules,
regulations, and requirements have increased the Company’s legal expenses, financial compliance and administrative
costs, made many other activities more time consuming and costly and diverted the attention of senior management. These
rules and regulations could also make it more difficult for us to attract and retain qualified members for our board of
directors, particularly to serve on our audit committee. In addition, if the Company receives a qualified opinion on the
adequacy of its internal control over financial reporting, shareholders and the Company’s lenders could lose confidence in
the reliability of the Company’s financial statements. This could have a material adverse impact on the value of the
Company’s stock and the Company’s liquidity.

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orders compared to consignment orders can lead to significant fluctuations in the Company’s revenue levels. However, the
Company does not believe that such variations are a meaningful indicator of the Company’s gross margins. Consignment
orders accounted for less than 5% of the Company’s revenues for the year ended April 30, 2008.

In the past, the timing and rescheduling of orders have caused the Company to experience significant quarterly
fluctuations in its revenues and earnings, and the Company expects such fluctuations to continue.

Critical Accounting Policies:

Management Estimates and Uncertainties - The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at
the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting
period. Significant estimates made in preparing the consolidated financial statements include depreciation and
amortization periods, the allowance for doubtful accounts, reserves for inventory and valuation of goodwill. Actual results
could materially differ from these estimates.

Revenue Recognition - Revenues from sales of the Company’s electronic manufacturing services business are
recognized when the product is shipped to the customer. In general, it is the Company’s policy to recognize revenue and
related costs when the order has been shipped from our facilities, which is also the same point that title passes under the
terms of the purchase order except for consignment inventory. Consignment inventory is shipped from the Company to an
independent warehouse for storage or shipped directly to the customer and stored in a segregated part of the customer’s
own facility. Upon the customer’s request for inventory, the consignment inventory is shipped to the customer if the
inventory was stored offsite or transferred from the segregated part of the customer’s facility for consumption, or use, by
the customer. The Company recognizes revenue upon such transfer. The Company does not earn a fee for storing the
consignment inventory. The Company generally provides a ninety (90) day warranty for workmanship only and does not
have any installation, acceptance or sales incentives, although the Company has negotiated longer warranty terms in
certain instances. The Company assembles and tests assemblies based on customers’ specifications. Historically, the
amount of returns for workmanship issues has been de minimis under the Company’s standard or extended warranties.
Any returns for workmanship issues received after each period end are accrued in the respective financial statements.

Inventories - Inventories are valued at the lower of cost or market. Cost is determined by the first-in, first-out method.
The Company establishes inventory reserves for valuation, shrinkage, and excess and obsolete inventory. The Company
records provisions for inventory shrinkage based on historical experience to account for unmeasured usage or loss. Actual
results differing from these estimates could significantly affect the Company’s inventories and cost of products sold. The
Company records provisions for excess and obsolete inventories for the difference between the cost of inventory and its
estimated realizable value based on assumptions about future product demand and market conditions. Actual product
demand or market conditions could be different than that projected by management.

Impairment of Long-Lived Assets - The Company reviews long-lived assets for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be recoverable. An asset is considered impaired if
its carrying amount exceeds the future undiscounted net cash flow the asset is expected to generate. If such asset is
considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of
the asset, if any, exceeds its fair market value. The Company has adopted SFAS No. 144, which establishes a single
accounting model for the impairment or disposal of long-lived assets, including discontinued operations.

Goodwill and Other Intangibles - The Company adopted on June 1, 2001, SFAS No. 141 “Business Combinations”.
Under SFAS No. 141, a purchaser must allocate the total consideration paid in a business combination to the acquired net
tangible and intangible assets based on their fair value. Goodwill represents the purchase price in excess of the fair value
of net assets acquired in business combinations. Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill
and Other Intangible Assets”, requires the Company to assess goodwill for impairment at least annually in the absence of
an indicator of possible impairment and immediately upon an indicator of possible

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impairment. The Company adopted SFAS 142 effective January 1, 2002. During the fourth quarter of fiscal year 2007, the
Company completed its annual assessment of impairment regarding the goodwill recorded. The Company calculates the
fair value of the reporting unit utilizing a combination of a discounted cash flow approach and certain market approaches
which considered both the Company’s market capitalization and trading multiples of comparable companies. The
calculations of fair value of the reporting unit involve significant judgment and different underlying assumptions could
result in different calculated fair values. The goodwill impairment analysis indicated there was no goodwill impairment for
the year ended April 30, 2007 as the fair value of the reporting unit exceeded the carrying value of the reporting unit by
approximately 1%.

In January 2008, the Company changed the date of its annual goodwill impairment test under SFAS 142 from the last
day of the year to the first day of the fiscal fourth quarter. The impairment test procedures were carried out during the
fourth quarter and up to the time of the filing of the Company’s Form 10-K, which allowed the Company additional time
to complete the required analysis under SFAS 142. The Company believes that the resulting change in accounting
principle related to the annual testing date did not delay, accelerate or avoid an impairment charge. The Company
determined that the change in accounting principle related to the annual testing date was preferable under the
circumstances and did not result in adjustments to the Company’s financial statements when applied retrospectively.
During the fiscal year 2008, the Company performed its annual goodwill impairment testing and the carrying value of the
Company’s reporting unit exceeded the fair value indicating a goodwill impairment. The Company completed the second
step of the goodwill impairment test used to measure the amount of the impairment loss by comparing the implied fair
value of the reporting unit goodwill with the carrying amount of the goodwill. As a result of this impairment analysis, the
Company recorded an impairment charge of $9.3 million for the year ended April 30, 2008. The impairment is due to
continuing customer pricing pressures and uncertain economic conditions as well as the Company’s declining stock price
during fiscal 2008.

New Accounting Standards:

In February 2006, the FASB issued Statement of Financial Accounting Standard No. 155, “Accounting for Certain
Hybrid Instruments” (SFAS 155). SFAS 155 allows financial instruments that have embedded derivatives to be accounted
for as a whole (eliminating the need to bifurcate the derivative from its host) if the holder elects to account for the whole
instrument on a fair value basis. This statement is effective for all financials instruments acquired or issued after the
beginning of the entity’s first fiscal year that begins after September 15, 2006. The adoption of SFAS 155 did not have a
material impact on the Company’s consolidated financial statements.

In June 2006, FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes – an interpretation of
FASB Statement No. 109 (“FIN 48”), that clarifies the accounting and recognition for income tax positions taken or
expected to be taken in the Company’s tax returns. The Company adopted FIN 48 on May 1, 2007, and recorded the
cumulative effect of a change in accounting principle by recording an increase in the liability for uncertain tax positions of
$153,900 that was accounted for as a debit to opening retained earnings. Uncertain tax position reserves of $14,803 were
reversed during fiscal 2008. The entire amount of the consolidated worldwide liability for uncertain tax positions could
affect the Company’s effective tax rate upon favorable resolution of the uncertain tax positions. Absent new experience in
defending these uncertain tax positions in the various jurisdictions to which they relate, the Company cannot currently
estimate a range of possible change of the April 30, 2008 liability over the next twelve months.

A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is
as follows:

Balance at May 1, 2007
Additions based on tax positions related to current year
Additions for tax positions in prior year
Reductions for tax positions of prior year

Balance at April 30, 2008

$153,900
—
6,494
(14,803)

$145,591

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Interest related to tax positions taken in the Company’s tax returns are recorded in income tax expense in the
Consolidated Statements of Operations.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”), which defines fair
value, establishes a framework for measuring fair value in generally accepted accounting principles and expands
disclosures about fair value measurements. SFAS 157 is effective for the Company beginning on January 1, 2008. The
requirements of SFAS 157 will be applied prospectively except for certain derivative instruments that would be adjusted
through the opening balance of retained earnings in the period of adoption. In November 2007, the FASB agreed to a
one-year deferral of the effective date of SFAS 157 for all non-financial assets and liabilities, except those that are
recognized or disclosed at fair value in the financial statements on a recurring basis. The Company is evaluating the
impact that the adoption of SFAS 157 may have on its financial statements.

In February 2007, the FASB issued SFAS No. 159 “The Fair Value Options for Financial Assets and Financial
Liabilities” (SFAS No. 159). SFAS 159 permits entities to choose to measure many financial assets and financial liabilities
at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in
earnings. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company is currently
assessing the impact that SFAS 159 may have on financial statements.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141R”). SFAS
141R establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired.
SFAS 141R also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the
business combination. SFAS 141R is effective for fiscal years beginning after December 15, 2008, and will be adopted in
the first quarter of fiscal 2009. The Company is currently evaluating the potential impact, if any, of the adoption of SFAS
141R on its consolidated results of operations and financial condition.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling interests in Consolidated Financial
Statements—an amendment of Accounting Research Bulletin No. 51” (“SFAS 160”). SFAS 160 establishes accounting
reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated
net income attributable to the parent and to the noncontrolling interest, changes in a parent’s ownership interest, and the
valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. SFAS 160 also establishes
disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the
noncontrolling owners. SFAS 160 is effective for fiscal years beginning after December 15, 2008. The Company is
currently evaluating the potential impact, if any, of the adoption of SFAS 160 on its consolidated results of operations and
financial condition.

Results of Operations:

FISCAL YEAR ENDED APRIL 30, 2008 COMPARED
TO FISCAL YEAR ENDED APRIL 30, 2007

Net sales increased 1.1% to $167,810,994 in fiscal year 2008 from $165,909,106 in the prior year. The Company’s
sales increased in the industrial electronics and fitness marketplaces during fiscal year 2008 as compared to the prior year.
The increase in sales volume was partially offset by price reductions to customers. Sales decreased in fiscal year 2008 in
the appliance, gaming and semiconductor marketplaces as compared to the prior year. The Company anticipates pricing
pressures from customers will continue in fiscal year 2009.

The Company’s sales in a particular industry are driven by the fluctuating forecasts and end-market demand of the
customers within that industry. Sales to customers are subject to variations from period to period depending on customer
order terminations, the life cycle of customer products and product transition. Sales to the Company’s five largest
customers accounted for 63% and 56% of net sales for fiscal years 2008 and 2007, respectively.

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Gross profit increased to $19,563,390 or 11.7% of net sales in fiscal year 2008 compared to $17,758,756 or 10.7% of
net sales in the prior year. The increase in the Company’s gross profit as a percentage of sales is due to the mix of product
shipped to customers. There can be no assurance that sales levels or gross margins will not decrease in future periods.

Selling and administrative expenses decreased in fiscal year 2008 to $12,375,458 or 7.4% of net sales compared to
$12,872,353 or 7.8% of net sales in fiscal year 2007. The decrease is primarily due to a decrease in sales commissions,
sales salaries, amortization expense, legal fees and other professional fees. Partially off-setting these decreases were
approximately $164,000 in professional fees related to Sarbanes-Oxley, specifically Section 404, Internal Control Over
Financial Reporting requirements.

During the fiscal year 2008, the Company performed its annual goodwill impairment testing and the carrying value of
the Company’s reporting unit exceeded the fair value indicating a goodwill impairment. The Company completed the
second step of the goodwill impairment test used to measure the amount of impairment loss by comparing the implied fair
value of the reporting unit goodwill with the carrying amount of the goodwill. As a result of this impairment analysis, the
Company recorded an impairment charge of $9.3 million for the year ended April 30, 2008. The impairment is due to
continuing customer pricing pressures and uncertain economic conditions as well as the Company’s declining stock price
during fiscal 2008.

Interest expense increased to $2,667,473 in fiscal year 2008 compared to $2,574,180 in fiscal year 2007. The interest
expense increased due to increased borrowings under the Company’s lines of credit to support working capital
requirements, which was partially offset by decreasing interest rates. Interest expense for fiscal year 2009 is expected to be
comparable to the amount of interest expense recorded in fiscal year 2008.

In fiscal year 2008, the income tax expense from continuing operations was $1,655,518 compared to $896,179 in
income tax expense in fiscal year 2007. The Company recorded income tax expense in fiscal 2008 despite a pre-tax loss
due primarily to the fact that the goodwill impairment charge of $9,298,945 related to non-deductible goodwill which is
treated as a permanent difference between book and tax income (loss). The Company anticipates an effective income tax
rate of approximately 36% for fiscal 2009.

The Company reported a net loss of $6,456,836 in fiscal year 2008. Basic and diluted earnings per share was ($1.69)
compared to basic and diluted earnings per share of $0.45 and $0.44, respectively, for the year ended April 30, 2007.
Excluding the goodwill impairment charge net income was $2,842,109 for fiscal year 2008 compared to $1,698,324 in
fiscal year 2007. Diluted earnings per share for the year ended April 30, 2008 was $0.74 compared to $0.44 in fiscal year
2007. We believe the Non-Gaap measure is a meaningful disclosure of the operating performance of the Company as it is
an alternative operating measure utilized by investors, management and the Board of Directors. See the following
Non-Gaap Reconciliation.

Income (loss) Reconciliation:

Net income before goodwill impairment

$ 1,009,383

$ 2,842,109

Goodwill impairment charge

9,298,945

Non-Gaap Reconciliation

Three Months

Ended

April 30, 2008

Twelve Months
Ended
April 30, 2008

Net loss

EPS Reconciliation:

($8,289,562)

($6,456,836)

Net income per common share – assuming dilution before goodwill impairment

0.26

0.74

Goodwill impairment

($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

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Results of Operations:

FISCAL YEAR ENDED APRIL 30, 2007 COMPARED
TO FISCAL YEAR ENDED APRIL 30, 2006

Net sales increased 32.9% to $165,909,106 in fiscal year 2007 from $124,786,476 in the prior year. The Company’s
sales increased in the industrial electronics, appliance, gaming, telecommunications, fitness, semiconductor and life
sciences marketplaces during fiscal year 2007 as compared to the prior year. The increase in sales volume was partially
offset by price reductions to customers. The Company anticipates pricing pressures from customers will continue in fiscal
year 2008. The increase in the industrial electronics, semiconductor and life sciences industries is primarily due to sales to
customers as the result of the acquisition of Able. The increase in sales in the appliance, gaming, telecommunications and
fitness marketplaces is primarily due to sales to customers existing prior to the Able acquisition. The increase in sales for
fiscal year 2007 was also due to short term demand related to the RoHS standard transition and the addition of several new
significant customers.

The Company’s sales in a particular industry are driven by the fluctuating forecasts and end-market demand of the
customers within that industry. Sales to customers are subject to variations from period to period depending on customer
order terminations, the life cycle of customer products and product transition. There can be no assurance that sales levels
or gross margins will remain stable in future periods. Sales to the Company’s five largest customers accounted for 56%
and 64% of net sales for fiscal years 2007 and 2006, respectively.

Gross profit increased to $17,758,756 or 10.7% of net sales in fiscal year 2007 compared to $14,800,099 or 11.9% of
net sales in the prior year. The decrease in the Company’s gross profit as a percentage of sales is the result of the operating
inefficiencies caused by the RoHS conversion required by many customers, and the longer than expected integration of
Able into SigmaTron. The Company also experienced increased raw material cost for various integrated circuits, plastics
and stamping due to soaring commodity prices, for steel and precious metals, and continuous pricing pressures from
customers. Transportation and regulatory costs also escalated.

Selling and administrative expenses increased in fiscal year 2007 to $12,872,353 or 7.8% of net sales compared to
$10,925,646 or 8.8% of net sales in fiscal year 2006. The increase is primarily due to additional personnel in the sales and
purchasing departments and an increase in commission expense. Amortization expense increased in fiscal year 2007 due
to the intangibles related to the acquisition of Able.

Interest expense increased to $2,574,180 in fiscal year 2007 compared to $1,421,455 in fiscal year 2006. The interest
expense increased due to increased borrowings under the Company’s lines of credit to support working capital
requirements, additional capital leases for machinery and equipment, rising interest rates, and the Able acquisition.

In fiscal year 2007, the income tax expense from continuing operations was $896,179 which resulted in an effective
rate of 34.5% compared to $935,589 in income tax expense and an effective rate of 32.7% in fiscal year 2006. The tax rate
in fiscal years 2007 and 2006 is impacted by the Company’s operations in foreign countries.

In June 2005, the Company closed on the sale of its Las Vegas, Nevada operation. The Las Vegas facility operated as a
complete EMS center specializing in the assembly of electronic products and cables for a broad range of customers
primarily in the gaming industry. The effective date of the transaction was May 30, 2005. The transaction was structured
as an asset sale, and included a $2,000,000 cash payment to the Company for the buyer’s purchase of the machinery,
equipment and other assets of the Las Vegas operation. The transaction was recorded by the Company in the first quarter
of fiscal year 2006 and included a gain on the transaction of approximately $311,000. The gain was offset by a loss of
approximately $383,000 on discontinued operations for the Las Vegas operation for the period ended April 30, 2006.

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Net income decreased to $1,698,324 in fiscal year 2007 compared to $1,882,132 in fiscal year 2006. Diluted earnings
per share for the year ended April 30, 2007, was $0.44 compared to $0.48 in fiscal year 2006. Basic earnings per share
was $0.45 and $0.50 for the year ended April 30, 2007 and 2006, respectively.

Liquidity and Capital Resources:

Operating Activities.

Cash flow provided by operating activities was $4,163,469 for the year ended April 30, 2008 compared to cash flow
used in operating activities of $2,308,847 in fiscal year 2007. Cash provided by operating activities was primarily the
result of net income (excluding the goodwill impairment charge in 2008) net of the non-cash effect of depreciation and
amortization and an increase in trade accounts payable. Trade accounts payable increased due to timing of payment to
vendors. Cash provided by operating activities in 2008 was partially offset by an increase in accounts receivable of
$6,530,677 due to timing of cash receipts from a significant customer. The Company’s inventories increased by
$1,774,698. The primary reason for the increase in inventories is customer safety stock requirements and the startup of
new programs with new and existing customers.

Cash flow used in operating activities was $2,308,847 for the year ended April 30, 2007 compared to cash flow
provided by operating activities of $1,997,144 in fiscal year 2006. Cash used in operating activities in 2007 was primarily
the result of a significant increase in inventories of $10,075,504 and an increase in accounts receivable of $2,549,567. The
increase in inventories in 2007 is attributable to an increase in the number of customers, customer required safety stock,
RoHS transition, and inefficiencies at the Company’s Hayward and Tijuana operations. The inefficiencies were due to the
integration of Able into the Company and the expansion of the Tijuana operations. Cash used in operating activities was
partially offset by net income, the non-cash effect of depreciation and amortization and an increase in trade payables.
During fiscal year 2006, cash provided by operating activities was the result of net income, net of the non-cash effect of
depreciation and amortization and an increase in trade accounts payable. Cash provided by operating activities was
partially offset by an increase in inventories of approximately $6,100,000. The increase in inventories in 2006 is primarily
attributable to an increase in customer required safety stock and the start up of the Company’s China facility.

Investing Activities.

During fiscal year 2008, the Company purchased approximately $2,400,000 in machinery and equipment. The
Company executed a five year sale lease back agreement for approximately $615,000 for certain acquisitions made during
fiscal year 2008, which has been rendered as a capital lease. The Company anticipates it will make additional machinery
and equipment acquisitions during fiscal year 2009 of approximately $3,000,000.

In fiscal year 2007, the Company purchased approximately $4,500,000 in machinery and equipment. The Company
executed three to five year capital leases to finance approximately $2,200,000 of these acquisitions in fiscal year 2007.

In fiscal year 2006, the Company purchased approximately $6,300,000 in machinery and equipment. The Company
executed three to five year capital leases to finance several of the purchases in fiscal year 2006.

In July 2005, the Company closed on the purchase of all of the outstanding stock of Able, a company headquartered in
Hayward, California and its wholly-owned subsidiary, AbleMex S.A. de C.V., located in Tijuana, Mexico. The effective
date of the transaction was July 1, 2005. Able was merged into the Company on November 1, 2005 and operates as a
division of the Company. The purchase price was approximately $16,800,000 and was recorded as a stock purchase
transaction in the first quarter of fiscal year 2006. The transaction was financed by the Company’s amended credit facility
and resulted in an increase of approximately $8,500,000 in goodwill.

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broad range of customers primarily in the gaming industry. The effective date of the transaction was May 30, 2005. The
transaction was structured as an asset sale, and included a $2,000,000 cash payment to the Company for the buyer’s
purchase of the machinery, equipment and other assets of the Las Vegas operation. The transaction was recorded by the
Company in the first quarter of fiscal year 2006 and included a gain on the transaction of approximately $311,000. The
gain was offset by a loss of approximately $383,000 on discontinued operations for the Las Vegas operation for the period
ended April 30, 2006.

Financing Activities.

On November 19, 2003, the Company purchased the property that serves as the Company’s corporate headquarters and
its Midwestern manufacturing facility. The Company executed a note and mortgage with LaSalle Bank N.A. in the amount
of $3,600,000. The Company refinanced the property on April 30, 2008. The new note bears a fixed interest rate of 5.59%
and is payable in sixty monthly installments. A final payment of approximately $2,115,438 is due on or before April 30,
2013. At April 30, 2008, $2,805,000 and at April 30, 2007, $2,985,000 was outstanding.

Cash used in financing activities was $711,871 for the year ended April 30, 2008, compared to cash provided by
financing activities of $4,106,815 in fiscal year 2007. Cash used in financing activities was the result of payments made
for capital lease, term loan, and building mortgage obligations. The net cash used in financing activities was partially
offset by increased borrowings under the line of credit and a sale lease back agreement.

Cash provided by financing activities was $4,106,815 for the year ended April 30, 2007, compared to $22,345,050 in
fiscal year 2006. Cash provided by financing activities in 2007 was the result of increased borrowing under the revolving
credit facility of $5,057,115 and an increase of $1,000,000 in the term loan during fiscal year 2007. The cash provide by
financing activities was partially offset by payments made for capital lease and building mortgage obligations. In fiscal
year 2006 cash provided by financing activities was primarily the result of increased borrowings under the revolving credit
facility and term loan. The additional working capital was required primarily for the acquisition of Able and to support
revenue growth.

The Company provides funds for salaries, wages, overhead and capital expenditure items as necessary to operate its
wholly-owned Mexican and Chinese subsidiaries and the Taiwan procurement branch. The Company provides funding in
U.S. dollars, which are exchanged for Pesos, Renminbi, and New Taiwan dollars

Table of Contents

as needed. The fluctuation of currencies from time to time, without an equal or greater increase in inflation, has not had a
material impact on the financial results of the Company. In fiscal year 2008, the Company’s U.S. operations paid
approximately $18,600,000 to its foreign subsidiaries for services provided.

The impact of inflation for the past three fiscal years has been minimal.

Off-balance Sheet Transactions:

The Company has no off-balance sheet transactions.

Contractual Obligations and Commercial Commitments:

The following table summarizes the Company’s contractual obligations at April 30, 2008, and the effect such
obligations are expected to have on its liquidity and cash flows in future periods.

Payment Obligations

Total

Less than

1 Year

1-3 Years

3-5 Years

After 5
Years

$ 3,688,134

$ 485,560

838,526

$2,364,048

Notes payable, including current

maturities

Capital leases, including current

maturities

4,131,437

1,804,657

2,209,413

117,367

Operating leases

3,060,569

1,445,508

1,575,461

39,600

Bank debt

29,175,377

2,164,383

27,010,994

Total contractual cash obligations

$40,055,517

$5,900,108

$31,634,394

$2,521,015

Maturities for notes payable and bank debt include estimated interest payments based on prevailing interest rates at
April 30, 2008.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Foreign Currency and Interest Rate Risks

The Company’s exposure to market risk for changes in interest rates is due primarily to its short-term investments and
borrowings under its credit agreements. The Company’s borrowings are at a variable rate and an increase in interest rates
of 1% would result in interest expense increasing by approximately $289,000 for the year ended April 30, 2008. As of
April 30, 2008, the Company had no short-term investments and approximately $29,000,000 borrowings under its credit
agreements. The Company does not use derivative financial investments. The Company’s cash equivalents, if any, are
invested in overnight commercial paper. The Company does not have any significant cash flow exposure due to rate
changes for its cash equivalents, as these instruments are short-term.

Inherent in the Company’s operations are certain risks related to changes in foreign currency exchange rates. The
Company provides funds for salaries, wages, overhead and capital expenditure items as necessary to operate its
wholly-owned Mexican and Chinese subsidiaries and the Taiwan procurement branch. The Company provides funding in
U.S. dollars, which are exchanged for Pesos, Renminbi, and New Taiwan dollars as needed. The Company does not use
any foreign currency forward exchange contracts or interest rate derivatives.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The response to this item is included in Item 15(a) of this Report.

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ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL

DISCLOSURE

Not applicable.

ITEM 9A (T). CONTROLS AND PROCEDURES

Our management, including our President and Chief Executive Officer and Chief Financial Officer, evaluated the
effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) as of April 30, 2008. Our disclosure controls and procedures are designed to ensure that
information required to be disclosed by the Company in the reports filed by the Company under the Securities Exchange
Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in
the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated
to our management, including our President and Chief Executive Officer and Chief Financial Officer, as appropriate to
allow timely decisions regarding required disclosure. Based on this evaluation, our President and Chief Executive Officer
and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of
April 30, 2008.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting.
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief
Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on
the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on our evaluation, our management concluded that our internal control over financial
reporting was effective as of April 30, 2008. This report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial reporting. Management’s report was not subject to
attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the
company to provide only management’s report in this annual report.

There has been no change in our internal control over financial reporting during the quarter ended April 30, 2008, that
has materially affected or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B OTHER INFORMATION

Not Applicable

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required under this item is incorporated herein by reference to the Company’s definitive proxy
statement, filed with the Securities and Exchange Commission not later than 120 days after the close of the Company’s
fiscal year ended April 30, 2008.

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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

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits:

PART IV

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.

(a)(1) and (a)(2)

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.

(a)(3)

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Index to Exhibits

3.1

3.2

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.

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

The Company hereby files as exhibits to this Report the exhibits listed in
Item 15(a)(3) above, which are attached hereto or incorporated herein.

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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused
this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

SIGMATRON INTERNATIONAL, INC.

By: /s/ Gary R. Fairhead

Gary R. Fairhead, President and Chief Executive
Officer,

Principal Executive Officer and Director

Dated: July 18, 2008

KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned directors and officers of SigmaTron
International, Inc., a Delaware corporation, which is filing an Annual Report on Form 10-K with the Securities and
Exchange Commission under the provisions of the Securities Exchange Act of 1934 as amended, hereby constitute and
appoint Gary R. Fairhead and Linda K. Blake, and each of them, each of their true and lawful attorneys-in fact and agents,
with full power of substitution and resubstitution, for him and in his name, place and stead, in all capacities, to sign any or
all amendments to the report to be filed with the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and purposes as each of them might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities, and on the dates indicated.

Signature

/s/ Franklin D. Sove

Franklin D. Sove

/s/ Gary R. Fairhead

Gary R. Fairhead

/s/ Linda K. Blake

Linda K. Blake

Title
Chairman of the Board of Directors

President and Chief Executive Officer,
(Principal Executive Officer) and Director

Chief Financial Officer, Secretary and Treasurer
(Principal Financial Officer and Principal Accounting Officer)

/s/ John P. Chen

Director

John P. Chen

/s/ Thomas W. Rieck

Director

Thomas W. Rieck

/s/ Dilip S. Vyas

Director

Dilip S. Vyas

Date
July 18,
2008

July 18,
2008

/s/ Carl Zemenick

Director

Carl Zemenick

July 18,
2008

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INDEX TO FINANCIAL STATEMENTS

SigmaTron International, Inc. and Subsidiaries

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

ASSETS
LIABILITIES AND STOCKHOLDERS’ EQUITY
CONSOLIDATED STATEMENTS OF OPERATIONS
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Financial statement schedules not listed above are omitted because they are not applicable or required.

F-1

Page

F-2

F-3
F-4
F-5
F-6
F-7
F-8

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
SigmaTron International, Inc.
Elk Grove, Illinois

We have audited the accompanying consolidated balance sheets of SigmaTron International, Inc. as of April 30, 2008 and
2007 and the related consolidated statements of operations, changes in stockholders’ equity and cash flows for each of the
three years in the period ended April 30, 2008. These consolidated financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Oversight Board (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. The Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of SigmaTron International, Inc. at April 30, 2008 and 2007 and the results of its operations and its cash flows for
each of the three years in the period ended April 30, 2008, in conformity with accounting principles generally accepted in
the United States of America.

As described in Note Q to the consolidated financial statements, effective May 1, 2006, the Company adopted the fair
value method of accounting provisions of Statement of Financial Accounting Standard No. 123 (revised 2004), “Share
Based Payment.”

BDO Seidman, LLP
Chicago, Illinois
July 11, 2008

F-2

Table of Contents

SigmaTron International, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
April 30,

ASSETS

CURRENT ASSETS

Cash and cash equivalents
Accounts receivable, less allowance for doubtful accounts of $213,000 and

$150,000 at April 30, 2008 and 2007, respectively

Inventories, net
Prepaid expenses and other assets
Deferred income taxes
Other receivables

2008

2007

3,833,627

2,769,653

26,747,552
42,146,770
1,039,607
1,453,007
38,783

20,279,874
40,849,791
1,289,207
1,251,241
224,189

Total current assets

75,259,346

66,663,956

PROPERTY, MACHINERY AND EQUIPMENT, NET

29,354,623

30,971,107

LONG-TERM ASSETS

Other assets
Intangible assets, net of amortization of $1,811,931 and $1,308,228 at April 30,

2008 and 2007, respectively

Goodwill

Total long-term assets

TOTAL ASSETS

The accompanying notes are an integral part of these statements.

F-3

1,034,155

1,006,126

958,069
—

1,461,772
9,298,945

1,992,224

11,766,843

$106,606,193

$109,401,906

Table of Contents

SigmaTron International, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS — CONTINUED
April 30,

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES
Trade accounts payable
Accrued expenses
Accrued payroll
Income taxes payable
Notes payable — bank
Notes payable — buildings
Capital lease obligations

2008

2007

$ 19,722,175
2,297,601
2,583,379
555,380
1,000,000
326,935
1,595,931

$ 15,473,660
2,613,636
2,241,287
243,596
1,000,000
528,092
1,690,437

Total current liabilities

28,081,401

23,790,708

NOTES PAYABLE — BANKS, LESS CURRENT PORTION

27,876,255

27,219,015

NOTES PAYABLE — BUILDINGS, LESS CURRENT PORTION

2,661,437

2,988,372

CAPITAL LEASE OBLIGATIONS, LESS CURRENT PORTION

2,125,692

3,125,297

DEFERRED INCOME TAXES

2,446,449

2,537,493

Total liabilities

63,191,234

59,660,885

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY

Preferred 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

Capital in excess of par value
Retained earnings

38,226
19,599,501
23,777,232

37,950
19,315,104
30,387,967

Total stockholders’ equity

43,414,959

49,741,021

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$106,606,193

$109,401,906

The accompanying notes are an integral part of these statements.

F-4

Table of Contents

SigmaTron International, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended April 30,

Net sales

Cost of products sold

2008
$167,810,994

2007
$165,909,106

2006
$124,786,476

148,247,604

148,150,350

109,986,377

Gross profit

19,563,390

17,758,756

14,800,099

Selling and administrative expenses
Goodwill impairment charge

12,375,458
9,298,945

12,872,353
—

10,925,646
—

Operating (loss) income

(2,111,013)

4,886,403

3,874,453

Other expense (income)
Interest expense

22,832
2,667,473

(282,280)
2,574,180

(408,889)
1,421,455

(Loss) income from continuing operations before income tax

expense

Income tax expense

(4,801,318)

2,594,503

2,861,887

1,655,518

896,179

935,589

(Loss) income from continuing operation

(6,456,836)

1,698,324

1,926,298

Discontinued operation

Gain on sale of Las Vegas operation
Loss from operations of discontinued Las Vegas location

Income tax benefit

Loss on discontinued operation

—
—

—

—
—

—

(310,731)
383,134

(28,237)

—

(44,166)

NET (LOSS) INCOME

$ (6,456,836)

1,698,324

$ 1,882,132

Earnings (loss) per share — basic
Continuing operations
Discontinued operation

Total

Earnings (loss) per share — diluted

($1.69)
0.00

(1.69)

0.45
0.00

0.45

0.51
(0.01)

0.50

Continuing operations
Discontinued operation

Total

($1.69)
0.00

(1.69)

0.44
0.00

0.44

0.49
(0.01)

0.48

Weighted-average shares of common stock outstanding

Basic

Diluted

3,811,832

3,791,077

3,756,804

3,811,832

3,879,155

3,894,731

The accompanying notes are an integral part of these statements.

F-5

Table of Contents

SigmaTron International, Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
Three years ended April 30, 2008, 2007 and 2006

Balance at May 1, 2005

Preferred
stock
$ —

Common
stock
$37,554

Capital in

excess of par

value
$19,087,020

Retained
earnings
$26,807,511

Total
stockholders’
equity
$45,932,085

Exercise of options

—

316

80,269

—

80,585

Net income

—

1,882,132

Balance at April 30, 2006

—

37,870

19,167,289

28,689,643

47,894,802

Tax benefit of exercise of options

—

Exercise of options

Stock-based compensation

Net income

—

96,000

17,520

34,295

—

96,000

17,600

34,295

—

1,698,324

Balance at April 30, 2007

37,950

19,315,104

30,387,967

49,741,021

Adjustment to initially apply FIN 48,
Accounting for Uncertainty in
Income Taxes

—

(153,900)

Exercise of options

—

276

252,816

Stock-based compensation

Net loss

—

31,581

—

(6,456,836)

—

253,092

31,581

Balance at April 30, 2008

$ —

$38,226

$19,599,501

$23,777,232

$43,414,959

The accompanying notes are an integral part of these statements.

F-6

Table of Contents

SigmaTron International, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended April 30,

Cash flows from operating activities

Net (loss) income
Adjustments to reconcile net (loss) income to net cash provided

by (used in) operating activities
Depreciation and amortization
Goodwill impairment charge
Stock-based compensation
Provision for doubtful accounts
Provision for inventory obsolescence
Deferred income taxes
Amortization of intangibles
Gain on sale of discontinued operation

Changes in operating assets and liabilities, net of acquisition

Accounts receivable
Inventories
Prepaid expenses and other assets
Refundable income taxes
Trade accounts payable
Accrued expenses and wages
Income taxes

2008

2007

2006

$(6,456,836)

$ 1,698,324

$ 1,882,132

4,004,108
9,298,945
31,581
63,000
477,719
(490,787)
503,703
—

4,033,619
—
34,295
17,107
475,763
(215,438)
724,578
—

(6,530,677)
(1,774,698)
406,977
—
4,248,515
26,057
355,862

(2,549,567)
(10,075,504)
1,166,790
—
2,028,732
948,296
(595,842)

3,635,643
—
—
296,918
390,087
(358,435)
595,900
(310,731)

(559,175)
(6,121,916)
(146,594)
(476,000)
3,207,340
(469,753)
431,728

Net cash provided by (used in) operating activities

4,163,469

(2,308,847)

1,997,144

Cash flows from investing activities

Acquisition of Able, net of cash acquired
Proceeds from sale of machinery and equipment
Proceeds from sale of Las Vegas operation
Purchases of machinery and equipment

—
12,396
—
(2,400,020)

—
—
—
(2,298,240)

(16,771,755)
182,244
1,705,695
(6,372,467)

Net cash used in investing activities

(2,387,624)

(2,298,240)

(21,256,283)

Cash flows from financing activities

Proceeds from exercise of options
Payments under building notes payable
Payments from other notes payable
Proceeds under sale lease back agreements
Payments under capital lease obligations
Proceeds under term loan
Payments under term loan
Tax benefit from exercise of stock options
Net proceeds under lines of credit

253,092
(528,092)
—
615,855
(1,709,966)
—
(1,000,000)
—
1,657,240

17,600
(504,624)
—
—
(1,559,276)
1,250,000
(250,000)
96,000
5,057,115

80,587
(482,740)
(300,000)
2,720,415
(1,322,154)
3,000,000
—
—
18,648,942

Net cash (used in) provided by financing activities

(711,871)

4,106,815

22,345,050

INCREASE (DECREASE) IN CASH

1,063,974

(500,272)

3,085,911

Cash and cash equivalents at beginning of year

2,769,653

3,269,925

184,014

Cash and cash equivalents at end of year

$ 3,833,627

$ 2,769,653

$ 3,269,925

Supplementary disclosures of cash flow information

Cash paid for interest
Cash paid for income taxes, net of (refunds)
Purchase of machinery and equipment financed under

$ 2,512,453
1,594,771

$ 1,890,947
1,415,033

886,652
1,135,078

capital lease obligations

—

2,162,179

—

Purchase of machinery and equipment financed under sale

lease back agreements

615,855

—

2,720,415

The accompanying notes are an integral part of these statements.

F-7

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

SigmaTron International, Inc. and subsidiaries (the “Company”) operates in one business segment as an independent
provider of electronic manufacturing services (“EMS”), which includes printed circuit board assemblies and completely
assembled (box-build) electronic products. In connection with the production of assembled products the Company also
provides services to its customers including (1) automatic and manual assembly and testing of products; (2) material
sourcing and procurement; (3) design, manufacturing and test engineering support; (4) warehousing and shipment
services; and (5) assistance in obtaining product approval from governmental and other regulatory bodies. The Company
provides these manufacturing services through an international network of facilities located in North America, China and
Taiwan. Approximately 9% of the consolidated assets of the Company are located in foreign jurisdictions outside the
United States as of both April 30, 2008 and 2007.

NOTE B — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation Policy

The consolidated financial statements include the accounts and transactions of the Company, its wholly-owned
subsidiaries, Standard Components de Mexico, S.A., and AbleMex S.A. de C.V., its wholly-owned foreign enterprise
Wujiang SigmaTron Electronics Co. Ltd. (“SigmaTron China”), and its procurement branch, SigmaTron Taiwan. The
functional currency of the Mexican and Chinese subsidiaries and procurement branch is the U.S. dollar.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements
and the reported amounts of revenues and expenses during the reporting period. Significant estimates made in preparing
the consolidated financial statements include depreciation and amortization periods, the allowance for doubtful accounts
and reserves for inventory and estimates used in the goodwill impairment test. Actual results could materially differ from
these estimates.

F-8

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

Cash and cash equivalents include cash and all highly liquid short-term investments maturing within three months of the
purchase date.

Accounts Receivable

The majority of the Company’s accounts receivable are due from companies in the consumer electronics, gaming, fitness,
industrial electronics, life sciences, semiconductor, telecommunications, appliance and automotive industries. Credit is
extended based on evaluation of a customer’s financial condition, and, generally, collateral is not required. Accounts
receivable are due in accordance with agreed upon terms, and are stated at amounts due from customers net of an
allowance for doubtful accounts. Accounts outstanding longer than the contractual payments terms are considered past
due. The Company writes off accounts receivable when they are determined to be uncollectible.

Allowance for Doubtful Accounts

The Company’s allowance for doubtful accounts relates to receivables not expected to be collected from our customers.
This allowance is based on management’s assessment of specific customer balances, considering the age of receivables
and financial stability of the customer and a five year average of prior uncollectible amounts. If there is an adverse change
in the financial condition of the Company’s customers, or if actual defaults are higher than provided for, an addition to the
allowance may be necessary.

Inventories

Inventories are valued at the lower of cost or market. Cost is determined by the first-in, first-out method. The inventory
includes an allocation of labor and overhead, including direct and indirect labor, freight and other overhead costs. The
Company establishes inventory reserves for valuation, shrinkage, and excess and obsolete inventory. The Company
records provisions for inventory shrinkage based on historical experience to account for unmeasured usage or loss. Actual
results differing from these estimates could significantly affect the Company’s inventories and cost of products sold. The
Company records provisions for excess and obsolete inventories for the difference between the cost of inventory and its
estimated realizable value based on assumptions about future product demand and market conditions. Actual product
demand or market conditions could be different than projected by management.

F-9

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

The Company’s inventories include parts and components that may be specialized in nature or subject to customers’ future
usage requirements. The Company has programs to minimize the required inventories on hand and actively monitors
customer purchase orders and backlog. The Company uses estimated allowances to reduce recorded amounts to market
values; such estimates could change in the future.

Property, Machinery and Equipment

Property, Machinery and equipment are valued at cost. The Company provides for depreciation and amortization using the
straight-line method over the estimated useful life of the assets:

Buildings
Machinery and equipment
Office equipment
Tools and dies
Leasehold improvements

Income Taxes

20 years
5-12 years
5 years
12 months
term of lease

Deferred income tax assets and liabilities are determined based on differences between financial reporting and tax bases of
assets and liabilities, and are measured using the enacted tax rates and laws that will be in effect when the differences are
expected to reverse. Valuation allowances are established when necessary to reduce deferred income tax assets to an
amount more likely than not to be realized.

Earnings per Share

Basic earnings per share are computed by dividing income available to common stockholders (the numerator) by the
weighted-average number of common shares outstanding (the denominator) for the period. The computation of diluted
earnings per share is similar to the computation of basic earnings per share, except that the denominator is increased to
include the number of additional common shares that would have been outstanding if the potentially dilutive common
shares had been issued. At April 30, 2008, 2007, and 2006 there were 498,707, 419,790 and 33,100 anti-dilutive shares,
respectively.

F-10

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

Revenues from sales of the Company’s electronic manufacturing services business are recognized when the product is
shipped. In general, it is the Company’s policy to recognize revenue and related costs when the order has been shipped
from its facilities, which is also the same point that title passes under the terms of the purchase order except for
consignment inventory, which is shipped from the Company to an independent warehouse for storage or shipped directly
to the customer and stored in a segregated part of the customer’s own facility. Upon the customer’s request for inventory,
the consignment inventory is shipped to the customer if the inventory was stored offsite or transferred from the segregated
part of the customer’s facility for consumption, or use, by the customer. The Company recognizes revenues upon such
transfer. The Company does not earn a fee for storing the consignment inventory.

The Company generally provides a (90) day warranty for workmanship only and does not have any installation,
acceptance or sales incentives, although the Company has negotiated longer warranty terms in certain instances. The
Company assembles and tests assemblies based on customer’s specifications. Historically, the amount of returns for
workmanship issues has been de minimus under the Company’s standard or extended warranties. Any returns for
workmanship issues received after each period end are accrued in the respective financial statements.

Shipping and Handling Costs

The Company records shipping and handling costs, within selling and administrative expenses. Customers are typically
invoiced for shipping costs. Shipping and handling costs were not material to the financial statements for fiscal years
2008, 2007, or 2006.

Fair Value of Financial Instruments

The Company’s financial instruments include receivables, notes payable, accounts payable, and accrued expenses. The fair
values of financial instruments are not materially different from their carrying values, due to the short-term nature of
receivables, accounts payable and accrued expenses and the market interest rates charged on the Company’s long term
debt.

Long-Lived Assets

The Company reviews long-lived assets (except goodwill) for impairment, whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. An asset is considered impaired if its carrying
amount exceeds the future undiscounted net cash flow the asset is expected to generate. If such asset is considered to be
impaired, the impairment

F-11

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

to be recognized is measured by the amount by which the carrying amount of the asset, if any, exceeds its fair market
value. There were no impairments for the fiscal years ended April 30, 2008, 2007 and 2006.

Goodwill and Other Intangibles

In accordance with Statement of Financial Accounting Standards SFAS No. 141 (“SFAS 141”), “Business Combinations”,
a purchaser must allocate the total consideration paid in a business combination to the acquired tangible and intangible
assets and acquired liabilities based on their fair value. Goodwill represents the purchase price in excess of the fair value
of assets acquired in business combinations. SFAS No. 142 (“SFAS 142”), Goodwill and Intangible Assets, requires the
Company to assess goodwill for impairment at least annually in the absence of an indicator of possible impairment and
immediately upon an indicator of possible impairment. During the fourth quarter of fiscal year 2007, the Company
completed its annual assessment of impairment regarding the goodwill recorded. The Company calculates fair value of the
reporting unit utilizing a combination of a discounted cash flow approach and a market approach which considers both the
Company’s market capitalization and trading multiples of comparable companies. The calculation of fair value of the
reporting unit involves significant judgment and utilization of different underlying assumptions could result in different
calculated fair values. The goodwill impairment analysis indicated there was no goodwill impairment for the year ended
April 30, 2007 as the fair value of the reporting unit exceeded the carrying value of the reporting unit by approximately
1%.

In fiscal year 2008, the Company changed the date of its annual goodwill impairment test SFAS 142 from the last day of
the fiscal year to the first day of the fiscal fourth quarter. The impairment test procedures were carried out during the
fourth quarter and up to a time close to the filing of the Company’s Form 10-K, which allowed the Company additional
time to complete the required analysis under SFAS 142. During the fiscal year 2008, the Company performed its annual
goodwill impairment testing and the carrying value of the Company’s reporting unit exceeded the fair value indicating a
goodwill impairment. The Company completed the second step of the goodwill impairment test used to measure the
amount of the impairment loss by comparing the implied fair value of the reporting unit goodwill with the carrying
amount of the goodwill. As a result of this impairment analysis, the Company recorded an impairment charge of
$9.3 million for the year ended April 30, 2008. The impairment is due to the Company’s continuing customer pricing
pressures and uncertain economic conditions as well as the Company’s declining stock price during fiscal 2008.

F-12

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

May 1, 2005
Able acquisition

April 30, 2006 and April 30, 2007
Goodwill Impairment Charge

April 30, 2008

Goodwill

$
756,959
8,541,986

$ 9,298,945
(9,298,945)

—

The following are the changes in the carrying amount of intangible assets, net of accumulated amortization:

Balance as of May 1, 2005

Internally
Developed
Software
—

Non-
competes and
Backlog

—

Customer
Relationships
—
$

Total

—

Able acquisition

115,000

260,000

2,395,000

2,770,000

Amortization expense 2006

(115,000)

(219,170)

(249,480)

(583,650)

Balance as of April 30, 2006

Amortization expense 2007

Balance as of April 30, 2007

Amortization expense 2008

—

40,830

2,145,520

2,186,350

(35,004)

(689,574)

(724,578)

5,826

1,455,946

1,461,772

(5,826)

(497,877)

(503,703)

Balance as of April 30, 2008

—

$ 958,069

Amortization period

1 year

2 years

8 years

N/A

F-13

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

The estimated intangible amortization expenses for the next five years are as follows:

Years Ended April 30,
2009
2010
2011
2012
2013
Thereafter

Stock Incentive Plans

$349,186
245,216
163,998
112,746
75,850
11,073

$958,069

The Company adopted Financial Accounting Standards Board, Share-Based Payment (“SFAS 123 (R)”) Accounting for
Stock Based Compensation on May 1, 2006, and implemented the new standard utilizing the modified prospective
application transition method. SFAS 123 (R) requires the Company to measure the cost of employee services received in
exchange for an equity award based on the grant date fair value. Options for which the requisite service requirement has
not been fully rendered and that are outstanding as of May 1, 2006 are valued in accordance with SFAS 123 “Accounting
for Stock Based Compensation” and will be recognized over the remaining service period. Stock based compensation
expense for all stock-based awards granted subsequent to May 1, 2006 was based on the grant date fair value estimated in
accordance with the provisions of SFAS No. 123 (R). The Company granted 2,500 and 16,000 options to non-executive
employees and recognized approximately $32,000 and $34,000 in stock compensation expense and a tax benefit of
approximately $12,000 and $13,000 in fiscal years 2008 and 2007, respectively.

Under the Company’s stock option plans, options to acquire shares of common stock have been made available for grant to
certain employees and directors. Each option granted has an exercise price of not less than 100% of the market value of
the common stock on the date of grant. The contractual life of each option is generally 10 years. The vesting of the grants
varies according to the individual options granted.

Prior to the adoption of SFAS 123 (R), the Company had elected to apply Accounting Principles Board Opinion 25 to
account for its stock-based compensation plans, as permitted under SFAS No. 123, Accounting for Stock-Based
Compensation. This method applied the intrinsic value method for stock options and other awards granted to employees.
Had the fair value method

F-14

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

been used during twelve months ended April 30, 2006 the following unaudited pro forma net loss would have been as
indicated in the following table:

Net income as reported

Add total stock-based employee compensation expense recorded in the period

Deduct total stock-based employee compensation expense determined under fair value-based method

for awards granted, modified, or settled, net of related tax effects

Pro forma net loss

2006
$ 1,882,132

5,248

(2,342,955)

$ (455,575)

In April 2006, in response to the issuance of SFAS 123 (R), the Company’s Compensation Committee of the Board of
Directors approved accelerating the vesting of 349,695 unvested stock options held by current employees and executive
officers. Under FASB Interpretation No. 44, Accounting for Certain Transactions Involving Stock Compensation – An
Interpretation of APB Opinion No. 25, a modification to accelerate the vesting of a fixed award effectively results in the
renewal of that award if, after the modification, an employee is able to exercise/vest in an award that under the original
terms, would have expired unexercisable/vested. If the employee continues to provide service and would have vested in
the awards under the original vesting provisions, the modification does not cause an effective renewal of the awards and,
accordingly, any incremental compensation expense measured as of the modification date should not be recognized. The
Company determined approximately 15,900 options were effectively renewed and compensation expense of $5,248 was
recognized in fiscal year 2006.

F-15

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

Earnings per share

Basic — as reported
Basic — pro forma

Diluted — as reported
Diluted — pro forma

New Accounting Standards

2006

$ 0.50
(.12)

0.48
(.12)

In February 2006, the FASB issued Statement of Financial Accounting Standard No. 155, “Accounting for Certain Hybrid
Instruments” (SFAS 155). SFAS 155 allows financial instruments that have embedded derivatives to be accounted for as a
whole (eliminating the need to bifurcate the derivative from its host) if the holder elects to account for the whole
instrument on a fair value basis. This statement is effective for all financials instruments acquired or issued after the
beginning of the entity’s first fiscal year that begins after September 15, 2006. The adoption of SFAS 155 did not have a
material impact on the Company’s consolidated financial statements.

In June 2006, FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes – an interpretation of
FASB Statement No. 109 (“FIN 48”), that clarifies the accounting and recognition for income tax positions taken or
expected to be taken in the Company’s tax returns. The Company adopted FIN 48 on May 1, 2007 and recorded the
cumulative effect of a change in accounting principle by recording an increase in the liability for uncertain tax positions of
$153,900 that was accounted for as a debit to opening retained earnings. Uncertain tax position reserves of $14,803 were
reversed during fiscal 2008. The entire amount of the consolidated worldwide liability for uncertain tax positions could
affect the Company’s effective tax rate upon favorable resolution of the uncertain tax positions. Absent new experience in
defending these uncertain tax positions in the various jurisdictions to which they relate, the Company cannot currently
estimate a range of possible change of the April 30, 2008 liability over the next twelve months.

F-16

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

A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as
follows:

Balance at May 1, 2007
Additions based on tax positions related to current year
Additions for tax positions in prior year
Reductions for tax positions of prior year

Balance at April 30, 2008

$153,900
—
6,494
(14,803)

$145,591

Interest related to tax positions taken in the Company’s tax returns are recorded in income tax expense in the Consolidated
Statements of Operations.

The Company files a U.S. income tax return and tax returns in various states. The Company’s subsidiaries also file tax
returns in various foreign jurisdictions. In addition to the U.S. the Company’s major taxing jurisdictions include China and
Mexico. In the U.S., tax years 2006, 2007 and 2008 are open. The Company’s enterprise operates under a tax holiday,
resulting in no uncertain tax positions for that entity for any tax year. In Mexico, the Company assumes that tax years from
2005 through 2008 remain open.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”), which defines fair value,
establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures
about fair value measurements. SFAS 157 is effective for the Company beginning on May 1, 2008. The requirements of
SFAS 157 will be applied prospectively except for certain derivative instruments that would be adjusted through the
opening balance of retained earnings in the period of adoption. In November 2007, the FASB agreed to a one-year deferral
of the effective date of SFAS 157 for all non-financial assets and liabilities, except those that are recognized or disclosed at
fair value in the financial statements on a recurring basis. The Company is evaluating the impact of the adoption of SFAS
157 on its financial statements.

F-17

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

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141R”). SFAS
141R establishes principles and requirements for how an acquirer recognizes an measures in its financial statements the
identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired.
SFAS 141R also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the
business combination. SFAS 141R is effective for fiscal years beginning after December 15, 2008, and will be adopted in
the first quarter of fiscal 2009. The Company is currently evaluating the potential impact, if any, of the adoption of SFAS
141R on its consolidated results of operations and financial conditions, which will depend on its future acquisition activity.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling interest in Consolidated Financial Statements
(“SFAS 160”). SFAS 160 establishes accounting and reporting standards for ownership interests in subsidiaries held by
parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling
interest, changes in a parent’s ownership interest, and the valuation of retained noncontrolling equity investments when a
subsidiary is deconsolidated. SFAS 160 also establishes disclosure requirements that clearly identify and distinguish
between the interest of the parent and the interests of the noncontrolling owners. SFAS 160 is effective for fiscal years
beginning after December 15, 2008. The Company is currently evaluating the potential impact, if any, of the adoption of
SFAS 160 on its consolidated results of operation and financial condition.

NOTE C — DISCONTINUED OPERATIONS

In June 2005, the Company closed on the sale of its Las Vegas, Nevada operation. The Las Vegas facility operated as a
complete EMS center specializing in the assembly of electronic products and cables for a broad range of customers
primarily in the gaming industry. The effective date of the transaction was May 30, 2005. The transaction was structured
as an asset sale, and included a $2,000,000 cash payment to the Company for the buyer’s purchase of the machinery,
equipment and other assets of the Las Vegas operation. The transaction was recorded by the Company in the first quarter
of fiscal year 2006 and included a gain on the transaction of approximately $311,000. The gain was offset by a loss of
approximately $383,000 on discontinued operations for the Las Vegas operation for the year ended April 30, 2006.

F-18

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

The following amounts related to the discontinued operation and have been segregated from continuing operations and
reflected as a discontinued operation for fiscal 2006 consolidated statement of income (in thousands):

Sales
Loss before tax benefit
Net loss from discontinued operation
Gain on sale of business

Net loss from discontinued operation

NOTE D — ALLOWANCE FOR DOUBTFUL ACCOUNTS

Changes in the Company’s allowance for doubtful accounts are as follows:

2006
$ 522
(383)
355
311

(44)

Beginning balance
Bad debt expense
Write-offs

2008
$150,000
63,000
—

2007
$ 268,917
17,107
(136,024)

2006
$ 120,000
296,918
(148,001)

$213,000

$ 150,000

$ 268,917

F-19

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
April 30, 2008, 2007 and 2006

NOTE E — INVENTORIES

Inventories consist of the following at April 30:

Finished products
Work in process
Raw materials

Less obsolescence reserve

2008
$18,735,846
2,542,762
22,591,181

2007
$10,359,223
3,002,970
28,732,898

43,869,789

42,095,091

1,723,019

1,245,300

$42,146,770

$40,849,791

Changes in the Company’s inventory obsolescence reserve are as follows:

Beginning balance
Provision for obsolescence
Write-offs

2008
$1,245,300
477,719
—

2007
$ 769,536
475,764
—

2006
$379,449
390,087
—

$1,723,019

$1,245,300

$769,536

F-20

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

Property, machinery and equipment consist of the following at April 30:

Land and buildings
Machinery and equipment
Office equipment
Tools and dies
Leasehold improvements
Equipment under capital leases

Less 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

2008
$11,920,435
36,046,726
3,764,374
288,598
3,019,545
7,445,202

2007
$11,418,021
34,648,320
3,597,142
284,070
3,006,914
7,359,817

62,484,880

60,314,284

33,130,257

29,343,177

Property, machinery and equipment, net

$29,354,623

$30,971,107

Depreciation and amortization expense was $4,004,108, $4,033,619 and $3,635,643 for the years ended April 30, 2008,
2007, and 2006, respectively.

F-21

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

The Company has a revolving credit facility under which the Company may borrow up to the lesser of (i) $32 million or
(ii) an amount equal to the sum of 85% of the receivable borrowing base and the lesser of $16 million or a percentage of
the inventory base. As of April 30, 2008 and 2007, $25,876,255 and 24,219,015, respectively, was outstanding under the
revolving credit facility. Borrowings under this revolving credit facility bear interest at either the prime rate less 0.25%
(5.00% at April 30, 2008) or LIBOR plus 2% (6.47% and 6.19% at April 30, 2008), as elected by the Company. The
Company must also pay an unused commitment fee equal to 0.20% on the revolving credit facility. There was
approximately $4.6 million of unused availability under the revolving credit facility as of April 30, 2008. In June 2008, the
Company amended the revolving credit facility to extend the term of the agreement until September 30, 2010 from
September 30, 2009 and amended certain financial covenants.

The Company also has a term loan with an outstanding balance of $3 million and $4 million as of April 30, 2008 and
2007, respectively. This term loan is payable in quarterly principal payments of $250,000 due each quarter through the
quarter ending June 30, 2011 and interest is payable monthly throughout the term of the loan. This loan bears interest at a
rate of 6.4675%.

The revolving credit facility and term loan are collateralized by substantially all of the domestically located assets of the
Company and contain certain financial covenants, including specific covenants pertaining to the maintenance of minimum
tangible net worth and net income. The agreement also restricts annual lease rentals and capital expenditures and the
payment of dividends. At April 30, 2008, the Company was in compliance with its financial covenants.

Notes Payable — Buildings

On November 19, 2003, the Company purchased the property that serves as the Company’s corporate headquarters and its
Midwestern manufacturing facility. The Company executed a note with LaSalle Bank N.A., (now Bank of America) in the
amount of $3,600,000. The Company refinanced the property on April 30, 2008. The new note bears a fixed interest rate
of 5.59% and is payable in sixty monthly installments. A final payment of approximately $2,115,438 is due on or before
April 30, 2013. At April 30, 2008, $2,805,000 and at April 30, 2007, $2,985,000 was outstanding.

F-22

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

In May 2002, the Company acquired a plant in Mexico through seller financing. The loan of $1,950,000 is payable in
equal monthly installments of approximately $31,000 over six and a half years at a rate of 7% interest per annum. Prior to
the acquisition of the plant the Company rented the facility. At April 30, 2008, $183,372 and at April 30, 2007, $531,464
was outstanding.

The aggregate amount of debt maturing in each of the next five fiscal years and thereafter is as follows:

Fiscal Year
2009
2010
2011
2012
2013

NOTE H — ACCRUED EXPENSES AND WAGES

Accrued expenses and wages consist of the following at April 30:

Wages
Bonuses
Interest payable
Commissions
Professional fees
Foreign payroll accruals
Other

F-23

$ 1,326,935
2,140,250
26,016,505
140,250
2,240,687

$31,864,627

2008
$1,638,659
944,720
144,046
42,298
335,202
734,790
1,021,265

2007
$1,505,077
736,210
481,812
83,474
426,296
794,201
827,853

$4,880,980

$4,854,923

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
April 30, 2008, 2007 and 2006

NOTE I — STRATEGIC TRANSACTIONS

In July 2005, the Company closed on the purchase of all of the outstanding stock of Able, a company headquartered in
Hayward California and its wholly owned subsidiary, AbleMex S.A. de C.V., located in Tijuana, Mexico. Able is an ISO
9001:2000 certified EMS company serving Original Equipment Manufacturers in the life sciences, telecommunications
and industrial electronics industries. The acquisition of Able has allowed the Company to make strides towards achieving
four objectives: (1) to further diversify its markets, capabilities and customer base, (2) to add a third low-cost
manufacturing facility in Tijuana, Mexico, (3) creating an opportunity to consolidate the California operations into one
facility, and (4) to generate incremental revenue from Able’s customers as they become familiar with the Company’s
broader array of services. The effective date of the transaction was July 1, 2005. Able was merged into the Company on
November 2005 and operates as a division of the Company. The purchase price was approximately $16,800,000 and was
recorded as a stock purchase transaction in the first quarter of fiscal year 2006. The transaction was financed by the
Company’s amended credit facility and resulted in an increase of approximately $8,500,000 in goodwill. This goodwill is
non-deductible for income tax purposes. As discussed in Note B, in fiscal 2008, this goodwill was impaired and written
off.

Assuming the purchase was recorded as of the first period reported, May 1, 2005, unaudited revenues for the year ended
April 30, 2006 would have been $128,050,591. Unaudited pro-forma net income would have been $1,785,722 for the
period ended April 30, 2006. Dilutive earnings per share would have been $0.46 for the year ended April 30, 2006.

F-24

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

The purchase price was allocated to the fair value of the assets and liabilities acquired as follows (000s omitted):

Cash
Trade receivables, net
Inventories
Other current assets
Property and equipment
Deferred tax asset
Goodwill
Intangible assets
Other assets
Accounts payable and accrued expenses
Obligations under capital leases
Deferred tax liability

Total consideration

NOTE J — INCOME TAXES

Amount
$
40
3,210
4,049
139
2,707
688
8,542
2,770
207
(3,407)
(938)
(1,235)

$16,772

The income tax provision (benefit) for the income (loss) from continuing operations for the years ended April 30 consists
of the following:

Current

Federal
State
Foreign

Deferred

Federal
State

2008

2007

2006

$1,707,890
242,740
195,675

$ 761,278
153,914
196,425

$ 892,477
226,551
174,996

(438,236)
(52,551)

(187,819)
(27,619)

(304,670)
53,765)

$1,655,518

$ 896,179

$ 935,589

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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

The reason for the differences between the income tax provision for the income (loss) from continuing operations and the
amounts computed by applying the statutory Federal income tax rates to income (loss) before income tax expense for the
years ended April 30 are as follows:

Income tax at
Federal rate
State income tax, net of federal
Goodwill impairment
Benefit of Chinese tax holiday
Other, net

2008

2007

2006

$(1,632,448)
(143,867)
3,626,589
—
(194,756)

$882,131
111,647
—
(24,993)
(72,606)

$973,042
89,475
—
(66,197)
(60,731)

$ 1,655,518

$896,179

$935,589

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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

Significant temporary differences that result in deferred tax assets and (liabilities) at April 30, 2008, and 2007, are as
follows:

Allowance for doubtful accounts
Inventory obsolescence reserve
Net operating loss carry-forward — from Able acquisition
Accruals not currently deductible
Inventory

Current deferred tax asset

Prepaid insurance

2008
83,069
671,969
—
325,478
402,539

2007
58,499
485,661
127,998
300,278
371,390

1,483,055

1,343,826

(30,048)

(92,585)

Current deferred tax liability

(30,048)

(92,585)

Net current deferred tax asset

$1,453,007

$1,251,241

Intangible assets — Able acquisition
Machinery and equipment

2008
$ (373,642)
(2,072,807)

2007
$ (570,084)
(1,967,409)

Net long-term deferred tax liability

$(2,446,449)

$(2,537,493)

The Company’s wholly-owned foreign enterprise, SigmaTron China, is subject to a reduction in income taxes within
China due to its foreign investment. The reduction in taxes is for a five year period commencing in the period the
operation becomes profitable, but not after December 31, 2008.

F-27

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

The Company sponsors 401(k) retirement savings plans, which are available to all non-union U.S. employees. The
Company may elect to match participant contributions ranging from $300 — $500 annually. The Company contributed
$96,905, $83,745 and $91,749 to the plans during the fiscal years ended April 30, 2008, 2007 and 2006, respectively. The
Company paid total expenses of $8,830, $15,870 and $24,716 for the fiscal years ended April 30, 2008, 2007 and 2006,
respectively, relating to costs associated with the administration of the plans.

NOTE L — MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of
uncollateralized accounts receivable. For the year ended April 30, 2008, two customers accounted for 23.0% and 20.6% of
net sales of the Company, and 33.7% and 17.5% of accounts receivable at April 30, 2008. For the fiscal year ended
April 30, 2007, two customers accounted for 24.8% and 16.9% of net sales of the Company, and 39.1% and 6.4% of
accounts receivable at April 30, 2007. For the fiscal year ended April 30, 2006, two customers accounted for 30.1% and
19.7% of net sales of the Company, and 35.3% and 6.2% of accounts receivable at April 30, 2006.

F-28

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
April 30, 2008, 2007 and 2006

NOTE M — LEASES

The Company leases certain facilities under various operating leases. The Company also leases various machinery and
equipment under capital leases.

Future minimum lease payments under leases with terms of one year or more are as follows at April 30, 2008:

Years ending April 30,

2009
2010
2011
2012
2013
Thereafter

Less amounts representing interest

Less current portion

Capital
leases
$1,804,657
1,005,257
773,677
430,479
117,367
0

Operating

leases
$1,445,508
1,096,782
436,007
42,672
10,800
28,800

4,131,437

$3,060,569

409,814

3,721,623

1,595,931

$2,125,692

Rent expense incurred under operating leases was approximately $1,505,000, $1,669,000 and $1,272,000 for the years
ended April 30, 2008, 2007 and 2006, respectively.

F-29

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
April 30, 2008, 2007 and 2006

NOTE N — STOCK OPTIONS

The Company has stock option plans (“Option Plans”) under which certain employees and outside non-employee directors
may acquire up to 1,603,500 shares of common stock. Options available for grant under the employee plans total
1,207,500, with the non-employee director plans allowing for a total of 396,000 options available for grant. At April 30,
2008, the Company has 58,464 shares available for future issuance to employees under the Option Plans. The Option
Plans are interpreted and administered by the Compensation Committee of the Board of Directors. The maximum term of
options granted under the Option Plans is generally 10 years. Options granted under the Option Plans are either incentive
stock options or nonqualified options. Options forfeited under the Option Plans are available for reissuance. Options
granted under these plans are granted at an exercise price equal to the fair market value of a share of the Company’s
common stock on the date of grant.

The weighted-average grant date fair value of the options granted during fiscal years 2008, 2007 and 2006 was $11.56,
$9.47, and $5.80, respectively.

The fair value of each option grant is estimated on the grant date using the Black-Scholes option pricing model with the
following assumptions:

Expected dividend yield
Expected stock price volatility
Average risk-free interest rate
Weighted-average expected life of options

2008

.750
3.91%

2007

.750
5.11%

2006

.750
3.37%

6.5 years

5 years

Option-valuation models require the input of highly subjective assumptions. Because the Company’s employee stock
options have characteristics significantly different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management’s opinion the existing method does not
necessarily provide a reliable single measure of the fair value of the Company’s employee stock options. The Company
used the U.S. Treasury yield in effect at the time of the option grant to calculate the risk-free interest rate. The weighted-
average expected life of options was calculated using the simplified method. The expected volatility and forfeitures of
options is based on historical experience and expected future results.

F-30

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

The table below summarizes option activity through April 30, 2008:

Outstanding at April 30, 2005

Options granted during 2006
Options exercised during 2006
Options forfeited during 2006

Outstanding at April 30, 2006

Options granted during 2007
Options exercised during 2007

Outstanding at April 30, 2007

Options granted during 2008
Options exercised during 2008
Options forfeited during 2008
Options expired during 2008

Outstanding at April 30, 2008

Number of
options
exercisable
at end
of year
169,485

Number of

options
176,153

390,700
(31,537)
(12,009)

Weighted-
average
exercise

price
$ 10.88

9.17
2.39
9.17

523,307

9.33

523,307

16,000
(8,000)

9.47
2.20

531,307

8.00

502,701

2,500
(27,600)
(4,400)
(3,100)

11.56
9.17
9.17
12.25

498,707

7.92

477,847

The aggregate intrinsic value is calculated as the difference between the market price of the Company’s common stock and
the exercise price of the underlying options. During the fiscal years ended April 30, 2008, 2007 and 2006, the aggregate
intrinsic value of options exercised was $67,620, $57,920 and $224,252, respectively. The aggregate intrinsic value of in
the money options outstanding was $314,959 as of April 30, 2008.

F-31

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

Information with respect to stock options outstanding and stock options exercisable at April 30, 2008, follows:

Range of exercise prices
$2.20 – 5.63
9.17 – 11.56

Number
outstanding at
April 30, 2008
103,515
395,192

Options outstanding

Weighted-average
remaining

contractual life
3.60 years
7.82 years

Weighted-
average
exercise price
2.51
$
9.34

498,707

7.92

Options exercisable

Number

exercisable at
April 30, 2008
103,515
374,332

Weighted-
average
exercise price
2.51
$
9.27

477,847

7.81

As of April 30, 2008, there was approximately $41,600 of unrecognized compensation cost related to the Company’s stock
option plans. Compensation cost of $26,400 is being amortized over a three-year vesting period using a straight-line basis
and compensation cost of $15,200 is being amortized over a four year vesting period using a straight-line basis.

F-32

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

The following table sets forth the computation of basic and diluted earnings per share:

Net (loss) income

Weighted-average shares

Basic
Effect of dilutive stock options

2008
$(6,456,836)

2007
$1,698,324

2006
$1,882,132

3,811,832
—

3,791,077
88,078

3,756,804
137,927

Diluted

3,811,832

3,879,155

3,894,731

Basic (loss) earnings per share

Diluted (loss) earnings per share

(1.69)

0.45

0.44

0.50

0.48

The computation of the diluted earnings per share is similar to the basic earnings per share, except that the denominator is
increased to include the number of additional common shares that would have been outstanding if the potentially dilutive
common shares had been issued. At April 30, 2008, 2007, and 2006 there were 498,707, 419,790 and 33,100 anti-dilutive
shares, respectively.

F-33

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)

The following is a summary of unaudited quarterly financial data for fiscal years 2008 and 2007:

2008
Net sales

First
quarter
$39,843,813

Second
quarter
$42,815,107

Third
quarter
$41,131,744

Fourth
quarter
$44,020,330

Income (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

Earnings (loss) per share-Diluted

0.22

0.21

0.18

0.08

(2.17)

Total shares-Basic

3,794,956

3,807,492

3,822,556

Total shares-Diluted

3,889,274

3,962,531

3,897,314

3,822,556

F-34

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

2007
Net sales

First
quarter
$36,959,865

Second
quarter
$44,858,662

Third
quarter
$44,584,513

Fourth
quarter
$39,506,066

Income before income tax expense

381,086

1,203,671

125,509

884,238

Net income

258,669

708,011

76,572

655,072

Earnings per share-Basic

Earnings per share-Diluted

0.07

0.19

0.18

0.02

0.17

Total shares-Basic

3,786,956

3,787,251

3,794,956

Total shares-Diluted

3,866,783

3,872,654

3,895,939

3,885,055

F-35

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
April 30, 2008, 2007 and 2006

NOTE Q — LITIGATION

As of April 30, 2008, the Company was not a party to any material legal proceedings.

From time to time the Company is involved in legal proceedings, claims or investigations that are incidental to the conduct
of the Company’s business. In future periods, the Company could be subjected to cash cost or non-cash charges to
earnings if any of these matters is resolved on unfavorable terms. However, although the ultimate outcome of any legal
matter cannot be predicted with certainty, based on present information, including our assessment of the merits of the
particular claim, the Company does not expect that these legal proceedings or claims will have any material adverse
impact on its future consolidated financial position or results of operations.

F-36