SigmaTron International Inc. Annual Report 2012

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FY2012 Annual Report · SigmaTron International Inc.

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SigmaTron inTernaTional, inc. 2012 a nnual reporT

OFFICErS

gary r. Fairhead*
Chairman of the Board,
President and
Chief Executive Officer

linda K. Frauendorfer*
Chief Financial Officer,
Vice President Finance,
Treasurer and Secretary

gregory a. Fairhead*
Executive Vice President,
and Assistant Secretary

John p. Sheehan*
Vice President,
Director of Supply Chain
and Assistant Secretary

daniel p. camp*
Vice President,
Acuña Operations

rajesh b. upadhyaya*
Executive Vice President,
West Coast Operations

Hom-ming chang*
Vice President,
China Operations

curtis W. campbell
Vice President of Sales,
West Coast Operations

Yousef m. Heidari
Vice President,
Engineering

donald g. madsen
Vice President,
Customer Service
Union City Operations

BOArD OF DIrECTOrS

gary r. Fairhead
Chairman of the Board,
President and
Chief Executive Officer,
SigmaTron International, Inc.

linda K. Frauendorfer
Chief Financial Officer,
SigmaTron International, Inc.

thomas W. rieck 1,3
Partner,
rieck and Crotty, P.C.

dilip S. Vyas 2,3,4
Independent Consultant

paul J. plante 1,2
President and Owner,
Florida Fresh Vending, LLC.

bruce J. mantia 2
retired Partner,
Ernst & Young LLP

barry r. Horek 1,3
retired Partner,
Ernst & Young LLP

COrPOrATE INFOrMATION

Sec counSel
Greenberg Traurig, LLP
77 West Wacker Drive
Chicago, Illinois 60601

corporate counSel
Howard & Howard Attorneys PLLC
200 South Michigan Avenue
Chicago, Illinois 60604

independent public
accountantS
BDO USA, 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. Frauendorfer at
the SigmaTron corporate office,
1.800.700.9095.

StocK tranSFer agent
and regiStrar
American Stock Transfer & Trust
Company, LLC
6201 15th Avenue
Brooklyn, New York 11219

dennis p. mcnamara
Vice President,
Engineering

Stephen H. mcnulty
Vice President,
Sales

thomas F. rovtar
Vice President,
Information Technology

Keith d. Wheaton
Vice President,
Business Development
West Coast Operations

*Executive Officers

1 Member of the
Audit Committee

2 Member of the
Compensation
Committee

3 Member of the
Nominating
Committee

4 Lead Director

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.

www.sigmatronintl.com

800.700.9095
inVeStor relationS
Fax 847.956.8001
tel 847.956.8000

Elk Grove Village, IL 60007
2201 Landmeier Road
SigmaTron International, Inc.
corporate oFFiceS

w
o
g
s
a
G
e
a
D

GLobAL
PresenCe

breADth of
CAPAbiLities

serviCe
exCeLLenCe

Customer
vALue

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SigmaTron Today
iS a STrong, global
EmS providEr wiTh
comprEhEnSivE
rESourcES and
ThE TEchnical
vErSaTiliTy To
handlE
any projEcT.

AT SIGMATRON, WE HAVE ALWAYS PURSUED
GROWTH BY BUILDING THE STRENGTHS
THAT TRANSLATE DIRECTLY INTO VALUE AND
COMPETITIVE ADVANTAGE FOR OUR CUSTOMERS.

ENHANCING SIGMATRON’S ABILITY
TO MEET EVOLVING CUSTOMER
NEEDS WILL CONTINUE TO DRIVE
OUR STRATEGIES. REGARDLESS OF
ECONOMIC CYCLE, THIS WILL ALWAYS
BE THE KEY TO OUR SUCCESS.

We continue to focus on delivering highly sophisticated, cost-effective
electronic manufacturing services (EMS) in fiscal 2012. During the year,
we also deepened our design capabilities and expanded our global
manufacturing footprint through the acquisition of Spitfire Controls,
Inc. This is just the latest in an ongoing series of strategic moves to
strengthen SigmaTron as a versatile, dependable high-technology
EMS resource for customers in an increasing number of industries
all over the world.

Today, SigmaTron serves nine robust technology sectors —
Medical/Life Sciences, Aerospace/Defense, Industrial Electronics,
Telecommunications, Semiconductor Equipment, Home Appliances,
Consumer Electronics, Fitness Equipment and Gaming Equipment —
with industry-certified manufacturing plants in the United States,
Mexico, China and Vietnam and other key capabilities in strategic
locations worldwide.

SIGMATRON IS CONTINUING TO DEVELOP

AND ExPAND WORLD-CLASS DESIGN AND

ENGINEERING CAPABILITIES TO BOLSTER

ITS ABILITY TO PROVIDE SINGLE-SOURCE

EFFICIENCY AND VALUE TO CUSTOMERS

IN SELECT MARkETS.

GLOBAL STRENGTH.

SigmaTron today is better positioned than ever to help its customers
compete in a dynamic global marketplace.

All over the world, SigmaTron delivers service
excellence through local project managers, a
global IT infrastructure and systems for real-time
process visibility and reporting.

Taipei, TaiWan
our tAiwAn-bAsed
globAl procurement
cApAbility helps ensure
quAlity mAteriAls
And components At A
competitive cost.

Wujiang, jiangsu, CHina
As lAbor costs rise
in chinA, we’re Adding
domestic chinese
sAles to our current
export cApAbilities
to leverAge our
presence there.

Ho CHi MinH CiTy, Vn
Acquisition in 2012 of
spitfire controls expAnds
our ems presence in AsiA
with A mAnufActuring
fAcility in ho chi minh
city, vietnAm.

In all global locations, we provide our customers
highest-quality products with state-of-the-art
testing, quality control systems, and industry-
specific certifications.

For an EMS provider of its size, SigmaTron has an extraordinary
global footprint, with strategic locations in the United States
and low-cost regions of Asia and Mexico.

union CiTy, Ca
Our uniOn city, ca lOcatiOn
is OnE Of siGmatrOn’s kEy
hiGh-tEchnOlOGy cEntErs
sErvinG mEdical/lifE sciEncE
as wEll as aErOspacE/
dEfEnsE custOmErs.

elk gRove village, il
Our Elk GrOvE villaGE, il
hEadquartErs cOntinuEs tO
bE a GatEway tO Our plants
and a cEntEr fOr lOcal
suppOrt tO kEy siGmatrOn
custOmErs.

Tijuana, mexiCo
uniOn city’s prOximity
tO Our tijuana, mExicO,
lOcatiOn EnablEs
miGratiOn Of prOductiOn
thErE tO OptimizE cOst
EffEctivEnEss.

el Paso, Tx

Del Rio, Tx

Tijuana, Chihuahua anD
aCuÑa, mexiCo
with Our rEcEnt spitfirE
acquisitiOn, siGmatrOn
nOw has thrEE Ems
facilitiEs in mExicO,
kEy tO sErvinG nOrth
amErican custOmErs.

iso 9001:2008
Conformity to the ISO 9001 demonstrates SigmaTron’s
ability to provide customers with the highest quality products
and services.

iso 13485:2003
SigmaTron has earned the ISO 13485:2003 certification required
to manufacture products in the medical/life sciences industry.

as9100B
SigmaTron has earned the AS9100B certification required to
manufacture products in the aerospace/defense industry.

iPC-a-610e
Key SigmaTron manufacturing facilities adhere to IPC-A-610E
standards of process conformity.

iTaR (inTeRnaTional TRaffiC in aRms RegulaTions)
SigmaTron is an ITAR provider, registered with the US
Government Regulations that control the export and import
of defense-related articles and services.

CeRTifieD exCellenCe.
At SigmaTron, we
are compliant with
the certifications
that assure
customers of our
commitment to
quality, safety and
the environment
in each industry
we serve.

comprehensive ems resources

We’ve continued to build capability breadth to meet a full spectrum of
customer needs across the product development cycle.

sigmatron’s business
model centers on
customer service
excellence, optimized
product performance
and quality. We
continue to build
upon our ability to
add value through
the full product
development cycle,
from product design,
prototype to short-
run and high-volume
production.

design
design
design

rototype
prototype
pprototype

customer

fullfillment,
logistics &
distribution

rma

consigned,
consigned,
consigned,
consigned,
consigned,
full &
full
full
full
full
partial
partial
partial
turnkey
services

testing

box-build & pack-out

system assembly

sigmatron international, inc. is a global electronic
manufacturing services company that provides
printed circuit board assemblies, complete electronic
product assemblies and more, to customers in a wide
variety of major industries, including:

sigmatron offers comprehensive resources, with
a full range of highly sophisticated electronic
manufacturing services:

■ design services

■ design for manufacturability and test services (dfm/dft)

■ medical/life sciences

■ aerospace/defense

■ industrial electronics

■ telecommunications

■ semiconductor equipment

■ home appliances

■ consumer electronics

■ fitness equipment

■ gaming equipment

■ prototype to high-volume production

■ dedicated support team or cft

■ consignment and/or turnkey services

■ full range of test capabilities

■ system assembly, box-build and pack-out

■ fulfillment, logistics and distribution

■ rma services

■ seamless transition to loWer-cost regions

WE’RE SIGMATRON.
CENTERED ON
THE CUSTOMER,
DELIVERING EMS
AND TECHNICAL
EXCELLENCE,
FOR MORE THAN
20 YEARS.

corporate oFFiceS
SigmaTron International, Inc.
2201 Landmeier Road
Elk Grove Village, IL 60007

tel 847.956.8000
Fax 847.956.8001
inVeStor relationS
800.700.9095

www.sigmatronintl.com

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

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

4 Lead Director

Committee
Nominating
3 Member of the

Committee
Compensation
2 Member of the

Audit Committee
1 Member of the

*Executive Officers

West Coast Operations
Business Development
Vice President,
Keith d. Wheaton

Information Technology
Vice President,
thomas F. rovtar

Sales
Vice President,
Stephen H. mcnulty

Engineering
Vice President,
dennis p. mcnamara

Brooklyn, New York 11219
6201 15th Avenue
Company, LLC
American Stock Transfer & Trust
and regiStrar
StocK tranSFer agent

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

Chicago, Illinois 60601
233 North Michigan Avenue
BDO USA, LLP
accountantS
independent public

Chicago, Illinois 60604
200 South Michigan Avenue
Howard & Howard Attorneys PLLC
corporate counSel

Chicago, Illinois 60601
77 West Wacker Drive
Greenberg Traurig, LLP
Sec counSel

COrPOrATE INFOrMATION

Ernst & Young LLP
retired Partner,
barry r. Horek 1,3

Ernst & Young LLP
retired Partner,
bruce J. mantia 2

Florida Fresh Vending, LLC.
President and Owner,
paul J. plante 1,2

Independent Consultant
dilip S. Vyas 2,3,4

rieck and Crotty, P.C.
Partner,
thomas W. rieck 1,3

SigmaTron International, Inc.
Chief Financial Officer,
linda K. Frauendorfer

SigmaTron International, Inc.
Chief Executive Officer,
President and
Chairman of the Board,
gary r. Fairhead

BOArD OF DIrECTOrS

Union City Operations
Customer Service
Vice President,
donald g. madsen

Engineering
Vice President,
Yousef m. Heidari

West Coast Operations
Vice President of Sales,
curtis W. campbell

China Operations
Vice President,
Hom-ming chang*

West Coast Operations
Executive Vice President,
rajesh b. upadhyaya*

Acuña Operations
Vice President,
daniel p. camp*

and Assistant Secretary
Director of Supply Chain
Vice President,
John p. Sheehan*

and Assistant Secretary
Executive Vice President,
gregory a. Fairhead*

Treasurer and Secretary
Vice President Finance,
Chief Financial Officer,
linda K. Frauendorfer*

Chief Executive Officer
President and
Chairman of the Board,
gary r. Fairhead*

OFFICErS

SigmaTron inTernaTional, inc. 2012 annual reporT

SigmaTron inTerna Tional, inc. 2012 form 10-k

To Our Stockholders

Throughout fiscal 2012, SigmaTron continued to operate in a challenging, volatile
economic and industry environment. Our year basically tracked the U.S. economy’s
movements—we saw short-term swings in demand from customers but no meaningful
indications of their long-term confidence in the economy. During the fourth quarter of
our fiscal year, there appeared to be signs that the economic environment was
improving, but that trend appeared to lose its momentum by the end of the quarter.

Financial results
When we compare our fiscal 2012 results to fiscal 2011, we posted a slight increase in
sales and a significant decrease in earnings. This trend of challenged earnings started in
the second half of fiscal 2011 and, driven by competitive pressures and persistent
uncertainty in the economy, has stretched through the past six quarters. While I certainly
hoped to report increases in both sales and revenues, thefact that we were able to
deliver a profitable year in the current environment is an accomplishment. We will
continue to pursue markets that are more attractive in terms of potential margins.
However, a public company our size needs a modest level of revenue growth to
leverage into earnings each year. Throughout fiscal 2012, we continued to pursue new
revenue opportunities and I am cautiously optimistic that we will be successful with
several of them during the coming fiscal year. Bringing new customers aboard, coupled
with our existing customer base, should provide us with the type of increased revenue
we seek in our ongoing efforts to grow earnings. However, it is important to remember
that all of this is taking place when margins continue to be squeezed. It will not be easy.

Following are updates on the activities at our various locations:

Elk Grove Village, Illinois
Our Elk Grove Village plant continued to struggle during fiscal 2012. The facility remains
a gateway to our plant in Acuña, Mexico, and provides valuable local support for
SigmaTron customers, but we have not been able to grow revenue there as hoped. We
moved decisively to reduce headcount, and the team has done an excellent job of
managing expenses. We have started the process of redirecting our focus in terms of
markets served and services offered. This will take some time to do, but we believe this
plant can compete domestically and there is a sense that certain customers and markets
are becoming more open to manufacturing in the United States.

Acuña, Mexico and Del Rio, Texas
Acuña remains our largest operation, but they had a difficult year as well. For the first
time in many years, we had some layoffs and increased number of short work weeks.
On a positive note, at fiscal year end we were moving toward a regular work week and
we are hopeful that the trend will continue. It remains my strong belief that Mexico will
continue to grow as the manufacturing location of choice in North America. I believe this
trend will help Acuña, Tijuana and our new addition, Chihuahua, going forward.

Wujiang–Suzhou, China
Wujiang had an excellent year in fiscal 2012. Our business there grew revenue, added
new skill sets and capabilities, and brought new members to an already strong team.
Due to the anticipated impact on our cost structure from the Chinese government’s
announcement of a multi-year plan to increase wages significantly year over year, we
plan to adjust our focus to include domestic sales in China. While China will continue to

be an important market—it remains critical to our international customers that we have a
strong presence there—we believe it will no longer be the de facto low-cost location for
our industry. Accordingly, we have strategies in place to position SigmaTron to sell both
internationally and domestically in China. We believe this capability will serve us well
over the long term.
Union City, California
Union City also had an excellent year. Our relocation in fiscal 2011 laid the foundation
for the revenue increase we saw in fiscal 2012. We were able to attract defense,
aerospace and medical customers and continue to work on additional new business in
these markets. Our transition to the new location also allowed us to migrate some Union
City business with several customers to Tijuana as planned. Union City continues to be
our highest-technology location and we believe it is well positioned to grow.

Tijuana, Mexico
I believe the operation is heading in the right direction even though Tijuana struggled
during the first half of fiscal 2012, revenue started to grow during the second half of the
fiscal year. As previously announced, in June 2012, we relocated the plant to a new,
superior location. Our belief is that the new location will allow us to better serve our
current customers and assist us in attracting new ones, much like the relocation did for
Union City. The Tijuana facility also stands to benefit from the trend of certain business
returning to North America from Asia, our new location provides a larger space which
can accommodate the needs of that business.

Taipei, Taiwan
Our Taiwan purchasing office continues to be critically important to all of SigmaTron’s
operations and will be a key driver of performance in fiscal 2013. We have modestly
expanded our team there and also relocated during the year. Our ability to source raw
material competitively is crucial to all of our operations and we believe our Taiwan team
does an excellent job.

Building SigmaTron strength through acquisition
As announced on June 1, 2012, we acquired Spitfire Controls (“Spitfire”), an original
equipment manufacturer of electronic controls in the home appliance industry,
subsequent to our fiscal year end. Spitfire was a valued customer for more than 15
years; our combination solidifies an already proven, productive relationship.
We are excited about the opportunities this acquisition brings to SigmaTron. With
Spitfire, we gain an experienced engineering team that has a strong focus and
reputation in electronic appliance controls. Spitfire will be marketed as a division of
SigmaTron, enabling us to approach appliance customers as an original design
manufacturer (ODM) as well as providing a vehicle by which we can increase our
customary electronic manufacturing services (EMS) business.

The acquisition adds two excellent manufacturing operations that we believe will make
our international footprint even more attractive to prospective customers. The Spitfire
plant in Chihuahua will bring our number of Mexican locations to three, significantly
enhancing our ability to compete in North America. Spitfire’s Vietnam facility will add an
attractive, low-cost manufacturing location that strengthens our presence in Asia.

Looking ahead to fiscal 2013
In summary, while results of fiscal 2012 may be disappointing, they are not unexpected.
Looking forward, we expect to face many of the same challenges we had in fiscal 2012.

The majority of our customers are proceeding conservatively at the time of this writing,
given the uncertainty that we see nationally and internationally.

We believe the volatile economic and market conditions will continue until at least
calendar year end, and we plan to manage the company accordingly. We will continue to
focus on new opportunities and strive to position the company to take advantage of the
economy when it starts to grow again.

Thank you
As always, I want to thank our employees, our Board of Directors and our professional
firms for their talent and dedication as we navigate this volatile economy. I would also
like to express my appreciation for the confidence shown in us by our financial partners,
as evidenced by their assistance in the Spitfire acquisition.

We are thankful to our customers for their continuing partnership with SigmaTron. We
also would like to thank our supply chain partners for their help as we work together on
programs that will allow us to improve productivity and achieve our mutual goals.
Finally, we appreciate our stockholders’ support. I am confident that we are doing the
right things to build this company for long-term success and value. I look forward to
continuing to report on our progress.

Sincerely,

Gary R. Fairhead
President and Chief Executive Officer

10-K 1 d364598d10k.htm FORM 10-K

Table of Contents

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

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

FORM 10-K

For the fiscal year ended April 30, 2012.

¨ 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(b) of the Act:

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

Name of each exchange on which registered
The NASDAQ Capital Market

Securities registered pursuant to Section 12(g) of the Act:
None

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files). x Yes ¨ 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 x.

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 definition of “accelerated filer” “large accelerated filer” and “smaller reporting company” in
Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨

Non-accelerated

Accelerated filer

Smaller reporting company x

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

The aggregate market value of the voting common equity held by non-affiliates of the registrant as of October 31, 2011 (the
last business day of the registrant’s most recently completed second fiscal quarter) was $12,631,394 based on the closing sale
price of $3.74 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 August 14, 2012 was 3,930,402.

DOCUMENTS INCORPORATED BY REFERENCE

Certain sections or portions of the definitive proxy statement of SigmaTron International, Inc., for use in connection with its
2012 annual meeting of stockholders, which the Company intends to file within 120 days of the fiscal year ended April 30,
2012, are incorporated by reference into Part III of this Form 10-K.

Table of Contents

PART I

TABLE OF CONTENTS

BUSINESS

ITEM 1.
ITEM 1A. RISK FACTORS
ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 2.
ITEM 3.
ITEM 4.

PROPERTIES
LEGAL PROCEEDINGS
MINE SAFETY DISCLOSURES

PART II

ITEM 5.

ITEM 6.
ITEM 7.

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

SELECTED FINANCIAL DATA

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
ITEM 8.
ITEM 9.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

ITEM 9A. 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
CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE

ITEM 13.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

SIGNATURES

3
9
15
15
16
16

16
17

17
26
26

27
27
27

28
28

Table of Contents

ITEM 1.

BUSINESS

CAUTIONARY NOTE:

PART I

In addition to historical financial information, this discussion of the business of SigmaTron International, Inc.
(“SigmaTron”), its wholly-owned subsidiaries Standard Components de Mexico S.A., AbleMex, S.A. de C.V., and
SigmaTron International Trading Co., wholly-owned foreign enterprises Wujiang SigmaTron Electronics Co., Ltd. and
SigmaTron Electronic Technology Co., Ltd. (collectively, “SigmaTron China”) and international procurement office
SigmaTron Taiwan branch (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, but not necessarily
limited to, 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 our operating results; the results of long-lived assets 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, Vietnamese or Taiwanese regulations affecting the
Company’s business; the turmoil in the global economy and financial markets; the stability of the U.S., Mexican, Chinese,
Vietnamese and Taiwanese economic, labor and political systems and conditions; currency exchange fluctuations; and the
ability of the Company to manage its growth, including its integration of the Spitfire Controls operation acquired in May
2012; including integration of Spitfire’s financial statements with the Company’s statements. 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 such filings, and the Company undertakes no obligation to
update such statements in light of future events or otherwise unless otherwise required by law.

Overview

SigmaTron 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.

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,
medical/life sciences, semiconductor, telecommunications and automotive.

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The Company operates manufacturing facilities in Elk Grove Village, Illinois; Union City, California; Acuna and
Tijuana, Mexico; and Suzhou-Wujiang, China. In addition, the Company maintains materials sourcing offices in Elk Grove
Village, Illinois; Union City, California; and Taipei, Taiwan and also has warehouses in Del Rio, Texas.

In an effort to facilitate the growth of our China operation, the Company established a new Chinese entity in October

2011 that allows the Company to provide services competitively to the domestic market in China. Nonetheless, during fiscal
year 2012, the Company continued to see a trend of Chinese costs increasing, thereby making Mexico a more competitive
manufacturing location to service North America. Indications suggest that this trend will continue. We feel the Company’s
international footprint provides our customers with flexibility within the Company to manufacture in China or Mexico or
both. We believe this strategy has continued to serve the Company well during these difficult economic times as its customers
continuously evaluate their supply chain strategies.

The Company expects continuing pressures on margins until the economy starts a sustained recovery. The Company is

hopeful to see that start during fiscal year 2013. Until that time, the Company will carefully manage its cost structure. We will
also work on integrating Spitfire into SigmaTron, which the Company believes will ultimately improve our economies of
scale and provide new revenue opportunities.

On May 31, 2012, SigmaTron acquired certain assets and assumed certain liabilities of Spitfire Controls, Inc.
(“Spitfire”). Spitfire is a privately held Illinois corporation headquartered in Carpentersville, Illinois with captive
manufacturing sites in Chihuahua, Mexico and suburban Ho Chi Minh City, Vietnam. Both manufacturing sites were among
the assets acquired by the Company. Spitfire was an original equipment manufacturer (“OEM”) of electronic controls, with a
focus on the major appliance (white goods) industry. Although North America is currently its primary market, Spitfire has
applications that can be used worldwide. Providing manufacturing solutions for Spitfire since 1994, SigmaTron has been a
strategic partner to Spitfire as it developed its OEM electronic controls business.

Spitfire provides cost effective designs as control solutions for its customers, primarily in high volume applications of

domestic cooking ranges, dishwashers, refrigerators, and portable appliances. Spitfire is a member of the Association of
Home Appliance Manufacturers (“AHAM”), as well as other industry related trade associations and is ISO 9001-2008
certified. In addition, Spitfire’s design capabilities will allow the Company to offer design services for the first time in
specific markets.

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 long-term purchase agreements with the majority of its major or single-source suppliers. The
Company believes short-term purchase orders with its suppliers provide the flexibility needed to source inventory based on
the needs of its customers.

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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 international
procurement office (“IPO”) in Taiwan and agents to source materials from the Far East. The Company believes its IPO 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.

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 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 comprehensive production and testing capabilities across all

business units to standardize processes and procedures. Each of its sites is linked together using the same ERP system and
real-time on-line visibility.

The Company is strategically located to support our customers with their New Product Introduction (“NPI”), Prototypes
to Volume Production. With locations in Elk Grove Village, Illinois; Union City, California; Acuna and Tijuana, Mexico; Del
Rio, Texas; Suzhou-Wujiang, China; and Taipei, Taiwan, the Company is able to support our customers’ needs with our broad
range of services including design for manufacturability (“DFM”), design for testability (“DFT”), printed circuit board
assemblies, test, box-build, and system integration. The Company offers original design manufacturing (“ODM”) services of
electronic controls in the major appliance industry. The Company’s ability to transition manufacturing to a lower cost region
without jeopardizing flexibility and service differentiate it from the competition. Manufacturing certifications include ISO
9001:2008, medical ISO 13485:2003, Aerospace AS9100B and International Traffic in Arms Regulations (“ITAR”)
certifications.

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.

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Markets and Customers

The Company’s customers are in the appliance, gaming, industrial electronics, fitness, medical/life sciences,
semiconductor, telecommunications and consumer electronics industries. As of April 30, 2012, the Company had
approximately 100 active customers ranging from Fortune 500 companies to small, privately held enterprises.

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

serves.

Markets
Industrial Electronics

Appliances

Fitness

Semiconductor Equipment

Gaming

Typical
OEM Application
Motor controls, power
supplies, lighting ballasts,
scales, joysticks

Percent of Net Sales
Fiscal
2011
%

Fiscal
2012
%

34.0

40.4

Household appliance controls

37.3

32.9

Treadmills, exercise bikes,
cross trainers

Process control and yield
management equipment for
semiconductor productions

Slot machines, lighting
displays

16.0

14.0

2.9

3.5

4.3

3.2

Telecommunications

Routers, communication

3.2

2.7

Consumer Electronics

Medical/Life Sciences

Total

Battery backup sump pumps,
electric bikes

Clinical diagnostic systems
and instruments

0.8

1.8

1.5

100%

For the fiscal year ended April 30, 2012, Spitfire and Life Fitness, Inc. accounted for 21.0% and 14.0%, respectively, of

the Company’s net sales. For the fiscal year ended April 30, 2011, Spitfire and Life Fitness, Inc. accounted for 24.0% and
16.0%, respectively, of the Company’s net sales. As discussed above, on May 31, 2012, the Company acquired Spitfire. The
Company will begin selling to Spitfires’ customers directly and will discontinue selling to Spitfire. Although the Company
does not have a long term contract with Life Fitness, nevertheless, the Company expects that Life Fitness will continue to
account for a significant percentage of the Company’s net sales, although the percentage of net sales may vary from period to
period.

Sales and Marketing

The Company markets its services through 13 independent manufacturers’ representative organizations that together

currently employ approximately 38 sales personnel in the United States and Canada. Independent manufacturers’
representatives organizations receive variable commissions based on orders received by the Company and are assigned
specific accounts, not territories. Many of the members of the Company’s senior management are actively involved in sales
and marketing efforts, and the Company has 6 direct sales employees.

Sales can be a misleading indicator of the Company’s financial performance. Sales levels can vary considerably among

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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 and gross margin levels. Consignment
orders accounted for less than 5% of the Company’s revenues for each of the fiscal years ended April 30, 2012 and 2011.

In the past, the timing of production and delivery of orders, primarily at the instance of its customers, has caused the

Company to experience significant quarterly fluctuations in its revenue and earnings, and the Company expects such
fluctuations to 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 and had 752 employees
at April 30, 2012. The Company’s wholly-owned subsidiary, AbleMex S.A. de C.V., a Mexican corporation, is located in
Tijuana, Baja California Mexico, a border town south of San Diego, California. AbleMex S.A. de C.V. was incorporated and
commenced operations in 2000. The operation had 151 employees at April 30, 2012. 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.

The Company’s wholly-owned foreign enterprises, Wujiang SigmaTron Electronics Co., Ltd. and SigmaTron Electronic
Technology Co., Ltd., are 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, 2012, this operation had 316 employees.

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 fluctuation of currencies
from time to time, without an equal or greater increase in inflation, could have a material impact on the financial results of the
Company. The impact of currency fluctuation for the fiscal year ended April 30, 2012 resulted in a foreign currency gain of
approximately $134,000. In fiscal year 2012, the Company’s U.S. operations paid approximately $17,000,000 to its foreign
subsidiaries for services provided. During fiscal year 2012, the Company received a distribution of approximately $1,221,222
from a foreign subsidiary based in Mexico. The Company does not anticipate any material U.S. income tax on the distribution
as the earnings were previously subject to U.S. tax. This distribution from the foreign subsidiary based in Mexico does not
change the Company’s intentions to indefinitely reinvest the income from the Company’s foreign subsidiaries. The
Company’s intent is to keep unrepatriated funds indefinitely reinvested outside of the United States and current plans do not
demonstrate a need to fund U.S. operations. It is not practicable to estimate the amount of additional taxes that may be
payable upon distribution.

The consolidated financial statements as of April 30, 2012 include the accounts and transactions of SigmaTron, its
wholly-owned subsidiaries, Standard Components de Mexico, S.A. and AbleMex S.A. de C.V., SigmaTron International
Trading Co., its wholly-owned foreign enterprises Wujiang SigmaTron Electronics Co., Ltd. and SigmaTron Electronic
Technology 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. Intercompany transactions are eliminated in
the consolidated financial statements.

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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 address all of these factors.

Consolidation

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. In the future, the Company may choose to enter into these
types of or other transactions at any time depending on available sources of financing, and such transactions could have a
material impact on the Company’s business, financial condition or operations.

On May 31, 2012, SigmaTron acquired certain assets and assumed certain liabilities of Spitfire. Spitfire is a privately
held Illinois corporation headquartered in Carpentersville, Illinois with captive manufacturing sites in Chihuahua, Mexico and
suburban Ho Chi Minh City, Vietnam. Both manufacturing sites were among the assets acquired by the Company. Spitfire
was an OEM of electronic controls, with a focus on the major appliance (white goods) industry. Although North America is
currently its primary market, Spitfire has applications that can be used worldwide. Providing manufacturing solutions for
Spitfire since 1994, SigmaTron has been a strategic partner to Spitfire as it developed its OEM electronic controls business.

Governmental Regulations

The Company’s operations are subject to certain foreign, federal, state and local regulatory requirements relating to,

among others, 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. Effective mid-2006, the Company’s
customers were required to comply with the European Union’s Restrictions of Hazardous Substances of RoHS, directives for
all of products that ship to the European marketplace. RoHS prohibits the use of lead, mercury and certain other specified
substances in electronics products. The Company has RoHS-dedicated manufacturing capabilities at all of its manufacturing
operations.

To date, the Company’s costs of compliance and environmental remediation have not been material. However, additional

or modified requirements may be imposed in the future. If such additional or modified requirements are imposed, or if
conditions requiring remediation are found to exist, the Company may be required to incur additional expenditures.

Backlog

The Company relies on customers’ forecasted orders and purchase orders (firm orders) from its customers to estimate

backlog. Historically customers rescheduled or cancelled firm orders and consequently there is little or no financial
significance between forecasted orders or firm orders. The Company has eliminated the distinction in its accounting system
between the two types of orders. The Company’s backlog of forecasted and firm orders as of April 30, 2012 and 2011 was
approximately $89,600,000 and $108,300,000, respectively. The Company estimates its firm orders at April 30, 2012 and
2011 to be $57,100,000 and $64,620,000, respectively. The Company anticipates a significant portion of the backlog at
April 30, 2012 will ship in fiscal year 2013. Because customers may cancel or reschedule deliveries, backlog may not be a
meaningful indicator of future revenue. Variations in the magnitude and duration of contracts, forecasts and purchase orders
received by the Company and delivery requirements generally may result in substantial fluctuations in backlog from period to
period.

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Employees

The Company employed approximately 1,700 people as of April 30, 2012, including 103 engaged in engineering or

engineering-related services, 1,269 in manufacturing and 328 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, 2012. The Company’s Mexican subsidiary, Standard
Components de Mexico S.A., has a labor contract with Sindicato De 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 February 1,
2014. The Company’s subsidiary located in Tijuana Mexico, has a labor contract with Sindicato Mexico Moderno De
Trabajadores De La, Baja California, C.R.O.C. The contract does not have an expiration date.

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 Registrant

Name
Gary R. Fairhead

Age
60

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.

Position

Linda K. Frauendorfer 51 Chief Financial Officer, Vice President Finance, Treasurer and Secretary since February 1994.

Gregory A. Fairhead

Executive Vice President and Assistant Secretary. Gregory A. Fairhead has been Executive
Vice President since February 2000 and Assistant Secretary since 1994. Mr. Fairhead was Vice
President – Acuna Operations for the Company from February 1990 to February 2000.
Gregory A. Fairhead is the brother of Gary R. Fairhead.

John P. Sheehan

51 Vice President, Director of Supply Chain and Assistant Secretary since February 1994.

Daniel P. Camp

Vice President, Acuna Operations since 2007. Vice President – China Operations from 2003 to
2007. General Manager / Vice President of Acuna Operations from 1994 to 2003.

Rajesh B. Upadhyaya

Executive Vice President, West Coast Operations since 2005. Mr. Upadhyaya was the Vice
President of the Fremont Operation from 2001 until 2005.

Hom-Ming Chang

Vice President, China Operation since 2007. Vice President – Hayward Materials / Test / IT
from 2005 – 2007. Vice President of Engineering, Fremont Operation from 2001 to 2005.

ITEM 1A. RISK FACTORS

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.

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

There is no assurance that the Company will be able to retain or renew its credit agreements in the future. In the event

the business grows rapidly, the uncertain economic climate continues or the Company considers another 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, or at all in the future.

The Company has a senior secured credit facility with Wells Fargo Bank (“Wells Fargo”), with a credit limit up to $30

million. The term of the credit facility extends through September 30, 2013, and allows the Company to choose among
interest rates at which it may borrow funds. The interest rate is the prime rate plus one half percent (effectively, 3.75% at
April 30, 2012) or LIBOR plus two and three quarter percent (effectively, 3.1% at April 30, 2012), which is paid monthly.
The credit facility is collateralized by substantially all of the domestically located assets of the Company and requires the
Company to be in compliance with several financial covenants. The Company was in compliance with its financial covenants
at April 30, 2012. As of April 30, 2012, there was a $16,000,000 outstanding balance and $14,000,000 of unused availability
under the credit facility.

Adverse changes in the economy or political conditions could negatively impact the Company’s business, results of
operations and financial condition.

The Company’s sales and gross margins depend significantly on market demand for its customers’ products. The

uncertainty in the U.S. and international economic and political environment could result in a decline in demand for our
customers’ products in any industry. Further, any adverse changes in tax rates and laws affecting our customers could result in
decreasing gross margins. Any of these factors could negatively impact the Company’s business, results of operations and
financial condition.

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. Some of these factors include:

• changes in sales mix to customers

• changes in availability and rising component cost

• 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

• volatility in the U.S. and international economic and financial markets

The Company’s customer base is concentrated.

Sales to the Company’s five largest customers accounted for 57% and 62% of net sales for the fiscal years ended
April 30, 2012 and 2011, respectively. The Company’s two largest customers accounted for 21.0% and 14.0% of net sales for
the fiscal year ended April 30, 2012 compared to 24.0% and 16.0% of net sales for the fiscal year ended April 30, 2011.
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

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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.

The Company has a significant amount of trade accounts receivable from some of its customers due to customer

concentration. If any of the Company’s customers have financial difficulties, the Company could encounter delays or defaults
in the payment of amounts owed. This could have a significant adverse impact on the Company’s results of operations and
financial condition.

Most of the Company’s customers do not commit to long-term production schedules, which makes it difficult to schedule
production and achieve maximum efficiency at the Company’s manufacturing facilities and to manage inventory levels.

The volume and timing of sales to the Company’s customers may vary due to:

• customers’ attempts to manage their inventory

• variation in demand for the Company’s customers’ products

• design changes, or

• acquisitions of or consolidation among customers

Many of the Company’s customers do not commit to firm production schedules. The Company’s inability to forecast the

level of customer orders with certainty can make it difficult to schedule production and maximize utilization of
manufacturing capacity and manage inventory levels. The Company could be required to increase or decrease staffing and
more closely manage other expenses in order to meet the anticipated demand of its customers. Orders from the Company’s
customers could be cancelled or delivery schedules could be deferred as a result of changes in our customers’ demand,
adversely affecting the Company’s results of operations, and resulting in higher inventory levels.

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.

Our customers have competitive challenges, including rapid technological changes, pricing pressure and decreasing
demand from their customers, which could adversely affect their business and the Company’s.

Factors affecting the industries that utilize our customers’ products could negatively impact our customers and the

Company. These factors include:

• increase competition among our customers and their competitors

• the inability of our customers to develop and market their products

• recessionary periods in our customers’ markets

• the potential that our customers’ products become obsolete

• our customers’ inability to react to rapidly changing technology

Any such factor or a combination of factors could negatively impact our customers’ need for or ability to pay for our

products, which could, in turn, affect the Company’s results of operations.

Customer relationships with start-up companies present more risk.

A small portion of the Company’s current customer base is comprised of start-up companies. Customer relationships

with start-up companies may present heightened risk due to the lack of product history. Slow market acceptance of their
products could result in demand fluctuations causing inventory levels to rise. Further, the current economic environment
could make it difficult for such emerging companies to obtain additional funding. This may result in additional credit risk
including, but not limited to the collection of trade account receivables and payment for their inventory. If the Company does
not have adequate allowances recorded, the results of operations may be negatively affected.

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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 greater experience, as well as greater manufacturing, purchasing, marketing and financial resources than the Company.

Competition from existing or potential new competitors may 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 also has operations in China. Therefore, the Company’s business and results of operations are dependent

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

The Company obtains many of its materials and components through its IPO 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 not achieve expected profitability from its acquisitions.

Acquisitions involve significant financial and operating risks that could have a material adverse effect on the Company’s

results of operations, including the acquisition of the Spitfire Controls in May 2012.

Acquisitions involve significant risks, which could have a material adverse effect on the Company including:

•

Financial risks, such as (1) the payment of a purchase price that exceeds the future value that we may realize
from the acquired operations and businesses; (2) an increase in the Company’s expenses and working capital
requirements, which could reduce our return on invested capital; (3) potential known and unknown liabilities
of the acquired businesses; (4) costs associated with integrating acquired operations and business; (5) the
incurrence of additional debt; (6) the financial impact of incorrectly valuing goodwill and other intangible
assets involved in any acquisitions, potential future impairment write-downs of goodwill and indefinite life
intangibles and the amortization of other intangible assets; (7) possible adverse tax and accounting effects;
and (8) the risk that the Company will spend substantial amounts

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purchasing these manufacturing facilities and assume significant contractual and other obligations with no
guaranteed levels of revenue or that the Company may have to close or sell acquired facilities at its costs,
which may include substantial employee severance costs and asset write-offs, which may result, in our
incurring significant losses.

The Company must implement its management information systems, operating systems and internal controls, and

assimilate and manage the personnel of the acquired operations. The difficulties of this integration may be further
complicated by geographic distances. The integration of acquired businesses may not be successful and could result in
disruption to other parts of our business.

Further there can be no assurance the integration of Spitfire’s financial statements with the Company’s statements can be

completed as required for SEC mandatory filings. The Company may incur significant costs to obtain the financial
information for such filings.

Disclosure and internal controls may not detect all errors or fraud.

The Company’s management, including the Chief Executive Officer and Chief Financial Officer, do not believe that the

Company’s 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.

Inadequate internal control over financial reporting could result in a reduction in the value of our common stock.

If the Company identifies and reports a material weakness in 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.

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. The impact of currency fluctuation for the year ended April 30, 2012
resulted in a currency gain of approximately $134,000. These fluctuations are expected to continue and could become
material and have a negative impact on the Company’s results of operations. The Company did not, and is not expected to,
utilize derivatives or hedge foreign currencies to reduce the risk of such fluctuations.

The availability of raw components or an increase in their price may affect the Company’s operations and profits.

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. Further, the
Company could operate at a cost disadvantage compared to competitors who have greater direct buying power from
suppliers. The Company does not enter into long-term purchase agreements with major or single-source suppliers. The
Company believes that short-term purchase orders with its suppliers provides flexibility, given that the Company’s orders are
based on the changing needs of its customers.

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The Company depends on management and skilled personnel.

The Company depends significantly on its President and other executive officers. The Company’s employees generally
are not bound by employment agreements and the Company cannot assure that it will retain its executive officers or skilled
personnel. 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 the Company 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 51% 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. 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. 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.

An adverse change in the interest rates for our borrowings could adversely affect our results of operations.

The Company pays interest on outstanding borrowings under its senior secured credit facility and certain other long-term

debt obligations at interest rates that fluctuate. An adverse change in the Company’s interest rates could have a material
adverse effect on its results of operations.

Changes in securities laws and regulations may increase costs.

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. More recently the
Dodd-Frank Wall Street Reform and Consumer Protection Act will require changes to our corporate governance, compliance
practices and securities disclosures. The Company expects increased costs related to these new regulations, including, but not
limited to, legal, financial and accounting costs. Further the Company anticipates it will be more difficult and more expensive
to obtain director and officer liability insurance. These developments may result in the Company having difficulty in
attracting and retaining qualified members of the board or qualified officers. Further, the costs associated with the compliance

with and implementation of procedures under these laws and related rules could have a material impact on the Company’s
results of operations.

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ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

At April 30, 2012, the Company, operating in one business segment as an independent EMS provider, had
manufacturing facilities located in Elk Grove Village, Illinois, Union City, 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, Union City,
California, and Taipei, Taiwan offices.

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

Location
Suzhou-Wujiang, China 147,500 High volume assembly, and testing of PTH and SMT, box-build, BGA

Services Offered

Square
Feet

Elk Grove Village, IL

124,300

Corporate headquarters, assembly and testing of PTH, SMT and BGA,
box-build, prototyping, warehousing

Union City, CA

117,000

Assembly and testing of PTH, SMT and BGA, box-build, prototyping,
warehousing

Acuna, Mexico

115,000

High volume assembly, and testing of PTH and SMT, box-build

Tijuana, Mexico

67,700 High volume assembly, and testing of PTH and SMT, box-build

Del Rio, TX

44,000 Warehousing, portion of which is bonded

Taipei, Taiwan

4,685 Materials procurement, alternative sourcing assistance and quality control

Owned/
Leased
*

Owned

Leased

Owned
**

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 and the Company has an option to purchase it.

The Union City, California, Tijuana, Mexico and Del Rio, Texas properties are occupied pursuant to leases of the
premises. The lease agreements for the Del Rio, Texas properties expire December 2015. The lease agreement for the
California property expires March 2021. The Tijuana, Mexico lease expires June 2017. 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 Acuna, Mexico, which is leased. The Company has an option to buy the leased portion of the facility in Acuna,
Mexico. The property in Elk Grove Village, Illinois is financed under a separate mortgage loan agreement, the final payment
on which is January 2015. The Company leases the IPO office in Taipei, Taiwan to coordinate Far East purchasing 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.

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ITEM 3. LEGAL PROCEEDINGS

As of April 30, 2012, 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 are resolved on unfavorable terms. However, although the ultimate outcome of any legal
matter cannot be predicted with certainty, based on present information, including management’s assessment of the merits of
any 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. MINE SAFETY DISCLOSURES

Not applicable.

PART II

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

ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

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, 2012, and 2011.

Common Stock as Reported
by NASDAQ

Period
Fiscal 2012:
Fourth Quarter
Third Quarter
Second Quarter
First Quarter

Fiscal 2011:
Fourth Quarter
Third Quarter
Second Quarter
First Quarter

High

Low

$4.40
4.12
4.93
5.40

$8.94
7.44
6.90
7.23

$3.66
3.15
3.15
4.52

$5.03
5.34
5.40
4.89

As of July 27, 2012, there were approximately 55 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 1,320 beneficial owners of the Company’s common stock.

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Dividend Information

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.

Equity Compensation Plan Information

For information concerning securities authorized for issuance under our equity compensation plans, see Part III, Item 12

of this Annual Report, under the caption “Security Ownership of Certain Beneficial Owners and Management and Related
Stockholders Matters” as well as the Company’s audited financial statements and notes thereto, including Note L, filed
herewith and all such information is incorporated herein by reference.

ITEM 6. SELECTED FINANCIAL DATA

As a smaller reporting company, as defined in Rule 10(f)(1) of Regulation S-K under the Securities Exchange Act of

1934, as amended (the “Exchange Act”), we are not required to provide the information required by this item.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

In addition to historical financial information, this discussion of the business of SigmaTron International,

Inc.(“SigmaTron”), its wholly-owned subsidiaries Standard Components de Mexico S.A., AbleMex, S.A. de C.V., and
SigmaTron International Trading Co., wholly-owned foreign enterprises Wujiang SigmaTron Electronics Co., Ltd. and
SigmaTron Electronic Technology Co., Ltd. (collectively, “SigmaTron China”) and international procurement office
SigmaTron Taiwan branch (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, but not necessarily
limited to, 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 our operating results; the results of long-lived assets 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, Vietnamese or Taiwanese regulations affecting the
Company’s business; the turmoil in the global economy and financial markets; the stability of the U.S., Mexican, Chinese,
Vietnamese and Taiwanese economic, labor and political systems and conditions; currency exchange fluctuations; and the
ability of the Company to manage its growth, including its integration of the Spitfire Controls operation acquired in May
2012; including integration of Spitfire’s financial statements with the Company’s statements. 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 such filings, and the Company undertakes no obligation to
update such statements in light of future events or otherwise unless otherwise required by law.

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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.

On May 31, 2012, SigmaTron acquired certain assets and assumed certain liabilities of Spitfire. Spitfire is a privately
held Illinois corporation headquartered in Carpentersville, Illinois with captive manufacturing sites in Chihuahua, Mexico and
suburban Ho Chi Minh City, Vietnam. Both manufacturing sites were among the assets acquired by the Company. Spitfire
was an original equipment manufacturer of electronic controls, with a focus on the major appliance (white goods) industry.
Although North America is currently its primary market, Spitfire has applications that can be used worldwide. Providing
manufacturing solutions for Spitfire since 1994, SigmaTron has been a strategic partner to Spitfire as it developed its OEM
electronic controls business.

Spitfire provides cost effective designs as control solutions for its customers, primarily in high volume applications of

The Company relies on numerous third-party suppliers for components used in the Company’s production process.

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 versus 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 and gross
margin levels. Consignment orders accounted for less than 5% of the Company’s revenues for the year ended April 30, 2012.

In an effort to facilitate growth of our China operation, the Company established a new Chinese entity in October 2011
that allows the Company to provide services competitively to the domestic market in China. Nonetheless, during fiscal year
2012, the Company continued to see a trend of Chinese costs increasing, thereby making Mexico a more competitive
manufacturing location to service North America. Indications suggest that this trend will continue. We feel the Company’s
international footprint provides our customers with flexibility within the Company to manufacture in China or Mexico or
both. We believe this strategy has continued to serve the Company well during these difficult economic times as its customers
continuously evaluate their supply chain strategies.

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In the past, the timing of production and delivery of orders, primarily at the instance of its customers, has caused the
Company to experience significant quarterly fluctuations in its revenues and earnings. The uncertainty associated with the
worldwide economy in general, and the United States economy specifically, makes forecasting difficult. Short-term customer
demands remain volatile. The Company continued to experience pricing pressures from both its customer and suppliers and
its margins continued to be reduced in fiscal 2012. The Company expects continuing pressure on margins until the economy
starts a sustained recovery. The Company is hopeful to see that start during fiscal year 2013. Until that time, the Company
will manage its cost structure. We will also work on integrating Spitfire into SigmaTron, which the Company believes will
ultimately improve our economies of scale and provide new revenue opportunities.

Due to the acquisition of Spitfire, effective June 1, 2012, the Company will discontinue selling to Spitfire. The Company

will instead begin selling directly to Spitfires’ customers.

On May 8, 2012, the Company entered into a real estate lease agreement to relocate its Tijuana, MX operation to a new

facility within Tijuana, MX. The current lease expired June 2012 and the Company began its relocation in June 2012. The
relocation was completed in July 2012. The Company will incur expenses due to the relocation of its Tijuana, MX operation,
which are estimated to be $295,000 to $325,000 (unaudited). These expenses will be recorded in the first fiscal quarter of
2013. All incentives realized under the lease will be recognized over the term of the lease, which is five years.

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 (“U.S. GAAP”) 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 long-lived assets. 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 finished good product is shipped to the customer. In general, and except for consignment inventory, it is
the Company’s policy to recognize revenue and related costs when the finished goods have been shipped from its facilities,
which is also the same point that title passes under the terms of the purchase order. Finished goods inventory for certain
customers 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 finished goods inventory, the
inventory is shipped to the customer if the inventory was stored off-site, or transferred from the segregated part of the
customer’s facility for consumption or use by the customer. The Company recognizes revenue upon such shipment or
transfer. The Company does not earn a fee for such arrangements. The Company from time to time may ship finished goods
from its facilities, which is also the same point that title passes under the terms of the purchase order, and invoice the
customer at the end of the calendar month. This is done only in special circumstances to accommodate a specific customer.
Further, from time to time customers request the Company hold finished goods after they have been invoiced to consolidate
finished goods for shipping purposes. 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 customers’ specifications. Historically, the amount
of returns for workmanship issues has been de minimis under the Company’s standard or extended warranties.

Inventories—Inventories are valued at the lower of cost or market. Cost is determined by the first-in, first-out method. In

the event of an inventory write-down, the Company records expense to state the inventory at lower of cost or market. 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

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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, including amortizable intangible 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 exceeds its fair market value.

Income Tax—The Company accounts for income taxes in accordance with the Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification (“ASC”) 740, “Income Taxes”. Our income tax expense, deferred tax assets
and liabilities and reserves for unrecognized tax benefits reflect management’s best assessment of estimated future taxes to be
paid. The Company is subject to income taxes in both the U.S. and several foreign jurisdictions. Significant judgments and
estimates by management are required in determining the consolidated income tax expense assessment.

Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue

and expense. In evaluating our ability to recover our deferred tax assets within the jurisdiction from which they arise, the
Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities,
projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income,
the Company begins with historical results adjusted for the results of discontinued operations and changes in accounting
policies, and incorporates assumptions including the amount of future state, federal and foreign pretax operating income, the
reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions
require significant judgment and estimates by management about the forecasts of future taxable income and are consistent
with the plans and estimates the Company uses to manage the underlying businesses. In evaluating the objective evidence
that historical results provide, the Company considers three years of cumulative operating income and/or loss.

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and

regulations in a multitude of jurisdictions across our global operations. Changes in tax laws and rates could also affect
recorded deferred tax assets and liabilities in the future. Management is not presently aware of any such changes that would
have a material effect on the Company’s results of operations, cash flows or financial position.

FASB ASC Topic 740, Income Taxes provides that a tax benefit from an uncertain tax position may be recognized when
it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or
litigation processes, based on the technical merits. ASC Topic 740 also provides guidance on measurement, derecognition,
classification, interest and penalties, accounting in interim periods, disclosure and transition.

The Company recognizes tax liabilities in accordance with ASC Topic 740 and the Company adjusts these liabilities
when its judgment changes as a result of the evaluation of new information not previously available. Due to the complexity of
some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current
estimate of the tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period
in which they are determined.

New Accounting Standards:

In October 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-13 for updated revenue recognition

guidance under the provisions of ASC 605-25, “Multiple-Element Arrangements”. The previous guidance has been retained
for criteria to determine when delivered items in a multiple-deliverable arrangements should be considered separate units of
accounting, however the updated guidance removes the

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previous separation criterion that objective and reliable evidence of fair value of any undelivered items must exist for the
delivered items to be considered a separate unit or separate units of accounting. This guidance was effective for fiscal years
beginning on or after July 15, 2010. The adoption of this guidance did not have a material effect on the Company’s
consolidated results of operations and financial condition.

In March 2010, the FASB issued ASU 2010-11, “Scope Exception Related to Embedded Credit Derivatives” to address

questions that have been raised in practice about the intended breadth of the embedded credit derivative scope exception in
paragraphs 815-15-15-8 through 815-15-15-9 of ASC 815, “Derivatives and Hedging”. The amended guidance clarifies that
the scope exception applies to contracts that contain an embedded credit derivative that is only in the form of subordination of
one financial instrument to another. This guidance was effective on August 1, 2010 for the Company. The adoption of this
guidance did not have a material impact on the Company’s consolidated results of operations and financial condition.

In December 2010, the FASB issued authoritative guidance regarding ASC No. 805, “Business Combinations,” on the

disclosure of supplementary pro forma information for business combinations. ASC No. 805 requires a public entity to
disclose pro forma information for business combinations that occurred in the current reporting period. The disclosures
include pro forma revenue and earnings of the combined entity for the current reporting period as though the acquisition date
for all business combinations that occurred during the year had been as of the beginning of the annual reporting period. The
adoption of this guidance did not have a material impact on the Company’s consolidated results of operations and financial
condition.

In May 2011, the FASB issued ASU 2011-04, “Amendments to Achieve Common Fair Value Measurement and
Disclosure Requirements in U.S. GAAP and IFRS,” which results in common fair value measurement and disclosure
requirements in U.S. GAAP and IFRS. Consequently, the amendments change the wording used to describe many of the
requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. ASU
2011-04 is effective for interim and annual periods beginning after December 15, 2011, which was first applicable to the
Company’s fiscal quarter beginning February 1, 2012. The adoption of this guidance did not have a material impact on the
Company’s consolidated results of operations and financial condition.

In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220), Presentation of Comprehensive

Income,” which requires disclosure of comprehensive income, the components of net income, and the components of other
comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive
statements. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the
statement of changes in shareholders’ equity. ASU 2011-05 became effective for fiscal years, and interim periods within those
years, beginning after December 15, 2011. In December, the FASB has issued ASU 2011-12, Comprehensive Income (Topic
220), that deferred the requirement to separately present within net income reclassification adjustments of items out of
accumulated other comprehensive income. The Company adopted this guidance beginning February 1, 2012. The adoption of
this guidance did not have a material impact on the Company’s consolidated results of operations and financial condition.

In September 2011, the FASB issued ASU 2011-08, “Intangibles, Goodwill and Other (Topic 350), Testing Goodwill for

impairment (revised topic).” The revised standard is intended to reduce the cost and complexity of the annual goodwill
impairment test by providing entities an option to perform a “qualitative” assessment to determine whether further
impairment testing is necessary. The revised standard is effective for annual and interim goodwill impairment tests performed
for fiscal years beginning after December 15, 2011. The Company adopted this guidance beginning February 1, 2012. The
adoption of this guidance did not have a material impact on the Company’s consolidated results of operations and financial
condition.

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Results of Operations:

FISCAL YEAR ENDED APRIL 30, 2012 COMPARED
TO FISCAL YEAR ENDED APRIL 30, 2011

The following table sets forth the percentage relationships of expense items to net sales for the years indicated:

Net sales
Operating expenses:

Cost of products sold
Selling and administrative expenses

Total operating expenses

Operating income

Fiscal Years

2012
100.0%

2011
100.0%

90.3
8.0

89.6
7.6

98.3

97.2

1.7%

2.8%

Net sales increased 3.2% to $156,635,984 in fiscal year 2012 from $151,728,084 in the prior year. The Company’s sales
increased in fiscal year 2012 in medical/life sciences, industrial and consumer electronics and semiconductor marketplaces as
compared to the prior year. The increase in sales dollars for these marketplaces was partially offset by a decrease in sales
dollars in the fitness, gaming, appliance and telecommunications marketplaces. The increase in net sales for the fiscal year
2012 is a result of our existing customers’ increased demand for product and the addition of some new customer programs
ramping up compared to the previous fiscal year.

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 cancellations, the life cycle of customer products and product transition. Sales to the Company’s five largest customers
accounted for 57% and 62% of net sales for fiscal years 2012 and 2011, respectively.

Gross profit decreased to $15,254,541, or 9.7% of net sales, in fiscal year 2012 compared to $15,787,206, or 10.4% of

net sales, in the prior fiscal year. The Company continued to experience pricing pressures from both its customers and
suppliers, which negatively affected the Company’s margins in fiscal year 2012. The Company expects continuing pressure
on margins until the economy starts a sustained recovery. The Company is hopeful to see that start during fiscal year 2013.
Until that time, the Company will carefully manage its cost structure and also work on integrating Spitfire into SigmaTron,
which the Company believes will ultimately improve its economies of scale and provide new revenue opportunities. The
decrease in gross profit in fiscal year 2012 was partially offset by a foreign currency gain of $133,979, compared to a foreign
currency loss of $157,971 in the prior fiscal year.

Selling and administrative expenses increased in fiscal year 2012 to $12,611,673, or 8.0% of net sales, compared to

$11,460,908, or 7.6% of net sales, in fiscal year 2011. The aggregate dollar increase in specific expense categories in fiscal
year 2012 totaled $1,422,629 of which $530,565 resulted from professional fees incurred related to the Spitfire acquisition
and the rest related to office and accounting salaries, commissions, bank fees, legal and accounting fees increasing. The
increase in fiscal year 2012 was partially offset by a decrease of $271,864 in multiple categories, including bonus expense,
travel, amortization expense and other subcategories of selling and administrative expenses. The Company expects to incur
additional professional fees in the first quarter of fiscal year 2013 related to the Spitfire acquisition.

Interest expense decreased to $1,025,325 in fiscal year 2012 compared to $1,154,352 in fiscal year 2011. The interest

expense decreased primarily due to the Company’s decreased borrowings under its senior secured credit facility. Interest
expense for fiscal year 2013 may increase if interest rates or borrowings, or both, increase during fiscal year 2013.

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In fiscal year 2012, income tax expense was $522,171 compared to $1,203,514 in income tax expense in fiscal year
2011. The effective tax rate for the years ended April 30, 2012 and 2011 was 31.5% and 37.8%, respectively. The decrease in
the effective tax rate for the year ended April 30, 2012 is due to favorable tax rates and higher profits from the Company’s
foreign entities and other tax credits.

The Company reported net income of $1,134,324 in fiscal year 2012 compared to a net income of $1,978,034 for fiscal
year 2011. Basic and diluted earnings per share were each $0.29 for fiscal year 2012 compared to basic and diluted earnings
per share of $0.52 and $0.51, respectively, for the year ended April 30, 2011.

On May 31, 2012, the Company completed the acquisition of Spitfire, an OEM of electronic controls, with a focus on

the major appliance industry. The acquisition will add two manufacturing operations in locations that will augment the
Company’s footprint and add Spitfire’s design capabilities which will allow the Company to offer design service for the first
time in specific markets. The Company incurred professional fees in conjunction with the Spitfire acquisition. Professional
fees of $530,565 were recorded as selling and administrative expenses during fiscal year 2012. The related after tax amount
was $363,437. Net income adjusted on a non-GAAP basis to exclude these expenses for fiscal year 2012 was $1,497,761.
The non-GAAP basic and diluted earnings per share, as adjusted, for fiscal year 2012 were each $0.38. The Company
believes the professional fees incurred in fiscal year 2012 and for the first quarter of fiscal year 2013 were onetime events and
the non-GAAP disclosure provides meaningful information regarding the Company’s results of operations.

In fiscal year 2011, the Company relocated its Hayward, CA operation to Union City, CA. The new plant layout
increased productivity and assisted in attracting interest from many new customers including some in the aviation, defense
and medical markets. The Company will continue to target these markets in fiscal 2013. The Company incurred relocation
expenses as a result of the move. Relocation expenses of $892,390 were recorded as a component of cost of products sold,
which consisted primarily of moving expenses related to equipment, the write-off of leasehold improvements and the
restoration of the Hayward facility. The related after tax amount was $562,206. Net income adjusted on a non-GAAP basis to
exclude relocation expenses for fiscal year 2011 was $2,540,240. The non-GAAP basic and diluted earnings per share, as
adjusted, for fiscal year 2011 were $0.66 and $0.65, respectively. The Company believes the relocation expense is a onetime
event and the non-GAAP disclosure provides meaningful information regarding the Company’s results of operations.

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non-GAAP Reconciliation

Income Reconciliation:
Net income before onetime expenses
Expenses – net of tax effect

Net income

EPS Reconciliation:
Income per common share – assuming dilution before

onetime expenses

Net income per common share – assuming dilution of

onetime expenses – net of tax

Net income per common share – assuming dilution

Year Ended
April 30, 2012

Year Ended
April 30, 2011

$1,497,761
363,437

$2,540,240
562,206

$1,134,324

$1,978,034

0.38

(0.09)

0.29

0.65

(0.14)

0.51

Weighted average number of common equivalent shares

outstanding – assuming dilution

3,906,279

3,890,949

Liquidity and Capital Resources:

Operating Activities.

Cash flow provided by operating activities was $9,808,310 for the fiscal year ended April 30, 2012, compared to cash
flow used in operating activities of $185,067 for the prior fiscal year. Cash flow provided by operating activities in fiscal year
2012 was primarily the result of net income, the non-cash effects of depreciation and amortization, a decrease in inventory
and an increase in accounts payable. The decrease in inventory of $7,147,110 was the result of the improvement of inventory
management practices. The increase in accounts payable of $1,402,892 was due to timing of payments in the ordinary course
of business. Net cash provided by operations in fiscal year 2012 was partially offset by an increase in accounts receivable.
The increase in accounts receivable of $4,381,326 was due to increased sales volume and timing of cash receipts from a
significant customer.

Cash flow used in operating activities was $185,067 for the year ended April 30, 2011. Cash flow used in operating

activities in fiscal year 2011 was primarily the result of an increase in inventories of $7,615,784 due to raw material
purchases to support increased demand for specific customers, increasing inventory levels for other customers delaying
shipments and the start up of new customer programs. Income taxes paid and a decrease in accounts payable also contributed
to fiscal year 2011 cash flow usage. Net cash used in operations in fiscal year 2011 was partially offset by net income, the
non-cash effect of depreciation and amortization, and a decrease in accounts receivable. The decrease in accounts receivable
of $1,374,307 and accounts payable of $241,294 was due to timing of receipts and payments in the ordinary course of
business.

Investing Activities.

In fiscal year 2012, the Company purchased approximately $2,300,000 in machinery and equipment to be used in the
ordinary course of business. The Company anticipates that it will make additional machinery and equipment purchases in
fiscal year 2013 of approximately $4,500,000.

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In fiscal year 2011, the Company purchased approximately $4,900,000 in machinery and equipment to be used in the

ordinary course of business. Additional purchases in fiscal year 2011 of approximately $541,500 and $835,000 was financed
under a capital lease and a sale leaseback agreement, respectively.

Financing Activities.

Cash used in financing activities was $6,970,338 for the fiscal year ended April 30, 2012, compared to cash provided by

financing activities of $5,190,678 in fiscal year 2011. Cash used in financing activities in fiscal year 2012 was primarily the
result of payments under the credit facility and for capital lease obligations. Cash provided by financing activities in fiscal
year 2011 was primarily the result of increased borrowings of $6,874,942 under the credit facility. The additional working
capital was required to support the increase in inventory.

Financing Summary.

The Company has a senior secured credit facility with Wells Fargo Bank (“Wells Fargo”), with a credit limit up to $30

The Company entered into a mortgage agreement on January 8, 2010, in the amount of $2,500,000, with Wells Fargo to

refinance the property that serves as the Company’s corporate headquarters and its Illinois manufacturing facility. The
Company repaid the prior Bank of America mortgage, which equaled $2,565,413, as of January 8, 2010, using proceeds from
the Wells Fargo mortgage and senior secured credit facility. The Wells Fargo note bears interest at a fixed rate of 6.42% per
year and is amortized over a sixty month period. A final payment of approximately $2,000,000 is due on or before January 8,
2015. The outstanding balance as of April 30, 2012 was $2,275,009.

On January 19, 2010, the Company entered into a leasing transaction with Wells Fargo Equipment Finance, Inc. to
refinance $1,287,407 of equipment. The term of the lease financing agreement extended to January 18, 2012 with monthly
payments of $55,872 and a fixed interest rate of 4.29%. This lease financing arrangement was paid in full as of January 31,
2012. The net book value of the equipment was $1,434,423 at April 30, 2012.

On August 20, 2010 and October 26, 2010, the Company entered into two capital leasing transactions (a lease finance

agreement and a sale leaseback agreement) with Wells Fargo Equipment Finance, Inc., to purchase equipment totaling
$1,150,582. The term of the lease finance agreement, with an initial principal amount of $315,252, extends to September
2016 with monthly payments of $4,973 and a fixed interest rate of 4.28%. The term of the sale leaseback agreement, with an
initial principal amount of $835,330, extends to August 2016 with monthly payments of $13,207 and a fixed interest rate of
4.36%. At April 30, 2012, $239,092 and $612,144 was outstanding under the lease finance and sale leaseback agreements,
respectively. The net book value at April 30, 2012 of the equipment under each of the lease finance agreement and sale
leaseback agreement was $273,656 and $696,402, respectively.

On November 29, 2010, the Company entered into a capital lease with Wells Fargo Equipment Finance, Inc., to purchase
equipment totaling $226,216. The term of the lease agreement extends to October 2016 with monthly payments of $3,627 and
a fixed interest rate of 4.99%. At April 30, 2012, the balance outstanding under the capital lease agreement was $175,104.
The net book value of the equipment under this lease at April 30, 2012 was $197,230.

The total amount outstanding at April 30, 2012 for the three remaining equipment lease transactions discussed above
was $1,026,339. The Company had two other capital leases not discussed above, one of which was paid in full in August
2011 and the other was paid in full in November 2011. The total net book value of the equipment under these other leases at

April 30, 2012 was $563,853.

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In September 2010, the Company entered into a real estate lease agreement in Union City, CA, to rent 116,993 square
feet of manufacturing and office space. Under the terms of the lease agreement, the Company receives incentives over the life
of the lease, which extends through March 2021. The amount of the deferred rent expense recorded for fiscal year 2012 was
$13,057. In addition, the landlord provided the Company tenant incentives of $418,000, which is being amortized over the
life of the lease.

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 international procurement office. The Company provides
funding in U.S. dollars, which are exchanged for Pesos, Renminbi, and New Taiwan Dollars as needed. The fluctuation of
currencies from time to time, without an equal or greater increase in inflation, could have a material impact on the financial
results of the Company. The impact of currency fluctuation for the fiscal year ended April 30, 2012, resulted in a foreign
currency gain of $133,979. In fiscal year 2012, the Company’s U.S. operations paid approximately $17,000,000 to its foreign
subsidiaries for services provided. During fiscal year 2012, the Company received a distribution of approximately $1,221,222
from a foreign subsidiary based in Mexico. The Company does not anticipate any material U.S. income tax on the distribution
as the earnings were previously subject to U.S. tax. This unrepatriated distribution from the foreign subsidiary based in
Mexico does not change the Company’s intentions to indefinitely reinvest the income from the Company’s foreign
subsidiaries. The Company’s intent is to keep funds indefinitely reinvested outside of the United States and current plans do
not demonstrate a need to fund U.S. operations. It is not practicable to estimate the amount of additional taxes that may be
payable upon distribution.

The Company anticipates its credit facilities, cash flow from operations and leasing resources will be adequate to meet

its working capital requirements and capital expenditures for the next twelve months. There is no assurance that the Company
will be able to retain or renew its credit agreements in the future, or that any retention or renewal will be on the same terms as
currently exist. In the event the business grows rapidly, the current economic climate deteriorates, customers delay payments,
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, or at all, in
the future.

The impact of inflation on the Company’s net sales, revenues and incomes from continuing operations for the past two

fiscal years has been minimal.

Off-balance Sheet Transactions:

The Company has no off-balance sheet transactions.

Contractual Obligations and Commercial Commitments:

As a smaller reporting company, as defined in Rule 10(f)(1) of Regulation S-K under the Exchange Act, we are not

required to provide the information required by this item.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

As a smaller reporting company, as defined in Rule 10(f)(1) of Regulation S-K under the Exchange Act, we are not

required to provide the information required by this item.

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. CONTROLS AND PROCEDURES

Disclosure Controls:

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 under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), Rules 13a-15(e) an 15(d)-15(e)) as of April 30, 2012. Our disclosure controls
and procedures are designed to provide reasonable assurance of achieving their objectives and our President and Chief
Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were
effective at the reasonable assurance level as of April 30, 2012.

Internal Controls:

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal controls over financial reporting are designed to provide
reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external
purposes in accordance with U.S. GAAP. 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 at the reasonable assurance level as of April 30, 2012.

This annual 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 the rules of the Securities and Exchange Commission 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, 2012, that

has materially affected or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

Not Applicable.

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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, to be filed with the Securities and Exchange Commission not later than 120 days after the close of the Company’s
fiscal year ended April 30, 2012.

ITEM 11. EXECUTIVE COMPENSATION

The information required under this item is incorporated herein by reference to the Company’s definitive proxy

statement, to be filed with the Securities and Exchange Commission not later than 120 days after the close of the Company’s
fiscal year ended April 30, 2012.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND

RELATED STOCKHOLDER MATTERS

The information required under this item is incorporated herein by reference to the Company’s definitive proxy

statement, to be filed with the Securities and Exchange Commission not later than 120 days after the close of the Company’s
fiscal year ended April 30, 2012.

ITEM 13. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

The information required under this item is incorporated herein by reference to the Company’s definitive proxy

statement, to be filed with the Securities and Exchange Commission not later than 120 days after the close of the Company’s
fiscal year ended April 30, 2012.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required under this item is incorporated herein by reference to the Company’s definitive proxy

statement, to be filed with the Securities and Exchange Commission not later than 120 days after the close of the Company’s
fiscal year ended April 30, 2012.

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) 1

PART IV

The financial statements are listed in the Index to Financial Statements filed as part of this Annual Report on Form 10-K
beginning on Page F-1.

Table of Contents

(a) 2
(a) 3 and (b)

Index to Exhibits

3.1

3.2

10.1

10.2

10.3

10.4

10.5

10.6

10.7

10.8

10.9

10.10

10.11

10.12

10.13

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, incorporated herein by reference
to Exhibit 3.2 to the Company’s Form 10-K for the fiscal year ended April 30, 2000.

Form of 1993 Stock Option Plan, incorporated herein by reference to Exhibit 10.4 to the Company’s Registration
Statement on Form S-1, File No. 33-72100.*

Form of Incentive Stock Option Agreement for the Company’s 1993 Stock Option Plan , incorporated herein by
reference to Exhibit 10.5 to the Company’s Registration Statement on Form S-1, File No. 33-72100.*

Form of Non-Statutory Stock Option Agreement for the Company’s 1993 stock Option Plan, incorporated herein by
reference to Exhibit 10.6 to the Company’s Registration Statement on Form S-1, File No. 33-72100.*

2000 Outside Directors’ Stock Option Plan, incorporated herein by reference to Appendix 1 to the Company’s 2000
Proxy Statement filed on August 21, 2000.*

2004 Directors’ Stock Option Plan, incorporated herein by reference to Appendix C to the Company’s 2004 Proxy
Statement filed on August 16, 2004.*

2004 Employee Stock Option Plan, incorporated herein by reference to Appendix B to the Company’s 2004 Proxy
Statement filed on August 16, 2004. *

Change in Control Plan dated May 30, 2002, incorporated herein by reference to Exhibit 10.15 to the Company’s
Form 10-K for the fiscal year ended April 30, 2005.*

Credit Agreement between SigmaTron International, Inc. and Wells Fargo International Banking and Trade
Solutions (IBTS), dated January 8, 2010, incorporated herein by reference to Exhibit 10.1 to the Company’s Form
8-K filed on January 14, 2010.

Revolving Line of Credit Note issued by SigmaTron International, Inc. to Wells Fargo International Banking and
Trade Solutions (IBTS), dated January 8, 2010 incorporated herein by reference to Exhibit 10.2 to the Company’s
Form 8-K filed on January 14, 2010.

Promissory Note issued by SigmaTron International, Inc. to Wells Fargo International Banking and Trade Solutions
(IBTS), dated January 8, 2010, incorporated herein by reference to Exhibit 10.3 to the Company’s Form 8-K filed
on January 14, 2010.

Third Amendment to the Credit Agreement between SigmaTron International, Inc. and Wells Fargo Bank, National
Association, dated August 6, 2010, incorporated herein by reference to Exhibit 10.11 to the Company’s Form 10-Q
filed on December 14, 2010.

SigmaTron International, Inc. 2012 Employee Bonus Plan dated November 10, 2011, incorporated herein by
reference to Exhibit 10.1 to the Company’s Form 8-K filed on November 17, 2011.*

SigmaTron International, Inc. 2012 Officer Bonus Plan dated November 10, 2011, incorporated herein by reference
to Exhibit 10.2 to the Company’s Form 8-K filed on November 17, 2011.*

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10.14

10.15

10.16

SigmaTron International, Inc. 2011 Employee Stock Option Plan dated September 16, 2011, incorporated
herein by reference to Exhibit 10.14 to the Company’s Registration Statement on Form S-8 filed on December
14, 2011.

Purchase Agreement between SigmaTron International, Inc., and its nominees and Spitfire Controls, Inc., dated
as of May 31, 2012, incorporated herein by reference to Exhibit 2.1 to the Company’s Form 8-K filed on June
4, 2012.

Fourth Amendment to Amended and Restated Credit Agreement; Second Amendment to Amended and
Restated Continuing Security Agreement: Rights to Payment and Inventory; And First Amendment to
Amended and Restated Security Agreement: Equipment and Fixtures between SigmaTron International, Inc.,
and Wells Fargo Bank, National Association, dated May 31, 2012, incorporated herein by reference to Exhibit
10.14 to the Company’s Form 8-K filed on June 4, 2012.

101.INS

XBRL Instance Document†

101.SCH

101.CAL

101.DEF

101.LAB

101.PRE

XBRL Taxonomy Extension Scheme Document†

XBRL Taxonomy Extension Calculation Linkbase Document†

XBRL Taxonomy Extension Definition Linkbase Document†

XBRL Taxonomy Extension Label Linkbase Document†

XBRL Taxonomy Extension Presentation Linkbase Document†

21.0

23.1

24.0

31.1

31.2

32.1

32.2

Subsidiaries of the Registrant, incorporated herein by reference to the Company’s Form 10-K for the fiscal year
ended April 30, 2007, filed on July 24, 2007.

Consent of BDO USA, LLP.**

Power of Attorney of Directors and Executive Officers (included on the signature page of this Form 10-K for
the fiscal year ended April 30, 2012).**

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.**

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.**

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).**

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
†

Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration
statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not
filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to
liability under those sections.

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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SIGNATURES

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.

SIGMATRON INTERNATIONAL, INC.

By: /s/ Gary R. Fairhead

Gary R. Fairhead, President and Chief Executive Officer,
Principal Executive Officer and Director

Dated: August 14, 2012

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. Frauendorfer, 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/ Gary R. Fairhead
Gary R. Fairhead

Title

Chairman of the Board of Directors, President and Chief Executive
Officer, (Principal Executive Officer) and Director

Date

August 14, 2012

/s/ Linda K. Frauendorfer
Linda K. Frauendorfer

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

August 14, 2012

/s/ Thomas W. Rieck
Thomas W. Rieck

/s/ Dilip S. Vyas
Dilip S. Vyas

/s/ Paul J. Plante
Paul J. Plante

/s/ Barry R. Horek
Barry R. Horek

/s/ Bruce J. Mantia
Bruce J. Mantia

Director

August 14, 2012

Table of Contents

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 INCOME
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Financial statement schedules 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 Village, Illinois

We have audited the accompanying consolidated balance sheets of SigmaTron International, Inc. as of April 30, 2012 and
2011 and the related consolidated statements of income, changes in stockholders’ equity and cash flows for the years then
ended. 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 Accounting 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 financial statement presentation. 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, 2012 and 2011 and the results of its operations and its cash flows for the
years then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ BDO USA, LLP
Chicago, Illinois
August 14, 2012

F-2

Table of Contents

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

CURRENT ASSETS

ASSETS

2012

2011

Cash and cash equivalents
Accounts receivable, less allowance for doubtful accounts of $164,103 and $150,000

$ 4,668,931 $

4,138,102

at April 30, 2012 and 2011, respectively

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

Total current assets

PROPERTY, MACHINERY AND EQUIPMENT, NET

OTHER LONG-TERM ASSETS

Customer relationships, net of amortization of $2,683,075 and $2,570,325 at April 30,

2012 and 2011, respectively

Miscellaneous

Total other long-term assets

TOTAL ASSETS

The accompanying notes are an integral part of these statements.

F-3

27,916,288
37,838,378
1,170,537
465,653
1,840,751
238,592

23,549,065
45,021,840
922,345
427,512
1,536,233
273,943

74,139,130

75,869,040

24,373,494

26,189,150

86,925
547,334

199,675
645,864

634,259

845,539

$99,146,883 $102,903,729

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
Current portion of long-term debt
Current portion of capital lease obligations

Total current liabilities

LONG-TERM DEBT, LESS CURRENT PORTION

CAPITAL LEASE OBLIGATIONS, LESS CURRENT PORTION

DEFERRED RENT

DEFERRED INCOME TAXES

Total liabilities

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY

2012

2011

$20,233,521 $ 18,830,629
1,065,203
3,266,766
260,990
832,262

1,012,549
3,338,127
126,828
219,457

24,930,482
18,175,013

24,255,850
24,301,841

806,882

1,044,181

735,616

722,559

3,477,819

2,835,721

48,125,812

53,160,152

Preferred stock, $.01 par value; 500,000 shares authorized, none issued or outstanding
Common stock, $.01 par value; 12,000,000 shares authorized, 3,909,572 and

3,864,274 shares issued and outstanding at April 30, 2012 and 2011, respectively

Capital in excess of par value
Retained earnings

Total stockholders’ equity

—

39,096
19,891,996
31,089,979

38,643
19,749,278
29,955,656

51,021,071

49,743,577

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$99,146,883 $102,903,729

The accompanying notes are an integral part of these statements.

F-4

Table of Contents

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

Net sales

Cost of products sold

Gross profit
Selling and administrative expenses

Operating income

Other income
Interest expense

Income before income tax expense
Income tax expense

NET INCOME

Earnings per common share

Basic

Diluted

Weighted-average shares of common stock outstanding

Basic

Diluted

The accompanying notes are an integral part of these statements.

F-5

2012

2011

$156,635,984 $151,728,084

141,381,443

135,940,878

15,254,541
12,611,673

15,787,206
11,460,908

2,642,868
(38,952)
1,025,325

1,656,495
522,171

4,326,298
(9,602)
1,154,352

3,181,548
1,203,514

1,134,324 $

1,978,034

0.29 $

0.52

0.51

3,878,207

3,828,638

3,906,279

3,890,949

Table of Contents

SigmaTron International, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Years ended April 30, 2012 and 2011

Balance at April 30, 2010
Stock-based compensation
Exercise of stock options
Net income

Balance at April 30, 2011
Stock-based compensation
Exercise of stock options
Tax benefit from exercise of options
Net income

Preferred Common

excess of par

stock

value

Retained
earnings

Capital in

Total
stockholders’
equity

$ — $38,226 $19,647,360 $27,977,621 $47,663,207
9,657
— —
9,657
—
—
92,679
92,262
417
—
— 1,978,034 1,978,034
— —

— 38,643 19,749,279 29,955,655 49,743,577
2,414
— —
2,414
—
99,656
99,203
—
453
—
41,100
41,100
— —
—
— 1,134,324 1,134,324
— —

Balance at April 30, 2012

$ — $39,096 $19,891,996 $31,089,979 $51,021,071

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 income
Adjustments to reconcile net income to net cash provided by (used in) operating

$ 1,134,324

$ 1,978,034

2012

2011

activities

Depreciation and amortization
Stock-based compensation
Provision for doubtful accounts
Provision for inventory obsolescence
Deferred income tax expense
Amortization of customer relationships
Loss from disposal or sale of machinery and equipment

Changes in assets and liabilities
Accounts receivable
Inventories
Prepaid expenses and other assets
Refundable income taxes
Trade accounts payable
Deferred rent
Accrued expenses and payroll
Income taxes payable

4,069,944
2,414
14,103
36,352
337,580
112,750
52,855

(4,381,326)
7,147,110
(114,311)
(38,141)
1,402,892
13,057
18,707
—

4,440,426
9,657
6,600
—
533,534
163,996
8,637

1,374,307
(7,615,784)
80,333
(427,512)
(241,294)
722,559
70,057
(1,288,617)

Net cash provided by (used in) operating activities

9,808,310

(185,067)

Cash flows from investing activities

Purchases of machinery and equipment

Net cash used in investing activities

Cash flows from financing activities

Proceeds from exercise of common stock options
Payments under capital lease obligations
Proceeds under sale lease back agreement
Payments under other notes payable
Payments under building notes payable
Net (payments) proceeds under lines of credit
Change in bank overdraft
Tax benefit from exercise of options

Net cash (used in) provided by financing activities

INCREASE IN CASH
Cash and cash equivalents at beginning of year

(2,307,143)

(4,920,081)

(2,307,143)

(4,920,081)

99,656
(850,104)
—
(160,994)
(99,996)
(6,000,000)
—
41,100

92,679
(943,711)
835,330
(160,994)
(99,996)
6,874,942
(1,407,572)
—

(6,970,338)

5,190,678

530,829
4,138,102

85,530
4,052,572

Cash and cash equivalents at end of year

$ 4,668,931

$ 4,138,102

Supplementary disclosures of cash flow information

Cash paid for interest
Cash paid for income taxes, net of (refunds)

968,478
(93,287)

$ 1,011,517
1,990,756

Purchase of machinery and equipment financed under capital leases

—

541,468

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, 2012 and 2011

NOTE A—DESCRIPTION OF THE BUSINESS

SigmaTron International, Inc., its subsidiaries, foreign enterprises and international procurement office (collectively, the
“Company”) operate 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. As of April 30, 2012, the Company provided these manufacturing services through
an international network of facilities located in North America, China and Taiwan. Approximately 10% of the total
consolidated assets of the Company are located in foreign jurisdictions outside the United States as of April 30, 2012 and
2011.

NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation Policy

The consolidated financial statements include the accounts and transactions of SigmaTron International, Inc. (“SigmaTron”),
its wholly-owned subsidiaries, Standard Components de Mexico, S.A., AbleMex S.A. de C.V., and SigmaTron International
Trading Co., wholly-owned foreign enterprises Wujiang SigmaTron Electronics Co. Ltd. and SigmaTron Electronic
Technology Co., Ltd. (collectively, “SigmaTron China”), and its international procurement office, SigmaTron Taiwan. The
functional currency of the Mexican and Chinese subsidiaries and procurement branch is the U.S. dollar. Intercompany
transactions are eliminated in the consolidated financial statements. The impact of currency fluctuation for the fiscal year
ended April 30, 2012 resulted in a gain of approximately $134,000, compared to a loss of approximately $158,000 for the
prior fiscal year.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the
United States of America (“GAAP”) 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

F-8

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
April 30, 2012 and 2011

NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued

Use of Estimates—Continued

amortization periods, the allowance for doubtful accounts, reserves for inventory and valuation of long-lived assets. Actual
results could materially differ from these estimates.

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, medical/life sciences, semiconductor, telecommunications and appliance 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. In the event of an
inventory write-down, the Company records expense to state the inventory at lower of cost or market. The Company
establishes inventory reserves for valuation, shrinkage, and excess and obsolete inventory. 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

F-9

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
April 30, 2012 and 2011

NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued

Inventories—Continued

conditions. Actual product demand or market conditions could be different than that projected by management.

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 and software
Tools and dies
Leasehold improvements

20 years
5-12 years
3-5 years
12 months
term of lease

Expenses for repairs and maintenance are charged to selling and administrative expenses as incurred.

Deferred Financing Costs

Deferred financing costs consist of costs incurred to obtain the Company’s long-term debt and are amortized using the
straight-line method over the term of the related debt. Deferred financing fees of $8,756 and $90,302, net of accumulated
amortization of $238,354 and $156,808 as of April 30, 2012 and 2011, respectively, are classified in other long-term assets on
the Company’s balance sheet.

Income Taxes

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 are expected to 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. See Note H—Income Taxes, Page F-22.

F-10

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
April 30, 2012 and 2011

NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued

Earnings per Share

Basic earnings per share are computed by dividing net income (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 stock equivalents such as stock options
had been exercised. At April 30, 2012 and 2011, there were 400,190 and 395,190 anti-dilutive common stock equivalents,
respectively, which have been excluded from the calculation of diluted earnings per share.

Revenue Recognition

Revenues from sales of the Company’s electronic manufacturing services business are recognized when the finished good
product is shipped to the customer. In general, and except for consignment inventory, it is the Company’s policy to recognize
revenue and related costs when the finished goods have been shipped from its facilities, which is also the same point that title
passes under the terms of the purchase order. Finished goods inventory for certain customers 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 finished goods inventory, the inventory is shipped to the customer if the
inventory was stored off-site, or transferred from the segregated part of the customer’s facility for consumption or use by the
customer. The Company recognizes revenue upon such shipment or transfer. The Company does not earn a fee for such
arrangements. The Company from time to time may ship finished goods from its facilities, which is also the same point that
title passes under the terms of the purchase order, and invoice the customer at the end of the calendar month. This is done
only in special circumstances to accommodate a specific customer. Further, from time to time customers request the
Company hold finished goods after they have been invoiced to consolidate finished goods for shipping purposes. 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 customers’ specifications. Historically, the amount of returns for workmanship issues has been de
minimis under the Company’s standard or extended warranties.

F-11

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
April 30, 2012 and 2011

NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued

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 2012 or
2011.

Fair Value Measurements

Fair value measurements are determined based upon the exit price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants exclusive of any transaction costs. The Company utilizes a fair
value hierarchy based upon the observability of inputs used in valuation techniques as follows:

Level 1: Observable inputs such as quoted prices in active markets;

Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

Level 3:

Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own
assumptions.

Fair Value of Financial Instruments

The Company’s financial instruments include cash and cash equivalents, receivables, accounts payable and accrued expenses
which approximate fair value at April 30, 2012, due to their short-term nature. The carrying amounts of the Company’s debt
obligations approximate fair value based on future payments discounted at current interest rates for similar obligations or
interest rates which fluctuate with the market.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets, including amortizable intangible 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 exceeds its fair market value.

F-12

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
April 30, 2012 and 2011

NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued

Intangibles Assets

The following are the changes in the carrying amount of customer relationships, net of accumulated amortization:

Balance as of April 30, 2010
Amortization expense 2011

Balance as of April 30, 2011
Amortization expense 2012

Balance as of April 30, 2012

Amortization period

The estimated intangible amortization expenses for future years are as follows:

Years Ending April 30,
2013
2014

$ 363,671
(163,996)

199,675
(112,750)

$ 86,925

8 years

$75,850
11,075

$86,925

The Company’s customer relationships are amortized utilizing accelerated amortization methods.

F-13

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
April 30, 2012 and 2011

NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued

Stock Incentive Plans

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. The Company measures the cost of employee services received in exchange for
an equity award based on the grant date fair value and records that cost over the respective vesting period of the award.

Reclassifications

Certain reclassifications have been made to the previously reported 2011 financial statements to conform to the 2012
presentation.

New Accounting Standards

In October 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
No. 2009-13 for updated revenue recognition guidance under the provisions of Accounting Standards Codification (“ASC”)
605-25, “Multiple-Element Arrangements”. The previous guidance has been retained for criteria to determine when delivered
items in a multiple-deliverable arrangements should be considered separate units of accounting, however the updated
guidance removes the previous separation criterion that objective and reliable evidence of fair value of any undelivered items
must exist for the delivered items to be considered a separate unit or separate units of accounting. This guidance was effective
for fiscal years beginning on or after July 15, 2010. The adoption of this guidance did not have a material effect on the
Company’s consolidated results of operations and financial condition.

In March 2010, the FASB issued ASU 2010-11, “Scope Exception Related to Embedded Credit Derivatives” to address
questions that have been raised in practice about the intended breadth of the embedded credit derivative scope exception in
paragraphs 815-15-15-8 through 815-15-15-9 of ASC 815, “Derivatives and Hedging”. The amended guidance clarifies that
the scope exception applies to contracts that contain an embedded credit derivative that is only in the form of subordination of
one financial instrument to another. This guidance was effective on August 1, 2010 for the Company. The adoption of this
guidance did not have a material impact on the Company’s consolidated results of operations and financial condition.

F-14

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
April 30, 2012 and 2011

NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued

New Accounting Standards—Continued

In December 2010, the FASB issued authoritative guidance regarding ASC No. 805, “Business Combinations,” on the
disclosure of supplementary pro forma information for business combinations. ASC No. 805 requires a public entity to
disclose pro forma information for business combinations that occurred in the current reporting period. The disclosures
include pro forma revenue and earnings of the combined entity for the current reporting period as though the acquisition date
for all business combinations that occurred during the year had been as of the beginning of the annual reporting period. The
adoption of this guidance did not have a material impact on the Company’s consolidated results of operations and financial
condition. See Note N—Subsequent Events, Page F-31.

In May 2011, the FASB issued ASU 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure
Requirements in U.S. GAAP and International Financial Reporting Standards “IFRS,” which results in common fair value
measurement and disclosure requirements in U.S. GAAP and IFRS. Consequently, the amendments change the wording used
to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value
measurements. ASU 2011-04 is effective for interim and annual periods beginning after December 15, 2011, which was first
applicable to the Company’s fiscal quarter beginning February 1, 2012. The adoption of this guidance did not have a material
impact on the Company’s consolidated results of operations and financial condition.

In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220), Presentation of Comprehensive
Income”, which requires disclosure of comprehensive income, the components of net income, and the components of other
comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive
statements. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the
statement of changes in shareholders’ equity. ASU 2011-05 became effective for fiscal years, and interim periods within those
years, beginning after December 15, 2011. In December, the FASB has issued ASU 2011-12, Comprehensive Income (Topic
220), that deferred the requirement to separately present within net income reclassification adjustments of items out of
accumulated other comprehensive income. The Company adopted this guidance beginning February 1, 2012. The adoption of
this guidance did not have a material impact on the Company’s consolidated results of operations and financial condition.

F-15

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
April 30, 2012 and 2011

NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued

New Accounting Standards—Continued

In September 2011, the FASB issued ASU 2011-08, “Intangibles, Goodwill and Other (Topic 350), Testing Goodwill for
impairment (revised topic).” The revised standard is intended to reduce the cost and complexity of the annual goodwill
impairment test by providing entities an option to perform a “qualitative” assessment to determine whether further
impairment testing is necessary. The revised standard is effective for annual and interim goodwill impairment tests performed
for fiscal years beginning after December 15, 2011. The Company adopted this guidance beginning February 1, 2012. The
adoption of this guidance did not have a material impact on the Company’s consolidated results of operations and financial
condition.

NOTE C—ALLOWANCE FOR DOUBTFUL ACCOUNTS

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

Beginning balance
Bad debt expense
Write-offs

2012
$150,000
14,103
—

2011
$150,000
6,600
(6,600)

$164,103

$150,000

F-16

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
April 30, 2012 and 2011

NOTE D—INVENTORIES

Inventories consist of the following at April 30:

Finished products
Work in process
Raw materials

Less obsolescence reserve

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

Beginning balance
Provision for obsolescence
Write-offs

F-17

2012

2011

$10,271,704 $10,862,889
2,280,209
33,720,490

2,101,341
27,343,433

39,716,478
1,878,100

46,863,588
1,841,748

$37,838,378 $45,021,840

2012
$1,841,748
36,352
—

2011
$1,897,320
—
(55,572)

$1,878,100

$1,841,748

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
April 30, 2012 and 2011

NOTE E—PROPERTY, MACHINERY AND EQUIPMENT, NET

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

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

2012

2011

$12,311,942 $12,335,112
44,364,140
5,046,379
295,095
2,967,879
5,125,379

49,582,841
5,591,497
295,095
3,085,887
1,376,799

72,244,061

70,133,984

Less accumulated depreciation and amortization, including
amortization of assets under capital leases of $209,510
and $1,533,010 at April 30, 2012 and 2011, respectively

47,870,567

43,944,834

Property, machinery and equipment, net

$24,373,494 $26,189,150

Depreciation and amortization expense was $4,069,944 and $4,440,426 for the years ended April 30, 2012 and 2011,
respectively.

F-18

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
April 30, 2012 and 2011

NOTE F—LONG-TERM DEBT

Note Payable—Bank

The Company has a senior secured credit facility with Wells Fargo Bank (“Wells Fargo”), with a credit limit up to $30
million. The term of the credit facility extends through September 30, 2013, and allows the Company to choose among
interest rates at which it may borrow funds. The interest rate is the prime rate plus one half percent (effectively, 3.75% at
April 30, 2012) or LIBOR plus two and three quarter percent (effectively, 3.1% at April 30, 2012), which is paid monthly.
The credit facility is collateralized by substantially all of the domestically located assets of the Company and requires the
Company to be in compliance with several financial covenants. The Company was in compliance with its financial covenants
at April 30, 2012. As of April 30, 2012, there was a $16,000,000 outstanding balance and $14,000,000 of unused availability
under the credit facility.

Capital Lease Obligations

On January 19, 2010, the Company entered into a leasing transaction with Wells Fargo Equipment Finance, Inc. to refinance
$1,287,407 of equipment. The term of the lease financing agreement extended to January 18, 2012 with monthly payments of
$55,872 and a fixed interest rate of 4.29%. This lease financing arrangement was paid in full and the Company assumed
ownership of the assets as of January 31, 2012. The net book value of the related equipment was $1,434,423 at April 30,
2012.

On August 20, 2010 and October 26, 2010, the Company entered into two capital leasing transactions (a lease finance
agreement and a sale leaseback agreement) with Wells Fargo Equipment Finance, Inc., to purchase equipment totaling
$1,150,582. The term of the lease finance agreement of $315,252 extends to September 2016 with monthly payments of
$4,973 and a fixed interest rate of 4.28%. The term of the sale leaseback agreement of $835,330 extends to August 2016 with
monthly payments of $13,207 and a fixed interest rate of 4.36%. At April 30, 2012, $239,092 and $612,144 was outstanding
under the lease finance and sale leaseback agreements, respectively. The net book value at April 30, 2012 of the equipment
under each of the lease finance agreement and sale leaseback agreement was $273,656 and $696,402, respectively.

F-19

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
April 30, 2012 and 2011

NOTE F—LONG-TERM DEBT—Continued

Capital Lease Obligations—Continued

The total amount outstanding at April 30, 2012 for the three remaining equipment lease transactions discussed above was
$1,026,339. The Company had two other capital leases not discussed above, one of which was paid in full in August 2011
and the other was paid in full in November 2011. The Company assumed ownership of the equipment on the date the leases
were paid in full. The total net book value of the equipment under these other leases at April 30, 2012 was $563,853.

Note Payable—Buildings

The Company entered into a mortgage agreement on January 8, 2010, in the amount of $2,500,000 with Wells Fargo to
refinance the property that serves as the Company’s corporate headquarters and its Illinois manufacturing facility. The
Company repaid the prior Bank of America mortgage, which equaled $2,565,413, as of January 8, 2010, using proceeds from
the Wells Fargo mortgage and senior secured credit facility. The Wells Fargo note bears interest at a fixed rate of 6.42% per
year and is amortized over a sixty month period. A final payment of approximately $2,000,000 is due on or before January 8,
2015. The outstanding balance as of April 30, 2012 was $2,275,009.

Other Debt

In October 2009, the Company entered into a financial licensing agreement for software. The term of the note payable is for
36 months, with monthly payments of approximately $13,415, and no interest is payable under the agreement. The balances
outstanding under the note payable at April 30, 2012 and 2011, were $26,832 and $187,826, respectively.

The aggregate amount of debt maturing (excluding capital lease obligations) in each of the next three fiscal years and
thereafter is as follows:

F-20

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
April 30, 2012 and 2011

NOTE F—LONG-TERM DEBT—Continued

Other Debt—Continued

Fiscal Year
2013
2014
2015
Thereafter

See Note K for future maturities under capital lease obligations.

NOTE G—ACCRUED EXPENSES AND PAYROLL

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

Wages
Bonuses
Foreign payroll accruals
Interest payable
Commissions
Professional fees
Other

F-21

$
126,828
16,099,996
2,075,017
—

$18,301,841

2012
$1,709,671
534,271
1,094,185
54,771
56,267
267,369
634,142

2011
$1,576,169
712,237
978,360
77,369
37,282
158,016
792,536

$4,350,676

$4,331,969

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
April 30, 2012 and 2011

NOTE H—INCOME TAXES

U.S. and foreign income before income tax expense for the years ended April 30 are as follows:

Domestic
Foreign

Income before Income Taxes

Provision for Income Taxes

The income tax provision for the years ended April 30 consists of the following:

Current:
Federal
State
Foreign

Total Current

Deferred:
Federal
State
Foreign

Total Deferred

Provision for income taxes

F-22

2012
$ 106,965
1,549,530

2011
$1,854,577
1,326,971

$1,656,495

$3,181,548

2012

2011

$ (78,639)
(9,698)
272,928

$ 192,990
77,707
399,283

184,591

669,980

65,388
38,102
234,090

465,138
68,396
—

377,580

533,534

$522,171

$1,203,514

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
April 30, 2012 and 2011

NOTE H—INCOME TAXES—Continued

Provision for Income Taxes—Continued

The difference between the income tax provision and the amounts computed by applying the statutory Federal income tax
rates to income before tax expense for the years ended April 30 are as follows:

U.S. Federal provision:
At Statutory Rate
State Taxes
Foreign Tax Differential
Employment Credits
Other

Total

2012

2011

$563,246
18,748
(19,823)
(71,944)
31,944

$1,081,726
91,829
(51,886)
—
81,845

$522,171

$1,203,514

F-23

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
April 30, 2012 and 2011

NOTE H—INCOME TAXES—Continued

Deferred Tax Assets and Liabilities

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

Deferred Tax Assets:
Federal & State NOL Carryforward
Reserves and Accruals
Stock Based Compensation
Inventory
Other Intangibles
Deferred Rent
Allowance for Doubtful Accounts
Other

Total Gross Deferred Tax Assets
Less: Val. Allowance

Total Deferred Tax Assets

Deferred Tax Liabilities:
Other Intangibles
Property, Machinery & Equipment
Deferred Flat Tax Liability (Net)

Total Gross Deferred Tax Liabilities

Net Deferred Tax Asset/(Liability)

F-24

2012

2011

39,783
605,366
51,201
1,148,245
(87,310)
408,965
69,186
30,296

—
384,336
—
1,093,398
(36,318)
313,161
58,499
—

2,265,732
(12,342)

1,813,076
—

$ 2,253,390

$ 1,813,076

$
(36,648)
(3,561,010)
(292,800)

$
(77,872)
(3,034,692)
—

$(3,890,458)

$(3,112,564)

$(1,637,068)

$(1,299,488)

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
April 30, 2012 and 2011

NOTE H—INCOME TAXES—Continued

Deferred Tax Assets and Liabilities—Continued

The above amounts are classified in the Consolidated Balance Sheets at April 30, are as follows:

Current assets:

Deferred income taxes

Non-current liabilities:

Deferred income taxes

Net Deferred Tax Asset/(Liability)

2012

2011

$ 1,840,751

$ 1,536,233

(3,477,819)

(2,835,721)

$(1,637,068)

$(1,299,488)

The Company has not provided U.S. deferred taxes for a significant portion of undistributed earnings of the Company’s
foreign subsidiaries. The Company’s intent is to keep unrepatriated funds indefinitely reinvested outside of the United States
and current plans do not demonstrate a need to fund U.S. operations. It is not practicable to estimate the amount of additional
taxes that may be payable upon distribution.

Unrecognized Tax Benefits

The Company has no unrecognized tax benefits at April 30, 3012 and 2011. A reconciliation of the beginning and ending
amount of unrecognized tax benefits, excluding interest and penalties, is as follows:

Beginning Balance
Tax positions related to current year
Tax positions related to prior years
Reductions due to settlements
Reductions due to lapses in statutes of limitations

Ending Balance

2012
$—
—
—
—
—

2011
$ 50,038
—
—
—
(50,038)

$—

$ —

For the fiscal year ended April 30, 2012 and 2011, the amount of consolidated worldwide liability for uncertain tax positions
that impacted the Company’s effective tax rate was $0 and $50,038, respectively.

F-25

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
April 30, 2012 and 2011

NOTE H—INCOME TAXES—Continued

Other

Interest related to tax positions taken in the Company’s tax returns are recorded in income tax expense in the Consolidated
Statements of Income. The Company did not record penalties in the Consolidated Statements of Income.

During the fiscal year ended April 30, 2011, the Company completed an examination with the Internal Revenue Service
related to fiscal years April 30, 2008 and April 30, 2009. The completion of the examination had no impact on the amount of
the unrecognized tax benefits. The settlement of the examination resulted in an increase to tax expense of $6,143 related to
interest on a deficiency notice.

The Company is subject to taxation in the U.S. and various state and foreign jurisdictions. With few exceptions, the Company
is no longer subject to state, local or foreign examinations by tax authorities for fiscal years before 2007. The Company is no
longer subject to U.S. Federal examinations by tax authorities for fiscal years before 2010.

NOTE I—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 up to $300 annually. The Company contributed $87,160 and $75,392 to the plans
during the fiscal years ended April 30, 2012 and 2011, respectively. The Company paid total expenses of $6,500 and $10,000
for the fiscal years ended April 30, 2012 and 2011, respectively, relating to costs associated with the administration of the
plans.

NOTE J—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 fiscal year ended April 30, 2012, two customers accounted for 21.0% and 14.0%
of net sales of the Company, respectively, and 50.7% and 7.4% of accounts receivable as of April 30, 2012, respectively. For
the year ended April 30, 2011, two customers accounted for 24.0% and 16.0% of net sales of the Company, and 42.3% and
6.9% of accounts receivable at April 30, 2011.

F-26

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
April 30, 2012 and 2011

NOTE K—LEASES

The Company leases certain facilities under various operating leases expiring at various date through April 2017. 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, 2012:

Years ending April 30,
2013
2014
2015
2016
2017
Thereafter

Less amounts representing interest

Less current portion

Capital
leases
$ 261,683
261,683
261,682
261,682
86,248
—

Operating

leases
$1,013,933
1,191,918
1,245,770
1,273,929
1,274,702
3,681,699

1,132,978

$9,681,951

106,639

1,026,339

219,457

$ 806,882

Rent expense incurred under operating leases was approximately $1,412,455 and $1,569,996 for the years ended April 30,
2012 and 2011, respectively.

In September 2010, the Company entered into a real estate lease agreement in Union City, CA, to rent manufacturing and
office space. Under the terms of the lease agreement, the Company receives incentives over the life of the lease, which
extends through March 2021. The amount of the deferred rent expense recorded for the fiscal year ended April 30, 2012 was
$13,057. In addition, the landlord provided the Company tenant incentives of $418,000, which is being amortized over the
life of the lease.

F-27

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
April 30, 2012 and 2011

NOTE L—STOCK OPTIONS

The Company has stock option plans (“Option Plans”) under which certain employees and non-employee directors may
acquire up to 1,753,500 shares of common stock. Options available for grant under the employee plans total 1,357,500, with
the non-employee director plans allowing for a total of 396,000 options available for grant. All Option Plans have been
approved by the Company’s shareholders. At April 30, 2012, the Company has 205,864 shares available for future issuance to
employees under the employee plan and none under the non-employee director plan. The Option Plans are interpreted and
administered by the Compensation Committee of the Board of Directors. In fiscal year 2012, there were 150,000 options
approved and available for grant by 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. Each
Option under the Option Plans is exercisable for one share of stock. 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.

There were no options granted during fiscal year 2012 or 2011.

Option-valuation models require the input of highly subjective assumptions. Because the Company’s 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 stock options. When the Company does grant stock options, it uses
the U.S. Treasury yield in effect at the time of the option grant to calculate the risk-free interest rate and the simplified
method to calculate the weighted-average expected life, due to limited history. The expected dividend, volatility and
forfeitures rates of options are based on historical experience and expected future results.

F-28

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
April 30, 2012 and 2011

NOTE L—STOCK OPTIONS—Continued

The table below summarizes option activity through April 30, 2012:

Outstanding at April 30, 2010
Options exercised during 2011
Options exercised/expired during 2011

Outstanding at April 30, 2011
Options exercised during 2012
Options expired during 2012

Outstanding at April 30, 2012

Number of
securities to be
issued upon
exercise of
outstanding options

502,037
(41,218)
(1,230)

459,589
(45,298)
(4,099)

Weighted-
average
exercise

price
$ 7.90
2.20
4.00

8.42
2.20
3.69

Number of
options
exercisable
at end
of year
498,910

458,337

410,192

$ 9.16

410,192

Intrinsic value is calculated as the positive 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, 2012 and 2011, the aggregate intrinsic value
of options exercised was $71,118 and $128,009, respectively. As of April 30, 2012 and 2011, the aggregate intrinsic value of
in the money options outstanding was $0 and $159,529, respectively.

F-29

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
April 30, 2012 and 2011

NOTE L—STOCK OPTIONS—Continued

Information with respect to stock options outstanding and exercisable at April 30, 2012, follows:

Range of exercise prices
$3.99 – 5.40
9.17 – 11.56

Options outstanding and exercisable

Number

Weighted-average

outstanding at
April 30, 2012
15,000
395,192

410,192

remaining

contractual life
3.52 years
3.82 years

Weighted-
average
exercise price
4.46
$
9.34

9.16

The Company recognized approximately $2,400 and $9,700 in stock compensation expense in fiscal years 2012 and 2011,
respectively.

As of April 30, 2012, the balance of unrecognized compensation cost related to the Company’s stock option plans was $0.

NOTE M—HAYWARD, CA OPERATION MOVE

In fiscal year 2011, the Company relocated its Hayward, CA operation to Union City, CA. The Company incurred relocation
expenses as a result of the move. The relocation expenses of $892,390, which are included in cost of products sold for fiscal
year 2011, consists primarily of moving expenses related to equipment, the write-off of leasehold improvements and the
restoration of the Hayward facility. The related after tax amount was $562,206. All accrued amounts have been paid off as of
fiscal year 2011.

F-30

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
April 30, 2012 and 2011

NOTE N—SUBSEQUENT EVENTS

Acquisition of Spitfire Controls, Inc.

The Purchase Agreement

The Company entered into a Purchase Agreement as of May 31, 2012 with Spitfire Controls, Inc., an Illinois corporation
(“Seller”), regarding the acquisition of certain assets of the Seller by the Company. Prior to the date of the Purchase
Agreement, the Seller and/or its affiliates are and have been customers and strategic partners of the Company, with such
relationships dating back to 1994.

Seller, on its own and through its subsidiaries Digital Appliance Controls de Mexico, S.A. de C.V., a Mexico corporation
(“DAC”), and Spitfire Controls (Cayman) Co. Ltd., a Cayman Islands exempted company (“Cayman”), their subsidiaries and
Seller’s affiliated entities, is engaged in the business of the design, manufacture, sale and distribution of electrical or
electronic controls for appliances (the “Business”). Pursuant to the terms of the Purchase Agreement, the Company agreed to
acquire and has acquired on May 31, 2012 certain “Acquired Assets” from or at the direction of the Seller (the
“Transaction”). The Acquired Assets, which are listed in greater detail in the Purchase Agreement, consist of (i) all of the
equity securities of DAC and Cayman and (ii) all of the assets used by or useful in the conduct of the Business. In addition to
acquiring the Acquired Assets, the Company has also obtained an agreement not to compete against the Business as it will be
operated by the Company after the closing of the Transaction from each of the Seller and the sole owner of Seller, Gregory
Jay Ramsey (“Ramsey”).

In exchange for the Acquired Assets, the Company has agreed to pay a purchase price consisting of: (i) the satisfaction and
release of the account payable of approximately $16,000,000 owed by Seller to the Company; (ii) future payments, which are
based upon the annual post-closing performance of the Business during each of the Company’s fiscal years 2013 through
2019; and (iii) the issuance to Ramsey, at the Seller’s direction, of 50,000 shares of restricted common stock of the Company,
12,500 of which vested upon the closing of the Transaction and 12,500 of which will vest on each of the first, second and
third anniversaries of the closing of the Transaction. While no event will accelerate the vesting of such shares, the unvested
shares will not vest and will be forfeited automatically in certain specified circumstances, including, but not limited to, in the
event that the Seller’s consultant relationship with the Company is terminated for cause or if Seller or Ramsey breaches its or
his respective non-competition, non-solicitation and/or non-disparagement covenants to the Company.

F-31

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
April 30, 2012 and 2011

NOTE N—SUBSEQUENT EVENTS—Continued

Acquisition of Spitfire Controls, Inc.—Continued

The Purchase Agreement—Continued

In addition to the foregoing, the Company has agreed to assume (i) the Seller’s obligations under certain specified contracts
and Governmental Authorizations (as defined in the Purchase Agreement), (ii) specified trade accounts payable and accrued
expenses of the Seller as agreed upon by the parties and (iii) specified inter-company payables involving the Seller, DAC,
Cayman and/or their subsidiaries and associated companies. Further, each of DAC and Cayman has retained the liabilities
associated with its respective operations, which is customary in transactions involving the purchase or sale of all of the equity
securities of an entity. As a result, the Company has indirectly acquired such liabilities through the Transaction. The Purchase
Agreement specifies that the Company will not assume any liabilities of the Seller or its associated companies other than
those discussed above.

The Credit Amendment

Concurrent with the Transaction, the Company entered into amendments of its credit facility with Wells Fargo (“the Credit
Amendment”). The Credit Amendment modified certain financial covenant thresholds applicable to the Company, added
property at two of the locations acquired in the Transaction as collateral for the loan to the Company, permitted the Company
to acquire certain inter-company payables involving the Seller, DAC, Cayman or the subsidiaries and associated companies
and permitted the Company to discharge and release the account payable owed by the Seller to the Company in partial
consideration for the Transaction.

Tijuana, MX Operation Move

On May 8, 2012, the Company entered into a real estate lease agreement to relocate its Tijuana, MX operation to a new
facility within Tijuana, MX. The current lease expired June 2012 and the Company began its relocation in June 2012. The
relocation was completed in July 2012. The Company will incur expenses due to the relocation of its Tijuana, MX operation,
which are estimated to be $295,000 to $325,000 (unaudited). These expenses will be recorded in the first fiscal quarter of
2013. All incentives realized under the lease will be recognized over the term of the lease, which is five years.

F-32

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
April 30, 2012 and 2011

NOTE O—SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following is a summary of unaudited quarterly financial data for fiscal year 2012:

2012
Net sales
Income before income tax expense
Net income
Earnings per share-Basic
Earnings per share-Diluted
Total shares-Basic
Total shares-Diluted

First
quarter

Second
quarter

Third
quarter

Fourth
quarter

382,487
240,961
0.06 $
0.06 $

$38,892,011 $39,902,653 $38,099,493 $39,741,827
886,838
251,128
649,440
158,267
0.17
0.04 $
$
$
0.17
0.04 $
3,864,274 3,864,412 3,875,253 3,909,572
3,890,760 3,883,683 3,895,111 3,909,572

136,042
85,656
0.02 $
0.02 $

F-33

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
April 30, 2012 and 2011

NOTE O—SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)—Continued

The following is a summary of unaudited quarterly financial data for fiscal year 2011:

2011
Net sales
Income before income tax expense
Net income
Earnings per share-Basic
Earnings per share-Diluted
Total shares-Basic
Total shares-Diluted

First
quarter

Second
quarter

Third
quarter

Fourth
quarter

$38,061,373 $38,195,193 $36,934,982 $38,536,536
484,754
1,361,670
279,177
857,989
0.08
0.07
3,823,056 3,823,056 3,846,212
3,881,139 3,886,181 3,916,903

$
$
3,822,801
3,877,079

930,521
586,050
0.15 $
0.15 $

404,603
254,818
0.07 $
0.07 $

(0.22) $
(0.22) $

F-34

Table of Contents

SigmaTron International, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
April 30, 2012 and 2011

NOTE P—LITIGATION

As of April 30, 2012, 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 are resolved on unfavorable terms. However, although the ultimate outcome of any legal matter cannot
be predicted with certainty, based on present information, including management’s assessment of the merits of any 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-35