-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, c57WwgO2Dqe9gjra2Gh5Wdf7JomYSms7yhFWnFyGN0LVsOnAqCF3bKMNPhJhfzpZ DeIENIJAWruQ71Hzzmnf8A== 0000355948-95-000006.txt : 19950415 0000355948-95-000006.hdr.sgml : 19950414 ACCESSION NUMBER: 0000355948-95-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950228 FILED AS OF DATE: 19950413 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: RICHARDSON ELECTRONICS LTD/DE CENTRAL INDEX KEY: 0000355948 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRONIC PARTS & EQUIPMENT, NEC [5065] IRS NUMBER: 362096643 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12906 FILM NUMBER: 95528707 BUSINESS ADDRESS: STREET 1: 40W267 KESLINGER RD CITY: LAFOX STATE: IL ZIP: 60147 BUSINESS PHONE: 7082082200 MAIL ADDRESS: STREET 1: 40W267 KESLINGER ROAD CITY: LAFOX STATE: IL ZIP: 60147 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 28, 1995 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to ______________ Commission file number 0-12906 RICHARDSON ELECTRONICS, LTD. (Exact name of registrant as specified in its charter) Delaware 36-2096643 (State of incorporation or organization) (I.R.S. Employer Identification No.) 40W267 Keslinger Road, LaFox, Illinois 60147 (Address of principal executive offices and zip code) (Registrant's telephone number, including area code: (708) 208-2200 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No As of April 10, 1995, there were outstanding 8,196,400 shares of Common Stock, $.05 par value, and 3,247,145 shares of Class B Common Stock, $.05 par value, which are convertible into Common Stock on a share for share basis. This Quarterly Report on Form 10-Q contains 14 pages. An exhibit index is at page 13. (1) Richardson Electronics, Ltd. and Subsidiaries Form 10-Q For the Quarter Ended February 28, 1995 INDEX Page PART 1 - FINANCIAL INFORMATION Consolidated Condensed Balance Sheets 3 Consolidated Condensed Statements of Income 5 Consolidated Condensed Statements of Cash Flow 6 Notes to Consolidated Condensed Financial Statements 7 Management's Discussion and Analysis of the Financial Condition and Results of Operations 9 PART II - OTHER INFORMATION 12 (2) Part 1 - Financial Information Richardson Electronics, Ltd. and Subsidiaries Consolidated Condensed Balance Sheets (in thousands) February 28 May 31 1995 1994 --------- --------- (Unaudited) (Audited) ASSETS Current Assets Cash and equivalents 8,916 $9,739 Receivables, less allowances of $1,327 and $1,405 38,003 34,901 Inventories 78,404 73,863 Assets held for disposition, less valuation reserves of $16,361 and $15,832 9,755 10,274 Other 7,662 8,190 --------- --------- TOTAL CURRENT ASSETS 142,740 136,967 Investments 9,953 17,836 Property, Plant and Equipment 40,033 41,608 Less accumulated depreciation (23,733) (24,676) --------- --------- 16,300 16,932 Other Assets 6,380 7,732 --------- --------- TOTAL ASSETS $175,373 $179,467 ========= ========= See notes to consolidated condensed financial statements. (3) Part 1 - Financial Information Richardson Electronics, Ltd. and Subsidiaries Consolidated Condensed Balance Sheets (in thousands) February 28 May 31 1995 1994 --------- --------- (Unaudited) (Audited) LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $10,791 $10,925 Accrued expenses 9,243 11,839 Liabilities related to disposition 13,435 15,842 Current portion of long-term debt 1,865 1,867 --------- --------- TOTAL CURRENT LIABILITIES 35,334 40,473 Long-term debt, less current portion 84,398 86,421 Stockholders' Equity Common stock, $.05 par value; issued 8,196 at February 28, 1995 and 8,056 at May 31, 1994 410 403 Class B Common Stock, convertible, $.05 par value; issued 3,247 at February 28, 1995 and 3,247 at May 31, 1994 162 162 Preferred stock, $1.00 par value -- -- Additional paid-in capital 49,874 49,352 Retained earnings 6,462 4,912 Foreign currency translation adjustment (1,323) (2,383) Market valuation of investments, net of tax 56 127 --------- --------- TOTAL STOCKHOLDERS' EQUITY 55,641 52,573 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $175,373 $179,467 ========= ========= See notes to consolidated condensed financial statements. (4) Richardson Electronics, Ltd. and Subsidiaries Consolidated Condensed Statements of Income (in thousands, except per share amounts) (Unaudited) Three Months Ended Nine Months Ended February 28 February 28 -------- --------- ----------- --------- 1995 1994 1995 1994 -------- --------- --------- --------- Net sales $51,255 $43,051 $148,670 $123,097 Costs and expenses: Cost of products sold 36,582 30,952 105,924 89,008 Selling, general and administrative expenses 12,308 10,118 34,833 28,536 -------- --------- --------- --------- 48,890 41,070 140,757 117,544 -------- --------- --------- --------- Operating income 2,365 1,981 7,913 5,553 Other (income) expense: Interest expense 1,523 1,856 4,639 5,609 Investment income (485) (405) (1,022) (2,069) Other, net (145) 92 (88) 498 -------- --------- --------- --------- 893 1,543 3,529 4,038 -------- --------- --------- --------- Income before income taxes 1,472 438 4,384 1,515 Income taxes 500 180 1,500 600 -------- --------- --------- --------- Net Income $972 $258 $2,884 $915 ======== ========= ========= ========= Net income per share $.08 $.02 $.25 $.08 ======== ========= ========= ========= Average shares outstanding 11,642 11,302 11,537 11,303 ======== ========= ========= ========= See notes to consolidated condensed financial statements. (5) Richardson Electronics, Ltd. and Subsidiaries Consolidated Condensed Statements of Cash Flows (in thousands)(unaudited) Nine Months Ended February 28 ------------------------- 1995 1994 --------- --------- OPERATING ACTIVITIES Net income $2,884 $915 Non-cash charges to income: Depreciation 1,985 3,476 Amortization of intangibles and financing costs 274 760 Deferred income taxes 1,535 278 Common stock awards and contribution to employee stock ownership plan 505 193 --------- --------- Total non-cash charges 4,299 4,707 --------- --------- Net income, adjusted for non-cash charges 7,183 5,622 Changes in working capital, net of effects of currency translation: Receivables (2,563) (1,711) Inventories (3,136) (1,806) Other current assets 707 (379) Accounts payable (655) (2,329) Other liabilities (5,281) (5,355) --------- --------- Net changes in working capital (10,928) (11,580) --------- --------- NET CASH USED IN OPERATING ACTIVITIES (3,745) (5,958) --------- --------- FINANCING ACTIVITIES Payments on debt (2,025) (3,901) Cash dividends (1,334) (1,317) Proceeds from borrowings -- 753 --------- --------- NET CASH USED IN FINANCING ACTIVITIES (3,359) (4,465) --------- --------- INVESTING ACTIVITIES Reduction in investments 7,767 8,940 Capital expenditures (1,934) (1,161) Other 448 85 --------- --------- NET CASH PROVIDED BY INVESTING ACTIVITIES 6,281 7,864 --------- --------- DECREASE IN CASH AND EQUIVALENTS (823) (2,559) Cash and equivalents at beginning of year 9,739 7,098 --------- --------- CASH AND EQUIVALENTS AT END OF PERIOD $8,916 $4,539 ========= ========= See notes to consolidated condensed financial statements. (6) Richardson Electronics, Ltd. and Subsidiaries Notes to Consolidated Condensed Financial Statements Nine Months Ended February 28, 1995 (Unaudited) Note A -- Basis of Presentation The accompanying unaudited Consolidated Condensed Financial Statements ("Statements") have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q. In the opinion of management, all adjustments necessary for a fair presentation of the results of operations for the periods covered have been reflected in the Statements. Certain information and footnotes necessary for a fair presentation of the financial position and results of operations in conformity with generally accepted accounting principles have been omitted in accordance with the aforementioned instructions. It is suggested that the Statements be read in conjunction with the Financial Statements and Notes thereto included in the Company's Annual Report on Form 10-K for the year ended May 31, 1994. Note B -- Income Taxes The income tax provisions for the three- and nine-month periods ended February 28, 1995 are based on the estimated effective tax rate of 34% for 1995 income, as expected state income taxes are offset by U.S. foreign sales corporation tax benefits. The income tax provisions for the three- and nine-month periods ended February 28, 1994 are based on the estimated effective tax rate of 40% for fiscal 1994 income. The fiscal 1994 rate differs from the applicable federal statutory rate of 34% principally as a result of state income taxes and foreign operating losses for which the related tax benefit will not be recognized until the future foreign earnings are realized. Note C -- Phase-down of Manufacturing Operations The Company recorded a charge of $26,500,000 in the fourth quarter of 1994 to provide for the phase-down of its manufacturing operations, including $21,400,000 for planned sale or dissolution of its Brive, France facility and $5,100,000 for incremental costs related to a 1991 provision to phase down its domestic manufacturing operation. Subsequent to February 28, 1995, the Company transfered the Brive operating assets to the local management group and the Brive facility to the City of Brive, in exchange for extinguishment of the related mortgage liability. These transfers were completed during the fourth (7) Richardson Electronics, Ltd. and Subsidiaries Notes to Consolidated Condensed Financial Statements Nine Months Ended February 28, 1995 (Unaudited) quarter of 1995. The Company has also entered into a three year purchase agreement with the local management group, whereby the Company has committed to purchase $8,682,000, $10,820,000 and $ 11,212,000, respectively in the first, second and final year of the contract. Costs incurred in the first nine months of 1995 related to the manufacturing phase-down were consistent with management's projections included in the 1994 charge. (8) Management's Discussion and Analysis of Financial Condition and Results of Operations Three- and Nine-Month Periods Ended February 28, 1995 Results of Operations Net sales for the quarter ended February 28, 1995 were a record $51,225,000, up 19% from last year's third quarter of $43,051,000. Sales for the nine-month period were $148,670,000, a 21% increase from $123,097,000 in the prior year. Sales and gross margin by the Company's strategic business units ("SBU") in 1995 were as follows (Gross margins for each SBU include provisions for returns and overstock. Provisions for LIFO, manufacturing charges and other costs are included under the caption "Corporate") (in thousands): Change Gross Change Sales from 1994 Margin from 1994 --------- --------- --------- --------- Third Quarter Electron Device Group $ 26,178 12% $ 7,542 5% Solid State & Components 12,912 22% 4,050 16% Display Products Group 8,903 35% 3,030 39% Security Systems Division 3,262 23% 703 21% Corporate 0 (652) --------- --------- --------- --------- Consolidated $ 51,255 19% $ 14,673 21% ========= ========= ========= ========= Nine Months Electron Device Group $ 77,119 14% $ 22,632 7% Solid State & Components 36,432 23% 11,600 16% Display Products Group 26,031 42% 8,573 39% Security Systems Division 9,088 16% 2,044 16% Corporate 0 (2,103) --------- --------- --------- --------- Consolidated $ 148,670 21% $ 42,746 25% ========= ========= ========= ========= Sales and product margin by geographic area in 1995 were as follows (Product margins exclude inventory and manufacturing provisions, which are not practical to identify by geographic area.) (in thousands): Change Gross Change Sales from 1994 Margin from 1994 --------- --------- --------- --------- Third Quarter North America $ 30,183 19% $ 9,074 14% Europe 11,966 26% 4,002 20% Rest of World 9,106 11% 2,628 8% --------- --------- --------- --------- Consolidated $ 51,255 19% $ 15,704 15% ========= ========= ========= ========= Nine Months North America $ 86,818 19% $ 26,443 13% Europe 33,917 24% 11,094 21% Rest of World 27,935 22% 8,180 12% --------- --------- --------- --------- Consolidated $ 148,670 21% $ 45,717 14% ========= ========= ========= ========= (9) Management's Discussion and Analysis of Financial Condition and Results of Operations Three- and Nine-Month Periods Ended February 28, 1995 (Unaudited) The gross margin for the first nine months was 28.8%, compared to 27.7% in the prior year, reflecting the elimination of charges for manufacturing inefficiencies at the Company's production facility in Brive, France. Underabsorbed costs included in the determination of operating results in the first nine months of 1995 were $779,000, all of which were associated with the Company's LaFox, Illinois facility. In the prior-year comparable period, such costs were $3,991,000 relating to manufacturing in both LaFox and Brive. Operating losses related to Brive and anticipated to be incurred during 1995 prior to the sale or dissolution of this operation were included in the 1994 charge (See Note C of the accompanying Notes to the Consolidated Condensed Financial Statements) and therefore did not affect 1995 results. A loss of approximately $449,000 related to Brive operations was charged against the 1994 reserve in 1995. Costs charged against the reserve, in the aggregate, were consistent with management's original estimate. The gross margin improvement related to manufacturing was partially offset by changes in product mix and competitive pricing, which caused product margins on distribution sales to decline to 30.8% from 32.5%. Selling, general, and administrative expenses for the first nine months of fiscal 1995 were $34,833,000, an increase of $6,297,000 from the prior year, primarily due to personnel additions for expansion of the specialty sales program and incentive payments on increased gross margins. Selling, general and administrative expenses as a percent of sales were comparable between periods at 23.4% in 1995 and 23.2% in 1994. Sales, gross margins and operating expense trends on a quarterly basis were comparable to year to date results. Interest expense for the first nine months declined 17% to $4,639,000, reflecting lower debt levels and the elimination of interest on a mortgage encumbering the Brive facility, as such interest expense was included in the determination of the Brive operating loss charged against the 1994 reserve. The trend for interest expense was similar on a quarterly basis. Investment income for the first nine months declined 51% to $1,022,000, reflecting lower investment levels in the current period and higher realized capital gains in last year's first nine months. Third quarter investment income was slightly higher than the prior year. (10) Management's Discussion and Analysis of Financial Condition and Results of Operations Three- and Nine-Month Periods Ended February 28, 1995 (Unaudited) Liquidity and Capital Resources Cash provided by operations, exclusive of working capital requirements, was $7,183,000 in the first nine months of 1995, compared to $5,622,000 for the same period last year. Higher working capital requirements in the first nine months of 1995 were $10,928,000, including a $3,136,000 increase in inventories to support sales growth in the Display Products Group and Solid State & Components strategic business units, $2,563,000 in higher receivable balances and $2,936,000 for severance, professional fees and other disbursements related to the phase-down of manufacturing operations. Funding for the current year activity and for scheduled debt repayments was obtained through the liquidation of $7,767,000 from the long-term investment portfolio. Cash reserves, investments and funds from operations are expected to be adequate to meet the operational needs and future dividends of the Company. Additional working capital requirements in 1994 were $11,580,000, including a $2,000,000 payment to the Internal Revenue Service in settlement of audits for 1986 through 1990, as well as increases in receivables, and inventories and reductions in current liabilities. Certain of the Company's loan agreements contain various financial and operating covenants which set benchmark levels for tangible net worth, the ratio of debt to tangible net worth and annual debt service coverage. The Company was in compliance with these covenants at February 28, 1995. In addition, certain of these agreements contain restrictions relating to the purchase of treasury stock or the payment of cash dividends. At February 28, 1995, $3,126,000 was available for such transactions. Payment of dividends will be considered quarterly based upon corporate performance. At February 28, 1995, the Company's non-current investment portfolio was $9,953,000, carried in the accompanying consolidated condensed balance sheet at market value. Included in the portfolio are high-yield investments for which management periodically evaluates the associated market risk. The investments are being maintained for corporate purposes which may include short-term operating needs and the evaluation of opportunities for the Company's expansion. (11) Part II--OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS No material developments have occurred in the matters reported under the category "Legal Proceedings" in the Registrant's Report on Form 10-K for the year ended May 31, 1994. ITEM 2. CHANGES IN SECURITIES None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit 10(a) Incorporation by reference to Exhibit 10(a) to the Company's Current Report on Form 8-K dated February 23, 1995. Exhibit 10(b) Incorporation by reference to Exhibit 10(b) to the Company's Current Report on Form 8-K dated February 23, 1995. Exhibit 27 - Financial Data Schedule - page 15. (b) Reports on Form 8-K - A Form 8-K was filed on February 23, 1995 reporting under Item 2 certain agreements between the Company, the City of Brive, and certain management employees from the Brive, France manufacturing facility, in relation to the disposition by transfer of the Brive manufacturing operations and assets, as described in Note C of the Notes to the Consolidated Condensed Financial Statements. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. RICHARDSON ELECTRONICS, LTD. Date April 10 , 1995 By _______________________ William J. Garry Vice President and Chief Financial Officer EX-27 2
5 1,000 9-MOS MAY-31-1995 FEB-28-1995 8,916 0 39,330 1,327 78,404 142,740 40,033 23,733 175,373 35,334 84,398 410 0 162 55,069 175,373 148,670 148,670 105,924 105,924 0 150 4,639 4,384 1,500 2,884 0 0 0 2,884 .25 .25
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