-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QrL2hhDiqt3RfsQQEtdEExqYCl5V0Cew1Rk0VcsPLijh8ve5eapwOykspZhVhjdP H7spFwrpDHeeed3ulEk9KA== 0000355948-95-000015.txt : 19951013 0000355948-95-000015.hdr.sgml : 19951013 ACCESSION NUMBER: 0000355948-95-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950831 FILED AS OF DATE: 19951012 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: 95580058 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 August 31, 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) (708) 208-2200 (Registrant's telephone number, including area code) 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 October 9, 1995, there were outstanding 8,330,394 shares of Common Stock, $.05 par value, and 3,247,118 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 13 pages. An exhibit index is at page 10. (1) Richardson Electronics, Ltd. and Subsidiaries Form 10-Q For the Quarter Ended August 31, 1995 INDEX Page ---- PART I - FINANCIAL INFORMATION Consolidated Condensed Balance Sheets 3 Consolidated Condensed Statements of Income 4 Consolidated Condensed Statements of Cash Flows 5 Notes to Consolidated Condensed Financial Statements 6 Management's Discussion and Analysis of Results of Operations and Financial Condition 7 PART II - OTHER INFORMATION 10 (2) Part I - Financial Information Richardson Electronics, Ltd. and Subsidiaries Consolidated Condensed Balance Sheets (in thousands) August 31 May 31 1995 1995 --------- --------- (Unaudited) (Audited) ASSETS - ------ Current assets: Cash and equivalents $ 4,197 $ 11,151 Receivables,less allowance of $1,572 and $1,385 40,914 42,768 Inventories 87,159 81,267 Other 9,149 8,762 --------- --------- Total current assets 141,419 143,948 Investments 3,596 7,070 Property, plant and equipment, net 16,318 16,388 Other assets 6,482 6,108 --------- --------- Total assets $ 167,815 $ 173,514 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current liabilities: Accounts payable $ 12,948 $ 16,695 Accrued expenses 8,974 11,161 Current portion of long-term debt 9,857 9,857 --------- --------- Total current liabilities 31,779 37,713 Long-term debt, less current portion 79,182 79,647 Stockholders' equity: Common stock, $.05 par value; issued 8,330 at August 31, 1995 and 8,225 at May 31, 1995 415 411 Class B common stock, convertible, $.05 par value; issued 3,247 at August 31, 1995 and at May 31, 1995 162 162 Additional paid-in capital 50,515 49,989 Retained earnings 7,421 6,141 Foreign currency translation adjustment (1,819) (686) Market appreciation on investments, net of tax 160 137 --------- --------- Total stockholders' equity 56,854 56,154 --------- --------- Total liabilities and stockholders' equity $ 167,815 $ 173,514 ========= ========= See notes to consolidated condensed financial statements. (3) Richardson Electronics, Ltd. and Subsidiaries Consolidated Condensed Statements of Income (in thousands, except per share amounts) Three Months Ended August 31 --------------------------- 1995 1994 --------- --------- (Unaudited) Net sales $ 57,201 $ 46,407 Costs and expenses: Cost of products sold 40,063 32,904 Selling, general and administrative expenses 13,311 10,980 --------- --------- 53,374 43,884 --------- --------- Operating income 3,827 2,523 Other (income) expense: Interest expense 1,504 1,549 Investment income (511) (246) Other, net 174 6 --------- --------- 1,167 1,309 --------- --------- Income before income taxes 2,660 1,214 Income taxes 930 430 --------- --------- Net income $ 1,730 $ 784 ========= ========= Net income per share $ .15 $ .07 ========= ========= Average shares outstanding 11,710 11,428 ========= ========= See notes to consolidated condensed financial statements. (4) Richardson Electronics, Ltd. and Subsidiaries Consolidated Condensed Statements of Cash Flows (in thousands)(unaudited) Three Months Ended August 31 ---------------------- 1995 1994 --------- --------- Operating Activities: Net income $ 1,730 $ 784 Non-cash charges to income: Depreciation 654 681 Amortization of intangibles and financing costs 85 86 Deferred income taxes (275) 381 Common stock awards and contribution to employee stock ownership plan 530 505 --------- --------- Total non-cash charges 994 1,653 --------- --------- Net income adjusted for non-cash charges 2,724 2,437 Changes in working capital, net of effects of currency translation: Accounts receivable 1,344 1,182 Inventories (6,461) (3,997) Other current assets (559) (73) Accounts payable (3,828) 7 Other liabilities (2,084) (2,956) --------- --------- Net changes in working capital (11,588) (5,837) --------- --------- Net cash used in operating activities (8,864) (3,400) --------- --------- Financing Activities: Payments on debt (465) (466) Cash dividends (449) (445) --------- --------- Net cash used in financing activities (914) (911) --------- --------- Investing Activities: Reduction in investments 3,514 3,347 Capital expenditures (627) (607) Other (63) 26 --------- --------- Net cash provided by investing activities 2,824 2,766 --------- --------- Decrease in cash and equivalents (6,954) (1,545) Cash and equivalents at beginning of year 11,151 9,739 --------- --------- Cash and equivalents at end of period $ 4,197 $ 8,194 ========= ========= See notes to consolidated condensed financial statements. (5) Richardson Electronics, Ltd. and Subsidiaries Notes to Consolidated Condensed Financial Statements Three Months Ended August 31, 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, 1995. The Company accounts for its results of operations on a 52/53 week period ending on the Saturday nearest May 31 in each year. Quarterly results for the periods ended August 31, 1995 and August 31, 1994 are for 14 and 13 weeks, respectively. Note B -- Income Taxes The income tax provision of $930,000 for the three months ended August 31, 1995 is based on the estimated effective tax rate of 35% for fiscal 1996 income. The income tax provision for first quarter of fiscal 1995 was also based on a 35% estimated effective tax rate. In both years, the rate differs from the applicable federal statutory rate of 34% principally as a result of state income taxes, partially offset by a foreign sales corporation tax benefit. (6) Management's Discussion and Analysis of Results of Operations and Financial Condition Three Months Ended August 31, 1995 (Unaudited) Results of Operations Net sales for the quarter ended August 31, 1995 were $57.2 million, compared to last year's first quarter of $46.4 million. Sales and gross margin by the Company's strategic business units (SBU) are summarized in the following table. 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). Sales Gross Margin ----------------- ------------------ Quarter ended August 31 1995 1994 1995 1994 ------- ------- ------- ------- Electron Device Group $26,809 $23,865 $ 8,217 $ 7,054 Solid State & Components 15,943 11,318 4,971 3,668 Display Products Group 8,872 8,596 3,188 2,748 Security Systems Division 5,577 2,628 1,163 620 Corporate - - (401) (587) ------- ------- ------- ------- Consolidated $57,201 $46,407 $17,138 $13,503 ======= ======= ======= ======= Sales and product margin by geographic area are summarized in the following table. Product margins exclude inventory and manufacturing provisions, which are not practical to identify by geographic area (in thousands). Sales Product Margin ----------------- ------------------ Quarter ended August 31 1995 1994 1995 1994 ------- ------- -------- ------- North America $34,279 $27,388 $10,422 $ 8,457 Europe 13,027 10,167 4,586 3,240 Rest of World 9,895 8,852 2,941 2,684 ------- ------- -------- ------- Consolidated $57,201 $46,407 $17,949 $14,381 ======= ======= ======= ======= Sales, margin and expense comparisons are affected by the Company's accounting calendar, which included 14 weeks in the quarter ended August 31, 1995 and 13 weeks in the quarter ended August 31, 1994. Gross margins for the current year first quarter were 30.0%, compared to 29.1% in the prior year, reflecting higher product margins and lower manufacturing inefficiencies. Product margins were 31.4%, compared to 31.0% in the prior year. Manufacturing variances (7) Management's Discussion and Analysis of Results of Operations and Financial Condition Three Months Ended August 31, 1995 (Unaudited) included in the determination of operating results in the first quarter were insignificant, compared to $.3 million the prior year. Selling, general, and administrative expenses for the first quarter of fiscal 1996 were $13.3 million, an increase of $2.3 million from the prior year, as a result of sales staff additions, incentive payments on increased gross margins and the Company's accounting calendar. Selling, general and administrative expense as a percent of sales improved, declining to 23.3% from 23.7%. Investment income of $.5 million in the current year quarter compared to $.2 million in the prior comparable period reflects higher realized capital gains. Net income was $1.7 million or $.15 per share, compared to $.8 million or $.07 per share in the prior year first quarter. Liquidity and Capital Resources Cash provided by operations, exclusive of working capital requirements, was $2.7 million in the first quarter of fiscal 1996, compared to $2.4 million for the first quarter last year. Higher working capital requirements of $11.6 million in the current quarter and $5.8 million last year, debt service and dividend payments were met from cash generated by operations and by liquidation of investments. Quarterly working capital requirements are affected by the timing of semi-annual interest payments under the Company's long-term debt agreements. First quarter interest payments were $2.9 million in each of fiscal 1996 and 1995. First quarter working capital requirements also include additional inventory investments of $6.5 million in fiscal 1996 and $4.0 million in fiscal 1995 to support sales growth in the SSC, DPG, and SSD business units. Working capital requirements in fiscal 1996 include a $1.1 million payment related to the settlement of audits of the Company's fiscal 1991 and 1992 federal income tax returns. Subsequent to August 31, 1995, the Company received $2.7 million in federal and state tax refunds. (8) Management's Discussion and Analysis of Results of Operations and Financial Condition Three Months Ended August 31, 1995 (Unaudited) Certain of the Company's loan agreements contain various financial and operating covenants which set benchmark levels for tangible net worth, debt / tangible net worth ratio and annual debt service coverage. The Company was in compliance with these covenants at August 31, 1995. The $8 million short-term bank loan due August 31, 1995 was extended to November 30, 1995. The Company is negotiating a $25 million revolving credit facility to consolidate an existing $10.2 million long-term loan and the $8 million short-term loan and to provide an additional $6.8 million for working capital. In addition, certain of the current agreements contain restrictions on the Company relating to the purchase of treasury stock or the payment of cash dividends. At August 31, 1995, $4.7 million was available for such transactions. Payment of dividends will be considered quarterly based upon corporate performance. At August 31, 1995, the market value of the Company's non-current investment portfolio totaled $3.6 million. 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. Cash reserves, investments, funds from operations and credit lines are expected to be adequate to meet the operational needs and future dividends of the Company. (9) 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 fiscal year ended May 31, 1995. 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 - $8,000,000 Promissory note dated August 31, 1995 delivered to American National Bank. - page 12 Exhibit 27 - Financial Data Schedule - page 13. (b) Reports on Form 8-K - None (10) PART II - OTHER INFORMATION 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 October 12 , 1995 By /s/ William J. Garry William J. Garry Vice President and Chief Financial Officer (11) EX-10 2 EXHIBIT 10 PROMISSORY NOTE (UNSECURED) $8,000,000.00 Chicago.Illinois August 31, 1995 Due November 30, 1995 FOR VALUE RECEIVED, the undersigned (jointly and severally if more than one) ("Borrower"), promises to pay to the order of AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO ("Bank"), at its principal place of business in Chicago, Illinois or such other place as Bank may designate from time to time hereafter, the principal sum of Eight Million and no/100 Dollars, or such lesser principal sum as may then be owed by Borrower to Bank hereunder. Borrowers obligations and liabilities to Bank under this Note ("Borrowers Liabilities") shall be due and payable on November 30, 1995. The unpaid principal balance of Borrowers Liabilities due hereunder shall bear interest from the date hereof until paid, computed as follows (delete inapplicable provisions): (ii) at a daily rate equal to the daily rate equivalent of 0**% per annum (computed on the basis of a 360-day year and actual days elapsed) in excess of the rate of interest announced or published publicly from time to time by Bank as its prime or base rate of interest (the "Base Rate"); provided, however, that in the event that any of Borrower's Liabilities are not paid when due, the unpaid amount of Borrower's Liabilities shall bear interest after the due date until paid at a rate equal to the sum of (a) the rate in effect prior to the due date and (b) 3%. If the rate of interest to be charged by Bank to Borrower hereunder is that specified in clause (ii), such rate shall fluctuate hereafter from time to time concurrently with, and in an amount equal to, each increase or decrease in the Base Rate, whichever is applicable. Accrued interest shall be payable by Borrower to Bank with each principal installment of Borrowers Liabilities due hereunder, or as billed by Bank to Borrower, at Bank's principal place of business, or at such other place as Bank may designate from time to time hereafter. Borrower warrants and represents to Bank that Borrower shall use the proceeds represented by this Note solely for proper business purposes, and consistently with all applicable laws and statutes. The occurrence of any one of the following events shall constitute a default by the Borrower ("Event of Default") under this Note (a) if Borrower fails to pay any of Borrower's Liabilities when due and payable: (b) if Borrower fails to perform, keep or observe any term, provision, condition, covenant, warranty or representation contained in this Note which is required to be performed, kept, or observed by Borrower: (c) occurrence of a default or an event of default under any agreement, instrument or document heretofore, now or at any time hereafter delivered by or on behalf of Borrower to Bank; (d) occurrence of a default or an event of default under any agreement, instrument or document heretofore, now or at any time hereafter delivered to Bank by any guarantor or Borrowers Liabilities; (e) if any of Borrower's assets are attached, seized, subjected to a writ of distress warrant, or are levied upon or become subject to any lien or come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors: (f) if Borrower or any guarantor of Borrower's Liabilities becomes insolvent or generally fails to pay, or admits in writing its inability to pay, debts as they become due, if a petition under any section or chapter of the Bankruptcy Reform Act of 1978 or any similar law or regulation is filed by or against Borrower or any such guarantor, if Borrower or any such guarantor shall make an assignment for the benefit of creditors, if any case or proceeding is filed by or against Borrower or any such guarantor for its dissolution or liquidation, or upon the death or incompetency of Borrower or any such guarantor, or the appointment of a conservator for all or any portion of Borrower's assets; or (g) if a contribution failure occurs with respect to any pension plan maintained by Borrower or any corporation, trade or business that is, along with Borrower, a member of a controlled group of corporations or a controlled group of trades or businesses (as described in Sections 414(b) and (c) of the Internal Revenue Code of 1986 or Section 4001 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) sufficient to give rise to a lien under Section 302(f) of ERISA; or (h) if Bank is reasonably insecure. Upon the occurrence of an Event of Default, at Bank's option, without notice by Bank to or demand by Bank of Borrower, all of Borrowers Liabilities shall be due and payable forthwith. All of Bank's rights and remedies under this Note are cumulative and non-exclusive. The acceptance by Bank of any partial payment made hereunder after the time when any of Borrower's Liabilities become due and payable will not establish a custom, or waive any rights of Bank to enforce prompt payment hereof. Bank's failure to require strict performance by Borrower of any provision of this Note shall not waive, affect or diminish any right of Bank thereafter to demand strict compliance and performance therewith. Any waiver of an Event of Default hereunder shall not suspend. waive or affect any other Event of Default hereunder. Borrower and every endorser waive presentment, demand and protest and notice of presentment. protest, default non-payment, maturity, release, compromise, settlement, extension or renewal of this Note, and hereby ratify and confirm whatever Bank may do in this regard. Borrower further waives any and all notice or demand to which Borrower might be entitled with respect to this Note by virtue of any applicable statute or law (to the extent permitted by law). Borrower agrees to pay, upon Bank's demand therefor, any and all costs, fees and expenses (including attorneys fees, costs and expenses) incurred by Bank (i) in enforcing any of Bank's rights hereunder, and (ii) in representing Bank in any litigation, contest, suit or dispute or to commence, defend or intervene or to take any action with respect to any litigation, contests suit or dispute (whether instituted by Bank, Borrower or any other person) in any way relating to this Note or Borrower's Liabilities, and to the extent not paid the same shall become part of Borrower's Liabilities hereunder. This Note shall be deemed to have been submitted by Borrower to Bank at Bank's principal place of business and shall be deemed to have been made thereat. This Note shall be governed and controlled by the laws of the State of Illinois as to interpretation, enforcement. validity, construction, effect, choice of law and in all other respects. TO INDUCE BANK TO ACCEPT THIS NOTE, BORROWER, IRREVOCABLY, AGREES THAT, SUBJECT TO BANK'S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT, ARISING OUT OF OR FROM OR RELATED TO THIS NOTE SHALL BE LITIGATED IN COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO, STATE OF ILLINOIS. BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID CITY AND STATE. BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST BORROWER BY BANK IN ACCORDANCE WITH THIS PARAGRAPH. BORROWER IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING (i) TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR IN CONNECTION WITH THIS NOTE OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH, OR (ii) ARISING FROM ANY DISPUTE OR CONTROVERSY IN CONNECTION WITH OR RELATED TO THIS NOTE OR ANY SUCH AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. **BORROWER MAY SELECT LIBOR RATE OPTION (Plus Spread of 1.50). 40W267 Keslinger road RICHARDSON ELECTRONICS, LTD. LaFox, IL 60147 By: /s/ William J. Garry VP Finance EX-27 3
5 1000 3-MOS MAY-31-1996 AUG-31-1995 4197 0 42486 1572 87159 141419 41373 25055 167815 31779 79182 415 0 162 56277 167815 57201 57201 40063 40063 0 43 1504 2660 930 1730 0 0 0 1730 .15 .15
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