-----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, JLvs3xfAl2TQAblP5LtsK0abeXksrHm2b8tSrXxW72OstXfCycyNTDDTwk/O01z6 dEm7NZ/bprzGRjV96O5Mew== 0000355948-94-000024.txt : 19941021 0000355948-94-000024.hdr.sgml : 19941021 ACCESSION NUMBER: 0000355948-94-000024 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940831 FILED AS OF DATE: 19941014 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: RICHARDSON ELECTRONICS LTD/DE CENTRAL INDEX KEY: 0000355948 STANDARD INDUSTRIAL CLASSIFICATION: 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: 94552649 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, 1994 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 October 11, 1994, there were outstanding 8,190,386 shares of Common Stock, $.05 par value, and 3,247,159 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. It does not contain an exhibit index. (1) 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) Richardson Electronics, Ltd. and Subsidiaries Consolidated Condensed Balance Sheets (in thousands) August 31 May 31 1994 1994 --------- --------- (Unaudited) (Audited) ASSETS Current Assets Cash and equivalents $8,194 $9,739 Receivables, less allowances of $1,461 and $1,405 34,152 34,901 Inventories: Finished products 76,882 72,136 Work in process 620 1,049 Materials 1,253 678 --------- --------- 78,755 73,863 Assets held for disposition, less valuation reserves of $16,900 and $15,832 10,232 10,274 Other 8,322 8,190 --------- --------- TOTAL CURRENT ASSETS 139,655 136,967 Investments 14,631 17,836 Property, Plant and Equipment 39,671 41,608 Less accumulated depreciation (22,965) (24,676) --------- --------- 16,706 16,932 Other Assets 7,229 7,797 --------- --------- TOTAL ASSETS $178,221 $179,532 ========= ========= See notes to consolidated condensed financial statements. Richardson Electronics, Ltd. and Subsidiaries Consolidated Condensed Balance Sheets (in thousands, except per share amounts) August 31 May 31 1994 1994 --------- --------- (Unaudited) (Audited) LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $11,145 $10,925 Accrued expenses 9,202 11,839 Liabilities related to disposition 15,760 15,842 Current portion of long-term debt 1,867 1,867 --------- --------- TOTAL CURRENT LIABILITIES 37,974 40,473 Long-term debt, less current portion 85,955 86,421 Deferred income taxes 57 65 Stockholders' Equity Common stock, $.05 par value; issued 8,190 at August 31, 1994 and 8,056 at May 31, 1994 409 403 Class B Common Stock, convertible, $.05 par value; issued 3,247 at August 31, 1994 and 3,247 at May 31, 1994 162 162 Preferred stock, $1.00 par value -- -- Additional paid-in capital 49,845 49,352 Retained earnings 5,252 4,912 Foreign currency translation adjustment (1,647) (2,383) Market appreciation on investments, net of tax 214 127 --------- --------- TOTAL STOCKHOLDERS' EQUITY 54,235 52,573 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $178,221 $179,532 ========= ========= See notes to consolidated condensed financial statements. Richardson Electronics, Ltd. and Subsidiaries Consolidated Condensed Statements of Income (in thousands, except per share amounts) (Unaudited) Three Months Ended August 31 ----------- --------- 1994 1993 --------- --------- Net sales $46,407 $35,846 Costs and expenses: Cost of products sold 32,904 25,883 Selling, general and administrative expenses 10,980 8,874 Interest expense 1,549 1,862 Investment income (246) (1,001) Other (income) expense, net 6 128 --------- --------- 45,193 35,746 --------- --------- Income before income taxes 1,214 100 Income taxes 430 40 --------- --------- Net income $784 $60 ========= ========= Net income per share $.07 $.01 ========= ========= Average shares outstanding 11,428 11,308 ========= ========= See notes to consolidated condensed financial statements. Richardson Electronics, Ltd. and Subsidiaries Consolidated Condensed Statements of Cash Flows (in thousands)(unaudited) Three Months Ended August 31 ----------------------- 1994 1993 --------- --------- OPERATING ACTIVITIES Net income $784 $60 Non-cash charges to income: Depreciation 681 1,174 Amortization of intangibles and financing costs 86 241 Deferred income taxes 381 109 Common stock awards and contribution to employee stock ownership plan 505 67 --------- --------- Total non-cash charges 1,653 1,591 --------- --------- Net income, adjusted for non-cash charges 2,437 1,651 Changes in working capital, net of effects of currency translation: Accounts receivable 1,182 2,569 Inventories (3,997) (2,630) Other current assets (73) (1,792) Accounts payable 7 (2,759) Other liabilities (2,956) (5,234) --------- --------- Net changes in working capital (5,837) (9,846) --------- --------- NET CASH USED IN OPERATING ACTIVITIES (3,400) (8,195) --------- --------- FINANCING ACTIVITIES Payments on debt (466) (676) Cash dividends (445) (438) --------- --------- NET CASH USED IN FINANCING ACTIVITIES (911) (1,114) --------- --------- INVESTING ACTIVITIES Reduction in investments 3,347 4,515 Capital expenditures (607) (325) Other 26 122 --------- --------- NET CASH PROVIDED BY INVESTING ACTIVITIES 2,766 4,312 --------- --------- DECREASE IN CASH AND EQUIVALENTS (1,545) (4,997) Cash and equivalents at beginning of year 8,194 2,101 --------- --------- CASH AND EQUIVALENTS AT END OF PERIOD $6,649 ($2,896) ========= ========= See notes to consolidated condensed financial statements. Richardson Electronics, Ltd. and Subsidiaries Notes to Consolidated Condensed Financial Statements (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 provision of $430,000 for the three months ended August 31, 1994 is based on the estimated effective tax rate of 35% for fiscal 1995 income. This rate differs from the applicable federal statutory rate of 34% principally as a result of state income taxes. The income tax provision of $60,000 for the three months ended August 31, 1993 is based on the estimated effective tax rate of 40% for fiscal 1994 income. This 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. Negotiations are continuing with local management regarding their proposed buy-out of the Brive operation. First quarter costs related to the manufacturing phase-down were consistent with management's projections included in the fiscal 1994 charge. Richardson Electronics, Ltd. and Subsidiaries Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Net sales for the quarter ended August 31, 1994 were $46,407,000, up 29% from last year's first quarter of $35,846,000. Sales by the Company's Display Products Group increased 71% to $8,615,000. Sales by the Solid State & Components Group increased 31% to $11,322,000, while Electron Device Group sales increased 21% to $23,840,000 and Security Systems Division sales increased 11% to $2,630,000. On a geographic basis, North American sales for the current quarter were $27,388,000, a 22% increase over the prior year. Sales for the European region were up 43%, to $10,167,000. Sales for the Rest of the World (ROW) region increased 39% to $8,852,000. The ROW region consists primarily of Latin America and the far east. Gross margin for the first quarter was 29.1%, compared to 27.8% in the prior year, reflecting lower charges for manufacturing inefficiencies. Underabsorbed costs included in the determination of operating results in the current quarter were $328,000, all of which were associated with the Company's LaFox, Illinois facility. In the prior year comparable quarter, such costs were $1,625,000 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 first quarter results. A loss of approximately $390,000 related to the Brive operation was charged against the 1994 reserve and was consistent with management's estimates made in establishing the reserve. 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 31.0% from 33.5%. Selling, general, and administrative expenses for the first quarter of fiscal 1995 were $10,980,000, an increase of $2,106,000 from the prior year, as a result of payroll additions for the specialty sales program and higher incentive payments related to gross margins. Selling expense as a percent of sales declined to 23.7% from 24.8%. Interest expense declined 17% to $1,549,000, 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. Investment income declined 75% to $246,000, reflecting lower investment levels in the current quarter and high realized capital gains in last year's first quarter. Liquidity and Capital Resources Cash provided by operations, exclusive of working capital requirements, was $2,437,000 in the first quarter of fiscal 1995, compared to $1,651,000 for the first quarter last year. Higher working capital requirements of $5,837,000 in the current quarter and $9,846,000 last year and debt service and dividend payments were met from cash generated by operations and by liquidation of investments. 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 totaled $2,916,000 in fiscal 1995 and $3,251,000 in fiscal 1994. Additional working capital requirements in fiscal 1995 included a $3,997,000 increase in inventories to support sales growth in the DPG and SSC business units and $1,382,000 for expenditures related to the phase-down of manufacturing operations. Additional working capital requirements in fiscal 1994 included a $2,000,000 payment to the Internal Revenue Service in settlement of audits for fiscal 1986 through 1990 and a payment of $1,700,000 to the French government for value added taxes which were refunded in the second quarter of 1994. Funding for the current year activity and for scheduled debt repayments was obtained through the liquidation of $3,347,000 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. 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, 1994. In addition, certain of these agreements contain restrictions on the Company relating to the purchase of treasury stock or the payment of cash dividends. At August 31, 1994, $1,893,000 was available for such transactions. Payment of dividends will be considered quarterly based upon corporate performance. At August 31, 1994, the market value of the Company's non-current investment portfolio totaled $14,631,000. 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. 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, 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) Exhibits - None (b) Reports on Form 8-K - None. 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 , 1994 By /s/ William J. Garry William J. Garry Vice President and Chief Financial Officer EX-27 2
5 1,000 3-MOS MAY-31-1995 AUG-31-1994 8,194 0 34,152 1,461 78,755 139,655 39,671 22,965 178,221 37,974 85,955 409 0 162 53,664 178,221 46,407 46,407 32,904 32,904 0 49 1,549 1,214 430 784 0 0 0 784 .07 .07
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