10-Q

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 December 1, 2007

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 or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
40W267 Keslinger Road, P.O. Box 393	LaFox, Illinois 60147-0393
(Address of principal executive offices)

Registrant’s telephone number, including area code:(630) 208-2200

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 is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer  ¨            Accelerated Filer  x            Non-Accelerated Filer  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

¨  Yes    x  No

As of January 7, 2008, there were outstanding 14,816,914 shares of Common Stock, $0.05 par value and 3,048,258 shares of Class B Common Stock, $0.05 par value, which are convertible into Common Stock of the registrant on a share for share basis.

TABLE OF CONTENTS

		Page
Part I.	Financial Information
Item 1.	Financial Statements	2
	Unaudited Condensed Consolidated Balance Sheets	2
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	3
	Unaudited Condensed Consolidated Statements of Cash Flows	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	29
Part II.	Other Information
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 4.	Submission of Matters to a Vote of Security Holders	30
Item 5.	Other Information	31
Item 6.	Exhibits	31
Signatures		32
Exhibit Index		33

1

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Richardson Electronics, Ltd.

Unaudited Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)

	December 1, 2007			June 2, 2007
Assets
Current assets:
Cash and cash equivalents	$	20,200		$	17,436
Restricted cash		—			61,899
Receivables, less allowance of $1,464 and $1,574		104,271			105,709
Inventories		115,762			110,174
Prepaid expenses		4,928			5,129
Deferred income taxes		2,471			2,131
Current assets of discontinued operations held for sale		137			242
Total current assets		247,769			302,720
Non-current assets:
Property, plant and equipment, net		30,883			29,278
Goodwill		12,307			11,611
Other intangible assets, net		875			1,581
Non-current deferred income taxes		1,089			389
Assets held for sale		1,200			1,429
Other assets		1,802			2,058
Non-current assets of discontinued operations held for sale		5			5
Total non-current assets		48,161			46,351
Total assets	$	295,930		$	349,071
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	67,784		$	55,530
Accrued liabilities		20,296			31,330
Current portion of long-term debt		—			65,711
Current liabilities of discontinued operations held for sale		149			2,737
Total current liabilities		88,229			155,308
Non-current liabilities:
Long-term debt, less current portion		55,683			55,683
Long-term income tax liabilities		7,063			—
Non-current liabilities		1,418			1,535
Total non-current liabilities		64,164			57,218
Total liabilities		152,393			212,526
Commitments and contingencies		—			—
Stockholders’ equity
Common stock, $0.05 par value; issued 15,929 shares at December 1, 2007 and 15,920 shares at June 2, 2007		797			796
Class B common stock, convertible, $0.05 par value; issued 3,048 at December 1, 2007 and June 2, 2007		152			152
Preferred stock, $1.00 par value, no shares issued		—			-
Additional paid-in-capital		119,450			118,880
Common stock in treasury, at cost, 1,112 shares at December 1, 2007 and 1,179 shares at June 2, 2007		(6,592	)		(6,989	)
Retained earnings		19,210			21,631
Accumulated other comprehensive income		10,520			2,075
Total stockholders’ equity		143,537			136,545
Total liabilities and stockholders’ equity	$	295,930		$	349,071

2

Richardson Electronics, Ltd.

Unaudited Condensed Consolidated Statements of Operations

and Comprehensive Income (Loss)

(In thousands, except per share amounts)

	Three Months Ended						Six Months Ended
Statements of Operations	December 1, 2007			December 2, 2006			December 1, 2007			December 2, 2006
Net sales	$	144,985		$	137,714		$	274,450		$	277,151
Cost of sales		111,185			104,680			208,012			209,765
Gross profit		33,800			33,034			66,438			67,386
Selling, general, and administrative expenses		31,317			30,695			61,283			61,008
Loss on disposal of assets		10			339			11			320
Operating income		2,473			2,000			5,144			6,058
Other (income) expense:
Interest expense		1,616			1,432			4,244			3,042
Investment income		(245	)		(737	)		(616	)		(814	)
Foreign exchange (gain) loss		1,357			(233	)		1,801			154
Retirement of long-term debt expenses		—			—			—			2,540
Other, net		(39	)		(1	)		8			13
Total other expense		2,689			461			5,437			4,935
Income (loss) from continuing operations before income taxes		(216	)		1,539			(293	)		1,123
Income tax provision		464			209			778			601
Income (loss) from continuing operations		(680	)		1,330			(1,071	)		522
Income (loss) from discontinued operations, net of tax		24			(248	)		55			(539	)
Net income (loss)	$	(656	)	$	1,082		$	(1,016	)	$	(17	)
Net income (loss) per common share – basic:
Income (loss) from continuing operations	$	(0.04	)	$	0.08		$	(0.06	)	$	0.03
Income (loss) from discontinued operations		0.00			(0.02	)		0.00			(0.03	)
Net income (loss) per common share – basic	$	(0.04	)	$	0.06		$	(0.06	)	$	(0.00	)
Net income (loss) per Class B common share – basic:
Income (loss) from continuing operations	$	(0.03	)	$	0.07		$	(0.05	)	$	0.03
Income (loss) from discontinued operations		0.00			(0.01	)		0.00			(0.03	)
Net income (loss) per Class B common share – basic	$	(0.03	)	$	0.06		$	(0.05	)	$	(0.00	)
Net income (loss) per common share – diluted:
Income (loss) from continuing operations	$	(0.04	)	$	0.08		$	(0.06	)	$	0.03
Income (loss) from discontinued operations		0.00			(0.02	)		0.00			(0.03	)
Net income (loss) per common share – diluted	$	(0.04	)	$	0.06		$	(0.06	)	$	(0.00	)
Net income (loss) per Class B common share – diluted:
Income (loss) from continuing operations	$	(0.03	)	$	0.07		$	(0.05	)	$	0.03
Income (loss) from discontinued operations		0.00			(0.01	)		0.00			(0.03	)
Net income (loss) per Class B common share – diluted	$	(0.03	)	$	0.06		$	(0.05	)	$	(0.00	)
Weighted average number of shares:
Common shares - basic		14,798			14,451			14,783			14,435
Class B common shares - basic		3,048			3,073			3,048			3,073
Common shares - diluted		14,798			17,669			14,783			17,590
Class B common shares - diluted		3,048			3,073			3,048			3,073
Dividends per common share	$	0.040		$	0.040		$	0.080		$	0.080
Dividends per Class B common share	$	0.036		$	0.036		$	0.072		$	0.072
Statements of Comprehensive Income (Loss)
Net income (loss)	$	(656	)	$	1,082		$	(1,016	)	$	(17	)
Foreign currency translation, net of tax		4,710			698			5,456			787
Discontinued operations foreign currency translation, net of tax		—			(796	)		—			(808	)
Fair value adjustments on investments, net of tax		(119	)		(493	)		(355	)		(494	)
Comprehensive income (loss)	$	3,935		$	491		$	4,085		$	(532	)

3

Richardson Electronics, Ltd.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

	Three Months Ended						Six Months Ended
	December 1, 2007			December 2, 2006			December 1, 2007			December 2, 2006
Operating activities:
Net income (loss)	$	(656	)	$	1,082		$	(1,016	)	$	(17	)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Depreciation and amortization		1,258			1,569			2,573			3,117
Loss on disposal of assets		10			339			11			320
Retirement of long-term debt expenses		—			—			—			2,540
Write-off of deferred financing costs		—			—			643			62
Stock compensation expense		249			400			347			576
Deferred income taxes		(201	)		13			(979	)		(229	)
Receivables		(3,457	)		4,104			5,400			3,308
Inventories		5,134			(3,113	)		(1,429	)		(7,831	)
Accounts payable and accrued liabilities		1,982			39			4,846			(4,539	)
Other liabilities		(170	)		33			(177	)		114
Other		(1,410	)		(773	)		(1,548	)		(1,243	)
Net cash provided by (used in) operating activities		2,739			3,693			8,671			(3,822	)
Investing activities:
Capital expenditures		(2,314	)		(1,866	)		(3,892	)		(2,725	)
Proceeds from sale of assets		346			37			387			43
Proceeds from sales of available-for-sale securities		—			3,564			157			3,682
Purchases of available-for-sale securities		—			(64	)		(157	)		(182	)
Net cash provided by (used in) investing activities		(1,968	)		1,671			(3,505	)		818
Financing activities:
Proceeds from borrowings		65,600			65,871			111,400			137,411
Payments on debt		(69,800	)		(69,594	)		(177,040	)		(129,810	)
Restricted cash		—			—			61,899			—
Proceeds from issuance of common stock		—			720			69			720
Cash dividends		(703	)		(692	)		(1,405	)		(1,379	)
Payments on retirement of long-term debt		—			(6,515	)		—			(7,215	)
Other		(95	)		(172	)		(95	)		(658	)
Net cash used in financing activities		(4,998	)		(10,382	)		(5,172	)		(931	)
Effect of exchange rate changes on cash and cash equivalents		2,646			426			2,770			535
Increase (decrease) in cash and cash equivalents		(1,581	)		(4,592	)		2,764			(3,400	)
Cash and cash equivalents at beginning of period		21,781			18,202			17,436			17,010
Cash and cash equivalents at end of period	$	20,200		$	13,610		$	20,200		$	13,610

4

RICHARDSON ELECTRONICS, LTD.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

STATEMENTS

1. DESCRIPTION OF THE COMPANY

Richardson Electronics, Ltd. (“the Company”) is a global provider of engineered solutions and a global distributor of electronic components to the radio frequency (“RF”), wireless and power conversion, electron device, and display systems markets. Utilizing its core engineering and manufacturing capabilities, the Company is committed to a strategy of providing specialized technical expertise and value-added products, or “engineered solutions,” in response to customers’ needs. These solutions include products which the Company manufactures or modifies and products which are manufactured to its specifications by independent manufacturers under the Company’s own private labels. Additionally, the Company provides solutions and adds value through design-in support, systems integration, prototype design and manufacturing, testing, and logistics for end products of its customers. Design-in support includes component modifications or the identification of lower-cost product alternatives or complementary products.

The Company’s products include RF and microwave components, power semiconductors, electron tubes, microwave generators, and data display monitors. These products are used to control, switch or amplify electrical power signals, or as display devices in a variety of industrial, commercial, and communication applications.

The Company’s sales and marketing, product management, and purchasing functions are organized as follows:

RF, Wireless & Power Division (“RFPD”) serves the global RF and wireless communications market, including infrastructure, and wireless networks, and power conversion market.

Electron Device Group (“EDG”) provides engineered solutions and distributes electronic components to customers in diverse markets including the steel, automotive, textile, plastics, semiconductor manufacturing, and broadcast industries.

Display Systems Group (“DSG”) is a global provider of integrated display products and systems to the public information, financial, point-of-sale, industrial, and healthcare markets.

The Company currently has operations in the following major geographic regions:

• North America;

• Asia/Pacific;

• Europe; and

• Latin America.

2. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Item 10 of Regulation S-K. Accordingly, they do not include all the information and notes required by United States generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments necessary for a fair presentation of the results of interim periods have been made and such adjustments were of a normal and recurring nature. All inter-company transactions and balances have been eliminated. The unaudited condensed consolidated financial statements presented

5

herein include the accounts of the Company and our wholly owned subsidiaries. The results of operations and cash flows for the three and six-month periods ended December 1, 2007 are not necessarily indicative of the results that may be expected for the fiscal year ending May 31, 2008.

The June 2, 2007, unaudited condensed consolidated balance sheet has been restated to reflect the decision the Company made in the second quarter of fiscal 2008 to sell its building in Pianopoli, Italy. The net book value of the Company’s building in Pianopoli, Italy is classified as assets held for sale on the Company’s unaudited condensed consolidated balance sheet as of December 1, 2007, and June 2, 2007. See Note 3 “Discontinued Operations / Assets Held for Sale” to our unaudited condensed consolidated financial statements for further discussion of this matter.

As used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” or the Company refer to Richardson Electronics, Ltd. and our wholly owned subsidiaries.

The Company’s fiscal quarter ends on the Saturday nearest the end of the quarter ending month. The first six months of fiscal 2008 and 2007 contain 26 weeks.

The financial information contained in this report should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended June 2, 2007.

3. DISCONTINUED OPERATIONS / ASSETS HELD FOR SALE

Discontinued Operations Held for Sale:

On May 31, 2007, the Company completed the sale of the Security Systems Division/Burtek Systems (“SSD/Burtek”) to Honeywell International Incorporated (“Honeywell”). The Company presents SSD/Burtek as a discontinued operation in accordance with the criteria of Statement of Financial Accounting Standards (“SFAS”) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“SFAS No. 144”), and prior period results and disclosures have been restated to reflect this reporting.

The agreement documenting the sale of SSD/Burtek to Honeywell contemplated a post-closing working capital-based purchase price adjustment. During the second quarter of fiscal 2008, the Company received notification from Honeywell seeking a purchase price adjustment in the amount of $6.4 million. The Company is in the process of assessing the accuracy and validity of Honeywell’s request, but has not yet completed this process and accordingly cannot assess how much, if any, of this amount will be paid to Honeywell. Should the Company ultimately pay Honeywell all or a significant portion of this amount, it could have a material adverse impact on results of the Company’s discontinued operations and cash flows.

Net sales, gross profit, interest expense, income tax provision, and income (loss) from discontinued operations for the three and six-month periods ended December 1, 2007, and December 2, 2006, are presented in the following table (in thousands):

	Second Quarter					Six Months
	FY 2008		FY 2007			FY 2008		FY 2007
Net Sales	$	267		$ 28,092		$	569	$	54,410
Gross profit		80		7,545			168		14,512
Interest expense		—		1,365			—		2,738
Income tax provision		9		923			25		1,715
Income (loss), net of tax		24		(248	)		55		(539	)

6

The net sales, gross profit, and income from discontinued operations for the second quarter and first six months of fiscal 2008 represent the operations of the Company’s Colombia location which were included in the SSD/Burtek sale agreement with Honeywell, but were not included as part of the May 31, 2007, closing. In the first quarter of fiscal 2008, the Company and Honeywell mutually agreed that Honeywell would not purchase the SSD/Burtek Colombia business, and that the Company would wind down the SSD/Burtek Colombia business in exchange for a payment equal to a portion of the value of the SSD/Burtek business in Colombia on May 31, 2007, and reimbursement of related employee severance expenses. The Company expects to cease operations of the SSD/Burtek business in Colombia during the third quarter of fiscal 2008. Results of the operation of the SSD/Burtek business in Colombia are included in discontinued operations in accordance with SFAS No. 144. The second quarter and first six months of fiscal 2007 results represent all the operations that were included as part of the SSD/Burtek agreement. In accordance with Emerging Issues Task Force (“EITF”) Issue No. 87-24, Allocation of Interest to Discontinued Operations (“EITF 87-24”), the Company has allocated interest expense of $1.4 million and $2.7 million to discontinued operations for the second quarter and first six months of fiscal 2007, respectively, due to the requirement under the Company’s multi-currency revolving credit agreement (“credit agreement”) to pay the proceeds from the sale of a business to the parties in the credit agreement.

Assets and liabilities classified as discontinued operations held for sale on our unaudited condensed consolidated balance sheet as of December 1, 2007, and June 2, 2007, include the following (in thousands):

	December 1, 2007		June 2, 2007
Accounts receivable	$	2	$	128
Inventories		135		114
Current assets of discontinued operations held for sale		137		242
Property, plant, and equipment, net		5		5
Non-current assets of discontinued operations held for sale		5		5
Total assets of discontinued operations held for sale	$	142	$	247
Accounts payable	$	149	$	1,569
Accrued liabilities		—		1,168
Current liabilities of discontinued operations held for sale		149		2,737
Total liabilities and stockholders’ equity of discontinued operations held for sale	$	149	$	2,737

Assets Held for Sale:

In July 2006, we decided to sell our interests in property located in Rio De Janeiro, Brazil, which has a book value of $0.7 million. During the first quarter of fiscal 2008, the Company received an offer to purchase our interests in the property for 2.0 million Brazilian Reais, which is equivalent to approximately $1.1 million, and received a security deposit of 0.6 million Brazilian Reais. Upon closing of the sale, the Company will receive additional proceeds of 0.4 million Brazilian Reais in cash and a note receivable of 1.0 million Brazilian Reais which is payable in ten monthly installments of 0.1 million Brazilian Reais, commencing one month after closing. The closing of this transaction is expected to occur during the third quarter of fiscal 2008, however, the Company cannot give any assurance as to the actual timing or successful completion of the transaction.

In October 2007, we decided to sell our building in Pianopoli, Italy, which has a net book value of $0.5 million. The Company expects the completion of this sale to occur during the third quarter of fiscal 2008. The Company cannot give any assurance as to the actual timing or successful completion of the transaction.

In accordance with SFAS No. 144, we have classified the net assets related to both buildings as assets held for sale on our unaudited condensed consolidated balance sheet as of December 1, 2007, and June 2, 2007.

7

4. INVESTMENT IN MARKETABLE EQUITY SECURITIES

The Company’s investments are primarily equity securities, all of which are classified as available-for-sale and are carried at their fair value based on the quoted market prices. The fair value of the Company’s equity securities, which are included in other non-current assets, was $0.6 million as of December 1, 2007, and $1.0 million as of June 2, 2007. Proceeds from the sale of the securities was $0 and $0.2 million during the second quarter and first six months of fiscal 2008, respectively, and $3.6 million and $3.7 million during the same periods of fiscal 2007. During the second quarter of fiscal 2007, the Company retained $3.5 million of proceeds from the sale of securities. In prior periods all proceeds from the sale of securities were reinvested. Gross realized gains on those sales were immaterial during the second quarter and first six months of fiscal 2008, respectively, and $0.7 million and $0.7 million for the same periods of fiscal 2007. Gross realized losses on security sales were immaterial for the second quarter and first six months of fiscal 2008 and fiscal 2007. Net unrealized holding losses of $0.1 million and $0.4 million for the second quarter and first six months of fiscal 2008, respectively, and net unrealized holding gains of $0.2 million and $0.1 million for the second quarter and first six months of fiscal 2007, respectively, have been included in accumulated comprehensive income for fiscal 2008 and 2007.

The following table is the disclosure under SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, for the investment in marketable equity securities with fair values less than cost basis (in thousands):

	Marketable Security Holding Length
	Less Than 12 Months				More Than 12 Months				Total
Description of Securities	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
December 1, 2007 Common Stock	$	215	$	149	$	—	$	—	$	215	$	149
June 2, 2007 Common Stock	$	65	$	4	$	—	$	—	$	65	$	4

5. GOODWILL AND OTHER INTANGIBLE ASSETS

Changes in the carrying amount of goodwill during the six months ended December 1, 2007, by reportable segment were as follows (in thousands):

	Goodwill
	RFPD		EDG		DSG		Total
Balance at June 2, 2007	$	263	$	902	$	10,446	$	11,611
Foreign currency translation		9		15		672		696
Balance at December 1, 2007	$	272	$	917	$	11,118	$	12,307

During the fourth quarter of each fiscal year, the Company’s goodwill balances are reviewed for impairment through the application of a fair-value-based test, using the third quarter as the measurement date. The results of the test as of March 3, 2007, indicated no goodwill impairment, as, for all reporting units, our estimated reporting unit fair value exceeded the carrying value of the reporting unit. Our estimate of fair value for each of our reporting units was based primarily on projected future operating results and cash flows and other assumptions.

8

Intangible assets subject to amortization were as follows (in thousands):

	Intangible Assets Subject to Amortization
	December 1, 2007				June 2, 2007
	Gross Amounts		Accumulated Amortization		Gross Amounts		Accumulated Amortization
Deferred financing costs	$	2,744	$	1,869	$	4,539	$	2,958
Trademarks		478		478		478		478
Total	$	3,222	$	2,347	$	5,017	$	3,436

Deferred financing costs decreased during the first six months of fiscal 2008 primarily due to the write-off of previously capitalized deferred financing costs of $0.6 million related to the extinguishment of the Company’s existing credit agreement as a result of the Company entering into a new $40.0 million credit agreement (“new credit agreement”) on July 27, 2007. The write-off of $0.6 million was recorded as interest expense during the first quarter of fiscal 2008. The remaining amounts of deferred financing costs as of December 1, 2007, are associated with the Company’s 7 ³/4% convertible senior subordinated notes (“7 ³/4% notes”) and the Company’s 8% convertible senior subordinated notes (“8% notes”).

Amortization expense for the three and six-months ended December 1, 2007, and December 2, 2006, was as follows (in thousands):

	Amortization Expense for Three Months				Amortization Expense for Six Months
	FY 2008		FY 2007		FY 2008		FY 2007
Deferred financing costs	$	58	$	122	$	158	$	221
Trademarks		—		3		—		3
Total	$	58	$	125	$	158	$	224

The amortization expense associated with the intangible assets subject to amortization is expected to be $0.3 million in fiscal 2008, and $0.2 million for fiscal years 2009, 2010, and 2011. Amortization expense for fiscal year 2012 is expected to be approximately $0.1 million. The weighted average number of years of amortization expense remaining is 3.73.

6. RESTRUCTURING CHARGES

The Company implemented a global restructuring plan during fiscal 2007 (“2007 Restructuring Plan”). The 2007 Restructuring Plan was designed to decrease the number of warehouses and streamline processes throughout the organization. During fiscal 2007, the Company centralized inventory distribution in Europe, restructured its Latin American operations, and reduced its total workforce, including the elimination of certain layers of management.

As a result of the Company’s 2007 Restructuring Plan, restructuring charges of $2.2 million were recorded in selling, general, and administrative expenses (“SG&A”) during fiscal 2007. During the first six months of fiscal 2008, severance costs of $1.2 million were paid out. The remaining balance payable as of December 1, 2007, has been included in accrued liabilities.

9

As of December 1, 2007, the amounts associated with the activity related to the 2007 Restructuring Plan were as follows (in thousands):

	Restructuring Liability June 2, 2007		For the six months ended December 1, 2007							Restructuring Liability December 1, 2007
2007 Restructuring Plan			Reserve Recorded		Payment			Adjustment To Reserve
Employee severance costs:
RFPD	$	188	$	—	$	(152	)	$	—	$	36
EDG		379		—		(379	)		—		—
Corporate		684		—		(629	)		—		55
Total	$	1,251	$	—	$	(1,160	)	$	—	$	91

7. WARRANTIES

The Company offers warranties for specific products it manufactures. The Company also provides extended warranties for some products it sells that lengthen the period of coverage specified in the manufacturer’s original warranty. Warranty terms generally range from one to three years.

The Company estimates the cost to perform under its warranty obligation and recognizes this estimated cost at the time of the related product sale. The Company records expense related to its warranty obligations as cost of sales in its unaudited condensed consolidated statements of operations. Each quarter, the Company assesses actual warranty costs incurred on a product-by-product basis and compares the warranty costs to its estimated warranty obligation. The estimates with respect to new products are based generally on knowledge of the products, are extrapolated to reflect the extended warranty period, and are refined each quarter as better information with respect to warranty experience becomes known.

Warranty reserves are established for costs that are expected to be incurred after the sale and delivery of products under warranty. The warranty reserves are determined based on known product failures, historical experience, and other currently available evidence.

Changes in the warranty reserve for the first six months of fiscal 2008 were as follows (in thousands):

	Warranty Reserve
Balance at June 2, 2007	$	415
Accruals for products sold		251
Utilization		(229	)
Balance at December 1, 2007	$	437

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8. DEBT

Long-term debt for the periods ended December 1, 2007, and June 2, 2007, was as follows (in thousands):

	December 1, 2007		June 2, 2007
7 3/4% notes, due December 2011	$	44,683	$	44,683
8% notes, due June 2011		11,000		11,000
New credit agreement, due July 2010 (7.50% at December 1, 2007)		—		—
Credit agreement, due October 2009 (7.72% at June 2, 2007)		—		65,711
Total debt		55,683		121,394
Less: current portion		—		(65,711	)
Long-term debt	$	55,683	$	55,683

As of December 1, 2007, the Company maintained $55.7 million in long-term debt, in the form of two series of convertible notes. The Company entered into the new credit agreement on July 27, 2007, which includes a Euro subfacility of $15.0 million and a Singapore subfacility of $5.0 million. This new credit agreement expires in July 2010 and bears interest at applicable LIBOR, SIBOR, or prime rates plus a margin varying with certain quarterly borrowings under the new credit agreement. This new credit agreement is secured by a lien on the Company’s assets and also contains a financial covenant requiring the Company to maintain a leverage ratio of less than 2.0 to 1.0. Pursuant to an amendment to the new credit agreement entered into on November 29, 2007, the required leverage ratio was increased to 3.0 to 1.0 for the fiscal quarters ended December 1, 2007, and ending March 1, 2008. The commitment fee related to the new credit agreement is 0.25% per annum payable quarterly on the average daily unused portion of the aggregate commitment. At December 1, 2007, there were no amounts outstanding under the new credit agreement. Outstanding letters of credit were approximately $0.4 million, and the unused line was $39.6 million.

The new credit agreement consists of the following facilities as of December 1, 2007 (in thousands):

	Capacity		Amount Outstanding
U.S. Facility	$	20,000	$	—
Euro Subfacility		15,000		—
Singapore Subfacility		5,000		—
Total	$	40,000	$	—

Interest expense increased to $1.6 million and $4.2 million for the second quarter and first six months of fiscal 2008, respectively, as compared with $1.4 million and $3.0 million during the second quarter and first six months of fiscal 2007, respectively. The components of interest expense from continuing operations are shown in the following table (in thousands):

	Second Quarter				Six Months
	FY 2008		FY 2007		FY 2008		FY 2007
7 3/4% notes interest expense	$	865	$	875	$	1,731	$	1,731
8% notes interest expense		220		416		440		973
Credit agreement interest expense		—		—		556		—
New credit agreement interest expense		446		—		675		—
Deferred financing costs amortization		58		122		158		221
Write-off of deferred financing costs		—		—		643		62
Other		27		19		41		55
Total interest expense	$	1,616	$	1,432	$	4,244	$	3,042

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Interest expense incurred on the credit agreement during the second quarter and first six months of fiscal 2008 related primarily to borrowings to support working capital investments. During the first quarter of fiscal 2008, the Company wrote off $0.6 million of deferred financing costs due to the extinguishment of the credit agreement on July 27, 2007.

9. INCOME TAXES

The effective income tax rate for the second quarter of fiscal 2008 was a provision of 214.8% as compared with a provision of 13.6% for the second quarter of fiscal 2007. The difference between the effective tax rates as compared to the U.S. federal statutory rate of 34% primarily results from the Company’s geographical distribution of taxable income or losses and valuation allowances related to net operating losses. For the second quarter of fiscal 2008, the tax benefit related to net operating losses was limited by a net increase in valuation allowances of $1.7 million.

In the normal course of business, the Company is subject to examination by taxing authorities throughout the world. The Company is no longer subject to either U.S. federal, state, or local tax examinations by tax authorities for years prior to fiscal year 2004. With few exceptions, the Company is no longer subject to non-U.S. income tax examinations by tax authorities for years prior to fiscal year 2002. The Company’s primary foreign tax jurisdictions are the United Kingdom, Germany, Singapore, and the Netherlands. The company has tax years open beginning in fiscal year 2002 in Germany, the Netherlands, and Singapore; in the U.S. beginning in fiscal year 2004; and in the United Kingdom beginning in fiscal year 2005.

Effective June 3, 2007, the Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of SFAS 109, Accounting for Income Taxes (“FIN 48”). The application of FIN 48 would have resulted in an increase in retained earnings of $1.6 million, except that the increase was fully offset by the application of a valuation allowance against net operating losses. In addition, the Company reclassified $7.0 million of income tax liabilities from current liabilities to non-current liabilities as the Company does not anticipate settling the liabilities within the next twelve months.

At June 3, 2007, the Company’s worldwide liability for uncertain tax positions was $6.5 million, excluding interest and penalties. Unrecognized tax benefits of $2.6 million would affect the Company’s effective tax rate if recognized. There were no significant changes in components of the liability in the six months ending December 1, 2007.

The Company records penalties and interest relating to uncertain tax positions in the income tax expense line item within the unaudited condensed consolidated statements of operations. At June 3, 2007, approximately $0.8 million was included in the liability for uncertain tax positions for the possible payment of interest and penalties. There were no significant changes to penalties and interest relating to uncertain tax positions in the six months ending December 1, 2007.

It is reasonably possible that there will be a change in the unrecognized tax benefits in the range of $0 to approximately $1.4 million due to the expiration of various statutes of limitations within the next 12 months.

10. CALCULATION OF EARNINGS PER SHARE

The Company has authorized 30,000 shares of common stock, 10,000 shares of Class B common stock, and 5,000 shares of preferred stock. The Class B common stock has ten votes per share. The Class B common stock has transferability restrictions; however, it may be converted into common stock on a share-for-share basis at any time. With respect to dividends and distributions, shares of common stock and Class B common stock rank equally and have the same rights, except that Class B common stock cash dividends are limited to 90% of the amount of common stock cash dividends.

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According to the EITF Issue No. 03-6, Participating Securities and the Two-Class Method under FASB Statement No. 128 (“EITF No. 03-6”), the Company’s Class B common stock is considered a participating security requiring the use of the two-class method for the computation of basic and diluted earnings per share. The two-class computation method for each period reflects the cash dividends paid per share for each class of stock, plus the amount of allocated undistributed earnings per share computed using the participation percentage which reflects the dividend rights of each class of stock. Basic and diluted earnings per share were computed using the two-class method as prescribed in EITF No. 03-6. The shares of Class B common stock are considered to be participating convertible securities since the shares of Class B common stock are convertible on a share-for-share basis into shares of common stock and may participate in dividends with common stock according to a predetermined formula which is 90% of the amount of common stock cash dividends.

Diluted earnings per share is calculated by dividing net income, adjusted for interest savings, net of tax, on assumed conversion of convertible debentures and notes, by the actual shares outstanding and share equivalents that would arise from the exercise of stock options, certain restricted stock awards, and the assumed conversion of convertible debentures and notes when dilutive. For the second quarter and first six months of fiscal 2008 and 2007, the assumed conversion and the effect of the interest savings of the Company’s 7 ³/4% notes and 8% notes were excluded because their inclusion would have been anti-dilutive.

The per share amounts presented in the unaudited condensed consolidated statements of operations are based on the following amounts (in thousands, except per share amounts):

	Three Months Ended						Six Months Ended
	December 1, 2007			December 2, 2006			December 1, 2007			December 2, 2006
Numerator for basic and diluted EPS:
Income (loss) from continuing operations	$	(680	)	$	1,330		$	(1,071	)	$	522
Less dividends:
Common stock		593			581			1,185			1,157
Class B common stock		110			111			220			222
Undistributed earnings (losses)	$	(1,383	)	$	638		$	2,476		$	(857	)
Common stock undistributed earnings (losses)	$	(1,167	)	$	536		$	(2,088	)	$	(719	)
Class B common stock undistributed earnings (losses) – basic		(216	)		102			(388	)		(138	)
Total undistributed earnings (losses) – common stock and
Class B common stock – basic	$	(1,383	)	$	638		$	(2,476	)	$	(857	)
Common stock undistributed earnings (losses)	$	(1,167	)	$	536		$	(2,088	)	$	(720	)
Class B common stock undistributed earnings (losses) – diluted		(216	)		102			(388	)		(137	)
Total undistributed earnings (losses) – Class B common stock – diluted	$	(1,383	)	$	638		$	(2,476	)	$	(857	)
Income (loss) from discontinued operations	$	24		$	(248	)	$	55		$	(539	)
Less dividends:
Common stock		593			581			1,185			1,157
Class B common stock		110			111			220			222
Undistributed losses	$	(679	)	$	(940	)	$	(1,350	)	$	(1,918	)
Common stock undistributed losses	$	(573	)	$	(789	)	$	(1,139	)	$	(1,610	)
Class B common stock undistributed losses – basic		(106	)		(151	)		(211	)		(308	)
Total undistributed losses – common stock and Class B common stock – basic	$	(679	)	$	(940	)	$	(1,350	)	$	(1,918	)
Common stock undistributed losses	$	(573	)	$	(790	)	$	(1,139	)	$	(1,611	)
Class B common stock undistributed losses – diluted		(106	)		(150	)		(211	)		(307	)
Total undistributed losses – Class B common stock – diluted	$	(679	)	$	(940	)	$	(1,350	)	$	(1,918	)

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	Three Months Ended						Six Months Ended
	December 1, 2007			December 2, 2006			December 1, 2007			December 2, 2006
Numerator for basic and diluted EPS continued:
Net income (loss)	$	(656	)	$	1,082		$	(1,016	)	$	(17	)
Less dividends:
Common stock		593			581			1,185			1,157
Class B common stock		110			111			220			222
Undistributed earnings (losses)	$	(1,359	)	$	390		$	(2,421	)	$	(1,396	)
Common stock undistributed earnings (losses)	$	(1,146	)	$	327		$	(2,042	)	$	(1,172	)
Class B common stock undistributed earnings (losses) – basic		(213	)		63			(379	)		(224	)
Total undistributed earnings (losses) – common stock and Class B common stock – basic	$	(1,359	)	$	390		$	(2,421	)	$	(1,396	)
Common stock undistributed earnings (losses)	$	(1,146	)	$	328		$	(2,042	)	$	(1,173	)
Class B common stock undistributed earnings (losses) – diluted		(213	)		62			(379	)		(223	)
Total undistributed earnings (losses) – Class B common stock – diluted	$	(1,359	)	$	390		$	(2,421	)	$	(1,396	)
Denominator for basic and diluted EPS:
Denominator for basic EPS:
Common stock weighted average shares		14,798			14,451			14,783			14,435
Class B common stock weighted average shares, and shares under if-converted method for diluted earnings per share		3,048			3,073			3,048			3,073
Effect of dilutive securities
Unvested restricted stock awards		—			8			—			6
Dilutive stock options		—			137			—			76
Denominator for diluted EPS adjusted for weighted average shares and assumed conversions (1)		17,846			17,669			17,831			17,590
Income (loss) from continuing operations per share:
Common stock – basic	$	(0.04	)	$	0.08		$	(0.06	)	$	0.03
Class B common stock – basic	$	(0.03	)	$	0.07		$	(0.05	)	$	0.03
Common stock – diluted	$	(0.04	)	$	0.08		$	(0.06	)	$	0.03
Class B common stock – diluted	$	(0.03	)	$	0.07		$	(0.05	)	$	0.03
Income (loss) from discontinued operations per share:
Common stock – basic	$	0.00		$	(0.02	)	$	0.00		$	(0.03	)
Class B common stock – basic	$	0.00		$	(0.01	)	$	0.00		$	(0.03	)
Common stock – diluted	$	0.00		$	(0.02	)	$	0.00		$	(0.03	)
Class B common stock – diluted	$	0.00		$	(0.01	)	$	0.00		$	(0.03	)
Net income (loss) per share:
Common stock – basic	$	(0.04	)	$	0.06		$	(0.06	)	$	(0.00	)
Class B common stock – basic	$	(0.03	)	$	0.06		$	(0.05	)	$	(0.00	)
Common stock – diluted	$	(0.04	)	$	0.06		$	(0.06	)	$	(0.00	)
Class B common stock – diluted	$	(0.03	)	$	0.06		$	(0.05	)	$	(0.00	)
Common stock options that were anti-dilutive and not included in dilutive earnings per common share		1,760			1,804			1,760			1,941

(1) Total common stock equivalents and Class B common stock for the three and six months ended December 1, 2007, are excluded from our diluted common stock earnings per share calculation because their impact would be anti-dilutive.

11. SHARE BASED COMPENSATION

In the first quarter of fiscal 2007, the Company adopted SFAS No. 123 (Revised 2004), Share-Based Payment, which requires the measurement and recognition of compensation cost at fair value for all share-based payments, including stock options. The Company estimates fair value using the Black-Scholes option-pricing model, which requires assumptions such as expected volatility, risk-free interest rate, expected life, and dividends. Compensation cost is recognized using a graded-vesting schedule over the

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applicable vesting period, or date on which retirement eligibility is achieved, if shorter (non-substantive vesting period approach). Share-based compensation totaled approximately $0.2 million and $0.3 million for the second quarter and first six months of fiscal 2008, respectively, as compared with $0.4 million and $0.6 million for the second quarter and first six months of fiscal 2007, respectively.

12. SEGMENT REPORTING

Based on our interpretation of SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information (“SFAS 131”), we have identified three reportable segments: RF, Wireless & Power Division, Electron Device Group, and the Display Systems Group.

RFPD serves the global RF and wireless communications market, including infrastructure, and wireless networks, and power conversion market.

EDG provides engineered solutions and distributes electronic components to customers in diverse markets including the steel, automotive, textile, plastics, semiconductor manufacturing, and broadcast industries.

DSG is a global provider of integrated display products and systems to the public information, financial, point-of-sale, industrial, and healthcare markets.

Each segment is directed by a Vice President and General Manager who reports to the Chief Executive Officer (“CEO”). The CEO evaluates performance and allocates resources, in part, based on the direct operating contribution of each segment. Direct operating contribution is defined as gross margin less direct selling expenses.

Accounts receivable, inventory, and goodwill are identified by segment. Cash, net property plant and equipment, and other assets are not identifiable by segment.

Operating results and assets by segment are summarized in the following table (in thousands):

	Net Sales		Gross Profit		Direct Operating Contribution			Assets
Second Quarter Fiscal 2008
RFPD	$	95,486	$	21,095	$	10,243		$	135,444
EDG		27,379		8,728		5,040			49,313
DSG		20,873		4,457		(81	)		40,332
Total	$	143,738	$	34,280	$	15,202		$	225,089
Second Quarter Fiscal 2007
RFPD	$	89,994	$	20,392	$	11,817		$	119,719
EDG		25,494		8,339		5,549			46,338
DSG		21,380		5,192		694			39,025
Total	$	136,868	$	33,923	$	18,060		$	205,082

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	Net Sales		Gross Profit		Direct Operating Contribution		Assets
Six Months Fiscal 2008
RFPD	$	179,792	$	41,467	$	20,363	$	135,444
EDG		51,962		16,517		9,223		49,313
DSG		40,262		8,897		44		40,332
Total	$	272,016	$	66,881	$	29,630	$	225,089
Six Months Fiscal 2007
RFPD	$	181,326	$	41,855	$	24,991	$	119,719
EDG		50,168		16,050		10,650		46,338
DSG		43,209		10,157		1,433		39,025
Total	$	274,703	$	68,062	$	37,074	$	205,082

A reconciliation of net sales, gross profit, operating income, and assets to the relevant consolidated amounts is as follows (in thousands):

	Second Quarter						Six Months
	2008			2007			2008			2007
Segment net sales	$	143,738		$	136,868		$	272,016		$	274,703
Corporate		1,247			846			2,434			2,448
Net sales	$	144,985		$	137,714		$	274,450		$	277,151
Segment gross profit	$	34,280		$	33,923		$	66,881		$	68,062
Manufacturing variances and other costs		(480	)		(889	)		(443	)		(676	)
Gross profit	$	33,800		$	33,034		$	66,438		$	67,386
Segment direct operating contribution	$	15,202		$	18,060		$	29,630		$	37,074
Manufacturing variances and other costs		(480	)		(889	)		(443	)		(676	)
Regional selling expenses		—			(2,921	)		—			(6,551	)
Administrative expenses		(12,239	)		(11,911	)		(24,032	)		(23,469	)
Loss on disposal of assets		(10	)		(339	)		(11	)		(320	)
Operating income	$	2,473		$	2,000		$	5,144		$	6,058

	December 1, 2007		June 2, 2007
Segment assets	$	225,089	$	208,939
Cash, cash equivalents, and restricted cash		20,200		79,335
Other current assets (1)		14,650		25,815
Net property (2)		30,883		29,278
Other assets (2) (3)		4,966		5,457
Assets of discontinued operations held for sale		142		247
Total assets	$	295,930	$	349,071

(1) Other current assets include miscellaneous receivables, manufacturing inventories, prepaid expenses, and current deferred income taxes.

(2) Net property and other assets as of June 2, 2007, have been restated to reflect the decision the Company made in the second quarter of fiscal 2008 to sell its building in Pianopoli, Italy. The net book value of the Company’s building in Pianopoli, Italy is classified as assets held for sale for all periods presented.

(3) Other assets include investments, assets held for sale, non-current deferred income taxes, and other assets.

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Geographic net sales information is primarily grouped by customer destination into the following five areas: North America, Asia/Pacific, Europe, Latin America, and Corporate. Europe includes sales to the Middle East and Africa. Net sales to Mexico are included as part of Latin America. Corporate consists of freight and other non-specific net sales.

Net sales and gross profit by geographic region are as follows (in thousands):

	Second Quarter						Six Months
	FY 2008			FY 2007			FY 2008			FY 2007
Net Sales
North America	$	59,033		$	56,929		$	111,840		$	117,313
Asia/Pacific		43,164			39,295			81,293			78,801
Europe		37,715			37,015			71,917			70,614
Latin America		4,440			3,965			8,534			8,940
Corporate		633			510			866			1,483
Total	$	144,985		$	137,714		$	274,450		$	277,151
Gross Profit
North America	$	15,454		$	15,130		$	29,587		$	30,682
Asia/Pacific		9,412			9,014			18,899			18,581
Europe		9,384			9,214			18,637			18,261
Latin America		1,295			1,137			2,562			2,605
Corporate		(1,745	)		(1,461	)		(3,247	)		(2,743	)
Total	$	33,800		$	33,034		$	66,438		$	67,386

The Company sells its products to customers in diversified industries and performs periodic credit evaluations of its customers’ financial condition. Terms are generally on open account, payable net 30 days in North America, and vary throughout Asia/Pacific, Europe, and Latin America. Estimates of credit losses are recorded in the financial statements based on periodic reviews of outstanding accounts.

13. RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157, Fair Value Measurements (“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. Under SFAS No. 157, fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts. The standard clarifies that fair value should be based on the assumptions market participants would use when pricing the asset or liability. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. SFAS No. 157 will be effective for the Company beginning in fiscal 2009. The Company is currently in the process of assessing the impact of SFAS No. 157 but does not believe that the adoption of the standard will have a material impact on the consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS No. 159”). SFAS No. 159 provides guidance with respect to presentation and disclosure requirements for reporting financial assets and liabilities at fair value. SFAS No. 159 does not eliminate disclosure requirements included in other accounting standards, including requirements for disclosures about fair value measurement, as included in SFAS No. 157, and in SFAS No. 107, Disclosures about Fair Value of Financial Instruments. SFAS No. 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007. SFAS No. 159 will be effective for the Company beginning in fiscal 2009. The Company is currently in the process of assessing the impact of SFAS No. 159 but does not believe that the adoption of the standard will have a material impact on the consolidated financial statements.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Except for the historical information contained herein, the matters discussed in this Quarterly Report on Form 10-Q are forward-looking statements relating to future events, which involve certain risks and uncertainties. Further, there can be no assurance that the trends reflected in historical information will continue in the future.

Investors should consider carefully the risk factors described in the Company’s Annual Report on Form 10-K, in addition to the other information included and incorporated by reference in this Quarterly Report on Form 10-Q. All statements other than statements of historical facts included in this report are statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934. The words “may,” “will,” “should,” “could,” “expect,” “plan,” “intend,” “estimate,” “anticipate,” “predict,” “believe,” “potential,” “continue,” and similar expressions and variations thereof are intended to identify forward-looking statements. Such statements appear in a number of places in this report and include statements regarding the intent, belief, or current expectations of the Company, its directors, or its officers with respect to, among other things: (i) trends affecting the Company’s financial condition or results of operations; (ii) the Company’s financing plans; (iii) the Company’s business and growth strategies, including potential acquisitions; and (iv) other plans and objectives for future operations. Any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and actual results may differ materially from those predicted in the forward-looking statements or which may be anticipated from historical results or trends.

Investors should also be aware that while the Company does, from time to time, communicate with securities analysts, it is against the Company’s policy to disclose to them any material non-public information or other confidential commercial information. Accordingly, stockholders should not assume that the Company agrees with any statement or report issued by any analyst irrespective of the content of the statement or report. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts, or opinions, such reports are not the responsibility of the Company.

INTRODUCTION

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to assist the reader in better understanding our business, results of operations, financial condition, changes in financial condition, critical accounting policies and estimates, and significant developments. MD&A is provided as a supplement to, and should be read in conjunction with, our unaudited condensed consolidated financial statements and the accompanying notes thereto appearing elsewhere herein. This section is organized as follows:

• Business Overview

• Results of Continuing Operations – an analysis and comparison of our consolidated results of operations for the three and six months ended December 1, 2007, and December 2, 2006, as reflected in our unaudited condensed consolidated statements of operations.

• Liquidity, Financial Position, and Capital Resources – a discussion of our primary sources and uses of cash for the six months ended December 1, 2007, and December 2, 2006, and a discussion of selected changes in our financial position.

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BUSINESS OVERVIEW

We are a global provider of engineered solutions and a global distributor of electronic components to the radio frequency (“RF”), wireless and power conversion, electron device, and display systems markets. Utilizing our core engineering and manufacturing capabilities, we are committed to a strategy of providing specialized technical expertise and value-added products, or “engineered solutions,” in response to our customers’ needs. These solutions include products which we manufacture or modify and products which are manufactured to our specifications by independent manufacturers under our own private labels. Additionally, we provide solutions and add value through design-in support, systems integration, prototype design and manufacturing, testing, and logistics for end products of its customers. Design-in support includes component modifications or the identification of lower-cost product alternatives or complementary products.

Our products include RF and microwave components, power semiconductors, electron tubes, microwave generators, and data display monitors. These products are used to control, switch or amplify electrical power signals, or as display devices in a variety of industrial, commercial, and communication applications.

Our sales and marketing, product management, and purchasing functions from continuing operations are organized as follows:

RF, Wireless & Power Division (“RFPD”) serves the global RF and wireless communications market, including infrastructure, and wireless networks, and power conversion market.

Electron Device Group (“EDG”) provides engineered solutions and distributes electronic components to customers in diverse markets including the steel, automotive, textile, plastics, semiconductor manufacturing, and broadcast industries.

Display Systems Group (“DSG”) is a global provider of integrated display products and systems to the public information, financial, point-of-sale, industrial, and healthcare markets.

We currently have operations in the following major geographic regions:

• North America;

• Asia/Pacific;

• Europe; and

• Latin America.

RESULTS OF CONTINUING OPERATIONS

Second Quarter Fiscal 2008 Overview

• Cash flows provided by operating activities were $2.7 million during the second quarter of fiscal 2008 compared with $3.7 million provided by operating activities during the second quarter of fiscal 2007.

• Net sales for RFPD and EDG increased 6.1% and 7.4%, respectively, during the second quarter of fiscal 2008 compared to the second quarter of fiscal 2007.

• Net sales for the DSG decreased 2.4% during the second quarter of fiscal 2008 compared to the second quarter of fiscal 2007.

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• The Asia/Pacific region experienced a 9.8% increase in net sales during the second quarter of fiscal 2008, as compared to the second quarter of fiscal 2007.

• Gross margin percentage for RFPD, EDG, and DSG decreased 0.6%, 0.8%, and 2.9%, respectively, during the second quarter of fiscal 2008 compared to the second quarter of fiscal 2007.

• Operating income generated during the second quarter of fiscal 2008 was $2.5 million, a $0.5 million increase from the $2.0 million generated during the second quarter of fiscal 2007.

• Foreign exchange loss increased to $1.4 million during the second quarter of fiscal 2008 as compared to a foreign exchange gain of $0.2 million during the second quarter of fiscal 2007.

The net loss of $0.7 million during the second quarter of fiscal 2008 reflects the impact of the following significant items:

• $0.9 million of expense related to foreign exchange loss for cash received from the sale of our Security Systems Division/Burtek Systems (“SSD/Burtek”) that was temporarily held in our European entities.

• $0.9 million of severance expense primarily related to contractual arrangements with employees relating to an acquisition.

• $0.5 million of income tax expense related to restructuring of inter-company debt with certain foreign subsidiaries.

First Half Fiscal 2008 Overview

• Cash flows provided by operating activities were $8.7 million during the first half of fiscal 2008 while cash flows used by operating activities were $3.8 million during the first half of fiscal 2007.

• Net sales for RFPD and DSG decreased 0.8% and 6.8%, respectively, during the first half of fiscal 2008 compared to the first half of fiscal 2007.

• Net sales for EDG increased 3.6% during the first half of 2008 compared to the first half of fiscal 2007.

• Net sales for the Asia/Pacific geographic region increased 3.2% during the first half of fiscal 2008, as compared to the first half of fiscal 2007.

• Gross margin percentage for EDG and DSG decreased 0.2% and 1.4%, respectively, during the first half of fiscal 2008 compared to the first half of fiscal 2007.

• Operating income generated during the first half of fiscal 2008 decreased $1.0 million, from $6.1 million generated during the first half of fiscal 2007, to $5.1 million generated during the first half of fiscal 2008.

• Foreign exchange loss increased to a loss of $1.8 million during the first six months of fiscal 2008 as compared to a foreign exchange loss of $0.2 million during the first six months of fiscal 2007.

Net Sales and Gross Profit Analysis

During the second quarter of fiscal 2008, consolidated net sales increased 5.3% due to sales growth in wireless, power, and electron device products, partially offset by a decline in display systems products. Net sales during the first six months of fiscal 2008 declined 1.0% due to a decline in wireless and display systems products, partially offset by an increase in electron device products.

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Net sales by segment and percent change for the three and six months ended December 1, 2007, and December 2, 2006, was as follows (in thousands):

Net Sales
	FY 2008		FY 2007		% Change
Second Quarter
RFPD	$	95,486	$	89,994	6.1	%
EDG		27,379		25,494	7.4	%
DSG		20,873		21,380	(2.4	%)
Corporate		1,247		846
Total	$	144,985	$	137,714	5.3	%
Six Months
RFPD	$	179,792	$	181,326	(0.8	%)
EDG		51,962		50,168	3.6	%
DSG		40,262		43,209	(6.8	%)
Corporate		2,434		2,448
Total	$	274,450	$	277,151	(1.0	%)

Consolidated gross profit increased 2.3% during the second quarter of fiscal 2008, due primarily to an increase in sales volume of wireless and electron device products. Consolidated gross profit decreased 1.4% during the first six months of fiscal 2008, due primarily to a decrease in sales volume for display systems products. Consolidated gross margin as a percentage of net sales decreased to 23.3% in the second quarter of fiscal 2008 as compared to 24.0% for the second quarter of fiscal 2007, due primarily to an increase in inventory reserves and additional inbound freight, while consolidated gross margin remained relatively flat at 24.2% for the first six months of fiscal 2008 as compared with 24.3% for the first six months of fiscal 2007. Gross profit reflects the distribution and manufacturing product margin less manufacturing variances, inventory overstock charges, customer returns, scrap and cycle count adjustments, engineering costs, and other provisions. Gross profit on freight and miscellaneous costs are included under the caption “Corporate”.

Gross profit by segment and percent of segment sales for the three and six months ended December 1, 2007, and December 2, 2006, were as follows (in thousands):

Gross Profit
	FY 2008			% of Net Sales		FY 2007			% of Net Sales
Second Quarter
RFPD	$	21,095		22.1	%	$	20,392		22.7	%
EDG		8,728		31.9	%		8,339		32.7	%
DSG		4,457		21.4	%		5,192		24.3	%
Corporate		(480	)				(889	)
Total	$	33,800		23.3	%	$	33,034		24.0	%
Six Months
RFPD	$	41,467		23.1	%	$	41,855		23.1	%
EDG		16,517		31.8	%		16,050		32.0	%
DSG		8,897		22.1	%		10,157		23.5	%
Corporate		(443	)				(676	)
Total	$	66,438		24.2	%	$	67,386		24.3	%

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RF, Wireless & Power Division

RFPD net sales increased $5.5 million, or 6.1%, from $90.0 million in the second quarter of fiscal 2007, to $95.5 million in the second quarter of fiscal 2008. The net sales increase in the second quarter of fiscal 2008 as compared to second quarter of fiscal 2007 was due primarily to an increase in demand for power conversion and network access products, partially offset by a decrease in infrastructure products. Power conversion net sales increased during the second quarter of fiscal 2008 to $13.9 million, or 27.5%, from $10.9 million during the second quarter of fiscal 2007, due to sales growth in Asia/Pacific and Europe. The growth in net sales of power conversion products continues to be strong in Asia/Pacific and Europe which benefited from RFPD’s penetration of the welding and steel manufacturing market with induction heating and power supply applications. Alternative energy application growth in Europe and Asia/Pacific also contributed to the increase in power conversion net sales. Network access net sales increased 8.6% to $37.8 million during the second quarter of fiscal 2008 from $34.8 million during the second quarter of fiscal 2007, due primarily to an increase in wireless local-area network (“WLAN”) sales in Asia/Pacific. Infrastructure products net sales were $24.0 million during the second quarter of fiscal 2008, which is 7.2% lower than net sales during the second quarter of fiscal 2007. The decline for infrastructure products net sales was due primarily to the timing of the different phases of the Time Division-Synchronous Code Division Multiple Access (“TD-SCDMA”) project in China. Phase one of the TD-SCDMA project occurred during fiscal 2007, while phase two is scheduled to begin in the second half of fiscal 2008. During the second quarter of fiscal 2008, the gross margin as a percent of net sales declined to 22.1% from 22.7% during the second quarter of fiscal 2007. This decrease is due primarily to shifts in product mix. The gross margin percentage remained flat at 23.1% for the first six months of fiscal 2008 and 2007.

Electron Device Group

EDG net sales increased $1.9 million, or 7.4%, from $25.5 million during the second quarter of fiscal 2007, to $27.4 million during the second quarter of fiscal 2008. Net sales increased during the first six months of fiscal 2008 to $52.0 million, a 3.6% increase from $50.2 million during the first six months of fiscal 2007. The net sales increase for both periods was due to an increase in tube sales, partially offset by a decline in semiconductor fabrication equipment products. Net sales of tubes increased 9.0% and 6.7% to $19.4 million and $36.6 million for the second quarter and first six months of fiscal 2008, respectively, from $17.8 million and $34.3 million in the same periods during fiscal 2007. Semiconductor fabrication equipment net sales declined 1.4% and 3.4% to $5.2 million and $10.6 million during the second quarter and first six months of fiscal 2008, respectively, as compared to the second quarter and first six months of fiscal 2007. Excluding the Asia/Pacific market, the semiconductor fabrication equipment industry experienced an overall decline. The gross profit improvement of 4.7% and 2.9% during the second quarter and first six months of fiscal 2008 compared to the same time periods during fiscal 2007, respectively, was due primarily to an increase in sales volume. Gross margin as a percent of sales declined to 31.9% in the second quarter of fiscal 2008, compared to a gross margin as a percent of sales of 32.7% in the second quarter of fiscal 2007. The decrease in gross margin is due primarily to a decline in semiconductor fabrication equipment product margins, partially offset by improved tube margins. The gross margin percentage for the first six months of fiscal 2008 declined slightly to 31.8% from 32.0% during the first six months of fiscal 2007.

Display Systems Group

DSG net sales decreased $0.5 million, or 2.4%, from $21.4 million during the second quarter of fiscal 2007, to $20.9 million during the second quarter of fiscal 2007. Net sales declined to $40.3 million during the first six months of fiscal 2008, or 6.8% from $43.2 million of net sales during the first six months of fiscal 2007. The decline in both periods was due to a decline in medical monitors and custom display products. Net sales of medical monitors declined 5.2% and 16.8% to $5.5 million and $9.9 million during the second quarter and first six months of fiscal 2008, respectively, as compared with $5.8 million and $11.9 million

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during the second quarter and first six months of fiscal 2007. Net sales of custom display products declined 14.4% to $8.9 million during the second quarter of fiscal 2008 and from $10.4 million during the second quarter of fiscal 2007. Custom display products net sales declined 14.5% to $18.9 million during the first six months of fiscal 2008 from $22.1 million during the first six months of fiscal 2007. The decline for both periods was due primarily to the completion of non-recurring projects during fiscal 2007. Gross margin percent of revenue declined to 21.4% and 22.1% during the second quarter and first six months of fiscal 2008, respectively, from 24.3% and 23.5% during the second quarter and first six months of fiscal 2007. The decline in gross margin as a percent of sales was due primarily to a decline in medical monitor margins caused by increased competition from other low margin resellers.

Sales by Geographic Area

On a geographic basis, the Company categorizes its sales by destination: North America, Asia/Pacific, Europe, Latin America, and Corporate. Europe includes net sales to the Middle East and Africa. Latin America includes net sales to Mexico. Corporate consists of freight and other non-specific net sales.

Net sales and gross margin, as a percent of net sales, by geographic area are as follows (in thousands):

Net Sales
	FY 2008		FY 2007		% Change
Second Quarter
North America	$	59,033	$	56,929	3.7	%
Asia/Pacific		43,164		39,295	9.8	%
Europe		37,715		37,015	1.9	%
Latin America		4,440		3,965	12.0	%
Corporate		633		510
Total	$	144,985	$	137,714	5.3	%
Six Months
North America	$	111,840	$	117,313	(4.7	%)
Asia/Pacific		81,293		78,801	3.2	%
Europe		71,917		70,614	1.8	%
Latin America		8,534		8,940	(4.5	%)
Corporate		866		1,483
Total	$	274,450	$	277,151	(1.0	%)

Gross profit by geographic area and percent of geographic sales are presented in the following table (in thousands):

Gross Profit
	FY 2008			% of Net Sales		FY 2007			% of Net Sales
Second Quarter
North America	$	15,454		26.2	%	$	15,130		26.6	%
Asia/Pacific		9,412		21.8	%		9,014		22.9	%
Europe		9,384		24.9	%		9,214		24.9	%
Latin America		1,295		29.2	%		1,137		28.7	%
Corporate		(1,745	)				(1,461	)
Total	$	33,800		23.3	%	$	33,034		24.0	%
Six Months
North America	$	29,587		26.5	%	$	30,682		26.2	%
Asia/Pacific		18,899		23.2	%		18,581		23.6	%
Europe		18,637		25.9	%		18,261		25.9	%
Latin America		2,562		30.0	%		2,605		29.1	%
Corporate		(3,247	)				(2,743	)
Total	$	66,438		24.2	%	$	67,386		24.3	%

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Net sales in North America increased 3.7% in the second quarter of fiscal 2008 to $59.0 million as compared with $57.0 million during the second quarter of fiscal 2007. Net sales for the first six months of fiscal 2008 decreased 4.7% to $111.8 million as compared to $117.3 million during the first six months of fiscal 2007. The net sales increase in North America for the second quarter was due primarily to an increase in sales for wireless and electron device products, partially offset by a decline in display systems products. The net sales decline for the first six months of fiscal 2008 was due primarily to a decline in display system and wireless products, partially offset by an increase in sales of electron device products. Gross margin decreased to 26.2% during the second quarter of fiscal 2008, from 26.6% during the second quarter of fiscal 2007. The gross margin decline was due primarily to decline in gross margins of wireless and display systems products. Gross margin increased to 26.5% during the first six months of fiscal 2008, from 26.2% during the first six months of fiscal 2007. The gross margin improvement for the first six months was due primarily to improved electron device product margins.

Net sales in Asia/Pacific increased $3.9 million during the second quarter of fiscal 2008, or 9.8%, from $39.3 million during the second quarter of fiscal 2007, to $43.2 million during the second quarter of fiscal 2008. For the first six months of fiscal 2008, net sales grew to $81.3 million, a 3.2% increase from $78.8 million during the first six months of fiscal 2007. The increase for the second quarter and first six months was due primarily to higher net sales for power conversion, network access, and electron device products, partially offset by a decline in net sales for infrastructure products. Net sales in China increased 22.5% to $15.4 million and 27.1% to $32.1 million during the second quarter and first six months of fiscal 2008 compared to the second quarter and first six months of fiscal 2007, respectively. During the second quarter and first six months of fiscal 2008, gross margin declined to 21.8% and 23.2%, respectively, from 22.9% and 23.6% during the second quarter and first six months of fiscal 2007. The decline in gross margin for both periods was primarily due to shifts in product mix.

Net sales in Europe grew 1.9% to $37.7 million and 1.8% to $71.9 million during the second quarter and first six months of fiscal 2008, respectively, from $37.0 million and $70.6 million during the second quarter and first six months of fiscal 2007. Gross margin in Europe remained flat at 24.9% and 25.9% during the second quarter and first six months of fiscal 2008 and 2007, respectively.

Net sales in Latin America increased $0.4 million, or 12.0%, from $4.0 million during the second quarter of fiscal 2007, to $4.4 million during the second quarter of fiscal 2008. During the first six months of fiscal 2008, net sales declined 4.5% to $8.5 million, from $8.9 million during the first six months of fiscal 2007. Gross margin in Latin America increased to 29.2% and 30.0% in the second quarter and first six months of fiscal 2008, respectively, from 28.7% and 29.1% in the same periods during fiscal 2007. The gross margin improvement was primarily attributable to improved margins for wireless and electron device products.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses (“SG&A”) increased during the second quarter of fiscal 2008 to $31.3 million as compared with $30.7 million during the second quarter of fiscal 2007. SG&A during the first six months of fiscal 2008 increased slightly to $61.3 million from $61.0 million during the first six months of fiscal 2007. SG&A expense in the second quarter and first six months of fiscal 2008 included severance expense of $0.9 million and $1.5 million, respectively, as compared with severance costs of $0.5 million and $1.3 million during the second quarter and first six months of fiscal 2007, respectively. SG&A decreased to 21.6% of net sales during the second quarter of fiscal 2008 from 22.3% during the second quarter of fiscal 2007.

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Other (Income) Expense

During the second quarter of fiscal 2008, other (income) expense increased to an expense of $2.7 million from an expense of $0.5 million during the second quarter of fiscal 2007. During the first six months of fiscal 2008, other (income) expense increased to an expense of $5.4 million from $4.9 million during the first six months of fiscal 2007. The increase in expense for both periods relates primarily to unfavorable changes in foreign currency exchange rate and an increase in interest expense. Other income (expense) included a foreign exchange loss of $1.4 million during the second quarter of fiscal 2008 as compared with a foreign exchange gain of $0.2 million during the second quarter of fiscal 2007. For the first six months of fiscal 2008, the foreign exchange loss was $1.8 million, compared to a foreign exchange loss of $0.2 million during the first six months of fiscal 2007. The foreign exchange loss in the second quarter of fiscal 2008 includes a loss of approximately $0.9 million relating to cash received from the sale of our SSD/Burtek business that was temporarily held in our European entities. Other (income) expense included costs associated with the retirement of long-term debt of $2.5 million in the first quarter of fiscal 2007 due to the Company entering into two separate agreements in August 2006 to purchase $14.0 million of the Company’s 8% convertible senior subordinated notes. The Company incurred no such charges in fiscal 2008. Interest expense increased to $1.6 million and $4.2 million during the second quarter and first six months of fiscal 2008, respectively, as compared with $1.4 million and $3.0 million during the second quarter and first six months of fiscal 2007, respectively. See Note 8 “Debt” of our unaudited condensed consolidated financial statements for additional discussion on interest expense.

Income Tax Provision

The effective income tax rate for the second quarter of fiscal 2008 was a provision of 214.8% as compared with a provision of 13.6% for the second quarter of fiscal 2007. The difference between the effective tax rates as compared to the U.S. federal statutory rate of 34% primarily results from the Company’s geographical distribution of taxable income or losses and valuation allowances related to net operating losses. For the second quarter of fiscal 2008, the tax benefit related to net operating losses was limited by a net increase in valuation allowances of $1.7 million.

In the normal course of business, the Company is subject to examination by taxing authorities throughout the world. The Company is no longer subject to either U.S. federal, state, or local tax examinations by tax authorities for years prior to fiscal year 2004. With few exceptions, the Company is no longer subject to non-U.S. income tax examinations by tax authorities for years prior to fiscal year 2002. The Company’s primary foreign tax jurisdictions are the United Kingdom, Germany, Singapore, and the Netherlands. The company has tax years open beginning in fiscal year 2002 in Germany, the Netherlands, and Singapore; in the U.S. beginning in fiscal year 2004; and in the United Kingdom beginning in fiscal year 2005.

Effective June 3, 2007, the Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of SFAS 109, Accounting for Income Taxes (“FIN 48”). The application of FIN 48 would have resulted in an increase in retained earnings of $1.6 million, except that the increase was fully offset by the application of a valuation allowance against net operating losses. In addition, the Company reclassified $7.0 million of income tax liabilities from current liabilities to non-current liabilities as the Company does not anticipate settling the liabilities within the next twelve months.

At June 3, 2007, the Company’s worldwide liability for uncertain tax positions was $6.5 million, excluding interest and penalties. Unrecognized tax benefits of $2.6 million would affect the Company’s effective tax rate if recognized. There were no significant changes in components of the liability in the six months ending December 1, 2007.

The Company records penalties and interest relating to uncertain tax positions in the income tax expense line item within the unaudited consolidated statements of operations. At June 3, 2007, approximately $0.8 million was included in the liability for uncertain tax positions for the possible payment of interest and penalties. There were no significant changes to penalties and interest relating to uncertain tax positions in the six months ending December 1, 2007.

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It is reasonably possible that there will be a change in the unrecognized tax benefits in the range of $0 to approximately $1.4 million due to the expiration of various statutes of limitations within the next 12 months.

Net Income (Loss) and Per Share Data

Net loss for the second quarter of fiscal 2008 was $0.7 million, or $0.04 per diluted common share and $0.03 per Class B diluted common share as compared with net income of $1.1 million for the second quarter of fiscal 2007, or $0.06 per diluted common share and $0.06 per Class B diluted common share. Net loss for the first six months of fiscal 2008 was $1.0 million, or $0.06 per diluted common share and $0.05 per Class B diluted common share as compared with a net loss of $17 thousand for the second quarter of fiscal 2007, or $0.00 per diluted common share and Class B diluted common share.

LIQUIDITY, FINANCIAL POSITION, AND CAPITAL RESOURCES

The Company has financed its growth and cash needs largely through income from operations, borrowings under the revolving credit facilities, issuance of convertible senior subordinated notes, and sale of assets. Liquidity provided by operating activities is reduced by working capital requirements, debt service, capital expenditures, dividends, and business acquisitions. Liquidity provided by operating activities is increased by proceeds from borrowings and from the dispositions of businesses and assets.

Cash and cash equivalents were $20.2 million as of December 1, 2007, as compared to $17.4 million as of June 2, 2007.

Cash Flows from Operating Activities

Cash provided by operating activities during the first six months of fiscal 2008 was $8.7 million, primarily due to lower accounts receivable and higher accounts payable balances, partially offset by higher inventory balances. Accounts receivable declined $5.4 million, excluding the impact of foreign currency exchange rate changes of $4.0 million, during the first six months of fiscal 2008 compared to the first six months of fiscal 2007. This decline was primarily attributable to improved cash collections. Accounts payable balances increased $11.7 million, excluding the impact of foreign currency exchange rate changes of $1.1 million, during the first six months of fiscal 2008, primarily due to negotiating with many of our vendors related to payment terms. Inventory balances increased $1.4 million during the first six months of fiscal 2008, excluding the impact of foreign currency exchange rate changes of $4.1 million.

Cash used in operating activities during the first six months of fiscal 2007 was $3.8 million due primarily to higher inventories, lower accounts payable, and lower accrued liabilities, partially offset by lower accounts receivable. The increase in inventories of $7.8 million, excluding the impact of foreign currency exchange rate changes of $0.2 million, was primarily due to higher inventory stocking levels to support anticipated sales growth. Accounts payable balances decreased $1.0 million, excluding the impact of foreign currency exchange rate changes of $0.8 million, due primarily to the timing of payments of inventory. Accrued liabilities decreased $3.5 million, excluding the impact of foreign currency exchange rate changes of $0.3 million, due primarily to payments of interest on long-term debt and remittance of foreign sales and use taxes. Accounts receivable declined $3.3 million, excluding the impact of foreign currency exchange rate changes of $1.4 million, during the first six months of fiscal 2007 due primarily to a decline in sales volume.

Cash Flows from Investing Activities

Net cash used in investing activities of $3.5 million during the first six months of fiscal 2008 was due primarily to capital expenditures for information technology projects and building improvements. Net cash provided by investing activities of $0.8 million during the first six months of fiscal 2007 was due primarily to the liquidation of approximately $3.5 million of long-term investments, partially offset by capital expenditures of $2.7 million for information technology projects.

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Cash Flows from Financing Activities

Net cash used in financing activities of $5.2 million during the first six months of fiscal 2008 was due primarily to paying off $61.4 million of debt outstanding under the Company’s multi-currency revolving credit agreement (“credit agreement”) from the use of restricted cash of $61.9 million, in addition to net debt payments of $4.2 million on the Company’s new $40.0 million credit agreement (“new credit agreement”). During the first six months of fiscal 2007, net cash used in financing activities was $0.9 million, due primarily to cash payments for the early debt retirement of $7.2 million and dividend payments of $1.4 million, partially offset by net debt borrowings of $7.6 million.

The Company entered into the new credit agreement on July 27, 2007, which includes a Euro subfacility of $15.0 million and a Singapore subfacility of $5.0 million. This new credit agreement expires in July 2010 and bears interest at applicable LIBOR, SIBOR, or prime rates plus a margin varying with certain quarterly borrowings under the new credit agreement. This new credit agreement is secured by a lien on the Company’s assets and also contains a financial covenant requiring the Company to maintain a leverage ratio of less than 2.0 to 1.0. Pursuant to an amendment to the new credit agreement entered into on November 29, 2007, the required leverage ratio was increased to 3.0 to 1.0 for the fiscal quarters ended December 1, 2007, and ending March 1, 2008. The commitment fee related to the new credit agreement is 0.25% per annum payable quarterly on the average daily unused portion of the aggregate commitment. At December 1, 2007, there were no amounts outstanding under the new credit agreement. Outstanding letters of credit were approximately $0.4 million, and the unused line was $39.6 million.

The new credit agreement consists of the following facilities as of December 1, 2007 (in thousands):

	Capacity		Amount Outstanding
U.S. Facility	$	20,000	$	—
Euro Subfacility		15,000		—
Singapore Subfacility		5,000		—
Total	$	40,000	$	—

The Company believes that the existing sources of liquidity, including current cash, as well as cash provided by operating activities, supplemented as necessary with funds available under credit arrangements, will provide sufficient resources to meet known capital requirements and working capital needs for the fiscal year ending May 31, 2008.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Risk Management and Market Sensitive Financial Instruments

Certain operations, assets, and liabilities of the Company are denominated in foreign currencies subjecting the Company to foreign currency exchange risk. In addition, some of the Company’s debt financing varies with market rates exposing the Company to the market risk from changes in interest rates. In order to provide the user of these financial statements guidance regarding the magnitude of these risks, the Securities and Exchange Commission requires the Company to provide certain quantitative disclosures based upon hypothetical assumptions. Specifically, these disclosures require the calculation of the effect of a 10% increase in market interest rates and an unfavorable 10% change in the U.S. dollar against foreign currencies on the reported net earnings and financial position of the Company.

Interest Expense Exposure

The Company’s new credit agreement’s interest rates vary based on market interest rates. Had interest rates increased 10%, interest expense would have increased by an immaterial amount for the second quarter of fiscal 2008 or second quarter of fiscal 2007.

Foreign Currency Exposure

The Company’s foreign denominated assets and liabilities are cash, accounts receivable, inventory, accounts payable, and intercompany receivables and payables, as it conducts business in countries of the European Union, Asia/Pacific and, to a lesser extent, Canada and Latin America. Tools that the Company may use to manage foreign exchange exposures include currency clauses in sales contracts, local debt to offset asset exposures and forward contracts to hedge significant transactions. The Company has not entered into any forward contracts in fiscal 2008 or 2007.

Had the U.S. dollar changed unfavorably 10% against various foreign currencies, net sales would have been lower by an estimated $5.4 million and $10.4 million during the second quarter and first six months of fiscal 2008, respectively. Had the U.S. dollar changed unfavorably 10% against various foreign currencies, net sales would have been lower by an estimated $5.3 million and $10.0 million during the second quarter and first six months of fiscal 2007, respectively. Total assets would have declined by an estimated $26.6 million as of December 1, 2007, and an estimated $17.9 million as of the fiscal year ended June 2, 2007. The total liabilities would have decreased by an estimated $1.0 million as of December 1, 2007, and an estimated $3.8 million as of the fiscal year ended June 2, 2007.

The interpretation and analysis of these disclosures should not be considered in isolation since such variances in interest rates and exchange rates would likely influence other economic factors. Such factors, which are not readily quantifiable, would likely also affect the Company’s operations.

For an additional description of the Company’s market risk, see “Item 7A – Quantitative and Qualitative Disclosures about Market Risk – Risk Management and Market Sensitive Financial Instruments” in the Company’s Annual Report on Form 10-K for the fiscal year ended June 2, 2007.

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ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Management of the Company, with the participation of the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) as of December 1, 2007. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported on a timely basis and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding disclosure. Based upon this evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.

(b) Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the second quarter of fiscal 2008 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is involved in several pending judicial proceedings concerning matters arising in the ordinary course of its business. We cannot predict the outcome of any pending legal matters, and an unfavorable outcome of any one or more of these matters could have a material adverse effect on our business, results of operations, cash flows, and financial position.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended June 2, 2007, which could materially affect the Company’s business, financial condition or future results. The risks described in the Company’s Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially affect the Company’s business, and financial condition.

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

At the annual meeting of stockholders held on October 9, 2007, six proposals were submitted to a vote of the Company’s stockholders: (1) to elect its directors; (2) to approve an amendment to the Richardson Electronics, Ltd. Employees 2001 Incentive Compensation Plan to increase the number of shares subject to the Plan by 900,000; (3) to approve an amendment to the Richardson Electronics, Ltd. 1999 Stock Purchase Plan to increase the number of shares to the Plan by 200,000; (4) to approve an amendment to the Richardson Electronics, Ltd. Employees 1999 Stock Purchase Plan to allow employees to purchase the shares at 85% of fair market value as of the day of the last fiscal year; (5) to approve the Edward J. Richardson Incentive Compensation Plan; and (6) to ratify the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for fiscal 2008. Stockholders present in person or by proxy holding shares representing 42,206,651 votes out of a total of 45,287,814 votes entitled to be voted at the meeting, which was more than the number of votes necessary to constitute a quorum. The following table sets forth the results of the voting:

Proposal	Number of Affirmative Votes	Withheld authority
1. Election of Directors
Edward J. Richardson	37,630,074	8,542,213
Scott Hodes	36,681,150	10,440,061
Samuel Rubinovitz	35,008,332	13,785,697
Arnold R. Allen	36,679,900	10,442,561
Jacques Bouyer	41,589,558	623,245
Harold L. Purkey	35,013,816	13,774,729
Ad Ketelaars	41,592,163	618,035
John R. Peterson	34,241,512	15,319,337

Proposal	For	Against	Abstain	Not Voted
2. Amend the Employees 2001 Compensation Plan to increase the Plan by 900,000 shares	37,527,790	2,473,400	7,001	5,279,623
Proposal	For	Against	Abstain	Not Voted
3. Amend the Employees 1999 Stock Purchase Plan to increase the Plan by 200,000 shares	39,540,558	460,237	7,396	5,279,623

30

Proposal	For	Against	Abstain	Not Voted
4. Amendment the Employees 1999 Stock Purchase Plan to purchase shares at 85% of the fair market value as of the last day of the fiscal year	39,699,667	302,648	5,876	5,279,623
Proposal	For	Against	Abstain	Not Voted
5. Approve the Edward J. Richardson Incentive Compensation Plan	34,997,056	5,000,992	10,143	5,279,623
Proposal	For	Against	Abstain	Not Voted
6. Ratify the selection of Ernst & Young LLP	34,440,949	7,761,966	3,736	3,081,163

ITEM 5. OTHER INFORMATION

Appointment of James M. Dudek, Jr. as Principal Accounting Officer

On December 17, 2007, the Company and James M. Dudek, Jr., age 36, entered into an Employment, Nondisclosure and Non-compete Agreement (the “Employment Agreement”) pursuant to which Mr. Dudek would become Controller and Chief Accounting Officer of the Company. Mr. Dudek commenced employment with the Company on December 17, 2007, and on January 8, 2008, the Board of Directors of the Company appointed him to the offices of Controller and Chief Accounting Officer.

Prior to joining the Company, Mr. Dudek held two positions with Career Education Corporation, most recently serving as the Senior Director, Financial Reporting since September 2006, and Director of Accounting from February 2004 until September 2006. Prior to that, he held several positions with ConAgra Refrigerated Foods Group, most recently serving as Retail Sales Controller from May 2002 until February 2004, Corporate Financial Planning Manager from February 2000 until May 2002, and Planning Analyst from September 1999 until February 2000. He earned his Bachelor of Science Degree in Accounting from the University of Illinois at Chicago in December 1993 and has been a Certified Public Accountant since May 1996.

Under the Employment Agreement, Mr. Dudek’s initial base salary is $185,000 per year, and he was granted a non-qualified option to purchase 5,000 shares of the Company’s common stock. The option has an exercise price of $6.23, equal to the fair market value of the Company’s common stock at the close of business on December 17, 2007. The option will vest in five substantially equal annual installments. Mr. Dudek will also be awarded a one-time starting bonus of $40,000 on March 3, 2008, which is subject to repayment in full if his employment is terminated for cause or he resigns for any reason prior to March 3, 2009. Mr. Dudek will be entitled to participate in the Company’s annual cash incentive plan with a target annual incentive bonus equal to 35% of his annual base salary. Mr. Dudek will also participate in other benefit plans offered to executive officers of the Company.

Under the Employment Agreement, upon a termination of his employment by the Company without cause, Mr. Dudek is entitled to a payment equal to his then current annual base salary and any earned bonus through the date of termination. Mr. Dudek has agreed not to compete with the Company during the term of his employment and for a period of one year thereafter.

Results of Operation and Financial Condition and Declaration of Dividend

On January 9, 2008, the Company issued a press release reporting results for its fiscal second quarter ended December 1, 2007, and the declaration of a cash dividend. A copy of the press release is furnished with this report as Exhibit 99.1 to this form 10-Q and incorporated by reference herein.

ITEM 6. EXHIBITS

See exhibit index which is incorporated by reference herein.

31

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.

	RICHARDSON ELECTRONICS, LTD.
Date: January 10, 2008	By:	/s/ Kathleen S. Dvorak
		Kathleen S. Dvorak Chief Financial Officer (on behalf of the Registrant and as Principal Financial Officer)

32

Exhibit Index 

(c) EXHIBITS

Exhibit Number	Description
3.1	Restated Certificate of Incorporation of the Company, incorporated by reference to Appendix B to the Proxy Statement / Prospectus dated November 13, 1986, incorporated by reference to the Company’s Registration Statement on Form S-4.
3.2	Amended and Restated By-laws of the Company.
10.1	Form of Employment, Nondisclosure and Non-compete Agreement between the Company and Kathleen S. Dvorak dated as of October 24, 2007, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed October 25, 2007.
10.2	First Amendment to Revolving Credit Agreement entered into as of November 29, 2007, by and among Richardson Electronics, Ltd., Richardson Electronics Limited, Richardson Electronics Benelux B.V., Richardson Electronics Pte Ltd., Richardson Electronics Pty Limited, and JP Morgan Bank, N.A.
31.1	Certification of Edward J. Richardson pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed pursuant to Part I).
31.2	Certification of Kathleen S. Dvorak pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed pursuant to Part I).
32	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed pursuant to Part I).
99.1	Press release, dated January 9, 2008, regarding the Company’s results for its fiscal second quarter ended December 1, 2007, and the declaration of a cash dividend.

33

EX-3.2

Exhibit 3.2

AMENDED AND RESTATED BY-LAWS

OF

RICHARDSON ELECTRONICS, LTD.

AS OF SEPTEMBER 12, 2007

ARTICLE I

OFFICES

SECTION 1. REGISTERED OFFICE.—The registered office shall be established and maintained at the Office of the United States Corporation Company, in the City of Dover, in the County of Kent, in the State of Delaware, and said corporation shall be the registered agent of this corporation in charge thereof.

SECTION 2. OTHER OFFICES.—The corporation may have other offices, either within or without the State of Delaware, at such place or places as the Board of Directors may from time to time appoint or the business of the corporation may require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

SECTION 1. ANNUAL MEETINGS.—Annual meetings of stockholders for the election of directors and for such other business as may be stated in the notice of the meeting, shall be held at such place, either within or without the State of Delaware, and at such time and date as the Board of Directors, by resolution, shall determine and as set forth in the notice of the meeting. In the event the Board of Directors fails to so determine the time, date and place of meeting, the annual meeting of stockholders shall be held at the registered office of the corporation in Delaware on the first Thursday in October of each year.

If the date of the annual meeting shall fall upon a legal holiday, the meeting shall be held on the next succeeding business day. At each annual meeting, the stockholders entitled to vote shall elect a Board of Directors and they may transact such other corporate business as shall be stated in the notice of the meeting.

SECTION 2. OTHER MEETINGS.—Meetings of stockholders for any purpose other than the election of directors may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting.

SECTION 3. VOTING.—Each stockholder entitled to vote in accordance with the terms of the Certificate of Incorporation and in accordance with the provisions of these By-Laws shall be entitled to such number of votes, in person or by proxy, for each share of stock entitled to vote held by such stockholder as provided in the Certificate of Incorporation or the resolution or resolutions of the directors establishing the voting rights, if any, of Preferred Stock or any series thereof, but no proxy shall be voted after three years from its date unless such proxy provides for a longer period. Upon the demand of any stockholder, the vote for directors and the

vote upon any question before the meeting, shall be by ballot. All elections for directors shall be decided by plurality vote; all other questions shall be elected by majority vote except as otherwise provided by the Certificate of Incorporation or the laws of the State of Delaware.

A complete list of the stockholders entitled to vote at the ensuing election, arranged in alphabetical order, with the address of each, and the number of shares held by each, shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

SECTION 4. QUORUM.—Except as otherwise required by Law, by the Certificate of Incorporation or by these By-Laws, the presence, in person or by proxy, of stockholders holding stock of the corporation entitled to vote having a majority of voting power shall constitute a quorum at all meetings of the stockholders. In case a quorum shall not be present at any meeting, a majority in voting interest of the stockholders entitled to vote thereat, present in person or by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until the requisite amount of stock entitled to vote shall be present. At any such adjourned meeting at which the requisite amount of stock entitled to vote shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed; but only those stockholders entitled to vote at the meeting as originally noticed shall be entitled to vote at any adjournment or adjournments thereof.

SECTION 5. SPECIAL PURPOSES.—Special meetings of the stockholders for any purpose or purposes may be called by the Chairman of the Board, President or Secretary, or by resolution of the directors.

SECTION 6. NOTICE OF MEETINGS.—Written notice, stating the place, date and time of the meeting, and the general nature of the business to be considered, shall be given to each stockholder entitled to vote thereat at his address as it appears on the records of the corporation, not less than ten nor more than sixty days before the date of the meeting.

SECTION 7. ACTION WITHOUT MEETING.—Unless otherwise provided by the Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders, or any action which may be taken at any annual or special meeting, may be taken without a meeting without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.

ARTICLE III

DIRECTORS

SECTION 1. NUMBER AND TERM.—The number of directors shall be eight (8). The directors shall be elected at the annual meeting of the stockholders and each director shall be elected to serve until his successor shall be elected and shall qualify.

SECTION 2. RESIGNATIONS.—Any director, member of a committee or other officer may resign at any time. Such resignation shall be made in writing, and shall take effect at the time specified therein, and if no time be specified, at the time of its receipt by the Chairman of the Board, President or Secretary. The acceptance of a resignation shall not be necessary to make it effective.

SECTION 3. VACANCIES.—If the office of any director, member of a committee or other officer becomes vacant, the remaining directors in office, though less than a quorum by a majority vote, may appoint any qualified person to fill such vacancy, who shall hold office for the unexpired term and until his successor shall be duly chosen.

SECTION 4. REMOVAL.—Except as hereinafter provided, any director or directors may be removed either for or without cause at any time by the affirmative vote of the holders of the shares of stock outstanding and entitled to vote having a majority of the voting power, at a special meeting of the stockholders called for the purpose and the vacancies thus created may be filled, at the meeting held for the purpose of removal, by the affirmative vote of a majority in voting interest of the stockholders entitled to vote.

Unless the Certificate of Incorporation otherwise provides, stockholders may effect removal of a director who is a member of a classified Board of Directors only for cause. If the Certificate of Incorporation provides for cumulative voting and if less than the entire board is to be removed, no director may be removed without cause if the votes cast against his removal would be sufficient to elect him if then cumulatively voted at an election of the entire board of directors, or, if there be classes of directors, at an election of the class of directors of which he is a part.

If the holders of any class or series are entitled to elect one or more directors by the provisions of the Certificate of Incorporation, these provisions shall apply, in respect to the removal without cause of a director or directors so elected, to the vote of the holders of the outstanding shares of that class or series and not to the vote of the outstanding shares as a whole.

SECTION 5. INCREASE OF NUMBER.—The number of directors may be increased by amendment of these By-Laws by the affirmative vote of a majority of the directors, though less than a quorum, or, by the affirmative vote of a majority in voting interest of the stockholders, at the annual meeting or at a special meeting called for that purpose, and by like vote the additional directors may be chosen at such meeting to hold office until the next annual election and until their successors are elected and qualify.

SECTION 6. POWERS.—The Board of Directors shall exercise all of the powers of the corporation except such as are by law, or by the Certificate of Incorporation of the corporation or by these By-Laws conferred upon or reserved to the stockholders.

SECTION 7. COMMITTEES.—The Board of Directors may, by resolution or resolutions passed by a majority of the whole board, designate one or more committees, each committee to consist of two or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.

Any such committee, to the extent provided in the resolution of the Board of Directors, or in these By-Laws, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation’s property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the By-Laws of the corporation; and, unless the resolution, these By-Laws, or the Certificate of Incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock.

SECTION 8. MEETINGS.—The newly elected directors may hold their first meeting for the purpose or organization and the transaction of business, if a quorum be present, immediately after the annual meeting of the stockholders; or the time and place of such meeting may be fixed by consent in writing of all the directors.

Regular meetings of the directors may be held without notice at such places and times as shall be determined from time to time by resolution of the directors.

Special meetings of the board may be called by the Chairman of the Board or by the Secretary on the written request of any two directors on at least two day’s notice to each director and shall be held at such place or places as may be determined by the directors, or as shall be stated in the call of the meeting.

Unless otherwise restricted by the Certificate of Incorporation or these By-Laws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.

SECTION 9. QUORUM.—A majority of the directors shall constitute a quorum for the transaction of business. If at any meeting of the board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum is obtained, and no further notice thereof need be given other than by announcement at the meeting which shall be so adjourned.

SECTION 10. COMPENSATION.—By resolution of the Board, Directors may be compensated for their services as directors or as members of committees, and receive a fixed fee and expenses of attendance at each meeting. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity as an officer, agent or otherwise, and receiving compensation therefor.

SECTION 11. ACTION WITHOUT MEETING.—Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting, if prior to such action a written consent thereto is signed by all members of the board, or of such committee as the case may be, and such written consent is filed with the minutes of proceedings of the board or committee.

ARTICLE IV

OFFICERS

SECTION 1. OFFICERS.—The officers of the corporation shall be a Chairman of the Board, a President, a Chief Financial Officer, a Treasurer, and a Secretary, all of whom shall be elected by the Board of Directors and who shall hold office until their successors are elected and qualified. In addition, the Board of Directors may elect one or more Vice-Presidents and such Assistant Secretaries and Assistant Treasurers as they may deem proper. None of the officers of the corporation need be directors. The officers shall be elected at the first meeting of the Board of Directors after each annual meeting. More than two offices may be held by the same person.

SECTION 2. OTHER OFFICERS AND AGENTS.—The Board of Directors may appoint such other officers and agents as it may deem advisable, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors.

SECTION 3. CHAIRMAN.—The Chairman of the Board of Directors shall be the chief executive officer of the corporation. He or she shall preside at all meetings of the stockholders and of the Board of Directors; and, subject to the direction and control of the Board of Directors, he or she shall be in charge of the business of the corporation and shall direct the policy and management of the corporation. In general he or she shall discharge all the duties incident to the position of chief executive officer and such other duties as may be prescribed by the Board of Directors from time to time. He or she may sign certificates for shares of the corporation, any deeds, mortgages, bonds, contracts, or other instruments which the Board of Directors have authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by these By-Laws to some other officer or agent of the corporation, or shall be required by law to be otherwise signed or executed, and he or she may accomplish such execution either under or without the seal of the corporation and either individually or with the Secretary, any Assistant Secretary, or any other officer thereunto authorized by the Board of Directors or these By-Laws, according to the requirements of the form of the instrument. He or she may vote or execute consents or proxies with respect to all securities which the corporation is entitled to vote except as and to the extent such authority shall be vested in a different officer or agent of the corporation by the Board of Directors.

SECTION 4. PRESIDENT.—The President shall be the chief operating officer of the corporation and, subject to the direction and control of the Board of Directors and Chairman of the Board, shall in general supervise, manage and control all of the operations, business and affairs of the corporation. In the absence of the Chairman of the Board, he or she shall preside at all meetings of the stockholders and of the Board of Directors. He or she may sign certificates for shares of the corporation, any deeds, mortgages, bonds, contracts or other instruments which the Board of Directors have authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by these By-Laws to some other officer or agent of the corporation, or shall be required by law to be otherwise signed or executed, and he or she may accomplish such execution either under or without the seal of the corporation and either individually or with the Secretary, any Assistant Secretary, or any other officer thereunto authorized by the Board of Directors or these By-Laws, according to the requirements of the form of the instrument. In general he or she shall perform all duties incident to the office of President and such other duties as may be prescribed by the Chairman of the Board or by the Board of Directors from time to time.

SECTION 5. VICE-PRESIDENT.—The Vice President (or in the event there be more than one Vice President, each of the Vice Presidents) shall assist the Chairman of the Board and President in the discharge of their duties as the Chairman of the Board and President may direct and shall perform such other duties as from time to time may be assigned to him or her by the Chairman of the Board or President or by the Board of Directors. In the absence of the President or in the event of his or her inability or refusal to act, the Vice President (or in the event there be more than one Vice President, the Vice Presidents in the order designated by the Board of Directors, or by the Chairman of the Board if the Board of Directors has not made such a designation, or by the President if neither the Chairman of the Board nor the Board of Directors has made such a designation, or in the absence of any designation, then in the order of seniority of tenure as Vice President) shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Except in those instances in which the authority to execute is expressly delegated to another officer or agent of the corporation or a different mode of execution is expressly prescribed by the Board of Directors or these By-Laws, the Vice President (or each of them if there are more than one) may execute for the corporation certificates for its shares and any contracts, deeds, mortgages, bonds or other instruments which the Board of Directors has authorized to be executed, and he or she may accomplish such execution either under or without the seal of the corporation and either individually or with the Secretary, any Assistant Secretary, or any other officer thereunto authorized by the Board of Directors, according to the requirements of the form of the instrument.

SECTION 6. CHIEF FINANCIAL OFFICER.—The Chief Financial Officer shall be the chief financial officer and principal accounting officer of the corporation having the duties, responsibility and authority incident to such position for all financial and accounting matters involving the corporation. He or she shall have such other duties, responsibilities and authority as may be determined by and be responsible to, the Board of Directors, the Audit Committee, the Chairman of the Board, and the President.

SECTION 7. TREASURER.—The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate account of receipts and disbursements in books belonging to the corporation. He or she shall deposit all moneys and other valuables in the name and to the credit of the corporation in such depositaries as may be designated by the Board of Directors or pursuant to their authorization.

The Treasurer shall disburse the funds of the corporation as may be ordered by the Board of Directors, or the Chairman of the Board or the President, or the Chief Financial Officer, taking proper vouchers for such disbursements. He or she shall render to the Chairman of the Board, the President, the Chief Financial Officer and Board of Directors at the regular meetings of the Board of Directors, or whenever they may request it, an account of all his or her transactions as Treasurer and of the financial condition of the corporation. If required by the Board of Directors, he or she shall give the corporation a bond for the faithful discharge of his or her duties in such amount and with such surety as the board shall prescribe. He or she shall be responsible to the Chief Financial Officer.

SECTION 8. SECRETARY.—The Secretary shall give, or cause to be given, notice of all meetings of stockholders and directors, and all other notices required by law or by these By-Laws, and in case of his or her absence or refusal or neglect so to do, any such notice may be given by any person thereunto directed by the Chairman of the Board or the President, or by the directors, or stockholders, upon whose requisition the meeting is called as provided in these By-Laws. He or she shall record all the proceedings of the corporation and of the directors in a book to be kept for that purpose, and shall perform such other duties as may be assigned to him or her by the directors or Chairman of the Board or the President. He or she shall have the custody of the seal of the corporation and shall affix the same to all instruments requiring it, when authorized by the directors or the Chairman of the Board or the President, and attest the same.

SECTION 9. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES.—Assistant Treasurers and Assistant Secretaries, if any, shall be elected and shall have such powers and shall perform such duties as shall be assigned to them, respectively, by the directors.

ARTICLE V

MISCELLANEOUS

SECTION 1. CERTIFICATES OF STOCK.—The shares of the corporation shall be represented by certificates, provided, however, that the Board may provide by resolution that some or all of any classes or series of the corporation’s stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Notwithstanding the foregoing, every holder of stock represented by certificates and, upon request, every holder of uncertificated shares shall be entitled to have a certificate, in any form approved by the Board, signed by the Chairman of the Board or the President or a Vice President of the corporation and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer of the corporation, and shall bear the corporate seal of the corporation. If the certificate is countersigned by a transfer agent or registrar other than the corporation or its employee, any other signature and the corporate seal appearing on certificates of stock may be facsimile, engraved or printed. In case any such officer, transfer agent or registrar who has signed or whose facsimile signature appears on any such certificate shall have ceased to be such officer, transfer agent or registrar before the certificate is issued, such certificate may nevertheless be issued by the corporation with the same effect as if such officer, transfer agent or registrar had not ceased to be such officer, transfer agent or registrar at the date of its issue. Every holder of uncertificated shares shall be entitled to receive a statement of holdings as evidence of share ownership.

SECTION 2. LOST CERTIFICATES.—A new certificate of stock may be issued in the place of any certificate theretofore issued by the corporation, alleged to have been lost or destroyed, and the directors may, in their discretion, require the owner of the lost or destroyed certificate, or his legal representatives, to give the corporation a bond, in such sum as they may direct, not exceeding double the value of the stock, to indemnify the corporation against any claim that may be made against it on account of the alleged loss of any such certificate, or the issuance of any such new certificate.

SECTION 3. TRANSFER OF SHARES.—The shares of stock of the corporation shall be transferable only upon its books by the holders thereof in person or by their duly authorized attorneys or legal representatives, and upon such transfer the old certificates shall be surrendered to the corporation by the delivery thereof to the person in charge of the stock and transfer books and ledgers, or to such other person as the directors may designate, by whom they shall be cancelled, and new certificates shall thereupon be issued. A record shall be made of each transfer and whenever a transfer shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer.

SECTION 4. STOCKHOLDERS RECORD DATE.—In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

SECTION 5. DIVIDENDS.—Subject to the provisions of the Certificate of Incorporation, the Board of Directors may, out of funds legally available therefor at any regular or special meeting, declare dividends upon the capital stock of the corporation as and when they deem expedient. Before declaring any dividend there may be set apart out of any funds of the corporation available for dividends, such sum or sums as the directors from time to time in their discretion deem proper for working capital or as a reserve fund to meet contingencies or for equalizing dividends or for such other purposes as the directors shall deem conducive to the interests of the corporation.

SECTION 6. SEAL.—The corporate seal shall be circular in form and shall contain the name of the corporation, the year of its creation and the words “CORPORATE SEAL DELAWARE.” Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

SECTION 7. FISCAL YEAR.—The fiscal year of the corporation shall be determined by resolution of the Board of Directors.

SECTION 8. CHECKS.—All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation, and in such manner as shall be determined from time to time by resolution of the Board of Directors.

SECTION 9. NOTICE AND WAIVER OF NOTICE.—Whenever any notice is required by these By-Laws to be given, personal notice is not meant unless expressly so stated, and any notice so required shall be deemed to be sufficient if given by depositing the same in the United States mail, postage prepaid, addressed to the person entitled thereto at his address as it appears on the records of the corporation, and such notice shall be deemed to have been given on the day of such mailing. Stockholders not entitled to vote shall not be entitled to receive notice of any meetings except as otherwise provided by Statute.

Whenever any notice whatever is required to be given under the provisions of any law, or under the provisions of the Certificate of Incorporation of the corporation or these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.

ARTICLE VI

AMENDMENTS

These By-Laws may be altered or repealed and By-Laws may be made at any annual meeting of the stockholders or at any special meeting thereof if notice of the proposed alteration or repeal or By-Law or By-Laws to be made be contained in the notice of such special meeting, by the affirmative vote of the stock issued and outstanding and entitled to vote thereat having a majority of the voting power, or by the affirmative vote of a majority of the Board of Directors, at any regular meeting of the Board of Directors, or at any special meeting of the Board of Directors, if notice of the proposed alteration or repeal, or By-Law or By-Laws to be made, be contained in the notice of such special meeting.

ARTICLE VII

INDEMNIFICATION

SECTION 1. GENERAL.—The corporation shall indemnify, and advance Expenses (as hereinafter defined) to, Indemnitee (as hereinafter defined) as provided in this Article and to the fullest extent permitted by applicable law, as the same exists or may hereafter be amended.

SECTION 2. PROCEEDINGS OTHER THAN PROCEEDINGS BY OR IN THE RIGHT OF THE CORPORATION.—Indemnitee shall be entitled to the rights of indemnification provided in this Section 2 if, by reason of his Corporate Status (as hereinafter defined), he is, or is threatened to be made, a party to any Proceeding (as hereinafter defined), other than a Proceeding by or in the right of the corporation. Pursuant to this Section 2, Indemnitee shall be indemnified against Expenses, judgments, penalties, fines (including, without limitation, excise taxes assessed on an Indemnitee with respect to an employee benefit plan) and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such Proceeding or any claim, issue or matter therein, if he acted in Good Faith.

SECTION 3. PROCEEDINGS BY OR IN THE RIGHT OF THE CORPORATION.—Indemnitee shall be entitled to the rights of indemnification provided in this Section 3 if, by reason of his Corporate Status, he is, or is threatened to be made, a party to any Proceeding brought by or in the right of the corporation to procure a judgment in its favor. Pursuant to this Section, Indemnitee shall be indemnified against Expenses, judgments, penalties and amounts paid in settlement actually and reasonably incurred by him or on

his behalf in connection with such Proceeding if he acted in Good Faith. Notwithstanding the foregoing, no indemnification against such Expenses, judgments, penalties and amounts paid in settlement shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable to the corporation if applicable law prohibits such indemnification; provided, however, that, if applicable law so permits, indemnification against Expenses, judgments, penalties and amounts paid in settlement shall nevertheless be made by the corporation in such event if and only to the extent that the Court of Chancery of the State of Delaware, or the court in which such Proceeding shall have been brought or is pending, shall determine.

SECTION 4. INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR PARTLY SUCCESSFUL.—Notwithstanding any other provision of this Article, to the extent that Indemnitee is, by reason of his Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, he shall be indemnified to the maximum extent permitted by law against all Expenses, judgments, penalties, fines, and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the corporation shall indemnify Indemnitee to the maximum extent permitted by law against all Expenses, judgments, penalties, fines, and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

SECTION 5. INDEMNIFICATION FOR EXPENSES OF A WITNESS.—Notwithstanding any other provision of this Article, to the extent that Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.

SECTION 6. ADVANCEMENT OF EXPENSES.—Notwithstanding any provisions to the contrary in Section 7, the corporation shall advance all reasonable Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding within twenty days after the receipt by the corporation of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by an undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined that Indemnitee is not entitled to be indemnified against such Expenses. Any advance and undertaking to repay pursuant to this Section 6 shall be unsecured and interest free.

SECTION 7. PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION.—

(a) To obtain indemnification under this Article, Indemnitee shall submit to the corporation a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The Secretary of the corporation shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that Indemnitee has requested indemnification.

(b) Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 7(a) hereof, a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall be made in the specific case: (i) if a Change in Control (as hereinafter defined) shall have occurred, by Independent Counsel (as hereinafter defined) (unless Indemnitee shall request that such determination be made by the Board of Directors or the stockholders, in which case by the person or persons or in the manner provided for in clauses (ii) or (iii) of this Section 7(b)) in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee; (ii) if a Change of Control shall not have occurred, (A) by the Board of Directors by a majority vote of a quorum consisting of Disinterested Directors (as hereinafter defined), or (B) if a quorum of the Board of Directors consisting of Disinterested Directors is not obtainable or, even if obtainable, such quorum of Disinterested Directors so directs, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee or (C) by the stockholders of the corporation; or (iii) as provided in Section 8(b) of this Article; and, if it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination. Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the corporation (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the corporation hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

(c) In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 7(b) of this Article, the Independent Counsel shall be selected as provided in this Section 7(c). If a Change of Control shall not have occurred, the Independent Counsel shall be selected by the Board of Directors, and the corporation shall give written notice to Indemnitee advising him of the identity of the Independent Counsel so selected. If a Change of Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board of Directors, in which event the preceding sentence shall apply), and Indemnitee shall give written notice to the corporation advising it of the identity of the Independent Counsel so selected. In either event, Indemnitee or the corporation, as the case may be, may, within 7 days after such written notice of selection shall have been given, deliver to the corporation or to Indemnitee, as the case may be, a written objection to such selection. Such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 13 of this Article, and the objection shall set forth with particularity the factual basis of such assertion. If such written objection is made, the Independent Counsel so selected may not serve as Independent Counsel unless and until a court has determined that such objection is without merit. If, within 20 days after submission by Indemnitee of a written request for indemnification pursuant to Section 7(a) hereof, no Independent Counsel shall have been selected and not objected to, either the corporation or Indemnitee may petition the Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection which shall have been made by the corporation or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the Court or by such other person as the Court shall designate, and the person with respect to whom an objection is so resolved or the person so appointed shall act as Independent Counsel under Section 7(b) hereof. The corporation shall pay any and all reasonable fees and

expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 7(b) hereof, and the corporation shall pay all reasonable fees and expenses incident to the procedures of this Section 7(c), regardless of the manner in which such Independent Counsel was selected or appointed. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 9(a)(iii) of this Article, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

SECTION 8. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.—

(a) In making a determination with respect to entitlement to indemnification hereunder, the person, persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Article if Indemnitee has submitted a request for indemnification in accordance with Section 7(a) of this Article, and the corporation shall have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption.

(b) If the person, persons or entity empowered or selected under Section 7 of this Article to determine whether Indemnitee is entitled to indemnification shall not have made such determination within 60 days after receipt by the corporation of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional 30 days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 8(b) shall not apply (i) if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 7(b) of this Article and if (A) within 15 days after receipt by the corporation of the request for such determination the Board of Directors has resolved to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within 75 days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within 15 days after such receipt for the purpose of making such determination, such meeting is held for such purpose within 60 days after having been so called and such determination is made thereat, or (ii) if the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 7(b) of this Article.

(c) The termination of any Proceeding or of any claim, issue or matter therein by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Article) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in Good Faith.

(d) For purposes of any determination of Good Faith, Indemnitee shall be deemed to have acted in Good Faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or

on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise. The provisions of this Section 7(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Article.

(e) The knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Article.

SECTION 9. REMEDIES OF INDEMNITEE.—

(a) In the event that (i) a determination is made pursuant to Section 7 of this Article that Indemnitee is not entitled to indemnification under this Article, (ii) advancement of Expenses is not timely made pursuant to Section 6 of this Article, (iii) the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 7(b) of this Article and such determination shall not have been made and delivered in a written opinion within 90 days after receipt by the corporation of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 5 of this Article within ten (10) days after receipt by the corporation of a written request therefor, or (v) payment of indemnification is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 8 of this Article, Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of his entitlement to such indemnification or advancement of Expenses. Alternatively, Indemnitee, at his option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the rules of the American Arbitration Association. Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 9(a). The corporation shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

(b) In the event that a determination shall have been made pursuant to Section 7 of this Article that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 9 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 9 the corporation shall have the burden of proving that Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.

(c) If a determination shall have been made or deemed to have been made pursuant to Section 7 or 8 of this Article that Indemnitee is entitled to indemnification, the corporation shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 9, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.

(d) The corporation shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 9 that the procedures and presumptions of this Article are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the corporation is bound by all the provisions of this Article.

(e) In the event that Indemnitee, pursuant to this Section 9, seeks a judicial adjudication of or an award in arbitration to enforce his rights under, or to recover damages for breach of, this Article, Indemnitee shall be entitled to recover from the corporation, and shall be indemnified by the corporation against, any and all expenses (of the types described in the definition of Expenses in Section 13 of this Article) actually and reasonably incurred by him in such judicial adjudication or arbitration, but only if he prevails therein. If it shall be determined in said judicial adjudication or arbitration that Indemnitee is entitled to receive part but not all of the indemnification or advancement of expenses sought, the expenses incurred by Indemnitee in connection with such judicial adjudication or arbitration shall be appropriately prorated.

SECTION 10. NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE; SUBROGATION.—

(a) The rights of indemnification and to receive advancement of Expenses as provided by this Article shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, the By-Laws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. The rights conferred by this Article shall be deemed contract rights and no amendment, alteration or repeal of this Article or of any provision hereof shall be effective as to any Indemnitee with respect to any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal. The provisions of this Article shall continue as to an Indemnitee whose Corporate Status has ceased and shall inure to the benefit of his heirs, executors and administrators.

(b) To the extent that the corporation maintains an insurance policy or policies providing liability insurance for directors, officers, employees, agents or fiduciaries of the corporation or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person serves at the request of the corporation, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee or agent under such policy or policies.

(c) In the event of any payment under this Article, the corporation shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the corporation to bring suit to enforce such rights.

(d) The corporation shall not be liable under this Article to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

(e) The corporation shall have the express authority to enter into such agreements as the Board of Directors deems appropriate for the indemnification of present or future directors, officers, employees or agents of the corporation in connection with their service to, or status with, any Enterprise.

SECTION 11. SEVERABILITY.—If any provision or provisions of this Article shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Article (including without limitation, each portion of any Section of this Article containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Article (including, without limitation, each portion of any Section of this Article containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

SECTION 12. CERTAIN PERSONS NOT ENTITLED TO INDEMNIFICATION OR ADVANCEMENT OF EXPENSES.—Notwithstanding any other provision of this Article, no person shall be entitled to indemnification or advancement of Expenses under this Article with respect to any Proceeding, or any claim therein other than to enforce indemnification rights under this Article, brought or made by him against the corporation.

SECTION 13. DEFINITIONS.—For purposes of this Article:

(a) “Change in Control” means a change in control of the corporation occurring after the Effective Date of a nature that would be required to be reported in response to Item 5(f) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934 (the “Act”), whether or not the corporation is then subject to such reporting requirement; provided, however, that, without limitation, such a Change in Control shall be deemed to have occurred if after the Effective Date (i) any “person” (as such term is used in Sections 1 3(d) and 1 4(d) of the Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the corporation representing 50% or more of the combined voting power of the corporation’s then outstanding securities without the prior approval of at least two-thirds of the members of the Board of Directors in office immediately prior to such person attaining such percentage interest; (ii) the corporation is a party to a merger, consolidation, sale of assets or other reorganization, or a proxy contest, as a consequence of which members of the Board of Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors thereafter; or (iii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (including for this purpose any new director whose election or nomination for election by the corporation’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board of Directors.

(b) “Corporate Status” describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the corporation or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the request of the corporation.

(c) “Disinterested Director” means a director of the corporation who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

(d) “Effective Date” means September 11, 1986.

(e) “Enterprise” shall mean the corporation and any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the request of the corporation as a director, officer, employee, agent or fiduciary.

(f) “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, or being or preparing to be a witness in a Proceeding.

(g) “Good Faith” shall mean Indemnitee having acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal Proceeding, having had no reasonable cause to believe Indemnitee’s conduct was unlawful.

(h) “Indemnitee” includes any person who is, or is threatened to be made, a witness in or a party to any Proceeding as described in Sections 2, 3, 4 or 5 of this Article by reason of his Corporate Status.

(i) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent (i) the corporation or Indemnitee in any matter material to either such party, or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the corporation or Indemnitee in an action to determine Indemnitee’s rights under this Article.

(j) “Proceeding” includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other threatened, pending or completed proceeding whether civil, criminal, administrative or investigative, except one initiated by an Indemnitee. For purposes of the foregoing sentence, a “Proceeding” shall not be deemed to have been initiated by Indemnitee where Indemnitee seeks pursuant to Section 9 of this Article to enforce his rights under this Article.

SECTION 14. NOTICES.—Any notice, request or other communication required or permitted to be given to the corporation under this Article shall be in writing and either delivered in person or sent by telex, telegram or certified or registered mail, postage prepaid, return receipt requested, to the Secretary of the corporation and shall be effective only upon receipt by the Secretary.

SECTION 15. MISCELLANEOUS.—Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate.

EX-10.2

Exhibit 10.2

EXECUTION COPY

FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT

This First Amendment to Revolving Credit Agreement (this “Amendment”) is entered into as of November 29, 2007 (the “Effective Date”) by and among Richardson Electronics, Ltd., a Delaware corporation, Richardson Electronics Limited, an English limited liability company, Richardson Electronics Benelux B.V., a Dutch private limited liability company, Richardson Electronics Pte Ltd, a company organized under the laws of Singapore, Richardson Electronics Pty Limited, a company organized under the laws of New South Wales, Australia, the lenders party hereto (each, a “Lender” and collectively, the “Lenders”) and JP Morgan Bank, N.A., a national banking association as administrative agent (in such capacity, the “Administrative Agent”).

RECITALS

WHEREAS, the Borrowers, the Lenders and the Agent are parties to that certain Revolving Credit Agreement dated as of July 27, 2007 (as amended or modified from time to time, the foregoing being referred to as the “Agreement”);

WHEREAS, the Borrowers, the Lenders and the Agent desire to amend the Agreement in certain respects on terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties hereto agree as follows:

1. Defined Terms. Capitalized terms used herein but not defined herein shall have the meanings ascribed thereto in the Agreement.

2. Amendments to the Agreement. The Agreement is hereby amended as follows:

(a) Section 1.1 of the Agreement is hereby amended to delete in their entirety the definitions of “Borrower,” “Identified Charges,” “Leverage Ratio,” “Singapore Subfacility,” and “US Facility Borrower” contained therein and to replace said definitions as follows:

“‘Borrowers’ (each a ‘Borrower’) means each of Richardson Electronics, Ltd., a Delaware corporation, Richardson Electronics Limited, an English limited liability company, Richardson Electronics Benelux B.V., a Dutch private limited liability company, Richardson Electronics Pte Ltd, a company organized under the laws of Singapore, and Richardson Electronics Pty Limited, a company organized under the laws of New South Wales, Australia.”

“‘Identified Charges’ shall mean (i) severance and restructuring charges related to consolidation of operations by means of creation of an inventory hub, in each case incurred by the US-Borrower and its Subsidiaries and incurred solely in the fiscal

quarter ended June 2, 2007 and not exceeding the sum of Two Million Dollars ($2,000,000) in aggregate in respect of such quarter and (ii) severance charges in the fiscal quarter ended November 30, 2007 and not exceeding the sum of Eight Hundred Thousand Dollars ($800,000) in aggregate in respect of such quarter.”

“‘Leverage Ratio’ means, as of any date of calculation, the quotient of (i) Senior Funded Debt outstanding on such date, over (ii) Adjusted EBITDA calculated for the US-Borrower and its consolidated Subsidiaries for the period of the trailing four consecutive fiscal quarters ending on or most recently ended prior to such date of determination; provided, that with respect to the fiscal quarter ended June 2, 2007 and December 1, 2007 there shall be added to Adjusted EBITDA the relevant Identified Charges.”

‘“Singapore Subfacility’ means the revolving loans denominated in Singapore Dollars and made available by the Lenders to the Singapore Borrower and the Australia Borrower pursuant to the terms hereof. Loans under the Singapore Subfacility may only be SIBOR Advances.”

‘“US Facility Borrower’ means the US-Borrower, the Singapore Borrower, the Australia Borrower and the Euro Holding Company.”

(b) Section 1.1 is further amended to insert the following new definitions in the appropriate alphabetical sequence:

‘“Australia Borrower’ means Richardson Electronics Pty, a company organized under the laws of New South Wales, Australia.”

(c) Section 1.1 is further amended to delete clause (ii) contained in the definition of “Collateral Documents” thereof and to replace the text of such clause with the word “Reserved.”

(d) The Australia Borrower is hereby added as a Borrower under the Agreement and hereby agrees to be bound by all the terms and conditions contained therein. The Australia Borrower’s contact information is set forth beneath its signature hereto.

(e) Section 6.24 of the Agreement is hereby deleted in its entirety and replaced as follows:

“6.24 Leverage Ratio. The US-Borrower and its Subsidiaries will maintain at all times a Leverage Ratio of less than 3.0 to 1.0 for the fiscal quarter ended December 1, 2007 and the fiscal quarter ended March 1, 2008 and thereafter will at all times maintain a Leverage Ratio of 2.0 to 1.0.”

(f) A new Section 6.27 is hereby added as follows:

“6.27 First Real Estate Mortgage On or before January 15, 2008, the US-Borrower shall have granted to the Administrative Agent, for the benefit of the Lenders, a first priority perfected mortgage on all real property owned by the US-Borrower and its Affiliates in LaFox, Illinois, which mortgage shall be accompanied by such other deliveries and conditions customarily associated

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with the granting of a mortgage on real property in favor of the Administrative Agent, including, without limitation the delivery to the Administrative Agent of a lender’s policy of title insurance, a property survey certified to the Administrative Agent, evidence of insurance and loss payable/additional insured endorsement in favor of the Administrative Agent, and such other information and agreements deemed appropriate, in each case in form and substance acceptable to the Administrative Agent and its counsel.”

(g) Annex A to the Agreement is hereby deleted in its entirety and replaced with Annex A attached hereto and made a part hereof.

3. Effectiveness. This Amendment shall become effective when the Administrative Agent has received all of the following acknowledged to be satisfactory by the Administrative Agent:

(a) This Amendment, executed by the requisite signatories;

(b) A certificate, signed by the chief executive officer of Richardson Electronics, Ltd. substantially in the form of Exhibit I attached hereto and made a part hereof, stating that on the Effective Date (after giving effect to this Amendment) no Default or Unmatured Default has occurred and is continuing and further certifying that the representations and warranties contained in Article 5 of the Agreement are true and correct on and as of the Effective Date;

(c) The representations and warranties contained in Section 4 of this Amendment shall be true and correct in all material respects; and

(d) Such other documents, instruments or approvals (and, if requested by the Administrative Agent, certified duplicates of executed copies thereof) as the Administrative Agent may reasonably request.

4. Representations and Warranties. Each Borrower represents and warrants to the Lenders and the Administrative Agent (which representations and warranties shall become part of the representations and warranties made by such Borrower under the Agreement) that:

(a) The execution, delivery and performance of this Amendment has been duly authorized by all necessary action and will not require any consent or approval of any person or entity, violate in any material respect any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to it or constitute a default under any indenture or loan or credit agreement or any other agreement, lease or instrument to which any Borrower is a party or by which it or its properties may be bound or affected;

(b) No consent, approval or authorization of or declaration or filing with any governmental authority or any non-governmental person or entity, including without limitation, any creditor or partner of any Borrower is required on the part of such Borrower in connection with the execution, delivery and performance of this Amendment or the transactions contemplated thereby and the execution, delivery and performance of this Amendment and the transactions contemplated hereby will not violate the terms of any contract or agreement to which such Borrower is a party;

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(c) The Agreement, as amended hereby, is the legal, valid and binding obligation of each Borrower, enforceable against it in accordance with the terms thereof;

(d) The most recent financial statements of each Borrower delivered to the Lenders are complete and accurate in all material respects and present fairly the financial condition of such Borrowers as of such date in accordance with generally accepted accounting principles. There has been no adverse material change in the condition of the business, properties, operations or condition, financial or otherwise, of any Borrower since the date of such financial statements which has or could reasonably be expected to have a Material Adverse Effect in respect of the US-Borrower or its Subsidiaries; and

(e) After giving effect to this Amendment and the transactions contemplated hereby, no Default or Event of Default has occurred or exists under the Agreement as of the Effective Date hereof.

5. Conditions Subsequent Within fifteen (15) days of the Effective Date, the US- Borrower shall furnish evidence satisfactory to the Administrative Agent of the legal existence, capacity and authority of the Australia Borrower to execute, deliver and perform the Agreement and to become a party thereto and evidence of due execution and delivery of same by the Australia Borrower which evidence may include, without limitation, appropriate resolutions of the directors of Australia Borrower or such other company action necessary to give effect to the provisions of this Section 5.

6. Acknowledgement and Reaffirmation; No Waiver. Each Borrower hereby ratifies and affirms all of the obligations and undertakings contained in the Agreement and the Agreement remains in full force and effect in accordance with its terms. Each Borrower and each Guarantor hereby acknowledges, agrees and affirms that each document and instrument securing or supporting the obligations and indebtedness owing to the Lenders and Administrative Agent prior to the date of this Amendment remains in full force and effect in accordance with its terms, and that such security and support remains in full force effect as to all obligations under the Agreement.

7. Expenses. The Borrowers jointly and severally agree to pay and save the Lenders and Administrative Agent harmless from liability for the payment of all costs and expenses arising in connection with this Amendment, including the reasonable fees and expenses of Baker & McKenzie LLP, counsel to the Administrative Agent and certain of the Lenders, in connection with the preparation and review of this Amendment and any related documents.

8. Governing Law. This Amendment shall be governed by, and shall be construed and enforced in accordance with, the laws of the State of Illinois.

9. Counterparts; Facsimile. This Amendment may be executed in one or more counterparts, each of which together shall constitute the same agreement. One or more counterparts of this Amendment may be delivered by facsimile, with the intention that such delivery shall have the same effect as delivery of an original counterpart thereof.

[The remainder of this page has been left blank intentionally]

- 4 -

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the date first written above.

BORROWERS:
RICHARDSON ELECTRONICS, LTD.
	/s/ Edward J. Richardson
By:	Edward J. Richardson
Title:	Chairman, CEO and President
RICHARDSON ELECTRONICS LIMITED
	/s/ Thomas Harbrecht
By:	Thomas Harbrecht
Title:	Director
RICHARDSON ELECTRONICS BENELUX B.V.
	/s/ Thomas Harbrecht
By:	Thomas Harbrecht
Title:	Managing Director A
RICHARDSON ELECTRONICS PTE LTD
	/s/ Thomas Harbrecht
By:	Thomas Harbrecht
Title:	Director
RICHARDSON ELECTRONICS PTY LIMITED
	/s/ Thomas Harbrecht
By:	Thomas Harbrecht
Title:	Director
40 W267 Keslinger Road P.O. Box 393 LaFox, Illinois 60147-0393 Attention: Michelle Perricone Tel: 630-208-2200 Fax: 630-208-2950

- 5 -

GUARANTOR
THE UNDERSIGNED, EACH A GUARANTOR OF THE OBLIGATIONS UNDER THE AGREEMENT, BEING FAMILIAR WITH THE TERMS OF THE FOREGOING AMENDMENT, HEREBY RATIFIES AND REAFFIRMS ALL SUCH OBLIGATIONS, IN EACH CASE AS SET FORTH IN THOSE CERTAIN GUARANTIES, DATED JULY 27, 2007
RICHARDSON ELECTRONICS, LTD.
	/s/ Edward J. Richardson
By:	Edward J. Richardson
Title:	Chairman, CEO and President
RICHARDSON INTERNATIONAL, INC.
	/s/ Edward J. Richardson
By:	Edward J. Richardson
Title:	President

- 6 -

ADMINISTRATIVE AGENT:
JPMORGAN CHASE BANK, N.A.,
	/s/ Michelle Otten
By:	Michelle Otten
Title:	Assistant Vice President

- 7 -

LENDERS:
JPMORGAN CHASE BANK, N.A.,
	/s/ Michelle Otten
By:	Michelle Otten
Title:	Assistant Vice President
JP MORGAN EUROPE LIMITED
	/s/ Paul F. Hogan
By:	Paul F. Hogan
Title:	Vice President
JP MORGAN CHASE BANK, N.A. London Branch, as Overdraft Lender
	/s/ Paul F. Hogan
By:	Paul F. Hogan
Title:	Vice President
JPMORGAN CHASE BANK, N.A., through its Singapore Branch
	/s/ Ruth Lee
By:	Ruth Lee
Title:	Assistant Vice President

- 8 -

ANNEX A

PRICING SCHEDULE

Applicable Margin	Level I Status		Level II Status		Level III Status		Level IV Status
Eurocurrency Rate	1.00	%	1.25	%	1.50	%	1.75	%
Commitment Fee	.25	%	.25	%	.25	%	.25	%
Floating Rate	0.00	%	0.00	%	0.00	%	0.00	%
SIBOR Rate	1.00	%	1.25	%	1.50	%	1.75	%
Standby Letter of Credit Fee	1.00	%	1.25	%	1.50	%	1.75	%

For the purposes of this Schedule, the following terms have the following meanings, subject to the final paragraph of this Schedule:

“Financials” means the annual or quarterly financial statements of the US-Borrower delivered by the US-Borrower pursuant to this Agreement.

“Level I Status” exists at any date if, in any fiscal quarter of the US-Borrower referred to in the most recent Financials, the average Leverage Ratio is less than or equal to 1.0 to 1.00.

“Level II Status” exists at any date if, in any fiscal quarter of the US-Borrower referred to in the most recent Financials, (i) the US-Borrower has not qualified for Level I Status and (ii) the average Leverage Ratio is less than or equal to 1.5 or 1.00.

“Level III Status” exists at any date if, in any fiscal quarter of the US-Borrower referred to in the most recent Financials, (i) the US-Borrower has not qualified for Level I Status or Level II Status and (ii) the average Leverage Ratio is less than or equal to 2.0 to 1.0.

“Level IV Status” exists at any date if, in any fiscal quarter of the US-Borrower referred to in the most recent Financials, (i) the US-Borrower has not qualified for Level I Status, Level II Status, and Level III Status and (ii) the average Leverage Ratio is greater than 2.0 to 1.0 but less than 3.0 to 1.0.

“Status” means, at any date of determination, whichever of Level I Status, Level II Status, Level III Status, or Level IV Status.

The Applicable Margin set forth above shall be subject to adjustment (upwards or downwards, as appropriate) based on the US-Borrower’s Status as at the end of each fiscal quarter in accordance with the table set forth above and computed with reference to the

- 9 -

average Leverage Ratio during any such fiscal quarter and shall take effect upon delivery to the Administrative Agent of financial statements for the US-Borrower and its Subsidiaries in respect of the fiscal quarter ended December 1, 2007. Prior to such delivery, the Applicable Margin shall be computed under the methods in effect prior to the effectiveness of the First Amendment to Revolving Credit Agreement, dated November 29, 2007. The US-Borrower’s Status as at the last day of each fiscal quarter (which shall be used to compute the average Leverage Ratio) shall be determined from the then most recent Financials. The numerator upon which the average Leverage Ratio will be calculated shall be based on the sum of daily outstandings for all Loans and Letters of Credit under the Agreement divided by the total number of days in the applicable quarter. The Leverage Ratio shall be computed by dividing such numerator by Adjusted EBITDA calculated for the US-Borrower and its Subsidiaries for the period of the trailing four consecutive fiscal quarters ending on or most recently ended prior to any date of determination. Any adjustment shall be effective commencing five (5) Business Days after the delivery to the Lenders of such Financials. In the event that the US-Borrower shall at any time fail to furnish to the Lenders such Financials (together with a Compliance Certificate) within the time limitations specified by this Agreement, then the maximum Applicable Margin shall apply from the date of such failure until the fifth (5th) Business Day after such Financials (and accompanying Compliance Certificate) are so delivered.

EXHIBIT I

OFFICER’S CERTIFICATE

This Certificate is delivered to JPMorgan Chase Bank, N.A., as Administrative Agent by Richardson Electronics, Ltd., pursuant to that certain Revolving Credit Agreement, dated as of July 27, 2007 among the Borrowers named therein, the Lenders set forth on the signature pages thereto and the Administrative Agent identified therein (as amended or modified from time to time, the “Credit Agreement”). All capitalized terms used herein but not defined shall have the respective meanings ascribed thereto in the Credit Agreement. The undersigned, in his capacity as chief executive officer of Richardson Electronics, Ltd., hereby certifies to the Administrative Agent and the Lenders that on the date hereof no Default or Unmatured Default has occurred and is continuing and that all the representations and warranties contained in Article V of the Credit Agreement are true and correct on and as of the date hereof.

This Certificate is delivered as of November 29, 2007.

By: /s/ Edward J. Richardson

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002

I, Edward J. Richardson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Richardson Electronics, Ltd. for the period ended December 1, 2007;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 10, 2008

Signature: /S/ EDWARD J. RICHARDSON

Edward J. Richardson

Chairman of the Board and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002

I, Kathleen S. Dvorak, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Richardson Electronics, Ltd. for the period ended December 1, 2007;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 10, 2008

Signature: /S/ KATHLEEN S. DVORAK

Kathleen S. Dvorak

Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Richardson Electronics, Ltd. (the “Company”) on Form 10-Q for the period ended December 1, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Edward J. Richardson, Chairman of the Board and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Edward J. Richardson

Edward J. Richardson

Chairman of the Board and Chief Executive Officer

January 10, 2008

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Richardson Electronics, Ltd. (the “Company”) on Form 10-Q for the period ended December 1, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kathleen S. Dvorak, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Kathleen S. Dvorak

Kathleen S. Dvorak

Chief Financial Officer

January 10, 2008

EX-99.1

Exhibit 99.1

For Immediate Release		Corporate Headquarters
		40W267 Keslinger Road
For Details Contact:		PO Box 393
Edward J. Richardson	Kathleen S. Dvorak	LaFox, IL 60147-0393
Chairman and CEO	EVP & CFO	USA
Phone: (630) 208-2340	(630) 208-2208	Phone:      (630) 208-2200
E-mail: info@rell.com		Fax:           (630) 208-2550

RICHARDSON ELECTRONICS REPORTS

SECOND QUARTER FISCAL 2008 RESULTS

AND DECLARES A CASH DIVIDEND

LaFox, IL, January 9, 2008: Richardson Electronics, Ltd. (NASDAQ: RELL), a global provider of engineered solutions, today reported its second quarter results for the period ended December 1, 2007. Net sales for the second quarter of fiscal 2008 were $145.0 million, up 5.3% from $137.7 million during the second quarter of fiscal 2007. Gross profit improved to $33.8 million during the second quarter of fiscal 2008 as compared with $33.0 million during the second quarter of fiscal 2007. Operating income increased to $2.5 million during the second quarter of fiscal 2008 from $2.0 million during the second quarter of fiscal 2007. Net loss was $0.7 million during the second quarter of fiscal 2008, or $0.04 per diluted common share, as compared to net income of $1.1 million, or $0.06 per diluted common share, in the second quarter of fiscal 2007.

The net loss during the second quarter of fiscal 2008 reflects the impact of the following significant items:

• $0.9 million of expense related to foreign exchange loss for cash received from the sale of our Security Systems Division/Burtek Systems that was temporarily held in our European entities.

• $0.9 million of severance expense primarily related to contractual arrangements with employees relating to an acquisition.

• $0.5 million of income tax expense related to restructuring of inter-company debt with certain foreign subsidiaries.

“Our 5% sales growth in the quarter reflects growth in our RF, Wireless & Power Division and Electron Device Group offset by a slight decrease in sales within our Display Systems Group,” said Edward J. Richardson, Chairman, Chief Executive Officer and President. “We are encouraged by the consistent demand for our products as well as the progress we are making with our key initiatives that we believe will enhance the overall financial condition of the company.”

FINANCIAL HIGHLIGHTS — SECOND QUARTER FISCAL 2008

• Cash flows provided by operating activities were $2.7 million during the second quarter of fiscal 2008 compared with $3.7 million provided by operating activities during the second quarter of fiscal 2007.

• Net sales for RF, Wireless & Power Division and the Electron Device Group increased 6.1% and 7.4%, respectively, during the second quarter of fiscal 2008 compared to the second quarter of fiscal 2007.

• Net sales for the Display Systems Group decreased 2.4% during the second quarter of fiscal 2008 compared to the second quarter of fiscal 2007.

• The Asia/Pacific region experienced a 9.8% increase in net sales during the second quarter of fiscal 2008, as compared to the second quarter of fiscal 2007.

• Gross margin percentage for RF, Wireless & Power Division, Electron Device Group, and the Display Systems Group decreased 0.6%, 0.8%, and 2.9%, respectively, during the second quarter of fiscal 2008 compared to the second quarter of fiscal 2007.

• Operating income generated during the second quarter of fiscal 2008 was $2.5 million, a $0.5 million increase from the $2.0 million generated during the second quarter of fiscal 2007.

• Foreign exchange loss increased to $1.4 million during the second quarter of fiscal 2008 as compared to a foreign exchange gain of $0.2 million during the second quarter of fiscal 2007.

FINANCIAL HIGHLIGHTS — FIRST HALF FISCAL 2008

• Cash flows provided by operating activities were $8.7 million during the first half of fiscal 2008 while cash flows used by operating activities were $3.8 million during the first half of fiscal 2007.

• Net sales for RF, Wireless & Power Division and the Display Systems Group decreased 0.8% and 6.8%, respectively, during the first half of fiscal 2008 compared to the first half of fiscal 2007.

• Net sales for the Electron Device Group increased 3.6% during the first half of 2008 compared to the first half of fiscal 2007.

• Net sales for the Asia/Pacific geographic region increased 3.2% during the first half of fiscal 2008, as compared to the first half of fiscal 2007.

• Gross margin percentage for RF, Wireless & Power Division held constant while gross margin for Electron Device Group and the Display Systems Group decreased 0.2% and 1.4%, respectively, during the first half of fiscal 2008 compared to the first half of fiscal 2007.

• Operating income generated during the first half of fiscal 2008 was $5.1 million, a $1.0 million decrease from the $6.1 million generated during the first half of fiscal 2007.

• Foreign exchange loss increased to a loss of $1.8 million during the first six months of fiscal 2008 as compared to a foreign exchange loss of $0.2 million during the first six months of fiscal 2007.

OUTLOOK

“While our earnings fell short of our expectations, we are making progress in a number of significant areas of our business. We are nearing the completion of implementing our hub distribution infrastructure. In addition, some of our key initiatives for the remainder of fiscal 2008 include reducing our SG&A expenses, improving our inventory turns, reducing our foreign currency exposure and continuing to further improve our operating cash flow,” said Kathleen Dvorak, Chief Financial Officer.

“While these initiatives will take time, we are confident that these actions will deliver long-term value for all of our stakeholders,” added Mr. Richardson.

CASH DIVIDEND

The Company today also announced that its Board of Directors voted to declare a $0.02 cash dividend per share, which is a reduction of $0.02 per share from the prior dividend, to all holders of common stock. The cash dividend of $0.02 per share will be payable February 24, 2008 to all common stockholders of record on February 10, 2008. The Company currently has 14,816,914 shares of common stock outstanding. A dividend equal to 90 percent of the dividend paid on the common stock will be paid to the holders of the 3,048,258 outstanding shares of Class B common stock.

“The Board believes that a reduction in the cash dividend was an appropriate action based on the Company’s current financial performance,” said Mr. Richardson.

CONFERENCE CALL INFORMATION

On Thursday, January 10, 2008, at 9:00 a.m. CT, Edward J. Richardson; Chairman and Chief Executive Officer, and Kathleen S. Dvorak; Chief Financial Officer, will host a conference call to discuss the Company’s second quarter financial results. A question and answer session will be included as part of the call’s agenda. To listen to the call, please dial 888-481-7939 and enter passcode 242 190 08 approximately five minutes prior to the start of the call. A replay of the call will be available beginning at 11:00 a.m. on January 10, 2008, for seven days. The telephone numbers for the replay are (USA) 888-286-8010 and (International) 617-801-6888; access code 54175079.

This release includes certain “forward-looking” statements as defined by the Securities and Exchange Commission. Statements in this press release regarding the Company’s business which are not historical facts represent “forward-looking” statements that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the most recently ended fiscal year. The Company assumes no responsibility to update the forward-looking statements in this release as a result of new information, future events, or otherwise.

About Richardson Electronics

Richardson Electronics, Ltd. is a global provider of “Engineered Solutions,” serving the RF, Wireless & Power Conversion; Electron Device; and Display Systems markets. The Company delivers engineered solutions for its customers’ needs through product manufacturing, systems integration, prototype design and manufacture, testing and logistics. Press announcements and other information about Richardson are available at www.rell.com.

Richardson Electronics, Ltd.

Unaudited Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

	Three Months Ended						Six Months Ended
	December 1, 2007			December 2, 2006			December 1, 2007			December 2, 2006
Statements of Operations
Net sales	$	144,985		$	137,714		$	274,450		$	277,151
Cost of sales		111,185			104,680			208,012			209,765
Gross profit		33,800			33,034			66,438			67,386
Selling, general, and administrative expenses		31,317			30,695			61,283			61,008
Loss on disposal of assets		10			339			11			320
Operating income		2,473			2,000			5,144			6,058
Other (income) expense:
Interest expense		1,616			1,432			4,244			3,042
Investment income		(245	)		(737	)		(616	)		(814	)
Foreign exchange (gain) loss		1,357			(233	)		1,801			154
Retirement of long-term debt expenses		—			—			—			2,540
Other, net		(39	)		(1	)		8			13
Total other expense		2,689			461			5,437			4,935
Income (loss) from continuing operations before income taxes		(216	)		1,539			(293	)		1,123
Income tax provision		464			209			778			601
Income (loss) from continuing operations		(680	)		1,330			(1,071	)		522
Income (loss) from discontinued operations, net of tax		24			(248	)		55			(539	)
Net income (loss)	$	(656	)	$	1,082		$	(1,016	)	$	(17	)
Net income (loss) per common share – basic:
Income (loss) from continuing operations	$	(0.04	)	$	0.08		$	(0.06	)	$	0.03
Income (loss) from discontinued operations		0.00			(0.02	)		0.00			(0.03	)
Net income (loss) per common share – basic	$	(0.04	)	$	0.06		$	(0.06	)	$	(0.00	)
Net income (loss) per common share – diluted:
Income (loss) from continuing operations	$	(0.04	)	$	0.08		$	(0.06	)	$	0.03
Income (loss) from discontinued operations		0.00			(0.02	)		0.00			(0.03	)
Net income (loss) per common share – diluted	$	(0.04	)	$	0.06		$	(0.06	)	$	(0.00	)
Weighted average number of shares:
Common shares – basic		14,798			14,451			14,783			14,435
Class B common shares – basic		3,048			3,073			3,048			3,073
Common shares – diluted (1)		14,798			17,669			14,783			17,590
Class B common shares – diluted		3,048			3,073			3,048			3,073
Dividends per common share	$	0.040		$	0.040		$	0.080		$	0.080
Dividends per Class B common share	$	0.036		$	0.036		$	0.072		$	0.072

(1) Total common stock equivalents and Class B common stock for the three and six months ended December 1, 2007, are excluded from our diluted earnings per share calculation because their impact would be anti-dilutive.

Richardson Electronics, Ltd.

Unaudited Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)

	December 1, 2007			June 2, 2007
Assets
Current assets:
Cash and cash equivalents	$	20,200		$	17,436
Restricted cash		—			61,899
Receivables, less allowance of $1,464 and $1,574		104,271			105,709
Inventories		115,762			110,174
Prepaid expenses		4,928			5,129
Deferred income taxes		2,471			2,131
Current assets of discontinued operations held for sale		137			242
Total current assets		247,769			302,720
Non-current assets:
Property, plant and equipment, net		30,883			29,278
Goodwill		12,307			11,611
Other intangible assets, net		875			1,581
Non-current deferred income taxes		1,089			389
Assets held for sale		1,200			1,429
Other assets		1,802			2,058
Non-current assets of discontinued operations held for sale		5			5
Total non-current assets		48,161			46,351
Total assets	$	295,930		$	349,071
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	67,784		$	55,530
Accrued liabilities		20,296			31,330
Current portion of long-term debt		—			65,711
Current liabilities of discontinued operations held for sale		149			2,737
Total current liabilities		88,229			155,308
Non-current liabilities:
Long-term debt, less current portion		55,683			55,683
Long-term income tax liabilities		7,063			—
Non-current liabilities		1,418			1,535
Total non-current liabilities		64,164			57,218
Total liabilities		152,393			212,526
Commitments and contingencies		—			—
Stockholders’ equity
Common stock, $0.05 par value; issued 15,929 shares at December 1, 2007 and 15,920 shares at June 2, 2007		797			796
Class B common stock, convertible, $0.05 par value; issued 3,048 at December 1, 2007 and June 2, 2007		152			152
Preferred stock, $1.00 par value, no shares issued		—			—
Additional paid-in-capital		119,450			118,880
Common stock in treasury, at cost, 1,112 shares at December 1, 2007 and 1,179 shares at June 2, 2007		(6,592	)		(6,989	)
Retained earnings		19,210			21,631
Accumulated other comprehensive income		10,520			2,075
Total stockholders’ equity		143,537			136,545
Total liabilities and stockholders’ equity	$	295,930		$	349,071

Richardson Electronics, Ltd.

Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands)

	Three Months Ended						Six Months Ended
	December 1, 2007			December 2, 2006			December 1, 2007			December 2, 2006
Operating activities:
Net income (loss)	$	(656	)	$	1,082		$	(1,016	)	$	(17	)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Depreciation and amortization		1,258			1,569			2,573			3,117
Loss on disposal of assets		10			339			11			320
Retirement of long-term debt expenses		—			—			—			2,540
Write-off of deferred financing costs		—			—			643			62
Stock compensation expense		249			400			347			576
Deferred income taxes		(201	)		13			(979	)		(229	)
Receivables		(3,457	)		4,104			5,400			3,308
Inventories		5,134			(3,113	)		(1,429	)		(7,831	)
Accounts payable and accrued liabilities		1,982			39			4,846			(4,539	)
Other liabilities		(170	)		33			(177	)		114
Other		(1,410	)		(773	)		(1,548	)		(1,243	)
Net cash provided by (used in) operating activities		2,739			3,693			8,671			(3,822	)
Investing activities:
Capital expenditures		(2,314	)		(1,866	)		(3,892	)		(2,725	)
Proceeds from sale of assets		346			37			387			43
Proceeds from sales of available-for-sale securities		—			3,564			157			3,682
Purchases of available-for-sale securities		—			(64	)		(157	)		(182	)
Net cash provided by (used in) investing activities		(1,968	)		1,671			(3,505	)		818
Financing activities:
Proceeds from borrowings		65,600			65,871			111,400			137,411
Payments on debt		(69,800	)		(69,594	)		(177,040	)		(129,810	)
Restricted cash		—			—			61,899			—
Proceeds from issuance of common stock		—			720			69			720
Cash dividends		(703	)		(692	)		(1,405	)		(1,379	)
Payments on retirement of long-term debt		—			(6,515	)		—			(7,215	)
Other		(95	)		(172	)		(95	)		(658	)
Net cash used in financing activities		(4,998	)		(10,382	)		(5,172	)		(931	)
Effect of exchange rate changes on cash and cash equivalents		2,646			426			2,770			535
Increase (decrease) in cash and cash equivalents		(1,581	)		(4,592	)		2,764			(3,400	)
Cash and cash equivalents at beginning of period		21,781			18,202			17,436			17,010
Cash and cash equivalents at end of period	$	20,200		$	13,610		$	20,200		$	13,610

Richardson Electronics, Ltd.

Unaudited Net Sales and Gross Profit

For the Second Quarter and First Six Months of Fiscal 2008 and 2007

(In thousands)

By Business Unit:

	Net Sales						Gross Profit
	FY 2008		FY 2007		% Change		FY 2008			GP% of Sales		FY 2007			GP% of Sales
Second Quarter
RF, Wireless & Power Division	$	95,486	$	89,994	6.1	%	$	21,095		22.1	%	$	20,392		22.7	%
Electron Device Group		27,379		25,494	7.4	%		8,728		31.9	%		8,339		32.7	%
Display Systems Group		20,873		21,380	(2.4	%)		4,457		21.4	%		5,192		24.3	%
Corporate		1,247		846				(480	)				(889	)
Total	$	144,985	$	137,714	5.3	%	$	33,800		23.3	%	$	33,034		24.0	%
	FY 2008		FY 2007		% Change		FY 2008			GP% of Sales		FY 2007			GP% of Sales
Six Months
RF, Wireless & Power Division	$	179,792	$	181,326	(0.8	%)	$	41,467		23.1	%	$	41,855		23.1	%
Electron Device Group		51,962		50,168	3.6	%		16,517		31.8	%		16,050		32.0	%
Display Systems Group		40,262		43,209	(6.8	%)		8,897		22.1	%		10,157		23.5	%
Corporate		2,434		2,448				(443	)				(676	)
Total	$	274,450	$	277,151	(1.0	%)	$	66,438		24.2	%	$	67,386		24.3	%
By Geographic Area:
	Net Sales						Gross Profit
	FY 2008		FY 2007		% Change		FY 2008			GP% of Sales		FY 2007			GP% of Sales
Second Quarter
North America	$	59,033	$	56,929	3.7	%	$	15,454		26.2	%	$	15,130		26.6	%
Asia/Pacific		43,164		39,295	9.8	%		9,412		21.8	%		9,014		22.9	%
Europe		37,715		37,015	1.9	%		9,384		24.9	%		9,214		24.9	%
Latin America		4,440		3,965	12.0	%		1,295		29.2	%		1,137		28.7	%
Corporate		633		510				(1,745	)				(1,461	)
Total	$	144,985	$	137,714	5.3	%	$	33,800		23.3	%	$	33,034		24.0	%
	FY 2008		FY 2007		% Change		FY 2008			GP% of Sales		FY 2007			GP% of Sales
Six Months
North America	$	111,840	$	117,313	(4.7	%)	$	29,587		26.5	%	$	30,682		26.2	%
Asia/Pacific		81,293		78,801	3.2	%		18,899		23.2	%		18,581		23.6	%
Europe		71,917		70,614	1.8	%		18,637		25.9	%		18,261		25.9	%
Latin America		8,534		8,940	(4.5	%)		2,562		30.0	%		2,605		29.1	%
Corporate		866		1,483				(3,247	)				(2,743	)
Total	$	274,450	$	277,151	(1.0	%)	$	66,438		24.2	%	$	67,386		24.3	%

Note: Europe includes net sales and gross profit to the Middle East and Africa.

Latin America includes net sales and gross profit to Mexico.

Corporate consists of freight and other non-specific net sales.