8-K 1 d8k.htm FORM 8-K Form 8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported) : August 30, 2005

 

 

LOGO

 

RICHARDSON ELECTRONICS, LTD.

(Exact name of registrant as specified in its charter)

 

 

Delaware   0-12906   36-2096643

(State or other jurisdiction

of incorporation)

   (Commission File Number)  

(IRS Employer

Identification No.)

 

40W267 Keslinger Road, P.O. Box 393, LaFox, Illinois   60147-0393
(Address of principal executive offices)   (Zip Code)

 

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

 

 

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Item 2.02. Results of Operation and Financial Condition

 

On August 26, 2005, Richardson Electronics, Ltd. issued a press release reporting results for its fiscal fourth quarter and fiscal year ended May 28, 2005. A copy of the press release is furnished below:

 

Richardson Reports Record Sales for Second Consecutive Year

 

LaFox, IL, Friday, August 26, 2005: Richardson Electronics, Ltd. (NASDAQ: RELL) today reported results for its fiscal fourth quarter and fiscal year ended May 28, 2005.

 

For the second consecutive year, the Company achieved record sales with all four strategic business units growing sales. Sales increased 11.3% to $578.7 million in fiscal 2005 with strong demand for custom display and wireless products. Sales at all four of the Company’s geographic areas increased over fiscal 2004 with continued strength in Asia/Pacific where sales achieved double-digit growth for the seventh consecutive year.

 

Net loss in fiscal 2005 was $11.3 million, or $0.67 per diluted share, compared to net income of $6.0 million, or $0.42 per diluted share, in fiscal 2004. The loss included incremental tax provisions, restructuring and other charges and a gain on sale of land.

 

  •   The Company recorded incremental income tax provisions of $13.1 million in fiscal 2005 primarily to increase the valuation allowance related to the Company’s deferred tax assets.

 

  •   The Company implemented restructuring actions at the end of the third quarter of fiscal 2005, which included changes in management and a reduction in workforce of over 60 employees, to accelerate the alignment of operations with the Company’s engineered solutions strategy and improve operating efficiency. Restructuring charges of $2.2 million (before tax) and incremental inventory write-down charges of $0.9 million (before tax) were recorded in the fiscal year.

 

  •   The Company incurred $2.4 million (before tax) of additional expense related to Sarbanes-Oxley compliance, audit and tax fees.

 

  •   On May 26, 2005, the Company completed the sale of approximately 205 acres of undeveloped real estate adjoining its headquarters in LaFox, Illinois. The sale resulted in a gain of $9.9 million (before tax).

 

For the fourth quarter of fiscal 2005, the Company’s sales grew year over year for the twelfth consecutive quarter. Sales increased to $147.3 million in the quarter, up 1.4% over the fourth quarter of fiscal 2004, with increased demand for security systems, industrial power and wireless products partially offset by lower sales of cathode ray tubes and specialty displays. Geographically, sales in Latin America and Asia led the growth in the quarter partially offset by lower sales in Europe. Sales in North America were essentially flat in the quarter compared to the fourth quarter of fiscal 2004.

 

Net income in the fourth quarter of fiscal 2005 was $2.5 million, or $0.14 per diluted share, compared to net income of $2.6 million, or $0.18 per diluted share, in the fourth quarter of fiscal 2004.

 

Eliminating the gain on sale of land of $9.9 million, the Company was not in compliance with its credit agreement covenants at May 28, 2005. The Company has received a waiver and has executed an amendment to the credit agreement to provide the Company additional flexibility for the first three quarters of fiscal 2006. In addition, the amendment extended the Company’s requirement to refinance the remaining $22.3 million aggregate principal amount of the 7 1/4% convertible subordinated debentures and the 8 1/4% convertible senior subordinated debentures from February 28, 2006 to June 10, 2006.

“Although we were pleased with record level sales, we were disappointed with our fiscal 2005 results,” said Edward J. Richardson, Chairman of the Board and Chief Executive Officer. “The operating results of the Company were significantly impacted by the costs associated with the restructuring, which we initiated in February 2005, as well as the expense to comply with Sarbanes-Oxley requirements and the accounting fees related to the restatement of foreign exchange accounting on intercompany balances.”

 

“Our strategy of engineered solutions continues to be extremely well received by our customers and vendors as evidenced by our second consecutive year of record sales levels. We are confident that this strategy combined with a reorganized and much more efficient organization will continue to produce record sales and return the Company to improved levels of profitability.”

 

On Friday, August 26, 2005 at 9:00 a.m. CDT, Mr. Edward J. Richardson, Chairman and Chief Executive Officer will host a conference call to discuss the release. A question and answer session will be included as part of the call’s agenda. To listen to the call, please dial 800-762-6067 approximately five minutes prior to the start of the call. A replay of the call will be available from 12:30 p.m. on August 26, 2005 through September 27, 2005. The telephone numbers for the replay are (USA) 800-475-6701 and (International) 320-365-3844; access code 793712.

 

This release includes certain “forward-looking” statements as defined by the SEC. 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 “Risk Factors” in the Company’s annual report on Form 10-K. 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 and wireless communications, industrial power conversion, security 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 on the World Wide Web at http://www.rell.com/investor.asp.

Richardson Electronics, Ltd.

Consolidated Condensed Statements of Operations

 

(In thousands, except per share amounts)

 

     Three Months Ended
    Twelve Months Ended
     May 28,
2005
     May 29,
2004
    May 28,
2005
     May 29,
2004

Net sales

    $ 147,303     $ 145,300    $ 578,724     $ 519,823

Cost of products sold

      114,546       109,015      441,817       392,117
    
 
  
 

Gross margin

      32,757       36,285      136,907       127,706

Selling, general and administrative expenses

      33,460       30,030      128,733       108,299

(Gain) loss on disposal of assets

      (9,918 )     579      (9,918 )     579
    
 
  
 

Operating income

      9,215       5,676      18,092       18,828

Other expenses, net

      3,790       2,093      7,538       10,258
    
 
  
 

Income before income tax

      5,425       3,583      10,554       8,570

Income tax provision

      2,923       1,003      21,865       2,537
    
 
  
 

Net income (loss)

    $ 2,502     $ 2,580    $ (11,311 )   $ 6,033
    
 
  
 

Net income (loss) per share - basic:

                              

Net income (loss) per share

    $ .14     $ .18    $ (.67 )   $ .43
    
 
  
 

Average shares outstanding

      17,321       14,153      16,942       14,040
    
 
  
 

Net income (loss) per share - diluted:

                              

Net income (loss) per share

    $ .14     $ .18    $ (.67 )   $ .42
    
 
  
 

Average shares outstanding

      17,554       14,553      16,942       14,418
    
 
  
 

Dividends per common share

    $ .04     $ .04    $ .16     $ .16
    
 
  
 

 

Certain amounts in fiscal 2004 were reclassified to conform to the fiscal 2005 presentation.

Richardson Electronics, Ltd.

Sales and Gross Margin

 

(In thousands)

 

By Business Unit:                                                 
     Sales
     Gross Margin
  
     FY 2005
    FY 2004
    %
Change
     FY 2005
     GM%
of
Sales
     FY 2004
     GM%
of
Sales
  

Fourth Quarter

                                                 

RF and Wireless Communications

    $ 68,549    $ 67,896    1.0 %   $ 14,298     20.9 %   $ 15,150     22.3 %

Industrial Power Group

      32,298      31,505    2.5 %     9,480     29.4 %     9,964     31.6 %

Security Systems Division

      26,853      25,438    5.6 %     6,827     25.4 %     6,626     26.0 %

Display Systems Group

      18,038      18,696    -3.5 %     4,337     24.0 %     4,973     26.6 %

Other

      1,565      1,765    -11.3 %     (2,185 )           (428 )      
    
  
        
       
     

Total

    $ 147,303    $ 145,300    1.4 %   $ 32,757     22.2 %   $ 36,285     25.0 %
    
  
        
       
     
Year to Date                                                 

RF and Wireless Communications

    $ 265,602    $ 231,389    14.8 %   $ 58,162     21.9 %   $ 52,340     22.6 %

Industrial Power Group

      122,906      112,737    9.0 %     37,005     30.1 %     34,694     30.8 %

Security Systems Division

      105,581      101,979    3.5 %     26,889     25.5 %     26,045     25.5 %

Display Systems Group

      78,078      66,452    17.5 %     17,865     22.9 %     17,105     25.7 %

Other

      6,557      7,266    -9.8 %     (3,014 )           (2,478 )      
    
  
        
       
     

Total

    $ 578,724    $ 519,823    11.3 %   $ 136,907     23.7 %   $ 127,706     24.6 %
    
  
        
       
     
By Geographic Area:                                                 
     Sales
     Gross Margin
  
     FY 2005
    FY 2004
    %
Change
     FY 2005
     GM%
of
Sales
     FY 2004
     GM%
of
Sales
  
Fourth Quarter                                                 

North America

    $ 76,160    $ 76,023    0.2 %   $ 21,479     28.2 %   $ 19,519     25.7 %

Europe

      29,562      30,689    -3.7 %     8,211     27.8 %     8,778     28.6 %

Asia/Pacific

      33,582      32,948    1.9 %     8,131     24.2 %     7,077     21.5 %

Latin America

      5,974      4,963    20.4 %     1,695     28.4 %     1,319     26.6 %

Corporate

      2,025      677    199.1 %     (6,759 )           (408 )      
    
  
        
       
     

Total

    $ 147,303    $ 145,300    1.4 %   $ 32,757     22.2 %   $ 36,285     25.0 %
    
  
        
       
     
Year to Date                                                 

North America

    $ 303,708    $ 275,491    10.2 %   $ 80,262     26.4 %   $ 71,763     26.0 %

Europe

      123,846      116,714    6.1 %     35,258     28.5 %     33,603     28.8 %

Asia/Pacific

      124,799      104,068    19.9 %     29,691     23.8 %     23,304     22.4 %

Latin America

      21,366      20,065    6.5 %     5,879     27.5 %     4,860     24.2 %

Corporate

      5,005      3,485    43.6 %     (14,183 )           (5,824 )      
    
  
        
       
     

Total

    $ 578,724    $ 519,823    11.3 %   $ 136,907     23.7 %   $ 127,706     24.6 %
    
  
        
       
     

 

Note: Certain amounts in fiscal 2004 were reclassified to conform with the fiscal 2005 presentation. Europe includes sales and gross margins to Middle East and Africa. Corporate consists of freight and other non-area specific sales and gross margins.

Richardson Electronics, Ltd.

Consolidated Condensed Balance Sheets

 

(In thousands)

 

     May 28,
2005
    May 29,
2004
ASSETS              

Current assets:

              

Cash and cash equivalents

    $ 24,530    $ 16,927

Accounts receivable, net

      106,928      106,130

Inventories

      102,272      92,297

Other

      9,937      19,739
    
  

Total current assets

      243,667      235,093

Property, plant and equipment, net

      31,821      30,589

Goodwill and intangible assets, net

      7,167      6,309

Other assets

      5,163      10,954
    
  

Total assets

    $ 287,818    $ 282,945
    
  
LIABILITIES AND STOCKHOLDERS’ EQUITY              

Current liabilities:

              

Accounts payable

    $ 39,305    $ 33,473

Accrued liabilities

      22,731      23,224

Current portion of long-term debt

      22,305      4,027
    
  

Total current liabilities

      84,341      60,724

Long-term debt, less current portion

      98,028      133,813

Other liabilities

      1,401      241
    
  

Total liabilities

      183,770      194,778

Stockholders’ equity

      104,048      88,167
    
  

Total liabilities and stockholders’ equity

    $ 287,818    $ 282,945
    
  

 

Certain amounts in fiscal 2004 were reclassified to conform to the fiscal 2005 presentation.

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

   

RICHARDSON ELECTRONICS, LTD.

Date: August 30, 2005   By:  

/s/ David J. DeNeve

    Name:   David J. DeNeve
    Title:   Senior Vice President and
        Chief Financial Officer