PART I

Item 1. Business
Introduction and Business Strategy

Richardson Electronics, Ltd. is a specialized global provider of engineered solutions serving the RF and wireless communications, industrial power conversion, medical imaging, security and display systems markets. The Company provides "engineered solutions" to its customers through product manufacturing, systems integration, prototype design and assembly, testing and logistics. The Company's products include radio frequency ("RF") and microwave components, power semiconductors, electron tubes, microwave generators, data display monitors and electronic security products and systems. These products are used to control, switch or amplify electrical power or signals, or as display, recording or alarm devices in a variety of industrial, communication, security and medical imaging applications.

The Company's objective is to be the preeminent international supplier of niche electronic components to industrial and commercial users. To fulfill this objective, the Company employs the following basic strategies:

Capitalize on Engineering and Manufacturing Expertise. Richardson believes that its success is largely attributable to its core engineering and manufacturing competency and skill in identifying cost competitive solutions for its customers. Historically, the Company's primary business was the distribution and manufacture of electron tubes and it continues to be a major supplier of these products. Today, the Company outsources manufacturing requirements for products sold in volume, but retains its engineering and manufacturing expertise. Richardson uses this expertise to identify engineered solutions for customers' applications, not only in electron tube technology but also in each product area in which it specializes. Approximately 50% of the Company's sales are derived from products the Company electronically or physically modifies or sells under its own brand names.

Specialize in Selected Niche Markets. The Company specializes in selected niche markets that demand technical service and where price is not the primary competitive factor. Richardson seldom competes against commodity distributors. In many parts of its business, the Company's principal competitors are not other distributors but rather original equipment manufacturers ("OEMs"). The Company offers engineered solutions to its customers including the design, prototype manufacturing and/or electrical or mechanical modification and distribution of approximately 80,000 products ranging in price from $1 to $100,000 each. The Company estimates that over 60% of its sales are attributable to products intended for replacement and repair applications, in contrast to use as components in new original equipment.

Leverage Customer Base. The Company strives to grow by offering new products to its existing customer base. The Company has followed the migration of its customers from electron tubes to newer technologies, primarily semiconductors. Sales of products other than electron tubes represented 81.4% of sales in the year ended May 31, 2001, compared to 55.2 % five years ago.

Maintain Superior Customer Service. The Company maintains more than 300,000 part numbers in its inventory database. More than 80% of all orders received by 6:00 p.m. are shipped complete the same day.

Provide Global Service. Richardson has kept pace with the globalization of the electronics industry and addresses the growing demands in lesser developed countries for modern business and industrial equipment, related parts, service and technical assistance. Today, the Company's operations are worldwide in scope through 68 sales offices, including 44 located outside of the United States. The Company has offices in 24 countries and authorized representatives in an additional 19 countries. In fiscal 2001, 48.8% of sales were to customers based outside of the United States. As Richardson continues to extend its geographic reach, the Company works with its vendors to include new geographies in its franchise agreements. In addition, Richardson's global presence is a competitive advantage and growth opportunity since many of its multinational customers prefer local support.

Maintain State-of-the-Art Information Systems. Through a global information systems network, all offices have realtime access to the Company's database including customer information, product cross-referencing, market analysis, stock availability and quotation activity. Customers have online access to product information and purchasing capability via Richardson's web site, www.rell.com. The Company offers electronic data interchange to those customers requiring this service. All systems are available on a seven day, 24 hour schedule ("7/24"). The Company is committed to continually improve its technology, simultaneously improving efficiencies in asset utilization and reducing operating expenses as a percent of sales.

Growth Strategy

Richardson's long range plan for growth and profit maximization is defined in three broad categories, discussed in the following paragraphs:

Internal Growth. The Company believes that, in most circumstances, internal growth provides the best means of expanding its business. Both geographic and product line expansion have and will continue to be employed. In many instances, Richardson's original product line, electron tubes, provides the foundation for establishing new customer relationships, particularly in developing countries where older technologies are still predominately employed. From that base, the Company can identify and capitalize on new market opportunities for its other products. Over the last five years the Company has increased the number of sales offices to 68 to support its new business development efforts.

Expansion of the Company's product offerings is an ongoing program. Of particular note, the following areas have, in recent years, generated significant sales gains: amplifiers, transmitters and pallets for wireless communication: microwave generators; medical imaging components; flat panel displays and monitors; and digital CCTV security systems.

Continuous Operational Improvement. During the last five years, the Company embarked on a vigorous program to improve operating efficiencies and asset utilization. Incentive programs were revised to heighten Richardson managers' commitment to these goals. As a result, selling, general and administrative expenses as a percent of sales were reduced from 24.3% in fiscal 1997 to 18.8% in 2001. Inventory turns improved from 1.9 to 2.8 over the same period. Additional programs are ongoing, including a significant investment in a full suite of enterprise resource planning modules scheduled for installation over the next year.

Acquisitions. The Company has a successful record of acquiring and integrating businesses. Since 1980, the Company has acquired 33 companies or significant product lines. The Company evaluates acquisition opportunities on an ongoing basis. The Company's acquisition criteria require that a target provide either (i) product line growth opportunities permitting Richardson to leverage its existing customer base, (ii) additional geographic coverage of Richardson's existing product offerings or, (iii) additional technical resources. In the last five years, the Company's acquisition pace has accelerated with the purchase of 15 businesses including, most significantly, Compucon (interconnect devices for RF applications - Wireless), TRL Engineering (amplifier pallet design and engineering - Wireless), Pixelink and Eternal Graphics (display systems integration - Display) and Burtek, Security Service International and Adler Video (security systems - Security), Celti (fiber optic communication - Wire less), and Aviv (design-in services for active and passive components - Wireless).

Strategic Business Units

The marketing, sales, product management and purchasing functions of Richardson are organized as strategic business units serving specific markets: RF & Wireless Communication Group ("Wireless"), Industrial Power Group ("Industrial"), Medical Systems Group ("Medical"), Security Systems Division ("Security") and Display Systems Group ("Display"). Common logistics, information systems, finance, legal, human resources and general administrative functions support the entire organization. These support organizations are highly centralized with most corporate functions located at the Company's administrative headquarters and principal stocking facility in LaFox, Illinois.

RF & Wireless Communications Group

The RF & Wireless Communications Group serves the global RF and wireless communications market and the radio and television broadcast industry, predominately for infrastructure applications. Our product and sales team of RF and wireless engineers and global design centers assists our customers with circuit design, selecting cost effective components, planning reliable and timely supply, prototype testing and assembly.

Long term growth in wireless applications is likely as the demand for all types of wireless communication gains in popularity. In addition to voice communication, the demand for high-speed data transmission will require major investments in both system upgrades and new systems to handle broader bandwidth.

Richardson supports these growth opportunities by becoming partners with many of the key RF and wireless component manufacturers. A key to our success in relationships with our existing vendors, and our success in attracting new vendors, is the visibility we give them to worldwide demand for their current products and products in development. Richardson's global information system includes programs that our sales force employ to forecast product demand by potential design opportunity based on dialog with our customers. This information is shared with our manufacturing partners to help them predict near and long-term demand and product life cycles. Richardson has global distribution agreements with such leading semiconductor suppliers as ANADIGICS, Ericsson, M/A-COM, Motorola and Stanford Microdevices. In addition, Richardson has partnerships with many niche RF and wireless suppliers to form the most comprehensive RF and wireless resource in the industry.

The following is a description of Wireless's major product groups:

• RF and Microwave Devices - a wide variety of components, such as mixers, switches, amplifiers, oscillators and RF diodes, which are used in telecommunications and other related markets, such as broadcast, cable TV, cellular and PCS, satellite, wireless LANs and various other wireless applications.
  
  
• Interconnect Devices - passive components used to connect all types of electronic equipment including those employing RF technology.
  
  
• Fiber Optics - components including laser diodes, photo detector, transamplifiers, and transceiver modules used in fiber optic communications for data communication and hybrid fiber coax and telecommunication markets.
  
  
• Broadcast Equipment - video products, camera tubes, klystrons, transmitters and accessories used for radio and television broadcasting.

Richardson participates in every RF and wireless application and market in the world, focused on infrastructure rather than consumer-driven subscriber applications. In the past year, we gained market share in RF and wireless applications used in industrial, broadcast, avionics and cellular markets through the expansion of our engineering sales organization, addition of new vendor franchises and acquisition of businesses operating in Israel and Latin America.

Industrial Power Group

Richardson serves a broad range of customers across many business sectors including the steel, automotive, textile, plastics, semiconductor and transportation industries. Our engineering skill and products are used in countless applications, such as motor speed controls, industrial heating, laser technology, semiconductor manufacturing equipment, radar and welding.

A reorganization from a product oriented to a market focused strategy was completed a year ago, forming the Industrial Product Group to serve the industrial market's need for both vacuum tube and solid-state technologies. Today, the Group supports both replacement products for systems using electron tubes and the design and assembly of new systems employing power semiconductors.

We are committed to a specialized strategy of providing engineered solutions for our customers. With our technical expertise and value-added capabilities, we offer the customer: design services, lower-cost product alternatives, complementary products, system integration, component modification and assembly. This broad array of services supports both OEM's and end-users.

Richardson is a leading systems integrator and supplier of components and assemblies for microwave equipment which is used in the manufacture of wafers. Wafers are essential in the production of semiconductors. In addition, the Group's products are employed in the manufacture of printed circuit boards. Designing our products into new OEM applications also increases the probability of our participation in after-market sales.

We represent the leading manufacturers of electronics used in industrial power applications. Among the suppiers we support are APT, Bussmann, Cornell-Dubilier, CPI, Ferraz, General Electric, Hitachi, Jennings, Nissei-Arcotronics, Ohmite, Powerex, Toshiba, Triton, United Chemi-Con, Varian, Wakefield and Westcode. In fiscal 2001, we expanded our product offering to include Tyco Electronics and Electronic Devices, Inc.

The following is a description of Industrial's major product groups:

• Power Semiconductors - solid-state, high-frequency power amplifiers used in broadcast, cellular, aircraft and satellite communications and in many types of electronic instrumentation. In many circumstances, the customer prefers to acquire the complete assembly as opposed to the discrete transistor. Accordingly, the Company expanded its product offering to include design and prototype assembly of amplifiers and pallets incorporating RF power transistors.
  
  
• Silicon Controlled Rectifiers ("SCRs"), Heat Sink Assemblies and Power Semiconductor Modules - components used in many industrial control applications because of their ability to switch large amounts of power at high speeds. These silicon power devices are capable of operating at up to 4,000 volts at 2,000 amperes.
  
  
• High Voltage and Power Capacitors - devices used in industrial, avionics, medical and broadcast applications for filtering, high-current bypass, feed-through capacitance for harmonic attenuation, pulse shaping, grid and plate blocking, tuning of tank circuits, antenna coupling and energy discharge.
  
  
• Power Amplifier / Oscillator Tubes - vacuum or gas-filled tubes used in applications where current or voltage amplification and/or oscillation is required. Applications include induction heating, diathermy equipment, communications and radar systems and power supplies for voltage regulation or amplification.
  
  
• Microwave Generators - devices that incorporate magnetrons, which are high vacuum oscillator tubes used to generate energy at microwave frequencies. The pulsed magnetron is predominantly used to generate high-energy microwave signals for radar applications. Magnetrons are also used in vulcanizing rubber, food processing, packaging, wood / glue drying, in the manufacture of wafers for the semiconductor industry and other industrial heating applications such as microwave ovens and by the medical industry for sterilization and cancer therapy.
  
  
• Hydrogen Thyratrons - electron tubes capable of high speed and high voltage switching. They are used to control the power in laser and radar equipment and in linear accelerators for cancer treatment.
  
  
• Thyratrons and Rectifiers - vacuum or gas-filled tubes used to control the flow of electrical current. Thyratrons are used to control ignitrons, electric motor speed controls, theatrical lighting and machinery such as printing presses and various types of medical equipment. Rectifiers are used to restrict electric current flow to one direction in power supply applications.
  
  
• Ignitrons - mercury pool tubes used to control the flow of large amounts of electrical current. Their primary applications are in welding equipment, power conversion, fusion research and power rectification equipment.
  

Geographically, our vacuum tube revenue base is spread broadly throughout the world, while solid-state sales are concentrated in North America. This imbalance represents an excellent opportunity to capitalize on our existing worldwide customer relationships and grow the industrial solid-state segment outside North America.

Medical Systems Group

Richardson serves the medical imaging market, providing system upgrades and integration services in addition to a wide range of diagnostic imaging components. Our team of medical imaging specialists and display product professionals support medical service dealers and hospital maintenance professionals throughout the world.

The Company's broad range of products cover applications for conventional, angiographic, cardiac catheterizations and computed tomography X-ray systems, as well as magnetic resonance imaging and ultrasound systems. Glassware products include X-ray tubes, medical imaging intensifiers and camera tubes. Other products include high-resolution color and monochrome displays, X-ray generators, cable assemblies and test equipment. We support our customers' requirements for imaging and display products from such well-known sources as Barco, Clinton, Comet, Dome Imaging, Dunlee, Image Systems, NEC, Philips-FIMI, Siemens, Thomson and Toshiba.

The following is a description of Medical's major product groups:

• CT and X-Ray Tubes - glass and glass/metal vacuum tubes which generate high-frequency radiation for use in medical diagnostic imaging including fluoroscopy and computer-aided tomography ("CAT-scan").
  
  
• Image Intensifiers - glass/metal vacuum tube that converts x-ray level radiation into light-level energy used in fluoroscopy, angio, and digital imaging applications.
  
  
• High Resolution Displays - an integral component of Picture and Archiving Communications Systems ("PACS"), displays are used in diagnostic and non-diagnostic imaging to display the digital image generated from CT, MRI, radiography and other digital modalities.

We reload X-ray tubes and image intensifiers in Dallas, Texas, Richmond, Virginia and Amsterdam, Holland. Our Richmond facility also provides engineering expertise to customize medical imaging upgrades and to integrate various imaging components into packaged "sub-systems." Our reloaded X-ray tubes include Dunlee, GE, Philips, Shimatzu, Siemens and Toshiba products. Remanufactured or upgraded image intensifier systems include GE, Philips, Picker and Siemens equipment. All reloaded or remanufactured products meet or exceed manufacturers' specifications at a substantial cost savings to the customer.

Among Richardson's newest offerings is RELLmed, an integrated imaging solution that facilitates 100 percent compatibility between various imaging hardware components. RELLmed bundles fully configured computers, video controller cards and high-resolution display monitors into a single operating system that can be custom-designed to meet the customer's specific requirements.

Security Systems Division

Richardson is a full-line distributor of closed circuit television ("CCTV"), fire, burglary, access control, sound and communication products and accessories. We specialize in CCTV design-in support and have particular expertise in the industry's fastest growth area - applications employing digital technology. Security Systems has 23 worldwide stocking locations with 16 in North America, 4 in Europe and 3 in Latin America.

The Group serves its worldwide market through a direct sales force averaging more than ten years of experience, a 130 page catalog and an e-commerce enabled web site, www.cctvnet.com.

Security Systems supports its customer base with products from more than 100 manufacturers including such well-known names as Aiphone, Mitsubishi, Panasonic, Paradox, Pelco, Sanyo, and Sony. In addition, the Company carries its own private label brands, National Electronics and Capture.

The following is a description of SSD's major product groups:

• CCTV Products - Used in surveillance applications and for monitoring hazardous environments in the workplace. Products include: cameras, lenses, monitors, multiplexers, time lapse recorders, hard disk recorders, Internet-based video servers and associated accessories.
  
  
• Burglar and Fire Alarms and Access Control Products - Devices used to detect unauthorized access to an area or the presence of smoke or fire.
  
  
• Commercial Sound Systems - Sound reproduction components used in background music, paging and telephonic interconnect systems.

The security systems industry is moving to digital imaging technology. Richardson participates in this transition with new products under the National Electronics and Capture brands including state-of-the-art equipment such as hard disk recording, Internet based transmission, covert applications, speed dome applications and telephone-control-based CCTV systems.

Display Systems Group

Richardson provides custom display solutions and systems integration services for the public information, financial, point-of-sale and general data display markets. The customer base includes organizations from virtually all areas of business, including, stock exchanges, airlines, retail and restaurant franchises, as well as all types of industrial users of data display devices.

Monitors, including liquid crystal displays ("LCD") and plasma display panels ("PDP"), became the Group's dominate product line in fiscal 2001. Monitors sales grew by more than 36 percent, closing the year at $28 million, representing 65 percent of the Groups's sales.

Our technical sales force assists customers in developing solutions for data display issues such as: special mounting, glare reduction, ruggedness, touch screen integration and many others.

The Group's legacy business, replacement cathode ray tubes ("CRT") continues to be an important market. The Company's success in this area was achieved by the development of an extensive cross-reference capability. This database, coupled with custom mounting hardware installed by the Group, enables Richardson to provide replacement tubes for more than 200,000 original manufacturers' models.

Richardson has long-standing relationships with key manufacturers including Clinton Electronics, Fujitsu General, Intel, NEC/Mitsubishi, Panasonic, Philips-FIMI, Siemens and Sony, among others. These vendor relationships give the Group a well-balanced and leading-edge line of products.

The Company has design and intergration operations in Chicago, Illinois and Boston, Massachusetts and stocking locations in Chicago, Boston and Lincoln, England.

The following is a description of Display's major product groups:

• Cathode Ray Tubes - vacuum tubes that convert an electrical signal into a visual image to display information on computer terminals or televisions. CRTs are used in various environments, including hospitals, financial institutions, airports and numerous other applications wherever large user groups share electronic data visually. The product line includes both monochrome and color tubes.
  
  
• Data Display Monitors - peripheral components incorporating a color or monochrome CRT capable of displaying an analog or digitally generated video signal.
  
  
• Flat Panel Displays - display monitors incorporating a liquid crystal or plasma panel, as an alternative to the traditional CRT technology, typically a few inches in depth and ranging from 10" to 42" measured diagonally.

Distribution and Marketing

The Company purchases RF and power semiconductors, vacuum tubes, monitors and flat panel displays, and electronic security products and systems from various sources, including Advanced Power Technology ("APT"), Antech Industries, ANADIGICS, Burle Indutries, Clinton Electronics, Communication and Power Industries ("CPI"), Covimag, Dome Imaging, Dunlee, Ericsson, FIMI, Filtronic, Fujitsu, General Electric, Hi Sharp, Hitron, Huber & Suhner, Jennings, Johnson Components, KDI Electronics, Litton, M/A-COM, Microsemi, Motorola, MPD, New Japan Radio, NEC Tecnologies, Orion/Daewoo, Panasonic, Paradox, Pelco, Philips, Powerex, QMI, RF Power, Samsung, Sanyo, Semtech, Sensor-matic, Siemens, Sony, ST Microelectronics, Stanford Microdevices, Teletube(Samtell), Tensonite, Thales Components Corporation, Toshiba, Triton Services, United Monolithic Semiconductor, Varian Associates and Watkins Johnson.

During fiscal 2001, Richardson added the following vendors: AEM, Inc., Electronic Devices, Inc., Peregrine Semiconductor, Toko America, Trilithic Wireless and Tyco Electronics' Electronic Modules division.

In 1991, the Company settled an antitrust suit with the U.S. Department of Justice related to its participation in the electron tube manufacturing industry. As a consequence, certain of its manufacturing activities became uneconomic and were divested or discontinued, including the sale of the Company's former Brive, France manufacturing operation to local management, who continued the business under the name, Covimag. Formal transfer of ownership occurred in January 1995. Under an evergreen agreement, the Company and Covimag negotiate a purchase commitment on an annual basis. Covimag is highly dependent on Richardson, which is its primary customer. Settlement of purchases under the contract is at standard terms. Except for the supply contract, Richardson has no other financial commitment to or from Covimag. Relationships under the supply contract are believed by the Company to be satisfactory.

In addition to the agreement with Covimag, the Company has marketing and distribution agreements with various manufacturers in the electron tube, semiconductor and CCTV industries. The most significant distributor agreement is with CPI under which the Company functions as the exclusive distributor of power grid tubes throughout the world, with the exception of the United States and certain Eastern European countries. In these areas, however, the Company remains the only CPI stocking distributor.

Customer orders are taken by the regional sales offices and supported by one of Richardson's principal distribution facilities in LaFox, Illinois; Houston, Texas; Vancouver, British Columbia; or Lincoln, England. There are 41 additional stocking locations throughout the world. The Company utilizes a sophisticated data processing network that provides online, real-time interconnection of all sales offices and central distribution operations, seven days per week, 24 hours per day ("7/24"). Information on stock availability, cross-reference information, customers and market analyses are instantly obtainable throughout the entire distribution network.

Manufacturing

The Company distributes its proprietary products principally under the trade names "Amperex," "Capture," "Cetron," "National," and "RF Gain." Approximately 25% of the Company's sales are from products it manufactures or modifies through value-added services. An additional 25% of the Company's sales are of products manufactured to its specifications by independent manufacturers under private label.

The products currently manufactured by the Company, or subcontracted on a proprietary basis for the Company, include RF amplifiers, transmitters and pallet assemblies thyratrons and rectifiers, power tubes, ignitrons, microwave generators, electronic display tubes, phototubes, SCR assemblies and spark gap tubes. Richardson reloads and remanufactures medical x-ray tubes. The materials used in the manufacturing process consist of glass bulbs and tubing, nickel, stainless steel and other metals, plastic and metal bases, ceramics and a wide variety of fabricated metal components. These materials generally are readily available, but some components may require long lead times for production and some materials are subject to shortages or price fluctuations based on supply and demand.

Employees

As of May 31, 2001, the Company employed 1091 individuals on a full-time basis. Of these, 628 are located in the United States, including 80 employed in administrative and clerical positions, 451 in sales and distribution and 97 in value-added and product manufacturing. The Company's international subsidiaries employ 463 individuals engaged in administration, sales, distribution, manufacturing and value-added operations. All of Richardson's employees are non-union. The Company's relationship with its employees is considered to be good.

Competition

Richardson believes that, on a global basis, it is a significant distributor of RF and power semiconductors and subassemblies, electron tubes, CRTs and security systems. For many of its product offerings, the Company competes against the OEM for sales of replacement parts and system upgrades to service existing installed equipment. In addition, the Company competes worldwide with other general line distributors and other distributors of electronic components.

Patents and Trademarks

The Company holds or licenses certain manufacturing patents and trademark rights, including the trademarks "National," "Cetron" and "Amperex." The Company believes that although its patents and trademarks have value, they will not determine the Company's success, which depends principally upon its core engineering capability, marketing technical support, product delivery and the quality and economic value of its products.

Item 2.     Properties

The Company's corporate facility and largest distribution center is owned by the Company and is located on approximately 300 acres in LaFox, Illinois, consisting of approximately 255,000 square feet of manufacturing, warehouse and office space. Richardson also owns a building containing approximately 45,000 square feet of warehouse space on 1.5 acres in Geneva, Illinois. Owned facilities outside of the United States are located in England, Spain and Italy.

The Company also maintains leased branch sales offices in or near major cities throughout the world, including 42 locations in North America, 21 in Europe, 12 in the Far East / Pacific Rim and 5 in Latin America. The Company leases production facilities in Texas, Virginia and the Netherlands for its medical tube reloading operations.

Item 3.     Legal Proceedings

The Company is a defendant in Panache Broadcasting of Pennsylvania v. Richardson Electronics, Ltd., et. al., in United States District Court, Northern District of Illinois, filed in 1990. The complaint is a class action for purposes of liability determination on behalf of all persons and businesses in the United States who purchased electron power tubes encompassed by the VASCO joint venture of the defendants from one or more of the defendant corporations at any time between February 26, 1986 and March 16, 1993. The complaint alleges antitrust violations and seeks treble damages, injunctive relief and attorneys fees. The Company has denied the material allegations. The case remains primarily in the preliminary discovery stage.

From time to time the Company is involved in other litigation arising in the normal course of its business which is not expected to have a material adverse effect on the Company.

Item 4.     Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of stockholders, through the solicitation of proxies or otherwise, during the fourth quarter of the fiscal year ended May 31, 2001.

PART II

Item 5.     Market for the Registrant's Common Equity and Related Stockholder Matters

Incorporated herein by reference from pages 22 (for dividend payments) and 34 (for market data) of the Company's 2001 Annual Report for the fiscal year ended May 31, 2001 (Annual Report).

Item 6.     Selected Financial Data

Incorporated herein by reference from page 16 of the Annual Report.

Item 7.     Management's Discussion and Analysis of Financial Condition and Results of Operations

Incorporated herein by reference from pages 17 to 20 of the Annual Report. Investors should consider carefully the following risk factors, in addition to the other information included and incorporated by reference in this annual report on Form 10-K. 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 "expect," "estimate," "anticipate," "predict," "believe" 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 o f 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. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those predicted in the forward-looking statements or which may be anticipated from historical results or trends. In addition to the information contained in the Company's other filings with the Securities and Exchange Commission, factors which could affect future performance include, among others, the following:

• Fourth quarter fiscal 2001 operating results softened from the immediately preceding quarter as the Company began feeling the effects of the general economic slowdown and particularly lower demand for RF and wireless products in telecommunication markets. These conditions continued as of the date of this report.
• General economic or business conditions, domestic and foreign, may be less favorable than expected, resulting in lower sales or lower profit margins than expected and contrary to historical trends.
• Competitive pressures may increase or change through industry consolidation, entry of new competitors, marketing changes or otherwise. There can be no assurance that the Company will be able to continue to compete effectively with existing or potential competitors.
• Technological changes may affect the marketability of inventory on hand.
• Changes in relationships with customers or vendors, the ability to develop new relationships or the business failure of several customers or vendors may affect sales or profitability.
• Political, legislative or regulatory changes may adversely affect the businesses in which the Company operates.
• Changes in securities markets, interest rates or foreign exchange rates may adversely affect the Company's performance or stock price.
• The failure to obtain or retain key executive or technical personnel could affect future performance.
• The Company's growth strategy includes expansion through acquisitions. There can be no assurance that the Company will be able to successfully complete further acquisitions or that past or future acquisitions will not have an adverse impact on the Company's operations.
• The potential future sale of Common Stock shares, possible anti-takeover measures available to the Company, dividend policies, as well as voting control of the Company by Edward J. Richardson, Chairman of the Board and Chief Executive Officer may affect the stock price.
• The continued availability of financing on favorable terms can not be assured.

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk

Incorporated by reference from page 20 of the Annual Report "Risk Management and Market Sensitive Financial Instruments."

Item 8.     Financial Statements and Supplementary Data

Incorporated herein by reference from pages 21 through 32 of the Annual Report.

Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

PART III

Item 10.   Directors and Executive Officers of the Registrant

Information concerning Directors and Executive Officers of the Company is contained in the Company's Proxy Statement to be used in connection with its Annual Meeting of Stockholders scheduled to be held October 16, 2001, under the captions "ELECTION OF DIRECTORS - Information Relating to Directors, Nominees and Executive Officers", "ELECTION OF DIRECTORS - Affiliations" and "SECTION 16 FILINGS", which information is incorporated herein by reference.

Item 11.   Executive Compensation

Incorporated herein by reference is information concerning executive compensation contained in the Company's Proxy Statement to be used in connection with its Annual Meeting of Stockholders scheduled to be held October 16, 2001, under the captions "ELECTION OF DIRECTORS - Directors Compensation" and "EXECUTIVE COMPENSATION", except for captions "REPORT ON EXECUTIVE COMPENSATION" and "PERFORMANCE GRAPH".

Item 12.   Security Ownership of Certain Beneficial Owners and Management

Information concerning security ownership of certain beneficial owners and management is contained in the Company's Proxy Statement to be used in connection with its Annual Meeting of Stockholders scheduled to be held October 16, 2001, under the caption "ELECTION OF DIRECTORS - Information Relating to Directors, Nominees and Executive Officers" and "PRINCIPAL STOCKHOLDERS", which information is incorporated herein by reference.

Item 13.   Certain Relationships and Related Transactions

Information concerning certain relationships and related transactions is contained in the Company's Proxy Statement to be used in connection with its Annual Meeting of Stockholders scheduled to be held October 16, 2001, under the caption "ELECTION OF DIRECTORS - Information Relating to Directors, Nominees and Executive Officers," which information is incorporated herein by reference.

PART IV

Item 14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a) The following consolidated financial statements of the registrant and its subsidiaries included on pages 17 through 28 of the Annual Report are incorporated herein by reference: