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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended May 31, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
Commission File No. 0-12906
RICHARDSON ELECTRONICS, LTD.
(Exact name of registrant as specified in its charter)
Delaware 36-2096643
(State of incorporation or organization) (I.R.S. Employer Identification No.)
40W267 Keslinger Road, P.O. Box 393, LaFox, Illinois 60147-0393
(Address of principal executive offices)
Registrant's telephone number including area code: (630) 208-2200
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.05 par value
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. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
As of August 26, 1999, there were outstanding 9,392,024 shares of Common
Stock, $.05 par value, and 3,233,009 shares of Class B Common Stock, $.05 par
value, which are convertible into Common Stock on a share for share basis, of
the registrant and the aggregate market value of such shares, based on the
reported last sale price of the Common Stock on such date, held by non-
affiliates of the registrant was approximately $64,100,000.
(1)
(Cover page continued)
Portions of the 1999 Annual Report to Stockholders of registrant for fiscal
year ended May 31, 1999 are incorporated in Parts I, II, and IV of this
Report. Portions of the registrant's Proxy Statement dated September 3, 1999
for the Annual Meeting of Stockholders scheduled to be held October 12, 1999,
which will be filed pursuant to Regulation 14(A), are incorporated by
reference in Part III of this Report. Except as specifically incorporated
herein by reference, the above mentioned Annual Report to Stockholders and
Proxy Statement are not deemed filed as part of this report.
The exhibit index is located at pages 16 through 23.
(2)
PART I
Item 1. Business
Introduction and Business Strategy
Richardson Electronics, Ltd. is a specialized international distributor of
electronic components, equipment and assemblies primarily for niche
industrial applications. Its products include electron tubes, microwave
generators, radio frequency ("RF") and microwave components, power
semiconductors, 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.
Richardson differentiates itself by providing engineered solutions to its
customers. Its capabilities extend beyond simple product distribution to
include specialty product manufacturing and systems integration and include
value-added services such as component assembly, prototype design and
manufacture, testing, kitting and logistics.
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 out-
sources 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 in each product area in which it specializes.
Approximately 45% 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 which 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 62.6% of sales in the year ended May
31, 1999, compared to 46.7% 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 69
sales offices, including 39 located outside of the United States. In fiscal
1999, 49.4% of sales were derived from outside the United States.
Maintain State-of-the-Art Information Systems.
Through a global, information systems network, all offices have real-time
access to the Company's database including customer information, product
cross-referencing, market analysis, stock availability and quotation
activity. Customers have on-line access to product information and purchasing
capability via Richardson's web site. The Company offers electronic data
interchange to those customers requiring this service.
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 tripled the number of sales offices to 69 to support its new business
development efforts.
Expansion of the Company's product offerings is an on-going program. Of
particular note, the following areas have recently generated significant
sales gains: microwave generators; medical imaging components; amplifiers,
transmitters and pallets for wireless communication, flat panel displays,
monitors; and CCTV security systems.
Continuous Operational Improvement.
During the last four 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 23.4% in fiscal 1995 to 22.1% in 1999. Inventory turns
improved from 1.7 to 2.2 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 two years.
The Company believes European logistics and stocking levels may offer
additional opportunities for cost savings.
Acquisitions.
The Company has a successful record of acquiring and integrating businesses.
Since 1980, the Company has acquired 28 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 or (ii) additional geographic coverage of Richardson's
existing product offerings. In the last four years, the Company's acquisition
pace has accelerated with the purchases of twelve businesses including, most
significantly, Tubemaster (medical imaging-EDG), Compucon (interconnect
devices for RF applications-SSC) and Burtek, Security Service International
and Adler Video (security systems-SSD).
Strategic Business Units
The marketing, sales, product management and purchasing functions of
Richardson are organized as four strategic business units: Electron Device
Group ("EDG"), Solid State and Components ("SSC"), Display Products Group
("DPG") and Security Systems Division ("SSD"). Common logistics, information
systems, finance, legal, human resources and general administrative functions
support the entire organization. The Company's support organization is highly
centralized with most corporate functions located at its administrative
headquarters and principal stocking facility in LaFox, Illinois.
Electron Device Group
EDG's principal products, electron tubes, are used to control, switch,
oscillate or amplify electrical power. This technology has been used for more
than 80 years in electronic circuitry throughout the industrialized world.
With such a vast installed base, replacement applications represent EDG's
primary focus. In certain situations, including high power broadcasting and
industrial equipment, electron tubes are the only economical technology
capable of meeting power requirements or withstanding severe environmental or
other operating conditions.
EDG serves a multitude of industries including automotive, avionics,
communications, marine, plastics, rubber, steel and textile. Several major
applications include dielectric and induction heating, motor speed controls,
radar, resistance welding equipment and television and radio broadcast
equipment. Microwave generator systems are designed and assembled by the
Company for use in the manufacture of wafers for the semiconductor industry
and other industrial heating applications.
In addition to the industries set forth above, Richardson believes the
increased emphasis on containment of medical costs offers significant
opportunities to supply replacement tubes and system upgrades to the
diagnostic medical imaging market, estimated by the Company at $900 million
annually. EDG distributes high voltage switch tubes, x-ray tubes and image
intensifiers used in x-ray imaging equipment and specialty tubes for
analytical equipment, as well as camera tubes, photomultipliers, switch
tubes, magnetrons, hydrogen thyratrons and imaging equipment to the medical
industry. In the last several years, the Company has capitalized on its
engineering skill, expanding its product offering to include assistance in
systems integration and upgrades of existing medical equipment to incorporate
state-of-the-art imaging systems. In 1996, Richardson purchased two North
American facilities, one for x-ray tube reloading and the second for digital
imaging systems. During 1997, the Company continued its growth in the medical
imaging market and established a European facility to supply the European
market with reloaded x-ray tubes.
Certain sectors of the electron tube market in which the Company participates
are modestly contracting due to the continued substitution of semiconductor
technology for traditional electron tube applications. EDG is expanding its
customer base beyond North America and Europe. As industrialized countries
convert to solid state, equipment employing tube technology is frequently
redeployed to lesser-developed areas of the world. Richardson's global
expansion is, in part, to capitalize on this opportunity. The annual global
market for electron tubes served by EDG is estimated by the Company to be
more than $3.0 billion. As a result of product line and global expansion, EDG
sales increased in each of the last four years.
The following is a description of EDG's major product groups:
Power Amplifier / Oscillator Tubes are 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.
X-ray Tubes and X-ray Image Intensifiers are glass and glass/metal vacuum
tubes which generate high-frequency radiation for use in industrial,
analytical and medical equipment. Stationary anode x-ray tubes are used
primarily for inspection and non-destructive testing of solid materials and
in crystallography. Rotating anode x-ray tubes are primarily used in medical
applications, including fluoroscopy and computer-aided tomography (CAT-scan).
Microwave Generators 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.
Broadcast Equipment includes video products, camera tubes, klystrons,
transmitters and accessories used for radio and television broadcasting.
Hydrogen Thyratrons are 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 are 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.
Industrial Receiving Tubes are vacuum tubes used to regulate or amplify small
amounts of power in a wide variety of electrical and electronic equipment.
Communications, medical instrumentation, consumer electronics, audiophile and
industrial controls are typical applications for this product.
Ignitrons are 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.
Solid State and Components
SSC serves many of the same customers and industries as EDG and focuses its
broad product offerings on two specialized markets. Because of the Company's
expertise in electron tube technology, it developed a strong competency in
power semiconductors. From this base in power semiconductors, SSC has
expanded into related products for Radio Frequency ("RF") and microwave
components. In addition to the distribution of products, SSC provides design,
prototype assembly, manufacturing, kitting, testing and other essential
services to these markets. SSC's RF and microwave components are used by the
emerging wireless and telecommunications markets as well as Richardson's
traditional communications, broadcast and avionics customers. SSC's power
semiconductors and related components serve industrial markets in power
conversion applications.
The majority of SSC's business is with OEMs. Because time-to-market is so
critical in today's electronics industry, OEMs are outsourcing engineering
design-in of devices and components. Richardson employs its core engineering
expertise and distribution competency in wireless and industrial applications
to meet customer requirements for design-in and prototype assembly of silicon
controlled rectifier assemblies, amplifiers, pallets and other components.
In October 1996, the Company acquired Compucon, a distributor of interconnect
devices operating in the northeastern United States. This acquisition brought
to the Company a new complimentary product line and management with the
specialized knowledge of its applications. The Company has achieved
significant growth in this line by expanding Compucon's regional
specialization through its worldwide sales network. In 1999, the company
acquired TRL Technologies, an engineering design firm and manufacturer of
amplifier circuits. In August 1999, the Company expanded its product
offering, signing a global distribution agreement with Motorola .
The following is a description of SSC's major product groups:
RF and Microwave Devices include 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.
Power Semiconductors are 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.
Interconnect Devices are passive components used to connect all types of
electronic equipment including those employing RF technology.
Silicon Controlled Rectifiers ("SCRs"), Heat Sink Assemblies and Power
Semiconductor Modules are 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 are used in industrial, avionics, medical
and broadcast applications for filtering, high-current by-pass, feed-through
capacitance for harmonic attenuation, pulse shaping, grid and plate blocking,
tuning of tank circuits, antenna coupling and energy discharge.
Display Products Group
DPG sells data display and instrumentation cathode ray tubes ("CRTs") that
are used in data display, marine, medical, radar and avionic applications.
This business unit recently expanded its product line to include flat panel
displays and monitors. DPG's primary market is users of replacement CRTs and
related components, principally large manufacturing and service companies.
Its customer base also includes both independent and original equipment
service organizations. Richardson estimates worldwide annual factory sales of
CRTs excluding television tubes to be $2 billion. DPG offers a cost effective
alternative to purchasing a complete data display monitor by replacing only
the defective CRT. In addition to product sales, DPG provides engineered
solutions to its customers including system integration, extensive cross-
referencing and other value-added capabilities that enable DPG to offer off-
the-shelf availability for more than 200,000 manufacturers' part numbers from
an inventory of approximately 200 standard CRTs.
Computer terminals and monitors, broadcast monitors, viewfinders and
TelePrompTers(r), radar and instrumentation displays are some of the many
product applications. Large mainframe systems, using multiple data display
terminals, represent the largest market served by DPG. Typical users include
hospitals, airports, airlines, brokerage offices, banks, television studios,
utilities and assembly lines. The Company acquired Eternal Graphics Inc. and
Pixelink in fiscal 1998 and 1999, respectively, expanding DPG's expertise to
include monitors, flat panel displays and related systems integration for
financial institutions and medical imaging applications.
The following is a description of DPG's major product groups:
Cathode Ray Tubes are 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 are peripheral components incorporating a color or
monochrome CRT capable of displaying an analog or digitally generated video
signal.
Flat Panel Displays are display monitors incorporating a liquid crystal
display or plasma panel, rather than a CRT, typically a few inches in depth
and ranging from 10" to 42" measured diagonally.
Security Systems Division
SSD serves the commercial security and surveillance industry with primary
emphasis on closed circuit television ("CCTV") systems and components. SSD's
strategy is to leverage Richardson's existing customer base of Fortune 1000
customers and other large end users, as opposed to security dealers or
retailers. SSD's principal value-added service is system design. The Company
believes that due to heightened concerns over crime and the increasing
incidence of liability claims, industrial and commercial organizations are
expanding the use of CCTV systems to monitor and document activities in a
wide range of applications. Industry sources estimate that North American
wholesale sales of CCTV and related security equipment were $750 million in
1997 with a projected annual growth rate of 10% through 2000. In addition to
its CCTV product offerings, SSD provides electronic components for burglar
and fire detection systems, access control systems and commercial sound
systems.
Technology is changing continuously in the electronic surveillance industry.
SSD offers its customers engineered solutions including systems integration,
education and training. These engineered solutions assure SSD's customers
remain at the forefront of the industry in terms of product knowledge and end
user requirements.
SSD's sales increased significantly in 1997 and 1998 and more modestly in
1999. Acquisitions and a significant increase in SSD's field sales force were
principally responsible for these sales gains. In February 1997 and August
1997, respectively, the Company acquired Burtek and Security Services
International, both of which are security systems distributors operating in
Canada, with combined annual sales of approximately $38.0 million. In
December, 1998 the Company acquired Adler Video Systems, a southern
California based distributor of CCTV systems with annual sales of
approximately $8.4 million.
The following is a description of SSD's major product groups:
CCTV Products which include cameras, lenses, monitors, scanners, time lapse
recorders and associated accessories, are used in surveillance applications
and for monitoring hazardous environments in the workplace.
Burglar and Fire Detection Systems are devices used to detect unauthorized
access to an area or the presence of smoke or fire.
Commercial Sound Systems are sound reproduction components used in background
music, paging and telephonic interconnect systems.
Distribution and Marketing
The Company purchases vacuum tubes, RF and power semiconductors, related
electronic components and electronic security products and systems from
various sources, including Advanced Power Technology, Ad-Tech Industries,
Burle Industries, Clinton Electronics, Communication and Power Industries
("CPI"), Covimag, Dunlee, Ericsson, FIMI, Fujitsu, Gasser & Sons, General
Electric, Hi Sharp, Huber & Suhner, Jennings, KDI Electronics, Litton, M/A-
COM, MPD, New Japan Radio, Orion/Daewoo, NEC Tecnologies, Panasonic, Paradox,
Pelco, Philips, Powerex, QMI, RF Prime, Samsung, Samtell, Sanyo, SCT Societe
des Ceramiques, Semtech, Sensormatic, Sony, Stanford Microdevices, Stellex
Microwave Systems, Teletube, THOMSON, Toshiba, Triton Services, United
Monolithic Semiconductor, Varian Associates and Watkins Johnson. No single
outside supplier accounted for more than 10% of the Company's purchases in
any one of the last three years, other than CPI, which accounted for 10.3% of
purchases in fiscal 1997.
In August 1999, the Company entered into a non-exclusive distributor
agreement with Motorola. This agreement reinstates Richardson as an
authorized distributor, reversing an almost three-year old decision to reduce
their number of stocking distributors. The new relationship expands upon the
former agreement in two ways. It extends the previous North American
franchise to a global level. Also, it encompasses a wider array of components
to include wireless RF / IF product in addition to the previous offering of
RF power transistors. Under the prior agreement in its last full year before
termination in fiscal 1996, the Company sold approximately $17.0 million of
Motorola products. Future revenues under the new agreement cannot be
predicted with any level of certainty. However, because of the significant
amount of engineering required to design-in the product, recovery and
expansion of the Motorola line will be gradual.
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.
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 managed by the same individuals previously employed
by the Company at this facility. 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
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 is 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 generally
directed to one of Richardson's principal distribution facilities in LaFox,
Illinois; Houston, Texas; Vancouver, British Columbia; or Lincoln, England.
There are 32 additional stocking locations throughout the world. The Company
utilizes a sophisticated data processing network which provides on-line,
real-time interconnection of all sales offices and central distribution
operations. 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 "National," "Cetron," "RF Gain", 'Amperex." and "MONORAY".
Approximately 21% of the Company's sales are from products it manufactures or
modifies through value-added services. The Company also sells products under
these brand names made by independent manufacturers to the Company's
specifications.
The products currently manufactured by the Company, or subcontracted on a
proprietary basis for the Company, include thyratrons and rectifiers, power
tubes, ignitrons, microwave generators, solar collector power tubes,
electronic display tubes, phototubes, SCR assemblies, spark gap tubes, RF
amplifiers, transmitters and pallet assemblies. 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.
Employees
As of May 31, 1999, the Company employed 884 individuals on a full-time
basis. Of these, 528 are located in the United States, including 74 employed
in administrative and clerical positions, 361 in sales and distribution and
93 in value-added and product manufacturing. The Company's international
subsidiaries employ an additional 356 individuals engaged in administration,
sales, distribution 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 electron tubes, RF and power semiconductors and subassemblies, 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 branch sales offices in or near major cities
throughout the world, including 42 locations in North America, 13 in Europe,
10 in the Far East / Pacific Rim and 4 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. 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 from one or more of
the defendant corporations at any time since February 26, 1986. 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, 1999.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
Incorporated herein by reference to pages 12 (for dividend payments) and
23 (for market data) of the Annual Report.
Item 6. Selected Financial Data
Incorporated herein by reference to page 6 of the Annual Report.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Incorporated herein by reference to pages 7 to 10 of the Annual Report.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Incorporated herein by reference to page 10 of the Annual Report..
Item 8. Financial Statements and Supplementary Data
Incorporated herein by reference to pages 11 through 22 of the Annual
Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
No event has occurred within the 24 month period prior to the date of
the Company's most recent financial statements, which would require
disclosure under Item 9 of this Report.
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 12, 1999,
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 12, 1999, 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 12, 1999, 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 12, 1999, under
the caption "EXECUTIVE COMPENSATION - Compensation Committee Interlocks and
Insider Participation", 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 11 through 22 of the Annual Report are
incorporated herein by reference:
Filing Method
Report of Independent Accountants E
1. FINANCIAL STATEMENTS:
Consolidated Balance Sheets - May 31, 1999 and 1998 E
Consolidated Statements of Operations - Years ended
May 31, 1999, 1998 and 1997 E
Consolidated Statements of Cash Flows - Years ended
May 31, 1999, 1998 and 1997 E
Consolidated Statements of Stockholders' Equity -
Years ended May 31, 1999, 1998 and 1997 E
Notes to Consolidated Financial Statements E
The following consolidated financial information for the
fiscal years 1999, 1998 and 1997 is submitted herewith:
2. FINANCIAL STATEMENT SCHEDULES:
II. Valuation and Qualifying Accounts E
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and therefore,
have been omitted.
(b) REPORTS ON FORM 8-K.
None.
(c) EXHIBITS
Filing
Method
3(b) By-laws of the Company, as amended, incorporated
by reference to the Company's Annual Report on
Form 10-K for the fiscal year ended May 31, 1997. NA
4(a) 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, Commission File No. 33-8696. NA
4(b) Specimen forms of Common Stock and Class B Common
Stock certificates of the Company incorporated by
reference to Exhibit 4(a) to the Company's Registration
Statement on Form S-1, Commission File No. 33-10834. NA
4(c) Indenture between the Company and Continental Illinois
National Bank and Trust Company of Chicago (including
form of 71/4% Convertible Subordinated Debentures due
December 15, 2006) incorporated by reference to Exhibit 4(b)
to the Company's Annual Report on Form 10-K for the fiscal
year ended May 31, 1987. NA
4(c)(1) First Amendment to the Indenture between the Company and
First Trust of Illinois, a National Association, as
successor to Continental Illinois National Bank and Trust
Company of Chicago, dated February 18, 1997, incorporated
by reference to Exhibit 4(a) to the Company's Quarterly
Report on Form 10-Q for the quarter ended February 28, 1997. NA
4(d) Indenture between the Company and American National Bank
and Trust Company, as Trustee, for 81/4% Convertible Senior
Subordinated Debentures due June 15, 2006 (including form
of 81/4% Convertible Senior Subordinated Debentures due
June 15, 2006) incorporated by reference to Exhibit 10 of
the Company's Schedule 13E-4, filed February 18, 1997. NA
10(a) Loan Agreement dated as of March 1, 1998 among Richardson
Electronics, Ltd., various lending institutions and
American National Bank and Trust Company of Chicago as
Agent, establishing a $50,000,000 Credit Facility,
incorporated by reference to Exhibit 10(a) to the
Company's Quarterly Report on Form 10-Q for the quarter
ended February 28, 1998. NA
10(b) Industrial Building Lease, dated April 10, 1996 between
the Company and the American National Bank and Trust
Company, as trustee under Trust No. 56120 dated 2-23-83
incorporated by reference to Exhibit 10(b) to the
Company's Annual Report on Form 10-K for the fiscal year
ended May 31, 1996. NA
10(c) Amended and Restated Credit Agreement made as of
March 1, 1998 between Burtek Systems, Inc. as Borrower
and First Chicago NBD Bank, Canada as Lender Richardson
Electronics, Ltd. as Guarantor, incorporated by reference
to Exhibit 10(b) to the Company's Quarterly Report on
Form 10-Q for the quarter ended February 28, 1998. NA
10(d) The Corporate Plan for Retirement
The Profit Sharing / 401(k) Plan
Fidelity Basic Plan Document No. 07 dated June 1, 1996,
incorporated by reference to Exhibit 10(d) to the
Company's Annual Report on Form 10-K for the fiscal year
ended May 31, 1996. NA
10(e) The Company's Amended and Restated Incentive Stock
Option Plan effective April 8, 1987 incorporated by
reference to Exhibit 10(m) to the Company's Annual Report
on Form 10-K for the fiscal year ended May 31, 1987. NA
10(e)(1) First Amendment to the Company's Amended and Restated
Incentive Stock Option Plan effective April 11, 1989
incorporated by reference to Exhibit 10(l)(1) to the
Company's Annual Report on Form 10-K for the fiscal year
ended May 31, 1989. NA
10(e)(2) Second Amendment to the Company's Amended and Restated
Incentive Stock Option Plan effective April 11, 1989
incorporated by reference to Exhibit 10(l)(2) to the
Company's Annual Report on Form 10-K for the fiscal year
ended May 31, 1991. NA
10(e)(3) Third Amendment to the Company's Amended and Restated
Incentive Stock Option Plan effective April 11, 1989
dated August 15, 1996, incorporated by reference to the
Company's Proxy Statement used in connection with its
Annual Meeting of Stockholders held October 1, 1996. NA
10(f) Richardson Electronics, Ltd. Employees 1996 Stock
Purchase Plan incorporated by reference to Appendix A
of the Company's Proxy Statement dated September 3, 1996
for its Annual Meeting of Stockholders held on
October 1, 1996. NA
10(g) Employees Stock Ownership Plan and Trust Agreement,
effective as of June 1, 1987, dated July 14, 1994,
incorporated by reference to Exhibit 10(f) to the Company's
Annual Report on Form 10-K for the fiscal year ended
May 31, 1994. NA
10(g)(1) First Amendment to Employees Stock Ownership Plan and
Trust Agreement, dated July 12, 1995, incorporated by
reference to Exhibit 10(g)(1) to the Company's Annual
Report on Form 10-K for the fiscal year ended May 31, 1995. NA
10(g)(2) Second Amendment to Employees Stock Ownership Plan and
Trust Agreement, dated July 12, 1995, dated April 10, 1996,
incorporated by reference to the Company's Proxy Statement
used in connection with its Annual Meeting of Stockholders
held October 1, 1996. NA
10(g)(3) Third Amendment to Employees Stock Ownership Plan and
Trust Agreement, dated July 12, 1995, dated April 9, 1997
incorporated by reference to the Company's Annual Report on
Form 10-K for the fiscal year ended May 31, 1998. NA
10(h) Richardson Electronics, Ltd. Employees 1999 Stock
Purchase Plan. E
10(i) Stock Option Plan for Non-Employee Directors incorporated
by reference to Appendix A to the Company's Proxy Statement
dated August 30, 1989 for its Annual Meeting of Stockholders
held on October 18, 1989. NA
10(j) Richardson Electronics, Ltd. 1996 Stock Option Plan
for Non-Employee Directors, incorporated by reference
to Appendix C of the Company's Proxy Statement dated
September 3, 1996 for its Annual Meeting of Stockholders
held on October 1, 1996. NA
10(k) The Company's Employees' Incentive Compensation Plan
incorporated by reference to Appendix A to the Company's
Proxy Statement dated August 31, 1990 for its Annual
Meeting of Stockholders held on October 9, 1990. NA
10(k)(1) First Amendment to Employees Incentive Compensation
Plan incorporated by reference to Exhibit 10(p)(1) to
the Company's Annual Report on Form 10-K for the fiscal
year ended May 31, 1991. NA
10(k)(2) Second Amendment to Employees Incentive Compensation Plan
dated August 15, 1996, incorporated by reference to the
Company's Proxy Statement used in connection with its
Annual Meeting of Stockholders held October 1, 1996. NA
10(l) Richardson Electronics, Ltd. Employees' 1994 Incentive
Compensation Plan incorporated by reference to Exhibit A
to the Company's Proxy Statement dated August 31, 1994
for its Annual Meeting of Stockholders held on
October 11, 1994. NA
10(l)(1) First Amendment to the Richardson Electronics, Ltd.
Employees' 1994 Incentive Compensation Plan dated
August 15, 1996, incorporated by reference to the
Company's Proxy Statement used in connection with its
Annual Meeting of Stockholders held October 1, 1996. NA
10(m) Richardson Electronics, Ltd. 1996 Incentive Compensation
Plan incorporated by reference to Appendix B of the
Company's Proxy Statement dated September 3, 1996 for its
Annual Meeting of Stockholders held on October 1, 1996. NA
10(n) Richardson Electronics, Ltd. 1998 Incentive Compensation
Plan incorporated by reference to Appendix A of the
Company's Proxy Statement dated September 3, 1998 for its
Annual Meeting of Stockholders held on October 6, 1998. NA
10(o) Correspondence outlining Agreement between the Company
and Arnold R. Allen with respect to Mr. Allen's employment
by the Company, incorporated by reference to Exhibit 10(v)
to the Company's Annual Report on Form 10-K, for the
fiscal year ended May 31, 1985. NA
10(o)(1) Letter dated February 3, 1992 between the Company and
Arnold R. Allen outlining Mr. Allen's engagement as a
consultant by the Company, incorporated by reference to
Exhibit 10 (r)(1) to the Company's Annual Report on
Form 10-K, for the fiscal year ended May 31, 1992. NA
10(o)(2) Letter dated April 1, 1993 between the Company and
Arnold R. Allen regarding Mr. Allen's engagement as
consultant by the Company, incorporated by reference
to Exhibit 10(i)(2) to the Company's Annual Report on
Form 10-K for the fiscal year ended May 31, 1994. NA
10(p) Letter dated January 14, 1992 between the Company and
Jacques Bouyer setting forth the terms of Mr. Bouyer's
engagement as a management consultant by the Company
for Europe, incorporated by reference to Exhibit 10(t)(1)
to the Company's Annual Report on Form 10-K for the
fiscal year ended on May 31, 1992. NA
10(p)(1) Letter dated January 15, 1992 between the Company and
Jacques Bouyer setting forth the terms of Mr. Bouyer's
engagement as a management consultant by the Company for
the United States, incorporated by reference to
Exhibit 10(t)(1) to the Company's Annual Report on
Form 10-K for the fiscal year ended on May 31, 1992. NA
10(q) Letter dated January 13, 1994 between the Company and
Samuel Rubinovitz setting forth the terms of
Mr. Rubinovitz' engagement as management consultant by
the Company incorporated by reference to Exhibit 10(m)
to the Company's Annual Report on Form 10-K for the
fiscal year ended on May 31, 1994. NA
10(r) Letter dated April 4, 1994 between the Company and
Bart F. Petrini setting forth the terms of Mr. Petrini's
employment by the Company, incorporated by reference to
Exhibit 10(o) to the Company's Annual Report on Form 10-K
for the fiscal year ended on May 31, 1994. NA
10(s) Letter dated May 20, 1994 between the Company and William J.
Garry setting forth the terms of Mr. Garry's employment by
the Company, incorporated by reference to Exhibit 10(p) to
the Company's Annual Report on Form 10-K for the fiscal year
ended on May 31, 1994. NA
10(t) Employment, Nondisclosure and Non-Compete Agreement dated
June 1, 1998 between the Company and Flint Cooper setting
forth the terms of Mr. Cooper's employment by the Company,
incorporated by reference to Exhibit 10(p) to the Company's
Annual Report on Form 10-K for the fiscal year ended on
May 31, 1998. NA
10(u) Agreement dated January 16, 1997 between the Company
and Dennis Gandy setting forth the terms of Mr. Gandy's
employment by the Company, incorporated by reference to
Exhibit 10(b) to the Company's Quarterly Report on
Form 10-Q for the quarter ended February 28, 1997. NA
10(v) Agreement dated March 21, 1997 between the Company and
David Gilden setting forth the terms of Mr. Gilden's
employment by the Company, incorporated by reference to
Exhibit 10(c) to the Company's Quarterly Report on
Form 10-Q for the quarter ended February 28, 1997. NA
10(w) Employment agreement dated as of November 7, 1996
between the Company and Bruce W. Johnson incorporated
by reference to Exhibit (c)(4) of the Company's
Schedule 13 E-4, filed December 18, 1996. NA
10(x) Employment agreement dated as of January 26, 1998
between the Company and Norman Hilgendorf, incorporated
by reference to Exhibit 10(c) of the Company's Quarterly
Report on Form 10-Q for the quarter ended February 28, 1998. NA
10(y) Employment agreement dated as of May 10, 1993 as amended
March 23, 1998 between the Company and Pierluigi Calderone
incorporated by reference to Exhibit 10(d) of the Company's
Quarterly Report on Form 10-Q for the quarter ended
February 28, 1998. NA
10(z) The Company's Directors and Officers Liability Insurance
Policy issued by Chubb Group of Insurance Companies
Policy Number 8125-64-60A, incorporated by reference to
Exhibit 10(t) to the Company's Annual Report on Form 10-K
for the fiscal year ended May 31, 1991. NA
10(z)(1) The Company's Directors and Officers Executive Liability and
Indemnification Insurance Policy renewal issued by Chubb
Group of Insurance Companies - Policy Number 8125-64-60F. E
10(z)(2) The Company's Excess Directors and Officers Liability and
Corporate Indemnification Policy issued by St. Paul
Mercury Insurance Company - Policy Number 900DX0414. E
10(z)(3) The Company's Directors and Officers Liability Insurance
Policy issued by CNA Insurance Companies - Policy
Number DOX600028634. E
10(aa) Distributor Agreement, executed August 8, 1991, between
Registrant and Varian Associates, Inc., incorporated by
reference to Exhibit 10(d) of the Company's Current Report
on Form 8-K for September 30, 1991. NA
10(aa)(1) Amendment, dated as of September 30, 1991, between
Registrant and Varian Associates, Inc., incorporated
by reference to Exhibit 10(e) of the Company's Current
Report on Form 8-K for September 30, 1991. NA
10(aa)(2) First Amendment to Distributor Agreement between Varian
Associates, Inc. and the Company as of April 10, 1992,
incorporated by reference to Exhibit 10(v)(5) of the
Company's Annual Report on Form 10-K for the fiscal
year ended May 31, 1992. NA
10(aa)(3) Consent to Assignment and Assignment dated August 4,
1995 between Registrant and Varian Associates Inc.,
incorporated by reference to Exhibit 10(s)(4) of the
Company's Annual Report on Form 10-K for the fiscal
year ended May 31, 1995. NA
10(aa)(4) Final Judgment, dated April 1, 1992, in the matter of
United States of America v. Richardson Electronics, Ltd.,
filed in the United States District Court for the
Northern District of Illinois, Eastern Division, as
Docket No. 91 C 6211 incorporated by reference to
Exhibit 10(v)(7) to the Company's Annual Report on
Form 10-K for the fiscal year ended May 31, 1992. NA
10(bb) Trade Mark License Agreement dated as of May 1, 1991
between North American Philips Corporation and the
Company incorporated by reference to Exhibit 10(w)(3)
of the Company's Annual Report on Form 10-K for the
fiscal year ended May 31, 1991. NA
10(cc) Agreement among Richardson Electronics, Ltd.,
Richardson Electronique S.A., Covelec S.A. (now known
as Covimag S.A.), and Messrs. Denis Dumont and Patrick
Pertzborn, delivered February 23, 1995, translated from
French, incorporated by reference to Exhibit 10(b) to
the Company's Report on Form 8-K dated February 23, 1995. NA
10(dd) Settlement Agreement by and between the United States
of America and Richardson Electronics, Ltd. dated
May 31, 1995 incorporated by reference to Exhibit 10(a)
to the Company's Report on Form 8-K dated May 31, 1995. NA
13 Annual Report to Stockholders for fiscal year ending
May 31, 1999 (except for the pages and information
thereof expressly incorporated by reference in this
Form 10-K, the Annual Report to Stockholders is provided
solely for the information of the Securities and Exchange
Commission and is not deemed "filed" as part of this
Form 10-K). E
21 Subsidiaries of the Company. E
23 Consent of Independent Auditors. E
27 Financial Data Schedule. E
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.
By:/s/Edward J. Richardson By:/s/Bruce W, Johnson
Edward J. Richardson, Bruce W. Johnson,
Chairman of the Board and President and Chief Operating
Chief Executive Officer Officer
By:/s/William J. Garry
William J. Garry
Senior Vice President and
Date: August 27, 1999 Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ Edward J. Richardson /s/ Bruce W. Johnson
Edward J. Richardson, Chairman Bruce W. Johnson, President,
of the Board, Chief Executive Chief Operating Officer, and Director
Officer (principal executive officer) August 27, 1999
and Director
August 27, 1999
/s/ William J. Garry /s/ Ad Ketelaars
William J. Garry, Senior Vice Ad Ketelaars, Director
President and Chief Financial August 27, 1999
Officer (principal financial and
accounting officer) and Director
August 27, 1999
/s/ Scott Hodes /s/ Samuel Rubinovitz
Scott Hodes, Director Samuel Rubinovitz, Director
August 27, 1999 August 27, 1999
/s/ Arnold R. Allen /s/ Ken Douglas
Arnold R. Allen, Director Ken Douglas, Director
August 27, 1999 August 27, 1999
/s/ Jacques Bouyer /s/ Harold L. Purkey
Jacques Bouyer, Director Harold L. Purkey, Director
August 27, 1999 August 27, 1999