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, 1995
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, LaFox, Illinois 60147
(Address of principal executive offices)
Registrant's telephone number including area code: (708) 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,
$.05 par value
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
As of August 25, 1995, there were outstanding 8,299,594 shares of Common
Stock,$.05 par value, and 3,247,118 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, held by non-
affiliates of the registrant was approximately $37,900,000.
Portions of the 1995 Annual Report to Stockholders of Registrant for fiscal year
ended May 31, 1995 are incorporated in Parts I, II, and IV of this Report.
Portions of the Registrant's Proxy Statement dated August 31, 1995 for the
Annual Meeting of Stockholders scheduled to be held October 10, 1995 are
incorporated 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.
Exhibit index located at pages 14 through 21.
PART I
Item 1. Business
The registrant (herein with its subsidiaries referred to as the "Company"
or "Richardson") operates in one industry as a value-added distributor of
electronic components, including vacuum tubes, semiconductors and related
products. These devices are used primarily to control, switch or amplify
electrical power or signals, or as display devices in a variety of industrial,
communication, scientific and other applications. The Company offers a wide
range of value-added services, including labeling, testing and repackaging. The
Company manufactures certain of the electron tubes it distributes. In addition,
the Company distributes a variety of closed circuit television ("CCTV")
equipment and other security systems related products.
Consolidated sales in 1995 set a new record at $208.1 million, up 21% over
the prior year. The Company believes that much of its growth is attributable to
its concentration on specialized areas of the electronics market. Historically,
the Company's primary business was the distribution of electron tubes and it
continues to be a major distributor of these products. In recent years, the
Company has followed the migration of its customers to newer technologies,
capitalizing on its expertise as a value-added distributor. In 1995, due to the
significant increase in new product offerings including solid state components
and cathode ray tubes, these product lines represented 49% of consolidated sales
compared to 23% five years ago. The addition of new product lines is primarily
based upon compatibility with the Company's existing customer base. The Company
also seeks new applications and customers (including, without limitation,
through new and expanded distribution franchises) for its existing product
lines.
A significant portion of the Company's sales are of replacement parts.
Specialized areas of the original equipment industry and research and
development applications are also served by the Company. The marketing and sales
organization of the Company is divided into four strategic business units
(SBUs): Electron Device Group (EDG), Solid State and Components Group (SSC),
Display Products Group (DPG), and Security Systems Division (SSD). EDG
distributes power grid tubes and continuous wave magnetrons for industrial
heating applications and also thyratrons, ignitrons, receiving tubes and special
purpose tubes which are sold to many industries, including automotive, steel,
plastics and textiles companies. EDG also distributes high voltage switch tubes
and x-ray tubes 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.
Power grid tube and camera tube product lines are sold by EDG to the radio and
television broadcast industry. In addition, EDG assists other SBU's to market
cathode ray tubes (CRTs), semiconductors and other products to the broadcast
industry. EDG also serves the avionics, marine, microwave and communications
markets with product lines including traveling wave tubes, klystrons, planar
triodes, hydrogen thyratrons, magnetrons and display storage tubes.
SSC distributes RF transistors and amplifiers, communications modules,
passive components, silicon controlled rectifiers, integrated circuits,
semiconductors, high voltage capacitors, resistors, broadcast amplifiers, and
other RF and microwave semiconductors for avionics, broadcast, communications,
data display and industrial applications. DPG markets data display and
instrumentation CRTs that are used in data display, marine, medical, radar, and
avionic applications. It also distributes flyback transformers and various
components for monitor and terminal repair. SSD distributes CCTV equipment, as
well as fiber optic, microwave, intercommunication, access control and other
security related products, equipment and accessories, for both initial
installation and replacement. In addition, SSD is an approved repair service
organization. Sales trends for each SBU are summarized and analyzed in
Management's Discussion and Analysis on pages 11-13 of the Annual Report to
Stockholders for the Year Ended May 31, 1995 (Annual Report).
Sales in the global market for electron tubes in which the Company
participates, principally through EDG, is estimated by the Company to be
approximately $2 billion. The Company participates through SSC in specialized
segments of the semiconductor portion of the market by distributing power
semiconductors and RF and microwave semiconductors. According to industry
estimates, European, United States and Japan-based factory sales for power
semiconductors approximate $5 billion. Richardson estimates the portion of this
market it serves at $700 million. DPG estimates factory sales of CRTs in the
global market approximate $5 billion. The Company estimates that annual
wholesale sales for CCTV and related security equipment in which the Company
participates as a distributor, principally through SSD, approximate $320
million. (Estimates are based on applicable industry statistics for calendar
year 1994.)
Sales of solid state components, primarily RF semiconductors, have grown
rapidly in recent years. Semiconductors have been replacing electron tubes in
many applications, such as low power television and radio transmitters. However,
in other applications, including higher power broadcasting and industrial
equipment, electron tubes are more suitable than semiconductors due to the
higher power capabilities of tubes and their ability to withstand severe
environmental and other conditions which often damage semiconductors.
Semiconductors, however, continue to expand the range of their applications.
Consequently, many parts of the electron tube market in which the Company
participates, are declining. The Company countered the trend in the electron
tube market through several initiatives by its EDG unit, including greater
emphasis on international sales and expansion of the sales force serving the
medical replacement market. As a result, EDG sales increased 15% in 1995 after
declining 6% in 1994, and 5% in 1993 (see "Management's Discussion and Analysis
of Results of Operations and Financial Condition - Sales and Gross Margin
Analysis, EDG" in the Annual Report).
The Company has found that a replacement market for power semiconductors
exists and that many of its electron tube customers have semiconductor
requirements as well. In addition SSC's sales to original equipment
manufacturers continue to grow, accounting for approximately 63% of the SBU's
1995 sales. SSC's sales increased 24% in 1995, 34% in 1994 and 15% in 1993 (see
"Management's Discussion and Analysis of Results of Operations and Financial
Condition - Sales Analysis, SSC" in the Annual Report.)
The Company's sales of CRT's and other display products increased 34% in
1995, 42% in 1994 and 17% in 1993 (see "Management's Discussion and Analysis of
Results of Operations and Financial Condition - Sales Analysis, DPG" in the
Annual Report.)
SSD's sales increased 26% in 1995, 2% in 1994 and declined 13% in 1993 (see
"Management's Discussion and Analysis of Results of Operations and Financial
Condition - Sales Analysis, SSD" in the Annual Report.)
Developments in the Past Fiscal Year
In May, 1995, the Company reached an agreement with the U.S. Department of
Justice (DOJ) regarding a claim filed that the Company was civilly liable for
damages and penalties under the False Claims Act and the Lanham Act in
connection with a 1989 Department of Defense contract for night-vision tubes.
The Company paid $4.7 million to the Government in return for a release of
monetary claims in connection with the contract. See Note B of the "Notes to
Consolidated Financial Statements" of the Annual Report.
In 1995, the Company transferred ownership of the Brive, France
manufacturing operations to local management and transferred ownership of the
Brive land and building to the mortgagor in exchange for the release of the
related mortgage obligation. See Other Charges in Note B of the "Notes to
Consolidated Financial Statements" of the Annual Report.
In 1993, the Company developed a plan to reorganize its sales staff on a
specialty basis by SBU wherever possible. This plan was implemented throughout
North America in 1994. During 1995, we expanded the specialty sales concept to
Europe. The Company also made a major commitment to the rapidly expanding CCTV
market in 1995. A new general manager was hired for SSD, and the sales force was
doubled in size.
Products
The following is a description of some of the Company's products:
Power Amplifier / Oscillator Tubes are vacuum or gas filled tubes used in
applications where current or voltage amplification and/or oscillation is
required. Some areas of use are: induction heating, diathermy equipment, sonic
generators, communications and radar systems and power supplies for voltage
regulation or amplification.
RF Power Transistors are "solid state" high-frequency power amplifiers used
in land mobile, aircraft and satellite communications and in many types of
electronic instrumentation.
Cathode Ray Tubes ("CRTs") are vacuum tubes which convert an electrical
signal into a visual image to display information on computer terminals or
televisions used in the medical, scientific and publishing industries as well as
in general business applications. Includes both monochrome and color monitors.
Closed-circuit Television ("CCTV") products include cameras, lenses,
monitors, scanners, time lapse recorders and associated accessories. CCTV
products are used in surveillance applications and monitoring hazardous
environments in the work-place.
Magnetrons are high vacuum oscillator tubes which are 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 heating applications such as microwave ovens and devices used by
the medical industry.
Silicon Controlled Rectifiers (SCR's) and Power Semiconductor Modules are
used in many industrial control applications, and have spawned new 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.
Planar Triodes are high frequency triodes manufactured using a special
process to enable them to operate at several thousand megahertz (MHz). Aircraft
instrumentation and television translators use planar triodes.
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.
Computer Terminal Components are electronic components used in repair of
computer terminals and monitors, including flyback transformers, semiconductors,
power supplies, controls and switches.
Receiving/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, and
industrial controls are typical applications for this product.
Hydrogen Thyratrons are electron tubes capable of high speed and high
voltage switching. They are used in switching of power to radar magnetrons and
lasers.
Camera Tubes are vacuum tubes used to change a visible light image to
electronic signals which are then transmitted to a monitor for conversion back
to a visible image. Camera tubes are used in broadcast, security and medical
applications.
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.
X-ray Tubes are used 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 used primarily in medical applications, including fluoroscopy and
computer-aided tomography (CAT-scan).
Microwave Diodes are specialized diodes intended for use at microwave and
RF frequencies for oscillator, mixer, switching, and power control, and
amplifier applications in broadcast, avionic, telecommunication, medical and
industrial equipment.
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 and power rectification equipment.
Distribution and Marketing
The Company buys, warehouses and distributes more than 62,000 types of
tubes and semiconductors ranging in price from $1 to $35,000 for tubes and $.10
to $2,500 for semiconductors and related components. The Company processes
approximately 570 orders per day averaging $1,460 each (for an average total of
$832,000 per day). The Company distributes electron tubes it manufactures as
well as electron tubes, power, RF and microwave semiconductors and related
products purchased from other sources, including Varian Associates, Inc.,
Motorola, Inc., Panasonic Industrial Company, Clinton Electronics Corp., Burle
Industries, Inc., Philips, Powerex, ITT Electron Technology Division, SGS
THOMSON, M/A-COM, Microwave Associates, RF Products, Litton Electron Devices,
Computer Components Source, Joslyn Jennings, MPD Inc., New Japan Radio, General
Electric, Pelco and CEIEC. No single outside supplier currently accounts for
more than 10% of the Company's purchases in any year, other than Varian
Associates, Inc., which accounted for approximately 18%, 17% and 22% of
purchases in fiscal 1995, 1994 and 1993, respectively. The Company believes that
the loss of any one supplier, other than Varian, would not cause a material
adverse impact on its earnings and revenues. On August 14, 1995 Varian announced
the consummation of the sale of its electron device business, the business unit
of Varian with which the Company has principally done business, to a new entity,
Communications and Power Industries, Inc. ("CPII"), having the same management
and operating personnel as Varian's former electron device business. The
Company believes that relationships with CPII will continue to be satisfactory.
The Company has entered into marketing distribution agreements with various
manufacturers in the tube, semiconductor, and CCTV industries. The most
significant is a distributor agreement with the Electron Device Group of Varian
Associates, Inc. (this agreement was assigned to CPII in connection with
Varian's sale of its electron device business) under which the Company is such
group's exclusive distributor of power grid tubes throughout the world with the
exception of the United States and certain Eastern European countries where the
Company is one of such group's stocking distributors. Varian product accounted
for 17%, 18% and 20% of net sales of the Company in fiscal 1995, 1994 and 1993,
respectively.
Customer orders are taken by the regional sales offices and directed to the
Company's headquarters and distribution facility in LaFox, Illinois or to one of
its international distribution centers. The Company utilizes a sophisticated
data processing network which provides on-line, real-time interconnection of all
sales offices, manufacturing facilities and central distribution operations.
Information on stock availability, customers, and competitive market analyses
are instantly obtainable throughout the entire distribution network. Most of the
products distributed by Richardson are critical to the function of the equipment
in which they are used, therefore, Richardson utilizes this system, achieving
same-day shipment on over 90% of its customer orders.
The Company markets its products to manufacturers and end-users in, among
others, the areas of communications, industrial heating, marine, medical care
and avionics. The Company also sells to customers who purchase for resale,
including electronics distributors and service companies. The Company has
established supply contracts, generally for a one-year term, with certain
customers, and is committed pursuant to these contracts to maintain minimum
inventories so as to provide product without significant delay. Management
believes that for the past two fiscal years approximately 20% of the Company's
sales were made under such supply contracts. During the past five years, no
single customer represented more than 10% of the Company's sales.
The Company emphasizes sales to replacement markets. Some of these markets
may expand as new equipment utilizing electron tubes continues to be sold. For
example: equipment such as video monitors and computer display terminals which
use cathode ray tubes also present expanding market opportunities for
replacement purposes; new communications equipment using microwave devices such
as traveling wave tubes and klystrons and RF transistors continue to be
developed for applications with high power or high-frequency requirements that
tube technology alone can provide.
The Company's backlog of firm orders scheduled for future delivery within
12 months was $46,300,000, $29,700,000 and $22,400,000 as of May 31, 1995, 1994
and 1993, respectively. The Company's backlog primarily consists of commercial
contracts that require future shipping dates, and the 1995 increase reflects
higher contract levels for SSC and DPG. The level of the Company's backlog,
which is not significant to annual sales, does not provide a reliable indicator
of future sales levels.
International
International sales, including export sales, represented approximately 46%
of the Company's fiscal 1995 sales. These sales were $96,644,000, $79,123,000,
and $75,101,000 in fiscal years 1995, 1994 and 1993, respectively. Export sales
from the United States were $38,653,000, $29,667,000 and $28,396,000 in
1995,1994 and 1993. On May 31, 1995, the Company had 51 locations throughout the
world. See Note J of the "Notes to Consolidated Financial Statements" of the
Annual Report for details of the Company's international operations, including
sales, operating income and identifiable assets.
Manufacturing
The Company distributes its manufactured products principally under the
trade names "National", "Cetron" and "Amperex". Located in LaFox, Illinois, the
Company's manufacturing operations, including value-added, accounted for
approximately 6% of its product distribution requirements in fiscal 1995. Such
manufacturing operations contributed sales of approximately $12 million in
fiscal 1995, $30 million in fiscal 1994 and $33 million in fiscal 1993. The
decrease in sales of manufactured products is a result of the transfer of
ownership of the Brive, France manufacturing facility and the phase-down of
manufacturing activity in LaFox, Illinois. (See Note B of the "Notes to
Consolidated Financial Statements" of the Annual Report.)
The products currently manufactured by the Company include thyratrons and
rectifiers, power tubes, ignitrons, electronic display tubes, phototubes, SCR
assemblies and spark gap tubes. The materials used in the manufacturing process
are readily available and 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.
Research and Development
The objective of the Company's research and development is to increase the
number of applications for its products and to develop existing technology with
respect to advanced products. The Company emphasizes product development rather
than basic research. The ability of the Company to compete is, in part,
dependent upon its ability to anticipate changing market needs and to provide
the required products.
At present, a staff of 6 persons are involved, on a full- or part-time
basis, in various phases of product development. The Company's expenditures in
this area were $229,000, $358,000 and $584,000 in fiscal 1995, 1994 and 1993.
Employees
As of May 31, 1995, the Company employed 406 individuals on a full time
basis at U.S. locations. Of these, 61 are employed in administrative and
clerical positions, 250 are employed in sales and distribution, and 95 are
employed in value-added and product manufacturing. The Company's foreign
subsidiaries employ an additional 134 individuals engaged in administration,
sales and distribution. All of the Company's employees are non-union.
Competition
Although the Company believes it is a significant distributor of electron
tubes and semiconductors in the United States, it competes worldwide with other
general line distributors and manufacturers and other distributors of electronic
components (including original equipment manufacturers), many of which are
substantially larger and have greater resources than the Company. The Company
also competes against manufacturers of semiconductors, which have replaced
electron tubes in many applications.
Patents and Trademarks
The Company acquired certain manufacturing patents and trademarks in
connection with acquisitions, including the trademarks "National", "Cetron," and
"Amperex." The Company believes that although the patents and trademarks it has
obtained have value, they will not be determinative of the Company's success,
which depends principally upon its marketing technical support, product delivery
and the quality and economic value of its products.
Item 2. Properties
The Company owns facilities on approximately 300 acres in LaFox, Illinois,
consisting of a modern, single and two-story concrete, brick and steel
constructed building containing approximately 255,000 square feet of
manufacturing, warehouse and office space. The Company also owns a four-story
building containing approximately 45,000 square feet of warehouse space on 1.5
acres in Geneva, Illinois. The Company's United Kingdom subsidiary owns a 12,000
square foot single story brick building in Lincoln, England which it utilizes as
a sales office and warehouse hub for European sales distribution. The Company's
Spanish subsidiary owns 3,510 square feet of office and warehouse space in a
55,000 square foot industrial concrete building constructed in 1988 in Madrid,
Spain. The Company's Italian subsidiary owns an office and warehouse facility
located in Florence, Italy which consists of approximately 6,400 square feet of
a brick and concrete industrial building.
The Company also rents branch sales offices on a short-term basis in or
near Boston, Los Angeles, Miami, New York, Orlando, and San Francisco; and in or
near London, England; Mexico City, Mexico; Milan, Italy; Montreal, Canada; and
Rome, Italy. Additional sales offices, which include warehouse space, leased on
a short-term basis, are located in Houston and San Antonio; and in or near
Amsterdam, The Netherlands; Munich, Germany; Paris, France; Sao Paulo, Brazil;
Singapore; Taipei, Taiwan; Tokyo, Japan; and Toronto, Canada. Additional
warehouse space in Geneva, Illinois is also rented on a short-term basis. The
Company also leases a facility from a trust, of which Edward J. Richardson,
Chairman of the Board of the Company, is the principal beneficiary. Such
facility is used by SSD as its sales office and warehouse. Under the terms of
this lease, the Company is obligated to make rental payments of $68,705 per
year, expiring in 1996. In the opinion of management, the lease is on terms no
less favorable to the Company than similar leases which would be available from
unrelated third parties.
Item 3. Legal Proceedings
No material developments have occurred in the matter of Panache
Broadcasting of Pennsylvania, Inc. v. Richardson Electronics, Ltd. and Varian
Associates, Inc., pending in the United States District Court for the Northern
District of Illinois, Eastern Division, docket no. 90 C 6400. The complaint
alleges violations of Sections 1 and 2 of the Sherman Act and Section 7 of the
Clayton Act As previously reported the matter remains primarily in the
discovery stage and the Court has not determined whether the matter may be
maintained as a class action.
See Part I, Item 1, Business, Developments in the Past Fiscal Year,
regarding the settlement of monetary claims of the United States in connection
with a 1989 contract with the Department of Justice for night-vision tubes. The
Government has not sought any administrative remedies in connection with such
matter and the Company cannot predict whether or not further action will be
taken or the financial impact, if any, of any such action.
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, 1995.
PART II
Item 5. Market for the Registrant's Common Stock and Related Security Holder
Matters
Incorporated herein by reference to pages 15 (for dividend payments), 20
(for dividend restriction) and 24 (for market data) of the Annual Report to
Stockholders for the year ended May 31, 1995.
Item 6. Selected Financial Data
Incorporated herein by reference to page 10 of the Annual Report to
Stockholders for the year ended May 31, 1995.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Incorporated herein by reference to pages 11 to 13 of the Annual Report to
Stockholders for the year ended May 31, 1995.
Item 8. Financial Statements and Supplementary Data
Incorporated herein by reference to pages 14 through 24 of the Annual
Report to Stockholders for the year ended May 31, 1995.
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 10, 1995, 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 is contained in the Company's Proxy Statement to be used in
connection with its Annual Meeting of Stockholders scheduled to be held October
10, 1995, 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
10, 1995, 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 10, 1995, 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 14 through 24 of its Annual Report to
Stockholders for the fiscal year ended May 31, 1995 are incorporated herein by
reference:
Filing Method
Report of Independent Accountants E
1. FINANCIAL STATEMENTS:
Consolidated Balance Sheets - May 31, 1995 and 1994 E
Consolidated Statements of Operations - Years ended
May 31, 1995, 1994 and 1993 E
Consolidated Statements of Cash Flows - Years ended
May 31, 1995, 1994 and 1993 E
Consolidated Statements of Stockholders' Equity - Years
ended May 31, 1995, 1994 and 1993 E
Notes to Consolidated Financial Statements E
The following consolidated financial information for the
fiscal years 1995, 1994 and 1993 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.
Form 8-K, dated May 31, 1995, reporting under Item 5 - Other Events
a Settlement Agreement with the United States of America entered into
on May 31, 1995.
(c) EXHIBITS
Filing Method
3(a) Restated Certificate of Incorporation of the Company, incor-
porated 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
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, 1994. NA
4(a) Specimen forms of Common Stock and Class B Common Stock certifi-
cates 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(b) Indenture between the Company and Continental Illinois National
Bank and Trust Company of Chicago (including form of 7 1/4%
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, 1990. NA
10(a) $13,000,000 Senior Term Note dated March 28, 1994 delivered
to American National Bank, incorporated by reference to the
Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended February 28, 1994. NA
10(b) $8,000,000 Promissory note dated May 31, 1995 delivered to
American National Bank. E
10(c) Industrial Building Lease, dated April 14, 1993 between
the Company and the American National Bank & Trust, as trustee
under Trust No. 56120 dated February 23, 1983, incorporated
by reference to Exhibit 10(b) to the Company's Annual Report
on Form 10-K for the fiscal year ended May 31, 1993. NA
10(d) The Company's Employees Profit Sharing Plan and Trust
Agreement, (as amended and restated effective June 1, 1989)
dated July 14, 1994 incorporated by reference to Exhibit 10(c)
to the Company's Annual Report on form 10-K for the fiscal
year ended May 31, 1994. 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 incorpo-
rated 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 incorpo-
rated 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(f) The Company's Amended and Restated Employees Stock Purchase
Plan, incorporated by reference to the Company's Proxy Statement
used in connection with its Annual Meeting of Stockholders held
October 2, 1985. NA
10(f)(1) First Amendment to Amended and Restated Employees Stock
Purchase Plan, incorporated by reference to Appendix D to the
Company's Proxy Statement/Prospectus dated November 13, 1986
included in its Registration Statement on Form S-4, Commission
File No. 33-8696. NA
10(f)(2) Second Amendment to Amended and Restated Employees Stock
Purchase Plan, incorporated by reference to Appendix E to the
Company's Proxy Statement/Prospectus dated November 13, 1986
included in its Registration Statement on Form S-4, Commission
File No. 33-8696. NA
10(f)(3) Third Amendment to Amended and Restated Employees Stock
Purchase Plan incorporated by reference to Exhibit 10(m)(3) to
the Company's Annual Report on Form 10-K for the fiscal year
ended May 31, 1990. NA
10(f)(4) Fourth Amendment to Amended and Restated Employees Stock
Purchase Plan incorporated by reference to Exhibit 10(m)(4) to
the Company's Annual Report on Form 10-K for the fiscal year
ended May 31, 1991. NA
10(f)(5) Fifth Amendment to Amended and Restated Employees Stock
Purchase Plan incorporated by reference to Exhibit 10(m)(5) to
the Company's Annual Report on Form 10-K for the fiscal year
ended May 31, 1991. 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. E
10(h) 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(i) 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(i)(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(j) Richardson Electronics, Ltd. Employees' 1994 Incentive Compen-
sation 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(k) 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(k)(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(k)(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(l) 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(l)(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(m) Letter dated November 27, 1992 between the Company and Ad
Ketelaars setting forth the terms of Mr. Ketelaars' employment
by the Company, incorporated by reference to Exhibit 10(k) to
the Company's Annual Report on Form 10-K for the fiscal year
ended on May 31, 1994. NA
10(n) 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(o) 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(p) 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(q) Letter dated October 17, 1994 between the Company and Flint Cooper
setting forth the terms of Mr. Cooper's employment by the Company,
incorporated by reference to Exhibit 10 to the Company's Quarterly
Report on Form 10-Q for the quarter ended November 30, 1994. NA
10(r) 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(u) to the
Company's Annual Report on Form 10-K for the fiscal year ended
May 31, 1991. NA
10(r)(1) The Company's Directors and Officers Liability Insurance
Policy renewal issued by Chubb Group of Insurance Companies
Policy Number 8125-64-60D. E
10(r)(2) The Company's Excess Directors and Officers Liability
and Corporate Indemnification Policy issued St. Paul Mercury
Insurance Company Policy Number 900DX0134. E
10(r)(3) The Company's Directors and Officers Liability Insurance
Policy issued by CNA Insurance Companies Policy Number DOX600028634. E
10(s)(1) 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(s)(2) 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(s)(3) First Amendment to Distributor Agreement between Varian
Associates, Inc. and the Company as of April 10, 1992, incorpo-
rated 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(s)(4) Consent to Assignment and Assignment dated August 4, 1995
between Registrant and Varian Associates Inc. E
10(s)(5) 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(t) 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(u) Agreement among the City of Brive, Richardson Electronics, Ltd.,
Richardson Electronique S.A., Covelec S.A., and Messrs. Denis
Dumont and Patrick Pertzborn, delivered February 23, 1995,
translated from French, incorporated by reference to Exhibit 10(a)
to the Company's Report on Form 8-K dated February 23, 1995. NA
10(v) Agreement among Richardson Electronics, Ltd., Richardson
Electronique S.A., Covelec 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(w) 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 From 8-K dated May 31, 1995. NA
11 Statement re computation of net income per share. E
13 Annual Report to Stockholders for fiscal year ending May 31, 1995
(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 Schedules. 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,
Chairman of the Board and
President
By: /s/
William J. Garry
Vice President and
Date: August 25, 1995 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/ /s/
Edward J. Richardson, Chairman Dennis R. Gandy, Director
of the Board (principal executive August 25, 1995
officer), President and Director
August 25, 1995
/s/ /s/
Joel Levine, Director Scott Hodes, Director
August 15, 1995 August 25, 1995
/s/ /s/
William J. Garry, Vice President Samuel Rubinovitz, Director
and Chief Financial Officer August 25, 1995
(principal financial and accounting
officer) and Director
August 25, 1995
/s/ /s/
Arnold R. Allen, Director Kenneth J. Douglas, Director
August 14, 1995 August 14, 1995
/s/ /s/
Jacques Bouyer, Director Harold L. Purkey
August 25, 1995 August 25, 1995
<TABLE>
Richardson Electronics, Ltd. and Subsidiaries
Schedule II - Valuation and Qualifying Accounts
(in thousands)
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
ADDITIONS
Balance at <F1> <F2> Balance at
DESCRIPTION Beginning Charged to Charged to Deductions - End of
of Period Expenses Other Accts Describe Period
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Year ended May 31, 1995:
Allowance for sales returns and
doubtful accounts $ 1,405 $ 199 $ -- $ 219 <F1> $ 1,385
Assets held for disposition $ 15,832 $ -- $ -- $ 15,832 <F2> $ --
Liabilities related to disposition $ 5,568 $ -- $ -- $ 5,568 <F2> $ --
Accrual for phase-down of
domestic manufacturing $ 2,598 $ -- $ -- $ 870 <F3> $ 1,728
Year ended May 31, 1994:
Allowance for sales returns and
doubtful accounts $ 1,456 $ 199 $ -- $ 250 <F1> $ 1,405
Assets held for disposition $ -- $ 15,832 $ -- $ -- $ 15,832
Liabilities related to disposition $ -- $ 5,568 $ -- $ -- $ 5,568
Accrual for phase-down of
domestic manufacturing $ 2,954 $ 5,100 $ -- $ 5,456 <F3> $ 2,598
Year ended May 31, 1993:
Allowance for sales returns and
doubtful accounts $ 1,435 $ 328 $ -- $ 307 <F1> $ 1,456
Accrual for phase-down of
domestic manufacturing $ 4,510 $ -- $ -- $ 1,556 <F4> $ 2,954
<FN>
<F1> Uncollectible amounts written off, net of recoveries and foreign currency
translation.
<F2> Asset write offs and costs incurred for the divestiture of the Company's
Brive, France, manufacturing operations.
<F3> Costs incurred for the phase-down of domestic manufacturing and the
disposition of manufactured inventory.
<F4> Costs incurred for the phase-down of domestic manufacturing and the transfer
of certain product lines to the Brive, France facility.
</FN>
</TABLE>
EXHIBIT 10(b)
PROMISSORY NOTE (UNSECURED)
$8,000,000.00 Chicago. Illinois May 31, 1995
Due August 31, 1995
FOR VALUE RECEIVED, the undersigned (jointly and severally if
more than one) ("Borrower"), promises to pay to the order of
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO ("Bank"), at
its principal place of business in Chicago, Illinois or such other
place as Bank may designate from time to time hereafter, the
principal sum of Eight Million and no/100 Dollars, or such lesser
principal sum as may then be owed by Borrower to Bank hereunder.
Borrowers obligations and liabilities to Bank under this Note
("Borrowers Liabilities") shall be due and payable on August 31,
1995.
The unpaid principal balance of Borrowers Liabilities due
hereunder shall bear interest from the date hereof until paid,
computed as follows (delete inapplicable provisions): (ii) at a
daily rate equal to the daily rate equivalent of 0**% per annum
(computed on the basis of a 360-day year and actual days elapsed)
in excess of the rate of interest announced or published publicly
from time to time by Bank as its prime or base rate of interest
(the "Base Rate"); provided, however, that in the event that any of
Borrower's Liabilities are not paid when due, the unpaid amount of
Borrower's Liabilities shall bear interest after the due date until
paid at a rate equal to the sum of (a) the rate in effect prior to
the due date and (b) 3%.
If the rate of interest to be charged by Bank to Borrower
hereunder is that specified in clause (ii), such rate shall
fluctuate hereafter from time to time concurrently with, and in an
amount equal to, each increase or decrease in the Base Rate,
whichever is applicable.
Accrued interest shall be payable by Borrower to Bank with
each principal installment of Borrowers Liabilities due hereunder,
or as billed by Bank to Borrower, at Bank's principal place of
business, or at such other place as Bank may designate from time to
time hereafter.
Borrower warrants and represents to Bank that Borrower shall
use the proceeds represented by this Note solely for proper
business purposes, and consistently with all applicable laws and
statutes.
The occurrence of any one of the following events shall constitute
a default by the Borrower ("Event of Default") under this Note (a)
if Borrower fails to pay any of Borrower's Liabilities when due and
payable: (b) if Borrower fails to perform, keep or observe any
term, provision, condition, covenant, warranty or representation
contained in this Note which is required to be performed, kept, or
observed by Borrower: (c) occurrence of a default or an event of
default under any agreement, instrument or document heretofore, now
or at any time hereafter delivered by or on behalf of Borrower to
Bank; (d) occurrence of a default or an event of default under any
agreement, instrument or document heretofore, now or at any time
hereafter delivered to Bank by any guarantor or Borrowers
Liabilities; (e) if any of Borrower's assets are attached, seized,
subjected to a writ of distress warrant, or are levied upon or
become subject to any lien or come within the possession of any
receiver, trustee, custodian or assignee for the benefit of
creditors: (f) if Borrower or any guarantor of Borrower's
Liabilities becomes insolvent or generally fails to pay, or admits
in writing its inability to pay, debts as they become due, if a
petition under any section or chapter of the Bankruptcy Reform Act
of 1978 or any similar law or regulation is filed by or against
Borrower or any such guarantor, if Borrower or any such guarantor
shall make an assignment for the benefit of creditors, if any case
or proceeding is filed by or against Borrower or any such guarantor
for its dissolution or liquidation, or upon the death or
incompetency of Borrower or any such guarantor, or the appointment
of a conservator for all or any portion of Borrower's assets; or
(g) if a contribution failure occurs with respect to any pension
plan maintained by Borrower or any corporation, trade or business
that is, along with Borrower, a member of a controlled group of
corporations or a controlled group of trades or businesses (as
described in Sections 414(b) and (c) of the Internal Revenue Code
of 1986 or Section 4001 of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) sufficient to give rise to a
lien under Section 302(f) of ERISA; or (h) if Bank is reasonably
insecure.
Upon the occurrence of an Event of Default, at Bank's option,
without notice by Bank to or demand by Bank of Borrower, all of
Borrowers Liabilities shall be due and payable forthwith.
All of Bank's rights and remedies under this Note are
cumulative and non-exclusive. The acceptance by Bank of any
partial payment made hereunder after the time when any of
Borrower's Liabilities become due and payable will not establish a
custom, or waive any rights of Bank to enforce prompt payment
hereof. Bank's failure to require strict performance by Borrower
of any provision of this Note shall not waive, affect or diminish
any right of Bank thereafter to demand strict compliance and
performance therewith. Any waiver of an Event of Default hereunder
shall not suspend. waive or affect any other Event of Default
hereunder. Borrower and every endorser waive presentment, demand
and protest and notice of presentment. protest, default
non-payment, maturity, release, compromise, settlement, extension
or renewal of this Note, and hereby ratify and confirm whatever
Bank may do in this regard. Borrower further waives any and all
notice or demand to which Borrower might be entitled with respect
to this Note by virtue of any applicable statute or law (to the
extent permitted by law).
Borrower agrees to pay, upon Bank's demand therefor, any and
all costs, fees and expenses (including attorneys fees, costs and
expenses) incurred by Bank (i) in enforcing any of Bank's rights
hereunder, and (ii) in representing Bank in any litigation,
contest, suit or dispute or to commence, defend or intervene or to
take any action with respect to any litigation, contests suit or
dispute (whether instituted by Bank, Borrower or any other person)
in any way relating to this Note or Borrower's Liabilities, and to
the extent not paid the same shall become part of Borrower's
Liabilities hereunder.
This Note shall be deemed to have been submitted by Borrower
to Bank at Bank's principal place of business and shall be deemed
to have been made thereat. This Note shall be governed and
controlled by the laws of the State of Illinois as to
interpretation, enforcement. validity, construction, effect, choice
of law and in all other respects.
TO INDUCE BANK TO ACCEPT THIS NOTE, BORROWER, IRREVOCABLY,
AGREES THAT, SUBJECT TO BANK'S SOLE AND ABSOLUTE ELECTION, ALL
ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT, ARISING OUT
OF OR FROM OR RELATED TO THIS NOTE SHALL BE LITIGATED IN COURTS
HAVING SITUS WITHIN THE CITY OF CHICAGO, STATE OF ILLINOIS.
BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY
LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID CITY AND STATE.
BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE
THE VENUE OF ANY LITIGATION BROUGHT AGAINST BORROWER BY BANK IN
ACCORDANCE WITH THIS PARAGRAPH.
BORROWER IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING (i) TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR
IN CONNECTION WITH THIS NOTE OR ANY AMENDMENT, INSTRUMENT, DOCUMENT
OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH, OR (ii) ARISING FROM ANY DISPUTE OR
CONTROVERSY IN CONNECTION WITH OR RELATED TO THIS NOTE OR ANY SUCH
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT, AND AGREES THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.
**BORROWER MAY SELECT LIBOR RATE OPTION (Plus Spread of 1.50).
40W267 Keslinger road RICHARDSON ELECTRONICS, LTD.
LaFox, IL 60147 By: /s/ William J. Garry
VP & CFO
EXHIBIT 10(g)(1)
Amendment No. 1 to Restated
Richardson Electronics, Ltd.
Employee Stock Ownership Plan
Richardson Electronics, Ltd., a Delaware corporation, hereby
amends the Richardson Electronics, Ltd. Employees Stock Ownership
Plan, as amended and restated on July 14, 1994, effective June 1,
1989, by deleting Section 6.1(b) thereof in its entirety and by
substituting in its place the following, effective June 1, 1989,
to-wit:
(b) The Participants who shall be eligible to receive
an allocation under this Section 6.1 with respect to a Plan
Year shall be limited to: (1) Participants who are Employees
on the last work day of the immediately preceding Plan Year
(including Participants who incurred a Termination of
Employment on such date) and who are credited with a Year of
service for such Plan Year, (2) Participants who retired on
or after their Normal Retirement Date during such
immediately preceding Plan Year; and (3) Participants who
terminated employment during such immediately preceding Plan
Year due to death, Permanent Disability or involuntary
termination of Employment (other than Termination of
Employment for cause). Effective as to Plan Year ending on
or after May 29, 1993, the preceding sentence shall read as
follows:
"The Participants who shall be eligible to receive an
allocation under this Section 6.1 with respect to a
Plan Year shall be limited to (1) Participants who are
Employees on the last work day of such Plan Year
(including Participants who incurred a Termination of
Employment on such date) and who are credited with a
Year of Service for such Plan Year, (2) Participants
who retired on or after their Normal Retirement Date
during such Plan Year, and (3) Participants who
terminated employment during such Plan Year due to
death, Permanent Disability or involuntary Termination
of Employment (other than Termination of Employment for
cause)."
In Witness Whereof, the undersigned has caused this
instrument to be executed as of this 12th day of July, 1995.
Richardson Electronics, Ltd.
By /s/ Edward J. Richardson
As Its Chairman and President
EXHIBIT 10(r)(1)
CHUBB Executive Protection Policy
DECLARATIONS
EXECUTIVE PROTECTION POLICY
Policy Number 8125-64-60D
Federal Insurance Company, a stock
insurance company, incorporated under the
laws of Indiana, herein called the
Company.
Item 1. Parent Organization:
RICHARDSON ELECTRONICS, LTD.
40W267 KESLINGER ROAD
LA FOX, ILLINOIS
60147
Item 2. Policy Period: From 12:01 A.M. on MAY 31, 1995
To 12:01 A.M. MAY 31, 1996
Local time at the address shown in
Item 1.
Item 3. Coverage Summary
Description
GENERAL TERMS AND CONDITIONS
EXECUTIVE LIABILITY AND INDEMNIFICATION
FIDUCIARY LIABILITY
CRIME INSURANCE
KIDNAP/RANSOM AND EXTORTION
Item 4. Termination of
Prior Policies: 8125-64-60C
THE EXECUTIVE LIABILITY AND INDEMNIFICATION, FIDUCIARY LIABILITY,
OUTSIDE DIRECTORSHIP LIABILITY AND EMPLOYMENT PRACTICES LIABILITY
COVERAGE SECTIONS (WHICHEVER ARE APPLICABLE) ARE ALL WRITTEN ON A
CLAIMS MADE BASIS. EXCEPT AS OTHERWISE PROVIDED, THESE COVERAGE
SECTIONS COVER ONLY CLAIMS FIRST MADE AGAINST THE INSURED DURING
THE POLICY PERIOD. PLEASE READ CAREFULLY.
In witness whereof, the Company issuing this policy has caused this
policy to be signed by its authorized officers, but it shall not be
valid unless also signed by a duly authorized representative of the
Company.
FEDERAL INSURANCE COMPANY
Henry G. Gulick Dean R. O'Hare
Secretary President
May 24, 1995 John S. Bain
Date Authorized Representative
CHUBB Executive Protection Policy
General Terms
and Conditions
Territory 1. Coverage shall extend anywhere in the world.
Terms and Conditions
2. Except for the General Terms and Conditions or
unless stated to the contrary in any coverage
section, the terms and conditions of each coverage
section of this policy apply only to that section
and shall not be construed to apply to any other
coverage section of this policy.
Limits of Liability and
Deductible Amounts
3. Unless stated to the contrary in any coverage
section, the limits of liability and deductible
amounts shown for each coverage section of this
policy are separate limits of liability and
separate deductible amounts pertaining to the
coverage section for which they are shown; the
application of a deductible amount to a loss under
one coverage section of this policy shall not
reduce the deductible amount under any other
coverage section of this policy.
Notice 4. Notice to the Company under this policy shall be
given in writing addressed to:
Notice of Claim:
National Claims Department
Chubb Group of Insurance Companies
15 Mountain View Road
Warren, New Jersey 07059
All Other Notices:
Executive Protection Department
Chubb Group of Insurance Companies
15 Mountain View Road
Warren, New Jersey 07059
Such notice shall be effective on the date of
receipt by the Company at such address.
Investigation and Settlement
5. The Company may make any investigation it deems
necessary and may, with the written consent of the
Insured, make any settlement of a claim it deems
expedient. If the Insured withholds consent to
such settlement, the Company's liability for all
loss on account of such claim shall not exceed the
amount for which the Company could have settled
such claim plus costs, charges and expenses accrued
as of the date such settlement was proposed in
writing by the Company to the Insured.
Valuation and
Foreign Currency
6. All premiums, limits, retentions, loss and other
amounts under this policy are expressed and payable
in the currency of the United States of America.
Except as otherwise provided in any coverage
section, if judgment is rendered, settlement is
denominated or another element of loss under this
policy is stated in a currency other than United
States of America dollars, payment under this
policy shall be made in United States dollars at
the rate of exchange published in the Wall Street
Journal on the date the final judgment is reached,
the amount of the settlement is agreed upon or the
other element of loss is due, respectively.
Subrogation
7. In the event of any payment under this policy, the
Company shall be subrogated to the extent of such
payment to all the Insured's rights of recovery,
and the Insured shall execute all papers required
and shall do everything necessary to secure and
preserve such rights, including the execution of
such documents necessary to enable the Company
effectively to bring suit in the name of the
Insured.
Action Against
the Company
8. No action shall lie against the Company unless, as
a condition precedent thereto, there shall have
been full compliance with all the terms of this
policy. No person or organization shall have any
right under this policy to join the Company as a
party to any action against the Insured to
determine the Insured's liability nor shall the
Company be impleaded by the Insured or his legal
representatives. Bankruptcy or insolvency of an
Insured or of the estate of an Insured shall not
relieve the Company of its obligations nor deprive
the Company of its rights under this policy.
Authorization Clause
9. By acceptance of this policy, the Parent
Organization agrees to act on behalf of all
Insureds with respect to the giving and receiving
of notice of claim or termination, the payment of
premiums and the receiving of any return premiums
that may become due under this policy, the
negotiation, agreement to and acceptance of
endorsements, and the giving or receiving of any
notice provided for in this policy (except the
giving of notice to apply for the Extended
Reporting Period), and the Insureds agree that the
Parent Organization shall act on their behalf.
Alteration
and Assignment
10. No change in, modification of, or assignment of
interest under this policy shall be effective
except when made by a written endorsement to this
policy which is signed by an authorized employee of
Chubb & Son Inc.
Termination of
Policy or
Coverage Section
11. This policy or any coverage section shall terminate
at the earliest of the following times:
(A) sixty days after the receipt by the Parent
Organization of a written notice of
termination from the Company,
(B) upon the receipt by the Company of written
notice of termination from the Parent
Organization,
(C) upon expiration of the Policy Period as set
forth in Item 2 of the Declarations of this
policy, or
(D) at such other time as may be agreed upon by
the Company and the Parent Organization.
The Company shall refund the unearned premium
computed at customary short rates if the policy or
any coverage section is terminated by the Parent
Organization. Under any other circumstances the
refund shall be computed pro rata.
Termination of
Prior Bonds
or Policies
12. Any bonds or policies issued by the Company or its
affiliates and specified in Item 4 of the
Declarations of this policy shall terminate, if not
already terminated, as of the inception date of
this policy. Such prior bonds or policies shall
not cover any loss under the Crime or Kidnap/Ransom
& Extortion coverage sections not discovered and
notified to the Company prior to the inception date
of this policy.
Definitions
13. When used in this policy:
Parent Organization means the organization
designated in Item 1 of the Declarations of this
policy.
Policy Period means the period of time specified in
Item 2 of the Declarations of this policy, subject
to prior termination in accordance with Subsection
11 above. If this period is less than or greater
than one year, then the Limits of Liability
specified in the Declarations for each coverage
section shall be the Company's maximum limit of
liability under such coverage section for the
entire period.
<PAGE>
CHUBB Executive Protection Policy
ENDORSEMENT
Coverage Section: GENERAL TERMS
Company: FEDERAL INSURANCE COMPANY
Endorsement No: 1
Effective date of
this endorsement: MAY 31, 1995
To be attached to and form part of Policy No. 8125-64-60D
Issued to: RICHARDSON ELECTRONICS, LTD.
ILLINOIS AMENDATORY ENDORSEMENT
It is agreed that:
Subsection 11, "Termination of Policy or Coverage Section", of the
General Terms and Conditions is amended by the following:
CANCELLATION
All notices of cancellation of insurance must be mailed at least 30
days prior to the effective date of cancellation during the first
60 days of coverage. After the policy or coverage section has been
effective for 61 days or more, all notices must be mailed at least
60 days prior to the effective date of cancellation. All such
notices shall include a specific explanation of the reason or
reasons for cancellation and shall be mailed to the Parent
Organization and mortgagee or lien holder, if known, at the last
mailing address known to the company. However, where cancellation
is for nonpayment of premium, at least 10 days notice of
cancellation shall be given.
No policy or coverage section which has been in effect for 60 days
may be cancelled except for one of the following reasons:
(a) Nonpayment of premium;
(b) The policy or coverage section was obtained through a
material misrepresentation;
(c) Any insured violated any of the terms and conditions of
the policy or coverage section;
(d) The risk originally accepted has measurably increased;
(e) Certification to the Director of the loss of reinsurance
by the insurer which provided coverage to the insurer for
all or a substantial part of the underlying risk insured;
or,
(f) A determination by the Director that the continuation of
the policy or coverage section could place the insurer in
violation of the insurance laws of this state.
NONRENEWAL AND EXTENDED REPORTING PERIOD
No company shall fail to renew any policy or coverage section of
insurance unless it shall send by mail to the Parent Organization
at least 60 days advance notice of its intention not to renew. The
company shall maintain proof of the mailing of such notice on one
of the following forms: a recognized U.S. Post Office form or a
form acceptable to the U.S. Post Office or other commercial mail
delivery service. An exact and unaltered copy of such notice shall
also be sent to the Parent Organization's broker, if known, or the
agent of record and to the mortgagee or lien holder at the last
mailing address known by the company. However, where cancellation
is for nonpayment of premium, at least 10 days notice of
cancellation shall be given.
Should a company fail to comply with the notice requirements, the
policy or coverage section shall terminate only as provided in this
Subsection. In the event notice is provided at least 31 days, but
less than 60 days prior to expiration of the policy or coverage
section, the policy or coverage section shall be extended for a
period of 60 days or until the effective date of any similar
insurance procured by the Insured, whichever is less, on the same
terms and conditions as the policy or coverage section sought to be
terminated. In the event notice is provided less than 31 days
prior to the expiration of the policy or coverage section, the
policy or coverage section shall be extended for a period of one
year or until the effective date of any similar insurance procured
by the insured, whichever is less, on the same terms and conditions
as the policy or coverage section sought to be terminated unless
the insurer has manifested its willingness to renew at a premium
which represents an increase not exceeding 30%. The premium for
coverage shall be prorated in accordance with the amount of the
last year's premium, and the company shall be entitled to this
premium for the extension of coverage and such extension may be
contingent upon the payment of such premium.
Renewal of a policy or coverage section does not constitute a
waiver or estoppel with respect to grounds for cancellation which
existed before the effective date of such renewal.
In all notices of intention not to renew any policy or coverage
section for insurance, the company shall provide a specific
explanation of the reasons for nonrenewal.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
John S. Bain
Authorized Representative
May 24, 1995
Date
<PAGE>
CHUBB Executive Protection Policy
DECLARATIONS
EXECUTIVE LIABILITY AND
INDEMNIFICATION COVERAGE SECTION
Item 1. Parent Organization:
RICHARDSON ELECTRONICS, LTD.
Item 2. Limits of Liability:
(A) Each Loss $15,000,000.
(B) Each Policy Period $15,000,000.
Note that the limits of liability and any deductible or
retention are reduced or exhausted by Defense Costs.
Item 3. Coinsurance Percent: NONE
Item 4. Deductible Amount:
Insuring Clause 2 $ 500,000.
Item 5. Insured Organization:
Richardson Electronics, Ltd.
and its Subsidiaries.
Item 6. Insured Persons:
Any person who has been, now is, or shall become a duly
elected director or a duly elected or appointed officer
of the Insured Organization.
Item 7. Extended Reporting Period:
(A) Additional Premium: 75% of the annual premium
(B) Additional Period: one year
Item 8. Pending or Prior Date: October 12, 1983
Item 9. Continuity Date: October 12, 1983
<PAGE>
CHUBB Executive Protection Policy
Executive Liability
and Indemnification
Coverage Section
In consideration of payment of the premium and subject to
the Declarations, General Terms and Conditions, and the
limitations, conditions, provisions and other terms of
this coverage section, the Company agrees as follows:
Insuring Clauses
Executive
Liability Coverage
Insuring Clause 1
1. The Company shall pay on behalf of each of the
Insured Persons all Loss for which the Insured
Person is not indemnified by the Insured
Organization and which the Insured Person becomes
legally obligated to pay on account of any Claim
first made against him, individually or otherwise,
during the Policy Period or, if exercised, during
the Extended Reporting Period, for a Wrongful Act
committed, attempted, or allegedly committed or
attempted by such Insured Person before or during
the Policy Period.
Executive
Indemnification
Coverage
Insuring Clause 2
2. The Company shall pay on behalf of the Insured
Organization all Loss for which the Insured
Organization grants indemnification to each Insured
Person, as permitted or required by law, which the
Insured Person has become legally obligated to pay
on account of any Claim first made against him,
individually or otherwise, during the Policy Period
or, if exercised, during the Extended Reporting
Period, for a Wrongful Act committed, attempted, or
allegedly committed or attempted by such Insured
Person before or during the Policy Period.
Estates and Legal Representatives
3. Subject otherwise to the General Terms and
Conditions and the limitations, conditions,
provisions and other terms of this coverage
section, coverage shall extend to Claims for the
Wrongful Acts of Insured Persons made against the
estates, heirs, legal representatives or assigns of
Insured Persons who are deceased or against the
legal representatives or assigns of Insured Persons
who are incompetent, insolvent or bankrupt.
Extended
Reporting Period
4. If the Company terminates or refuses to renew this
coverage section other than for nonpayment of
premium, the Parent Organization and the Insured
Persons shall have the right, upon payment of the
additional premium set forth in Item 7(A) of the
Declarations for this coverage section, to an
extension of the coverage granted by this coverage
section for the period set forth in Item 7(B) of
the Declarations for this coverage section
(Extended Reporting Period) following the effective
date of termination or nonrenewal, but only for any
Wrongful Act committed, attempted, or allegedly
committed or attempted, prior to the effective date
of termination or nonrenewal. This right of
extension shall lapse unless written notice of such
election, together with payment of the additional
premium due, is received by the Company within 30
days following the effective date of termination or
nonrenewal. Any Claim made during the Extended
Reporting Period shall be deemed to have been made
during the immediately preceding Policy Period.
If the Parent Organization terminates or declines
to accept renewal, the Company may, if requested,
at its sole option, grant an Extended Reporting
Period. The offer of renewal terms and conditions
or premiums different from those in effect prior to
renewal shall not constitute refusal to renew.
Exclusions
Exclusions Applicable
to Insuring
Clauses 1 and 2
5. The Company shall not be liable for Loss on account
of any Claim made against any Insured Person:
(a) based upon, arising from, or in consequence of
any circumstance if written notice of such
circumstance has been given under any policy
or coverage section of which this coverage
section is a renewal or replacement and if
such prior policy or coverage section affords
coverage (or would afford such coverage except
for the exhaustion of its limits of liability)
for such Loss, in whole or in part, as a
result of such notice;
(b) based upon, arising from, or in consequence of
any demand, suit or other proceeding pending,
or order, decree or judgement entered against
any Insured on or prior to the Pending or
Prior Date set forth in Item 8 of the
Declarations for this coverage section, or the
same or any substantially similar fact,
circumstance or situation underlying or
alleged therein;
(c) brought or maintained by or on behalf of any
Insured except:
(i) a Claim that is a derivative action
brought or maintained on behalf of an
Insured Organization by one or more
persons who are not Insured Persons and
who bring and maintain the Claim without
the solicitation, assistance or
participation of any Insured,
(ii) a Claim brought or maintained by an
Insured Person for the actual or alleged
wrongful termination of the Insured
Person, or
(iii) a Claim brought or maintained by an
Insured Person for contribution or
indemnity, if the Claim directly results
from another Claim covered under this
coverage section;
(d) for an actual or alleged violation of the
responsibilities, obligations or duties
imposed by the Employee Retirement Income
Security Act of 1974 and amendments thereto or
similar provisions of any federal, state or
local statutory law or common law upon
fiduciaries of any pension, profit sharing,
health and welfare or other employee benefit
plan or trust established or maintained for
the purpose of providing benefits to employees
of an Insured Organization;
(e) for bodily injury, mental or emotional
distress, sickness, disease or death of any
person or damage to or destruction of any
tangible property including loss of use
thereof; or
(f) based upon, arising from, or in consequence of
(i) the actual, alleged or threatened
discharge, release, escape or disposal of
Pollutants into or on real or personal
property, water or the atmosphere; or (ii) any
direction or request that the Insured test
for, monitor, clean up, remove, contain,
treat, detoxify or neutralize Pollutants, or
any voluntary decision to do so; including but
not limited to any Claim for financial loss to
the Insured Organization, its security holders
or its creditors based upon, arising from, or
in consequence of the matters described in (i)
or (ii) of this exclusion.
Exclusions Applicable
to Insuring
Clause 1 Only
6. The Company shall not be liable under Insuring
Clause 1 for Loss on account of any Claim made
against any Insured Person:
(a) for an accounting of profits made from the
purchase or sale by such Insured Person of
securities of the Insured Organization within
the meaning of Section 16 (b) of the
Securities Exchange Act of 1934 and amendments
thereto or similar provisions of any federal,
state or local statutory law or common law;
(b) based upon, arising from, or in consequence of
any deliberately fraudulent act or omission or
any willful violation of any statute or
regulation by such Insured Person, if a
judgement or other final adjudication adverse
to the Insured Person establishes such a
deliberately fraudulent act or omission or
willful violation; or
(c) based upon, arising from, or in consequence of
such Insured Person having gained in fact any
personal profit, remuneration or advantage to
which such Insured Person was not legally
entitled.
Severability of Exclusions
7. With respect to the Exclusions in Subsections 5 and
6 of this coverage section, no fact pertaining to
or knowledge possessed by any Insured Person shall
be imputed to any other Insured Person to determine
if coverage is available.
Limit of Liability,
Deductible and
Coinsurance
8. For the purposes of this coverage section, all Loss
arising out of the same Wrongful Act and all
Interrelated Wrongful Acts of any Insured Person
shall be deemed one Loss, and such Loss shall be
deemed to have originated in the earliest Policy
Period in which a Claim is first made against any
Insured Person alleging any such Wrongful Act or
Interrelated Wrongful Acts.
The Company's maximum liability for each Loss,
whether covered under Insuring Clause 1 or Insuring
Clause 2 or both, shall be the Limit of Liability
for each Loss set forth in Item 2(A) of the
Declarations for this coverage section. The
Company's maximum aggregate liability for all Loss
on account of all Claims first made during the same
Policy Period, whether covered under Insuring
Clause 1 or Insuring Clause 2 or both, shall be the
Limit of Liability for each Policy Period set forth
in Item 2(B) of the Declarations for this coverage
section.
The Company's liability under Insuring Clause 2
shall apply only to that part of each Loss which is
excess of the Deductible Amount set forth in Item 4
of the Declarations for this coverage section and
such Deductible Amount shall be borne by the
Insureds uninsured and at their own risk.
If a single Loss is covered in part under Insuring
Clause 1 and in part under Insuring Clause 2, the
Deductible Amount applicable to the Loss shall be
the Insuring Clause 2 deductible set forth in Item
4 of the Declarations for this coverage section.
With respect to all Loss (excess of the applicable
Deductible Amount) originating in any one Policy
Period, the Insureds shall bear uninsured and at
their own risk that percent of all such Loss
specified as the Coinsurance Percent in Item 3 of
the Declarations for this coverage section, and the
Company's liability hereunder shall apply only to
the remaining percent of all such Loss.
Any Loss covered in whole or in part by this
coverage section and the Employment Practices
Liability coverage section of this policy (if
purchased) shall be subject to the limits of
liability, deductible and coinsurance percent
applicable to such other coverage section;
provided, however, if any limit of liability
applicable to such other coverage section is
exhausted with respect to such Loss, any remaining
portion of such Loss otherwise covered by this
coverage section shall be subject to the Limits of
Liability and Coinsurance Percent applicable to
this coverage section, as reduced by the amount of
such Loss otherwise covered by this coverage
section which is paid by the Company pursuant to
such other coverage section.
For purposes of this Subsection 8 only, the
Extended Reporting Period, if exercised, shall be
part of and not in addition to the immediately
preceding Policy Period.
Presumptive
Indemnification
9. If the Insured Organization.
(a) fails or refuses, other than for reason of
Financial Impairment, to indemnify the Insured
Person for Loss; and
(b) is permitted or required to indemnify the
Insured Person for such Loss pursuant to:
(i) the by-laws or certificate of
incorporation of the Insured Organization
in effect at the inception of this
coverage section, or
(ii) any subsequently amended or superseding
by-laws or certificate of incorporation
of the Insured Organization provided,
however, that such amended or superseding
by-laws or certificate of incorporation
expand or broaden, and do not restrict or
in any way limit, the Insured
Organization's ability to indemnify the
Insured Person;
then, notwithstanding any other conditions,
provisions or terms of this coverage section
to the contrary, any payment by the Company of
such Loss shall be subject to (i) the Insuring
Clause 2 Deductible Amount set forth in Item 4
of the Declarations for this coverage section,
and (ii) all of the Exclusions set forth in
Subsections 5 and 6 of this coverage section.
For purposes of this Subsection 9, the
shareholder and board of director resolutions
of the Insured Organization shall be deemed to
provide indemnification for such Loss to the
fullest extent permitted by such by-laws or
certificate of incorporation.
Reporting
and Notice
10. The Insureds shall, as a condition precedent to
exercising their rights under this coverage
section, give to the Company written notice as soon
as practicable of any Claim made against any of
them for a Wrongful Act.
If during the Policy Period or Extended Reporting
Period (if exercised) an Insured becomes aware of
circumstances which could give rise to a Claim and
gives written notice of such circumstance(s) to the
Company, then any Claims subsequently arising from
such circumstances shall be considered to have been
made during the Policy Period or the Extended
Reporting Period in which the circumstances were
first reported to the Company.
The Insureds shall, as a condition precedent to
exercising their rights under this coverage
section, give to the Company such information and
cooperation as it may reasonably require, including
but not limited to a description of the Claim or
circumstances, the nature of the alleged Wrongful
Act, the nature of the alleged or potential damage,
the names of actual or potential claimants, and the
manner in which the Insured first became aware of
the Claim or circumstances.
Defense and Settlement
11. Subject to this Subsection, it shall be the duty of
the Insured Persons and not the duty of the Company
to defend Claims made against the Insured Persons.
The Insureds agree not to settle any Claim, incur
any Defense Costs or otherwise assume any
contractual obligation or admit any liability with
respect to any Claim without the Company's written
consent, which shall not be unreasonably withheld.
The Company shall not be liable for any settlement,
Defense Costs, assumed obligation or admission to
which it has not consented.
The Company shall have the right and shall be given
the opportunity to effectively associate with the
Insureds in the investigation, defense and
settlement, including but not limited to the
negotiation of a settlement, of any Claim that
appears reasonably likely to be covered in whole or
in part by this coverage section.
The Insureds agree to provide the Company with all
information, assistance and cooperation which the
Company reasonably requests and agree that in the
event of a Claim the Insureds will do nothing that
may prejudice the Company's position or its
potential or actual rights of recovery.
Defense Costs are part of and not in addition to
the Limits of Liability set forth in Item 2 of the
Declarations for this coverage section, and the
payment by the Company of Defense Costs reduces
such Limits of Liability.
Allocation
12. If both Loss covered by this coverage section and
loss not covered by this coverage section are
incurred, either because a Claim against the
Insured Persons includes both covered and uncovered
matters or because a Claim is made against both an
Insured Person and others, including the Insured
Organization, the Insureds and the Company shall
use their best efforts to agree upon a fair and
proper allocation of such amount between covered
Loss and uncovered loss.
If the Insureds and the Company agree on an
allocation of Defense Costs, the Company shall
advance on a current basis Defense Costs allocated
to the covered Loss. If the Insureds and the
Company cannot agree on an allocation:
(a) no presumption as to allocation shall exist in
any arbitration, suit or other proceeding;
(b) the Company shall advance on a current basis
Defense Costs which the Company believes to be
covered under this coverage section until a
different allocation is negotiated, arbitrated
or judicially determined; and
(c) the Company, if requested by the Insureds,
shall submit the dispute to binding
arbitration. The rules of the American
Arbitration Association shall apply except
with respect to the selection of the
arbitration panel, which shall consist of one
arbitrator selected by the Insureds, one
arbitrator selected by the Company, and a
third independent arbitrator selected by the
first two arbitrators.
Any negotiated, arbitrated or judicially determined
allocation of Defense Costs on account of a Claim
shall be applied retroactively to all Defense Costs
on account of such Claim, notwithstanding any prior
advancement to the contrary. Any allocation or
advancement of Defense Costs on account of a Claim
shall not apply to or create any presumption with
respect to the allocation of other Loss on account
of such Claim.
Other
Insurance
13. If any Loss arising from any Claim made against any
Insured Persons is insured under any other valid
policy(ies), prior or current, then this coverage
section shall cover such Loss, subject to its
limitations, conditions, provisions and other
terms, only to the extent that the amount of such
Loss is in excess of the amount of payment from
such other insurance whether such other insurance
is stated to be primary, contributory, excess,
contingent or otherwise, unless such other
insurance is written only as specific excess
insurance over the Limits of Liability provided in
this coverage section.
Changes in Exposure
Acquisition or
Creation of
Another Organization
14. If the Insured Organization (i) acquires securities
or voting rights in another organization or creates
another organization, which as a result of such
acquisition or creation becomes a Subsidiary, or
(ii) acquires any organization by merger into or
consolidation with an Insured Organization, such
organization and its Insured Persons shall be
Insureds under this coverage section but only with
respect to Wrongful Acts committed, attempted, or
allegedly committed or attempted, after such
acquisition or creation unless the Company agrees,
after presentation of a complete application and
all appropriate information, to provide coverage by
endorsement for Wrongful Acts committed, attempted,
or allegedly committed or attempted, by such
Insured Persons prior to such acquisition or
creation.
If the fair value of all cash, securities, assumed
indebtedness and other consideration paid by the
Insured Organization for any such acquisition or
creation exceeds 10% of the total assets of the
Parent Organization as reflected in the Parent
Organization's most recent audited consolidated
financial statements, the Parent Organization shall
give written notice of such acquisition or creation
to the Company as soon as practicable together with
such information as the Company may require and
shall pay any reasonable additional premium
required by the Company.
Acquisition of Parent
Organization by
Another Organization
15. If (i) the Parent Organization merges into or
consolidates with another organization, or (ii)
another organization or person or group of
organizations and/or persons acting in concert
acquires securities or voting rights which result
in ownership or voting control by the other
organization(s) or person(s) of more than 50% of
the outstanding securities representing the present
right to vote for the election of directors of the
Parent Organization, coverage under this coverage
section shall continue until termination of this
coverage section, but only with respect to Claims
for Wrongful Acts committed, attempted, or
allegedly committed or attempted, by Insured
Persons prior to such merger, consolidation or
acquisition. The Parent Organization shall give
written notice of such merger, consolidation or
acquisition to the Company as soon as practicable
together with such information as the Company may
require.
Cessation of Subsidiaries
16. In the event an organization ceases to be a
Subsidiary before or after the Inception Date of
this coverage section, coverage with respect to
such Subsidiary and its Insured Persons shall
continue until termination of this coverage section
but only with respect to Claims for Wrongful Acts
committed, attempted or allegedly committed or
attempted prior to the date such organization
ceased to be a Subsidiary.
Representations and Severability
17. In granting coverage to any one of the Insureds,
the Company has relied upon the declarations and
statements in the written application for this
coverage section and upon any declarations and
statements in the original written application
submitted to another insurer in respect of the
prior coverage incepting as of the Continuity Date
set forth in Item 9 of the Declarations for this
coverage section. All such declarations and
statements are the basis of such coverage and shall
be considered as incorporated in and constituting
part of this coverage section.
Such written application(s) for coverage shall be
construed as a separate application for coverage by
each of the Insured Persons. With respect to the
declarations and statements contained in such
written application(s) for coverage, no statement
in the application or knowledge possessed by any
Insured Person shall be imputed to any other
Insured Person for the purpose of determining if
coverage is available.
Definitions
18. When used in this coverage section:
Claim means:
(i) a written demand for monetary damages,
(ii) a civil proceeding commenced by the service of
a complaint or similar pleading,
(iii) a criminal proceeding commenced by a return of
an indictment, or
(iv) a formal administrative or regulatory
proceeding commenced by the filing of a notice
of charges, formal investigative order or
similar document,
against any Insured Person for a Wrongful Act,
including any appeal therefrom.
Defense Costs means that part of Loss consisting of
reasonable costs, charges, fees (including but not
limited to attorneys' fees and experts' fees) and
expenses (other than regular or overtime wages,
salaries or fees of the directors, officers or
employees of the Insured Organization) incurred in
defending or investigating Claims and the premium
for appeal, attachment or similar bonds.
Financial Impairment means the status of the
Insured Organization resulting from (i) the
appointment by any state or federal official,
agency or court of any receiver, conservator,
liquidator, trustee, rehabilitator or similar
official to take control of, supervise, manage or
liquidate the Insured Organization, or (ii) the
Insured Organization becoming a debtor in
possession.
Insured, either in the singular or plural, means
the Insured Organization and any Insured Person.
Insured Capacity means the position or capacity
designated in Item 6 of the Declarations for this
coverage section held by any Insured Person but
shall not include any position or capacity in any
organization other than the Insured Organization,
even if the Insured Organization directed or
requested the Insured Person to serve in such other
position or capacity.
Insured Organization means, collectively, those
organizations designated in Item 5 of the
Declarations for this coverage section.
Insured Person, either in the singular or plural,
means any one or more of those persons designated
in Item 6 of the Declarations for this coverage
section.
Interrelated Wrongful Acts means all causally
connected Wrongful Acts.
Loss means the total amount which any Insured
Person becomes legally obligated to pay on account
of each Claim and for all Claims in each Policy
Period and the Extended Reporting Period, if
exercised, made against them for Wrongful Acts for
which coverage applies, including, but not limited
to, damages, judgements, settlements, costs and
Defense Costs. Loss does not include (i) any amount
not indemnified by the Insured Organization for
which the Insured Person is absolved from payment
by reason of any covenant, agreement or court
order, (ii) any amount incurred by the Insured
Organization (including its board of directors or
any committee of the board of directors) in
connection with the investigation or evaluation of
any Claim or potential Claim by or on behalf of the
Insured Organization, (iii) fines or penalties
imposed by law or the multiple portion of any
multiplied damage award, or (iv) matters
uninsurable under the law pursuant to which this
coverage section is construed.
Pollutants means any substance located anywhere in
the world exhibiting any hazardous characteristics
as defined by, or identified on a list of hazardous
substances issued by, the United States
Environmental Protection Agency or a state, county,
municipality or locality counterpart thereof. Such
substances shall include, without limitation,
solids, liquids, gaseous or thermal irritants,
contaminants or smoke, vapor, soot, fumes, acids,
alkalis, chemicals or waste materials. Pollutants
shall also mean any other air emission, odor, waste
water, oil or oil products, infectious or medical
waste, asbestos or asbestos products and any noise.
Subsidiary, either in the singular or plural, means
any organization in which more than 50% of the
outstanding securities or voting rights
representing the present right to vote for election
of directors is owned or controlled, directly or
indirectly, in any combination, by one or more
Insured Organizations.
Wrongful Act means any error, misstatement,
misleading statement, act, omission, neglect, or
breach of duty committed, attempted, or allegedly
committed or attempted, by an Insured Person,
individually or otherwise, in his Insured Capacity,
or any matter claimed against him solely by reason
of his serving in such Insured Capacity.
<PAGE>
CHUBB Executive Protection Policy
ENDORSEMENT
Coverage Section: EXECUTIVE LIABILITY
Company: FEDERAL INSURANCE COMPANY
Endorsement No: 1
Effective date of this endorsement: MAY 31, 1995
Issued to: RICHARDSON ELECTRONICS, LTD.
To be attached to and form part of Policy No. 8125-64-60D
ILLINOIS AMENDATORY ENDORSEMENT
It is agreed that:
Subsection 4, "Extended Reporting Period", shall be deleted and
replaced by the following:
EXTENDED REPORTING PERIOD
4. If the Company or the Insured terminates or refuses to renew
this coverage section, the Parent Organization and the Insured
Persons shall have the right, upon payment of the additional
premium set forth in Item 7(A) of the Declarations for this
coverage section, to an extension of the coverage granted by
the coverage section for a period of one year as set forth in
Item 7(B) of the Declarations for this coverage section
(Extended Reporting Period) following the effective date of
termination or nonrenewal, but only for any Wrongful Act
committed, attempted, or allegedly committed or attempted,
prior to the effective date of termination or nonrenewal.
This right of extension shall lapse unless written notice of
such election, together with payment of the additional premium
due, is received by the Company within 30 days following the
effective date of termination or nonrenewal. Any Claim made
during the Extended Reporting Period shall be deemed to have
been made during the immediately preceding Policy Period.
It is further agreed that Subsection 18, "Definitions", shall be
amended by deleting Defense Costs and replacing it with the
following:
Defense Costs means that part of Loss consisting of reasonable
costs, charges, fees (including but not limited to attorneys'
fees and experts' fees) and expenses (other than regular or
overtime wages, salaries or fees of the directors, officers or
employees of the Insured Organization or the salaries of the
employees, officers or staff attorneys of the Company)
incurred in defending or investigating Claims and the premium
for appeal, attachment or similar bonds.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
John S. Bain
Authorized Representative
May 24, 1995
Date
<PAGE>
CHUBB Executive Protection Policy
ENDORSEMENT
Coverage Section: EXECUTIVE LIABILITY
Company: FEDERAL INSURANCE COMPANY
Endorsement No: 2
Effective date of this endorsement: MAY 31, 1995
Issued to: RICHARDSON ELECTRONICS, LTD.
To be attached to and form part of Policy No. 8125-64-60D
It is agreed that Item 6 of the Declarations page, Insured Persons,
is amended to include the following:
Microwave Business Unit Manager
Broadcast Business Unit Manager
Export/Middle East/Africa/Reg. Sls. Mgr.
Regional Sales Manager - REI/GEB
Industrial Business Unit Manager
General Manager - RESA
Solid State Components Bus. Unit Manager
Director General - REISA
Regional Sales Manager - RESA
Medical Business Unit Manager
Canada Region Sales Manager
Western Region Sales Manager
Eastern Region Sales Manager
Director Marketing Administration ROW
Regional Sales Manager - GmbH
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
John S. Bain
Authorized Representative
May 24, 1995
Date
<PAGE>
CHUBB Executive Protection Policy
ENDORSEMENT
Coverage Section: EXECUTIVE LIABILITY
Company: FEDERAL INSURANCE COMPANY
Endorsement No: 3
Effective date of this endorsement: MAY 31, 1995
Issued to: RICHARDSON ELECTRONICS, LTD.
To be attached to and form part of Policy No. 8125-64-60D
OPTIONAL GUARANTEED DEFENSE COSTS ALLOCATION
In consideration of the premium paid, it is agreed that subsection 12,
Allocation, is deleted in its entirety and the following is inserted:
Allocation
12. If both Loss covered by this coverage section and loss not covered by
this coverage section are incurred, either because a Claim against an
Insured Person includes both covered and uncovered matters or because a
Claim is made against both an Insured Person and others, including the
Insured Organization, the Insured and the Company shall allocate such
amount as follows:
(a) with respect to defense costs, to create certainty in determining
a fair and proper allocation of Defense Costs, 80% of all Defense
Costs which must otherwise be allocated as described above shall
be allocated to covered Loss and shall be advanced by the Company
on a current basis; provided, however, that no Defense Costs shall
be allocated to the Insured Organization to the extent the Insured
Organization is unable to pay by reason of Financial Impairment.
This Defense Cost allocation shall be the final and binding allocation of such
Defense Costs and shall not apply to or create any presumption with respect to
the allocation of any other Loss;
(b) with respect to Loss other than Defense Costs:
(i) the Insured and the Company shall use their best efforts to
agree upon a fair and proper allocation of such amount
between covered Loss and uncovered loss; and
(ii) if the Insured and the Company cannot agree on any
allocation, no presumption as to allocation shall exist in
any arbitration, suit or other proceeding. The Company, if
requested by the Insured, shall submit the allocation
dispute to binding arbitration. The rules of the American
Arbitration Association shall apply except with respect to
the selection of the arbitration panel, which shall consist
of one arbitrator selected by the Insureds, one arbitrator
selected by the Company, and a third independent arbitrator
selected by the first two arbitrators.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
John S. Bain
Authorized Representative
May 24, 1995
Date
CHUBB Executive Protection Policy
ENDORSEMENT
Coverage Section: EXECUTIVE LIABILITY
Company: FEDERAL INSURANCE COMPANY
Endorsement No: 4
Effective date of this endorsement: MAY 31, 1995
Issued to: RICHARDSON ELECTRONICS, LTD.
To be attached to and form part of Policy No. 8125-64-60D
It is agreed that:
1. Item 6 of the Declarations, Insured Persons, is amended by adding the
following:
... and any elected or appointed officer of the Insured Organization in
an Outside Directorship.
2. Subsection 18, "Definitions", is amended by adding the following:
Outside Directorship means the position of director, officer, trustee,
governor, or equivalent executive position with an Outside Entity if
service by an Insured Person in such position was at the specific
request of the Insured Organization or was part of the duties regularly
assigned to the Insured Person by the Insured Organization.
Outside Entity means any non-profit corporation, community chest, fund
organization or foundation exempt from federal income tax as an
organization described in Section 501(c)(3), Internal Revenue Code of
1986, as amended.
3. The following subsection is added to this coverage section:
OUTSIDE DIRECTORSHIPS
19. Coverage provided to any Insured person in an Outside Directorship
shall:
(a) not extend to the Outside Entity or to any director,
officer, trustee, governor or any other equivalent executive
or employee of the Outside Entity, other than the Insured
Person serving in the Outside Directorship;
(b) be specifically excess of any indemnity (other than any
indemnity provided by the Insured Organization) or insurance
available to such Insured Person by reason of serving in the
Outside Directorship, including any indemnity or insurance
available from or provided by the Outside Entity;
(c) not extend to Loss on account of any Claim made against any
Insured Person for a Wrongful Act committed, attempted, or
allegedly committed or attempted by such Insured Person
while serving in the Outside Directorship if such Wrongful
Act is committed, attempted, or allegedly committed or
attempted, after the date (i) such Insured Person ceases to
be an officer of the Insured Organization, or (ii) service
by such Insured Person in the Outside Directorship ceases to
be at the specific request of the Insured Organization or a
part of the duties regularly assigned to the Insured Person
by the Insured Organization;
(d) not extend to Loss on account of any Claim made against any
Insured Person for a Wrongful Act committed, attempted or
allegedly committed or attempted by such Insured Person
while serving in the Outside Directorship where such Claim
is (i) by the Outside Entity, or (ii) on behalf of the
Outside Entity and a director, officer, trustee, governor or
equivalent executive of the Outside Entity instigates such
Claim, or (iii) by any director, officer, trustee, governor
or equivalent executive of the Outside Entity.
4. The Company maximum liability to pay Loss under this coverage section,
including this endorsement, shall not exceed the amount set forth in
Item 2 of the Declarations. This endorsement does not increase the
Company's maximum liability beyond the Limits of Liability set forth in
Item 2 of the Declarations.
5. Payment by the Company or any of its subsidiaries or affiliated
companies under another policy on account of a Claim also covered
pursuant to this endorsement shall reduce by the amount of the payment
the Company's Limits of Liability under this coverage section with
respect to such Claim.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
John S. Bain
Authorized Representative
May 24, 1995
Date
<PAGE>
CHUBB Executive Protection Policy
ENDORSEMENT
Coverage Section: EXECUTIVE LIABILITY
Company: FEDERAL INSURANCE COMPANY
Endorsement No: 5
Effective date of this endorsement: MAY 31, 1995
Issued to: RICHARDSON ELECTRONICS, LTD.
To be attached to and form part of Policy No. 8125-64-60D
It is agreed that if a Claim against an Insured Person includes a claim
against the Insured Person's lawful spouse solely by reason of (i) such
spouse's status as a spouse of the Insured Person, or (ii) such spouse's
ownership interest in property which the claimant seeks as recovery for
alleged Wrongful Acts of the Insured Person, all loss which such spouse
becomes legally obligated to pay on account of such Claim shall be treated for
purposes of this coverage section as Loss which the Insured Person becomes
legally obligated to pay on account of the Claim made against the Insured
Person. All limitations, conditions, provisions and other terms of coverage
(including the deductible) applicable to the Insured Person's Loss shall also
be applicable to such spousal loss.
The coverage extension afforded by this Endorsement does not apply to any
Claim alleging any wrongful act or omission by the Insured Person's spouse.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
John S. Bain
Authorized Representative
May 24, 1995
Date
EXHIBIT 10(r)(2)
IMPORTANT NOTE: THIS IS CLAIMS MADE COVERAGE. PLEASE READ THIS
POLICY CAREFULLY.
THIS POLICY, SUBJECT TO THE DECLARATIONS, INSURING AGREEMENTS,
TERMS, CONDITIONS, LIMITATIONS AND AMENDMENTS, APPLIES ONLY TO
CLAIM OR CLAIMS THAT ARE FIRST MADE AGAINST THE INSURED(S) AND
REPORTED TO THE INSURER DURING THE POLICY PERIOD OR DISCOVERY
PERIOD (IF APPLICABLE).
THE LIMIT OF LIABILITY AVAILABLE TO PAY JUDGMENTS OR SETTLEMENTS
SHALL BE REDUCED AND MAY BE EXHAUSTED BY AMOUNTS INCURRED FOR
DEFENSE COSTS, CHARGES AND EXPENSES. THE RETENTION(S) APPLY(IES) TO
DEFENSE COSTS, CHARGES AND EXPENSES.
ST. PAUL MERCURY
INSURANCE COMPANY
St. Paul, Minnesota 55102
A Capital Stock Company
Herein Called the Insurer
EXCESS DIRECTORS AND OFFICERS LIABILITY AND CORPORATE
INDEMNIFICATION POLICY
DECLARATIONS
Item 1. Named Insured: The Directors and Officers of
Richardson Electronics, Ltd.
Item 2. Address (No., Street, City, State and Zip Code)
40W267 Keslinger Road
LaFox, IL 60147
Item 3. Policy Period
From 5/31/95 To 05-31-96 (12:01 A.M. Standard Time at the
address stated in Item 2.)
Item 4. Limit of Liability $15,000,000. each Policy Period in
excess of Item 7(E). The limit of liability available to pay
judgments or settlements shall be reduced and may be exhausted by
amounts incurred for legal defense costs, charges and expense.
Item 5. Retentions (Applicable to Section 2(B)(2))
$1,000,000. Corporate Indemnification Each Loss
$ 0 Each Insured Each Loss
$ 0 Aggregate All Insureds Each Loss
Item 6. Premium $ 77,500.
Item 7. Schedule of Underlying Insurer(s)
(A) 1. Underlying Insurer: Federal Insurance Company
2. Policy Number: 8125-64-60D
3. Policy Period: From: 05-31-95 To: 05-31-96
4. Limit of Liability: $15,000,000.
5. Retentions:
$500,000 Corporate Indemnification Each Loss
$ 0 Each Insured Each Loss
$ 0 Aggregate All Insureds Each Loss
(B) 1. Underlying Insurer: Not Applicable
2. Policy Number:
3. Policy Period: From: To:
4. Limit of Liability: $
(C) 1. Underlying Insurer: Not Applicable
2. Policy Number:
3. Policy Period: From: To:
4. Limit of Liability: $
(D) 1. Underlying Insurer: Not Applicable
2. Policy Number:
3. Policy Period: From: To:
4. Limit of Liability: $
(E) Total amount of Underlying Limit of Liability
$15,000,000 and any retentions or deductibles as
applicable under the policy(ies) as stated in this
Item 7.
Item 8. Subject to the Terms, Conditions and Limitations of this
policy as hereinafter provided, this policy follows the form of:
Insurer's Name: Federal Insurance Company
Policy Number: 8125-64-60D
Item 9. Forms Attached
1) St. Paul Mercury Insurance Company Policy, Form #50408.
2) Endorsements one through four.
3) St.Paul Mercury Insurance Company Application, Form #
50264, and its attachments.
James C. Styer
Authorized Representative
July 20, 1995
Countersignature Date
Highland Park, IL
Countersigned At
<PAGE>
INSURING CLAUSE
In consideration of the payment of the premium, in reliance upon
the statements made to the Insurer by application including its
attachments, a copy of which is attached to and forms a part of
this policy, and any material submitted therewith (which shall be
retained on file by the Insurer and be deemed attached hereto), and
except as hereinafter otherwise provided or amended, this policy is
subject to the same Insuring Agreement(s), Terms, Conditions and
Limitations as provided by the policy stated in Item 8 of the
Declarations and any amendments thereto, provided:
A. 1. the Insurer has received prior written notice from the
Insured(s) of any amendments to the policy stated in Item 8 of the
Declarations, and
2. the Insurer has given to the Insured(s) its written
consent to any amendments to the policy stated in Item 8 of the
Declarations. and
3. the Insured has paid any required additional premium.
B. This policy is not subject to the same premium or the amount
and Limit of Liability of the policy stated in Item 8 of the
Declarations.
TERMS, CONDITIONS AND LIMITATIONS
Section 1. UNDERLYING INSURANCE
A. It is a condition precedent to the Insured(s) rights under
this policy that the Insured(s) notify the Insurer, as soon as
practicable in writing, of a failure to maintain in full force
and effect, except as provided for under Section 2(B), and
without alteration of any Terms, Conditions, Limit of
Liability or Retentions, any of the underlying insurance
policies as stated in Item 7 of the Declarations.
B. Failure to maintain, as set forth above, any of the underlying
insurance policies as stated in Item 7 of the Declarations,
except as provided for under Section 2(B), shall not
invalidate this policy, but the liability of the Insurer for
loss under this policy shall apply only to the same extent it
would have been liable had the underlying insurance policies
been maintained as set forth above. In no event shall the
Insurer be liable to pay loss under this policy until the
total amount of the Underlying Limit of Liability, as stated
in Item 7(E) of the Declarations, has been paid solely by
reason of the payment of loss.
Section 2. LIMIT OF LIABILITY
A. The Insurer shall only be liable to make payment under this
policy after the total amount of the Underlying Limit of
Liability as stated in Item 7(E) of the Declarations has been
paid solely by reason of the payment of loss.
B. In the event of the reduction or exhaustion of the total
amount of the Underlying Limit of Liability as stated in Item
7(E) of the Declarations solely by reason of the payment of
loss, this policy shall:
1. in the event of such reduction pay excess of the reduced
amount of the Underlying Limit of Liability but not to
exceed the amount stated in Item 4 of the Declarations,
or
2. in the event of exhaustion continue in force provided
always that this policy shall only pay the excess over
the Retention amount stated in Item 5 of the Declarations
as respects each and every loss hereunder, but not to
exceed the amount stated in Item 4 of the Declarations.
C. The Insurers' liability for loss subject to paragraphs (A) and
(B) above shall be the amount stated in Item 4 of the
Declarations which shall be the maximum liability of the
Insurer in the Policy Period stated in Item 3 of the
Declarations. The Limit of Liability of the Insurer for the
Discovery Period, if elected, shall be part of, and not in
addition to, the Limit of Liability as stated in Item 4 of the
Declarations.
Section 3. LOSS PROVISIONS
The Insured(s) shall as a condition precedent to the right to be
indemnified under this policy give to the Insurer notice in
writing, as soon as practicable and during the Policy Period or
during the Discovery Period, if effective, of any claim made
against the Insured(s).
Section 4. NOTICE
Notice hereunder shall be given to St. Paul Mercury Insurance
Company, 385 Washington Street, St. Paul, MN 55102.
Section 5. CANCELLATION
This policy may be cancelled by the Corporation at any time by
mailing written notice to the Insurer at the address shown in
Section 4 stating when thereafter such cancellation shall be
effective or by surrender of this policy to the Insurer or its
authorized agent. This policy may also be cancelled by or on
behalf of the Insurer by delivering to the Corporation or by
mailing to the Corporation by registered, certified, or other first
class mail, at the Corporation's address as shown in Item 2 of the
Declarations, written notice stating when, not less than sixty (60)
days thereafter, the cancellation shall be effective. The mailing
of such notice as aforesaid shall be sufficient proof of notice.
The Policy Period terminates at the date and hour specified in such
notice, or at the date and time of surrender.
If the period of limitation relating to the giving of notice is
prohibited or made void by any law controlling the construction
thereof, such period shall be deemed to be amended so as to be
equal to the minimum period of limitation permitted by such law.
Section 6. DISCOVERY PERIOD
If the Insurer shall cancel or refuse to renew (refusal to renew is
hereafter referred to as non-renewal) this policy, the Corporation
or the Insureds shall have the right, upon payment of the
additional premium of 75% of the premium hereunder, to an extension
of the cover granted by this policy to report any claim or claims
in accordance with Section 3, which claim or claims are made
against the Insureds during the period of twelve (12) months after
the effective date of cancellation or non-renewal, herein called
the Discovery Period, but only for any Wrongful Act committed
before the effective date of such cancellation or non-renewal and
otherwise covered by this policy.
This right shall terminate, however, unless the Corporation or the
Insureds provide written notice of such election together with the
payment of the additional premium due and this is received by the
Insurer at the address shown in Section 4 within ten (10) days
after the effective date of cancellation or non-renewal.
Discovery Period wherever used in this policy shall also mean
optional extension period or extended reporting period as defined
by the policy stated in Item 8 of the Declarations.
The offer by the Insurer of renewal terms, conditions, limits of
liability and/or premiums different from those of the expiring
policy shall not constitute non-renewal.
The provisions of this Section 6 and the rights granted herein to
the Corporation or the Insureds shall not apply to any cancellation
resulting from non-payment of premium.
Section 7. NUCLEAR ENERGY LIABILITY EXCLUSION
It is agreed that:
A. This policy does not apply:
1. Under any Liability Coverage, to bodily injury or
property damage
a. with respect to which an Insured under this policy
is also an Insured under a nuclear energy liability
policy issued by Nuclear Energy Liability Insurance
Association, Mutual Atomic Energy Liability
Underwriters or Nuclear Insurance Association of
Canada, or would be an Insured under any such
policy but for its termination upon exhaustion of
its limit of liability; or
b. resulting from the hazardous properties of nuclear
material and with respect to which (1) any person
or organization is required to maintain financial
protection pursuant to the Atomic Energy Act of
1954, or any law amendatory thereof, or (2) the
Insured is, or had this policy not been issued
would be, entitled to indemnity from the United
States of America, or an agency thereof, under any
agreement entered into by the United States of
America, or any agency thereof with any person or
organization.
2. Under any Medical Payments coverage, or under any
Supplementary Payments provision relating to first aid,
to expenses incurred with respects to bodily injury
resulting from the hazardous properties of nuclear
material and arising out of the operation of a nuclear
facility by any person or organization.
3. Under any Liability Coverage, to bodily injury or
property damage resulting from the hazardous properties
of nuclear material, if
a. the nuclear material (1) is at any nuclear facility
owned by, or operated by or on behalf of an Insured
or (2) has been discharged or dispersed therefrom;
b. the nuclear material is contained in spent fuel or
waste at any time possessed, handled, used,
processed, stored, transported or disposed of by or
on behalf of an Insured, or
c. the bodily injury or property damage arises out of
the furnishing by an Insured of services,
materials, parts or equipment in connection with
the planning, construction, maintenance, operation
or use of any nuclear facility, but if such
facility is located within the United States of
America, its territories or possessions or Canada,
this exclusion (c) applies only to property damage
to such nuclear facility and any property thereat.
B. As used in this exclusion:
"hazardous properties" include radioactive, toxic or explosive
properties;
"nuclear material" means source material, special nuclear
material or by-product material;
"source material," "special nuclear material," and by-product
material have the meanings given them in the Atomic Energy Act
of 1954 or in any law amendatory thereof;
"spent fuel" means any fuel element or fuel component, solid
or liquid, which has been used or exposed to radiation in a
nuclear reactor;
"waste" means any waste material (1) containing by-product
material and (2) resulting from the operation by any person or
organization of any nuclear facility included within the
definition of nuclear facility under paragraph (1) or (2)
thereof;
"nuclear facility" means
(1) any nuclear reactor,
(2) any equipment or device designed or used for (1)
separating the isotopes of uranium or plutonium, (2)
processing or utilizing spent fuel, or (3) handling,
processing or packaging waste,
(3) any equipment or device used for the processing,
fabricating or alloying of special nuclear material if at any
time the total amount of such material in the custody of the
Insured and the premises where such equipment or device is
located consists of or contains more than 25 grams of
plutonium or uranium 233 or any combination thereof, or more
than 250 grams of uranium 235,
(4) any structure, basin, excavation, premises or place
prepared or used for the storage or disposal of waste,
and includes the site on which any of the foregoing is
located, and operations conducted on such site and all
premises used for such operations;
"nuclear reactor" means any apparatus designed or used to
sustain nuclear fission in a self-supporting chain reaction or
to contain critical mass of fissionable material, "property
damage" includes all forms of radioactive contamination of
property.
Section 8. ACTION AGAINST THE INSURER
No action shall lie against the Insurer unless, as a condition
precedent thereto, there shall have been full compliance with all
of the terms of this policy, nor until the amount of the
Corporation's obligation to pay and/or the Insureds' obligation to
pay have been finally determined either by judgment against the
Insureds after actual trial or by written agreement of the
Corporation and/or the Insureds, the claimant and the Insurer.
Any person or organization or the legal representative thereof who
has secured such judgment or written agreement shall thereafter be
entitled to recover under this policy to the extent of the
insurance afforded by this policy. No person or organization shall
have any right under this policy to join the Insurer as a party to
any action against the Corporation and/or Insureds to determine the
Insureds' liability, nor shall the Insurer be impleaded by the
Corporation and/or Insureds or their legal representatives.
Bankruptcy or insolvency of the Corporation or the Corporation's
estate, or bankruptcy or insolvency of the Insureds or the
Insureds' estate shall not relieve the Insurer of any of its
obligations hereunder.
IN WITNESS WHEREOF, the Insurer designated on the Declarations page
has caused this policy to be signed by its President and Secretary
and countersigned on the Declarations page by a duly authorized
representative of the Insurer.
Secretary President
<PAGE>
ENDORSEMENT #1
The following spaces preceded by an asterisk (*) need not be
completed if this endorsement and the policy have the same
inception date.
ATTACHED TO AND FORMING
PART OF POLICY NO.
900DX0134
ILLINOIS AMENDATORY ENDORSEMENT
M1137 Ed. 6-90
In Consideration of the premium charged, it is hereby understood
and agreed that:
1. The first paragraph under Section 5. CANCELLATION is hereby
deleted in its entirety and substituted with the following:
This policy may be cancelled by the Corporation at any time by
mailing written notice to the Insurer at the address shown in
Section 4 stating when thereafter such cancellation shall be
effective or by surrender of this policy to the Insurer or its
authorized agent. This policy may also be cancelled by or on
behalf of the Insurer by mailing to the Corporation, by registered,
certified or other first class mail, at the last mailing address
known to the Insurer, written notice stating when, not less than
sixty (60) days thereafter, the cancellation shall be effective.
All such notices shall contain the specific reason(s) for
cancellation. If this policy has been in effect for more than
sixty (60) days, the cancellation must be for one of the following
reasons:
A. Nonpayment of premium;
B. Misrepresentation or fraud made by or with the knowledge
of the Corporation or the Insureds in obtaining the
policy or in pursuing a claim under the policy;
C. A violation by any Insured of any of the terms and
conditions of the policy;
D. A substantial increase in the risk originally assumed;
E. Loss of reinsurance by the Insurer which provided
coverage to the Insurer for a significant amount of the
underlying risk insured. Certification of the loss of
reinsurance must be given to the Director of Insurance.
F. A determination by the Director of Insurance that the
continuation of the policy would place the Insurer in
violation of the insurance laws of the State of Illinois.
It is further agreed that this policy may be non renewed by or
on behalf of the Insurer by mailing written notice to the
Corporation, by registered, certified, or other first class
mail, at the last mailing address known to the Insurer. All
such notices shall contain the specific reason(s) for non
renewal. It is further agreed that non renewal of this policy
will be effective sixty (60) days after receipt of the Insured
of written notice from the Insurer of its desire to non renew
this policy, or at the time and date set forth in the notice
of non renewal, provided sixty (60) days notice has been given
the Corporation prior to said date.
2. It is further understood and agreed that Section 6. DISCOVERY
PERIOD is hereby deleted in its entirety and replaced with the
following:
If the Insurer or the Insured(s) shall cancel or refuse to
renew (refusal to renew is hereafter referred to as
non-renewal) this policy, the Corporation or the Insured(s)
shall have the right, upon payment of the additional premium
of seventy five percent (75%) of the expiring annual premium
hereunder, to report any claim or claims in accordance with
Section 3, which claim or claims are made against the
Insured(s) during the period of twelve (12) months after the
effective date of cancellation or non-renewal, herein called
the Discovery Period, but only for any Wrongful Act committed
before the effective date of such cancellation or non-renewal
and otherwise covered by this policy.
This right shall terminate, however, unless the Corporation or
the Insured(s) provide written notice of such election
together with the payment of the additional premium due and
this is received by the Insurer at the address shown in
Section 4 within thirty (30) days after the effective date of
cancellation or non-renewal.
The additional premium for the Discovery Period shall be fully
earned at the inception of the Discovery Period. The Discovery
Period is not cancelable.
Nothing herein contained shall be held to vary, alter, waive or
extend any of the terms, conditions, provisions, agreements or
limitations of the above mentioned policy, other than as above
stated.
In Witness Whereof,the Company has caused this endorsement to be
signed by a duly authorized representative of the Company.
Authorized Representative
<PAGE>
ENDORSEMENT #2
The following spaces preceded by an asterisk (*) need not be
completed if this endorsement and the policy have the same
inception date.
ATTACHED TO AND FORMING
PART OF POLICY NO.
900DX0134
PRIOR AND PENDING LITIGATION EXCLUSION
M1150 Ed. 3-90
In consideration of the premium charged, it is hereby understood
and agreed that the Insurer shall not be liable to make any payment
for loss in connection with any claim or claims made against the
Insured(s) arising from any prior or pending litigation as of
05-31-90, as well as all future claims or litigation based upon the
pending or prior litigation or derived from the same or essentially
the same facts (actual or alleged) that gave rise to the prior or
pending litigation.
Nothing herein contained shall be held to vary, alter, waive or
extend any of the terms, conditions, provisions, agreements or
limitations of the above mentioned policy, other than as above
stated.
In Witness Whereof,the Company has caused this endorsement to be
signed by a duly authorized representative of the Company.
Authorized Representative
<PAGE>
ENDORSEMENT #3
The following spaces preceded by an asterisk (*) need not be
completed if this endorsement and the policy have the same
inception date.
ATTACHED TO AND FORMING
PART OF POLICY NO.
900DX0134
In consideration of the premium charged, it is understood and
agreed that the Insurer shall not be liable to make any payment for
Loss in connection with any claim or claims made against the
Insureds, based upon, arising out of, attributable to or in any way
involving the following:
1. Panache Broadcasting of Pennsylvania, Inc. v. Richardson
Electronics, Ltd.; Varian Associates, Inc.; and Varian
Supply Company (Case No. 90 C 6400.); or
2. A contract to supply tubes to the United States
Government which was completed in 1989 as described in
Note K - Litigation on page 23 of the Richardson
Electronics, Ltd. 1994 Annual Report; or
3. Arius, Inc. v. Richardson Electronics, Ltd., Flint
Cooper, William Alexander, Kevin Dutton (case number CI.
95-202 in the Circuit Court of the Ninth Judicial Circuit
in and for Orange County, Florida)
Nothing herein contained shall be held to vary, alter, waive or
extend any of the terms, conditions, provisions, agreements or
limitations of the above mentioned policy, other than as above
stated.
In Witness Whereof,the Company has caused this endorsement to be
signed by a duly authorized representative of the Company.
Authorized Representative
<PAGE>
ENDORSEMENT #4
The following spaces preceded by an asterisk (*) need not be
completed if this endorsement and the policy have the same
inception date.
ATTACHED TO AND FORMING
PART OF POLICY NO.
900DX0134
REPORTED INCIDENTS EXCLUSION
M1117 Ed. 3-90
In consideration of the premium charged, it is hereby understood
and agreed that under this policy the Insurer shall not be liable
to make any payment for Loss in connection with any claim or claims
made against the Insured(s) arising from any circumstances of which
notice has been given under any insurance in force prior to the
inception date of this policy including any applicable discovery
period.
Nothing herein contained shall be held to vary, alter, waive or
extend any of the terms, conditions, provisions, agreements or
limitations of the above mentioned policy, other than as above
stated.
In Witness Whereof,the Company has caused this endorsement to be
signed by a duly authorized representative of the Company.
Authorized Representative
<PAGE>
RENEWAL APPLICATION
FOR DIRECTORS AND OFFICERS LIABILITY
AND CORPORATE INDEMNIFICATION
THIS IS A RENEWAL APPLICATION FOR A CLAIMS MADE POLICY
This policy includes provisions that may reduce your limit of
liability by defense costs. Defense costs are applied to the
retention(s) and loss participation amounts.
1.(a) Name of Corporation (Organization)
Richardson Electronics, Ltd.
(b) Address
40W267 Keslinger road, LaFox, IL 60147
(c) State of Incorporation (or Charter)
Delaware
2. Amount of insurance desired on renewal
(Excess of primary $15,000,000) $15,000,000
3. Stock (This question does not apply to Non-Profit
Organizations but must be answered for each for-profit subsidiary
owned more than 50 percent by a non-profit organization.)
(a) Total number of common shares outstanding Class B Common
8,196,386 3,247,159
(b) Total number of common stockholders 721 45
(c) Total number of common shares
owned directly or beneficially by Officers
6,458,215 3,232,422
(d) Total number of common shares owned
directly or beneficially by Directors,
who are not Officers 516,045 247
(e) Attach a list of names and percentages of
shareholders owning, directly or beneficially,
five percent or more of the common shares or
other class of stock.
4. Attach a list of all subsidiary corporations that are more
than 50 percent owned for which coverage is requested and
designate the percentage of ownership, nature of operations,
date acquired or created and the Directors and Officers of
each.
5. Unless such information is contained in the latest Annual
Report of the Corporation, attach a list of (a) the names of
all directors of the parent Corporation and (b) the names and
official titles of all Officers of the parent Corporation.
6. (a) Does the corporation have under consideration at
the present time or do they contemplate any
acquisitions, tender offers or mergers?
If yes, attach full details. NO
(b) Have there been any offers (including tender offers)
or negotiations to offer to purchase five percent or
more of any class of voting stock of the corporation
in the past three years or are any such offers
expected in the future?
If yes, attach full details. NO
7. Has the corporation or any subsidiary filed or contemplated
filing any new public offering of securities either pursuant
to the Securities Act of 1933 or exempt from registration
under regulation A within the past 12 months or within the
next 12 months?
If yes, attach a statement of full details including
the prospectus. YES
8. Attached and made a part of this application by reference are:
(a) Copy of last Annual Report and latest interim report.
(b) Copy of Provisions of the Charter or By-Laws drafted
within the last year covering any measures which may be
deemed to be "anti-takeover" in matter. If not
applicable, so state. NA
(c) Copy of Notice to Stockholders and the Proxy Statement
for either the last or next Annual Meeting.
(d) Copy of Form 10-K for latest fiscal year and latest 10-Q.
(e) Copy of any article about the corporation which appeared
in a business news publication within the past six months
as well as a schedule of interviews granted to news
media.
(f) Copy of form 8K Reports and 13D filed within the last 12
months.
(g) Copy of most recent Schedule of Insurance.
(h) Operational brochures (not application if 10-K
available).
9. It is agreed that this renewal application is a supplement to
the applications previously submitted to the Insurer in
conjunction with the underwriting and issuance of insurance
policies for which this policy is a renewal or replacement or
otherwise succeeds in time, and those applications together
with this application shall constitute the complete
application which shall be the basis of any quotation which
may be made.
10. The undersigned authorized Officer of the Corporation (or
Organization) declares, after inquiry, that the statements set
forth herein are true. The undersigned authorized Officer
agrees that if the information supplied on this application
changes between the date of this application and the effective
date of the insurance, the undersigned will immediately notify
the Insurer of such changes, and that the Insurer may withdraw
or modify any outstanding quotations and/or authorization or
agreement to bind the insurance.
Although the signing of this Application does not bind the
undersigned on behalf of the Corporation (or Organization), to
effect this insurance, the undersigned on behalf of the
Corporation (or Organization), agrees that this form and the
said statements shall be the basis of any insurance contract
or agreement which may be made. The Insurer is hereby
authorized to make any investigation and inquiry in connection
with this application.
KENTUCKY FRAUD WARNING: Any person who knowingly and with intent
to defraud any insurance company or other person files an
application for insurance containing any materially false
information or conceals for the purpose of misleading information
concerning any fact material thereto commits a fraudulent insurance
act, which is a crime.
NEW YORK FRAUD WARNING: Any person who knowingly and with intent
to defraud any insurance company or other person files an
application for insurance or statement of claim containing any
materially false information, or conceals for the purpose of
misleading, information concerning any fact material thereto,
commits a fraudulent insurance act, which is a crime, and shall
also be subject to a civil penalty not to exceed five thousand
dollars and the stated value of the claim for each such violation.
OHIO FRAUD WARNING: Any person, who, with intent to defraud or
knowing that he is facilitating a fraud against an insurer, submits
an application or files a claim containing a false or deceptive
statement is guilty of insurance fraud.
OKLAHOMA FRAUD WARNING: Any person who knowingly, and with intent
to injure, defraud or deceive any insurer, makes any claim for the
proceeds of an insurance policy containing any false, incomplete or
misleading information is guilty of a felony.
PENNSYLVANIA FRAUD WARNING: Any person who knowingly and with
intent to defraud any insurance company or other person files an
application for insurance or statement of claim containing any
materially false information or conceals for the purpose of
misleading, information concerning any fact material thereto
commits a fraudulent insurance act, which is a crime and subjects
such person to criminal and civil penalties.
Any indication or offer to provide coverage may include terms and
conditions which are materially different from expiring coverage.
The company shall not be obligated to provide terms in accordance
with requested coverage and terms and conditions may be offered
which are materially different from those requested.
If an order is received, the application will be attached to and
form part of the policy.
Broker or Agent
Mesirow Insurance Services. Inc.
City, State
Highland Park, IL
Date Submitted
05/10/95
Signed: Edward J. Richardson
Title: Chairman & President
Corporation (or Organization)
Richardson Electronics, Ltd.
Date: May 15, 1995
EXHIBIT 10(r)(3)
CNA INSURANCE COMPANIES
CNA Plaza.
Chicago, IL 60685
DECLARATIONS EXCESS INSURANCE POLICY
NOTICE
THIS IS A "CLAIMS-MADE" POLICY AND, SUBJECT TO ITS PROVISIONS,
APPLIES ONLY TO ANY CLAIM FIRST MADE AGAINST THE INSUREDS DURING
THE POLICY PERIOD. NO COVERAGE EXISTS FOR ANY CLAIM FIRST MADE
AFTER THE END OF THE POLICY PERIOD UNLESS, AND TO THE EXTENT, THE
EXTENDED REPORTING PERIOD APPLIES. THE LIMIT OF LIABILITY SHALL BE
REDUCED BY AMOUNTS INCURRED AS DEFENSE COSTS.
ACCOUNT NUMBER 45386
COVERAGE PROVIDED BY CONTINENTAL CASUALTY COMPANY
POLICY NUMBER DOX 600028634
AGENCY 910 701425
NAMED ENTITY AND PRINCIPAL ADDRESS
Item 1.
RICHARDSON ELECTRONICS, LTD.
40W267 KESLINGER RD.
LAFOX, IL 60147
Attn: LEONARD R. PRANGE
AGENT
NORTHBROOK RISK MANAGERS INC
ROBINA K. FISHER
3100 DUNDEE RD. STE. 205
P.O. BOX 4410 NORTHBROOK, IL 62624
(708) 564-4350
Item 2. Policy Period:
May 31, 1994 to May 31, 1995
12:01 a.m. Standard Time at the Principal Address stated in Item 1.
Item 3. Limit of Liability (Inclusive of Defense Costs):
$5,000,000 Maximum aggregate Limit of Liability for the Policy
Period.
Item 4. Schedule of Underlying Insurance:
A. Primary Policy:
Name of Carrier Federal Insurance Company
Policy No. 8125-64-60C
Limits $15,000,000
Deductible/Retention Amount 0/0/$1,000,000
B. Underlying Excess Policy(ies):
Name of Carrier Federal Insurance Company
Policy No. 443 01 66
Limits $15,000,000
Deductible/Retention Amount
Item 5. Policy Premium:
$26,300
Item 6. Forms and Endorsements forming a part of this policy at
inception: G-15920-A12, G-39543-B, G-39543-B
These Declarations along with the completed and signed Application
and the Excess Insurance Policy, shall constitute the contract
between the Insureds, the Named Entity, and the Insurer.
Authorized Representative Selwyn S. Marcus
Date: 8-23-94
CANCELLATION/NON-RENEWAL PROVISIONS
STATE OF ILLINOIS
Any cancellation or non-renewal provisions contained in the policy
to which this endorsement is attached are deleted and replaced by
the following:
I. Cancellation
A. This policy can be cancelled by either the entity named in
Item 1. of the Declarations or the Insurer.
1. The entity named in Item 1. of the Declarations can
cancel this policy at any time by mailing advance written
notice to the Insurer stating when the cancellation is to
be effective.
2. The Insurer can cancel this policy by giving written
notice to the entity named in Item 1. of the Declarations
at least:
a. 10 days before the effective date of cancellation
if cancellation is for non-payment of premium.
However, the entity named in Item 1. of the
Declarations may continue the coverage by payment
in full at any time prior to the effective date of
cancellation;
b. 30 days before the effective date of cancellation
if cancellation is for any other reason provided
that the policy has been in effect for 60 days or
less; or
c. 60 days before the effective date of cancellation
if the policy has been in effect for more than 60
days and cancellation is for any other reason as
set forth below.
B. The Insurer will mail notice to the entity named in Item
1. of the Declarations at the last mailing address known
to the Insurer, and a copy shall also be mailed to the
agent of the entity named in Item 1. of the Declarations.
C. Notice of cancellation will state the effective date of
cancellation. The policy will end on that date. The
specific reason for such cancellation shall also be
stated.
D. Proof of mailing will be sufficient proof of notice.
E. If this policy is cancelled, the Insurer will send the
entity named in Item 1. of the Declarations any premium
refund due. If the Insurer cancels, the refund will be
pro-rata. If the entity named in Item 1. of the
Declarations cancels, the refund may be less than
pro-rata.
The cancellation will be effective even if the Insurer
has not made or offered a refund.
If this policy has been in effect for more than 60 days,
the Insurer shall not cancel this policy except for one
or more of the following conditions:
1. non-payment of premium;
2. material misrepresentation;
3. a material increase in the hazard insured against;
4. violation of any terms or conditions of the policy
by the entity named in Item 1. of the Declarations;
5. substantial loss of reinsurance by the Insurer
affecting this particular type of insurance,
certified to the insurance regulatory authority;
6. a determination by the insurance regulatory
authority that continuation of the policy will
place the Insurer in violation of the insurance
laws of the state.
II. Non-Renewal
If the Insurer decides not to renew this policy, 60 days advance
written notice shall be mailed to the entity named in Item 1. of
the Declarations at the last known address.
The notice shall include the specific reason for such non-renewal.
If the Insurer offers to renew this policy at terms which involve
an increase in premium of 30% or more or changes in deductibles or
coverage that materially alter the policy, such terms will take
effect on the renewal date if the Insurer has notified the entity
named in Item 1. of the Declarations of the terms at lest 60 days
prior to the expiration date of this policy.
This endorsement, which forms a part of and is for attachment to
the following described Policy issued by the designated Insurer
takes effect on the effective date of said Policy, unless another
effective date is shown below, at the hour stated in said Policy
and expires concurrently with said Policy.
Must Be Completed
ENDT. NO. 1 POLICY NO. 600028634
PRIOR OR PENDING LITIGATION
IN CONSIDERATION OF THE PREMIUM CHARGED, IT IS HEREBY UNDERSTOOD
AND AGREED THAT THE INSURER SHALL NOT BE LIABLE TO MAKE ANY PAYMENT
FOR LOSS IN CONNECTION WITH ANY CLAIM MADE AGAINST THE DIRECTORS OR
OFFICERS BASED UPON OR ATTRIBUTABLE TO LITIGATION PRIOR TO OR
PENDING AS OF 5/31/91 INVOLVING THE COMPANY NOTED IN ITEM A OF THE
DECLARATIONS PAGE (HEREINAFTER CALLED THE COMPANY) AND/OR ITS
SUBSIDIARY(IES) AND/OR DIRECTORS OR OFFICERS OF THE COMPANY AND/OR
ITS SUBSIDIARY(IES) OR ARISING OUT OF THE FACTS OR CIRCUMSTANCES
UNDERLYING OR ALLEGED IN ANY SUCH PRIOR OR PENDING LITIGATION.
ALL OTHER PROVISIONS OF THE POLICY REMAIN UNCHANGED.
This endorsement is a part of your policy and takes effect on the
effective date of your policy, unless another effective date is
shown below.
Must Be Completed
ENDT. NO 2 POLICY NO. 600028634
PRIOR NOTICE EXCLUSION ENDORSEMENT
IT IS UNDERSTOOD AND AGREED THAT THE INSURER SHALL NOT BE LIABLE TO
MAKE ANY PAYMENT FOR LOSS IN CONNECTION WITH ANY CLAIM MADE AGAINST
THE DIRECTORS OR OFFICERS BASED UPON, ARISING OUT OF, RELATING TO,
DIRECTLY OR INDIRECTLY RESULTING FROM OR IN CONSEQUENCE OF, OR IN
ANY WAY INVOLVING:
1. ANY WRONGFUL ACT OR ANY MATTER, FACT, CIRCUMSTANCE, SITUATION,
TRANSACTION, CASUALTY, OR EVENT WHICH HAS BEEN THE SUBJECT OF
ANY NOTICE GIVEN PRIOR TO THE EFFECTIVE DATE OF THIS POLICY
UNDER ANY OTHER POLICY, OR
2. ANY OTHER WRONGFUL ACT WHICH, TOGETHER WITH A WRONGFUL ACT
WHICH HAS BEEN THE SUBJECT OF SUCH NOTICE DESCRIBED IN THE
PRECEDING CLAUSE, WOULD CONSTITUTE INTERRELATED WRONGFUL ACTS.
IT IS FURTHER UNDERSTOOD AND AGREED THAT THE TERM "INTERRELATED
WRONGFUL ACTS" IS DEFINED AS FOLLOWS:
WRONGFUL ACTS WHICH HAVE IN COMMON ANY MATTER, FACT, CIRCUMSTANCE,
SITUATION, TRANSACTION, CASUALTY OR EVENT, OR ONE OR MORE SERIES
THEREOF.
ALL OTHER PROVISIONS OF THE POLICY REMAIN UNCHANGED.
This endorsement is a part of your policy and takes effect on the
effective date of your policy, unless another effective date is
shown below.
Must Be Completed
ENDT. NO. 3 Policy No. 600028634
EXCESS INSURANCE POLICY
In consideration of the payment of the premium and in reliance on
all statements made and information furnished to Continental
Casualty Company (hereinafter called the "Insurer"), and/or to the
insurers of the Underlying Insurance, including the statements made
in the Application made a part hereof and subject to all of the
provisions of this Policy, the Insurer and the Insureds agree as
follows:
I. INSURING AGREEMENT
The Insurer shall provide the Insureds with excess coverage
over the Underlying Insurance as set forth in Item 4 of the
Declarations during the Policy Period set forth in Item 2 of
the Declarations. Coverage hereunder shall attach only after
all such Underlying Insurance has been exhausted by payments
for losses and shall then apply in conformance with the same
provisions of the Primary Policy at its inception, except for
premium, limit of liability and as otherwise specifically set
forth in the provisions of this Policy.
II. POLICY DEFINITIONS
Application shall mean the written application for this
Policy, including any materials submitted therewith, which
together shall be on file with the Insurer and deemed a part
of and attached hereto as if physically attached to this
Policy.
Named Entity means the organization named in Item 1 of the
Declarations.
Insureds means those persons or organization(s) insured under
the Primary Policy, at its inception.
Policy Period means the period from the effective date and
hour of this Policy as set forth in Item 2. of the
Declarations, to the Policy expiration date and hour set forth
in Item 2. of the Declarations, or its earlier cancellation
date or termination date, if any.
Primary Policy means the Policy scheduled in Item 4(a) of the
Declarations.
Underlying Insurance means all those Policies scheduled in
Item 4 of the Declarations and any Policies replacing them.
III. MAINTENANCE OF UNDERLYING INSURANCE
All of the Underlying Insurance scheduled in Item 4 of the
Declarations shall be maintained during the Policy Period in
full effect, except for any reduction of the aggregate
limit(s) of liability available under the Underlying Insurance
solely by reason of payment of losses thereunder. Failure to
comply with the foregoing shall not invalidate this Policy but
the Insurer shall not be liable to a greater extent than if
this condition had been complied with. To the extent that any
Underlying Insurance is not maintained in full effect during
the currency of this Policy Period, then the Insureds shall be
deemed to have retained any loss for the amount of the limit
of liability of any Underlying Insurance which is not
maintained as set forth above.
In the event of any actual or alleged (a) failure by the
Insureds to give notice or to exercise any extensions under
any Underlying Insurance or (b) misrepresentation or breach of
warranties by any of the Insureds with respect to any
Underlying Insurance, the Insurer shall not be liable
hereunder to a greater extent than it would have been in the
absence of such actual or alleged failure, misrepresentation
or breach.
It is further a condition of this Policy that the Insurer
shall be notified in writing, as soon as practicable of
cancellation and/or alteration of any provisions of any of the
policies of Underlying Insurance.
IV. LIMIT OF LIABILITY
The amount set forth in Item 3 of the Declarations shall be
the maximum aggregate Limit of Liability of the Insurer for
the Policy Period.
Costs of defense shall be part of and not in addition to the
Limit of Liability in Item 3 of the Declarations, and such
costs of defense shall reduce the Limit of Liability stated in
Item 3 of the Declarations.
V. DEPLETION OF UNDERLYING LIMIT(S)
In the event of the depletion of the limit(s) of liability of
the Underlying Insurance solely as the result of actual
payment of losses thereunder by the applicable insurers, this
Policy shall, subject to the Insurer's Limit of Liability and
to the other terms of this Policy, continue to apply to losses
as Excess Insurance over the amount of insurance remaining
under such Underlying Insurance. In the event of the
exhaustion of all of the limit(s) of liability of such
Underlying Insurance solely as a result of payment of losses
thereunder, the remaining limits available under this Policy
shall, subject to the Insurer's Limit of Liability and to the
other provisions of this Policy, continue for subsequent
losses as primary insurance and any retention specified in the
Primary Policy shall be imposed under this Policy as to each
claim made; otherwise no retention shall be imposed under this
Policy.
This Policy only provides coverage excess of the Underlying
Insurance. This Policy does not provide coverage for any loss
not covered by the Underlying Insurance except and to the
extent that such loss is not paid under the Underlying
Insurance solely by reason of the reduction or exhaustion of
the available Underlying Insurance through payments of loss
thereunder. In the event the insurer of one or more of the
Underlying Insurance policies fails to pay loss in connection
with any claim covered under the Underlying Insurance as a
result of the insolvency, bankruptcy, or liquidation of said
insurer, then the Insureds hereunder shall be deemed to have
retained any loss for the amount of the limit of liability of
said insurer which is not paid as a result of such insolvency,
bankruptcy or liquidation.
If any Underlying Insurance bears an effective date which is
prior to the effective date of this Policy and if any such
insurance becomes exhausted or impaired by payment of loss
with respect to any claim which, shall be deemed to be made
prior to the effective date of this Policy, then with respect
to any claim made after the effective date of this Policy, the
Insureds shall be deemed to have retained any loss for the
amount of any such Underlying Insurance which is exhausted or
impaired by payment of loss with respect to such claim made
prior to the effective date of this Policy.
VI. CLAIM PARTICIPATION
The Insured shall not admit liability, consent to any judgment
against them, or agree to any settlement which is reasonably
likely to involve the Limit of Liability of this Policy
without the Insurer's consent, such consent not to be
unreasonably withheld.
The Insurer may, at its sole discretion, elect to participate
in the investigation, settlement or defense of any claim
against any of the Insureds for matters covered by this Policy
even if the Underlying Insurance has not been exhausted.
All provisions of the Underlying Insurance are considered as
part of this Policy except that it shall be the duty of the
Insureds and not the duty of the Insurer to defend any claims
against any of the Insureds.
VII. SUBROGATION - RECOVERIES
In that this Policy is "Excess Coverage", the Insureds and the
Insurer's right of recovery against any person or other entity
may not be exclusively subrogated. Despite the foregoing, in
the event of any payment under this Policy, the Insurer shall
be subrogated to all the Insured's rights of recovery against
any person or organization, and the Insureds shall execute and
deliver instruments and papers and do whatever else is
necessary to secure such rights.
Any amounts recovered after payment of loss hereunder shall be
apportioned in the inverse order of payment to the extent of
actual payment. The expenses of all such recovery proceedings
shall be apportioned in the ratio of respective recoveries.
VIII. NOTICE
The Insurer shall be given notice in writing as soon as is
practicable in the event of (a) the cancellation of any
Underlying Insurance and (b) any additional or return premiums
charged or allowed in connection with any Underlying
Insurance. Notice regarding (a) and (b) above shall be given
to Manager, Directors and Officers Liability Underwriting, CNA
Insurance Companies, CNA Plaza, Chicago, Illinois 60685.
The Insurer shall be given notice as soon as practicable of
any notice of claim or any situation that could give rise to
a claim under any Underlying Insurance. Notice of any claim
to the Insurer shall be given in writing to Manager,
Professional Liability Claims, CNA Insurance Companies, CNA
Plaza, Chicago, Illinois 60685.
IX. COMPANY AUTHORIZATION CLAUSE
By acceptance of this Policy, the Named Entity named in Item
1 of the Declarations agrees to act on behalf of all the
Insureds with respect to the giving and receiving of notice of
claim or cancellations, the payment of premiums and the
receiving of any return premiums that may become due under
this Policy and the Insureds agree that the Named Entity shall
in all cases be authorized to act on their behalf.
X. ALTERATION
No change in or modification of this Policy shall be effective
except when made by endorsement signed by an authorized
employee of the Insurer or any of its agents relating to this
Policy.
XI. POLICY CANCELLATION
This Policy may be cancelled by the Named Entity at any time
by written notice or by surrender of this Policy to the
Insurer. This Policy may also be cancelled by or on behalf of
the Insurer by delivery to the Named Entity or by mailing to
the Named Entity, by registered, certified or other first
class mail, at the address shown in Item 1 of the
Declarations, written notice stating when, not less than
thirty (30) days thereafter, the cancellation shall become
effective. The mailing of such notice as aforesaid shall be
sufficient proof of notice and this Policy shall cancel at the
date and hour specified in such notice.
If the period of limitation relating to the giving of notice
is prohibited or made void by any law controlling the
construction thereof, such period shall be deemed to be
amended so as to be equal to the minimum period of limitation
permitted by such law.
The Insurer shall refund the unearned premium computed at less
than pro-rata if the Policy is cancelled in its entirety by
the Named Entity. Under any other circumstances the refund
shall be computed pro rata.
XII. EXCLUSIONS
Notwithstanding any provisions of the Underlying Insurance,
the Insurer shall not be liable to make payment for loss in
connection with any claim based upon, arising out of, relating
to, directly or indirectly resulting from, or in consequence
of, or in any way involving:
1. nuclear reaction, radiation or contamination regardless
of causes;
2. pollutants, including but not limited to loss arising out
of any:
a. request, demand or order that any of the Insureds
or others test for, monitor, clean up, remove,
contain, treat, detoxify or neutralize, or in any
way respond to, or assess the effects of
pollutants, or
b. claim by or on behalf of a governmental authority
for damages because of testing for, monitoring,
cleaning up, removing, containing, treating,
detoxifying or neutralizing or in any way
responding to or assessing the effects of
pollutants;
Pollutants means any solid, liquid, gaseous or thermal
irritant or contaminant, including smoke, vapor, soot,
fumes, acids, alkalis, chemicals and waste. Waste
includes materials to be recycled, reconditioned or
reclaimed .
XIII. CONDITIONS
No action shall be taken against the Insurer unless, as a
condition precedent, there shall have been full compliance
with all the provisions of this Policy, nor until the amount
of the Insureds obligation to pay shall have been finally
determined either by final and nonappealable judgement against
the Insureds after trial, or by written agreement of the
Insureds, the claimant and the Insurer.
RENEWAL APPLICATION FOR
DIRECTORS AND OFFICERS LIABILITY INSURANCE
NOTICE
THIS IS AN APPLICATION FOR A CLAIMS-MADE POLICY WHICH, SUBJECT TO
ITS PROVISIONS, APPLIES ONLY TO ANY CLAIM FIRST MADE AGAINST THE
DIRECTORS AND OFFICERS DURING THE POLICY PERIOD. NO COVERAGE
EXISTS FOR CLAIMS FIRST MADE AFTER THE END OF THE POLICY PERIOD
UNLESS, AND TO THE EXTENT, THE EXTENDED REPORTING PERIOD APPLIES.
THE LIMIT OF LIABILITY SHALL BE REDUCED BY AMOUNTS INCURRED AS
DEFENSE COSTS. DEFENSE COSTS SHALL BE SUBJECT TO THE RETENTION
AMOUNTS. PLEASE REVIEW THE POLICY CAREFULLY AND DISCUSS THE
COVERAGE WITH YOUR INSURANCE AGENT OR BROKER.
INSTRUCTIONS FOR COMPLETING THIS APPLICATION
Please read the instructions carefully, and complete and submit all
requested Information and required attachments. Please note that
terms appearing in bold face in the above Notice and in any
Application Question below are defined in the Policy and shall have
the same meaning in this Application as in the Policy. This
Application and all materials submitted or required shall be held
in confidence. Questions 3 and 4 need not be answered if the
information requested is contained in any required attachments.
REQUIRED ATTACHMENTS:
1. All proxy statements and Notices of Annual Meeting to
Stockholders within the last twelve months
2. Audited financial statements for the most recent three
fiscal years
3. The latest interim financial statements
4. The indemnification provisions of the charter and bylaws
5. Any filings made to the SEC within the last 12 months
Please submit this Application to:
CNA INSURANCE COMPANIES
FINANCIAL INSURANCE DIVISION - 20 SOUTH
CNA PLAZA
CHICAGO, ILLINOIS 60685
(312)
ANY PERSON WHO, WITH INTENT TO DEFRAUD OR KNOWING THAT (S)HE IS
FACILITATING A FRAUD AGAINST AN INSURER, SUBMITS AN APPLICATION OR
FILES A CLAIM CONTAINING A FALSE OR DECEPTIVE STATEMENT MAY BE
GUILTY OF INSURANCE FRAUD.
1. Named Entity: Richardson Electronics, Ltd.
Street Address: 40W267 Keslinger Road
City: LaFox State: IL Zip Code: 60147
Telephone: (708) 208-2200
2. The Officer designated by the Entity to receive notices from
the Insurer concerning this Insurance is:
Leonard R. Prange, Vice President & CFO
Questions 3 and 4 Need Not be Answered if the Information Requested
is Contained in the Required Attachments
3. Has there been any material change in the nature of the
operations within the last 12 months? No
If "Yes", provide details;
4. Stock Ownership of Named Entity
Class B Common
a.Total number of common shares outstanding: 8,039,727 3,247,543
b.Total number of common shareholders: 732 47
c.Total number of common shares owned directly
or beneficially by Directors: 6,556,591 3,273,877
d.Total number of common shares owned directly
or beneficially by Officers who are not
Directors 282,866 1,174
e.Does any shareholder own directly or beneficially
five percent or more of the common shares? Yes
If "Yes", designate name and percentage of holdings:
See attached
Include by attachment the information above (item.a-e) for any
additional classes of voting stock.
f.Are there any other securities convertible
to voting stock? Yes
If "Yes", provide details: 7-1/4% Convertible Subordinated
Debentures due Dec. 15, 2006 convertible into 3,583,161 shares of
common stock at a conversion price of $21.14 per share.
5. Have there been any changes in senior management (Board
Chairman, President, Executive Vice President, etc.) in the
last 12 months? No
If "Yes", provide details: Attached is list of officers and
directors
6. By attachment to this Application, provide the following
information for any Subsidiary acquired or created after the
effective date of the current Policy:
a. Name d. Nature of business
b. Date of acquisition e. Domestic or foreign
c. Percent of ownership f. Name of parent entity
See attached subsidiary list
7. During the last 12 months, has the Entity been involved in, or
is it presently
considering, any merger, consolidation, acquisition, tender offer,
or divestment or sale of its stock in excess of 10% of the total
stock outstanding? Yes
If "Yes" provide details: See attached press releases
8. Has the Entity filed, or contemplated filing, a registration
statement with the Securities and Exchange Commission:
a. within the past 12 months? No
b. within the next 12 months? No
If "Yes", to either of the above, provide details and furnish a
copy of such registration statement if available.
9.a. Within the last 12 months has the Named Entity or any
Subsidiary made or joined in a Schedule 13-D filing with the
Securities and Exchange Commission with respect to ownership
of the securities of another corporation? Yes
If "Yes", provide details. See Attached Schedule 13D
b. Within the last 12 months, has the Named Entity or any
Subsidiary become aware that any person, corporation or other
entity has made a Schedule 13-D filing with respect to the
ownership of the securities of the Named Entity or any
Subsidiary? Yes
If "Yes", provide details. See attached schedules
10. Please provide the following insurance information: Per your
files.
a. Pension/Fiduciary Liability Limit Carrier Expir Date
b. Commercial Crime/Fidelity Limit Carrier Expir Date
c. General Liability Limit Carrier Expir Date
11. During the last 12 months has the Entity or any of the
Directors and Officers been involved in any of the following:
a. any anti-trust, copyright or patent
litigation? Yes
b. any civil or criminal action or
administrative proceeding charging a violation of
any federal or state security law or regulation? No
c. any representative actions, class actions
or derivative suits? Yes
d. other material litigation? No
If "Yes", to any of the above, please attach full details. Per
your files
12. The undersigned declares that to the best of his/her knowledge
the statements set forth herein are true and correct and that
reasonable efforts have been made to obtain sufficient
information from all of the Directors and officers to
facilitate the proper and accurate completion of this
Application for the proposed Policy. Signing of this
Application does not bind the undersigned to complete the
insurance, but it is agreed that this Application shall be the
basis of the contract should a Policy be issued, and this
Application will be attached to and become part of such
Policy. The undersigned agrees that if after the date of this
Application and prior to the effective date of the Policy, any
occurrence, event or other circumstance should render any of
the information contained in this Application inaccurate or
incomplete, then the undersigned shall notify the Insurer of
such occurrence, event or circumstance and shall provide the
Insurer with information that would complete, update or
correct the information contained in this Application. Any
outstanding quotations may be modified or withdrawn at the
sole discretion of the Insurer.
13. It is agreed that this Renewal Application and all
Application(s) for all policies issued by the Insurer of which
the proposed Policy would be a direct or indirect renewal or
replacement, copies of which will be attached to the proposed
Policy, and any materials submitted or required (which shall
be maintained on file by the Insurer and be deemed attached as
if physically attached to the proposed Policy), are true and
are the basis of the proposed Policy and are to be considered
as incorporated into and constituting a part of the proposed
Policy.
14. The information requested in this Application is for
underwriting purposes only and does not constitute notice to
the Insurer under any Policy of a Claim or potential claim.
All such notices must be submitted to the Insurer pursuant to
Section VII of the Policy.
The undersigned acknowledges that he or she is aware that Defense
Costs reduce and may exhaust the Limit of Liability. The Insurer
is not liable for any Loss (which includes Defense Costs) in excess
of the Limit of Liability.
This Application must be signed by the Chairman of the Board or
President.
Signed Edward J. Richardson
Title Chairman and President
Corporation Richardson Electronics, Ltd.
Date March 8, 1994
A POLICY CANNOT BE ISSUED UNLESS THE APPLICATION IS PROPERLY SIGNED
AND DATED
EXHIBIT 10(s)(4)
CONSENT TO ASSIGNMENT
AND
ASSIGNMENT
This Consent to Assignment and Assignment ("Consent and
Assignment") is entered into by and between Varian Associates,
Inc., a Delaware corporation ("Varian") and Richardson Electronics,
Ltd., a Delaware corporation ("Richardson").
WHEREAS, Varian has entered into a stock sale agreement dated
June 9, 1995 ("Stock Agreement") pursuant to which Varian will
transfer substantially all of the assets of Varian's Electron
Devices business, including those of Varian's Power Grid Tube
Products business unit, to Communications & Power Industries, Inc.,
a Delaware corporation, a wholly-owned subsidiary ("Assignee"), and
sell the stock of Assignee to CPII Acquisition Corp., a Delaware
corporation ("Buyer"); and
WHEREAS, Varian desires to assign to Buyer all of Varian's
right title and interest in that certain Distributor Agreement
executed by and between Varian and Richardson on August 9, 1991,
and as subsequently amended ("Distributor Agreement"), and all
purchase orders, purchase contracts and order releases thereunder
("Contracts").
NOW, THEREFORE, Richardson hereby consents to the assignment
by Varian to Assignee of all of Varian's right title and interest
in the Distributor Agreement and the Contracts, such assignment to
become effective upon execution of this Consent and Assignment by
the parties hereto, and consummation and closing of the transaction
contemplated by the Stock Agreement. Nothing herein shall be held
or construed to release Varian from any liability whatsoever under
the Distributor Agreement or Contracts or from its covenants,
agreements and obligations thereunder, but Richardson may have such
remedies against Varian (including, without limitation, liquidated
damages as provided in the Distributor Agreement) in the same
manner as if the herein consented to assignment had not been made.
It is further agreed that the taking by Richardson of any remedy
against Assignee shall not preclude Richardson from the exercise of
such remedy against Varian, but Richardson may have the same remedy
against Varian and Assignee at the same or different times, but
Richardson shall be limited to satisfaction in the aggregate only
to the debts or obligations that may accrue under or by virtue of
the Distributor Agreement or Contracts.
IN WITNESS WHEREOF, the duly authorized representatives of the
parties hereto have executed this Consent and Assignment.
VARIAN ASSOCIATES, INC. RICHARDSON ELECTRONICS, LTD.
By: Joseph B. Phair By: Edward J. Richardson
Title: Vice President, General Title: Chairman & President
Counsel and Secretary
Signature: /s/ Joseph B. Phair Signature:/s/Edward J Richardson
Date: August 4, 1995 Date: July 27, 1995
Exhibit 11
Richardson Electronics, Ltd. and Subsidiaries
Computation of Net Income per Share
Net income (loss) per share for 1995, 1994 and 1993 was computed by
dividing net income (loss) by the weighted average number of common and common
share equivalents outstanding. The treasury stock method was applied to those
stock options that would have a dilutive effect on net income per share. The
average market price of the Company's stock was used in determining primary
income per share, while the year-end market price (if greater than the average
market price) was used in determining fully diluted net income per share.
The Company's 7 1/4% convertible debentures have not been included in the
calculation of income per share because their effect would be anti-dilutive.
Fully diluted income per share has not been presented on the face of the income
statement because it does not differ significantly from primary income per share
for each year.
(Shares and amounts in thousands) 1995 1994 1993
-------- -------- --------
Primary net income (loss) per share:
Weighted average shares outstanding 11,425 11,285 11,251
Effect of dilutive stock options 141 14 84
-------- -------- --------
Total 11,566 11,299 11,335
======== ======== ========
Net income (loss) before extraordinary item $ 2,481 $(19,809) $ 2,802
Extraordinary gain on bond repurchase 527 -- --
-------- -------- --------
Net income (loss) $ 3,008 $(19,809) $ 2,802
======== ======== ========
Per share amounts:
Net income (loss) before extra-
ordinary item $ .21 $ (1.75) $ .25
Extraordinary gain on bond repurchase .05 -- --
-------- -------- --------
Net income (loss) per share $ .26 $ (1.75) $ .25
======== ======== ========
Fully diluted net income per share:
Weighted average shares outstanding 11,425 11,285 11,251
Effect of dilutive stock options 174 14 98
-------- -------- --------
Total 11,599 11,299 11,349
======== ======== ========
Net income (loss) before extra-
ordinary item $ 2,481 $(19,809) $ 2,802
Extraordinary gain on bond repurchase 527 -- --
-------- -------- --------
Net income (loss) $ 3,008 $(19,809) $ 2,802
======== ======== ========
Per share amounts:
Net income (loss) before extra-
ordinary item $ .21 $ (1.75) $ .25
Extraordinary gain on bond repurchase .05 -- --
-------- -------- --------
Net income (loss) per share $ .26 $ (1.75) $ .25
======== ======== ========
The following portions of the Company's Annual Report to Stockholders for the
Year Ended May 31, 1995 are incorporated by reference. The page numbers as
indicated are the same as the printed copy which was distributed to the
shareholders.
<TABLE>
Five-Year Financial Review
<CAPTION>
Statement of Operations Data Year Ended May 31
(in thousands, except per share amounts) 1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net sales $208,118 $172,094 $159,215 $158,789 $161,146
Cost of products sold 148,085 124,703 111,620 109,600 115,401
Other charges <F1> -- 26,500 -- -- 20,000
Selling, general and administrative expenses 53,374 41,226 38,070 40,947 41,890
Other expense, net 4,028 5,874 5,023 5,385 8,397
-------- -------- -------- -------- --------
Income (loss) before income taxes
and extraordinary item 2,631 (26,209) 4,502 2,857 (24,542)
Income tax provision (benefit) 150 (6,400) 1,700 1,150 (8,329)
-------- -------- -------- -------- --------
Income (loss) before extraordinary item 2,481 (19,809) 2,802 1,707 (16,213)
Extraordinary gain on bond repurchase 527 -- -- 2,290
-------- -------- -------- -------- --------
Net income (loss) $ 3,008 $(19,809) $ 2,802 $ 1,707 $(13,923)
======== ======== ======== ======== ========
Net income (loss) per share:
Before extraordinary item $ .21 $ (1.75) $ .25 $ .15 $ (1.46)
Extraordinary gain on bond repurchase .05 -- -- .21
-------- -------- -------- -------- --------
Net income (loss) per share $ .26 $ (1.75) $ .25 $ .15 $ (1.25)
======== ======== ======== ======== ========
Dividends per common share $ .16 $ .16 $ .16 $ .16 $ .16
======== ======== ======== ======== ========
Balance Sheet and Other Data May 31
(dollars in thousands) 1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
Receivables $ 42,768 $ 34,901 $ 30,267 $ 27,488 $ 26,711
Inventories 81,267 73,863 86,955 84,427 88,661
Working capital, net 106,235 96,494 103,987 103,165 97,332
Investments 7,070 17,836 29,080 28,785 31,056
Property, plant and equipment, net 16,388 16,932 36,242 39,328 42,013
Total assets 173,514 179,467 205,043 205,837 214,723
Long-term debt 79,647 86,421 98,855 101,456 103,163
Stockholders' equity 56,154 52,573 75,417 76,009 73,383
Employees at May 31 540 654 683 655 693
Stockholders 758 785 778 819 789
<FN>
<F1> In 1995, the Company recorded a charge of $4,700,000 for the
settlement of a U. S. Government claim related to a 1989 contract.
In 1994, the Company established a $26,500,000 provision, including
$21,400,000 for the estimated costs of a plan to dispose of its
manufacturing operations in Brive, France, and $5,100,000 for
incremental costs related to a provision established in 1991. The
1991 charge provided $20,000,000 for the estimated costs of the
settlement of a Department of Justice investigation and related
matters and the phase-down of domestic manufacturing operations.
</FN>
</TABLE>
Page 10
Management's Discussion and Analysis
Results of Operations
Sales and Gross Margin Analysis
The Company is a value-added distributor of electronic components,
considered to be one industry segment. The marketing and sales organization of
the Company is divided into four strategic business units (SBUs): Electron
Device Group (EDG), Solid State and Components (SSC), Display Products Group
(DPG) and Security Systems Division (SSD). Consolidated sales in fiscal 1995
were a record $208.1 million. Sales and gross margin by SBU are presented in the
following table. Gross margin for each SBU reflects the distribution product
margin less overstock and other inventory reserves. Manufacturing variances and
miscellaneous costs are included under the caption "other".
Sales
(in thousands) 1995 % 1994 % 1993 %
-------- ----- -------- ----- -------- -----
EDG $105,454 50.7 $ 91,736 53.2 $ 97,846 61.4
SSC 52,409 25.2 42,274 24.6 31,619 19.9
DPG 36,502 17.5 27,150 15.8 19,076 12.0
SSD 13,753 6.6 10,934 6.4 10,674 6.7
-------- ----- -------- ----- -------- -----
Consolidated $208,118 100.0 $172,094 100.0 $159,215 100.0
======== ===== ======== ===== ======== =====
Gross Margins
(in thousands) 1995 % 1994 % 1993 %
-------- ----- -------- ----- -------- -----
EDG $ 30,884 29.3 $ 27,897 30.4 $ 31,894 32.6
SSC 16,416 31.3 14,117 33.4 11,213 35.5
DPG 12,463 34.1 9,090 33.5 6,598 34.6
SSD 3,037 22.1 2,468 22.6 2,360 22.1
-------- -------- --------
Total 62,800 30.2 53,572 31.1 52,065 32.7
-------- -------- --------
Other (2,767) (6,181) (4,470)
-------- -------- --------
Consolidated $ 60,033 28.8 $ 47,391 27.5 $ 47,595 29.9
======== ========= =========
On a geographic basis, the Company categorizes its sales by destination:
North America, Europe and Rest of World. Sales and product margin by geographic
area were as follows (product margins exclude inventory and manufacturing
provisions, which are not practical to identify by area):
Sales
(in thousands) 1995 % 1994 % 1993 %
-------- ----- -------- ----- -------- -----
North America $123,508 59.4 $102,870 59.8 $ 93,724 58.8
Europe 46,071 22.1 37,699 21.9 35,942 22.6
Rest of World 38,539 18.5 31,525 18.3 29,549 18.6
-------- ----- -------- ----- -------- -----
Consolidated $208,118 100.0 $172,094 100.0 $159,215 100.0
======== ===== ======== ===== ======== =====
Product Margins
(in thousands) 1995 % 1994 % 1993 %
-------- ----- -------- ----- -------- -----
North America $ 37,489 30.4 $ 32,845 31.9 $ 31,730 33.9
Europe 15,163 32.9 12,529 33.2 12,723 35.4
Rest of World 11,325 29.4 9,944 31.5 9,544 32.3
-------- -------- --------
Consolidated $ 63,977 30.7 $ 55,318 32.1 $ 53,997 33.9
======== ======== ========
Sales growth in all three areas exceeded 20% in 1995, while product margins
increased at a slightly slower pace. International sales were negatively im-
pacted in 1993 and 1994 by economic conditions, particularly in Europe, and by
changes in exchange rates as the U. S. dollar strengthened. Approximately 39% of
the Company's sales are denominated in currencies other than the U. S. dollar.
Foreign exchange rate changes increased these sales by an average of 5% in 1995
and reduced them by 9% in 1994.
Sales and gross margin trends are analyzed for each strategic business unit
in the following sections.
Electron Device Group
EDG realized sales gains of 15% in 1995, successfully reversing the
previous trend. The vacuum tube industry, in which EDG operates, is
characterized by mature products, the emergence of tube rebuilders, and vigorous
price competition. Several initiatives contributed to provide new growth areas
for EDG. A primary factor was greater emphasis on overseas markets, as
international sales increased at a 19% rate, now accounting for 57% of EDG's
sales. Additionally, the group expanded its sales force serving the medical
electronics replacement market. Demand in the medical/replacement market for x-
ray, computed tomography (CT), medical resonance imaging (MRI) and radiation
therapy components is expected to continue to increase in response to the desire
to control rising medical costs. Gross margins as a percent of sales for EDG
were 29.3% in 1995, compared to 30.4% in 1994 and 32.6% in 1993, reflecting
increased competition, changes in product mix and, in 1995, higher costs for
products previously manufactured by the Company and now purchased from the
Brive, France, management group.
Solid State and Components
This group operates in several markets, including the rapidly growing
wireless and telecommunications markets. Sales increased 24% in 1995 to $52.4
million, following a 34% increase in 1994. The reorganization and expansion of
the sales force on a specialty basis in 1992 was a major factor contributing to
SSC's growth. A significant portion of the sales increase represents expansion
of product lines and the addition of major manufacturers of RF and microwave
components to support expanding technologies. International sales, growing at a
slower pace than domestic sales, represented 36%, 37% and 40% of SSC's sales in
1995, 1994 and 1993, respectively. Gross margin gains, under competitive
pressure, increased at a lesser rate than sales.
Page 11
Display Products Group
DPG sales increased 34% in 1995 to $36.5 million, following a 42% increase
in 1994. Sales growth in North America benefited from the implementation of the
specialty sales force and the addition of significant new customers for major
original equipment manufacturer and multi-vendor repair programs. Sales growth
is expected to continue in the replacement market for cathode ray tubes and
related products. The product mix for DPG is shifting from monochrome CRTs to
higher-priced color CRTs, which have increased from 9% of units sold in 1993 to
11% in 1994 and 16% in 1995. During 1995, DPG established a relationship with a
supplier for additional products, including flybacks, complimentary to the
group's line of CRT's. Sales growth benefited from the addition of these new
products. International sales represented 35%, 33% and 30% of DPG's sales in
1995, 1994 and 1993, respectively.
Security Systems Division
SSD operates in the rapidly expanding closed-circuit television market. The
Company made a substantial investment in SSD in 1995, doubling the size of its
sales staff. This strategy contributed to the 26% sales growth in 1995, and is
expected to accelerate growth in 1996. International sales, primarily in Canada,
represented 40% of SSD's sales in 1995 and 1994, and 34% in 1993.
Cost of Sales, Gross Margins and Other Charges
The following table reconciles product margins on distribution activities
to gross margins reported in the Statements of Operations:
(% of sales) 1995 1994 1993
------- ------- -------
Product margin on distribution 30.7 % 32.1 % 33.9 %
Manufacturing variances and
warranty costs (0.5) (2.9) (2.2)
Overstock provisions (0.5) (0.9) (0.8)
Other costs (0.9) (0.8) (1.0)
------- ------- -------
Gross margin 28.8 % 27.5 % 29.9 %
======= ======= =======
Fluctuations in distribution margins reflect the effects of higher product
costs, foreign exchange rate variations, and changes in product mix. Average
selling prices, excluding the effects of foreign currency changes, declined
1.1% in 1995 and increased 0.7% in 1994.
For several years prior to 1995, gross margins were negatively impacted by
underutilization of capacity, manufacturing inefficiencies and manufactured
product warranties. As a result, management developed a plan to phase down its
involvement in manufacturing. In 1994, the Company recorded a charge of $26.5
million to provide for this phase-down, including $21.4 million for asset write-
downs and costs related to a plan to divest the Company's Brive, France,
operations. The balance, $5.1 million, was for the phase-down of domestic
manufacturing operations. Ownership of the Brive facility was transferred to
local management in 1995 and the manufacturing phase-down was completed with no
additional charges required in 1995. Details of management's plan and the
related costs are presented in Note B to the accompanying consolidated financial
statements.
Gross margins increased to 28.8% of sales in 1995, primarily due to the
elimination of manufacturing inefficiencies.
In May 1995, under an agreement with the United States Department of
Justice (DOJ), the Company paid $4.7 million in return for the release of
monetary claims related to a 1989 contract for certain night-vision tubes. The
original claim was in excess of $11 million.
Selling, General and Administrative Expenses
Selling, general and administrative expenses represented 23.4% of sales in
1995, 24.0% in 1994 and 23.9% in 1993. At $48.7 million, 1995 expenses increased
$7.5 million over 1994, reflecting the expansion of the SSC, SSD and
international sales forces, as well as translation of foreign denominated
expenses into weaker U.S. dollars and incentive payments on increased gross
margins.
Other (Income) Expense
Interest expense declined 15% in 1995 due to the elimination of the debt on
the Company's facility in Brive, France. Title to this facility was transferred
to the mortgage holder in exchange for cancellation of the debt. Investment
income was $1.9 million in 1995, $2.4 million in 1994 and $3.2 million in 1993.
Investment income declined in 1995 and 1994, reflecting lower investment levels
and lower realized capital gains. The remaining other (income) expense is
primarily the result of foreign exchange (gains) losses, which were $(0.3)
million in 1995, $0.6 million in 1994 and $0.5 million in 1993.
Income Tax Provision
The effective tax rates were 6% in fiscal 1995, 24% in 1994 and 38% in
1993. The 1995 rate differs from the U. S. statutory rate of 34% as a result of
the carryback of the $4.7 million DOJ settlement to prior years with a 46%
statutory rate. The 1994 rate differs from the 34% U. S. statutory rate
primarily as a result of the provision for the disposition of the Company's
French manufacturing operations, which for financial reporting purposes resulted
in a U. S. tax benefit at a lower rate (See Note F to the accompanying consoli-
dated financial statements). The rate in 1993 was higher than the federal
statutory rate due to state income taxes and foreign net operating losses for
which no benefit was realized.
Page 12
Net Income (Loss) and per Share Data
Net income was $3.0 million or $.26 per share in 1995, including the effect
of an extraordinary gain of $.5 million, net of tax, or $.05 per share on the
repurchase of a portion of the Company's convertible debentures, and a charge of
$2.3 million, net of tax, for the settlement of the DOJ claim. The net loss of
$19.8 million or $1.75 per share in 1994 includes the provision for the phase-
down of manufacturing operations, which had an after-tax effect of $19.5
million, or $1.73. Net income in 1993 was $2.8 million or $.25 per share.
Financial Condition
Liquidity
Liquidity is provided by the operating activities of the Company, adjusted
for non-cash items, and is reduced by working capital requirements, debt
service, and capital equipment acquisitions.
Cash provided by operations, exclusive of working capital requirements, was
$7.9 million in fiscal 1995, $5.8 million in 1994 and $9.1 million in 1993.
Higher working capital requirements of $14.6 million in 1995, $8.1 million in
1994 and $3.1 million in 1993 and debt service and dividend payments were met
from cash generated by operations, liquidation of investments and additional
borrowings.
Working capital requirements included higher receivables and inventories to
support rising sales. The Company's market niche as a distributor of electron
tubes and semiconductors for replacement results in relatively high levels of
inventory due to the nature of the product carried and the markets served. Many
of these products represent trailing-edge technology which may not be available
from other sources, and may not be currently manufactured. Also, in many cases,
the products are components of production equipment for which immediate
availability is critical to the customer.
Working capital requirements in 1995 also included $6.3 million for
severance and other costs related to the disposition of the Company's Brive
manufacturing facility. Working capital requirements in 1994 included $2.0
million for the payment of an IRS tax settlement.
The Company has proposed a plan to the Illinois Environmental Protection
Agency to monitor and process groundwater contaminated by certain solvents as a
result of handling practices previously employed at the LaFox facility. Costs of
remediation are not presently determinable, but are not anticipated to be
material.
Financing
In May 1995, the Company borrowed $8.0 million from its principal bank by
issuing an unsecured promissory note due August 31, 1995. The proceeds were used
to pay the $4.7 million DOJ settlement and to repurchase a portion of the
Company's 7 1/4% convertible debentures. During 1996, the Company anticipates
re-negotiating and consolidating its bank term loan and $8 million note under a
new credit agreement.
The indenture related to the Company's 7 1/4% convertible debentures, contain
certain restrictions relating to the purchase of treasury stock and the payment
of cash dividends. At May 31, 1995, $2.9 million was free of such restrictions.
Payment of dividends will be considered quarterly.
Investments
At May 31, 1995, the Company's non-current investments were approximately
$7.1 million. Management regularly monitors its investment portfolio per-
formance, including its high-yield bonds. These funds are being maintained for
corporate purposes, including short-term operating needs and strategic
acquisitions of product lines or businesses.
Currency Fluctuations
The Company's foreign denominated assets and liabilities are cash, accounts
receivable and accounts payable, primarily in member countries of the European
community, and, to a lesser extent, in Canada, Singapore and Japan. The Company
monitors its foreign exchange exposures and may enter into forward contracts to
hedge significant transactions. Other tools which may be used to manage foreign
exchange exposures include the use of currency clauses in sales contracts and
the use of local debt to offset asset exposures.
Page 13
Consolidated Balance Sheets
May 31
(in thousands) 1995 1994
--------- ---------
Assets
Current assets
Cash and equivalents $ 11,151 $ 9,739
Receivables, less allowance of $1,385 and $1,405 42,768 34,901
Inventories - Note A 81,267 73,863
Assets held for disposition, less valuation
reserve of $ 15,832 - Note B -- 10,274
Other 8,762 8,190
-------- --------
Total current assets 143,948 136,967
Investments - Note D 7,070 17,836
Property, plant and equipment, net - Note A 16,388 16,932
Other assets - Note A 6,108 7,732
-------- --------
Total assets $173,514 $179,467
======== ========
Liabilities and stockholders' equity
Current liabilities
Accounts payable $ 16,695 $ 10,925
Liabilities related to disposition - Note B -- 15,842
Accrued liabilities - Note G 11,161 11,839
Short-term debt and current maturities of
long-term debt - Note E 9,857 1,867
-------- --------
Total current liabilities 37,713 40,473
Long-term debt, less current portion - Note E 79,647 86,421
-------- --------
Total liabilities 117,360 126,894
Stockholders' equity - Notes E and H
Common Stock, $.05 par value 411 403
Class B Common Stock, convertible, $.05 par value 162 162
Preferred Stock, $1.00 par value -- --
Additional paid-in capital 49,989 49,352
Retained earnings 6,141 4,912
Foreign currency translation adjustment (686) (2,383)
Market appreciation on investments, net of
tax - Note D 137 127
-------- --------
Total stockholders' equity 56,154 52,573
-------- --------
Total liabilities and stockholders' equity $173,514 $179,467
======== ========
See notes to consolidated financial statements.
Page 14
Consolidated Statements of Operations
Year Ended May 31
(in thousands, except per share amounts) 1995 1994 1993
-------- -------- --------
Net sales $208,118 $172,094 $159,215
Costs and expenses:
Cost of products sold 148,085 124,703 111,620
Other charges - Note B -- 26,500 --
Selling, general and administrative
expenses 53,374 41,226 38,070
-------- -------- --------
201,459 192,429 149,690
-------- -------- --------
Operating income (loss) 6,659 (20,335) 9,525
Other (income) expense:
Interest expense 6,473 7,631 7,676
Investment income - Note D (1,863) (2,442) (3,216)
Other (582) 685 563
-------- -------- --------
4,028 5,874 5,023
-------- -------- --------
Income (loss) before income taxes
and extraordinary item 2,631 (26,209) 4,502
Income tax provision (benefit) - Note F 150 (6,400) 1,700
-------- -------- --------
Income (loss) before extraordinary item 2,481 (19,809) 2,802
Extraordinary gain on bond repurchase,
net of income taxes of $337 - Note E 527 -- --
-------- -------- --------
Net income (loss) $ 3,008 $(19,809) $ 2,802
======== ======== ========
Net income (loss) before extraordinary item $ .21 $ (1.75) $ .25
Extraordinary gain on bond repurchase .05 -- --
-------- -------- --------
Net income (loss) per share $ .26 $ (1.75) $ .25
======== ======== ========
Average shares outstanding 11,566 11,299 11,335
======== ======== ========
Dividends per common share $ .16 $ .16 $ .16
======== ======== ========
See notes to consolidated financial statements.
Page 15
Consolidated Statements of Cash Flows
Year Ended May 31
(in thousands) 1995 1994 1993
-------- -------- --------
Operating Activities:
Net income (loss) $ 3,008 $(19,809) $ 2,802
Adjustments to reconcile net income
(loss) to cash (used in) provided by
operating activities:
Depreciation 2,669 4,753 5,150
Amortization of intangibles and
financing costs 427 964 1,353
Deferred income taxes 1,310 (6,717) (309)
Stock contribution to employee
ownership plan 500 125 125
Phase-down of manufacturing operations - Note B -- 26,500 --
-------- -------- --------
Net adjustments 4,906 25,625 6,319
-------- -------- --------
Net income (loss) adjusted for
non-cash items 7,914 5,816 9,121
Changes in working capital, net of
effects of currency translation:
Receivables (7,215) (5,132) (3,182)
Inventories (5,600) 1,197 (3,574)
Other current assets (429) (928) 1,105
Accounts payable 5,079 (770) 1,728
Accrued liabilities (6,437) (2,485) 812
-------- -------- --------
Net changes in working capital (14,602) (8,118) (3,111)
-------- -------- --------
Net cash (used in) provided by
operating activities (6,688) (2,302) 6,010
-------- -------- --------
Financing Activities:
Proceeds from borrowings 8,000 13,770 6,390
Payments on debt (6,784) (16,641) (8,811)
Proceeds from sale of common stock 145 71 118
Cash dividends (1,779) (1,754) (1,749)
-------- -------- --------
Net cash used in financing activities (418) (4,554) (4,052)
-------- -------- --------
Investing Activities:
Sales of investments 22,118 29,796 23,243
Purchases of investments (11,335) (18,343) (23,538)
Capital expenditures (2,703) (2,164) (2,313)
Other 438 208 (325)
-------- -------- --------
Net cash provided by (used in)
investing activities 8,518 9,497 (2,933)
-------- -------- --------
Increase (decrease) in cash and
equivalents 1,412 2,641 (975)
Cash and equivalents at beginning
of year 9,739 7,098 8,073
-------- -------- --------
Cash and equivalents at end of year $ 11,151 $ 9,739 $ 7,098
======== ======== ========
See notes to consolidated financial statements.
Page 16
<TABLE>
Consolidated Statements of Stockholders' Equity
<CAPTION>
Shares Issued
-------------- Additional Market
(shares and dollars Class B Par Paid-in Retained Foreign Appre-
in thousands) Common Common Value Capital Earnings Currency ciation Total
------ ------ ------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance June 1, 1992 7,987 3,248 $ 561 $48,917 $25,422 $ 1,109 $ -- $76,009
Shares contributed to
ESOP - Note I 15 -- 1 124 -- -- -- 125
Shares issued under
ESPP and stock
option plan - Note H 17 -- 1 117 -- -- -- 118
Dividends -- -- -- -- (1,749) -- -- (1,749)
Currency translation -- -- -- -- -- (1,888) -- (1,888)
Net income -- -- -- -- 2,802 -- -- 2,802
------ ------ ------ ------- ------- ------- ------- -------
Balance May 31, 1993 8,019 3,248 563 49,158 26,475 (779) -- 75,417
Shares contributed to
ESOP - Note I 20 -- 1 124 -- -- -- 125
Shares issued under
ESPP and stock
option plan - Note H 17 -- 1 70 -- -- -- 71
Dividends -- -- -- -- (1,754) -- -- (1,754)
Currency translation -- -- -- -- -- (1,604) -- (1,604)
Cumulative effect of
adoption of FASB
statement 115 - Note D -- -- -- -- -- -- 127 127
Net loss -- -- -- -- (19,809) -- -- (19,809)
------ ------ ------ ------- ------- ------- ------- -------
Balance May 31, 1994 8,056 3,248 565 49,352 4,912 (2,383) 127 52,573
Shares contributed to
ESOP - Note I 133 -- 7 493 -- -- -- 500
Shares issued under
ESPP and stock
option plan - Note H 35 -- 1 144 -- -- -- 145
Conversion of Class B shares
to common shares 1 (1) -- -- -- -- -- --
Dividends -- -- -- -- (1,779) -- -- (1,779)
Currency translation -- -- -- -- -- 1,697 -- 1,697
Market appreciation - Note D -- -- -- -- -- -- 10 10
Net loss -- -- -- -- 3,008 -- -- 3,008
------ ------ ------ ------- ------- ------- ------- -------
Balance May 31, 1995 8,225 3,247 $ 573 $49,989 $ 6,141 $ (686) $ 137 $56,154
====== ====== ====== ======= ======= ======= ======= =======
</TABLE>
See notes to consolidated financial statements.
Page 17
Notes to Consolidated Financial Statements
Note A -- Significant Accounting Policies
Principles of Consolidation: The consolidated financial statements include
the accounts and operations of the Company and its subsidiaries. All significant
intercompany transactions are eliminated.
Cash Equivalents: The Company considers short-term investments that have a
maturity of three months or less, when purchased, to be cash equivalents. The
carrying amounts reported in the balance sheet for cash and equivalents
approximate the fair market value of these assets.
Inventories: Inventories are stated at the lower of cost or market.
Inventory costs determined using the last-in, first-out (LIFO) method represent
84% and 78% of total inventories at May 31, 1995 and 1994, respectively. The
remaining inventories are costed on the first-in, first-out (FIFO) method. If
the FIFO method, which approximates current costs, had been used for all
inventories, the total amount of inventories would have been increased by
$5,742,000 and $5,653,000 at May 31, 1995 and 1994, respectively. Substantially
all inventories represent finished goods held for sale.
Property, Plant and Equipment: Property, plant and equipment are stated at
cost. Provisions for depreciation are computed principally using the straight-
line method for financial reporting purposes and accelerated methods for income
tax purposes. Property, plant and equipment consist of the following:
May 31
(in thousands) 1995 1994
--------- ---------
Land and improvements $ 2,741 $ 2,618
Buildings and improvements 18,068 18,508
Machinery and equipment 20,039 20,482
--------- ---------
Property at cost 40,848 41,608
Accumulated depreciation (24,460) (24,676)
--------- ---------
Property, net $ 16,388 $ 16,932
========= =========
Other assets: Goodwill and other deferred charges are amortized using the
straight-line method over the expected economic life of the assets. Deferred
financing costs are amortized over the term of the related indebtedness by the
interest method. Deferred income taxes reverse as benefits are realized. Other
assets consist of the following:
May 31
(in thousands) 1995 1994
--------- ---------
Deferred income taxes $ 2,137 $ 3,405
Deferred financing costs 2,634 2,634
Goodwill 3,740 3,651
Other deferred charges 1,604 1,609
--------- ---------
Other assets at cost 10,115 11,299
Accumulated amortization (4,007) (3,567)
--------- ---------
Other assets, net $ 6,108 $ 7,732
========= =========
Foreign Currency Translation: Foreign currency transactions and financial
statements are translated into U. S. dollars at current rates, except that
revenues, costs and expenses are translated at average rates during each
reporting period. Gains and losses resulting from foreign currency transactions
are included in income currently. Foreign currency transaction gains (losses)
reflected in operations were $316,000, $(607,000), and $(480,000) in 1995, 1994,
and 1993, respectively. Gains and losses resulting from translation of foreign
financial statements are credited or charged directly to a separate component of
shareholders' equity.
Revenue Recognition: Revenues are recorded upon shipment.
Income taxes: Deferred tax assets and liabilities are determined based on
differences between financial reporting and tax basis of assets and liabilities
and are measured using the enacted marginal tax rates.
Earnings per Share: Earnings per share are based on the weighted average
number of Common and Class B Common shares outstanding and share equivalents
that would arise from the exercise of stock options. The 7 1/4% Convertible
Subordinated Debentures were not included as share equivalents because the
effect of conversion would be anti-dilutive.
Reclassifications: Certain amounts in the 1993 and 1994 financial
statements have been reclassified to conform to the 1995 presentation.
Note B -- Other Charges
In March, 1994, the Company announced that the U. S. Department of Justice
of approximately $11 million under the False Claims Act and the Lanham Act in
connection with a Department of Defense contract for night-vision tubes that was
completed in 1989. In May, 1995 the Company reached an agreement with the DOJ
and paid $4.7 million to the Government in return for a release of monetary
claims in connection with the contract.
In 1994, the Company recorded a charge of $26,500,000 to provide for the
costs and asset write-downs from the phase-down of its involvement in
manufacturing operations. Of the charge, $21,400,000 consisted of the write-down
of assets to net realizable value and the accrual of severance and other costs
associated with disposition of the Company's Brive, France facility. The balance
of the charge, $5,100,000, related to the phase-down of domestic manufacturing
operations.
In 1995, the Company transferred ownership of the Brive operations to local
management, and ownership of the Brive land and building was returned to the
City of Brive, in exchange for release from the related mortgage obligation. The
costs incurred were consistent with the provision made in 1994, and no further
charges were recorded in 1995.
Page 18
The assets, adjusted to net realizable value, and the liabilities of the
French manufacturing operations were segregated and classified as current assets
and liabilities in the consolidated balance sheet at May 31, 1994.
The phase-down of domestic operations was substantially completed in 1995,
except for the Panache litigation described in Note K and clean-up costs and
environmental monitoring related to handling practices previously employed for
certain solvents at the Company's LaFox, Illinois facility. The Company has
proposed a plan to the Illinois Environmental Protection Agency to monitor and
process groundwater at the LaFox facility. Costs of remediation are not
presently determinable, but are not anticipated to be material.
Note C -- Marketing Agreements
The Company has entered into several marketing distribution agreements with
various manufacturers in the electron tube and semiconductor businesses. The
most significant is a distribution agreement with the Electron Device Group of
Varian Associates, Inc. Product sales under this distribution agreement
accounted for 17%, 18%, and 20%, of net sales of the Company in fiscal 1995,
1994, and 1993, respectively.
Note D -- Investments
In May 1993, the Financial Accounting Standards Board issued Statement No.
115, "Accounting for Certain Investments in Debt and Equity Securities" (the
Statement). The Company adopted the provisions of the Statement for investments
held as of May 31, 1994. The Statement requires investments to be classified as
trading, available-for-sale or held-to-maturity. Management has determined the
Company's investments are properly classified as available-for-sale. In
accordance with the Statement, prior period financial statements have not been
restated to reflect the change in accounting principle. The cumulative effect,
at May 31, 1994, of adopting the Statement increased shareholders' equity by
$127,000 (net of $82,000 in deferred income taxes) to reflect the net unrealized
gains on securities classified as available-for-sale previously carried at cost.
The investment portfolio at May 31, 1995 and 1994 is stated at fair value
based on quoted market prices or dealers' quotes and consists of securities
available-for-sale, as follows:
Gross Gross Estimated
Unrealized Unrealized Fair
(in thousands) Cost Gains Losses Value
-------- -------- -------- --------
At May 31, 1995:
Corporate bonds $ 417 $ 5 $ -- $ 422
Convertible bonds 1,189 55 (113) 1,131
Other bonds 1,310 80 (36) 1,354
Equity securities 3,929 567 (333) 4,163
-------- -------- -------- --------
Total investments $ 6,845 $ 707 $ (482) $ 7,070
======== ======== ======== ========
At May 31, 1994:
Corporate bonds $ 8,357 $ 18 $ (35) $ 8,340
Convertible bonds 1,954 152 (39) 2,067
Other bonds 1,318 48 (27) 1,339
Equity securities 5,998 349 (257) 6,090
-------- -------- -------- --------
Total investments $ 17,627 $ 567 $ (358) $ 17,836
======== ======== ======== ========
The maturity schedule for securities available-for-sale at May 31, 1995 is as
follows:
Estimated
Fair
(in thousands) Cost Value
-------- --------
Due in one year or less $ 812 $ 812
Due after one year through five years 1,678 1,626
Due after five years through ten years 426 469
-------- --------
Total bonds 2,916 2,907
Equity securities 3,929 4,163
-------- --------
Total investments $ 6,845 $ 7,070
======== ========
Interest and dividend income are accrued as earned. Gains and losses are
recognized in income on the investment portfolio when securities are sold or to
reflect a decline in market value estimated by management to be of a permanent
nature. Investment income includes capital gains of $1,205,000 in 1995,
$1,292,000 in 1994 and $1,526,000 in 1993. Of these amounts, sales of equity
securities generated gains of $1,044,000, $739,000 and $1,301,000, respectively.
Note E -- Debt Financing
Long-term debt consists of the following:
(in thousands) 1995 1994
-------- --------
7 1/4% Convertible subordinated debentures
due 2006 $ 70,825 $ 75,735
Floating-rate bank term loan due
November, 1998 (7.69% at May 31, 1995) 10,679 12,536
Other -- 17
-------- --------
Total debt 81,504 88,288
Less current maturities 1,857 1,867
-------- --------
Long-term debt, net $ 79,647 $ 86,421
======== ========
The 7 1/4% convertible subordinated debentures are unsecured and
subordinated to other long-term debt. Each $1,000 debenture is convertible into
the Company's Common Stock at any time prior to maturity at $21.14 per share and
is redeemable by the Company at a premium through 1996. The Company is required
Page 19
to make sinking fund payments on December 15 of each year from 1996 to 2005 in
order to retire 75% of the original $83,000,000 issue prior to maturity, of
which $12,175,000 has been repurchased and will be used to satisfy a portion of
the sinking fund requirement. Sinking fund requirements for the next five years
are $275,000 in fiscal 1998 and $6,225,000 in fiscal 1999 and 2000. The
debenture agreement restricts the use of retained earnings for the payment of
dividends or purchase of treasury stock. As of May 31, 1995, $2,921,000 was free
of such restrictions.
During fiscal 1995, the Company repurchased $4,910,000 at face value of its
7 1/4% convertible debentures for $3,956,000. Net of unamortized deferred
financing costs of $90,000, and income taxes of $337,000, an extraordinary gain
of $527,000 was recorded.
In March 1994, the Company entered into a $13,000,000 term loan agreement.
The proceeds of the loan were used to repay outstanding floating-rate term
loans. The loan requires quarterly principal payments of $464,000 and a balloon
payment at maturity in November, 1998. Financial covenants under the agreement
set benchmark levels for tangible net worth, debt to tangible net worth ratio
and annual debt service coverage. The Company is in compliance with such
covenants at May 31, 1995. The loan bears interest at the bank's prime rate or
the London Inter-Bank Offered Rate (LIBOR), adjusted based on the Company's
financial performance.
The Company borrowed an additional $8,000,000 in May 1995 from the same
institution, due August 31, 1995 with interest at the bank's prime rate or
LIBOR. During 1996, the Company anticipates renegotiating and consolidating
these borrowings under a new credit arrangement.
Aggregate maturities of debt during the next five years are as follows:
$9,857,000 in 1996, $1,857,000 in 1997, $2,132,000 in 1998, $11,332,000 in 1999
and $6,225,000 in 2000. Cash payments for interest were $6,506,000, $7,710,000,
and $7,801,000 in 1995, 1994, and 1993, respectively.
In the following table, the fair value of the Company's 7 1/4% convertible
debentures is based on quoted market prices. The fair value of floating-rate
bank term loans is based on carrying value.
(in thousands) 1995 1994
Carrying Fair Carrying Fair
Value Value Value Value
-------- -------- -------- --------
7 1/4% Convertible
debentures $ 70,825 $ 56,306 $ 75,735 $ 56,044
Bank term loans 18,679 18,679 12,536 12,536
Other loans -- -- 17 17
-------- -------- -------- --------
Total $ 89,504 $ 74,985 $ 88,288 $ 68,597
======== ======== ======== ========
Note F -- Income Taxes
The components of income (loss) before income taxes and extraordinary item
are:
(in thousands) 1995 1994 1993
-------- -------- --------
United States $ 781 $ (2,284) $ 4,282
Foreign 1,850 (23,925) 220
-------- -------- --------
Income (loss) before taxes $ 2,631 $(26,209) $ 4,502
======== ======== ========
The differences between the provision (credit) for income taxes and income
taxes computed at the federal statutory tax rate of 34% are as follows:
(in thousands) 1995 1994 1993
-------- -------- --------
Federal income tax at statutory
rate $ 895 $ (8,911) $ 1,531
Effect of:
Claim settlement taxed at 46%
carryback year statutory rate (600) -- --
Non-deductible foreign losses 180 9,036 233
Estimated U.S tax benefit on
provision for disposition
of French manufacturing -- (5,000) --
State income taxes, net of
federal tax benefit (38) (1,203) 226
FSC benefit on export sales (273) (258) (247)
Other (14) (64) (43)
-------- -------- --------
Income tax provision (benefit) $ 150 $ (6,400) $ 1,700
======== ======== ========
In 1995, due to the timing and nature of the claim settlement with the DOJ
(see Note B), the Company utilized a ten year carryback provision permitted by
the Internal Revenue Service (IRS).
Tax benefits of $8,000,000 will be realized if the disposition of the
Company's French operations is treated as an ordinary loss for federal tax
purposes (see Note B). A tax benefit of $5,000,000 was recorded in 1994 based
upon alternative tax strategies. In 1995, the Company submitted a request to the
IRS for a private letter ruling, but was informed that the IRS has chosen not to
rule on cases regarding this issue.
Page 20
The provisions (credits) for income taxes before extraordinary item consist
of the following:
(in thousands) 1995 1994 1993
-------- -------- --------
Currently payable:
Federal $ (1,930) $ 137 $ 937
State (150) -- 170
Foreign 1,250 196 885
-------- -------- --------
Total currently payable (830) 333 1,992
-------- -------- --------
Deferred:
Federal 1,386 (4,455) 174
State 93 (1,822) 97
Foreign (499) (456) (563)
-------- -------- --------
Total deferred 980 (6,733) (292)
-------- -------- --------
Income tax provision (benefit) $ 150 $ (6,400) $ 1,700
======== ======== ========
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Non-current deferred tax
assets and liabilities are offset on the balance sheet within tax jurisdictions.
Significant components of the Company's deferred tax assets and liabilities as
of May 31, 1995 and 1994 are as follows:
Non-
Current current
(in thousands) Asset (1) Asset (2)
-------- --------
At May 31, 1995:
Deferred tax assets:
Operating loss carryforward $ -- $ 4,933
Elimination of intercompany profit in
inventory 1,619 --
Inventory valuation 2,557 --
Other, net 19 480
-------- --------
Deferred tax assets 4,195 5,413
Deferred tax liabilities:
Accelerated depreciation -- (3,276)
-------- --------
Net deferred tax $ 4,195 $ 2,137
======== ========
At May 31, 1994:
Deferred tax assets:
Provision for phase-down of
manufacturing operations $ -- $ 5,793
Elimination of intercompany profit in
inventory 2,470 --
Inventory valuation 1,775 --
Other, net -- 625
-------- --------
Deferred tax assets 4,245 6,418
Deferred tax liabilities:
Accelerated depreciation -- (3,013)
-------- --------
Net deferred tax $ 4,245 $ 3,405
======== ========
(1) Included in other current assets on the balance sheet
(2) Included in other assets on the balance sheet
Operating loss carryforwards primarily result from domestic losses expiring
in 2009 and 2010. Net income taxes paid (refunds received) were $(361,000),
$3,053,000, and $(1,792,000) in 1995, 1994, and 1993, respectively. The
Company's United States federal tax returns have been audited through 1992. In
June, 1996, the Company paid $1,100,000 to the IRS, including $520,000 for
interest, in settlement of the 1992 tax audit. These costs had been provided for
in prior years.
Note G -- Accrued Liabilities
Accrued liabilities consist of the following:
May 31
(in thousands) 1995 1994
-------- --------
Compensation and payroll taxes $ 4,592 $ 4,178
Phase-down of manufacturing 1,212 2,598
Interest 2,511 2,544
Income taxes 530 386
Other 2,316 2,133
-------- --------
Accrued liabilities $ 11,161 $ 11,839
======== ========
Note H -- Stockholders' Equity
The Company has authorized 30,000,000 shares of Common Stock, 10,000,000
shares of Class B Common Stock, and 5,000,000 shares of Preferred Stock. The
Class B Common Stock has ten votes per share and generally votes together with
the Common Stock. The Class B Common Stock has transferability restrictions;
however, it may be converted into Common Stock on a share-for-share basis at any
time. With respect to dividends and distributions, shares of Common Stock and
Class B Common Stock rank equally and have the same rights, except that Class B
Common Stock is limited to 90% of the amount of cash dividends declared on
Common Stock.
Total Common Stock issued at May 31, 1995 was 8,224,704 shares. An
additional 8,394,999 shares of Common Stock have been reserved for future
issuance under the Employee Stock Purchase and Option Plans and potential
conversion of the 7 1/4% Debentures and Class B Common Stock.
The Employee Stock Purchase Plan (ESPP) provides substantially all
employees an opportunity to purchase Common Stock of the Company at 85% of its
fair market value. The plan has reserved 247,500 shares, of which 207,195 shares
had been purchased by employees through May 31, 1995.
On July 13, 1994, the Board of Directors approved the Employees 1994
Incentive Compensation Plan which authorizes the issuance of up to 500,000
shares as incentive stock options, non-qualified stock options, or stock awards.
Under this plan 491,500 shares are reserved for future issuance. An additional
384,150 shares are reserved under a predecessor plan. The Plan authorizes the
granting of incentive stock options at the fair market value at the date of
grant. Generally, these options become exercisable over staggered periods and
expire up to ten years from the date of grant.
Page 21
Under a non-qualified stock option plan, 74,787 shares have been reserved
for future issuance for options exercisable based on earnings performance.
Additionally, 499,080 and 300,000 shares, respectively, have been reserved for
future issuance to employees and directors of the Company relating to qualified
stock options exercisable based on the passage of time. Each option is
exercisable over a period from its date of grant at the market value on the date
of grant and expires ten years from the date of grant.
The following table contains further information on the stock option plans:
Incentive Stock Options 1995 1994 1993
-------- -------- --------
Outstanding, June 1 434,221 444,813 390,283
Granted 246,100 40,150 73,500
Exercised (9,000) -- --
Cancelled (50,571) (50,742) (18,970)
-------- -------- --------
Outstanding, May 31 620,750 434,221 444,813
======== ======== ========
Price range at May 31 $ 3.75 $ 6.00 $ 6.00
to to to
$ 8.125 $ 8.125 $ 8.125
Exercisable at May 31 478,270 199,111 136,334
Available for grant at May 31 254,900 -- 40,907
Non-Qualified Stock Options 1995 1994 1993
-------- -------- --------
Outstanding, June 1 669,890 493,532 373,121
Granted 50,000 208,100 152,500
Cancelled (7,347) (31,742) (32,089)
-------- -------- --------
Outstanding, May 31 712,543 669,890 493,532
======== ======== ========
Price range at May 31 $ 3.75 $ 5.25 $ 7.25
to to to
$ 12.95 $ 12.95 $ 12.95
Exercisable at May 31 577,229 345,026 304,823
Available for grant at May 31 161,324 204,477 380,805
Note I -- Employee Retirement Plans
The Company's domestic employee retirement plans consist of a profit
sharing plan and a stock ownership plan (ESOP). Annual contributions in cash or
Company stock are made at the discretion of the Board of Directors. In addition,
the profit sharing plan has a 401(k) provision whereby the Company matches 50%
of employee contributions up to 3% of base pay. Charges to expense for
discretionary and matching contributions to these plans were $745,000 in 1995,
$740,000 in 1994 and $718,000 in 1993. Stock contributions to the ESOP were
$500,000, $125,000 and $125,000 in 1995, 1994 and 1993, respectively, based on
the stock price at the date contributed. Shares are included in the calculation
of earnings per share, and didvends are paid to the ESOP from the date the
shares are contributed. Foreign employees are covered by a variety of primarily
government mandated programs.
Note J -- Industry and Market Information
The Company operates in one industry as a distributor of electronic
components, including vacuum tubes and semiconductors. The Company invoices its
customers and makes shipments from two primary geographic locations: North
America (which services the U. S., Canada, Latin America, and the Far East) and
Europe.
(in thousands) 1995 1994 1993
-------- -------- --------
Sales:
North America $186,103 $154,205 $142,197
Less intersegment transfers 15,316 13,691 12,762
-------- -------- --------
To unaffiliated customers 170,787 140,514 129,435
-------- -------- --------
Europe 49,244 40,367 36,048
Less intersegment transfers 11,913 8,787 6,268
-------- -------- --------
To unaffiliated customers 37,331 31,580 29,780
-------- -------- --------
Consolidated $208,118 $172,094 $159,215
======== ======== ========
Operating income (loss):
North America $ 6,187 $ 6,235 $ 10,700
Europe 1,984 (25,054) 399
Corporate expenses (1,512) (1,516) (1,574)
-------- -------- --------
Consolidated $ 6,659 $(20,335) $ 9,525
======== ======== ========
Identifiable assets:
North America $142,031 $119,033 $120,721
Europe 21,653 35,310 48,564
Corporate assets 9,830 25,124 35,758
-------- -------- --------
Consolidated $173,514 $179,467 $205,043
======== ======== ========
Intersegment transfers originate mainly from the United States or Europe
and are accounted for on an "arm's length" basis with profits eliminated in
consolidation. Export sales shipped directly from the United States were
$38,653,000 in 1995, $29,667,000 in 1994, and $28,396,000 in 1993.
Operating income was reduced by $4,700,000 in North America in 1995 for the
payment of a claim settlement, and by $5,100,000 in North America and
$21,400,000 in Europe in 1994 for the provision for phase-down of manufacturing
operations, as described in Note B. Corporate assets consist primarily of cash
and investments.
Page 22
The Company sells its products to companies in diversified industries and
performs periodic credit evaluations of its customers' financial condition.
Terms are generally on open account, payable net 30 days. Credit losses are
recorded in the financial statements based on periodic reviews of outstanding
accounts and consistently have been within management's estimates.
Sales by product line are summarized in Management's Discussion and
Analysis.
Note K -- Litigation
On September 30, 1991, the Company reached a settlement with the U. S.
Department of Justice (DOJ) which prohibits the Company from collecting tube
carcasses otherwise available to tube rebuilders, provides certain restrictions
on its dealings with Varian Associates, Inc. with respect to power grid tubes
and requires the Company to obtain DOJ approval for the acquisition of any
company (or its power grid tube assets) engaged in the rebuilding, manufacture,
or distribution of power grid tubes, except under limited circumstances.
On June 19, 1990, the Company was served with a complaint in Panache
Broadcasting of Pennsylvania, Inc. v. Richardson Electronics, Ltd.; Varian
Associates, Inc.; and Varian Supply Company (VASCO - a joint venture between the
Company and Varian Associates, Inc.), in U. S. District Court for the Eastern
Division of Pennsylvania alleging violations of Sections 1 and 2 of the Sherman
Act and Section 7 of the Clayton Act. This action purports to be a class action
on behalf of all persons and businesses in the U. S. "who purchased electron
power tubes from one or more of the defendant corporations at any time" since
the formation of VASCO. The suit seeks treble damages alleged to be in excess
of $100,000, injunctive relief, and attorneys' fees. The litigation has been
transferred to the U. S. District Court for the Northern District of Illinois,
Eastern Division as cause No. 90C6400, and is in the discovery stage. The Court
has not determined whether the action may be maintained on behalf of a class.
The Company is vigorously defending itself and the VASCO joint venture against
this action.
While it is not possible at this time to predict the outcome of this legal
action, in the opinion of management, the disposition of the lawsuit and other
matters mentioned above will not have a material effect on financial position.
Note L -- Selected Quarterly Financial Data
(Unaudited)
Summarized quarterly financial data for 1995 and 1994 follow. There were no
material fourth quarter adjustments in 1995. Fourth quarter adjustments in 1994
include $675,000 in excess of original estimates for overstock inventory and
$365,000 for a LIFO reserve requirement. See Note B regarding the 1995 claim
settlement and the 1994 phase-down of manufacturing operations.
(in thousands, except per
share amounts) First Second Third Fourth
-------- -------- -------- --------
1995:
Net sales $ 46,407 $ 51,008 $ 51,255 $ 59,448
Gross margin 13,503 14,570 14,673 17,287
Claim settlement -- -- -- (4,700)
Income (loss) before
extraordinary item 784 1,128 972 (403)
Extraordinary gain on
bond repurchase -- -- -- 527
Net income 784 1,128 972 124
Net income per share
before extraordinary gain $ .07 $ .10 $ .08 $ (.04)
Net income per share .07 .10 .08 .01
1994:
Net sales $ 35,846 $ 44,200 $ 43,051 $ 48,997
Gross margin 9,963 12,027 12,099 13,302
Phase-down of manufacturing -- -- -- (26,500)
Net income 60 597 258 (20,724)
Net income per share $ .01 $ .05 $ .02 $ (1.83)
Page 23
Report of Independent Auditors
Stockholders and Directors
Richardson Electronics, Ltd.
LaFox, Illinois
We have audited the accompanying consolidated balance sheets of Richardson
Electronics, Ltd. and subsidiaries as of May 31, 1995 and 1994, and the related
consolidated statements of operations, cash flows and stockholders' equity for
each of the three years in the period ended May 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Richardson
Electronics, Ltd. and subsidiaries at May 31, 1995 and 1994, and the
consolidated results of their operations and cash flows for each of the three
years in the period ended May 31, 1995, in conformity with generally accepted
accounting principles.
As discussed in Note D to the consolidated financial statements, at May 31,
1994 the Company changed its method of accounting for its investments.
Ernst & Young LLP
Chicago, Illinois,
July 12, 1995
Stockholder Information
Corporate Offices
Richardson Electronics, Ltd.
40W267 Keslinger Road
LaFox, Illinois 60147
Annual Meeting
We encourage all stockholders to attend the annual meeting scheduled for
Tuesday, October 10, 1995 at 3:15 p.m. at the Company's corporate offices.
Further details are available in your proxy materials.
Transfer Agent and Registrar
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60690
Auditors
Ernst & Young LLP
233 S. Wacker Drive
Chicago, Illinois 60606
Form 10K
A copy of the Company's Annual Report on Form 10K, filed with the
Securities and Exchange Commission is available without charge upon request. All
inquiries should be addressed to the Investor Relations Department, Richardson
Electronics, Ltd., 40W267 Keslinger Road, LaFox, Illinois 60147.
Market Price of Common Stock
The common stock is traded on the NASDAQ National Market System under the
symbol "RELL". The number of stockholders of Common Stock and Class B Common
Stock at May 31, 1995 was 715 and 43, respectively. The quarterly market price
ranges of the Company's common stock were as follows:
1995 1994
Fiscal Quarters High Low High Low
-------- -------- -------- --------
First 5 1/2 3 3/4 7 3/4 6
Second 9 4 1/2 6 3/4 5 1/2
Third 8 1/2 6 5/8 6 3/4 5 3/4
Fourth 8 1/8 6 3/4 6 1/2 4 1/2
Page 24
EXHIBIT 21
SUBSIDIARIES
OF
RICHARDSON ELECTRONICS, LTD.
Name of Immediate
Jurisdiction of Owner(s) and its/their
Subsidiary Incorporation Percentage of Ownership
Richardson Delaware Richardson
International, Inc. Electronics, Ltd. 100%
Richardson Virgin Islands Richardson
Electronics Foreign International, Inc.
Sales Corporation 100%
Cetron Delaware Richardson
International International, Inc.
Sales Corporation 100%
Richardson Canada Richardson
Electronics Canada, International, Inc.
Ltd. 100%
Richardson United Kingdom Richardson
Electronics (Europe) International, Inc.
Ltd. 100%
Richardson France REL Holdings, Inc. 99.3%
Electronique SNC Richardson Electronics
UK Ltd. .07%
Richardson France France Richardson Electronique
SNC S.A. 99% and Richardson
International, Inc. 1%
REL Holdings, Inc. Illinois Richardson International,
Inc. 100%
Richardson United Kingdom Richardson Electronics
Electronics (Europe) Ltd. 100%
UK Ltd.
Richardson Italy Richardson International,
Electronics Inc. 90% and
Italy SRL Richardson Electronics,
Ltd. 10%
Richardson Spain Richardson International,
Electronics Inc. 88% and Richardson
Iberica, S.A. Electronics, Ltd., 12%
Richardson Germany Richardson International
Electronics GmbH Inc., 98% and Richardson
Electronics, Ltd., 2%
Richardson Japan Richardson International,
Electronics Japan Inc. 100%
K.K.
Richardson Singapore Richardson International,
Electronics Pte Ltd. Inc. 100%
Richardson Mexico Richardson Electronics,
Electronics S.A. Ltd. 100%
de C.V.
Richardson Netherlands Richardson International,
Electronics Inc. 100%
Benelux BV
Richardson Brazil Richardson Electronics,
Electronics Ltd. 100%
do Brasil Ltda.
Richardson Australia Richardson Electronics,
Electronics Ltd. 50%
PTY LTD Richardson International,
Inc. 50%
EXHIBIT 23
Consent of Independent Auditors
We consent to the incorporation by reference in Post Effective
Amendment Number 1 to Registration Statement Number 2-89888 on
Form S-8, Registration Statement Number 33-36475 on Form S-8 and
Registration Statement Number 33-54745 on Form S-8 of our report
dated July 12, 1995, with respect to the consolidated financial
statements and schedules of Richardson Electronics, Ltd. included
in the Annual Report on Form 10-K for the year ended May 31,
1995.
Ernst & Young LLP
Chicago, Illinois
August 23, 1995
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