9 unchanged sentences
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of May 28, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated August 1, 2022 expressed an unqualified opinion thereon.
−Removed: Change in the Accounting Method Related to Leases
−Removed: As discussed in Note 6 to the consolidated financial statements, the Company has changed its method of accounting for leases during the year ended May 30, 2020 due to the adoption of Accounting Standards Codification Topic 842, Leases.
Basis for Opinion
1 unchanged sentence
Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.
−Removed: We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
+Added: We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
7 unchanged sentences
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:
−Removed: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgements.
+Added: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.
The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
2 unchanged sentences
Inventories are stated at the lower of cost and net realizable value.
−Removed: Provisions for obsolete or slow-moving inventories are based upon regular analysis of obsolescence, the exiting of certain markets and assumptions about future demand and market conditions.
+Added: Provisions for obsolete or slow-moving inventories are based upon regular analysis of stock rotation privileges, obsolescence, the exiting of certain markets and assumptions about future demand and market conditions.
A number of products in the PMT segment represent trailing edge technology.
−Removed: PMT often buys products ahead of supplier price increases and extended lead times which can create surplus inventory.
+Added: PMT often buys products ahead of supplier price increases and extended lead times which can create higher levels of inventory.
As technologies evolve and customers replace their capital equipment, the market for and resulting net realizable value of PMT's products may decline.
−Removed: We have identified the Company's estimation of inventory reserve for the PMT segment as a critical audit matter due to the significant judgments required by management in estimating future demand for each individual inventory item.
−Removed: The Company's forecasted demand, performed on an item-by-item basis, requires inputs from operations personnel and assessment of current market conditions and future industry trends, which can be difficult to predict given evolving technologies and the declining market for some products.
−Removed: Auditing this matter involved especially challenging auditor judgment due to the nature and extent of audit effort needed to evaluate the reasonableness of the assumptions and judgements made by management.
+Added: We have identified the Company's estimation of inventory reserve for the PMT segment as a critical audit matter due to the significant judgments required by management in estimating net realizable value for each individual inventory item.
+Added: The Company's estimation of inventory reserve, performed on an item-by-item basis, requires inputs from operations personnel and an assessment of current market conditions and future industry trends, which can be difficult to predict given evolving technologies and the declining market for some products.
+Added: Auditing this matter involved especially challenging auditor judgment due to the nature and extent of audit effort needed to evaluate the reasonableness of the assumptions and judgments made by management.
The primary procedures we performed to address this critical audit matter included:
−Removed: Assessing the reasonableness of management's estimate of future demand by (i) discussing with operations personnel, including product and sales managers, their assessment as to viability of aged and slow-moving inventory, and (ii) comparing our independently-developed estimates of future demand for slow-moving inventory (using historical customer ordering trends, industry publications, future product designs, and current uses) to management's estimates.
−Removed: Evaluating the reasonableness of management's forecasted demand by performing a retrospective comparison of prior estimates to current period sales, write-offs, and inventory consumptions.
+Added: Assessing the design and implementation of controls over the development of the Company’s estimation of inventory reserve.
+Added: Assessing the reasonableness of management's estimate by (i) discussing with operations personnel, including product and sales managers, their assessment as to viability of aged and slow-moving inventory, (ii) evaluating historical customer ordering trends and current uses, and (iii) for certain products, evaluating future product designs and stock rotation privileges.
+Added: Evaluating the reasonableness of management's estimate by performing a retrospective comparison of prior estimates to current period sales, write-offs, and inventory consumptions.
/s/ BDO USA, LLP
18 unchanged sentences
Total non-current assets
−Removed: Liabilities and Stockholders’ Equity
Current liabilities:
27 unchanged sentences
Selling, general and administrative expenses
−Removed: Impairment of goodwill
Loss on disposal of assets
5 unchanged sentences
Income (loss) before income taxes
−Removed: Income tax provision
+Added: Income tax (benefit) provision
Net income (loss)
−Removed: Foreign currency translation gain (loss), net of tax
+Added: Foreign currency translation (loss) gain, net of tax
Comprehensive income (loss)
9 unchanged sentences
Class B common shares - Diluted
−Removed: Dividends per common share
−Removed: Dividends per Class B common share
+Added: Dividends per share:
+Added: Class B common share
Richardson Electronics, Ltd.
5 unchanged sentences
Adjustments to reconcile net income (loss) to cash
−Removed: provided by (used in) operating activities:
+Added: provided by operating activities:
Depreciation and amortization
3 unchanged sentences
Deferred income taxes
−Removed: Impairment of goodwill
Change in assets and liabilities:
3 unchanged sentences
Accrued liabilities
−Removed: Net cash provided by (used in) operating activities
+Added: Net cash provided by operating activities
Investing activities:
2 unchanged sentences
Purchases of investments
−Removed: Net cash provided by (used in) investing activities
+Added: Net cash (used in) provided by investing activities
Financing activities:
4 unchanged sentences
Effect of exchange rate changes on cash and cash equivalents
−Removed: Increase (decrease) in cash and cash equivalents
+Added: (Decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
15 unchanged sentences
Restricted stock issuance
−Removed: Convert Class B to Common
Dividends paid to:
1 unchanged sentence
Class B ($ 0.22 per share)
−Removed: Balance June 1, 2019:
+Added: Balance May 30, 2020:
Comprehensive income
18 unchanged sentences
Restricted stock issuance
+Added: Class B converted to common
Dividends paid to:
2 unchanged sentences
Balance May 28, 2022
+Added: Richardson Electronics, Ltd.
Notes to Consolidated Financial Statements
1 unchanged sentence
Richardson Electronics, Ltd.
−Removed: is a leading global provider of engineered solutions, power grid and microwave tubes and related consumables;
+Added: is a leading global manufacturer of engineered solutions, power grid and microwave tubes, and related consumables;
power conversion and RF and microwave components;
−Removed: high value flat panel detector solutions, replacement parts, tubes and service training for diagnostic imaging equipment;
+Added: high-value replacement parts, tubes, and service training for diagnostic imaging equipment;
and customized display solutions.
+Added: More than 60 % of our products are manufactured in LaFox, Illinois, Marlborough, Massachusetts, or Donaueschingen, Germany, or by one of our manufacturing partners throughout the world.
+Added: All our partners manufacture to our strict specifications and per our supplier code of conduct.
We serve customers in the alternative energy, healthcare, aviation, broadcast, communications, industrial, marine, medical, military, scientific, and semiconductor markets.
3 unchanged sentences
These products are used to control, switch or amplify electrical power signals, or are used as display devices in a variety of industrial, commercial, medical and communication applications.
−Removed: We have three operating and reportable segments, which we define as follows:
−Removed: Power and Microwave Technologies Group (“PMT”) combines our core engineered solutions capabilities, power grid and microwave tube business with new disruptive RF, Wireless and Power technologies.
+Added: We have three operating and reportable segments.
+Added: Starting with our first quarter earnings release in October for fiscal 2023, we will introduce our new Green Energy Solutions (“GES”) segment.
+Added: This segment is carved out of our existing PMT segment as we continue to focus on power management applications that support the green energy market globally.
+Added: Accordingly, in the first quarter of fiscal 2023, we will begin reporting on four segments.
+Added: The three operating and reportable segments for fiscal 2022, fiscal 2021 and fiscal 2020 are defined as follows:
+Added: Power and Microwave Technologies (“PMT”) combines our core engineered solutions capabilities, power grid and microwave tube business with new disruptive RF, Wireless and Power technologies.
As a designer, manufacturer, technology partner and authorized distributor, PMT’s strategy is to provide specialized technical expertise and engineered solutions based on our core engineering and manufacturing capabilities on a global basis.
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and additional replacement solutions currently under development for the diagnostic imaging service market.
−Removed: Through a combination of newly developed products and partnerships, service offerings and training programs, we believe we can help our customers improve efficiency and deliver better clinical outcomes while lowering the cost of healthcare delivery.
+Added: Through a combination of newly developed products and partnerships, service offerings and training programs, we believe we can help our customers improve efficiency while lowering the cost of healthcare delivery.
We currently have operations in the following major geographic regions:
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All intercompany transactions and account balances have been eliminated in consolidation.
−Removed: Our fiscal year 2021 began on May 31, 2020 and ended on May 29, 2021, fiscal year 2020 began on June 2, 2019 and ended on May 30, 2020 and our fiscal year 2019 began on June 3, 2018 and ended on June 1, 2019.
+Added: Our fiscal year 2022 began on May 30, 2021 and ended on May 28, 2022, our fiscal year 2021 began on May 31, 2020 and ended on May 29, 2021 and our fiscal year 2020 began on June 2, 2019 and ended on May 30, 2020.
Unless otherwise noted, all references to a particular year in this document shall mean our fiscal year.
26 unchanged sentences
Revenue Recognition:
−Removed: The Company has a number of defined revenue streams across our reportable segments.
−Removed: Distribution is the Company’s largest revenue stream.
−Removed: The distribution business does not include a separate service bundled with the product sold or sold on top of the product.
+Added: Our customers are generally not resellers, but rather businesses that incorporate our products into their processes from which they generate an economic benefit.
+Added: The goods are also distinct in that each item sold to the customer is clearly identified on both the purchase order and resulting invoice.
+Added: Each product we sell benefits the customer independently of the other products.
+Added: Each item on each purchase order from the customer can be used by the customer unrelated to any other products we provide to the customer.
+Added: The Company’s revenue includes the following streams:
+Added: Manufacturing/assembly
+Added: Services revenue
Distribution typically includes products purchased from our suppliers, stocked in our warehouses and then sold to our customers.
+Added: The distribution business does not include a separate service bundled with the product sold or sold on top of the product.
Revenue is recognized when control of the promised goods is transferred to our customers, which is simultaneous with the title transferring to the customer, in an amount that reflects the transaction price consideration that we expect to receive in exchange for those goods.
−Removed: Control refers to the ability of the customer to direct the use of, and obtain substantially all of, the remaining benefits from the goods.
+Added: Control refers to the ability of the customer to direct the use of, and obtain substantially all of, the remaining benefits
+Added: from the goods.
Our transaction price consideration is fixed, unless otherwise disclosed below as variable consideration.
1 unchanged sentence
Terms are generally on open account, payable net 30 days in North America, and vary throughout Asia/Pacific, Europe and Latin America subject to customary credit checks.
−Removed: The Company also sells products that are manufactured or assembled in our manufacturing facility.
+Added: Manufacturing/assembly typically includes the products that are manufactured or assembled in our manufacturing facility.
These products can either be built to the customer’s prints/designs or are products that we stock in our warehouse to sell to any customer that places an order.
The manufacturing business does not include a separate service bundled with the product sold or sold in addition to the product.
−Removed: The Company recognizes services revenue when the repair, installation or training is performed.
−Removed: The services we provide are relatively short in duration and typically completed in one or two weeks.
−Removed: Therefore, at each reporting date, the amount of unbilled work is insignificant.
−Removed: The services revenue has consistently accounted for less than 5 % of the Company’s total revenues and is expected to continue at that level.
−Removed: We also record discounts taken and estimate returns based on historical experience.
−Removed: Our products are often manufactured to meet the specific design needs of our customers’ applications.
−Removed: Our engineers work closely with customers to ensure that our products will meet their needs.
−Removed: Our customers are under no obligation to compensate us for designing the products we sell.
−Removed: Contracts with customers
−Removed: A revenue contract exists once a customer purchase order is received, reviewed and accepted.
−Removed: Prior to accepting a customer purchase order, we review the credit worthiness of the customer.
−Removed: Purchase orders are deemed to meet the collectability criterion once the customer’s credit is approved.
−Removed: Contract Liabilities:
−Removed: Contract liabilities and revenue recognized were as follows ( in thousands ):
−Removed: Contract liabilities (deferred revenue)
−Removed: The Company receives advance payments or deposits from our customers before revenue is recognized resulting in contract liabilities.
−Removed: Contract liabilities are included in accrued liabilities in the consolidated balance sheets.
−Removed: Performance obligations and satisfaction of performance obligation in the contract
−Removed: Each accepted purchase order identifies a distinct good or service as the performance obligation.
−Removed: The goods are generally standard products we purchased from a supplier and stocked on our shelves.
−Removed: They can also be customized products purchased from a supplier or products that are customized or have value added to them in house prior to shipping to the customer.
Our contracts for customized products generally include termination provisions if a customer cancels its order.
−Removed: However, we recognize revenue at a point in time because the termination provisions do not require, upon cancelation, the customer to pay fees that are commensurate with the work performed.
+Added: However, we recognize revenue at a point in time because the termination provisions normally do not require, upon cancelation, the customer to pay fees that are commensurate with the work performed.
Each purchase order explicitly states the goods or service that we promise to transfer to the customer.
3 unchanged sentences
As such, they are not a separate promised service.
−Removed: For shipping point, the Company is making the election under ASC 606-10-25-18B to account for shipping and handling as activities to fulfill the promise to transfer the goods.
+Added: The Company elects to account for shipping and handling as activities to fulfill the promise to transfer the goods.
The goods we provide to our customers are distinct in that our customers benefit from the goods we sell them through use in their own processes.
−Removed: Our customers are generally not resellers, but rather businesses that incorporate our products into their processes from which they generate an economic benefit.
−Removed: The goods are also distinct in that each item sold to the customer is clearly identified on both the purchase order and resulting invoice.
−Removed: Each product we sell benefits the customer independently of the other products.
−Removed: Each item on each purchase order from the customer can be used by the customer unrelated to any other products we provide to the customer.
−Removed: Determine the transaction price and variable consideration
−Removed: The transaction price for each product is the amount invoiced to the customer.
−Removed: Each product on a purchase order is a separate performance obligation with an observable standalone selling price.
−Removed: The transaction price is a fixed price per unit, except for the variable consideration.
−Removed: The Company elects to exclude sales tax from the transaction price.
−Removed: Recognize revenue when the entity satisfies a performance obligation
−Removed: W e recognize revenue at a point in time when title transfers to the customer, at the shipping point for FOB shipping contracts and at the customer’s delivery location for FOB destination contracts.
−Removed: We believe that the transfer of title best represents when the customer obtains control of the goods.
−Removed: Prior to that date, we do not have right to payment, and the significant risks and rewards remain with us.
−Removed: The significant risks and rewards of ownership of the inventory transfer simultaneously with the transfer of title.
−Removed: The customer’s acceptance of the goods is based on objective measurements, not subjective.
−Removed: Additional considerations
−Removed: Sale with right of return:
−Removed: Our return policy is available to customers in our terms and conditions found on our website www.rell.com.
+Added: Repair, installation or training activities generate services revenue.
+Added: The services we provide are relatively short in duration and typically completed in one or two weeks.
+Added: Therefore, at each reporting date, the amount of unbilled work is insignificant.
+Added: The services revenue has consistently accounted for less than 5 % of the Company’s total revenues and is expected to continue at that level.
+Added: We record discounts taken based on historical experience.
The policy varies by business unit.
−Removed: The Company allows returns with prior written authorization and we allow returns within ten days of shipment for replacement parts.
+Added: The Company allows returns with prior written authorization.
+Added: We estimate returns based on historical experience .
The Company maintains a reserve for returns based on historical trends that covers all contracts and revenue streams using the expected value method because we have a large number of contracts with similar characteristics, which is considered variable consideration.
1 unchanged sentence
We value the inventory at cost due to there being minimal or no costs to the Company as we generally require the customer to pay freight and we typically do not have costs associated with activities such as relabeling or repackaging.
−Removed: The reserve is considered immaterial at each balance sheet date for further consideration.
+Added: The reserve is considered immaterial at each balance sheet date.
Returns for defective product are typically covered by our suppliers’ warranty, thus, returns for defective product are not factored into our reserve.
−Removed: We offer warranties for the limited number of specific products we manufacture.
−Removed: For further information regarding the impact of warranties see the Warrantie s discussion included elsewhere in Note 3.
−Removed: Principal versus agent considerations:
Principal versus agent guidance was considered for customized products that are provided by our suppliers versus manufactured by the Company.
2 unchanged sentences
The Company recognizes revenue in the gross amount of consideration.
+Added: Contracts with customers
+Added: A revenue contract exists once a customer purchase order is received, reviewed and accepted.
+Added: Each accepted purchase order identifies a distinct good or service as the performance obligation.
+Added: The goods are generally standard products we purchased from a supplier and stocked on our shelves.
+Added: They can also be customized products purchased from a supplier or products that are customized or have value added to them in house prior to shipping to the customer.
+Added: Prior to accepting a customer purchase order, we review the credit worthiness of the customer.
+Added: Purchase orders are deemed to meet the collectability criterion once the customer’s credit is approved.
+Added: The Company receives advance payments or deposits from our customers before revenue is recognized resulting in contract liabilities.
+Added: Contract liabilities are included in accrued liabilities in the consolidated balance sheets.
+Added: Contract Liabilities:
+Added: Contract liabilities and revenue recognized were as follows ( in thousands ):
+Added: Contract liabilities (deferred revenue)
See Note 9, Segment and Geographic Information, for a disaggregation of revenue by reportable segment and geographic region, which represents how our chief operating decision maker reviews information internally to evaluate our financial performance and to make resource allocation and other decisions for the Company.
6 unchanged sentences
Gains and losses resulting from foreign currency transactions are included in income.
−Removed: Foreign exchange (gain) loss reflected in our consolidated statements of comprehensive income (loss) were $ 0.8 million loss during fiscal 2021, a small gain during fiscal 2020 and a loss of less than $ 0.1 million during fiscal 2019.
+Added: Foreign exchange (gain) loss reflected in our consolidated statements of comprehensive income (loss) were $ 0.3 million loss during fiscal 2022, a $ 0.8 million loss during fiscal 2021 and a small gain during fiscal 2020.
Shipping and Handling Fees and Costs:
14 unchanged sentences
In circumstances where we, or any of our affiliates, have incurred three years of cumulative losses which constitute significant negative evidence, positive evidence of equal or greater significance is needed to overcome the negative evidence before a tax benefit is recognized for deductible temporary differences and loss carryforwards.
−Removed: As of May 29, 2021, we had no investments.
−Removed: As of May 30, 2020, we invested in time deposits and certificates of deposit (“CDs”) in the amount of $ 16.0 million.
−Removed: We liquidated our investments in the fourth quarter of 2021.
+Added: As of May 28, 2022, we had $ 5.0 million invested in a Certificate of Deposit (CD), which will mature in less than twelve months.
+Added: As of May 29, 2021, we had no investments, as we liquidated our investments in the fourth quarter of fiscal 2021.
Intangible Assets:
15 unchanged sentences
Property, plant, and equipment, net
−Removed: Construction in progress at May 29, 2021 includes $ 0.8 million related to our Healthcare growth initiatives.
+Added: Construction in progress at May 28, 2022 includes $ 1.0 million for manufacturing facilities, $ 0.5 million for Healthcare initiatives and $ 0.3 million for IT systems.
All projects are expected to be completed before the end of fiscal 2023.
30 unchanged sentences
Changes in the warranty reserve during fiscal 2022 and fiscal 2021 were as follows ( in thousands ):
−Removed: Balance at June 1, 2019
+Added: Balance at May 30, 2020
Accruals for products sold
12 unchanged sentences
Options Outstanding at June 1, 2019
−Removed: Options Outstanding at June 1, 2019
Options Outstanding at May 30, 2020
Options Outstanding at May 29, 2021
+Added: Options Outstanding at May 28, 2022
Options Vested at May 28, 2022
3 unchanged sentences
There were 373,489 stock options exercised during fiscal 2022, with cash received of $ 3.0 million.
−Removed: The total intrinsic value of options exercised was $ 0.1 million during fiscal 2021 and was less than $ 0.1 million during both fiscal 2020 and fiscal 2019.
+Added: The total intrinsic value of options exercised was $ 1.9 million during fiscal 2022, $ 0.1 million for fiscal 2021 and less than $ 0.1 million for fiscal 2020.
The weighted average fair value of stock option grants was $ 1.50 during fiscal 2022, $ 0.49 during fiscal 2021 and $ 0.81 during fiscal 2020.
18 unchanged sentences
As of May 28, 2022 a summary of restricted stock award transactions was as follows ( in thousands ):
−Removed: Unvested at June 1, 2019
Unvested at May 30, 2020
Unvested at May 29, 2021
+Added: Unvested at May 28, 2022
Compensation effects arising from issuing stock awards have been charged against income and recorded as additional paid-in-capital in the consolidated statements of stockholders’ equity during fiscal 2022, fiscal 2021 and fiscal 2020.
9 unchanged sentences
With respect to dividends and distributions, shares of common stock and Class B common stock rank equally and have the same rights, except that Class B common stock cash dividends are limited to 90 % of the amount of Class A common stock cash dividends.
−Removed: In accordance with ASC 260-10, Earnings Per Share (“ASC 260”), our Class B common stock is considered a participating security requiring the use of the two-class method for the computation of basic and diluted earnings per share.
+Added: Our Class B common stock is considered a participating security requiring the use of the two-class method for the computation of basic and diluted earnings per share.
The two-class computation method for each period reflects the cash dividends paid per share for each class of stock, plus the amount of allocated undistributed earnings per share computed using the participation percentage which reflects the dividend rights of each class of stock.
−Removed: Basic and diluted earnings per share were computed using the two-class method as prescribed in ASC 260.
+Added: Basic and diluted earnings per share were computed using the two-class method.
The shares of Class B common stock are considered to be participating convertible securities since the shares of Class B common stock are convertible on a share-for-share basis into shares of common stock and may participate in dividends with common stock according to a predetermined formula which is 90% of the amount of Class A common stock cash dividends.
5 unchanged sentences
Class B common stock
−Removed: Undistributed losses
−Removed: Common stock undistributed losses
−Removed: Class B common stock undistributed losses
−Removed: Total undistributed losses
+Added: Undistributed earnings (loss)
+Added: Common stock undistributed earnings (loss)
+Added: Class B common stock undistributed earnings (loss)
+Added: Total undistributed earnings (loss)
Denominator for Basic and Diluted EPS:
26 unchanged sentences
McIntyre III (former owner of IMES), has an ownership interest in LDL, LLC.
+Added: McIntyre will be departing from the Company in fiscal year 2023 , effective as of September 24, 2022 .
The lease agreement provides for monthly payments over five years with total future minimum lease payments of $ 0.5 million.
−Removed: Rental expense related to this lease amounted to $ 0.1 million for the fiscal years ended May 29, 2021, May 30, 2020 and June 1, 2019.
−Removed: GOODWILL AND INTANGIBLE ASSETS
−Removed: As a result of the Company’s annual impairment review as of March 3, 2019, and after reviewing the totality of events and circumstances as provided in ASU 2011-08, we determined that it was more likely than not that the fair value for the IMES reporting unit was less than its carrying value.
−Removed: Accordingly, we performed the quantitative impairment test using the income method, which was based on a discounted future cash flow approach that used the significant assumptions of projected revenue, projected operational profit, terminal growth rates and the cost of capital.
−Removed: The Guideline Public Company Method was also considered in the goodwill impairment assessment.
−Removed: The quantitative impairment test determined that IMES reporting unit‘s carrying value exceeded its fair value by an amount that exceeded the recorded goodwill balance.
−Removed: As a result, in the fourth quarter of fiscal 2019, the Company recorded a non-cash goodwill impairment charge of $ 6.3 million for the full amount of the goodwill associated with the IMES reporting unit.
+Added: Rental expense related to this lease amounted to $ 0.2 million for the fiscal year ended May 28, 2022 and $ 0.1 million for fiscal years ended May 29, 2021 and May 30, 2020.
INTANGIBLE ASSETS
14 unchanged sentences
(1) Change from prior periods reflect impact of foreign currency translation.
−Removed: Under ASC 350, companies must perform the annual test for impairment for indefinite life intangible assets, for which the Company has none, as well as test definite life assets for impairment in the event of a “trigger event” such as adverse changes in the business climate or market which might negatively impact the value of a reporting unit.
+Added: Companies must perform the annual test for impairment for indefinite life intangible assets, for which the Company has none, as well as test definite life assets for impairment in the event of a “trigger event” such as adverse changes in the business climate or market which might negatively impact the value of a reporting unit.
We determined that the intangible assets were not impaired as of May 28, 2022 on the basis that no adverse events or changes in circumstances were identified that could indicate that the carrying amounts of such assets may not be recoverable.
5 unchanged sentences
The Company leases real and personal property in the normal course of business under various operating and financing leases.
−Removed: The Company has two types of operating leases:
−Removed: leases for facility space and leases for automobiles.
+Added: The Company uses operating leases for facility space and automobiles.
Most of the leased facility space is for sales and general office use.
Automobile leases are used throughout the Company.
−Removed: The financing lease is used for our computer servers
−Removed: The new standard was effective for the Company on June 2, 2019.
−Removed: The FASB issued ASU 2018-11, targeted improvements to Topic 842, which includes an option to not restate comparative periods in transition and elect to use the effective date of Topic 842 as the date of initial application of transition.
−Removed: We adopted the new standard applying the new transition method allowed under ASU 2018-11.
−Removed: As a result of adopting Topic 842, at June 2, 2019, we recognized operating right-of-use assets of $ 3.6 million, financing right-of-use assets of $ 0.5 million, operating lease liabilities of $ 3.8 million and financing lease liabilities of $ 0.5 million.
+Added: Financing leases are used for computer servers.
Several leases include renewal clauses which vary in length and may not include specific rent renewal amounts.
−Removed: The Company will revise the value of the right of use assets and associated lease liabilities when the Company is reasonably certain it will renew the lease.
−Removed: The standard did not have a material impact on our results of operations or cash flows.
+Added: The Company will revise the value of the right of use assets and associated lease liabilities when the Company determines it is reasonably certain of renewal.
The gross amounts of assets and liabilities related to both operating and financing leases at May 28, 2022 and May 29, 2021 were as follows (in thousands) :
23 unchanged sentences
Operating Leases
−Removed: Financing Leases
Total lease payments
7 unchanged sentences
Operating leases
−Removed: Financing leases
The cash outflows of the leasing activity of the Company as lessee for fiscal 2022 and fiscal 2021 were as follows (in thousands) :
16 unchanged sentences
Total deferred
−Removed: Income tax provision
+Added: Income tax (benefit) provision
The differences between income taxes at the U.S.
9 unchanged sentences
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
−Removed: Significant components as of May 29, 2021 and May 30, 2020 were as follows ( in thousands ):
+Added: Our deferred tax assets and liabilities reflect operations as of May 28, 2022 and May 29, 2021.
+Added: Significant components were as follows ( in thousands ):
Fiscal Year Ended
20 unchanged sentences
The Company is not subject to the BEAT provision due to the revenue thresholds.
−Removed: During fiscal 2021, final regulations were released that provide taxpayers with a high tax exception (“HTE”) election.
−Removed: Given the Company’s tax profile, the Company intends to make such election with its fiscal 2021 tax return, and the forecasted GILTI inclusion has been estimated assuming the HTE is elected.
−Removed: The Company made this election on its fiscal 2020 tax return, adjusting its NOL and offsetting valuation allowance.
−Removed: As of May 29, 2021, we had approximately $ 3.0 million of net deferred tax assets related to federal net operating loss (“NOL”) carryforwards, compared to $ 3.7 million as of May 30, 2020.
+Added: As of May 28, 2022, we have utilized all net deferred tax assets related to federal net operating loss (“NOL”) carryforwards, compared to $ 3.0 million as of May 29, 2021.
Net deferred tax assets related to domestic state NOL carryforwards at May 28, 2022 amounted to approximately $ 2.4 million, compared to $ 3.9 million at May 29, 2021.
2 unchanged sentences
We also had a domestic net deferred tax asset of $ 1.8 million of foreign tax credit carryforwards as of both May 28, 2022 and May 29, 2021.
−Removed: We did no t have any alternative minimum tax credit carryforward as of May 29, 2021.
We have historically determined that undistributed earnings of our foreign subsidiaries, to the extent of cash available, will be repatriated to the U.S.
1 unchanged sentence
The deferred tax liability related to undistributed earnings of our foreign subsidiaries was less than $ 0.1 million in both fiscal 2022 and fiscal 2021.
−Removed: Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets.
+Added: Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to support a more likely than not assertion that its deferred tax assets will be realized.
A significant component of objective evidence evaluated was the cumulative income or loss incurred in each jurisdiction over the three-year period ended May 28, 2022.
−Removed: Such objective evidence limits the ability to consider subjective evidence such as future income projections.
−Removed: We considered other positive evidence in determining the need for a
−Removed: valuation allowance in the U.S.
−Removed: including the subpart F and GILTI inclusions of our foreign earnings.
−Removed: The weight of this positive evidence is not sufficient to outweigh other negative evidence in evaluating our need for a valuation allowance in the U.S.
−Removed: jurisdiction.
−Removed: As of May 29, 2021, a valuation allowance of $ 12.2 million was established to record only the portion of the deferred tax asset that will more likely than not be realized.
+Added: We considered other positive evidence in determining the need for a valuation allowance in the U.S.
+Added: including the subpart F and GILTI inclusions of our foreign earnings, the changes in our business performance in recent years, and the utilization of federal NOLs.
+Added: The weight of this positive evidence is sufficient to outweigh other negative evidence in evaluating our need for a valuation allowance in the U.S.
+Added: federal jurisdiction.
+Added: As a result of the positive evidence outweighing the negative evidence for the year ended May 28,
+Added: 2022, we have released the full valuation allowance on the U.S.
+Added: federal and state deferred tax items.
+Added: In addition, we partially released the valuation allowance on the state NOL deferred tax item, based on the amount of the NOLs that management believes it is more likely than not to realize.
+Added: We have maintained a full valuation allowance against the foreign tax credit deferred tax asset based on negative evidence relating to the Company’s ability to utilize the foreign tax credit carryforward in the future.
+Added: As of May 28, 2022, a valuation allowance of $ 3.5 million was recorded, representing the portion of the deferred tax asset that management does not believe is more likely than not to be realized.
The valuation allowance as of May 29, 2021 was $ 12.2 million.
−Removed: We recorded a valuation allowance for all domestic federal and state net deferred tax assets considering the significant cumulative losses in the U.S.
−Removed: jurisdiction and the reversal of the deferred tax liability for foreign earnings.
−Removed: The valuation allowance also related to deferred tax assets in foreign jurisdictions where historical taxable losses have been incurred.
+Added: The remaining valuation allowance relates to foreign tax credits ($ 1.8 million), state NOLs ($ 0.2 million) and deferred tax assets in foreign jurisdictions where historical taxable losses have been incurred ($ 1.5 million).
The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are increased, or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as our projections for growth.
5 unchanged sentences
tax jurisdictions.
−Removed: We are currently under examination in Thailand (fiscal 2008 through 2011) and Germany (fiscal 2015 through 2018).
+Added: We are currently under examination in Germany for fiscal 2015 through fiscal 2018.
+Added: This audit is expected to be closed in the first quarter of fiscal 2023.
Our primary foreign tax jurisdictions are Germany and the Netherlands.
4 unchanged sentences
We have no t recorded a liability for interest and penalties as of May 28, 2022 or May 29, 2021.
−Removed: It is not expected that there will be a change in the unrecognized tax benefits due to the expiration of various statutes of limitations within the next twelve months.
The following table summarizes the activity related to the unrecognized tax benefits (in thousands ):
4 unchanged sentences
EMPLOYEE BENEFIT PLANS
−Removed: Employee Profit Sharing Plan:
The employee profit sharing plan is a defined contribution profit sharing plan.
The profit sharing plan has a 401(k) provision whereby we match 50 % of employee contributions up to 6.0 % of pay.
+Added: Previously, the Company matched contributions up to 4.0 % of pay for fiscal 2021 and fiscal 2020.
Charges to expense for matching contributions to this plan were $ 0.8 million, $ 0.6 million and $ 0.5 million, during fiscal 2022, fiscal 2021 and fiscal 2020, respectively.
SEGMENT AND GEOGRAPHIC INFORMATION
−Removed: In accordance with ASC 280-10, Segment Reporting , we have identified three reportable segments:
+Added: We have three operating and reportable segments.
+Added: Starting with our first quarter earnings release in October for fiscal 2023, we will introduce our new Green Energy Solutions (“GES”) segment.
+Added: This segment is carved out of our existing PMT segment as we continue to focus on power management applications that support the green energy market globally.
+Added: Accordingly, in the first quarter of fiscal 2023, we will begin reporting on four segments.
+Added: The reportable segments for fiscal 2022, fiscal 2021 and fiscal 2020 were:
PMT, Canvys and Healthcare.
−Removed: PMT combines our core engineered solutions capabilities, power grid and microwave tube business with new disruptive RF, Wireless and Power technologies.
+Added: Power and Microwave Technologies (“PMT”) combines our core engineered solutions capabilities, power grid and microwave tube business with new disruptive RF, Wireless and Power technologies.
As a designer, manufacturer, technology partner and authorized distributor, PMT’s strategy is to provide specialized technical expertise and engineered solutions based on our core engineering and manufacturing capabilities on a global basis.
4 unchanged sentences
Canvys provides customized display solutions serving the corporate enterprise, financial, healthcare, industrial and medical original equipment manufacturers markets.
−Removed: Our engineers design, manufacture, source and support a full spectrum of solutions to
−Removed: match the needs of our customers.
+Added: Our engineers design, manufacture, source and support a full spectrum of solutions to match the needs of our customers.
We offer long term availability and proven custom display solutions that include touch screens, protective panels, custom enclosures, All-In-One computers, specialized cabinet finishes and application specific software packages and certification services.
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and additional replacement solutions currently under development for the diagnostic imaging service market.
−Removed: Through a combination of newly developed products and partnerships, service offerings and training programs, we believe we can help our customers improve efficiency and deliver better clinical outcomes while lowering the cost of healthcare delivery.
+Added: Through a combination of newly developed products and partnerships, service offerings and training programs, we believe we can help our customers improve efficiency while lowering the cost of healthcare delivery.
The CEO, who is the chief operating decision maker, evaluates performance and allocates resources primarily based on the gross profit of each segment.
24 unchanged sentences
Latin America
−Removed: Other includes primarily net sales not allocated to a specific geographical region, unabsorbed value-add costs and other unallocated expenses.
−Removed: Major Customers
+Added: Other includes primarily net sales not allocated to a specific geographical region, unabsorbed value-add cost and other unallocated expenses .
During fiscal 2022, fiscal 2021 and fiscal 2020, no one customer accounted for more than 10 percent of the Company’s consolidated net sales.
11 unchanged sentences
The depreciation and amortization, which includes our fixed assets and intangibles, were primarily in the US.
−Removed: Depreciation and amortization expense that belong to our foreign affiliates was approximately $ 0.3 million for fiscal 2021, $ 0.3 million for fiscal 2020 and $ 0.2 million for fiscal 2019, respectively.
+Added: Depreciation and amortization expense that belongs to our foreign affiliates was approximately $ 0.1 million for fiscal 2022, $ 0.3 million for fiscal 2021 and $ 0.3 million for fiscal 2020, respectively.
RISKS AND UNCERTAINTIES
−Removed: On October 15, 2018, Varex Imaging Corporation (“Varex”) filed its original Complaint (Case No.
−Removed: 1:18-cv-06911) against Richardson Electronics Ltd.
−Removed: (“Richardson”) in the Northern District of Illinois, which was subsequently amended on November 27, 2018.
−Removed: Varex alleged counts of infringement of U.S.
−Removed: 6,456,692 and 6,519,317.
−Removed: Subsequently, on October 24, 2018, Varex filed a motion for preliminary injunction to stop the sale of Richardson’s ALTA750 TM product.
−Removed: Richardson filed an opposition to the preliminary injunction.
−Removed: In January 2019, the Court took evidence on the preliminary injunction issue.
−Removed: On September 30, 2019, the Court denied Varex’s Motion for Preliminary Injunction.
−Removed: On August 6, 2020, Varex amended its Complaint to add claims of trade secret misappropriation and Richardson moved to dismiss that Amended Complaint on September 9, 2020.
−Removed: On April 2, 2021, as part of an overall settlement where Richardson did not admit liability but wanted to move forward, Richardson agreed to pay Varex $ 1.6 million to settle this matter, which was recorded in selling, general and administrative expenses within the Consolidated Statements of Comprehensive Income (Loss).
−Removed: Company Response to COVID-19
−Removed: In March 2020, the World Health Organization classified the outbreak of COVID-19 as a pandemic.
−Removed: Thereafter, most U.S.
−Removed: states imposed “shelter in place” directives on their populations to stem the spread of COVID-19 and similar restrictive measures were taken by governments across the world.
−Removed: The shelter in place directives generally required the closure of businesses that did not provide essential functions.
−Removed: The Company was considered a critical supplier of products to healthcare and critical infrastructure businesses.
−Removed: Further, several of our largest customers mandated that we continue to supply parts so as not to disrupt the supply chain and their ability to serve critical industries.
−Removed: As such, the Company qualified as an “Essential Business” and the Company continued our manufacturing and distribution operations throughout 2021.
−Removed: Our top priority was ensuring the health and safety of our employees and, accordingly, we undertook measures such as limiting the number of people in any one of our facilities by requiring only employees who could not perform their work remotely to physically work in a Company US-based facility.
−Removed: The Company advised all other employees that could perform their job functions remotely to do so.
−Removed: As such, the Company’s operations remained operational.
−Removed: The impact of the COVID-19 outbreak and its effects continue to evolve.
−Removed: As such, the full magnitude that the pandemic, and the steps taken to prevent and/or mitigate its spread, will have on the Company’s financial condition, liquidity and future results of operations is uncertain.
−Removed: The extent of the impact of the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the duration and spread of the pandemic, the extent, speed and effectiveness of worldwide containment and vaccination efforts and the impact of these and other factors on our employees, customers and suppliers.
−Removed: Our ability to meet customer demands for products may be impaired or, similarly, our customers may experience adverse business consequences due to COVID-19 and its effects.
+Added: Legal Settlement – Fiscal 2021
+Added: On April 2, 2021, as part of a settlement where the Company did not admit liability, Richardson agreed to pay Varex Imaging Corporation (“Varex”) $ 1.6 million to settle alleged counts of patent infringement and claims of trade secret misappropriation.
+Added: This settlement was recorded in selling, general and administrative expenses within the Consolidated Statements of Comprehensive Income for the third quarter of fiscal 2021.
+Added: COVID-19 Update
+Added: The impact of the COVID-19 pandemic and its effects continue to evolve.
+Added: As such, the full magnitude that the pandemic, and the steps taken to prevent, mitigate and/or respond to its spread, will have on the Company’s financial condition, liquidity and future results of operations is uncertain.
+Added: The extent of the impact of the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the duration and spread of the pandemic, the extent, speed and effectiveness of continued worldwide containment efforts, and other actions taken by governments, businesses and individuals in response to abatement and resurgence of the disease.
+Added: Our ability to meet customer demands for products may be impaired or, similarly, our customers may experience adverse business consequences due to the continued impact of COVID-19 and its effects.
Reduced demand for products or impaired ability to meet customer demand (including disruptions at our transportation service providers or vendors) could have a material adverse effect on our business, operations and financial performance.
−Removed: There was a decline in PMT sales during the first three months of fiscal 2021, a decline in Healthcare sales during the first six months of fiscal 2021 and a decline in Canvys sales during the first nine months of fiscal 2021.
−Removed: The majority of these declines in sales were related to the COVID-19 global pandemic.
−Removed: While we had some COVID-19 related component delays impacting new product development schedules, we did not experience a major interruption in our supply chain.
+Added: There were sales declines during fiscal year 2021, the majority of which were related to the COVID-19 global pandemic.
+Added: While the Company did not experience sales declines during fiscal year 2022 as a result of the pandemic, the impacts from the pandemic negatively impacted our gross margins as a percentage of net sales in our Canvys and Healthcare segments.
+Added: As a result of COVID-19 and its effects, we experienced some COVID-19 related component delays impacting new product development schedules.
+Added: The global markets have generally suffered, and are continuing to suffer, from material disruptions in the supply chain.
Management continues to monitor the global situation on its financial condition, liquidity, operations, suppliers, industry and workforce.
−Removed: Given the ever-evolving nature of the pandemic and the continued global responses to curb its spread, the Company is not presently able to fully estimate the effects of COVID-19 on its results of operations, financial condition or liquidity for fiscal year 2022.
+Added: Given the ever-evolving nature of the pandemic and the continued global responses to the ongoing impact of the pandemic as well the cycle of recurrences and the after-effects, the Company is not presently able to fully estimate the effects of COVID-19 on its results of operations, financial condition or liquidity going forward.
Company Response to CARES Act
1 unchanged sentence
The CARES Act included provisions relating to refundable payroll tax credits, deferral of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, increased limitations on qualified charitable contributions and technical corrections to tax depreciation methods for qualified, improvement property.
−Removed: As of May 29, 2021, the Company deferred $ 0.9 million of employer-side social security tax payments.
+Added: As of May 28, 2022, the Company deferred $ 0.4 million of employer-side social security tax payments, which will be made by December 31, 2022.
The Company has estimated and recorded the overall effects of the CARES Act and does not anticipate a material change.
FAIR VALUE MEASUREMENTS
−Removed: Investments measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820 as of May 29, 2021 and May 30, 2020 were as follows ( in thousands ):
−Removed: Time deposits/CDs
−Removed: Time deposits/CDs
+Added: Investments measured at fair value as of May 28, 2022 and May 29, 2021 were as follows ( in thousands ):
VALUATION AND QUALIFYING ACCOUNTS
−Removed: The following table presents the valuation and qualifying account activity for fiscal years ended May 29, 2021, May 30, 2020 and June 1, 2019, ( in thousands ):
+Added: The following table presents the valuation and qualifying account activity for fiscal years ended May 28, 2022, May 29, 2021 and May 30, 2020, ( in thousands ):
Year ended May 28, 2022
4 unchanged sentences
Inventory provisions
−Removed: Year ended June 1, 2019
+Added: Year ended May 30, 2020
Allowance for doubtful accounts
3 unchanged sentences
Charges to cost of sales.
−Removed: Included in fiscal 2021 were inventory write-downs of $ 0.6 million for PMT, $ 0.1 million for Canvys and $ 0.4 million for Healthcare.
−Removed: Inventory disposed of or sold, net of foreign currency translation.
+Added: Included in fiscal 2022 were inventory write-downs of $ 0.4 million for PMT and $ 0.1 million for Healthcare .
+Added: Inventory disposed or sold, net of foreign currency translation.
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) ( in thousands, except per share amounts ):
−Removed: Net (loss) income
−Removed: Net (loss) income per share:
+Added: Net income per share:
Common stock - basic
2 unchanged sentences
Class B common stock - diluted
−Removed: Net income (loss)
−Removed: Net income (loss) per share:
+Added: Net (loss) income
+Added: Net (loss) income per share:
Common stock - basic
2 unchanged sentences
Class B common stock - diluted
−Removed: Report of Independent Registered Public Accounting Firm
−Removed: Board of Directors and Stockholders
−Removed: Richardson Electronics, Ltd.
−Removed: LaFox, Illinois
−Removed: Opinion on Internal Control over Financial Reporting
−Removed: We have audited Richardson Electronic Ltd.’s (the “Company’s”) internal control over financial reporting as of May 29, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”).
−Removed: In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of May 29, 2021, based on the COSO criteria .
−Removed: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company and subsidiaries as of May 29, 2021 and May 30, 2020, the related consolidated statements of comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended May 29, 2021, and the related notes and our report dated August 2, 2021 expressed an unqualified opinion thereon.
−Removed: Basis for Opinion
−Removed: The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, Management’s Report on Internal Control over Financial Reporting.
−Removed: Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
−Removed: We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.
−Removed: federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB.
−Removed: Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
−Removed: Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.
−Removed: Our audit also included performing such other procedures as we considered necessary in the circumstances.
−Removed: We believe that our audit provides a reasonable basis for our opinion.
−Removed: Definition and Limitations of Internal Control over Financial Reporting
−Removed: A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
−Removed: A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
−Removed: (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;
−Removed: and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
−Removed: Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
−Removed: Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
−Removed: /s/ BDO USA, LLP
−Removed: Chicago, Illinois
−Removed: August 2, 2021
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.