Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Aug. 28, 2021 | Oct. 05, 2021 | |
Document Information [Line Items] | ||
Entity Registrant Name | RICHARDSON ELECTRONICS LTD/DE | |
Entity Central Index Key | 0000355948 | |
Document Type | 10-Q | |
Trading Symbol | RELL | |
Document Period End Date | Aug. 28, 2021 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --05-28 | |
Entity's Reporting Status Current | Yes | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Small Business | true | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2022 | |
Entity File Number | 0-12906 | |
Entity Tax Identification Number | 36-2096643 | |
Entity Address, Address Line One | 40W267 Keslinger Road | |
Entity Address, Address Line Two | P.O. Box 393 | |
Entity Address, City or Town | LaFox | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 60147-0393 | |
City Area Code | 630 | |
Local Phone Number | 208-2200 | |
Entity Incorporation, State or Country Code | DE | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes | |
Title of 12(b) Security | Common stock, $0.05 Par Value | |
Security Exchange Name | NASDAQ | |
Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 11,240,760 | |
Common Class B | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 2,096,919 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Aug. 28, 2021 | May 29, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 36,418 | $ 43,316 |
Accounts receivable, less allowance of $205 and $202, respectively | 29,724 | 25,096 |
Inventories, net | 67,649 | 63,508 |
Prepaid expenses and other assets | 2,429 | 2,385 |
Total current assets | 136,220 | 134,305 |
Non-current assets: | ||
Property, plant and equipment, net | 17,132 | 17,067 |
Intangible assets, net | 2,204 | 2,270 |
Lease ROU asset | 4,116 | 2,570 |
Non-current deferred income taxes | 534 | 541 |
Total non-current assets | 23,986 | 22,448 |
Total assets | 160,206 | 156,753 |
Current liabilities: | ||
Accounts payable | 17,421 | 16,979 |
Accrued liabilities | 14,534 | 14,182 |
Lease liability current | 1,297 | 1,066 |
Total current liabilities | 33,252 | 32,227 |
Non-current liabilities: | ||
Non-current deferred income tax liabilities | 274 | 242 |
Lease liability non-current | 2,638 | 1,358 |
Other non-current liabilities | 1,364 | 1,366 |
Total non-current liabilities | 4,276 | 2,966 |
Total liabilities | 37,528 | 35,193 |
Stockholders’ equity | ||
Preferred stock, $1.00 par value, no shares issued | ||
Additional paid-in-capital | 62,974 | 62,707 |
Retained earnings | 55,146 | 53,297 |
Accumulated other comprehensive income | 3,891 | 4,893 |
Total stockholders’ equity | 122,678 | 121,560 |
Total liabilities and stockholders’ equity | 160,206 | 156,753 |
Common Stock | ||
Stockholders’ equity | ||
Common stock, $0.05 par value; issued and outstanding 11,241 shares on August 28, 2021 and 11,160 shares on May 29, 2021 Class B common stock, convertible, $0.05 par value; issued and outstanding 2,097 shares on August 28, 2021 and May 29, 2021 | 562 | 558 |
Common Class B | ||
Stockholders’ equity | ||
Common stock, $0.05 par value; issued and outstanding 11,241 shares on August 28, 2021 and 11,160 shares on May 29, 2021 Class B common stock, convertible, $0.05 par value; issued and outstanding 2,097 shares on August 28, 2021 and May 29, 2021 | $ 105 | $ 105 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Aug. 28, 2021 | May 29, 2021 |
Allowance for accounts receivable | $ 205 | $ 202 |
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred Stock, issued (in shares) | 0 | 0 |
Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.05 | $ 0.05 |
Common stock, issued (in shares) | 11,241 | 11,160 |
Common stock, outstanding (in shares) | 11,241 | 11,160 |
Common Class B | ||
Common stock, par value (in dollars per share) | $ 0.05 | $ 0.05 |
Common stock, issued (in shares) | 2,097 | 2,097 |
Common stock, outstanding (in shares) | 2,097 | 2,097 |
Unaudited Consolidated Statemen
Unaudited Consolidated Statements of Comprehensive Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Aug. 28, 2021 | Aug. 29, 2020 | |
Net sales | $ 53,704 | $ 38,812 |
Cost of sales | 37,407 | 26,453 |
Gross profit | 16,297 | 12,359 |
Selling, general and administrative expenses | 13,469 | 12,976 |
Operating income (loss) | 2,828 | (617) |
Other expense (income): | ||
Investment/interest income | (17) | (18) |
Foreign exchange loss | 27 | 442 |
Other, net | 16 | (18) |
Total other expense | 26 | 406 |
Income (loss) before income taxes | 2,802 | (1,023) |
Income tax provision | 167 | 124 |
Net income (loss) | 2,635 | (1,147) |
Foreign currency translation (loss) gain, net of tax | (1,002) | 2,136 |
Comprehensive income | $ 1,633 | $ 989 |
Weighted average number of shares: | ||
Common shares - Diluted | 11,467 | 11,070 |
Common Stock | ||
Net income (loss) per share: | ||
Common shares - Basic | $ 0.20 | $ (0.09) |
Common shares - Diluted | $ 0.20 | $ (0.09) |
Weighted average number of shares: | ||
Common shares - Basic | 11,194 | 11,070 |
Common shares - Diluted | 11,467 | 11,070 |
Dividends per share: | ||
Dividends per share | $ 0.060 | $ 0.060 |
Common Class B | ||
Net income (loss) per share: | ||
Common shares - Basic | 0.18 | (0.08) |
Common shares - Diluted | $ 0.18 | $ (0.08) |
Weighted average number of shares: | ||
Common shares - Basic | 2,097 | 2,097 |
Common shares - Diluted | 2,097 | 2,097 |
Dividends per share: | ||
Dividends per share | $ 0.054 | $ 0.054 |
Unaudited Consolidated Statem_2
Unaudited Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Aug. 28, 2021 | Aug. 29, 2020 | |
Operating activities: | ||
Net income (loss) | $ 2,635 | $ (1,147) |
Adjustments to reconcile net income (loss) to cash used in operating activities: | ||
Depreciation and amortization | 829 | 873 |
Inventory provisions | 83 | 237 |
Share-based compensation expense | 219 | 201 |
Deferred income taxes | 35 | 2 |
Change in assets and liabilities: | ||
Accounts receivable | (5,008) | (854) |
Inventories | (4,957) | (1,621) |
Prepaid expenses and other assets | (62) | 109 |
Accounts payable | 607 | (2,734) |
Accrued liabilities | 480 | 1,779 |
Other | 266 | (202) |
Net cash used in operating activities | (4,873) | (3,357) |
Investing activities: | ||
Capital expenditures | (837) | (718) |
Proceeds from maturity of investments | 16,000 | |
Purchases of investments | (9,000) | |
Net cash (used in) provided by investing activities | (837) | 6,282 |
Financing activities: | ||
Proceeds from issuance of common stock | 52 | |
Cash dividends paid | (786) | (780) |
Payment of financing lease principal | (45) | (45) |
Net cash used in financing activities | (779) | (825) |
Effect of exchange rate changes on cash and cash equivalents | (409) | 860 |
(Decrease) increase in cash and cash equivalents | (6,898) | 2,960 |
Cash and cash equivalents at beginning of period | 43,316 | 30,535 |
Cash and cash equivalents at end of period | $ 36,418 | $ 33,495 |
Unaudited Consolidated Statem_3
Unaudited Consolidated Statement of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common | Common Class B | Common Stock | Common StockCommon | Common StockCommon Class B | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income |
Beginning Balance at May. 30, 2020 | $ 118,660 | $ 657 | $ 61,749 | $ 54,764 | $ 1,490 | ||||
Beginning Balance (in shares) at May. 30, 2020 | 11,038 | 2,097 | |||||||
Comprehensive income: | |||||||||
Net income (loss) | (1,147) | (1,147) | |||||||
Foreign currency translation | 2,136 | 2,136 | |||||||
Share-based compensation: | |||||||||
Restricted stock | 131 | 131 | |||||||
Stock options | 70 | 70 | |||||||
Restricted stock issuance | 4 | (4) | |||||||
Restricted stock issuance (in shares) | 73 | ||||||||
Dividends paid to: | |||||||||
Common ($0.060 per share) | (667) | (667) | |||||||
Class B ($0.054 per share) | (113) | (113) | |||||||
Ending Balance at Aug. 29, 2020 | 119,070 | 661 | 61,946 | 52,837 | 3,626 | ||||
Ending Balance (in shares) at Aug. 29, 2020 | 11,111 | 2,097 | |||||||
Beginning Balance at May. 29, 2021 | 121,560 | 663 | 62,707 | 53,297 | 4,893 | ||||
Beginning Balance (in shares) at May. 29, 2021 | 11,160 | 2,097 | 11,160 | 2,097 | |||||
Comprehensive income: | |||||||||
Net income (loss) | 2,635 | 2,635 | |||||||
Foreign currency translation | (1,002) | (1,002) | |||||||
Share-based compensation: | |||||||||
Restricted stock | 128 | 128 | |||||||
Stock options | 91 | 91 | |||||||
Options exercised | 52 | $ 8 | 52 | ||||||
Restricted stock issuance | 4 | (4) | |||||||
Restricted stock issuance (in shares) | 73 | ||||||||
Dividends paid to: | |||||||||
Common ($0.060 per share) | (673) | (673) | |||||||
Class B ($0.054 per share) | (113) | (113) | |||||||
Ending Balance at Aug. 28, 2021 | $ 122,678 | $ 667 | $ 62,974 | $ 55,146 | $ 3,891 | ||||
Ending Balance (in shares) at Aug. 28, 2021 | 11,241 | 2,097 | 11,241 | 2,097 |
Unaudited Consolidated Statem_4
Unaudited Consolidated Statement of Stockholders' Equity (Parenthetical) - Common Stock - $ / shares | 3 Months Ended | |
Aug. 28, 2021 | Aug. 29, 2020 | |
Common | ||
Dividends per common share | $ 0.060 | $ 0.060 |
Common Class B | ||
Dividends per common share | $ 0.054 | $ 0.054 |
Description of the Company
Description of the Company | 3 Months Ended |
Aug. 28, 2021 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Description of the Company | 1. DESCRIPTION OF THE COMPANY Richardson Electronics, Ltd. is a leading global provider of engineered solutions, power grid and microwave tubes and related consumables; power conversion and RF and microwave components; high value flat panel detector solutions, replacement parts, tubes and service training for diagnostic imaging equipment; and customized display solutions. We serve customers in the alternative energy, healthcare, aviation, broadcast, communications, industrial, marine, medical, military, scientific and semiconductor markets. The Company’s strategy is to provide specialized technical expertise and “engineered solutions” based on our core engineering and manufacturing capabilities. The Company provides solutions and adds value through design-in support, systems integration, prototype design and manufacturing, testing, logistics and aftermarket technical service and repair through its global infrastructure. Our products include electron tubes and related components, microwave generators, subsystems used in semiconductor manufacturing and visual technology solutions. 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. We have three operating and reportable segments, which we define as follows: 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. 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. We provide solutions and add value through design-in support, systems integration, prototype design and manufacturing, testing, logistics and aftermarket technical service and repair—all through our existing global infrastructure. PMT’s focus is on products for power, RF and microwave applications for customers in 5G, alternative energy, aviation, broadcast, communications, industrial, marine, medical, military, scientific and semiconductor markets. PMT focuses on various applications including broadcast transmission, CO2 laser cutting, diagnostic imaging, dielectric and induction heating, high energy transfer, high voltage switching, plasma, power conversion, radar and radiation oncology. PMT also offers its customers technical services for both microwave and industrial equipment. Canvys provides customized display solutions serving the corporate enterprise, financial, healthcare, industrial and medical original equipment manufacturers markets. 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. We partner with both private label manufacturing companies and leading branded hardware vendors to offer the highest quality display and touch solutions and customized computing platforms. Healthcare manufactures, repairs, refurbishes and distributes high value replacement parts and equipment for the healthcare market including hospitals, medical centers, asset management companies, independent service organizations and multi-vendor service providers. Products include diagnostic imaging replacement parts for CT and MRI systems; replacement CT and MRI tubes; CT service training; MRI coils, cold heads and RF amplifiers; hydrogen thyratrons, klystrons, magnetrons; flat panel detector upgrades; pre-owned CT systems; and additional replacement solutions currently under development for the diagnostic imaging service market. 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. We currently have operations in the following major geographic regions: North America, Asia/Pacific, Europe and Latin America. |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Aug. 28, 2021 | |
Basis Of Presentation [Abstract] | |
Basis of Presentation | 2. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and notes required by GAAP for complete financial statements. Our fiscal quarter ends on the Saturday nearest the end of the quarter-ending month. The first quarter of fiscal 2022 and fiscal 2021 both contained 13 weeks. In the opinion of management, all adjustments, which are of a normal and recurring nature, necessary for a fair presentation of the results of interim periods have been made. All inter-company transactions and balances have been eliminated. The unaudited consolidated financial statements presented herein include the accounts of our wholly owned subsidiaries. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The results of our operations for the three months ended August 28 , 20 2 1 are not necessarily indicative of the results that may be expected for the fiscal year ending May 2 8 , 20 2 2. The financial information contained in this report should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended May 29, 2021, that we filed on August 2, 2021. |
Critical Accounting Policies an
Critical Accounting Policies and Estimates | 3 Months Ended |
Aug. 28, 2021 | |
Accounting Policies [Abstract] | |
Critical Accounting Policies and Estimates | 3. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Inventories, net: Our consolidated inventories were stated at the lower of cost and net realizable value, generally using a weighted-average cost method. Our net inventories include approximately $59.6 million of finished goods, $4.6 million of raw materials and $3.4 million of work-in-progress as of August 28, 2021, as compared to approximately $57.0 million of finished goods, $3.9 million of raw materials and $2.6 million of work-in-progress as of May 29, 2021. At this time, we do not anticipate any material risks or uncertainties related to possible future inventory write-downs. Provisions for obsolete or slow moving inventories are recorded based upon regular analysis of stock rotation privileges, obsolescence, the exiting of certain markets and assumptions about future demand and market conditions. If future demand changes in the industry, or market conditions differ from management’s estimates, additional provisions may be necessary. Inventory reserves were approximately $5.9 million as of August 28, 2021 and $5.9 million as of May 29, 2021. Revenue Recognition: The Company has a number of defined revenue streams across our reportable segments. Distribution is the Company’s largest revenue stream. The distribution business does not include a separate service bundled with the product sold or sold on top of the product. Distribution typically includes products purchased from our suppliers, stocked in our warehouses and then sold to our customers. 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. Control refers to the ability of the customer to direct the use of, and obtain substantially all of, the remaining benefits from the goods. Our transaction price consideration is fixed, unless otherwise disclosed below as variable consideration. G enerally, our contracts require our customers to pay for goods after we deliver products to them. 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. The Company also sells 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. The Company recognizes services revenue when the repair, installation or training is performed. The services we provide are relatively short in duration and typically completed in one or two weeks. Therefore, at each reporting date, the amount of unbilled work is insignificant. The services revenue has consistently accounted for less than 5% of the Company’s total revenues and is expected to continue at that level. We also record discounts taken and estimate returns based on historical experience. Our products are often manufactured to meet the specific design needs of our customers’ applications. Our engineers work closely with customers to ensure that our products will meet their needs. Our customers are under no obligation to compensate us for designing the products we sell. Contracts with customers A Contract Liabilities: Contract liabilities and revenue recognized were as follows ( in thousands ): May 29, 2021 Additions Revenue Recognized August 28, 2021 Contract liabilities (deferred revenue) $ 3,313 $ 1,641 $ (2,066 ) $ 2,888 The Company receives advance payments or deposits from our customers before revenue is recognized resulting in contract liabilities. Contract liabilities are included in accrued liabilities in the consolidated balance sheets. Performance obligations and satisfaction of performance obligation in the contract Each accepted purchase order identifies a distinct good or service as the performance obligation. The goods are generally standard products we purchased from a supplier and stocked on our shelves. 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. 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. Each purchase order explicitly states the goods or service that we promise to transfer to the customer. The promises to the customer are limited only to those goods or service. The performance obligation is our promise to deliver both goods that were produced by the Company and resale of goods that we purchase from our suppliers. Our shipping and handling activities for destination shipments are performed prior to the customer obtaining control. As such, they are not a separate promised service. 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. 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. Our customers are generally not resellers, but rather businesses that incorporate our products into their processes from which they generate an economic benefit. The goods are also distinct in that each item sold to the customer is clearly identified on both the purchase order and resulting invoice. Each product we sell benefits the customer independently of the other products. 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 . Determine the transaction price and variable consideration The transaction price for each product is the amount invoiced to the customer. Each product on a purchase order is a separate performance obligation with an observable standalone selling price. Recognize revenue when the entity satisfies a performance obligation 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. We believe that the transfer of title best represents when the customer obtains control of the goods. Prior to that date, we do not have right to payment, and the significant risks and rewards remain with us. The significant risks and rewards of ownership of the inventory transfer simultaneously with the transfer of title. The customer’s acceptance of the goods is based on objective measurements, not subjective. Additional considerations Sale with right of return: Our return policy is available to customers in our terms and conditions found on our website www.rell.com. The policy varies by business unit. The Company allows returns with prior written authorization and we allow returns within ten days of shipment for replacement parts. The Company maintains a reserve for returns based on historical trends that covers all contracts and revenue streams The reserve is considered immaterial at each balance sheet date for further consideration. Returns for defective product are typically covered by our suppliers’ warranty, thus, returns for defective product are not factored into our reserve. Warranties: We offer warranties for the limited number of specific products we manufacture. For further information regarding the impact of warranties see the Warranties discussion elsewhere in Note 3. Principal versus agent considerations: Principal versus agent guidance was considered for customized products that are provided by our suppliers versus manufactured by the Company. The Company acts as the principal as we are responsible for satisfying the performance obligation. We have primary responsibility for fulfilling the contract, we have inventory risk prior to delivery to our customer, we establish prices, our consideration is not in the form of a commission and we bear the credit risk. The Company recognizes revenue in the gross amount of consideration. See Note 7, Segment Reporting, Loss Contingencies: We accrue a liability for loss contingencies when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. If we determine that there is at least a reasonable possibility that a loss may have been incurred, we will include a disclosure describing the contingency. Intangible Assets: Intangible assets are initially recorded at their fair market values determined by quoted market prices in active markets, if available, or recognized valuation models. Intangible assets that have finite useful lives are amortized over their useful lives either on a straight-line basis or over their projected future cash flows and are tested for impairment when events or changes in circumstances occur that indicate possible impairment. Our intangible assets represent the fair value for trade name, customer relationships, non-compete agreements and technology acquired in connection with the acquisitions. Intangible assets subject to amortization were as follows (in thousands) : August 28, 2021 May 29, 2021 Gross Amounts: Trade Name $ 659 $ 659 Customer Relationships (1) 3,416 3,426 Non-compete Agreements 177 177 Technology 230 230 Total Gross Amounts $ 4,482 $ 4,492 Accumulated Amortization: Trade Name $ 659 $ 659 Customer Relationships 1,299 1,249 Non-compete Agreements 177 177 Technology 143 137 Total Accumulated Amortization $ 2,278 $ 2,222 Net Intangible Assets $ 2,204 $ 2,270 (1) Change from prior periods reflect impact of foreign currency translation. The amortization expense associated with the intangible assets subject to amortization for the next five years is presented in the following table (in thousands) Fiscal Year Amortization Expense Remaining 2022 $ 189 2023 246 2024 232 2025 220 2026 185 Thereafter 1,132 Total amortization expense $ 2,204 The weighted average number of years of amortization expense remaining is 12.6 years. Income Taxes: We recognize deferred tax assets and liabilities based on the differences between financial statement carrying amounts and the tax bases of assets and liabilities. We regularly review our deferred tax assets for recoverability and determine the need for a valuation allowance based on a number of factors, including both positive and negative evidence. These factors include historical taxable income or loss, projected future taxable income or loss, the expected timing of the reversals of existing temporary differences and the implementation of tax planning strategies. 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. Accrued Liabilities: Accrued liabilities consisted of the following (in thousands): August 28, 2021 May 29, 2021 Compensation and payroll taxes $ 4,748 $ 4,945 Accrued severance 694 685 Professional fees 631 533 Deferred revenue 2,888 3,313 Other accrued expenses 5,573 4,706 Accrued Liabilities $ 14,534 $ 14,182 Warranties: We offer warranties for the limited number of specific products we manufacture. Our warranty terms generally range from one to three years. We estimate the cost to perform under the warranty obligation and recognize this estimated cost at the time of the related product sale. We record expense related to our warranty obligations as cost of sales in our consolidated statements of comprehensive income. Each quarter, we assess actual warranty costs incurred on a product-by-product basis and compare the warranty costs to our estimated warranty obligation. With respect to new products, estimates are based generally on knowledge of the products and warranty experience, if a sufficient history exists. Warranty reserves are established for costs that are expected to be incurred after the sale and delivery of products under warranty. Warranty reserves are included in accrued liabilities on our consolidated balance sheets. The warranty reserves are determined based on known product failures, historical experience and other available evidence. Warranty reserves were approximately $0.6 million as of August 28, 2021 and $0.5 million as of May 29, 2021. |
Lease Obligations and Other Com
Lease Obligations and Other Commitments | 3 Months Ended |
Aug. 28, 2021 | |
Commitments And Contingencies Disclosure [Abstract] | |
Lease Obligations and Other Commitments | 4. LEASE OBLIGATIONS AND OTHER COMMITMENTS The Company leases real and personal property in the normal course of business under various operating leases and financing leases. The Company has two types of operating leases: leases for facility space and leases for automobiles. Most of the leased facility space is for sales and general office use. Automobile leases are used throughout the Company. The financing lease is for our computer servers. The gross amounts of assets and liabilities related to both operating and financing leases were as follows (in thousands) : Lease Type August 28, 2021 May 29, 2021 Operating lease ROU asset $ 3,831 $ 2,262 Financing lease ROU asset 285 308 Total Lease ROU asset $ 4,116 $ 2,570 Operating lease liability current $ 1,193 $ 918 Financing lease liability current 104 148 Total lease liability current $ 1,297 $ 1,066 Operating lease liability non-current $ 2,638 $ 1,358 Total lease liability non-current $ 2,638 $ 1,358 The components of lease costs were as follows (in thousands) : Three Months Ended August 28, 2021 August 29, 2020 Consolidated operating lease expense Operating expenses $ 455 $ 488 Consolidated financing lease amortization Operating expenses 23 23 Consolidated financing lease interest Interest expense 2 4 Consolidated financing lease expense 25 27 Net lease cost $ 480 $ 515 The approximate future minimum lease payments under operating and financing leases at August 28, 2021 were as follows (in thousands) : Fiscal Year Operating Leases Financing Leases Total Remaining 2022 $ 1,033 $ 106 $ 1,139 2023 1,192 — 1,192 2024 816 — 816 2025 575 — 575 2026 403 — 403 Thereafter 95 — 95 Total lease payments 4,114 106 4,220 Less imputed interest 283 2 285 Net minimum lease payments $ 3,831 $ 104 $ 3,935 The weighted average remaining lease terms and interest rates of leases held by the Company as of August 28, 2021 were as follows: Lease Type Weighted Average Remaining Lease Term in Years Weighted Average Interest Rate Operating leases 3.7 4.5% Financing leases 0.6 4.6% The cash outflows of the leasing activity of the Company as lessee for three months ending August 28, 2021 and August 29, 2020 were as follows (in thousands) : Three Months Ended Cash Flow Source Classification August 28, 2021 August 29, 2020 Operating cash flows from operating leases Operating activities $ 1,554 $ 261 Operating cash flows from financing leases Operating activities 44 42 Finance cash flows from financing leases Financing activities 45 45 |
Income Taxes
Income Taxes | 3 Months Ended |
Aug. 28, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 5. INCOME TAXES We recorded an income tax provision of $0.2 million and $0.1 million for the first three months of fiscal 2022 and the first three months of fiscal 2021, respectively. The effective income tax rate during the first three months of fiscal 2022 was a tax provision of 5.9% as compared to a tax provision of (12.1%) during the first three months of fiscal 2021. The difference in rate during the first three months of fiscal 2022 as compared to the first three months of fiscal 2021 reflects changes in our geographical distribution of income (loss). The 5.9% effective income tax rate differs from the federal statutory rate of 21% as a result of our geographical distribution of income (loss) and the movement of the valuation allowance against our U.S. state and federal net deferred tax assets. In the normal course of business, we are subject to examination by taxing authorities throughout the world. Generally, years prior to fiscal 2015 are closed for examination under the statute of limitation for U.S. federal, U.S. state and local or non-U.S. tax jurisdictions. We are currently under examination in Thailand (fiscal 2008 through 2011) and Germany (fiscal 2015 through 2018). Our primary foreign tax jurisdictions are Germany and the Netherlands. We have tax years open in Germany beginning in fiscal 2015 and the Netherlands beginning in fiscal 2018. We have historically determined that certain undistributed earnings of our foreign subsidiaries, to the extent of cash available, will be repatriated to the U.S. The deferred tax liability on the outside basis difference is now primarily withholding tax on future dividend distributions. We have provided a deferred tax liability of less than $0.1 million as of both August 28, 2021 and as of May 29, 2021. As of August 28, 2021 and as of May 29, 2021, our worldwide liability for uncertain tax positions related to continuing operations was $0.1 million, excluding interest and penalties. We record penalties and interest related to uncertain tax positions in the income tax expense line item within the consolidated statements of comprehensive income. The valuation allowance against the net deferred tax assets that will more likely than not be realized was $11.5 million as of August 28, 2021. The valuation allowance against the net deferred tax assets was $12.2 million as of May 29, 2021 as no material additional domestic federal and state net deferred tax assets were generated during the first quarter of fiscal 2021 from losses in the U.S. jurisdiction. A full valuation allowance on the U.S. and state deferred tax assets will be maintained until sufficient positive evidence related to sources of future taxable income exists to support a reversal of the valuation allowance. 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. |
Calculation of Earnings Per Sha
Calculation of Earnings Per Share | 3 Months Ended |
Aug. 28, 2021 | |
Earnings Per Share [Abstract] | |
Calculation of Earnings Per Share | 6. CALCULATION OF EARNINGS PER SHARE We have authorized 17,000,000 shares of common stock and 3,000,000 shares of Class B common stock. The Class B common stock has 10 votes per share and has transferability restrictions; however, Class B common stock 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 cash dividends are limited to 90% of the amount of common stock cash dividends. In accordance with ASC 260-10, Earnings Per Share The earnings per share (“EPS”) presented in our unaudited consolidated statements of comprehensive income were based on the following amounts ( in thousands, except per share amounts Three Months Ended August 28, 2021 August 29, 2020 Basic Diluted Basic Diluted Numerator for Basic and Diluted EPS: Net income (loss) $ 2,635 $ 2,635 $ (1,147 ) $ (1,147 ) Less dividends: Common stock 673 673 667 667 Class B common stock 113 113 113 113 Undistributed earnings (loss) $ 1,849 $ 1,849 $ (1,927 ) $ (1,927 ) Common stock undistributed earnings (loss) $ 1,582 $ 1,588 $ (1,646 ) $ (1,646 ) Class B common stock undistributed earnings (loss) 267 261 (281 ) (281 ) Total undistributed earnings (loss) $ 1,849 $ 1,849 $ (1,927 ) $ (1,927 ) Denominator for Basic and Diluted EPS: Common stock weighted average shares 11,194 11,194 11,070 11,070 Effect of dilutive securities Dilutive stock options 273 — Denominator for diluted EPS adjusted for weighted average shares and assumed conversion 11,467 11,070 Class B commons stock weighted average shares, and shares under if-converted method for diluted EPS 2,097 2,097 2,097 2,097 Net income (loss) per share: Common stock $ 0.20 $ 0.20 $ (0.09 ) $ (0.09 ) Class B common stock $ 0.18 $ 0.18 $ (0.08 ) $ (0.08 ) Note: The were no common stock options that were antidilutive in the first quarter of fiscal 2022. Common stock options that were anti-dilutive and not included in diluted earnings per common share for the first quarter of fiscal 2021 were 1,593. |
Segment Reporting
Segment Reporting | 3 Months Ended |
Aug. 28, 2021 | |
Segment Reporting [Abstract] | |
Segment Reporting | 7 . SEGMENT REPORTING We have identified three reportable segments as follows: 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. We provide solutions and add value through design-in support, systems integration, prototype design and manufacturing, testing, logistics and aftermarket technical service and repair—all through our existing global infrastructure. PMT’s focus is on products for power, RF and microwave applications for customers in 5G, alternative energy, aviation, broadcast, communications, industrial, marine, medical, military, scientific and semiconductor markets. PMT focuses on various applications including broadcast transmission, CO2 laser cutting, diagnostic imaging, dielectric and induction heating, high energy transfer, high voltage switching, plasma, power conversion, radar and radiation oncology. PMT also offers its customers technical services for both microwave and industrial equipment. Canvys provides customized display solutions serving the corporate enterprise, financial, healthcare, industrial and medical original equipment manufacturers markets. 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. We partner with both private label manufacturing companies and leading branded hardware vendors to offer the highest quality display and touch solutions and customized computing platforms. Healthcare manufactures, repairs, refurbishes and distributes high value replacement parts and equipment for the healthcare market including hospitals, medical centers, asset management companies, independent service organizations and multi-vendor service providers. Products include diagnostic imaging replacement parts for CT and MRI systems; replacement CT and MRI tubes; CT service training; MRI coils, cold heads and RF amplifiers; hydrogen thyratrons, klystrons, magnetrons; flat panel detector upgrades; pre-owned CT systems; and additional replacement solutions currently under development for the diagnostic imaging service market. 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. The CEO, who is the chief operating decision maker, evaluates performance and allocates resources primarily based on the gross profit of each segment. Operating results by segment are summarized in the following table ( in thousands Three Months Ended August 28, 2021 August 29, 2020 PMT Net Sales $ 43,009 $ 30,252 Gross Profit 12,931 9,971 Canvys Net Sales $ 8,441 $ 6,712 Gross Profit 2,818 2,284 Healthcare Net Sales $ 2,254 $ 1,848 Gross Profit 548 104 Geographic net sales information is primarily grouped by customer destination into five areas: North America; Asia/Pacific; Europe; Latin America; and Other. Net sales and gross profit by geographic region are summarized in the following table ( in thousands Three Months Ended August 28, 2021 August 29, 2020 Net Sales North America $ 20,528 $ 16,129 Asia/Pacific 13,246 10,035 Europe 17,050 10,687 Latin America 2,875 1,927 Other (1) 5 34 Total $ 53,704 $ 38,812 Gross Profit North America $ 7,380 $ 6,017 Asia/Pacific 4,146 3,078 Europe 4,789 3,356 Latin America 1,081 662 Other (1) (1,099 ) (754 ) Total $ 16,297 $ 12,359 (1) Other includes primarily net sales not allocated to a specific geographical region, unabsorbed value-add costs and other unallocated expenses. We sell our products to customers in diversified industries and perform periodic credit evaluations of our customers’ financial condition. Terms are generally on open account, payable net 30 days in North America, and vary throughout Asia/Pacific, Europe and Latin America. Estimates of credit losses are recorded in the financial statements based on monthly reviews of outstanding accounts. |
Risks and Uncertainties
Risks and Uncertainties | 3 Months Ended |
Aug. 28, 2021 | |
Risks And Uncertainties [Abstract] | |
Risks and Uncertainties | 8. RISKS AND UNCERTAINTIES Company Response to COVID-19 In March 2020, the World Health Organization classified the outbreak of COVID-19 as a pandemic. Thereafter, most U.S. 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. The shelter in place directives generally required the closure of businesses that did not provide essential functions. The Company was considered a critical supplier of products to healthcare and critical infrastructure businesses. 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. As such, the Company qualified as an “Essential Business” and the Company continued our manufacturing and distribution operations throughout 2021. 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. The impact of the COVID-19 outbreak and its effects continue to evolve. 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. 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. 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. 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. 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. Management continues to monitor the global situation on its financial condition, liquidity, operations, suppliers, industry and workforce. 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. Company Response to CARES Act On March 27, 2020, Congress enacted the Coronavirus Aid, Relief and Economic Security (“CARES”) Act to provide certain relief as a result of the COVID-19 outbreak. 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. As of August 28, 2021, the Company deferred $0.9 million of employer-side social security tax payments. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Aug. 28, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 9. FAIR VALUE MEASUREMENTS Investments are measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820. The Company had no investments as of August 28, 2021 and May 29, 2021. |
Related Party Transaction
Related Party Transaction | 3 Months Ended |
Aug. 28, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transaction | 10. RELATED PARTY TRANSACTION On June 15, 2015, the Company entered into a lease agreement for the IMES facility with LDL, LLC. That lease agreement was extended for five years in fiscal 2021. The Company shall be entitled to extend the term of the lease for a period of an additional five years by notifying the landlord in writing of its intention to do so within six months of the expiration of the term. The Executive Vice President of IMES, Lee A. McIntyre III (former owner of IMES), has an ownership interest in LDL, LLC. The lease agreement provides for monthly payments over five years with total future minimum lease payments of $0.6 million. Rental expense related to this lease amounted to less than $0.1 million for the three months ended August 28, 2021 and August 29, 2020. |
Critical Accounting Policies _2
Critical Accounting Policies and Estimates (Policies) | 3 Months Ended |
Aug. 28, 2021 | |
Accounting Policies [Abstract] | |
Inventories, net | Inventories, net: Our consolidated inventories were stated at the lower of cost and net realizable value, generally using a weighted-average cost method. Our net inventories include approximately $59.6 million of finished goods, $4.6 million of raw materials and $3.4 million of work-in-progress as of August 28, 2021, as compared to approximately $57.0 million of finished goods, $3.9 million of raw materials and $2.6 million of work-in-progress as of May 29, 2021. At this time, we do not anticipate any material risks or uncertainties related to possible future inventory write-downs. Provisions for obsolete or slow moving inventories are recorded based upon regular analysis of stock rotation privileges, obsolescence, the exiting of certain markets and assumptions about future demand and market conditions. If future demand changes in the industry, or market conditions differ from management’s estimates, additional provisions may be necessary. Inventory reserves were approximately $5.9 million as of August 28, 2021 and $5.9 million as of May 29, 2021. |
Revenue Recognition | Revenue Recognition: The Company has a number of defined revenue streams across our reportable segments. Distribution is the Company’s largest revenue stream. The distribution business does not include a separate service bundled with the product sold or sold on top of the product. Distribution typically includes products purchased from our suppliers, stocked in our warehouses and then sold to our customers. 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. Control refers to the ability of the customer to direct the use of, and obtain substantially all of, the remaining benefits from the goods. Our transaction price consideration is fixed, unless otherwise disclosed below as variable consideration. G enerally, our contracts require our customers to pay for goods after we deliver products to them. 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. The Company also sells 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. The Company recognizes services revenue when the repair, installation or training is performed. The services we provide are relatively short in duration and typically completed in one or two weeks. Therefore, at each reporting date, the amount of unbilled work is insignificant. The services revenue has consistently accounted for less than 5% of the Company’s total revenues and is expected to continue at that level. We also record discounts taken and estimate returns based on historical experience. Our products are often manufactured to meet the specific design needs of our customers’ applications. Our engineers work closely with customers to ensure that our products will meet their needs. Our customers are under no obligation to compensate us for designing the products we sell. Contracts with customers A Contract Liabilities: Contract liabilities and revenue recognized were as follows ( in thousands ): May 29, 2021 Additions Revenue Recognized August 28, 2021 Contract liabilities (deferred revenue) $ 3,313 $ 1,641 $ (2,066 ) $ 2,888 The Company receives advance payments or deposits from our customers before revenue is recognized resulting in contract liabilities. Contract liabilities are included in accrued liabilities in the consolidated balance sheets. Performance obligations and satisfaction of performance obligation in the contract Each accepted purchase order identifies a distinct good or service as the performance obligation. The goods are generally standard products we purchased from a supplier and stocked on our shelves. 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. 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. Each purchase order explicitly states the goods or service that we promise to transfer to the customer. The promises to the customer are limited only to those goods or service. The performance obligation is our promise to deliver both goods that were produced by the Company and resale of goods that we purchase from our suppliers. Our shipping and handling activities for destination shipments are performed prior to the customer obtaining control. As such, they are not a separate promised service. 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. 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. Our customers are generally not resellers, but rather businesses that incorporate our products into their processes from which they generate an economic benefit. The goods are also distinct in that each item sold to the customer is clearly identified on both the purchase order and resulting invoice. Each product we sell benefits the customer independently of the other products. 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 . Determine the transaction price and variable consideration The transaction price for each product is the amount invoiced to the customer. Each product on a purchase order is a separate performance obligation with an observable standalone selling price. Recognize revenue when the entity satisfies a performance obligation 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. We believe that the transfer of title best represents when the customer obtains control of the goods. Prior to that date, we do not have right to payment, and the significant risks and rewards remain with us. The significant risks and rewards of ownership of the inventory transfer simultaneously with the transfer of title. The customer’s acceptance of the goods is based on objective measurements, not subjective. Additional considerations Sale with right of return: Our return policy is available to customers in our terms and conditions found on our website www.rell.com. The policy varies by business unit. The Company allows returns with prior written authorization and we allow returns within ten days of shipment for replacement parts. The Company maintains a reserve for returns based on historical trends that covers all contracts and revenue streams The reserve is considered immaterial at each balance sheet date for further consideration. Returns for defective product are typically covered by our suppliers’ warranty, thus, returns for defective product are not factored into our reserve. Warranties: We offer warranties for the limited number of specific products we manufacture. For further information regarding the impact of warranties see the Warranties discussion elsewhere in Note 3. Principal versus agent considerations: Principal versus agent guidance was considered for customized products that are provided by our suppliers versus manufactured by the Company. The Company acts as the principal as we are responsible for satisfying the performance obligation. We have primary responsibility for fulfilling the contract, we have inventory risk prior to delivery to our customer, we establish prices, our consideration is not in the form of a commission and we bear the credit risk. The Company recognizes revenue in the gross amount of consideration. See Note 7, Segment Reporting, |
Loss Contingencies | Loss Contingencies: We accrue a liability for loss contingencies when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. If we determine that there is at least a reasonable possibility that a loss may have been incurred, we will include a disclosure describing the contingency. |
Intangible Assets | Intangible Assets: Intangible assets are initially recorded at their fair market values determined by quoted market prices in active markets, if available, or recognized valuation models. Intangible assets that have finite useful lives are amortized over their useful lives either on a straight-line basis or over their projected future cash flows and are tested for impairment when events or changes in circumstances occur that indicate possible impairment. Our intangible assets represent the fair value for trade name, customer relationships, non-compete agreements and technology acquired in connection with the acquisitions. Intangible assets subject to amortization were as follows (in thousands) : August 28, 2021 May 29, 2021 Gross Amounts: Trade Name $ 659 $ 659 Customer Relationships (1) 3,416 3,426 Non-compete Agreements 177 177 Technology 230 230 Total Gross Amounts $ 4,482 $ 4,492 Accumulated Amortization: Trade Name $ 659 $ 659 Customer Relationships 1,299 1,249 Non-compete Agreements 177 177 Technology 143 137 Total Accumulated Amortization $ 2,278 $ 2,222 Net Intangible Assets $ 2,204 $ 2,270 (1) Change from prior periods reflect impact of foreign currency translation. The amortization expense associated with the intangible assets subject to amortization for the next five years is presented in the following table (in thousands) Fiscal Year Amortization Expense Remaining 2022 $ 189 2023 246 2024 232 2025 220 2026 185 Thereafter 1,132 Total amortization expense $ 2,204 The weighted average number of years of amortization expense remaining is 12.6 years. |
Income Taxes | Income Taxes: We recognize deferred tax assets and liabilities based on the differences between financial statement carrying amounts and the tax bases of assets and liabilities. We regularly review our deferred tax assets for recoverability and determine the need for a valuation allowance based on a number of factors, including both positive and negative evidence. These factors include historical taxable income or loss, projected future taxable income or loss, the expected timing of the reversals of existing temporary differences and the implementation of tax planning strategies. 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. |
Accrued Liabilities | Accrued Liabilities: Accrued liabilities consisted of the following (in thousands): August 28, 2021 May 29, 2021 Compensation and payroll taxes $ 4,748 $ 4,945 Accrued severance 694 685 Professional fees 631 533 Deferred revenue 2,888 3,313 Other accrued expenses 5,573 4,706 Accrued Liabilities $ 14,534 $ 14,182 |
Warranties | Warranties: We offer warranties for the limited number of specific products we manufacture. Our warranty terms generally range from one to three years. We estimate the cost to perform under the warranty obligation and recognize this estimated cost at the time of the related product sale. We record expense related to our warranty obligations as cost of sales in our consolidated statements of comprehensive income. Each quarter, we assess actual warranty costs incurred on a product-by-product basis and compare the warranty costs to our estimated warranty obligation. With respect to new products, estimates are based generally on knowledge of the products and warranty experience, if a sufficient history exists. Warranty reserves are established for costs that are expected to be incurred after the sale and delivery of products under warranty. Warranty reserves are included in accrued liabilities on our consolidated balance sheets. The warranty reserves are determined based on known product failures, historical experience and other available evidence. Warranty reserves were approximately $0.6 million as of August 28, 2021 and $0.5 million as of May 29, 2021. |
Critical Accounting Policies _3
Critical Accounting Policies and Estimates (Tables) | 3 Months Ended |
Aug. 28, 2021 | |
Accounting Policies [Abstract] | |
Schedule of Contract Liabilities and Revenue Recognized | Contract Liabilities: Contract liabilities and revenue recognized were as follows ( in thousands ): May 29, 2021 Additions Revenue Recognized August 28, 2021 Contract liabilities (deferred revenue) $ 3,313 $ 1,641 $ (2,066 ) $ 2,888 |
Schedule of Intangible Assets Subject to Amortization | Intangible assets subject to amortization were as follows August 28, 2021 May 29, 2021 Gross Amounts: Trade Name $ 659 $ 659 Customer Relationships (1) 3,416 3,426 Non-compete Agreements 177 177 Technology 230 230 Total Gross Amounts $ 4,482 $ 4,492 Accumulated Amortization: Trade Name $ 659 $ 659 Customer Relationships 1,299 1,249 Non-compete Agreements 177 177 Technology 143 137 Total Accumulated Amortization $ 2,278 $ 2,222 Net Intangible Assets $ 2,204 $ 2,270 (1) Change from prior periods reflect impact of foreign currency translation. |
Schedule of the Amortization Expense for the Next Five Years | The amortization expense associated with the intangible assets subject to amortization for the next five years is presented in the following table (in thousands) Fiscal Year Amortization Expense Remaining 2022 $ 189 2023 246 2024 232 2025 220 2026 185 Thereafter 1,132 Total amortization expense $ 2,204 |
Schedule of Accrued Liabilities | Accrued Liabilities: Accrued liabilities consisted of the following (in thousands): August 28, 2021 May 29, 2021 Compensation and payroll taxes $ 4,748 $ 4,945 Accrued severance 694 685 Professional fees 631 533 Deferred revenue 2,888 3,313 Other accrued expenses 5,573 4,706 Accrued Liabilities $ 14,534 $ 14,182 |
Lease Obligations and Other C_2
Lease Obligations and Other Commitments (Tables) | 3 Months Ended |
Aug. 28, 2021 | |
Commitments And Contingencies Disclosure [Abstract] | |
Schedule of Gross Amount Assets and Liabilities Related to Operating and Financing Leases | The gross amounts of assets and liabilities related to both operating and financing leases were as follows (in thousands) : Lease Type August 28, 2021 May 29, 2021 Operating lease ROU asset $ 3,831 $ 2,262 Financing lease ROU asset 285 308 Total Lease ROU asset $ 4,116 $ 2,570 Operating lease liability current $ 1,193 $ 918 Financing lease liability current 104 148 Total lease liability current $ 1,297 $ 1,066 Operating lease liability non-current $ 2,638 $ 1,358 Total lease liability non-current $ 2,638 $ 1,358 |
Components of Lease Costs | The components of lease costs were as follows (in thousands) : Three Months Ended August 28, 2021 August 29, 2020 Consolidated operating lease expense Operating expenses $ 455 $ 488 Consolidated financing lease amortization Operating expenses 23 23 Consolidated financing lease interest Interest expense 2 4 Consolidated financing lease expense 25 27 Net lease cost $ 480 $ 515 |
Schedule of Future Minimum Lease Payments under Operating and Financing Leases | The approximate future minimum lease payments under operating and financing leases at August 28, 2021 were as follows (in thousands) : Fiscal Year Operating Leases Financing Leases Total Remaining 2022 $ 1,033 $ 106 $ 1,139 2023 1,192 — 1,192 2024 816 — 816 2025 575 — 575 2026 403 — 403 Thereafter 95 — 95 Total lease payments 4,114 106 4,220 Less imputed interest 283 2 285 Net minimum lease payments $ 3,831 $ 104 $ 3,935 |
Schedule of Weighted Average Remaining Lease Terms and Interest Rates of Leases | The weighted average remaining lease terms and interest rates of leases held by the Company as of August 28, 2021 were as follows: Lease Type Weighted Average Remaining Lease Term in Years Weighted Average Interest Rate Operating leases 3.7 4.5% Financing leases 0.6 4.6% |
Schedule of Cash Outflows of Leasing Activity | The cash outflows of the leasing activity of the Company as lessee for three months ending August 28, 2021 and August 29, 2020 were as follows (in thousands) : Three Months Ended Cash Flow Source Classification August 28, 2021 August 29, 2020 Operating cash flows from operating leases Operating activities $ 1,554 $ 261 Operating cash flows from financing leases Operating activities 44 42 Finance cash flows from financing leases Financing activities 45 45 |
Calculation of Earnings Per S_2
Calculation of Earnings Per Share (Tables) | 3 Months Ended |
Aug. 28, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The earnings per share (“EPS”) presented in our unaudited consolidated statements of comprehensive income were based on the following amounts ( in thousands, except per share amounts Three Months Ended August 28, 2021 August 29, 2020 Basic Diluted Basic Diluted Numerator for Basic and Diluted EPS: Net income (loss) $ 2,635 $ 2,635 $ (1,147 ) $ (1,147 ) Less dividends: Common stock 673 673 667 667 Class B common stock 113 113 113 113 Undistributed earnings (loss) $ 1,849 $ 1,849 $ (1,927 ) $ (1,927 ) Common stock undistributed earnings (loss) $ 1,582 $ 1,588 $ (1,646 ) $ (1,646 ) Class B common stock undistributed earnings (loss) 267 261 (281 ) (281 ) Total undistributed earnings (loss) $ 1,849 $ 1,849 $ (1,927 ) $ (1,927 ) Denominator for Basic and Diluted EPS: Common stock weighted average shares 11,194 11,194 11,070 11,070 Effect of dilutive securities Dilutive stock options 273 — Denominator for diluted EPS adjusted for weighted average shares and assumed conversion 11,467 11,070 Class B commons stock weighted average shares, and shares under if-converted method for diluted EPS 2,097 2,097 2,097 2,097 Net income (loss) per share: Common stock $ 0.20 $ 0.20 $ (0.09 ) $ (0.09 ) Class B common stock $ 0.18 $ 0.18 $ (0.08 ) $ (0.08 ) Note: The were no common stock options that were antidilutive in the first quarter of fiscal 2022. Common stock options that were anti-dilutive and not included in diluted earnings per common share for the first quarter of fiscal 2021 were 1,593. |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Aug. 28, 2021 | |
Segment Reporting [Abstract] | |
Schedule of Operating Results by Segment | Operating results by segment are summarized in the following table ( in thousands Three Months Ended August 28, 2021 August 29, 2020 PMT Net Sales $ 43,009 $ 30,252 Gross Profit 12,931 9,971 Canvys Net Sales $ 8,441 $ 6,712 Gross Profit 2,818 2,284 Healthcare Net Sales $ 2,254 $ 1,848 Gross Profit 548 104 |
Schedule of Net Sales and Gross Profit by Geographic Region | Net sales and gross profit by geographic region are summarized in the following table ( in thousands Three Months Ended August 28, 2021 August 29, 2020 Net Sales North America $ 20,528 $ 16,129 Asia/Pacific 13,246 10,035 Europe 17,050 10,687 Latin America 2,875 1,927 Other (1) 5 34 Total $ 53,704 $ 38,812 Gross Profit North America $ 7,380 $ 6,017 Asia/Pacific 4,146 3,078 Europe 4,789 3,356 Latin America 1,081 662 Other (1) (1,099 ) (754 ) Total $ 16,297 $ 12,359 (1) Other includes primarily net sales not allocated to a specific geographical region, unabsorbed value-add costs and other unallocated expenses. |
Description of the Company - Ad
Description of the Company - Additional Information (Details) | 3 Months Ended |
Aug. 28, 2021Segment | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Number of operating segments | 3 |
Number of reportable segments | 3 |
Critical Accounting Policies _4
Critical Accounting Policies and Estimates - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 28, 2021 | May 29, 2021 | |
Critical Accounting Policies And Estimates [Line Items] | ||
Finished goods | $ 59.6 | $ 57 |
Raw material | 4.6 | 3.9 |
Work in progress | 3.4 | 2.6 |
Inventory valuation reserves | $ 5.9 | 5.9 |
Weighted average number of years of amortization expense | 12 years 7 months 6 days | |
Warranty reserves | $ 0.6 | $ 0.5 |
Maximum | ||
Critical Accounting Policies And Estimates [Line Items] | ||
Services revenue recognized as percentage of aggregate revenue | 5.00% | |
Warranty term | 3 years | |
Minimum | ||
Critical Accounting Policies And Estimates [Line Items] | ||
Warranty term | 1 year |
Critical Accounting Policies _5
Critical Accounting Policies and Estimates - Schedule of Contract Liabilities and Revenue Recognized (Details) $ in Thousands | 3 Months Ended |
Aug. 28, 2021USD ($) | |
Revenue From Contract With Customer [Abstract] | |
Contract Liabilities (Deferred Revenue), Beginning Balance | $ 3,313 |
Contract Liabilities (Deferred Revenue), Additions | 1,641 |
Contract Liabilities (Deferred Revenue), Revenue Recognized | (2,066) |
Contract Liabilities (Deferred Revenue), Ending Balance | $ 2,888 |
Critical Accounting Policies _6
Critical Accounting Policies and Estimates - Schedule of Intangible Assets Subject to Amortization (Details) - USD ($) $ in Thousands | Aug. 28, 2021 | May 29, 2021 | |
Finite-Lived Intangible Assets [Line Items] | |||
Total Gross Amounts | $ 4,482 | $ 4,492 | |
Total Accumulated Amortization | 2,278 | 2,222 | |
Net Intangible Assets | 2,204 | 2,270 | |
Trade Names | |||
Finite-Lived Intangible Assets [Line Items] | |||
Total Gross Amounts | 659 | 659 | |
Total Accumulated Amortization | 659 | 659 | |
Customer Relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Total Gross Amounts | [1] | 3,416 | 3,426 |
Total Accumulated Amortization | 1,299 | 1,249 | |
Non-compete Agreements | |||
Finite-Lived Intangible Assets [Line Items] | |||
Total Gross Amounts | 177 | 177 | |
Total Accumulated Amortization | 177 | 177 | |
Technology | |||
Finite-Lived Intangible Assets [Line Items] | |||
Total Gross Amounts | 230 | 230 | |
Total Accumulated Amortization | $ 143 | $ 137 | |
[1] | Change from prior periods reflect impact of foreign currency translation. |
Critical Accounting Policies _7
Critical Accounting Policies and Estimates - Schedule of the Amortization Expense for the Next Five Years (Details) - USD ($) $ in Thousands | Aug. 28, 2021 | May 29, 2021 |
Fiscal Year | ||
Remaining 2022 | $ 189 | |
2023 | 246 | |
2024 | 232 | |
2025 | 220 | |
2026 | 185 | |
Thereafter | 1,132 | |
Net Intangible Assets | $ 2,204 | $ 2,270 |
Critical Accounting Policies _8
Critical Accounting Policies and Estimates - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands | Aug. 28, 2021 | May 29, 2021 |
Accrued Liabilities: | ||
Compensation and payroll taxes | $ 4,748 | $ 4,945 |
Accrued severance | 694 | 685 |
Professional fees | 631 | 533 |
Deferred revenue | 2,888 | 3,313 |
Other accrued expenses | 5,573 | 4,706 |
Accrued Liabilities | $ 14,534 | $ 14,182 |
Lease Obligations and Other C_3
Lease Obligations and Other Commitments - Schedule of Gross Amount Assets and Liabilities Related to Operating and Financing Leases (Details) - USD ($) $ in Thousands | Aug. 28, 2021 | May 29, 2021 |
Lease Type | ||
Operating lease ROU asset | $ 3,831 | $ 2,262 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Total Lease ROU asset | Total Lease ROU asset |
Financing lease ROU asset | $ 285 | $ 308 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Total Lease ROU asset | Total Lease ROU asset |
Total Lease ROU asset | $ 4,116 | $ 2,570 |
Operating lease liability current | $ 1,193 | $ 918 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Total lease liability current | Total lease liability current |
Financing lease liability current | $ 104 | $ 148 |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List] | Total lease liability current | Total lease liability current |
Total lease liability current | $ 1,297 | $ 1,066 |
Operating lease liability non-current | $ 2,638 | $ 1,358 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Total lease liability non-current | Total lease liability non-current |
Total lease liability non-current | $ 2,638 | $ 1,358 |
Lease Obligations and Other C_4
Lease Obligations and Other Commitments - Components of Lease Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Aug. 28, 2021 | Aug. 29, 2020 | |
Lease Cost [Abstract] | ||
Consolidated operating lease expense | $ 455 | $ 488 |
Consolidated financing lease amortization | 23 | 23 |
Consolidated financing lease interest | 2 | 4 |
Consolidated financing lease expense | 25 | 27 |
Net lease cost | $ 480 | $ 515 |
Lease Obligations and Other C_5
Lease Obligations and Other Commitments - Schedule of Future Minimum Lease Payments Under Operating and Financing Leases (Details) $ in Thousands | Aug. 28, 2021USD ($) |
Operating Leases | |
Remaining 2022 | $ 1,033 |
2023 | 1,192 |
2024 | 816 |
2025 | 575 |
2026 | 403 |
Thereafter | 95 |
Total lease payments | 4,114 |
Less imputed interest | 283 |
Net minimum lease payments | 3,831 |
Finance Leases | |
Remaining 2022 | 106 |
Total lease payments | 106 |
Less imputed interest | 2 |
Net minimum lease payments | 104 |
Total | |
Remaining 2022 | 1,139 |
2023 | 1,192 |
2024 | 816 |
2025 | 575 |
2026 | 403 |
Thereafter | 95 |
Total lease payments | 4,220 |
Less imputed interest | 285 |
Net minimum lease payments | $ 3,935 |
Lease Obligations and Other C_6
Lease Obligations and Other Commitments - Schedule of Weighted Average Lease Terms and Interest Rates of Leases (Details) | Aug. 28, 2021 |
Commitments And Contingencies Disclosure [Abstract] | |
Weighted average remaining lease term in years, operating leases | 3 years 8 months 12 days |
Weighted average remaining lease term in years, financing leases | 7 months 6 days |
Weighted average interest rate, operating leases | 4.50% |
Weighted average interest rate, financing leases | 4.60% |
Lease Obligations and Other C_7
Lease Obligations and Other Commitments - Schedule of Cash Outflows of Leasing Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Aug. 28, 2021 | Aug. 29, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | ||
Operating cash flows from operating leases | $ 1,554 | $ 261 |
Operating cash flows from financing leases | 44 | 42 |
Finance cash flows from financing leases | $ 45 | $ 45 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) | 3 Months Ended | ||
Aug. 28, 2021 | Aug. 29, 2020 | May 29, 2021 | |
Operating Loss Carryforwards [Line Items] | |||
Income tax provision | $ 167,000 | $ 124,000 | |
Effective income tax rate | 5.90% | (12.10%) | |
U.S. statutory tax rate | 21.00% | ||
Liability for uncertain tax positions related to continuing operations, excluding interest and penalties | $ 100,000 | $ 100,000 | |
Deferred tax valuation allowance | 11,500,000 | 12,200,000 | |
Maximum | |||
Operating Loss Carryforwards [Line Items] | |||
Deferred tax liability, undistributed earnings of foreign subsidiaries | $ 100,000 | $ 100,000 |
Calculation of Earnings Per S_3
Calculation of Earnings Per Share - Additional Information (Details) | 3 Months Ended | |
Aug. 28, 2021Voteshares | Aug. 29, 2020shares | |
Schedule Of Earning Per Share [Line Items] | ||
Limit of cash dividends Class B common stock (percent) | 90.00% | |
Common stock options anti-dilutive | 0 | 1,593,000 |
Common Stock | ||
Schedule Of Earning Per Share [Line Items] | ||
Common stock shares, authorized | 17,000,000 | |
Common Class B | ||
Schedule Of Earning Per Share [Line Items] | ||
Common stock shares, authorized | 3,000,000 | |
Number of votes per share | Vote | 10 |
Calculation of Earnings Per S_4
Calculation of Earnings Per Share - Schedule of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Aug. 28, 2021 | Aug. 29, 2020 | |
Numerator for Basic and Diluted Earnings Per Share: | ||
Net income (loss) | $ 2,635 | $ (1,147) |
Undistributed earnings (loss), Basic | 1,849 | (1,927) |
Undistributed earnings (loss), Diluted | $ 1,849 | $ (1,927) |
Denominator for Basic and Diluted Earnings Per Share: | ||
Effect of dilutive securities dilutive stock options | 273 | |
Weighted Average Number of Shares Outstanding, Diluted | 11,467 | 11,070 |
Basic | ||
Numerator for Basic and Diluted Earnings Per Share: | ||
Net income (loss) | $ 2,635 | $ (1,147) |
Diluted | ||
Numerator for Basic and Diluted Earnings Per Share: | ||
Net income (loss) | 2,635 | (1,147) |
Common Stock | ||
Numerator for Basic and Diluted Earnings Per Share: | ||
Undistributed earnings (loss), Basic | 1,582 | (1,646) |
Undistributed earnings (loss), Diluted | $ 1,588 | $ (1,646) |
Denominator for Basic and Diluted Earnings Per Share: | ||
Weighted Average Number of Shares Outstanding, Basic | 11,194 | 11,070 |
Weighted Average Number of Shares Outstanding, Diluted | 11,467 | 11,070 |
Net income (loss) per share: | ||
Earnings Per Share, Basic | $ 0.20 | $ (0.09) |
Earnings Per Share, Diluted | $ 0.20 | $ (0.09) |
Common Stock | Basic | ||
Numerator for Basic and Diluted Earnings Per Share: | ||
Less dividends | $ 673 | $ 667 |
Common Stock | Diluted | ||
Numerator for Basic and Diluted Earnings Per Share: | ||
Less dividends | 673 | 667 |
Common Class B | ||
Numerator for Basic and Diluted Earnings Per Share: | ||
Undistributed earnings (loss), Basic | 267 | (281) |
Undistributed earnings (loss), Diluted | $ 261 | $ (281) |
Denominator for Basic and Diluted Earnings Per Share: | ||
Weighted Average Number of Shares Outstanding, Basic | 2,097 | 2,097 |
Weighted Average Number of Shares Outstanding, Diluted | 2,097 | 2,097 |
Net income (loss) per share: | ||
Earnings Per Share, Basic | $ 0.18 | $ (0.08) |
Earnings Per Share, Diluted | $ 0.18 | $ (0.08) |
Common Class B | Basic | ||
Numerator for Basic and Diluted Earnings Per Share: | ||
Less dividends | $ 113 | $ 113 |
Common Class B | Diluted | ||
Numerator for Basic and Diluted Earnings Per Share: | ||
Less dividends | $ 113 | $ 113 |
Segment Reporting - Additional
Segment Reporting - Additional Information (Details) | 3 Months Ended |
Aug. 28, 2021Segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 3 |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Operating Results by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Aug. 28, 2021 | Aug. 29, 2020 | |
Segment Reporting Information [Line Items] | ||
Net Sales | $ 53,704 | $ 38,812 |
Gross Profit | 16,297 | 12,359 |
PMT | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 43,009 | 30,252 |
Gross Profit | 12,931 | 9,971 |
Canvys | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 8,441 | 6,712 |
Gross Profit | 2,818 | 2,284 |
Healthcare | ||
Segment Reporting Information [Line Items] | ||
Net Sales | 2,254 | 1,848 |
Gross Profit | $ 548 | $ 104 |
Segment Reporting - Schedule _2
Segment Reporting - Schedule of Net Sales and Gross Profit by Geographic Region (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Aug. 28, 2021 | Aug. 29, 2020 | ||
Segment Reporting Information [Line Items] | |||
Net Sales | $ 53,704 | $ 38,812 | |
Gross Profit | 16,297 | 12,359 | |
North America | |||
Segment Reporting Information [Line Items] | |||
Net Sales | 20,528 | 16,129 | |
Gross Profit | 7,380 | 6,017 | |
Asia/Pacific | |||
Segment Reporting Information [Line Items] | |||
Net Sales | 13,246 | 10,035 | |
Gross Profit | 4,146 | 3,078 | |
Europe | |||
Segment Reporting Information [Line Items] | |||
Net Sales | 17,050 | 10,687 | |
Gross Profit | 4,789 | 3,356 | |
Latin America | |||
Segment Reporting Information [Line Items] | |||
Net Sales | 2,875 | 1,927 | |
Gross Profit | 1,081 | 662 | |
Other | |||
Segment Reporting Information [Line Items] | |||
Net Sales | [1] | 5 | 34 |
Gross Profit | [1] | $ (1,099) | $ (754) |
[1] | Other includes primarily net sales not allocated to a specific geographical region, unabsorbed value-add costs and other unallocated expenses. |
Risks and Uncertainties - Addit
Risks and Uncertainties - Additional Information (Details) $ in Millions | 3 Months Ended |
Aug. 28, 2021USD ($) | |
Risks And Uncertainties [Abstract] | |
Deferred employer social security tax payments | $ 0.9 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) - USD ($) | Aug. 28, 2021 | May 29, 2021 |
Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments measured at fair value | $ 0 | $ 0 |
Related Party Transaction - Add
Related Party Transaction - Additional Information (Details) - Lessor - LDL, LLC - Lee A. McIntyre III - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Aug. 28, 2021 | Aug. 29, 2020 | May 29, 2021 | |
Related Party Transaction [Line Items] | |||
Total future minimum lease payments | $ 0.6 | ||
Lease term | 5 years | ||
Renewal term | 5 years | ||
Extended term | 5 years | ||
Maximum | |||
Related Party Transaction [Line Items] | |||
Rental expense | $ 0.1 | $ 0.1 |