Richardson Electronics(RELL) - 2025 Q4 - Annual Report

PART I This part provides an overview of the company's business operations, risk factors, and legal disclosures ITEM 1. Business Richardson Electronics manufactures engineered solutions, green energy, and display products; Healthcare assets sold in FY2025 - Richardson Electronics, Ltd. is a global manufacturer of engineered solutions, green energy products, power grid and microwave tubes, and customized display solutions, serving diverse markets including alternative energy, healthcare, and semiconductor[16] - On January 24, 2025, the Company sold a substantial portion of its Healthcare business assets to DirectMed Imaging, LLC, and entered into an exclusive 10-year global supply agreement for repaired Siemens CT X-ray tubes and manufacturing of ALTA CT X-ray tubes[17] - The Healthcare asset sale resulted in a total loss of $5.1 million recorded for the fiscal year ended May 31, 2025[17] General This section provides general information about the company's business and operations Government Regulations This section outlines the government regulations impacting the company's operations Geography This section details the geographic scope of the company's business activities Business Segments The company operates through distinct business segments, each focusing on specific product lines and markets Power and Microwave Technologies (PMT) This segment focuses on power grid and microwave tubes and related engineered solutions Green Energy Solutions (GES) This segment provides products and solutions for the green energy market Canvys This segment specializes in customized display solutions for various applications Healthcare This segment previously offered healthcare products, with significant assets sold in fiscal 2025 Sales and Product Management This section describes the company's sales strategies and product management processes Distribution This section details the company's global distribution network and logistics International Sales This section covers the company's sales activities in international markets Major Customers This section identifies the company's significant customer relationships Human Capital This section provides an overview of the company's human resources and workforce management Recruitment & Staffing This section outlines the company's strategies for attracting and retaining talent Employees This section provides information regarding the company's employee base and structure Culture This section describes the company's organizational culture and values Website Access to SEC Reports This section details how to access the company's SEC filings online ITEM 1A. Risk Factors The company faces risks from sales, inventory, competition, supply chain, IT, international operations, finance, legal, and concentrated ownership - Key business and operational risks include failure to achieve sales and margin targets, significant inventory obsolescence charges due to evolving technology, and intense competitive pressures[47][48][49] - The Company is dependent on a limited number of vendors, with two suppliers each representing over 10% of total cost of sales in fiscal 2025, and faces risks from supply chain disruptions and reliance on information technology systems, including cybersecurity threats[51][52][53] - International operations, which account for 56% of sales, expose the Company to risks such as foreign currency exchange rate fluctuations, unstable political/economic conditions, and tariffs on products manufactured in China[39][67][69][70] - Legal and regulatory risks include potential intellectual property claims, substantial operational costs to comply with data privacy laws (e.g., GDPR, CCPA), and compliance with trade, export controls, and anti-corruption laws[72][75][78] - Edward J. Richardson, Chairman, CEO, and President, beneficially owned approximately 61% of the voting power of outstanding common stock as of July 28, 2025, allowing him to exert control over stockholder votes[82] Business and Operational Risks This section details risks related to the company's core business activities and operational processes Risks Related to International Operations This section outlines specific risks associated with the company's global business presence Financial Risks This section describes risks pertaining to the company's financial condition and capital structure Legal and Regulatory Risks This section covers risks arising from legal proceedings and regulatory compliance requirements Ownership Risks This section addresses risks related to the company's ownership structure and control General Risk Factors This section includes broad risk factors that could generally impact the company's business ITEM 1B. Unresolved Staff Comments The Company reported no unresolved staff comments from the SEC - There are no unresolved staff comments[89] ITEM 1C. Cybersecurity The company manages cybersecurity risks via a NIST-based framework and IRP, with Board oversight, and has not experienced material impacts from threats - The Company's cybersecurity risk management program follows the U.S. National Institute of Standards and Technology (NIST) Cyber Security Framework, focusing on identifying, assessing, managing, and remediating material risks[91][92] - An established Incident Response Plan (IRP) is executed by an Incident Response Team (IRT), led by the Information Systems Director, involving internal IT professionals and cross-functional stakeholders, potentially engaging external resources[93][94] - Cybersecurity threats have not materially affected the Company's business strategy, results of operations, or financial condition in the past three fiscal years[95] - The Board of Directors delegates cybersecurity risk oversight to the Audit Committee, which receives quarterly updates from the CFO on incidents, threats, mitigation strategies, and controls[97][98] Risk Management and Strategy This section details the company's approach to managing cybersecurity risks and strategic initiatives Governance This section outlines the governance structure for cybersecurity oversight within the company ITEM 2. Properties The company operates one owned and 24 leased global facilities, including its Illinois headquarters, supporting manufacturing, sales, and distribution across all segments - The Company owns one facility and leases 24 facilities globally, including its corporate headquarters and largest distribution center in LaFox, Illinois (224,000 sq ft)[99] - Facilities are geographically diverse across North America, Asia/Pacific, Europe, and Latin America, serving PMT, Canvys, GES, and Healthcare segments for corporate, sales, distribution, and manufacturing purposes[99][100] ITEM 3. Legal Proceedings The Company reported no material legal proceedings - There are no legal proceedings to report[101] ITEM 4. Mine Safety Disclosure The Company stated that Mine Safety Disclosure is not applicable to its operations - Mine Safety Disclosure is not applicable[102] PART II This part covers market information, financial performance, and internal controls ITEM 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on NASDAQ (RELL), paid $3.4 million in annual dividends, and joined the Russell 3000® Index in 2023 - The Company's common stock is traded on the NASDAQ Global Select Market