RICHARDSON ELECTRONICS LTD

Previous wording

Certain statements in this report may constitute “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. The terms “may”, “should”, “could”, “anticipate”, “believe”, “continues”, “estimate”, “expect”, “intend”, “objective”, “plan”, “potential”, “project” and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. These statements are based on management’s current expectations, intentions or beliefs and are subject to a number of factors, assumptions and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Factors that could cause or contribute to such differences or that might otherwise impact the business include; economic, labor and political conditions; global business disruption caused by the Russia invasion in Ukraine and related sanctions; currency exchange fluctuations; and the ability of the Company to manage its growth and the risk factors set forth in our Annual Report on Form 10-K filed with the SEC on July 31, 2023. We undertake no obligation to update any such factor or to publicly announce the results of any revisions to any forward-looking statements contained herein whether as a result of new information, future events or otherwise.

Current wording

Certain statements in this report may constitute “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. The terms “may”, “should”, “could”, “anticipate”, “believe”, “continues”, “estimate”, “expect”, “intend”, “objective”, “plan”, “potential”, “project” and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. These statements are based on management’s current expectations, intentions or beliefs and are subject to a number of factors, assumptions and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Factors that could cause or contribute to such differences or that might otherwise impact the business include; economic, labor and political conditions; global business disruption caused by the Russian invasion of Ukraine and related sanctions; currency exchange fluctuations; and the ability of the Company to manage its growth and the risk factors set forth in our Annual Report on Form 10-K filed with the SEC on July 31, 2023. We undertake no obligation to update any such factor or to publicly announce the results of any revisions to any forward-looking statements contained herein whether as a result of new information, future events or otherwise.

Previous wording

Results of Operations – an analysis and comparison of our consolidated results of operations for the three and six month periods ended December 2, 2023 and November 26, 2022, as reflected in our unaudited consolidated statements of comprehensive (loss) income.

Current wording

Results of Operations – an analysis and comparison of our consolidated results of operations for the three and nine-month periods ended March 2, 2024 and February 25, 2023, as reflected in our unaudited consolidated statements of comprehensive income.

Previous wording

Liquidity, Financial Position and Capital Resources – a discussion of our primary sources and uses of cash for the six month periods ended December 2, 2023 and November 26, 2022, and a discussion of changes in our financial position.

Current wording

Liquidity, Financial Position and Capital Resources – a discussion of our primary sources and uses of cash for the nine-month periods ended March 2, 2024 and February 25, 2023, and a discussion of changes in our financial position.

Previous wording

Richardson Electronics, Ltd. (the "Company", "we", "our") is a leading global manufacturer of engineered solutions, power grid and microwave tubes and related consumables; power conversion and RF and microwave components; high-value replacement parts, tubes and service training for diagnostic imaging equipment; and customized display solutions. Nearly 55% of our products are manufactured in LaFox, Illinois, Marlborough, Massachusetts or Donaueschingen, Germany, or by one of our manufacturing partners throughout the world. 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. 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.

Current wording

Richardson Electronics, Ltd. (the "Company", "we", "our") is a leading global manufacturer of engineered solutions, power grid and microwave tubes and related consumables; power conversion and RF and microwave components; high-value replacement parts, tubes and service training for diagnostic imaging equipment; and customized display solutions. Nearly 55% of our products are manufactured at our facilities located in LaFox, Illinois, Marlborough, Massachusetts and Donaueschingen, Germany, or by one of our manufacturing partners throughout the world. 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. 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.

Previous wording

Management continues to work with its suppliers as well as its customers to mitigate the impact of the tariffs on our customers’ markets. However, if the Company is unable to successfully pass through the additional cost of these tariffs, or if the higher prices reduce demand for the Company's products, it will have a negative effect on the Company's sales and gross margins.

Current wording

Management continues to work with suppliers and customers to mitigate the impact of the tariffs in our markets. However, if the Company is unable to successfully pass through the additional cost of these tariffs, or if the higher prices reduce demand for the Company's products, it will have a negative effect on the Company's sales and gross margins.

Previous wording

We currently have operations in the following major geographic regions: North America, Asia/Pacific, Europe and Latin America.

Current wording

We currently operate within the following major geographic regions: North America, Asia/Pacific, Europe and Latin America.

Previous wording

The second quarter of fiscal 2024 and fiscal 2023 both contained 13 weeks.

Current wording

The third quarter of fiscal 2024 and fiscal 2023 both contained 13 weeks.

Previous wording

Net sales during the second quarter of fiscal 2024 were $44.1 million, a decrease of 33.0%, compared to net sales of $65.9 million during the second quarter of fiscal 2023.

Current wording

Net sales during the third quarter of fiscal 2024 were $52.4 million, a decrease of 25.6%, compared to net sales of $70.4 million during the third quarter of fiscal 2023.

Previous wording

Gross margin decreased to 28.4% during the second quarter of fiscal 2024 compared to 33.2% during the second quarter of fiscal 2023.

Current wording

Gross margin decreased to 29.5% during the third quarter of fiscal 2024 compared to 31.8% during the third quarter of fiscal 2023.

Previous wording

Operating loss during the second quarter of fiscal 2024 was $2.0 million compared to operating income of $7.2 million during the second quarter of fiscal 2023.

Current wording

Operating income during the third quarter of fiscal 2024 was $1.0 million compared to operating income of $7.6 million during the third quarter of fiscal 2023.

Previous wording

The first six months of fiscal 2024 contained 27 weeks and the first six months of fiscal 2023 contained 26 weeks.

Current wording

The first nine months of fiscal 2024 contained 40 weeks and the first nine months of fiscal 2023 contained 39 weeks.

Previous wording

Net sales during the first six months of fiscal 2024 were $96.7 million, a decrease of 27.5%, compared to net sales of $133.5 million during the first six months of fiscal 2023.

Current wording

Net sales during the first nine months of fiscal 2024 were $149.1 million, a decrease of 26.9%, compared to net sales of $203.8 million during the first nine months of fiscal 2023.

Previous wording

Gross margin decreased to 30.8% during the first six months of fiscal 2024 compared to 33.6% during the first six months of fiscal 2024.

Current wording

Gross margin decreased to 30.3% during the first nine months of fiscal 2024 compared to 33.0% during the first nine months of fiscal 2023.

Previous wording

Operating loss during the first six months of fiscal 2024 was $0.5 million compared to operating income of $16.0 million during the first six months of fiscal 2023.

Current wording

Operating income during the first nine months of fiscal 2024 was $0.5 million compared to operating income of $23.6 million during the first nine months of fiscal 2023.

Previous wording

Net sales by segment and percent change during the second quarter and first six months of fiscal 2024 and fiscal 2023 were as follows (in thousands):

Current wording

Net sales by segment and percent change during the third quarter and first nine months of fiscal 2024 and fiscal 2023 were as follows (in thousands):

Previous wording

During the second quarter of fiscal 2024, consolidated net sales decreased 33.0% compared to the second quarter of fiscal 2023. Sales for PMT decreased 22.9 %, sales for GES decreased 78.8%, sales for Canvys decreased 27.7% and sales for Healthcare decreased 0.3%. The decrease in PMT was mainly due to a cyclical downturn in the semi-wafer fabrication industry. The decrease in GES reflected the project-based nature of this segment and was mainly due to lower shipments of battery modules for wind turbine products and the completion of Phase I for the EV locomotive prototype build. The decrease in Canvys was primarily due to lower sales in the North American market. The decrease in Healthcare was primarily due to lower equipment sales, partially offset by higher parts and CT tube sales.

Current wording

During the third quarter of fiscal 2024, consolidated net sales decreased 25.6% compared to the third quarter of fiscal 2023. Sales for PMT decreased 33.4 %, sales for GES increased 0.5%, sales for Canvys decreased 32.0% and sales for Healthcare increased 29.5%. The decrease in PMT was mainly due to a cyclical downturn in the semi-wafer fabrication industry. The increase in GES was mainly due to increased shipments of battery modules for wind turbine products. The decrease in Canvys was primarily due to customer pushouts in the North American market. The increase in Healthcare was primarily due to increases in parts and CT tube sales, partially offset by a decrease in equipment sales.

Previous wording

During the first six months of fiscal 2024, consolidated net sales decreased 27.5% compared to the first six months of fiscal 2023. Sales for PMT decreased 22.0%, sales for GES decreased 66.3%, sales for Canvys decreased 16.2% and sales for Healthcare decreased 11.8%. The decrease in sales for PMT was mainly due to a cyclical downturn in the semi-wafer fabrication industry. The decrease in sales for GES reflected the project-based nature of this segment and was mainly due to lower shipments of battery modules for wind turbine products and the completion of Phase I for the EV locomotive prototype build. The decrease in sales for Canvys was primarily due to lower sales in the North American market. The decrease in sales for Healthcare was primarily due to decreases in parts and equipment sales.

Current wording

During the first nine months of fiscal 2024, consolidated net sales decreased 26.9% compared to the first nine months of fiscal 2023. Sales for PMT decreased 26.0%, sales for GES decreased 42.6%, sales for Canvys decreased 21.2% and sales for Healthcare decreased 0.3%. The decrease in sales for PMT was mainly due to a cyclical downturn in the semi-wafer fabrication industry. The decrease in sales for GES reflected the project-based nature of this segment and was mainly due to lower shipments of battery modules for wind turbine products in the first half of the year and the completion of the EV locomotive prototype build in fiscal 2023. The decrease in sales for Canvys was primarily due to lower sales in the North American market. The decrease in sales for Healthcare was primarily due to decreases in equipment sales, partially offset by an increase in CT tube sales.

Previous wording

Gross profit by segment and percent of net sales for the second quarter and first six months of fiscal 2024 and fiscal 2023 were as follows (in thousands):

Current wording

Gross profit by segment and percent of net sales for the third quarter and first nine months of fiscal 2024 and fiscal 2023 were as follows (in thousands):

Previous wording

Consolidated gross profit decreased to $12.5 million during the second quarter of fiscal 2024 compared to $21.9 million during the second quarter of fiscal 2023. Consolidated gross margin as a percentage of net sales decreased to 28.4% during the second quarter of fiscal 2024 when compared to 33.2% during the second quarter of fiscal 2023, primarily due to unfavorable product mix and manufacturing under absorption in PMT, unfavorable product mix in GES and manufacturing under absorption in Healthcare. Improved product mix and lower freight costs in Canvys partially offset the unfavorable margin impacts for PMT, Healthcare and GES.

Current wording

Consolidated gross profit decreased to $15.4 million during the third quarter of fiscal 2024 compared to $22.4 million during the third quarter of fiscal 2023. Consolidated gross margin as a percentage of net sales decreased to 29.5% during the third quarter of fiscal 2024 when compared to 31.8% during the third quarter of fiscal 2023. This decrease was mainly due to the unfavorable product mix and manufacturing under absorption in PMT with a partial offset from the favorable product mix in GES, Canvys and Healthcare.

Previous wording

Consolidated gross profit decreased to $29.8 million during the first six months of fiscal 2024 compared to $44.9 million during the six months of fiscal 2023. Consolidated gross margin as a percentage of net sales decreased to 30.8% during the first six months of fiscal 2024 compared to 33.6% during the first six months of fiscal 2023, primarily due to unfavorable product mix and manufacturing under absorption in PMT, unfavorable product mix in GES and manufacturing under absorption as well as higher component scrap expense in Healthcare. Improved product mix and lower freight costs in Canvys partially offsets the unfavorable margin impacts for PMT, Healthcare and GES.

Current wording

Consolidated gross profit decreased to $45.2 million during the first nine months of fiscal 2024 compared to $67.3 million during the first nine months of fiscal 2023. Consolidated gross margin as a percentage of net sales decreased to 30.3% during the first nine months of fiscal 2024 compared to 33.0% during the first nine months of fiscal 2023. This decrease was primarily due to unfavorable product mix and manufacturing under absorption in PMT, unfavorable product mix in GES, manufacturing under absorption and higher scrap in Healthcare with a partial offset from the favorable product mix in Canvys.

Previous wording

PMT net sales decreased 22.9% to $31.3 million during the second quarter of fiscal 2024 from $40.6 million during the second quarter of fiscal 2023. The decrease was mainly due to lower sales of semi-wafer fabrication products which mainly reflected the cyclical slowdown in that market. Gross margin as a percentage of net sales decreased to 28.5% during the second quarter of fiscal 2024 as compared to 34.5% during the second quarter of fiscal 2023 due to unfavorable product mix and manufacturing under absorption.

Current wording

PMT net sales decreased 33.4% to $31.2 million during the third quarter of fiscal 2024 from $46.8 million during the third quarter of fiscal 2023. The decrease was mainly due to lower sales of semi-wafer fabrication products which mainly reflected the cyclical slowdown in that market. Gross margin as a percentage of net sales decreased to 28.3% during the third quarter of fiscal 2024 as compared to 32.9% during the third quarter of fiscal 2023 due to unfavorable product mix and manufacturing under absorption.

Previous wording

PMT net sales decreased 22.0% to $67.0 million during the first six months of fiscal 2024 from $85.9 million during the first six months of fiscal 2023. The decrease was due to lower sales of semi-wafer fabrication products reflecting the cyclical slowdown in that market. Gross margin as a percentage of net sales decreased to 30.5% during the first six months of fiscal 2024 as compared to 34.4% during the first six months of fiscal 2023 due to unfavorable product mix and manufacturing under absorption.

Current wording

PMT net sales decreased 26.0% to $98.2 million during the first nine months of fiscal 2024 from $132.8 million during the first nine months of fiscal 2023. The decrease was due to lower sales of semi-wafer fabrication products reflecting the cyclical slowdown in that market. Gross margin as a percentage of net sales decreased to 29.8% during the first nine months of fiscal 2024 as compared to 33.9% during the first nine months of fiscal 2023 due to unfavorable product mix and manufacturing under absorption.

Previous wording

GES net sales decreased 66.3% to $7.0 million during the first six months of fiscal 2024 from $20.8 million during the first six months of fiscal 2023. The decrease reflected the project-based nature of this segment and was mainly due to lower shipments of battery modules for wind turbine products and completion of Phase I of our EV locomotive prototype build in fiscal 2023. Phase II of the EV locomotive prototype will begin in the second quarter of fiscal 2025. Gross margin was 33.4% during the first six months of fiscal 2024 as compared to 34.5% during the first six months of fiscal 2023 due to product mix.

Current wording

GES net sales decreased 42.6% to $18.5 million during the first nine months of fiscal 2024 from $32.3 million during the first nine months of fiscal 2023. The decrease reflected the project-based nature of this segment and was mainly due to lower shipments of battery modules for wind turbine products in Q1 and Q2 and completion of our EV locomotive prototype build in fiscal 2023. Gross margin was 29.2% during the first nine months of fiscal 2024 as compared to 31.4% during the first nine months of fiscal 2023 due to product mix.

Previous wording

Canvys net sales decreased 27.7% to $7.3 million during the second quarter of fiscal 2024 from $10.1 million during the second quarter of fiscal 2023, due to lower sales in the North American market. Gross margin as a percentage of net sales increased to 33.5% during the second quarter of fiscal 2024 from 29.7% during the second quarter of fiscal 2023 primarily due to improved product mix and lower freight costs.

Current wording

Canvys net sales decreased 32.0% to $6.6 million during the third quarter of fiscal 2024 from $9.7 million during the third quarter of fiscal 2023, due to customer pushouts in the North American market. Gross margin as a percentage of net sales increased to 34.4% during the third quarter of fiscal 2024 from 32.0% during the third quarter of fiscal 2023 primarily due to improved product mix.

Previous wording

Canvys net sales decreased 16.2% to $17.2 million during the first six months of fiscal 2024 from $20.5 million during the first six months of fiscal 2023, due to lower sales in the North American market. Gross margin as a percentage of net sales increased to 33.8% during the first six months of fiscal 2024 from 30.6% during the first six months of fiscal 2023 primarily due to improved product mix and lower freight costs.

Current wording

Canvys net sales decreased 21.2% to $23.8 million during the first nine months of fiscal 2024 from $30.2 million during the first nine months of fiscal 2023, due to lower sales in the North American market. Gross margin as a percentage of net sales increased to 34.0% during the first nine months of fiscal 2024 from 31.0% during the first nine months of fiscal 2023 primarily due to improved product mix and lower freight costs.

Previous wording

Healthcare net sales decreased 0.3% from $2.9 million during the second quarter of fiscal 2023 primarily due to a decrease in equipment sales, partially offset by increases in parts and CT tube sales. Gross margin as a percentage of net sales decreased to 14.8% during the second quarter of fiscal 2024 as compared to 23.2% during the second quarter of fiscal 2023 primarily due to manufacturing under absorption.

Current wording

Healthcare net sales increased 29.5% to $3.1 million during the third quarter of fiscal 2024 from $2.4 million during the third quarter of fiscal 2023 primarily due to increases in parts and CT tube sales, partially offset by a decrease in equipment sales. Gross margin as a percentage of net sales increased to 41.6% during the third quarter of fiscal 2024 as compared to 39.8% during the third quarter of fiscal 2023 primarily due to product mix.

Previous wording

Healthcare net sales decreased 11.8% to $5.5 million during the first six months of fiscal 2024 from $6.2 million during the first six months of fiscal 2023 primarily due to decreases in parts and equipment sales. Gross margin as a percentage of net sales decreased to 22.7% during the first six months of fiscal 2024 as compared to 30.3% during the first six months of fiscal 2023 primarily due to manufacturing under absorption and higher component scrap expense.

Current wording

Healthcare net sales decreased 0.3% during the first nine months of fiscal 2024 from $8.6 million during the first nine months of fiscal 2023 primarily due to a decrease in equipment sales, partially offset by an increase in CT tube sales. Gross margin as a percentage of net sales decreased to 29.5% during the first nine months of fiscal 2024 as compared to 32.9% during the first nine months of fiscal 2023 primarily due to manufacturing under absorption and higher scrap expense.

Previous wording

Selling, general and administrative expenses (“SG&A”) decreased slightly to $14.5 million for the second quarter of fiscal 2024 when compared to $14.7 million for the year ago quarter. The decrease from the second quarter of fiscal 2023 reflected lower incentives due to financial performance partially offset by higher salaries and fringe expense. Expressed as a percentage of net sales, SG&A for the second quarter of fiscal 2024 increased to 32.8% compared to 22.3% for the second quarter of fiscal 2023.

Current wording

Selling, general and administrative expenses (“SG&A”) decreased slightly to $14.4 million for the third quarter of fiscal 2024 when compared to $14.8 million for the year ago quarter. The decrease from the third quarter of fiscal 2023 reflected lower incentives due to financial performance partially offset by higher R&D expenses. Expressed as a percentage of net sales, SG&A for the third quarter of fiscal 2024 increased to 27.6% compared to 21.0% for the third quarter of fiscal 2023.

Previous wording

SG&A increased $1.4 million to $30.3 million for the first six months of fiscal 2024 when compared to the prior year. The increase from the first half of fiscal 2023 mainly reflected higher employee compensation expenses. Expressed as a percentage of net sales, SG&A for the first six months of fiscal 2024 increased to 31.3% compared to 21.7% for the first six months of fiscal 2023.

Current wording

SG&A increased $1.0 million or 2.3% to $44.7 million for the first nine months of fiscal 2024 when compared to the prior year. The increase from the first nine months of fiscal 2023 mainly reflected higher salaries and R&D expenses, partially offset by lower incentive expense. Expressed as a percentage of net sales, SG&A for the first nine months of fiscal 2024 increased to 30.0% compared to 21.4% for the first nine months of fiscal 2023.

Previous wording

Other expense was $0.3 million during the second quarter of fiscal 2024, compared to other expense of $0.1 million for the second quarter of fiscal 2023. Other expense during the second quarter of fiscal 2024 included interest income and foreign exchange losses. Our foreign exchange gains and losses are primarily due to the translation of U.S. dollars held in non-U.S. entities. We currently do not utilize derivative instruments to manage our exposure to foreign currency.

Current wording

Other expense was less $0.1 million during the third quarter of fiscal 2024, compared to other income of $0.4 million for the third quarter of fiscal 2023. Other expense during the third quarter of fiscal 2024 included interest income and foreign exchange losses. Our foreign exchange gains and losses are primarily due to the translation of U.S. dollars held in non-U.S. entities. We currently do not utilize derivative instruments to manage our exposure to foreign currency.

Previous wording

Other expense was $0.1 million during the first six months of fiscal 2024, compared to other expense of $0.5 million for the first six months of fiscal 2023. Other expense during the first six months of fiscal 2024 included interest income and foreign exchange losses. Our foreign exchange gains and losses are primarily due to the translation of U.S. dollars held in non-U.S. entities.

Current wording

Other expense was $0.2 million during the first nine months of fiscal 2024, compared to other expense of $0.1 million for the first nine months of fiscal 2023. Other expense during the first nine months of fiscal 2024 included interest income and foreign exchange losses. Our foreign exchange gains and losses are primarily due to the translation of U.S. dollars held in non-U.S. entities.

Previous wording

We recorded an income tax benefit of $0.5 million and an income tax provision of $1.5 million for the second quarter of fiscal 2024 and the second quarter of fiscal 2023, respectively. The effective income tax rate during the second quarter of fiscal 2024 was 21.6% as compared to 21.5% during the second quarter of fiscal 2023. The difference in rate during the second quarter of fiscal 2024 as compared to the second quarter of fiscal 2023 reflects changes in the geographical distribution of income (loss), which is primarily driven by a decrease in U.S. earnings for fiscal 2024 and the state income tax provision, as well as the utilization of U.S. research and development credits. The 21.6% effective income tax rate differs from the federal statutory rate of 21% as a result of our geographical distribution of income (loss) and the utilization of the U.S. research and development credit.

Current wording

We recorded an income tax provision of $0.2 million and $1.7 million for the third quarter of fiscal 2024 and the third quarter of fiscal 2023, respectively. The effective income tax rate during the third quarter of fiscal 2024 was 23.4% as compared to 20.7% during the third quarter of fiscal 2023. The difference in rate during the third quarter of fiscal 2024 as compared to the third quarter of fiscal 2023 reflects changes in our geographical distribution of income, which is primarily driven by a decrease in U.S. earnings for fiscal 2024 and the state income tax provision as well as the U.S. research and development credits. The 23.4% effective income tax rate differs from the federal statutory rate of 21% as a result of our geographical distribution of income and the utilization of the U.S. research and development credit.

Previous wording

We recorded an income tax benefit of $0.1 million and an income tax provision of $3.6 million for the first six months of fiscal 2024 and the first six months of fiscal 2023, respectively. The effective income tax rate during the first six months of fiscal 2024 was a tax benefit of 16.5% as compared to a tax provision of 23.4% during the first six months of fiscal 2023. The difference in rate during the first six months of fiscal 2024 as compared to the first six months of fiscal 2023 reflects changes in the geographical distribution of income (loss), which is primarily driven by a decrease in U.S. earnings for fiscal 2024 and the state income tax provision, as well as the utilization of U.S. research and development credits. The 16.5% effective income tax rate differs from the federal statutory rate of 21% as a result of our geographical distribution of income (loss) and the utilization of the U.S. research and development credit.

Current wording

We recorded an income tax provision of $0.1 million and $5.3 million for the first nine months of fiscal 2024 and the first nine months of fiscal 2023, respectively. The effective income tax rate during the first nine months of fiscal 2024 was a tax provision of 39.2% as compared to a tax provision of 22.5% during the first nine months of fiscal 2023. The difference in rate during the first nine months of fiscal 2024 as compared to the first nine months of fiscal 2023 reflects changes in our geographical distribution of income, which is primarily driven by a decrease in U.S. earnings for fiscal 2024, and the state income tax provision, as well as the U.S. research and development credits. The 39.2% effective income tax rate differs from the federal statutory rate of 21% as a result of our geographical distribution of income, which is primarily driven by a decrease in U.S. earnings for fiscal 2024, state income tax provision and the U.S. research and development credit.

Previous wording

The Company did not have any uncertain tax positions as of December 2, 2023 and May 27, 2023. We record penalties and interest related to uncertain tax positions in the income tax expense line item within the consolidated statements of comprehensive (loss) income when applicable. The reserve for the German audits was reversed in fiscal 2023.

Current wording

The Company did not have any uncertain tax positions as of March 2, 2024 and May 27, 2023. We record penalties and interest related to uncertain tax positions in the income tax expense line item within the consolidated statements of comprehensive loss when applicable.

Previous wording

Net (Loss) Income and Per Share Data

Current wording

Net Income and Per Share Data

Previous wording

Net loss during the second quarter of fiscal 2024 was $1.8 million, or $0.13 per diluted common share and $0.12 per Class B diluted common share as compared to net income of $5.5 million during the second quarter of fiscal 2023 or $0.39 per diluted common share and $0.35 per Class B diluted common share.

Current wording

Net income during the third quarter of fiscal 2024 was $0.8 million, or $0.05 per diluted common share and $0.05 per Class B diluted common share as compared to net income of $6.3 million during the third quarter of fiscal 2023 or $0.44 per diluted common share and $0.40 per Class B diluted common share.

Previous wording

Net loss during the first six months of fiscal 2024 was $0.6 million, or $.04 per diluted common share and $0.04 per Class B diluted common share as compared to net income of $11.9 million during the first six months of fiscal 2023 or $0.83 per diluted common share and $0.75 per Class B diluted common share.

Current wording

Net income during the first nine months of fiscal 2024 was $0.2 million, or $0.01 per diluted common share and $0.01 per Class B diluted common share as compared to net income of $18.2 million during the first nine months of fiscal 2023 or $1.27 per diluted common share and $1.15 per Class B diluted common share.

Previous wording

Cash and cash equivalents were $22.8 million at December 2, 2023. Cash and cash equivalents by geographic area at December 2, 2023 consisted of $9.3 million in North America, $6.6 million in Europe, $1.1 million in Latin America and $5.8 million in Asia/Pacific. We repatriated $0.3 million to the United States in the second quarter of fiscal 2024 from our entity in Mexico. Although the Tax Cuts and Jobs Act generally eliminated federal income tax on future cash repatriation to the United States, cash repatriation may be subject to state and local taxes, withholding or similar taxes. See Note 8, Income Taxes, of the notes to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for the fiscal year ended May 27, 2023, filed with the SEC on July 31, 2023 for further information.

Current wording

Cash and cash equivalents were $18.9 million at March 2, 2024. Cash and cash equivalents by geographic area at March 2, 2024 consisted of $5.7 million in North America, $5.9 million in Europe, $1.0 million in Latin America and $6.3 million in Asia/Pacific. We repatriated $0.3 million to the United States in the second quarter of fiscal 2024 from our entity in Mexico. Although the Tax Cuts and Jobs Act generally eliminated federal income tax on future cash repatriation to the United States, cash repatriation may be subject to state and local taxes, withholding or similar taxes. See Note 8, Income Taxes, of the notes to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for the fiscal year ended May 27, 2023, filed with the SEC on July 31, 2023, for further information.

Previous wording

Cash and cash equivalents were $25.0 million at May 27, 2023. Cash and cash equivalents by geographic area at May 27, 2023 consisted of $8.1 million in North America, $8.6 million in Europe, $1.5 million in Latin America and $6.8 million in Asia/Pacific. No funds were repatriated to the United States in fiscal 2023 from our foreign entities.

Current wording

Cash and cash equivalents were $25.0 million on May 27, 2023. Cash and cash equivalents by geographic area on May 27, 2023 consisted of $8.1 million in North America, $8.6 million in Europe, $1.5 million in Latin America and $6.8 million in Asia/Pacific. No funds were repatriated to the United States in fiscal 2023 from our foreign entities.

Previous wording

On March 20, 2023, the Company established a senior, secured revolving credit facility agreement with a three-year term in an aggregate principal amount not to exceed $30 million, including a swingline loan and a letter of credit sub-facility (collectively, the "Revolving Credit Facility") with PNC Bank. The Revolving Credit Facility is guaranteed by the Company's domestic subsidiaries. Proceeds of the borrowings under the Revolving Credit Facility are expected to be used for working capital and general corporate purposes of the Company and its subsidiaries. As of the end of the second quarter for fiscal 2024 and the date of this report, no amounts were outstanding under the Revolving Credit Facility.

Current wording

On March 20, 2023, the Company established a senior, secured revolving credit facility agreement with a three-year term in an aggregate principal amount not to exceed $30 million, including a swingline loan and a letter of credit sub-facility (collectively, the "Revolving Credit Facility") with PNC Bank. The Revolving Credit Facility is guaranteed by the Company's domestic subsidiaries. Proceeds of the borrowings under the Revolving Credit Facility are expected to be used for working capital and general corporate purposes of the Company and its subsidiaries. The Company utilized $3.7 million of the credit line to address short-term cash requirements and repaid that $3.7 million during the third quarter of fiscal 2024. As of the end of the third quarter for fiscal 2024 and the date of this report, no amounts were outstanding under the Revolving Credit Facility.