37 slides from Richardson Electronics's shareholder meeting presentation, Oct 16, 2003
Slide 1: 2003 Stockholders Meeting
2003 Stockholders Meeting Global Provider of Engineered Solutions, Specializing in RF & Microwave Technology @ Richardson eo “\*®
Slide 2: Edward J. Richardson, Chairman and CEO
Edward J. Richardson Chairman of the Board and Chief Executive Officer
Slide 3: Board of Directors and Independent Auditors
Introductic Board of Directors Edward J. Richardson. Chairman of the Board and Chief Executive Officer Arnold R. Allen Management Consultant Jacques Bouyer Retired CEO and COB of Philips Components-France Scott Hodes Partner, Law Firm of McGure, Woods, Ross & Harcles Bruce W. Johnson President and C
Slide 4: Meeting agenda
Introduction — Edward J. Richardson Formal Proceedings — William G. Seils Business Overview — Edward J. Richardson 2003 Highlights — Bruce Johnson Financial Highlights — Dario Sacomani SBU Highlights 0 DSG — Robert Heise O SSD — Wendy Diddell @ Wrap-up — Edward J. Richardson
Slide 5: Slide 5
Slide 6: Sales by Business Unit
Sales by Wireless Industrial Security @Display Wireless Industrial Security Display Corporate Total Total as reported c Business Un. $050 $000 $050 000 $250 $200 10 $100 00 ~ 1999 2000 2001 «2002-2003 $104.0 $1545 $244.4 $2024 $222.4 Wi (876 | 881 748 778 7O2 84500824 B51 921 375 «505 595 GOT) G42 1
Slide 7: Demand Creation
@ Demand Creation O Understanding the Needs of the Customer m@ Engineering and Design Services O 50% + of Products Sold are Modified or Designed-in @ Technical Sales and Support Staff m@ FY 2003 Gross Margin 24.3%* Exchudes charges
Slide 8: Sales and Margin by SBU, Fiscal Year 2003
SBU Ma arg agi by $ (dallas in millions) Fiscal Year 2003 Sales GM% FY 03 FY02) %Change FY03 FY 02 BP Chg Wireless $ 2224 $ 202.4 9.9% 224% 235% -11% Industrial 77.5 74.6 39% 327% 327% Security 92.1 85.1 8.2% 249% 236% 13% Display 64.2 60.7 5.8% 253% 261% -08% Corporate 7.0 7.8 Total* $ 463.2 $ 430.
Slide 9: Sales by Geographic Area
by Geographic Are. (dalars in millions) North America 265.3 235.0 +86% Europe 100.0 90.8 +10.1% Asia / Pacific 747 64.7 + 15.6 % Latin America 20.2 26.7 = 24.1% Corporate / Other 13.0 13.4 -3.2% Totar +76% *ExcludesMedical
Slide 10: Sales and Margin by SBU — Q1
Sales and rgin by SBU — Q1 04 (dalars in millions) First Quarter Sales GM% Q1 04 Q103 = % Change 104 Q103 BP Chg Wireless $ 49.8 $ 47.1 57% 22.4% 22.8% 0.4% Industrial 25.9 23.4 10.2% 29.7% 32.2% 2.5% Security 25.2 22.4 12.3% 25.3% 24.3% 1.0% Display 16.1 13.3 21.0% 26.5 % 27.1% + 0.6% Corporate 24
Slide 11: Sales by Geographic Area — Q1
les by Geographic Area — Q1 04 (dalars in millions) North America 63.6 58.7 48.5% Europe 24.8 224 +10.6% Asia / Pacific 21.5 17.3 + 24.0% Latin America 5.1 5.1 40.6% Corporate / Other 43 5.1 = 16.7% Total 119.3 108.6 +9.8%
Slide 12: Bruce Johnson, President and COO
Bruce Johnson President and Chief Operating Officer Richardson Electronics Engineered Solutions
Slide 13: Fiscal Year Overview
Overview @ 15.6% Sales Growth in Asia/Pacific to Record $75 ir Taiwan 47% Japan 26% China 19% @ 10.1% Sales Growth in Europe to Record $100 million UK 25% Spain 13% = 8.6% Sales Growth in North America O Canada >10% to record $59 million
Slide 14: Fiscal Year Overview: Market Reach and Capabilities
Fiscal Yea Overview ™ Continued to Expand Market Reach and Capabilities O Strategic Partnerships = Added 11 New Vendors = Expanded Geographic Coverage with 8 Existing Vendors = Increased total global agreements to 66 O Key Investments — Continued to Expand Our Global Sales Organization = Added 23 En
Slide 15: Fiscal Year Overview: SBU Highlights
Fiscal Yeai Overview @ SBU Highlights O RAWC = Developed several new engineered solution products including: = In-home compensator = Cellular jammer = Digital broadcast pallets = Added four new vendors = Expanded geographic coverage with four existing vendors = Named global distributor for Huber Suh
Slide 16: Fiscal Year Overview: SBU Highlights (cont'd)
Fiscal Ye. Overview @ SBU Highlights (cont'd) O IPG = Added one new vendor = Expanded geographic coverage with two existing vendors = Signed exclusive global agreement for Powerex fast SCR and diode products = Expanded global agreement with Cornell Dubilier (passive components) for exclusivity in Eu
Slide 17: Sales Growth Higher than Market Growth
Sales Growth Higher than Market Growth Sales from Engineered Solutions Gross Margin SG&A Operating Income Dso Inventory days Debt to Capital Asia/Pacific Sales as percent of total RFWC Sales as percent of total + 10.0 % 50 days 80 days 40.0 % + 30.0 % + 60.0 %
Slide 18: Dario Sacomani, SVP and CFO
Dario Sacomani Senior Vice President and Chief Financtal Officer Richardson Electronics Engineered Solutions
Slide 19: Income Statement
Statement) (dollars in millions, except per share amounts) % chg Sales i H 4.7% Cost of sales 4.6% Gross margin 5.2% Percent of sales S,G8A 6.6% Percent of sales Operating loss 370.3% Other expenses 36.0% Pretax loss 27.8% Income tax benefits 52.5% Net loss before acct'g change 14.0% Effect of accou
Slide 20: Charges
‘Gnmittions) Inventory charges Severance charges Other charges Loss on medical sale Pretax charges Income tax provision Aftertax charges Valuation allowance Cumulative effect of accounting change Total charges
Slide 21: Fiscal 2003 Excluding Charges
Fiscal 2003 Sales Cost of sales Gross margin Percent of sales SG&A Percent of sales Operating income Other expenses Pre-tax income Income taxes Net income per share Average shares (dollars in millions, except per share amounts) 13,992 Excludes charges nated in presentation Full Year Fy02 443.5 334.0
Slide 22: Balance Sheet
(dollars in millions) Cash Receivables Inventory Property & other Total assets Long-term debt Other liabilities Equity Liabilities & equity May = May Change 2003 2002 ky % $17.5 $ 15.5 85.4 84.2 95.9 107.2 66.8 79.9 $265.6 $286.8 $138.4 $132.2 60.9 $5.0 76.3 99.6 $265.6 $286.8 $ 20 1.2 (11.3) (13.1)
Slide 23: Fiscal 2003 Cash Flow
Fiscal 2003 Cash Flow Gnmiltions) FY03 Net income $ @7.6) Non-cash items 39.0 Adjusted income 11.4 Working capital BD Cash from ops Ta REL stock trans. AA Sale of business : FX effect 2. Sources of cash $ 10.8 Capital spending $ 61 Dividends 2.2 Business acquisitions a4 Net borrowings 0.9) Other 0.3
Slide 24: First Quarter Income Statement
(dollars in millions, except per share amounts) First Quarter FY03* Sales EF 108.6 Cost of sales 81.5 Gross margin 7.2% Percent of sales $,G&A 6.6% Percent of sales Operating income 12.4% Other expenses 0.6% Pre-tax income 77.9% Income taxes 77.5% Net income 78.2% per share 100.0% Average shares 14,
Slide 25: Balance Sheet, August 2003
(dollars in millions) Cash Receivables Inventory Property & other Total assets Long-term debt Accounts payable Other liabilities Equity Liabilities & equity Change August May 2003 2003 8 $181 $ 175 $ 06 +34% 81 84 03) -0.4% 936 9 23) -24% 66 668 (12) -1.8% $262.4 $2656 $ (2) -1.2% $1346 $1384 $ (G8)
Slide 26: 2004 Cash Flow
2004 Cash Flow Gnmillions) First Quarter Chal 2004 2003 $ Net income 05 $(17.6)$ 18.1 Non-cash items 29196 = (17.3) Adjusted income 28 2.0 og Working capital 38 10.4) 142 Cash from ops 66 64) 15.0 REL stock trans. O41 - 0.1 Sources ofcash$ 6.7 $ (8.4) $ 15.1 Capital spending $ (1.9) $ (1.5) 02 Divid
Slide 27: Robert Heise, Display Systems Group
Robert Heise Vice President and General Manager, Display Systems Group
Slide 28: DSG FY03
DSG FYO3 Q Signed a value added distribution agreement with NEC-Mitsubishi Electronics Display of America Q Signed agreement with IBM to Description Fvos ]Fy02 | % Change Sales 64in1 | 60607 | 5806 Gross Margin 1621s | 15864 | 22% Gross Margin ®e [253% | 261% |- 8 pis. Direct Operating [9,188 [8528
Slide 29: DSG Business Model
DSG Business Model 2 3 a ocess Co i = : = = a 5 8 EAE suvpiers ‘Sonvare Pecated MED — CoreDSG_—— Vertical Mt Gross Sating 3 partnerships, SalesTeam SalesTeam — SalesTeam SS} ane ewee
Slide 30: DSG Sales by Market
DSG Sales by Marke Custom Custom — Display : 22% Legacy oe Le 51% Govt_/ pub ve inte 12% 0 Sales - $50.5M FY03 Sales - $64.2M FY00 Sales - .!
Slide 31: Wendy Diddell, Security Systems Division
Wendy Diddell Security Systems Division ichardson: lectronics Engineered Solutions
Slide 32: SSD Gross Margin FY03
Fy03 92090 Gross Margin $2939 Gross Margin % 249% Direct Operating Contribution. $8,718 C1 Increased gross margin from 23.6% in FYO2 to 24.9% in FYO3 through launch of engineered solutions/ private label DVR line. Oincreased market share in Canada through value added service approach. Oincreased mar
Slide 33: SSD Business Model
SSD Business Model Markets Support Applications Solutions Sales
Slide 34: SSD Category Overview
SSD Category Overvie MARKET Security Products Monitoring / Identification Products Estimated at $122 Billion by 2010 Estimated at $40 Billion by 2010 Other a seu ire Alarms Physical ri Security Hore 24% ayes Monitoring / Identification coe 33% Surveillance 16% Tr Security 33% Source: SDM Online 2/25
Slide 35: Edward J. Richardson, Chairman and CEO
Edward J. Richardson Chairman of the Board and Chief Executive Officer
Slide 36: Challenging Business Environment Continues
® Challenging Business Environment Continues @ Limited Near Term Visibility @ Design & Engineering Activity at High Level § First Quarter 2004 Bookings up 6.5% Sequentially IPG 15.0% RFWC 8.5% Asia/Pacific 48.5% = RF Competition Consolidating @ Engineered Solutions Strategy Should Continue to Facili
Slide 37: Thank You
Thank You... For Investing in RELL ichardson: lectronics Engineered Solutions