Edward Richardson – Chairman and CEO Kathleen Dvorak - CFO Wendy Diddell - EVP, Corporate Development and General Manager, Canvys Pat Fitzgerald - EVP and General Manager of Richardson Healthcare Greg Peloquin – Executive Vice President and General Manager, Electron Device Group

Al Tobia – Sidus Investments Mark Zinski - 21st Century Equity Research

Good morning, and welcome to our second quarter 2015 conference call. Joining me today are Kathy Dvorak, Chief Financial Officer; Wendy Diddell, Executive Vice President of Corporate Development and General Manager of Canvys; Greg Peloquin, Executive Vice President and General Manager of EDG; and Pat Fitzgerald, Executive Vice President and General Manager of Richardson Healthcare.

As a reminder, this call is being recorded and will be available for audio playback on our website. Before we get started, I’d like to remind you that we’ll be making forward-looking statements, and they’re based on current expectations and involve risks and uncertainties.

Therefore, our actual results could differ materially. Please refer to our press release and SEC filings for an explanation of our risk factors.

Second quarter revenues were $33.8 million, a 4.5% decrease compared to net sales of $35.4 million in the prior year. Sales for EDG increased 2.4% over the prior year, offset by anticipated declines in Canvys revenue and lower sales of additional start-up cost in healthcare.

We're pleased with the performance of EDG under Greg Peloquin's management. Greg rejoined the company during the first quarter as Executive Vice President and General Manager of EDG.

Greg was a very strong leader for us managing RFPD prior to its sale to [indiscernible] in March 2011. And he brings a tremendous amount of energy to the business.

Greg has already brought a new level of enthusiasm and ideas to EDG and Richardson Electronics. Greg will be discussing the EDG's second quarter and year-to-date performance during the call.

We're also pleased with the addition of Pat Fitzgerald who joined us in August as the Executive Vice President and General Manager to lead our newly formed Healthcare business. Pat joined us from Dunlee, a division of Philips Healthcare where he was responsible for developing the third-party CT and x-ray tube business.

Pat will discuss the start up of Richardson Healthcare and have plans for future growth. We believe that the realignment of the three business units; EDG, Healthcare and Canvys will allow us to focus on key growth opportunities in EDG and capitalize on needs that currently being met in the healthcare market.

We're investing resources in developing these businesses by focusing on organic growth initiatives as well as acquisitions. Before we provide details of how's the business units performance, I'll turn the call over to Kathy Dvorak to present the financial details.

Thank you, Ed, and good morning. As we have discussed for some time, our focus for fiscal 2015 is and have been developing our new IT platform.

This global IT platform provides a foundation to support our growth initiatives. Currently operating expenses are exceptionally high.

We have brought on many consultants to help us work through manual process until we are confident that everything is operating as planned and then the next step will be to automate. We are also incurring duplicated expense for IT support and have spent about $100,000 in travel related to training a global organization on the new system.

In total, expenses related to our IT conversion were nearly $1 million in the quarter. Spending for the balance of fiscal 2015 will remain high as we migrate and then stabilize the system.

Sales for the second quarter were $33.8 million, down 4.5%. Gross margin decreased to 30.9% from 31.1%.

Operating expenses were $12.6 million. Current operating expenses include $500,000 of expense for new product developments, a $1 million of IT expense, and $1.1 million of expense related to investments in our initiatives for engineered solutions and healthcare.

With a high level of incremental expense our operating loss for the second quarter of fiscal 2015 was $2.2 million. Once our IT platform is in place, we believe we will be able to accommodate our various businesses and growth initiatives in a cost effective manner.

Interest income for the quarter was about $249,000. Loss from continuing operations before tax was $1.9 million and bottom line we had a net loss of $1.1 million.

Cash and investments at year end were $125.3 million. Our share continues to decline and is now at $13.8 million.

Cash used by operating activities was $2 million with $2.1 million related to an increase in inventory purchases. Depreciation was $443,000 for the quarter.

Capital spending was $1.1 million with about $400,000 related to IT and $600,000 related to machinery and equipment for manufacturing. As I had mentioned, our focus for the balance of this year is to successfully complete the migration to our new IT platforms.

This then allows us to aggressively pursue our growth initiatives that will lead to significantly improve financial performance.

Thanks Kathy. Good morning, everyone.

Looking at the overall quarter, with support of strong bookings in the first quarter, EDG continues to grow year-over-year for the second quarter of fiscal year of 2015. While the overall market for electron tubes continued to be flat to down, we continue to gain market share with tubes and engineered solutions in the quarter.

This increase in new engineered solution sales and market share gains allows us to grow just over 2% versus prior year in the quarter. Product margin was down slightly by 70 basis point, mainly due to product and regional sales mix.

We continue, though, to show improvements in our manufacturing efficiency and we're managing expenses to support our growth initiatives. We're also carefully monitoring working capital requirements to support the business.

The most encouraging item during this quarter was our bookings increased nearly 10% over prior year with a book-to-bill of 1.11 with the strong backlog at the end of the quarter, growing market share and having new technologies we feel very strongly and confident that we'll continue growing this business and improving profitability now and into the future. On a regional basis, growth in the second quarter was led by North America and European sales organizations, which are both up over prior year.

Asia was down slightly to prior year, but showed strong bookings in the quarter. In North America our growth is led by key engineered solution programs and a semiconductor capital equipment market.

Our investments and expertise and high power applications and a vertically integrated manufacturing capability gave us unique position in providing design and custom equipment for various applications. This is an area where we continue to gain market share, key OEMs throughout the world with this very strong engineering design support capability.

Europe's growth is largely attributed to an increase in laser tubes and consumable sales along with an increased demand in marine and avionics markets. We also had a major win in a large European-based medical equipment OEM that will begin shipping second half of our fiscal year.

With respect to markets and product lines in engineered solutions business including our microwave generators continues to show significant year-over-year growth as our demand creation strategy gains traction. The demand creation strategy takes advantage of our highly trained experienced sales force who are backed by our growing engineering team.

We have been able to win business opportunities that need a mix specialists like Richardson Electronics that can provide a significant amount of engineering support and manufacturing capabilities on a global basis. In our recent analyst calls we discussed various applications such as special processes and microwave equipment for packaging applications and tobacco stem drawing, which take advantage of our engineered solutions capabilities.

With that I'm happy to announce that we booked the first order for 100 kilowatt generators for new customer in China to use in a tobacco drawing application. These will be shipping in the fourth quarter.

We're also very pleased to announce that we shipped the customer approved system for the thermal cut processing applications. Each system's sales were over $300,000 with the advances of 30 more systems in the future.

We are currently working on more than 20 new opportunities for different engineered solutions products; so needless to say, our demand creation sales strategies producing new opportunities for our company and engineering teams are meeting the customers' needs. As I mentioned earlier, EDG sales growth over prior year has also driven by sales of laser tubes and consumables as well as tubes used in marine and avionics applications.

We continue to gain market share in the laser tube and consumable market through expanding our product offering as well as aggressive marketing sales activities. We also continue to launch programs which keep us in front of our laser equipment customers.

Our relationships with our key power grid tube suppliers have never been stronger as we power our demand creation strategy in to expanding tube lights and finding opportunities to use tubes. Our backlog continues to grow with a renewed focus on demand creation, our engineered solutions along with our ability to gain market share in our MRO business.

The team has done a great job of adding capabilities, new products and new technologies to complement our existing MRO business. A number of factors changes in the future will help us become more efficient and increase our capabilities to serve our customers' engineering and global logistics needs.

With that I'd say thank you. And I turn over to Pat Fitzgerald who will provide an update on Richardson Healthcare.

Morning to everyone. Healthcare sales which consist today primarily of our image systems brand displays for Picture Archiving and Communications Systems or PACS and related equipments for operating rooms were $1.1 million in the second quarter, down from $1.3 million in the first quarter.

In FY '14 the PACS display business was reported as product Canvys. Gross margin was 23.7% versus 24.4% in first quarter due to the mix of product and the need to be competitively priced to win business.

Hospitals continued to delay many PACS display refresh projects through the state capital budgets and they are also looking hard at lower cost alternatives. Healthcare providers are under extreme pressure to reduce cost, while gearing up to provide services to more patients.

Capital spending and maintenance budgets remained tight as hospitals adjust to changes in reimbursement risk. Price is increasingly one of the leading factors behind purchasing decisions.

As a result, there is growing demand for an alternative source to the OEMs for replacement parts and service on a global basis. We estimate the global market for diagnostic imaging replacement parts and service to be between US$7 billion and US$8 billion annually.

In November, we publically launched Richardson Healthcare. The launch activities included a new dedicated healthcare website, rellhealthcare.com, press releases and a targeted email campaign in the lead up to the industry's largest trade show, The Radiological Society of North America also known as RSNA.

Customer reaction was very positive and there was considerable interest during the show in Richardson entering the market with flat panel detectors, replacement CT and x-ray tubes and other high value replacement parts. Our products which attracted significant attention during the show was the Thales Artpix EZ2GO digital radiography solution.

We have an agreement with Thales to distribute their digital flat panel detectors as replacements, retrofits and upgrades into existing diagnostic imaging equipment. The Artpix EZ2GO features a wireless detector paired with a rugged tablet that interfaces with the hospital's information system.

It is a direct radiography or DR system that is portable, can be used with any existing X-ray system without the need for a dedicate system interface and can bring the hospitals significant workflow improvements compared to computed radiography or CR systems. The Artpix EZ2GO produces digital images in seconds rather than minutes, allowing hospitals to perform more patient exams in less time using their existing radiology equipment.

Flat panel detectors represent an immediate opportunity to sell additional high value products to healthcare providers and independent service organizations. We will begin on-site demonstrations of the Artpix EZ2GO at customer sites later this month, because the skill sets required to support flat panel detectors are very similar to the PACS display business.

We expect to be able to leverage our existing healthcare sales and support teams as we expand into flat panel detectors. Richardson sales power grid tubes for replacement in MRI amplifiers to third-party service organizations that support a growing number of hospitals on a global basis.

Sales of these products are currently reported in EDG. We are in the process of transitioning account responsibility for healthcare service providers, and we'll include them in healthcare results beginning in FY '16.

Between our PACS displays and power grid tubes, we have excellent relationships with hospitals and independent service organizations on a global basis. Internal investments in CT and x-ray tubes manufacturing began in earnest in the second quarter with the focus on identifying and ordering equipment with long lead tenants to support our initial operations.

We expect to have the capability to certify and sell pre-owned CT tubes by the end of the fiscal year. We are pursuing a number of partnerships with companies that have products that could be complementary to our healthcare product portfolio and where we believe we can add value to Richardson distribution.

This would be similar to our partnership with Thales for flat panel detectors and power grid tubes. We also continue to meet with companies for manufacturing and supply of replacement parts for CT and MRI equipment.

We're considering several acquisitions in this market, and are focusing on companies with models that can be expanded internationally to take advantage of the growing demand for alternative replacement part sources in Europe, Asia, the Middle East and parts of Latin America. Our projection for the third quarter is for higher sales than the second quarter, given anticipated PACS display project lens and initial sales of the Artpix EZ2GO solution.

Canvys, which includes the engineering manufacture and sale of custom displays to original equipment manufactures in the industrial and medical markets performed below expectations during the second quarter of fiscal year 2015. Sales of $5.9 million were 22.2% below prior year's sales of $7.6 million.

On a constant note, gross margin improved to 28% versus 25.7% during the second quarter of fiscal 2014, driven by strong margin performance in North America. The decline in sales during the quarter was due primarily to the loss of one key customer in North America, as well as the typical vertical of the end demand associated with the project-based business.

Some of our customers are developing systems programs in order to purchase displays and handouts. Lead time for any new display project from concept to delivery can range from six to 18 months up to several years.

Demand and timing has impacted by our wide range of factors outside of Canvys control including economic issues, changing investment priorities, design challenges and regulatory issues. Pricing pressure, mainly in the form of customers switching to low cost consumer solutions or standard off-the-shelf solutions, continues to be an issue as well.

We continue to engage both new and existing customers in discussion for custom display requirements. During the quarter we completed negotiations with the former Canvys customer to resume building displays of Canvys at their relocated manufacturing of assistance to Southeast Asia.

The customer was considering both offshore and U.S.-based contract manufacturing. We received a supplying order for nearly $1 million and the shipments staring in February 2015.

Another second quarter win is for two different size monitors, which will be incorporated in intravascular imaging system with ability to assess vessel composition. We were also successful in closing a program with an industry leading dental company.

We now provide unique display solutions for nearly all of the significant players in the dental equipment manufacturing business on a global basis. Here's just a few examples of new business and type of high profile customers we serve.

While demand from the majority of our existing customers remain stable and interest in our solutions remains high, our most significant challenges generating sufficient new business acting to offset the business loss in FY '14. Since the beginning of the fiscal year we've been highly focused on consolidating the North American and European-based sales.

Canvys is one of the only custom display companies able to support medical and industrial OEMs with global requirements. We have developed a full range of display platforms that can be more easily and quickly modified to new customer requirements.

As more OEMs are tend -- returning to touch displays for controlling various types of equipment being manufactured, we enable them to reduce the number of display vendors they currently use by offering full range of customizable solutions. We'll also make sure the OEMs have unique selling point.

No OEM wants the same solutions as competitor. We have two design centres in Germany and Boston supported by Richardson Electronics' global infrastructure.

We have the ability to consolidate purchasing requirements historically made at the regional level. We stock displays close to manufacturing sites.

We manage the display technology lifecycle and we can and we can easily communicate with decision makers throughout the world. Also in the past several years we have reduced cost and improved efficiency within Canvys.

The past year the Canvys team was the first to develop and implement Microsoft Dynamics, Richardson Electronics new IT system. For the past six months many of the Canvys team had been serving and training relative to rest of the organization in addition to performing their normal business requirements.

Our efforts will continue as we work to find ways to win more business with both our existing customers as well as new customers. Ed, I turn the call back over to you.

Thanks Wendy. We remained committed to use our cash to make strategic acquisitions, invest in growth strategies, repurchase stock and pay dividends.

We're continuing to invest in resources to develop our intellectual property and grow sales in new markets such as healthcare. We spent $59.2 million on our stock buyback program, which has reduced the number of shares outstanding to 13.8 million.

We've initiated Richardson Healthcare under Pat Fitzgerald's leadership and brought Greg Peloquin back to bring new ideas and a high level of excitement to EDG. We've identified several excellent acquisition candidates in the healthcare market and we hope to announce one or more purchase agreements prior to our fiscal year end.

Our new IT system will add a new level of sophistication into our customer service and global supply chain. We hope to go live in the new system prior to the close of FY '15.

We believe sales in the third quarter will be in the range of $34 million to $36 million. It's an exciting time at Richardson Electronics, and we look forward to discussing our future plans in more detail you after the closer of the third quarter.

At this point, Kathy, Wendy, Greg, Pat and I'll be happy to answer your questions. Mika, may we please open the line for questions?

Yeah. Kathy mentioned that cost were exceptionally high for the IT system implementation.

I guess my question is where are we in knowing that this is going to be done and how long after you cut over will the costs stay high. So kind of maybe give us some detail on the risk that the IT implementation extends?

Okay the biggest cost is our duplicate cost because we are paying for a transition services agreement with Arrow which continues to provide that service. So as soon as we cut over on an annual basis, there is 2 million flowing through the FY ‘14 P&L related to that duplicate service that we know goes away.

In terms of the other costs, we also have duplicate costs of facilities that we had a cut over. So I think I would say I am very confident that you take out at least 2.5 million of duplicate costs across the year and then as we stabilize and automate the system and I think a lot of the incremental people costs also start to go away.

And where are we in terms of you knowing that that is going to occur by a date?

It will occur this fiscal year.

Right but I guess my question is, would you mean it will occur meaning – I assume it’s not just like you cut over to this system and then it’s done. There is still transition right.

Are you saying that all of that will be done by the end of May?

There will not be the duplicate expenses. You will continue to do ongoing enhancements.

But that’s ongoing enhancements to a system that you own so that you will be completely off their system by May.

Not.

Okay which would mean that your system will be up and running before that right?

It is now. We just haven’t cut over the entire business.

Okay so the risk to it not working is very low.

Not.

Or the risk you missing that date is low I guess?

Yes.

Okay. And then on Canvys, what was the booking – what can you talk about [ph] gross bookings or how do we look at Canvys.

I mean obviously it’s a lump business. Is there anything it did?

It can be [ph] in terms of growth bookings numbers there?

It’s kind of smiling [ph] to myself. I wrote down answer to that question during the recorded remarks.

Canvys is the first group to cut over to the new IT systems. So we went live in North America in June and then we went live in Germany at the beginning of our second quarter and right now, we don’t have good visibility into the backlogs and my commitment to internal folks as well as to you is to start reporting on that in a more definitive way at the end of the third quarter.

So we are just getting our arms around the reporting functionality and how we can give you some good reliable data. So one thing I wanted to point out is that what we do with a lot of our major customers is we get blanket orders.

So the blanket orders are in the system but we also provide some flexibility in terms of when they can issue those call up orders. So the forecast that we give is always going to be subject to kind of that lumpiness that you just defined.

Right.

But again my commitment is I will try to comeback to everybody at the end of third quarter with some much better backlog information or more specific backlog information.

Okay. And then, just one other question on the healthcare side and maybe you could talk to us about.

What do you feel the addressable market near term right now and as you look at M&A, how does that – how will that impact your addressable market? Is it – if you are looking at M&A, is it increasing your addressable market or is it product offering you need from M&A?

It’s both. What we are attempting to do is to acquire companies that can provide high value diagnostic imaging parts that are complementary to our CT and X-Ray tube offering as well as our flat panel detectors and our power grid tubes that go into that market.

So the acquisitions we are looking at are companies that currently sell these products and most of those companies are domestically based and sell the majority of their products in the US and our objective is to take their strategy, add it to our menu of products and take it globally through our 25 foreign subsidiaries. So it will be certainly accretive to sales and revenue, revenue and earnings as soon as we can be fortunate enough to get some of these transactions completed.

All right and then just one other thing – I won’t monopolize this but when the IT system is implemented, what level of revenue can you handle before you have to increase your OpEx meaningfully or what capacity do you have to process?

I wish we had that problem but let me have Kathy answer it.

I am with Ed on that one. From a capacity standpoint, it’s not the IT system.

We have adequate global staff to handle the business. So I don’t think there is any great step up in operating expense.

I mean, how much more revenue can you process given your existing OpEx you got there?

You can double the company.

Okay.

Yes good morning everyone. Ed, one on the Sq D [ph], the increase in the IT system, is that – I mean, is it thinking there essentially because you are planning a major acquisition that’s going to – that you are going to try to grow, when you had mentioned that the acquisitions you are looking at tend to be domestic based but that you want to grow them internationally.

Is that the – primarily the rationale behind the IT expansion?

No. When we sold RFPD, we were on a system that we called Rabinet and it’s a legacy system that we built over 30 years as a matter of fact but it was very expensive to operate, about $8 million to $10 million a year to run the system.

We had 30 people in IT and so we made a decision at the time we sold RFPD that we’d sell the system to Arrow. They really didn’t have a global system to run the business on at that time and I guess they do now.

So we entered into a transition services agreement as Kathy mentioned and we are paying them and still are about $2 million a year for our portion of the system but we understood that we couldn’t afford to spend 8 million plus on a system like that and be $150 million or $300 million in revenue. As you know, at one time the company was $600 million to $700 million in revenue.

So that’s the process that we’ve spent the last two years building the Microsoft system sort of a duplicate of our Rabinet system if you will and are presently transitioning on to the new system but that was a reason. It’s economics and probably more sophistication and sort of a point and click version of the old legacy system.

Okay but that - it is a more robust system that will help accommodate potential acquisition now?

Well absolutely.

Yeah. And then on the acquisition score, just – and this is just based on your tone – I mean, your tone seems to suggest you are a little more confident that you will be able to make a deal this fiscal year.

Is that the – are you seeing – are you more comfortable with the valuation multiples you are seeing out there?

No. I feel comfortable with the valuation multiples I am seeing out there.

I used to buy these companies for asset value. Now we are comfortable more with the terms of the agreement.

I wouldn’t want to spend a lot of time but we are really disappointed in the large acquisition we worked on for almost two years and we think at least with these acquisitions we are looking at, we have the terms pretty well worked out in the [indiscernible]. It’s a matter of doing the due diligence and make sure all the numbers add as we go forward.

Okay and then just in terms of Europe and potential FX exposure, I mean you had only a minimal FX loss this quarter? What are you seeing in terms of Europe and are you feeling – how are you feeling about your FX exposure here?

I will let Kathy answer that one.

Our exposure basically is the inventory that we are holding in Europe in Amsterdam. So transactions go both ways.

I mean Fx obviously as the dollar strengthens, it does impact sales, it impacts margins because we transact in 25 different currencies but from a balance sheet perspective, our primary issue with Fx is the inventory we hold overseas in Europe but again we buy and sell typically in Euro with that inventory however when we translated back for our US GAAP purposes, we do have bad FX translation loss.

Okay. So is it fair to say you don’t see a - well, I don’t want to put you on the spot but you don’t see any major FX swing next quarter?

I would - that’s good. I mean, we do our best to mitigate currency.

I mean, the dollars we hold overseas, we try to hold in local currency and then we have the translation risk you know when we translate back to balance sheet but you know, we look at currency fluctuations all the time and see what we need to do but we do not do hedging.

Okay. And then I guess my last question is in regards to the new healthcare division.

You cited that there is some hesitancy in hospital spending or at least some delays in your CapEx spending but I would assume the mailing force is that you are providing a better cost proposition with your distributed products. So where – how are those two forces kind of competing with each other at this point?

It looked - I mean, this is the hospital CapEx delay sort of winning out at this point but that you – you think your value proposition could win out at some point?

Well the CapEx delay issue has to do with the packed [ph] sales and new equipment basically going into the hospitals and our strategy of course is to go into diagnostic imaging parts with a foundation around CT and X-Ray tubes and flat panel detectors and there that’s – those are aftermarket parts where we are competing with the OEMs, GE, Siemens, Toshiba, Philips to some extent I guess for their aftermarket business and existing equipment and what we see it’s typical this is how this business has been built over the years is selling aftermarket parts and OEM applications. The OEM prices to the hospitals are very high and so we see a major opportunity to be an independent part suppliers to the medical institutions and third party service organizations yet [ph] reduced prices to the OEMs substantially reduced.

So that’s actually an advantage to us that the hospitals are looking at any way possible to reduce costs.

Okay great. That’s it for me.

Thank you.

Hi gentlemen.

Hi Steve.

Thanks for taking my call. I am relatively new to your company.

I’ve been following it for a few years but had owned the stock for over a year now and frankly. With the way you are progressing in terms of your plans.

However, there are several questions I have regarding the just basic comparables to other similar-sized companies and I will get to those in a second. So my first question is which markets are driving the EDGE growth and which are declining?

Okay. Well, the EDGE growth right now is driven by what we call Engineered solutions and one of the products that Greg talked about is we designed – custom design and manufacture microwave generators for industrial heating and that business is up substantially.

We’ve been talking about projects in China that deal with Tobacco drying, we have a new one that we are just shipping against for manufacturing cups that have a thermal characteristic. There is just any number of opportunities.

As Greg mentioned, we are looking at twenty opportunities at this time for products that go into industrial heating with engineered solution and then also the semiconductor Wafer Fab business is up substantially and the – even the [indiscernible] tube business, we continue to gain market share. So there were a number of drivers in that market.

It’s a very diverse market.

And what’s lagging there? What’s declining or what’s going away?

Well, we see declines in the broadcast industry. For example, Analog to digital conversion happened in the US a long time ago but it’s happening now in Latin America and other emerging countries if you will and if that occurs, these transmitters go from tube based technology to Substrate technology and that market unfortunately is continuing to decline all the time.

Right. Okay, that’s it.

All right. So in terms of acquisitions, are you looking at anything larger than $10 million?

We have two in the $10 million range and we have a third one that’s probably more iffy. That’s about $30 million.

Right. So I guess relative to similar companies into our stock price, we’ve got this completely adequate [ph] amount of cash on the balance sheet.

Why are we dribbling it out in the small dividends? Why not just take off the cash or some number and do a onetime dividend and that shareholders invest the money perhaps more profitable elsewhere since we are just doing a lot of payment on the balance sheet on the expense side for managing low tertiary cash?

As I mentioned earlier and you may have heard in previous calls, we spent the better part of two years looking at a very substantial acquisition on a company that had revenue of about $90 million and unfortunately we weren’t able to complete that transaction but that would have taken a substantial amount of the cash. In the meantime as we mentioned on the call, we spent $59 million in stock and we have raised a dividend.

We really want to use the cash to grow the company and to do acquisitions particularly in the healthcare space and that’s our strategy for the future. So that….

I guess I understand but you know with interest rates so low and debt easily accessible, I mean they are giving away money, why not pay it out when you do eventually do something take some amount of debt on to the balance sheet?

Well, it’s interesting that rates are so low but when you see the requirements necessary to borrow money at those rates, it’s something else.

Okay. Well fair enough but I do think we are completely over cashed here.

And so that brings up – the stock buybacks are great. I am a big fan.

Especially at low prices, too many companies buy it at high prices. So I think you are doing the right thing but my question for this past quarter is, how do we buy back stock at $11 a share when the stock barely buzzed above 10?

We didn’t in the last quarter. We were buying stock below $10 and the $11 purchase was from previous time.

Didn’t you – wouldn’t that sort of quarterly [ph] buy back $200,000 shares of $11 or did I do the math wrong?

No it was all $10 or less.

Okay. So the average price has been $11 [ph] okay.

Okay.

I have to relook at the number on your press release.

That was an average price probably for the $59 million that we have spent which is obviously higher than the current rate on the star [ph].

I understand but on the press release, it was like 2.2 – I have to look at it again. I don’t have it in front of me unfortunately but it was pretty simple math but that’s okay.

Maybe I was getting the wrong number. So – and then I look at the expenses for management.

I mean, there is a million dollars for CEO, there is $0.5 million for CFO. I look at similar companies with similar profiles, similar sales that are paying half of the amount.

So why do we have such a high expense structure now that our revenues are substantially lower and net of cash, we have a $7 million company.

Now we are adding some management both – two of the new additions to the staff that we are really excited about our Greg and Pat and we’ve – also in the healthcare space, we have added several executives that are going to help us grow that business. We are investing in the business and that’s what you are seeing but we haven’t got interaction yet particularly in healthcare.

No I understand that but I am saying even like your pay is million plus according to the information I got in front of me where similar companies are half that rate and you got so many layers under you running the division that it just seems like we are piling on expenses or well above our comparables in the industries?

Well I appreciate your opinion.

All right. Okay and my last thing is – and again, I like your company.

I am just saying there is some housekeeping things that are killing our stock and one of them is the two-class structure. At what point do we get rid of that and you say, the two-class structure is actually hurting us.

We are asked that question all the time. It’s been there since the company went public in 1983 and I would say that it is a characteristic of a company that when you invest that you realize this is almost permanent.

Well but I guess I asked you, at this point, you have a fiduciary duty to shareholders [indiscernible] ownership charts of the company and I want to obviously argue that the two-class structure is harming the stock price and shareholders. So how do you balance that and you must know personally that it’s hurting the stock price.

So why keep it up when it doesn’t make sense? What benefit is it?

When we do sales of divisions for instance the IRS division and you are working with large public companies and they want to make sure that when they make an offer that they can get the deal done. You know it makes things like that happen.

It’s a reasonable answer. Well, like I said, I like the company.

I am a stock buyer here and I wish you all.

We appreciate your investment. Thank you.

So Ed, just – I don’t want to blabber those last points. I don’t think there is any reason to have the B shares though.

I understand you saying it’s a legacy situation but it’s probably something if you are interested in the valuation of the company going up. When you do start earning money, maybe that’s a better time to consider removing it.

Right now, I mean the stock is trading on the cash and the buyback. It’s not even discounting the prospect of earning money and I can understand if you remove the B shares, the stock is good.

Companies [indiscernible] play automatically because of the cash but if you do make an acquisition and I am assuming that the prospect is for fiscal ’16 to have reduced expenses and increased revenue from organic and inorganic means and therefore to be looking at sort of profitability levels. Is that sort of – if I outline fiscal ’16, is that what we are looking at here starting in August?

That’s our plan now, yes.

Okay. I would say from the standpoint of just, people who’ve owned the stock for a while and watch the stock kind of trade on assets for a while.

The dividend is a decent return of capital for sure but it’s not large enough to really excite anybody at 2.4%. So the things that would get the stock moving more [indiscernible] larger dividends.

Obviously M&A and profitability and then the stock does get moving, I would – there is really no reason to have the B shares then. I understand now you can protect – its protection against the takeover bid but getting deals done in things like that, they get done easily without B shares.

We always consider opportunities. So we will look at it in the future.

Yeah.

Are there any other questions?

All right. Thank you again for joining us and for your ongoing support to Richardson Electronics.

We look forward to discussing our fiscal 2015 third quarter results with you in April. Thanks very much.