RICHARDSON ELECTRONICS, LTD. Earnings Per Share Disclosure
Our Class B common stock is considered a participating security requiring the use of the two-class method for the computation of basic and diluted earnings per share. The two-class computation method for each period reflects the cash dividends paid per share for each class of stock, plus the amount of allocated undistributed earnings per share computed using the participation percentage which reflects the dividend rights of each class of stock. Basic and diluted earnings per share were computed using the two-class method. The shares of Class B common stock are considered to be participating convertible securities since the shares of Class B common stock are convertible on a share-for-share basis into shares of common stock and may participate in dividends with common stock according to a predetermined formula which is 90% of the amount of Class A common stock cash dividends.
The allocation of undistributed (loss) earnings between common stock and Class B common stock is based on the relationship of the weighted shares outstanding for the respective stock class (common or Class B) to the total of the weighted shares outstanding for common stock and 90% of the weighted shares outstanding for Class B common stock. The adjustment to the number of outstanding Class B common stock shares reflects the limitation of Class B common stock dividends to 90% of common stock dividends.
The EPS presented in our Consolidated Statements of Comprehensive Income are based on the following (in thousands, except per share amounts):
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For the Fiscal Year Ended |
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May 31, 2025 |
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June 1, 2024 |
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May 27, 2023 |
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Basic |
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Diluted |
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Basic |
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Diluted |
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Basic |
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Diluted |
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Numerator for Basic and Diluted EPS: |
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Net (loss) income |
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$ |
(1,143 |
) |
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$ |
(1,143 |
) |
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$ |
61 |
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$ |
61 |
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$ |
22,333 |
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$ |
22,333 |
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Less dividends: |
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Common stock |
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2,964 |
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2,964 |
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2,933 |
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2,933 |
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2,877 |
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2,877 |
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Class B common stock |
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443 |
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443 |
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|
443 |
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|
443 |
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|
443 |
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|
443 |
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Undistributed (loss) earnings |
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$ |
(4,550 |
) |
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$ |
(4,550 |
) |
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$ |
(3,315 |
) |
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$ |
(3,315 |
) |
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$ |
19,013 |
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$ |
19,013 |
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Common stock undistributed (loss) earnings |
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$ |
(3,957 |
) |
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$ |
(3,957 |
) |
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$ |
(2,880 |
) |
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$ |
(2,887 |
) |
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$ |
16,467 |
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$ |
16,573 |
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Class B common stock undistributed (loss) earnings |
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(593 |
) |
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(593 |
) |
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(435 |
) |
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(428 |
) |
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2,546 |
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2,440 |
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Total undistributed (loss) earnings |
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$ |
(4,550 |
) |
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$ |
(4,550 |
) |
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$ |
(3,315 |
) |
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$ |
(3,315 |
) |
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$ |
19,013 |
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$ |
19,013 |
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Denominator for Basic and Diluted EPS: |
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Common stock weighted average shares |
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12,298 |
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12,298 |
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12,214 |
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12,214 |
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11,943 |
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11,943 |
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Effect of dilutive securities |
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Dilutive stock options and awards |
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— |
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250 |
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599 |
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Denominator for diluted EPS adjusted for |
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12,298 |
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12,464 |
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12,542 |
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Class B common stock weighted average |
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2,049 |
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2,049 |
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2,051 |
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2,051 |
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2,052 |
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2,052 |
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Net (loss) income per share: |
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Common stock |
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$ |
(0.08 |
) |
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$ |
(0.08 |
) |
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$ |
0.00 |
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$ |
0.00 |
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$ |
1.62 |
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$ |
1.55 |
|
Class B common stock |
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$ |
(0.07 |
) |
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$ |
(0.07 |
) |
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$ |
0.00 |
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$ |
0.00 |
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$ |
1.46 |
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$ |
1.40 |
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Note: There were 232 common stock options and awards that were anti-dilutive and not included in the diluted earnings per share for fiscal 2025. There were no common stock options that were anti-dilutive for fiscal 2024 and fiscal 2023.
About Earnings Per Share Disclosures
The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.
Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.