Good day, ladies and gentlemen, and welcome to the Fiscal 2015 First Quarter Earnings Call for Richardson Electronics. At this time, all participants are in a listen-only mode and later we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to your host for today, Ed Richardson, CEO. Please proceed.

Good morning and welcome to our first 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; 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 that 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. First quarter revenues were $34.7 million, a 1.3% increase compared to net sales of $34.3 million in the prior year. The increase in sales reflects a strong start to the year with growth in the EDG business, up 7.6% over the prior year, offset by an anticipated decline in Canvys revenue. We're pleased to announce the return of Greg Peloquin, who joined 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 Arrow in March 2011, and brings a tremendous amount of energy to the business. We're confident Greg and his management team will bring a new level of enthusiasm, ideas and continued revenue growth for EDG and Richardson Electronics. We're also pleased to announce 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 unit. For the past 10 years, Pat was the President of Dunlee, a division of Philips Healthcare and a highly respected executive in the healthcare replacement parts market. Richardson Healthcare sales, which initially include sales of our fixture, archiving and communication system or PAC displays and related equipment for operating rooms were $1.3 million during its first quarter of independent operation. This business was formerly reported as part of Canvys. We believe that the realignment of the three business units EDG, Healthcare and Canvys where we're always focused on key growth opportunities and capitalize on needs not currently being met in the power management and healthcare markets. We're investing resources in these markets, focusing on organic growth initiatives as well as acquisitions. Unfortunately, Greg is not able to join us today for the question-and-answer session. Pat will be happy to answer your questions in reference to healthcare. Both Greg and Pat look forward to discussing performance and sharing their insights with you during our next analyst call in January. Before we provide details about business unit performance in the first quarter of fiscal year 2015, I'll turn the call over to Kathy Dvorak, to present the financial details.

Thank you, Ed and good morning. As we discussed in July, our focus for fiscal 2015 centers on transitioning to a new IT platform, which will position us for future growth. As a result, both capital expenditures and operating expenses are running unusually high. We have brought on temporary employees, are incurring duplicated expense for data alliance, equipment, infrastructure and travel, as we build out our new IT environment. As a result, our financial performance was impacted as it reflects higher expenses. Sales for the quarter were up slightly to $34.7 million, compared to $34.3 million during the prior year. Gross margin increased to 30.7%, compared to 29.8% during the prior year, partly due to having left unabsorbed labor and overhead expense in our manufacturing facility during the quarter. Operating expenses were $11.2 million for quarter, compared to $10.1 million in fiscal 2014. Current operating expenses includes 500,000 of expense related to our growth initiatives including new product development and Richardson Healthcare. We also incurred 500,000 of expense related to our new IT system. With these additional expenses, our operating loss for fiscal 2015 was $0.1 million. Interest income for the quarter was about $256,000. Loss from continuing operations before tax was $218,000 and bottom line we had a net loss of $83,000. Cash and investments at yearend were $133 million. We spend $488,000 on share repurchases during the quarter. Since the end of the quarter we have also spent an additional $592,000 on share repurchases. Cash used by operating activities was $0.3 million. This includes $2.1 million of inventory purchases for some of our new product offerings. Depreciation and amortization were $366,000 for the quarter. Capital spending was $834,000, primarily in IT investment and manufacturing equipment. As I’ve mentioned, our top priority is to transition to our new IT platform, which then provides a foundation for us to aggressively pursue our growth initiatives in fiscal 2016 and beyond. Now I'll turn the call over to Ed, who will discuss the operating performance of EDG and Healthcare.

Thanks Kathy. EDG sales in the first quarter were very strong at $27.4 million, up 7.6% from the prior year. Gross margin was 31.7% compared to 30.8% last year. We remain optimistic that the global economic conditions are stabilizing. In the first quarter, sales in all geographic areas were above the prior year's first quarter. North America sales were particularly strong with double-digit growth reflecting increasing demand from several of our large manufacturing customers in the semiconductor capital equipment market. We're also seeing an increase in demand in India. The Latin American market, particularly Brazil continues to have economic challenges, but still showed sales growth over the prior year. We also benefit from strong end user relationships in Latin America, which results in higher margin sales. Sales in several of our product lines are up over the prior year. Sales in the microwave business unit were up significantly over the prior year. We continue to see new and increasing numbers of opportunities for microwave generators. We see nine new customer opportunities in China alone for microwave generators over the past quarter. Microwave generators are used for many different applications including mining, industrial heating, cooking, drying and plasma. These applications have high power requirements, which cannot be met by our [F4] (ph) solid-state technology. Last year in the second quarter, we we're again building a new product development team consisting of engineers from microwave cavity lab, which was bought by CPI. This team of engineers has raised the level of Richardson Electronics design capability, which enables us to develop unique solutions, our own intellectual property and realize higher margins. These solutions are manufactured in Lafox. We focused on the tobacco stem) drawing application as an example of one of the significant opportunities. Another exciting opportunity this team is working on is…

Thanks Ed and good morning everyone. Canvys, which now includes the engineering, manufacture and sale of custom displays to original equipment manufacturers in the industrial and medical market performed on par with expectations during the first quarter of fiscal year 2015. Sales of $6 million were down from $7.4 million this time last year. This decline is primarily due to the loss of a key North American customer late in fiscal year 2014 and it continues the emphasis on digital signage. It is also a reflection of the normal variability associated with fluctuating customer demand. Sales to our medical OEMs are still being impacted by tight capital spending in the healthcare market. Our gross margin improved to 27.7% versus 25.6% during the first quarter of fiscal 2014. Product margins were higher in both Europe and North America. The newly consolidated sales and marketing teams are working together to capitalize on platform displays and improving purchasing power. The team has also done an excellent job understanding the market and knowning where to price solutions without risking the business. We continue to closely manage expenses to improve efficiency. At the end of FY'14, we consolidated sales management under our global sales manager. This is working well as the teams are sharing information on customers and programs and using solutions developed for one application to lend business with similar customers in other parts of the world. We are in the process of moving specific project manufacturing currently outsourced in Europe through our Boston production facility. This will lead to better utilization of resources and higher gross margin. We made tremendous strides reducing inventory in FY'14. The team continues to focus on inventory management and working capitalization to remain strong. We are pleased to announce that our Boston facility will become ISO 13485 certified at the end of this calendar year. ISO 13485 is an international organization for standardization or ISO standard, which was published in 2003. It provides requirements for a comprehensive quality management system for the design and manufactured medical devices. The certification sets us further apart from our competition and is a requirement to win display programs for several large potential customers. The Boston facility will also serve as a model for becoming ISO 13485 certified in our Lafox manufacturing facility in the future. During the quarter we won several more high profile display programs with existing and new customers. Some examples of our recent wins to Blue Chip companies include displays for use in radiation treatment around eye surgery equipment, dental environment, teleprompting applications and wood working machinery. We added to that early in the second quarter with program wins for Lasik surgery, blood analysis and transportation application. We anticipate the revenue from new customers will begin later in the fiscal year and will help us deliver solid performance in our current fiscal year.

Thanks Wendy. We remain committed to use our cash to make strategic acquisitions, invest in growth strategies, repurchase stock and pay dividends. We are investing in resources to develop our own intellectual property and we will grow sales in new markets such as healthcare while maximizing the use of our existing global customer base and infrastructure. We've spent $57 million on our stock buyback program, which has reduced the number of shares outstanding to less than $14 million and we'll continue to opportunistically purchase shares. We currently have $17.5 million remaining in share repurchase authorization. We believe sales in our second quarter will remain in the range of $34 million to $36 million. We are pleased with the growth we saw during the first quarter and we believe that our investments will return higher sales, growth and earnings in the future. We appreciate your ongoing patience and support. At this point Kathy, Wendy, Greg and I will be happy to answer your questions. Shelley, may we open the line for questions please?

(Operator Instructions) And your first question comes from the line of Mark Zinski with 21st Century Entities. Please proceed.

Yes. Good morning, everyone.

Good morning, Mark.

Ed, I was wondering if you could potentially kind of dissect a little bit what you're seeing in Europe right now either by product line or by country. You seem to indicate that or you did say that sales were up across all geographies. I am just wondering if that has changed at all you know within the last several weeks.

Not really. We've pretty much seen it continue. In Europe I would say, it's more pronounced than in northern portion of Europe, countries like Spain and some cases Italy are still really having economic problems. It's more the Northern Europe where we see the strength.

Okay. Do you have a percentage of sales for the CO2 laser business?

You mean the growth?

Well, that end growth as a percentage of EDG’s business.

We really don’t report in that manner.

Okay, then growth wise.

Yes. It's up substantially. The consumable business is doubled last year and it's on track to do that again this year and the laser II business itself is up about 25% over last year.

Okay. Is it more EDG’s growth? Is it a combination of the rebound in the semiconductor and CO2 laser then?

Yes.

Okay. Those will be the two prominent factors.

Right. The growth in the CO2 laser business and the consumable business has been continuing year-over-year. However, we saw the semiconductor wafer fab business come back really strong in the quarter, that had probably more of an impact on the upside even in the CO2 laser.

Okay. Great. And then in terms of the -- your new Healthcare segment, about what percentage of that revenue is like product versus service at this point? Is it primarily product?

It's all product at this moment right. We really don’t intend to go into the service business. We will do what we call train the trainer, so that we have the ability to train the technicians and know how to install the parts and we will also be doing some training in that area. But we'll be training service engineers to service either institution's equipment or independent service engineers who are learning the business.

And just to clarify then these are parts that are obviously kind of more lower cost generic parts that can adequately replace OEM parts, is that fair to say?

Not really. Most of the products that we're looking at are much higher value parts and they're not generic. They're exact replacements for the OEM parts.

Okay. And so why then -- but these replacement parts then are just lower priced relative to the OEM parts.

Absolutely. A good example of that we mentioned the CT tubes used in CT X-ray equipment and the OEMs many times are charging over $200,000 list price for those CT tubes and we should be in a position to substantially discount those prices going forward.

And so just from a strategy standpoint this Healthcare business seems a little bit on the surface at least to be somewhat countercyclical, in that the healthcare systems are quite cost constrained. So this would seem to play into that theme is that fair to say?

Not sure I understand what you mean.

Well, this business should still fare pretty well in leaner economic times.

Absolutely. There is more and more pressure on the healthcare cost than to maintain existing equipment today than ever before. There is not funds available for new capital expenditure. So they are inclined to repair existing equipment rather than buy new equipment that plays right into our strategy.

Okay. Great. That’s it from me. Thank you.

Thanks Mark.

(Operator Instruction) And at this time we have no further questions in queue.

Okay Shelley. Well, thank you again for joining us and to your ongoing support of Richardson Electronics. We look forward to discussing our fiscal 2015 second quarter results with you in January. Thanks very much.

Ladies and gentlemen, thank you for joining today's conference. This concludes the presentation. You may now disconnect and have a great day.