EX-99.1 5 rell-ex991x2013831xq1.htm EXHIBIT 99.1 RELL-EX99.1-2013.8.31-Q1


Press Release
For Immediate Release
For Details Contact:                             40W267 Keslinger Road
Edward J. Richardson        Kathleen S. Dvorak            PO BOX 393
Chairman and CEO        EVP & CFO                LaFox, IL 60147-0393 USA
Phone: (630) 208-2340        (630) 208-2208                (630) 208-2200 | Fax: (630) 208-2550
                                        
RICHARDSON ELECTRONICS REPORTS FIRST QUARTER FISCAL 2014 RESULTS AND DECLARES QUARTERLY CASH DIVIDEND

LaFox, IL, October 9, 2013: Richardson Electronics, Ltd. (NASDAQ: RELL) today reported sales and earnings for its first quarter ended August 31, 2013. The Company also announced that its Board of Directors declared a $0.06 per share quarterly cash dividend.
Net sales for the first quarter of fiscal 2014 were $34.3 million, a 3.9% decrease compared to net sales of $35.7 million in the prior year. The sales decline primarily reflects a decline in demand for picture archive and communication systems (PAC) monitors as well as the conclusion of a significant North American based industrial Original Equipment Manufacturers ("OEM") monitor program. Gross margin declined to $10.2 million, or 29.8% of net sales during the first quarter of fiscal 2014, compared to $10.6 million, or 29.9% of net sales during fiscal 2013. Operating expenses remained flat for the first quarters of fiscal 2013 and 2014. Operating income for the first quarter of fiscal 2014 was $0.1 million, compared to operating income for the first quarter of fiscal 2013 of $0.5 million.
Income from continuing operations for the first quarter of fiscal 2014 was $2.0 million, or $0.14 per diluted common share, compared to income from continuing operations of $0.7 million, or $0.05 per diluted common share during the first quarter of last year.
“We were pleased to see our EDG business stabilize during the first quarter, and are strategically investing in niche areas of EDG where we have identified potential growth opportunities. EDG continues to strengthen its service capabilities which will drive incremental end user sales of both laser and industrial tubes. At the same time, sales in the healthcare market of Canvys continue to be challenged by uncertainty regarding healthcare reform. However, we remain optimistic that new display opportunities will arise for Canvys once healthcare reform is finalized and with our continued focus on custom solutions for OEMs,” said Edward J. Richardson, Chairman, Chief Executive Officer and President.

“We believe our second quarter sales should be in the range of $35 to $37 million. We remain focused on building our business to achieve sustainable growth over the long term,” said Mr. Richardson.

FINANCIAL SUMMARY ─ THREE MONTHS ENDED AUGUST 31, 2013

•
Net sales for the first quarter of fiscal 2014 were $34.3 million, down 3.9%, compared to net sales of $35.7 million during the first quarter of fiscal 2013.

•
Gross margin was relatively flat at 29.8% during the first quarter of fiscal 2014, compared to 29.9% during the first quarter of fiscal 2013.

•
Selling, general, and administrative expenses remained flat at $10.1 million for the first quarter of fiscal 2014 and fiscal 2013, or 29.4% and 28.5% of net sales, respectively.





•
Operating income during the first quarter of fiscal 2014 was $0.1 million, or 0.4% of net sales, compared to an operating income of $0.5 million, or 1.4% of net sales during the first quarter of fiscal 2013.

•
Income from continuing operations during the first quarter of fiscal 2014 was $2.0 million, or $0.14 per diluted common share, versus $0.7 million, or $0.05 per diluted common share, during the first quarter of fiscal 2013.

•
Loss from discontinued operations, net of tax, was less than $0.1 million, during the first quarters of fiscal 2014 and fiscal 2013.

•
Net income during the first quarter of fiscal 2014 was $2.0 million, compared to net income of $0.6 million during the first quarter of fiscal 2013, or $0.14 and $0.04 per diluted common share, respectively.

CASH DIVIDEND AND SHARE REPURCHASES
The Company also announced today that its Board of Directors declared a $0.06 quarterly dividend per share to holders of common stock and a $0.054 cash dividend per share to holders of Class B common stock. The dividend will be payable on November 26, 2013, to common stockholders of record on November 8, 2013.
“Cash and investments at the end of our first quarter were $136.6 million. We used $6.7 million to repurchase 0.6 million shares during the first quarter. As of today, the Company currently has 11.9 million outstanding shares of common stock and 2.2 million outstanding shares of Class B common stock. With our strong balance sheet, we are committed to returning value to our shareholders,” said Mr. Richardson.

CONFERENCE CALL INFORMATION
On Thursday, October 10, 2013, at 9:00 a.m. CT, Edward J. Richardson, Chairman and Chief Executive Officer, and Kathleen S. Dvorak, Chief Financial Officer, will host a conference call to discuss the Company's first quarter results for fiscal 2014. A question and answer session will be included as part of the call's agenda. To listen to the call, please dial (888) 339-2688 and enter passcode 48241797 approximately five minutes prior to the start of the call. A replay of the call will be available beginning at 11:00 a.m. CT on October 10, 2013, for seven days. The telephone numbers for the replay are (USA) (888) 286-8010 and (International) (617) 801-6888; passcode 85074836.

FORWARD-LOOKING STATEMENTS
This release includes certain “forward-looking” statements as defined by the Securities and Exchange Commission. Statements in this press release regarding the Company's business which are not historical facts represent “forward-looking” statements that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see Item 1A, “Risk Factors” in the Company's Annual Report on Form 10-K filed on July 26, 2013. The Company assumes no responsibility to update the “forward-looking” statements in this release as a result of new information, future events, or otherwise.




ABOUT RICHARDSON ELECTRONICS, LTD.
Richardson Electronics, Ltd. is a leading global provider of engineered solutions, power grid and microwave tubes and related consumables, and customized display solutions serving customers in the alternative energy, 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. More information is available online at www.rell.com.
Richardson Electronics common stock trades on the NASDAQ Global Select Market under the ticker symbol RELL.
                                    






Richardson Electronics, Ltd.
Consolidated Balance Sheets
(in thousands, except per share amounts)
 
Unaudited
 
Audited
 
August 31, 
 2013
 
June 1, 
 2013
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
92,530

 
$
102,002

Accounts receivable, less allowance of $1,078 and $1,092
19,499

 
18,268

Inventories
35,277

 
33,975

Prepaid expenses and other assets
1,011

 
1,155

Deferred income taxes
1,912

 
1,856

Income tax receivable
3,678

 
6,429

Investments—current
39,822

 
38,971

Discontinued operations—assets
338

 
303

Total current assets
194,067

 
202,959

Non-current assets:
 
 
 
Property, plant and equipment, net
5,600

 
5,073

Goodwill
1,567

 
1,519

Other intangibles
891

 
908

Non-current deferred income taxes
1,449

 
1,398

Investments—non-current
4,226

 
5,461

Total non-current assets
13,733

 
14,359

Total assets
$
207,800

 
$
217,318

Liabilities and Stockholders’ Equity

 
 
Current liabilities:
 
 
 
Accounts payable
$
11,755

 
$
14,255

Accrued liabilities
7,412

 
9,566

Discontinued operations—liabilities
541

 
245

Total current liabilities
19,708

 
24,066

Non-current liabilities:
 
 
 
Long-term income tax liabilities
6,484

 
6,726

Other non-current liabilities
1,337

 
1,287

Total non-current liabilities
7,821

 
8,013

Total liabilities
27,529

 
32,079

Commitments and contingencies
—

 
—

Stockholders’ equity
 
 
 
Common stock, $0.05 par value; issued 12,006 shares at August 31, 2013, and 12,263 shares at June 1, 2013
600

 
613

Class B common stock, convertible, $0.05 par value; issued 2,191 shares at August 31, 2013 and 2,491 shares at June 1, 2013
110

 
125

Preferred stock, $1.00 par value, no shares issued
—

 
—

Additional paid-in-capital
67,607

 
73,979

Common stock in treasury, at cost, 19 shares at August 31, 2013, and 9 shares at June 1, 2013
(210
)
 
(105
)
Retained earnings
102,927

 
101,816

Accumulated other comprehensive income
9,237

 
8,811

Total stockholders’ equity
180,271

 
185,239

Total liabilities and stockholders’ equity
$
207,800

 
$
217,318






Richardson Electronics, Ltd.
Unaudited Consolidated Statements of Comprehensive Income
(in thousands, except per share amounts)
 
Three Months Ended
 
August 31, 
 2013
 
September 1, 
 2012
Statements of Comprehensive Income
 
 
 
Net Sales
$
34,257

 
$
35,650

Cost of Sales
24,065

 
25,004

Gross profit
10,192

 
10,646

Selling, general, and administrative expenses
10,069

 
10,149

Gain (loss) on disposal of assets
—

 
(4
)
Operating income
123

 
501

Other (income) expense:
 
 
 
Investment/interest income
(265
)
 
(383
)
Foreign exchange (gain) loss
106

 
(37
)
Proceeds from legal settlement
(2,115
)
 
—

Other, net
(30
)
 
(23
)
Total other income
(2,304
)
 
(443
)
Income from continuing operations before income taxes
2,427

 
944

Income tax provision
448

 
210

Income from continuing operations
1,979

 
734

Loss from discontinued operations, net of tax
(11
)
 
(87
)
Net income
1,968

 
647

Foreign currency translation gain, net of tax
425

 
400

Fair value adjustments on investments
1

 
1

Comprehensive income
$
2,394

 
$
1,048

Net income per Common share - Basic:
 
 
 
Income from continuing operations
0.14

 
0.05

Income (loss) from discontinued operations
—

 
(0.01
)
Total net income per Common share - Basic:
0.14

 
0.04

Net income per Class B common share - Basic:
 
 
 
Income from continuing operations
$
0.13

 
$
0.04

Income from discontinued operations
—

 
—

Total net income per Class B common share - Basic:
$
0.13

 
$
0.04

Net income per Common share - Diluted:
 
 
 
Income from continuing operations
$
0.14

 
$
0.05

Income (loss) from discontinued operations
—

 
(0.01
)
Total net income per Common share - Diluted:
$
0.14

 
$
0.04

Net income per Class B common share - Diluted:
 
 
 
Income from continuing operations
$
0.13

 
$
0.04

Income from discontinued operations
—

 
—

Total net income per Class B common share - Diluted:
$
0.13

 
$
0.04

Weighted average number of shares:
 
 
 
Common shares - Basic
12,127

 
12,772

Class B common shares - Basic
2,428

 
2,913

Common shares - Diluted
14,688

 
15,787

Class B common shares - Diluted
2,428

 
2,913

Dividends per common share
$
0.060

 
$
0.060

Dividends per Class B common share
$
0.054

 
$
0.054






Richardson Electronics, Ltd.
Consolidated Statements of Cash Flows
(in thousands)
 
Three Months Ended
 
August 31, 
 2013
 
September 1, 
 2012
Operating activities:
 
 
 
Net income
$
1,968

 
$
647

Adjustments to reconcile net income to cash provided by (used in) operating activities:
 
 
 
Depreciation and amortization
248

 
299

Gain on sale of investments
(7
)
 
(20
)
Gain on disposal of assets
—

 
(4
)
Share-based compensation expense
114

 
124

Deferred income taxes
(59
)
 
(1
)
Inventory provisions
70

 
74

Change in assets and liabilities, net of effect of acquired businesses:
 
 
 
Accounts receivable
(1,218
)
 
(646
)
Income tax receivable
2,751

 
155

Inventories
(520
)
 
(624
)
Prepaid expenses and other assets
156

 
(622
)
Accounts payable
(2,547
)
 
(1,430
)
Accrued liabilities
(1,890
)
 
(1,006
)
Long-term income tax liabilities
(242
)
 
(321
)
Other
(9
)
 
42

Net cash used in operating activities
(1,185
)
 
(3,333
)
Investing activities:
 
 
 
Cash consideration paid for acquired businesses
(973
)
 
—

Capital expenditures
(441
)
 
(79
)
Proceeds from sale of assets
—

 
4

Proceeds from maturity of investments
40,488

 
57,747

Purchases of investments
(40,094
)
 
(51,725
)
Proceeds from sales of available-for-sale securities
56

 
54

Purchases of available-for-sale securities
(56
)
 
(54
)
Other
69

 
1

Net cash provided by (used in) investing activities
(951
)
 
5,948

Financing activities:
 
 
 
Repurchase of common stock
(6,700
)
 
(5,552
)
Proceeds from issuance of common stock
71

 
11

Cash dividends paid
(857
)
 
—

Other
1

 
—

Net cash used in financing activities
(7,485
)
 
(5,541
)
Effect of exchange rate changes on cash and cash equivalents
149

 
271

Decrease in cash and cash equivalents
(9,472
)
 
(2,655
)
Cash and cash equivalents at beginning of period
102,002

 
43,893

Cash and cash equivalents at end of period
$
92,530

 
$
41,238

 
 
 
 






Richardson Electronics, Ltd.
Net Sales and Gross Profit
For the First Quarter of Fiscal 2014 and Fiscal 2013
(in thousands)

By Strategic Business Unit:
Net Sales
Q1
 
Q1
 
 
FY 2014
 
FY 2013
% Change
EDG
$
25,479

 
$
25,627

(0.6)%
Canvys
8,778

 
10,023

(12.4)%
Total
$
34,257

 
$
35,650

(3.9)%
 
 
 
 
 
Gross Profit
Q1
 
Q1
 
 
FY 2014
% of Net Sales
FY 2013
% of Net Sales
EDG
$
7,859

30.8%
$
8,000

31.2%
Canvys
2,333

26.6%
2,646

26.4%
Total
$
10,192

29.8%
$
10,646

29.9%