EX-99.1 5 rell-ex991x20140301xq3.htm EXHIBIT 99.1 RELL-EX99.1-2014.03.01-Q3


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 THIRD QUARTER FISCAL 2014 RESULTS AND DECLARES QUARTERLY CASH DIVIDEND; INVESTS IN KEY INITIATIVES

LaFox, IL, April 9, 2014: Richardson Electronics, Ltd. (NASDAQ: RELL), today reported sales and earnings for its third quarter ended March 1, 2014. The Company also announced that its Board of Directors declared a $0.06 per share quarterly cash dividend.
Net sales for the third quarter of fiscal 2014 were $32.9 million, a 2.2% decrease compared to net sales of $33.6 million in the prior year. Sales for the company's EDG business were relatively flat while sales for Canvys were down 6.5%, compared to the prior year's quarter. Gross margin decreased to $9.7 million, or 29.3% of net sales during the third quarter of fiscal 2014, compared to $9.9 million, or 29.5% of net sales during fiscal 2013. Operating expenses were $10.5 million for the third quarter of fiscal 2014, compared to $9.3 million for the third quarter of fiscal 2013. Operating loss for the third quarter of fiscal 2014 was $0.9 million compared to operating income of $0.6 million for the third quarter of fiscal 2013.
Loss from continuing operations for the third quarter of fiscal 2014 was $0.1 million compared to income from continuing operations for the third quarter of fiscal 2013 of $0.6 million, or $0.04 per diluted common share.
“We remain committed to profit improvement with growth initiatives that allow us to leverage our global infrastructure.  While we are not satisfied with our current financial performance, we are pleased to see pockets of growth in key geographic areas and markets.  Sales in both the Asia and European regions improved versus the prior year.  In terms of key markets, we are seeing growth in industrial markets as well as the automotive markets which utilize laser cutting equipment,” said Edward J. Richardson, Chairman, Chief Executive Officer and President.

“We believe our fourth quarter sales should be in the range of $34 to $36 million. We continue to focus on acquisition targets, and to invest in key initiatives such as vacuum capacitors and our new product development team focused on microwave solutions. Both take advantage of our global infrastructure and provide significant opportunity for sustainable growth over the long term,” said Mr. Richardson.

FINANCIAL SUMMARY ─ THREE MONTHS ENDED MARCH 1, 2014

•
Net sales for the third quarter of fiscal 2014 were $32.9 million, down 2.2%, compared to net sales of $33.6 million during the third quarter of fiscal 2013.

•
Gross margin decreased to 29.3% during the third quarter of fiscal 2014 compared to 29.5% during last year's third quarter.

•
Selling, general, and administrative expenses increased to $10.5 million, or 32.0% of net sales for the third quarter of fiscal 2014 compared to $9.3 million for the third quarter of fiscal 2013, or




27.7% of net sales. Operating expenses during the third quarter of fiscal 2014 included approximately $0.4 million of expenses associated with evaluating potential acquisitions, $0.1 million for new product development costs, and $0.2 million of increased information technology expenses for a new system implementation.

•
Operating loss during the third quarter of fiscal 2014 was $0.9 million compared to operating income of $0.6 million for the third quarter of fiscal 2013.

•
Other income for the third quarter of fiscal 2014 was $0.7 million compared to expense of $0.2 million for the third quarter of fiscal 2013. Other income for the third quarter of fiscal 2014 included $0.4 million of proceeds from a class action lawsuit settlement.

•
Loss from continuing operations during the third quarter of fiscal 2014 was $0.1 million compared to income from continuing operations for the third quarter of fiscal 2013 of $0.6 million, or $0.04 per diluted common share.

•
Loss from discontinued operations, net of tax, was $0.4 million during the third quarter of fiscal 2014 compared to $0.2 million during the third quarter of fiscal 2013.

•
Net loss during the third quarter of fiscal 2014 was $0.5 million compared to net income of $0.4 million, or $0.03 per diluted common share, during the third quarter of fiscal 2013.

FINANCIAL SUMMARY – NINE MONTHS ENDED MARCH 1, 2014

•
Net sales for the first nine months of fiscal 2014 were $102.6 million, down 3.1%, compared to net sales of $105.9 million during the first nine months of fiscal 2013.

•
Gross margin increased to 30.1% during the first nine months of fiscal 2014 compared to 29.6% during the first nine months of fiscal 2013.

•
Selling, general, and administrative expenses increased to $31.1 million, or 30.3% of net sales, for the first nine months of fiscal 2014 compared to $29.7 million, or 28.0% of net sales, for the first nine months of fiscal 2013. Operating expenses during the nine months of fiscal 2014 included $0.8 million of expenses associated with evaluating potential acquisitions, $0.2 million for new product development costs, and $0.5 million of increased information technology expenses for a new system implementation.

•
Operating loss during the first nine months of fiscal 2014 was $0.2 million compared to operating income of $1.6 million during the first nine months of fiscal 2013.

•
Other income for the first nine months of fiscal 2014 was $3.3 million compared to other income of $0.3 million for the first nine months of fiscal 2013. Other income for the first nine months of fiscal 2014 included $2.5 million of proceeds from a class action lawsuit settlement.

•
Income from continuing operations during the first nine months of fiscal 2014 was $2.5 million, or $0.17 per diluted common share, versus $1.9 million, or $0.12 per diluted common share, during the first nine months of fiscal 2013.

•
Loss from discontinued operations, net of tax, was $0.5 million during the first nine months of fiscal 2014 and fiscal 2013.

•
Net income during the first nine months of fiscal 2014 was $2.0 million, or $0.13 per diluted common share, compared to net income of $1.4 million, or $0.09 per diluted common share, during the first nine months of fiscal 2013.





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 May 23, 2014, to common stockholders of record on May 9, 2014.
“Cash and investments at the end of our third quarter were $132.2 million. As of today, the Company currently has 11.8 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, April 10, 2014, 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 third 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 13408790 approximately five minutes prior to the start of the call. A replay of the call will be available beginning at 11:59 p.m. CT on April 10, 2014, for seven days. The telephone numbers for the replay are (USA) (888) 286-8010 and (International) (617) 801-6888; passcode 35522088.

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
 
March 1, 
 2014
 
June 1, 
 2013
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
97,160

 
$
102,002

Accounts receivable, less allowance of $1,106 and $1,092
20,026

 
18,268

Inventories
35,180

 
33,975

Prepaid expenses and other assets
1,319

 
1,155

Deferred income taxes
1,915

 
1,856

Income tax receivable
3,640

 
6,429

Investments—current
33,322

 
38,971

Discontinued operations—assets
148

 
303

Total current assets
192,710

 
202,959

Non-current assets:
 
 
 
Property, plant and equipment, net
6,541

 
5,073

Goodwill
1,668

 
1,519

Other intangibles
864

 
908

Non-current deferred income taxes
1,487

 
1,398

Investments—non-current
1,757

 
5,461

Total non-current assets
12,317

 
14,359

Total assets
$
205,027

 
$
217,318

Liabilities and Stockholders’ Equity

 
 
Current liabilities:
 
 
 
Accounts payable
$
11,248

 
$
14,255

Accrued liabilities
7,428

 
9,566

Discontinued operations—liabilities
—

 
245

Total current liabilities
18,676

 
24,066

Non-current liabilities:
 
 
 
Long-term income tax liabilities
6,291

 
6,726

Other non-current liabilities
1,287

 
1,287

Discontinued operations—non-current liabilities
133

 
—

Total non-current liabilities
7,711

 
8,013

Total liabilities
26,387

 
32,079

Commitments and contingencies
—

 
—

Stockholders’ equity
 
 
 
Common stock, $0.05 par value; issued 11,835 shares at March 1, 2014, and 12,263 shares at June 1, 2013
592

 
613

Class B common stock, convertible, $0.05 par value; issued 2,191 shares at March 1, 2014 and 2,491 shares at June 1, 2013
110

 
125

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

 
—

Additional paid-in-capital
65,955

 
73,979

Common stock in treasury, at cost, 0 shares at March 1, 2014, and 9 shares at June 1, 2013
—

 
(105
)
Retained earnings
101,263

 
101,816

Accumulated other comprehensive income
10,720

 
8,811

Total stockholders’ equity
178,640

 
185,239

Total liabilities and stockholders’ equity
$
205,027

 
$
217,318






Richardson Electronics, Ltd.
Unaudited Consolidated Statements of Comprehensive Income (Loss)
(in thousands, except per share amounts)
 
Three Months Ended
 
Nine Months Ended
 
March 1, 
 2014
 
March 2, 
 2013
 
March 1, 
 2014
 
March 2, 
 2013
Net Sales
$
32,884

 
$
33,630

 
$
102,577

 
$
105,883

Cost of Sales
23,233

 
23,720

 
71,727

 
74,585

Gross profit
9,651

 
9,910

 
30,850

 
31,298

Selling, general, and administrative expenses
10,537

 
9,318

 
31,079

 
29,695

Gain on disposal of assets
—

 
—

 
—

 
(2
)
Operating income (loss)
(886
)
 
592

 
(229
)
 
1,605

Other (income) expense:
 
 
 
 
 
 
 
Investment/interest income
(277
)
 
(260
)
 
(797
)
 
(995
)
Foreign exchange loss
31

 
460

 
123

 
720

Proceeds from legal settlement
(432
)
 
—

 
(2,547
)
 
—

Other, net
(21
)
 
3

 
(36
)
 
(62
)
Total other (income) expense
(699
)
 
203

 
(3,257
)
 
(337
)
Income (loss) from continuing operations before income taxes
(187
)
 
389

 
3,028

 
1,942

Income tax provision (benefit)
(75
)
 
(197
)
 
530

 
41

Income (loss) from continuing operations
(112
)
 
586

 
2,498

 
1,901

Loss from discontinued operations, net of tax
(420
)
 
(182
)
 
(538
)
 
(472
)
Net income (loss)
(532
)
 
404

 
1,960

 
1,429

Foreign currency translation gain (loss), net of tax
258

 
(103
)
 
1,879

 
1,844

Fair value adjustments on investments
6

 
9

 
29

 
14

Comprehensive income (loss)
$
(268
)
 
$
310

 
$
3,868

 
$
3,287

Net income (loss) per Common share - Basic:
 
 
 
 
 
 
 
Income (loss) from continuing operations
$
(0.01
)
 
$
0.04

 
$
0.18

 
$
0.13

Loss from discontinued operations
(0.03
)
 
(0.01
)
 
(0.04
)
 
(0.03
)
Total net income (loss) per Common share - Basic:
$
(0.04
)
 
$
0.03

 
$
0.14

 
$
0.10

Net income (loss) per Class B common share - Basic:
 
 
 
 
 
 
 
Income (loss) from continuing operations
$
(0.01
)
 
$
0.04

 
$
0.16

 
$
0.11

Loss from discontinued operations
(0.03
)
 
(0.01
)
 
(0.03
)
 
(0.03
)
Total net income (loss) per Class B common share - Basic:
$
(0.04
)
 
$
0.03

 
$
0.13

 
$
0.08

Net income (loss) per Common share - Diluted:
 
 
 
 
 
 
 
Income (loss) from continuing operations
$
(0.01
)
 
$
0.04

 
$
0.17

 
$
0.12

Loss from discontinued operations
(0.03
)
 
(0.01
)
 
(0.04
)
 
(0.03
)
Total net income (loss) per Common share - Diluted:
$
(0.04
)
 
$
0.03

 
$
0.13

 
$
0.09

Net income (loss) per Class B common share - Diluted:
 
 
 
 

 

Income (loss) from continuing operations
$
(0.01
)
 
$
0.04

 
$
0.16

 
$
0.11

Loss from discontinued operations
(0.03
)
 
(0.01
)
 
(0.03
)
 
(0.03
)
Total net income (loss) per Class B common share - Diluted:
$
(0.04
)
 
$
0.03

 
$
0.13

 
$
0.08

Weighted average number of shares:
 
 
 
 
 
 
 
Common shares - Basic
11,832

 
12,292

 
11,942

 
12,500

Class B common shares - Basic
2,191

 
2,740

 
2,270

 
2,822

Common shares - Diluted
14,140

 
15,165

 
14,335

 
15,455

Class B common shares - Diluted
2,191

 
2,740

 
2,270

 
2,822

Dividends per common share
$
0.060

 
$
0.060

 
$
0.180

 
$
0.180

Dividends per Class B common share
$
0.054

 
$
0.054

 
$
0.162

 
$
0.162






Richardson Electronics, Ltd.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
 
Three Months Ended
 
Nine Months Ended
 
March 1, 
 2014

March 2, 
 2013
 
March 1, 
 2014
 
March 2, 
 2013
Operating activities:
 
 
 
 
 
 
 
Net income (loss)
(532
)
 
404

 
1,960

 
1,429

Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
 
 
 
 

 

Depreciation and amortization
275

 
218

 
796

 
783

Gain on sale of investments
(4
)
 
(5
)
 
(23
)
 
(26
)
Loss on disposal of assets
—

 
18

 
—

 
16

Share-based compensation expense
201

 
81

 
585

 
413

Deferred income taxes
62

 
(8
)
 
(105
)
 
(16
)
Change in assets and liabilities, net of effect of acquired businesses:
 
 
 
 

 

Accounts receivable
228

 
1,881

 
(1,498
)
 
477

Income tax receivable
(319
)
 
(419
)
 
2,789

 
(228
)
Inventories
273

 
452

 
133

 
2,167

Prepaid expenses and other assets
140

 
102

 
(134
)
 
(324
)
Accounts payable
(940
)
 
(979
)
 
(3,170
)
 
255

Accrued liabilities
(73
)
 
(95
)
 
(2,528
)
 
(295
)
Long-term income tax liabilities
175

 
191

 
(302
)
 
(126
)
Other
13

 
158

 
60

 
348

Net cash provided by (used in) operating activities
(501
)
 
1,999

 
(1,437
)
 
4,873

Investing activities:
 
 
 
 

 

Cash consideration paid for acquired businesses
—

 
—

 
(973
)
 
(2,557
)
Capital expenditures
(840
)
 
(512
)
 
(1,821
)
 
(1,069
)
Proceeds from sale of assets
—

 
—

 
—

 
4

Proceeds from maturity of investments
203,757

 
30,032

 
258,289

 
127,542

Purchases of investments
(197,321
)
 
(6,959
)
 
(248,873
)
 
(82,521
)
Proceeds from sales of available-for-sale securities
76

 
24

 
152

 
161

Purchases of available-for-sale securities
(76
)
 
(24
)
 
(152
)
 
(161
)
Other
6

 
—

 
97

 
—

Net cash provided by investing activities
5,602

 
22,561

 
6,719

 
41,399

Financing activities:
 
 
 
 

 

Repurchase of common stock
—

 
—

 
(8,725
)
 
(11,550
)
Proceeds from issuance of common stock
13

 
65

 
184

 
148

Cash dividends paid
(829
)
 
(886
)
 
(2,514
)
 
(2,685
)
Other
(26
)
 
—

 
(25
)
 
—

Net cash used in financing activities
(842
)
 
(821
)
 
(11,080
)
 
(14,087
)
Effect of exchange rate changes on cash and cash equivalents
255

 
(234
)
 
956

 
945

Increase/ (decrease) in cash and cash equivalents
4,514

 
23,505

 
(4,842
)
 
33,130

Cash and cash equivalents at beginning of period
92,646

 
53,518

 
102,002

 
43,893

Cash and cash equivalents at end of period
$
97,160

 
$
77,023

 
$
97,160

 
$
77,023







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

By Strategic Business Unit:
Net Sales
QTD
 
QTD
 
 
FY 2014
 
FY 2013
% Change
EDG
$
24,193

 
$
24,333

(0.6)%
Canvys
8,691

 
9,297

(6.5)%
Total
$
32,884

 
$
33,630

(2.2)%
 
 
 
 
 
 
YTD
 
YTD
 
 
FY 2014
 
FY 2013
% Change
EDG
$
75,835


$
76,146

(0.4)%
Canvys
26,742


29,737

(10.1)%
Total
$
102,577


$
105,883

(3.1)%
 
 
 
 
 
Gross Profit
QTD
 
QTD
 
 
FY 2014
% of Net Sales
FY 2013
% of Net Sales
EDG
$
7,139

29.5%
$
7,407

30.4%
Canvys
2,512

28.9%
2,503

26.9%
Total
$
9,651

29.3%
$
9,910

29.5%
 
 
 
 
 

YTD

YTD


FY 2014
% of Net Sales
FY 2013
% of Net Sales
EDG
$
23,505

31.0%
$
23,337

30.6%
Canvys
7,345

27.5%
7,961

26.8%
Total
$
30,850

30.1%
$
31,298

29.6%