EX-99.1 7 exhibit991-pressrelease.htm EXHIBIT 99.1 Exhibit 99.1 - Press Release


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 FOURTH QUARTER AND FISCAL 2014 RESULTS
AND DECLARES QUARTERLY CASH DIVIDEND

LaFox, IL, July 23, 2014 Richardson Electronics, Ltd. (NASDAQ: RELL), today reported sales and earnings for its fourth quarter and fiscal year ended May 31, 2014. The Company also announced that its Board of Directors declared a $0.06 per share quarterly cash dividend.
Fiscal 2014 Results
Net sales for fiscal 2014 were $138.0 million, a 2.2% decrease compared to net sales of $141.1 million in the prior year. Gross margin was $41.0 million, or 29.7% of net sales during fiscal 2014, compared to $41.5 million, or 29.5% of net sales during fiscal 2013.
Operating expenses were $43.5 million for fiscal 2014, compared to $41.5 for fiscal 2013. Operating expenses included employee termination costs of $1.2 million, $1.1 million related to potential acquisitions, $0.4 million investment in new product development, and system implementation expenses of $0.8 million.
Operating loss of $4.2 million in fiscal 2014 included a goodwill impairment charge of $1.7 million.
Loss from continuing operations for fiscal 2014 was $0.3 million, compared to income of $0.5 million from continuing operations for fiscal 2013.
Cash provided by operating activities totaled $4.6 million for fiscal 2014, compared to cash provided by operating activities of $8.6 million in fiscal 2013.
Fourth Quarter Results
Net sales for the fourth quarter of fiscal 2014 were $35.4 million, a 0.6% increase compared to net sales of $35.2 million in the prior year. Sales for the Company's EDG business were up 3.8% while sales for its Canvys division were down 9.1%, compared to the prior year's quarter. Gross margin was $10.2 million, or 28.7% of net sales during the fourth quarter of fiscal 2014, compared to $10.2 million, or 29.1% of net sales during fiscal 2013.
Operating expenses were $12.4 million for the fourth quarter of fiscal 2014, compared to $11.8 million for the fourth quarter of fiscal 2013. The fourth quarter of fiscal 2014 operating expenses included employee termination costs of $1.2 million, $0.5 million related to potential acquisitions, $0.2 million investment in new product development, and system implementation expenses of $0.5 million.
Operating loss for the fourth quarter of fiscal 2014 was $3.9 million compared to operating loss of $1.6 million for the fourth quarter of fiscal 2013. The fiscal 2014 fourth quarter operating loss included a $1.7 million goodwill impairment charge.
Loss from continuing operations for the fourth quarter of fiscal 2014 was $2.8 million compared to loss from continuing operations for the fourth quarter of fiscal 2013 of $1.4 million.





FINANCIAL SUMMARY – FISCAL 2014

•
Net sales for fiscal 2014 were $138.0 million, down 2.2%, compared to net sales of $141.1 during fiscal 2013.
•
Gross margin increased to 29.7% during fiscal 2014 compared to 29.5% during fiscal 2013.
•
Selling, general, and administrative expenses increased to $43.5 million, or 31.5% of net sales, for fiscal 2014 compared to $41.5 million, or 29.4% of net sales, for fiscal 2013.
•
Operating loss during fiscal 2014 was $4.2 million compared to breakeven for fiscal 2013.
•
Other income for fiscal 2014 was $3.5 million compared to other income of $0.6 million for fiscal 2013. Other income for fiscal 2014 included $2.5 million of proceeds from a class action lawsuit settlement.
•
Loss from continuing operations during fiscal 2014 was $0.3 million versus income of $0.5 million during fiscal 2013.
•
Loss from discontinued operations, net of tax, was $0.2 million during fiscal 2014 compared to income from discontinued operations, net of tax, of $0.8 million during fiscal 2013, or $0.05 per diluted common share.
•
Net loss during fiscal 2014 was $0.5 million compared to net income of $1.2 million, or $0.08 per diluted common share, during fiscal 2013.

FINANCIAL SUMMARY ─ FOURTH QUARTER

•
Net sales for the fourth quarter of fiscal 2014 were $35.4 million, up 0.6%, compared to net sales of $35.2 million during the fourth quarter of fiscal 2013.
•
Gross margin decreased to 28.7% during the fourth quarter of fiscal 2014 compared to 29.1% during last year's fourth quarter.
•
Selling, general, and administrative expenses increased to $12.4 million, or 35.1% of net sales for the fourth quarter of fiscal 2014 compared to $11.8 million for the fourth quarter of fiscal 2013, or 33.7% of net sales.
•
Operating loss during the fourth quarter of fiscal 2014 was $3.9 million compared to operating loss of $1.6 million for the fourth quarter of fiscal 2013.
•
Other income for the fourth quarter of fiscal 2014 was $0.2 million compared to income of $0.3 million for the fourth quarter of fiscal 2013.
•
Loss from continuing operations during the fourth quarter of fiscal 2014 was $2.8 million compared to loss from continuing operations for the fourth quarter of fiscal 2013 of $1.4 million.
•
Income from discontinued operations, net of tax, was $0.4 million during the fourth quarter of fiscal 2014 compared to income from discontinued operations, net of tax, of $1.2 million during the fourth quarter of fiscal 2013.
•
Net loss during the fourth quarter of fiscal 2014 was $2.5 million compared to net loss of $0.2 million during the fourth quarter of fiscal 2013.






CASH DIVIDEND
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 August 22, 2014, to common stockholders of record on August 8, 2014.
“Cash and investments at the end of our fourth quarter were $136.0 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 Edward Richardson, Chairman, Chief Executive Officer, and President.

OUTLOOK
“We believe sales for fiscal 2015 will be in the range of $140 to $150 million. We will continue to use our cash and investments to make strategic acquisitions, invest in growth initiatives, and repurchase our stock.  During the last several years, our small strategic acquisitions have provided additional resources, customers, and knowledge-based support to EDG. 
While the market for tubes has been declining, we have been able to increase our market share and improve our margins. We are taking costs out of EDG to enable us to dedicate resources to our growth initiatives. We are developing our own intellectual property and plan to grow sales in new markets, such as healthcare, while maximizing the use of our existing global customer base and infrastructure.  With an improving economy and continued attention to operating efficiencies, we are confident that our investments will result in higher sales growth and improved financial performance over the long term,” concluded Mr. Richardson.

CONFERENCE CALL INFORMATION
On Thursday, July 24, 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 fourth 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 77103118 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 July 24, 2014, for seven days. The telephone numbers for the replay are (USA) (888) 286-8010 and (International) (617) 801-6888; passcode 82510744.

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)
 
May 31,   2014
 
June 1,   2013
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
102,752

 
$
102,002

Accounts receivable, less allowance of $581 and $1,092
18,354

 
18,268

Inventories
33,869

 
33,975

Prepaid expenses and other assets
1,089

 
1,155

Deferred income taxes
1,537

 
1,856

Income tax receivable
2,888

 
6,429

Investments - current
31,732

 
38,971

Discontinued operations - assets
18

 
303

Total current assets
192,239

 
202,959

Non-current assets:
 
 
 
Property, plant and equipment, net
7,223

 
5,073

Goodwill
—

 
1,519

Other Intangibles
843

 
908

Non-current deferred income taxes
1,724

 
1,398

Investments - non-current
1,516

 
5,461

Total non-current assets
11,306

 
14,359

Total assets
$
203,545

 
$
217,318

Liabilities and Stockholders’ Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
12,337

 
$
14,255

Accrued liabilities
9,220

 
9,566

Discontinued operations - liabilities
7

 
245

Total current liabilities
21,564

 
24,066

Non-current liabilities:
 
 
 
Non-current deferred income taxes liability
5,691

 
6,726

Other non-current liabilities
1,315

 
1,287

Discontinued operations - non-current liabilities
130

 
—

Total non-current liabilities
7,136

 
8,013

Total liabilities
28,700

 
32,079

Commitments and contingencies
—

 
—

Stockholders’ equity
 
 
 
Common stock, $0.05 par value; issued 11,835 shares at May 31, 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 May 31, 2014, and 2,491 shares at June 1, 2013
110

 
125

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

 
—

Additional paid-in-capital
66,141

 
73,979

Common stock in treasury, at cost, 1 share at May 31, 2014, and 9 shares at June 1, 2013
(14
)
 
(105
)
Retained earnings
97,959

 
101,816

Accumulated other comprehensive income
10,057

 
8,811

Total stockholders’ equity
174,845

 
185,239

Total liabilities and stockholders’ equity
$
203,545

 
$
217,318






Richardson Electronics, Ltd.
Consolidated Statements of Comprehensive Income (Loss)
(in thousands, except per share amounts)
 
Three Months Ended
 
Twelve Months Ended
 
May 31, 
 2014
 
June 1, 
 2013
 
May 31,   2014
 
June 1,   2013
Statements of Comprehensive Income (Loss)
 
 
 
 
 
 
 
Net sales
$
35,383

 
$
35,183

 
$
137,960

 
$
141,066

Cost of sales
25,219

 
24,936

 
96,946

 
99,521

Gross profit
10,164

 
10,247

 
41,014

 
41,545

Selling, general, and administrative expenses
12,417

 
11,841

 
43,496

 
41,536

Impairment of goodwill
1,671

 
—

 
1,671

 
—

Loss on disposal of assets
—

 
—

 
—

 
(2
)
Operating income (loss)
(3,924
)
 
(1,594
)
 
(4,153
)
 
11

Other (income) expense:
 
 
 
 
 
 
 
Investment/interest income
(221
)
 
(311
)
 
(1,018
)
 
(1,306
)
Foreign exchange (gain) loss
(39
)
 
40

 
84

 
760

Proceeds from legal settlement
—

 
—

 
(2,547
)
 
—

Other, net
16

 
(23
)
 
(20
)
 
(85
)
Total other income
(244
)
 
(294
)
 
(3,501
)
 
(631
)
Income (loss) from continuing operations before income taxes
(3,680
)
 
(1,300
)
 
(652
)
 
642

Income tax provision (benefit)
(837
)
 
119

 
(307
)
 
160

Income (loss) from continuing operations
(2,843
)
 
(1,419
)
 
(345
)
 
482

Income (loss) from discontinued operations, net of tax
368

 
1,238

 
(170
)
 
766

Net income (loss)
(2,475
)
 
(181
)
 
(515
)
 
1,248

Foreign currency translation gain (loss), net of tax
664

 
336

 
(1,216
)
 
(1,508
)
Fair value adjustments on investments gain (loss)
(1
)
 
(16
)
 
(30
)
 
(30
)
Comprehensive income (loss)
$
(1,812
)
 
$
139

 
$
(1,761
)
 
$
(290
)
Net income (loss) per Common share - Basic:
 
 
 
 
 
 
 
Income (loss) from continuing operations
$
(0.21
)
 
$
(0.10
)
 
$
(0.03
)
 
$
0.03

Income (loss) from discontinued operations
0.03

 
0.08

 
(0.01
)
 
0.05

Total net income (loss) per Common share - Basic:
$
(0.18
)
 
$
(0.02
)
 
$
(0.04
)
 
$
0.08

Net income (loss) per Class B common share - Basic:
 
 
 
 
 
 
 
Income (loss) from continuing operations
$
(0.19
)
 
$
(0.09
)
 
$
(0.02
)
 
$
0.03

Income (loss) from discontinued operations
0.02

 
0.08

 
(0.01
)
 
0.05

Total net income (loss) per Class B common share - Basic:
$
(0.17
)
 
$
(0.01
)
 
$
(0.03
)
 
$
0.08

Net income (loss) per Common share - Diluted:
 
 
 
 
 
 
 
Income (loss) from continuing operations
$
(0.21
)
 
$
(0.09
)
 
$
(0.03
)
 
$
0.03

Income (loss) from discontinued operations
0.03

 
0.08

 
(0.01
)
 
0.05

Total net income (loss) per Common share - Diluted:
$
(0.18
)
 
$
(0.01
)
 
$
(0.04
)
 
$
0.08

Net income (loss) per Class B common share - Diluted:
 
 
 
 
 
 
 
Income (loss) from continuing operations
$
(0.19
)
 
$
(0.08
)
 
$
(0.02
)
 
$
0.03

Income (loss) from discontinued operations
0.02

 
0.08

 
(0.01
)
 
0.05

Total net income (loss) per Class B common share - Diluted:
$
(0.17
)
 
$
—

 
$
(0.03
)
 
$
0.08

Weighted average number of shares:
 
 
 
 
 
 
 
Common shares - Basic
11,833

 
12,293

 
11,915

 
12,448

Class B common shares - Basic
2,191

 
2,696

 
2,250

 
2,790

Common shares - Diluted
11,833

 
15,122

 
11,915

 
15,372

Class B common shares - Diluted
2,191

 
2,696

 
2,250

 
2,790

Dividends per common share
$
0.060

 
$
0.060

 
$
0.240

 
$
0.240

Dividends per Class B common share
$
0.054

 
$
0.054

 
$
0.220

 
$
0.220





Richardson Electronics, Ltd.
Consolidated Statements of Cash Flows
(in thousands)
 
Three Months Ended
 
Twelve Months Ended
 
May 31, 
 2014
 
June 1, 
 2013
 
May 31,   2014
 
June 1,   2013
Operating activities:
 
 
 
 
 
 
 
Net income (loss)
$
(2,475
)
 
$
(181
)
 
$
(515
)
 
$
1,248

Adjustments to reconcile net income to cash provided by (used in) operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
298

 
274

 
1,094

 
1,057

Gain on sale of investments
(4
)
 
(2
)
 
(27
)
 
(28
)
Loss on disposal of assets
—

 
—

 
—

 
16

Share-based compensation expense
174

 
206

 
759

 
619

Deferred income taxes
(900
)
 
161

 
(1,005
)
 
145

Impairment of goodwill
1,671

 
—

 
1,671

 
—

Change in assets and liabilities, net of effect of acquired businesses:
 
 
 
 
 
 
 
Accounts receivable
1,693

 
1,337

 
195

 
1,814

Income tax receivable
752

 
371

 
3,541

 
143

Inventories
1,384

 
930

 
1,517

 
3,097

Prepaid expenses and other assets
230

 
(5
)
 
96

 
(329
)
Accounts payable
1,098

 
1,227

 
(2,072
)
 
1,482

Accrued liabilities
1,805

 
1,255

 
(723
)
 
960

Other non-current liabilities
435

 
(1,792
)
 
133

 
(1,918
)
Other
(111
)
 
(29
)
 
(51
)
 
319

Net cash provided by operating activities
6,050

 
3,752

 
4,613

 
8,625

Investing activities:
 
 
 
 
 
 
 
Cash consideration paid for acquired businesses
—

 
—

 
(973
)
 
(2,557
)
Capital expenditures
(960
)
 
(571
)
 
(2,781
)
 
(1,640
)
Proceeds from sale of assets
—

 
—

 
—

 
4

Proceeds from maturity of investments
83,990

 
26,686

 
342,279

 
154,228

Purchases of investments
(82,150
)
 
(377
)
 
(331,023
)
 
(82,898
)
Proceeds from sales of available-for-sale securities
24

 
27

 
176

 
188

Purchases of available-for-sale securities
(24
)
 
(27
)
 
(176
)
 
(188
)
Other
1

 
68

 
98

 
68

Net cash provided by investing activities
881

 
25,806

 
7,600

 
67,205

Financing activities:
 
 
 
 
 
 
 
Repurchase of common stock
(14
)
 
(3,474
)
 
(8,739
)
 
(15,024
)
Proceeds from issuance of common stock
6

 
50

 
190

 
198

Cash dividends paid
(827
)
 
(886
)
 
(3,341
)
 
(3,571
)
Other
62

 
—

 
37

 
—

Net cash used in financing activities
(773
)
 
(4,310
)
 
(11,853
)
 
(18,397
)
Effect of exchange rate changes on cash and cash equivalents
(566
)
 
(269
)
 
390

 
676

Increase in cash and cash equivalents
5,592

 
24,979

 
750

 
58,109

Cash and cash equivalents at beginning of period
97,160

 
77,023

 
102,002

 
43,893

Cash and cash equivalents at end of period
$
102,752

 
$
102,002

 
$
102,752

 
$
102,002






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

By Strategic Business Unit:
Net Sales
 
 
 
 
 
Q4 FY 2014
 
Q4 FY 2013
% Change
EDG
$
27,439

 
$
26,447

3.8%
Canvys
7,944

 
8,736

(9.1)%
Total
$
35,383

 
$
35,183

0.6%
 
 
 
 
 
 
FY 2014
 
FY 2013
% Change
EDG
$
103,274

 
$
102,593

0.7%
Canvys
34,686

 
38,473

(9.8)%
Total
$
137,960

 
$
141,066

(2.2)%
 
 
 
 
 
Gross Profit
 
 
 
 
 
Q4 FY 2014
% of Net Sales
Q4 FY 2013
% of Net Sales
EDG
$
8,105

29.5%
$
8,094

30.6%
Canvys
2,059

25.9%
2,153

24.6%
Total
$
10,164

28.7%
$
10,247

29.1%
 
 
 
 
 
 
FY 2014
% of Net Sales
FY 2013
% of Net Sales
EDG
$
31,610

30.6%
$
31,431

30.6%
Canvys
9,404

27.1%
10,114

26.3%
Total
$
41,014

29.7%
$
41,545

29.5%