EX-99.2 8 dex992.htm PRESS RELEASE Press Release

Exhibit 99.2

LOGO

 


 

           

For Immediate Release

  

Corporate Headquarters 40W267 Keslinger Road

PO Box 393

For Details Contact:       LaFox, IL 60147-0393
Ed Richardson    David J. DeNeve    USA

Chairman and Chief Executive Officer

   Senior Vice President and    Phone:   (630) 208-2200

Richardson Electronics, Ltd.

   Chief Financial Officer    Fax:   (630) 208-2550

Phone: (630) 208-2340

   Richardson Electronics, Ltd.     

E-mail: info@rell.com

       

 


Richardson Reports Record Fiscal Third Quarter Sales and Gross Profit

LaFox, IL, Wednesday, April 11, 2007: Richardson Electronics, Ltd. (NASDAQ: RELL) announced today results for its fiscal third quarter ended March 3, 2007. Sales in the third quarter were $160.1 million, an increase of 5.3% from the third quarter of fiscal 2006. Gross profit improved 5.3% to $39.0 million in the third quarter of fiscal 2007 as compared with $37.1 million in the same quarter last year. Operating income was $5.6 million for the third quarter of fiscal 2007 versus $1.5 million in the prior year. Operating income included a gain of $2.5 million from the sale of real estate and a building in Geneva, Illinois. Excluding this gain, operating income in the third quarter of fiscal 2007 more than doubled operating income in the same period last year.

SG&A expenses remained relatively flat for the comparable third quarter periods, while SG&A as a percentage of net sales decreased to 22.4% of sales in the third quarter of fiscal 2007 as compared with 23.3% of sales in the third quarter of fiscal 2006.

Other expense included a foreign exchange loss of $0.1 million in the third quarter of fiscal 2007 as compared to a foreign exchange gain of $1.6 million in the prior year. The foreign exchange variance was due to the strengthening of the U.S. dollar, primarily related to receivables due from foreign subsidiaries to the U.S. parent company and denominated in foreign currencies.

Net income was $1.0 million in the third quarter of fiscal 2007, or $0.06 per diluted common share, as compared to a net loss of $1.1 million, or $0.07 per diluted common share, in the third quarter of last fiscal year.

The RF, Wireless & Power Division (RFPD) continued to lead the sales growth with a 10.8% increase in sales for the third quarter of fiscal 2007 over the prior year. RFPD sales reached $89.2 million with strong global demand for infrastructure and power conversion products. Sales in the Electron Device Group increased 11.3% to $24.4 million primarily due to higher sales of semiconductor fabrication and tube products. Security Systems Division/Burtek Systems’ (SSD/Burtek) sales for the third quarter of fiscal 2007 grew 3.7% from the prior


year to $26.2 million due to growth in distribution products. Sales in the Display Systems Group were 16.8% lower for the third quarter of fiscal 2007 at $19.6 million due to a decrease in project business for custom displays, a less favorable market for medical monitors, and lower demand for cathode ray tubes as compared to last year.

On a geographic basis, sales in Europe increased 16.8% to $39.9 million as compared to last year, with strong demand for wireless, power, electron device, and security system products. Sales in Asia/Pacific were $40.5 million during the third quarter of fiscal 2007, a 16.7% increase over the prior year, due to sales growth in wireless infrastructure and power conversion products. Sales in North America declined 1.2% to $74.4 million during the third quarter of fiscal 2007 due to lower demand for display system products, partially offset by increases in electron device and wireless products sales. Sales in Latin America decreased 12.6% to $5.1 million due to a decline in sales of wireless, electron device, and security systems products.

“Our continued market penetration in Asia/Pacific and Europe, strong focus on core competencies and engineered solutions in the wireless, power, and electron device industries, and the implementation of our restructuring plan will help us achieve our goal of improved operating performance,” said Edward J. Richardson, Chairman, Chief Executive Officer and President. “We will continue to evaluate the performance of each business unit, seeking to improve operational efficiencies and asset utilization to increase shareholder value.”

On April 6, 2007, the Company entered into a definitive agreement with Honeywell International Inc. to sell certain assets and liabilities of the Company’s SSD/Burtek strategic business unit for $80 million in cash, subject to post-closing adjustments. The sale is subject to regulatory review. The Company anticipates the completion of the sale to occur in the fourth quarter of fiscal 2007 or the first quarter of fiscal 2008. Upon completion, the Company would report SSD/Burtek as a discontinued operation in accordance with the criteria of SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.

As of March 3, 2007, the net assets of SSD/Burtek included in the sale were approximately $33 million. Based on the Company’s tax structure and its ability to use existing net operating loss carryforwards to offset any gain in the U.S., the Company does not expect to pay income taxes as a result of the sale. After transaction expenses, net proceeds from the sale are estimated to be $76 million. Upon closing, the Company expects to record a gain on sale of approximately $43 million. The Company expects to use the net proceeds from the sale to pay down debt outstanding under its credit agreement.

“The resources of Honeywell combined with SSD/Burtek will offer our customers an expanded range of products and the finest solutions for their security requirements. SSD/Burtek has been a major contributor to the success of Richardson Electronics. We are extremely pleased with the future of the business as part of Honeywell,” said Edward J. Richardson.

On Thursday, April 12, 2007 at 9:00 a.m. CDT, Mr. Edward J. Richardson, Chairman, Chief Executive Officer and President, will host a conference call to discuss the release. A question and answer session will be included as part of the call’s agenda. To listen to the call, please dial 888-428-4473 approximately five minutes prior to the start of the call. A replay of the call will be available from 12:30 p.m. on April 12, 2007 through August 8, 2007. The


telephone numbers to access the replay in the U.S. is 800-475-6701 and outside of the U.S. is 320-365-3844; access code 869436.

This release includes certain “forward-looking” statements as defined by the SEC. 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 for the most recently ended fiscal year. 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

Richardson Electronics, Ltd. is a global provider of “Engineered Solutions,” serving the RF, Wireless & Power Conversion; Electron Device; Security; and Display Systems markets. The Company delivers engineered solutions for its customers’ needs through product manufacturing, systems integration, prototype design and manufacture, testing and logistics. Press announcements and other information about Richardson are available on the World Wide Web at http://www.rell.com/investor.asp.

 


Richardson Electronics, Ltd.

Condensed Consolidated Statements of Operations

(Unaudited)(in thousands, except per share amounts)

 

     Three Months Ended     Nine Months Ended  
Statements of Operations    March 3,
2007
    March 4,
2006
    March 3,
2007
    March 4,
2006
 

Net sales

   $ 160,141     $ 152,128     $ 491,702     $ 466,110  

Cost of sales

     121,093       115,039       370,756       350,983  
                                

Gross profit

     39,048       37,089       120,946       115,127  

Selling, general, and administrative expenses

     35,877       35,502       107,386       100,766  

(Gain) loss on disposal of assets

     (2,418 )     75       (2,098 )     (87 )
                                

Operating income

     5,589       1,512       15,658       14,448  
                                

Other (income) expense:

        

Interest expense

     2,706       2,479       8,486       7,076  

Investment income

     (71 )     (117 )     (885 )     (248 )

Foreign exchange (gain) loss

     110       (1,611 )     315       2,071  

Retirement of long-term debt expenses

                 2,540        

Other, net

     15       54       74       229  
                                

Total other expense

     2,760       805       10,530       9,128  
                                

Income before income taxes

     2,829       707       5,128       5,320  

Income tax provision

     1,792       1,853       4,108       4,353  
                                

Net income (loss)

   $ 1,037     $ (1,146 )   $ 1,020     $ 967  
                                

Net income (loss) per share—basic:

        

Common stock

   $ 0.06     $ (0.07 )   $ 0.06     $ 0.06  
                                

Common stock average shares outstanding

     14,559       14,328       14,493       14,310  
                                

Class B common stock

   $ 0.05     $ (0.06 )   $ 0.05     $ 0.05  
                                

Class B common stock average shares outstanding

     3,048       3,093       3,048       3,093  
                                

Net income (loss) per share—diluted:

        

Common stock

   $ 0.06     $ (0.07 )   $ 0.06     $ 0.06  
                                

Common stock average shares outstanding

     17,732       14,328       17,638       17,476  
                                

Class B common stock

   $ 0.05     $ (0.06 )   $ 0.05     $ 0.05  
                                

Class B common stock average shares outstanding

     3,048       3,093       3,048       3,093  
                                

Dividends per common share

   $ 0.040     $ 0.040     $ 0.120     $ 0.120  
                                

Dividends per Class B common share

   $ 0.036     $ 0.036     $ 0.108     $ 0.108  
                                

 


Richardson Electronics, Ltd.

Net Sales and Gross Profit

For the Third Quarter and First Nine Months of Fiscal 2007 and 2006

(Unaudited, in thousands)

By Business Unit:

 

     Net Sales     Gross Profit  
     FY 2007    FY 2006    %
Change
    FY 2007     GP% of
Sales
    FY 2006     GP% of
Sales
 

Third Quarter

                

RF, Wireless & Power Division

   $ 89,241    $ 80,526    10.8 %   $ 20,576     23.1 %   $ 19,049     23.7 %

Electron Device Group

     24,384      21,907    11.3 %     7,922     32.5 %     7,099     32.4 %

Security Systems Division/Burtek Systems

     26,247      25,316    3.7 %     6,934     26.4 %     6,016     23.8 %

Display Systems Group

     19,592      23,537    (16.8 %)     4,713     24.1 %     6,426     27.3 %

Corporate

     677      842        (1,097 )       (1,501 )  
                                    

Total

   $ 160,141    $ 152,128    5.3 %   $ 39,048     24.4 %   $ 37,089     24.4 %
                                    

Nine Months

                

RF, Wireless & Power Division

   $ 270,567    $ 241,252    12.2 %   $ 62,431     23.1 %   $ 55,890     23.2 %

Electron Device Group

     74,552      70,352    6.0 %     23,972     32.2 %     22,543     32.0 %

Security Systems Division/Burtek Systems

     80,657      80,488    0.2 %     21,446     26.6 %     20,185     25.1 %

Display Systems Group

     62,801      69,881    (10.1 %)     14,870     23.7 %     18,559     26.6 %

Corporate

     3,125      4,137        (1,773 )       (2,050 )  
                                    

Total

   $ 491,702    $ 466,110    5.5 %   $ 120,946     24.6 %   $ 115,127     24.7 %
                                    

By Geographic Area:

                
     Net Sales     Gross Profit  
     FY 2007    FY 2006    %
Change
    FY 2007     GP% of
Sales
    FY 2006     GP% of
Sales
 

Third Quarter

                

North America

   $ 74,393    $ 75,291    (1.2 %)   $ 20,584     27.7 %   $ 20,813     27.6 %

Asia/Pacific

     40,505      34,707    16.7 %     9,947     24.6 %     8,805     25.4 %

Europe

     39,867      34,138    16.8 %     10,369     26.0 %     10,298     30.2 %

Latin America

     5,054      5,780    (12.6 %)     1,383     27.4 %     1,910     33.0 %

Corporate

     322      2,212        (3,235 )       (4,737 )  
                                    

Total

   $ 160,141    $ 152,128    5.3 %   $ 39,048     24.4 %   $ 37,089     24.4 %
                                    

Nine Months

                

North America

   $ 238,909    $ 236,631    1.0 %   $ 64,138     26.8 %   $ 63,354     26.8 %

Asia/Pacific

     119,306      106,700    11.8 %     28,528     23.9 %     26,164     24.5 %

Europe

     116,086      101,869    14.0 %     30,261     26.1 %     28,665     28.1 %

Latin America

     15,449      17,760    (13.0 %)     4,371     28.3 %     5,059     28.5 %

Corporate

     1,952      3,150        (6,352 )       (8,115 )  
                                    

Total

   $ 491,702    $ 466,110    5.5 %   $ 120,946     24.6 %   $ 115,127     24.7 %
                                    

 

Note:

  

Europe includes net sales and gross profit to the Middle East and Africa.

Latin America includes net sales and gross profit to Mexico.

Corporate consists of freight, other non-specific net sales and gross profit, and customer cash discounts.

 


Richardson Electronics, Ltd.

Condensed Consolidated Balance Sheets

(in thousands, except per share amounts)

 

     Unaudited
March 3,
2007
    June 3,
2006
 

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 12,363     $ 17,010  

Receivables, less allowance of $2,318 and $2,142

     115,474       115,733  

Inventories

     131,007       117,320  

Prepaid expenses

     7,635       3,739  

Deferred income taxes

     1,057       1,527  
                

Total current assets

     267,536       255,329  
                

Non-current assets:

    

Property, plant and equipment, net

     31,647       32,357  

Goodwill

     13,179       13,068  

Other intangible assets, net

     2,016       2,413  

Non-current deferred income taxes

     1,335       1,300  

Assets held for sale

     1,243       1,018  

Other assets

     1,831       3,814  
                

Total non-current assets

     51,251       53,970  
                

Total assets

   $ 318,787     $ 309,299  
                

Liabilities and Stockholders’ Equity

    

Current liabilities:

    

Accounts payable

   $ 56,407     $ 52,494  

Accrued liabilities

     28,479       30,588  

Current portion of long-term debt

     16       14,016  
                

Total current liabilities

     84,902       97,098  
                

Non-current liabilities:

    

Long-term debt, less current portion

     133,433       112,792  

Non-current liabilities

     1,803       1,169  
                

Total non-current liabilities

     135,236       113,961  
                

Total liabilities

     220,138       211,059  
                

Commitments and contingencies

            

Stockholders’ equity

    

Common stock, $0.05 par value; issued 15,813 shares at March 3, 2007 and 15,663 shares at
June 3, 2006

     791       783  

Class B common stock, convertible, $0.05 par value; issued 3,048 shares at March 3, 2007 and 3,093 shares at June 3, 2006

     152       155  

Preferred stock, $1.00 par value, no shares issued

            

Additional paid-in-capital

     118,536       119,149  

Common stock in treasury, at cost, 1,249 shares at March 3, 2007 and 1,261 shares at June 3, 2006

     (7,404 )     (7,473 )

Accumulated deficit

     (18,028 )     (19,048 )

Accumulated other comprehensive income

     4,602       4,674  
                

Total stockholders’ equity

     98,649       98,240  
                

Total liabilities and stockholders’ equity

   $ 318,787     $ 309,299