Press release

EX-99.1 5 dex991.htm PRESS RELEASE Press release

Exhibit 99.1

LOGO

For Immediate Release

For Details Contact:

Edward J. Richardson

Chairman and CEO

Phone: (630) 208-2340

E-mail: info@rell.com

Kathleen S. Dvorak

EVP & CFO

(630) 208-2208

Corporate Headquarters

40W267 Keslinger Road

PO Box 393

LaFox, IL 60147-0393

USA

Phone: (630) 208-2200

Fax: (630) 208-2550

RICHARDSON ELECTRONICS REPORTS SECOND QUARTER

FISCAL 2011 RESULTS AND DECLARES CASH DIVIDEND

Second quarter sales growth of 23.7%

RFPD becomes a discontinued operation

LaFox, IL, January 5, 2011: Richardson Electronics, Ltd. (NASDAQ: RELL) today reported sales and earnings for its second quarter ended November 27, 2010. The Company’s second quarter results reflect its RFPD business unit as a discontinued operation. The Company also declared its regular quarterly dividend.

Net sales for the second quarter of Fiscal 2011 were $41.0 million, up 23.7% from net sales of $33.1 million during the second quarter of last year. Operating income was $0.6 million or 1.5% of net sales for the second quarter of Fiscal 2011, compared to $0.3 million or 0.9% of net sales during last year’s second quarter. Income from continuing operations during the second quarter of fiscal 2011 was $0.2 million, or $0.01 per diluted common share, compared to a loss from continuing operations of $0.3 million during the second quarter of last year.

Income from discontinued operations, net of tax, was $7.3 million, or $0.40 per diluted common share, during the second quarter of fiscal 2011 compared to $3.4 million, or $0.19 per diluted common share, during the second quarter of fiscal 2010.

Net income during the second quarter of fiscal 2011 was $7.5 million, or $0.41 per diluted common share, compared to net income of $3.1 million, or $0.18 per diluted common share, in the prior year’s second quarter.

“We are moving forward with the sale of our RFPD business unit to Arrow Electronics. We expect to close the transaction within the next 60 days. In the interim, we continue to see strong sales growth for our EDG business and improving signs for Canvys. Post-transaction, we will realign our cost structure for the remaining businesses to achieve our near-term goal of attaining a 5% operating margin,” said Edward J. Richardson, Chairman, Chief Executive Officer and President of Richardson Electronics, Ltd.

FINANCIAL SUMMARY — THREE MONTHS ENDED NOVEMBER 27, 2010

•

Net sales for the second quarter of fiscal 2011 were $41.0 million, up 23.7%, compared to net sales of $33.1 million during the second quarter of last year.

•

Gross margin as a percentage of net sales decreased to 28.8% during the second quarter of fiscal 2011 compared to 32.9% during the second quarter of last year.

•

SG&A expenses during the second quarter of Fiscal 2011 were $11.2 million, or 27.3% of net sales, compared to $10.6 million, or 32.0% of net sales, during the second quarter of last year.

•

Operating income during the second quarter of fiscal 2011 was $0.6 million, or 1.5% of net sales, compared to $0.3 million, or 0.9% of net sales, for the second quarter last year.

•

Income from continuing operations during the second quarter of fiscal 2011 was $0.2 million, or $0.01 per diluted common share, compared to a loss from continuing operations of $0.3 million during the second quarter of last year.

•

FINANCIAL SUMMARY — SIX MONTHS ENDED NOVEMBER 27, 2010

•

Net sales for the first six months of fiscal 2011 were $78.5 million, up 24.3%, compared to net sales of $63.1 million during the first six months of last year.

•

Gross margin as a percentage of net sales decreased to 29.5% during the first six months of fiscal 2011 compared to 31.6% during the first six months of last year.

•

SG&A expenses during the first six months of Fiscal 2011 were $21.7 million, or 27.7% of net sales, compared to $21.0 million, or 33.3% of net sales, during the first six months of last year.

•

Operating income during the first six months of fiscal 2011 was $1.4 million, or 1.8% of net sales, compared to a loss of $1.0 million for the first six months of last year.

•

Income from continuing operations during the first six months of fiscal 2011 was $0.6 million, or $0.03 per diluted common share, compared to a loss from continuing operations of $2.5 million, during the first six months of last year.

•

Income from discontinued operations, net of tax, was $15.2 million, or $0.84 per diluted common share, during the first six months of fiscal 2011 compared to $7.6 million, or $0.42 per diluted common share, during the first six months of the prior year.

•

Net income during the first six months of fiscal 2011 was $15.8 million, or $0.87 per diluted common share, compared to net income of $5.0 million, or $0.28 per diluted common share, during the first six months of the prior year.

CASH FLOWS AND BALANCE SHEET

Cash flows provided by operating activities were $2.8 million during the second quarter of Fiscal 2011, compared to cash flows provided by operating activities of $6.9 million during the second quarter of Fiscal 2010. The Company ended the quarter in a net cash position of $15.0 million, reflecting cash of $33.0 million and total debt of $18.0 million.

“The balance sheet items shown as discontinued assets and liabilities all relate to RFPD. Our balance sheet for our third quarter will reflect the cash proceeds from the sale as well as the remaining assets and liabilities of our existing businesses. After the sale, our balance sheet will provide us with tremendous flexibility and liquidity for our future,” said Kathleen Dvorak, Executive Vice President and Chief Financial Officer.

OUTLOOK

On October 1, 2010, the Company announced that it had signed a definitive agreement to sell its RF, Wireless and Power Division (“RFPD”) and certain other assets to Arrow Electronics, Inc. (NYSE: ARW) for $210 million in cash, subject to post-closing adjustments.

The transaction is subject to the approval of shareholders of Richardson Electronics, Ltd. as well as customary closing conditions and regulatory approvals. The companies expect the transaction to close in the next 60 days.

“We expect that sales for EDG and Canvys for the third quarter to be in the range of $38 to $40 million, representing more than 10% growth over the prior year. Post-transaction, our goal will be to appropriately align our cost structure and implement our growth strategy to deliver solid financial and operational results,” said Mr. Richardson.

CASH DIVIDEND

The Company also announced today that its Board of Directors voted to declare a $0.02 cash dividend per share to all holders of common stock and a $0.018 cash dividend per share to all holders of Class B common stock. The dividend will be payable on February 25, 2011, to all common stockholders of record on February 10, 2011. The Company currently has 14,980,190 outstanding shares of common stock and 3,001,961 outstanding shares of Class B common stock.

CONFERENCE CALL INFORMATION

On Thursday, January 6, 2011, 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 second quarter fiscal 2011 results. A question and answer session will be included as part of the call’s agenda. To listen to the call, please dial 800-688-0796 and enter passcode 20623014 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 January 6, 2011, for seven days. The telephone numbers for the replay are (USA) 800-688-0796 and (International) 617-614-4070; access code 64749137.

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 2010 Annual Report on Form 10-K, Item 1A, “Risk Factors” in the Company’s Quarterly Report on Form 10-Q for the period ended August 28, 2010 and “Risk Factors” in the Company’s Definitive Proxy Statement filed on December 21, 2010. 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 global provider of engineered solutions, a global distributor of electronic components to the radio frequency, wireless and power management, and electron device markets, and a global provider of display solutions to the display systems markets. Utilizing its core engineering and manufacturing capabilities, the Company’s strategy is to provide specialized technical expertise and value-add, or “engineered solutions.” The Company provides solutions and adds value through design-in support, systems integration, prototype design and manufacturing, testing, and logistics for end products of its customers. 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.

Unaudited Condensed Consolidated Statements of Income

(in thousands, except per share amounts)


	Three Months Ended						Six Months Ended
	November 27, 2010			November 28, 2009			November 27, 2010			November 28, 2009

Net sales	$	40,980		$	33,116		$	78,490		$	63,130
Cost of sales		29,185			22,216			55,304			43,163

Gross profit		11,795			10,900			23,186			19,967
Selling, general, and administrative expenses		11,198			10,589			21,743			20,997
(Gain) loss on disposal of assets		2			—			2			(2	)

Operating income (loss)		595			311			1,441			(1,028	)

Other (income) expense:
Interest expense		39			325			106			664
Investment income		—			(8	)		—			(18	)
Foreign exchange loss		197			700			316			1,518
Loss on retirement of short-term debt		—			—			60			—
Other, net		(79	)		(91	)		(70	)		(98	)

Total other expense		157			926			412			2,066

Income (loss) from continuing operations before income taxes		438			(615	)		1,029			(3,094	)
Income tax provision (benefit)		270			(353	)		408			(564	)

Income (loss) from continuing operations		168			(262	)		621			(2,530	)
Income from discontinued operations, net of tax		7,291			3,396			15,214			7,579

Net income	$	7,459		$	3,134		$	15,835		$	5,049


Net income per Common share - Basic:
Income (loss) from continuing operations	$	0.01		$	(0.01	)	$	0.04		$	(0.14	)
Income from discontinued operations		0.42			0.19			0.87			0.43

Total net income per Common share - Basic:	$	0.43		$	0.18		$	0.91		$	0.29


Net income per Class B common share - Basic:
Income (loss) from continuing operations	$	0.01		$	(0.01	)	$	0.03		$	(0.13	)
Income from discontinued operations		0.38			0.17			0.78			0.39

Total net income per Class B common share - Basic:	$	0.39		$	0.16		$	0.81		$	0.26


Net income per Common share - Diluted:
Income (loss) from continuing operations	$	0.01		$	(0.01	)	$	0.03		$	(0.14	)
Income from discontinued operations		0.40			0.19			0.84			0.42

Total net income per Common share - Diluted:	$	0.41		$	0.18		$	0.87		$	0.28


Net income per Class B common share - Diluted:
Income (loss) from continuing operations	$	0.01		$	(0.01	)	$	0.03		$	(0.13	)
Income from discontinued operations		0.37			0.17			0.77			0.39

Total net income per Class B common share - Diluted:	$	0.38		$	0.16		$	0.80		$	0.26


Weighted average number of shares:
Common shares - Basic		14,768			14,864			14,725			14,862

Class B common shares - Basic		3,028			3,048			3,038			3,048

Common shares - Diluted		18,099			17,912			18,010			17,910

Class B common shares - Diluted		3,028			3,048			3,038			3,048


Dividends per common share	$	0.020		$	0.020		$	0.040		$	0.040

Dividends per Class B common share	$	0.018		$	0.018		$	0.036		$	0.036

Richardson Electronics, Ltd.

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except per share amounts)


	November 27, 2010			May 29, 2010
Assets
Current assets:
Cash and cash equivalents	$	33,033		$	29,038
Accounts receivable, less allowance of $312 and $369		22,008			19,762
Inventories		26,491			26,797
Prepaid expenses		1,388			1,438
Deferred income taxes		346			317
Discontinued operations - assets		173,168			148,169

Total current assets		256,434			225,521


Non-current assets:
Property, plant and equipment, net		5,752			6,561
Deferred financing costs, net		—			60
Non-current deferred income taxes		1,550			1,541
Other non-current assets		358			1,132

Total non-current assets		7,660			9,294

Total assets	$	264,094		$	234,815


Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	18,750		$	18,067
Accrued liabilities		10,864			10,037
Short-term debt		18,000			19,517
Discontinued operations - liabilities		60,990			53,366

Total current liabilities		108,604			100,987


Non-current liabilities:
Long-term income tax liabilities		346			254
Other non-current liabilities		494			490
Discontinued operations - non-current liabilities		3,265			3,221

Total non-current liabilities		4,105			3,965

Total liabilities		112,709			104,952


Commitments and contingencies		—			—

Stockholders’ equity
Common stock, $0.05 par value; issued 16,317 shares at November 27, 2010, and 16,029 shares at May 29, 2010		814			802
Class B common stock, convertible, $0.05 par value; issued 3,002 shares at November 27, 2010, and 3,048 shares at May 29, 2010		152			152
Preferred stock, $1.00 par value, no shares issued		—			—
Additional paid-in-capital		123,065			120,998
Common stock in treasury, at cost, 1,370 shares at November 27, 2010, and 1,355 shares at May 29, 2010		(8,665	)		(8,503	)
Retained earnings		28,061			12,925
Accumulated other comprehensive income		7,958			3,489

Total stockholders’ equity		151,385			129,863

Total liabilities and stockholders’ equity	$	264,094		$	234,815

Richardson Electronics, Ltd.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)


	Three Months Ended						Six Months Ended
	November 27, 2010			November 28, 2009			November 27, 2010			November 28, 2009
Operating activities:
Net income	$	7,459		$	3,134		$	15,835		$	5,049
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		490			1,115			1,385			2,179
Loss from discontinued operations		—			1,173			—			1,173
Loss on retirement of short-term debt		—			—			60			—
Stock compensation expense		160			202			308			351
Deferred income taxes		(85	)		260			(31	)		84
Accounts receivable		(9,536	)		(4,786	)		(11,212	)		1,039
Inventories		(3,473	)		7,705			(10,016	)		5,885
Prepaid expenses		(862	)		204			(1,704	)		(1,472	)
Accounts payable		7,361			(988	)		6,651			(8,731	)
Accrued liabilities		1,762			591			2,021			946
Other		(481	)		(1,711	)		(61	)		(1,804	)

Net cash provided by operating activities		2,795			6,899			3,236			4,699

Investing activities:
Capital expenditures		(97	)		(214	)		(496	)		(494	)
Proceeds from sales of available-for-sale securities		73			64			83			103
Purchases of available-for-sale securities		(73	)		(64	)		(83	)		(103	)
Other		(40	)		(10	)		(33	)		(27	)

Net cash used in investing activities		(137	)		(224	)		(529	)		(521	)

Financing activities:
Proceeds from borrowings		47,300			—			109,600			10,200
Payments on debt		(51,300	)		—			(91,600	)		(10,200	)
Payments on retirement of short-term debt		—			—			(19,517	)		—
Repurchase of common stock		(162	)		—			(162	)		—
Proceeds from issuance of common stock		1,607			—			1,771			5
Cash dividends paid		(351	)		(352	)		(699	)		(704	)
Other		—			10			—			10

Net cash used in financing activities		(2,906	)		(342	)		(607	)		(689	)

Effect of exchange rate changes on cash and cash equivalents		1,299			1,829			1,895			2,581

Increase in cash and cash equivalents		1,051			8,162			3,995			6,070
Cash and cash equivalents at beginning of period		31,982			41,795			29,038			43,887

Cash and cash equivalents at end of period	$	33,033		$	49,957		$	33,033		$	49,957

Richardson Electronics, Ltd.

Net Sales and Gross Profit

For the Second Quarter and First Six Months of Fiscal 2011 and Fiscal 2010

(in thousands)

By Strategic Business Unit:


	Net Sales							Gross Profit
Second Quarter	FY 2011		FY 2010		% Change			FY 2011		% of Net Sales			FY 2010		% of Net Sales
EDG		28,655		20,121		42.4	%		8,942		31.2	%		7,366		36.6	%
Canvys		12,325		12,995		(5.2	%)		2,853		23.1	%		3,535		27.2	%

Total	$	40,980	$	33,116		23.7	%	$	11,795		28.8	%	$	10,901		32.9	%


	Net Sales							Gross Profit
First Six Months	FY 2011		FY 2010		% Change			FY 2011		% of Net Sales			FY 2010		% of Net Sales
EDG		56,148		38,917		44.3	%		17,998		32.1	%		13,633		35.0	%
Canvys		22,342		24,213		(7.7	%)		5,188		23.2	%		6,335		26.2	%

Total	$	78,490	$	63,130		24.3	%	$	23,186		29.5	%	$	19,968		31.6	%