Exhibit 99.1
Corporate Headquarters | ||||
For Immediate Release | 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 Second Quarter Sales, a 6.4% Increase over Prior Year
LaFox, IL, Wednesday, January 10, 2007:Richardson Electronics, Ltd. (NASDAQ: RELL) announced today results for its fiscal second quarter ended December 2, 2006. Sales in the quarter were $165.8 million, an increase of 6.4% from the second quarter of fiscal 2006. Gross profit improved 2.7% to $40.6 million, or 24.5% of net sales in the second quarter of fiscal 2007 as compared with $39.5 million in the same quarter last year. The prior year’s second quarter included a $0.9 million favorable adjustment to warranty expense which improved gross margin from 24.7% to 25.4% last fiscal year.
SG&A expenses in the second quarter of fiscal 2007 included restructuring expense of $0.6 million related to the implementation of the fiscal 2007 global restructuring plan and stock compensation expense of $0.3 million related to Statement of Financial Accounting Standards No. 123(R) which was adopted in the first quarter of fiscal 2007. Operating income decreased to $4.1 million in the second quarter of fiscal 2007 from $7.2 million in the prior year period. SG&A as a percentage of net sales increased to 21.8% of sales in the second quarter of fiscal 2007 as compared with 20.7% of sales in the same quarter last year. Other expense included a foreign exchange gain of $0.2 million during the second quarter of fiscal 2007 as compared to a foreign exchange loss of $3.8 million last year. The foreign exchange variance was due to the weakening 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 $1.1 million in the second quarter of fiscal 2007, or $0.06 per diluted common share, as compared with net income of $0.3 million, or $0.02 per diluted common share, in the second quarter last fiscal year. Excluding the restructuring expense of $0.6 million and the stock compensation expense of $0.3 million, net income was $2.0 million in the second quarter of fiscal 2007, or $0.11 per diluted common share. We present these adjusted net income figures because we did not incur restructuring or stock compensation expenses in the second quarter of fiscal 2006 and believe that such presentation is useful for comparative purposes.
RF, Wireless & Power Division (RFPD) led the sales growth for the second quarter of fiscal 2007, increasing sales 13.1% to $90.0 million with higher demand of infrastructure, power conversion, and passive/interconnect products. Sales in the Electron Device Group were $25.5 million, a 3.6% increase from the prior year due to continued growth in semiconductor fabrication products. Security Systems Division/Burtek Systems’ sales remained relatively flat at $28.1 million during the second quarter of fiscal 2007 versus the same period last year. Sales in the Display Systems Group (DSG) were 2.3% lower for the second quarter of fiscal 2007 at $21.4 million due to delays in project based business for custom displays and lower demand for cathode ray tubes (CRT) as compared with the same quarter in fiscal 2006.
On a geographic basis, sales in Europe grew 14.0% to $39.8 million for the second quarter of fiscal 2007 due to continued growth in wireless, display system, and electron device products sales. Sales in Asia/Pacific increased 12.9% to $39.3 million with strong demand for wireless infrastructure and power conversion products. Sales in North America increased to $81.3 million, a 2.6% increase from the second quarter of fiscal 2006 with growth in electron device, wireless, and security system products lines. Sales in Latin America decreased 19.4% to $4.8 million due to a decline in sales of security products.
“Forecasting sales for DSG continues to be a challenge as the business is heavily dependent on the rollout of large projects. Extended delivery on several of the projects resulted in sales and gross margin percentage being lower than our expectations,” said Edward J. Richardson, Chairman, Chief Executive Officer and President. “RFPD’s continued sales growth around the globe has helped us continue our year-over-year sales improvement while the global restructuring plan will streamline the organization which will impact our overall performance during the next twelve months.”
On Thursday, January 11, 2007 at 9:00 a.m. CST, 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 800-553-0349 approximately five minutes prior to the start of the call. A replay of the call will be available from 12:30 p.m. on January 11, 2007 through April 11, 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 857688.
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 athttp://www.rell.com/investor.asp.
Richardson Electronics, Ltd.
Condensed Consolidated Statements of Operations
(Unaudited)(in thousands, except per share amounts)
Three Months Ended | Six Months Ended | |||||||||||||||
December 2, 2006 | December 3, 2005 | December 2, 2006 | December 3, 2005 | |||||||||||||
Statements of Operations | ||||||||||||||||
Net sales | $ | 165,806 | $ | 155,837 | $ | 331,561 | $ | 313,982 | ||||||||
Cost of sales | 125,227 | 116,331 | 249,663 | 235,944 | ||||||||||||
Gross profit | 40,579 | 39,506 | 81,898 | 78,038 | ||||||||||||
Selling, general, and administrative expenses | 36,130 | 32,283 | 71,509 | 65,264 | ||||||||||||
(Gain) loss on disposal of assets | 339 | (22 | ) | 320 | (162 | ) | ||||||||||
Operating income | 4,110 | 7,245 | 10,069 | 12,936 | ||||||||||||
Other (income) expense: | ||||||||||||||||
Interest expense | 2,797 | 2,320 | 5,780 | 4,597 | ||||||||||||
Investment income | (737 | ) | (23 | ) | (814 | ) | (131 | ) | ||||||||
Foreign exchange (gain) loss | (189 | ) | 3,819 | 205 | 3,682 | |||||||||||
Retirement of long-term debt expenses | — | — | 2,540 | — | ||||||||||||
Other, net | 25 | 131 | 59 | 175 | ||||||||||||
Total other expense | 1,896 | 6,247 | 7,770 | 8,323 | ||||||||||||
Income before income taxes | 2,214 | 998 | 2,299 | 4,613 | ||||||||||||
Income tax provision | 1,132 | 705 | 2,316 | 2,500 | ||||||||||||
Net income (loss) | $ | 1,082 | $ | 293 | $ | (17 | ) | $ | 2,113 | |||||||
Net income (loss) per share – basic: | ||||||||||||||||
Common stock | $ | 0.06 | $ | 0.02 | $ | (0.00 | ) | $ | 0.12 | |||||||
Common stock average shares outstanding | 14,451 | 14,293 | 14,435 | 14,284 | ||||||||||||
Class B common stock | $ | 0.06 | $ | 0.02 | $ | (0.00 | ) | $ | 0.11 | |||||||
Class B common stock average shares outstanding | 3,073 | 3,110 | 3,073 | 3,110 | ||||||||||||
Net income (loss) per share – diluted: | ||||||||||||||||
Common stock | $ | 0.06 | $ | 0.02 | $ | (0.00 | ) | $ | 0.12 | |||||||
Common stock average shares outstanding | 17,669 | 17,462 | 14,435 | 17,475 | ||||||||||||
Class B common stock | $ | 0.06 | $ | 0.02 | $ | (0.00 | ) | $ | 0.11 | |||||||
Class B common stock average shares outstanding | 3,073 | 3,110 | 3,073 | 3,110 | ||||||||||||
Dividends per common share | $ | 0.040 | $ | 0.040 | $ | 0.080 | $ | 0.080 | ||||||||
Dividends per Class B common share | $ | 0.036 | $ | 0.036 | $ | 0.072 | $ | 0.072 | ||||||||
Richardson Electronics, Ltd.
Net Sales and Gross Profit
For the Second Quarter and First Six 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 | |||||||||||||||||
Second Quarter | |||||||||||||||||||||||
RF, Wireless & Power Division | $ | 89,994 | $ | 79,569 | 13.1 | % | $ | 20,392 | 22.7 | % | $ | 18,645 | 23.4 | % | |||||||||
Electron Device Group | 25,494 | 24,607 | 3.6 | % | 8,339 | 32.7 | % | 7,712 | 31.3 | % | |||||||||||||
Security Systems Division/Burtek Systems | 28,092 | 28,268 | (0.6 | %) | 7,545 | 26.9 | % | 7,155 | 25.3 | % | |||||||||||||
Display Systems Group | 21,380 | 21,894 | (2.3 | %) | 5,192 | 24.3 | % | 6,118 | 27.9 | % | |||||||||||||
Corporate | 846 | 1,499 | (889 | ) | (124 | ) | |||||||||||||||||
Total | $ | 165,806 | $ | 155,837 | 6.4 | % | $ | 40,579 | 24.5 | % | $ | 39,506 | 25.4 | % | |||||||||
Six Months | |||||||||||||||||||||||
RF, Wireless & Power Division | $ | 181,326 | $ | 160,726 | 12.8 | % | $ | 41,855 | 23.1 | % | $ | 36,841 | 22.9 | % | |||||||||
Electron Device Group | 50,168 | 48,445 | 3.6 | % | 16,050 | 32.0 | % | 15,444 | 31.9 | % | |||||||||||||
Security Systems Division/Burtek Systems | 54,410 | 55,172 | (1.4 | %) | 14,512 | 26.7 | % | 14,169 | 25.7 | % | |||||||||||||
Display Systems Group | 43,209 | 46,344 | (6.8 | %) | 10,157 | 23.5 | % | 12,133 | 26.2 | % | |||||||||||||
Corporate | 2,448 | 3,295 | (676 | ) | (549 | ) | |||||||||||||||||
Total | $ | 331,561 | $ | 313,982 | 5.6 | % | $ | 81,898 | 24.7 | % | $ | 78,038 | 24.9 | % | |||||||||
By Geographic Area: | |||||||||||||||||||||||
Net Sales | Gross Profit | ||||||||||||||||||||||
FY 2007 | FY 2006 | % Change | FY 2007 | GP % of Sales | FY 2006 | GP% of Sales | |||||||||||||||||
Second Quarter | |||||||||||||||||||||||
North America | $ | 81,284 | $ | 79,219 | 2.6 | % | $ | 21,788 | 26.8 | % | $ | 21,052 | 26.6 | % | |||||||||
Asia/Pacific | 39,295 | 34,793 | 12.9 | % | 9,014 | 22.9 | % | 8,221 | 23.6 | % | |||||||||||||
Europe | 39,799 | 34,925 | 14.0 | % | 10,074 | 25.3 | % | 9,041 | 25.9 | % | |||||||||||||
Latin America | 4,817 | 5,980 | (19.4 | %) | 1,365 | 28.3 | % | 1,627 | 27.2 | % | |||||||||||||
Corporate | 611 | 920 | (1,662 | ) | (435 | ) | |||||||||||||||||
Total | $ | 165,806 | $ | 155,837 | 6.4 | % | $ | 40,579 | 24.5 | % | $ | 39,506 | 25.4 | % | |||||||||
Six Months | |||||||||||||||||||||||
North America | $ | 164,516 | $ | 161,340 | 2.0 | % | $ | 43,554 | 26.5 | % | $ | 42,541 | 26.4 | % | |||||||||
Asia/Pacific | 78,801 | 71,993 | 9.5 | % | 18,581 | 23.6 | % | 17,359 | 24.1 | % | |||||||||||||
Europe | 76,219 | 67,731 | 12.5 | % | 19,892 | 26.1 | % | 18,367 | 27.1 | % | |||||||||||||
Latin America | 10,395 | 11,980 | (13.2 | %) | 2,988 | 28.7 | % | 3,149 | 26.3 | % | |||||||||||||
Corporate | 1,630 | 938 | (3,117 | ) | (3,378 | ) | |||||||||||||||||
Total | $ | 331,561 | $ | 313,982 | 5.6 | % | $ | 81,898 | 24.7 | % | $ | 78,038 | 24.9 | % | |||||||||
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.
Pro Forma Net Income and Net Income Per Share
For the Second Quarter of Fiscal 2007
Actual | Per Share | |||||
Net income, as reported | $ | 1,082 | $ | 0.06 | ||
Adjustments, net of income tax effect | ||||||
Restructuring expense | 559 | 0.03 | ||||
Stock compensation expense | 319 | 0.02 | ||||
Net income, pro forma | $ | 1,960 | $ | 0.11 | ||
Richardson Electronics, Ltd.
Condensed Consolidated Balance Sheets
(in thousands, except per share amounts)
Unaudited December 2, 2006 | June 3, 2006 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 13,610 | $ | 17,010 | ||||
Receivables, less allowance of $2,230 and $2,142 | 117,280 | 115,733 | ||||||
Inventories | 124,639 | 117,320 | ||||||
Prepaid expenses | 6,720 | 3,739 | ||||||
Deferred income taxes | 1,529 | 1,527 | ||||||
Total current assets | 263,778 | 255,329 | ||||||
Non-current assets: | ||||||||
Property, plant and equipment, net | 31,434 | 32,357 | ||||||
Goodwill | 13,245 | 13,068 | ||||||
Other intangible assets, net | 2,151 | 2,413 | ||||||
Non-current deferred income taxes | 1,518 | 1,300 | ||||||
Assets held for sale | 1,052 | 1,018 | ||||||
Other assets | 1,423 | 3,814 | ||||||
Total non-current assets | 50,823 | 53,970 | ||||||
Total assets | $ | 314,601 | $ | 309,299 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 54,998 | $ | 52,494 | ||||
Accrued liabilities | 31,334 | 30,588 | ||||||
Current portion of long-term debt | 8,016 | 14,016 | ||||||
Total current liabilities | 94,348 | 97,098 | ||||||
Non-current liabilities: | ||||||||
Long-term debt, less current portion | 120,819 | 112,792 | ||||||
Non-current liabilities | 1,322 | 1,169 | ||||||
Total non-current liabilities | 122,141 | 113,961 | ||||||
Total liabilities | 216,489 | 211,059 | ||||||
Commitments and contingencies | — | — | ||||||
Stockholders’ equity | ||||||||
Common stock, $0.05 par value; issued 15,784 shares at December 2, 2006 and 15,663 shares at June 3, 2006 | 789 | 783 | ||||||
Class B common stock, convertible, $0.05 par value; issued 3,073 shares at December 2, 2006 and 3,093 shares at June 3, 2006 | 154 | 155 | ||||||
Preferred stock, $1.00 par value, no shares issued | — | — | ||||||
Additional paid-in-capital | 119,000 | 119,149 | ||||||
Common stock in treasury, at cost, 1,250 shares at December 2, 2006 and 1,261 shares at June 3, 2006 | (7,407 | ) | (7,473 | ) | ||||
Accumulated deficit | (19,065 | ) | (19,048 | ) | ||||
Accumulated other comprehensive income | 4,641 | 4,674 | ||||||
Total stockholders’ equity | 98,112 | 98,240 | ||||||
Total liabilities and stockholders’ equity | $ | 314,601 | $ | 309,299 | ||||