Exhibit 99.2
For Immediate Release | Corporate Headquarters40W267 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 athttp://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 | 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 | ||||