Exhibit 99.1
For Immediate Release | Corporate Headquarters | |||
40W267 Keslinger Road | ||||
For Details Contact: | PO Box 393 | |||
Edward J. Richardson | Kathleen S. Dvorak | LaFox, IL 60147-0393 | ||
Chairman and CEO | EVP & CFO | USA | ||
Phone: (630) 208-2340 | (630) 208-2208 | Phone: (630) 208-2200 | ||
E-mail:info@rell.com | Fax: (630) 208-2550 |
RICHARDSON ELECTRONICS REPORTS
SECOND QUARTER FISCAL 2008 RESULTS
AND DECLARES A CASH DIVIDEND
LaFox, IL, January 9, 2008:Richardson Electronics, Ltd. (NASDAQ: RELL), a global provider of engineered solutions, today reported its second quarter results for the period ended December 1, 2007. Net sales for the second quarter of fiscal 2008 were $145.0 million, up 5.3% from $137.7 million during the second quarter of fiscal 2007. Gross profit improved to $33.8 million during the second quarter of fiscal 2008 as compared with $33.0 million during the second quarter of fiscal 2007. Operating income increased to $2.5 million during the second quarter of fiscal 2008 from $2.0 million during the second quarter of fiscal 2007. Net loss was $0.7 million during the second quarter of fiscal 2008, or $0.04 per diluted common share, as compared to net income of $1.1 million, or $0.06 per diluted common share, in the second quarter of fiscal 2007.
The net loss during the second quarter of fiscal 2008 reflects the impact of the following significant items:
• | $0.9 million of expense related to foreign exchange loss for cash received from the sale of our Security Systems Division/Burtek Systems that was temporarily held in our European entities. |
• | $0.9 million of severance expense primarily related to contractual arrangements with employees relating to an acquisition. |
• | $0.5 million of income tax expense related to restructuring of inter-company debt with certain foreign subsidiaries. |
“Our 5% sales growth in the quarter reflects growth in our RF, Wireless & Power Division and Electron Device Group offset by a slight decrease in sales within our Display Systems Group,” said Edward J. Richardson, Chairman, Chief Executive Officer and President. “We are encouraged by the consistent demand for our products as well as the progress we are making with our key initiatives that we believe will enhance the overall financial condition of the company.”
FINANCIAL HIGHLIGHTS — SECOND QUARTER FISCAL 2008
• | Cash flows provided by operating activities were $2.7 million during the second quarter of fiscal 2008 compared with $3.7 million provided by operating activities during the second quarter of fiscal 2007. |
• | Net sales for RF, Wireless & Power Division and the Electron Device Group increased 6.1% and 7.4%, respectively, during the second quarter of fiscal 2008 compared to the second quarter of fiscal 2007. |
• | Net sales for the Display Systems Group decreased 2.4% during the second quarter of fiscal 2008 compared to the second quarter of fiscal 2007. |
• | The Asia/Pacific region experienced a 9.8% increase in net sales during the second quarter of fiscal 2008, as compared to the second quarter of fiscal 2007. |
• | Gross margin percentage for RF, Wireless & Power Division, Electron Device Group, and the Display Systems Group decreased 0.6%, 0.8%, and 2.9%, respectively, during the second quarter of fiscal 2008 compared to the second quarter of fiscal 2007. |
• | Operating income generated during the second quarter of fiscal 2008 was $2.5 million, a $0.5 million increase from the $2.0 million generated during the second quarter of fiscal 2007. |
• | Foreign exchange loss increased to $1.4 million during the second quarter of fiscal 2008 as compared to a foreign exchange gain of $0.2 million during the second quarter of fiscal 2007. |
FINANCIAL HIGHLIGHTS — FIRST HALF FISCAL 2008
• | Cash flows provided by operating activities were $8.7 million during the first half of fiscal 2008 while cash flows used by operating activities were $3.8 million during the first half of fiscal 2007. |
• | Net sales for RF, Wireless & Power Division and the Display Systems Group decreased 0.8% and 6.8%, respectively, during the first half of fiscal 2008 compared to the first half of fiscal 2007. |
• | Net sales for the Electron Device Group increased 3.6% during the first half of 2008 compared to the first half of fiscal 2007. |
• | Net sales for the Asia/Pacific geographic region increased 3.2% during the first half of fiscal 2008, as compared to the first half of fiscal 2007. |
• | Gross margin percentage for RF, Wireless & Power Division held constant while gross margin for Electron Device Group and the Display Systems Group decreased 0.2% and 1.4%, respectively, during the first half of fiscal 2008 compared to the first half of fiscal 2007. |
• | Operating income generated during the first half of fiscal 2008 was $5.1 million, a $1.0 million decrease from the $6.1 million generated during the first half of fiscal 2007. |
• | Foreign exchange loss increased to a loss of $1.8 million during the first six months of fiscal 2008 as compared to a foreign exchange loss of $0.2 million during the first six months of fiscal 2007. |
OUTLOOK
“While our earnings fell short of our expectations, we are making progress in a number of significant areas of our business. We are nearing the completion of implementing our hub distribution infrastructure. In addition, some of our key initiatives for the remainder of fiscal 2008 include reducing our SG&A expenses, improving our inventory turns, reducing our foreign currency exposure and continuing to further improve our operating cash flow,” said Kathleen Dvorak, Chief Financial Officer.
“While these initiatives will take time, we are confident that these actions will deliver long-term value for all of our stakeholders,” added Mr. Richardson.
CASH DIVIDEND
The Company today also announced that its Board of Directors voted to declare a $0.02 cash dividend per share, which is a reduction of $0.02 per share from the prior dividend, to all holders of common stock. The cash dividend of $0.02 per share will be payable February 24, 2008 to all common stockholders of record on February 10, 2008. The Company currently has 14,816,914 shares of common stock outstanding. A dividend equal to 90 percent of the dividend paid on the common stock will be paid to the holders of the 3,048,258 outstanding shares of Class B common stock.
“The Board believes that a reduction in the cash dividend was an appropriate action based on the Company’s current financial performance,” said Mr. Richardson.
CONFERENCE CALL INFORMATION
On Thursday, January 10, 2008, 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 financial results. A question and answer session will be included as part of the call’s agenda. To listen to the call, please dial 888-481-7939 and enter passcode 242 190 08 approximately five minutes prior to the start of the call. A replay of the call will be available beginning at 11:00 a.m. on January 10, 2008, for seven days. The telephone numbers for the replay are (USA) 888-286-8010 and (International) 617-801-6888; access code 54175079.
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 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; 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 at www.rell.com.
Richardson Electronics, Ltd.
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended | Six Months Ended | |||||||||||||||
December 1, 2007 | December 2, 2006 | December 1, 2007 | December 2, 2006 | |||||||||||||
Statements of Operations | ||||||||||||||||
Net sales | $ | 144,985 | $ | 137,714 | $ | 274,450 | $ | 277,151 | ||||||||
Cost of sales | 111,185 | 104,680 | 208,012 | 209,765 | ||||||||||||
Gross profit | 33,800 | 33,034 | 66,438 | 67,386 | ||||||||||||
Selling, general, and administrative expenses | 31,317 | 30,695 | 61,283 | 61,008 | ||||||||||||
Loss on disposal of assets | 10 | 339 | 11 | 320 | ||||||||||||
Operating income | 2,473 | 2,000 | 5,144 | 6,058 | ||||||||||||
Other (income) expense: | ||||||||||||||||
Interest expense | 1,616 | 1,432 | 4,244 | 3,042 | ||||||||||||
Investment income | (245 | ) | (737 | ) | (616 | ) | (814 | ) | ||||||||
Foreign exchange (gain) loss | 1,357 | (233 | ) | 1,801 | 154 | |||||||||||
Retirement of long-term debt expenses | — | — | — | 2,540 | ||||||||||||
Other, net | (39 | ) | (1 | ) | 8 | 13 | ||||||||||
Total other expense | 2,689 | 461 | 5,437 | 4,935 | ||||||||||||
Income (loss) from continuing operations before income taxes | (216 | ) | 1,539 | (293 | ) | 1,123 | ||||||||||
Income tax provision | 464 | 209 | 778 | 601 | ||||||||||||
Income (loss) from continuing operations | (680 | ) | 1,330 | (1,071 | ) | 522 | ||||||||||
Income (loss) from discontinued operations, net of tax | 24 | (248 | ) | 55 | (539 | ) | ||||||||||
Net income (loss) | $ | (656 | ) | $ | 1,082 | $ | (1,016 | ) | $ | (17 | ) | |||||
Net income (loss) per common share – basic: | ||||||||||||||||
Income (loss) from continuing operations | $ | (0.04 | ) | $ | 0.08 | $ | (0.06 | ) | $ | 0.03 | ||||||
Income (loss) from discontinued operations | 0.00 | (0.02 | ) | 0.00 | (0.03 | ) | ||||||||||
Net income (loss) per common share – basic | $ | (0.04 | ) | $ | 0.06 | $ | (0.06 | ) | $ | (0.00 | ) | |||||
Net income (loss) per common share – diluted: | ||||||||||||||||
Income (loss) from continuing operations | $ | (0.04 | ) | $ | 0.08 | $ | (0.06 | ) | $ | 0.03 | ||||||
Income (loss) from discontinued operations | 0.00 | (0.02 | ) | 0.00 | (0.03 | ) | ||||||||||
Net income (loss) per common share – diluted | $ | (0.04 | ) | $ | 0.06 | $ | (0.06 | ) | $ | (0.00 | ) | |||||
Weighted average number of shares: | ||||||||||||||||
Common shares – basic | 14,798 | 14,451 | 14,783 | 14,435 | ||||||||||||
Class B common shares – basic | 3,048 | 3,073 | 3,048 | 3,073 | ||||||||||||
Common shares – diluted (1) | 14,798 | 17,669 | 14,783 | 17,590 | ||||||||||||
Class B common shares – diluted | 3,048 | 3,073 | 3,048 | 3,073 | ||||||||||||
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 | ||||||||
(1) | Total common stock equivalents and Class B common stock for the three and six months ended December 1, 2007, are excluded from our diluted earnings per share calculation because their impact would be anti-dilutive. |
Richardson Electronics, Ltd.
Unaudited Condensed Consolidated Balance Sheets
(In thousands, except per share amounts)
December 1, 2007 | June 2, 2007 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 20,200 | $ | 17,436 | ||||
Restricted cash | — | 61,899 | ||||||
Receivables, less allowance of $1,464 and $1,574 | 104,271 | 105,709 | ||||||
Inventories | 115,762 | 110,174 | ||||||
Prepaid expenses | 4,928 | 5,129 | ||||||
Deferred income taxes | 2,471 | 2,131 | ||||||
Current assets of discontinued operations held for sale | 137 | 242 | ||||||
Total current assets | 247,769 | 302,720 | ||||||
Non-current assets: | ||||||||
Property, plant and equipment, net | 30,883 | 29,278 | ||||||
Goodwill | 12,307 | 11,611 | ||||||
Other intangible assets, net | 875 | 1,581 | ||||||
Non-current deferred income taxes | 1,089 | 389 | ||||||
Assets held for sale | 1,200 | 1,429 | ||||||
Other assets | 1,802 | 2,058 | ||||||
Non-current assets of discontinued operations held for sale | 5 | 5 | ||||||
Total non-current assets | 48,161 | 46,351 | ||||||
Total assets | $ | 295,930 | $ | 349,071 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 67,784 | $ | 55,530 | ||||
Accrued liabilities | 20,296 | 31,330 | ||||||
Current portion of long-term debt | — | 65,711 | ||||||
Current liabilities of discontinued operations held for sale | 149 | 2,737 | ||||||
Total current liabilities | 88,229 | 155,308 | ||||||
Non-current liabilities: | ||||||||
Long-term debt, less current portion | 55,683 | 55,683 | ||||||
Long-term income tax liabilities | 7,063 | — | ||||||
Non-current liabilities | 1,418 | 1,535 | ||||||
Total non-current liabilities | 64,164 | 57,218 | ||||||
Total liabilities | 152,393 | 212,526 | ||||||
Commitments and contingencies | — | — | ||||||
Stockholders’ equity | ||||||||
Common stock, $0.05 par value; issued 15,929 shares at December 1, 2007 and 15,920 shares at June 2, 2007 | 797 | 796 | ||||||
Class B common stock, convertible, $0.05 par value; issued 3,048 at December 1, 2007 and June 2, 2007 | 152 | 152 | ||||||
Preferred stock, $1.00 par value, no shares issued | — | — | ||||||
Additional paid-in-capital | 119,450 | 118,880 | ||||||
Common stock in treasury, at cost, 1,112 shares at December 1, 2007 and 1,179 shares at June 2, 2007 | (6,592 | ) | (6,989 | ) | ||||
Retained earnings | 19,210 | 21,631 | ||||||
Accumulated other comprehensive income | 10,520 | 2,075 | ||||||
Total stockholders’ equity | 143,537 | 136,545 | ||||||
Total liabilities and stockholders’ equity | $ | 295,930 | $ | 349,071 | ||||
Richardson Electronics, Ltd.
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)
Three Months Ended | Six Months Ended | |||||||||||||||
December 1, 2007 | December 2, 2006 | December 1, 2007 | December 2, 2006 | |||||||||||||
Operating activities: | ||||||||||||||||
Net income (loss) | $ | (656 | ) | $ | 1,082 | $ | (1,016 | ) | $ | (17 | ) | |||||
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: | ||||||||||||||||
Depreciation and amortization | 1,258 | 1,569 | 2,573 | 3,117 | ||||||||||||
Loss on disposal of assets | 10 | 339 | 11 | 320 | ||||||||||||
Retirement of long-term debt expenses | — | — | — | 2,540 | ||||||||||||
Write-off of deferred financing costs | — | — | 643 | 62 | ||||||||||||
Stock compensation expense | 249 | 400 | 347 | 576 | ||||||||||||
Deferred income taxes | (201 | ) | 13 | (979 | ) | (229 | ) | |||||||||
Receivables | (3,457 | ) | 4,104 | 5,400 | 3,308 | |||||||||||
Inventories | 5,134 | (3,113 | ) | (1,429 | ) | (7,831 | ) | |||||||||
Accounts payable and accrued liabilities | 1,982 | 39 | 4,846 | (4,539 | ) | |||||||||||
Other liabilities | (170 | ) | 33 | (177 | ) | 114 | ||||||||||
Other | (1,410 | ) | (773 | ) | (1,548 | ) | (1,243 | ) | ||||||||
Net cash provided by (used in) operating activities | 2,739 | 3,693 | 8,671 | (3,822 | ) | |||||||||||
Investing activities: | ||||||||||||||||
Capital expenditures | (2,314 | ) | (1,866 | ) | (3,892 | ) | (2,725 | ) | ||||||||
Proceeds from sale of assets | 346 | 37 | 387 | 43 | ||||||||||||
Proceeds from sales of available-for-sale securities | — | 3,564 | 157 | 3,682 | ||||||||||||
Purchases of available-for-sale securities | — | (64 | ) | (157 | ) | (182 | ) | |||||||||
Net cash provided by (used in) investing activities | (1,968 | ) | 1,671 | (3,505 | ) | 818 | ||||||||||
Financing activities: | ||||||||||||||||
Proceeds from borrowings | 65,600 | 65,871 | 111,400 | 137,411 | ||||||||||||
Payments on debt | (69,800 | ) | (69,594 | ) | (177,040 | ) | (129,810 | ) | ||||||||
Restricted cash | — | — | 61,899 | — | ||||||||||||
Proceeds from issuance of common stock | — | 720 | 69 | 720 | ||||||||||||
Cash dividends | (703 | ) | (692 | ) | (1,405 | ) | (1,379 | ) | ||||||||
Payments on retirement of long-term debt | — | (6,515 | ) | — | (7,215 | ) | ||||||||||
Other | (95 | ) | (172 | ) | (95 | ) | (658 | ) | ||||||||
Net cash used in financing activities | (4,998 | ) | (10,382 | ) | (5,172 | ) | (931 | ) | ||||||||
Effect of exchange rate changes on cash and cash equivalents | 2,646 | 426 | 2,770 | 535 | ||||||||||||
Increase (decrease) in cash and cash equivalents | (1,581 | ) | (4,592 | ) | 2,764 | (3,400 | ) | |||||||||
Cash and cash equivalents at beginning of period | 21,781 | 18,202 | 17,436 | 17,010 | ||||||||||||
Cash and cash equivalents at end of period | $ | 20,200 | $ | 13,610 | $ | 20,200 | $ | 13,610 | ||||||||
Richardson Electronics, Ltd.
Unaudited Net Sales and Gross Profit
For the Second Quarter and First Six Months of Fiscal 2008 and 2007
(In thousands)
By Business Unit:
Net Sales | Gross Profit | ||||||||||||||||||||||
FY 2008 | FY 2007 | % Change | FY 2008 | GP% of Sales | FY 2007 | GP% of Sales | |||||||||||||||||
Second Quarter | |||||||||||||||||||||||
RF, Wireless & Power Division | $ | 95,486 | $ | 89,994 | 6.1 | % | $ | 21,095 | 22.1 | % | $ | 20,392 | 22.7 | % | |||||||||
Electron Device Group | 27,379 | 25,494 | 7.4 | % | 8,728 | 31.9 | % | 8,339 | 32.7 | % | |||||||||||||
Display Systems Group | 20,873 | 21,380 | (2.4 | %) | 4,457 | 21.4 | % | 5,192 | 24.3 | % | |||||||||||||
Corporate | 1,247 | 846 | (480 | ) | (889 | ) | |||||||||||||||||
Total | $ | 144,985 | $ | 137,714 | 5.3 | % | $ | 33,800 | 23.3 | % | $ | 33,034 | 24.0 | % | |||||||||
FY 2008 | FY 2007 | % Change | FY 2008 | GP% of Sales | FY 2007 | GP% of Sales | |||||||||||||||||
Six Months | |||||||||||||||||||||||
RF, Wireless & Power Division | $ | 179,792 | $ | 181,326 | (0.8 | %) | $ | 41,467 | 23.1 | % | $ | 41,855 | 23.1 | % | |||||||||
Electron Device Group | 51,962 | 50,168 | 3.6 | % | 16,517 | 31.8 | % | 16,050 | 32.0 | % | |||||||||||||
Display Systems Group | 40,262 | 43,209 | (6.8 | %) | 8,897 | 22.1 | % | 10,157 | 23.5 | % | |||||||||||||
Corporate | 2,434 | 2,448 | (443 | ) | (676 | ) | |||||||||||||||||
Total | $ | 274,450 | $ | 277,151 | (1.0 | %) | $ | 66,438 | 24.2 | % | $ | 67,386 | 24.3 | % | |||||||||
By Geographic Area: | |||||||||||||||||||||||
Net Sales | Gross Profit | ||||||||||||||||||||||
FY 2008 | FY 2007 | % Change | FY 2008 | GP% of Sales | FY 2007 | GP% of Sales | |||||||||||||||||
Second Quarter | |||||||||||||||||||||||
North America | $ | 59,033 | $ | 56,929 | 3.7 | % | $ | 15,454 | 26.2 | % | $ | 15,130 | 26.6 | % | |||||||||
Asia/Pacific | 43,164 | 39,295 | 9.8 | % | 9,412 | 21.8 | % | 9,014 | 22.9 | % | |||||||||||||
Europe | 37,715 | 37,015 | 1.9 | % | 9,384 | 24.9 | % | 9,214 | 24.9 | % | |||||||||||||
Latin America | 4,440 | 3,965 | 12.0 | % | 1,295 | 29.2 | % | 1,137 | 28.7 | % | |||||||||||||
Corporate | 633 | 510 | (1,745 | ) | (1,461 | ) | |||||||||||||||||
Total | $ | 144,985 | $ | 137,714 | 5.3 | % | $ | 33,800 | 23.3 | % | $ | 33,034 | 24.0 | % | |||||||||
FY 2008 | FY 2007 | % Change | FY 2008 | GP% of Sales | FY 2007 | GP% of Sales | |||||||||||||||||
Six Months | |||||||||||||||||||||||
North America | $ | 111,840 | $ | 117,313 | (4.7 | %) | $ | 29,587 | 26.5 | % | $ | 30,682 | 26.2 | % | |||||||||
Asia/Pacific | 81,293 | 78,801 | 3.2 | % | 18,899 | 23.2 | % | 18,581 | 23.6 | % | |||||||||||||
Europe | 71,917 | 70,614 | 1.8 | % | 18,637 | 25.9 | % | 18,261 | 25.9 | % | |||||||||||||
Latin America | 8,534 | 8,940 | (4.5 | %) | 2,562 | 30.0 | % | 2,605 | 29.1 | % | |||||||||||||
Corporate | 866 | 1,483 | (3,247 | ) | (2,743 | ) | |||||||||||||||||
Total | $ | 274,450 | $ | 277,151 | (1.0 | %) | $ | 66,438 | 24.2 | % | $ | 67,386 | 24.3 | % | |||||||||
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 and other non-specific net sales. |