Exhibit 99.1
For Immediate Release | Corporate Headquarters | |||||||
For Details Contact: | 40W267 Keslinger Road | |||||||
Edward J. Richardson | Kathleen S. Dvorak | PO Box 393 | ||||||
Chairman and CEO | EVP & CFO | LaFox, IL 60147-0393 USA | ||||||
Phone: | (630) 208-2340 | (630) 208-2208 | Phone: | (630) 208-2200 | ||||
E-mail: | info@rell.com | Fax: | (630) 208-2550 |
RICHARDSON ELECTRONICS REPORTS FIRST QUARTER
FISCAL 2010 RESULTS AND DECLARES CASH DIVIDEND
LaFox, IL, October 7, 2009:Richardson Electronics, Ltd. (NASDAQ: RELL) today reported net sales during the first quarter ended August 29, 2009, of $109.5 million, a 21.2% decrease from net sales of $138.9 million during the first quarter of last year. Net income during the first quarter was $1.9 million, or $0.11 per diluted common share, as compared with net income of $3.7 million, or $0.20 per diluted common share, during the first quarter of last year.
Operating income during the first quarter was $3.5 million as compared with operating income of $4.5 million during last year’s first quarter. Selling, General, and Administrative (“SG&A”) expenses were $22.9 million, down $5.3 million or 18.8%, compared to SG&A expenses of $28.2 million during the first quarter of last year.
“Although sales were well below last year’s first quarter, we were pleased that our operating margin remained at 3.2%. This reflects both gross margin improvement as well as our continued cost reductions. These actions should lead to significantly improved operating leverage as sales begin to recover,” said Edward J. Richardson, Chairman, Chief Executive Officer and President of Richardson Electronics, Ltd.
FINANCIAL SUMMARY — THREE MONTHS ENDED AUGUST 29, 2009
• | Net sales for the first quarter of fiscal 2010 were $109.5 million, down 21.2%, compared to net sales of $138.9 million during the first quarter of last year. |
• | Gross margin as a percent of net sales increased to 24.2% during the first quarter of fiscal 2010, compared to 23.5% during the first quarter of last year. |
• | SG&A expenses decreased to $22.9 million during the first quarter of fiscal 2010, compared to $28.2 million during the first quarter of last year. |
• | Operating income during the first quarter of fiscal 2010 was $3.5 million, compared to operating income of $4.5 million during the first quarter of last year. |
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• | Net income during the first quarter of fiscal 2010 was $1.9 million, or $0.11 per diluted common share, versus net income of $3.7 million, or $0.20 per diluted common share, during the first quarter of last year. |
FOCUS ON WORKING CAPITAL MANAGEMENT AND CASH FLOWS
Cash flows used in operating activities were $2.2 million during the first quarter of fiscal 2010, compared to $1.0 million used during last year’s first quarter. Our debt less cash at the end of our first quarter of fiscal 2010 was $10.6 million, an $8.0 million improvement, compared to $18.6 million at the end of the prior year’s first quarter.
“Although we invested $3.7 million of cash during the first quarter in working capital, we did so cautiously in order to be in a position to support our customers as global market conditions improve. We remain committed to improving our working capital management and expect our operations to generate positive cash flows for the remainder of fiscal 2010,” said Kathleen S. Dvorak, Executive Vice President and Chief Financial Officer.
During the first quarter, the Company did not repurchase any shares of its common stock under its share repurchase program. The share repurchase program was approved by the Company’s Board of Directors in January 2009. The share repurchase program does not have an expiration date and may be exercised at any time.
OUTLOOK
“In the near term, our sales volume will continue to be impacted by the weak global economic conditions, and as a result, we anticipate that sales for the second quarter of fiscal 2010 will be down in the range of 10% to 15% compared to the prior year. Our cost reduction efforts, combined with increased efficiencies, should position the company for improved profitability. We are now on track to spend less than $95 million for SG&A during fiscal 2010,” concluded Mr. Richardson.
CASH DIVIDEND
The Company today also announced 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 November 20, 2009, to all common stockholders of record on November 6, 2009. The Company currently has 14,866,774 outstanding shares of common stock and 3,048,258 outstanding shares of Class B common stock.
CONFERENCE CALL INFORMATION
On Thursday, October 8, 2009, 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 first quarter fiscal 2010 results. A question and answer session will be included as part of the call’s agenda. To listen to the call, please dial 866-800-8648 and enter passcode 64401144 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 October 8, 2009, for seven days. The telephone numbers for the replay are (USA) 888-286-8010 and (International) 617-801-6888; access code 96080296.
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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 2009 Annual Report on Form 10-K. 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 and a global distributor of electronic components to the radio frequency (“RF”), wireless and power conversion, electron device, and 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 atwww.rell.com.
Richardson Electronics common stock trades on the NASDAQ Global Market under the ticker symbol RELL.
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Richardson Electronics, Ltd.
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
Three Months Ended | ||||||||
August 29, 2009 | August 30, 2008 | |||||||
Statements of Operations | ||||||||
Net sales | $ | 109,492 | $ | 138,947 | ||||
Cost of sales | 83,023 | 106,228 | ||||||
Gross profit | 26,469 | 32,719 | ||||||
Selling, general, and administrative expenses | 22,943 | 28,184 | ||||||
(Gain) loss on disposal of assets | (2 | ) | 75 | |||||
Operating income | 3,528 | 4,460 | ||||||
Other (income) expense: | ||||||||
Interest expense | 1,145 | 1,176 | ||||||
Investment income | (33 | ) | (207 | ) | ||||
Foreign exchange (gain) loss | 818 | (998 | ) | |||||
Other, net | (7 | ) | (76 | ) | ||||
Total other (income) expense | 1,923 | (105 | ) | |||||
Income before income taxes | 1,605 | 4,565 | ||||||
Income tax provision (benefit) | (310 | ) | 872 | |||||
Net income | $ | 1,915 | $ | 3,693 | ||||
Net income per share – basic: | ||||||||
Common stock | $ | 0.11 | $ | 0.21 | ||||
Class B Common stock | $ | 0.10 | $ | 0.19 | ||||
Net income per share – diluted: | ||||||||
Common stock | $ | 0.11 | $ | 0.20 | ||||
Class B Common stock | $ | 0.10 | $ | 0.18 | ||||
Weighted average number of shares: | ||||||||
Common shares - basic | 14,859 | 14,854 | ||||||
Class B common shares - basic | 3,048 | 3,048 | ||||||
Common shares - diluted | 17,915 | 18,981 | ||||||
Class B common shares - diluted | 3,048 | 3,048 | ||||||
Dividends per common share | $ | 0.020 | $ | 0.020 | ||||
Dividends per Class B common share | $ | 0.018 | $ | 0.018 | ||||
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Richardson Electronics, Ltd.
Unaudited Condensed Consolidated Balance Sheets
(in thousands, except per share amounts)
August 29, 2009 | May 30, 2009 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 41,795 | $ | 43,887 | ||||
Accounts receivable, less allowance of $2,116 and $2,396 | 87,588 | 92,449 | ||||||
Inventories | 83,602 | 81,165 | ||||||
Prepaid expenses | 7,329 | 5,245 | ||||||
Deferred income taxes | 2,677 | 2,591 | ||||||
Total current assets | 222,991 | 225,337 | ||||||
Non-current assets: | ||||||||
Property, plant and equipment, net | 18,651 | 19,371 | ||||||
Other intangible assets, net | 385 | 432 | ||||||
Non-current deferred income taxes | 3,572 | 3,385 | ||||||
Other non-current assets | 303 | 290 | ||||||
Total non-current assets | 22,911 | 23,478 | ||||||
Total assets | $ | 245,902 | $ | 248,815 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 45,421 | $ | 52,996 | ||||
Accrued liabilities | 19,261 | 18,371 | ||||||
Total current liabilities | 64,682 | 71,367 | ||||||
Non-current liabilities: | ||||||||
Long-term debt | 52,353 | 52,353 | ||||||
Long-term income tax liabilities | 4,612 | 5,016 | ||||||
Other non-current liabilities | 1,465 | 1,386 | ||||||
Total non-current liabilities | 58,430 | 58,755 | ||||||
Total liabilities | 123,112 | 130,122 | ||||||
Commitments and contingencies | — | — | ||||||
Stockholders’ equity | ||||||||
Common stock, $0.05 par value; issued 15,931 shares at August 29, 2009, and 15,930 shares at May 30, 2009 | 797 | 797 | ||||||
Class B common stock, convertible, $0.05 par value; issued 3,048 shares at August 29, 2009, and at May 30, 2009 | 152 | 152 | ||||||
Preferred stock, $1.00 par value, no shares issued | — | — | ||||||
Additional paid-in-capital | 120,172 | 120,370 | ||||||
Common stock in treasury, at cost, 1,065 shares at August 29, 2009, and at May 30, 2009 | (6,310 | ) | (6,310 | ) | ||||
Accumulated deficit | (560 | ) | (2,475 | ) | ||||
Accumulated other comprehensive income | 8,539 | 6,159 | ||||||
Total stockholders’ equity | 122,790 | 118,693 | ||||||
Total liabilities and stockholders’ equity | $ | 245,902 | $ | 248,815 | ||||
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Richardson Electronics, Ltd.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Three Months Ended | ||||||||
August 29, 2009 | August 30, 2008 | |||||||
Operating activities: | ||||||||
Net income | $ | 1,915 | $ | 3,693 | ||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
Depreciation and amortization | 1,064 | 1,209 | ||||||
(Gain) loss on disposal of assets | (2 | ) | 75 | |||||
Stock compensation expense | 149 | 98 | ||||||
Deferred income taxes | (176 | ) | 191 | |||||
Accounts receivable | 5,825 | 1,154 | ||||||
Inventories | (1,820 | ) | (7,598 | ) | ||||
Prepaid expenses | (1,676 | ) | (1,257 | ) | ||||
Accounts payable | (7,743 | ) | 3,849 | |||||
Accrued liabilities | 355 | (1,646 | ) | |||||
Other liabilities | (91 | ) | (731 | ) | ||||
Net cash used in operating activities | (2,200 | ) | (963 | ) | ||||
Investing activities: | ||||||||
Capital expenditures | (280 | ) | (129 | ) | ||||
Proceeds from sale of assets | — | 22 | ||||||
Contingent purchase price consideration | — | (53 | ) | |||||
Gain on sale of investments | (17 | ) | (14 | ) | ||||
Proceeds from sales of available-for-sale securities | 39 | 59 | ||||||
Purchases of available-for-sale securities | (39 | ) | (59 | ) | ||||
Net cash used in investing activities | (297 | ) | (174 | ) | ||||
Financing activities: | ||||||||
Proceeds from borrowings | 10,200 | 10,300 | ||||||
Payments on debt | (10,200 | ) | (10,300 | ) | ||||
Proceeds from issuance of common stock | 5 | 5 | ||||||
Cash dividends | (352 | ) | (352 | ) | ||||
Net cash used in financing activities | (347 | ) | (347 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 752 | (1,491 | ) | |||||
Decrease in cash and cash equivalents | (2,092 | ) | (2,975 | ) | ||||
Cash and cash equivalents at beginning of period | 43,887 | 40,042 | ||||||
Cash and cash equivalents at end of period | $ | 41,795 | $ | 37,067 | ||||
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Richardson Electronics, Ltd.
Net Sales and Gross Profit
For First Quarter Fiscal 2010 and 2009
(in thousands)
By Business Unit:
Net Sales | Gross Profit | ||||||||||||||||||||||
First Quarter | FY 2010 | FY 2009 | % Change | FY 2010 | % of Sales | FY 2009 | % of Sales | ||||||||||||||||
RF, Wireless & Power Division | $ | 79,478 | $ | 96,872 | (18.0 | )% | $ | 17,402 | 21.9 | % | $ | 20,906 | 21.6 | % | |||||||||
Electron Device Group | 18,796 | 25,051 | (25.0 | )% | 6,267 | 33.3 | % | 7,629 | 30.5 | % | |||||||||||||
Canvys | 11,218 | 17,113 | (34.4 | )% | 2,800 | 25.0 | % | 4,330 | 25.3 | % | |||||||||||||
Corporate | — | (89 | ) | — | (146 | ) | |||||||||||||||||
Total | $ | 109,492 | $ | 138,947 | (21.2 | )% | $ | 26,469 | 24.2 | % | $ | 32,719 | 23.5 | % | |||||||||
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