Exhibit 99.1
Corporate Headquarters | ||||
For Immediate Release | 40W267 Keslinger Road | |||
PO Box 393 | ||||
For Details Contact: | LaFox, IL 60147-0393 | |||
Edward J. Richardson | Kathleen S. Dvorak | USA | ||
Chairman and CEO | EVP & CFO | Phone: (630) 208-2200 | ||
Phone: (630) 208-2340 | (630) 208-2208 | Fax: (630) 208-2550 | ||
E-mail:info@rell.com |
RICHARDSON ELECTRONICS REPORTS SECOND QUARTER
FISCAL 2010 RESULTS AND DECLARES CASH DIVIDEND
LaFox, IL, January 6, 2010:Richardson Electronics, Ltd. (NASDAQ: RELL) today reported net sales for the second quarter ended November 28, 2009, of $115.9 million, a 12.5% decrease from net sales of $132.6 million for the second quarter of last year. Operating income during the second quarter was $5.4 million, or 4.6% of net sales, as compared with operating income of $5.0 million, or 3.7% of net sales, during last year’s second quarter. Income from continuing operations during the second quarter was $4.3 million, or $0.24 per diluted common share, as compared with income from continuing operations of $5.9 million, or $0.31 per diluted common share, during the second quarter of last year.
Loss from discontinued operations for the second quarter of fiscal 2010 of $1.2 million represents a final settlement of working capital based purchase price adjustment claims and other related claims from the divestiture of the Security Systems Division in May of 2007.
“We were very pleased with the Richardson team’s execution during the second quarter as our revenue, working capital management, and cash flows were in line with our expectations. While our year-over-year revenue decline reflects the uncertain global economy, our strengthening sales trends provide confidence that our business environment is improving. We continue to find cost savings throughout our company which we believe will provide further opportunities for operating margin improvement,” said Edward J. Richardson, Chairman, Chief Executive Officer and President of Richardson Electronics, Ltd.
FINANCIAL SUMMARY — THREE MONTHS ENDED NOVEMBER 28, 2009
• | Net sales for the second quarter of fiscal 2010 were $115.9 million, down 12.5%, compared to net sales of $132.6 million during the second quarter of last year. |
• | Gross margin as a percent of net sales remained flat at 25.0% during the second quarter of fiscal 2010 and 2009. |
1
• | SG&A expenses decreased to $23.7 million, or 20.4% of net sales, during the second quarter of fiscal 2010, compared to $28.2 million, or 21.3% of net sales, during the second quarter of last year. |
• | Operating income during the second quarter of fiscal 2010 improved to $5.4 million, compared to operating income of $5.0 million during the second quarter of last year. |
• | Income from continuing operations during the second quarter of fiscal 2010 was $4.3 million versus income from continuing operations of $5.9 million during the second quarter of last year. |
FINANCIAL SUMMARY — SIX MONTHS ENDED NOVEMBER 28, 2009
• | Net sales for the first six months of fiscal 2010 were $225.4 million, down 17.0%, compared to net sales of $271.5 million during the first six months of last year. |
• | Gross margin as a percent of net sales increased to 24.6% during the first six months of fiscal 2010, compared to 24.3% during the first six months of last year. |
• | SG&A expenses decreased to $46.6 million, or 20.7% of net sales, during the first six months of fiscal 2010, compared to $56.4 million, or 20.8% of net sales, during the first six months of last year. |
• | Operating income during the first six months of fiscal 2010 was $8.9 million, or 3.9% of net sales, compared to operating income of $9.4 million, or 3.5% of net sales, during the first six months of last year. |
• | Income from continuing operations during the first six months of fiscal 2010 was $6.2 million versus $9.6 million during the first six months of last year. |
CASH FLOW, WORKING CAPITAL MANAGEMENT, DEBT REDUCTION
Cash flows provided by operating activities were $6.9 million during the second quarter of fiscal 2010, compared to $4.5 million during the second quarter of last year. Our debt less cash at the end of our second quarter was $2.4 million compared to $16.9 million at the end of the second quarter last year.
“We generated $1.9 million of cash from our working capital investments during the second quarter compared to using $0.3 million of cash during last year’s second quarter. We expect our operations to generate positive cash flows for the remainder of the year and plan to take advantage of opportunities to reduce both our long-term debt and interest expense,” said Kathleen S. Dvorak, Executive Vice President and Chief Financial Officer.
On December 11, 2009, the Company provided notice to the holders of its 8% convertible senior subordinated notes that it was redeeming all $7.7 million in aggregate principal outstanding at face value on January 11, 2010. In addition, the Company purchased $0.9 million of its 7 3/4% convertible senior subordinated notes at 97% of face value during December 2009. As a result of these transactions, the Company’s long-term debt will be reduced by approximately $8.5 million during the third quarter of fiscal 2010.
2
During January 2010, the Company will be repurchasing approximately 300,000 shares of its common stock held in its Employee Stock Ownership Plan (“ESOP”) in a private transaction. The ESOP was terminated on October 15, 2009.
OUTLOOK
“While the economic environment is still uncertain, we are encouraged by our current level of backlog and believe that our sales for the third quarter will be in the range of $115 million to $120 million which is positive sales growth compared to sales of $110 million during last year’s third quarter. Our cost reduction efforts are clearly reflected in the 4.6% operating margin achieved in the second quarter. Our goal is to deliver further improvements in operating margin for the balance of the year,” 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 February 19, 2010, to all common stockholders of record on February 10, 2010. The Company currently has 14,867,811 outstanding shares of common stock and 3,048,258 outstanding shares of Class B common stock.
CONFERENCE CALL INFORMATION
On Thursday, January 7, 2010, 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 2010 results. A question and answer session will be included as part of the call’s agenda. To listen to the call, please dial 888-419-5570 and enter passcode 75252895 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 7, 2010, for seven days. The telephone numbers for the replay are (USA) 888-286-8010 and (International) 617-801-6888; access code 31587399.
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.
3
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.
4
Richardson Electronics, Ltd.
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
Three Months Ended | Six Months Ended | |||||||||||||||
Statements of Operations | November 28, 2009 | November 29, 2008 | November 28, 2009 | November 29, 2008 | ||||||||||||
Net sales | $ | 115,934 | $ | 132,551 | $ | 225,426 | $ | 271,498 | ||||||||
Cost of sales | 86,893 | 99,373 | 169,916 | 205,601 | ||||||||||||
Gross profit | 29,041 | 33,178 | 55,510 | 65,897 | ||||||||||||
Selling, general, and administrative expenses | 23,673 | 28,219 | 46,616 | 56,403 | ||||||||||||
(Gain) loss on disposal of assets | — | 3 | (2 | ) | 78 | |||||||||||
Operating income | 5,368 | 4,956 | 8,896 | 9,416 | ||||||||||||
Other (income) expense: | ||||||||||||||||
Interest expense | 1,099 | 1,183 | 2,244 | 2,359 | ||||||||||||
Investment income | (27 | ) | (163 | ) | (60 | ) | (370 | ) | ||||||||
Foreign exchange (gain) loss | 700 | (1,485 | ) | 1,518 | (2,483 | ) | ||||||||||
Gain on retirement of long-term debt | — | (849 | ) | — | (849 | ) | ||||||||||
Other, net | (91 | ) | (90 | ) | (98 | ) | (166 | ) | ||||||||
Total other (income) expense | 1,681 | (1,404 | ) | 3,604 | (1,509 | ) | ||||||||||
Income from continuing operations before income taxes | 3,687 | 6,360 | 5,292 | 10,925 | ||||||||||||
Income tax provision (benefit) | (620 | ) | 426 | (930 | ) | 1,298 | ||||||||||
Income from continuing operations | 4,307 | 5,934 | 6,222 | 9,627 | ||||||||||||
Loss from discontinued operations | 1,173 | — | 1,173 | — | ||||||||||||
Net income | $ | 3,134 | $ | 5,934 | $ | 5,049 | $ | 9,627 | ||||||||
Net income per common share – basic: | ||||||||||||||||
Income from continuing operations | $ | 0.25 | $ | 0.34 | $ | 0.36 | $ | 0.55 | ||||||||
Loss from discontinued operations | (0.07 | ) | — | (0.07 | ) | — | ||||||||||
Net income per common share – basic | $ | 0.18 | $ | 0.34 | $ | 0.29 | $ | 0.55 | ||||||||
Net income per Class B common share – basic: | ||||||||||||||||
Income from continuing operations | $ | 0.22 | $ | 0.30 | $ | 0.32 | $ | 0.49 | ||||||||
Loss from discontinued operations | (0.06 | ) | — | (0.06 | ) | — | ||||||||||
Net income per Class B common share – basic | $ | 0.16 | $ | 0.30 | $ | 0.26 | $ | 0.49 | ||||||||
Net income per common share – diluted: | ||||||||||||||||
Income from continuing operations | $ | 0.24 | $ | 0.31 | $ | 0.34 | $ | 0.52 | ||||||||
Loss from discontinued operations | (0.06 | ) | — | (0.06 | ) | — | ||||||||||
Net income per common share – diluted | $ | 0.18 | $ | 0.31 | $ | 0.28 | $ | 0.52 | ||||||||
Net income per Class B common share – diluted: | ||||||||||||||||
Income from continuing operations | $ | 0.21 | $ | 0.28 | $ | 0.31 | $ | 0.47 | ||||||||
Loss from discontinued operations | (0.05 | ) | — | (0.05 | ) | — | ||||||||||
Net income per Class B common share – diluted | $ | 0.16 | $ | 0.28 | $ | 0.26 | $ | 0.47 | ||||||||
Weighted average number of shares: | ||||||||||||||||
Common shares – basic | 14,864 | 14,858 | 14,862 | 14,855 | ||||||||||||
Class B common shares – basic | 3,048 | 3,048 | 3,048 | 3,048 | ||||||||||||
Common shares – diluted | 21,148 | 21,140 | 18,661 | 21,139 | ||||||||||||
Class B common shares – diluted | 3,048 | 3,048 | 3,048 | 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 | ||||||||
5
Richardson Electronics, Ltd.
Unaudited Condensed Consolidated Balance Sheets
(in thousands, except per share amounts)
November 28, 2009 | May 30, 2009 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 49,957 | $ | 43,887 | ||||
Accounts receivable, less allowance of $2,079 and $2,396 | 94,119 | 92,449 | ||||||
Inventories | 77,074 | 81,165 | ||||||
Prepaid expenses | 7,077 | 5,245 | ||||||
Deferred income taxes | 2,361 | 2,591 | ||||||
Total current assets | 230,588 | 225,337 | ||||||
Non-current assets: | ||||||||
Property, plant and equipment, net | 17,822 | 19,371 | ||||||
Other intangible assets, net | 337 | 432 | ||||||
Non-current deferred income taxes | 3,819 | 3,385 | ||||||
Other non-current assets | 316 | 290 | ||||||
Total non-current assets | 22,294 | 23,478 | ||||||
Total assets | $ | 252,882 | $ | 248,815 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 44,727 | $ | 52,996 | ||||
Accrued liabilities | 20,065 | 18,371 | ||||||
Current liabilities of discontinued operations | 1,000 | — | ||||||
Total current liabilities | 65,792 | 71,367 | ||||||
Non-current liabilities: | ||||||||
Long-term debt | 52,353 | 52,353 | ||||||
Long-term income tax liabilities | 3,635 | 5,016 | ||||||
Other non-current liabilities | 1,568 | 1,386 | ||||||
Total non-current liabilities | 57,556 | 58,755 | ||||||
Total liabilities | 123,348 | 130,122 | ||||||
Commitments and contingencies | — | — | ||||||
Stockholders’ equity | ||||||||
Common stock, $0.05 par value; issued 15,931 shares at November 28, 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 November 28, 2009, and at May 30, 2009 | 152 | 152 | ||||||
Preferred stock, $1.00 par value, no shares issued | — | — | ||||||
Additional paid-in-capital | 120,022 | 120,370 | ||||||
Common stock in treasury, at cost, 1,063 shares at November 28, 2009, and 1,065 shares at May 30, 2009 | (6,300 | ) | (6,310 | ) | ||||
Retained earnings (accumulated deficit) | 2,574 | (2,475 | ) | |||||
Accumulated other comprehensive income | 12,289 | 6,159 | ||||||
Total stockholders’ equity | 129,534 | 118,693 | ||||||
Total liabilities and stockholders’ equity | $ | 252,882 | $ | 248,815 | ||||
6
Richardson Electronics, Ltd.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Three Months Ended | Six Months Ended | |||||||||||||||
November 28, 2009 | November 29, 2008 | November 28, 2009 | November 29, 2008 | |||||||||||||
Operating activities: | ||||||||||||||||
Net income | $ | 3,134 | $ | 5,934 | $ | 5,049 | $ | 9,627 | ||||||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 1,115 | 1,150 | 2,179 | 2,359 | ||||||||||||
Loss from discontinued operations | 1,173 | — | 1,173 | — | ||||||||||||
Gain on retirement of long-term debt | — | (849 | ) | — | (849 | ) | ||||||||||
(Gain) loss on disposal of assets | — | 3 | (2 | ) | 78 | |||||||||||
Stock compensation expense | 202 | 206 | 351 | 304 | ||||||||||||
Deferred income taxes | 260 | (251 | ) | 84 | (60 | ) | ||||||||||
Accounts receivable | (4,786 | ) | 918 | 1,039 | 2,072 | |||||||||||
Inventories | 7,705 | (2,800 | ) | 5,885 | (10,398 | ) | ||||||||||
Prepaid expenses | 204 | 35 | (1,472 | ) | (1,222 | ) | ||||||||||
Accounts payable | (988 | ) | 1,558 | (8,731 | ) | 5,407 | ||||||||||
Accrued liabilities | 591 | (586 | ) | 946 | (2,232 | ) | ||||||||||
Long-term income tax liabilities | (868 | ) | (552 | ) | (1,222 | ) | (745 | ) | ||||||||
Other | (843 | ) | (231 | ) | (580 | ) | (769 | ) | ||||||||
Net cash provided by operating activities | 6,899 | 4,535 | 4,699 | 3,572 | ||||||||||||
Investing activities: | ||||||||||||||||
Capital expenditures | (214 | ) | (369 | ) | (494 | ) | (498 | ) | ||||||||
Proceeds from sale of assets | — | 29 | — | 51 | ||||||||||||
Contingent purchase price | — | (86 | ) | — | (139 | ) | ||||||||||
(Gain) loss on sale of investments | (10 | ) | 4 | (27 | ) | (10 | ) | |||||||||
Proceeds from sales of available-for-sale securities | 64 | 40 | 103 | 99 | ||||||||||||
Purchases of available-for-sale securities | (64 | ) | (40 | ) | (103 | ) | (99 | ) | ||||||||
Net cash used in investing activities | (224 | ) | (422 | ) | (521 | ) | (596 | ) | ||||||||
Financing activities: | ||||||||||||||||
Proceeds from borrowings | — | 47,600 | 10,200 | 57,900 | ||||||||||||
Payments on debt | — | (47,600 | ) | (10,200 | ) | (57,900 | ) | |||||||||
Retirement of long-term debt | — | (2,364 | ) | — | (2,364 | ) | ||||||||||
Proceeds from issuance of common stock | — | — | 5 | 5 | ||||||||||||
Cash dividends | (352 | ) | (352 | ) | (704 | ) | (704 | ) | ||||||||
Other | 10 | — | 10 | — | ||||||||||||
Net cash used in financing activities | (342 | ) | (2,716 | ) | (689 | ) | (3,063 | ) | ||||||||
Effect of exchange rate changes on cash and cash equivalents | 1,829 | (2,984 | ) | 2,581 | (4,475 | ) | ||||||||||
Increase (decrease) in cash and cash equivalents | 8,162 | (1,587 | ) | 6,070 | (4,562 | ) | ||||||||||
Cash and cash equivalents at beginning of period | 41,795 | 37,067 | 43,887 | 40,042 | ||||||||||||
Cash and cash equivalents at end of period | $ | 49,957 | $ | 35,480 | $ | 49,957 | $ | 35,480 | ||||||||
7
Richardson Electronics, Ltd.
Net Sales and Gross Profit
For Second Quarter and First Six Months of Fiscal 2010 and 2009
(in thousands)
By Business Unit:
Net Sales | Gross Profit | |||||||||||||||||||||||
Second Quarter | FY 2010 | FY 2009 | % Change | FY 2010 | % of Sales | FY 2009 | % of Sales | |||||||||||||||||
RF, Wireless & Power Division | $ | 82,818 | $ | 93,445 | (11.4 | )% | $ | 18,141 | 21.9 | % | $ | 21,263 | 22.8 | % | ||||||||||
Electron Device Group | 20,121 | 22,210 | (9.4 | )% | 7,366 | 36.6 | % | 7,811 | 35.2 | % | ||||||||||||||
Canvys | 12,995 | 16,820 | (22.7 | )% | 3,535 | 27.2 | % | 4,156 | 24.7 | % | ||||||||||||||
Corporate | — | 76 | (1 | ) | (52 | ) | ||||||||||||||||||
Total | $ | 115,934 | $ | 132,551 | (12.5 | )% | $ | 29,041 | 25.0 | % | $ | 33,178 | 25.0 | % | ||||||||||
Net Sales | Gross Profit | |||||||||||||||||||||||
First Six Months | FY 2010 | FY 2009 | % Change | FY 2010 | % of Sales | FY 2009 | % of Sales | |||||||||||||||||
RF, Wireless & Power Division | $ | 162,296 | $ | 190,317 | (14.7 | )% | $ | 35,543 | 21.9 | % | $ | 42,169 | 22.2 | % | ||||||||||
Electron Device Group | 38,917 | 47,261 | (17.7 | )% | 13,633 | 35.0 | % | 15,440 | 32.7 | % | ||||||||||||||
Canvys | 24,213 | 33,933 | (28.6 | )% | 6,335 | 26.2 | % | 8,486 | 25.0 | % | ||||||||||||||
Corporate | — | (13 | ) | (1 | ) | (198 | ) | |||||||||||||||||
Total | $ | 225,426 | $ | 271,498 | (17.0 | )% | $ | 55,510 | 24.6 | % | $ | 65,897 | 24.3 | % | ||||||||||
8