Exhibit 99.1
For Immediate Release
| Corporate Headquarters 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 RECORD FIRST QUARTER
FISCAL 2011 RESULTS AND DECLARES CASH DIVIDEND
First quarter sales growth of 25%
Earnings per share of $0.47
LaFox, IL, October 6, 2010:Richardson Electronics, Ltd. (NASDAQ: RELL) today reported record sales and earnings for its first quarter ended August 28, 2010. The Company also declared its regular quarterly dividend.
Net sales for the first quarter of Fiscal 2011 were $137.1 million, up 25.3% from net sales of $109.5 million during the first quarter of last year. Operating income improved to $9.3 million or 6.8% of net sales for the first quarter of Fiscal 2011, compared to $3.5 million or 3.2% of net sales during last year’s first quarter.
“We are pleased to begin Fiscal 2011 on a strong note which includes record sales and earnings for our first quarter. Net sales growth included growth of over 25 percent from our RFPD business and over 46 percent growth from our EDG business. Also, our consolidated operating margin is at the highest level in the Company’s history,” said Edward J. Richardson, Chairman, Chief Executive Officer and President of Richardson Electronics, Ltd.
FINANCIAL SUMMARY — THREE MONTHS ENDED AUGUST 28, 2010
• | Net sales for the first quarter of fiscal 2011 were $137.1 million, up 25.3%, compared to net sales of $109.5 million during the first quarter of last year. |
• | Gross margin as a percentage of net sales decreased to 23.8% during the first quarter of fiscal 2011 compared to 24.2% during the first quarter of last year. |
• | SG&A expenses during the first quarter of Fiscal 2011 were $23.3 million, or 17.0% of net sales, compared to $22.9 million, or 21.0% of net sales, during the first quarter of last year. |
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• | Operating income during the first quarter of fiscal 2011 was $9.3 million, or 6.8% of net sales, compared to $3.5 million, or 3.2% of net sales, for the first quarter last year. |
• | Net income during the first quarter of fiscal 2011 was $8.4 million, or $0.47 per diluted common share, compared to net income of $1.9 million, or $0.11 per diluted common share, during the first quarter of last year. |
CASH FLOWS AND REDUCED DEBT
Cash flowsprovided by operating activities were $0.4 million during the first quarter of Fiscal 2011, compared to cash flowsused in operating activities of $2.2 million during the first quarter of Fiscal 2010. The Company ended the quarter in a net cash position of $10.0 million, reflecting cash of $32.0 million and total debt of $22.0 million.
“Our balance sheet is solid and we are continuing our focus on working capital management and operational excellence,” said Kathleen Dvorak, Executive Vice President and Chief Financial Officer.
OUTLOOK
On October 1, 2010, the Company announced the signing of a definitive agreement to sell its RF, Wireless and Power Division (“RFPD”) and certain other assets to Arrow Electronics, Inc. (NYSE: ARW) for $210 million in cash, subject to post-closing adjustments.
The transaction is subject to the approval of shareholders of Richardson Electronics, Ltd. as well as customary closing conditions and regulatory approvals. The companies expect the transaction to close in early January 2011.
“We continue to see growing demand in our business despite concern over the sustainability of the recovery. During the second quarter, RFPD will be reflected as a discontinued operation. As a result, we expect that sales for EDG and Canvys for the second quarter to be in the range of $35 to $40 million, representing more than 10 percent growth over prior year,” said Mr. Richardson.
CASH DIVIDEND
The Company also announced today 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 19, 2010, to all common stockholders of record on November 5, 2010. The Company currently has 14,697,341 outstanding shares of common stock and 3,048,258 outstanding shares of Class B common stock.
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CONFERENCE CALL INFORMATION
On Thursday, October 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 first quarter fiscal 2011 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 68973186 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 7, 2010, for seven days. The telephone numbers for the replay are (USA) 888-286-8010 and (International) 617-801-6888; access code 64771075.
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 2010 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, wireless and power management, 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 28, 2010 | August 29, 2009 | ||||||
Statements of Operations | |||||||
Net sales | $ | 137,144 | $ | 109,492 | |||
Cost of sales | 104,553 | 83,023 | |||||
Gross profit | 32,591 | 26,469 | |||||
Selling, general, and administrative expenses | 23,295 | 22,943 | |||||
Gain on disposal of assets | — | (2 | ) | ||||
Operating income | 9,296 | 3,528 | |||||
Other (income) expense: | |||||||
Interest expense | 234 | 1,145 | |||||
Investment income | — | (33 | ) | ||||
Foreign exchange loss | 119 | 818 | |||||
Loss on retirement of short-term debt | 60 | — | |||||
Other, net | 9 | (7 | ) | ||||
Total other expense | 422 | 1,923 | |||||
Income before income taxes | 8,874 | 1,605 | |||||
Income tax provision (benefit) | 498 | (310 | ) | ||||
Net income | $ | 8,376 | $ | 1,915 | |||
Net income per share - basic: | |||||||
Common stock | $ | 0.48 | $ | 0.11 | |||
Class B Common stock | $ | 0.43 | $ | 0.10 | |||
Net income per share - diluted: | |||||||
Common stock | $ | 0.47 | $ | 0.11 | |||
Class B Common stock | $ | 0.43 | $ | 0.10 | |||
Weighted average number of shares: | |||||||
Common shares - basic | 14,679 | 14,859 | |||||
Class B common shares - basic | 3,048 | 3,048 | |||||
Common shares - diluted | 17,917 | 17,915 | |||||
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 28, 2010 | May 29, 2010 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 31,982 | $ | 29,038 | ||||
Accounts receivable, less allowance of $1,492 and $1,592 | 102,037 | 98,691 | ||||||
Inventories | 85,564 | 78,730 | ||||||
Prepaid expenses | 4,758 | 4,514 | ||||||
Deferred income taxes | 2,251 | 2,404 | ||||||
Total current assets | 226,592 | 213,377 | ||||||
Non-current assets: | ||||||||
Property, plant and equipment, net | 16,207 | 16,675 | ||||||
Deferred financing costs, net | — | 60 | ||||||
Non-current deferred income taxes | 3,790 | 3,571 | ||||||
Other non-current assets | 319 | 1,132 | ||||||
Total non-current assets | 20,316 | 21,438 | ||||||
Total assets | $ | 246,908 | $ | 234,815 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 61,169 | $ | 61,616 | ||||
Accrued liabilities | 18,732 | 18,807 | ||||||
Short-term debt | 22,000 | 19,517 | ||||||
Total current liabilities | 101,901 | 99,940 | ||||||
Non-current liabilities | ||||||||
Long-term income tax liabilities | 3,417 | 3,475 | ||||||
Other non-current liabilities | 1,369 | 1,537 | ||||||
Total non-current liabilities | 4,786 | 5,012 | ||||||
Total liabilities | 106,687 | 104,952 | ||||||
Commitments and contingencies | — | — | ||||||
Stockholders’ equity | ||||||||
Common stock, $0.05 par value; issued 16,051 shares at August 28, 2010, and 16,029 shares at May 29, 2010 | 803 | 802 | ||||||
Class B common stock, convertible, $0.05 par value; issued 3,048 shares at August 28, 2010, and at May 29, 2010 | 152 | 152 | ||||||
Preferred stock, $1.00 par value, no shares issued | — | — | ||||||
Additional paid-in-capital | 121,312 | 120,998 | ||||||
Common stock in treasury, at cost, 1,355 shares at August 28, 2010, and at May 29, 2010 | (8,503 | ) | (8,503 | ) | ||||
Retained earnings | 20,953 | 12,925 | ||||||
Accumulated other comprehensive income | 5,504 | 3,489 | ||||||
Total stockholders’ equity | 140,221 | 129,863 | ||||||
Total liabilities and stockholders’ equity | $ | 246,908 | $ | 234,815 | ||||
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Richardson Electronics, Ltd.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Three Months Ended | ||||||||
August 28, 2010 | August 29, 2009 | |||||||
Operating activities: | ||||||||
Net income | $ | 8,376 | $ | 1,915 | ||||
Adjustments to reconcile net income to cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 895 | 1,064 | ||||||
Loss on retirement of short-term debt | 60 | — | ||||||
Gain on disposal of assets | — | (2 | ) | |||||
Stock compensation expense | 148 | 149 | ||||||
Deferred income taxes | 54 | (176 | ) | |||||
Accounts receivable | (1,676 | ) | 5,825 | |||||
Inventories | (6,543 | ) | (1,820 | ) | ||||
Prepaid expenses | (842 | ) | (1,676 | ) | ||||
Accounts payable | (710 | ) | (7,743 | ) | ||||
Accrued liabilities | 259 | 355 | ||||||
Other | 420 | (91 | ) | |||||
Net cash provided by (used in) operating activities | 441 | (2,200 | ) | |||||
Investing activities: | ||||||||
Capital expenditures | (399 | ) | (280 | ) | ||||
(Gain) loss on sale of investments | 4 | (17 | ) | |||||
Market value adjustments | 3 | — | ||||||
Proceeds from sales of available-for-sale securities | 10 | 39 | ||||||
Purchases of available-for-sale securities | (10 | ) | (39 | ) | ||||
Net cash used in investing activities | (392 | ) | (297 | ) | ||||
Financing activities: | ||||||||
Proceeds from borrowings | 62,300 | 10,200 | ||||||
Payments on debt | (40,300 | ) | (10,200 | ) | ||||
Payments on retirement of short-term debt | (19,517 | ) | — | |||||
Proceeds from issuance of common stock | 164 | 5 | ||||||
Cash dividends paid | (348 | ) | (352 | ) | ||||
Net cash provided by (used in) financing activities | 2,299 | (347 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | 596 | 752 | ||||||
Increase (decrease) in cash and cash equivalents | 2,944 | (2,092 | ) | |||||
Cash and cash equivalents at beginning of period | 29,038 | 43,887 | ||||||
Cash and cash equivalents at end of period | $ | 31,982 | $ | 41,795 | ||||
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Richardson Electronics, Ltd.
Net Sales and Gross Profit
For the First Quarter of Fiscal 2011 and Fiscal 2010
(in thousands)
By Sales Business Unit:
Net Sales | Gross Profit | ||||||||||||||||||||
% | % of | % of | |||||||||||||||||||
First Quarter | FY 2011 | FY 2010 | Change | FY 2011 | Net Sales | FY 2010 | Net Sales | ||||||||||||||
RFPD | $ | 99,634 | $ | 79,478 | 25.4 | % | $ | 21,201 | 21.3 | % | $ | 17,402 | 21.9 | % | |||||||
EDG | 27,493 | 18,796 | 46.3 | % | 9,055 | 32.9 | % | 6,267 | 33.3 | % | |||||||||||
Canvys | 10,017 | 11,218 | (10.7 | %) | 2,335 | 23.3 | % | 2,800 | 25.0 | % | |||||||||||
Total | $ | 137,144 | $ | 109,492 | 25.3 | % | $ | 32,591 | 23.8 | % | $ | 26,469 | 24.2 | % | |||||||
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