EX-99.1 5 rell-ex991x20131130xq2.htm EXHIBIT 99.1 RELL-EX99.1-2013.11.30-Q2


Press Release
For Immediate Release
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                (630) 208-2200 | Fax: (630) 208-2550
                                        
RICHARDSON ELECTRONICS REPORTS SECOND QUARTER FISCAL 2014 RESULTS AND DECLARES QUARTERLY CASH DIVIDEND

LaFox, IL, January 8, 2014: Richardson Electronics, Ltd. (NASDAQ: RELL), today reported sales and earnings for its second quarter ended November 30, 2013. The Company also announced that its Board of Directors declared a $0.06 per share quarterly cash dividend.
Net sales for the second quarter of fiscal 2014 were $35.4 million, a 3.2% decrease compared to net sales of $36.6 million in the prior year. Sales for the company's EDG business were flat while sales for Canvys were down 10.9%, compared to the prior year's quarter. Gross margin increased to $11.0 million, or 31.1% of net sales during the second quarter of fiscal 2014, compared to $10.7 million, or 29.3% of net sales during fiscal 2013. Operating expenses were $10.5 million for the second quarter of fiscal 2014, compared to $10.2 million for the second quarter of fiscal 2013. Operating income for the second quarters of fiscal 2014 and 2013 remained flat at $0.5 million.
Income from continuing operations for the second quarters of fiscal 2014 and 2013 was $0.6 million, or $0.04 per diluted common share.
“We remain committed to our strategy of building a strong platform for growth that allows us to leverage our global distribution network to drive profit improvement. While we see some economic improvements in China and Europe, we expect challenging conditions to continue so we will closely manage our expenses and working capital investment. Our balance sheet is strong which provides financial flexibility to invest in our growth initiatives, return capital to shareholders, and acquire businesses to diversify our portfolio,” said Edward J. Richardson, Chairman, Chief Executive Officer and President.

“We believe our third quarter sales should be in the range of $34 to $36 million. Our goal is to build our business to achieve sustainable growth over the long term,” said Mr. Richardson.

FINANCIAL SUMMARY ─ THREE MONTHS ENDED NOVEMBER 30, 2013

•
Net sales for the second quarter of fiscal 2014 were $35.4 million, down 3.2%, compared to net sales of $36.6 million during the second quarter of fiscal 2013.

•
Gross margin increased to 31.1% during the second quarter of fiscal 2014 compared to 29.3% during last year's second quarter.

•
Selling, general, and administrative expenses increased slightly to $10.5 million, or 29.6% of net sales for the second quarter of fiscal 2014 compared to $10.2 million for the second quarter of fiscal 2013, or 27.9% of net sales.





•
Operating income during the second quarter of fiscal 2014 and 2013 was $0.5 million, or 1.5% and 1.4% of net sales, respectively.

•
Income from continuing operations for during the second quarter of fiscal 2014 and fiscal 2013 was $0.6 million, or $0.04 per diluted common share.

•
Loss from discontinued operations, net of tax, was $0.1 million during the second quarter of fiscal 2014 compared to $0.2 million during the second quarter of fiscal 2013.

•
Net income during the second quarter of fiscal 2014 was $0.5 million, or $0.03 per diluted common share, compared to net income of $0.4 million, or $0.03 per diluted common share, during the second quarter of fiscal 2013, .

FINANCIAL SUMMARY – SIX MONTHS ENDED NOVEMBER 30, 2013

•
Net sales for the first six months of fiscal 2014 were $69.7 million, down 3.5%, compared to net sales of $72.3 million during the first six months of fiscal 2013.

•
Gross margin increased to 30.4% during the first six months of fiscal 2014 compared to 29.6% during the first six months of fiscal 2013.

•
Selling, general, and administrative expenses slightly increased to $20.5 million, or 29.5% of net sales, for the first six months of fiscal 2014 compared to $20.4 million, or 28.2% of net sales, for the first six months of fiscal 2013.

•
Operating income during the first six months of fiscal 2014 was $0.7 million, or 0.9% of net sales, compared to an operating income of $1.0 million, or 1.4% of net sales, during the first six months of fiscal 2013.

•
Income from continuing operations during the first six months of fiscal 2014 was $2.6 million, or $0.18 per diluted common share, versus $1.3 million, or $0.08 per diluted common share, during the first six months of fiscal 2013.

•
Loss from discontinued operations, net of tax, was $0.1 million, during the first six months of fiscal 2014, compared to $0.3 million during the first six months of fiscal 2013.

•
Net income during the first six months of fiscal 2014 was $2.5 million, or $0.17 per diluted common share, compared to net income of $1.0 million, or $0.06 per diluted common share, during the first six months of fiscal 2013.

CASH DIVIDEND AND SHARE REPURCHASES
The Company also announced today that its Board of Directors declared a $0.06 quarterly dividend per share to holders of common stock and a $0.054 cash dividend per share to holders of Class B common stock. The dividend will be payable on February 21, 2014, to common stockholders of record on February 7, 2014.
“Cash and investments at the end of our second quarter were $134.1 million. We used $2.0 million to repurchase 0.2 million shares during the second quarter. As of today, the Company currently has 11.8 million outstanding shares of common stock and 2.2 million outstanding shares of Class B common stock. With our strong balance sheet, we are committed to returning value to our shareholders,” said Mr. Richardson.





CONFERENCE CALL INFORMATION
On Thursday, January 9, 2014, 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 results for fiscal 2014. A question and answer session will be included as part of the call's agenda. To listen to the call, please dial (888) 339-2688 and enter passcode 24209746 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 9, 2014, for seven days. The telephone numbers for the replay are (USA) (888) 286-8010 and (International) (617) 801-6888; passcode 34766989.

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 Annual Report on Form 10-K filed on July 26, 2013. 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 leading global provider of engineered solutions, power grid and microwave tubes and related consumables, and customized display solutions serving customers in the alternative energy, aviation, broadcast, communications, industrial, marine, medical, military, scientific and semiconductor markets. The Company's strategy is to provide specialized technical expertise and “engineered solutions” based on our core engineering and manufacturing capabilities. The Company provides solutions and adds value through design-in support, systems integration, prototype design and manufacturing, testing, logistics, and aftermarket technical service and repair. More information is available online at www.rell.com.
Richardson Electronics common stock trades on the NASDAQ Global Select Market under the ticker symbol RELL.
                                    






Richardson Electronics, Ltd.
Consolidated Balance Sheets
(in thousands, except per share amounts)
 
Unaudited
 
Audited
 
November 30, 
 2013
 
June 1, 
 2013
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
92,646

 
$
102,002

Accounts receivable, less allowance of $1,167 and $1,092
20,216

 
18,268

Inventories
35,296

 
33,975

Prepaid expenses and other assets
1,453

 
1,155

Deferred income taxes
1,983

 
1,856

Income tax receivable
3,321

 
6,429

Investments—current
39,508

 
38,971

Discontinued operations—assets
356

 
303

Total current assets
194,779

 
202,959

Non-current assets:
 
 
 
Property, plant and equipment, net
5,935

 
5,073

Goodwill
1,633

 
1,519

Other intangibles
881

 
908

Non-current deferred income taxes
1,477

 
1,398

Investments—non-current
1,991

 
5,461

Total non-current assets
11,917

 
14,359

Total assets
$
206,696

 
$
217,318

Liabilities and Stockholders’ Equity

 
 
Current liabilities:
 
 
 
Accounts payable
$
12,152

 
$
14,255

Accrued liabilities
7,472

 
9,566

Discontinued operations—liabilities
—

 
245

Total current liabilities
19,624

 
24,066

Non-current liabilities:
 
 
 
Long-term income tax liabilities
6,249

 
6,726

Other non-current liabilities
1,284

 
1,287

Total non-current liabilities
7,533

 
8,013

Total liabilities
27,157

 
32,079

Commitments and contingencies
—

 
—

Stockholders’ equity
 
 
 
Common stock, $0.05 par value; issued 11,828 shares at November 30, 2013, and 12,263 shares at June 1, 2013
591

 
613

Class B common stock, convertible, $0.05 par value; issued 2,191 shares at November 30, 2013 and 2,491 shares at June 1, 2013
110

 
125

Preferred stock, $1.00 par value, no shares issued
—

 
—

Additional paid-in-capital
65,760

 
73,979

Common stock in treasury, at cost, 0 shares at November 30, 2013, and 9 shares at June 1, 2013
—

 
(105
)
Retained earnings
102,623

 
101,816

Accumulated other comprehensive income
10,455

 
8,811

Total stockholders’ equity
179,539

 
185,239

Total liabilities and stockholders’ equity
$
206,696

 
$
217,318






Richardson Electronics, Ltd.
Unaudited Consolidated Statements of Comprehensive Income
(in thousands, except per share amounts)
 
Three Months Ended
 
Six Months Ended
 
November 30, 
 2013
 
December 1, 
 2012
 
November 30, 
 2013
 
December 1, 
 2012
Net Sales
$
35,436

 
$
36,603

 
$
69,693

 
$
72,253

Cost of Sales
24,429

 
25,861

 
48,494

 
50,865

Gross profit
11,007

 
10,742

 
21,199

 
21,388

Selling, general, and administrative expenses
10,473

 
10,228

 
20,542

 
20,377

(Gain) loss on disposal of assets
—

 
2

 
—

 
(2
)
Operating income
534

 
512

 
657

 
1,013

Other (income) expense:
 
 
 
 
 
 
 
Investment/interest income
(255
)
 
(352
)
 
(520
)
 
(735
)
Foreign exchange (gain) loss
(14
)
 
297

 
92

 
260

Proceeds from legal settlement
—

 
—

 
(2,115
)
 
—

Other, net
15

 
(42
)
 
(15
)
 
(65
)
Total other income
(254
)
 
(97
)
 
(2,558
)
 
(540
)
Income from continuing operations before income taxes
788

 
609

 
3,215

 
1,553

Income tax provision
157

 
28

 
605

 
238

Income from continuing operations
631

 
581

 
2,610

 
1,315

Loss from discontinued operations, net of tax
(107
)
 
(203
)
 
(118
)
 
(290
)
Net income
524

 
378

 
2,492

 
1,025

Foreign currency translation gain, net of tax
1,196

 
1,547

 
1,621

 
1,947

Fair value adjustments on investments
22

 
4

 
23

 
5

Comprehensive income
$
1,742

 
$
1,929

 
$
4,136

 
$
2,977

Net income per Common share - Basic:
 
 
 
 
 
 
 
Income from continuing operations
$
0.05

 
$
0.04

 
$
0.19

 
$
0.09

Loss from discontinued operations
(0.01
)
 
(0.01
)
 
(0.01
)
 
(0.02
)
Total net income per Common share - Basic:
$
0.04

 
$
0.03

 
$
0.18

 
$
0.07

Net income per Class B common share - Basic:
 
 
 
 
 
 
 
Income from continuing operations
$
0.04

 
$
0.03

 
$
0.17

 
$
0.08

Loss from discontinued operations
(0.01
)
 
(0.01
)
 
(0.01
)
 
(0.02
)
Total net income per Class B common share - Basic:
$
0.03

 
$
0.02

 
$
0.16

 
$
0.06

Net income per Common share - Diluted:
 
 
 
 
 
 
 
Income from continuing operations
$
0.04

 
$
0.04

 
$
0.18

 
$
0.08

Loss from discontinued operations
(0.01
)
 
(0.01
)
 
(0.01
)
 
(0.02
)
Total net income per Common share - Diluted:
$
0.03

 
$
0.03

 
$
0.17

 
$
0.06

Net income per Class B common share - Diluted:
 
 
 
 

 

Income from continuing operations
$
0.04

 
$
0.03

 
$
0.17

 
$
0.08

Loss from discontinued operations
(0.01
)
 
(0.01
)
 
(0.01
)
 
(0.02
)
Total net income per Class B common share - Diluted:
$
0.03

 
$
0.02

 
$
0.16

 
$
0.06

Weighted average number of shares:
 
 
 
 
 
 
 
Common shares - Basic
11,871

 
12,437

 
11,997

 
12,604

Class B common shares - Basic
2,191

 
2,812

 
2,309

 
2,863

Common shares - Diluted
14,185

 
15,345

 
14,433

 
15,567

Class B common shares - Diluted
2,191

 
2,812

 
2,309

 
2,863

Dividends per common share
$
0.060

 
$
0.060

 
$
0.120

 
$
0.120

Dividends per Class B common share
$
0.054

 
$
0.054

 
$
0.108

 
$
0.108






Richardson Electronics, Ltd.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
 
Three Months Ended
 
Six Months Ended
 
November 30, 
 2013

December 1, 
 2012
 
November 30, 
 2013
 
December 1, 
 2012
Operating activities:
 
 
 
 
 
 
 
Net income
524

 
378

 
2,492

 
1,025

Adjustments to reconcile net income to cash provided by (used in) operating activities:
 
 
 
 

 

Depreciation and amortization
273

 
266

 
521

 
565

Gain on sale of investments
(12
)
 
(1
)
 
(19
)
 
(21
)
(Gain) loss on disposal of assets
—

 
2

 
—

 
(2
)
Share-based compensation expense
270

 
208

 
384

 
332

Deferred income taxes
(108
)
 
(7
)
 
(167
)
 
(8
)
Change in assets and liabilities, net of effect of acquired businesses:
 
 
 
 

 

Accounts receivable
(508
)
 
(758
)
 
(1,726
)
 
(1,404
)
Income tax receivable
357

 
36

 
3,108

 
191

Inventories
310

 
2,265

 
(140
)
 
1,715

Prepaid expenses and other assets
(430
)
 
196

 
(274
)
 
(426
)
Accounts payable
317

 
2,664

 
(2,230
)
 
1,234

Accrued liabilities
(565
)
 
806

 
(2,455
)
 
(200
)
Long-term income tax liabilities
(235
)
 
4

 
(477
)
 
(317
)
Other
56

 
148

 
47

 
190

Net cash provided by (used in) operating activities
249

 
6,207

 
(936
)
 
2,874

Investing activities:
 
 
 
 

 

Cash consideration paid for acquired businesses
—

 
(2,557
)
 
(973
)
 
(2,557
)
Capital expenditures
(540
)
 
(478
)
 
(981
)
 
(557
)
Proceeds from sale of assets
—

 
—

 
—

 
4

Proceeds from maturity of investments
14,044

 
39,763

 
54,532

 
97,510

Purchases of investments
(11,458
)
 
(23,838
)
 
(51,552
)
 
(75,562
)
Proceeds from sales of available-for-sale securities
20

 
83

 
76

 
137

Purchases of available-for-sale securities
(20
)
 
(83
)
 
(76
)
 
(137
)
Other
22

 
—

 
91

 
—

Net cash provided by investing activities
2,068

 
12,890

 
1,117

 
18,838

Financing activities:
 
 
 
 

 

Repurchase of common stock
(2,025
)
 
(5,998
)
 
(8,725
)
 
(11,550
)
Proceeds from issuance of common stock
100

 
72

 
171

 
83

Cash dividends paid
(828
)
 
(1,799
)
 
(1,685
)
 
(1,799
)
Other
—

 
—

 
1

 
—

Net cash used in financing activities
(2,753
)
 
(7,725
)
 
(10,238
)
 
(13,266
)
Effect of exchange rate changes on cash and cash equivalents
552

 
908

 
701

 
1,179

Increase/ (decrease) in cash and cash equivalents
116

 
12,280

 
(9,356
)
 
9,625

Cash and cash equivalents at beginning of period
92,530

 
41,238

 
102,002

 
43,893

Cash and cash equivalents at end of period
$
92,646

 
$
53,518

 
$
92,646

 
$
53,518

 
 
 
 
 
 
 
 






Richardson Electronics, Ltd.
Net Sales and Gross Profit
For the Second Quarter and First Six Months of Fiscal 2014 and Fiscal 2013
(in thousands)

By Strategic Business Unit:
Net Sales
QTD
 
QTD
 
 
FY 2014
 
FY 2013
% Change
EDG
$
26,163

 
$
26,186

(0.1)%
Canvys
9,273

 
10,417

(11.0)%
Total
$
35,436

 
$
36,603

(3.2)%
 
 
 
 
 
 
YTD
 
YTD
 
 
FY 2014
 
FY 2013
% Change
EDG
$
51,642


$
51,813

(0.3)%
Canvys
18,051


20,440

(11.7)%
Total
$
69,693


$
72,253

(3.5)%
 
 
 
 
 
Gross Profit
QTD
 
QTD
 
 
FY 2014
% of Net Sales
FY 2013
% of Net Sales
EDG
$
8,507

32.5%
$
7,930

30.3%
Canvys
2,500

27.0%
2,812

27.0%
Total
$
11,007

31.1%
$
10,742

29.3%
 
 
 
 
 

YTD

YTD


FY 2014
% of Net Sales
FY 2013
% of Net Sales
EDG
$
16,366

31.7%
$
15,930

30.7%
Canvys
4,833

26.8%
5,458

26.7%
Total
$
21,199

30.4%
$
21,388

29.6%