Richardson Electronics Reports Second Quarter Fiscal 2013 Results and Declares Cash Dividend

Richardson Electronics Reports Second Quarter Fiscal 2013 Results and Declares Cash Dividend

LAFOX, Ill.--(BUSINESS WIRE)-- Richardson Electronics, Ltd. (NAS: RELL) today reported sales and earnings for its second quarter ended December 1, 2012. 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 2013 were $36.6 million, down 6.5% from net sales of $39.1 million during the second quarter of last year reflecting the impact of the uncertainty within the global marketplace. Gross profit for the second quarter of fiscal 2013 was $10.7 million, or 29.3% of net sales, compared to $11.7 million, or 29.9% of net sales, during the second quarter of fiscal 2012. Gross profit during the second quarter of fiscal 2013 was impacted by unabsorbed manufacturing labor and overhead of $0.3 million, or 0.8% of net sales.


Selling, General, and Administrative ("SG&A") costs during the second quarter of fiscal 2013 were $10.2 million, compared to $10.0 million during last year's second quarter. SG&A expenses during the second quarter of fiscal 2013 included severance costs, expenses related to a preference claim, and product development costs totaling $0.4 million.

Operating income during the second quarter of fiscal 2013 was $0.5 million, or 1.4% of net sales, compared to operating income of $1.7 million, or 4.4% of net sales, during the second quarter of last year. Income from continuing operations for the second quarter of fiscal 2013 was $0.6 million, or $0.04 per diluted common share, compared to income from continuing operations of $1.6 million, or $0.09 per diluted common share during the second quarter of last year.

"Sales in the first half of our fiscal year were impacted by slowing growth in Asia combined with global financial instability and a decline in demand for semiconductor wafer fabrication components. We have adjusted resources to align our costs with current sales expectations. With an outlook for improving global economic conditions, we anticipate sales for the second half of our fiscal year to be up significantly over the first half," said Edward J. Richardson, Chairman, Chief Executive Officer and President.

"We continue to focus on converting sales from OEM customers to end users through our expanded service capabilities for laser and industrial tubes. We are in an excellent position to help customers replace tubes and service their equipment. Our ability to create opportunities to extend our business model into new industries is also crucial to the long-term success of the company," concluded Mr. Richardson.

FINANCIAL SUMMARY ─ THREE MONTHS ENDED DECEMBER 1, 2012

  • Net sales for the second quarter of fiscal 2013 were $36.6 million, down 6.5%, compared to net sales of $39.1 million during the second quarter of last year.

  • Gross margin as a percentage of net sales decreased to 29.3% during the second quarter of fiscal 2013 compared to 29.9% during the second quarter of last year.

  • SG&A expenses during the second quarter of fiscal 2013 were $10.2 million, or 27.9% of net sales, compared to $10.0 million, or 25.5% of net sales, during the second quarter of last year.

  • Operating income during the second quarter of fiscal 2013 was $0.5 million, or 1.4% of net sales, compared to operating income of $1.7 million, or 4.4% of net sales, during the second quarter of last year.

  • Income from continuing operations during the second quarter of fiscal 2013 was $0.6 million, or $0.04 per diluted common share, compared to income from continuing operations of $1.6 million, or $0.09 per diluted common share, during the second quarter of last year.

  • Loss from discontinued operations, net of tax, was $0.2 million, during the second quarter of fiscal 2013 compared to a loss from discontinued operations, net of tax, of $0.8 million, during the second quarter of last year.

  • Net income during the second quarter of fiscal 2013 was $0.4 million, or $0.03 per diluted common share, compared to net income of $0.8 million, or $0.04 per diluted common share, during the second quarter of last year.

FINANCIAL SUMMARY ─ SIX MONTHS ENDED DECEMBER 1, 2012

  • Net sales for the first six months of fiscal 2013 were $72.3 million, down 10.4%, compared to net sales of $80.6 million during the first six months of last year.

  • Gross margin as a percentage of net sales decreased to 29.6% during the first six months of fiscal 2013 compared to 30.2% during the first six months of last year.

  • SG&A expenses during the first six months of fiscal 2013 were $20.4 million, or 28.2% of net sales, compared to $20.7 million, or 25.7% of net sales, during the first six months of last year.

  • Operating income during the first six months of fiscal 2013 was $1.0 million, or 1.4% of net sales, compared to operating income of $3.7 million, or 4.6% of net sales, during the first six months of last year.

  • Income from continuing operations during the first six months of fiscal 2013 was $1.3 million, or $0.08 per diluted common share, compared to income from continuing operations of $2.7 million, or $0.15 per diluted common share, during the first six months of last year.

  • Loss from discontinued operations, net of tax, was $0.3 million, during the first six months of fiscal 2013 compared to income from discontinued operations, net of tax, of $1.8 million, or $0.10 per diluted common share, during the first six months of last year.

  • Net income during the first six months of fiscal 2013 was $1.0 million, or $0.06 per diluted common share, compared to net income of $4.5 million, or $0.25 per diluted common share, during the first six months of last year.

CASH USED FOR SHARE REPURCHASES

"Cash and investments at the end of our second quarter were $147.3 million. We used $6.0 million to repurchase 0.5 million shares during the second quarter of fiscal 2013. As of today, we have repurchased a total of 3.5 million shares for $44.2 million under our share repurchase authorization and currently have $30.8 million remaining. With our strong balance sheet, we are committed to returning value to our shareholders through a combination of cash dividends, share repurchases, and strategic acquisitions," said Mr. Richardson.

Share repurchases may be made on the open market or in privately negotiated transactions, subject to market conditions and trading restrictions. This authorization has no expiration and may be cancelled at any time.

CASH DIVIDEND

The Company also announced today that its Board of Directors declared a $0.06 dividend per share to all holders of common stock and a $0.054 cash dividend per share to all holders of Class B common stock. The dividend will be payable on February 22, 2013, to all common stockholders of record on February 8, 2013. The Company currently has 12.3 million outstanding shares of common stock and 2.7 outstanding shares of Class B common stock.

CONFERENCE CALL INFORMATION

On Thursday, January 10, 2013, 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 2013. A question and answer session will be included as part of the call's agenda. To listen to the call, please dial (877) 465-4511 and enter passcode 75280206 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 10, 2013, for seven days. The telephone numbers for the replay are (USA) (888) 286-8010 and (International) (617) 801-6888; access code 51931348.

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 27, 2012, and in the Company's Proxy Statement on Schedule 14A filed on August 30, 2012. 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 atwww.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

December 1,

June 2,

2012

2012

Assets

Current assets:

Cash and cash equivalents

$

53,518

$

43,893

Accounts receivable, less allowance of $1,047 and $1,058

21,706

19,727

Inventories

35,252

34,675

Prepaid expenses and other assets

1,287

806

Deferred income taxes

2,029

2,095

Income tax receivable

6,381

6,572

Investments - current

86,395

105,009

Discontinued operations - assets

248

514

Total current assets

206,816

213,291

Non-current assets:

Property, plant and equipment, net

4,438

4,375

Goodwill

2,269

1,261

Other intangibles

272

355

Non-current deferred income taxes

1,474

1,458

Investments - non-current

7,380

10,683

Total non-current assets

15,833

18,132

Total assets

$

222,649

$

231,423

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

13,960

$

12,611

Accrued liabilities

8,302

8,466

Discontinued operations - liabilities

418

253

Total current liabilities

22,680

21,330

Non-current liabilities:

Long-term income tax liabilities

6,947

7,306

Other non-current liabilities

1,385

1,213

Discontinued operations - non-current liabilities

1,380

1,361

Total non-current liabilities

9,712

9,880

Total liabilities

32,392

31,210

Commitments and contingencies

-

-

Stockholders' equity

Common stock, $0.05 par value; issued 12,284 shares at December 1, 2012, and 13,074

shares at June 2, 2012

611

654

Class B common stock, convertible, $0.05 par value; issued 2,740 shares at December 1, 2012

and 2,920 shares at June 2, 2012

141

146

Preferred stock, $1.00 par value, no shares issued

-

-

Additional paid-in-capital

76,914

88,217

Common stock in treasury, at cost, -0- shares at December 1, 2012, and 18 shares

at June 2, 2012

-

(216

)

Retained earnings

103,366

104,139

Accumulated other comprehensive income

9,225

7,273

Total stockholders' equity

190,257

200,213

Total liabilities and stockholders' equity

$

222,649

$

231,423

Richardson Electronics, Ltd.

Unaudited Consolidated Statements of Comprehensive Income (Loss)

(in thousands, except per share amounts)

Three Months Ended

Six Months Ended

December 1,

December 3,

December 1,

December 3,

2012

2011

2012

2011

Net sales

$

36,603

$

39,138

$

72,253

$

80,649

Cost of sales

25,861

27,448

50,865

56,257

Gross profit

10,742

11,690

21,388

24,392

Selling, general, and administrative expenses

10,228

9,973

20,377

20,745

(Gain) loss on disposal of assets

2

-

(2

)

(70

)

Operating income

512

1,717

1,013

3,717

Other (income) expense:

Investment/interest income

(352

)

(281

)

(735

)

(645

)

Foreign exchange (gain) loss

297

(486

)

260

295

Other, net

(42

)

19

(65

)

(2

)

Total other income

(97

)

(748

)

(540

)

(352

)

Income from continuing operations before income taxes

609

2,465

1,553

4,069

Income tax provision

28

836

238

1,411

Income from continuing operations

581

1,629

1,315

2,658

Income (loss) from discontinued operations, net of tax

(203

)

(799

)

(290

)

1,803

Net income

378

830

1,025

4,461

Foreign currency translation gain (loss), net of tax

1,547

(2,573

)

1,947

(1,205

)

Fair value adjustments on investments

4

(3

)

5

(51

)

Comprehensive income (loss)

$

1,929

$

(1,746

)

$

2,977

$

3,205

Net income per Common share - Basic:

Income from continuing operations

$

0.04

$

0.10

$

0.09

$

0.16

Income (loss) from discontinued operations

(0.01

)

(0.05

)

(0.02

)

0.11

Total net income per Common share - Basic:

$

0.03

$

0.05

$

0.07

$

0.27

Net income per Class B common share - Basic:

Income from continuing operations

$

0.03

$

0.09

$

0.08

$

0.14

Income (loss) from discontinued operations