Press Release

EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

LOGO


		Corporate Headquarters
*For Immediate Release*		40W267 Keslinger Road
		PO Box 393
For Details Contact:		LaFox, IL 60147-0393
Ed Richardson	David J. DeNeve	USA
Chairman and Chief Executive Officer	Senior Vice President and	Phone: (630) 208-2200
Richardson Electronics, Ltd.	Chief Financial Officer	Fax: (630) 208-2550
Phone: (630) 208-2340	Richardson Electronics, Ltd.
E-mail: info@rell.com

Richardson Reports Record Second Quarter Sales, a 6.4% Increase over Prior Year

LaFox, IL, Wednesday, January 10, 2007: Richardson Electronics, Ltd. (NASDAQ: RELL) announced today results for its fiscal second quarter ended December 2, 2006. Sales in the quarter were $165.8 million, an increase of 6.4% from the second quarter of fiscal 2006. Gross profit improved 2.7% to $40.6 million, or 24.5% of net sales in the second quarter of fiscal 2007 as compared with $39.5 million in the same quarter last year. The prior year’s second quarter included a $0.9 million favorable adjustment to warranty expense which improved gross margin from 24.7% to 25.4% last fiscal year.

SG&A expenses in the second quarter of fiscal 2007 included restructuring expense of $0.6 million related to the implementation of the fiscal 2007 global restructuring plan and stock compensation expense of $0.3 million related to Statement of Financial Accounting Standards No. 123(R) which was adopted in the first quarter of fiscal 2007. Operating income decreased to $4.1 million in the second quarter of fiscal 2007 from $7.2 million in the prior year period. SG&A as a percentage of net sales increased to 21.8% of sales in the second quarter of fiscal 2007 as compared with 20.7% of sales in the same quarter last year. Other expense included a foreign exchange gain of $0.2 million during the second quarter of fiscal 2007 as compared to a foreign exchange loss of $3.8 million last year. The foreign exchange variance was due to the weakening of the U.S. dollar, primarily related to receivables due from foreign subsidiaries to the U.S. parent company and denominated in foreign currencies.

Net income was $1.1 million in the second quarter of fiscal 2007, or $0.06 per diluted common share, as compared with net income of $0.3 million, or $0.02 per diluted common share, in the second quarter last fiscal year. Excluding the restructuring expense of $0.6 million and the stock compensation expense of $0.3 million, net income was $2.0 million in the second quarter of fiscal 2007, or $0.11 per diluted common share. We present these adjusted net income figures because we did not incur restructuring or stock compensation expenses in the second quarter of fiscal 2006 and believe that such presentation is useful for comparative purposes.

RF, Wireless & Power Division (RFPD) led the sales growth for the second quarter of fiscal 2007, increasing sales 13.1% to $90.0 million with higher demand of infrastructure, power conversion, and passive/interconnect products. Sales in the Electron Device Group were $25.5 million, a 3.6% increase from the prior year due to continued growth in semiconductor fabrication products. Security Systems Division/Burtek Systems’ sales remained relatively flat at $28.1 million during the second quarter of fiscal 2007 versus the same period last year. Sales in the Display Systems Group (DSG) were 2.3% lower for the second quarter of fiscal 2007 at $21.4 million due to delays in project based business for custom displays and lower demand for cathode ray tubes (CRT) as compared with the same quarter in fiscal 2006.

On a geographic basis, sales in Europe grew 14.0% to $39.8 million for the second quarter of fiscal 2007 due to continued growth in wireless, display system, and electron device products sales. Sales in Asia/Pacific increased 12.9% to $39.3 million with strong demand for wireless infrastructure and power conversion products. Sales in North America increased to $81.3 million, a 2.6% increase from the second quarter of fiscal 2006 with growth in electron device, wireless, and security system products lines. Sales in Latin America decreased 19.4% to $4.8 million due to a decline in sales of security products.

“Forecasting sales for DSG continues to be a challenge as the business is heavily dependent on the rollout of large projects. Extended delivery on several of the projects resulted in sales and gross margin percentage being lower than our expectations,” said Edward J. Richardson, Chairman, Chief Executive Officer and President. “RFPD’s continued sales growth around the globe has helped us continue our year-over-year sales improvement while the global restructuring plan will streamline the organization which will impact our overall performance during the next twelve months.”

On Thursday, January 11, 2007 at 9:00 a.m. CST, Mr. Edward J. Richardson, Chairman, Chief Executive Officer and President, will host a conference call to discuss the release. A question and answer session will be included as part of the call’s agenda. To listen to the call, please dial 800-553-0349 approximately five minutes prior to the start of the call. A replay of the call will be available from 12:30 p.m. on January 11, 2007 through April 11, 2007. The telephone numbers to access the replay in the U.S. is 800-475-6701 and outside of the U.S. is 320-365-3844; access code 857688.

This release includes certain “forward-looking” statements as defined by the SEC. 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 for the most recently ended fiscal year. 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

Richardson Electronics, Ltd. is a global provider of “Engineered Solutions,” serving the RF, Wireless & Power Conversion; Electron Device; Security; and Display Systems markets. The Company delivers engineered solutions for its customers’ needs through product manufacturing, systems integration, prototype design and manufacture, testing and logistics.

Press announcements and other information about Richardson are available on the World Wide Web at http://www.rell.com/investor.asp.

Richardson Electronics, Ltd.

Condensed Consolidated Statements of Operations

(Unaudited)(in thousands, except per share amounts)


	Three Months Ended						Six Months Ended
	December 2, 2006			December 3, 2005			December 2, 2006			December 3, 2005
Statements of Operations

Net sales	$	165,806		$	155,837		$	331,561		$	313,982
Cost of sales		125,227			116,331			249,663			235,944

Gross profit		40,579			39,506			81,898			78,038
Selling, general, and administrative expenses		36,130			32,283			71,509			65,264
(Gain) loss on disposal of assets		339			(22	)		320			(162	)

Operating income		4,110			7,245			10,069			12,936

Other (income) expense:
Interest expense		2,797			2,320			5,780			4,597
Investment income		(737	)		(23	)		(814	)		(131	)
Foreign exchange (gain) loss		(189	)		3,819			205			3,682
Retirement of long-term debt expenses		—			—			2,540			—
Other, net		25			131			59			175

Total other expense		1,896			6,247			7,770			8,323

Income before income taxes		2,214			998			2,299			4,613
Income tax provision		1,132			705			2,316			2,500

Net income (loss)	$	1,082		$	293		$	(17	)	$	2,113

Net income (loss) per share – basic:
Common stock	$	0.06		$	0.02		$	(0.00	)	$	0.12

Common stock average shares outstanding		14,451			14,293			14,435			14,284

Class B common stock	$	0.06		$	0.02		$	(0.00	)	$	0.11

Class B common stock average shares outstanding		3,073			3,110			3,073			3,110

Net income (loss) per share – diluted:
Common stock	$	0.06		$	0.02		$	(0.00	)	$	0.12

Common stock average shares outstanding		17,669			17,462			14,435			17,475

Class B common stock	$	0.06		$	0.02		$	(0.00	)	$	0.11

Class B common stock average shares outstanding		3,073			3,110			3,073			3,110

Dividends per common share	$	0.040		$	0.040		$	0.080		$	0.080

Dividends per Class B common share	$	0.036		$	0.036		$	0.072		$	0.072

Richardson Electronics, Ltd.

Net Sales and Gross Profit

For the Second Quarter and First Six Months of Fiscal 2007 and 2006

(Unaudited, in thousands)

By Business Unit:


	Net Sales						Gross Profit
	FY 2007		FY 2006		% Change		FY 2007			GP % of Sales		FY 2006			GP% of Sales
	FY 2007		FY 2006		% Change		FY 2007			GP % of Sales		FY 2006			GP% of Sales
Second Quarter
RF, Wireless & Power Division	$	89,994	$	79,569	13.1	%	$	20,392		22.7	%	$	18,645		23.4	%
Electron Device Group		25,494		24,607	3.6	%		8,339		32.7	%		7,712		31.3	%
Security Systems Division/Burtek Systems		28,092		28,268	(0.6	%)		7,545		26.9	%		7,155		25.3	%
Display Systems Group		21,380		21,894	(2.3	%)		5,192		24.3	%		6,118		27.9	%
Corporate		846		1,499				(889	)				(124	)

Total	$	165,806	$	155,837	6.4	%	$	40,579		24.5	%	$	39,506		25.4	%


Six Months
RF, Wireless & Power Division	$	181,326	$	160,726	12.8	%	$	41,855		23.1	%	$	36,841		22.9	%
Electron Device Group		50,168		48,445	3.6	%		16,050		32.0	%		15,444		31.9	%
Security Systems Division/Burtek Systems		54,410		55,172	(1.4	%)		14,512		26.7	%		14,169		25.7	%
Display Systems Group		43,209		46,344	(6.8	%)		10,157		23.5	%		12,133		26.2	%
Corporate		2,448		3,295				(676	)				(549	)

Total	$	331,561	$	313,982	5.6	%	$	81,898		24.7	%	$	78,038		24.9	%


By Geographic Area:

	Net Sales						Gross Profit
	FY 2007		FY 2006		% Change		FY 2007			GP % of Sales		FY 2006			GP% of Sales
Second Quarter
North America	$	81,284	$	79,219	2.6	%	$	21,788		26.8	%	$	21,052		26.6	%
Asia/Pacific		39,295		34,793	12.9	%		9,014		22.9	%		8,221		23.6	%
Europe		39,799		34,925	14.0	%		10,074		25.3	%		9,041		25.9	%
Latin America		4,817		5,980	(19.4	%)		1,365		28.3	%		1,627		27.2	%
Corporate		611		920				(1,662	)				(435	)

Total	$	165,806	$	155,837	6.4	%	$	40,579		24.5	%	$	39,506		25.4	%


Six Months
North America	$	164,516	$	161,340	2.0	%	$	43,554		26.5	%	$	42,541		26.4	%
Asia/Pacific		78,801		71,993	9.5	%		18,581		23.6	%		17,359		24.1	%
Europe		76,219		67,731	12.5	%		19,892		26.1	%		18,367		27.1	%
Latin America		10,395		11,980	(13.2	%)		2,988		28.7	%		3,149		26.3	%
Corporate		1,630		938				(3,117	)				(3,378	)

Total	$	331,561	$	313,982	5.6	%	$	81,898		24.7	%	$	78,038		24.9	%

Note:

Europe includes net sales and gross profit to the Middle East and Africa.

Latin America includes net sales and gross profit to Mexico.

Corporate consists of freight, other non-specific net sales and gross profit, and customer cash discounts.

Richardson Electronics, Ltd.

Pro Forma Net Income and Net Income Per Share

For the Second Quarter of Fiscal 2007


	Actual		Per Share
Net income, as reported	$	1,082	$	0.06
Adjustments, net of income tax effect
Restructuring expense		559		0.03
Stock compensation expense		319		0.02

Net income, pro forma	$	1,960	$	0.11

Richardson Electronics, Ltd.

Condensed Consolidated Balance Sheets

(in thousands, except per share amounts)


	Unaudited December 2, 2006			June 3, 2006
Assets
Current assets:
Cash and cash equivalents	$	13,610		$	17,010
Receivables, less allowance of $2,230 and $2,142		117,280			115,733
Inventories		124,639			117,320
Prepaid expenses		6,720			3,739
Deferred income taxes		1,529			1,527

Total current assets		263,778			255,329

Non-current assets:
Property, plant and equipment, net		31,434			32,357
Goodwill		13,245			13,068
Other intangible assets, net		2,151			2,413
Non-current deferred income taxes		1,518			1,300
Assets held for sale		1,052			1,018
Other assets		1,423			3,814

Total non-current assets		50,823			53,970

Total assets	$	314,601		$	309,299

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	54,998		$	52,494
Accrued liabilities		31,334			30,588
Current portion of long-term debt		8,016			14,016

Total current liabilities		94,348			97,098

Non-current liabilities:
Long-term debt, less current portion		120,819			112,792
Non-current liabilities		1,322			1,169

Total non-current liabilities		122,141			113,961

Total liabilities		216,489			211,059

Commitments and contingencies		—			—
Stockholders’ equity
Common stock, $0.05 par value; issued 15,784 shares at December 2, 2006 and 15,663 shares at June 3, 2006		789			783
Class B common stock, convertible, $0.05 par value; issued 3,073 shares at December 2, 2006 and 3,093 shares at June 3, 2006		154			155
Preferred stock, $1.00 par value, no shares issued		—			—
Additional paid-in-capital		119,000			119,149
Common stock in treasury, at cost, 1,250 shares at December 2, 2006 and 1,261 shares at June 3, 2006		(7,407	)		(7,473	)
Accumulated deficit		(19,065	)		(19,048	)
Accumulated other comprehensive income		4,641			4,674

Total stockholders’ equity		98,112			98,240

Total liabilities and stockholders’ equity	$	314,601		$	309,299