Richardson Electronics Reports First Quarter Fiscal 2015 Results

Richardson Electronics Reports First Quarter Fiscal 2015 Results and Declares Quarterly Cash Dividend

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 25, 2014. 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
	August 30,			May 31,
	2014			2014
Assets
Current assets:
Cash and cash equivalents	$	98,084		$	102,752
Accounts receivable, less allowance of $564 and $581	18,494			18,354
Inventories	35,620			33,869
Prepaid expenses and other assets	936			1,089
Deferred income taxes	1,803			1,537
Income tax receivable	580			2,888
Investments—current	26,362			31,732
Discontinued operations—assets	—			18
Total current assets	181,879			192,239
Non-current assets:
Property, plant and equipment, net	7,723			7,223
Other intangibles	820			843
Non-current deferred income taxes	1,686			1,724
Investments—non-current	8,797			1,516
Total non-current assets	19,026			11,306
Total assets	$	200,905		$	203,545
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	12,336		$	12,337
Accrued liabilities	8,490			9,220
Discontinued operations—liabilities	—			7
Total current liabilities	20,826			21,564
Non-current liabilities:
Long-term income tax liabilities	5,876			5,691
Other non-current liabilities	1,296			1,315
Discontinued operations—non-current liabilities	126			130
Total non-current liabilities	7,298			7,136
Total liabilities	28,124			28,700
Commitments and contingencies	—			—
Stockholders’ equity
Common stock, $0.05 par value; issued 11,906 shares at August 30, 2014, and 11,835 shares at May 31, 2014	595			592
Class B common stock, convertible, $0.05 par value; issued 2,141 shares at August 30, 2014 and 2,191 shares at May 31, 2014	107			110
Preferred stock, $1.00 par value, no shares issued	—			—
Additional paid-in-capital	66,419			66,141
Common stock in treasury, at cost, 50 shares at August 30, 2014, and 1 share at May 31, 2014	(501		)	(14		)
Retained earnings	97,048			97,959
Accumulated other comprehensive income	9,113			10,057
Total stockholders’ equity	172,781			174,845
Total liabilities and stockholders’ equity	$	200,905		$	203,545


Richardson Electronics, Ltd.
Unaudited Consolidated Statements of Comprehensive Income (Loss)
(in thousands, except per share amounts)

	Three Months Ended
	August 30,			August 31,
	2014			2013
Statements of Comprehensive Income (Loss)
Net Sales	$	34,699		$	34,257
Cost of Sales	24,041			24,065
Gross profit	10,658			10,192
Selling, general, and administrative expenses	11,182			10,069
Gain on disposal of assets	9			—
Operating income (loss)	(533		)	123
Other (income) expense:
Investment/interest income	(256		)	(265		)
Foreign exchange (gain) loss	(57		)	106
Proceeds from legal settlement	—			(2,115		)
Other, net	(2		)	(30		)
Total other income	(315		)	(2,304		)
Income (loss) from continuing operations before income taxes	(218		)	2,427
Income tax provision (benefit)	(135		)	448
Income (loss) from continuing operations	(83		)	1,979
Loss from discontinued operations, net of tax	—			(11		)
Net income (loss)	(83		)	1,968
Foreign currency translation gain (loss), net of tax	(968		)	425
Fair value adjustments on investments	25			1
Comprehensive income (loss)	$	(1,026	)	$	2,394
Net income (loss) per Common share - Basic:
Income (loss) from continuing operations	$	(0.01	)	$	0.14
Income (loss) from discontinued operations	—			—
Total net income (loss) per Common share - Basic:	$	(0.01	)	$	0.14
Net income (loss) per Class B common share - Basic:
Income (loss) from continuing operations	$	(0.01	)	$	0.13
Income (loss) from discontinued operations	—			—
Total net income (loss) per Class B common share - Basic:	$	(0.01	)	$	0.13
Net income (loss) per Common share - Diluted:
Income (loss) from continuing operations	$	(0.01	)	$	0.14
Income (loss) from discontinued operations	—			—
Total net income (loss) per Common share - Diluted:	$	(0.01	)	$	0.14
Net income (loss) per Class B common share - Diluted:
Income (loss) from continuing operations	$	(0.01	)	$	0.13
Income (loss) from discontinued operations	—			—
Total net income (loss) per Class B common share - Diluted:	$	(0.01	)	$	0.13
Weighted average number of shares:
Common shares - Basic	11,822			12,127
Class B common shares - Basic	2,182			2,428
Common shares - Diluted	11,822			14,688
Class B common shares - Diluted	2,182			2,428
Dividends per common share	$	0.060		$	0.060
Dividends per Class B common share	$	0.054		$	0.054


Richardson Electronics, Ltd.
Consolidated Statements of Cash Flows
(in thousands)

	Three Months Ended
	August 30,			August 31,
	2014			2013
Operating activities:
Net income (loss)	$	(83	)	$	1,968
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Depreciation and amortization	366			248
Gain on sale of investments	(3		)	(7		)
Share-based compensation expense	120			114
Deferred income taxes	(79		)	(59		)
Change in assets and liabilities, net of effect of acquired businesses:
Accounts receivable	(372		)	(1,218		)
Income tax receivable	2,308			2,751
Inventories	(2,110		)	(450		)
Prepaid expenses and other assets	135			156
Accounts payable	101			(2,547		)
Accrued liabilities	(662		)	(1,890		)
Long-term income tax liabilities	—			(242		)
Other	(49		)	(9		)
Net cash used in operating activities	(328		)	(1,185		)
Investing activities:
Cash consideration paid for acquired businesses	—			(973		)
Capital expenditures	(834		)	(441		)
Proceeds from maturity of investments	30,482			40,488
Purchases of investments	(32,362		)	(40,094		)
Proceeds from sales of available-for-sale securities	37			56
Purchases of available-for-sale securities	(37		)	(56		)
Other	(28		)	69
Net cash used in investing activities	(2,742		)	(951		)
Financing activities:
Repurchase of common stock	(488		)	(6,700		)
Proceeds from issuance of common stock	158			71
Cash dividends paid	(828		)	(857		)
Other	1			1
Net cash used in financing activities	(1,157		)	(7,485		)
Effect of exchange rate changes on cash and cash equivalents	(441		)	149
Decrease in cash and cash equivalents	(4,668		)	(9,472		)
Cash and cash equivalents at beginning of period	102,752			102,002
Cash and cash equivalents at end of period	$	98,084		$	92,530


Richardson Electronics, Ltd.
Net Sales and Gross Profit
For the First Quarter of Fiscal 2015 and Fiscal 2014
(in thousands)

By Strategic Business Unit:

Net Sales	Q1			Q1
	FY 2015			FY 2014		% Change
EDG	$	27,438		$	25,479	7.7%
Canvys	5,968			7,446		(19.8%)
Healthcare	1,293			$	1,332	(2.9%)
Total	$	34,699		$	34,257	1.3%

Gross Profit	Q1			Q1
	FY 2015		% of Net Sales	FY 2014		% of Net Sales
EDG	$	8,686	31.7%	$	7,859	30.8%
Canvys	1,656		27.7%	1,903		25.6%
Healthcare	316		24.4%	430		32.3%
Total	$	10,658	30.7%	$	10,192	29.8%

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