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Richardson Electronics Reports Second Quarter Fiscal 2010 Results and Declares Cash Dividend

Posted by Dana in January 7th 2010

Richardson Electronics, Ltd. (NASDAQ: RELL) reported net sales for the second quarter ended November 28, 2009, of $115.9 million, a 12.5% decrease from net sales of $132.6 million for the second quarter of last year. Operating income during the second quarter was $5.4 million, or 4.6% of net sales, as compared with operating income of $5.0 million, or 3.7% of net sales, during last year’s second quarter. Income from continuing operations during the second quarter was $4.3 million, or $0.24 per diluted common share, as compared with income from continuing operations of $5.9 million, or $0.31 per diluted common share, during the second quarter of last year.

Loss from discontinued operations for the second quarter of fiscal 2010 of $1.2 million represents a final settlement of working capital based purchase price adjustment claims and other related claims from the divestiture of the Security Systems Division in May of 2007.

FINANCIAL SUMMARY ─ THREE MONTHS ENDED NOVEMBER 28, 2009

* Net sales for the second quarter of fiscal 2010 were $115.9 million, down 12.5%, compared to net sales of $132.6 million during the second quarter of last year.
* Gross margin as a percent of net sales remained flat at 25.0% during the second quarter of fiscal 2010 and 2009.
* SG&A expenses decreased to $23.7 million, or 20.4% of net sales, during the second quarter of fiscal 2010, compared to $28.2 million, or 21.3% of net sales, during the second quarter of last year.
* Operating income during the second quarter of fiscal 2010 improved to $5.4 million, compared to operating income of $5.0 million during the second quarter of last year.
* Income from continuing operations during the second quarter of fiscal 2010 was $4.3 million versus income from continuing operations of $5.9 million during the second quarter of last year.

FINANCIAL SUMMARY ─ SIX MONTHS ENDED NOVEMBER 28, 2009

* Net sales for the first six months of fiscal 2010 were $225.4 million, down 17.0%, compared to net sales of $271.5 million during the first six months of last year.
* Gross margin as a percent of net sales increased to 24.6% during the first six months of fiscal 2010, compared to 24.3% during the first six months of last year.
* SG&A expenses decreased to $46.6 million, or 20.7% of net sales, during the first six months of fiscal 2010, compared to $56.4 million, or 20.8% of net sales, during the first six months of last year.
* Operating income during the first six months of fiscal 2010 was $8.9 million, or 3.9% of net sales, compared to operating income of $9.4 million, or 3.5% of net sales, during the first six months of last year.
* Income from continuing operations during the first six months of fiscal 2010 was $6.2 million versus $9.6 million during the first six months of last year.

CASH FLOW, WORKING CAPITAL MANAGEMENT, DEBT REDUCTION

Cash flows provided by operating activities were $6.9 million during the second quarter of fiscal 2010, compared to $4.5 million during the second quarter of last year. Our debt less cash at the end of our second quarter was $2.4 million compared to $16.9 million at the end of the second quarter last year.

On December 11, 2009, the Company provided notice to the holders of its 8% convertible senior subordinated notes that it was redeeming all $7.7 million in aggregate principal outstanding at face value on January 11, 2010. In addition, the Company purchased $0.9 million of its 7¾% convertible senior subordinated notes at 97% of face value during December 2009. As a result of these transactions, the Company’s long-term debt will be reduced by approximately $8.5 million during the third quarter of fiscal 2010.

During January 2010, the Company will be repurchasing approximately 300,000 shares of its common stock held in its Employee Stock Ownership Plan (“ESOP”) in a private transaction. The ESOP was terminated on October 15, 2009.

CASH DIVIDEND

The Company also announced 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 February 19, 2010, to all common stockholders of record on February 10, 2010. The Company currently has 14,867,811 outstanding shares of common stock and 3,048,258 outstanding shares of Class B common stock.