RICHARDSON ELECTRONICS LTD/DE - FORM 10-K - EX-99.1 - EXHIBIT 99.1 - July 27, 2015

Attached files

file filename
10-K - 10-K - RICHARDSON ELECTRONICS LTD/DErell-2015530x10xk.htm
EX-21 - EXHIBIT 21 - RICHARDSON ELECTRONICS LTD/DErell_2015x5x30xexhibit21.htm
EX-32 - EXHIBIT 32 - RICHARDSON ELECTRONICS LTD/DErell_2015x5x30xexhibit32.htm
EX-31.2 - EXHIBIT 31.2 - RICHARDSON ELECTRONICS LTD/DErell_2015x5x30xexhibit312.htm
EX-23.1 - EXHIBIT 23.1 - RICHARDSON ELECTRONICS LTD/DErell_2015x5x30xexhibit231.htm
EX-31.1 - EXHIBIT 31.1 - RICHARDSON ELECTRONICS LTD/DErell_2015x5x30xexhibit311.htm
EX-23.1A - EXHIBIT 23.1A - RICHARDSON ELECTRONICS LTD/DErell_2015x5x30xexhibit231a.htm


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 FOURTH QUARTER AND FISCAL 2015 RESULTS
AND DECLARES QUARTERLY CASH DIVIDEND

LaFox, IL, July 22, 2015 Richardson Electronics, Ltd. (NASDAQ: RELL), today reported sales and earnings for its fourth quarter and fiscal year ended May 30, 2015. The Company also announced that its Board of Directors declared a $.06 per share quarterly cash dividend.
Fiscal 2015 Results
Net sales for fiscal 2015 were $137.0 million, a slight decrease from net sales of $138.0 million in the prior year. Gross margin was $41.1 million, or 30.0% of net sales during fiscal 2015, compared to $41.0 million, or 29.7% of net sales during fiscal 2014.
Operating expenses were $49.2 million for fiscal 2015, compared to $43.5 for fiscal 2014. Operating expenses for fiscal 2015 included employee termination costs of $1.1 million, $3.9 million related to the Company's global IT implementation, and $4.2 million related to its engineered solutions and healthcare growth initiatives.
Operating loss in fiscal 2015 was $8.1 million, compared to an operating loss of $4.2 million in the prior year.
Loss from continuing operations for fiscal 2015 was $5.5 million, compared to a loss of $0.3 million from continuing operations for fiscal 2014.
Cash used by operating activities totaled $9.8 million for fiscal 2015, compared to cash provided by operating activities of $4.6 million in fiscal 2014. Use of cash was impacted by an increase in inventory to support the Company's growth initiatives and an increase in accounts receivable related to slower collections during the IT implementation.
Fourth Quarter Results
Net sales for the fourth quarter of fiscal 2015 were $35.0 million, a 1.2% decrease, compared to net sales of $35.4 million in the prior year. Sales for the Company's EDG business were down 4.1% while sales for its Canvys and Healthcare divisions were up 7.3% and 12.9%, respectively. Gross margin was $10.2 million, or 29.2% of net sales during the fourth quarter of fiscal 2015, compared to $10.2 million, or 28.7% of net sales during fiscal 2014.
Operating expenses were $12.9 million for the fourth quarter of fiscal 2015, compared to $12.4 million for the fourth quarter of fiscal 2014. The fourth quarter of fiscal 2015 and fiscal 2014 operating expenses included employee termination costs of $1.1 million and $1.2 million, respectively.
Operating loss for the fourth quarter of fiscal 2015 was $2.6 million, compared to operating loss of $3.9 million for the fourth quarter of fiscal 2014. The fiscal 2014 fourth quarter operating loss included a $1.7 million goodwill impairment charge.




Loss from continuing operations for the fourth quarter of fiscal 2015 was $2.1 million, compared to loss from continuing operations for the fourth quarter of fiscal 2014 of $2.8 million.

FINANCIAL SUMMARY – FISCAL 2015

•
Net sales for fiscal 2015 were $137.0 million, down 0.7%, compared to net sales of $138.0 during fiscal 2014.
•
Gross margin was 30.0% of net sales for fiscal year 2015, compared to 29.7% of net sales for fiscal 2014.
•
Selling, general, and administrative expenses increased to $49.2 million, or 35.9% of net sales, for fiscal 2015, compared to $43.5 million, or 31.5% of net sales, for fiscal 2014.
•
Operating loss during fiscal 2015 was $8.1 million, compared to $4.2 million for fiscal 2014.
•
Other income for fiscal 2015 was $1.1 million, compared to other income of $3.5 million for fiscal 2014. Other income for fiscal 2014 included $2.5 million of proceeds from a class action lawsuit settlement.
•
Loss from continuing operations during fiscal 2015 was $5.5 million versus a loss of $0.3 million during fiscal 2014.
•
Loss from discontinued operations, net of tax, was less than $0.1 million during fiscal 2015, compared to loss from discontinued operations, net of tax, of $0.2 million during fiscal 2014.
•
Net loss during fiscal 2015 was $5.6 million, compared to net loss of $0.5 million during fiscal 2014.

FINANCIAL SUMMARY – FOURTH QUARTER

•
Net sales for the fourth quarter of fiscal 2015 were $35.0 million, down 1.2%, compared to net sales of $35.4 million during the fourth quarter of fiscal 2014.
•
Gross margin increased to 29.2% during the fourth quarter of fiscal 2015, compared to 28.7% during last year's fourth quarter.
•
Selling, general, and administrative expenses increased to $12.9 million, or 36.8% of net sales for the fourth quarter of fiscal 2015, compared to $12.4 million for the fourth quarter of fiscal 2014, or 35.1% of net sales.
•
Operating loss during the fourth quarter of fiscal 2015 was $2.6 million, compared to operating loss of $3.9 million for the fourth quarter of fiscal 2014.
•
Other income for the fourth quarter of fiscal 2015 was less than $0.1 million, compared to income of $0.2 million for the fourth quarter of fiscal 2014.
•
Loss from continuing operations during the fourth quarter of fiscal 2015 was $2.1 million, compared to loss from continuing operations for the fourth quarter of fiscal 2014 of $2.8 million.
•
Loss from discontinued operations, net of tax, was $0.1 million during the fourth quarter of fiscal 2015, compared to income from discontinued operations, net of tax, of $0.4 million during the fourth quarter of fiscal 2014.




•
Net loss during the fourth quarter of fiscal 2015 was $2.2 million, compared to net loss of $2.5 million during the fourth quarter of fiscal 2014.

CASH DIVIDEND
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 August 21, 2015, to common stockholders of record on August 6, 2015.
Cash and investments at the end of our fourth quarter were $109.8 million. As of today, the Company currently has 11.5 million outstanding shares of common stock and 2.1 million outstanding shares of Class B common stock.

OUTLOOK
“Fiscal 2015 was a year of significant investment and accomplishments that should position us to deliver long-term, sustainable growth with improved operating results. We implemented our new ERP system, began building our capabilities in Richardson Healthcare, and invested in our sales and engineering organization to support new technologies for power and microwave markets and applications,” said Edward Richardson, Chairman, Chief Executive Officer, and President.
“We now have a multi-pronged growth strategy that will enable us to increase our product offering, enhance our service capabilities, and expand our customer base while taking advantage of our existing global infrastructure. Sales for Fiscal 2016 will be in the range of $160 to $170 million, including the acquisition of International Medical Equipment and Service ("IMES"). We will continue to evaluate acquisition targets and make prudent investments in our growth initiatives. We look forward to improving our operating performance, delivering enhanced customer service and returning value to our shareholders," concluded Mr. Richardson.

CONFERENCE CALL INFORMATION
On Thursday, July 23, 2015, 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 fourth quarter results for fiscal 2015. 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 97038740 approximately five minutes prior to the start of the call. A replay of the call will be available beginning at 11:59 p.m. CT on July 23, 2015, for seven days. The telephone numbers for the replay are (USA) (888) 286-8010 and (International) (617) 801-6888; passcode 90375367.

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; power conversion and RF and microwave components; high value displays, flat panel detector solutions and replacement parts for diagnostic imaging equipment; and customized display solutions.  We serve customers in the alternative energy, healthcare, 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 through its global infrastructure. More information is available 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)
 
May 30, 
 2015
 
May 31, 
 2014
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
74,535

 
$
102,752

Accounts receivable, less allowance of $283 and $581
20,753

 
18,354

Inventories
38,769

 
33,869

Prepaid expenses and other assets
1,696

 
1,089

Deferred income taxes
804

 
1,537

Income tax receivable
929

 
2,888

Investments - current
23,692

 
31,732

Discontinued operations - assets
—

 
18

Total current assets
161,178

 
192,239

Non-current assets:
 
 
 
Property, plant and equipment, net
10,081

 
7,223

Other intangibles
743

 
843

Non-current deferred income taxes
1,443

 
1,724

Investments - non-current
11,549

 
1,516

Total non-current assets
23,816

 
11,306

Total assets
$
184,994

 
$
203,545

Liabilities and Stockholders’ Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
15,768

 
$
12,337

Accrued liabilities
10,144

 
9,220

Discontinued operations - liabilities
—

 
7

Total current liabilities
25,912

 
21,564

Non-current liabilities:
 
 
 
Non-current deferred income taxes liability
1,209

 
5,691

Other non-current liabilities
1,221

 
1,315

Discontinued operations - non-current liabilities
—

 
130

Total non-current liabilities
2,430

 
7,136

Total liabilities
28,342

 
28,700

Commitments and contingencies
—

 
—

Stockholders’ equity
 
 
 
Common stock, $0.05 par value; issued and outstanding 11,530 shares at May 30, 2015, and 11,835 shares at May 31, 2014
577

 
592

Class B common stock, convertible, $0.05 par value; issued and outstanding 2,141 shares at May 30, 2015, and 2,191 shares at May 31, 2014
107

 
110

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

 
—

Additional paid-in-capital
63,252

 
66,141

Common stock in treasury, at cost, no shares at May 30, 2015, and 1 share at May 31, 2014
—

 
(14
)
Retained earnings
89,141

 
97,959

Accumulated other comprehensive income
3,575

 
10,057

Total stockholders’ equity
156,652

 
174,845

Total liabilities and stockholders’ equity
$
184,994

 
$
203,545






Richardson Electronics, Ltd.
Consolidated Statements of Comprehensive Income (Loss)
(in thousands, except per share amounts)
 
Three Months Ended
 
Twelve Months Ended
 
May 30, 
 2015
 
May 31, 
 2014
 
May 30, 
 2015
 
May 31, 
 2014
Statements of Comprehensive Income (Loss)
 
 
 
 
 
 
 
Net sales
$
34,946

 
$
35,383

 
$
136,957

 
$
137,960

Cost of sales
24,728

 
25,219

 
95,819

 
96,946

Gross profit
10,218

 
10,164

 
41,138

 
41,014

Selling, general, and administrative expenses
12,863

 
12,417

 
49,229

 
43,496

Impairment of goodwill
—

 
1,671

 
—

 
1,671

Gain on disposal of assets
—

 
—

 
(5
)
 
—

Operating loss
(2,645
)
 
(3,924
)
 
(8,086
)
 
(4,153
)
Other (income) expense:
 
 
 
 
 
 
 
Investment/interest income
(255
)
 
(221
)
 
(999
)
 
(1,018
)
Foreign exchange (gain) loss
100

 
(39
)
 
(185
)
 
84

Proceeds from legal settlement
—

 
—

 
—

 
(2,547
)
Other, net
114

 
16

 
92

 
(20
)
Total other income
(41
)
 
(244
)
 
(1,092
)
 
(3,501
)
Loss from continuing operations before income taxes
(2,604
)
 
(3,680
)
 
(6,994
)
 
(652
)
Income tax benefit
(501
)
 
(837
)
 
(1,466
)
 
(307
)
Loss from continuing operations
(2,103
)
 
(2,843
)
 
(5,528
)
 
(345
)
Income (loss) from discontinued operations, net of tax
(118
)
 
368

 
(31
)
 
(170
)
Net income (loss)
(2,221
)
 
(2,475
)
 
(5,559
)
 
(515
)
Foreign currency translation gain (loss), net of tax
(355
)
 
(664
)
 
(6,504
)
 
1,216

Fair value adjustments on investments gain (loss)
(8
)
 
1

 
22

 
30

Comprehensive income (loss)
$
(2,584
)
 
$
(3,138
)
 
$
(12,041
)
 
$
731

Net income (loss) per Common share - Basic:
 
 
 
 
 
 
 
Income (loss) from continuing operations
$
(0.16
)
 
$
(0.21
)
 
$
(0.41
)
 
$
(0.03
)
Income (loss) from discontinued operations
(0.01
)
 
0.03

 
—

 
(0.01
)
Total net income (loss) per Common share - Basic:
$
(0.17
)
 
$
(0.18
)
 
$
(0.41
)
 
$
(0.04
)
Net income (loss) per Class B common share - Basic:
 
 
 
 
 
 
 
Income (loss) from continuing operations
$
(0.13
)
 
$
(0.19
)
 
$
(0.36
)
 
$
(0.02
)
Income (loss) from discontinued operations
(0.01
)
 
0.02

 
—

 
(0.01
)
Total net income (loss) per Class B common share - Basic:
$
(0.14
)
 
$
(0.17
)
 
$
(0.36
)
 
$
(0.03
)
Net income (loss) per Common share - Diluted:
 
 
 
 
 
 
 
Income (loss) from continuing operations
$
(0.16
)
 
$
(0.21
)
 
$
(0.41
)
 
$
(0.03
)
Income (loss) from discontinued operations
(0.01
)
 
0.03

 
—

 
(0.01
)
Total net income (loss) per Common share - Diluted:
$
(0.17
)
 
$
(0.18
)
 
$
(0.41
)
 
$
(0.04
)
Net income (loss) per Class B common share - Diluted:
 
 
 
 
 
 
 
Income (loss) from continuing operations
$
(0.13
)
 
$
(0.19
)
 
$
(0.36
)
 
$
(0.02
)
Income (loss) from discontinued operations
(0.01
)
 
0.02

 
—

 
(0.01
)
Total net income (loss) per Class B common share - Diluted:
$
(0.14
)
 
$
(0.17
)
 
$
(0.36
)
 
$
(0.03
)
Weighted average number of shares:
 
 
 
 
 
 
 
Common shares - Basic
11,529

 
11,833

 
11,682

 
11,915

Class B common shares - Basic
2,141

 
2,191

 
2,151

 
2,250

Common shares - Diluted
11,529

 
11,833

 
11,682

 
11,915

Class B common shares - Diluted
2,141

 
2,191

 
2,151

 
2,250

Dividends per common share
$
0.060

 
$
0.060

 
$
0.240

 
$
0.240

Dividends per Class B common share
$
0.054

 
$
0.054

 
$
0.220

 
$
0.220





Richardson Electronics, Ltd.
Consolidated Statements of Cash Flows
(in thousands)
 
Three Months Ended
 
Twelve Months Ended
 
May 30, 
 2015
 
May 31, 
 2014
 
May 30, 
 2015
 
May 31, 
 2014
Operating activities:
 
 
 
 
 
 
 
Net loss
$
(2,221
)
 
$
(2,475
)
 
$
(5,559
)
 
$
(515
)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
480

 
298

 
1,707

 
1,094

Gain on sale of investments
(12
)
 
(4
)
 
(27
)
 
(27
)
Loss (gain) on disposal of assets
25

 
—

 
(5
)
 
—

Share-based compensation expense
197

 
174

 
726

 
759

Deferred income taxes
(939
)
 
(900
)
 
(1,604
)
 
(1,005
)
Impairment of goodwill
—

 
1,671

 
—

 
1,671

Change in assets and liabilities, net of effect of acquired businesses:
 
 
 
 
 
 
 
Accounts receivable
(1,840
)
 
1,693

 
(4,495
)
 
195

Income tax receivable
(929
)
 
752

 
1,959

 
3,541

Inventories
(3,153
)
 
1,384

 
(7,519
)
 
1,517

Prepaid expenses and other assets
(161
)
 
230

 
(888
)
 
96

Accounts payable
4,596

 
1,098

 
4,207

 
(2,072
)
Accrued liabilities
1,949

 
1,805

 
1,480

 
(723
)
Other non-current liabilities
—

 
435

 
—

 
133

Other
270

 
(111
)
 
238

 
(51
)
Net cash provided by (used in) operating activities
(1,738
)
 
6,050

 
(9,780
)
 
4,613

Investing activities:
 
 
 
 
 
 
 
Cash consideration paid for acquired businesses
—

 
—

 
—

 
(973
)
Capital expenditures
(1,487
)
 
(960
)
 
(4,737
)
 
(2,781
)
Proceeds from sale of assets
—

 
—

 
—

 
—

Proceeds from maturity of investments
1,660

 
83,990

 
33,617

 
342,279

Purchases of investments
(1,457
)
 
(82,150
)
 
(35,550
)
 
(331,023
)
Proceeds from sales of available-for-sale securities
41

 
24

 
227

 
176

Purchases of available-for-sale securities
(41
)
 
(24
)
 
(227
)
 
(176
)
Other
(120
)
 
1

 
(248
)
 
98

Net cash provided by (used in) investing activities
(1,404
)
 
881

 
(6,918
)
 
7,600

Financing activities:
 
 
 
 
 
 
 
Repurchase of common stock
—

 
(14
)
 
(3,945
)
 
(8,739
)
Proceeds from issuance of common stock
23

 
6

 
324

 
190

Cash dividends paid
(807
)
 
(827
)
 
(3,260
)
 
(3,341
)
Other
3

 
62

 
3

 
37

Net cash used in financing activities
(781
)
 
(773
)
 
(6,878
)
 
(11,853
)
Effect of exchange rate changes on cash and cash equivalents
60

 
(566
)
 
(4,641
)
 
390

Increase (Decrease) in cash and cash equivalents
(3,863
)
 
5,592

 
(28,217
)
 
750

Cash and cash equivalents at beginning of period
78,398

 
97,160

 
102,752

 
102,002

Cash and cash equivalents at end of period
$
74,535

 
$
102,752

 
$
74,535

 
$
102,752






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

By Strategic Business Unit:
Net Sales
 
 
 
 
 
Q4 FY 2015
 
Q4 FY 2014
% Change
EDG
$
26,316

 
$
27,439

(4.1)%
Canvys
6,535

 
6,088

7.3%
Healthcare
2,095

 
1,856

12.9%
Total
$
34,946

 
$
35,383

(1.2)%
 
 
 
 
 
 
FY 2015
 
FY 2014
% Change
EDG
$
105,748

 
$
103,274

2.4%
Canvys
24,645

 
27,857

(11.5)%
Healthcare
6,564

 
6,829

(3.9)%
Total
$
136,957

 
$
137,960

(0.7)%
 
 
 
 
 
Gross Profit
 
 
 
 
 
Q4 FY 2015
% of Net Sales
Q4 FY 2014
% of Net Sales
EDG
$
8,194

31.1%
$
8,105

29.5%
Canvys
1,528

23.4%
1,618

26.6%
Healthcare
496

23.7%
441

23.8%
Total
$
10,218

29.2%
$
10,164

28.7%
 
 
 
 
 
 
FY 2015
% of Net Sales
FY 2014
% of Net Sales
EDG
$
33,098

31.3%
$
31,610

30.6%
Canvys
6,457

26.2%
7,588

27.2%
Healthcare
1,583

24.1%
1,816

26.6%
Total
$
41,138

30.0%
$
41,014

29.7%




RICHARDSON ELECTRONICS LTD/DE Reports