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Richardson Electronics Ltd. Reports Operating Results (10-Q)

October 07, 2010 | About:

10qk

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Richardson Electronics Ltd. (RELL) filed Quarterly Report for the period ended 2010-08-28.

Richardson Electronics Ltd. has a market cap of $183.1 million; its shares were traded at around $10.33 with a P/E ratio of 10.6 and P/S ratio of 0.4. The dividend yield of Richardson Electronics Ltd. stocks is 0.8%.RELL is in the portfolios of Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates.

Highlight of Business Operations:

EDG net sales increased 46.3% to $27.5 million during the first quarter of fiscal 2011, from $18.8 million during the first quarter of fiscal 2010, due primarily to an increase in tube and semiconductor fabrication equipment net sales. Net sales of tubes increased to $18.8 million during the first quarter of fiscal 2011, as compared to $13.0 million during the first quarter of fiscal 2010. The increase was due primarily to increased demand from industrial manufacturers who began to increase production as they recovered from the economic downturn. Net sales of semiconductor fabrication equipment products increased to $5.8 million during the first quarter of fiscal 2011, as compared to $3.5 million during the first quarter of fiscal 2010. The semiconductor fabrication equipment industry, primarily in North America, has improved from the overall industry-wide decline. Gross margin as a percentage of net sales slightly decreased to 32.9% during the first quarter of fiscal 2011, as compared to 33.3% during the first quarter of fiscal 2010.

Other (income) expense was $0.4 million of expense during the first quarter of fiscal 2011, as compared to $1.9 million of expense during the first quarter of fiscal 2010. The decrease in expense during the first quarter of fiscal 2011 from the first quarter of fiscal 2010 was due primarily to lessened unfavorable changes in foreign currency exchange rates relative to the U.S. dollar and a reduction of interest expense related to the redemption of our 7 3/4 % Notes. Other (income) expense included a foreign exchange loss of $0.1 million during the first quarter of fiscal 2011, as compared to a foreign exchange loss of $0.8 million during the first quarter of fiscal 2010. Our foreign exchange gains and losses are primarily due to the translation of our U.S. currency we have in non-U.S. bank accounts. We currently do not utilize derivative instruments to manage our exposure to foreign currency. The first quarter of fiscal 2011 included interest expense of $0.2 million, as compared to interest expense of $1.1 million during the first quarter of fiscal 2010. The first quarter of fiscal 2011 included a loss of $0.1 million related to the redemption of our 7 3/4% Notes, as compared to a neither a gain nor loss on redemption of long-term debt during the first quarter of fiscal 2010. See Note 5 Debt of our unaudited condensed consolidated financial statements for an additional discussion on the fiscal 2011 short-term debt redemption.

Net income during the first quarter of fiscal 2011 was $8.4 million, or $0.47 per diluted common share and $0.43 per Class B diluted common share, as compared to net income of $1.9 million during the first quarter of fiscal 2010, or $0.11 per diluted common share and $0.10 per Class B diluted common share.

Cash provided by operating activities during the first quarter of fiscal 2011 was $0.4 million due primarily to higher accounts receivable and inventory balances. The increase in inventory of $6.5 million, excluding the impact of foreign currency exchange of $0.3 million, during the first quarter of fiscal 2011 was due primarily to increased sales volume and inventory purchased to support future sales growth. The increase in accounts receivable balances was due primarily to a $1.7 million impact of foreign currency exchange during the first quarter of fiscal 2011.

Cash used in operating activities during the first quarter of fiscal 2010 was $2.2 million, due primarily to lower accounts payable and higher inventory balances, partially offset by lower accounts receivable balances. The decline in accounts payable balances of $7.7 million, excluding the impact of foreign currency exchange of $0.2 million, during the first quarter of fiscal 2010 was due primarily to the timing of payments. The increase in inventory balances of $1.8 million, excluding the impact of foreign currency exchange of $0.6 million, during the first quarter of fiscal 2010 was due primarily to investments in inventory for anticipated sales in future quarters. The decrease in accounts receivable balances of $5.8 million, excluding the impact of foreign currency exchange of $1.0 million, during the first quarter of fiscal 2010 was due primarily to accelerated cash collections efforts.

Dividend payments for the first quarter of fiscal 2011 were approximately $0.3 million. All future payments of dividends are at the discretion of the Board of Directors. Dividend payments will depend on earnings, capital requirements, operating conditions, and such other factors that the Board may deem relevant. Our Board of Directors paid a quarterly dividend of $0.02 per common share and $0.018 per Class B common share during the first quarter of fiscal 2011.

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