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

January 06, 2011 | About:
10qk

10qk

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Richardson Electronics Ltd. (RELL) filed Quarterly Report for the period ended 2010-11-27.

Richardson Electronics Ltd. has a market cap of $226.8 million; its shares were traded at around $12.78 with a P/E ratio of 9.6 and P/S ratio of 0.4. The dividend yield of Richardson Electronics Ltd. stocks is 0.7%.RELL is in the portfolios of Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates.

Highlight of Business Operations:

Net sales for EDG were $56.1 million, up 44.3% during the first six months of fiscal 2011, from $38.9 million during the first six month of fiscal 2010. This increase reflects incremental sales volume from a major distribution agreement that began in March 2010 as well as increased demand reflecting improving economic conditions. Overall demand for tubes continues to show tremendous growth across all EDG product lines. As equipment is returned to active production, we are experiencing growing demand for our products that support this equipment. Gross margin as a percentage of net sales decreased to 32.1% during the first six months of fiscal 2011, as compared to 35.0% during the first six months of fiscal 2010. The decline in our gross margin percentage primarily reflects the lower-margin business that was transferred to EDG under the terms of a distribution agreement. As these pricing commitments included in the distribution agreement expire, we expect EDGs gross margin percentage will improve.

Selling, general and administrative expenses (SG&A) were $11.2 million for the second quarter of fiscal 2011 compared to $10.6 million during the second quarter of fiscal 2010. The $11.2 million and $10.6 million during the second quarter of fiscal 2011 and fiscal 2010, respectively, reflects the SG&A that does not specifically relate to RFPD. The increase in SG&A during the second quarter of fiscal 2011 relates to start up costs for a distribution agreement. We expect these incremental start up costs to continue for the balance of fiscal 2011.

Other (income) expense was $0.2 million of expense during the second quarter of fiscal 2011, as compared to $0.9 million of expense during the second quarter of fiscal 2010. The decrease in expense during the second quarter of fiscal 2011 from the second 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 $0.2 million during the second quarter of fiscal 2011, as compared to a foreign exchange loss of $0.7 million during the second 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. entities. We currently do not utilize derivative instruments to manage our exposure to foreign currency. The second quarter of fiscal 2011 included interest expense of less than $0.1 million, as compared to interest expense of $0.3 million during the second quarter of fiscal 2010.

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 $0.3 million during the first six months of fiscal 2011, as compared to a foreign exchange loss of $1.5 million during the first six months 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. entities. We currently do not utilize derivative instruments to manage our exposure to foreign currency. The first six months of fiscal 2011 included interest expense of $0.1 million, as compared to interest expense of $0.7 million during the first six months of fiscal 2010.

As of November 27, 2010, our worldwide liability for uncertain tax positions, excluding interest and penalties, was $3.5 million as compared to $3.3 million as of May 29, 2010. We record penalties and interest relating to uncertain tax positions in the income tax expense line item within the unaudited condensed consolidated statements of operations and comprehensive income (loss). The net liability for uncertain tax positions increased in the three months ended November 27, 2010, primarily due to new uncertain tax positions.

It is reasonably possible that there will be a change in the unrecognized tax benefits, excluding interest and penalties, in the range of $0 to approximately $0.4 million due to the expiration of various statutes of limitations and uncertain tax positions being effectively settled with taxing authorities within the next 12 months.

Read the The complete Report

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