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

October 08, 2009 | About:
10qk

10qk

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Richardson Electronics Ltd. (RELL) filed Quarterly Report for the period ended 2009-08-29.

Richardson Electronics Ltd. is a global provider of Engineered Solutions serving the RF Wireless & Power Conversion; Electron Device; Security; and Display Systems markets. The Company delivers engineered solutions for its customers' needs through product manufacturing systems integration prototype design and manufacture testing and logistics. Richardson Electronics Ltd. has a market cap of $90.9 million; its shares were traded at around $5.07 with a P/E ratio of 12.1 and P/S ratio of 0.2. The dividend yield of Richardson Electronics Ltd. stocks is 1.6%.

Highlight of Business Operations:

Selling, general, and administrative expenses (“SG&A”) decreased $5.3 million during the first quarter of fiscal 2010 to $22.9 million, from $28.2 million during the first quarter of fiscal 2009. The decrease in SG&A expense during the first quarter of fiscal 2010 reflects our ongoing cost reduction initiatives including headcount reductions, significant reductions in discretionary spending, and re-negotiating contracts.

Other (income) expense was $1.9 million of expense during the first quarter of fiscal 2010 as compared to $0.1 million of income during the first quarter of fiscal 2009. The change to expense from income during the first quarter of fiscal 2010 was due primarily to unfavorable changes in foreign currency exchange rates. Other (income) expense included a foreign exchange loss of $0.8 million during the first quarter of fiscal 2010 as compared to a foreign exchange gain of $1.0 million during the first quarter of fiscal 2009.

Net income during the first quarter of fiscal 2010 was $1.9 million, or $0.11 per diluted common share and $0.10 per Class B diluted common share as compared to net income of $3.7 million during the first quarter of fiscal 2009, or $0.20 per diluted common share and $0.18 per Class B diluted common share.

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 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 decline 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 collection efforts.

Cash used in operating activities during the first quarter of fiscal 2009 was $1.0 million, due primarily to higher inventory balances and lower accrued liability balances, partially offset by higher accounts payable balances and lower accounts receivable balances. The increase in inventory balances of $7.6 million, excluding the impact of foreign currency exchange of $1.4 million, during the first quarter of fiscal 2009 was due primarily to purchases of inventory necessary to support higher-than-anticipated sales volume in future quarters. The decline in accrued liability balances of $1.7 million, excluding the impact of foreign currency exchange of $0.3 million, during the first quarter of fiscal 2009 was due primarily to the timing of accrued interest payments on long-term debt. The increase in accounts payable balances of $3.8 million, excluding the impact of foreign currency exchange of $0.7 million, during the first quarter of fiscal 2009 was due primarily to negotiating favorable payment terms with many of our vendors. The decline in account receivable balances of $1.2 million, excluding the impact of foreign currency of $2.6 million, during the first quarter of fiscal 2009 was due primarily to accelerated cash collections related to past due balances.

We entered into a $40.0 million revolving credit agreement on July 27, 2007, which included a Euro sub-facility and a Singapore sub-facility. The U.S. facility is reduced by the amounts drawn on the Euro sub-facility and Singapore sub-facility. Pursuant to an amendment to the revolving credit agreement entered into on July 20, 2009, the total capacity was reduced from $40.0 million to $25.0 million. As of August 29, 2009, there were no amounts outstanding under the revolving credit agreement. Outstanding letters of credit were approximately $0.1 million and we also had $2.5 million reserved for usage on our commercial credit card program, leaving an unused line of $22.4 million as of August 29, 2009. Based on our loan covenants, actual available credit as of August 29, 2009, was $22.4 million. We were in compliance with our loan covenants as of August 29, 2009.

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