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

January 07, 2010 | About:
10qk

10qk

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Richardson Electronics Ltd. (RELL) filed Quarterly Report for the period ended 2009-11-28.

Richardson Electronics Ltd. has a market cap of $109.2 million; its shares were traded at around $6.1 with a P/E ratio of 18.6 and P/S ratio of 0.2. The dividend yield of Richardson Electronics Ltd. stocks is 1.4%.

Highlight of Business Operations:

Selling, general, and administrative expenses (“SG&A”) decreased $4.5 million and $9.8 million to $23.7 million and $46.6 million during the second quarter and first six months of fiscal 2010, respectively, from $28.2 million and $56.4 million during the second quarter and first six months of fiscal 2009, respectively. Severance expense recorded during the second quarter and first six months of 2010 was $0.3 million and $0.5 million, respectively. Severance expense recorded during the second quarter and first six months of 2009 was $0.5 million and $1.1 million, respectively. The decrease in SG&A expense during the second quarter and first six months 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 $1.7 million and $3.6 million of expense during the second quarter and first six months of fiscal 2010, respectively, as compared to $1.4 million and $1.5 million of income during the second quarter and first six months of fiscal 2009, respectively. The change to expense from income during the second quarter and first six months of fiscal 2010 was due primarily to unfavorable changes in foreign currency exchange rates and a gain on retirement of long-term debt. Other (income) expense included a foreign exchange loss of $0.7 million and $1.5 million during the second quarter and first six months of fiscal 2010, respectively, as compared to a foreign exchange gain of $1.5 million and $2.5 million during the second quarter and first six months of fiscal 2009, respectively. The second quarter and first six months of fiscal 2009 also included a gain on retirement of long-term debt of $0.9 million.

Net income during the second quarter of fiscal 2010 was $3.1 million, or $0.18 per diluted common share and $0.16 per Class B diluted common share as compared to net income of $5.9 million during the second quarter of fiscal 2009, or $0.31 per diluted common share and $0.28 per Class B diluted common share. Net income during the first six months of fiscal 2010 was $5.0 million, or $0.28 per diluted common share and $0.26 per Class B diluted common share as compared to net income of $9.6 million during the first six months of fiscal 2009, or $0.52 per diluted common share and $0.47 per Class B diluted common share.

Cash provided by operating activities during the first six months of fiscal 2010 was $4.7 million, due primarily to lower inventory and accounts receivable balances and higher accrued liability balances, partially offset by lower accounts payable balances. The decline in inventory of $5.9 million, excluding the impact of foreign currency exchange of $1.8 million, during the first six months of fiscal 2010 was due primarily to a reduction in inventory purchases. The decline in accounts receivable balances of $1.0 million, excluding the impact of foreign currency exchange of $3.0 million, during the first six months of fiscal 2010 was due primarily to accelerated cash collection efforts. The increase in accrued liabilities of $1.0 million, excluding the impact of foreign currency exchange of $0.6 million, during the first six months of fiscal 2010 was due primarily to the timing of payments. The decline in accounts payable balances of $8.7 million, excluding the impact of foreign currency exchange of $0.5 million, during the first six months of fiscal 2010 was due primarily to the timing of payments and a decline in inventory purchases.

$1.9 million, during the first six months of fiscal 2009 was due primarily to negotiating favorable payment terms with many of our vendors. The decline in accounts receivable balances of $2.1 million, excluding the impact of foreign currency of $7.3 million, during the first six months of fiscal 2009 was due primarily to a decline in sales volume. The increase in inventory balances of $10.4 million, excluding the impact of foreign currency exchange of $4.6 million, during the first six months of fiscal 2009 was due primarily to purchases of inventory necessary to support anticipated sales volume in future quarters. The decline in accrued liability balances of $2.2 million, excluding the impact of foreign currency exchange of $0.8 million, during the first six months of fiscal 2009 was due primarily to the timing and payment of accrued payroll and accrued taxes.

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 November 28, 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 November 28, 2009. Based on our loan covenants, actual available credit as of November 28, 2009, was $22.4 million. We were in compliance with our loan covenants as of November 28, 2009.

Read the The complete ReportRELL is in the portfolios of Chuck Royce of ROYCE & ASSOCIATES.

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