Richardson Reports Record Second Quarter Sales, a 6.4% Increase Over Prior Year

Richardson Electronics, Ltd. (Nasdaq: RELL) announced today results for its fiscal second quarter ended December 2, 2006. Sales in the quarter were $165.8 million, an increase of 6.4% from the second quarter of fiscal 2006. Gross profit improved 2.7% to $40.6 million, or 24.5% of net sales in the second quarter of fiscal 2007 as compared with $39.5 million in the same quarter last year. The prior year's second quarter included a $0.9 million favorable adjustment to warranty expense which improved gross margin from 24.7% to 25.4% last fiscal year.

SG&A expenses in the second quarter of fiscal 2007 included restructuring expense of $0.6 million related to the implementation of the fiscal 2007 global restructuring plan and stock compensation expense of $0.3 million related to Statement of Financial Accounting Standards No. 123(R) which was adopted in the first quarter of fiscal 2007. Operating income decreased to $4.1 million in the second quarter of fiscal 2007 from $7.2 million in the prior year period. SG&A as a percentage of net sales increased to 21.8% of sales in the second quarter of fiscal 2007 as compared with 20.7% of sales in the same quarter last year. Other expense included a foreign exchange gain of $0.2 million during the second quarter of fiscal 2007 as compared to a foreign exchange loss of $3.8 million last year. The foreign exchange variance was due to the weakening of the U.S. dollar, primarily related to receivables due from foreign subsidiaries to the U.S. parent company and denominated in foreign currencies.

Net income was $1.1 million in the second quarter of fiscal 2007, or $0.06 per diluted common share, as compared with net income of $0.3 million, or $0.02 per diluted common share, in the second quarter last fiscal year. Excluding the restructuring expense of $0.6 million and the stock compensation expense of $0.3 million, net income was $2.0 million in the second quarter of fiscal 2007, or $0.11 per diluted common share. We present these adjusted net income figures because we did not incur restructuring or stock compensation expenses in the second quarter of fiscal 2006 and believe that such presentation is useful for comparative purposes.

RF, Wireless & Power Division (RFPD) led the sales growth for the second quarter of fiscal 2007, increasing sales 13.1% to $90.0 million with higher demand of infrastructure, power conversion, and passive/interconnect products. Sales in the Electron Device Group were $25.5 million, a 3.6% increase from the prior year due to continued growth in semiconductor fabrication products. Security Systems Division/Burtek Systems' sales remained relatively flat at $28.1 million during the second quarter of fiscal 2007 versus the same period last year. Sales in the Display Systems Group (DSG) were 2.3% lower for the second quarter of fiscal 2007 at $21.4 million due to delays in project based business for custom displays and lower demand for cathode ray tubes (CRT) as compared with the same quarter in fiscal 2006.

On a geographic basis, sales in Europe grew 14.0% to $39.8 million for the second quarter of fiscal 2007 due to continued growth in wireless, display system, and electron device products sales. Sales in Asia/Pacific increased 12.9% to $39.3 million with strong demand for wireless infrastructure and power conversion products. Sales in North America increased to $81.3 million, a 2.6% increase from the second quarter of fiscal 2006 with growth in electron device, wireless, and security system products lines. Sales in Latin America decreased 19.4% to $4.8 million due to a decline in sales of security products.

"Forecasting sales for DSG continues to be a challenge as the business is heavily dependent on the rollout of large projects. Extended delivery on several of the projects resulted in sales and gross margin percentage being lower than our expectations," said Edward J. Richardson, Chairman, Chief Executive Officer and President. "RFPD's continued sales growth around the globe has helped us continue our year-over-year sales improvement while the global restructuring plan will streamline the organization which will impact our overall performance during the next twelve months."

On Thursday, January 11, 2007 at 9:00 a.m. CST, Mr. Edward J. Richardson, Chairman, Chief Executive Officer and President, will host a conference call to discuss the release. A question and answer session will be included as part of the call's agenda. To listen to the call, please dial 800-553-0349 approximately five minutes prior to the start of the call. A replay of the call will be available from 12:30 p.m. on January 11, 2007 through April 11, 2007. The telephone numbers to access the replay in the U.S. is 800-475-6701 and outside of the U.S. is 320-365-3844; access code 857688.

This release includes certain "forward-looking" statements as defined by the SEC. 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 for the most recently ended fiscal year. 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

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. Press announcements and other information about Richardson are available on the World Wide Web at http://www.rell.com/investor.asp .

Richardson Electronics, Ltd.

Condensed Consolidated Statements of Operations

(Unaudited)(in thousands, except per share amounts)

Three Months Ended Six Months Ended

December 2, December 3, December 2, December 3,

Statements of 2006 2005 2006 2005

Operations

Net sales $165,806 $155,837 $331,561 $313,982

Cost of sales 125,227 116,331 249,663 235,944

Gross profit 40,579 39,506 81,898 78,038

Selling, general,

and administrative

expenses 36,130 32,283 71,509 65,264

(Gain) loss on

disposal of assets 339 (22) 320 (162)

Operating income 4,110 7,245 10,069 12,936

Other (income) expense:

Interest expense 2,797 2,320 5,780 4,597

Investment income (737) (23) (814) (131)

Foreign exchange

(gain) loss (189) 3,819 205 3,682

Retirement of long-

term debt expenses - - 2,540 -

Other, net 25 131 59 175

Total other expense 1,896 6,247 7,770 8,323

Income before income

taxes 2,214 998 2,299 4,613

Income tax provision 1,132 705 2,316 2,500

Net income (loss) $1,082 $293 $(17) $2,113

Net income (loss)

per share - basic:

Common stock $0.06 $0.02 $(0.00) $0.12

Common stock average

shares outstanding 14,451 14,293 14,435 14,284

Class B common stock $0.06 $0.02 $(0.00) $0.11

Class B common stock

average shares

outstanding 3,073 3,110 3,073 3,110

Net income (loss)

per share - diluted:

Common stock $0.06 $0.02 $(0.00) $0.12

Common stock average

shares outstanding 17,669 17,462 14,435 17,475

Class B common stock $0.06 $0.02 $(0.00) $0.11

Class B common stock

average shares

outstanding 3,073 3,110 3,073 3,110

Dividends per common

share $0.040 $0.040 $0.080 $0.080

Dividends per Class B

common share $0.036 $0.036 $0.072 $0.072

Richardson Electronics, Ltd.

Net Sales and Gross Profit

For the Second Quarter and First Six Months of Fiscal 2007 and 2006

(Unaudited, in thousands)

By Business Unit:

Net Sales Gross Profit

% GP% of GP% of

Second Quarter FY 2007 FY 2006 Change FY 2007 Sales FY 2006 Sales

RF, Wireless &

Power Division $89,994 $79,569 13.1% $20,392 22.7% $18,645 23.4%

Electron Device

Group 25,494 24,607 3.6% 8,339 32.7% 7,712 31.3%

Security Systems

Division/Burtek

Systems 28,092 28,268 (0.6%) 7,545 26.9% 7,155 25.3%

Display Systems

Group 21,380 21,894 (2.3%) 5,192 24.3% 6,118 27.9%

Corporate 846 1,499 (889) (124)

Total $165,806 $155,837 6.4% $40,579 24.5% $39,506 25.4%

Six Months

RF, Wireless &

Power Division $181,326 $160,726 12.8% $41,855 23.1% $36,841 22.9%

Electron Device

Group 50,168 48,445 3.6% 16,050 32.0% 15,444 31.9%

Security Systems

Division/Burtek

Systems 54,410 55,172 (1.4%) 14,512 26.7% 14,169 25.7%

Display Systems

Group 43,209 46,344 (6.8%) 10,157 23.5% 12,133 26.2%

Corporate 2,448 3,295 (676) (549)

Total $331,561 $313,982 5.6% $81,898 24.7% $78,038 24.9%

By Geographic Area:

Net Sales Gross Profit

% GP% of GP% of

Second Quarter FY 2007 FY 2006 Change FY 2007 Sales FY 2006 Sales

North America $81,284 $79,219 2.6% $21,788 26.8% $21,052 26.6%

Asia/Pacific 39,295 34,793 12.9% 9,014 22.9% 8,221 23.6%

Europe 39,799 34,925 14.0% 10,074 25.3% 9,041 25.9%

Latin America 4,817 5,980 (19.4%) 1,365 28.3% 1,627 27.2%

Corporate 611 920 (1,662) (435)

Total $165,806 $155,837 6.4% $40,579 24.5% $39,506 25.4%

Six Months

North America $164,516 $161,340 2.0% $43,554 26.5% $42,541 26.4%

Asia/Pacific 78,801 71,993 9.5% 18,581 23.6% 17,359 24.1%

Europe 76,219 67,731 12.5% 19,892 26.1% 18,367 27.1%

Latin America 10,395 11,980 (13.2%) 2,988 28.7% 3,149 26.3%

Corporate 1,630 938 (3,117) (3,378)

Total $331,561 $313,982 5.6% $81,898 24.7% $78,038 24.9%

Note: Europe includes net sales and gross profit to the Middle East and

Africa.

Latin America includes net sales and gross profit to Mexico.

Corporate consists of freight, other non-specific net sales and

gross profit, and customer cash discounts.

Richardson Electronics, Ltd.

Pro Forma Net Income and Net Income Per Share

For the Second Quarter of Fiscal 2007

Actual Per Share

Net income, as reported $1,082 $0.06

Adjustments, net of income tax effect

Restructuring expense 559 0.03

Stock compensation expense 319 0.02

Net income, pro forma $1,960 $0.11

Richardson Electronics, Ltd.

Condensed Consolidated Balance Sheets

(in thousands, except per share amounts)

Unaudited

December 2, June 3,

2006 2006

Assets

Current assets:

Cash and cash equivalents $13,610 $17,010

Receivables, less allowance of $2,230

and $2,142 117,280 115,733

Inventories 124,639 117,320

Prepaid expenses 6,720 3,739

Deferred income taxes 1,529 1,527

Total current assets 263,778 255,329

Non-current assets:

Property, plant and equipment, net 31,434 32,357

Goodwill 13,245 13,068

Other intangible assets, net 2,151 2,413

Non-current deferred income taxes 1,518 1,300

Assets held for sale 1,052 1,018

Other assets 1,423 3,814

Total non-current assets 50,823 53,970

Total assets $314,601 $309,299

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable $54,998 $52,494

Accrued liabilities 31,334 30,588

Current portion of long-term debt 8,016 14,016

Total current liabilities 94,348 97,098

Non-current liabilities:

Long-term debt, less current portion 120,819 112,792

Non-current liabilities 1,322 1,169

Total non-current liabilities 122,141 113,961

Total liabilities 216,489 211,059

Commitments and contingencies - -

Stockholders' equity

Common stock, $0.05 par value; issued

15,784 shares at December 2, 2006 and

15,663 shares at June 3, 2006 789 783

Class B common stock, convertible, $0.05

par value; issued 3,073 shares at

December 2, 2006 and 3,093 shares at

June 3, 2006 154 155

Preferred stock, $1.00 par value,

no shares issued - -

Additional paid-in-capital 119,000 119,149

Common stock in treasury, at cost,

1,250 shares at December 2, 2006

and 1,261 shares at June 3, 2006 (7,407) (7,473)

Accumulated deficit (19,065) (19,048)

Accumulated other comprehensive income 4,641 4,674

Total stockholders' equity 98,112 98,240

Total liabilities and stockholders' equity $314,601 $309,299