Exhibit 99.1
For Immediate Release | Media Contact: | Alisha Goff | ||
503/627-7075 | ||||
alisha.goff@tektronix.com | ||||
Analyst Contact: | Paul Oldham | |||
503/627-4027 | ||||
paul.r.oldham@tektronix.com |
Tektronix Reports Results for the
First Quarter of Fiscal 2008
First Quarter of Fiscal 2008
Sales Growth Fuels Strong Earnings and Cash Flow
BEAVERTON, Ore., September 20, 2007 — Tektronix, Inc. (NYSE: TEK) today reported net sales of $291.5 million and net earnings from continuing operations of $20.1 million or $0.26 per share for the first quarter ended September 1, 2007. This compares with net sales of $268.1 million and net earnings from continuing operations of $20.1 million or $0.24 per share for the same period last year. Excluding acquisition-related costs, business realignment costs, and share-based compensation expense, net earnings from continuing operations were $30.5 million or $0.40 per share for the first quarter as compared with $29.2 million or $0.35 per share for the same period last year.
“Sales were up 9% over last year resulting in strong earnings and cash flow,” said Rick Wills, Tektronix Chairman and CEO. “Orders were down 5%, primarily due to a decline in our Japan region which was impacted by our order policy changes and some economic uncertainty. In addition, we saw continued market softness for network diagnostic communications products. These factors were partially offset by growth in other geographies and by improvement in orders for our network management products.”
Instruments business orders were down 7%, with modest growth in all geographies except Japan. “We saw continued good demand for oscilloscopes driven by new products, with particular strength in value oscilloscopes. Sales were up 14% as we delivered against the new product backlog built last year,” continued Wills.
Orders in the Communications business were flat year-over-year with strong growth in network management products offset by a decline in network diagnostic products. “Although we continue to see the ongoing impact of both the market consolidation and slow operator spending
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for network diagnostic products, we are encouraged by signs of strengthening in the market for our network management products,” said Wills. “Communications business sales declined 5% on a difficult comparison to last year but were up sequentially from the fourth quarter.”
Looking forward, we believe this will be our low point for orders for the year and subsequent quarters should show good improvement. We expect this improvement will be driven in our Instruments business by strong new products already introduced and those that we expect to introduce in the next several quarters. In our Communications business, we believe order improvement will be driven by growing strength in demand for network management products. In addition we expect to have completed the Japan order booking policy change which had a negative impact in the first quarter.
During the quarter we issued $345 million of convertible debt, and repurchased $164 million — or nearly five million shares — of common stock reflecting our commitment to optimize our capital structure, reduce our cost of capital and improve earnings per share through our share repurchase program.
Second Quarter Guidance
For the second quarter of fiscal 2008, the company expects net sales to be approximately $270 - $280 million. Earnings per share from continuing operations are expected to be between $0.38 and $0.42 before mostly non-cash acquisition-related costs, business realignment costs, one-time items and share-based compensation expense.
For the second quarter of fiscal 2008, the company expects net sales to be approximately $270 - $280 million. Earnings per share from continuing operations are expected to be between $0.38 and $0.42 before mostly non-cash acquisition-related costs, business realignment costs, one-time items and share-based compensation expense.
Recent highlights include the following:
New product introductions, including:
• | Tektronix Ultra-Wideband Software (Tektronix UWB) for the ultra performance DPO/DSA70000 oscilloscopes.The expanded capabilities include real-time analysis of Ultra-Wideband RF and electrical signals to support the test and measurement requirements of digital RF applications such as ultra-wideband communications, ultra-wideband radar and high-speed serial data. | ||
• | RFXpress™, a new software package that performs RF/IF/IQ waveform creation and editing of digitally modulated signals for AWG5000 and AWG7000 arbitrary waveform generators. This new package simplifies debug and conformance test and improves productivity with a user interface that makes creation and management of general purpose digital RF waveforms far more intuitive when testing emerging digital RF applications. | ||
• | Unified Assurance for Converged Networks, a next-generation service assurance platform that addresses the service assurance performance monitoring and management needs of multi-technology, multi-service fixed and wireless network operators.The new platform provides end-to-end service level views for all user sessions across multiple access and core network technologies. | ||
• | Enhancements to the GeoProbe Network Assurance solution, part of the industry-leading Unified Assurance suite of applications for management of next generation converged networks.The enhancements enable network operators to monitor new mobile interfaces for IP converged networks, building on the extensive capability of the GeoProbe platform to perform real-time, multi-protocol, cross-architecture performance monitoring. |
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Key customer wins, including:
• | Allion Test Labs Inc., a leading IT testing organization headquartered in Taiwan, selected Tektronix for its new high-speed serial test bench consisting of high performance real-time oscilloscopes and arbitrary waveform generators for SATA II compliance testing. | ||
• | Rai Way, the owner and operator of Italian public broadcaster RAI Group’s broadcasting division, installed Tektronix MTM400 MPEG Transport Stream Monitors in numerous locations to monitor transport stream quality in its digital terrestrial television network. | ||
• | London’s “Glassworks,” one of the largest visual effects and computer animation studios in Europe, installed dual-link capabilities in its telecine suite using Tektronix’ WVR7120 waveform rasterizer. The flagship rasterizer will be used to quickly detect, isolate, and diagnose multi-format video quality problems in the transfer of motion picture film into electronic form. | ||
• | SaskTel, the leading full-service communications provider in Saskatchewan, Canada deployed GeoProbe Network Assurance solution to monitor TDM, VoIP and mobile voice and messaging applications throughout its network. |
Several product awards, including:
• | Tektronix’ DPO/DSA72004 Ultra-High Performance Oscilloscope received the ‘Electron d’Or’ award and was voted Best Test and Measurement Product of the Year 2007 in the test and measurement category as chosen by a jury of industry experts, in conjunction with the editors of Electronique, the leading French electronics monthly magazine. | ||
• | Tektronix’ RSA6114A Real-Time Spectrum Analyzer was awarded the 2007 Canadian Technical Security Conference Award by the Professional Development TSCM Group Inc. for significant industry contribution, research and engineering design. |
In addition,
• | Tektronix issued $345 million of five-year, senior convertible notes at a 1.625% interest rate and $34.57 issue price. In addition, Tektronix purchased a bond hedge and issued warrants to increase the conversion premium from 15% to 42.5%. In connection with the debt issuance, the Board of Directors increased the share repurchase authorization by an additional $350 million. Tektronix spent $164 million during the quarter to repurchase approximately 4.8 million shares. | ||
• | China Electronics Standardization Institution (CESI) partnered with Tektronix to set up a joint lab for advanced research and assessment of digital RF and digital TV standards in China, key drivers of the new digital world. The new lab will be a key research facility for the development of China’s new DTV and digital RF standards. | ||
• | Tektronix announced it will develop an automated Compliance Test Suite for high-speed serial standards using test management software from National Instruments. The combination of Tektronix instruments and the open nature of NI TestStand software gives customers a platform to rapidly characterize new products and bring them to market faster. | ||
• | Neil Huddlestone was named President of Tektronix China. Huddlestone is the senior executive responsible for Tektronix business in China and will lead the senior management team in China with specific responsibility for sales and business development in the country. Huddlestone is based at the company’s regional headquarters in Shanghai. |
Tektronix also today declared a quarterly cash dividend of $.06 per share on the outstanding common shares of the Company, payable on October 29, 2007 to shareholders of record as of the close of market on October 5, 2007.
Tektronix will be discussing its first quarter results and future guidance on a conference call today, beginning at 1:30 p.m. Pacific. A live Webcast of the conference call will be available atwww.tektronix.com/ir. A replay of the Webcast will be available at the same Web site for one year.
In addition, Tektronix will hold its Annual Meeting of Shareholders on Thursday, September 27, 2007, at 10:00 a.m. Pacific at the company’s headquarters in Beaverton, Oregon.
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Tektronix presents non-GAAP measures of net earnings and net earnings per share from continuing operations that exclude the effects of acquisition-related costs, business realignment costs, share-based compensation and one-time items. The “Reconciliation of GAAP to Non-GAAP Results” reconciles net earnings in accordance with generally accepted accounting principles (GAAP) to the non-GAAP net earnings. Tektronix presents non-GAAP net earnings to help readers differentiate the results of ongoing activity from results that include acquisition-related costs, business realignment costs, share-based compensation and one-time items. Some of these items pertain to events that have not yet occurred and are not possible to ascertain with a reasonable degree of accuracy. Therefore, no reconciliation to GAAP for projected amounts is provided. In addition, in line with common industry practice and in order to enable comparison with other technology companies, guidance for non-GAAP net earnings excludes the effects of share-based compensation under FAS123R. Management of Tektronix uses these non-GAAP measures to evaluate the Company’s results of operations and for forecasting purposes, as well as to compensate employees.
Statements and information in this press release that relate to future events or results (including the Company’s statements and expectations regarding sales and earnings per share, orders, markets, market position and market growth opportunities, strategic direction and the introduction of new products) are based on the Company’s current expectations. They constitute forward-looking statements subject to a number of risk factors, which could cause actual results to differ materially from those currently expected or desired. Those factors include: worldwide geopolitical and economic conditions; current and future business conditions in the electronics, communications, computer and advanced technologies industries; changes in order rates and customer cancellations, including changes in seasonal buying habits and timing of large orders, as well as the application of a global order booking policy; competitive factors, including pricing pressures, loss of key employees, technological developments and new products offered by competitors; changes in product and sales mix, and the related effects on gross margins; customer acceptance of large orders with delayed acceptance criteria; the Company’s ability to deliver a timely flow of competitive new products, and market acceptance of these products; risks related to our information technology systems; the availability of parts and supplies from third-party suppliers on a timely basis and at reasonable prices; risks associated with compliance with the “Restriction of Hazardous Substances” worldwide regulatory provisions, including the associated conversion of current and future product designs and manufacturing processes to procure or produce lead-free products, and with export regulations; inventory risks due to changes in market demand or the Company’s business strategies; changes in effective tax rates; currency fluctuations; and the ability to develop effective sales channels. Further information on factors that could cause actual results to differ from those anticipated is included in filings made by the Company from time-to-time with the Securities and Exchange Commission, including but not limited to annual reports on Form 10-K and the quarterly reports on Form 10-Q.
About Tektronix
Tektronix is a leading supplier of test, measurement, and monitoring products, solutions and services for the communications, computer, and semiconductor industries — as well as military/aerospace, consumer electronics, education and a broad range of other industries worldwide. With 60 years of experience, Tektronix enables its customers to design, build, deploy, and manage next-generation global communications networks, advanced and pervasive technologies. Headquartered in Beaverton, Oregon, Tektronix has operations in 19 countries worldwide. Tektronix’ Web address is www.tektronix.com.
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Consolidated Statements of Operations
Quarter Ended | ||||||||
September 1, | August 26, | |||||||
(In thousands, except per share amounts) | 2007 | 2006 | ||||||
Net sales | $ | 291,494 | $ | 268,113 | ||||
Cost of sales | 124,559 | 104,763 | ||||||
Gross profit | 166,935 | 163,350 | ||||||
Research and development expenses | 49,163 | 50,869 | ||||||
Selling, general and administrative expenses | 86,518 | 79,873 | ||||||
Business realignment costs | 1,057 | 2,596 | ||||||
Acquisition related costs and amortization | 1,720 | 1,471 | ||||||
Loss on disposition of assets, net | 3 | 554 | ||||||
Operating income | 28,474 | 27,987 | ||||||
Interest income | 5,533 | 4,670 | ||||||
Interest expense | (1,415 | ) | (99 | ) | ||||
Other non-operating expense, net | (1,102 | ) | (1,011 | ) | ||||
Earnings before taxes | 31,490 | 31,547 | ||||||
Income tax expense | 11,434 | 11,434 | ||||||
Net earnings from continuing operations | 20,056 | 20,113 | ||||||
Gain from discontinued operations, net of income taxes | 20 | 7 | ||||||
Net earnings | $ | 20,076 | $ | 20,120 | ||||
Earnings per share: | ||||||||
Continuing operations — basic | $ | 0.27 | $ | 0.25 | ||||
Continuing operations — diluted | $ | 0.26 | $ | 0.24 | ||||
Discontinued operations — basic | $ | — | $ | — | ||||
Discontinued operations — diluted | $ | — | $ | — | ||||
Net earnings — basic | $ | 0.27 | $ | 0.25 | ||||
Net earnings — diluted | $ | 0.26 | $ | 0.24 | ||||
Weighted average shares outstanding: | ||||||||
Basic | 75,237 | 82,074 | ||||||
Diluted | 77,078 | 83,542 | ||||||
Cash dividend declared per share | $ | 0.06 | $ | 0.06 |
Note: | The first quarter of fiscal year 2008 includes an extra week to accommodate our fiscal calendar. |
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Consolidated Balance Sheets
(In thousands) | September 1, 2007 | May 26, 2007 | ||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 453,986 | $ | 95,887 | ||||
Short-term marketable investments | 26,903 | 87,873 | ||||||
Trade accounts receivable, net | 156,261 | 188,070 | ||||||
Inventories | 166,716 | 176,267 | ||||||
Other current assets | 69,011 | 71,743 | ||||||
Total current assets | 872,877 | 619,840 | ||||||
Property, plant and equipment, net | 128,955 | 129,914 | ||||||
Long-term marketable investments | 91,583 | 174,307 | ||||||
Deferred tax assets | 43,818 | 21,464 | ||||||
Goodwill, net | 329,045 | 326,468 | ||||||
Pension asset | 34,050 | 32,115 | ||||||
Other long-term assets | 113,911 | 105,190 | ||||||
Total assets | $ | 1,614,239 | $ | 1,409,298 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 91,608 | $ | 134,349 | ||||
Accrued compensation | 61,560 | 75,761 | ||||||
Deferred revenue | 88,203 | 89,340 | ||||||
Total current liabilities | 241,371 | 299,450 | ||||||
Convertible notes | 345,000 | — | ||||||
Pension and postretirement benefit liabilities | 71,043 | 70,103 | ||||||
Long-term liabilities | 72,056 | 49,899 | ||||||
Shareholders’ equity: | ||||||||
Common stock | 546,415 | 539,799 | ||||||
Retained earnings | 426,204 | 545,399 | ||||||
Accumulated other comprehensive loss | (87,850 | ) | (95,352 | ) | ||||
Total shareholders’ equity | 884,769 | 989,846 | ||||||
Total liabilities and shareholders’ equity | $ | 1,614,239 | $ | 1,409,298 | ||||
Shares outstanding | 75,062 | 78,488 |
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Selected Additional Financial Data
Quarter Ended | ||||||||||||
% | September 1, | August 26, | ||||||||||
(In thousands, except per share amounts) | Growth | 2007 | 2006 | |||||||||
Orders Data: | ||||||||||||
Orders | (5 | %) | $ | 241,809 | $ | 255,399 | ||||||
U.S. | 4 | % | 99,723 | 96,194 | ||||||||
International | (11 | %) | 142,086 | 159,205 | ||||||||
Instruments Business | (7 | %) | 184,840 | 198,279 | ||||||||
Communications Business | (0 | %) | 56,969 | 57,120 | ||||||||
Sales Data: | ||||||||||||
Net Sales | 9 | % | $ | 291,494 | $ | 268,113 | ||||||
U.S. | 28 | % | 125,620 | 97,979 | ||||||||
International | (3 | %) | 165,874 | 170,134 | ||||||||
Instruments Business | 14 | % | 225,340 | 198,212 | ||||||||
Communications Business | (5 | %) | 66,154 | 69,901 | ||||||||
Reconciliation of GAAP to Non-GAAP Results: | ||||||||||||
Net earnings — GAAP | $ | 20,076 | $ | 20,120 | ||||||||
Discontinued operations, net of income taxes | (20 | ) | (7 | ) | ||||||||
Net earnings from continuing operations | 20,056 | 20,113 | ||||||||||
Business realignment costs | 1,057 | 2,596 | ||||||||||
Acquisition related costs | 7,415 | 7,444 | ||||||||||
Shared based compensation costs | 7,322 | 4,201 | ||||||||||
Tax effect of above items | (5,372 | ) | (5,119 | ) | ||||||||
Net earnings — non-GAAP | $ | 30,478 | $ | 29,235 | ||||||||
Diluted EPS — non-GAAP | $ | 0.40 | $ | 0.35 | ||||||||
Income Statement Items as a Percentage of Net Sales: | ||||||||||||
Cost of sales | 43 | % | 39 | % | ||||||||
Research and development expenses | 17 | % | 19 | % | ||||||||
Selling, general and administrative expenses | 30 | % | 30 | % | ||||||||
Business realignment costs | 0 | % | 1 | % | ||||||||
Acquisition related costs and amortization | 1 | % | 1 | % | ||||||||
Loss on disposition of assets, net | 0 | % | 0 | % | ||||||||
Operating income | 10 | % | 10 | % | ||||||||
Capital Expenditures and Depreciation: | ||||||||||||
Capital expenditures | $ | 4,668 | $ | 6,124 | ||||||||
Depreciation and amortization expense | $ | 7,363 | $ | 7,297 | ||||||||
Balance Sheet and Cash Flow: | Quarter Ended | Quarter Ended | ||||||
September 1, | May 26, | |||||||
2007 | 2007 | |||||||
Cash and Marketable Investments: | ||||||||
Cash and cash equivalents | $ | 453,986 | $ | 95,887 | ||||
Short-term marketable investments | 26,903 | 87,873 | ||||||
Long-term marketable investments | 91,583 | 174,307 | ||||||
Cash and Marketable Investments | $ | 572,472 | $ | 358,067 | ||||
Cash Flow from Operations | $ | 45,765 | $ | 43,279 | ||||
Accounts receivable as a percentage of net sales | 15.6 | % | 15.1 | % | ||||
Days sales outstanding | 52.5 | 57.3 | ||||||
Countback days sales outstanding | 46.5 | 46.8 | ||||||
Inventory as a percentage of net sales | 15.5 | % | 14.4 | % | ||||
Inventory turns | 2.7 | 2.7 | ||||||
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