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 2006
BEAVERTON, Ore., Sept. 15, 2005 - Tektronix, Inc. (NYSE: TEK) today reported net
sales of $235.1 million and net earnings from continuing operations of $14.2
million or $0.17 per share for the first quarter ended August 27, 2005. This
compares with net sales of $250.5 million and net earnings from continuing
operations of $36.5 million or $0.43 per share for the same period last year.
Excluding acquisition-related costs, business realignment costs and one-time
items, net earnings from continuing operations were $21.3 million or $0.25 per
share for the first quarter ended August 27, 2005, as compared with $36.9
million or $0.43 per share for the same period last year.
"We are very satisfied with our overall performance this quarter," said Rick
Wills, Tektronix Chairman and CEO. "We managed through a comparatively tough
period, and delivered earnings which were in line with our expectations. In
addition, we were encouraged by the pick up in demand in August after a slower
start at the beginning of the quarter."
"The Inet acquisition continued to yield solid results. We had a number of
significant customer wins in the quarter including orders for network management
systems for UMTS, GPRS and VoIP, which contributed to the strongest order
performance to date for this business. In addition, we recorded double digit,
year-over-year growth in our two newer product areas - signal sources and real
time spectrum analyzers - fueled by strong new products. Initial orders for our
AFG3000 family of signal sources, which began shipping late in the quarter,
exceeded our expectations. These transformational products, featuring our
innovative and powerful "generator on a chip" based architecture, offer
unprecedented performance and ease of use at a very attractive price.
Additionally, we have continued to see good customer demand for our recently
introduced TDS6000C, the world's fastest real-time oscilloscope," said Wills.
For the second quarter of fiscal 2006, the company expects net sales to be
approximately $240 - $250 million. Earnings per share from continuing operations
are expected to be between $0.25
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Tektronix First Quarter 2006 Results.../2
and $0.29 before mostly non-cash costs related to the acquisition of Inet
Technologies, business realignment costs, and other one-time items.
"As we said last quarter, assuming stable markets, normal seasonality and the
strength of new products in the second half, we expect the first quarter to
represent the low point for the year in terms of both sales and earnings per
share," said Wills.
"We are encouraged by the continued success from the Inet acquisition and from
recently introduced products, as well as the continued progress we
are making on the pipeline of products set to introduce over the next few
quarters," concluded Wills.
Recent highlights include the following:
- The availability of the AFG3000 family of signal sources, six models
whose ease of use and innovative performance establishes a new
benchmark for this class of product.
- An award by Beijing International Radio, Film and Television Equipment
Exhibition (BIRTV), the region's largest exhibition for radio and TV
service providers and equipment manufacturers, for the "Outstanding
Product" for the MTS430 MPEG Analyzer. The submission was judged
by an independent panel of China's foremost experts in broadcast
technology and presented at BIRTV 2005 in Beijing, China.
- The addition of the High Speed Downlink Packet Access software option
to the market leading NetTek(TM) Wireless RF Field Tester, making
Tektronix the first manufacturer to provide HSDPA test and measurement
capabilities in a handheld form factor.
- The introduction of a new radio frequency identification (RFID)
software measurement suite for WCA200A, RSA3300A and RSA3408A
Real-Time Spectrum Analyzers which continues to advance the
capabilities of Tektronix' Real-Time Spectrum Analyzers by adding new
measurements and troubleshooting features specifically designed to
help the RFID engineer.
- The expansion of the TDS1000 and TDS2000 series, the world's best
selling line of oscilloscopes in units, by adding two new models - one
of which, the TDS1001, is the lowest priced digital oscilloscope
available from any major vendor.
- Significant wins from major network operators around the world for
network management systems for UMTS, GPRS and VoIP, as well as service
assurance and customer assurance software solutions.
- The appointment of Rich McBee to Senior Vice President of the
Communications Business. McBee, a proven senior executive at
Tektronix, has held a broad range of positions and has experience
running a significant portion of the Tektronix organization.
In addition, today Tektronix declared a quarterly cash dividend of $0.06 per
share on the outstanding common shares of the Company, payable on October 24,
2005 to shareholders of record as of the close of market on October 7, 2005.
Tektronix will hold its Annual Meeting of Shareholders on Thursday, September
22, 2005, at 10:00 a.m. Central Daylight Time (CDT) at the Hotel Crescent Court,
400 Crescent Court, Dallas, Texas.
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Tektronix First Quarter 2006 Results.../3
Tektronix will be discussing its first quarter results and future guidance on a
conference call today, beginning at 1:30 p.m. Pacific Daylight Time (PDT). A
live Webcast of the conference call will be available at www.tektronix.com/ir. A
replay of the Webcast will be available at the same Web site for one year.
Tektronix presents pro forma measures of net earnings and net earnings per share
from continuing operations that exclude the effects of acquisition-related
costs, business realignment costs and one-time items. The "Reconciliation of Pro
Forma Measures to GAAP" reconciles the results of operations in accordance with
generally accepted accounting principles (GAAP) to the pro forma results of
operations. Tektronix presents pro forma results of operations to help readers
differentiate the results of ongoing operating activity from results that
include acquisition-related costs, business realignment costs and one-time
items. Management of Tektronix uses these pro forma measures to evaluate the
Company's results of operations and for forecasting purposes.
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, market position and market growth opportunities, 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;
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; the Company's
ability to deliver a timely flow of competitive new products, and market
acceptance of these products; 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 and/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; the ability to develop effective sales channels;
and risks associated with the integration of Inet Technologies including
realization of expected growth opportunities. 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, Inc. is a test, measurement, and monitoring company providing
measurement solutions to the communications, computer, and semiconductor
industries worldwide. With more than 55 years of experience, Tektronix enables
its customers to design, build, deploy, and manage next-generation global
communications networks and advanced technologies. Headquartered in Beaverton,
Oregon, Tektronix has operations in 19 countries worldwide. Tektronix' Web
address is www.tektronix.com.
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Tektronix First Quarter 2006 Results.../4
Consolidated Statements of Operations
Quarter Ended
-----------------------
August 27, August 28,
(In thousands, except per share amounts) 2005 2004
---------- ----------
Net sales $235,060 $250,465
Cost of sales 99,103 101,946
-------- --------
Gross profit 135,957 148,519
Research and development expenses 43,605 33,579
Selling, general and administrative expenses 68,565 65,066
Business realignment costs 2,481 2,039
Acquisition related costs and amortization 3,436 787
Loss (gain) on disposition of assets, net 4 (1,891)
-------- --------
Operating income 17,866 48,939
Interest income 3,092 5,462
Interest expense (97) (83)
Other non-operating expense, net (986) (2,224)
-------- --------
Earnings before taxes 19,875 52,094
Income tax expense 5,707 15,628
-------- --------
Net earnings from continuing operations 14,168 36,466
Loss from discontinued operations,
net of income taxes (82) (58)
-------- --------
Net earnings $ 14,086 $ 36,408
======== ========
Earnings per share:
Continuing operations - basic $ 0.17 $ 0.44
Continuing operations - diluted $ 0.17 $ 0.43
Discontinued operations - basic $ -- $ --
Discontinued operations - diluted $ -- $ --
Net earnings - basic $ 0.17 $ 0.43
Net earnings - diluted $ 0.17 $ 0.43
Weighted average shares outstanding:
Basic 84,603 83,782
Diluted 85,297 85,211
Cash dividend declared per share $ 0.06 $ 0.04
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Tektronix First Quarter 2006 Results.../5
Consolidated Balance Sheets
(In thousands) August 27, 2005 May 28, 2005
--------------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 95,002 $ 131,640
Short-term marketable investments 111,477 120,881
Trade accounts receivable, net 161,346 155,332
Inventories 130,544 131,096
Other current assets 86,657 80,177
---------- ----------
Total current assets 585,026 619,126
Property, plant and equipment, net 122,062 120,546
Long-term marketable investments 162,009 226,892
Deferred tax assets 53,340 56,560
Goodwill, net 303,166 301,934
Other long-term assets 131,099 135,285
---------- ----------
Total assets $1,356,702 $1,460,343
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 108,582 $ 115,058
Accrued compensation 55,411 78,938
Deferred revenue 54,639 57,509
---------- ----------
Total current liabilities 218,632 251,505
Long-term liabilities 189,855 223,015
Shareholders' equity:
Common stock 496,848 501,886
Retained earnings 608,987 639,720
Accumulated other comprehensive loss (157,620) (155,783)
---------- ----------
Total shareholders' equity 948,215 985,823
---------- ----------
Total liabilities and shareholders' equity $1,356,702 $1,460,343
========== ==========
Shares outstanding 83,360 85,144
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Tektronix First Quarter 2006 Results.../6
SELECTED ADDITIONAL FINANCIAL DATA
Quarter Ended
-----------------------
% August 27, August 28,
(Dollars in thousands, except per share amounts) Growth 2005 2004
------ ---------- ----------
PRODUCT ORDERS AND SALES DATA:
Orders 13% $230,434 $204,287
U.S. 19% 76,428 64,251
International 10% 154,006 140,036
Total - excluding Rohde and Schwarz & Inet (9%) 185,613 204,380
Net Sales (6%) $235,060 $250,465
U.S. (20%) 84,403 105,764
International 4% 150,657 144,701
Total - excluding Rohde and Schwarz & Inet (11%) 203,265 229,267
BOOK TO BILL RATIO CALCULATION:
Product Orders $230,434 $204,287
Product Sales $221,835 $231,500
Book to Bill ratio 1.04 0.88
RECONCILIATION OF PRO FORMA MEASURES TO GAAP:
Net earnings from continuing operations - GAAP $ 14,168 $ 36,466
Effect of :
Acquisition related items reported in cost of
sales 5,112 --
Acquisition related items reported in operating
expenses 3,436 787
Business realignment costs 2,481 2,039
Gain on sale of Nevada City property -- (2,161)
Tax effect of above items (3,943) (200)
-------- --------
Net earnings from continuing operations - Pro Forma $ 21,254 $ 36,931
Diluted earnings per share - Pro Forma $ 0.25 $ 0.43
INCOME STATEMENT ITEMS AS A PERCENTAGE OF NET SALES:
Cost of sales 42% 41%
Research and development expenses 19% 13%
Selling, general and administrative expenses 29% 26%
Business realignment costs 1% 1%
Acquisition related costs and amortization 1% 0%
Loss (gain) on disposition of assets, net 0% (1%)
Operating income 8% 20%
CAPITAL EXPENDITURES AND DEPRECIATION:
Capital expenditures $ 8,744 $ 7,506
Depreciation and amortization expense $ 7,006 $ 6,678
Quarter Ended Year Ended
August 27, 2005 May 28, 2005
--------------- ------------
BALANCE SHEET:
Cash and Marketable Investments:
Cash and cash equivalents $ 95,002 $131,640
Short-term marketable investments 111,477 120,881
Long-term marketable investments 162,009 226,892
-------- --------
Cash and Marketable Investments $368,488 $479,413
Accounts receivable as a percentage of net sales 16.8% 13.9%
Days sales outstanding 62.5 54.7
Average days sales outstanding 61.3 50.7
Inventory as a percentage of net sales 13.9% 11.3%
Inventory turns 3.0 3.6
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Tektronix First Quarter 2006 Results.../7
Discontinued Operations
Quarter Ended
-----------------------
August 27, August 28,
(In thousands) 2005 2004
---------- ----------
Loss on sale of VideoTele.com (less applicable
income tax benefit of $1 and $1) $ (1) $ (1)
Loss on sale of optical parametric test business
(less applicable income tax benefit of $36 and $40) (68) (72)
Gain (loss) on sale of Gage (less applicable income
tax benefit (expense) of $6 and $(8)) (11) 15
Loss on sale of Color Printing and Imaging
(less applicable income tax benefit of $1 and $0) (2) --
---- ----
Loss from discontinued operations, net of income taxes $(82) $(58)
==== ====
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Tektronix First Quarter 2006 Results.../8
RECONCILIATION OF PRO FORMA MEASURES TO GAAP
Quarter Ended August 27, 2005 Quarter Ended August 28, 2004
------------------------------------------ ------------------------------------
Adjustments Adjustments
----------- -----------
(In thousands, except per share amounts) GAAP Inet Other PRO FORMA GAAP PRO FORMA
-------- ------ ------ --------- -------- ---------
Net sales $235,060 -- -- $235,060 $250,465 -- $250,465
Cost of sales 99,103 (5,073) (A) (39) 93,991 101,946 -- 101,946
-------- ------ ------ -------- -------- ------ --------
Gross profit 135,957 5,073 39 141,069 148,519 -- 148,519
Gross margin 57.8% 60.0% 59.3% 59.3%
Research and development expenses 43,605 -- -- 43,605 33,579 -- 33,579
Selling, general and administrative expenses 68,565 -- -- 68,565 65,066 -- 65,066
Business realignment costs 2,481 -- (2,481) -- 2,039 (2,039) --
Acquisition related costs:
Write-off of IPR&D 365 -- (365) -- -- -- --
Amortization of acquired intangible assets 1,284 (1,279) (5) -- -- -- --
Amortization of stock option compensation 90 (90) -- -- -- -- --
Transition expenses 1,697 (1,030) (667) -- 787 (787) --
-------- ------ ------ -------- -------- ------ --------
Total acquisition related costs 3,436 (2,399) (1,037) -- 787 (787) --
Loss (gain) on disposition of assets 4 -- -- 4 (1,891) 2,161 (B) 270
-------- ------ ------ -------- -------- ------ --------
Operating income 17,866 7,472 3,557 28,895 48,939 665 49,604
Operating margin 7.6% 12.3% 19.5% 19.8%
Other income, net 2,009 -- -- 2,009 3,155 3,155
-------- ------ ------ -------- -------- ------ --------
Earnings before taxes 19,875 7,472 3,557 30,904 52,094 665 52,759
Income tax expense 5,707 2,856 1,087 9,650 15,628 200 15,828
-------- ------ ------ -------- -------- ------ --------
Net earnings from continuing operations $ 14,168 4,616 2,470 $ 21,254 $ 36,466 465 $ 36,931
Earnings per share - diluted $ 0.17 $ 0.25 $ 0.43 $ 0.43
Weighted average shares outstanding - diluted 85,297 85,297 85,211 85,211
-------- -------- -------- --------
(A) Amortization of acquired intangible assets and non-cash expense for Inet
inventory step up adjustment to fair value
(B) Gain on sale of Nevada City property
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