Media Contact: Alisha Goff
503/627-7075
alisha.goff@tektronix.com
Analyst Contact: Sue Kirby
503/627-6106
sue.g.kirby@tektronix.com
TEKTRONIX REPORTS STRONG RESULTS FOR THE SECOND QUARTER OF FISCAL 2004
Strengthening Markets and Good Response to New Products
Drive Double-digit Orders Growth
BEAVERTON, Ore., December 18, 2003 - Tektronix, Inc. (NYSE: TEK) today reported
net sales of $217.9 million and net earnings from continuing operations of $36.5
million or $0.42 per share, for the second quarter ended November 29, 2003. This
compares with net sales of $203.6 million and net earnings from continuing
operations of $8.4 million or $0.10 per share, for the same period a year ago.
Excluding business realignment and one-time items, net earnings from continuing
operations were $19.3 million or $0.22 per share for the second quarter, as
compared with $11.7 million or $0.13 per share for the same period last year.
Included in one-time items is a non-cash gain resulting from the settlement of
the historical defined benefit pension plan at our recently acquired Japanese
subsidiary.
"At 25% growth, this was our strongest order level in more than two and a half
years, due primarily to strengthening in the overall market and good response to
new products," said Rick Wills, Tektronix Chairman and CEO. "During our first
quarter, we saw pockets of stronger demand in selected sectors and regions, and
this quarter the improvement continued with growth across all of our core
product areas and regions. Finally, earnings outpaced sales growth as expected,
due in part to the leverage we have built into our business model during the
past two years."
"There was strength across all of our major product categories. We saw very good
demand for our entire line of oscilloscope products, including the TDS7704B, the
world's fastest digital oscilloscope, which we announced this quarter. Our
signal source products have been well received in our key markets, and our
industry-leading video
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Tektronix Second Quarter 2004 Results.../2
products continued to provide broadcasters and system integrators with the tools
to support the digital evolution," continued Wills. "In addition, we made
excellent progress on new products which will be introduced in the second half
of this fiscal year."
"We believe Tektronix is well positioned to benefit from a recovery. We have a
strong market position in our four core product areas, and our two developing
product categories, Signal Sources and RF Test, represent good opportunities for
growth. We have structured our business model to enable us to grow earnings
faster than revenues as orders strengthen. And, as the markets recover, we
remain diligently focused on managing the business - deliberately managing
operations, carefully investing in future products and technology, and remaining
attentive to the changes in our customer needs," concluded Wills.
For the third quarter of fiscal 2004, the company expects sales to be
approximately $220 to $230 million. Earnings per share from continuing
operations are expected to be between $0.23 and $0.25, excluding a net credit of
$15 - $20 million from business realignment costs and one-time items. The
projected credit includes an estimated gain on the sale of real estate in Japan.
Key announcements for the second quarter of fiscal 2004 include the following:
.. The new Tektronix TDS7000B series including the 7-GHz DPO, taking the
award-winning Digital Phosphor Oscilloscopes (DPOs) to a new performance
level, solving the most demanding high-speed measurement problems in
communications, computing, and other advanced electronic applications.
.. New signal analysis capabilities for the TLA700 Series logic analyzers,
representing the completion of the iLink Tool Set, an integrated suite of
logic analyzer, oscilloscope and accessories for maximum design, debug and
troubleshooting proficiency.
.. New W-CDMA capabilities for the industry-leading NetTek(R) Field Tool, the
market leading handheld instrument used for base station troubleshooting
and quick identification of problems in 3G networks.
.. Three awards from the Beijing International Radio, Film and Television
Equipment Exhibition (BIRTV), one of the largest exhibitions for radio and
TV service providers and equipment manufacturers.
.. The purchase of signal sources and oscilloscopes by Silicon Image, Inc., a
leader in high-bandwidth semiconductor and system solutions for mass
markets for the first High-Definition Multimedia Interface (TM) (HDMI(TM))
Authorized Testing Center (ATC) in the United States.
.. The decision by Datang Mobile Communications Equipment Co., Ltd., a major
provider of telecommunications equipment in China, to use Tektronix' Series
of Wireless Communication Analyzers (WCA) for development of
next-generation user equipment.
In addition, today Tektronix declared a quarterly cash dividend of four cents
(4(cent)) per share on the outstanding common shares of the Company, payable on
January 26, 2004 to shareholders of record as of the close of market on January
9, 2004.
Tektronix also announced a mid-year payout in connection with its employee
results share program. "Our employees helped to differentiate Tektronix during
the difficult
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Tektronix Second Quarter 2004 Results.../3
technology market over the last few years," said Wills. "We are delighted to be
able to provide our employees with a way to share in the success of the company,
especially during the holiday season."
Tektronix will be discussing its second quarter results and future guidance on a
conference call today, beginning at 1:30 p.m. Pacific Standard Time (PST). 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 through Thursday,
March 18, 2004.
Tektronix presents pro forma measures of net earnings and net earnings per share
from continuing operations that exclude the effects of business realignment and
one-time items. The schedule provided on page seven 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 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 expectations as to sales, orders, earnings per
share, expenses, including business realignment and one-time charges, market
position, market growth opportunities and 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; 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, 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; inventory risks due to
changes in market demand or the Company's business strategies; risks associated
with a planned third quarter implementation of an Oracle software-based
manufacturing material and resource planning system; resolution of indemnities
relating to certain acquisitions and divestitures; changes in effective tax
rates; currency fluctuations; the ability to develop effective sales channels;
and the ability to successfully integrate the Sony/Tektronix acquisition.
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,
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Tektronix Second Quarter 2004 Results.../4
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 Second Quarter 2004 Results.../5
Consolidated Statements of Operations
Quarter Ended Two Quarters Ended
November 29, November 30, November 29, November 30,
(In thousands, except per share amounts) 2003 2002 2003 2002
------------- ------------ ------------ ------------
Net sales $ 217,921 $ 203,570 $ 419,359 $ 402,082
Cost of sales 96,084 102,302 188,414 202,457
------------- ------------ ------------ ------------
Gross profit 121,837 101,268 230,945 199,625
Research and development expenses 31,403 24,305 60,505 48,244
Selling, general and administrative expenses 68,309 62,596 130,834 117,231
Equity in business ventures' loss - 1,440 - 2,893
Business realignment costs 11,718 3,258 16,344 12,823
Acquisition related costs (credits), net (35,681) 1,832 (34,365) 1,832
Loss (gain) on sale of assets 36 (491) - (506)
------------- ------------ ------------ ------------
Operating income 46,052 8,328 57,627 17,108
Interest income 5,190 7,326 11,122 14,854
Interest expense (661) (1,276) (1,783) (3,329)
Other non-operating income (expense), net 126 (1,467) (459) (1,946)
------------- ------------ ------------ ------------
Earnings before taxes 50,707 12,911 66,507 26,687
Income tax (benefit) expense 14,198 4,520 18,622 (3,159)
------------- ------------ ------------ ------------
Net earnings from continuing operations 36,509 8,391 47,885 29,846
Discontinued operations:
Loss on sale of VideoTele.com
(less applicable income tax benefit of $0,
$210, $3 and $210) - (390) (5) (390)
Loss from operations of VideoTele.com
(less applicable income tax benefit of $0,
$960, $0 and $1,413) - (1,782) - (2,624)
Gain (loss) on sale of optical parametric test business
(less applicable income tax expense (benefit) of $47,
$0, $(89) and $0) 87 - (166) -
Loss from operations of optical parametric test business
(less applicable income tax benefit of $0,
$552, $0 and $775) - (1,025) - (1,440)
Loss on sale of Gage (less applicable
income tax benefit of $59, $0, $515 and $0) (109) - (957) -
Loss from operations of Gage (less
applicable income tax benefit of $0,
$249, $212 and $475) - (462) (394) (881)
------------- ------------ ------------ ------------
Net earnings $ 36,487 $ 4,732 $ 46,363 $ 24,511
============= ============ ============ ============
Earnings per share from continuing
operations - basic $ 0.43 $ 0.10 $ 0.57 $ 0.34
Earnings per share from continuing
operations - diluted $ 0.42 $ 0.10 $ 0.56 $ 0.34
Loss per share from discontinued
operations - basic and diluted $ - $ (0.04) $ (0.02) $ (0.06)
Earnings per share - basic $ 0.43 $ 0.05 $ 0.55 $ 0.28
Earnings per share - diluted $ 0.42 $ 0.05 $ 0.54 $ 0.28
Weighted average shares outstanding - basic 84,553 87,127 84,625 88,344
Weighted average shares outstanding - diluted 86,427 87,335 86,116 88,625
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Tektronix Second Quarter 2004 Results.../6
Consolidated Balance Sheets
(In thousands) November 29, 2003 May 31, 2003
----------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $ 175,693 $ 190,387
Short-term marketable investments 26,865 106,369
Trade accounts receivable, net 100,665 100,334
Inventories 92,297 92,868
Other current assets 78,453 83,816
Assets of discontinued operations - 7,938
-------------- --------------
Total current assets 473,973 581,712
Property, plant and equipment, net 123,515 127,985
Long-term marketable investments 466,793 415,606
Deferred tax assets 134,980 144,134
Other long-term assets 129,161 115,273
-------------- --------------
Total assets $ 1,328,422 $ 1,384,710
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 113,113 $ 101,753
Accrued compensation 67,180 58,193
Current portion of long-term debt 993 56,584
Deferred revenue 20,021 19,551
Liabilities of discontinued operations - 651
-------------- --------------
Total current liabilities 201,307 236,732
Long-term debt 60,271 55,002
Other long-term liabilities 235,908 313,750
Shareholders' equity:
Common stock 235,269 223,233
Retained earnings 730,286 707,191
Accumulated other comprehensive loss (134,619) (151,198)
-------------- --------------
Total shareholders' equity 830,936 779,226
-------------- --------------
Total liabilities and shareholders' equity $ 1,328,422 $ 1,384,710
============== ==============
Shares outstanding 84,600 84,844
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Tektronix Second Quarter 2004 Results.../7
SELECTED ADDITIONAL FINANCIAL DATA
Quarter Ended Two Quarters Ended
(Dollars in thousands, % November 29, November 30, % November 29, November 30,
except per share amounts) Growth 2003 2002 Growth 2003 2002
----------- ------------ ------------ ---------- ------------ ------------
PRODUCT ORDERS AND SALES DATA:
Orders 25% $ 224,245 $ 179,171 18% $ 433,721 $ 368,018
U.S. 28% 93,264 73,121 20% 182,932 152,423
International 24% 130,981 106,050 16% 250,789 215,595
Net Sales 7% $ 217,921 $ 203,570 4% $ 419,359 $ 402,082
U.S. 1% 95,326 94,745 (3%) 179,453 184,931
International 13% 122,595 108,825 10% 239,906 217,151
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BOOK TO BILL RATIO CALCULATION
Product Orders 224,245 179,171 433,721 368,018
Product Sales 201,687 191,826 387,852 376,626
Book to Bill ratio 1.11 0.93 1.12 0.98
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EFFECT OF BUSINESS REALIGNMENT AND ONE-TIME
ITEMS:
Net earnings from continuing operations $ 36,509 $ 8,391 $ 47,885 $ 29,846
Business realignment costs 11,718 3,258 16,344 12,823
Acquisition related costs (credits):
Pension gain (36,741) - (36,741) -
Transition expenses 1,060 1,832 2,376 1,832
------------ ------------ ------------ ------------
(35,681) 1,832 (34,365) 1,832
Tax effect of above items 6,710 (1,781) 5,046 (5,129)
Reversal of tax reserve - - - (12,500)
------------ ------------ ------------ ------------
Net income excluding business realignment
and one-time items $ 19,256 $ 11,700 $ 34,910 $ 26,872
Diluted earnings per share excluding business
realignment and one-time items $ 0.22 $ 0.13 $ 0.41 $ 0.30
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INCOME STATEMENT ITEMS AS A PERCENTAGE OF NET
SALES:
Cost of sales 44% 50% 45% 50%
Research and development expenses 15% 12% 14% 12%
Selling, general and administrative expenses 31% 31% 31% 29%
Equity in business ventures' loss 0% 1% 0% 1%
Business realignment costs 5% 1% 4% 3%
Acquisition related costs (credits), net (16%) 1% (8%) 1%
Loss (gain) on sale of assets 0% 0% 0% 0%
Operating income 21% 4% 14% 4%
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CAPITAL EXPENDITURES AND DEPRECIATION:
Capital expenditures $ 5,028 $ 4,911 $ 9,240 $ 7,618
Depreciation and amortization expense $ 7,024 $ 8,741 $ 14,060 $ 17,553
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Quarter Ended Year Ended
November 29, 2003 May 31, 2003
------------------ ------------------
BALANCE SHEET:
Cash and Marketable Investments:
Cash and cash equivalents $ 175,693 $ 190,387
Short-term marketable investments 26,865 106,369
Long-term marketable investments 466,793 415,606
------------------ ------------------
Cash and Marketable Investments $ 669,351 $ 712,362
Accounts receivable as a percentage
of annualized net sales 11.4% 12.3%
Days sales outstanding 42.0 47.0
Average days sales outstanding 41.6 45.6
Inventory as a percentage of annualized net sales 10.4% 13.1%
Inventory turns 4.2 3.7
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