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 Results for the Fourth Quarter
and Full Year of Fiscal 2003
Q4 Results Reflect Strong Product Demand and Good Operational Execution
BEAVERTON, Ore., June 26, 2003 - Tektronix, Inc. (NYSE: TEK) today reported net
sales of $202.3 million and net earnings from continuing operations of $4.3
million or $0.05 per share, for the fourth quarter ended May 31, 2003. This
compares with net sales of $202.2 million and net earnings from continuing
operations of $6.7 million or $0.07 per share, for the same period a year ago.
Excluding business realignment and one-time items, net earnings from continuing
operations were $10.0 million or $0.12 per share for the fourth quarter, as
compared with $12.7 million or $0.14 per share for the same period last year.
"We delivered solid results in the quarter," said Rick Wills, Tektronix Chairman
and CEO. "There was strong demand across our product portfolio - particularly
internationally. We believe that the economic environment and our end markets
have started to stabilize."
For fiscal year 2003, the company reported net sales of $791.0 million, compared
with sales of $810.3 million in fiscal year 2002. Net earnings from continuing
operations were $35.1 million, or $0.40 per share for fiscal year 2003. This
compares with net earnings from continuing operations of $33.6 million, or $0.36
per share for fiscal year 2002. Excluding business realignment and one-time
items, net earnings from continuing operations for fiscal year 2003 were $48.5
million, or $0.56 per share, as compared with $49.2 million, or $0.53 per share
for fiscal year 2002.
"We delivered strong results this year, remaining profitable, growing orders and
accomplishing critical strategic objectives in an environment that continued to
be challenging - these results differentiate Tektronix," said Wills. "One of
these objectives,
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Tektronix Fourth Quarter 2003 Results.../2
the acquisition and integration of our joint venture in Japan, exceeded our
expectations. By quickly reducing costs, improving sales force effectiveness and
leveraging products and technologies for broader market application, we were
able to exceed our sales and profitability projections for Japan."
"In addition to increasing our presence in Japan, China was another strategic
focus. We opened a new manufacturing facility in Shanghai and began
manufacturing our newest value oscilloscopes for worldwide distribution -
increasing our sales penetration of these products in China," continued Wills.
"Other accomplishments included strengthening our management team - with an
emphasis on the sales and marketing area - and strategic divestures of under
performing product lines. As we see the environment begin to stabilize, the
progress in these areas positions us well as we move into the next fiscal year."
For the first quarter of fiscal 2004, the company expects sales to be
approximately flat with the same period a year ago. Earnings per share are
expected to be between $0.10 and $0.12, excluding anticipated business
realignment and one-time charges of $3.0 - $4.0 million.
"With markets seeming to stabilize in the last several months, we are well
positioned to grow our leadership position in our four core product areas and to
expand our two emerging product lines. We continue to manage operations to
improve profitability and our product and technology engine to drive innovation,
which will enable us to see good operating leverage as we see growth," concluded
Wills.
Key highlights for the fourth quarter of fiscal 2003 include the following:
o A high-volume purchase by the China Ministry of Education to place
Tektronix oscilloscopes in university labs throughout China,
expanding Tektronix' large installed base in universities and
bringing the latest digital tools to more students.
o Several significant orders for mobile protocol test equipment
including a major sale of protocol, monitoring and maintenance tools
to Advanced Info Service (AIS) PLC, Thailand's leading wireless
operator, and a large, multi-unit sale of protocol testers to Taiwan
Cellular Corporation (TCC), Taiwan's largest network operator.
o The opening of the company's newest operation in China, Tektronix
(China) Co. Ltd. The new manufacturing facility in Shanghai,
currently manufacturing the company's TDS1000/2000 value
oscilloscope products, will be used for expansion in China, a
growing segment of the test and measurement market.
o The sale of a high-performance oscilloscope and an array of
accessories to National Instruments, including a TDS6604 digital
storage oscilloscope, the P7260, the world's fastest single-ended
active probe, the P7350 5 GHz differential probe, Jitter Analysis
Software, USB 2.0 Compliance Test Package, and other applications.
The oscilloscope will be used in the development of Pentium IV-based
motherboards and other projects involving advanced technologies.
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Tektronix Fourth Quarter 2002 Results.../3
o The world's first fully-automated component analog video signal
analyzer for high-definition and PC format signals simplifying and
standardizing testing and new capabilities for its current digital
video test including two new interfaces for the MTX1000 MPEG
Recorder and Player, and an HD-SDI Stress Test module for the
Tektronix TG2000 Multi-format Video Signal Generator Platform.
o The sale of the company's optical parametric test product line to
Thorlabs, a New Jersey-based maker of photonics products.
Tektronix will be discussing its fourth 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 through Thursday,
July 10, 2003.
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, earnings per share,
expenses, including business realignment and one-time charges, market position,
new products and expected results of investments in Japan and China) 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,
including the length and severity of the current downturn, which is unknown, and
in particular, the current downturn in the telecommunications industry,
including but not limited to the optical segment, which has experienced a more
dramatic decline than other industries; the ability to reduce expenditures to
adjust to the current downturn while at the same time maintaining the capacity
and resources to quickly ramp up if, and when, a recovery occurs; 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; resolution of
indemnities relating to certain acquisitions and divestitures; changes in
effective tax rates; currency fluctuations; the ability to develop effective
sales channels; the ability to successfully integrate the Sony/Tektronix
acquisition; and, generally, the Company's ability to execute successfully
during the current downturn. 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.
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Tektronix Fourth Quarter 2003 Results.../4
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 more than 20 countries worldwide. Tektronix'
Web address is www.tektronix.com.
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Tektronix Fourth Quarter 2003 Results.../5
Consolidated Statements of Operations
-------------------------------------
Quarter Ended Year Ended
May 31, May 25, May 31, May 25,
(In thousands, except per share amounts) 2003 2002 2003 2002
---- ---- ---- ----
Net sales $ 202,321 $ 202,243 $ 791,048 $ 810,300
Cost of sales 95,672 104,236 385,305 409,676
------------ ------------ ------------ ------------
Gross profit 106,649 98,007 405,743 400,624
Research and development expenses 26,477 24,592 101,137 112,389
Selling, general and administrative expenses 67,325 55,950 247,605 220,784
Equity in business ventures' loss -- 863 2,893 3,971
Gain on sale of Video and Networking Division -- (818) -- (818)
Business realignment costs 7,553 10,102 34,551 24,820
Acquisition related costs 894 -- 3,521 --
Loss on sale of assets 696 1,320 108 5,808
------------ ------------ ------------ ------------
Operating income 3,704 5,998 15,928 33,670
Non-operating income, net 2,553 4,284 17,377 17,955
------------ ------------ ------------ ------------
Earnings before taxes 6,257 10,282 33,305 51,625
Income tax (benefit) expense 2,002 3,599 (1,843) 18,069
------------ ------------ ------------ ------------
Net earnings from continuing operations 4,255 6,683 35,148 33,556
Discontinued operations:
Gain (loss) on sale of VideoTele.com (less applicable
income tax benefit of $70, $0, $344 and $0) (130) -- (639) --
Loss from operations of VideoTele.com
(less applicable income tax benefit of
$0, $670, $1,413 and $1,007) -- (1,245) (2,624) (1,869)
Loss on sale of optical parametric test business
(less applicable income tax benefit of $938,
$0, $9,222 and $0) (1,743) -- (17,127) --
Loss from operations of optical parametric test
business (less applicable income tax benefit of $364,
$111, $1,376 and $111) (676) (206) (2,556) (206)
Income (loss) from operations of Gage (less
applicable income tax (expense) benefit of ($38),
$253, $508 and $554) 71 (469) (943) (1,029)
Impairment of net assets of Gage (less applicable
income tax benefit of $1,174, $0, $1,174 and $0 (2,180) -- (2,180) --
Gain on sale of Color Printing and Imaging division
(less applicable income tax expense of $1,750,
$700, $8,750 and $1,204) 3,250 1,300 16,250 2,237
------------ ------------ ------------ ------------
Net earnings $ 2,847 $ 6,063 $ 25,329 $ 32,689
============ ============ ============ ============
Earnings per share from continuing
operations - basic $ 0.05 $ 0.07 $ 0.40 $ 0.37
Earnings per share from continuing
operations - diluted $ 0.05 $ 0.07 $ 0.40 $ 0.36
Loss per share from discontinued
operations - basic and diluted $ (0.02) $ (0.01) $ (0.11) $ (0.01)
Earnings per share - basic $ 0.03 $ 0.07 $ 0.29 $ 0.36
Earnings per share - diluted $ 0.03 $ 0.07 $ 0.29 $ 0.35
Weighted average shares outstanding - basic 84,886 90,869 87,105 91,439
Weighted average shares outstanding - diluted 85,251 91,779 87,367 92,263
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Tektronix Fourth Quarter 2003 Results.../6
Consolidated Balance Sheets
---------------------------
(In thousands) May 31, 2003 May 25, 2002
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 190,387 $ 260,773
Short-term marketable investments 106,369 193,644
Trade accounts receivable, net 100,334 94,309
Inventories 92,868 114,524
Assets of discontinued operations 7,938 49,674
Other current assets 90,408 69,552
---------------------- ----------------------
Total current assets 588,304 782,476
Property, plant and equipment, net 127,985 130,567
Long-term marketable investments 415,606 301,104
Deferred tax assets, net 144,134 64,522
Other long-term assets 115,273 105,520
---------------------- ----------------------
Total assets $ 1,391,302 $ 1,384,189
====================== ======================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 101,753 $ 155,036
Accrued compensation 58,193 56,940
Current portion of long-term debt 56,584 41,765
Deferred revenue 19,551 16,808
Liabilities of discontinued operations 651 3,119
---------------------- ----------------------
Total current liabilities 236,732 273,668
Long-term debt 55,002 57,300
Other long-term liabilities 320,342 126,027
Shareholders' equity:
Common stock 223,233 231,035
Retained earnings 707,191 774,282
Accumulated other comprehensive loss (151,198) (78,123)
---------------------- ----------------------
Total shareholders' equity 779,226 927,194
---------------------- ----------------------
Total liabilities and shareholders' equity $ 1,391,302 $ 1,384,189
====================== ======================
Shares outstanding 84,844 90,509
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Tektronix Fourth Quarter 2003 Results.../7
Selected Additional Financial Data
Quarter Ended Year Ended
(Dollars in thousands, % May 31, May 25, % May 31, May 25,
except per share amounts) Growth 2003 2002 Growth 2003 2002
-------- --------- --------- -------- --------- ---------
Product Orders and Sales Data:
Orders 16% $ 204,500 $ 176,500 9% $ 750,300 $ 687,400
U.S. (3%) 83,400 86,100 (0%) 301,200 302,100
International 34% 121,100 90,400 17% 449,100 385,300
Net Sales 0% $ 202,321 $ 202,243 (2%) $ 791,048 $ 810,300
U.S. (21%) 78,003 98,737 (15%) 332,710 393,010
International 20% 124,318 103,506 10% 458,338 417,290
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Effect of Business Realignment and One-Time Items:
Net earnings from continuing operations $ 4,255 $ 6,683 $ 35,148 $ 33,556
Business realignment costs 7,553 10,102 34,551 24,820
Acquisition related costs 894 -- 3,521 --
Gain on sale of Video and Networking Division -- (818) -- (818)
Tax effect of above items (2,703) (3,249) (12,183) (8,401)
Reversal of tax reserve -- -- (12,500) --
------------------- --------------- -------------- --------------
Net income excluding business realignment
and one-time items $ 9,999 $ 12,718 $ 48,537 $ 49,157
Diluted earnings per share excluding business
realignment and one-time items $ 0.12 $ 0.14 $ 0.56 $ 0.53
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Income Statement Items as a Percentage of Net Sales:
Cost of sales 47% 51% 49% 51%
Research and development expenses 13% 12% 13% 14%
Selling, general and administrative expenses 33% 28% 31% 27%
Equity in business ventures' loss 0% 0% 1% 0%
Business realignment costs 4% 5% 4% 3%
Loss on sale of assets 1% 1% 0% 1%
Operating income 2% 3% 2% 4%
- ------------------------------------------------------------------------------------------------------------------------------------
Capital Expenditures and Depreciation:
Capital expenditures $ 5,582 $ 3,427 $ 17,153 $ 14,539
Depreciation and amortization expense $ 7,566 $ 9,149 $ 33,672 $ 39,597
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended
May 31, 2003 May 25, 2002
-------------- --------------
Balance Sheet:
Cash and Marketable Investments:
Cash and cash equivalents $ 190,387 $ 260,773
Short-term marketable investments 106,369 193,644
Long-term marketable investments 415,606 301,104
------------------- ----------------
Cash and Marketable Investments $ 712,362 $ 755,521
Accounts receivable as a percentage
of net sales 12.3% 14.0%
Days sales outstanding 47.0 42.4
Average days sales outstanding 45.6 50.8
Inventory as a percentage of net sales 13.1% 16.0%
Inventory turns 3.7 3.2
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