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 Strengthening Results for the
First Quarter of Fiscal 2004
Double-digit Orders Growth and Tight Operations
Fuel Earnings Ahead of Projections
BEAVERTON, Ore., September 18, 2003 - Tektronix, Inc. (NYSE: TEK) today reported
net sales of $201.4 million and net earnings from continuing operations of $11.4
million or $0.13 per share, for the first quarter ended August 30, 2003. This
compares with net sales of $198.5 million and net earnings from continuing
operations of $21.5 million or $0.24 per share, for the same period a year ago.
Excluding business realignment and one-time items, net earnings from continuing
operations were $15.7 million or $0.18 per share for the first quarter, as
compared with $15.2 million or $0.17 per share for the same period last year.
"We are particularly pleased with our operating results compared to last year,
which had the benefit of an extra week and a significant tax credit," said Rick
Wills, Tektronix Chairman and CEO. "We saw orders growth of 11% driven by
several large orders and continued stability in our base business. Also, we
improved gross margins and continued to manage expenses, both of which
contributed to strong operating results."
"We saw good customer response to products as well as strength in key geographic
regions, most notably in Japan. Demand was high for our mobile protocol testing
tools, our industry-leading logic analyzers and our video test products that
support the advancement of digital and high-definition signals," continued
Wills. "While we are certainly encouraged about our performance this quarter and
are seeing some strength in the mobile and government sectors, we are still
cautious about the timing and slope of a broad-based recovery.
-more-
Tektronix First Quarter 2004 Results.../2
For the second quarter of fiscal 2004, the company expects sales to be
approximately $205 - $210 million. Earnings per share from continuing operations
are expected to be between $0.14 and $0.16, excluding business realignment and
one time charges of $10 - $15 million.
"While we can't call a recovery yet, we are well positioned with a strong
product pipeline and continued investment in developing the advanced
technologies to meet the future roadmaps of our customers. We continue to focus
on strengthening our market position in our four core markets and on developing
our position in two key new product markets. Additionally, we have built
leverage into our business model which should allow us to grow earnings faster
than revenues as we see growth," concluded Wills.
Key highlights for the first quarter of fiscal 2004 include the following:
o A new protocol test platform, the K15, which is equipped with
first-to-market application software to enable a new level of analysis of
third-generation (3G) and existing second-generation (2G, 2.5G) mobile
networks.
o New software and hardware solutions that will speed critical compliance and
validation testing for emerging serial data standards within the computer
and communications industries. The new RT-Eye oscilloscope package and the
P7350SMA probe will save designers time when proof-testing their serial
products for compliance.
o A next-generation logic analyzer series that offers higher timing
resolution, deeper memory timing and faster state acquisition than any
other logic analyzer on the market at a comparable price point. The TLA5000
Series logic analyzers gives cost-conscious designers a superior test
instrument for performing hardware timing analysis and ensuring proper
operation and specification adherence of digital systems.
o The recommendation by China's Academy of Broadcast Science, (ABS) under the
State Administration of Radio, Film, and Television (SARFT) to use
Tektronix analysis tools to determine video picture quality at its National
Center of Test and Metrology for Radio and Television.
o An order for the NetTek field tool, a leading product in its class, to Asia
Pacific Broadband Wireless Communications, Inc., one of several companies
licensed to offer third-generation mobile services in Taiwan.
o The sale of Gage Applied, Inc., a subsidiary of Tektronix, to
KineticSystems Corporation, an Illinois-based designer and manufacturer of
high-performance data acquisition products and systems for the worldwide
aerospace, automotive and scientific laboratory markets.
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 through Thursday,
December 18, 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 six 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
-more-
Tektronix First Quarter 2004 Results.../3
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,
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, including the length and severity
of the current downturn, which is unknown; 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; 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, 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.
-more-
Tektronix First Quarter 2004 Results.../4
Consolidated Statements of Operations
Quarter Ended
August 30, August 31,
(In thousands, except per share amounts) 2003 2002
--------- -------------
Net sales $ 201,438 $ 198,512
Cost of sales 92,330 100,155
--------- ---------
Gross profit 109,108 98,357
Research and development expenses 29,102 23,939
Selling, general and administrative expenses 62,525 54,635
Equity in business ventures' loss -- 1,453
Business realignment costs 4,626 9,565
Acquisition related costs 1,316 --
Gain on sale of assets (36) (15)
--------- ---------
Operating income 11,575 8,780
Non-operating income, net 4,225 4,996
--------- ---------
Earnings before taxes 15,800 13,776
Income tax (benefit) expense 4,424 (7,679)
--------- ---------
Net earnings from continuing operations 11,376 21,455
Discontinued operations:
Loss on operations of optical parametric test business
(less applicable income tax benefit of $0,
and $223) -- (415)
Loss on sale of optical parametric test business
(less applicable income tax benefit of $136,
and $0) (253) --
Loss from operations of Gage (less
applicable income tax benefit of $212,
and $226) (394) (419)
Loss on sale of Gage (less applicable
income tax benefit of $457 and $0) (848) --
Loss on operations of VideoTele.com
(less applicable income tax benefit of $3,
and $453) (5) (842)
--------- ---------
Net earnings $ 9,876 $ 19,779
========= =========
Earnings per share from continuing
operations - basic $ 0.13 $ 0.24
Earnings per share from continuing
operations - diluted $ 0.13 $ 0.24
Loss per share from discontinued
operations - basic and diluted $ (0.02) $ (0.02)
Earnings per share - basic $ 0.12 $ 0.22
Earnings per share - diluted $ 0.12 $ 0.22
Weighted average shares outstanding - basic 84,697 89,474
Weighted average shares outstanding - diluted 85,816 89,808
-more-
Tektronix First Quarter 2004 Results.../5
Consolidated Balance Sheets
(In thousands) August 30, 2003 May 31, 2003
--------------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 145,254 $ 190,387
Short-term marketable investments 92,478 106,369
Trade accounts receivable, net 97,814 100,334
Inventories 86,869 92,868
Other current assets 78,504 90,408
Assets of discontinued operations -- 7,938
----------- -----------
Total current assets 500,919 588,304
Property, plant and equipment, net 123,493 127,985
Long-term marketable investments 391,688 415,606
Deferred tax assets, net 145,764 144,134
Other long-term assets 118,866 115,273
----------- -----------
Total assets $ 1,280,730 $ 1,391,302
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 105,337 $ 101,753
Accrued compensation 52,216 58,193
Current portion of long-term debt 1,241 56,584
Deferred revenue 16,521 19,551
Liabilities of discontinued operations -- 651
----------- -----------
Total current liabilities 175,315 236,732
Long-term debt 56,475 55,002
Other long-term liabilities 280,491 320,342
Shareholders' equity:
Common stock 225,666 223,233
Retained earnings 701,498 707,191
Accumulated other comprehensive loss (158,715) (151,198)
----------- -----------
Total shareholders' equity 768,449 779,226
----------- -----------
Total liabilities and shareholders' equity $ 1,280,730 $ 1,391,302
=========== ===========
Shares outstanding 84,288 84,844
-more-
Tektronix First Quarter 2004 Results.../6
Selected Additional Financial Data
Quarter Ended
(Dollars in thousands, % August 30, August 31,
except per share amounts) Growth 2003 2002
------ ------------- ----------
Product Orders and Sales Data:
Orders 11% $ 209,500 $ 188,800
U.S 13% 89,700 79,300
International 9% 119,800 109,500
Net Sales 1% $ 201,438 $ 198,512
U.S (7%) 84,127 90,186
International 8% 117,311 108,326
- --------------------------------------------------------------------------------
Effect of Business Realignment and One-Time Items:
Net earnings from continuing operations $ 11,376 $ 21,455
Business realignment costs 4,626 9,565
Acquisition related costs 1,316 --
Tax effect of above items (1,664) (3,348)
Reversal of tax reserve -- (12,500)
---------- ----------
Net income excluding business realignment
and one-time items $ 15,654 $ 15,172
Diluted earnings per share excluding business
realignment and one-time items $ 0.18 $ 0.17
- --------------------------------------------------------------------------------
Income Statement Items as a Percentage of Net Sales:
Cost of sales 46% 50%
Research and development expenses 14% 12%
Selling, general and administrative expenses 31% 28%
Equity in business ventures' loss 0% 1%
Business realignment costs 2% 5%
Acquisition related costs 1% 0%
Gain on sale of assets 0% 0%
Operating income 6% 4%
- --------------------------------------------------------------------------------
Capital Expenditures and Depreciation:
Capital expenditures $ 4,212 $ 2,707
Depreciation and amortization expense $ 7,252 $ 8,813
- --------------------------------------------------------------------------------
Quarter Ended Year Ended
August 30, 2003 May 31, 2003
--------------- ------------
Balance Sheet:
Cash and Marketable Investments:
Cash and cash equivalents $ 145,254 $ 190,387
Short-term marketable investments 92,478 106,369
Long-term marketable investments 391,688 415,606
---------- ----------
Cash and Marketable Investments $ 629,420 $ 712,362
Accounts receivable as a percentage
of annualized net sales 12.3% 12.3%
Days sales outstanding 44.2 47.0
Average days sales outstanding 44.8 45.6
Inventory as a percentage of annualized net sales 11.2% 13.1%
Inventory turns 4.1 3.7
- --------------------------------------------------------------------------------
###