Media Contact: Alisha Goff
503/627-7075
alisha.goff@tektronix.com
Analyst Contact: John Gardner
503/627-5614
john.d.gardner@tektronix.com
TEKTRONIX REPORTS STRONG RESULTS FOR THE THIRD
QUARTER OF FISCAL 2004
POSTS STRONGEST QUARTER FOR SALES IN NEARLY THREE YEARS
BEAVERTON, Ore., March 18, 2004 - Tektronix, Inc. (NYSE: TEK) today reported net
sales of $243.5 million and net earnings from continuing operations of $43.9
million or $0.50 per share, for the third quarter ended February 28, 2004. This
compares with net sales of $186.6 million and net earnings from continuing
operations of $1.0 million or $0.01 per share, for the same period a year ago.
Excluding business realignment and one-time items, net earnings from continuing
operations were $29.1 million or $0.33 per share for the third quarter, as
compared with $11.7 million or $0.13 per share for the same period last year.
"We saw orders growth of 20% for the quarter driven by continued strength in the
overall market and positive response to new products. Signal sources,
oscilloscopes and logic analyzers were especially strong," said Rick Wills,
Tektronix Chairman and CEO. "More importantly, it is our second quarter in a row
in which we saw growth across all regions and most product lines, consistent
with our belief that we are in the midst of the phased recovery."
"There were several things of note in the quarter from an operational standpoint
as well. We successfully implemented a state-of-the-art supply chain enterprise
resource planning system with no impact to shipments - the team did a great
job," continued Wills. "We also completed the sale of our Japanese headquarters
building in connection with the planned move of our Tokyo headquarter operations
to a newer leased facility."
"In addition, Rohde and Schwarz, whose products we currently distribute in the
US and Canada, will begin selling their products directly in those markets and
we will not distribute their products after June 1, 2004. This relationship has
been mutually beneficial, one that enabled Rohde and Schwarz to develop a
presence in the United States and helped Tektronix develop customer
relationships and a direct sales force in support of our strategy to expand our
RF product
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Tektronix Third Quarter 2004 Results.../2
offerings. While this will impact revenues next year, we do not expect it to
have a negative impact on earnings."
"This was a great quarter for Tektronix in many respects. We continue to see
elements of a phased recovery and continue to grow our four core product
categories. The acceptance of new products in the quarter demonstrates this. We
are gaining traction in our two new product categories -- these represent good,
long-term opportunities for growth. And, as we saw this quarter, we have
demonstrated our ability to grow earnings faster than revenues," concluded
Wills.
For the fourth quarter of fiscal 2004, the company expects sales to be
approximately $230 - $240 million. Earnings per share from continuing operations
are expected to be between $0.24 and $0.28.
Highlights for the third quarter of fiscal 2004 include the following:
.. Tektronix launched the TDS5000B oscilloscope, with innovative features
around ease-of-use, immediately following the close of the quarter. The
TDS5000B Series significantly improves productivity and simplifies test
activities by electrical engineers and technicians.
.. Tektronix announced its new RSA Series of real-time spectrum analyzers that
provide the first complete measurement package for engineers developing
cutting-edge Radio Frequency (RF) technologies, ranging from RF
Identification (ID) tags to sophisticated radar applications.
.. The WCA200A Series, which belongs to Tektronix' portfolio of real-time
spectrum analyzers was selected by the readers of EE-Evaluation Engineering
as the Communications Test Product of the Year.
.. Tektronix added compliance testing of UMTS R5 to its K1297-G20 protocol
tester, the industry's leading protocol test platform with the ability to
address more than one thousand protocols.
.. Tektronix announced its MPEG Test Systems are now available in a new
portable form factor for improved ease of use and with a high performance
processor that provides greatly increased analysis speeds.
.. Tektronix' TDS7000B series was selected as one of 100 top products of 2003
by EDN Magazine and was also nominated for the 2003 Innovation of the Year
Award. The TDS7704B was also named product of the year by Germany's
Elektronic magazine.
.. The London-based Farm Group's latest facility, Uncle Post Production,
installed Tektronix' WVR600 waveform rasterizers to provide advanced
quality control editing and colorist resources for the influential London
post production industry.
In addition, today Tektronix declared a quarterly cash dividend of $0.04 per
share on the outstanding common shares of the Company, payable on April 26, 2004
to shareholders of record as of the close of market on April 9, 2004.
Tektronix will be discussing its third 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
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Tektronix Third Quarter 2004 Results.../3
will be available at www.tektronix.com/ir. A replay of the Webcast will be
available at the same Web site through Friday, March 18, 2005.
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 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, 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; resolution of
indemnities relating to certain acquisitions and divestitures; 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, 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 Third Quarter 2004 Results.../4
Consolidated Statements of Operations
Quarter Ended Three Quarters Ended
---------------------------- ----------------------------
February 28, March 1, February 28, March 1,
(In thousands, except per share amounts) 2004 2003 2004 2003
------------ ------------ ------------ ------------
Net sales $ 243,506 $ 186,645 $ 662,865 $ 588,727
Cost of sales 102,326 87,177 290,740 289,634
------------ ------------ ------------ ------------
Gross profit 141,180 99,468 372,125 299,093
Research and development expenses 32,772 26,416 93,277 74,660
Selling, general and administrative expenses 69,519 63,048 200,353 180,279
Equity in business venture's loss - - - 2,893
Business realignment costs 3,706 14,175 20,050 26,998
Acquisition related costs (credits), net (18,034) 795 (52,399) 2,627
Loss (gain) on sale of assets 741 (82) 741 (588)
------------ ------------ ------------ ------------
Operating income (loss) 52,476 (4,884) 110,103 12,224
Interest income 5,118 6,782 16,240 21,636
Interest expense (198) (1,221) (1,981) (4,550)
Other non-operating income (expense), net 7,177 (316) 6,718 (2,262)
------------ ------------ ------------ ------------
Earnings before taxes 64,573 361 131,080 27,048
Income tax (benefit) expense 20,702 (686) 39,324 (3,845)
------------ ------------ ------------ ------------
Net earnings from continuing operations 43,871 1,047 91,756 30,893
Loss from discontinued operations, net of tax (258) (3,123) (1,780) (8,458)
------------ ------------ ------------ ------------
Net earnings (loss) $ 43,613 $ (2,076) $ 89,976 $ 22,435
============ ============ ============ ============
Earnings per share from continuing
operations - basic $ 0.52 $ 0.01 $ 1.08 $ 0.35
Earnings per share from continuing
operations - diluted $ 0.50 $ 0.01 $ 1.06 $ 0.35
Loss per share from discontinued operations -
basic and diluted $ - $ (0.04) $ (0.02) $ (0.10)
Earnings (loss) per share - basic $ 0.51 $ (0.02) $ 1.06 $ 0.26
Earnings (loss) per share - diluted $ 0.50 $ (0.02) $ 1.04 $ 0.25
Weighted average shares outstanding - basic 84,921 86,750 84,724 87,826
Weighted average shares outstanding - diluted 87,682 86,945 86,676 88,071
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Tektronix Third Quarter 2004 Results.../5
Consolidated Balance Sheets
(In thousands) February 28, 2004 May 31, 2003
------------------ ------------------
ASSETS
Current assets:
Cash and cash equivalents $ 162,347 $ 190,387
Short-term marketable investments 59,133 106,369
Trade accounts receivable, net 130,258 100,334
Inventories 94,752 92,868
Other current assets 55,554 83,816
Assets of discontinued operations - 7,938
------------------ ------------------
Total current assets 502,044 581,712
Property, plant and equipment, net 111,599 127,985
Long-term marketable investments 473,848 415,606
Deferred tax assets 131,001 144,134
Goodwill, net 80,735 73,736
Other long-term assets 41,972 41,537
------------------ ------------------
Total assets $ 1,341,199 $ 1,384,710
================== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 115,961 $ 101,753
Accrued compensation 76,469 58,193
Current portion of long-term debt 940 56,584
Deferred revenue 23,890 19,551
Liabilities of discontinued operations - 651
------------------ ------------------
Total current liabilities 217,260 236,732
Long-term debt 9,746 55,002
Other long-term liabilities 233,558 313,750
Shareholders' equity:
Common stock 250,763 223,233
Retained earnings 760,334 707,191
Accumulated other comprehensive loss (130,462) (151,198)
------------------ ------------------
Total shareholders' equity 880,635 779,226
------------------ ------------------
Total liabilities and shareholders' equity $ 1,341,199 $ 1,384,710
================== ==================
Shares outstanding 85,061 84,844
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Tektronix Third Quarter 2004 Results.../6
SELECTED ADDITIONAL FINANCIAL DATA
Quarter Ended Three Quarters Ended
--------------------------- ---------------------------
(Dollars in thousands, % February 28, March 1, % February 28, March 1,
except per share amounts) Growth 2004 2003 Growth 2004 2003
------------ ------------ ------------ ------------ ------------ ------------
PRODUCT ORDERS AND SALES DATA:
Orders 20% $ 213,234 $ 177,752 19% $ 646,955 $ 545,770
U.S. 12% 73,004 65,382 18% 255,936 217,805
International 25% 140,230 112,370 19% 391,019 327,965
Net Sales 30% $ 243,506 $ 186,645 13% $ 662,865 $ 588,727
U.S. 35% 94,142 69,776 7% 273,595 254,707
International 28% 149,364 116,869 17% 389,270 334,020
- ----------------------------------------------------------------------------------------------------------------------------
BOOK TO BILL RATIO CALCULATION:
Product Orders 213,234 177,752 646,955 545,770
Product Sales 226,580 174,505 614,432 551,131
Book to Bill ratio 0.94 1.02 1.05 0.99
- ----------------------------------------------------------------------------------------------------------------------------
EFFECT OF BUSINESS REALIGNMENT AND ONE-TIME ITEMS:
Net earnings from continuing operations $ 43,871 $ 1,047 $ 91,756 $ 30,893
Business realignment costs 3,706 14,175 20,050 26,998
Gain on sale of corporate equity securities (7,293) - (7,293) -
Acquisition related costs (credits):
Pension gain - - (36,741) -
Net gain on assets held for sale (19,262) - (19,262) -
Transition expenses 1,228 795 3,604 2,627
------------ ------------ ------------ ------------
(18,034) 795 (52,399) 2,627
Tax effect of above items 6,846 (4,351) 11,893 (9,480)
Reversal of tax reserve - - - (12,500)
------------ ------------ ------------ ------------
Net income excluding business realignment
and one-time items $ 29,096 $ 11,666 $ 64,007 $ 38,538
Diluted earnings per share excluding business
realignment and one-time items $ 0.33 $ 0.13 $ 0.74 $ 0.44
- ----------------------------------------------------------------------------------------------------------------------------
INCOME STATEMENT ITEMS AS A PERCENTAGE OF NET SALES:
Cost of sales 42% 47% 44% 49%
Research and development expenses 13% 14% 14% 13%
Selling, general and administrative expenses 28% 34% 30% 31%
Equity in business venture's loss 0% 0% 0% 0%
Business realignment costs 2% 8% 3% 5%
Acquisition related costs (credits), net (7%) 0% (8%) 0%
Loss (gain) on sale of assets 0% 0% 0% 0%
Operating income (loss) 22% (3%) 17% 2%
- ----------------------------------------------------------------------------------------------------------------------------
CAPITAL EXPENDITURES AND DEPRECIATION:
Capital expenditures $ 5,601 $ 3,953 $ 14,841 $ 11,571
Depreciation and amortization expense $ 6,721 $ 8,553 $ 20,997 $ 26,107
- ----------------------------------------------------------------------------------------------------------------------------
Quarter Ended Year Ended
February 28, 2004 May 31, 2003
------------------ ------------------
BALANCE SHEET:
Cash and Marketable Investments:
Cash and cash equivalents $ 162,347 $ 190,387
Short-term marketable investments 59,133 106,369
Long-term marketable investments 473,848 415,606
------------------ ------------------
Cash and Marketable Investments $ 695,328 $ 712,362
Accounts receivable as a percentage
of annualized net sales 11.0% 12.3%
Days sales outstanding 48.7 47.0
Average days sales outstanding 40.1 45.6
Inventory as a percentage of annualized net
sales 9.4% 13.1%
Inventory turns 4.5 3.7
- ----------------------------------------------------------------------------------------------------------------------------
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Tektronix Third Quarter 2004 Results.../7
DISCONTINUED OPERATIONS:
Quarter Ended Three Quarters Ended
---------------------------- ----------------------------
February 28, March 1, February 28, March 1,
(In thousands, except per share amounts) 2004 2003 2004 2003
------------ ------------ ------------ ------------
Loss on sale of VideoTele.com (less applicable
income tax benefit of $13, $64, $16 and $274) (23) (118) (28) (508)
Loss from operations of VideoTele.com (less
applicable income tax benefit of $0, $0, $0
and $1,413) - - - (2,624)
Loss on sale of optical parametric test business
(less applicable income tax benefit of $25, $0,
$114 and $0) (47) - (213) -
Loss from operations of optical parametric test
business (less applicable income tax benefit of
$0, $8,520, $0 and $9,295) - (15,824) - (17,264)
Loss on sale of Gage (less applicable income tax
benefit of $101, $0, $616 and $0) (188) - (1,145) -
Loss from operations of Gage (less applicable
income tax benefit of $0, $25, $212 and $500) - (181) (394) (1,062)
Gain on sale of Color Printing and Imaging (less
applicable income tax expense of $0, $7,000,
$0 and $7,000) - 13,000 - 13,000
------------ ------------ ------------ ------------
Loss from discontinued operations, net of tax $ (258) $ (3,123) $ (1,780) $ (8,458)
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