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 Results for the
First Quarter of Fiscal 2005
Delivers Exceptional Earnings on Strong Sales
BEAVERTON, Ore., Sept. 16, 2004 - Tektronix, Inc. (NYSE: TEK) today reported net
sales of $250.5 million and net earnings from continuing operations of $36.5
million or $0.43 per share for the first quarter ended August 28, 2004. This
compares with net sales of $201.4 million and net earnings from continuing
operations of $11.4 million or $0.13 per share for the same period last year.
Excluding business realignment and one-time items, net earnings from continuing
operations were $36.9 million or $0.43 per share for the first quarter ended
August 28, 2004, as compared with $15.7 million or $0.18 per share for the same
period last year.
"This was another great quarter for Tektronix. We saw sales growth of 24%, net
earnings that were considerably higher than the first quarter of last year and
orders that were in line with our expectations," said Rick Wills, Tektronix
Chairman and CEO. "We are very pleased with our strong operational results this
quarter driven largely by our gross margin improvement efforts as well as our
operating leverage."
"From a regional standpoint, we continued to see solid demand for our products,
especially in Japan and Asia/Pacific," continued Wills. "Our oscilloscope
products showed excellent growth, further demonstrating positive customer
response to new products introduced during the last fiscal year."
"During the quarter, we announced an agreement to acquire Inet Technologies, a
leading global provider of communications software solutions that enable network
operators to more strategically and profitably operate their businesses.
Combining Inet with our mobile protocol test products is a key strategic move
which should enable us to grow and enhance our already strong leadership
position in this market. We expect the transaction to close on September 30,
2004," continued Wills.
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Tektronix First Quarter 2005 Results.../2
For the second quarter of fiscal 2005, the company expects net sales to be $235
- - $245 million and earnings per share from continuing operations of $.30 to
$.35, excluding business realignment and one-time items and the impact of the
acquisition of Inet Technologies.
"We are encouraged by the success we are seeing and believe our growth strategy
of investing in our four core product categories and two new product categories
is paying off as we strengthen our competitive position in each," concluded
Wills.
Recent highlights include the following:
o The introduction of a High Definition (HD) Rasterizer, the WVR7100, which
monitors the quality of high-definition content to meet the demands of
broadcasters and video editors. With the WVR7100 Rasterizer, HD, standard
definition, and composite analog signals, as well as digital and analog
audio can be all monitored from one instrument.
o The purchase by Xerox Corporation of 114 Tektronix Digital Phosphor
Oscilloscopes for use throughout the company. Of the chosen instruments, 91
are the new TDS5000B with MyScope(TM), the industry's first customizable
user interface.
o The announcement that the Department of Ion Physics at Uppsala University
in Sweden selected Tektronix' oscilloscopes for use in tests on particle
accelerators. The facility is one of the world's leading centers for
research into the use of mass spectrometry for radionuclide dating and
ion-beam based material analysis.
o The announcement that NVIDIA Corporation, a worldwide leader in visual
processing solutions, was able to expedite time to market for its GeForce 6
series of graphics solutions based on PCI Express(TM) by using an automated
test suite consisting of the Tektronix TMS817 PCI Express support for the
TLA700 logic analyzer, TDS6000 Series digital storage oscilloscope, P7380
Series probes, and RT-Eye(TM) test software.
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 Friday,
September 16, 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 "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 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 the
effect of the Inet acquisition, sales, earnings per share, 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
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Tektronix First Quarter 2005 Results.../3
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 risks
associated with the acquisition of Inet Technologies, including satisfaction of
contingencies of closing and successful integration of the acquired business.
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 the
S-4 registration related to the acquisition of Inet Technologies, Inc., 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 2005 Results.../4
Consolidated Statements of Operations
Quarter Ended
August 28, August 30,
(In thousands, except per share amounts) 2004 2003
---- ----
Net sales $ 250,465 $ 201,438
Cost of sales 101,946 92,330
------------------ ------------------
Gross profit 148,519 109,108
Research and development expenses 33,579 29,102
Selling, general and administrative expenses 65,066 62,525
Business realignment costs 2,039 4,626
Acquisition related costs 787 1,316
Gain on disposition of assets (1,891) (36)
------------------ ------------------
Operating income 48,939 11,575
Interest income 5,462 5,932
Interest expense (83) (1,122)
Other non-operating expense, net (2,224) (585)
------------------ ------------------
Earnings before taxes 52,094 15,800
Income tax expense 15,628 4,424
------------------ ------------------
Net earnings from continuing operations 36,466 11,376
Loss from discontinued operations, net of income taxes (58) (1,500)
------------------ ------------------
Net earnings $ 36,408 $ 9,876
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Net earnings per share from continuing operations - basic $ 0.44 $ 0.13
Net earnings per share from continuing operations - diluted $ 0.43 $ 0.13
Loss per share from discontinued operations - basic $ - $ (0.02)
Loss per share from discontinued operations - diluted $ - $ (0.02)
Net earnings per share - basic $ 0.43 $ 0.12
Net earnings per share - diluted $ 0.43 $ 0.12
Weighted average shares outstanding - basic 83,782 84,697
Weighted average shares outstanding - diluted 85,211 85,816
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Tektronix First Quarter 2005 Results.../5
Consolidated Balance Sheets
(In thousands) August 28, 2004 May 29, 2004
--------------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 106,679 $ 149,011
Short-term marketable investments 125,763 90,956
Trade accounts receivable, net 134,374 133,150
Inventories 100,866 102,101
Other current assets 61,086 69,812
----------------------- -----------------------
Total current assets 528,768 545,030
Property, plant and equipment, net 105,837 105,310
Long-term marketable investments 377,172 463,878
Deferred tax assets 106,156 105,886
Goodwill, net 79,260 79,774
Other long-term assets 28,951 30,825
----------------------- -----------------------
Total assets $ 1,226,144 $ 1,330,703
======================= =======================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 128,799 $ 134,048
Accrued compensation 57,216 89,212
Deferred revenue 22,101 25,247
----------------------- -----------------------
Total current liabilities 208,116 248,507
Long-term liabilities 167,691 211,616
Shareholders' equity:
Common stock 260,502 257,267
Retained earnings 726,284 748,381
Accumulated other comprehensive loss (136,449) (135,068)
----------------------- -----------------------
Total shareholders' equity 850,337 870,580
----------------------- -----------------------
Total liabilities and shareholders' equity $ 1,226,144 $ 1,330,703
======================= =======================
Shares outstanding 82,449 84,179
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Tektronix First Quarter 2005 Results.../6
Selected Additional Financial Data
Quarter Ended
(Dollars in thousands, % August 28, August 30,
except per share amounts) Growth 2004 2003
---------- ------------------- --------------
Product Orders and Sales Data:
Orders (2%) $ 204,288 $ 209,476
U.S. (28%) 64,251 89,669
International 17% 140,037 119,807
Total - excluding Rohde and Schwarz 5% 204,380 194,570
Net Sales 24% $ 250,465 $ 201,438
U.S. 26% 105,764 84,127
International 23% 144,701 117,311
Total - excluding Rohde and Schwarz 24% 229,267 184,379
- ----------------------------------------------------------------------------------------------------
Book to Bill Ratio Calculation:
Product Orders $ 204,288 $ 209,476
Product Sales $ 231,500 $ 186,205
Book to Bill ratio 0.88 1.12
- ----------------------------------------------------------------------------------------------------
Reconciliation of Pro Forma Measures to GAAP:
Net earnings from continuing operations - GAAP $ 36,466 $ 11,376
Effect of Business Realignment and One-Time Items:
Business realignment costs 2,039 4,626
Acquisition related costs 787 1,316
Gain on sale of Nevada City property (2,161) -
Tax effect of above items (200) (1,664)
------------------- --------------
Net earnings from continuing operations - Pro Forma $ 36,931 $ 15,654
Diluted earnings per share - Pro Forma $ 0.43 $ 0.18
- ----------------------------------------------------------------------------------------------------
Income Statement Items as a Percentage of Net Sales:
Cost of sales 41% 46%
Research and development expenses 13% 14%
Selling, general and administrative expenses 26% 31%
Business realignment costs 1% 2%
Acquisition related costs 0% 1%
Gain on disposition of assets (1%) 0%
Operating income 20% 6%
- ----------------------------------------------------------------------------------------------------
Capital Expenditures and Depreciation:
Capital expenditures $ 7,506 $ 4,212
Depreciation and amortization expense $ 6,678 $ 7,252
- ----------------------------------------------------------------------------------------------------
Quarter Ended Year Ended
August 28, 2004 May 29, 2004
------------------- --------------
Balance Sheet:
Cash and Marketable Investments:
Cash and cash equivalents $ 106,679 $ 149,011
Short-term marketable investments 125,763 90,956
Long-term marketable investments 377,172 463,878
------------------- --------------
Cash and Marketable Investments $ 609,614 $ 703,845
Accounts receivable as a percentage of net sales 13.4% 12.7%
Days sales outstanding 48.8 52.6
Average days sales outstanding 48.6 46.2
Inventory as a percentage of net sales 10.1% 10.6%
Inventory turns 4.0 4.1
- ----------------------------------------------------------------------------------------------------
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Tektronix First Quarter 2005 Results.../7
Discontinued Operations:
Quarter Ended
August 28, August 30,
(In thousands) 2004 2003
---- ----
Loss on sale of VideoTele.com (less applicable
income tax benefit of $1 and $3) $ (1) $ (5)
Loss on sale of optical parametric test business (less
applicable income tax benefit of $40 and $136) (72) (253)
Gain (loss) on sale of Gage (less applicable income
tax expense (benefit) of $8 and $(457)) 15 (848)
Loss from operations of Gage (less applicable income
tax benefit of $0 and $212) - (394)
------------------ ------------------
Loss from discontinued operations, net of income taxes $ (58) $ (1,500)
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