Tektronix Reports Results for the Second Quarter of Fiscal 2006
PRNewswire-FirstCall
BEAVERTON, Ore.

Tektronix, Inc. today reported net sales of $253.4 million and net earnings from continuing operations of $19.9 million or $0.24 per share for the second quarter ended November 26, 2005. This compares with net sales of $266.8 million and a net loss from continuing operations of $2.6 million or $0.03 per share for the same period last year. Excluding acquisition-related costs, business realignment costs and one-time items, net earnings from continuing operations were $25.8 million or $0.31 per share for the second quarter ended November 26, 2005, as compared with $34.5 million or $0.39 per share for the same period last year.

"Overall, we are very encouraged by our results in the second quarter," said Rick Wills, Tektronix Chairman and CEO. "Business levels firmed considerably during the quarter and we saw modest year-over-year growth in orders. The improvement in our markets at the end of last quarter continued during the second quarter. Our communications products, as well as our video products, each had double-digit order growth in the second quarter. Orders for general purpose products were down slightly from last year but were up significantly from the first quarter."

"Our two newer product categories -- signal sources and real-time spectrum analyzers -- continued to grow rapidly with over 50% year-over-year growth in the quarter, demonstrating our ability to penetrate targeted new market segments which is a key element of our growth strategy. And, we made excellent progress on our wave of new products set to introduce in the third quarter and over the next several quarters," said Wills.

For the third quarter of fiscal 2006, the company expects net sales to be approximately $255 - $265 million. Earnings per share from continuing operations are expected to be between $0.30 and $0.34 before mostly non-cash acquisition-related costs, business realignment costs, and one-time items.

"We continue to be encouraged by the recent strengthening of the market. We are very excited about the success of our recently introduced products as well as the major new products we expect to introduce this quarter and in the coming quarters," concluded Wills.

  Recent highlights include the following:

   *    The acquisition of Vqual Ltd, a leading provider of software tools
        for analysis, test and optimization of compressed digital media,
        based in Bristol, UK. The acquisition will enable Tektronix to offer
        its customers a complete suite of in-house compressed video analysis
        products.
   *    The selection by VIA Technologies of high-speed digital systems
        analysis tools from Tektronix to develop digital products based upon
        serial data standards such as second generation PCI-Express and SATA
        III.
   *    The selection by Framestore CFC, Europe's largest visual effects and
        computer animation studio, of Tektronix' WFM700 High Definition
        Waveform Monitors.
   *    The integration of Tektronix' Unified Assurance solution for IP
        networks with Psytechnics' Speech IP Monitor to provide customers
        with industry-leading network management and service management
        capabilities for IP networks.
   *    The receipt of the Innovation Award in the Test and Measurement
        category for the TDS6000 family of digital storage oscilloscopes,
        the first award of its kind from EDN China.

  And the introduction of several new products and capabilities including:

   *    A PC-based protocol analysis platform which facilitates deployment
        of triple play services through flexible and scalable protocol
        testing and analysis. The NSA18 provides portable troubleshooting
        and optimization of 3G UMTS networks.
   *    New software utilities for validating Ultra Wideband and WiMedia
        applications which extend the debug and analysis capabilities of the
        TDS6000 oscilloscopes to include real-time analysis of Ultra
        Wideband RF and electrical signals.
   *    Software for the market-leading Spectra diagnostics product line
        which helps carriers ensure interoperability between legacy and VoIP
        signaling technologies and validate equipment performance across
        converged networks.
   *    Intelligent Application Services for mobile network operators to its
        Unified Assurance offering -- a solution which provides the ability
        to analyze, detect and correct improper configuration of subscriber
        handsets to improve service levels.

In addition, today Tektronix declared a quarterly cash dividend of $0.06 per share on the outstanding common shares of the Company, payable on January 23, 2006 to shareholders of record as of the close of market on January 6, 2006.

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 for one year.

In addition, Tektronix will hold an investor event on January 12, 2006 at the company's facilities near Dallas, Texas featuring the company's communications network management and diagnostics business.

Tektronix presents pro forma measures of net earnings and net earnings per share from continuing operations that exclude the effects of acquisition- related costs, business realignment costs 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 acquisition-related costs, 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 sales and earnings per share, market position and market growth opportunities, and the introduction of 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; current and future 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, loss of key employees, technological developments and new products offered by competitors; changes in product and sales mix, and the related effects on gross margins; customer acceptance of large orders with delayed acceptance criteria; 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; risks associated with compliance with the "Restriction of Hazardous Substances" worldwide regulatory provisions, including the associated conversion of current and future product designs and manufacturing processes to procure and/or produce lead-free products, and with export regulations; inventory risks due to changes in market demand or the Company's business strategies; 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.

                  Consolidated Statements of Operations

                                       Quarter Ended     Two Quarters Ended
  (In thousands, except per           Nov. 26, Nov. 27,   Nov. 26, Nov. 27,
   share amounts)                       2005      2004      2005      2004

  Net sales                          $253,396  $266,828  $488,456  $517,293

  Cost of sales                       101,171   106,505   200,274   208,451

      Gross profit                    152,225   160,323   288,182   308,842

  Research and development expenses    45,673    41,878    89,278    75,457

  Selling, general and
   administrative expenses             73,103    76,320   141,668   141,386

  Business realignment costs            1,880       244     4,361     2,283

  Acquisition related costs and
   amortization                         2,095    34,941     5,531    35,728

  Loss (gain) on disposition of
   assets, net                             23        57        27    (1,834)

      Operating income                 29,451     6,883    47,317    55,822

  Interest income                       2,888     3,904     5,980     9,366

  Interest expense                       (146)     (335)     (243)     (418)

  Other non-operating expense, net     (1,993)   (1,067)   (2,979)   (3,291)

      Earnings before taxes            30,200     9,385    50,075    61,479

  Income tax expense                   10,322    11,964    16,029    27,592

      Net earnings (loss) from
       continuing operations           19,878    (2,579)   34,046    33,887

  Gain (loss) from discontinued
   operations, net of income taxes         17      (255)      (65)     (313)


  Net earnings (loss)                 $19,895   $(2,834)  $33,981   $33,574

  Earnings (loss) per share:

     Continuing operations - basic      $0.24    $(0.03)    $0.41     $0.40

     Continuing operations - diluted    $0.24    $(0.03)    $0.40     $0.39

     Discontinued operations - basic      $--       $--       $--       $--

     Discontinued operations -
      diluted                             $--       $--       $--       $--

     Net earnings - basic               $0.24    $(0.03)    $0.41     $0.39

     Net earnings - diluted             $0.24    $(0.03)    $0.40     $0.39

  Weighted average shares outstanding:
     Basic                             82,833    87,020    83,718    85,401

     Diluted                           83,584    87,020    84,438    86,949

  Cash dividend declared per share      $0.06     $0.06     $0.12     $0.10


                       Consolidated Balance Sheets

  (In thousands)                          November 26, 2005    May 28, 2005

  ASSETS
    Current assets:
      Cash and cash equivalents                $136,015           $131,640
      Short-term marketable investments          96,808            120,881
      Trade accounts receivable, net            162,418            155,332
      Inventories                               130,088            131,096
      Other current assets                       74,835             80,177
        Total current assets                    600,164            619,126

    Property, plant and equipment, net          124,110            120,546
    Long-term marketable investments            130,681            226,892
    Deferred tax assets                          51,742             56,560
    Goodwill, net                               301,954            301,934
    Other long-term assets                      127,171            135,285
        Total assets                         $1,335,822         $1,460,343

  LIABILITIES AND SHAREHOLDERS'
   EQUITY
    Current liabilities:
      Accounts payable and accrued liabilities $116,338           $115,058
      Accrued compensation                       61,484             78,938
      Deferred revenue                           59,319             57,509
        Total current liabilities               237,141            251,505

    Long-term liabilities                       180,473            223,015

  Shareholders' equity:
    Common stock                                492,896            501,886
    Retained earnings                           591,557            639,720
    Accumulated other comprehensive loss       (166,245)          (155,783)
      Total shareholders' equity                918,208            985,823
      Total liabilities and
       shareholders' equity                  $1,335,822         $1,460,343

    Shares outstanding                           81,833             85,144


  Selected Additional Financial Data

  (Dollars in thousands,          Quarter Ended          Two Quarters Ended
   except per share        %    Nov. 26,  Nov. 27,   %    Nov. 26,  Nov. 27,
   amounts)             Growth    2005      2004   Growth   2005      2004

  Product Orders and
   Sales Data:

  Orders                    2%  $240,765  $235,618   7%  $471,199  $439,906
    U.S.                   (0%)   85,111    85,404   8%   161,539   149,655
    International           4%   155,654   150,214   7%   309,660   290,251

    Total - excluding
     Rohde and Schwarz &
     Inet                  (0%)  212,928   213,851  (5%)  398,541   418,231

  Net Sales                (5%) $253,396  $266,828  (6%) $488,456  $517,293
    U.S.                  (12%)   92,079   104,205 (16%)  176,482   209,969
    International          (1%)  161,317   162,623   2%   311,974   307,324

    Total - excluding
     Rohde and Schwarz &
     Inet                 (11%)  217,953   244,349 (11%)  421,218   473,616


  Book to Bill Ratio
   Calculation:

  Product Orders                $240,765  $235,618       $471,199  $439,906
  Product Sales                 $238,383  $245,600       $460,218  $477,100

  Book to Bill ratio                1.01      0.96           1.02      0.92


  Reconciliation of Pro
   Forma Measures to
   GAAP:

  Net earnings from continuing
   operations - GAAP             $19,878   $(2,579)       $34,046   $33,887

  Effect of :
      Acquisition related
       items reported in
       cost of sales               4,703     4,635          9,815     4,635
      Acquisition related
       items reported in
       operating expenses          2,095    34,941          5,531    35,728
      Business realignment
       costs                       1,880       244          4,361     2,283
      Gain on sale of
       Nevada City
       property                       --        --             --    (2,161)
      Tax effect of
       above items                (2,769)   (2,778)        (6,712)   (2,978)

  Net earnings from
   continuing operations
   - Pro Forma                   $25,787   $34,463        $47,041   $71,394

  Diluted earnings per
   share - Pro Forma               $0.31     $0.39          $0.56     $0.82


  Income Statement Items
   as a Percentage of
   Net Sales:

  Cost of sales                      40%       40%            41%       40%
  Research and development
   expenses                          18%       16%            18%       15%
  Selling, general and
   administrative expenses           29%       29%            29%       27%
  Business realignment costs          1%        0%             1%        0%
  Acquisition related costs
   and amortization                   1%       13%             1%        7%
  Loss (gain) on disposition
   of assets, net                     0%        0%             0%       (0%)
  Operating income                   12%        3%            10%       11%


  Capital Expenditures
   and Depreciation:

  Capital expenditures            $9,889    $6,998        $18,633   $14,504
  Depreciation and
   amortization expense           $6,931    $7,200        $13,937   $13,878


                                          Quarter Ended       Year Ended
                                        November 26, 2005    May 28, 2005

  Balance Sheet:

  Cash and Marketable Investments:
     Cash and cash equivalents                $136,015          $131,640
     Short-term marketable investments          96,808           120,881
     Long-term marketable investments          130,681           226,892
       Cash and Marketable Investments        $363,504          $479,413


  Accounts receivable as a percentage of
   net sales                                     15.7%             13.9%
  Days sales outstanding                          58.3              54.7
  Countback days sales outstanding                49.7              51.8


  Inventory as a percentage of net sales         12.9%             11.3%
  Inventory turns                                  3.1               3.6


                         Discontinued Operations

                                                          Two Quarters
                                         Quarter Ended        Ended
                                       Nov. 26, Nov. 27,  Nov. 26, Nov. 27,
  (In thousands)                          2005     2004    2005     2004

  Loss on sale of VideoTele.com (less
   applicable income tax benefit of
   $1, $8, $1 and $9)                      $(2)    $(14)    $(3)    $(15)

  Loss on sale of optical parametric
   test business (less applicable income
   tax benefit of $76, $45, $112 and $85) (140)     (86)   (208)    (158)

  Gain (loss) on sale of Gage (less
   applicable income tax benefit (expense)
   of ($86), $83, ($80) and $75)           159     (155)    148     (140)

  Loss on sale of Color Printing and
   Imaging (less applicable income tax
   benefit of $0, $0, $1 and $0)            --       --      (2)      --


  Gain (loss) from discontinued operations,
   net of income taxes                     $17    $(255)   $(65)   $(313)


  Reconciliation of Pro Forma Measures to GAAP


  (In thousands, except per share amounts)        Quarter Ended
                                                November 26, 2005
                                                   Adjustments
                                        GAAP     Inet   Other     Pro Forma

  Net sales                           $253,396      --      --     $253,396
  Cost of sales                        101,171  (4,624)    (79)(A)   96,468
     Gross profit                      152,225   4,624      79      156,928
     Gross margin                        60.1%                        61.9%
  Research and development expenses     45,673      --      --       45,673
  Selling, general and administrative
   expenses                             73,103      --      --       73,103
  Business realignment costs             1,880      --  (1,880)          --

  Acquisition related costs:
       Write-off of IPR&D                   --      --      --           --
       Amortization of acquired
        intangible assets                1,293  (1,280)    (13)          --
       Amortization of stock option
        compensation                        84     (84)     --           --
       Transition expenses                 718    (733)     15           --
         Total acquisition related
          costs                          2,095  (2,097)      2           --

  Loss (gain) on disposition of assets      23      --      --           23
      Operating income                  29,451   6,721   1,957       38,129
      Operating margin                   11.6%                        15.0%
  Other income, net                        749      --                  749
      Earnings before taxes             30,200   6,721   1,957       38,878
  Income tax expense                    10,322   2,279     490       13,091
     Net earnings (loss) from
      continuing operations            $19,878   4,442   1,467      $25,787
  Earnings (loss) per share - diluted    $0.24                        $0.31
  Weighted average shares outstanding
   - diluted                            83,584                       83,584


                                                  Quarter Ended
                                                November 27, 2004
                                                   Adjustments
                                        GAAP     Inet   Other     Pro Forma

  Net sales                           $266,828        --    --     $266,828
  Cost of sales                        106,505    (4,635)   -- (A)  101,870
     Gross profit                      160,323     4,635    --      164,958
     Gross margin                        60.1%                        61.8%
  Research and development expenses     41,878        --    --       41,878
  Selling, general and administrative
   expenses                             76,320        --    --       76,320
  Business realignment costs               244        --  (244)          --

  Acquisition related costs:
       Write-off of IPR&D               32,195   (32,195)   --           --
       Amortization of acquired
        intangible assets                  846      (846)   --           --
       Amortization of stock option
        compensation                       204      (204)   --           --
       Transition expenses               1,696      (972) (724)          --
         Total acquisition related
          costs                         34,941   (34,217) (724)          --

  Loss (gain) on disposition of assets      57        --    --           57
      Operating income                   6,883    38,852   968       46,703
      Operating margin                    2.6%                        17.5%
  Other income, net                      2,502                        2,502
      Earnings before taxes              9,385    38,852   968       49,205
  Income tax expense                    11,964     2,509   269       14,742
     Net earnings (loss) from
      continuing operations            $(2,579)   36,343   699      $34,463
  Earnings (loss) per share - diluted   $(0.03)                       $0.39
  Weighted average shares outstanding
   - diluted                            87,020                       88,570


                                               Two Quarters Ended
                                                November 26, 2005
                                                   Adjustments
                                        GAAP     Inet   Other     Pro Forma

  Net sales                           $488,456      --      --     $488,456
  Cost of sales                        200,274  (9,697)   (118)(A)  190,459
     Gross profit                      288,182   9,697     118      297,997
     Gross margin                        59.0%                        61.0%
  Research and development expenses     89,278      --      --       89,278
  Selling, general and administrative
   expenses                            141,668      --      --      141,668
  Business realignment costs             4,361      --  (4,361)          --

  Acquisition related costs:
       Write-off of IPR&D                  365      --    (365)          --
       Amortization of acquired
        intangible assets                2,577  (2,559)    (18)          --
       Amortization of stock option
        compensation                       174    (174)     --           --
       Transition expenses               2,415  (1,763)   (652)          --
         Total acquisition related
          costs                          5,531  (4,496) (1,035)          --

  Loss (gain) on disposition of
   assets                                   27      --      --           27
      Operating income                  47,317  14,193   5,514       67,024
      Operating margin                    9.7%                        13.7%
  Other income, net                      2,758      --      --        2,758
      Earnings before taxes             50,075  14,193   5,514       69,782
  Income tax expense                    16,029   5,135   1,577       22,741
     Net earnings from continuing
      operations                       $34,046   9,058   3,937      $47,041
  Earnings per share - diluted           $0.40                        $0.56
  Weighted average shares outstanding
   - diluted                            84,438                       84,438


                                              Two Quarters Ended
                                               November 27, 2004
                                                  Adjustments
                                      GAAP      Inet    Other     Pro Forma

  Net sales                         $517,293        --      --     $517,293
  Cost of sales                      208,451    (4,635)     -- (A)  203,816
     Gross profit                    308,842     4,635      --      313,477
     Gross margin                      59.7%                          60.6%
  Research and development expenses   75,457        --      --       75,457
  Selling, general and
   administrative expenses           141,386        --      --      141,386
  Business realignment costs           2,283        --  (2,283)          --

  Acquisition related costs:
      Write-off of IPR&D              32,195   (32,195)     --           --
      Amortization of acquired
       intangible assets                 846      (846)     --           --
      Amortization of stock option
       compensation                      204      (204)     --           --
      Transition expenses              2,483      (972) (1,511)          --
        Total acquisition related
         costs                        35,728   (34,217) (1,511)          --

  Loss (gain) on disposition of
   assets                             (1,834)       --   2,161 (B)      327
      Operating income                55,822    38,852   1,633       96,307
      Operating margin                 10.8%                          18.6%
  Other income, net                    5,657        --      --        5,657
      Earnings before taxes           61,479    38,852   1,633      101,964
  Income tax expense                  27,592     2,509     469       30,570
     Net earnings from continuing
      operations                     $33,887    36,343   1,164      $71,394
  Earnings per share - diluted         $0.39                          $0.82
  Weighted average shares
   outstanding - diluted              86,949                         86,949

  (A)  Amortization of acquired intangible assets and non-cash expense for
       Inet inventory step up adjustment to fair value
  (B)  Gain on sale of Nevada City property

SOURCE: Tektronix, Inc.

CONTACT: Media, Alisha Goff, +1-503-627-7075, or
alisha.goff@tektronix.com, or Analyst, Paul Oldham, +1-503-627-4027, or
paul.r.oldham@tektronix.com, both of Tektronix, Inc.


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