Tektronix Reports Results for the Third Quarter of Fiscal 2006
Strong Results Fueled by New Products and Significant Customer Wins
PRNewswire-FirstCall
BEAVERTON, Ore.

Tektronix, Inc. today reported net sales of $262.1 million and net earnings from continuing operations of $24.9 million or $0.30 per share for the third quarter ended February 25, 2006. This compares with net sales of $256.3 million and net earnings from continuing operations of $23.4 million or $0.26 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 $31.1 million or $0.37 per share for the third quarter, as compared with $28.1 million or $0.31 per share for the same period last year.

"This was an outstanding quarter for us," said Rick Wills, Tektronix Chairman and CEO. "A modestly improving market, strength in new products and continued success in the communication sector led to strong orders, sales, earnings and cash flow."

"Overall, orders in the quarter grew 14%. Our instruments business orders grew 8% driven by our continued wave of new products -- including two new oscilloscope families introduced this quarter. In addition, we again saw solid growth from our two newer instrument product categories, signal sources and real-time spectrum analyzers," said Wills. "We also had excellent year-over- year order growth of 30% in our communications business driven by several significant customer wins in a continued strong market."

"In addition to our strong financial performance, we had a great quarter operationally with the successful introduction and shipment of two new oscilloscope families -- the DPO7000 and DPO4000 -- both based on next generation ASIC technology and highly-leveraged platforms that will be expanded in the future," Wills continued. "Early response to these exceptional products has been very positive. The DPO7000 delivers unmatched product specifications and eliminates the traditional trade-offs found in other oscilloscopes. The DPO4000 similarly delivers unmatched performance in its category and includes breakthrough innovations such as the Wave Inspector™ search capability. Finally, several of our products were selected for industry awards, highlighting our commitment to innovation and to solving customer problems."

For the fourth quarter of fiscal 2006, the company expects net sales to be approximately $275 - $285 million. Earnings per share from continuing operations are expected to be between $0.38 and $0.42 before mostly non-cash acquisition-related costs, business realignment costs, and one-time items.

"We continue to deliver on our growth strategy in both our instruments and communications businesses. By continuing to introduce new products and offer new capabilities, we expect to gain share, expand our market and win new customers," concluded Wills.

  Recent highlights include the following:

  New product introductions, including:

  -- Two new oscilloscope platforms, the DPO7000 -- with models ranging from
     500 MHz to 2.5 GHz on a next generation platform that makes broad use
     of IBM7HP silicon germanium (SiGe) technology to provide higher
     performance for demanding applications, and the DPO4000 -- with models
     ranging from 350 MHz to 1 GHz featuring the groundbreaking Wave
     Inspector™, an unprecedented set of easy-to-use tools for discovery
     and efficient viewing, navigating, and analyzing of waveform data.
  -- New monitoring capabilities for the WVR7100 and WVR6100 video
     rasterizers that will enable engineers and operators to quickly and
     reliably determine video signal and content quality for high-definition
     and standard-definition digital broadcast signals.
  -- The introduction of IPTV Video Quality Measurement (VQM) capabilities
     for our Spectra2 internet protocol diagnostic tools.  This package
     helps network operators identify the causes of poor digital image
     quality and is the first portable monitoring solution with support for
     multiple-level Quality of Service scores and analysis for carriers and
     cable networks in the emerging video over IP opportunity.

  Customer wins including:

  -- NBC's use of Tektronix HD Video Monitoring Equipment for their coverage
     of the Olympic Winter Games.
  -- China Electronics Standardization Institution's choice of Tektronix as
     the premier test instrument vendor for upgrading its IT testing and
     certification center. Tektronix instruments will be used for enhanced
     conformance testing and certification to support emerging technical
     standards and next generation digital TV.
  -- Freescale Semiconductor's selection of Tektronix TLA7000 Series logic
     analyzers to enable engineers to perform debug operations for the
     latest high-speed busses including Serial RapidIO®, PCI-Express and
     DDRS Memory.

  Several products won awards including:

  -- The RSA3408A Real-Time Spectrum Analyzer won a Best in Test award
     from the editors of Test and Measurement World.  The RSA3408A also won
     the Readers' Choice Award in the Instrumentation category, an award
     given for the best of 2005, as determined by the readers of
     EE-Evaluation Engineering magazine.
  -- The AFG3000 Series arbitrary function generator received Honorable
     Mention for Best in Test by Test and Measurement World.
  -- The TLA7000 Series logic analyzer with application software version 5.0
     was selected as a finalist for the 16th annual EDN Innovation Awards,
     an exclusive awards program that honors people, products and technology
     that have demonstrated innovation resulting in a significant advance in
     technology and/or product development.
  -- Tektronix oscilloscopes won the 2006 Readers' Choice Award for the
     third consecutive year from Electronics For You (EFY) magazine, one of
     Asia's leading publications for the electronics industry.
  -- Tektronix and TMN, the largest mobile network operator in Portugal,
     were awarded the Best Network Quality Initiative by the GSM Association
     for TMN's Customer Centric Service Quality Management solution, a
     service management system that uses technology from Tektronix' Unified
     Assurance suite to proactively detect, identify and rectify network and
     service degradations in real time.

In addition, today Tektronix declared a quarterly cash dividend of $0.06 per share on the outstanding common shares of the Company, payable on April 24, 2006 to shareholders of record as of the close of market on April 7, 2006.

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 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 April 12, 2006 in New York, New York. The event will provide an update on the Company's instruments and communications businesses and will provide an opportunity for discussions with business leadership.

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 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 60 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    Three Quarters Ended
                                     Feb. 25,   Feb. 26,  Feb. 25,  Feb. 26,
  (In thousands, except per share
   amounts)                            2006      2005      2006      2005

  Net sales                          $262,105  $256,332  $750,561  $773,625
  Cost of sales                       103,003   102,946   303,277   311,397

      Gross profit                    159,102   153,386   447,284   462,228

  Research and development expenses    44,566    43,380   133,844   118,837
  Selling, general and
   administrative expenses             76,347    78,750   218,015   220,136
  Business realignment costs            3,182       382     7,543     2,665
  Acquisition related costs and
   amortization                         1,418     2,590     6,949    38,318
  Loss (gain) on disposition of
   assets, net                             54       754        81    (1,080)

      Operating income                 33,535    27,530    80,852    83,352

  Interest income                       3,381     3,798     9,361    13,164
  Interest expense                        (96)     (113)     (339)     (531)
  Other non-operating income
   (expense), net                        (933)    1,422    (3,912)   (1,869)

      Earnings before taxes            35,887    32,637    85,962    94,116

  Income tax expense                   10,949     9,246    26,978    36,838

      Net earnings from continuing
       operations                      24,938    23,391    58,984    57,278

  Gain from discontinued operations,
      net of income taxes               1,575     3,430     1,510     3,117

  Net earnings                        $26,513   $26,821   $60,494   $60,395

  Earnings per share:

     Continuing operations - basic      $0.30     $0.26     $0.71     $0.66
     Continuing operations - diluted    $0.30     $0.26     $0.70     $0.65

     Discontinued operations - basic    $0.02     $0.04     $0.02     $0.04
     Discontinued operations -
      diluted                           $0.02     $0.04     $0.02     $0.04

     Net earnings - basic               $0.32     $0.30     $0.73     $0.70
     Net earnings - diluted             $0.32     $0.30     $0.72     $0.68

  Weighted average shares
   outstanding:
     Basic                             82,174    89,307    83,203    86,703
     Diluted                           83,319    90,690    84,065    88,236

  Cash dividend declared per share      $0.06     $0.06     $0.18     $0.16


  Reconciliation of Pro Forma Measures to GAAP


  (In thousands, except per share                Quarter Ended
   amounts)                                    February 25, 2006
                                                  Adjustments
                                       GAAP     Inet    Other     Pro Forma

  Net sales                          $262,105      --      --      $262,105
  Cost of sales                       103,003   (4,627)   (157)(A)   98,219
     Gross profit                     159,102    4,627     157      163,886
     Gross margin                       60.7%                         62.5%
  Research and development expenses    44,566      --      --        44,566
  Selling, general and
   administrative expenses             76,347      --      --        76,347
  Business realignment costs            3,182      --   (3,182)         --

  Acquisition related costs:
      Write-off of IPR&D                  --       --      --           --
      Amortization of acquired
       intangible assets                1,308   (1,279)    (29)         --
      Amortization of stock option
       compensation                        83      (83)    --           --
      Transition expenses                  27      (61)     34          --
        Total acquisition related
         costs                          1,418   (1,423)      5          --

  Loss on disposition of assets            54      --      --            54
      Operating income                 33,535    6,050   3,334       42,919
      Operating margin                  12.8%                         16.4%
  Other income, net                     2,352      --      --         2,352
      Earnings before taxes            35,887    6,050   3,334       45,271
  Income tax expense                   10,949    2,225     982       14,156
     Net earnings from continuing
      operations                      $24,938    3,825   2,352      $31,115
  Earnings per share - diluted          $0.30                         $0.37
  Weighted average shares
   outstanding - diluted               83,319                        83,319

                                              Three Quarters Ended
                                               February 25, 2006
                                                  Adjustments
                                       GAAP     Inet    Other     Pro Forma

  Net sales                          $750,561      --      --      $750,561
  Cost of sales                       303,277  (14,324)   (275)(A)  288,678
     Gross profit                     447,284   14,324     275      461,883
     Gross margin                       59.6%                         61.5%
  Research and development expenses   133,844      --      --       133,844
  Selling, general and
   administrative expenses            218,015      --      --       218,015
  Business realignment costs            7,543      --   (7,543)         --

  Acquisition related costs:
      Write-off of IPR&D                  365      --     (365)         --
      Amortization of acquired
       intangible assets                3,885   (3,838)    (47)         --
      Amortization of stock option
       compensation                       257     (257)    --           --
      Transition expenses               2,442   (1,824)   (618)         --
        Total acquisition related
         costs                          6,949   (5,919) (1,030)         --

  Loss (gain) on disposition of
   assets                                  81      --      --            81
      Operating income                 80,852   20,243   8,848      109,943
      Operating margin                  10.8%                         14.6%
  Other income, net                     5,110      --      --         5,110
      Earnings before taxes            85,962   20,243   8,848      115,053
  Income tax expense                   26,978    7,360   2,559       36,897
     Net earnings from continuing
      operations                      $58,984   12,883   6,289      $78,156
  Earnings per share - diluted          $0.70                         $0.93
  Weighted average shares
   outstanding - diluted               84,065                        84,065


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

  Net sales                         $256,332       --      --      $256,332
  Cost of sales                      102,946    (4,582)    --  (A)   98,364
     Gross profit                    153,386     4,582     --       157,968
     Gross margin                      59.8%                          61.6%
  Research and development expenses   43,380       --      --        43,380
  Selling, general and
   administrative expenses            78,750       --      --        78,750
  Business realignment costs             382       --     (382)         --

  Acquisition related costs:
      Write-off of IPR&D                  42       (42)    --           --
      Amortization of acquired
       intangible assets               1,288    (1,288)    --           --
      Amortization of stock option
       compensation                      307      (307)    --           --
      Transition expenses                953      (496)   (457)         --
        Total acquisition related
         costs                         2,590    (2,133)   (457)         --

  Loss on disposition of assets          754       --      --           754
      Operating income                27,530     6,715     839       35,084
      Operating margin                 10.7%                          13.7%
  Other income, net                    5,107       --      --         5,107
      Earnings before taxes           32,637     6,715     839       40,191
  Income tax expense                   9,246     2,557     252       12,055
     Net earnings from continuing
      operations                     $23,391     4,158     587      $28,136
  Earnings per share - diluted         $0.26                          $0.31
  Weighted average shares
   outstanding - diluted              90,690                         90,690

                                             Three Quarters Ended
                                               February 26, 2005
                                                  Adjustments
                                      GAAP      Inet    Other     Pro Forma

  Net sales                         $773,625       --      --      $773,625
  Cost of sales                      311,397    (9,217)    --  (A)  302,180
     Gross profit                    462,228     9,217     --       471,445
     Gross margin                      59.7%                          60.9%
  Research and development expenses  118,837       --      --       118,837
  Selling, general and
   administrative expenses           220,136       --      --       220,136
  Business realignment costs           2,665       --   (2,665)         --

  Acquisition related costs:
      Write-off of IPR&D              32,237   (32,237)    --           --
      Amortization of acquired
       intangible assets               2,134    (2,134)    --           --
      Amortization of stock option
       compensation                      511      (511)    --           --
      Transition expenses              3,436    (1,539) (1,897)         --
        Total acquisition related
         costs                        38,318   (36,421) (1,897)         --

  Loss (gain) on disposition of
   assets                             (1,080)      --    2,161 (B)    1,081
      Operating income                83,352    45,638   2,401      131,391
      Operating margin                 10.8%                          17.0%
  Other income, net                   10,764       --      --        10,764
      Earnings before taxes           94,116    45,638   2,401      142,155
  Income tax expense                  36,838     5,066     721       42,625
     Net earnings from continuing
      operations                     $57,278    40,572   1,680      $99,530
  Earnings per share - diluted         $0.65                          $1.13
  Weighted average shares
   outstanding - diluted              88,236                         88,236

  (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


                         Consolidated Balance Sheets


  (In thousands)                              February 25,         May 28,
                                                 2006               2005
  ASSETS
    Current assets:
      Cash and cash equivalents                $177,512           $131,640
      Short-term marketable
       investments                               94,543            120,881
      Trade accounts receivable, net            167,951            155,332
      Inventories                               139,138            131,096
      Other current assets                       69,078             80,177
        Total current assets                    648,222            619,126

    Property, plant and equipment, net          127,530            120,546
    Long-term marketable investments            115,699            226,892
    Deferred tax assets                          52,022             56,560
    Goodwill, net                               303,055            301,934
    Other long-term assets                      125,441            135,285
        Total assets                         $1,371,969         $1,460,343

  LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
      Accounts payable and accrued
       liabilities                             $126,750           $115,058
      Accrued compensation                       63,444             78,938
      Deferred revenue                           64,235             57,509
        Total current liabilities               254,429            251,505

    Long-term liabilities                       167,685            223,015

  Shareholders' equity:
    Common stock                                508,064            501,886
    Retained earnings                           605,191            639,720
    Accumulated other comprehensive loss       (163,400)          (155,783)
      Total shareholders' equity                949,855            985,823
      Total liabilities and
       shareholders' equity                  $1,371,969         $1,460,343

    Shares outstanding                           82,870             85,144


  Selected Additional Financial Data

                                  Quarter Ended         Three Quarters Ended
                                   Feb.    Feb.            Feb.        Feb.
  (Dollars in thousands,    %      25,      26,      %       25,        26,
  except per share        Growth                   Growth
   amounts)                        2006     2005            2006       2005

  Product Orders Data:

  Orders                   14%  $287,373  $252,037  10%  $758,572  $691,943

    U.S.                   13%    89,116    78,669  10%   250,655   228,324
    International          14%   198,257   173,368  10%   507,917   463,619

    Instruments Business    8%   193,390   179,482  (1%)  543,040   547,121
    Communications
     Business              30%    93,983    72,555  49%   215,532   144,822


  Book to Bill Ratio
   Calculation:

  Product Orders                $287,373  $252,037       $758,572  $691,943
  Product Sales                 $247,328  $243,363       $707,546  $725,534

  Book to Bill ratio                1.16      1.04           1.07      0.95


  Income Statement Items
   as a Percentage of Net
   Sales:

  Cost of sales                      39%       40%            40%       40%
  Research and development
   expenses                          17%       17%            18%       15%
  Selling, general and
   administrative expenses           29%       31%            29%       28%
  Business realignment
   costs                              1%        0%             1%        0%
  Acquisition related
   costs and amortization             1%        1%             1%        5%
  Loss (gain) on
   disposition of assets,
   net                                0%        0%             0%       (0%)
  Operating income                   13%       11%            11%       11%


  Capital Expenditures and
   Depreciation:

  Capital expenditures           $10,816    $6,636        $29,449   $21,140
  Depreciation and
   amortization expense           $6,912    $7,635        $20,849   $21,513


  Balance Sheet:                           Third       Second
                                          Quarter     Quarter
                                           Ended       Ended     Year Ended
                                         Feb. 25,      Nov. 26,     May 28,
                                            2006        2005        2005

  Cash and Marketable Investments:
     Cash and cash equivalents             $177,512    $136,015    $131,640
     Short-term marketable investments       94,543      96,808     120,881
     Long-term marketable investments       115,699     130,681     226,892
       Cash and Marketable Investments     $387,754    $363,504    $479,413


  Accounts receivable as a percentage of
   net sales                                  15.4%       15.7%       13.9%
  Days sales outstanding                       58.3        58.3        54.7
  Countback days sales outstanding             56.7        49.7        51.8


  Inventory as a percentage of net sales      12.9%       12.9%       11.3%
  Inventory turns                               3.0         3.1         3.6


                           Discontinued Operations

                                                           Three Quarters
                                          Quarter Ended         Ended
                                           Feb.     Feb.     Feb.     Feb.
                                            25,      26,      25,      26,
  (In thousands)                           2006     2005     2006     2005

  Loss on sale of VideoTele.com (less
   applicable income tax benefit of $0,
   $3, $1 and $12)                         $--       $(7)     $(3)    $(22)

  Gain (loss) on sale of optical
   parametric test business (less
   applicable income tax benefit
   (expense) of ($491), $10, ($379)
   and $95)                                 913      (18)     705     (176)

  Gain (loss) on sale of Gage (less
   applicable income tax benefit
   (expense) of ($326), $28, ($406)
   and $103)                                608      (53)     756     (193)

  Gain on sale of Color Printing and
   Imaging
     (less applicable income tax
      expense of $29, $1,889,
     $28 and $1,889)                         54    3,508       52    3,508


  Gain from discontinued operations,
     net of income taxes                 $1,575   $3,430   $1,510   $3,117

SOURCE: Tektronix, Inc.

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


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