Tektronix Reports Results for the Fourth Quarter and Full Year of Fiscal 2006
Excellent Results Reflect Success of New Product Introductions and Strength in Telecommunications
PRNewswire-FirstCall
BEAVERTON, Ore.

Tektronix, Inc. today reported net sales of $289.3 million and net earnings from continuing operations of $31.9 million or $0.37 per share for the fourth quarter ended May 27, 2006. This compares with net sales of $261.0 million and net earnings from continuing operations of $21.6 million or $0.25 per share for the same period last year. Excluding acquisition-related costs, business realignment and one-time items, net earnings from continuing operations were $36.4 million or $0.43 per share for the fourth quarter as compared with $27.4 million or $0.31 per share for the same period last year.

"This was an excellent quarter for us. Orders, sales and earnings were at the highest level we've seen this fiscal year reflecting the success of our new products and our continued ability to win in a strong telecommunications market," said Rick Wills, Tektronix Chairman and CEO.

"Orders in the fourth quarter grew over 21% as compared to the same quarter last year, and all regions showed double-digit orders growth," continued Wills. "Instruments business orders grew 7% driven by success from new product introductions. Within the Instruments business, orders for our general purpose test products grew 11% offset modestly by video products. Communications business orders grew a record 65% this quarter with large wins in all regions. We continue to see success with our very strong product offerings aimed at next-generation networks."

"During the quarter, we continued to introduce award winning products. We announced a family of new multi-format video waveform monitors which enable migration to high-definition video. We also introduced Cerify, the first automated system for testing file-based compressed digital video content. This product won the Pick Hit Award from Broadcast Engineering magazine at the National Association of Broadcasters show," Wills continued. "And, just after the close of the quarter, we announced that the DPO7000 oscilloscopes that we introduced last quarter won the Ultimate Product Award from EE Times and eeProductCenter for leading performance and innovation."

Full Year Results

For the fiscal year ended May 27, 2006, Tektronix reported net sales of $1.040 billion and net earnings from continuing operations of $90.9 million or $1.08 per share. This compares with net sales of $1.035 billion and net earnings from continuing operations of $78.9 million or $0.89 per share for the prior fiscal year. Excluding acquisition-related costs, business realignment costs and one-time items, net earnings from continuing operations were $114.6 million or $1.36 per share for the fiscal year, as compared with $126.9 million or $1.44 per share for the prior fiscal year.

"The fiscal year started slowly, with our first quarter reflecting market softness. However, every subsequent quarter showed sequential growth in orders, sales and earnings. Orders for the fiscal year were the strongest we've seen in five years. We saw strong double-digit orders growth from both of our new product areas -- with signal sources and spectrum analyzers growing approximately 30% each. And, our Communications business finished strong with 54% orders growth for the year."

"Looking forward, we remain confident in our strategy. We had a significant number of major new product introductions last year and are planning an even greater number this year. In addition, we continue to be optimistic about our ability to capitalize on the significant investment being made by network operators in next-generation telecommunications networks," concluded Wills.

First Quarter Guidance

For the first quarter of fiscal 2007, the company expects net sales to be approximately $255 - $265 million. Earnings per share from continuing operations are expected to be between $0.31 and $0.34 before mostly non-cash acquisition-related costs, business realignment costs, one-time items and share-based compensation expense.

  Recent highlights include the following:

  New product introductions, including:
  -- A new family of multi-format video waveform monitors that offer
     customers the widest range of product configurations and upgrades, and
     industry-first capabilities that enable the seamless migration from
     composite video configurations to complete HD/SD/composite solutions.
  -- Cerify, the world's first fully-automated system capable of verifying
     the quality of file-based, compressed digital video and audio prior to
     transmission or use, ensuring higher levels of end-customer viewing
     satisfaction. Tektronix also announced the availability of integrated
     content storage and quality control using Tektronix Cerify and Omneon
     media servers to provide customers with a QC system that interoperates
     seamlessly within the broadcast chain.
  -- The addition of the RF Scout Interference Hunter to the NetTek
     portfolio, an industry-first handheld platform that provides all of the
     tools necessary to hunt for RF interference and check signal quality
     both in-building and outdoors for wireless network optimization.
  -- The introduction of RSAVu offline-analysis software that enables
     customers to acquire signals using their Tektronix Real-Time Spectrum
     Analyzer (RSA) and then analyze the captured data in an off-line PC.
     The PC-based RSAVu software can provide the same analysis capabilities
     that exist on the RSA.
  -- A joint effort between Tektronix and TZero, the only IC supplier that
     enables broadcast quality video over wireless networks, to establish a
     gold standard for ultra wideband testing.

  Customer wins announced during the quarter, including:
  -- Sony's adoption of Tektronix' Real-Time Spectrum Analyzers for
     measuring and analyzing RFID communication conditions between
     contactless wireless cards equipped with Sony FeliCa IC card technology
     which will be used as a form of e-money.
  -- China's Chung Huang University Engineering College's choice of
     Tektronix' AFG3000 arbitrary/function generators for deployment across
     four labs to facilitate the delivery of courses including electronics,
     microprocessor, VLSI and FPGA, and to assist students in their research
     projects.
  -- Danish Broadcasting Corporation's installation of Tektronix' video
     equipment to provide cost-effective and easy-to-use monitoring
     solutions for advanced HD/SD testing for use in their new broadcast
     center.
  -- Vodafone Germany's purchase of products from Tektronix' Unified
     Assurance suite for its network-wide, real-time GPRS and UMTS
     monitoring system which provides end-to-end network and service
     monitoring independent of network infrastructure and underlying
     technologies.
  -- Vodafone Italia's decision to deploy Tektronix' Unified Assurance
     solution, including the industry leading GeoProbe, APM and Orion
     products, to proactively monitor the quantity and quality of data
     services delivered to its customers roaming abroad and to visitors from
     other countries who want to access Vodafone Italia's high-quality data
     services.
  -- BellSouth's decision to deploy the GeoProbe Voice-over-IP (VoIP)
     monitoring solution from Tektronix' Unified Assurance suite throughout
     its IP network. GeoProbe will provide BellSouth with end-to-end
     performance monitoring that enables rapid troubleshooting as well as
     identification of service degradations and network problems that may
     impact VoIP service quality.

  Product awards, including:
  -- The NAB Pick Hit Award from Broadcast Engineering magazine for
     Tektronix' Cerify.
  -- The Ultimate Product 2.4 from the editors and readers of EE Times and
     eeProductCenter for the DPO7000 family of oscilloscopes. The award was
     given for leading performance and innovation in the Test & Measurement
     category.

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

Tektronix will be discussing its fourth 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 for one year.

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. Some of these items pertain to events that have not yet occurred and are not possible to ascertain with a reasonable degree of accuracy. Therefore, no reconciliation to GAAP for projected amounts is provided. In addition, in line with common industry practice and in order to enable comparability with other technology companies, guidance for pro forma results of operations excludes the effects of share-based compensation under FAS123R. 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 leading test, measurement, and monitoring company providing measurement solutions to the communications, computer, and semiconductor industries worldwide. With over 60 years of experience, Tektronix provides general purpose test and measurement, video test and monitoring and communications network management and diagnostic products that enable 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       Fiscal Year Ended
                                  May 27,   May 28,    May 27,     May 28,
  (In thousands, except per        2006      2005        2006        2005
   share amounts)

  Net sales                      $289,309  $261,029  $1,039,870  $1,034,654
  Cost of sales                   115,151   104,481     418,428     415,878

      Gross profit                174,158   156,548     621,442     618,776

  Research and development
   expenses                        49,570    44,637     183,414     163,474
  Selling, general and
   administrative expenses         84,329    80,789     302,344     300,925
  Business realignment costs        2,304       435       9,847       3,100
  Acquisition related costs and
   amortization                     1,618     3,235       8,567      41,553
  Gain on disposition of assets,
   net                             (1,514)     (620)     (1,433)     (1,700)

      Operating income             37,851    28,072     118,703     111,424

  Interest income                   4,224     3,980      13,585      17,144
  Interest expense                   (144)     (289)       (483)       (820)
  Other non-operating income
   (expense), net                     535    (1,695)     (3,377)     (3,564)

      Earnings before taxes        42,466    30,068     128,428     124,184

  Income tax expense               10,558     8,495      37,536      45,333

      Net earnings from
       continuing operations       31,908    21,573      90,892      78,851

  Gain (loss) from discontinued
   operations, net of income
   taxes                              (47)     (372)      1,463       2,745

  Net earnings                    $31,861   $21,201     $92,355     $81,596

  Earnings per share:

     Continuing operations -
      basic                         $0.38     $0.25       $1.09       $0.91
     Continuing operations -
      diluted                       $0.37     $0.25       $1.08       $0.89

     Discontinued operations -
      basic                           $--       $--       $0.02       $0.03
     Discontinued operations -
      diluted                         $--       $--       $0.02       $0.03

     Net earnings - basic           $0.38     $0.24       $1.11       $0.94
     Net earnings - diluted         $0.37     $0.24       $1.09       $0.93

  Weighted average shares
   outstanding:
     Basic                         83,681    87,103      83,323      86,803
     Diluted                       85,365    87,840      84,381      88,151

  Cash dividend declared per
   share                            $0.06     $0.06       $0.24       $0.22


  Reconciliation of Pro Forma Measures to GAAP

                                                  Quarter Ended
  (In thousands, except per share                  May 27, 2006
   amounts)
                                                   Adjustments
                                        GAAP     Inet   Other     Pro Forma

  Net sales                           $289,309      --      --     $289,309
  Cost of sales                        115,151  (4,624)   (157)(A)  110,370
     Gross profit                      174,158   4,624     157      178,939
     Gross margin                        60.2%                        61.9%
  Research and development expenses     49,570      --      --       49,570
  Selling, general and administrative
   expenses                             84,329      --      --       84,329
  Business realignment costs             2,304      --  (2,304)          --

  Acquisition related costs:
       Write-off of IPR&D                   --      --      --           --
       Amortization of acquired
        intangible assets                1,309  (1,279)    (30)          --
       Amortization of stock option
        compensation                        82     (82)     --           --
       Transition expenses                 227    (131)    (96)          --
         Total acquisition related
          costs                          1,618  (1,492)   (126)          --

  Loss (gain) on disposition of
   assets                               (1,514)     --   1,635 (B)      121
      Operating income                  37,851   6,116     952       44,919
      Operating margin                   13.1%                        15.5%
  Other income, net                      4,615      --      --        4,615
      Earnings before taxes             42,466   6,116     952       49,534
  Income tax expense                    10,558   2,237     291       13,086
     Net earnings from continuing
      operations                       $31,908   3,879     661      $36,448
  Earnings per share - diluted           $0.37                        $0.43
  Weighted average shares outstanding
   - diluted                            85,365                       85,365


                                                  Quarter Ended
  (In thousands, except per share                  May 28, 2005
   amounts)
                                                   Adjustments
                                        GAAP      Inet   Other    Pro Forma

  Net sales                           $261,029       --     --     $261,029
  Cost of sales                        104,481   (5,557)    -- (A)   98,924
     Gross profit                      156,548    5,557     --      162,105
     Gross margin                        60.0%                        62.1%
  Research and development expenses     44,637       --     --       44,637
  Selling, general and administrative
   expenses                             80,789       --     --       80,789
  Business realignment costs               435     (328)  (107)          --

  Acquisition related costs:
       Write-off of IPR&D                   --       --     --           --
       Amortization of acquired
        intangible assets                1,280   (1,280)    --           --
       Amortization of stock option
        compensation                       274     (274)    --           --
       Transition expenses               1,681     (685)  (996)          --
         Total acquisition related
          costs                          3,235   (2,239)  (996)          --

  Loss (gain) on disposition of
   assets                                 (620)      --     --         (620)
      Operating income                  28,072    8,124  1,103       37,299
      Operating margin                   10.8%                        14.3%
  Other income, net                      1,996       --     --        1,996
      Earnings before taxes             30,068    8,124  1,103       39,295
  Income tax expense                     8,495    3,099    331       11,925
     Net earnings from continuing
      operations                       $21,573    5,025    772      $27,370
  Earnings per share - diluted           $0.25                        $0.31
  Weighted average shares outstanding
   - diluted                            87,840                       87,840


                                             Fiscal Year Ended
                                                May 27, 2006

                                                Adjustments
                                    GAAP      Inet    Other      Pro Forma

  Net sales                      $1,039,870       --      --     $1,039,870
  Cost of sales                     418,428  (18,948)   (432)(A)    399,048
     Gross profit                   621,442   18,948     432        640,822
     Gross margin                     59.8%                           61.6%
  Research and development
   expenses                         183,414       --      --        183,414
  Selling, general and
   administrative expenses          302,344       --      --        302,344
  Business realignment costs          9,847       --  (9,847)            --

  Acquisition related costs:
      Write-off of IPR&D                365       --    (365)            --
      Amortization of acquired
       intangible assets              5,194   (5,117)    (77)            --
      Amortization of stock
       option compensation              339     (339)     --             --
      Transition expenses             2,669   (1,955)   (714)            --
        Total acquisition
         related costs                8,567   (7,411) (1,156)            --

  Loss (gain) on disposition of
   assets                            (1,433)      --   1,635 (B)        202
      Operating income              118,703   26,359   9,800        154,862
      Operating margin                11.4%                           14.9%
  Other income, net                   9,725       --      --          9,725
      Earnings before taxes         128,428   26,359   9,800        164,587
  Income tax expense                 37,536    9,597   2,850         49,983
     Net earnings from
      continuing operations         $90,892   16,762   6,950       $114,604
  Earnings per share - diluted        $1.08                           $1.36
  Weighted average shares
   outstanding - diluted             84,381                          84,381


                                             Fiscal Year Ended
                                               May 28, 2005

                                                Adjustments
                                   GAAP       Inet    Other      Pro Forma

  Net sales                     $1,034,654        --      --     $1,034,654
  Cost of sales                    415,878   (14,774)     -- (A)    401,104
     Gross profit                  618,776    14,774      --        633,550
     Gross margin                    59.8%                            61.2%
  Research and development
   expenses                        163,474        --      --        163,474
  Selling, general and
   administrative expenses         300,925        --      --        300,925
  Business realignment costs         3,100      (328) (2,772)            --

  Acquisition related costs:
      Write-off of IPR&D            32,237   (32,237)     --             --
      Amortization of acquired
       intangible assets             3,414    (3,414)     --             --
      Amortization of stock
       option compensation             785      (785)     --             --
      Transition expenses            5,117    (2,224) (2,893)            --
        Total acquisition
         related costs              41,553   (38,660) (2,893)            --

  Loss (gain) on disposition of
   assets                           (1,700)       --   2,161 (B)        461
      Operating income             111,424    53,762   3,504        168,690
      Operating margin               10.8%                            16.3%
  Other income, net                 12,760        --      --         12,760
      Earnings before taxes        124,184    53,762   3,504        181,450
  Income tax expense                45,333     8,165   1,052         54,550
     Net earnings from
      continuing operations        $78,851    45,597   2,452       $126,900
  Earnings per share - diluted       $0.89                            $1.44
  Weighted average shares
   outstanding - diluted            88,151                           88,151

  (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)                             May 27, 2006       May 28, 2005

  ASSETS
    Current assets:
      Cash and cash equivalents                $215,587           $131,640
      Short-term marketable
       investments                              121,346            120,881
      Trade accounts receivable, net            174,599            155,332
      Inventories                               156,351            131,096
      Other current assets                       69,002             80,177
        Total current assets                    736,885            619,126

    Property, plant and equipment,
     net                                        127,510            120,546
    Long-term marketable investments            103,839            226,892
    Deferred tax assets                              --             56,560
    Goodwill, net                               307,189            301,934
    Pension asset                               239,128                868
    Other long-term assets                      119,539            134,417
        Total assets                         $1,634,090         $1,460,343

  LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
      Accounts payable and accrued
       liabilities                             $133,323           $115,058
      Accrued compensation                       71,718             78,938
      Deferred revenue                           66,677             57,509
        Total current liabilities               271,718            251,505

    Deferred income taxes                        65,935                 --
    Other long-term liabilities                 108,868            223,015

    Shareholders' equity:
      Common stock                              540,718            501,886
      Retained earnings                         620,465            639,720
      Accumulated other comprehensive
       income (loss)                             26,386           (155,783)
        Total shareholders' equity            1,187,569            985,823
        Total liabilities and
         shareholders' equity                $1,634,090         $1,460,343

    Shares outstanding                           83,719             85,144


  Selected Additional Financial Data

                               Quarter Ended            Fiscal Year Ended
  (Dollars in            %    May 27,   May 28,    %    May 27,    May 28,
   thousands)         Growth   2006      2005   Growth   2006       2005

  Product Orders Data:

  Orders                21%  $307,604  $253,365  13%  $1,066,176  $945,308

    U.S.                19%   108,333    90,812  12%     358,988   319,136
    International       23%   199,271   162,553  13%     707,188   626,172

    Instruments Business 7%   203,472   190,147   1%     746,512   737,268
    Communications
     Business           65%   104,132    63,218  54%     319,664   208,040


  Book to Bill Ratio
   Calculation:

  Product Orders             $307,604  $253,365       $1,066,176  $945,308
  Product Sales              $275,251  $247,376         $982,797  $972,910

  Book to Bill ratio             1.12      1.02             1.08      0.97


  Income Statement Items
   as a Percentage of
   Net Sales:

  Cost of sales                   40%       40%              40%       40%
  Research and
   development expenses           17%       17%              18%       16%
  Selling, general and
   administrative
   expenses                       29%       31%              29%       29%
  Business realignment
   costs                           1%        0%               1%        0%
  Acquisition related
   costs and
   amortization                    1%        1%               1%        4%
  Gain on disposition of
   assets, net                    (1%)       0%               0%        0%
  Operating income                13%       11%              11%       11%


  Capital Expenditures
   and Depreciation:

  Capital expenditures         $6,834   $11,324          $36,283   $32,464
  Depreciation and
   amortization expense        $7,128    $7,644          $27,977   $29,157


  Balance Sheet:                            Fourth      Third
                                           Quarter     Quarter
                                            Ended       Ended     Year Ended
                                           May 27,     Feb. 25,     May 28,
                                             2006        2006        2005

  Cash and Marketable Investments:
     Cash and cash equivalents             $215,587    $177,512    $131,640
     Short-term marketable investments      121,346      94,543     120,881
     Long-term marketable investments       103,839     115,699     226,892
       Cash and Marketable Investments     $440,772    $387,754    $479,413


  Accounts receivable as a percentage of
   net sales                                  14.3%       15.4%       13.9%
  Days sales outstanding                       54.9        58.3        54.6
  Countback days sales outstanding             46.6        56.7        51.8


  Inventory as a percentage of net sales      12.4%       12.9%       11.3%
  Inventory turns                               3.2         3.0         3.6


                         Discontinued Operations

                                         Quarter Ended    Fiscal Year Ended
                                        May 27,  May 28,  May 27,   May 28,
  (In thousands)                         2006     2005     2006      2005

  Loss on sale of VideoTele.com (less
   applicable income tax benefit of
   $0, $1, $1 and $13)                     $--     $(1)     $(3)    $(23)

  Gain (loss) on sale of optical
   parametric test business (less
   applicable income tax benefit
   (expense) of $41, $18, ($338)
   and $113)                               (76)    (36)     629     (212)

  Gain (loss) on sale of Gage (less
   applicable income tax benefit
   (expense) of ($2), $79, ($408)
   and $182)                                 3    (144)     759     (337)

  Gain (loss) on sale of Color Printing
   and Imaging (less applicable income
   tax benefit (expense) of ($14), $103,
   ($42) and ($1,786))                      26    (191)      78    3,317


  Gain (loss) from discontinued
   operations, net of income taxes        $(47)  $(372)  $1,463   $2,745

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


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