Tektronix Reports Results for the First Quarter of Fiscal 2007
Strong Sales, Earnings Leverage and Continued Flow of Innovative New Products
PRNewswire-FirstCall
BEAVERTON, Ore.

Tektronix, Inc. today reported net sales of $268.1 million and net earnings from continuing operations of $20.1 million or $0.24 per share for the first quarter ended August 26, 2006. This compares with net sales of $235.1 million and net earnings from continuing operations of $14.2 million or $0.17 per share for the same period last year. Excluding acquisition-related costs, business realignment costs, one-time items, and share-based compensation expense, net earnings from continuing operations were $29.2 million or $0.35 per share for the first quarter as compared with $21.3 million or $0.25 per share for the same period last year.

"This was a very good quarter for Tektronix with particular strength in sales and earnings," said Rick Wills, Tektronix Chairman and CEO. "Sales grew 14% over last year with both the Instruments and the Communications businesses showing double-digit growth. Earnings outpaced sales growth with earnings per share up 40% over last year, demonstrating our ability to leverage our cost structure."

Orders for the Instruments business were up 13% with strong growth from the oscilloscope and spectrum analyzer product categories. Growth in this business was the result of new products and a stable market overall. Wills noted, "We saw record orders for our spectrum analyzers as the market continues to respond favorably to our innovative real-time technology."

Orders for the Communications business were down 19% due to the timing of a few large orders. "We saw orders for this business grow over 65% in the previous quarter and we again expect double-digit order growth next quarter," Wills continued. "Sales were up 21% as some of the orders we received last year converted to revenue. Overall, this continues to be a healthy market driven by investment in next-generation telecommunications networks. Our ability to capitalize on this investment should continue to create opportunities for additional growth."

During the quarter, we continued to execute our growth strategy by delivering a robust pipeline of major new products including a new oscilloscope series -- the DPO70000, targeted at high-speed design applications, and the DSA70000 aimed at serial data designers. These products extend the uncompromised performance characteristics of the midrange DPO7000 series introduced earlier this calendar year. We also announced a new capability for the MTM400 Transport Stream Monitor that is designed to help simplify and strengthen network monitoring for Video over IP and IPTV applications.

In addition, in early August we began taking orders for a new Real-Time Spectrum Analyzer series that contributed to the record orders growth for this product category. These products provide breakthrough capabilities targeted at digital RF applications. Wills added, "The introduction of the RSA6100A series spectrum analyzers demonstrates our strategy to selectively enter new product categories and develop industry-leading products -- which should enable us to grow faster than the market."

Finally, in our Communications business, we introduced the K1297-G35, a new mobile test platform that provides the highest performance available for reliable testing of 3G and 3.5G broadband wireless network elements. This product enables customers to test modern mobile networks under simulated, yet realistic, conditions.

"Looking forward, we are encouraged by the progress of our recently introduced products and are excited about the strong product flow in our Instruments business in the coming quarters. 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.

Second Quarter Guidance

For the second quarter of fiscal 2007, the company expects net sales to be approximately $270 - $280 million. Earnings per share from continuing operations are expected to be between $0.33 and $0.37 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:
  * The DPO70000 Digital Phosphor Oscilloscope and the DSA70000 Digital
    Serial Analyzer.  A new high-performance oscilloscope series, the
    DPO70000 provides industry-leading capabilities for high-speed design
    and analysis. The DSA70000 series has the same base performance but is
    optimized for the serial data designer, providing an ideal test platform
    for high-speed standards including PCI-Express, XAUI, FB-DIMM and Serial
    ATA.
  * The TDS1000B/TDS2000B series of digital storage oscilloscopes, a
    replacement for the world's most popular oscilloscope, the
    TDS1000/TDS2000. These new versions of the ultra-lightweight, portable
    instruments add both Tektronix OpenChoice™ PC communication software
    and National Instruments SignalExpress™ Tektronix Edition interactive
    measurement software with USB connectivity.
  * A new monitoring solution for Video over IP and IPTV applications -- the
    addition of the IP/GigE capability for the MTM400 MPEG Transport Stream
    Monitor is designed to help simplify and strengthen network monitoring
    by allowing network engineers to view Multi or Single Program Transport
    Streams over Gigabit Ethernet networks and identify signal degradation
    issues.
  * A new mobile test platform for 3G and 3.5G broadband wireless networks
    -- the K1297-G35 Protocol Tester for mobile equipment manufacturers and
    mobile operators. This new platform offers the highest performance
    available for reliable testing of these networks with 14.4 Mbps on four
    inputs at the same time.
  * And, just after the close of the quarter, we publicly announced the
    RSA6100A Series Real-Time Spectrum Analyzers which provide an unmatched
    combination of real-time performance, capture bandwidth, and dynamic
    range to meet the needs of a broad range of cutting-edge digital RF
    applications.  These new capabilities reveal never before seen phenomena
    for digital RF designers.

  And a product award:
  * The Tektronix WFM7100 Video Waveform Monitor was awarded the
    "Outstanding Product" award for video production and broadcasting by
    Beijing International Radio, Film and Television Equipment Exhibition
    (BIRTV), for fast, reliable and easy content monitoring and measurement.
    This is the third year in a row that Tektronix' video products have won
    the outstanding product award.  BIRTV is the region's largest exhibition
    for radio and TV service providers and equipment manufacturers.

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

Tektronix will hold its Annual Meeting of Shareholders on Thursday, September 21, 2006, at 10:00 a.m. Pacific at the company's headquarters in Beaverton, Oregon.

Tektronix will be discussing its first quarter results and future guidance on a conference call today, beginning at 1:30 p.m. Pacific. 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, markets, market position and market growth opportunities, strategic direction 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 and timing of large orders; 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 is a leading supplier of test, measurement, and monitoring products, solutions and services for the communications, computer, and semiconductor industries -- as well as military/aerospace, consumer electronics, education and a broad range of other industries worldwide. With 60 years of experience, Tektronix enables its customers to design, build, deploy, and manage next-generation global communications networks, advanced and pervasive 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
                                               August 26,         August 27,
  (In thousands, except per share amounts)        2006               2005

  Net sales                                     $268,113           $235,060
  Cost of sales                                  104,763             99,103

      Gross profit                               163,350            135,957

  Research and development expenses               50,869             43,605
  Selling, general and administrative expenses    79,873             68,565
  Business realignment costs                       2,596              2,481
  Acquisition related costs and amortization       1,471              3,436
  Loss on disposition of assets, net                 554                  4

      Operating income                            27,987             17,866

  Interest income                                  4,670              3,092
  Interest expense                                   (99)               (97)
  Other non-operating expense, net                (1,011)              (986)

      Earnings before taxes                       31,547             19,875

  Income tax expense                              11,434              5,707

      Net earnings from continuing operations     20,113             14,168

  Gain (loss) from discontinued operations,
   net of income taxes                                 7                (82)

  Net earnings                                   $20,120            $14,086

  Earnings per share:

      Continuing operations - basic                $0.25              $0.17
      Continuing operations - diluted              $0.24              $0.17

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

      Net earnings - basic                         $0.25              $0.17
      Net earnings - diluted                       $0.24              $0.17

  Weighted average shares outstanding:
      Basic                                       82,074             84,603
      Diluted                                     83,542             85,297

  Cash dividend declared per share                 $0.06              $0.06



  Reconciliation of Pro Forma Measures to GAAP

  (In thousands, except                       Quarter Ended
   per share amounts)                        August 26, 2006
                                               Adjustments
                                                   Share-
                                                   based
                                                   Compen-
                                GAAP  Acquisitions sation  Other   Pro Forma

  Net sales                   $268,113      --       --      --    $268,113
  Cost of sales                104,763  (5,973)(A)   --      --      98,790
     Gross profit              163,350   5,973       --      --     169,323
     Gross margin                60.9%                                63.2%
  Research and development
   expenses                     50,869      --   (1,228)     --      49,641
  Selling, general and
   administrative expenses      79,873      --   (2,973)     --      76,900
  Business realignment costs     2,596      --       --  (2,596)         --

  Acquisition related costs:
      Write-off of IPR&D            --      --       --      --          --
      Amortization of acquired
       intangible assets         1,335  (1,335)      --      --          --
      Amortization of stock
       option compensation          81     (81)      --      --          --
      Transition expenses           55     (55)      --      --          --
        Total acquisition
         related costs           1,471  (1,471)      --      --          --

  Loss on disposition of assets    554      --       --      --         554
      Operating income          27,987   7,444    4,201   2,596      42,228
      Operating margin           10.4%                                15.8%
  Other income, net              3,560      --       --      --       3,560
      Earnings before taxes     31,547   7,444    4,201   2,596      45,788
  Income tax expense            11,434   2,753    1,462     904      16,553
     Net earnings from
      continuing operations    $20,113   4,691    2,739   1,692     $29,235
  Earnings per share - diluted   $0.24                                $0.35
  Weighted average shares
   outstanding - diluted        83,542                               83,542


                                                   Quarter Ended
                                                  August 27, 2005
                                                    Adjustments
                                       GAAP   Acquisitions  Other Pro Forma

  Net sales                          $235,060       --         --  $235,060
  Cost of sales                        99,103   (5,112)(A)     --    93,991
     Gross profit                     135,957    5,112         --   141,069
     Gross margin                       57.8%                         60.0%
  Research and development expenses    43,605       --         --    43,605
  Selling, general and administrative
   expenses                            68,565       --         --    68,565
  Business realignment costs            2,481       --     (2,481)       --

  Acquisition related costs:
      Write-off of IPR&D                  365     (365)        --        --
      Amortization of acquired
       intangible assets                1,284   (1,284)        --        --
      Amortization of stock option
       compensation                        90      (90)        --        --
      Transition expenses               1,697   (1,697)        --        --
        Total acquisition related costs 3,436   (3,436)        --        --

  Loss on disposition of assets             4       --         --         4
      Operating income                 17,866    8,548      2,481    28,895
      Operating margin                   7.6%                         12.3%
  Other income, net                     2,009       --         --     2,009
      Earnings before taxes            19,875    8,548      2,481    30,904
  Income tax expense                    5,707    3,099        844     9,650
     Net earnings from continuing
      operations                      $14,168    5,449      1,637   $21,254
  Earnings per share - diluted          $0.17                         $0.25
  Weighted average shares
   outstanding - diluted               85,297                        85,297

(A) Amortization of acquired intangible assets and non-cash expense for inventory step up adjustment to fair value

                       Consolidated Balance Sheets

  (In thousands)                           August 26, 2006     May 27, 2006

  ASSETS
    Current assets:
      Cash and cash equivalents                $200,360           $215,587
      Short-term marketable investments         129,002            121,346
      Trade accounts receivable, net            170,434            174,599
      Inventories                               165,438            156,351
      Other current assets                       68,161             69,002
        Total current assets                    733,395            736,885

    Property, plant and equipment, net          126,868            127,510
    Long-term marketable investments            105,351            103,839
    Goodwill, net                               306,134            307,189
    Pension asset                               236,539            239,128
    Other long-term assets                      111,557            119,539
        Total assets                         $1,619,844         $1,634,090

  LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
      Accounts payable and accrued
       liabilities                             $143,134           $133,323
      Accrued compensation                       65,174             71,718
      Deferred revenue                           72,415             66,677
        Total current liabilities               280,723            271,718

    Deferred income taxes                        62,766             65,935
    Other long-term liabilities                 106,743            108,868

    Shareholders' equity:
      Common stock                              540,899            540,718
      Retained earnings                         605,075            620,465
      Accumulated other comprehensive income     23,638             26,386
        Total shareholders' equity            1,169,612          1,187,569
        Total liabilities and
         shareholders' equity                $1,619,844         $1,634,090

    Shares outstanding                           82,515             83,719


  Selected Additional Financial Data
                                                      Quarter Ended
                                            %     August 26,   August 27,
  (Dollars in thousands)                  Growth     2006         2005

  Orders Data:

  Orders                                     4%     $255,399     $245,515

    U.S.                                    12%       96,194       86,131
    International                           (0%)     159,205      159,384

    Instruments Business                    13%      198,279      174,771
    Communications Business                (19%)      57,120       70,744

  Sales Data:

  Net Sales                                 14%     $268,113     $235,060

    U.S.                                    16%       97,979       84,403
    International                           13%      170,134      150,657

    Instruments Business                    12%      198,212      177,369
    Communications Business                 21%       69,901       57,691

  Income Statement Items as a Percentage
   of Net Sales:

  Cost of sales                                          39%          42%
  Research and development expenses                      19%          19%
  Selling, general and administrative
   expenses                                              30%          29%
  Business realignment costs                              1%           1%
  Acquisition related costs and
   amortization                                           1%           1%
  Loss on disposition of assets, net                      0%           0%
  Operating income                                       10%           8%


  Capital Expenditures and Depreciation:

  Capital expenditures                                $6,124       $8,744
  Depreciation and amortization expense               $7,297       $7,006


  Balance Sheet:                                 Quarter Ended Year Ended
                                                   August 26,    May 27,
                                                      2006         2006

  Cash and Marketable Investments:
     Cash and cash equivalents                      $200,360     $215,587
     Short-term marketable investments               129,002      121,346
     Long-term marketable investments                105,351      103,839
       Cash and Marketable Investments              $434,713     $440,772

  Accounts receivable as a percentage of net sales     16.1%        15.9%
  Days sales outstanding                                57.8         61.1
  Countback days sales outstanding                      49.3         46.6

  Inventory as a percentage of net sales               15.0%        13.8%
  Inventory turns                                        2.6          2.9

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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