Tektronix Reports Results for the Second Quarter of Fiscal 2007
Orders Up 18% Year Over Year
PRNewswire-FirstCall
BEAVERTON, Ore.

Tektronix, Inc. today reported net sales of $272.8 million and net earnings from continuing operations of $19.6 million or $0.24 per share for the second quarter ended November 25, 2006. This compares with net sales of $253.4 million and net earnings from continuing operations of $19.9 million or $0.24 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 $29.0 million or $0.35 per share for the second quarter as compared with $25.8 million or $0.31 per share for the same period last year.

"This was a good quarter for Tektronix in many respects. We saw orders growth of 18% driven by strong demand for general purpose instruments and continued success in network monitoring for next generation networks. In addition, we saw orders growth in every geography," said Rick Wills, Tektronix Chairman and CEO. "Strong orders resulted in sales growth of 8% over the prior year, and our strongest level of backlog in recent years. Pro forma earnings per share grew 13% on improved interest income, currency, and tax rate -- partially offset by lower gross margin."

Orders for the Instruments business were up 20% driven by a significant digital design win for logic analyzers, continued strong growth in oscilloscopes and excellent demand for our spectrum analyzer products -- which grew over 50%.

Orders in the Communications business were up 7% driven by continued demand for next generation telecommunications network monitoring solutions. Wills continued, "However, we saw order growth slow modestly as a result of delayed capital expenditure investments and the timing of new installations."

We continued to execute our growth strategy in the Instruments business by bringing to market several major products beginning with the introduction of the DSA8200 sampling oscilloscope, modules and software that represent significant performance advancements for testing the newest generation of serial data technologies. In addition, we made considerable progress in our two newer product categories. We introduced a high performance signal source for testing high-speed serial data buses and wideband digital RF technologies. Based on a new platform, it is the fastest and most versatile product in its class. And, we saw continued strong customer response to the recently introduced RSA6100A Series Real-Time Spectrum Analyzers. These products, which began shipping this quarter, increase our addressable market and contributed to strong growth in our spectrum analyzer products overall.

In our Communications business, we introduced the K1297-G35 WiMAX -- the industry's first protocol monitoring platform for functional test of mobile WiMAX broadband technologies. In addition, just after the close of the quarter, we completed the acquisition of Minacom, a leading provider of active probe test solutions used by telecommunications carriers, cable multi-service operators, and wireless and VoIP providers worldwide. This acquisition will expand Tektronix' leadership and addressable market in monitoring next generation networks.

"Looking forward, we are encouraged by customer response to recent product introductions. We believe our markets for Instruments products remain stable and in spite of the recent slowing in the growth rates for our Communications products, we remain optimistic about our long-term opportunities in this business," concluded Wills.

Third Quarter Guidance

For the third quarter of fiscal 2007, the company expects net sales to be approximately $275 - $285 million. Earnings per share from continuing operations are expected to be between $0.34 and $0.39 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 introduction of the new  DSA8200 Digital Serial Analyzer sampling
     oscilloscope, modules and software, which represent the most
     significant performance advancement in TDR (time-domain-reflectometry)
     test technology in 20 years, in direct response to the demanding needs
     and compliance requirements of high-speed serial data standards.
  -- The introduction of the new AWG7000 Arbitrary Waveform Generators which
     are built on a new platform and are the fastest, most capable and
     versatile AWGs available for testing of high-speed serial data and
     wideband digital RF signals.
  -- The availability of the K1297-G35 WiMAX solution, the
     telecommunications industry's first protocol monitoring platform for
     functional testing of Mobile WiMAX radio access products that are based
     on the IEEE 802.16e standard.
  -- The introduction of the world's most powerful WiMAX R&D Test Set, a new
     application specific test tool utilizing the RSA3408A Real-Time
     Spectrum Analyzer, which will enable engineering teams to more quickly
     detect, diagnose and resolve design issues for WiMAX end-user products.
  -- The addition of TD-SCDMA -- the mobile telecommunications standard
     developed for China -- as an option to the market leading NetTek
     Wireless RF Field Tester. Tektronix is the first manufacturer to
     provide TD-SCDMA RF field test and measurement capabilities in a
     handheld form.
  -- The availability of Spectra2|VQM (Video Quality Measurement)
     version 2.0, a next generation network test tool that delivers robust
     multi-user diagnostics monitoring for multicast and unicast IP video
     services and extends Tektronix' IP video leadership for the diagnosis
     and analysis of Internet Protocol TV (IPTV).
  -- The announcement of further extensions of IP Multimedia Subsystem (IMS)
     performance monitoring capabilities to the industry-leading Unified
     Assurance suite to enable true end-to-end performance monitoring and
     testing of current and next generation fixed, mobile and converged
     networks.

  Key customer wins, including:

  -- The selection by France's Institut national de l'audiovisuel, the
     world's first audiovisual archive center, to install the Tektronix
     MTS4EA Elementary Stream Analyzer software to augment its world-class
     training center and to help educate the next generation of AV and
     broadcast professionals.
  -- The selection by Teligent, a global supplier of value added services to
     telecommunications carriers, of Tektronix' Spectra2 portable
     diagnostics platform and conformance test suites to provide on-site
     testing and analysis of next generation networks.

  Product awards, including:

  -- A STAR Award from the Service & Support Professionals Association
     (SSPA) recognizing technology companies that display exceptional
     leadership, innovation, and commitment to service excellence. Tektronix
     was the only test and measurement industry firm that received a SSPA
     STAR Award for service and support delivery.

  -- Just after the close of the quarter, Tektronix announced that the
     DPO4000 Oscilloscope won the Elektra 'Product of the Year' Award for
     quality of design, technical innovation and usability as judged by an
     independent panel of industry experts, including representatives from
     companies, trade bodies and academia, as well as editors from
     Electronics Weekly.

In addition, today Tektronix declared a quarterly cash dividend of $.06 per share on the outstanding common shares of the Company, payable on January 22, 2007 to shareholders of record as of the close of market on January 5, 2007.

Tektronix will be discussing its second 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, share-based compensation 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, share-based compensation 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     Two Quarters Ended
                                    November   November  November  November
  (In thousands, except per share       25,       26,       25,       26,
   amounts)                            2006      2005      2006      2005

  Net sales                          $272,789  $253,396  $540,902  $488,456
  Cost of sales                       113,493   101,171   218,256   200,274

      Gross profit                    159,296   152,225   322,646   288,182

  Research and development expenses    49,012    45,673    99,881    89,278
  Selling, general and
   administrative expenses             84,164    73,103   164,037   141,668
  Business realignment costs
   (credits)                             (227)    1,880     2,369     4,361
  Acquisition related costs and
   amortization                         1,369     2,095     2,840     5,531
  Loss (gain) on disposition of
   assets, net                            (33)       23       521        27

      Operating income                 25,011    29,451    52,998    47,317

  Interest income                       4,263     2,888     8,933     5,980
  Interest expense                        (83)     (146)     (182)     (243)
  Other non-operating expense, net     (1,597)   (1,993)   (2,608)   (2,979)

      Earnings before taxes            27,594    30,200    59,141    50,075

  Income tax expense                    7,997    10,322    19,431    16,029

      Net earnings from continuing
       operations                      19,597    19,878    39,710    34,046

  Gain (loss) from discontinued
   operations,
      net of income taxes                  (4)       17         3       (65)

  Net earnings                        $19,593   $19,895   $39,713   $33,981

  Earnings per share:

     Continuing operations - basic      $0.24     $0.24     $0.49     $0.41
     Continuing operations - diluted    $0.24     $0.24     $0.48     $0.40

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

     Net earnings - basic               $0.24     $0.24     $0.49     $0.41
     Net earnings - diluted             $0.24     $0.24     $0.48     $0.40

  Weighted average shares
   outstanding:
     Basic                             81,535    82,833    81,791    83,718
     Diluted                           83,151    83,584    83,379    84,438

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


  Reconciliation of Pro Forma Measures to GAAP
  (in thousands, except per share amounts)
                                              Quarter Ended
                                            November 25, 2006
                                               Adjustments
                                                 Share-
                                                 based
                                               Compensa-
                              GAAP  Acquisitions  tion  Other    Pro Forma

  Net sales                 $272,789      --       --     --       $272,789
  Cost of sales              113,493  (4,722)(A) (167)    --        108,604
     Gross profit            159,296   4,722      167     --        164,185
     Gross margin              58.4%                                  60.2%
  Research and development
   expenses                   49,012      --   (1,622)    --         47,390
  Selling, general and
   administrative expenses    84,164      --   (3,887)    --         80,277
  Business realignment
   costs (credits)              (227)     --       --    227             --

  Acquisition related
   costs:
     Write-off of IPR&D           --      --       --     --             --
     Amortization of
      acquired intangible
      assets                   1,284  (1,284)      --     --             --
     Amortization of stock
      option compensation         63     (63)      --     --             --
     Transition expenses          22     (22)      --     --             --
       Total acquisition
        related costs          1,369  (1,369)      --     --             --

  Loss (gain) on
   disposition of assets,
   net                           (33)     --       --     --            (33)
      Operating income        25,011   6,091    5,676   (227)        36,551
      Operating margin          9.2%                                  13.4%
  Other income, net            2,583      --       --  2,734 (B)      5,317
      Earnings before taxes   27,594   6,091    5,676  2,507         41,868
  Income tax expense           7,997   2,253    1,808    821         12,879
     Net earnings from
      continuing operations  $19,597   3,838    3,868  1,686        $28,989
  Earnings per share -
   diluted                     $0.24                                  $0.35
  Weighted average shares
   outstanding - diluted      83,151                                 83,151


                                                     Quarter Ended
                                                  November 26, 2005
                                                     Adjustments
                                       GAAP  Acquisitions  Other  Pro Forma

  Net sales                          $253,396       --       --    $253,396
  Cost of sales                       101,171   (4,703)(A)   --      96,468
     Gross profit                     152,225    4,703       --     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
   (credits)                            1,880       --   (1,880)         --

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

  Loss (gain) on disposition of
   assets, net                             23       --       --          23
      Operating income                 29,451    6,798    1,880      38,129
      Operating margin                  11.6%                         15.0%
  Other income, net                       749       --       --         749
      Earnings before taxes            30,200    6,798    1,880      38,878
  Income tax expense                   10,322    2,298      471      13,091
     Net earnings from continuing
      operations                      $19,878    4,500    1,409     $25,787
  Earnings per share - diluted          $0.24                         $0.31
  Weighted average shares
   outstanding - diluted               83,584                        83,584


                                          Two Quarters Ended
                                           November 25, 2006
                                              Adjustments
                                                 Share-
                                                 based
                                               Compensa-
                              GAAP  Acquisitions  tion   Other    Pro Forma

  Net sales               $540,902       --        --      --      $540,902
  Cost of sales            218,256  (10,695)(A)  (167)     --       207,394
     Gross profit          322,646   10,695       167      --       333,508
     Gross margin            59.6%                                    61.7%
  Research and
   development expenses     99,881       --    (2,850)     --        97,031
  Selling, general and
   administrative
   expenses                164,037       --    (6,860)     --       157,177
  Business realignment
   costs (credits)           2,369       --        --  (2,369)           --

  Acquisition related
   costs:
     Write-off of IPR&D         --       --        --      --            --
     Amortization of
      acquired intangible
      assets                 2,619   (2,619)       --      --            --
     Amortization of
      stock option
      compensation             144     (144)       --      --            --
     Transition expenses        77      (77)       --      --            --
       Total acquisition
        related costs        2,840   (2,840)       --      --            --

  Loss (gain) on
   disposition of assets,
   net                         521       --       --      --            521
      Operating income      52,998   13,535    9,877   2,369         78,779
      Operating margin        9.8%                                    14.6%
  Other income, net          6,143       --       --   2,734 (B)      8,877
      Earnings before
       taxes                59,141   13,535    9,877   5,103         87,656
  Income tax expense        19,431    5,006    3,270   1,725         29,432
     Net earnings from
      continuing
      operations           $39,710    8,529    6,607   3,378        $58,224
  Earnings per
   share - diluted           $0.48                                    $0.70
  Weighted average shares
   outstanding - diluted    83,379                                   83,379


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

  Net sales                          $488,456       --       --    $488,456
  Cost of sales                       200,274   (9,815)(A)   --     190,459
     Gross profit                     288,182    9,815       --     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
   (credits)                            4,361            (4,361)         --

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

  Loss (gain) on disposition of
   assets, net                             27       --       --          27
      Operating income                 47,317   15,346    4,361      67,024
      Operating margin                   9.7%                         13.7%
  Other income, net                     2,758       --       --       2,758
      Earnings before taxes            50,075   15,346    4,361      69,782
  Income tax expense                   16,029    5,465    1,247      22,741
     Net earnings from continuing
      operations                      $34,046    9,881    3,114     $47,041
  Earnings per share - diluted          $0.40                         $0.56
  Weighted average shares
   outstanding - diluted               84,438                        84,438


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


                       Consolidated Balance Sheets


  (In thousands)                          November 25, 2006    May 27, 2006

  ASSETS
    Current assets:
      Cash and cash equivalents                $155,918           $215,587
      Short-term marketable
       investments                              115,035            121,346
      Trade accounts receivable, net            196,044            174,599
      Inventories                               162,350            156,351
      Other current assets                       77,499             69,002
        Total current assets                    706,846            736,885

    Property, plant and equipment, net          128,891            127,510
    Long-term marketable investments            172,121            103,839
    Goodwill, net                               306,978            307,189
    Pension asset                               233,968            239,128
    Other long-term assets                      101,963            119,539
        Total assets                         $1,650,767         $1,634,090

  LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
      Accounts payable and accrued
       liabilities                             $142,700           $133,323
      Accrued compensation                       68,304             71,718
      Deferred revenue                           89,033             66,677
        Total current liabilities               300,037            271,718

    Deferred income taxes                        57,363             65,935
    Other long-term liabilities                 108,346            108,868

    Shareholders' equity:
      Common stock                              548,570            540,718
      Retained earnings                         611,631            620,465
      Accumulated other comprehensive income     24,820             26,386
        Total shareholders' equity            1,185,021          1,187,569
        Total liabilities and
         shareholders' equity                $1,650,767         $1,634,090

    Shares outstanding                           82,370             83,719


  Selected Additional Financial Data
                                 Quarter Ended           Two Quarters Ended
                               November  November        November  November
                           %      25,       26,      %      25,       26,
  (Dollars in thousands) Growth  2006      2005    Growth  2006      2005

  Orders Data:

  Orders                  18%  $302,193  $256,910   11%  $557,592  $502,425

    U.S.                  22%   116,879    95,723   17%   213,073   181,854
    International         15%   185,314   161,187    7%   344,519   320,571

    Instruments Business  20%   248,096   206,484   17%   446,375   381,255
    Communications
     Business              7%    54,097    50,426   (8%)  111,217   121,170


  Sales Data:

  Net Sales                8%  $272,789  $253,396   11%  $540,902  $488,456

    U.S.                  (3%)   89,378    92,079    6%   187,357   176,482
    International         14%   183,411   161,317   13%   353,545   311,974

    Instruments Business   7%   205,244   192,250    9%   403,456   369,619
    Communications
     Business             10%    67,545    61,146   16%   137,446   118,837


  Income Statement Items as a Percentage
   of Net Sales:

  Cost of sales                     42%      40%              40%       41%
  Research and development
   expenses                         18%      18%              18%       18%
  Selling, general and
   administrative expenses          31%      29%              30%       29%
  Business realignment
   costs (credits)                   0%       1%               0%        1%
  Acquisition related costs and
   amortization                      1%       1%               1%        1%
  Loss (gain) on disposition of
   assets, net                       0%       0%               0%        0%
  Operating income                   9%      12%              10%       10%


  Capital Expenditures and
   Depreciation:

  Capital expenditures           $7,752   $9,889          $13,876   $18,633
  Depreciation and
   amortization expense          $7,245   $6,931          $14,542   $13,937


  Balance Sheet:                         Quarter      Quarter        Year
                                          Ended        Ended        Ended
                                       November 25,   August 26,    May 27,
                                           2006         2006         2006

  Cash and Marketable Investments:
     Cash and cash equivalents            $155,918    $200,360    $215,587
     Short-term marketable investments     115,035     129,002     121,346
     Long-term marketable investments      172,121     105,351     103,839
       Cash and Marketable Investments    $443,074    $434,713    $440,772


  Accounts receivable as a percentage
   of net sales                              16.8%       16.1%       15.9%
  Days sales outstanding                      65.4        57.8        61.1
  Countback days sales outstanding            54.6        49.3        46.6


  Inventory as a percentage of net sales     15.0%       15.0%       13.8%
  Inventory turns                              2.8         2.6         2.9

First Call Analyst:
FCMN Contact: beth.p.woodward@tektronix.com

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


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