Tektronix Reports Results for the Third Quarter of Fiscal 2007
PRNewswire-FirstCall
BEAVERTON, Ore.

Tektronix, Inc. today reported net sales of $265.8 million and net earnings from continuing operations of $19.5 million or $0.24 per share for the third quarter ended February 24, 2007. This compares with net sales of $262.1 million and net earnings from continuing operations of $24.9 million or $0.30 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 $31.1 million or $0.38 per share for the third quarter as compared with $31.1 million or $0.37 per share for the same period last year.

"During our third quarter, we saw continued strong demand in our Instruments business offset by weakness in orders in our Communications business due to a difficult comparison to the prior year and further softening in the market for these products," commented Rick Wills, Tektronix Chairman and CEO. "This resulted in overall orders that were down 2% from last year, sales that were up 1% and a sequential increase in backlog of 11%."

Orders for the Instruments business were up more than 10% over the prior year driven by continued strong demand for new products. Instruments business sales were flat with last year as we continued to build backlog for our newer products. "Customer response remains favorable to our strong flow of new products as demonstrated by the continued growth in Instruments business orders and the numerous industry awards in the quarter for our oscilloscopes, signal sources and spectrum analyzers," continued Wills.

Orders in the Communications business were down 30% year-over-year but were up 22% sequentially. "Lower year-over-year order levels were driven by a difficult comparison to last year when we won several large network management installations. While we saw good sequential growth, we also saw a continuation of slowing capital expenditures by large carriers and the effects of consolidation by network equipment manufacturers," said Wills. Sales for the Communications business were up 7% due to installations of network management systems awarded in prior periods.

The Instruments business continued to bring new products to market with the introduction of several new ultra high-performance oscilloscopes including the DSA72004, and the P7500, a new family of probes -- completing the line refresh we started last year of our mid to ultra-high end platforms. These new products provide the world's fastest performance and reinforce our commitment to provide our customers with the best tools available for testing next generation high-speed serial data applications.

In our Communications business, we continued to provide solutions that support architectures for next generation networks. We announced new IP Multimedia Subsystem (IMS) capabilities for our Unified Assurance suite which enable network operators to monitor service quality and customer experience in real-time throughout the deployment of IMS services and networks. In addition, our VoIP test solution received industry recognition for its role in helping cable operators provide the best possible service quality to their subscribers.

"Looking forward, we believe the markets for our Instruments products remain stable and we continue to be encouraged by customer response to recent product introductions. We expect to see continued softness in the market for the Communications business, however we believe our competitive position continues to be strong and remain optimistic about the long-term opportunities for this business," concluded Wills.

Fourth Quarter Guidance

For the fourth quarter of fiscal 2007, the company expects net sales to be approximately $290 - $300 million. Earnings per share from continuing operations are expected to be between $0.40 and $0.44 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 industry's fastest ultra-high performance
     oscilloscopes. New models of the DSA70000 and DPO70000 series offer
     more four-channel performance than any alternative oscilloscopes and
     are ideal for high-speed serial data applications. With up to 20 GHz
     bandwidth, the real-time DSA70000 models offer unsurpassed performance,
     essential for the development of next generation products for the new
     digital world.
  -- The introduction of the world's fastest, most capable and versatile
     active differential probes. The new P7500 probing family sets industry
     benchmarks for bandwidth aimed at next generation high-speed serial
     data rates.
  -- The availability of new monitoring capabilities for video services
     carried across an IP network. The MTM400 MPEG Transport Stream Monitor
     advances quality of service for IPTV broadcast by providing
     simultaneous monitoring of critical key performance indicators for up
     to 500 MPEG Transport Streams carried within a Gigabit Ethernet link to
     aid rapid fault resolution.
  -- The availability of two Tektronix Mobile WiMAX solutions: one for
     functional test and WiMAX infrastructure simulation based on the G35-
     WiMAX protocol test solution; and a monitoring solution based on the
     Network and Service Analyzer (NSA) platform. Both enable accelerated
     time-to-market and reduced development and integration costs.
  -- The availability of an end-to-end performance monitoring and testing
     solution for IMS. Tektronix' industry-leading Unified Assurance
     platform, which provides the foundation for the IMS solution, has been
     extended to include additional IMS technical capabilities and protocol
     support. Together with its market-leading portfolio of diagnostic and
     mobile protocol test equipment, the offering addresses the IMS
     architecture complexity and interoperability challenges that network
     operators are facing.

  Key customer wins, including:
  -- The announcement that Parade Technologies, Inc. used Tektronix test
     equipment for validation and compliance testing of the emerging
     DisplayPort serial data standard.
  -- The selection of several Tektronix instruments by HDMI Licensing, LLC
     as recommended test components in the HDMI Compliance Test
     Specification, the most significant upgrade yet in the specification
     that has become the de facto standard interface for high-definition
     devices including DVD players, HD televisions, and the newest gaming
     devices.
  -- The decision by Alcatel-Lucent to use the G35-WiMAX solution in the
     development of its WiMAX network infrastructure equipment to further
     enhance their WiMAX network solutions.

  Several product awards, including:
  -- The Best in Test Award for the AWG7000 Arbitrary Waveform Generator
     from Test & Measurement World -- one of 12 receiving the honor.
  -- A Readers' Choice Award for the DPO7000 Digital Phosphor Oscilloscopes
     from the readers of EE-Evaluation Engineering magazine in the
     Instrumentation category.
  -- The 2007 Readers' Choice Award in the Oscilloscope category given to
     Tektronix by Electronics For You (EFY) magazine, one of the leading
     publications in Asia. Tektronix has set a milestone as the only winner
     in the Oscilloscope category for the fourth consecutive year.
  -- Four awards given to the RSA6100A Real-Time Spectrum Analyzer; the 2006
     Editor's Choice Award from the editors of Portable Design magazine; one
     of the "Hot 100 Products of 2006" by EDN magazine; the Best Technology
     and Design 2006 Award by the editors of Electronic Design; and the
     DesignVision 2007 Award by the International Engineering Consortium in
     the Test & Measurement Equipment category.
  -- The Internet Telephony 2006 Product of the Year award from Internet
     Telephony for the Multimedia Terminal Adapter loopback VoIP test
     solution (patent pending). The award was given for the commitment
     Tektronix has shown in helping cable MSOs deliver the best possible
     VoIP service quality to their subscribers.

  In addition,
  -- Tektronix announced the appointment of Kaj Juul-Pederson to its Board
     of Directors and to the Nominating and Corporate Governance Committee
     as well as the Organization and Compensation Committee.
  -- And, at the beginning of the quarter, Tektronix completed its
     acquisition of Minacom, a leading provider of active probe test
     solutions used by telecommunications carriers, cable multi-system
     operators, wireless and VoIP providers worldwide.

In addition, today Tektronix declared a quarterly cash dividend of $.06 per share on the outstanding common shares of the Company, payable on April 23, 2007 to shareholders of record as of the close of market on April 6, 2007.

Tektronix will be discussing its third 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 will hold an investor event on April 12, 2007 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 non-GAAP 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 GAAP to Non-GAAP Results" reconciles net earnings in accordance with generally accepted accounting principles (GAAP) to the non-GAAP net earnings. Tektronix presents non-GAAP net earnings to help readers differentiate the results of ongoing 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 non-GAAP net earnings excludes the effects of share-based compensation under FAS123R. Management of Tektronix uses these non-GAAP measures to evaluate the Company's results of operations and for forecasting purposes, as well as to compensate employees.

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; risks related to the implementation of an upgrade to our information technology systems; 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   Three Quarters Ended
                                      February  February  February  February
                                         24,       25,       24,       25,
  (In thousands, except per share       2007      2006      2007      2006
   amounts)

  Net sales                          $265,756  $262,105  $806,658  $750,561
  Cost of sales                       108,674   103,003   326,930   303,277

      Gross profit                    157,082   159,102   479,728   447,284

  Research and development expenses    49,422    44,566   149,303   133,844
  Selling, general and
   administrative expenses             83,715    76,347   247,752   218,015
  Business realignment costs              430     3,182     2,799     7,543
  Acquisition related costs and
   amortization                         3,223     1,418     6,063     6,949
  Loss (gain) on disposition of
   assets, net                            (40)       54       481        81

      Operating income                 20,332    33,535    73,330    80,852

  Interest income                       3,970     3,381    12,903     9,361
  Interest expense                       (185)      (96)     (367)     (339)
  Other non-operating expense, net     (1,574)     (933)   (4,182)   (3,912)

      Earnings before taxes            22,543    35,887    81,684    85,962

  Income tax expense                    3,021    10,949    22,452    26,978

      Net earnings from continuing
       operations                      19,522    24,938    59,232    58,984

  Gain from discontinued operations,
      net of income taxes               3,229     1,575     3,232     1,510

  Net earnings                        $22,751   $26,513   $62,464   $60,494

  Earnings per share:

     Continuing operations - basic      $0.24     $0.30     $0.73     $0.71
     Continuing operations - diluted    $0.24     $0.30     $0.72     $0.70

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

     Net earnings - basic               $0.29     $0.32     $0.77     $0.73
     Net earnings - diluted             $0.28     $0.32     $0.76     $0.72

  Weighted average shares
   outstanding:
     Basic                             79,795    82,174    81,108    83,203
     Diluted                           81,301    83,319    82,720    84,065

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


                         Consolidated Balance Sheets


  (In thousands)                          February 24, 2007    May 27, 2006

  ASSETS
    Current assets:
      Cash and cash equivalents                $124,379           $215,587
      Short-term marketable
       investments                               61,632            121,346
      Trade accounts receivable, net            173,179            174,599
      Inventories                               167,461            156,351
      Other current assets                       80,198             69,002
        Total current assets                    606,849            736,885

    Property, plant and equipment,
     net                                        129,663            127,510
    Long-term marketable investments            159,597            103,839
    Goodwill, net                               325,409            307,189
    Pension asset                               231,397            239,128
    Other long-term assets                      110,732            119,539
        Total assets                         $1,563,647         $1,634,090

  LIABILITIES AND SHAREHOLDERS'
   EQUITY
    Current liabilities:
      Accounts payable and accrued
       liabilities                             $146,512           $133,323
      Accrued compensation                       60,037             71,718
      Deferred revenue                           93,612             66,677
        Total current liabilities               300,161            271,718

    Deferred income taxes                        49,063             65,935
    Other long-term liabilities                 110,043            108,868

    Shareholders' equity:
      Common stock                              533,542            540,718
      Retained earnings                         546,383            620,465
      Accumulated other comprehensive
       income                                    24,455             26,386
        Total shareholders' equity            1,104,380          1,187,569
        Total liabilities and
         shareholders' equity                $1,563,647         $1,634,090

    Shares outstanding                           79,303             83,719


  Selected Additional Financial Data
                                  Quarter Ended         Three Quarters Ended
  (In thousands, except        February  February        February  February
  per share amounts)        %     24,       25,      %      24,       25,
                         Growth  2007      2006   Growth   2007      2006
  Orders Data:

  Orders                   (2%) $297,454  $303,680   6%  $855,046  $806,105

    U.S.                    7%   106,517    99,961  13%   319,590   281,815
    International          (6%)  190,937   203,719   2%   535,456   524,290

    Instruments Business   10%   231,684   209,855  15%   678,059   591,110
    Communications
     Business             (30%)   65,770    93,825 (18%)  176,987   214,995


  Sales Data:

  Net Sales                 1%  $265,756  $262,105   7%  $806,658  $750,561

    U.S.                    8%    98,024    91,002   7%   285,381   267,484
    International          (2%)  167,732   171,103   8%   521,277   483,077

    Instruments Business   (0%)  201,251   201,815   6%   604,707   571,434
    Communications
     Business               7%    64,505    60,290  13%   201,951   179,127


  Reconciliation of GAAP
   to Non-GAAP Results:

  Net earnings - GAAP            $22,751   $26,513        $62,464   $60,494
  Discontinued operations,
   net of income taxes            (3,229)   (1,575)        (3,232)   (1,510)

  Net earnings from
   continuing operations          19,522    24,938         59,232    58,984

  Business realignment
   costs                             430     3,182          2,799     7,543
  Acquisition related
   costs                           8,217     6,202         21,752    21,548
  Shared based
   compensation costs              5,972       -           15,849       -
  Increase to
   environmental reserves          2,029       -            4,763       -
  Tax effect of above
   items                          (5,118)   (3,207)       (15,119)   (9,919)

  Net earnings - non-GAAP        $31,052   $31,115        $89,276   $78,156

  Diluted EPS - non-GAAP           $0.38     $0.37          $1.08     $0.93


  Income Statement Items
   as a Percentage of Net
   Sales:

  Cost of sales                      41%       39%            41%       40%
  Research and development
   expenses                          19%       17%            19%       18%
  Selling, general and
   administrative expenses           32%       29%            31%       29%
  Business realignment
   costs                              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                    8%       13%             9%       11%


  Capital Expenditures and
   Depreciation:

  Capital expenditures            $8,222   $10,816        $22,098   $29,449
  Depreciation and
   amortization expense           $7,140    $6,912        $21,682   $20,849


                                         Quarter       Quarter
  Balance Sheet:                          Ended         Ended    Year Ended
                                       February 24,  November 25,   May 27,
                                           2007         2006         2006

  Cash and Marketable Investments:
     Cash and cash equivalents            $124,379    $155,918    $215,587
     Short-term marketable investments      61,632     115,035     121,346
     Long-term marketable investments      159,597     172,121     103,839
       Cash and Marketable Investments    $345,608    $443,074    $440,772

  Accounts receivable as a percentage
   of net sales                              17.4%       16.8%       15.9%
  Days sales outstanding                      59.3        65.4        61.1
  Countback days sales outstanding            52.6        54.6        46.6

  Inventory as a percentage of net
   sales                                     15.5%       15.0%       13.8%
  Inventory turns                              2.6         2.8         2.9


                           Discontinued Operations

                                                           Three Quarters
                                         Quarter Ended         Ended
                                       February February February February
                                          24,      25,      24,      25,
  (In thousands)                         2007     2006     2007     2006

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

  Gain on sale of optical parametric
   test business
       (less applicable income tax
        expense of $0,
      $491, $9 and $379)                    -        913       16      705

  Gain (loss) on sale of Gage
       (less applicable income tax
        expense of $0,
      $326, $0 and $406)                    -        608       (1)     756

  Gain on sale of CPID (less applicable
   income tax expense of $1,739,
   $29, $1,732 and $28)                   3,229       54    3,218       52

  Gain from discontinued operations,
   net of tax                            $3,229   $1,575   $3,232   $1,510

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


Subscribe to Email Alerts

Click to subscribe to Tektronix breaking news

 

Subscribe to Email Alerts