-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CUDecuzz3RDoI+6Ch7ObusGPhHw4M8C1Z+UALQA+cRPV1NNjQgeuoQ/HRFiD8NRS pC+KYYylGLSgBYp8fZyqCA== 0000096879-96-000028.txt : 19961016 0000096879-96-000028.hdr.sgml : 19961016 ACCESSION NUMBER: 0000096879-96-000028 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960831 FILED AS OF DATE: 19961015 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEKTRONIX INC CENTRAL INDEX KEY: 0000096879 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 930343990 STATE OF INCORPORATION: OR FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04837 FILM NUMBER: 96643217 BUSINESS ADDRESS: STREET 1: 2660 SW PKWY CITY: WILSONVILLE STATE: OR ZIP: 97070 BUSINESS PHONE: 5036277111 MAIL ADDRESS: STREET 1: P O BOX 100 CITY: WILSONVILLE STATE: OR ZIP: 97070-1000 10-Q 1 1997 Q1 10-Q REPORT ============================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q [ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarter ended August 31, 1996, or, [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ________________ to _____________________. Commission File Number 1-4837 TEKTRONIX, INC. (Exact name of registrant as specified in its charter) OREGON 93-0343990 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 26600 S.W. PARKWAY WILSONVILLE, OREGON 97070-1000 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (503) 627-7111 NOT APPLICABLE (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ___X___ No______ AT SEPTEMBER 28, 1996 THERE WERE 32,843,447 COMMON SHARES OF TEKTRONIX, INC. OUTSTANDING. (Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.) TEKTRONIX, INC. AND SUBSIDIARIES - -------------------------------- INDEX - ----- PAGE NO. -------- Financial Statements: Condensed Consolidated Balance Sheets - 2 August 31, 1996 and May 25, 1996 Condensed Consolidated Statements of Operations - 3 for the Quarter Ended August 31, 1996 and the Quarter Ended August 26, 1995 Condensed Consolidated Statements of Cash Flows - 4 for the Quarter Ended August 31, 1996 and the Quarter Ended August 26, 1995 Notes to Condensed Consolidated Financial Statements 5 Management's Discussion and Analysis of Financial 6 Condition and Results of Operations Part II. Other Information 8 Signatures 10 1
TEKTRONIX, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) Aug. 31, May 25, (In thousands) 1996 1996 - ------------------------------------------------------------------------------------ ASSETS Current assets: Cash and cash equivalents $ 32,925 $ 36,644 Accounts receivable - net 311,391 375,309 Inventories 283,102 264,624 Other current assets 60,353 77,003 ---------- ---------- Total current assets 687,771 753,580 Property, plant, and equipment 682,602 676,543 Accumulated depreciation and amortization (374,759) (368,980) ---------- ---------- Property, plant and equipment - net 307,843 307,563 Property held for sale 25,445 18,903 Deferred tax assets 29,232 28,247 Other long-term assets 219,860 220,203 ---------- ---------- Total assets $1,270,151 $1,328,496 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term debt $ 15,055 $ 44,645 Accounts payable 152,089 178,353 Accrued compensation 99,353 120,044 Deferred revenue 20,160 22,295 ---------- ---------- Total current liabilities 286,657 365,337 Long-term debt 202,283 201,955 Other long-term liabilities 89,232 85,882 Shareholders' equity: Common stock 203,302 204,370 Retained earnings 396,406 378,606 Currency adjustment 52,858 52,069 Unrealized holding gains - net 39,413 40,277 ---------- ---------- Total shareholders' equity 691,979 675,322 ---------- ---------- Total liabilities and shareholders' equity $1,270,151 $1,328,496 ========== ==========
The accompanying notes are an integral part of these condensed consolidated financial statements. 2
TEKTRONIX, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Quarter ended Aug. 31, Aug. 26, (In thousands except for per share amounts) 1996 1995 - ------------------------------------------------------------------------------------ Net sales $ 440,115 $ 401,022 Cost of sales 248,843 231,082 ---------- ---------- Gross profit 191,272 169,940 Research and development expenses 46,447 38,479 Selling, general, and administrative expenses 112,095 98,809 Equity in business ventures' earnings (losses) 144 (593) ---------- ---------- Operating income 32,874 32,059 Other income - net 531 326 ---------- ---------- Earnings before taxes 33,405 32,385 Income taxes 10,690 9,715 ---------- ---------- Net earnings $ 22,715 $ 22,670 ========== ========== Earnings per share $ 0.69 $ 0.68 Dividends per share 0.15 0.15 Average shares outstanding 32,766 33,252
The accompanying notes are an integral part of these condensed consolidated financial statements. 3
TEKTRONIX, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Quarter ended Aug. 31, Aug. 26, (In thousands) 1996 1995 - ------------------------------------------------------------------------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 22,715 $ 22,670 Adjustments to reconcile net earnings to cash from operating activities: Depreciation expense 13,324 11,259 Deferred taxes -- 1,165 Accounts receivable 67,589 (503) Inventories (17,801) (25,675) Other current assets 16,131 7,557 Accounts payable (27,158) 5,590 Accrued compensation (20,883) (34,547) Other assets (9,106) (1,037) Other-net (4,970) (679) ---------- ---------- Net cash provided (used) by operating activities 39,841 (14,200) CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property, plant and equipment (19,011) (16,927) Proceeds from sale of assets 2,466 4,649 Proceeds from sale of investments 4,506 922 ---------- ---------- Net cash (used) by investing activities (12,039) (11,356) CASH FLOWS FROM FINANCING ACTIVITIES: Net change in short-term debt (29,592) (6,477) Issuance of long-term debt 450 50,009 Repayment of long-term debt -- (1,232) Issuance of common stock 465 7,630 Dividends (4,915) (5,036) ---------- ---------- Net cash provided (used) by financing activities (33,592) 44,894 Effect of exchange rate changes 2,071 (1,193) ---------- ---------- Increase (decrease) in cash and cash equivalents (3,719) 18,145 Cash and cash equivalents at beginning of year 36,644 31,761 ---------- ---------- Cash and cash equivalents at end of quarter $ 32,925 $ 49,906 ========== ========== SUPPLEMENTAL DISCLOSURES OF CASH FLOWS: Income taxes paid (refunded) - net $ (4,671) $ 11,874 Interest paid 7,302 5,571 NON-CASH INVESTING ACTIVITIES: Fair value adjustment to securities available-for-sale $ (1,440) $ 1,349 Income tax effect related to fair value adjustment 576 (540)
The accompanying notes are an integral part of these condensed consolidated financial statements. 4 TEKTRONIX, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS BASIS OF PRESENTATION The condensed consolidated financial statements and notes have been prepared by the Company without audit. Certain information and footnote disclosures normally included in annual financial statements, prepared in accordance with generally accepted accounting principles, have been condensed or omitted. Management believes that the condensed statements include all necessary adjustments which are of a normal and recurring nature and are adequate to present financial position, results of operations and cash flows for the interim periods. The condensed information should be read in conjunction with the financial statements and notes incorporated by reference in the Company's latest annual report on Form 10-K. The Company's fiscal year is the 52 or 53 weeks ending the last Saturday in May. Fiscal year 1997 is 53 weeks. The first quarter of 1997 is 14 weeks compared to 13 weeks in the first quarter of 1996. ACCOUNTS RECEIVABLE On September 10, 1996, the Company entered into a Receivable Purchase Agreement with Citibank NA to sell, without recourse, an undivided interest of up to $50.0 million in a defined pool of trade accounts receivable. The amount of receivables sold under this agreement will be reflected as a reduction of accounts receivable in subsequent balance sheets and as operating cash flows in subsequent statements of cash flows. INVENTORIES Inventories consisted of:
Aug. 31, May 25, (In thousands) 1996 1996 - ------------------------------------------------------------------------------------ Materials and work in process $ 152,661 $ 141,798 Finished goods 130,441 122,826 ---------- ---------- Inventories $ 283,102 $ 264,624 ========== ==========
INCOME TAXES The provision for income taxes consisted of:
Quarter ended Aug. 31, Aug. 26, (In thousands) 1996 1995 - ------------------------------------------------------------------------------------ United States $ 5,939 $ 1,536 State 1,485 390 Foreign 3,266 7,789 ---------- ---------- Income taxes $ 10,690 $ 9,715 ========== =========
The provision for income taxes was calculated at estimated annual effective rates of 32% and 30%, respectively, for the quarters ended August 31, 1996 and August 26, 1995. 5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Financial Condition The Company's financial condition is strong. Cash flow from operating activities and borrowing capacity from existing lines of credit are sufficient to meet current and anticipated future needs. At the end of the first quarter (August 31, 1996), the Company maintained bank credit facilities totaling $311.2 million, of which $231.9 million was available out of unused facilities, which include $149.3 million in lines of credit and $99.0 million under revolving credit agreements from United States and foreign banks. Current assets decreased by $65.8 million from the year end balance at May 31, 1996, due primarily to lower accounts receivable and other current assets, partly offset by higher inventories. Accounts receivable were lower due to improved collections and lower average weekly sales compared to the fourth quarter of last year. Increased inventories were due primarily to changes in the timing of shipments. Other current assets declined primarily because of a reduction in deferred tax assets due to the provision for taxes on current income. Current liabilities declined by $78.7 million, or 22%. Short-term debt was reduced by $29.6 million due to the improved collection of receivables. Accounts payable and accrued compensation declined due primarily to timing, including the payment of year-end accruals for incentives and commissions. Shareholders' equity increased by $16.7 million due primarily to earnings net of dividends. Results of Operations Quarter Ended August 31, 1996 vs. Quarter Ended August 26, 1995 In the first quarter of fiscal 1997, net earnings were $22.7 million, or $0.69 per share compared with $22.7 million, or $0.68 per share in the first quarter of fiscal 1996. Net sales were $440.1 million, up 10% from $401.0 million in the prior year. Measurement Business sales of $206.8 million were up 12% from the prior year reflecting particularly strong growth in telecommunications test products. Product orders were $184.3, an increase of 5% over product orders of $175.0 million in the first quarter of 1996. The Company continues to expect Measurement Business order and revenue growth in the 5% to 10% range in 1997. Color Printing and Imaging sales increased 2% to $124.0 million and product orders declined 2% to $112.2 million, as printer sales and order growth was significantly impacted by a decline in sales into the specialty printer markets. There was also a slow down in the growth rate in the office market as the channel adjusted its inventory levels and the Company prepared for the launch of the Phaser 350 in the second quarter. The Company expects sales and order growth for Color Printing and Imaging to be in the range of 10% to 15% for 1997, with expected growth of 5% to 10% for the second quarter, increasing to 15% to 20% in the second half of the year. 6 Video and Networking sales grew 16% to $109.3 million. Product orders were $117.2 million, an increase of 18% over 1996 product orders of $99.7 million. The Company expects Video and Networking sales and order growth in the range of 15% to 20% for the full year 1997 with a return to profitability by the end of the second quarter. Sales to customers in the United States increased by 16% from $211.0 million to $243.8 million, representing 55% of total sales. International sales of $196.3 million were up 3% from $190.0 million in the prior year, with good growth in the Pacific, but weakness in Europe due to softening economic conditions and the impact of currency fluctuations. Product orders from customers in the United States of $226.2 million were up 20% from last year's first quarter while international product orders of $187.5 million were down 7%. The Company expects total sales in the range of about $2 billion for the year. Cost of sales, as a percentage of net sales, declined from 57.6% to 56.5% due primarily to lower costs for some components and a higher mix of supplies sales in the printer business. Research and development and selling, general and administrative expenses increased as a percentage of sales, from 9.6% to 10.6% and from 24.6% to 25.5%, respectively, due to the high level of new product development and the Company's recent investments in systems and in distribution channels, predominately in the Pacific region. Operating income as a percentage of sales declined from 8.0% in the first quarter of 1996 to 7.5% in the current quarter. Income taxes increased from $9.7 million to $10.7 million due to the higher estimated effective annual tax rate of 32% for the current year, compared to 30% for all of last year. Net earnings of $22.7 million were flat compared to the prior year's quarter as higher sales and gross margins were offset by higher operating expenses and taxes. The Company continues to expect net earnings for the full year to increase by 10% to 20%, with the growth occurring in the second half of the fiscal year as the Company introduces several new products. Forward-looking Statements Information included in this Management's Discussion and Analysis relating to orders, sales and earnings expectations and new product introductions constitute forward-looking statements that involve a number of risks and uncertainties. From time to time, information provided by the Company, or statements made by its employees, may contain other forward- looking statements. As with many high technology companies, factors that could cause the Company's actual results or activities to differ materially from these forward-looking statements include but are not limited to: general economic conditions and business conditions in the electronics industry, including the effect on purchases by the Company's customers; competitive factors, including pricing pressures, technological developments and products offered by competitors; changes in product and sales mix, including an increase in indirect and systems sales by the Company and the related effects on gross margins; 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; inventory risks due to changes in market demand or the Company's business strategies; changes in effective tax rates; customer demand; currency fluctuations; the fact that a substantial portion of the Company's sales are generated from orders received during the quarter, making prediction of quarterly revenues and earnings difficult; and other risk factors listed from time to time in the Company's reports filed with the Securities and Exchange Commission and press releases. Additional risk factors specific to the Company's current plans and expectations that could cause the Company's actual results or activities to differ materially from those stated include: the significant organizational and operational challenges that could adversely affect the Company's ability to integrate and transform its Video and 7 Networking business successfully in the planned time frame; the Company's ability to effectively manage its growing systems integration business, particularly the large scale contracts in the Video and Networking Division; the timely introduction of new products scheduled during the Company's fiscal year which could be affected by engineering or other development program slippages, the ability to ramp up production or to develop effective sales channels, and demand for and acceptance of those and other Company products by the Company's customers which could be affected by the current uncertainties in economic conditions around the world, and by activities of the Company's competitors. PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS At the Company's annual meeting of shareholders on September 26, 1996, the shareholders voted on the election of four directors to the Company's board of directors. Pauline Lo Alker, A. Gary Ames, Paul E. Bragdon, and Paul C. Ely, Jr., were elected to serve a three-year term ending at the 1999 annual meeting of shareholders. The voting for each director was as follows: 28,152,104 shares voted for Pauline Lo Alker, and 67,794 withheld; 25,861,088 voted for A. Gary Ames, and 2,358,810 withheld; 28,147,092 voted for Paul E. Bragdon, and 72,086 withheld; and 28,147,502 voted for Paul C. Ely, Jr., and 72,396 withheld. The term of office of the Company's other directors continued after the 1996 annual meeting of shareholders, as follows: Keith R. McKennon, Jerome J. Meyer and William D. Walker until the 1997 annual meeting of shareholders; and A.M. Gleason, Wayland R. Hicks, and Merrill A. McPeak until the 1998 annual meeting of shareholders. At the meeting, the shareholders voted on three shareholder proposals. The proposals related to: (a) fixing the size of the Company's board of directors at 11 members and eliminating provisions for a classified board, (b) the Company's shareholder rights plan, and (c) the Company's severance arrangements with executives. The Company's definitive additional proxy materials, dated September 9, 1996 filed herewith as an exhibit, contains a description of the proposals. The number of shares voted for approval of the shareholder proposal fixing the size of the Company's board of directors at 11 members and eliminating provisions for a classified board was 8,517,377, the number voted against approval was 16,257,046, and 1,231,395 abstained. There were 2,214,080 broker non-votes. The number of shares voted for approval of the shareholder proposal regarding the shareholder rights plan was 8,433,692, the number voted against approval was 16,382,540, and 1,189,586 abstained. There were 2,214,080 broker non-votes. The number of shares voted for approval of the shareholder proposal regarding the Company's severance arrangements with executives was 2,178,061, the number voted against approval was 22,635,162, and 1,192,595 abstained. There were 2,214,080 broker non-votes. 8 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (27) Financial Data Schedule. (99) Definitive Additional Materials dated September 9, 1996, for the annual meeting of shareholders of Tektronix, Inc., held on September 26, 1996, previously filed on September 12, 1996, SEC File No. 1-4837. (b) No reports on Form 8-K have been filed during the quarter for which this report is filed. 9 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. October 10, 1996 TEKTRONIX, INC. By /S/ CARL W. NEUN ------------------------- Carl W. Neun Senior Vice President and Chief Financial Officer 10 EX-27 2 FINANCIAL DATA SCHEDULE
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 1,000 3-MOS MAY-31-1997 AUG-31-1996 32,925 0 317,809 6,418 283,102 687,771 682,602 374,759 1,270,151 286,657 202,283 203,302 0 0 488,677 1,270,151 0 440,115 0 248,843 0 0 3,736 33,405 10,690 22,715 0 0 0 22,715 0.69 0.69
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