-----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, HPAhO27g0upS6zoja8A6zaWzSyIYt8S889Seg+SnBKgsi15Gif8v3YQtrg3qzcWo mqmJXEG64Yv1Vjn8qkdFyQ== 0000096879-97-000010.txt : 19970415 0000096879-97-000010.hdr.sgml : 19970415 ACCESSION NUMBER: 0000096879-97-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970301 FILED AS OF DATE: 19970414 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: 97580028 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 Q3 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 March 1, 1997, 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 MARCH 29, 1997 THERE WERE 33,276,160 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 March 1, 1997 and May 25, 1996 Condensed Consolidated Statements of Operations - 3 for the Quarter ended March 1, 1997 and the Quarter ended February 24, 1996 for the Three quarters ended March 1, 1997 and the Three quarters ended February 24, 1996 Condensed Consolidated Statements of Cash Flows - 4 for the Three quarters ended March 1, 1997 and the Three quarters ended February 24, 1996 Notes to Condensed Consolidated Financial Statements 5 Management's Discussion and Analysis of Financial 6 Condition and Results of Operations Part II. Other Information 9 Signatures 10
TEKTRONIX, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) Mar. 1, May 25, (In thousands) 1997 1996 - ------------------------------------------------------------------------------------------------ ASSETS Current assets: Cash and cash equivalents $ 78,747 $ 36,644 Accounts receivable - net 274,252 375,309 Inventories 256,729 264,624 Other current assets 55,628 77,003 ---------- ---------- Total current assets 665,356 753,580 Property, plant, and equipment 683,510 676,543 Accumulated depreciation and amortization (359,034) (368,980) ---------- ---------- Property, plant and equipment - net 324,476 307,563 Property held for sale 13,566 18,903 Deferred tax assets 23,067 28,247 Other long-term assets 209,217 220,203 ---------- ---------- Total assets $1,235,682 $1,328,496 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term debt $ 6,985 $ 44,645 Accounts payable 168,939 178,353 Accrued compensation 71,191 120,044 Deferred revenue 7,669 22,295 ---------- ---------- Total current liabilities 254,784 365,337 Long-term debt 151,475 201,955 Other long-term liabilities 90,012 85,882 Shareholders' equity: Common stock 215,700 204,370 Retained earnings 441,743 378,606 Currency adjustment 38,472 52,069 Unrealized holding gains - net 43,496 40,277 ---------- ---------- Total shareholders' equity 739,411 675,322 ---------- ---------- Total liabilities and shareholders' equity $1,235,682 $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 Three quarters ended Mar. 1, Feb. 24, Mar. 1, Feb. 24, (In thousands except for per share amounts) 1997 1996 1997 1996 - ------------------------------------------------------------------------------------------------ Net sales $ 478,886 $ 433,500 $1,396,167 $1,278,120 Cost of sales 273,653 253,665 799,900 741,673 ---------- ---------- ---------- ---------- Gross profit 205,233 179,835 596,267 536,447 Research and development expenses 45,621 40,045 137,684 119,096 Selling, general, and administrative expenses 117,496 109,400 345,535 316,941 Equity in business ventures' earnings (loss) (861) 1,061 (467) 2,154 ---------- ---------- ---------- ---------- Operating income 41,255 31,451 112,581 102,564 Other income (expense) - net 1,042 617 2,026 (524) ---------- ---------- ---------- ---------- Earnings before taxes 42,297 32,068 114,607 102,040 Income taxes 13,535 9,620 36,674 30,612 ---------- --------- ---------- ---------- Net earnings $ 28,762 $ 22,448 $ 77,933 $ 71,428 ========== ========== ========== ========== Earnings per share $ 0.87 $ 0.67 $ 2.37 $ 2.14 Dividends per share 0.15 0.15 0.45 0.45 Average shares outstanding 33,077 33,381 32,908 33,353
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) Three quarters ended Mar. 1, Feb. 24, (In thousands) 1997 1996 - ------------------------------------------------------------------------------------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 77,933 $ 71,428 Adjustments to reconcile net earnings to cash provided by operating activities: Depreciation expense 41,768 34,939 Gains on sale of assets (15,100) (13,326) Deferred taxes 3,585 12,711 Accounts receivable 98,032 (29,269) Inventories 8,152 (28,412) Other current assets 24,562 26,932 Accounts payable (12,032) (17,106) Accrued compensation (48,305) (34,778) Other-net (2,070) (4,623) ---------- ---------- Net cash provided by operating activities 176,525 18,496 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property, plant and equipment (66,419) (75,006) Proceeds from sale of fixed assets 1,845 13,072 Proceeds from sale of investments 22,519 5,232 ---------- ---------- Net cash used by investing activities (42,055) (56,702) CASH FLOWS FROM FINANCING ACTIVITIES: Net change in short-term debt (37,622) 5,327 Issuance of long-term debt 358 50,236 Repayment of long-term debt (50,708) (2,459) Issuance of common stock 11,330 11,894 Repurchase of common stock -- (12,469) Dividends (14,796) (15,044) ---------- ---------- Net cash provided (used) by financing activities (91,438) 37,485 Effect of exchange rate changes (929) (2,136) ---------- ---------- Increase (decrease) in cash and cash equivalents 42,103 (2,857) Cash and cash equivalents at beginning of year 36,644 31,761 ---------- ---------- Cash and cash equivalents at end of quarter $ 78,747 $ 28,904 ========== ========== SUPPLEMENTAL DISCLOSURES OF CASH FLOWS: Income taxes paid - net $ 7,455 $ 22,533 Interest paid 14,408 14,647 NON-CASH INVESTING ACTIVITIES: Fair value adjustment to securities available-for-sale $ 3,314 $ 30,608 Income tax effect related to fair value adjustment (95) (12,243)
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 three quarters of 1997 were 40 weeks compared to 39 weeks in the first three quarters of 1996. ACCOUNTS RECEIVABLE On September 10, 1996, the Company entered into a five year revolving 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 is reflected as a reduction of accounts receivable in the balance sheet at March 1, 1997, and as operating cash flows in the statements of cash flows for the three quarters ended March 1, 1997. INVENTORIES Inventories consisted of:
Mar.1, May 25, (In thousands) 1997 1996 - ------------------------------------------------------------------------------------------------ Materials and work in process $ 141,656 $ 141,798 Finished goods 115,073 122,826 ---------- ---------- Inventories $ 256,729 $ 264,624 ========== ==========
INCOME TAXES The provision for income taxes consisted of:
Quarter ended Three quarters ended Mar. 1, Feb. 24, Mar. 1, Feb. 24, (In thousands) 1997 1996 1997 1996 - ------------------------------------------------------------------------------------------------ United States $ 8,000 $ 5,912 $ 21,442 $ 14,001 State 1,999 1,471 5,360 3,500 Foreign 3,536 2,237 9,872 13,111 ---------- ---------- ---------- ---------- Income taxes $ 13,535 $ 9,620 $ 36,674 $ 30,612 ========== ========== ========== ==========
The provision for income taxes was calculated at estimated annual effective rates of 32% and 30%, respectively, for the three quarters ended March 1, 1997, and February 24, 1996. 5 EARNINGS PER SHARE In February, 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 128, Earnings Per Share. SFAS 128, requires all companies whose capital structures include convertible securities and options to make a dual presentation of basic and diluted earnings per share. The new standard becomes effective for the interim statements issued after December 15, 1997. The effect on earnings per share for all periods reported is immaterial. 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 third quarter (March 1, 1997), the Company maintained bank credit facilities totaling $303.4 million, of which $295.8 million was unused. The unused facilities include $145.8 million in lines of credit and $150.0 million under revolving credit agreements from United States and foreign banks. Current assets decreased by $88.2 million, or 12%, from the year end balance at May 25, 1996, due primarily to reduced accounts receivable resulting from improved sales terms and collections and the $50 million securitization of receivables, partly offset by the increase in cash generated from operations during the year. Current liabilities decreased by $110.6 million, or 30%. Short-term debt was reduced by $37.7 million due to strong operating cash flows. Accrued compensation decreased $48.9 million due primarily to the payment of pension liabilities of $39 million and lower nine month accruals for incentives and commissions than last year's full year accruals. Shareholders' equity increased by $64.1 million due primarily to earnings net of dividends. 6 Results of Operations THREE QUARTERS ENDED MARCH 1, 1997 vs. THREE QUARTERS ENDED FEBRUARY 24, 1996 In the first nine months of fiscal 1997, net earnings were $77.9 million, or $2.37 per share compared with $71.4 million, or $2.14 per share in the first nine months of fiscal 1996. Net sales were $1,396.2 million, an increase of 9% from the prior year's total of $1,278.1 million. Measurement Business Division sales of $620.1 million increased 5% from the prior year, with growth in telecommunications test products and handheld tools. Strong sales to customers in the United States and Pacific regions were partially offset by lower sales in Japan, as discussed below. Product orders increased 2% from $556.0 million to $565.9 million. Color Printing and Imaging Division sales increased 14% to $449.0 million and product orders increased 16% from $367.0 million to $427.1 million. The increase was due to the successful launch of the Phaser* 600 during the third quarter which strengthened sales into the specialty printer markets and the continuation of strong sales of the Phaser 350 color solid ink printer and the Phaser 550 color laser printer into the office market. *(Phaser is a registered trademark of Tektronix, Inc.). Sales and orders were strong in all geographies. Video and Networking Division sales increased 11% to $327.1 million, led by strong sales of the Profile* video disk recorder and netstations. *(Profile is a registered trademark of Tektronix, Inc.). Product orders rose 13% from $279.6 million to $315.0 million. Sales and orders were strong in all geographies. Sales to customers in the United States increased 16% from $635.0 million to $736.1 million, and represented 53% of total sales. International sales of $660.1 million were up 3%, with strong growth in the Pacific region offset by weakness in Europe and Japan. Product orders from customers in the United States of $668.6 million were up 15% from last year while international product orders of $639.4 million were 3% higher as strong orders from the Pacific region were offset by a decline in orders from Sony/Tektronix, the Company's joint venture in Japan, due to a change in its inventory stocking policies in the current year. Cost of sales decreased as a percentage of net sales from 58.0% to 57.3% due to an improved mix of high margin supplies sales in the Color Printing and Imaging Division and lower costs in the Video and Networking Division. Research and development expenses increased as a percentage of sales, from 9.3% to 9.9%, due to the high level of new product development. Selling, general and administrative expenses decreased slightly as a percentage of sales from 24.8% to 24.7%. Operating income as a percentage of sales improved from 8.0% in 1996 to 8.1% due to the improved gross margins, partially offset by the higher research and development spending. While making significant progress over the prior year, the Video and Networking business has been operating at a loss through the first three quarters of the current year. The Company expects the Video and Networking Division to be at or near breakeven in the fourth quarter. The Company reported other income of $2.0 million compared to other expense of $0.5 million last year due primarily to higher gains on sales of stock in other companies. The provision for income taxes increased from $30.6 million to $36.7 million due to increased earnings before taxes and a higher estimated effective annual tax rate of 32% for the current year, compared to 30% last year. 7 QUARTER ENDED MARCH 1, 1997 vs. QUARTER ENDED FEBRUARY 24, 1996 In the third quarter of fiscal 1997, net earnings were $28.8 million, or $0.87 per share compared with $22.4 million, or $0.67 per share in the third quarter of fiscal 1996. Net sales were $478.9 million, up 10% from $433.5 million in the prior year. Product orders increased 15%, from $389.5 million to $449.4 million. Measurement Business sales of $210.0 million were up 2% from the prior year, as growth was constrained by parts shortages. Product orders were $189.2 million, an increase of 9% from $172.8 million in the third quarter of 1996, reflecting strong initial demand for the new TLA 700 logic analyzer introduced in January, 1997, as well as strong growth in tools and telecommunications test products. Color Printing and Imaging sales increased 28% to $167.2 million and product orders rose 30% to $161.9 million, due to the excellent performance of the Company's Phaser 350 and Phaser 550 office color printers, and strong sales of the Phaser 600, which began shipping in the quarter, into the graphic arts market. Video and Networking sales grew 5% to $101.7 million, which were lower than the Company's expectations as the introduction of two key products was delayed to the fourth quarter. Product orders were $98.3 million, an increase of 7% over 1996 product orders of $92.0 million. Sales to customers in the United States increased by 16% from $203.9 million to $235.9 million, representing 49% of total sales. International sales of $243.0 million were up 6% from $229.6 million in the prior year, with significant growth in the Pacific and modest improvement in Europe partly offset by weakness in Japan. The lower growth of international sales was due in part to the strong U.S. dollar. Product orders from customers in the United States of $227.0 million were up 22% from last year's third quarter while international product orders of $222.4 million were 9% ahead of last year. Cost of sales, as a percentage of net sales, decreased from 58.5% to 57.1% due to the demand for high margin printer supplies and reduced production costs at the Video and Networking Division. Research and development expenses increased slightly as a percentage of sales. Selling, general and administrative expenses declined as a percentage of sales, from 25.2% to 24.5%, due to the higher sales level in the current quarter. Operating income as a percentage of sales improved from 7.3% in the third quarter of 1996 to 8.6% in the current quarter due to the improved gross margins and the decline in operating expenses as a percentage of sales. Income taxes increased from $9.6 million to $13.5 million due to the higher earnings before taxes and the higher estimated effective annual tax rate of 32% for the current year, compared to 30% for all of last year. 8 Forward-looking Statements Information provided by the Company in this Form 10-Q regarding the Video and Networking Division, or statements made by the Company's employees, may contain 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 continuing integration and transformation of its Video and Networking business; the Company's ability to effectively manage its growing systems integration business, particularly the large scale contracts in the Video and Networking Division; parts availability in the Measurement Business; the ability to timely ship and to ramp up production for recently introduced products, which could be affected by engineering, development program slippages or parts availability; and demand for and acceptance of the new products 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 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (27) (i) Financial Data Schedule. (b) A report on Form 8-K was filed during the quarter for which this report is filed. The report was dated December 11, 1996, filed as of December 13, 1996, and covered items 5 and 7. A Consolidated Statement of Operations for the 12 months ended August 31, 1996 was filed as Exhibit 1 to this report. 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. April 10, 1997 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 9-MOS MAY-31-1997 MAR-01-1997 78,747 0 279,735 5,483 256,729 665,356 683,510 359,034 1,235,682 254,784 151,475 215,700 0 0 523,711 1,235,682 0 1,396,167 0 799,900 0 0 10,114 114,607 36,674 77,933 0 0 0 77,933 2.37 2.37
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