-----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, Ux4e2z20uzycA4JuYTEj7SYx4U/WVDYGJBT9ecv9IbG3KVmdb/PJRjKqG/uHbDJL RgjcchnqoTDnnJanZJf+og== 0000096879-97-000012.txt : 19971014 0000096879-97-000012.hdr.sgml : 19971014 ACCESSION NUMBER: 0000096879-97-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970830 FILED AS OF DATE: 19971010 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: SEC FILE NUMBER: 001-04837 FILM NUMBER: 97694144 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 1998 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 30, 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 SEPTEMBER 26, 1997 THERE WERE 33,759,757 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 30, 1997 and May 31, 1997 Condensed Consolidated Statements of Operations - 3 for the Quarter ended August 30, 1997 and the Quarter ended August 31, 1996 Condensed Consolidated Statements of Cash Flows - 4 for the Quarter ended August 30, 1997 and the Quarter ended August 31, 1996 Notes to Condensed Consolidated Financial Statements 5 Management's Discussion and Analysis of Financial 7 Condition and Results of Operations Part II. Other Information 9 Signatures 10 1 TEKTRONIX, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) Aug. 30, May 31, (In thousands) 1997 1997 - ------------------------------------------------------------------------------- ASSETS Current assets: Cash and cash equivalents $ 133,521 $142,726 Accounts receivable - net 274,146 305,832 Inventories 249,382 238,040 Other current assets 59,565 64,913 ---------- --------- Total current assets 716,614 751,511 Property, plant and equipment - net 349,998 343,130 Deferred tax assets 15,851 12,540 Other long-term assets 200,151 209,560 ---------- ---------- Total assets $1,282,614 $1,316,741 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term debt $ 6,312 $ 6,155 Accounts payable 154,554 181,366 Accrued compensation 68,685 90,946 Deferred revenue 26,332 25,622 ---------- ---------- Total current liabilities 255,883 304,089 Long-term debt 150,923 151,579 Other long-term liabilities 86,696 89,790 Shareholders' equity: Common stock 230,101 226,591 Retained earnings 495,277 473,582 Currency adjustment 33,722 34,447 Unrealized holding gains - net 30,012 36,663 ---------- ---------- Total shareholders' equity 789,112 771,283 ---------- ---------- Total liabilities and shareholders' equity $1,282,614 $1,316,741 ========== ========== 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. 30, Aug. 31, (In thousands except for per share amounts) 1997 1996 - ------------------------------------------------------------------------------- Net sales $ 481,274 $ 440,115 Cost of sales 280,001 248,843 ---------- ---------- Gross profit 201,273 191,272 Research and development expenses 46,215 46,447 Selling, general, and administrative expenses 116,908 112,095 Equity in business ventures' earnings 167 144 ---------- ---------- Operating income 38,317 32,874 Other income - net 1,557 531 ---------- ---------- Earnings before taxes 39,874 33,405 Income taxes 13,158 10,690 ---------- ---------- Net earnings $ 26,716 $ 22,715 ========== ========== Earnings per share $ 0.80 $ 0.69 Dividends per share 0.15 0.15 Average shares outstanding 33,536 32,766 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. 30, Aug. 31, (In thousands) 1997 1996 - ------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 26,716 $ 22,715 Adjustments to reconcile net earnings to cash provided by operating activities: Depreciation expense 15,517 13,324 Accounts receivable 27,732 67,589 Inventories (13,630) (17,801) Other current assets 370 16,131 Accounts payable (28,377) (27,158) Accrued compensation (21,795) (20,883) Other-net 3,761 (14,076) ---------- ---------- Net cash provided by activities 10,294 39,841 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment (27,829) (19,011) Proceeds from sale of fixed assets 4,164 2,466 Proceeds from sale of investments 7,316 4,506 ---------- ---------- Net cash used by investing activities (16,349) (12,039) CASH FLOWS FROM FINANCING ACTIVITIES Net change in short-term debt 76 (29,592) Issuance of long-term debt -- 450 Repayment of long-term debt (656) -- Issuance of common stock 5,233 465 Repurchase of common stock (1,722) -- Dividends (5,021) (4,915) ---------- ---------- Net cash used by financing activities (2,090) (33,592) Effect of exchange rate changes (1,060) 2,071 ---------- ---------- Decrease in cash and cash equivalents (9,205) (3,719) Cash and cash equivalents at beginning of year 142,726 36,644 ---------- ---------- Cash and cash equivalents at end of quarter $ 133,521 $ 32,925 ========== ========== SUPPLEMENTAL DISCLOSURES OF CASH FLOWS Income taxes paid (refunded)- net $ 8,984 $ (4,671) Interest paid 6,030 7,302 NON-CASH INVESTING ACTIVITIES Fair value adjustment to securities available-for-sale $ (11,280) $ (1,440) Income tax effect related to fair value adjustment 4,629 576 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 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 1998 is 52 weeks and fiscal year 1997 was 53 weeks. The first quarter of 1998 was 13 weeks compared to 14 weeks in the first quarter of 1997. INVENTORIES Inventories consisted of: Aug 30, May 31, (In thousands) 1997 1997 - ------------------------------------------------------------------------------- Materials and work in process $ 132,901 $ 134,743 Finished goods 116,481 103,297 ---------- ---------- Inventories $ 249,382 $ 238,040 ========== ========== PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consisted of: Aug 30, May 31, (In thousands) 1997 1997 - ------------------------------------------------------------------------------- Land $ 5,912 $ 6,096 Buildings 187,809 199,396 Machinery and equipment 512,559 493,791 ---------- ---------- 706,280 699,283 Accumulated depreciation and amortization (356,282) (356,153) ---------- ---------- Property, plant and equipment - net $ 349,998 $ 343,130 ========== ========== 5 INCOME TAXES The provision for income taxes consisted of: Quarter ended Aug. 30, Aug. 31, (In thousands) 1997 1996 - ------------------------------------------------------------------------------- United States $ 9,211 $ 5,939 State 1,887 1,485 Foreign 2,060 3,266 ---------- ---------- Income taxes $ 13,158 $ 10,690 ========== ========== The provision for income taxes was calculated at estimated annual effective rates of 33% and 32%, respectively, for the quarters ended August 30, 1997, and August 31, 1996. COMMON STOCK SPLIT AND DIVIDEND INCREASE On September 24, 1997, the Company's Board of Directors approved a three- for-two stock split of the Company's common stock, to be effected in the form of a 50% stock dividend, to holders of record on October 10, 1997. The Board of Directors also approved a 20% increase in the quarterly cash dividend to holders of record on October 10, 1997. The cash dividend rate will be twelve cents on each post-split share. Distribution of the stock dividend and the cash dividend will begin on October 31, 1997. Financial information contained in this report has not been restated to reflect the impact of the pending common stock split. FUTURE ACCOUNTING CHANGES In February 1997, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per Share." SFAS No. 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 beginning with the Company's third quarter ending on February 28, 1998. The pro forma diluted earnings per share under SFAS No. 128 is $0.78 for the quarter ended August 30, 1997 and $0.68 for the quarter ended August 31, 1996, based upon average shares outstanding of 34.3 million and 33.3 million, respectively. In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income." SFAS No. 130 establishes requirements for disclosure of comprehensive income and becomes effective for the Company's fiscal year ending May 1999. Reclassification of earlier financial statements for comparative purposes is required. In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." SFAS No. 131 establishes standards for disclosure about operating segments in annual financial statements and selected information in interim financial reports. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. This statement supersedes SFAS No. 14, "Financial Reporting for Segments of a Business Enterprise." The new standard becomes effective for the Company's fiscal year ending May 1999, and requires that comparative information from earlier years be restated to conform to the requirements of this standard. 6 SUBSEQUENT EVENT On September 2, 1997 the Company announced an agreement to purchase Siemens Communications Test Equipment GmbH (SCTE), a wholly owned subsidiary of Siemens based in Berlin, Germany, for approximately $46 million. The cash transaction closed on September 30, 1997 and will be accounted for by the purchase method of accounting in the second quarter. SCTE had revenues of approximately $60 million in its last fiscal year. The Company will take a one-time charge of $19 million in the second quarter to write off research and development projects currently underway at SCTE and to account for other integration expenses associated with the acquisition. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONs Financial Condition The Company's financial condition is strong. Cash flows from operating activities and borrowing capacity from existing lines of credit are expected to be sufficient to meet current and anticipated future needs. At the end of the first quarter (August 30, 1997), the Company maintained bank credit facilities totaling $307.9 million, of which $300.9 million was unused. Unused facilities include $150.9 million in lines of credit and $150.0 million under a revolving credit agreement from United States and foreign banks. The Company continued to experience significant improvements in working capital. Compared to the first quarter of fiscal 1997, accounts receivable improved from 17.7% to 14.2% of annualized sales and inventory improved from 16.1% to 13.0% of annualized sales. These improvements reduced accounts receivable and inventory required to support the business by $127 million. Current assets decreased by $34.9 million from the year end balance at May 31, 1997, due primarily to lower accounts receivable as a result of the normal lower sales in the first quarter compared to the fourth quarter of last year. Current liabilities declined by $48.2 million, or 16%. 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 $17.8 million due primarily to earnings net of dividends. Results of Operations 13 WEEKS ENDED AUGUST 30, 1997 vs. 14 WEEKS ENDED AUGUST 31, 1996 In the first quarter of fiscal 1998, net earnings increased 18% to $26.7 million, or $0.80 per share compared with $22.7 million, or $0.69 per share in the first quarter of fiscal 1997. Net sales were $481.3 million, up 9% from $440.1 million in the prior year. 7 Measurement Business sales of $227.7 million were up 10% from the prior year reflecting growth across all major product areas, including digital signal test, logic analyzers, television and telecommunications test products. Product orders were $209.1 million, an increase of 13% over product orders of $184.3 million in the first quarter of 1997. Sales and orders were particularly strong in the United States and Japan. Color Printing and Imaging sales increased 26% from $124.0 million to $155.7 million, with strong growth in the office market around the world. Product orders increased 33% from $112.2 million to $148.9 million. Early in the current quarter, the Company introduced the Phaser 560 color laser printer, which saw strong orders and sales in the period. Video and Networking sales were $97.9 million for the first quarter of 1998, down 10% from $109.3 million in the first quarter of 1997. The decline in sales was in the network displays business, as the current results compare with a very strong first quarter of the prior year for that business. Sales for the video content production business were up modestly, led by the PDR200 video file server. Product orders were $99.2 million, a decline of 15% over 1997 product orders of $117.2 million. Video and Networking operated at a loss for the quarter. The Company is accelerating steps to return the business to profitable growth and expects to take a charge of approximately $45 million to $55 million in the second quarter to account for these actions, which include streamlining its product offerings and reducing the unit's cost structure to increase operational efficiency. Sales to customers in the United States increased by 4% from $243.8 million to $252.9 million, representing 53% of total sales. International sales of $228.4 million were up 16% from $196.3 million in the prior year, with a rebound in Europe and strong growth in all other regions. Product orders from customers in the United States of $240.0 million were up 6% from last year's first quarter while international product orders of $217.2 million rose 16%. Cost of sales, as a percentage of net sales, increased from 56.5% to 58.2% due primarily to lower margins resulting from competitive pricing on video production products and the complexity of product offerings in Video and Networking. Also impacting margins was the strong launch of the Phaser 560 color printer, causing a heavier mix of product sales versus supplies, which provide higher margins. Research and development and selling, general and administrative expenses decreased as a percentage of sales, from 10.6% to 9.6% and from 25.5% to 24.3%, respectively. Operating income as a percentage of sales improved from 7.5% in the first quarter of 1997 to 8.0% in the current quarter due to lower operating expenses partly offset by higher cost of sales. Income taxes increased from $10.7 million to $13.2 million due to higher earnings before taxes and to the higher estimated effective annual tax rate of 33% for the current year, compared to 32% for all of last year. Net earnings of $26.7 million compared to $22.7 million in the prior year's quarter, an increase of 18%, primarily due to the higher operating income. On September 2, 1997 the Company announced an agreement to purchase Siemens Communications Test Equipment GmbH (SCTE), a wholly-owned subsidiary of Siemens based in Berlin, Germany. The cash transaction closed on September 30, 1997. SCTE had revenues of approximately $60 million in its last fiscal year. The Company will take a one-time charge of $19 million in the second quarter of fiscal 1998 to write off research and development projects currently underway at SCTE and to account for other integration expenses associated with the acquisition. Forward Looking Statements Statements and information included in this Form 10-Q that relate to the Company's goals, strategies and expectations as to future results, events and expectations are based on the Company's current expectations. They constitute forward looking statements subject to a number of risk factors that could cause actual results to differ materially from those currently expected or desired. From time to time, information provided by the Company, 8 or statements made by its employees, may contain other forward looking state- ments. As with many high technology companies, risk 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: world-wide economic 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, 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 sub- stantial 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 operational issues the Company faces in executing its strategy in Video and Networking; changes in the regulatory environment affecting the transition to high-definition television within the time frame anticipated by the Company; 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 the demand for and acceptance of new 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 25, 1997, the shareholders voted on the election of three directors to the Company's board of directors. Gerry B. Cameron, Jerome J. Meyer, and William D. Walker were elected to serve a three-year term ending at the Year 2000 annual meeting of shareholders. The voting for each director was as follows: 29,054,123 shares voted for Gerry B. Cameron, and 152,443 withheld; 29,047,710 voted for Jerome J. Meyer, and 158,856 withheld; and 29,056,478 voted for William D. Walker, and 150,088 withheld. The term of office of the Company's other directors continued after the 1997 annual meeting of shareholders, as follows: A.M. Gleason, Wayland R. Hicks, and Merrill A. McPeak until the 1998 annual meeting of shareholders; and Pauline Lo Alker, A. Gary Ames, and Paul C. Ely, Jr. until the 1999 annual meeting of shareholders. 9 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (27) (i) Financial Data Schedule. (b) No reports on Form 8-K have been filed during the quarter for which this report is filed. 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, 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 3-MOS MAY-31-1997 AUG-30-1997 133,521 0 277,168 3,022 249,382 716,614 706,280 356,282 1,282,614 255,883 150,923 230,101 0 0 559,011 1,282,614 0 481,274 0 280,001 0 0 2,435 39,874 13,158 26,716 0 0 0 26,716 0.80 0.80
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