-----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, G+3WUZY3hcgmI02ApVKjnC3kSND3o1lLPOaavxUFZkAVy8dmdOMqOktJgxZtj8aQ TxeOwGt+eomhzF/HIUi3Pw== 0000096879-98-000010.txt : 19980413 0000096879-98-000010.hdr.sgml : 19980413 ACCESSION NUMBER: 0000096879-98-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980228 FILED AS OF DATE: 19980410 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: 98591797 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 Q3 10-Q REPORT ============================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, DC 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 February 28, 1998 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 (IRS Employer incorporation or organization) Identification No.) 26600 SW 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 28, 1998 THERE WERE 50,526,231 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 February 28, 1998 and May 31, 1997 Condensed Consolidated Statements of Operations - 3 for the Quarter ended February 28, 1998 and the Quarter ended March 1, 1997 for the Three Quarters ended February 28, 1998 and the Three Quarters ended March 1, 1997 Condensed Consolidated Statements of Cash Flows - 4 for the Three Quarters ended February 28, 1998 and the Three Quarters ended March 1, 1997 Notes to Condensed Consolidated Financial Statements 6 Management's Discussion and Analysis of Financial 9 Condition and Results of Operations Part II. Other Information 14 Signatures 14 1 TEKTRONIX, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) Feb. 28, May 31, (In thousands) 1998 1997 - ------------------------------------------------------------------------------ ASSETS Current assets: Cash and cash equivalents $ 112,040 $ 142,726 Accounts receivable - net 294,771 305,832 Inventories 214,492 238,040 Other current assets 64,907 64,913 ---------- ---------- Total current assets 686,210 751,511 Property, plant and equipment - net 386,224 343,130 Deferred tax assets 23,858 12,540 Other long-term assets 191,669 209,560 ---------- ---------- Total assets $1,287,961 $1,316,741 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term debt $ 5,182 $ 6,155 Accounts payable 172,068 181,366 Accrued compensation 99,403 90,946 Deferred revenue 12,461 25,622 ---------- ---------- Total current liabilities 289,114 304,089 Long-term debt 150,708 151,579 Other long-term liabilities 86,637 89,790 Shareholders' equity: Common stock 224,272 226,591 Retained earnings 496,192 473,582 Currency adjustment 25,036 34,447 Unrealized holding gains - net 16,002 36,663 ---------- ---------- Total shareholders' equity 761,502 771,283 ---------- ---------- Total liabilities and shareholders' equity $1,287,961 $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 Three quarters ended (In thousands Feb. 28, Mar. 1, Feb. 28, Mar. 1, except for per share amounts) 1998 1997 1998 1997 - ------------------------------------------------------------------------------ Net sales $517,570 $478,886 $1,527,890 $1,396,167 Cost of sales 292,716 273,653 909,768 799,900 -------- -------- ---------- ---------- Gross profit 224,854 205,233 618,122 596,267 Research and development expenses 52,944 45,621 149,373 137,684 Selling, general, and administrative expenses 123,277 117,496 374,717 345,535 Equity in business ventures' earnings (loss) (34) (861) 430 (467) Non-recurring charges -- -- 40,478 -- -------- -------- ---------- ---------- Operating income 48,599 41,255 53,984 112,581 Other income - net 2,507 1,042 5,329 2,026 -------- -------- ---------- ---------- Earnings before taxes 51,106 42,297 59,313 114,607 Income taxes 16,865 13,535 19,573 36,674 -------- -------- ---------- ---------- Net earnings $ 34,241 $ 28,762 $ 39,740 $ 77,933 ======== ======== ========== ========== Basic earnings per share $ 0.68 $ 0.58 $ 0.79 $ 1.58 Diluted earnings per share $ 0.67 $ 0.57 $ 0.77 $ 1.56 Dividends per share $ 0.12 $ 0.10 $ 0.34 $ 0.30 Average shares outstanding-basic 50,483 49,616 50,438 49,362 Average shares outstanding-diluted 51,408 50,409 51,381 49,928 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 Feb. 28, Mar. 1, (In thousands) 1998 1997 - ------------------------------------------------------------------------------ CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 39,740 $ 77,933 Adjustments to reconcile net earnings to cash provided by operating activities: Depreciation expense 48,328 41,768 Inventory write-down related to restructuring 38,482 -- Non-recurring charges 40,478 -- Gains on sale of investments (18,941) (15,100) Accounts receivable 16,374 98,032 Inventories (4,779) 8,152 Other current assets (6,514) 24,562 Accounts payable (17,301) (12,032) Accrued compensation (16,234) (48,305) Other-net (16,763) (1,515) ---------- ---------- Net cash provided by operating activities 102,870 176,525 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment (95,921) (66,419) Acquisition of CTE (46,600) -- Proceeds from sale of fixed assets 9,510 1,845 Proceeds from sale of investments 22,083 22,519 ---------- ---------- Net cash used by investing activities (110,928) (42,055) CASH FLOWS FROM FINANCING ACTIVITIES Net change in short-term debt (1,183) (37,622) Issuance of long-term debt 111 358 Repayment of long-term debt (893) (50,708) Issuance of common stock 21,835 11,330 Repurchase of common stock (24,154) -- Dividends (17,130) (14,796) ---------- ---------- Net cash used by financing activities (21,414) (91,438) Effect of exchange rate changes (1,214) (929) ---------- ---------- Decrease in cash and cash equivalents (30,686) 42,103 Cash and cash equivalents at beginning of year 142,726 36,644 ---------- ---------- Cash and cash equivalents at end of quarter $ 112,040 $ 78,747 ========== ========== 4 SUPPLEMENTAL DISCLOSURES OF CASH FLOWS Income taxes paid- net $ 38,763 $ 7,455 Interest paid 12,204 14,408 NON-CASH INVESTING ACTIVITIES Fair value adjustment to securities available-for-sale $ (33,584) $ 3,314 Income tax effect related to fair value adjustment 12,923 (95) The accompanying notes are an integral part of these condensed consolidated financial statements. 5 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 and the first three quarters of 1998 were 39 weeks compared to 40 weeks in the first three quarters of 1997. RESTRUCTURING In the second quarter of 1998, the Company announced and began to implement a restructuring plan designed to return the Video and Networking Division business to profitable growth, and recorded a pre-tax provision of $60.0 million to account for these actions, which include streamlining its product offerings and reducing the unit's cost structure to increase operational efficiency. The plan will result in the separation of some employees worldwide and the exiting of certain facilities and product lines at a cost of $21.5 million. These costs are included in Non-recurring charges for the three quarters ended February 28, 1998 in the Condensed Consolidated Statements of Operations. In addition, the decision to streamline product offerings required a $38.5 million write-down of inventories, which is included in cost of sales for the three quarters ended February 28, 1998. ACQUISITION On September 30, 1997, the Company acquired Siemens' Communications Test Equipment GmbH (CTE), a wholly owned subsidiary of Siemens based in Berlin, Germany, for approximately $46.6 million in cash, including direct acquisition costs. The transaction was accounted for by the purchase method of accounting, and accordingly, the results of operations of CTE have been included in the Company's financial statements since the date of acquisition. Pro forma comparative results of operations are not presented because they are not material relative to the Company's results of operations. The purchase price was allocated as follows: (In thousands) - ------------------------------------------------------------------------------ Fair value of identified net assets acquired $ 6,600 Acquired in-process research and development 17,000 ---------- Identified intangibles 23,000 ---------- $ 46,600 ========== Acquired in-process research and development of $17,000 was expensed in the second quarter of the current year. (see Non-recurring charges footnote). The identified intangibles include $18.0 million of completed technology and $5.0 million of workforce-in-place and will be amortized on a straight-line basis over 15 years. 6 INVENTORIES Inventories consisted of: Feb. 28, May 31, (In thousands) 1998 1997 - ------------------------------------------------------------------------------ Materials and work in process $ 72,649 $ 134,743 Finished goods 141,843 103,297 ---------- ---------- Inventories $ 214,492 $ 238,040 ========== ========== PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consisted of: Feb. 28, May 31, (In thousands) 1998 1997 - ------------------------------------------------------------------------------ Land $ 5,957 $ 6,096 Buildings 193,818 199,396 Machinery and equipment 571,945 493,791 ---------- ---------- 771,720 699,283 Accumulated depreciation and amortization (385,496) (356,153) ---------- ---------- Property, plant and equipment - net $ 386,224 $ 343,130 ========== ========== NON-RECURRING CHARGES Non-recurring charges consisted of: Three quarters ended Feb. 28, (In thousands) 1997 - ------------------------------------------------------------------------------ Restructuring of the Video and Networking Division $ 59,960 In-process research and development acquired in the purchase of CTE 17,000 Accrued integration costs associated with the purchase of CTE 2,000 ---------- Total non-recurring charges $ 78,960 Less: Inventory write-down included in cost of sales (38,482) ---------- Non-recurring charges $ 40,478 ========== 7 INCOME TAXES The provision for income taxes consisted of: Quarter ended Three quarters ended Feb. 28, Mar. 1, Feb. 28, Mar. 1, (In thousands) 1998 1997 1998 1997 - ------------------------------------------------------------------------------ United States $ 19,196 $ 8,000 $ 19,961 $ 21,442 State 800 1,999 832 5,360 Foreign (3,131) 3,536 (1,220) 9,872 -------- -------- ---------- ---------- Income taxes $ 16,865 $ 13,535 $ 19,573 $ 36,674 ========= ======== ========== ========== The provision for income taxes was calculated at estimated annual effective rates of 33% and 32%, respectively, for the quarters ended February 28, 1998, and March 1, 1997. 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, 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 was twelve cents on each post-split share. Financial information contained in this report has been restated to reflect the impact of the common stock split. EARNINGS PER SHARE 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 became effective beginning with the Company's third quarter ending on February 28, 1998. Prior period amounts have been restated to conform with the presentation requirements of SFAS No. 128. For all periods presented, net earnings are the same for the calculation of both basic and diluted earnings per share. The difference between basic and diluted average shares outstanding is the dilutive potential shares from stock options outstanding. FUTURE ACCOUNTING CHANGES 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. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Financial Condition BALANCE SHEET AT FEBRUARY 28, 1998 vs. BALANCE SHEET AT MAY 31, 1997 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 third quarter (February 28, 1998), the Company maintained bank credit facilities totaling $307.7 million, of which $302.0 million was unused. Unused facilities include $152.0 million in lines of credit and $150.0 million under a revolving credit agreement from United States and foreign banks. Current assets decreased by $65.3 million from the year end balance at May 31, 1997, as cash, accounts receivable and inventory all declined. The net use of cash was due to high capital expenditures, reductions in trade payables and the funding of restructuring measures. Inventory was lower because of the $38.5 million write-down related to the restructuring of the Video and Networking Division discussed below, partly offset by the addition of inventory acquired in the second quarter as a result of the acquisition of Siemens' Communications Test Equipment business, and the normal seasonal increase in finished products. Current liabilities decreased $15.0 million, due primarily to the timing of trade payables. Property, plant and equipment increased by $43.1 million due to $97.6 million of capital expenditures as the Company is expanding printer equipment and facilities for future manufacturing capacity and continues to invest in information systems software and hardware. The capital expenditures were partly offset by depreciation of $48.3 million. Other long-term assets declined $17.9 million as a result of sales of, and a decline in market value of, some held-for-sale investments, partly offset by the addition of intangible assets on the acquisition of CTE discussed below. Deferred tax assets showed a net increase due to the reduction of the deferred tax liability on held-for-sale investments. Shareholders' equity decreased by $9.8 million due primarily to a decline in unrealized holding gains on investments in other companies and a reduction in currency adjustment caused by weak foreign currencies, partly offset by the increase in retained earnings. 9 Restructuring In the second quarter of 1998, the Company announced and began to implement a restructuring plan designed to return the Video and Networking Division business to profitable growth, and recorded a pre-tax provision of $60.0 million to account for these actions, which include streamlining its product offerings and reducing the unit's cost structure to increase operational efficiency. The plan will result in the separation of some employees worldwide and the exiting of certain facilities and product lines at a cost of $21.5 million. These costs are included in Non-recurring charges in the Condensed Consolidated Statements of Operations. In addition, the decision to streamline product offerings required a $38.5 million write-down of inventories in the second quarter, which is included in Cost of sales. The Company expects that approximately $16 million of the non-recurring charges require expenditures of cash, of which approximately $5 million has been expended to date and about $5 million will be expended in the fourth quarter of this fiscal year. The remaining $6 million will affect cash flows in fiscal year 1999. Acquisition On September 30, 1997, the Company acquired Siemens' Communications Test Equipment GmbH (CTE), a wholly owned subsidiary of Siemens based in Berlin, Germany, for approximately $46.6 million in cash, including direct acquisition costs. The transaction was accounted for by the purchase method of accounting. $17.0 million of the purchase was identified as in- process technology, which had not completed the development process and had no alternative future use, and was written off in the second quarter. In addition, integration costs of $2.0 million associated with the acquisition were accrued. Results of Operations THREE QUARTERS ENDED FEBRUARY 28, 1998 vs. THREE QUARTERS ENDED MARCH 1, 1997 The Company continued to experience significant improvements in working capital. Compared to the third quarter of fiscal 1997, accounts receivable improved from 14.3% to 14.2% of annualized sales and inventory improved from 13.4% to 10.4% of annualized sales. These improvements reduced the working capital required to support the business by $64 million. Net sales were $1,527.9 million, an increase of 9% from the prior year's total of $1,396.2 million. Net earnings were $39.7 million, or $0.79 per share ($0.77 diluted) compared with $77.9 million, or $1.58 per share ($1.56 diluted) in the first nine months of fiscal 1997. Results for the first nine months of fiscal 1998 include charges of $79.0 million ($52.9 million after taxes, or $1.05 per share) related to the restructuring of the Video and Networking Division and the acquisition of CTE. Shares and earnings per share have been restated to reflect a three- for-two stock split in October 1997. 10 Excluding the after-tax charges of $52.9 million, 1998 net earnings would have been $92.6 million, or $1.84 per share ($1.80 diluted). Measurement Business Division sales of $715.6 million increased 15% from the prior year, with growth in broadcast and telecommunications test products and logic analyzers. Product orders increased 12% from $565.9 million to $636.1 million with growth in all geographic regions except Pacific. Color Printing and Imaging Division sales increased 17% from $449.0 million to $525.0 million and product orders increased 16% from $427.1 million to $494.1 million, with strong sales of the Phaser* 560 printer, introduced in the first quarter, the successful launch of the Phaser 380 during the second quarter and the Phaser 360 in the current quarter. *(Phaser is a registered trademark of Tektronix, Inc.). Video and Networking Division sales decreased 12% from $327.1 million to $287.3 million. The decline in sales was in the netstation business, as the current results compare with a very strong nine months last year for that business which included two large installations of network computers. Sales for the video content production business were up, led by the Profile video file server and the Lightworks V.I.P digital video editing system. Product orders declined 11% from $315.0 million to $280.4 million. Sales to customers in the United States increased from $736.1 million to $781.9 million, and represented 51% of total sales. International sales of $746.0 million were up 13%, with growth in all regions but particular strength in the Americas and Japan. Product orders from customers in the United States of $715.7 million were up 7% from last year while international product orders of $694.9 million were up 9%. International orders and sales growth were even stronger when stated in local currencies, particularly in Europe and the Pacific, where some currencies declined significantly, year over year, against the dollar. Without the $38.5 million one-time inventory write-down related to the restructuring of Video and Networking Division in the second quarter, cost of sales for 1998 would have declined slightly as a percentage of net sales to 57.0%. Including the write-down, cost of sales increased as a percentage of sales from 57.3% to 59.5%. Research and development and selling, general and administrative expenses declined slightly, year-to- year, as a percentage of sales. Excluding the non-recurring charges, the operating margin would have improved from 8.1% to 8.7%. With the charges, operating income as a percentage of sales declined to 3.5%. The provision for income taxes declined from $36.7 million to $19.6 million due to the lower earnings before taxes. The estimated effective annual tax rate is 33% for the current year compared to 32% for last year. 11 QUARTER ENDED FEBRUARY 28, 1998 vs. QUARTER ENDED MARCH 1, 1997 In the third quarter of fiscal 1998, net earnings were $34.2 million, or $0.68 per share ($0.67 diluted), an increase of 19% over earnings of $28.8 million, or $0.58 per share ($0.57 diluted) in the third quarter of fiscal 1997. Net sales were $517.6 million, up 8% from $478.9 million in the prior year. Product orders increased 3%, from $449.4 million to $461.2 million. Measurement Business sales of $240.2 million were up 14% from the prior year reflecting strong growth in logic analyzers and telecommunications test products. The communication test equipment business, acquired in the second quarter of 1998, contributed about $14 million to third quarter sales. Sales were strong in the United States, but declined in Japan and the rest of the Pacific. Product orders were $196.5 million, an increase of 4% over product orders of $189.2 million in the second quarter of 1998 with strong growth in Europe offset by a sharp decline in the Pacific region. In addition to the direct impact in Asia, the Company experienced a slowdown in orders from United States manufacturers affected by business conditions in that region. The Company expects these conditions will exist for the next few quarters. Color Printing and Imaging sales increased 10% from $167.2 million to $183.7 million, with strong growth in unit shipments into the office market. The Phaser 560 color laser printer performed well and sales of the new solid ink Phaser 360, announced during the period, were exceptionally strong. Product orders increased 7% from $161.9 million to $173.2 million. Video and Networking sales were $93.7 million for the 1998 quarter, down 8% from $101.7 million in 1997. The decline in sales was in the netstation business. Sales for the video content production business were up, led by the Profile video file server. Product orders were $91.5 million, a decline of 7% from 1997 product orders of $98.3 million. Video and Networking operated at a small profit for the quarter, compared to a significant loss in the prior year quarter, and the Company expects the division to continue to operate profitably during the fourth quarter. Sales to customers in the United States increased by 8% from $235.9 million to $254.1 million, and represented 49% of total sales. International sales of $263.5 million were up 8% from $243.0 million in the prior year, with particularly strong growth in the Americas and improvement in Europe. Product orders from customers in the United States of $232.4 million were up 2% from last year's third quarter while international product orders of $228.8 million rose 3%. Cost of sales as a percentage of sales improved from 57.1% to 56.6%. The improvement is due primarily to a heavier sales mix of higher margin new products and supplies, and manufacturing cost reductions, particularly in the Video and Networking division. Research and development expense (R&D) increased as a percentage of sales, from 9.5% to 10.2% while selling, general and administrative expenses (SG&A) decreased from 24.5% to 23.8%. The operating margin increased from 8.6% to 9.4%, primarily due to gross margin improvement and cost control in SG&A, partly offset by higher R&D. The estimated effective annual tax rate is 33% for the current quarter compared to 32% for the prior year's third quarter. 12 YEAR 2000 In connection with the Company's ongoing program to standardize and upgrade its key financial, information and operational systems, an assessment has been made of the ability of these systems to operate in, and to process transactions and data involving, the year 2000 and beyond. The Company believes that all key systems that are not already year 2000 compliant will be modified, upgraded or replaced prior to the year 2000, and that any related costs will not have a material impact on the results of operations, financial condition or cash flows of future periods. 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, or statements made by its employees, may contain other forward looking statements. 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 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 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. 13 PART II. OTHER INFORMATION 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. April 9, 1998 TEKTRONIX, INC. By___________________________ Carl W. Neun Senior Vice President and Chief Financial Officer 14 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-30-1998 Feb-28-1998 112,040 0 298,993 4,222 214,492 686,210 771,720 385,496 1,287,961 289,114 150,708 224,272 0 0 537,230 1,287,961 0 1,527,890 0 909,768 0 0 7,111 59,313 19,573 39,740 0 0 0 39,740 0.79 0.77
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