EX-99.1 2 v25774exv99w1.htm EXHIBIT 99.1 exv99w1
 

Exhibit 99.1
         
For Immediate Release
  Media Contact:   Alisha Goff
 
      503/627-7075
 
      alisha.goff@tektronix.com
 
        
 
  Analyst Contact:   Paul Oldham
 
      503/627-4027
 
      paul.r.oldham@tektronix.com
Tektronix Reports Results for the
Second Quarter of Fiscal 2007
Orders Up 18% Year Over Year
BEAVERTON, Ore., December 14, 2006 — Tektronix, Inc. (NYSE: TEK) today reported net sales of $272.8 million and net earnings from continuing operations of $19.6 million or $0.24 per share for the second quarter ended November 25, 2006. This compares with net sales of $253.4 million and net earnings from continuing operations of $19.9 million or $0.24 per share for the same period last year. Excluding acquisition-related costs, business realignment costs, one-time items, and share-based compensation expense, net earnings from continuing operations were $29.0 million or $0.35 per share for the second quarter as compared with $25.8 million or $0.31 per share for the same period last year.
“This was a good quarter for Tektronix in many respects. We saw orders growth of 18% driven by strong demand for general purpose instruments and continued success in network monitoring for next generation networks. In addition, we saw orders growth in every geography,” said Rick Wills, Tektronix Chairman and CEO. “Strong orders resulted in sales growth of 8% over the prior year, and our strongest level of backlog in recent years. Pro forma earnings per share grew 13% on improved interest income, currency, and tax rate — partially offset by lower gross margin.”
Orders for the Instruments business were up 20% driven by a significant digital design win for logic analyzers, continued strong growth in oscilloscopes and excellent demand for our spectrum analyzer products — which grew over 50%.
Orders in the Communications business were up 7% driven by continued demand for next generation telecommunications network monitoring solutions. Wills continued, “However, we saw order growth slow modestly as a result of delayed capital expenditure investments and the timing of new installations.”
-more-

 

 

Tektronix Second Quarter 2007 Results.../2
We continued to execute our growth strategy in the Instruments business by bringing to market several major products beginning with the introduction of the DSA8200 sampling oscilloscope, modules and software that represent significant performance advancements for testing the newest generation of serial data technologies. In addition, we made considerable progress in our two newer product categories. We introduced a high performance signal source for testing high-speed serial data bases and wideband digital RF technologies. Based on a new platform, it is the fastest and most versatile product in its class. And, we saw continued strong customer response to the recently introduced RSA6100A Series Real-Time Spectrum Analyzers. These products, which began shipping this quarter, increase our addressable market and contributed to strong growth in our spectrum analyzer products overall.
In our Communications business, we introduced the K1297-G35 WiMAX — the industry’s first protocol monitoring platform for functional test of mobile WiMAX broadband technologies. In addition, just after the close of the quarter, we completed the acquisition of Minacom, a leading provider of active probe test solutions used by telecommunications carriers, cable multi-service operators, and wireless and VoIP providers worldwide. This acquisition will expand Tektronix’ leadership and addressable market in monitoring next generation networks.
“Looking forward, we are encouraged by customer response to recent product introductions. We believe our markets for Instruments products remain stable and in spite of the recent slowing in the growth rates for our Communications products, we remain optimistic about our long-term opportunities in this business,” concluded Wills.
Third Quarter Guidance
For the third quarter of fiscal 2007, the company expects net sales to be approximately $275 — $285 million. Earnings per share from continuing operations are expected to be between $0.34 and $0.39 before mostly non-cash acquisition-related costs, business realignment costs, one-time items and share-based compensation expense.
Recent highlights include the following:
New product introductions, including:
  •   The introduction of the new DSA8200 Digital Serial Analyzer sampling oscilloscope, modules and software, which represent the most significant performance advancement in TDR (time-domain-reflectometry) test technology in 20 years, in direct response to the demanding needs and compliance requirements of high-speed serial data standards.
 
  •   The introduction of the new AWG7000 Arbitrary Waveform Generators which are built on a new platform and are the fastest, most capable and versatile AWGs available for testing of high-speed serial data and wideband digital RF signals.
-more-

 

 

Tektronix Second Quarter 2007 Results.../3
  •   The availability of the K1297-G35 WiMAX solution, the telecommunications industry’s first protocol monitoring platform for functional testing of Mobile WiMAX radio access products that are based on the IEEE 802.16e standard.
 
  •   The introduction of the world’s most powerful WiMAX R&D Test Set, a new application specific test tool utilizing the RSA3408A Real-Time Spectrum Analyzer, which will enable engineering teams to more quickly detect, diagnose and resolve design issues for WiMAX end-user products.
 
  •   The addition of TD-SCDMA — the mobile telecommunications standard developed for China - as an option to the market leading NetTek Wireless RF Field Tester. Tektronix is the first manufacturer to provide TD-SCDMA RF field test and measurement capabilities in a handheld form.
 
  •   The availability of Spectra2|VQM (Video Quality Measurement) version 2.0, a next generation network test tool that delivers robust multi-user diagnostics monitoring for multicast and unicast IP video services and extends Tektronix’ IP video leadership for the diagnosis and analysis of Internet Protocol TV (IPTV).
 
  •   The announcement of further extensions of IP Multimedia Subsystem (IMS) performance monitoring capabilities to the industry-leading Unified Assurance suite to enable true end-to-end performance monitoring and testing of current and next generation fixed, mobile and converged networks.
Key customer wins, including:
  •   The selection by France’s Institut national de l’audiovisuel, the world’s first audiovisual archive center, to install the Tektronix MTS4EA Elementary Stream Analyzer software to augment its world-class training center and to help educate the next generation of AV and broadcast professionals.
 
  •   The selection by Teligent, a global supplier of value added services to telecommunications carriers, of Tektronix’ Spectra2 portable diagnostics platform and conformance test suites to provide on-site testing and analysis of next generation networks.
Product awards, including:
  •   A STAR Award from the Service & Support Professionals Association (SSPA) recognizing technology companies that display exceptional leadership, innovation, and commitment to service excellence. Tektronix was the only test and measurement industry firm that received a SSPA STAR Award for service and support delivery.
 
  •   Just after the close of the quarter, Tektronix announced that the DPO4000 Oscilloscope won the Elektra ‘Product of the Year’ Award for quality of design, technical innovation and usability as judged by an independent panel of industry experts, including representatives from companies, trade bodies and academia, as well as editors from Electronics Weekly.
In addition, today Tektronix declared a quarterly cash dividend of $.06 per share on the outstanding common shares of the Company, payable on January 22, 2007 to shareholders of record as of the close of market on January 5, 2007.
Tektronix will be discussing its second quarter results and future guidance on a conference call today, beginning at 1:30 p.m. Pacific. A live Webcast of the conference call will be available at
-more-

 

 

Tektronix Second Quarter 2007 Results.../4
www.tektronix.com/ir. A replay of the Webcast will be available at the same Web site for one year.
Tektronix presents pro forma measures of net earnings and net earnings per share from continuing operations that exclude the effects of acquisition-related costs, business realignment costs, share-based compensation and one-time items. The “Reconciliation of Pro Forma Measures to GAAP” reconciles the results of operations in accordance with generally accepted accounting principles (GAAP) to the pro forma results of operations. Tektronix presents pro forma results of operations to help readers differentiate the results of ongoing operating activity from results that include acquisition-related costs, business realignment costs, share-based compensation and one-time items. Some of these items pertain to events that have not yet occurred and are not possible to ascertain with a reasonable degree of accuracy. Therefore, no reconciliation to GAAP for projected amounts is provided. In addition, in line with common industry practice and in order to enable comparability with other technology companies, guidance for pro forma results of operations excludes the effects of share-based compensation under FAS123R. Management of Tektronix uses these pro forma measures to evaluate the Company’s results of operations and for forecasting purposes.
Statements and information in this press release that relate to future events or results (including the Company’s statements and expectations regarding sales and earnings per share, markets, market position and market growth opportunities, strategic direction and the introduction of new products) are based on the Company’s current expectations. They constitute forward-looking statements subject to a number of risk factors, which could cause actual results to differ materially from those currently expected or desired. Those factors include: worldwide geopolitical and economic conditions; current and future business conditions in the electronics, communications, computer and advanced technologies industries; changes in order rates and customer cancellations, including changes in seasonal buying habits and timing of large orders; competitive factors, including pricing pressures, loss of key employees, technological developments and new products offered by competitors; changes in product and sales mix, and the related effects on gross margins; customer acceptance of large orders with delayed acceptance criteria; the Company’s ability to deliver a timely flow of competitive new products, and market acceptance of these products; the availability of parts and supplies from third-party suppliers on a timely basis and at reasonable prices; risks associated with compliance with the “Restriction of Hazardous Substances” worldwide regulatory provisions, including the associated conversion of current and future product designs and manufacturing processes to procure or produce lead-free products, and with export regulations; inventory risks due to changes in market demand or the Company’s business strategies; changes in effective tax rates; currency fluctuations; and the ability to develop effective sales channels. Further information on factors that could cause actual results to differ from those anticipated is included in filings made by the Company from time-to-time with the Securities and Exchange Commission, including but not limited to annual reports on Form 10-K and the quarterly reports on Form 10-Q.
About Tektronix
Tektronix is a leading supplier of test, measurement, and monitoring products, solutions and services for the communications, computer, and semiconductor industries — as well as military/aerospace, consumer electronics, education and a broad range of other industries worldwide. With 60 years of experience, Tektronix enables its customers to design, build, deploy, and manage next-generation global communications networks, advanced and pervasive technologies. Headquartered in Beaverton, Oregon, Tektronix has operations in 19 countries worldwide. Tektronix’ Web address is www.tektronix.com .
-more-

 

 

Tektronix Second Quarter 2007 Results /5
Consolidated Statements of Operations
                                 
    Quarter Ended     Two Quarters Ended  
    November 25,     November 26,     November 25,     November 26,  
(In thousands, except per share amounts)   2006     2005     2006     2005  
 
                                
Net sales
   $ 272,789     $ 253,396     $ 540,902     $ 488,456  
Cost of sales
     113,493       101,171       218,256       200,274  
 
                        
Gross profit
     159,296       152,225       322,646       288,182  
 
                                
Research and development expenses
     49,012       45,673       99,881       89,278  
Selling, general and administrative expenses
     84,164       73,103       164,037       141,668  
Business realignment costs (credits)
     (227 )     1,880       2,369       4,361  
Acquisition related costs and amortization
     1,369       2,095       2,840       5,531  
Loss (gain) on disposition of assets, net
     (33 )     23       521       27  
 
                        
Operating income
     25,011       29,451       52,998       47,317  
 
                                
Interest income
     4,263       2,888       8,933       5,980  
Interest expense
     (83 )     (146 )     (182 )     (243 )
Other non-operating expense, net
     (1,597 )     (1,993 )     (2,608 )     (2,979 )
 
                        
Earnings before taxes
     27,594       30,200       59,141       50,075  
 
                                
Income tax expense
     7,997       10,322       19,431       16,029  
 
                        
Net earnings from continuing operations
     19,597       19,878       39,710       34,046  
 
                                
Gain (loss) from discontinued operations, net of income taxes
     (4 )     17       3       (65 )
 
                        
Net earnings
   $ 19,593     $ 19,895     $ 39,713     $ 33,981  
 
                        
 
                                
Earnings per share:
                                
Continuing operations — basic
   $ 0.24     $ 0.24     $ 0.49     $ 0.41  
Continuing operations — diluted
   $ 0.24     $ 0.24     $ 0.48     $ 0.40  
Discontinued operations — basic
   $ —     $ —     $ —     $ —  
Discontinued operations — diluted
   $ —     $ —     $ —     $ —  
Net earnings — basic
   $ 0.24     $ 0.24     $ 0.49     $ 0.41  
Net earnings — diluted
   $ 0.24     $ 0.24     $ 0.48     $ 0.40  
 
                                
Weighted average shares outstanding:
                                
Basic
     81,535       82,833       81,791       83,718  
Diluted
     83,151       83,584       83,379       84,438  
 
                                
Cash dividend declared per share
   $ 0.06     $ 0.06     $ 0.12     $ 0.12  
- more -

 

 

Tektronix Second Quarter 2007 Results /6
Reconciliation of Pro Forma Measures to GAAP
                                                                                                 
      Quarter Ended                 Quarter Ended    
(In thousands, except per share amounts)   November 25, 2006           November 26, 2005
                Adjustments                                     Adjustments            
                        Share-based                                                          
      GAAP       Acquisitions     Compensation     Other       Pro Forma                 GAAP       Acquisitions     Other       Pro Forma    
Net sales
     $ 272,789         —       —       —       $ 272,789                 $ 253,396         —       —       $ 253,396    
Cost of sales
       113,493         (4,722 )(A)     (167 )     —         108,604                   101,171         (4,703 )(A)     —         96,468    
 
                                                                              
Gross profit
       159,296         4,722       167       —         164,185                   152,225         4,703       —         156,928    
Gross margin
       58.4 %                                 60.2 %                 60.1 %                         61.9 %  
Research and development expenses
       49,012         —       (1,622 )     —         47,390                   45,673         —       —         45,673    
Selling, general and administrative expenses
       84,164         —       (3,887 )     —         80,277                   73,103         —       —         73,103    
Business realignment costs (credits)
       (227 )       —       —       227         —                   1,880         —       (1,880 )       —    
 
                                                                                                
Acquisition related costs:
                                                                                                
Write-off of IPR&D
       —         —       —       —         —                   —         —       —         —    
Amortization of acquired intangible assets
       1,284         (1,284 )     —       —         —                   1,293         (1,293 )     —         —    
Amortization of stock option compensation
       63         (63 )     —       —         —                   84         (84 )     —         —    
Transition expenses
       22         (22 )     —       —         —                   718         (718 )     —         —    
 
                                                                              
Total acquisition related costs
       1,369         (1,369 )     —       —         —                   2,095         (2,095 )     —         —    
 
                                                                                                
Loss (gain) on disposition of assets, net
       (33 )       —       —       —         (33 )                 23         —       —         23    
 
                                                                              
Operating income
       25,011         6,091       5,676       (227 )       36,551                   29,451         6,798       1,880         38,129    
Operating margin
       9.2 %                                 13.4 %                 11.6 %                         15.0 %  
 
                                                                                                
Other income, net
       2,583         —       —       2,734 (B)       5,317                   749         —       —         749    
 
                                                                              
Earnings before taxes
       27,594         6,091       5,676       2,507         41,868                   30,200         6,798       1,880         38,878    
 
                                                                                                
Income tax expense
       7,997         2,253       1,808       821         12,879                   10,322         2,298       471         13,091    
 
                                                                              
Net earnings from continuing operations
     $ 19,597         3,838       3,868       1,686       $ 28,989                 $ 19,878         4,500       1,409       $ 25,787    
 
                                                                                                
Earnings per share — diluted
     $ 0.24                                 $ 0.35                 $ 0.24                         $ 0.31    
 
                                                                                                
Weighted average shares outstanding — diluted
       83,151                                   83,151                   83,584                           83,584    
 
                                                                                        
 
                                                                                                
                                                                                                 
      Two Quarters Ended                 Two Quarters Ended    
    November 25, 2006           November 26, 2005
                Adjustments                                     Adjustments            
                        Share-based                                                          
      GAAP       Acquisitions     Compensation     Other       Pro Forma                 GAAP       Acquisitions     Other       Pro Forma    
Net sales
     $ 540,902         —       —       —       $ 540,902                 $ 488,456         —       —       $ 488,456    
Cost of sales
       218,256         (10,695 )(A)     (167 )     —         207,394                   200,274         (9,815 )(A)     —         190,459    
 
                                                                              
Gross profit
       322,646         10,695       167       —         333,508                   288,182         9,815       —         297,997    
Gross margin
       59.6 %                                 61.7 %                 59.0 %                         61.0 %  
Research and development expenses
       99,881         —       (2,850 )     —         97,031                   89,278         —       —         89,278    
Selling, general and administrative expenses
       164,037         —       (6,860 )     —         157,177                   141,668         —       —         141,668    
Business realignment costs (credits)
       2,369         —       —       (2,369 )       —                   4,361                 (4,361 )       —    
 
                                                                                                
Acquisition related costs:
                                                                                                
Write-off of IPR&D
       —         —       —       —         —                   365         (365 )     —         —    
Amortization of acquired intangible assets
       2,619         (2,619 )     —       —         —                   2,577         (2,577 )     —         —    
Amortization of stock option compensation
       144         (144 )     —       —         —                   174         (174 )     —         —    
Transition expenses
       77         (77 )     —       —         —                   2,415         (2,415 )     —         —    
 
                                                                              
Total acquisition related costs
       2,840         (2,840 )     —       —         —                   5,531         (5,531 )     —         —    
 
                                                                                                
Loss (gain) on disposition of assets, net
       521         —       —       —         521                   27         —       —         27    
 
                                                                              
Operating income
       52,998         13,535       9,877       2,369         78,779                   47,317         15,346       4,361         67,024    
Operating margin
       9.8 %                                 14.6 %                 9.7 %                         13.7 %  
 
                                                                                                
Other income, net
       6,143         —       —       2,734 (B)       8,877                   2,758         —       —         2,758    
 
                                                                              
Earnings before taxes
       59,141         13,535       9,877       5,103         87,656                   50,075         15,346       4,361         69,782    
 
                                                                                                
Income tax expense
       19,431         5,006       3,270       1,725         29,432                   16,029         5,465       1,247         22,741    
 
                                                                              
Net earnings from continuing operations
     $ 39,710         8,529       6,607       3,378       $ 58,224                 $ 34,046         9,881       3,114       $ 47,041    
 
                                                                                                
Earnings per share — diluted
     $ 0.48                                 $ 0.70                 $ 0.40                         $ 0.56    
 
                                                                              
 
                                                                                                
Weighted average shares outstanding — diluted
       83,379                                   83,379                   84,438                           84,438    
 
                                                                                        
 
                                                                                                
 
(A)   Amortization of acquired intangible assets and non-cash expense for inventory step up adjustment to fair value
 
(B)   Increase to Environmental Reserves
- more -

 

 

Tektronix Second Quarter 2007 Results /7
Consolidated Balance Sheets
                 
(In thousands)   November 25, 2006     May 27, 2006  
 
                
ASSETS
                
Current assets:
                
Cash and cash equivalents
   $ 155,918     $ 215,587  
Short-term marketable investments
     115,035       121,346  
Trade accounts receivable, net
     196,044       174,599  
Inventories
     162,350       156,351  
Other current assets
     77,499       69,002  
 
            
Total current assets
     706,846       736,885  
 
                
Property, plant and equipment, net
     128,891       127,510  
Long-term marketable investments
     172,121       103,839  
Goodwill, net
     306,978       307,189  
Pension asset
     233,968       239,128  
Other long-term assets
     101,963       119,539  
 
            
Total assets
   $ 1,650,767     $ 1,634,090  
 
            
 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
Current liabilities:
                
Accounts payable and accrued liabilities
   $ 142,700     $ 133,323  
Accrued compensation
     68,304       71,718  
Deferred revenue
     89,033       66,677  
 
            
Total current liabilities
     300,037       271,718  
 
                
Deferred income taxes
     57,363       65,935  
Other long-term liabilities
     108,346       108,868  
 
                
Shareholders’ equity:
                
Common stock
     548,570       540,718  
Retained earnings
     611,631       620,465  
Accumulated other comprehensive income
     24,820       26,386  
 
            
Total shareholders’ equity
     1,185,021       1,187,569  
 
            
Total liabilities and shareholders’ equity
   $ 1,650,767     $ 1,634,090  
 
            
 
                
Shares outstanding
     82,370       83,719  
- more -

 

 

Tektronix Second Quarter 2007 Results /8
Selected Additional Financial Data
                                                 
      Quarter Ended       Two Quarters Ended  
    %     November 25,     November 26,     %     November 25,     November 26,  
(Dollars in thousands)   Growth     2006     2005     Growth     2006     2005  
 
                                                
Orders Data:
                                                
 
                                                
Orders
     18 %   $ 302,193     $ 256,910       11 %   $ 557,592     $ 502,425  
 
                                                
U.S.
     22 %     116,879       95,723       17 %     213,073       181,854  
International
     15 %     185,314       161,187       7 %     344,519       320,571  
 
                                                
Instruments Business
     20 %     248,096       206,484       17 %     446,375       381,255  
Communications Business
     7 %     54,097       50,426       (8 %)     111,217       121,170  
 
                                                
 
 
                                                
Sales Data:
                                                
 
                                                
Net Sales
     8 %   $ 272,789     $ 253,396       11 %   $ 540,902     $ 488,456  
 
                                                
U.S.
     (3 %)     89,378       92,079       6 %     187,357       176,482  
International
     14 %     183,411       161,317       13 %     353,545       311,974  
 
                                                
Instruments Business
     7 %     205,244       192,250       9 %     403,456       369,619  
Communications Business
     10 %     67,545       61,146       16 %     137,446       118,837  
 
                                                
 
 
                                                
Income Statement Items as a Percentage of Net Sales:
                                                
 
                                                
Cost of sales
             42 %     40 %             40 %     41 %
Research and development expenses
             18 %     18 %             18 %     18 %
Selling, general and administrative expenses
             31 %     29 %             30 %     29 %
Business realignment costs (credits)
             0 %     1 %             0 %     1 %
Acquisition related costs and amortization
             1 %     1 %             1 %     1 %
Loss (gain) on disposition of assets, net
             0 %     0 %             0 %     0 %
Operating income
             9 %     12 %             10 %     10 %
 
                                                
 
 
                                                
Capital Expenditures and Depreciation:
                                                
 
                                                
Capital expenditures
           $ 7,752     $ 9,889             $ 13,876     $ 18,633  
Depreciation and amortization expense
           $ 7,245     $ 6,931             $ 14,542     $ 13,937  
 
                                                
 
                         
Balance Sheet:   Quarter Ended     Quarter Ended     Year Ended  
    November 25,     August 26,     May 27,  
    2006     2006     2006  
Cash and Marketable Investments:
                        
Cash and cash equivalents
   $ 155,918     $ 200,360     $ 215,587  
Short-term marketable investments
     115,035       129,002       121,346  
Long-term marketable investments
     172,121       105,351       103,839  
 
                  
Cash and Marketable Investments
   $ 443,074     $ 434,713     $ 440,772  
 
                        
Accounts receivable as a percentage of net sales
     16.8 %     16.1 %     15.9 %
Days sales outstanding
     65.4       57.8       61.1  
Countback days sales outstanding
     54.6       49.3       46.6  
 
                        
Inventory as a percentage of net sales
     15.0 %     15.0 %     13.8 %
Inventory turns
     2.8       2.6       2.9  
 
###