EX-99.1 2 v12644exv99w1.txt 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 FIRST QUARTER OF FISCAL 2006 BEAVERTON, Ore., Sept. 15, 2005 - Tektronix, Inc. (NYSE: TEK) today reported net sales of $235.1 million and net earnings from continuing operations of $14.2 million or $0.17 per share for the first quarter ended August 27, 2005. This compares with net sales of $250.5 million and net earnings from continuing operations of $36.5 million or $0.43 per share for the same period last year. Excluding acquisition-related costs, business realignment costs and one-time items, net earnings from continuing operations were $21.3 million or $0.25 per share for the first quarter ended August 27, 2005, as compared with $36.9 million or $0.43 per share for the same period last year. "We are very satisfied with our overall performance this quarter," said Rick Wills, Tektronix Chairman and CEO. "We managed through a comparatively tough period, and delivered earnings which were in line with our expectations. In addition, we were encouraged by the pick up in demand in August after a slower start at the beginning of the quarter." "The Inet acquisition continued to yield solid results. We had a number of significant customer wins in the quarter including orders for network management systems for UMTS, GPRS and VoIP, which contributed to the strongest order performance to date for this business. In addition, we recorded double digit, year-over-year growth in our two newer product areas - signal sources and real time spectrum analyzers - fueled by strong new products. Initial orders for our AFG3000 family of signal sources, which began shipping late in the quarter, exceeded our expectations. These transformational products, featuring our innovative and powerful "generator on a chip" based architecture, offer unprecedented performance and ease of use at a very attractive price. Additionally, we have continued to see good customer demand for our recently introduced TDS6000C, the world's fastest real-time oscilloscope," said Wills. For the second quarter of fiscal 2006, the company expects net sales to be approximately $240 - $250 million. Earnings per share from continuing operations are expected to be between $0.25 -more- Tektronix First Quarter 2006 Results.../2 and $0.29 before mostly non-cash costs related to the acquisition of Inet Technologies, business realignment costs, and other one-time items. "As we said last quarter, assuming stable markets, normal seasonality and the strength of new products in the second half, we expect the first quarter to represent the low point for the year in terms of both sales and earnings per share," said Wills. "We are encouraged by the continued success from the Inet acquisition and from recently introduced products, as well as the continued progress we are making on the pipeline of products set to introduce over the next few quarters," concluded Wills. Recent highlights include the following: - The availability of the AFG3000 family of signal sources, six models whose ease of use and innovative performance establishes a new benchmark for this class of product. - An award by Beijing International Radio, Film and Television Equipment Exhibition (BIRTV), the region's largest exhibition for radio and TV service providers and equipment manufacturers, for the "Outstanding Product" for the MTS430 MPEG Analyzer. The submission was judged by an independent panel of China's foremost experts in broadcast technology and presented at BIRTV 2005 in Beijing, China. - The addition of the High Speed Downlink Packet Access software option to the market leading NetTek(TM) Wireless RF Field Tester, making Tektronix the first manufacturer to provide HSDPA test and measurement capabilities in a handheld form factor. - The introduction of a new radio frequency identification (RFID) software measurement suite for WCA200A, RSA3300A and RSA3408A Real-Time Spectrum Analyzers which continues to advance the capabilities of Tektronix' Real-Time Spectrum Analyzers by adding new measurements and troubleshooting features specifically designed to help the RFID engineer. - The expansion of the TDS1000 and TDS2000 series, the world's best selling line of oscilloscopes in units, by adding two new models - one of which, the TDS1001, is the lowest priced digital oscilloscope available from any major vendor. - Significant wins from major network operators around the world for network management systems for UMTS, GPRS and VoIP, as well as service assurance and customer assurance software solutions. - The appointment of Rich McBee to Senior Vice President of the Communications Business. McBee, a proven senior executive at Tektronix, has held a broad range of positions and has experience running a significant portion of the Tektronix organization. In addition, today Tektronix declared a quarterly cash dividend of $0.06 per share on the outstanding common shares of the Company, payable on October 24, 2005 to shareholders of record as of the close of market on October 7, 2005. Tektronix will hold its Annual Meeting of Shareholders on Thursday, September 22, 2005, at 10:00 a.m. Central Daylight Time (CDT) at the Hotel Crescent Court, 400 Crescent Court, Dallas, Texas. -more- Tektronix First Quarter 2006 Results.../3 Tektronix will be discussing its first quarter results and future guidance on a conference call today, beginning at 1:30 p.m. Pacific Daylight Time (PDT). A live Webcast of the conference call will be available at 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 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 and one-time items. 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, market position and market growth opportunities, 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; 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; 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 and/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; the ability to develop effective sales channels; and risks associated with the integration of Inet Technologies including realization of expected growth opportunities. 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, Inc. is a test, measurement, and monitoring company providing measurement solutions to the communications, computer, and semiconductor industries worldwide. With more than 55 years of experience, Tektronix enables its customers to design, build, deploy, and manage next-generation global communications networks and advanced technologies. Headquartered in Beaverton, Oregon, Tektronix has operations in 19 countries worldwide. Tektronix' Web address is www.tektronix.com. -more- Tektronix First Quarter 2006 Results.../4 Consolidated Statements of Operations
Quarter Ended ----------------------- August 27, August 28, (In thousands, except per share amounts) 2005 2004 ---------- ---------- Net sales $235,060 $250,465 Cost of sales 99,103 101,946 -------- -------- Gross profit 135,957 148,519 Research and development expenses 43,605 33,579 Selling, general and administrative expenses 68,565 65,066 Business realignment costs 2,481 2,039 Acquisition related costs and amortization 3,436 787 Loss (gain) on disposition of assets, net 4 (1,891) -------- -------- Operating income 17,866 48,939 Interest income 3,092 5,462 Interest expense (97) (83) Other non-operating expense, net (986) (2,224) -------- -------- Earnings before taxes 19,875 52,094 Income tax expense 5,707 15,628 -------- -------- Net earnings from continuing operations 14,168 36,466 Loss from discontinued operations, net of income taxes (82) (58) -------- -------- Net earnings $ 14,086 $ 36,408 ======== ======== Earnings per share: Continuing operations - basic $ 0.17 $ 0.44 Continuing operations - diluted $ 0.17 $ 0.43 Discontinued operations - basic $ -- $ -- Discontinued operations - diluted $ -- $ -- Net earnings - basic $ 0.17 $ 0.43 Net earnings - diluted $ 0.17 $ 0.43 Weighted average shares outstanding: Basic 84,603 83,782 Diluted 85,297 85,211 Cash dividend declared per share $ 0.06 $ 0.04
-more- Tektronix First Quarter 2006 Results.../5 Consolidated Balance Sheets
(In thousands) August 27, 2005 May 28, 2005 --------------- ------------ ASSETS Current assets: Cash and cash equivalents $ 95,002 $ 131,640 Short-term marketable investments 111,477 120,881 Trade accounts receivable, net 161,346 155,332 Inventories 130,544 131,096 Other current assets 86,657 80,177 ---------- ---------- Total current assets 585,026 619,126 Property, plant and equipment, net 122,062 120,546 Long-term marketable investments 162,009 226,892 Deferred tax assets 53,340 56,560 Goodwill, net 303,166 301,934 Other long-term assets 131,099 135,285 ---------- ---------- Total assets $1,356,702 $1,460,343 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 108,582 $ 115,058 Accrued compensation 55,411 78,938 Deferred revenue 54,639 57,509 ---------- ---------- Total current liabilities 218,632 251,505 Long-term liabilities 189,855 223,015 Shareholders' equity: Common stock 496,848 501,886 Retained earnings 608,987 639,720 Accumulated other comprehensive loss (157,620) (155,783) ---------- ---------- Total shareholders' equity 948,215 985,823 ---------- ---------- Total liabilities and shareholders' equity $1,356,702 $1,460,343 ========== ========== Shares outstanding 83,360 85,144
-more- Tektronix First Quarter 2006 Results.../6 SELECTED ADDITIONAL FINANCIAL DATA
Quarter Ended ----------------------- % August 27, August 28, (Dollars in thousands, except per share amounts) Growth 2005 2004 ------ ---------- ---------- PRODUCT ORDERS AND SALES DATA: Orders 13% $230,434 $204,287 U.S. 19% 76,428 64,251 International 10% 154,006 140,036 Total - excluding Rohde and Schwarz & Inet (9%) 185,613 204,380 Net Sales (6%) $235,060 $250,465 U.S. (20%) 84,403 105,764 International 4% 150,657 144,701 Total - excluding Rohde and Schwarz & Inet (11%) 203,265 229,267 BOOK TO BILL RATIO CALCULATION: Product Orders $230,434 $204,287 Product Sales $221,835 $231,500 Book to Bill ratio 1.04 0.88 RECONCILIATION OF PRO FORMA MEASURES TO GAAP: Net earnings from continuing operations - GAAP $ 14,168 $ 36,466 Effect of : Acquisition related items reported in cost of sales 5,112 -- Acquisition related items reported in operating expenses 3,436 787 Business realignment costs 2,481 2,039 Gain on sale of Nevada City property -- (2,161) Tax effect of above items (3,943) (200) -------- -------- Net earnings from continuing operations - Pro Forma $ 21,254 $ 36,931 Diluted earnings per share - Pro Forma $ 0.25 $ 0.43 INCOME STATEMENT ITEMS AS A PERCENTAGE OF NET SALES: Cost of sales 42% 41% Research and development expenses 19% 13% Selling, general and administrative expenses 29% 26% Business realignment costs 1% 1% Acquisition related costs and amortization 1% 0% Loss (gain) on disposition of assets, net 0% (1%) Operating income 8% 20% CAPITAL EXPENDITURES AND DEPRECIATION: Capital expenditures $ 8,744 $ 7,506 Depreciation and amortization expense $ 7,006 $ 6,678
Quarter Ended Year Ended August 27, 2005 May 28, 2005 --------------- ------------ BALANCE SHEET: Cash and Marketable Investments: Cash and cash equivalents $ 95,002 $131,640 Short-term marketable investments 111,477 120,881 Long-term marketable investments 162,009 226,892 -------- -------- Cash and Marketable Investments $368,488 $479,413 Accounts receivable as a percentage of net sales 16.8% 13.9% Days sales outstanding 62.5 54.7 Average days sales outstanding 61.3 50.7 Inventory as a percentage of net sales 13.9% 11.3% Inventory turns 3.0 3.6
-more- Tektronix First Quarter 2006 Results.../7 Discontinued Operations
Quarter Ended ----------------------- August 27, August 28, (In thousands) 2005 2004 ---------- ---------- Loss on sale of VideoTele.com (less applicable income tax benefit of $1 and $1) $ (1) $ (1) Loss on sale of optical parametric test business (less applicable income tax benefit of $36 and $40) (68) (72) Gain (loss) on sale of Gage (less applicable income tax benefit (expense) of $6 and $(8)) (11) 15 Loss on sale of Color Printing and Imaging (less applicable income tax benefit of $1 and $0) (2) -- ---- ---- Loss from discontinued operations, net of income taxes $(82) $(58) ==== ====
-more- Tektronix First Quarter 2006 Results.../8 RECONCILIATION OF PRO FORMA MEASURES TO GAAP
Quarter Ended August 27, 2005 Quarter Ended August 28, 2004 ------------------------------------------ ------------------------------------ Adjustments Adjustments ----------- ----------- (In thousands, except per share amounts) GAAP Inet Other PRO FORMA GAAP PRO FORMA -------- ------ ------ --------- -------- --------- Net sales $235,060 -- -- $235,060 $250,465 -- $250,465 Cost of sales 99,103 (5,073) (A) (39) 93,991 101,946 -- 101,946 -------- ------ ------ -------- -------- ------ -------- Gross profit 135,957 5,073 39 141,069 148,519 -- 148,519 Gross margin 57.8% 60.0% 59.3% 59.3% Research and development expenses 43,605 -- -- 43,605 33,579 -- 33,579 Selling, general and administrative expenses 68,565 -- -- 68,565 65,066 -- 65,066 Business realignment costs 2,481 -- (2,481) -- 2,039 (2,039) -- Acquisition related costs: Write-off of IPR&D 365 -- (365) -- -- -- -- Amortization of acquired intangible assets 1,284 (1,279) (5) -- -- -- -- Amortization of stock option compensation 90 (90) -- -- -- -- -- Transition expenses 1,697 (1,030) (667) -- 787 (787) -- -------- ------ ------ -------- -------- ------ -------- Total acquisition related costs 3,436 (2,399) (1,037) -- 787 (787) -- Loss (gain) on disposition of assets 4 -- -- 4 (1,891) 2,161 (B) 270 -------- ------ ------ -------- -------- ------ -------- Operating income 17,866 7,472 3,557 28,895 48,939 665 49,604 Operating margin 7.6% 12.3% 19.5% 19.8% Other income, net 2,009 -- -- 2,009 3,155 3,155 -------- ------ ------ -------- -------- ------ -------- Earnings before taxes 19,875 7,472 3,557 30,904 52,094 665 52,759 Income tax expense 5,707 2,856 1,087 9,650 15,628 200 15,828 -------- ------ ------ -------- -------- ------ -------- Net earnings from continuing operations $ 14,168 4,616 2,470 $ 21,254 $ 36,466 465 $ 36,931 Earnings per share - diluted $ 0.17 $ 0.25 $ 0.43 $ 0.43 Weighted average shares outstanding - diluted 85,297 85,297 85,211 85,211 -------- -------- -------- --------
(A) Amortization of acquired intangible assets and non-cash expense for Inet inventory step up adjustment to fair value (B) Gain on sale of Nevada City property ###