EX-99.1 2 v23645exv99w1.htm EXHIBIT 99.1 exv99w1
 

         
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 2007
Strong Sales, Earnings Leverage and Continued
Flow of Innovative New Products
BEAVERTON, Ore., Sept. 14, 2006 — Tektronix, Inc. (NYSE: TEK) today reported net sales of $268.1 million and net earnings from continuing operations of $20.1 million or $0.24 per share for the first quarter ended August 26, 2006. This compares with net sales of $235.1 million and net earnings from continuing operations of $14.2 million or $0.17 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 $29.2 million or $0.35 per share for the first quarter as compared with $21.3 million or $0.25 per share for the same period last year.
“This was a very good quarter for Tektronix with particular strength in sales and earnings,” said Rick Wills, Tektronix Chairman and CEO. “Sales grew 14% over last year with both the Instruments and the Communications businesses showing double-digit growth. Earnings outpaced sales growth with earnings per share up 40% over last year, demonstrating our ability to leverage our cost structure.”
Orders for the Instruments business were up 13% with strong growth from the oscilloscope and spectrum analyzer product categories. Growth in this business was the result of new products and a stable market overall. Wills noted, “We saw record orders for our spectrum analyzers as the market continues to respond favorably to our innovative real-time technology.”
Orders for the Communications business were down 19% due to the timing of a few large orders. “We saw orders for this business grow over 65% in the previous quarter and we again expect double-digit order growth next quarter,” Wills continued. “Sales were up 21% as some of the orders we received last year converted to revenue. Overall, this continues to be a healthy market
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Tektronix First Quarter 2007 Results.../2
driven by investment in next-generation telecommunications networks. Our ability to capitalize on this investment should continue to create opportunities for additional growth.”
During the quarter, we continued to execute our growth strategy by delivering a robust pipeline of major new products including a new oscilloscope series – the DPO70000, targeted at high-speed design applications, and the DSA70000 aimed at serial data designers. These products extend the uncompromised performance characteristics of the midrange DPO7000 series introduced earlier this calendar year. We also announced a new capability for the MTM400 Transport Stream Monitor that is designed to help simplify and strengthen network monitoring for Video over IP and IPTV applications.
In addition, in early August we began taking orders for a new Real-Time Spectrum Analyzer series that contributed to the record orders growth for this product category. These products provide breakthrough capabilities targeted at digital RF applications. Wills added, “The introduction of the RSA6100A series spectrum analyzers demonstrates our strategy to selectively enter new product categories and develop industry-leading products – which should enable us to grow faster than the market.”
Finally, in our Communications business, we introduced the K1297-G35, a new mobile test platform that provides the highest performance available for reliable testing of 3G and 3.5G broadband wireless network elements. This product enables customers to test modern mobile networks under simulated, yet realistic, conditions.
“Looking forward, we are encouraged by the progress of our recently introduced products and are excited about the strong product flow in our Instruments business in the coming quarters. In addition, we continue to be optimistic about our ability to capitalize on the significant investment being made by network operators in next-generation telecommunications networks,” concluded Wills.
Second Quarter Guidance
For the second quarter of fiscal 2007, the company expects net sales to be approximately $270 - $280 million. Earnings per share from continuing operations are expected to be between $0.33 and $0.37 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 DPO70000 Digital Phosphor Oscilloscope and the DSA70000 Digital Serial Analyzer. A new high-performance oscilloscope series, the DPO70000 provides industry-leading capabilities for high-speed design and analysis. The DSA70000 series has the same base
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Tektronix First Quarter 2007 Results.../3
    performance but is optimized for the serial data designer, providing an ideal test platform for high-speed standards including PCI-Express, XAUI, FB-DIMM and Serial ATA.
 
•   The TDS1000B/TDS2000B series of digital storage oscilloscopes, a replacement for the world’s most popular oscilloscope, the TDS1000/TDS2000. These new versions of the ultra-lightweight, portable instruments add both Tektronix OpenChoice™ PC communication software and National Instruments SignalExpress™ Tektronix Edition interactive measurement software with USB connectivity.
 
•   A new monitoring solution for Video over IP and IPTV applications – the addition of the IP/GigE capability for the MTM400 MPEG Transport Stream Monitor is designed to help simplify and strengthen network monitoring by allowing network engineers to view Multi or Single Program Transport Streams over Gigabit Ethernet networks and identify signal degradation issues.
 
•   A new mobile test platform for 3G and 3.5G broadband wireless networks – the K1297-G35 Protocol Tester for mobile equipment manufacturers and mobile operators. This new platform offers the highest performance available for reliable testing of these networks with 14.4 Mbps on four inputs at the same time.
 
•   And, just after the close of the quarter, we publicly announced the RSA6100A Series Real-Time Spectrum Analyzers which provide an unmatched combination of real-time performance, capture bandwidth, and dynamic range to meet the needs of a broad range of cutting-edge digital RF applications. These new capabilities reveal never before seen phenomena for digital RF designers.
And a product award:
•   The Tektronix WFM7100 Video Waveform Monitor was awarded the “Outstanding Product” award for video production and broadcasting by Beijing International Radio, Film and Television Equipment Exhibition (BIRTV), for fast, reliable and easy content monitoring and measurement. This is the third year in a row that Tektronix’ video products have won the outstanding product award. BIRTV is the region’s largest exhibition for radio and TV service providers and equipment manufacturers.
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 23, 2006 to shareholders of record as of the close of market on October 6, 2006.
Tektronix will hold its Annual Meeting of Shareholders on Thursday, September 21, 2006, at 10:00 a.m. Pacific at the company’s headquarters in Beaverton, Oregon.
Tektronix will be discussing its first 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 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. 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
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Tektronix First Quarter 2007 Results.../4
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.
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Tektronix First Quarter 2007 Results.../5
Consolidated Statements of Operations
                 
    Quarter Ended  
    August 26,     August 27,  
(In thousands, except per share amounts)   2006     2005  
                 
Net sales
   $ 268,113     $ 235,060  
Cost of sales
     104,763       99,103  
 
            
Gross profit
     163,350       135,957  
 
                
Research and development expenses
     50,869       43,605  
Selling, general and administrative expenses
     79,873       68,565  
Business realignment costs
     2,596       2,481  
Acquisition related costs and amortization
     1,471       3,436  
Loss on disposition of assets, net
     554       4  
 
            
Operating income
     27,987       17,866  
 
                
Interest income
     4,670       3,092  
Interest expense
     (99 )     (97 )
Other non-operating expense, net
     (1,011 )     (986 )
 
            
Earnings before taxes
     31,547       19,875  
 
                
Income tax expense
     11,434       5,707  
 
            
Net earnings from continuing operations
     20,113       14,168  
Gain (loss) from discontinued operations, net of income taxes
     7       (82 )
 
            
Net earnings
   $ 20,120     $ 14,086  
 
            
 
                
Earnings per share:
                
Continuing operations — basic
   $ 0.25     $ 0.17  
Continuing operations — diluted
   $ 0.24     $ 0.17  
 
                
Discontinued operations — basic
   $ —     $ —  
Discontinued operations — diluted
   $ —     $ —  
 
                
Net earnings — basic
   $ 0.25     $ 0.17  
Net earnings — diluted
   $ 0.24     $ 0.17  
 
                
Weighted average shares outstanding:
                
Basic
     82,074       84,603  
Diluted
     83,542       85,297  
 
                
Cash dividend declared per share
   $ 0.06     $ 0.06  
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Tektronix First Quarter 2007 Results.../6
Reconciliation of Pro Forma Measures to GAAP
                                                                                         
    Quarter Ended   Quarter Ended
(In thousands, except per share amounts)   August 26, 2006   August 27, 2005
                Adjustments                             Adjustments            
                        Share-based                                                  
      GAAP       Acquisitions     Compensation     Other       Pro Forma         GAAP       Acquisitions     Other       Pro Forma    
 
                                                                                        
Net sales
     $ 268,113         —       —       —       $ 268,113         $ 235,060         —       —       $ 235,060    
Cost of sales
       104,763         (5,973 )(A)     —       —         98,790           99,103         (5,112 )(A)     —         93,991    
 
                                                                      
Gross profit
       163,350         5,973       —       —         169,323           135,957         5,112       —         141,069    
Gross margin
       60.9 %                                 63.2 %         57.8 %                         60.0 %  
Research and development expenses
       50,869         —       (1,228 )     —         49,641           43,605         —       —         43,605    
Selling, general and administrative expenses
       79,873         —       (2,973 )     —         76,900           68,565         —       —         68,565    
Business realignment costs
       2,596         —       —       (2,596 )       —           2,481         —       (2,481 )       —    
Acquisition related costs:
                                                                                        
Write-off of IPR&D
       —         —       —       —         —           365         (365 )     —         —    
Amortization of acquired intangible assets
       1,335         (1,335 )     —       —         —           1,284         (1,284 )     —         —    
Amortization of stock option compensation
       81         (81 )     —       —         —           90         (90 )     —         —    
Transition expenses
       55         (55 )     —       —         —           1,697         (1,697 )     —         —    
 
                                                                      
Total acquisition related costs
       1,471         (1,471 )     —       —         —           3,436         (3,436 )     —         —    
Loss on disposition of assets
       554         —       —       —         554           4         —       —         4    
 
                                                                      
Operating income
       27,987         7,444       4,201       2,596         42,228           17,866         8,548       2,481         28,895    
Operating margin
       10.4 %                                 15.8 %         7.6 %                         12.3 %  
Other income, net
       3,560         —       —       —         3,560           2,009         —       —         2,009    
 
                                                                      
Earnings before taxes
       31,547         7,444       4,201       2,596         45,788           19,875         8,548       2,481         30,904    
Income tax expense
       11,434         2,753       1,462       904         16,553           5,707         3,099       844         9,650    
 
                                                                      
Net earnings from continuing operations
     $ 20,113         4,691       2,739       1,692       $ 29,235         $ 14,168         5,449       1,637       $ 21,254    
Earnings per share — diluted
     $ 0.24                                 $ 0.35         $ 0.17                         $ 0.25    
Weighted average shares outstanding — diluted
       83,542                                   83,542           85,297                           85,297    
 
                                                                                
 
(A)   Amortization of acquired intangible assets and non-cash expense for inventory step up adjustment to fair value
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Tektronix First Quarter 2007 Results.../7
Consolidated Balance Sheets
                 
(In thousands)   August 26, 2006     May 27, 2006  
                 
ASSETS
                
Current assets:
                
Cash and cash equivalents
   $ 200,360     $ 215,587  
Short-term marketable investments
     129,002       121,346  
Trade accounts receivable, net
     170,434       174,599  
Inventories
     165,438       156,351  
Other current assets
     68,161       69,002  
 
            
Total current assets
     733,395       736,885  
 
                
Property, plant and equipment, net
     126,868       127,510  
Long-term marketable investments
     105,351       103,839  
Goodwill, net
     306,134       307,189  
Pension asset
     236,539       239,128  
Other long-term assets
     111,557       119,539  
 
            
Total assets
   $ 1,619,844     $ 1,634,090  
 
            
 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
Current liabilities:
                
Accounts payable and accrued liabilities
   $ 143,134     $ 133,323  
Accrued compensation
     65,174       71,718  
Deferred revenue
     72,415       66,677  
 
            
Total current liabilities
     280,723       271,718  
 
                
Deferred income taxes
     62,766       65,935  
Other long-term liabilities
     106,743       108,868  
 
                
Shareholders’ equity:
                
Common stock
     540,899       540,718  
Retained earnings
     605,075       620,465  
Accumulated other comprehensive income
     23,638       26,386  
 
            
Total shareholders’ equity
     1,169,612       1,187,569  
 
            
Total liabilities and shareholders’ equity
   $ 1,619,844     $ 1,634,090  
 
            
 
                
Shares outstanding
     82,515       83,719  
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Tektronix First Quarter 2007 Results.../8
Selected Additional Financial Data
                         
    Quarter Ended  
    %     August 26,     August 27,  
(Dollars in thousands)   Growth     2006     2005  
                         
Orders Data:
                        
 
                        
Orders
     4 %   $ 255,399     $ 245,515  
 
                        
U.S.
     12 %     96,194       86,131  
International
     (0 %)     159,205       159,384  
 
                        
Instruments Business
     13 %     198,279       174,771  
Communications Business
     (19 %)     57,120       70,744  
 
                        
 
 
                        
Sales Data:
                        
 
                        
Net Sales
     14 %   $ 268,113     $ 235,060  
 
                        
U.S.
     16 %     97,979       84,403  
International
     13 %     170,134       150,657  
 
                        
Instruments Business
     12 %     198,212       177,369  
Communications Business
     21 %     69,901       57,691  
 
                        
 
 
                        
Income Statement Items as a Percentage of Net Sales:
                        
 
                        
Cost of sales
             39 %     42 %
Research and development expenses
             19 %     19 %
Selling, general and administrative expenses
             30 %     29 %
Business realignment costs
             1 %     1 %
Acquisition related costs and amortization
             1 %     1 %
Loss on disposition of assets, net
             0 %     0 %
Operating income
             10 %     8 %
 
                        
 
 
                        
Capital Expenditures and Depreciation:
                        
 
                        
Capital expenditures
           $ 6,124     $ 8,744  
Depreciation and amortization expense
           $ 7,297     $ 7,006  
 
                        
 
                 
Balance Sheet:   Quarter Ended     Year Ended  
    August 26,     May 27,  
    2006     2006  
Cash and Marketable Investments:
                
Cash and cash equivalents
   $ 200,360     $ 215,587  
Short-term marketable investments
     129,002       121,346  
Long-term marketable investments
     105,351       103,839  
 
            
Cash and Marketable Investments
   $ 434,713     $ 440,772  
 
                
Accounts receivable as a percentage of net sales
     16.1 %     15.9 %
Days sales outstanding
     57.8       61.1  
Countback days sales outstanding
     49.3       46.6  
 
                
Inventory as a percentage of net sales
     15.0 %     13.8 %
Inventory turns
     2.6       2.9  
 
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