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WILSONVILLE, Ore., March 7 /PRNewswire/ -- Tektronix, Inc. (NYSE: TEK) today reported net income of $22.4 million, or $.67 per share, for third quarter fiscal 1996 compared with $21.4 million, or $.65 per share, for the same period a year ago. Net sales were $433.5 million for the period ended February 24, 1996, up 17 percent from sales of $371.7 million for the year ago quarter. Product orders were $389.5 million compared with $372.9 million in 1995.

The company said these were preliminary results. Final financial information for the third quarter, including a balance sheet, will be released on March 13, 1996.

"While we're pleased that we continued to show significant sales growth, the rate of sales and product order growth did not meet our expectations," said Jerome J. Meyer, Tektronix chairman and CEO. "Lower sales growth for the company and higher than expected costs in our Video and Networking business negatively affected our margins and earnings."
 Measurement Business

Sales for the Measurement Business Division were $206.0 million for the third quarter, up 11 percent from $185.7 million in third quarter 1995. Product orders were $172.8 million, compared to $170.8 million a year ago. "While Measurement enjoyed good revenue growth at 11 percent," said Meyer, "we had expected a growth rate closer to the 18 percent order growth rate seen in the first half of the year. Our parts shortages improved in the third month of the quarter but not in time to convert all of the orders to shipments."

The company attributed slower order growth to a number of factors. Orders in Japan were down 16 percent due to timing of product orders from the company's joint venture Sony/Tektronix, as a large seasonal order placed in the third quarter last year was placed in the second quarter in 1996. Long lead times associated with parts shortages on key products also contributed to lower order rates, and, in general, customers appear to be showing a more cautionary approach to capital expenditures.

"We continue to believe that our Measurement Business strategy is the correct one," said Meyer, "but in light of slower economic growth in our major markets and the more cautionary approach to spending being shown by customers, we expect order and revenue growth to be in the 5-10 percent range for the coming quarters."
 Color Printing

Third quarter Color Printing sales were $131.0 million, up 18 percent from $110.9 million in 1995. Product orders increased 11 percent, from $111.9 million in third quarter 1996 to $124.7 million in 1996.

"In the third quarter of 1995, we began our real thrust at the office market, and we are seeing strong demand for our color laser and solid ink products there," Meyer said. "Demand for our new Phaser(R) 550 color laser printer launched during the quarter has been above our expectation. Our focus on the office segment has resulted in significant sales and order growth in that segment. However, this focus and increasing competition in the specialty/graphic arts area has caused decreases in orders and sales in the specialty segment. The specialty market remains very important to us and will receive more focused attention in the future."

The company said that the growth rate in product orders for printers also was negatively impacted by the fact that third quarter 1995 included heavy first time orders for the company's initial color laser product.

Looking forward, the company said that it expects the fourth quarter to be impacted in a similar manner, as it compares against last year's fourth quarter, which included the very successful launch of the company's first solid ink color printer for the office. Sales and order growth is expected to be in the 10-15 percent range in the fourth quarter and improve in fiscal year 1997 to approximately 20 percent.
 Video and Networking

Sales for the Video and Networking business in the third quarter were $96.5 million, an increase of 30 percent on sales of $74.3 million in the 1995 period. Product orders were $92.0 million in 1996 compared with $90.2 million in 1995.

The company said the product order comparison between the periods was affected by the large system integration order from TV4 in Sweden last year. Discounting this order, product orders for the third quarter 1996 would have shown a 28 percent increase over 1995. This same order also had a significant impact on the International product order comparisons.

"We had strong sales and order growth for our Profile(TM) video disk recorder and our Netstation products, and we are excited about our recent introductions of the Heavyworks(TM) and Newsworks(TM) editing systems," Meyer said. "However, the costs associated with simplifying our product offering and rationalizing the businesses were higher than expected and negatively impacted the company's gross and operating margins for the quarter. In addition, both the Video business and the Network Displays business continued to have an increase of lower margin systems sales, which impacted margins."

The company said it continues to invest in Video and Networking as it refocuses and restructures the business. Video and Networking operated at a loss during the quarter and is expected to turn profitable during fiscal 1997.

The company said that it expects excellent growth in the coming year for its Profile and Lightworks products but does not believe it can repeat the same level of growth that it has enjoyed to date in the remainder of its Video and Networking business. Sales and order growth is expected to be in the 15-20 percent range for fiscal 1997.

"While we are somewhat disappointed in our overall results for the quarter, we remain on a solid growth path for sales and earnings," Meyer said. "Even with slower growth than recent periods, the company expects to be able to grow sales approximately 17 percent for 1996 and 15 percent for 1997. Earnings should be approximately $3.00 a share for fiscal 1996, up from $2.50 a share in 1995. We expect earnings in fiscal 1997 to be in the range of $3.30 - $3.60 with a higher tax rate and an increase in shares outstanding."

Except for the historical statements contained herein, the matters discussed in this news release, including the revenue, order and earnings expectations, are forward looking statements that involve risks and uncertainties. Factors that could cause actual results to differ materially include but are not limited to: general economic conditions, including their impact on capital expenditures; business conditions in the electronics industry; competitive factors, including pricing pressures, technological developments and products offered by competitors; changes in product and sales mix, including an increase in indirect and systems sales; the timely flow of competitive new products and market acceptance of those products; the availability of parts and supplies from third party suppliers on a timely basis and at reasonable prices; the company's efforts to integrate and restructure its Video and Networking business; and the risk factors listed from time to time in the company's SEC reports.

Tektronix is a portfolio of measurement, color printing, and video and networking businesses dedicated to applying technology excellence to customer challenges. Tektronix is headquartered in Wilsonville, Oregon and has operations in 23 countries outside the United States. Founded in 1946, the company had revenues of $1.5 billion in fiscal 1995.

The business and geographic net sales and product orders breakdown is as follows:
 Quarter Ended Three Quarters Ended
 Feb. 24, Feb. 25, Feb. 24, Feb. 25,
 (In thousands) 1996 1995 1996 1995
 Net Sales: $433,500 $371,688 $1,278,120 $1,055,195
 Measurement Business 206,016 185,719 591,536 522,018

Color Printing and
 Imaging 130,993 110,882 392,447 309,193
 Video and Networking 96,491 74,327 294,137 215,257
 U.S. 203,872 173,649 635,031 530,540
 International 229,628 197,279 643,089 515,928
 Other --- 760 --- 8,727
 Product Orders: $389,500 $372,900 $1,202,600 $1,022,800
 Measurement Business 172,800 170,800 556,000 494,800

Color Printing and
 Imaging 124,700 111,900 367,000 302,000
 Video and Networking 92,000 90,200 279,600 226,000
 U.S. 185,700 169,400 579,200 490,500
 International 203,800 203,500 623,400 532,300
 Consolidated Statements of Operations
 Quarter Ended Three Quarters Ended
 (In thousands, Feb. 24, Feb. 25, Feb. 24, Feb. 25,

except per share
 amounts) 1996 1995 1996 1995
 Net sales $433,500 $371,688 $1,278,120 $1,055,195
 Cost of sales 254,286 206,053 743,536 568,552
 Gross profit 179,214 165,635 534,584 486,643

Research and
 development expenses 40,045 38,818 119,096 122,201

Selling, general, and

 expenses 108,779 96,975 315,078 283,403

Equity in business
 ventures' earnings 1,061 63 2,154 705
 Operating income 31,451 29,905 102,564 81,744

Other (income) expense
 - net (617) 979 524 4,753
 Earnings before
 taxes 32,068 28,926 102,040 76,991
 Income taxes 9,620 7,568 30,612 19,651
 Net earnings $ 22,448 $ 21,358 $ 71,428 $ 57,340
 Earnings per share $0.67 $0.65 $2.14 $1.77
 Dividends per share 0.15 0.15 0.45 0.45

Average shares
 outstanding 33,381 32,738 33,353 32,448
-0- 2/7/96

/CONTACT: MEDIA: Shelley Marchesi, 503-685-4086, or ANALYST: Carl Neun, 503-685-4155, or Doug Shafer, 503-685-4111 all of Tektronix/


CO: Tektronix, Inc. ST: Oregon IN: CPR SU: ERN

JL -- SETH006 -- 1276 03/07/96 16:01 EST
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Date:Mar 7, 1996

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