Keithley Instruments Reports Profitable Results For Fiscal 2010 First Quarter

Keithley Instruments, Inc. (NYSE:KEI), a world leader in advanced electrical test instruments and systems, today announced results for its fiscal 2010 first quarter ended December 31, 2009.

Highlights
· Net sales of $28.4 million in the first quarter of fiscal 2010, a sequential increase of 18 percent from the fourth quarter of fiscal 2009
· Operating income of $7.0 million for the first quarter of fiscal 2010, which includes a $3.5 million gain on the sale of the Company’s RF product line
· Net income of $6.1 million for the first quarter of fiscal 2010
First Quarter Fiscal 2010 Results

Net sales of $28.4 million for the first quarter of fiscal 2010 decreased $2.7 million, or nine percent, from net sales of $31.1 million in last year’s first quarter. First quarter fiscal 2010 net income was $6.1 million, or $0.38 per share, which includes a gain of $3.0 million after-tax, or $0.19 per share, on the sale of the Company’s RF product line. Last year’s first quarter net loss was $32.4 million, or $2.07 per share, which included a special charge to income tax expense of $30.0 million, or $1.92 per share, to reserve for the Company’s U.S. deferred tax assets. In last year’s first quarter, excluding the non-cash special tax charge, the Company reported a net loss of $2.4 million, or $0.15 per share.

“We are pleased that we returned to profitability this quarter and that we are beginning to realize the earnings leverage derived from the cost reduction actions taken since September 2008,” stated Joseph P. Keithley, the Company’s Chairman, President and Chief Executive Officer. “During the past year, we have moved aggressively to reduce our cost structure and operate more efficiently. Furthermore, we are encouraged that we have continued to experience sequential increases in orders during each of our last three quarters, from a low in the March 2009 quarter.”

For the first quarter of fiscal 2010, the Company reported operating income of $7.0 million, which included a pre-tax $3.5 million gain on the sale of the Company’s RF product line. Excluding the gain, operating income was $3.5 million, or 12.4 percent of net sales, as compared to last year’s first quarter operating loss of $2.3 million, a $5.8 million improvement on $2.7 million lower sales. The increase in operating income, excluding the gain on the sale of the RF product line, was primarily the result of the cost reduction actions taken during the past year, which reduced operating expenses by 28 percent. Selling, general and administrative costs in the first quarter of fiscal 2010 decreased $2.7 million, and product development costs decreased $2.9 million. Gross margin dollars increased $0.1 million from the prior year, as gross margins, as a percent of net sales, improved to 63.0 percent of net sales compared to 57.2 percent in the prior year’s first quarter.

The Company completed the sale of its RF product line during the first quarter of fiscal 2010. The Company is estimating additional costs of approximately $0.3 million that will be incurred during the second and third quarters of fiscal 2010 and are expected to reduce the pre-tax gain to approximately $3.2 million.

The Company recorded tax expense of $1.0 million during the first quarter of fiscal 2010. This compares to tax expense of $30.2 million recorded during the first quarter of fiscal 2009, which included a $30.0 million special charge to establish a valuation allowance against the Company’s U.S. deferred tax assets.

Net sales of $28.4 million for the first quarter of fiscal 2010 decreased nine percent from last year’s first quarter; however, the effect of a weaker U.S. dollar positively impacted sales by approximately three percentage points. Sales outside of the Americas represented approximately 70 percent of total sales for the first quarter of fiscal 2010. Sequentially, net sales increased $4.3 million, or 18 percent, compared to the fourth quarter of fiscal 2009.

Orders of $27.0 million for the first quarter of fiscal 2010 increased six percent sequentially from the fourth quarter of fiscal 2009. Orders decreased $0.7 million, or two percent, compared with orders of $27.7 million for the first quarter of last year. Orders increased $5.2 million, or 24 percent, from a low in the March 2009 quarter. Geographically, orders increased two percent in the Americas and eight percent in Asia, and decreased 16 percent in Europe when compared to the prior year. Orders from the Company’s semiconductor customers increased approximately 15 percent, orders from both wireless communications customers and precision electronics customers each decreased approximately 15 percent, and orders from research and education customers were flat compared to the prior year’s first quarter. For the first quarter of fiscal 2010, semiconductor customer orders comprised approximately 30 percent of total orders, wireless communications customer orders were approximately five percent, precision electronics customer orders were approximately 25 percent, and research and education customer orders made up about 35 percent. Order backlog decreased $1.3 million during the quarter to $10.9 million at December 31, 2009.