Keithley Instruments Inc., a leader in advanced electrical test instruments and systems, announced that it has signed a definitive agreement with Agilent Technologies Inc. to sell substantially all of its RF product line to Agilent.
“Because we have placed a high emphasis on profitability in fiscal 2010 and beyond, we concluded that we could no longer continue to support our significant investment in RF measurement products, and should instead focus on growing our core business,” said Joseph P. Keithley, the company’s Chairman, President and Chief Executive Officer. “The impact of the economic downturn changed the expected timing of the returns we were anticipating from our RF product line, extending them beyond a time-frame that we were willing to continue to support. We are pleased that Agilent will be assuming this product line. Both Keithley and Agilent will work to provide high quality service and support through the transition for our customers using these products.”
Subject to the completion of customary closing conditions, it is anticipated that the transaction will close around November 30, 2009. Following the closing, it is anticipated that the majority of the RF team will become Agilent employees. Under the terms of the agreement, the company will transfer substantially all of the assets associated with the RF product line and Agilent will assume certain related liabilities. Agilent will provide global sales, service and support for the existing RF product line.
The company expects to receive cash proceeds of approximately $9 M and to realize a pre-tax gain in the range of $2.5 to $3.5 M during its first quarter ended December 31, 2009, as a result of the sale.
The company’s sales and earnings guidance provided on November 17, 2009 remains unchanged as a result of this transaction. Based upon current expectations, the company is estimating sales for the first quarter of fiscal 2010, which will end December 31, 2009, to range between $23 and $27 M and earnings before taxes to range from a loss to a profit, excluding the impact of the gain on the sale of the RF product line. The company’s strategic focus is on managing the company to ensure profitability in the short-term that will continue into the long-term. As a result of the significant cost reduction actions the company has taken since September 2008, including the discontinuance of its S600 product line and the anticipated sale of its RF product line, the company has lowered its annual break-even sales point to approximately $90 M, depending upon gross margins.
“Keithley remains committed to serving the challenging materials, device, and process measurement requirements that enable innovation within the electronics industry. As part of our initiative to improve our profitability in fiscal 2010, we made the decision to focus on growing our core business. We remain committed to supporting our customers in the semiconductor, wireless, precision electronics, and research and education industry segments, serving applications in research, development and production. The divestiture of our RF product line enables us to increase our focus on our core technologies and we intend to expand our efforts to leverage these strengths in support of new growth opportunities such as energy efficiency related devices and materials,” said Keithley.