-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ap68ZA5GCwSJTS8DHdk+dbCTL82ePHss+bHBtltqUhzfmRBx6tXfRGnOsuRf9H/9 cNGMGyyT5f+hCD6f2BHalw== 0000096879-96-000020.txt : 19960823 0000096879-96-000020.hdr.sgml : 19960823 ACCESSION NUMBER: 0000096879-96-000020 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19960525 FILED AS OF DATE: 19960822 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEKTRONIX INC CENTRAL INDEX KEY: 0000096879 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 930343990 STATE OF INCORPORATION: OR FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-04837 FILM NUMBER: 96619065 BUSINESS ADDRESS: STREET 1: 2660 SW PKWY CITY: WILSONVILLE STATE: OR ZIP: 97070 BUSINESS PHONE: 5036277111 MAIL ADDRESS: STREET 1: P O BOX 100 CITY: WILSONVILLE STATE: OR ZIP: 97070-1000 10-K 1 1996 ANNUAL REPORT TEST SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [X] Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended May 25, 1996 or [ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ______ to ______ Commission file number 1-4837 TEKTRONIX, INC. (Exact name of Registrant as specified in its charter) Oregon 93-0343990 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 26600 S.W. Parkway Avenue Wilsonville, Oregon 97070 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (503) 627-7111 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered ___________________ ________________________ Common Shares, New York Stock Exchange without par value Pacific Stock Exchange Series A No Par Preferred New York Stock Exchange Shares Purchase Rights Pacific Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes_____X_____. No__________. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the voting stock held by non- affiliates of the Registrant was approximately $1,223,211,765 at August 5, 1996. At August 5, 1996 there were 32,793,086 Common Shares of the Registrant outstanding. DOCUMENTS INCORPORATED BY REFERENCE ___________________________________ Document Part of 10-K into which incorporated ________ ____________________________________ Registrant's Proxy Statement Part III dated August 14, 1996 1996 Annual Report to Shareholders Parts I, II and IV PART I Item 1. Business. Tektronix is an Oregon corporation organized in 1946. Its principal executive offices are located at 26600 S.W. Parkway Avenue, Wilsonville, Oregon 97070, approximately 18 miles south of Portland. Its telephone number is (503) 627-7111. References herein to "Tektronix" or the "Company" are to Tektronix, Inc. and its wholly-owned subsidiaries unless the context indicates otherwise. Tektronix' products cover a wide range of electronic equipment. Measurement business products include general purpose test instruments, such as digital and analog oscilloscopes, logic analyzers, digital multimeters, VXI card-modular products, and probes; RF and wireless test instruments, such as spectrum analyzers, communication test sets and high frequency signal sources; telecommunications instruments, such as optical time domain reflectometers (OTDRs), and cable testers; and television test instruments, such as audio and video measurement sets, waveform monitors, vectorscopes, signal generators, and RF/cable measurement products. Color printing and imaging products include color printers, ink and related products and supplies. Video and networking products include studio production equipment, signal processing and distribution equipment, transmission systems, video editing systems, video disk recorders, netstations (X terminals) and related products. Products ________ The table below sets forth the contribution to total net sales of the Company's product groupings for the last three fiscal years (in thousands of dollars).
Measurement Color Printing Video and Business and Imaging Networking Other Products Products Products (2) Products (3) ________________ _______________ __________________ ________________ Amount Percent Amount Percent Amount Percent Amount Percent ______ _______ ______ _______ _______ _______ ______ _______ 1994 (1) $671,042 50.0% $313,475 23.4% $259,347 19.3% $98,632 7.3% 1995 (1) $731,061 48.8% $454,961 30.4% $303,213 20.2% $ 8,727 .6% 1996 (1) $812,250 45.9% $561,642 31.8% $394,966 22.3% $ - 0.0% _______ (1) During 1995 and 1996 the Company acquired Microwave Logic, Inc. (MLI), Lightworks Editing Systems Limited and Lightworks Editing Systems, Inc. under poolings of interests, and the Company's financial results for 1994 and 1995 have been restated to include MLI and Lightworks results for these fiscal years. (2) This is a combination of the Video Systems and Network Displays products groups which were reported as separate groups in 1994. (3) The Other Products grouping includes the historic net sales to third parties by the non-strategic components and other business operations that the Company divested in 1994 and 1995.
1 Measurement Business Products _____________________________ Because of their wide range of capabilities, measurement business products are used in a variety of applications, including research, design, testing, installation, manufacturing and service in the computer, military, commercial aerospace, telecommunications, television, process control and automotive industries. Tektronix pioneered the development of high precision oscilloscopes over 50 years ago, and the oscilloscope is the Company's primary measurement product. Oscilloscopes are used by engineers and technicians when an electrical signal needs to be viewed, measured, tested or calibrated. Oscilloscopes are used extensively in the computer, communications, aerospace and other industries for design, manufacturing and maintenance. In addition to electrical signals, oscilloscopes can be adapted to measure mechanical motion (vibration), sound, light, heat, pressure, strain and velocity. Oscilloscopes produce graphic representations of electrical signals on a cathode ray tube or other display device. Normally, the display shows the signal as a graph of its amplitude over a certain period of time, which may range from minutes to less than a billionth of a second. Oscilloscopes provide a convenient way to visually monitor and interpret analog electrical fluctuations, mechanical motion and sound. The development of the microprocessor and associated growth in microprocessor-based devices stimulated both the existing analog markets and new digital markets. In addition, the microprocessor made possible significant improvements in oscilloscope design and performance. Many of the oscilloscopes and other measurement products manufactured by Tektronix feature digital storage and conversion functions, programmable operations, the ability to work in conjunction with personal computers and workstations and combinations of these capabilities. In addition, trends toward smaller microelectronic devices have opened new segments for specialized measurement equipment, such as connectors, probes, adapters,and cameras and plotters to record displayed waveforms. Recently, Tektronix has designed a substantial portion of its oscilloscope product line to provide a consistent "architecture" across products and to enhance ease of use. Because the Company manufactures oscilloscopes in a wide range of configurations, bandwidths and other performance characteristics and in sizes ranging from hand-held to large laboratory units, this design provides customers with reduced learning time and higher productivity. The design also reduces the time required by the Company to develop new products because many essential user interface aspects have been standardized. Some elements of this design also have been patented and provide the Company with certain competitive advantages. The Company also offers modular instruments delivered on printed circuit cards that can be mixed and matched by customers and plugged directly into the backplane of industry-standard VXI- 2 based card cages. These are controlled by personal computers or workstations to form complete instrument systems tailored to customers' particular requirements. A number of measurement products are now available in the VXI standard, which products are used primarily in manufacturing applications. Tektronix has been instrumental in the development of VXI-based hardware and software industry standards. Measurement business products also include video and audio test products. Video and audio test products include vectorscopes, waveform monitors, signal generators, automated test equipment, demodulators, aural modulation monitors and synchronizers which are used primarily by the television industry to test and display the quality of video and audio signals. The resolution of images and the fidelity of sounds, as well as the stability of the signals that carry them, are essential to program quality. Tektronix' video and audio test products excel at the many forms of test and measurement vital to creating and maintaining signals of the highest quality. Market changes are driving the development of new categories of products from Tektronix. The proliferation of electronic technology requires technicians and field engineers to use smart electronic tools for servicing, maintaining and troubleshooting problems in electrical equipment. Tektronix' broad line of hand-held instruments, sold through distributors, are smart, rugged products designed specifically to address these needs. Tektronix offers a full range of sophisticated, easy-to-use handheld instruments, including digital multimeters and the award-winning TekScope, a handheld oscilloscope/digital multimeter combination. Tektronix' handheld instruments range in price from below $100 up to about $2,500. The Company also makes benchtop basic instruments. Applications include education, light manufacturing, electronic troubleshooting and basic electronic design. Logic analyzers are a principal tool for electronic designers, engineers and technicians in testing and trouble-shooting computers, computer peripheral devices and digital electronic systems and instruments. Logic analyzers capture, display and examine streams of data coded as binary digits (bits), which are transmitted simultaneously over many channels. The Company offers several lines of logic analyzers, including the 3000 Series, a standalone, mid-range analyzer targeted at medium sized designs, the newer TLA 500 Series, a high performance, mid-priced anlayzer optimized for embedded software debug, and the DAS Digital Analysis System, a broad application logic analyzer that combines logic analysis and pattern generation by using card modular plug-in units to permit a range of performance in one system. DAS systems are also used by software engineers in the development and optimization of microprocessor-based designs. Spectrum analyzers are used in communications and other industries to display and measure signal amplitude versus frequency 3 rather than amplitude versus time (the latter being what an oscilloscope displays). It is an essential tool used to design, check and adjust communications transmitting and receiving equipment. Products designed for the telecommunications industry play an increasingly important role in the Company's measurement business portfolio. Tektronix is a leading supplier of a broad range of test solutions for emerging networks, designed for ensuring integrity and optimizing performance of networks, and verifying design and assuring quality of communications equipment. Cable testers and fiber optic testers use time-domain-reflectometry techniques to locate faults in metallic and fiber optic cables. Essentially, these instruments send signals from one end of a cable and then measure the reflection time of the signals to determine the location of the fault. Cable testers and fiber optic testers are widely used in the telecommunication and cable television industries. The Company also has developed a series of products for SDH or SONET transmission testing in the telecommunications industry, and has developed an MPEG based signal generator and analyzer. The Company's 1995 acquisition of Microwave Logic, Inc., which was merged into Tektronix in May of 1996, strengthens the Company's offerings in this product area, as well as in the area of ATM asynchronous transfer mode products. Tektronix also sells and supports German manufacturer Rohde and Schwarz' wireless communications and TV products in the United States and Canada, including the first measurement solutions for Personal Communications Services (PCS), mobile phones and base stations available to North American manufacturers. Rohde and Schwarz also works with Tektronix to facilitate distribution in Russia, the Middle East and Eastern European countries. Tektronix' distributorship arrangement with Advantest, the Japanese instruments manufacturer, expands the company's offering within North America and Mexico, adding more than 100 solutions to the communications test product portfolio. Other measurement business products include digitizers, signal sources, curve tracers, wireless and modular lines of general purpose test instruments. Color Printing and Imaging Products ___________________________________ Tektronix' color printing and imaging products include color printers and related products and supplies. Color printers produce full color hard copies of images produced by personal computers, workstations and terminals. The Company's Phaser brand printers are compatible with the PostScript industry standard page description language, which specifies how an image is transferred to hard copy. By adopting the Postscript standard, color printers can be used in conjunction with a wide range of third-party graphics software. Tektronix produces Phaser color printers using thermal wax, liquid ink jet, dye sublimation and laser technologies. In addition, Tektronix has developed a proprietary printing technology that uses sticks of solid ink, of the Company's 4 own formulation, that are melted and then jetted onto the paper. This technology produces vivid and stable images, allows printing on plain rather than coated paper, and can be applied to a wide range of sizes and gauges of paper. Tektronix' printers are controlled by software designed and implemented by the Company. The use of color in computing and printing has been stimulated by enhancements in the underlying microprocessor technology of personal computers and workstations, by increasingly larger system and peripheral storage capabilities, and by enhancements in computer display capability. As personal computers increasingly become capable of displaying complex, colorful images, there has been an accompanying growth in demand for printers that can print such images in color. Tektronix has been manufacturing and selling color printers for over eleven years. Early users were graphics artists, engineers and scientists. More recently, workgroup office users have also become significant users of the Company's color printers. In January of 1996, the Company introduced its Phaser 550, a new desktop color laser printer that provides a high print speed and high resolution on letter and legal size paper and transparencies. The Phaser 550 printer combines laser-class speed, low cost per page, and high quality output intended to broaden the appeal of color for the average business user and help move color into the office printing environment. This product compliments the Company's Phaser 340, introduced in 1995, which is a solid ink printer with laser-class speed. The Company continues to produce high quality output color printers for the specialty graphics and office markets. While the market for color printers is currently growing rapidly, it is still much smaller than the market for monochrome printers. Moreover, it is characterized by intense and increasing competition, resulting in a competitive pricing environment. Because the market for color hard copy is still small compared to the market for monochrome printers, distribution of products from manufacturer to end user is less efficient. The Company expects distribution channels to expand as color hard copy becomes a more prominent feature in computer applications. Also included in color printing and imaging products are supplies for use with the Company's color printers, including inks, toner, transfer ribbons, maintenance kits and media (paper and transparencies). These supplies are a very significant source of ongoing color printing and imaging revenue and profit. The Company also manufactures a scanner accessory that enables a color printer to function as a color copier. Video and Networking Products _____________________________ As television continues to expand its offering content and distribution, markets have emerged for products capable of supporting development of content through the integration of computer applications. These trends, coupled with the increasing use of cable and satellite to distribute content, are expanding the 5 market for Tektronix' video products. These trends may result in increased demand for lower cost production products based on industry standard platforms and for systems that support the development and distribution of new forms of content. Most video products are produced at the Company's facility in Grass Valley, California. The subsidiary owning this property was merged into the Company in January of 1996. Grass Valley products are used by the television industry for program production and distribution. Products include studio production equipment, signal processing and distribution equipment and transmission systems. Studio production equipment is used in the creative process of television program production and assembly. Production equipment products include production switchers, special effects devices and editing controllers. Production switchers allow an operator to select signals from various sources, such as cameras, video tape recorders and network or remote transmissions, and to combine these signals into the continuous program seen by the viewing audience. Signal processing and distribution equipment is used in the process of moving signals within a television production facility or between facilities. Such equipment includes routing switchers, amplifiers, timing systems and signal conversion devices. Transmission systems are used in the process of transporting signals between facilities. Transmission system products include fiber optic video transmitter/receiver systems, digital video coders/decoders, cross-connect switches and interactive conferencing systems including distance learning systems. Customers for Grass Valley products include the television networks, local television stations, post-production houses (which assemble commercials and television programs from recorded footage), telephone and cable companies and corporate and educational users. Lightworks Editing Systems Limited, a United Kingdom company which was acquired by the Company in fiscal year 1996, designs, manufactures and distributes non-linear editing systems used for film and video editing. Video products also include the Company's Profile disk-based, multi-channel video storage and playback system. In contrast to conventional tape storage technology, the Profile system provides instant access to stored video images and better reliability due to the durability of the media. The Company's main networking product is a line of netstations, which are X windows-based graphics terminals that provide multiple windowing and networking capability. Also commonly referred to as X terminals, netstations allow users to communicate with one or more host computers and other devices such as printers, that make up a networked computing system. Most applications include a central "server" (containing applications and data) connected to multiple netstations, thereby allowing a number of users to access those applications and data. The Company no longer manufactures its older line of proprietary graphics terminals, but it still has a service business for its installed base for such products. This service business has continually declined as the installed base of these proprietary graphics 6 terminals declines. Netstation products are based on standard architecture originally developed by the Massachusetts Institute of Technology. Consequently, it is difficult for any manufacturer to develop a proprietary advantage in either the underlying hardware or in elements of the operating system, and competition in the netstation market is accordingly intense. The Company's terminals have historically been used in technical applications such as mechanical engineering design, drafting and mapping. As a result, the Company has enjoyed a strong position in the technical and scientific segments of the market. Recently, the market has expanded and shifted to commercial applications from scientific and engineering applications. In accordance with this trend, recent additions to the Company's netstation product line focus on new commercial and business applications, as well as engineering applications. Commercial customers now account for a major portion of the Company's netstation revenues. The Company's networking products also include WinDD software, which allows workstation or netstation users on a Unix network to run Microsoft Windows based applications in native mode (that is, without translation or emulation). Manufacturing _____________ During fiscal 1994, the Company sold its integrated circuits operation to Maxim Integrated Products, Inc. and transferred its hybrid circuits operation to a joint venture with Maxim, and in early 1995 completed the sale of approximately 65% of the stock of its printed circuit board operation in the initial public offering of Merix Corporation. As a result of these activities and other recent component operation divestitures, the Company's manufacturing operations are no longer highly integrated. The Company has entered into supply agreements with each of the companies now operating the respective component operations. Tektronix also purchases raw materials, additional components, data processing equipment and computer peripheral devices for use in its products and systems. In addition, the Company purchases components of its products from a variety of third party suppliers. Such purchased materials and components are generally available to Tektronix as needed. Although shortages are experienced from time to time, the Company currently believes that it will be able to acquire the required components as needed. Because some of these components are unique, disruptions in supply can have an effect on Company operations. Tektronix owns substantially all of its manufacturing facilities. Its primary manufacturing facilities are located in or near the Portland, Oregon metropolitan area. Some of Tektronix' products, components and accessories are assembled in the Peoples Republic of China. A logistics center is maintained in Heerenveen, The Netherlands. The Grass Valley products are manufactured near Grass Valley, California. The Lightworks video editing products 7 are manufactured in Reading, U.K. See Item 2, "Properties", for a more detailed description of the Company's manufacturing facilities. Certain Tektronix products are manufactured for the Japanese market at a plant in Gotemba, Japan by Sony/Tektronix Corporation, a Japanese corporation equally owned by Tektronix and Sony Corporation. Sony/Tektronix also designs and manufactures arbitrary waveform and function generators and benchtop semiconductor testers in Japan for sale worldwide by Tektronix. Sales and Distribution ______________________ Tektronix maintains its own worldwide sales and field maintenance organization, staffed with technically trained personnel. Sales in the United States, Canada, Brazil, the United Kingdom, Germany, France, Italy, Spain, The Netherlands, Belgium, Sweden, Denmark, Norway, Finland, Switzerland, The Republic of Ireland, Australia, Austria, Hong Kong, Taiwan, Korea, Singapore, China and Mexico are made through the Company and its subsidiaries and their field offices or distribution channels located in principal market areas. In most countries, all sales are made either directly by Tektronix or by independent distributors to whom Tektronix provides direct technical and administrative assistance. Certain of the Company's independent distributors also sell products manufactured by the Company's competitors. Sales of joint venture products in the Peoples Republic of China are made by three companies which are joint ventures between Tektronix and three different Peoples Republic of China corporations. Except for Grass Valley products, sales in Japan are made by Sony/Tektronix Corporation. Sales in India are made by Tektronix (India) Limited, an Indian company which is 62% owned by Tektronix and the balance held publicly. A number of the Tektronix field offices in the U.S. also perform major maintenance and reconditioning operations. Tektronix' principal customers are electronic and computer equipment manufacturers and service providers, private industrial concerns engaged in commercial or governmental projects, military and nonmilitary agencies of the United States and of foreign countries, public utilities, educational institutions, radio and television stations and networks, graphics arts companies and users of sophisticated office products. Certain products are sold both to equipment users and to original equipment manufacturers. During the last fiscal year, United States Government agencies accounted directly for approximately 1.4 percent of Tektronix' consolidated sales as compared with approximately two percent for the prior year. During the last five years, direct sales to United States Government agencies ranged from one to six percent. The balance of sales during each year was distributed among several thousand other customers, with no other single customer accounting for as much as three percent. The Company believes that sales directly related to United States Government expenditures (excluding sales to the United States Government) were approximately two percent of Tektronix' consolidated sales for the last fiscal year. Contracts involving the United States Government are subject, as is customary, to termination by the Government at its convenience. 8 Most Tektronix product sales are sold as standard catalog items. Tektronix attempts to fill its orders as promptly as possible. In video and networking, the Company is moving towards complete system sales. At May 25, 1996, Tektronix' unfilled product orders amounted to approximately $163 million, as compared to approximately $167 million at May 27, 1995. Tektronix expects that substantially all unfilled product orders at May 25, 1996 will be filled during its current fiscal year. Orders received by the Company are subject to cancellation by the customer. International Sales ___________________ The following table sets forth the breakdown between U.S. and international sales, based upon purchaser location, for each of the last three fiscal years (in thousands of dollars):
U.S. Sales International Sales ___________________ ___________________ Amount Percent Amount Percent ______ _______ ______ _______ 1994 $751,401 56.0% $591,095 44.0% 1995 $766,991 51.2% $730,971 48.8% 1996 $890,930 50.4% $877,928 49.6%
See "Business Segments" in the Notes to Consolidated Financial Statements at page 27 of the Company's 1996 Annual Report to Shareholders, containing information on sales, operating income and assets by geographic area based upon the location of the seller, which is incorporated by reference. Tektronix products are sold worldwide. European sales are made principally in Germany, France, the United Kingdom, Switzerland, Italy, Spain, Sweden, and The Netherlands. Other international sales are principally in Japan, Korea, Canada and Australia. International sales include both export sales from the United States and sales by non-U.S. subsidiaries. Fluctuating exchange rates and other factors beyond the control of Tektronix, such as the stability of international monetary conditions, tariff and trade policies and domestic and foreign tax and economic policies, affect the level and profitability of international sales. The Company does not believe it is materially exposed to exchange rate fluctuation, although the Company is unable to predict the effect of these factors on its business. The Company hedges against certain currency exposures in order to minimize their impact. Research and Development ________________________ Tektronix operates in an industry characterized by rapid technological change and research and development are important elements in its business. Expenditures during fiscal years ended May 28, 1994, May 27, 1995 and May 25, 1996 for research and development amounted to approximately $159,377,000, $166,171,000, and $164,292,000 respectively. Almost all of these funds were Company generated. 9 Research and development activities are conducted by research and design groups and specialized product development groups within the three product groups. These activities include: (i) research on basic devices and techniques (ii) the design and development of products and components and specialized equipment and (iii) the development of processes needed for production. Most of Tektronix' research and development is devoted to enhancing and developing its own products. Patents and Intellectual Property _________________________________ It is Tektronix' policy to seek patents in the United States and appropriate foreign countries for its significant patentable developments. However, electronic equipment as complex as most Tektronix products is generally not patentable in its entirety. The Company also seeks to protect significant trademarks and software through trademark and copyright registration. The Company has entered into license arrangements for components important to the manufacturing of some of its printers. The Company's printer business relies on an integrated strategy of licensed and internally developed technology to produce its industry leading products. This technology includes software, equipment, printing process and ink developments. As with any company whose business involves intellectual property, Tektronix is subject to claims of infringement. There are no material pending claims. Competition ___________ The electronics industry continues to become more competitive, both in the United States and abroad. Primary competitive factors are product performance, technology, customer service, product availability and price. Tektronix believes that its reputation in the marketplace is a significant positive competitive factor. With respect to many of its products, the Company competes with companies that have substantially larger resources. Tektronix is the world's largest manufacturer of oscilloscopes and no single competitor offers as complete a product line. The Company is also the leader in sales of test and measurement equipment for the television industry. Tektronix competes with a number of companies in specialized areas of other test and measurement products, and it competes with one very large company that sells a broad line of test and measurement products. Tektronix is also the leader in unit sales of office workgroup laser-class color printers, including color laser, solid ink jet and thermal wax color printers. Tektronix competes with a number of large, worldwide electronics firms that manufacture specialized equipment for the television industry, both with respect to its television test and measurement products and its Grass Valley products. Grass Valley products include leading high-performance production switchers and high-performance distribution/processing equipment. Tektronix is a leading supplier of netstations. 10 Employees _________ At May 25, 1996, Tektronix had 7,929 employees, of whom 1,572 were located in foreign countries. Tektronix' employees in the United States and most foreign countries are not covered by collective bargaining agreements. The Company believes that relations with its employees are good. Environment ___________ The Company's facilities are subject to numerous laws and regulations concerning the discharge of materials into the environment, or otherwise relating to protection of the environment. Compliance with these laws has not had and is not expected to have a material effect upon the capital expenditures, earnings or competitive position of the Company. Executive Officers of the Company _________________________________ The following are the executive officers of the Company:
Has Served As An Executive Officer of Name Position Age Tektronix Since ____ ________ ___ _______________ Jerome J. Meyer Chairman of the 58 1990 Board, Chief Executive Officer and President William D. Walker Vice Chairman of 65 1992 (also the Board, Director served in 1990 and from 1969 to 1984) John P. Karalis Senior Vice President, 58 1992 Corporate Development and Secretary Carl W. Neun Senior Vice President 52 1993 and Chief Financial Officer Daniel R. Brophy Vice President and 58 1996 President, Americas Operations Lucie J. Fjeldstad Vice President and 52 1995 President, Video and Networking Division
11
Has Served As An Executive Officer of Name Position Age Tektronix Since ____ ________ ___ _______________ Gerald Perkel Vice President and 40 1995 President, Color Printing and Imaging Division Daniel Terpack Vice President and 55 1993 President, Measurement Business Division Timothy E. Vice President and 43 1991 Thorsteinson President, Pacific Operations John W. Vold Vice President and 66 1991 President, European Operations
The executive officers are elected by the board of directors of the Company at its annual meeting, except for interim elections to fill vacancies. Executive officers hold their positions until the next annual meeting or until their successors are elected, or until such tenure is terminated by death, resignation or removal in the manner provided in the bylaws. There are no arrangements or understandings between executive officers or any other person pursuant to which the executive officers were elected and none of the executive officers are related. All of the executive officers named have been employed by Tektronix in management positions for the last five years except: Mr. Timothy E. Thorsteinson who joined Tektronix in October 1991 and from 1990 to 1991 was Director of Quality Performance of National Semiconductor Corporation ("National Semiconductor") and prior to that time held a number of management positions in human resources management at National Semiconductor; Mr. John P. Karalis who joined Tektronix in September 1992 and prior to that time was with the law firm of Brown and Bain (from 1989 to 1992) and Vice President and General Counsel of Apple Computer, Inc. (from 1987 to 1989); Mr. Carl W. Neun who joined Tektronix in March 1993 and prior to that time served as Senior Vice President of Administration and Chief Financial Officer of Conner Peripherals, Inc., (from 1987 to 1993); Ms. Lucie Fjeldstad who joined Tektronix in January 1995 and prior to that time was President and CEO of Fjeldstad International (from 1993 to 1995) and Vice President and General Manager, Multimedia of IBM Corporation (from 1990 to 1993); Mr. William D. Walker, who is not an employee of the Company and has been a director of the Company since 1980; and Mr. Daniel R. Brophy, who joined the company in December 1994 and prior to that time served as Assistant Vice President of Ascom Timeplex, a division of Ascom Holding AG, an international telecommunications company. 12 Item 2. Properties. A brief description of the location and general characteristics of the significant properties occupied by Tektronix in August of 1996 is set forth below. Tektronix believes that its operations are in compliance in all material respects with requirements relating to environmental quality, safety and energy conservation. Tektronix owns a 265 acre industrial park (the "Howard Vollum Park") near Beaverton, Oregon. The Howard Vollum Park includes 23 buildings arranged in a campus-like setting and containing an aggregate of approximately 2.6 million gross square feet of enclosed floor space. A substantial portion of the company's product manufacturing and administrative activities are located at Howard Vollum Park. Most of the Company's Measurement Business Division and a variety of the Video Networking Division products are manufactured at Howard Vollum Park. The Company leases certain excess space at the Howard Vollum Park to other corporations. The Company also owns property near Howard Vollum Park which is leased to another corporation. The Company's Color Printing and Imaging Division, and corporate headquarters occupy three buildings containing approximately 596,000 square feet on a 167 acre tract owned by the Company in Wilsonville, Oregon, approximately 16 miles south of Howard Vollum Park. An additional 192,000 square foot building on the Company's Wilsonville property is currently leased to another corporation. Tektronix' Video and Networking Division also has operating facilities in Grass Valley, California, which includes ten buildings containing a total of approximately 190,000 square feet of floor space on a 320 acre site, and three buildings containing a total of approximately 151,000 square feet on the Company's 116 acre tract of land in the neighboring town of Nevada City. The Company intends to consolidate these operations on the Nevada City site, and the 320 acre Grass Valley site is currently offered for sale. The buildings described above were constructed after 1957 and are maintained in good condition. Warehouses, production facilities and other critical operations are protected by fire sprinkler installations. Most manufacturing, office and engineering areas are air-conditioned. The Company believes that its facilities described above are adequate for their intended uses. Tektronix owns a 43 acre site six miles east of Vancouver, Washington (Vancouver is across the Columbia River from Portland, Oregon). The Company has leased the 485,000 square foot manufacturing facility that is situated on the site to another corporation. A 109,000 square foot logistics center owned by Tektronix is located on 23 acres of land in Heerenveen, The Netherlands. Field offices near London (83,000 square feet) and Sydney, Australia (23,000 square feet) are located in buildings owned by the Company. The Lightworks video editing manufacturing operations are 13 located on leased premises in Reading, U.K. Field Offices in other foreign countries occupy leased premises. Tektronix also owns a seven-acre site in Hoddesdon, England, with manufacturing buildings containing about 47,000 square feet which is leased to another corporation. Tektronix is attempting to sell this facility. Tektronix' US Sales and Service field offices aggregate approximately 245,000 square feet of leased space. A surplus office in Chicago, Illinois, consisting of approximately 60,000 square feet is offered for sale. Tektronix also owns an approximately 9,000 square foot facility in Nanticoke, Pennsylvania. Item 3. Legal Proceedings. Fluke Corporation filed suit against the Company in the Federal District Court for the Western District of Washington, alleging the Company violated trademark and unfair competition laws by copying certain trade dress of one of Fluke's digital multimeter product lines. The Court has issued a preliminary injunction prohibiting the Company from selling, distributing, advertising or promoting its 800 Series digital multimeters in the United States. The Company will comply with the order which it intends to appeal. It is not anticipated that the order will have a material adverse effect on the Company's operating results. Item 4. Submission of Matters to a Vote of Security Holders. No matter was submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report. Forward Looking Statements __________________________ Information included in this Report on Form 10-K relating to orders, sales and earnings expectations constitute forward-looking statements that involve a number of risks and uncertainties. From time to time, information provided by the Company, or statements made by its employees, may contain other forward-looking statements. As with many high technology companies, factors that could cause the company's actual results or activities to differ materially from these forward looking statements include but are not limited to: general economic conditions, and business conditions in the electronics industry, including the effect on purchases by the Company's customers; 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 by the Company 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; inventory risks due to changes in market demand or the Company's business strategies; changes in effective tax rates; customer demand; currency fluctuations; the fact that a substantial portion of the Company's 14 sales are generated from orders received during the quarter, making prediction of quarterly revenues and earnings difficult; and other risk factors listed from time to time in the Company's reports filed with the Securities and Exchange Commission and press releases. Additional risk factors specific to the Company's current plans and expectations that could cause the Company's actual results or activities to differ materially from those stated include: the significant organizational and operational challenges that could adversely affect the Company's ability to integrate and transform its Video and Networking business successfully in the planned time frame; the timely introduction of new products scheduled during the Company's fiscal year which could be affected by engineering or other development program slippages, the ability to ramp up production or to develop effective sales channels, and demand for and acceptance of those and other Company products by the Company's customers which could be affected by the current uncertainties in economic conditions around the world and by activities of the Company's competitors. PART II Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters. The information required by this item is included on page 25 of the Company's 1996 Annual Report to Shareholders and is incorporated herein by reference. Item 6. Selected Financial Data. The information required by this item is included on page 35 of the Company's 1996 Annual Report to Shareholders and is incorporated herein by reference. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. The information required by this item is included on pages 16 through 20 of the Company's 1996 Annual Report to Shareholders and is incorporated herein by reference. Item 8. Financial Statements and Supplementary Data. The information required by this item is included on pages 22 through 35 of the Company's 1996 Annual Report to Shareholders and is incorporated herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. 15 PART III Item 10. Directors and Executive Officers of the Registrant. The information required by this item regarding directors is included under "Board of Directors" and "Election of Directors" on pages 3 to 8 of the Company's Proxy Statement dated August 14, 1996. The information required by this item regarding officers is contained under "Executive Officers of the Company" in Item 1 of Part I hereof. The information required by Item 405 of Regulation S-K is included under "Section 16(a) Compliance. Beneficial Ownership Reporting" on page 19 of the Company's Proxy Statement dated August 14, 1996. Item 11. Executive Compensation. The information required by this item is included under "Directors' Compensation" and "Executive Compensation" on pages 7 to 13 of the Company's Proxy Statement dated August 14, 1996. Item 12. Security Ownership of Certain Beneficial Owners and Management. The information required by this item is included under "Ownership of Shares" and "Election of Directors" on page 2 and 4 to 7 of the Company's Proxy Statement dated August 14, 1996. Item 13. Certain Relationships and Related Transactions. None. PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. (a) (1) Financial Statements. ____________________ The following documents are included in the Company's 1996 Annual Report to Shareholders at the pages indicated and are incorporated herein by reference:
Page in 1996 Annual Report to Shareholders ______________________ Independent Auditors' Report 21 Consolidated Statements of Operations 22 Consolidated Balance Sheets 23 Consolidated Statements of Cash Flows 24 Consolidated Statements of Shareholders' 25 Equity Notes to Consolidated Financial Statements 26 to 34
16 (2) Financial Statement Schedules. No financial statement schedules are required to be filed with this report. Separate financial statements for the registrant have been omitted because the registrant is primarily an operating company and the subsidiaries included in the consolidated financial statements are substantially totally held. All subsidiaries of the registrant are included in the consolidated financial statements. Summarized financial information for 50 percent or less owned persons in which the registrant has an interest is included in the Notes to Consolidated Financial Statements appearing in the Company's Annual Report to Shareholders. (3) Exhibits: (3)(i) Restated Articles of Incorporation, as amended. Incorporated by reference to Exhibit (3) of Form 10-Q dated September 28, 1990, SEC File No. 1-4837. (ii) Bylaws, as amended. (4)(i) Indenture dated as of November 16, 1987, as amended by First Supplemental Indenture Dated as of July 13, 1993, covering the registrant's 7-1/2% notes due August 1, 2003,and the registrant's 7-5/8% notes due August 15, 2002. Indenture incorporated by reference to Exhibit 4(i) of Form 10-K dated August 22, 1990, SEC File No. 1-4837. (ii) Pursuant to Item 601(b)(4)(iii) of Regulation S-K, the registrant agrees to furnish to the Commission upon request copies of agreements relating to other indebtedness. +(10)(i) 1982 Stock Option Plan, as amended. Incorporated by reference to Exhibit 10(iii) of Form 10-K dated August 22, 1989, SEC File No. 1-4837. +(ii) Stock Incentive Plan, as amended. Incorporated by reference to Exhibit 10(ii)of Form 10-Q dated April 9, 1993, SEC File No. 1-4837. +(iii) Restated Annual Performance Improvement Plan. Incorporated by reference to Exhibit 10(i) of Form 10-Q dated April 9, 1993, SEC File No. 1-4837. 17 +(iv) Restated Deferred Compensation Plan. Incorporated by reference to Exhibit 10(i)of Form 10-Q dated December 20, 1984, SEC File No. 1-4837. +(v) Retirement Equalization Plan, Restatement +(vi) Severance Agreement entered into between the Company and its named officers. Incorporated by reference to Exhibit 10(viii)of Form 10-K dated August 18, 1993, SEC File No. 1-4837. +(vii) Indemnity Agreement entered into between the Company and its named officers and directors. Incorporated by reference to Exhibit 10(ix) of Form 10-K dated August 18, 1993, SEC File No. 1-4837. +(viii) Executive Severance Agreement entered into between the Company and its named officers. Incorporated by reference to Exhibit 10(ix) of Form 10-K dated August 9, 1995, SEC File No. 1-4837. +(ix) Executive Compensation and Benefits Agreement dated as of October 24, 1990. Incorporated by reference to Exhibit 10(ii) of Form 10-Q dated December 21, 1990, SEC File No. 1-4837. + (x) Executive Compensation and Benefits Agreement dated as of March 29, 1993. Incorporated by reference to Exhibit 10(xiv) of Form 10-K dated August 11, 1994, SEC File No. 1-4837. + (xi) Rights Agreement dated as of August 16, 1990. Incorporated by reference to Exhibit 1 of Form 8-K dated August 27, 1990, SEC File No. 1-4837. +(xii) Non-Employee Directors' Deferred Compensation Plan, 1995 Restatement dated July 1, 1995. Incorporated by reference to Exhibit 10 (xv) of Form 10-K dated August 9, 1995, SEC File No. 1-4837. +(xiii) Non-Employee Directors Stock Compensation Plan. Incorporated by reference to Exhibit 10(xvi) of Form 10-K dated August 9, 1995, SEC File No. 1-4837. 18 +(xiv) Executive Severance Agreement, as amended. Incorporated by reference to Exhibit 10(i) of Form 10-Q dated October 7, 1994, SEC File No. 1-4837. +(xv) Amendment to Supplemental Executive Retirement Agreement. Incorporated by reference to Exhibit 10(ii) of Form 10-Q dated October 7, 1994, SEC File No. 1-4837. +(xvi) Employment Agreement dated January 20, 1995. (13) Portions of the 1996 Annual Report to Shareholders that are incorporated herein by reference. (21) Subsidiaries of the registrant. (23) Independent Auditors' Consent. (24) Powers of Attorney. (27) Financial Data Schedule. (i) Restated Financial Data Schedule. + Compensatory Plan or Arrangement (b) No reports on Form 8-K have been filed during the last quarter of the period covered by this Report. 19 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. TEKTRONIX, INC. By CARL W. NEUN ______________________ Carl W. Neun Senior Vice President and Chief Financial Officer Dated: August 20, 1996 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Capacity Date _________ ________ ____ JEROME J. MEYER* Chairman, Chief August 20, 1996 Jerome J. Meyer Executive Officer, and President CARL W. NEUN* Senior Vice President August 20, 1996 Carl W. Neun and Chief Financial Officer, Principal Financial and Accounting Officer PAULINE LO ALKER* Director August 20, 1996 Pauline Lo Alker A. GARY AMES* Director August 20, 1996 A. Gary Ames PAUL E. BRAGDON* Director August 20, 1996 Paul E. Bragdon
20
Signature Capacity Date _________ ________ ____ PAUL C. ELY, JR.* Director August 20, 1996 Paul C. Ely, Jr. A. M. GLEASON* Director August 20, 1996 A. M. Gleason WAYLAND R. HICKS* Director August 20, 1996 Wayland R. Hicks KEITH R. MCKENNON* Director August 20, 1996 Keith R. McKennon MERRILL A. MCPEAK* Director August 20, 1996 Merrill A. McPeak JEAN VOLLUM* Director August 20, 1996 Jean Vollum WILLIAM D. WALKER Director August 20, 1996 William D. Walker *By JOHN P. KARALIS August 20, 1996 John P. Karalis as attorney-in-fact
21 EXHIBIT LIST (3)(i) Restated Articles of Incorporation, as amended. Incorporated by reference to Exhibit (3) of Form 10-Q dated September 28, 1990, SEC File No. 1-4837. (ii) Bylaws, as amended. (4)(i) Indenture dated as of November 16, 1987, as amended by First Supplemental Indenture Dated as of July 13, 1993, covering the registrant's 7-1/2% notes due August 1, 2003,and the registrant's 7-5/8% notes due August 15, 2002. Indenture incorporated by reference to Exhibit 4(i) of Form 10-K dated August 22, 1990, SEC File No. 1-4837. (ii) Pursuant to Item 601(b)(4)(iii) of Regulation S-K, the registrant agrees to furnish to the Commission upon request copies of agreements relating to other indebtedness. +(10)(i) 1982 Stock Option Plan, as amended. Incorporated by reference to Exhibit 10(iii) of Form 10-K dated August 22, 1989, SEC File No. 1-4837. +(ii) Stock Incentive Plan, as amended. Incorporated by reference to Exhibit 10(ii)of Form 10-Q dated April 9, 1993, SEC File No. 1-4837. +(iii) Restated Annual Performance Improvement Plan. Incorporated by reference to Exhibit 10(i) of Form 10-Q dated April 9, 1993, SEC File No. 1-4837. +(iv) Restated Deferred Compensation Plan. Incorporated by reference to Exhibit 10(i)of Form 10-Q dated December 20, 1984, SEC File No. 1-4837. +(v) Retirement Equalization Plan, Restatement +(vi) Severance Agreement entered into between the Company and its named officers. Incorporated by reference to Exhibit 10(viii)of Form 10-K dated August 18, 1993, SEC File No. 1-4837. +(vii) Indemnity Agreement entered into between the Company and its named officers and directors. Incorporated by reference to Exhibit 10(ix) of Form 10-K dated August 18, 1993, SEC File No. 1-4837. +(viii) Executive Severance Agreement entered into between the Company and its named officers. Incorporated by reference to Exhibit 10(ix) of Form 10-K dated August 9, 1995, SEC File No. 1-4837. +(ix) Executive Compensation and Benefits Agreement dated as of October 24, 1990. Incorporated by reference to Exhibit 10(ii) of Form 10-Q dated December 21, 1990, SEC File No. 1-4837. + (x) Executive Compensation and Benefits Agreement dated as of March 29, 1993. Incorporated by reference to Exhibit 10(xiv) of Form 10-K dated August 11, 1994, SEC File No. 1-4837. + (xi) Rights Agreement dated as of August 16, 1990. Incorporated by reference to Exhibit 1 of Form 8-K dated August 27, 1990, SEC File No. 1-4837. +(xii) Non-Employee Directors' Deferred Compensation Plan, 1995 Restatement dated July 1, 1995. Incorporated by reference to Exhibit 10 (xv) of Form 10-K dated August 9, 1995, SEC File No. 1-4837. +(xiii) Non-Employee Directors Stock Compensation Plan. Incorporated by reference to Exhibit 10(xvi) of Form 10-K dated August 9, 1995, SEC File No. 1-4837. +(xiv) Executive Severance Agreement, as amended. Incorporated by reference to Exhibit 10(i) of Form 10-Q dated October 7, 1994, SEC File No. 1-4837. +(xv) Amendment to Supplemental Executive Retirement Agreement. Incorporated by reference to Exhibit 10(ii) of Form 10-Q dated October 7, 1994, SEC File No. 1-4837. +(xvi) Employment Agreement dated January 20, 1995. (13) Portions of the 1996 Annual Report to Shareholders that are incorporated herein by reference. (21) Subsidiaries of the registrant. (23) Independent Auditors' Consent. (24) Powers of Attorney. (27) Financial Data Schedule. (i) Restated Financial Data Schedule. EX-3.2 2 EXHIBIT 3 (ii) As Amended through June 19, 1996 BYLAWS OF TEKTRONIX, INC. ARTICLE I SHAREHOLDERS Section 1. Annual Meeting. The annual meeting of shareholders shall be held on the date and at the time each year as shall be fixed by the board of directors and stated in the notice of meeting, for the purpose of electing directors and for the transaction of such other business as may properly come before the meeting. Section 2. Special Meetings. Special meetings of the shareholders may be called by the Chairman of the Board or by the board of directors, and shall be called by the Chairman of the Board at the request of the holders of not less than one tenth of all the outstanding shares of the corporation entitled to vote at the meeting. Section 3. Place of Meetings. The place of each annual meeting and any special meeting of the shareholders shall be determined by the board of directors. Section 4. Notice of Meeting. Written or printed notice stating the date, time and place of the shareholders meeting and, in the case of a special meeting or a meeting for which special notice is required by law, the purposes for which the meeting is called, shall be delivered by the corporation to each shareholder entitled to vote at the meeting and, if required by law, to any other shareholders entitled to receive notice, not earlier than sixty days nor less than thirty days before the meeting date. If mailed, the notice shall be deemed delivered when it is mailed to the shareholder with postage prepaid at the shareholder's address shown in the corporation's record of shareholders. Section 5. Closing of Transfer Records or Fixing of Record Date. The board of directors may fix a future date as the record date to determine the shareholders entitled to notice of a shareholders meeting, demand a special meeting, vote, take any other action or receive payment of any share or cash dividend or other distribution. This date shall not be earlier than seventy days or, in the case of a meeting, later than thirty-five days before the meeting or action requiring a determination of shareholders. The record date for any meeting, vote or other action of the shareholders shall be the same for all voting groups. If not otherwise fixed by the board of directors, the record 1 date to determine shareholders entitled to notice of and to vote at an annual or special shareholders meeting is the close of business on the day before the notice is first mailed or delivered to shareholders. If not otherwise fixed by the board of directors, the record date to determine shareholders entitled to receive payment of any share or cash dividend or other distribution is the close of business on the day the board of directors authorizes the share or cash dividend or other distribution. Section 6. Voting Lists. After a record date for a meeting is fixed, the corporation shall prepare an alphabetical list of all shareholders entitled to notice of the shareholders meeting. The list shall be arranged by voting group and, within each voting group, by class or series of shares, and it shall show the address of and number of shares held by each shareholder. The shareholders list shall be available for inspection by any shareholder, upon proper demand as may be required by law, beginning two business days after notice of the meeting is given and continuing through the meeting, at the corporation's principal office or at a place identified in the meeting notice in the city where the meeting will be held. The corporation shall make the shareholders list available at the meeting, and any shareholder or the shareholder's agent or attorney shall be entitled to inspect the list at any time during the meeting or any adjournment. Refusal or failure to prepare or make available the shareholders list does not affect the validity of action taken at the meeting. Section 7. Quorum; Adjournment. (a) Shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those shares exists with respect to that matter. A majority of the votes entitled to be cast on the matter by the voting group constitutes a quorum of that voting group for action on that matter. (b) A majority of votes represented at the meeting, although less than a quorum, may adjourn the meeting from time to time to a different time and place without further notice to any shareholder of any adjournment. At an adjourned meeting at which a quorum is present, any business may be transacted that might have been transacted at the meeting originally held. (c) Once a share is represented for any purpose at a meeting, it shall be present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for the adjourned meeting. A new record date must be set if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting. Section 8. Voting. If a quorum exists, action on a matter, other than the election of directors, by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless a greater number of affirmative votes is required by law or the Restated Articles of Incorporation. Unless otherwise provided in the Restated Articles of Incorporation, directors are 2 elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present. Section 9. Proxies. At all meetings of shareholders, a shareholder may vote by proxy executed in writing by the shareholder or by his duly authorized attorney in fact. Such proxy shall be filed with the secretary of the corporation before or at the time of the meeting. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy. Section 10. Voting of Shares by Certain Holders. (a) Shares standing in the name of another corporation may be voted by such officer, agent or proxy as the bylaws of such corporation may prescribe, or, in the absence of such provision, as the board of directors of such other corporation may determine. (b) Shares held by an administrator, executor, guardian or conservator may be voted by him, either in person or by proxy, without a transfer of such shares into his name. Shares standing in the name of a trustee may be voted by him, either in person or by proxy, but no trustee shall be entitled to vote shares held by him without a transfer of such shares into his name. (c) Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority so to do be contained in an appropriate order of the court by which such receiver was appointed. (d) A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred. (e) Neither treasury shares nor shares held by the corporation in a fiduciary capacity, nor shares held by another corporation if a majority of the shares entitled to vote for the election of directors of such other corporation is held by the corporation, shall be voted at any meeting or counted in determining the total number of outstanding shares at any given time. Section 11. Proper Business for Shareholders' Meeting. To be properly brought before the meeting, business must be either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the board of directors, (b) otherwise properly brought before a meeting by or at the direction of the board of directors, or (c) otherwise properly brought before the meeting by a shareholder. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a shareholder, the shareholder must have given timely notice thereof in writing to the Secretary of the corporation. To be timely, 3 a shareholder's notice must be delivered to or mailed and received at the principal executive office of the corporation not less than 50 days nor more than 75 days prior to the meeting; provided, however, that in the event that less than 65 days' notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made, whichever first occurs. A shareholder's notice to the Secretary shall set forth (a) one or more matters appropriate for shareholder action that the shareholder proposes to bring before the meeting, (b) a brief description of the matters desired to be brought before the meeting and the reasons for conducting such business at the meeting, (c) the name and record address of the shareholder, (d) the class and number of shares of the corporation that the shareholder owns or is entitled to vote and (e) any material interest of the shareholder in such matters. Notwithstanding anything in these bylaws to the contrary, no business shall be conducted at the annual meeting except in accordance with the procedure set forth in this Section 11; provided, however, that nothing in this Section 11 shall be deemed to preclude discussion by any shareholder of any business properly brought before the annual meeting. The Chairman of the Board shall, if the facts warrant, determine and declare to the meeting that the business was not properly brought before the meeting in accordance with the provisions of this Section 11, and if the Chairman of the Board should so determine, shall so declare to the meeting any such business not properly brought before the meeting shall not be transacted. Section 12. Shareholder Nomination of Directors. Not less than 50 days nor more than 75 days prior to the date of any annual meeting of shareholders, any shareholder who intends to make a nomination at the annual meeting shall deliver a notice to the Secretary of the corporation setting forth (a) as to each nominee whom the shareholder proposes to nominate for election or reelection as a director, (i) the name, age, business address and residence address of the nominee, (ii) the principal occupation or employment of the nominee, (iii) the class and number of shares of capital stock of the corporation that are beneficially owned by the nominee and (iv) any other information concerning the nominee that would be required, under the rules of the Securities and Exchange Commission, in a proxy statement soliciting proxies for the election of such nominee; and (b) as to the shareholder giving the notice, (i) the name and record address of the shareholder and (ii) the class and number of shares of capital stock of the corporation that are beneficially owned by the shareholder; provided, however, that in the event that less than 65 days' notice or prior public disclosure of the date of the annual meeting is given or made to shareholders, notice by the shareholder to be timely must be so delivered not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. Such notice shall include a signed consent to serve as a director of the corporation, if elected, of each such nominee. The corporation may require any proposed nominee to furnish such other information as may reasonably be required by the corporation to determine the eligibility of such proposed nominee to serve as a director of the corporation. 4 Section 13. Shareholder Nomination of Directors - Special Meetings. Any shareholder who intends to make a nomination at any special meeting of shareholders held for the purpose of electing directors shall deliver a timely notice to the Secretary of the corporation setting forth (a) as to each nominee whom the shareholder proposes to nominate for election or reelection as a director, (i) the name, age, business address and residence address of the nominee, (ii) the principal occupation or employment of the nominee, (iii) the class and number of shares of capital stock of the corporation that are beneficially owned by the nominee and (iv) any other information concerning the nominee that would be required, under the rules of the Securities and Exchange Commission, in a proxy statement soliciting proxies for the election of such nominee; and (b) as to the shareholder giving the notice, (i) the name and record address of the shareholder and (ii) the class and number of shares of capital stock of the corporation that are beneficially owned by the shareholder. To be timely for these purposes, such notice must be given (a) if given by the shareholder (or any of the shareholders) who or that made a demand for a meeting pursuant to which such meeting is to be held, concurrently with the delivery of such demand, and (b) otherwise, not later than the close of business on the 10th day following the day on which the notice of the special meeting was mailed. Such notice shall include a signed consent to serve as a director of the corporation, if elected, of each such nominee. The corporation may require any proposed nominee to furnish such other information as may reasonably be required by the corporation to determine the eligibility of such proposed nominee to serve as a director of the corporation. ARTICLE II BOARD OF DIRECTORS Section 1. General Powers. The business and affairs of the corporation shall be managed by its board of directors. Section 2. Number, Tenure and Qualifications. The directors of the corporation shall be divided into three classes of directors designated Class I, Class II and Class III. Until immediately prior to the 1996 annual meeting of shareholders, the number of directors of the corporation shall be eleven, consisting of four Class I directors, three Class II directors and four Class III directors. Effective immediately prior to the 1996 annual meeting of shareholders, the number of directors of the corporation shall be ten, consisting of four Class I directors, three Class II directors and three Class III directors. At the 1986 annual meeting of shareholders, Class I directors were elected to a term of office expiring at the 1987 annual meeting of shareholders, Class II directors were elected to a term of office expiring at the 1988 annual meeting of shareholders, and Class III directors were elected to a term of office expiring at the 1989 annual meeting of shareholders, and in each case until their successors are elected and qualified. At each annual meeting of shareholders following such initial classification and election, directors elected to succeed those directors whose terms 5 expire shall be elected to serve three-year terms and until their successors are elected and qualified, so that the term of one class of directors will expire each year. When the number of directors is changed by amendment of this Section 2, any newly created directorships, or any decrease in directorships, shall be so apportioned among the classes so as to make all classes as nearly equal as possible, provided that no decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. Directors need not be residents of the State of Oregon or shareholders of the corporation. Section 3. Annual and Regular Meetings. The annual meeting of the board of directors may be held before or after the annual meeting of shareholders, on the day and at the time and place designated by the Chairman of the Board. The board of directors may provide by resolution, the time and place, either within or without the State of Oregon, for the holding of regular meetings without notice other than such resolution. Section 4. Special Meetings. Special meetings of the board of directors may be called by or at the request of the Chairman of the Board or any two directors. The person or persons authorized to call special meetings of the board of directors may fix any place, either within or without the State of Oregon, as the place for holding any special meeting of the board of directors called by them. Section 5. Notice. Notice of the date, time and place of any special meeting of the board of directors shall be given at least three days prior to the meeting by notice communicated in person, by telephone, telegraph, teletype, other form of wire or wireless communication, mail or private carrier. If written, notice shall be effective at the earliest of (a) when received, (b) five days after its deposit in the United States mail, as evidenced by the postmark, if mailed postpaid and correctly addressed, or (c) on the date shown on the return receipt, if sent by registered or certified mail, return receipt requested and the receipt is signed by or on behalf of the addressee. Notice by all other means shall be deemed effective when received by or on behalf of the director. Notice of any regular or special meeting need not describe the purposes of the meeting unless required by law or the Restated Articles of Incorporation. Section 6. Quorum. A majority of the number of directors fixed by Section 2 of this Article II shall constitute a quorum for the transaction of business at any meeting of the board of directors, but if less than such majority is present at a meeting, a majority of the directors present may adjourn the meeting from time to time without further notice. Section 7. Manner of Acting. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors, unless a greater number is required by law or these bylaws. 6 Section 8. Vacancies. Any vacancy on the board of directors, including a vacancy resulting from an increase in the number of directors, may be filled by the shareholders, the board of directors, the remaining directors if less than a quorum (by the vote of a majority thereof) or by a sole remaining director. Any vacancy not filled by the directors shall be filled by election at an annual meeting or at a special meeting of shareholders called for that purpose. A vacancy that will occur at a specified later date, by reason of a resignation or otherwise, may be filled before the vacancy occurs, but the new director may not take office until the vacancy occurs. Section 9. Compensation. By resolution of the board of directors, the directors may be paid their expenses, if any, of attendance at each meeting of the board of directors, and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Section 10. Presumption of Assent. A director of the corporation who is present at a meeting of the board of directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action. It shall be the duty of the person acting as secretary of the meeting to record in the minutes any negative votes, abstentions or dissents if requested to do so by the director so voting, abstaining or dissenting. Section 11. Informal Action by Directors. Any action required to be taken at a meeting of directors, or any action which may be taken at a meeting of directors, may be taken without a meeting if a consent in writing setting forth the action so taken shall be signed by all the directors entitled to vote with respect to the subject matter thereof. Such consent shall have the same effect as a unanimous vote of the directors. Section 12. Removal. The shareholders may remove one or more directors with or without cause at a meeting called expressly for that purpose, unless the Restated Articles of Incorporation provide for removal for cause only. Section 13. Transactions with Directors. Any contract or other transaction between the corporation and one or more of its directors, or between the corporation and another party in which one or more of its directors are interested shall be valid notwithstanding the presence or participation of such director or directors in a meeting of the board of directors which acts upon or in reference to such contract or transaction, if the fact of such interest shall be disclosed or known to the board of directors and it shall authorize and approve such contract or transaction by a vote of a majority of the 7 directors present. Such interested director or directors may be counted in determining whether a quorum is present at any such meeting, but shall not be counted in calculating the majority necessary to carry such vote. This section shall not invalidate any contract or other transaction which would otherwise be valid under applicable law. Section 14. Meeting by Telephone Conference Call. A meeting of the board of directors may be held by means of conference telephone or similar communications equipment through which all persons participating in the meeting can hear each other. Participation in a meeting pursuant to this section shall constitute presence in person at the meeting. Notice (including waiver of notice) and quorum requirements as specified in Sections 5 and 6 of this Article shall apply to meetings pursuant to this section. A record shall be kept of the action taken for insertion into the minute book. ARTICLE III COMMITTEES Section 1. Designation. The board of directors, by resolution adopted by a majority of the number of directors fixed by Section 2 of Article II of these bylaws, may designate from among its members an executive committee and one or more other committees. The designation of a committee, and the delegation of authority to it, shall not operate to relieve the board of directors, or any member thereof, of any responsibility imposed upon it or him by law. No member of any committee shall continue to be a member thereof after he ceases to be a director of the corporation. The board of directors shall have the power at any time, by resolution adopted by a majority of the number of directors fixed by Section 2 of Article II of these bylaws, to increase or decrease the number of members of any committee, to fill vacancies thereon, to change any member thereof, and to change the functions or terminate the existence thereof. Section 2. Powers. During the interval between meetings of the board of directors, and subject to such limitations as may be imposed by resolution of the board of directors, the executive committee shall have and may exercise all the authority of the board of directors in the management of the corporation. Any other committee shall have such authority of the board of directors as the board shall delegate by resolution adopted by a majority of the number of directors fixed by Section 2 of Article II of these bylaws. Notwithstanding the foregoing, neither the executive committee nor any other committee shall have the authority of the board of directors in reference to amending the articles of incorporation; adopting a plan of merger or consolidation; recommending to the shareholders the sale, lease, exchange, mortgage, pledge or other disposition of all or substantially all the property and assets of the corporation otherwise than in the usual and regular course of its business; recommending to the shareholders a voluntary dissolution of the corporation or revocation thereof; or amending the 8 bylaws of the corporation. Reports on actions taken by a committee shall be submitted to the next succeeding meeting of the board of directors. Section 3. Procedure; Meetings; Quorum. Each committee shall appoint a chairman from among its members and a secretary who may, but need not, be a member of the committee or of the board of directors. The chairman shall preside at all committee meetings and the secretary shall keep a record of its proceedings. Regular meetings of a committee, of which no notice shall be necessary, shall be held on such days and at such places as shall be fixed by resolution adopted by a majority of the committee. Special meetings of a committee shall be called at the request of any member of the committee, and shall be held upon notice by letter or telegram mailed or delivered for transmission not later than during the second day preceding the day of the meeting, or by word of mouth or telephone received not later than the day immediately preceding the day of the meeting. Any notice required by this section may be waived in writing signed by the member or members entitled to the notice, whether before, or after the meeting time stated therein. Attendance of any member of a committee at a special meeting shall constitute a waiver of notice of such meeting. A majority of the committee, from time to time, shall be necessary to constitute a quorum for the transaction of business, and the act of a majority of the members present at a meeting at which a quorum is present shall be the act of the committee. The board of directors may vote to the members of any committee a reasonable fee as compensation for attendance at meetings of such committee. Section 4. Meeting by Telephone Conference Call. A meeting of a committee may be held by means of conference telephone or similar telephone communications equipment through which all persons participating in the meeting can hear each other. Participation in the meeting pursuant to this section shall constitute presence in person at the meeting. Notice (including waiver of notice) and quorum requirements as specified in Section 3 of this Article shall apply to meetings pursuant to this section. A record shall be kept of action taken for insertion into the minute book. Section 5. Informal Action by Committee. Any action which may be taken at a meeting of a committee may be taken without a meeting if a consent in writing setting forth the actions so taken shall be signed by all members of the committee entitled to vote with respect to the subject matter thereof. The action shall be effective on the date when the last signature is placed on the consent or at such earlier time as is set forth therein. The consent shall have the same effect as a unanimous vote of the committee. 9 ARTICLE IV OFFICERS Section 1. Number. The officers of the corporation shall be a Chairman of the Board of Directors (the "Chairman of the Board"); a President; a Secretary; and such other officers and assistant officers as may be elected or appointed from time to time by the board of directors. The officers of the corporation shall have such powers and duties as may be prescribed by the board of directors. Any two or more offices may be held by the same person. Section 2. Election and Term of Office. The officers of the corporation shall be elected annually by the board of directors at the first meeting of the board of directors held after the annual meeting of the shareholders. If the election of officers shall not be held at the meeting, it shall be held as soon thereafter as is convenient. Each officer shall hold office until a successor shall have been duly elected and shall have qualified or until the officer's death, resignation or removal in the manner hereinafter provided. Section 3. Removal. Any officer or agent elected or appointed by the board of directors may be removed by the board of directors at any time with or without cause. Election or appointment of an officer or agent shall not of itself create contract rights. Section 4. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the board of directors for the unexpired portion of the term. Section 5. Chairman of the Board. The Chairman of the Board of Directors shall be the chief executive officer of the corporation and, subject to the control of the board of directors, shall in general supervise and control all of the business and affairs of the corporation. The Chairman of the Board may execute in behalf of the corporation all contracts, agreements, stock certificates and other instruments. The Chairman of the Board shall from time to time report to the board of directors all matters within the Chairman's knowledge affecting the corporation which should be brought to the attention of the board. The Chairman of the Board, or such other individuals as may be designated by the Board of Directors from time to time, shall vote all shares of stock in other corporations owned by the corporation, and shall be empowered to execute proxies, waivers of notice, consents and other instruments in the name of the corporation with respect to such stock. He shall preside at all meetings of the board of directors and shareholders. The Chairman of the Board shall perform such other duties as may be prescribed from time to time by the board of directors. Section 6. President. The President shall be the chief operating officer of the corporation and shall supervise the operations of the corporation, subject to the 10 direction of the board of directors and the Chairman of the Board. The President shall perform such other duties as may be prescribed from time to time by the board of directors or the Chairman of the Board. Section 7. Secretary. The Secretary shall keep the minutes of all meetings of the directors and shareholders, and shall have custody of the minute books and other records pertaining to the corporate business. The Secretary shall countersign all stock certificates and other instruments requiring the seal of the corporation and shall perform such other duties as may be prescribed from time to time by the board of directors. Section 8. Salaries. The salaries of the officers shall be fixed from time to time by the board of directors and no officer shall be prevented from receiving such salary because the officer is also a director of the corporation. ARTICLE IV-A NON-CORPORATE OFFICERS A. The Chairman of the Board of the corporation shall have the power, in the exercise of his or her discretion, to appoint persons to hold positions and titles such as vice president, treasurer, assistant vice president, assistant secretary, president of a division, or similar titles as the business of the corporation may require, subject to such limits in appointment power as the board of directors may determine. Each such appointee shall have such title, shall serve in such capacity, and shall have such authority and perform such duties as the Chairman of the Board of the corporation shall determine; provided that no such appointee shall have executive powers, be in charge of a principal business unit, division or function or perform similar policy making functions. The board of directors shall be advised of any such appointment at a meeting of the board of directors, and the appointment shall be noted in the minutes of the meeting. The minutes shall state that such persons are non-corporate officers appointed pursuant to this Article IV-A of these bylaws. B. Any such appointee, absent specific election by the board of directors as an elected corporate officer (i) shall not be considered an officer elected by the board of directors pursuant to Article IV of these bylaws, (ii) shall not be considered an 'officer' of the corporation for the purposes of Rule 3b-2 promulgated under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (collectively, the "Act"), or an 'executive officer' of the corporation for the purposes of Rule 3b-7 promulgated under the Act, and similarly shall not be considered an 'officer' of the corporation for the purposes of Section 16 of the Act, or an 'executive officer' of the corporation for the purposes of Section 14 of the Act, and (iii) shall be empowered to represent himself or herself to third parties as an appointed vice president, etc., only, and shall be empowered to execute documents, bind the 11 corporation, or otherwise act on behalf of the corporation only as authorized by the Chairman of the Board or the President of the corporation or by resolution of the board of directors. An elected corporate officer of the corporation may also be appointed to a position pursuant to this Article IV-A. C. A person appointed to a position pursuant to this Article IV-A may be removed at any time by the Chairman of the Board or by the board of directors of the corporation. ARTICLE V INDEMNITY OF DIRECTORS AND OFFICERS A. The corporation shall indemnify to the fullest extent then permitted by law any person who is made, or threatened to be made, a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, investigative or otherwise (including an action, suit or proceeding by or in the right of the corporation) by reason of the fact that the person is or was a director or officer of the corporation or is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise against all expenses (including attorneys' fees), judgments, amounts paid in settlement and fines actually and reasonably incurred in connection therewith. B. Expenses incurred in connection with an action, suit or proceeding may be paid or reimbursed by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay such amounts if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation. C. The indemnification provided hereby shall not be deemed exclusive of any other rights to which those indemnified may be entitled under the Restated Articles of Incorporation, any statute, agreement, or vote of shareholders or directors or otherwise, both as to action in any official capacity and as to action in another capacity while holding an office, and shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such person. D. The corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or fiduciary with respect to any employee benefit plans of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent, or as a fiduciary of an employee benefit plan, of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against and incurred by the person in any such capacity, or arising out of the person's status as such, 12 whether or not the corporation would have the power to indemnify the person against such liability under the provisions of the Restated Articles of Incorporation or the Oregon Business Corporation Act. E. Any person other than a director or officer who is or was an employee or agent of the corporation, or fiduciary within the meaning of the Employee Retirement Income Security Act of 1974 with respect to any employee benefit plans of the corporation, or is or was serving at the request of the corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise may be indemnified to such extent as the board of directors in its discretion at any time or from time to time may authorize. ARTICLE VI CONTRACTS, LOANS, CHECKS AND DEPOSITS Section 1. Contracts. The board of directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances. Section 2. Loans. No loans shall be contracted on behalf of the corporation and no evidence of indebtedness shall be issued in its name unless authorized by a resolution of the board of directors. Such authority may be general or confined to specific instances. Section 3. Checks, Draft, etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation, shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall from time to time be determined by or pursuant to resolution of the board of directors. Section 4. Deposits. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositories as the board of directors may select. ARTICLE VII CERTIFICATES FOR SHARES AND THEIR TRANSFER Section 1. Certificates for Shares. Certificates representing shares of the corporation shall be in such form as shall be determined by the board of directors. 13 Such certificates shall be signed by the Chairman of the Board or a Vice President and by the Secretary or an Assistant Secretary and may be sealed with the seal of the corporation or a facsimile thereof. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the share transfer records of the corporation. All certificates surrendered to the corporation for transfer shall be cancelled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and cancelled, except that in case of a lost, destroyed or mutilated certificate a new one may be issued therefore upon such terms and indemnity to the corporation as the board of directors may prescribe. Section 2. Transfer of Shares. Transfer of shares of the corporation shall be made only on the share transfer records of the corporation by the holder of record thereof or by his legal representative, who shall furnish proper evidence of authority to transfer, or by his attorney thereunto authorized by power of attorney duly executed and filed with the secretary of the corporation. The person in whose name shares stand on the books of the corporation shall be deemed by the corporation to be the owner thereof for all purposes. Section 3. Transfer Agent and Registrar. The board of directors may from time to time appoint one or more transfer agents and one or more registrars for the shares of the corporation, with such powers and duties as the board of directors shall determine by resolution. The signatures of the president or vice president and the secretary or assistant secretary upon a certificate may be facsimiles if the certificate is countersigned by a transfer agent or registered by a registrar other than the corporation itself or an employee of the corporation. Section 4. Officer Ceasing to Act. In case any officer who has signed or whose facsimile signature has been placed upon a stock certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the date of its issuance. Section 5. Fractional Shares. The corporation shall not issue certificates for fractional shares. ARTICLE VIII FISCAL YEAR The fiscal year of the corporation shall end on the last Saturday in May of each year. 14 ARTICLE IX DIVIDENDS The board of directors may from time to time declare, and the corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law. ARTICLE X SEAL The seal of the corporation shall be in the form of a circle containing therein "TEKTRONIX, INC. CORPORATE SEAL OREGON." ARTICLE XI AMENDMENTS These bylaws may be altered, amended or repealed and new bylaws may be adopted by the board of directors at any regular or special meeting. I HEREBY CERTIFY that the foregoing are the bylaws of TEKTRONIX, INC. adopted at a meeting of the board of directors of the company held on September 9, 1963, and as amended with regard to Article IV at a meeting of the board of directors of the company held on December 22, 1966, and as amended with regard to Article IV at a meeting of the board of directors of the company held on January 30, 1969, and as amended with regard to Article II at a meeting of the board of directors of the company held on July 17, 1969, and as amended with regard to Article IV at a meeting of the board of directors of the company held on September 24, 1970, and as amended with regard to Article IV at a meeting of the board of directors of the company held on September 30, 1971, and as amended with regard to Article V at a meeting of the board of directors of the company held on September 27, 1973, and as amended with regard to Article IV at a meeting of the board of directors of the company held on September 26, 1974, and as amended with regard to Article I at a meeting of the board of directors of the company held on April 28, 1977, and as amended with regard to Article I at a meeting of the board of directors of the company held on May 20, 1977, and as amended with regard to Article IV at a meeting of the board of directors of the company held on January 18, 1979, and as amended with regard to Article II at a meeting of the board of directors of the company held on February 28, 1980, and as amended with regard to Article II at a meeting of the board of directors of the company held on May 22, 1980, and as amended with regard to Articles I, II and III at a meeting of the board of directors of the company held on June 25, 1980, and as amended with regard to 16 Article II at a meeting of the board of directors of the company held on September 9, 1980, with the amendment to be effective September 27, 1980, and as amended with regard to Article I at a meeting of the board of directors of the company held on July 23, 1981, and approved by the shareholders at a meeting held on September 26, 1981, and as amended with regard to Article VI at a meeting of the board of directors of the company held on May 3, 1983, and as amended with regard to Article II at a meeting of the board of directors of the company held on June 30, 1983, and as amended with regard to Articles III and IV at a meeting of the board of directors of the company held on March 1, 1984, and as amended with regard to Article I at a meeting of the board of directors of the company held on December 6, 1984, and as amended with regard to Article II at a meeting of the board of directors of the company held on August 13, 1985, and as amended with regard to Article II at a meeting of the board of directors of the company held on October 24, 1985, and as amended with regard to Article II at a meeting of the board of directors of the company held on July 17, 1986, and as amended with regard to Article V at a meeting of the board of directors of the company held on September 27, 1986, and as amended with regard to Article II at a meeting of the board of directors of the company held on June 23, 1988, and as amended with regard to Article II at a meeting of the board of directors of the company held on July 21, 1988, and as amended with regard to Article II at a meeting of the board of directors of the company held on July 20, 1989, and as amended with regard to Articles I, II and IV at a meeting of the board of directors of the company held on November 29, 1989, and as amended with regard to Articles II and IV at a meeting of the board of directors of the company held on April 25, 1990, and as amended with regard to Article I at a meeting of the board of directors of the company held on June 20, 1990, and as amended with regard to Article II at a meeting of the board of directors of the company held on July 19, 1990, and as amended with regard to Articles II and IV at a meeting of the board of directors of the company held on October 24, 1990, and as amended with regard to Article II at a meeting of the board of directors of the company held on March 20, 1991, and as amended with regard to Article I at a meeting of the board of directors of the company held on July 17, 1991, and as amended with regard to Articles I, II, IV, and VII at a meeting of the board of directors of the company held on September 26, 1991, and as amended with regard to Article II at a meeting of the board of directors of the company held on January 29, 1992, and as amended with regard to Article II by action of the board of directors of the company without a meeting, effective July 10, 1992, and as amended with regard to Article IV at a meeting of the board of directors of the company held on September 23, 1992, and as amended with regard to Article II by action of the board of directors of the company without a meeting, effective September 24, 1992, and as amended with regard to Article I at a meeting of the board of directors of the company held on October 18, 1992, and as amended with regard to Article II at a meeting of the board of directors of the company held on December 2, 1992, and as amended with regard to Article IV-A at a meeting of the board of directors of the company held on March 31, 1993, and as amended with regard to Articles I and II at a meeting of the board of directors of the company held on June 23, 1994, and as amended with regard to Article II at a meeting of the board of directors of the company held on December 15, 1994, and as amended with regard to Article II by action of the 16 board of directors of the company without a meeting, effective March 1, 1995, and as amended with regard to Article I at a meeting of the board of directors of the company held on September 20, 1995, and as amended with regard to Article II at a meeting of the board of directors of the company held on January 17, 1996, and as amended with regard to Articles II and IV at a meeting of the board of directors of the company held on June 19, 1996. JOHN P. KARALIS _______________ John P. Karalis Secretary EX-10.5 3 TEKTRONIX, INC. RETIREMENT EQUALIZATION PLAN (January 1, 1996 Restatement) Tektronix, Inc. an Oregon corporation PO Box 500 Beaverton, Oregon 97077 Tektronix Tektronix provides pension benefits for its employees through the Tektronix Pension Plan (the "Basic Plan"). Benefits under the Basic Plan are limited by maximum benefit rules under applicable law and regulations. Tektronix wishes to supplement Basic Plan benefits for a select group of management and highly compensated employees to make up for benefit amounts that are not payable under the Basic Plan because of benefit limits imposed by law. This Plan is intended to constitute an "excess benefit plan" (as defined in section 3(36) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")). In order to accomplish the above purposes, Tektronix hereby amends and restates the Tektronix, Inc. Retirement Equalization Plan (the "Plan"), as follows: 1. Administration. This Plan shall be administered by the Administrative Committee under the Basic Plan (the "Committee"). The Committee may delegate any or all of its duties with respect to the Plan (other than its duty to review denied claims or requests under Section 4.4) and/or the administration of benefit payments to Tektronix (acting through its Human Resources Department) or a third party acting as agent of the Committee. The Committee shall interpret the Plan and make determinations about participation and benefits. Any decision by the Committee within its authority shall be final and binding on all parties. 2. Benefits. 2.1 Eligibility. Any participant in this Plan, or (in the event of death) his or her spouse, beneficiary or contingent annuitant under the Basic Plan, who becomes entitled to a benefit under the Basic Plan shall be eligible for a benefit under Section 2.3 only if his or her Basic Plan benefit is limited by Basic Plan provisions required by sections 401(a)(17) or 415 of the Internal Revenue Code (the "Code"). 2.2 Participation. An employee shall be a participant in this Plan if he or she is designated as being eligible for a benefit under Section 2.3 by (i) the Board of Directors of Tektronix (the "Board") or the Organization and Compensation Committee (the "O&C Committee") of the Board, in the case of an elected officer of Tektronix; or (ii) the Chief Executive Officer, in the case of any other management or highly compensated employee (including an appointed officer) of Tektronix; provided, however, that no employee shall be considered a participant in this Plan unless and until he or she has received written notice of his or her designation. Notwithstanding the foregoing, no employee shall be designated as a participant in this Plan unless his or her "annual base pay rate" (as defined in the Basic Plan) exceeds $150,000 (as adjusted pursuant to section 401(a)(17) of the Code) (the "Minimum Rate"). Once an employee has become a participant pursuant to this Section 2.2, he or she will remain a participant throughout the remainder of his or her employment with Tektronix; provided, however, that no participant shall accrue any additional benefit under this Plan during any calendar year for which his or her total compensation is less than the Minimum Rate. 2.3 Amount and Payment. (a) The benefit payable under this Plan shall be the difference between the benefit actually paid under the Basic Plan and the amount that would have been paid in the absence of the limits imposed by sections 401(a)(17) and 415 of the Code. (b) Benefit payments under this Plan shall be paid at the time and in the form that benefits are paid to the recipient under the Basic Plan. (c) In no event shall any employee who was a participant in this Plan as of the date on which the 1996 Restatement was executed receive a benefit under this Plan which is less than the amount he or she would have received under Section 3.2(b) if the Plan had been terminated effective as of that date. 3. Amendment; Termination 3.1 Amendment. Tektronix may amend this Plan at any time so long as the rights preserved on termination under Section 3.2 are not reduced. The power to amend this Plan may be exercised by either the Board or the O&C Committee. 3.2 Termination. Tektronix may terminate the Plan at any time, as follows: (a) Termination shall be effected by notice to the Committee, which shall provide written notice of the termination to active, terminated or retired participants, and the spouses, beneficiaries or contingent annuitants of deceased participants. The termination date shall not be earlier than the first day of the month in which such notice is given. (b) After the effective date of termination of this Plan, no employee shall be eligible for any benefit under Section 2 except to the extent that such benefit is then accrued. A participant's accrued benefit shall be calculated based on the portion of his or her normal retirement benefit under this Plan, as projected to his or her normal retirement date in accordance with the procedures and actuarial assumptions in effect under the Basic Plan as of the effective date of termination, that had accrued as of that date. (c) The power to terminate this Plan may be exercised by either the Board or the O&C Committee. 4. Claims Procedure 4.1 Initial Claim. Any person claiming a benefit or requesting an interpretation, ruling or information under this Plan shall present the request in writing to the Committee Secretary who shall respond in writing as soon as is practicable. 4.2 Response to Initial Claim. If the claim or request is denied, the written notice of denial shall state the following: (a) The reasons for denial, with specific reference to the terms of the Plan provisions on which this denial is based. (b) A description of any additional material or information required and an explanation of why it is necessary. (c) An explanation of the Plan's claims review procedures. 4.3 Initial Notice of Denial. The initial notice of denial shall normally be given within 90 days of the review of the claim. If special circumstances require an extension of time, the claimant shall be so notified and the time limit shall be 180 days. 4.4 Review of Denied Claims. Any person whose claim or request is denied or who has not received a response within 30 days may request review by notice in writing to the Committee Secretary. The original decision will be reviewed by the Committee, which may, but shall not be required to, have the claimant appear before them. On review, whether or not there is a hearing, the claimant may have representation, examine pertinent documents and submit issues and comments in writing. 4.5 Decision on Review. The decision on review shall normally be made within 60 days. If an extension of time is required for a hearing or other special circumstances, the claimant shall be so notified and the time limit shall be 120 days. The decision shall be in writing and shall state the reasons and the relevant plan provisions. All decisions on review shall be final and bind all parties concerned. 5. General Provisions 5.1 Nonassignability. No interest under this Plan of any participant, or (in the event of death) of his or her spouse, beneficiary or contingent annuitant under the Basic Plan, may be assigned, transferred, seized by legal process or subjected to the claims of creditors in any way. 5.2 Notices. Any notice under this Plan shall be in writing and shall be effective when actually delivered or, if mailed, when deposited postpaid as first class mail. Mail shall be directed to Tektronix at the address stated in this Plan, to the participant at the address shown on the Tektronix employment records, or to such other address as a party shall specify by notice to the other parties or as the Committee may determine to be appropriate. Notices to the Committee shall be sent to Tektronix's address. 5.3 Not Contract of Employment. Nothing in this Plan shall give any employee the right to continue employment. The Plan shall not prevent discharge of any employee at any time for any reason. 5.4 Funding Status. The benefits under the Plan shall not be "funded" (within the meaning of section 401(a)(1) of ERISA), but shall constitute liabilities of Tektronix, and/or of any grantor trust maintained in conjunction with this Plan, that are payable when due. 5.5 Applicable Law. This Plan shall be construed according to Oregon law, except to the extent preempted by ERISA or other applicable federal law. 6. Effective Date This amendment and restatement of the Plan shall be effective as of January 1, 1996, except as specified in Section 2.3(c). 7. Execution In Witness Whereof, Tektronix, by its duly authorized officer, has executed this 1996 Restatement of the Plan on the date set forth below. TEKTRONIX, INC. By JEROME J. MEYER ___________________ Jerome J. Meyer Title Chairman & CEO Date April 15, 1996 EX-10.16 4 January 20, 1995 Ms. Lucie J. Fjeldstad 116 South Lake Drive Stamford, Connecticut 06901 Dear Lucie: It is with great pleasure that I write to confirm the terms of your employment by Tektronix, Inc., in the position of President, Video Systems of Tektronix, Inc. 1. Start Date. Position. Your employment with Tektronix started effective January 16, 1995. Subject to the usual and customary restrictions relating to the election, tenure, removal and replacement of corporate officers, you have been elected and will serve as a vice president of Tektronix with the title President, Video Systems, reporting to the Chief Executive Officer of Tektronix, Jerry Meyer. You agree to perform such acts and duties as the Chief Executive Officer, or his designee, shall reasonably direct; to comply with all applicable policies and procedures of Tektronix and its affiliates; and to devote your working time, energy and skills to your assignment and to the performance of your duties to Tektronix. 2. Compensation. You will be paid a base salary, payable biweekly, at an annual rate of $350,000. You will participate in the Tektronix Results Sharing program, which provides employees with a cash payout when specific financial targets are achieved, as well as in the general Tektronix' employee benefits programs, including group insurance, 401(k) plan, and time off program. You will accrue vacation time each regular accrual period under the time off program at an annual rate of 4 weeks (20 days) per year. You will be paid a one-time hire-on payment of $250,000 within thirty (30) days after your start date. This hire-on payment will be refundable in full if you terminate your employment with Tektronix prior to the second anniversary of your start date. You will also be a participant in Tektronix' Annual Performance Improvement Plan (APIP). The APIP plan provides cash payment opportunities contingent on attainment of established performance targets. To the full extent permitted by the plan, your performance targets will be set relative to performance of the video systems unit (or other unit for which you may have responsibility). Your targeted amount for the Tektronix 1995 fiscal year (approximately June 1994 through May 1995, FY95) will be 50% of your base pay. Your APIP payment for FY95 will be prorated, based on the portion of FY95 you are employed by Tektronix, but will not be less than 50% of your annual base salary rate prorated based on the portion of FY95 that you are employed by Tektronix. Your APIP award for the first half of the Tektronix 1996 fiscal year (approximately June 1995 through November 1995) will be specially, separately computed (on a prorated basis at the end of the fiscal Ms. Lucie J. Fjeldstad -2- January 20, 1995 year) and will not be less than 50% of one-half of your base annual pay rate. Except as set out above, all awards and payments under the APIP plan (including the total award for the overall Tektronix 1996 fiscal year) will be made at the times and on the conditions set out in the plan, and your future APIP participation and targeted amounts will be in accordance with the terms of the APIP plan. In addition, if you voluntarily terminate your employment or if your employment is terminated by Tektronix for cause or by reason of death or disability at any time prior to the date award payments are made by Tektronix, your participation will terminate and all rights to any award (including any minimum awards described above) will cease. You will also be eligible to participate in the Tektronix Executive Financial Counseling and Executive Physical programs and, commencing with Tektronix 1996 fiscal year, you will participate in the Executive Long-Term Incentive Compensation Program (LTIP) in accordance with its terms. Your first LTIP award grant will occur in June 1995 and will include performance shares and stock options in accordance with the LTIP plan. We will propose to our Board that your LTIP performance shares will be based on shareholder return and economic valued added (EVA) computed separately for your business unit. We will also provide you with our standard officers and directors indemnity agreement. Participation in all benefits and programs (including APIP and LTIP) are in accordance with the terms of those benefits and programs as in effect from time to time and subject to any changes generally applicable to other similarly situated participating Tektronix employees. All amounts payable to you under this Agreement are subject to applicable withholdings. 3. Stock Option and Stock Bonus Awards. Stock Option. You have been granted a non-qualified stock option to purchase 75,000 shares of Tektronix common stock pursuant to the Tektronix Stock Incentive Plan. Subject to the provisions of the plan, including the requirement of your continued employment, the option will continue in effect for ten years and seven days, with the options vesting as follows: options to purchase 25,000 shares on each of the first, second and third anniversaries of the date of grant. The option price (which will be the closing price at close of the market on the last trading day prior to your start date) and other terms have been established by the Board of Directors in accordance with the plan. A separate stock option agreement, substantially in the standard form used under the plan, will be prepared reflecting your option grant. Stock Bonus. You have been granted a stock bonus award of 28,000 shares of Tektronix common stock pursuant to the Tektronix Stock Incentive Plan. Eight thousand (8,000) of the shares will vest on the first anniversary of the date of the award. Ten thousand (10,000) shares will vest on the second anniversary of the date of the award provided that your sales and profit targets for the video systems unit have been achieved as set for that year. The final ten thousand (10,000) shares will vest on the third anniversary of the date of the award provided that your sales and profit targets for the video systems unit have been achieved as set for that year. Vesting during the second and third periods will be on a total basis with no proration for partial achievement. Shares which do not vest during the second or third vesting period due to failure to meet your sales and profit targets will be forfeited. Unvested bonus shares will also be subject to forfeiture to Tektronix if your employment terminates for any reason during a forfeiture period of three years following the date of the award. Ms. Lucie J. Fjeldstad - 3 - January 20, 1995 Dividends will accrue and be paid to you, with interest, as shares vest. You will have voting rights for all unforfeited stock, vested and unvested, during the three-year period. This award is also subject to certain restrictions stated in the plan and outlined in a separate stock bonus agreement, substantially in the standard form used under the plan, to be prepared reflecting your stock bonus grant. The effective date of the stock option and stock bonus awards will be your start date. 4. Severance Arrangements. As we have discussed, Tektronix is an "at will" employer. Basically, this means that your position is not intended to be for any fixed term and either you or Tektronix can terminate it at any time and for any reason. You and Tektronix will execute an Executive Severance Agreement and a Change in Control Agreement in the forms attached which provide for certain benefits upon termination by Tektronix as described in those agreements. 5. Relocation. Tektronix will reimburse you for reasonable travel costs, lodging, and meals incurred in your personal move to Portland, Oregon, temporary housing in the Portland metropolitan area for a period of up to 90 days after your start date, and for reasonable costs of moving (and storing, if needed) your household goods to Portland. All relocation benefits will be provided in accordance with the Tektronix Relocation Policy. As an additional relocation benefit, if you sell your home located at the above address in Stamford, Connecticut, in a bona fide third party transaction which closes within 6 months after your start date, Tektronix will pay you the amount the gross sales price (including any consideration to be received by you in any form) is below $1 million; provided that Tektronix' payment obligation shall not exceed $150,000 in total. Relocation assistance is provided for your benefit in connection with your employment at Tektronix. You have signed and returned a promissory note in the form enclosed related to repayment of relocation benefits (including the sales price protection regarding your Connecticut home) in the event of your voluntary termination from Tektronix within 24 months after the start date of your employment with Tektronix. Also note that you may be subject to some tax liability as a result of reimbursements made to you under this relocation assistance program. Current tax regulations require individuals to report reimbursements as gross income on their federal tax return. A tax deduction may be allowed for some of the reimbursed expenses. 6. Enclosures. You have signed and delivered the following forms to Tektronix prior to your start date: Tektronix Emplovment Agreement. This agreement relates to the nondisclosure of confidential information and ownership of inventions. Tektronix requires that all employees sign this agreement. Emplovment Eligibilitv Verification Form (Form I-9). Ms. Lucie J. Fjeldstad - 4 - January 20, 1995 7. Entire Agreement: Modification. This letter contains the entire agreement between you and Tektronix concerning your employment and supersedes any other discussions, agreements, representations or warranties of any kind, including the letter agreement between us dated January 6, 1995. Any modification of this agreement will only be effective if done in writing and signed by you and Tektronix. If for any reason any provision of this agreement shall be held invalid, that invalidity will not affect the remainder of this agreement. 8. Governing Law: Arbitration. This agreement is governed by the laws of Oregon (excluding conflicts of laws). You and Tektronix agree that any dispute or controversy concerning this agreement will be settled exclusively by arbitration in Portland, Oregon, in accordance with the Commercial Arbitration Rules of the American Arbitration Association or such comparable rules as you and Tektronix may agree upon. The prevailing party, as determined by the arbitrator, will be entitled to its reasonable attorneys' fees and costs. Any judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. 9. No Conflicts. You represent that you have no obligations which conflict with your full performance of your duties to Tektronix. Although you have provided us with clarification of your obligations to IBM, including regarding the ownership of any intellectual property or inventions which may be created by you, we continue to be entitled to rely on your representations that no conflicts exist. Please acknowledge your agreement with the terms of your employment by signing the original of this letter in the space provided and return it to my attention. Congratulations and we look forward to working with you at Tektronix. Sincerely yours, /s/ TIMOTHY E. THORSTEINSON ____________________________ Timothy E. Thorsteinson Vice President Total Quality/Corporate Human Resources enclosures I agree that the terms of my employment by Tektronix are as outlined in this letter. /s/ LUCIE J. FJELDSTAD 2-6-95 ______________________ _______ Lucie J. Fjeldstad Date EX-13 5 MANAGEMENT REVIEW RESULTS OF OPERATIONS OVERVIEW Tektronix recorded net earnings of $99.6 million, or $3.00 per share, in its fiscal year ended May 25, 1996, an increase of 22% over fiscal 1995 earnings of $81.6 million, or $2.50 per share. Net earnings in 1995 were 33% higher than 1994 earnings of $61.5 million, or $1.90 per share. All years have been restated to account for the acquisitions of Microwave Logic, Inc. in 1995, and of Lightworks Editing Systems Limited and Lightworks Editing Systems, Inc. in 1996, under the pooling of interests method of accounting. NET SALES AND PRODUCT ORDERS Net sales and product orders for 1996 were the highest in the Company's history. Net sales in 1996 were $1.769 billion, up 18% from $1.498 billion in 1995. Sales to customers in the United States of $890.9 million were 17% above the level for the prior year, and represented 50% of total sales. The improved domestic sales level is primarily the result of the acceptance of new products. International sales rose 21% from $724.7 million to $877.9 million, with improvement in all geographic regions, particularly in the Pacific, where the Company made significant new investments during the year, and in Japan. Product orders for 1996 were $1.658 billion, an increase of 17% over 1995. Net sales in 1995 were 12% higher than 1994. U.S. sales of $764.5 million in 1995 were 14% above the level of sales from continuing businesses in the prior year. International sales rose 26%, from $574.6 million in 1994 to $724.7 million in 1995, with improvement in all geographic regions. Net sales are expected to grow about 15% in 1997, with more of the growth expected in the second half of the fiscal year with the introduction of several new products. The Company's net sales are divided into three product classes. Net sales for the last three years in each product class are as follows:
(in thousands) 1996 1995 1994 Measurement Business $ 812,250 $ 731,061 $ 671,042 Color Printing and Imaging 561,642 454,961 313,475 Video and Networking 394,966 303,213 259,347 Other -- 8,727 98,632
Measurement Business sales accounted for 46% of total sales, and grew 11% from the prior year, due to the acceptance of new products, particularly in oscilloscopes, including the new digital oscilloscopes introduced in 1995, signal source products, handheld electronic tools and telecommunications products. Sales growth was constrained somewhat by component shortages in the second half of the year. Product orders increased 13% to $754.0 million. With the increase in order rates and continued improvement in parts shortages, the Company expects order and revenue growth in the 5% to 10% range for 1997. Measurement Business sales in 1995 were 9% higher than 1994 due to well-received new product introductions in several product lines. Color Printing and Imaging sales increased 23% from 1995, based on the continued office market acceptance of the Phaser 340 printer and the introduction of the Phaser 550 color laser printer during the year. Color Printing and Imaging sales made up 32% of total sales. Product orders rose 22% to $531.1 million. The Company expects overall Color Printing and Imaging sales and order growth in the range of 20% for 1997, with the growth rate lower in the first half of the year, then increasing due to further penetration of the office market and a strengthening position in specialty graphic arts printers through new product introductions. Color Printing and Imaging sales in 1995 increased 45% over 1994 due to market acceptance of new products and increased market penetration in Europe. Video and Networking sales increased 30% from 1995 due to strength in the Profile video disk recorder, Netstations and Grass Valley TV production equipment. Product orders, at $372.4 million, increased 20% from the prior year. Order growth in the latter part of the year was affected by the discontinuance of certain product lines, such as Video Desktop and Sabre editing systems, as a part of the integration and transformation of video operations. The Company expects sales and order growth in the range of 15% to 20% for 1997, with more of the growth expected to come in the second half of the fiscal year, due to anticipated strong demand in professional video markets and important new video product introductions starting late in the first half of the year. Video and Networking sales rose 17% in 1995 from 1994 due to the introduction of new products, partially offset by a decline in service revenue. 17 OPERATING COST AND EXPENSES Manufacturing cost of sales increased as a percentage of net sales to 58.3% in 1996 from 54.7% in 1995. The increase in cost of sales as a percentage of net sales was due to the use of alternative distribution channels, the impact of increased systems integration sales from Video and Networking and changes in product mix. Cost of sales as a percentage of net sales increased to 54.7% in 1995 from 53.9% in 1994, caused primarily by increased sales through alternative distribution channels, the impacts of a stronger Japanese Yen on certain component costs and higher performance-based compensation. During 1997, the Company expects to maintain gross margins at approximately 1996 levels. Research and development (R&D) expenses declined slightly and represented 9.3% of sales compared with 11.1% in 1995 and 11.9% in 1994. The reduction in R&D spending in 1996 occurred as the Company concentrated on more focused projects and experienced delays in hiring for certain technical positions. Selling, general and administrative (SG&A) expenses were 24.6% of sales compared to 26.7% in 1995 and 27.6% in 1994. R&D and SG&A expenses declined as a percentage of sales primarily due to higher sales volume and effective cost controls, particularly in administrative functions. Over the course of 1997, the Company plans to increase spending on R&D towards 10% of sales, and to continue to reduce the percentage of sales spent on SG&A by maintaining effective expense controls. Equity in business ventures' earnings increased to $5.1 million from $4.3 million in 1995 primarily due to the Company's equity in the earnings of Merix Corporation and Maxtek Components Corporation. The 1994 loss relates primarily to the Company's interest in Sony/Tektronix Corporation, which showed about break-even results in 1995 and 1996. Operating income as a percentage of sales increased year over year, rising from 6.5% in 1994 to 7.7% in 1995 and 8.1% in 1996, as lower operating expenses as a percentage of sales more than offset declining gross margins. Operating margins are expected to improve further in 1997 due to the stabilization of gross margins, coupled with continued efficiencies in SG&A. The Video and Networking integration activities are expected to be substantially completed in the first quarter, with anticipated return to profitability by the end of the second quarter of 1997. Interest expense increased in 1996 over the level of the prior two years primarily because of higher borrowings to fund working capital needs. Other income was $12.9 million in 1996 compared with income of $4.7 million in 1995 and $9.1 million in 1994. The improvement primarily reflected higher gains on sales of stock in other companies. The Company continues to hold equity positions in some of these companies that it expects to liquidate over time. The Company recorded taxes on 1996 results at the annual effective rate of 30%, compared with 26% in the prior year. The Company expects the annual effective tax rate to increase to about 32% in 1997 primarily due to lower anticipated tax credits. Net earnings of $99.6 million for 1996 were 22% higher than the prior year due to the increase in sales and the improvement in operating margins, partly offset by the higher effective tax rate. The growth in sales in 1995 generated a 33% increase in net earnings over 1994. The Company expects net earnings to increase by 10% to 20% in 1997, despite the anticipated higher effective tax rate, with most of the growth expected to come in the second half of the fiscal year as the Company introduces several new products. [Bar chart depicting operating income as a percentage of net sales] 1992 4.1% 1993 -6.0% 1994 6.5% 1995 7.7% 1996 8.1% 18 FINANCIAL CONDITION The Company's financial condition is strong. Cash flows from operating activities and borrowing capacity from existing lines of credit are expected to be sufficient to meet current and anticipated future needs. At May 25, 1996, the Company maintained bank credit facilities totaling $311.9 million, of which $192.4 million was available out of unused facilities, which include $149.8 million in lines of credit and $69.3 million in revolving credit agreements from United States and foreign banks. Additional details, including maturity dates of agreements and certain financial covenants, are included under "Short-term and long-term debt" in the Notes to Consolidated Financial Statements. Current assets increased by $87.4 million due primarily to higher accounts receivable and inventories. Accounts receivable were up $61.6 million primarily because of higher sales in the fourth quarter of 1996 compared with the same quarter of 1995, with a higher proportion of this year's sales in the last month as parts availability improved. Inventories rose by $18.9 million in response to higher order rates and the buildup of certain components due to longer vendor lead times. Net property, plant and equipment increased by $54.5 million due to capital expenditures related to facilities consolidation and implementation of information systems. The Company believes a similar level of capital expenditures will continue into 1997. Property held for sale decreased by $17.0 million as several properties were sold. The Company plans additional disposals in 1997. Deferred tax assets declined $48.2 million due to several factors, including the current pension funding, discussed further in the following paragraph, the provision for deferred taxes on unrealized holding gains on equity investments and the reversal of other temporary differences between book and tax income. Other long- term assets rose by $33.4 million due primarily to the increase in market value of the Company's equity investments. Current liabilities decreased by $22.5 million primarily due to a reduction in short-term debt offset by an increase in accrued compensation. The Company has classified commercial paper borrowings of $50.0 milllion as long-term debt as it has the intent to refinance these borrowings as they mature, and the ability to do so under the revolving credit agreement that matures in July, 2000. Accrued compensation increased by $13.4 million because of the reclassification of long-term pension liabilities to current, partly offset by the payment of severance obligations at the beginning of the year. Long- term debt increased as a result of the Company's issuance of $50 million in notes due August 15, 2002, and the reclassification of commercial paper discussed above. Other long-term liabilities declined $35.4 million due to the reclassification of some long-term pension liabilities to current as the Company will make a contribution to its principal United States pension plan for the first time since 1986. Shareholders' equity increased by $71.1 million or 12% due to earnings net of dividends, the increased unrealized holding gains arising from the higher market value of the Company's equity investments and stock options exercised, partly offset by the repurchase of approximately 840,000 of the Company's common shares and reduced currency adjustments due to the appreciating United States dollar. [bar chart depicting capital expenditures in millions] 1992 66.0 1993 58.9 1994 71.9 1995 103.8 1996 106.7 [bar chart depicting facilities in use in millions of square feet] 1992 6.1 1993 5.6 1994 5.0 1995 4.3 1996 4.1 19 DERIVATIVES AND FOREIGN EXCHANGE The Company has exposure to interest rate risk, primarily from its use of short-term and long-term borrowings to finance operations, and to investment risk, primarily from its equity investment portfolio. In 1996, the Company did not enter into any significant derivatives to hedge against these interest rate or investment risks. The Company is also exposed to exchange rate risk on transactions and commitments denominated in foreign currencies and uses forward exchange contracts and swaps to offset this risk. Changes in foreign exchange rates are not expected to have a significant effect on the Company's financial position or results of operations. The Company's policy is to only enter into derivative transactions when it has an identifiable exposure to risk, and to only enter into such transactions with creditworthy financial institutions. ACCOUNTING CHANGES In March 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 121, 'Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of'. SFAS No. 123, 'Accounting for Stock-Based Compensation', was issued in October, 1995. The impacts of the adoption of these pronouncements in 1997 are discussed under "Accounting policies" in the Notes to Consolidated Financial Statements. FORWARD LOOKING STATEMENTS Information included in the Chairman's Letter to Shareholders, this Management Review and elsewhere in this annual report relating to expectations as to revenues, orders, earnings, SG&A, R&D and other expense levels, gross and operating margins and tax rates, as well as anticipated new product introductions, constitute forward looking statements that involve a number of risks and uncertainties. As with many high technology companies, factors that could cause the Company's actual results or activities to differ materially from these forward looking statements include but are not limited to: general economic conditions, and business conditions in the electronics industry, including the effect on purchases by the Company's customers; 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 by the Company 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; inventory risks due to changes in market demand or the Company's business strategies; changes in effective tax rates; customer demand; currency fluctuations; the fact that a substantial portion of the Company's sales are generated from orders received during the quarter, making prediction of quarterly revenues and earnings difficult; and other risk factors listed from time-to-time in the Company's reports filed with the Securities and Exchange Commission and press releases. Additional risk factors specific to the Company's current plans and expectations that could cause the Company's actual results or activities to differ materially from those stated include: the significant organizational and operational challenges that could adversely affect the Company's ability to integrate and transform its Video and Networking business successfully in the planned time frame; the timely introduction of new products scheduled during the Company's fiscal year which could be affected by engineering or other development program slippages, the ability to ramp up production or to develop effective sales channels, and demand for and acceptance of those and other Company products by the Company's customers which could be affected by the current uncertainties in economic conditions around the world and by activities of the Company's competitors. 20 MANAGEMENT'S LETTER The consolidated financial statements of Tektronix, Inc. and subsidiaries have been prepared by management and have been audited by Tektronix' independent auditors, Deloitte & Touche LLP. Management is responsible for the consolidated financial statements, which have been prepared in conformity with generally accepted accounting principles and include amounts based on management's judgment. Management is also responsible for maintaining internal control, including systems designed to provide reasonable assurance that assets are safeguarded and that transactions are executed and recorded in accordance with established policies and procedures. Tektronix' controls and systems were developed by Tektronix management and have the full support and endorsement of the Board of Directors. Compliance is mandatory. The Board of Directors is responsible for the Company's financial and accounting policies, practices and reports. Its Audit Committee, composed entirely of outside directors, meets regularly with the independent auditors, representatives of management, and the internal auditors to review accounting, reporting, auditing and internal control matters. Both the independent auditors and the internal auditors have free access to the Audit Committee, with and without management representatives in attendance. PAUL E. BRAGDON PAUL E. BRAGDON Chairman of Tektronix Audit Committee CARL W. NEUN CARL W. NEUN Senior Vice President and Chief Financial Officer of Tektronix, Inc. INDEPENDENT AUDITORS' REPORT To the Directors and Shareholders of Tektronix, Inc.: We have audited the accompanying consolidated balance sheets of Tektronix, Inc. and subsidiaries as of May 25, 1996 and May 27, 1995, and the related consolidated statements of operations, shareholders' equity, and cash flows for the years ended May 25, 1996, May 27, 1995, and May 28, 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. The consolidated financial statements give retroactive effect to the merger of Tektronix, Inc., and Lightworks Editing Systems Limited and Lightworks Editing System, Inc., which has been accounted for as a pooling of interests as described in the Notes to Consolidated Financial Statements. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Tektronix, Inc. and subsidiaries at May 25, 1996 and May 27, 1995, and the results of their operations and their cash flows for the years ended May 25, 1996, May 27, 1995, and May 28, 1994, in conformity with generally accepted accounting principles. DELOITTE & TOUCHE LLP Portland, Oregon June 19, 1996 21 CONSOLIDATED STATEMENTS OF OPERATIONS in thousands, except per share amounts
FOR THE YEAR ENDED MAY 25, 1996 MAY 27, 1995 MAY 28, 1994 Net sales $ 1,768,858 $ 1,497,962 $ 1,342,496 Cost of sales 1,030,815 819,871 723,437 --------------------------------------------- Gross profit 738,043 678,091 619,059 Research and development expenses 164,292 166,171 159,377 Selling, general and administrative expenses 435,465 400,567 370,325 Equity in business ventures' earnings (loss) 5,081 4,268 (1,601) --------------------------------------------- Operating income 143,367 115,621 87,756 Interest expense 13,985 10,203 10,139 Other income - net 12,884 4,744 9,080 --------------------------------------------- Earnings before taxes 142,266 110,162 86,697 Income taxes 42,680 28,578 25,204 --------------------------------------------- Net earnings $ 99,586 $ 81,584 $ 61,493 ============================================= Earnings per share $ 3.00 $ 2.50 $ 1.90 Dividends per share 0.60 0.60 0.60 Average shares outstanding 33,197 32,578 32,333
The accompanying notes are an integral part of these consolidated financial statements. 22 CONSOLIDATED BALANCE SHEETS in thousands
MAY 25, 1996 MAY 27, 1995 ASSETS Current assets: Cash and cash equivalents $ 36,644 $ 31,761 Accounts receivable - net 375,309 313,758 Inventories 264,624 245,766 Other current assets 77,003 74,850 ---------------------------- Total current assets 753,580 666,135 Property, plant and equipment: Land 6,721 7,234 Buildings 194,644 170,583 Machinery and equipment 475,178 446,501 ---------------------------- 676,543 624,318 Accumulated depreciation and amortization (368,980) (371,238) ---------------------------- Property, plant and equipment - net 307,563 253,080 Property held for sale 18,903 35,912 Deferred tax assets 28,247 76,418 Other long-term assets 220,203 186,757 ---------------------------- Total assets $ 1,328,496 $ 1,218,302 ============================ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term debt $ 44,645 $ 87,623 Accounts payable 178,353 173,537 Accrued compensation 120,044 106,660 Deferred revenue 22,295 19,988 ---------------------------- Total current liabilities 365,337 387,808 Long-term debt 201,955 104,984 Other long-term liabilities 85,882 121,295 Commitments and contingencies -- -- Shareholders' equity: Preferred stock, no par value (authorized 1,000 shares; none issued) -- -- Common stock, no par value (authorized 80,000 shares; issued and outstanding 32,687 in 1996, and 33,083 in 1995) 204,370 216,251 Retained earnings 378,606 298,964 Currency adjustment 52,069 76,948 Unrealized holding gains - net 40,277 12,052 ---------------------------- Total shareholders' equity 675,322 604,215 ---------------------------- Total liabilities and shareholders' equity $ 1,328,496 $ 1,218,302 ============================
The accompanying notes are an integral part of these consolidated financial statements. 23 CONSOLIDATED STATEMENTS OF CASH FLOWS in thousands
FOR THE YEAR ENDED MAY 26, 1996 MAY 27, 1995 MAY 28, 1994 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 99,586 $ 81,584 $ 61,493 Adjustments to reconcile net earnings to cash from operating activities: Depreciation expense 47,138 40,857 55,298 Deferred taxes 26,041 (966) 9,843 Gains on sale of assets and investments (18,353) (9,923) (14,402) Accounts receivable (66,647) (29,991) (25,746) Inventories (19,681) (64,923) (2,141) Accounts payable 1,037 (5,059) 13,240 Accrued compensation 14,026 24,602 (25,750) Other liabilities (33,622) (22,866) (17,636) Other long-term assets (1,424) (48,102) (11,005) Other - net 1,105 (23,245) 8,595 --------------------------------------------- Net cash provided (used) by operating activities 49,206 (58,032) 51,789 --------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property, plant and equipment (106,709) (103,818) (71,933) Proceeds from sale of assets 19,776 43,482 51,978 Proceeds from sale of investments 23,263 23,920 26,285 --------------------------------------------- Net cash provided (used) by investing activities (63,670) (36,416) 6,330 --------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net change in short-term debt 7,339 67,092 (45,625) Issuance of long-term debt 50,000 1,396 105,331 Repayment of long-term debt (3,020) (602) (77,929) Issuance of common stock 18,104 40,480 23,706 Repurchase of common stock (29,985) (8,382) (33,831) Dividends (19,944) (18,435) (18,129) --------------------------------------------- Net cash provided (used) by financing activities 22,494 81,549 (46,477) --------------------------------------------- Effect of exchange rate changes (3,147) 1,207 1,771 --------------------------------------------- Increase (decrease) in cash and cash equivalents 4,883 (11,692) 13,413 Cash and cash equivalents at beginning of year 31,761 43,453 30,040 --------------------------------------------- Cash and cash equivalents at end of year $ 36,644 $ 31,761 $ 43,453 ============================================= SUPPLEMENTAL DISCLOSURES OF CASH FLOWS: Income taxes paid $ 18,669 $ 10,018 $ 6,379 Interest paid 16,594 13,775 10,809 NON-CASH INVESTING ACTIVITIES: Fair value adjustment to securities available-for-sale $ 47,042 $ 20,086 $ -- Income tax effect related to fair value adjustment 18,817 8,034 --
The accompanying notes are an integral part of these consolidated financial statements. 24 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY in thousands
UNREALIZED COMMON STOCK RETAINED CURRENCY HOLDING SHARES AMOUNT EARNINGS ADJUSTMENT GAINS-NET TOTAL BALANCE MAY 29, 1993 32,410 $194,278 $192,451 $ 50,739 $ -- $437,468 Shares issued to employees 1,125 23,706 23,706 Shares repurchased (1,338) (33,831) (33,831) Net earnings 61,493 61,493 Dividends- $0.60 per share (18,129) (18,129) Currency adjustment 2,072 2,072 -------------------------------------------------------------------- BALANCE MAY 28, 1994 32,197 184,153 235,815 52,811 -- 472,779 Shares issued to employees 1,179 40,480 40,480 Shares repurchased (293) (8,382) (8,382) Net earnings 81,584 81,584 Dividends- $0.60 per share (18,435) (18,435) Currency adjustment 24,137 24,137 Unrealized holding gains - net 12,052 12,052 -------------------------------------------------------------------- BALANCE MAY 27, 1995 33,083 216,251 298,964 76,948 12,052 604,215 Shares issued to employees 444 18,104 18,104 Shares repurchased (840) (29,985) (29,985) Net earnings 99,586 99,586 Dividends- $0.60 per share (19,944) (19,944) Currency adjustment (24,879) (24,879) Unrealized holding gains - net 28,225 28,225 -------------------------------------------------------------------- BALANCE MAY 25, 1996 32,687 $204,370 $378,606 $ 52,069 $ 40,277 $675,322 ====================================================================
The accompanying notes are an integral part of these consolidated financial statements. 25 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ACCOUNTING POLICIES THE COMPANY Tektronix, Inc. is a global high- technology company based on a portfolio of measurement, color printing, and video and networking businesses. Headquartered in Wilsonville, Oregon, Tektronix employs more than 7,900 people worldwide and maintains operations in 23 countries outside the United States. Tektronix was founded in 1946. FINANCIAL STATEMENT PRESENTATION The consolidated financial statements include the accounts of Tektronix, Inc. and its subsidiaries (the Company). Investments in joint ventures and minority-owned companies where the Company exercises significant influence are accounted for on the equity basis. Significant intercompany transactions and balances have been eliminated. Certain items have been reclassified to conform with the current year's presentation with no effect on previously reported earnings. Per share amounts are based on the weighted average number of shares outstanding during the year. The presentation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. FISCAL YEAR The Company's fiscal year is the 52 or 53 weeks ending the last Saturday in May. Fiscal years 1996, 1995 and 1994 were 52 weeks. FOREIGN CURRENCY TRANSLATION For most non-U.S. subsidiaries, assets and liabilities are translated into U.S. dollars at current exchange rates, and net earnings are translated at average exchange rates for the year. Gains and losses resulting from the translation of net assets are reported as a separate component of shareholders' equity. For non-U.S. subsidiaries in highly inflationary countries, net monetary assets are translated at current exchange rates and net nonmonetary assets are translated at historical rates, with the translation gains and losses included in net earnings. Gains and losses from foreign currency transactions are included in net earnings currently. DERIVATIVES Gains and losses on forward foreign exchange contracts used to hedge existing assets and liabilities are recognized in income each period and generally offset losses and gains on the assets and liabilities being hedged. Gains and losses related to hedges of firm commitments are deferred and included in the basis of the transaction when it is completed. CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash deposits in banks and highly liquid investments with original maturities of three months or less at the time of purchase. INVENTORIES Inventories are stated at the lower of cost or market. Cost is determined on the first-in, first-out (FIFO) basis. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at cost. Depreciation is based on the estimated useful lives of the assets, ranging from 10 to 48 years for buildings and 3 to 7 years for machinery and equipment, and is generally provided using the straight-line method. Property held for sale is stated at the lower of cost or estimated fair value less costs to sell and includes certain properties no longer used in the Company's operations. INVESTMENTS Investments in marketable equity securities are classified as available-for-sale and reported at fair value in the consolidated balance sheet under other long-term assets. The unrealized holding gains and losses are excluded from earnings and reported, net of deferred income taxes, as a separate component of shareholders' equity. INTANGIBLE ASSETS Intangible assets are included in other long-term assets at cost. Amortization is provided on a straight-line basis over periods not exceeding ten years. INCOME TAXES Deferred income taxes, reflecting the impact of temporary differences between the assets and liabilities recognized for financial reporting purposes and amounts recognized for tax purposes, are based on tax laws currently enacted. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion of the deferred tax assets will not be realized. 26 ENVIRONMENTAL COSTS The Company accrues environmental costs when it is probable that the Company has incurred a liability and the amount can be reasonably estimated. Environmental costs are expensed or capitalized as appropriate, depending on their future economic benefit. FUTURE ACCOUNTING CHANGES In March, 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 121, 'Accounting for the Impairment of Long- Lived Assets and for Long-Lived Assets to Be Disposed Of'. This statement establishes accounting standards for recognizing the impairment of certain long-term assets whenever circumstances indicate the carrying amounts may not be recoverable. Adoption of SFAS No. 121 in 1997 will not have a material effect on the Company's financial position or results of operations. SFAS No. 123, 'Accounting for Stock-Based Compensation', was issued in October, 1995. This statement establishes an alternative method of accounting that requires recognizing as expense the fair value of employee stock options and other stock-based awards at the grant date. SFAS No. 123 also allows the continuation of the current accounting treatment under which the Company does not recognize compensation expense for the stock options it awards to employees. Since the Company is electing to retain its current method, it will be required to present pro forma disclosures in its 1997 financial statements as if the fair value based method had been applied. ACQUISITIONS In March, 1995, the Company acquired all of the outstanding shares of Microwave Logic, Inc. (MLI) in exchange for 283,000 shares of the Company's common stock. In June, 1995, the Company acquired all of the outstanding shares of Lightworks Editing Systems Limited and Lightworks Editing Systems, Inc. (Lightworks) in exchange for 1,644,000 shares of the Company's common stock. Both acquisitions were accounted for as a pooling of interests and, accordingly, the consolidated financial statements have been restated to include the results of operations and financial position of MLI and Lightworks for all years presented. BUSINESS SEGMENTS The Company and its affiliates operate predominately in a single industry segment: the design, manufacture, sale and service of electronic measurement, design and display instruments and systems used in science, industry and education. Geographically, the Company operates primarily in the industrialized world. Net sales, earnings before taxes and total assets in the United States, Europe and other geographical areas were:
(in thousands) 1996 1995 1994 Net sales: United States sales to customers $ 890,930 $ 766,991 $ 751,401 United States export sales to customers 271,446 224,657 187,783 United States transfers to affiliates 720,969 434,959 313,004 --------------------------------------------- United States sales 1,883,345 1,426,607 1,252,188 --------------------------------------------- European sales to customers 470,840 392,070 315,471 European transfers to affiliates 3,183 3,783 4,031 --------------------------------------------- European sales 474,023 395,853 319,502 --------------------------------------------- Other area sales to customers 135,642 114,244 87,841 Other area transfers to affiliates 23,815 15,184 9,427 --------------------------------------------- Other area sales 159,457 129,428 97,268 Eliminations (747,967) (453,926) (326,462) --------------------------------------------- Net sales $ 1,768,858 $ 1,497,962 $ 1,342,496 ============================================= Earnings before taxes: United States $ 124,618 $ 123,800 $ 98,180 Europe 25,867 (6,618) 3,698 Other areas 8,174 6,678 1,992 Corporate and eliminations (16,393) (13,698) (17,173) --------------------------------------------- Earnings before taxes $ 142,266 $ 110,162 $ 86,697 ============================================= Total assets: United States $ 988,578 $ 851,435 $ 711,266 Europe 198,220 217,808 175,532 Other areas 69,883 47,530 34,170 Corporate and eliminations 71,815 101,529 81,879 --------------------------------------------- Total assets $ 1,328,496 $ 1,218,302 $ 1,002,847 =============================================
27 Transfers of products and services are made at arms-length prices between geographic areas. The profit on transfers between geographic areas is not recognized until sales are made to unaffiliated customers. Area earnings before taxes include all directly incurred and allocable costs, except identified corporate expenses. Assets are those that are specifically associated with the operations of each geographic area. Net sales to the United States government were not more than 3% of consolidated net sales in any of the past three years, and no other customer accounted for more than 2% of sales. NON-U.S. AFFILIATES The Company has operating subsidiaries located in Australia, Austria, Belgium, Brazil, Canada, China, Denmark, Finland, France, Germany, Hong Kong, India, Italy, Korea, Mexico, The Netherlands, Norway, Singapore, Spain, Sweden, Switzerland, Taiwan, and the United Kingdom (with a branch in Ireland). The assets, liabilities, net sales and earnings of non-U.S. subsidiaries are included in the consolidated financial statements in these amounts:
(in thousands) 1996 1995 1994 Current assets $ 207,333 $ 223,651 $ 147,090 Property, plant and equipment - net 34,295 28,214 42,976 Other long-term assets 11,835 18,420 2,339 Current liabilities 65,303 93,104 65,086 Other long-term liabilities 18,030 33,991 14,456 --------------------------------------------- Net sales $ 606,482 $ 506,314 $ 403,312 Gross profit 132,237 130,598 112,574 Operating income 36,502 4,192 3,184 Earnings before taxes 34,041 60 5,690 Net earnings (loss) 22,738 (908) 9,314
The Company has a 50% investment in a business venture in Japan. During 1995, the Company purchased an additional interest in a business venture in India and consolidates that company's results and financial position. The Company's share of the assets, liabilities, net sales and net loss of its unconsolidated affiliates, as well as the Company's arms-length sales to, purchases from, and accounts receivable consisted of:
(in thousands) 1996 1995 1994 Current assets $ 74,946 $ 84,787 $ 67,147 Property, plant and equipment - net 23,371 28,080 24,640 Other long-term assets 12,743 14,123 10,269 Current liabilities 32,775 29,002 20,537 Other long-term liabilities 9,323 10,148 7,549 --------------------------------------------- Net sales $ 147,860 $ 115,339 $ 94,246 Gross profit 44,756 40,548 33,808 Operating income (loss) 113 (1,486) (4,080) Earnings (loss) before taxes 53 96 (2,971) Net (loss) (306) (124) (1,601) --------------------------------------------- Sales to $ 114,307 $ 84,618 $ 67,535 Purchases from 13,650 10,259 5,585 Accounts receivable 9,524 5,199 11,117
There are no significant restrictions which prevent dividends to the parent company from non-U.S. affiliates. The Company received dividends from business ventures of $4.7 million in 1996. There were no dividends received in 1995 and 1994. ACCOUNTS RECEIVABLE Accounts receivable have been reduced by an allowance for doubtful accounts, which was $6.3 million in 1996 and $5.7 million in 1995. The net charges to this reserve for uncollected credit sales have not been material. INVENTORIES Inventories consisted of:
(in thousands) 1996 1995 Materials and work in process $ 141,798 $ 144,259 Finished goods 122,826 101,507 ---------------------------- Inventories $ 264,624 $ 245,766 ============================
28 OTHER LONG-TERM ASSETS Other long-term assets consisted of:
(in thousands) 1996 1995 Investment in business ventures $ 97,409 $ 115,350 Investment in marketable equity securities 78,117 29,392 Licensing agreements and other intangibles - net 28,873 22,653 Other 15,804 19,362 ---------------------------- Other long-term assets $ 220,203 $ 186,757 ============================
The Company's portion of undistributed earnings in business ventures in 1996 and 1995 was $19.2 million and $18.7 million, respectively. The company has a 35% equity interest in Merix Corporation. At May 25, 1996, the carrying value of that interest was $21.0 million, with a fair value, based upon quoted market price, of $63.7 million. Proceeds from the sales of marketable equity securities in 1996 and 1995 were $23.3 million and $16.7 million, respectively. Realized gains were computed based on the average cost of the underlying securities. At the end of 1996 and 1995, net unrealized holding gains of $67.1 million (less deferred taxes of $26.8 million) and $20.1 million (less deferred taxes of $8.0 million),respectively, were included as a separate component of shareholders' equity. Licensing agreements and other intangibles have been reduced by accumulated amortization of $10.9 million in 1996 and $12.3 million in 1995. SHORT-TERM AND LONG-TERM DEBT The Company's short-term debt consisted of:
(in thousands) 1996 1995 Commercial paper $ 30,663 $ 34,910 Lines of credit 12,564 23,113 Revolving credit agreement -- 28,000 ---------------------------- Short-term instruments 43,227 86,023 Current maturities of long-term debt 1,418 1,600 ---------------------------- Short-term debt $ 44,645 $ 87,623 ============================
The Company has a $150.0 million revolving credit agreement with Morgan Guaranty Trust Company of New York as agent that matures in July, 2000. The Company has an agreement with U.S. National Bank of Oregon to issue up to $100.0 million in commercial paper, backed by the revolving credit agreement. At May 25, 1996, the Company maintained bank credit facilities of $311.9 million, of which $192.4 million was available out of unused facilities, which include $149.8 million in lines of credit and $69.3 million in the revolving credit agreement. At May 25, 1996, the interest rates averaged 5.7% on commercial paper and 3.4% on utilized lines of credit. The Company's long-term debt consisted of:
(in thousands) 1996 1995 7.5% Notes due August 1, 2003 $ 100,000 $ 100,000 7.625% Notes due August 15, 2002 50,000 -- Commercial paper 49,986 -- Other long-term agreements 3,387 6,584 ---------------------------- Long-term instruments 203,373 106,584 Current maturities (1,418) (1,600) ---------------------------- Long-term debt $ 201,955 $ 104,984 ============================
Certain of the Company's debt agreements require the maintenance of specified interest rate coverage ratios and a minimum consolidated tangible net worth. At May 25, 1996, the Company had unrestricted retained earnings of $97.3 million after meeting those requirements. The Company has classified commercial paper borrowings of $50.0 million as long-term debt as it has the intent to refinance these borrowings as they mature, and the ability to do so under the revolving credit agreement that matures in July, 2000. Aggregate long-term debt payments will be $1.4 million in 1997, $1.3 million in 1998, $0.7 million in 1999, none in 2000 and $50.0 million in 2001. 29 OTHER LONG-TERM LIABILITIES Other long-term liabilities consisted of:
(in thousands) 1996 1995 Accrued postretirement benefits $ 46,953 $ 49,233 Accrued pension 23,037 53,085 Other 15,892 18,977 ---------------------------- Other long-term liabilities $ 85,882 $ 121,295 ============================
OTHER INCOME - NET Other income - net consisted of:
(in thousands) 1996 1995 1994 Gain on sale of marketable equity securities $ 20,198 $ 14,314 $ 13,309 Charitable contributions (2,590) (2,562) (2,824) Currency losses (1,322) (2,231) (1,980) Other (3,402) (4,777) 575 --------------------------------------------- Other income - net $ 12,884 $ 4,744 $ 9,080 =============================================
COMMITMENTS AND CONTINGENCIES Rental expense was $25.3 million in 1996, $28.0 million in 1995, and $20.7 million in 1994. The future minimum obligations under operating leases and other commitments having an initial or remaining noncancelable term in excess of one year as of May 25, 1996, were:
(in thousands) operating leases commitments 1997 $ 17,156 $ 18,462 1998 11,302 4,487 1999 6,939 1,846 2000 3,775 1,443 2001 1,616 436 Future years 3,875 -- ---------------------------- Total $ 44,663 $ 26,674 ============================
The Company signed a supply agreement pursuant to the 1994 sale of its Integrated Circuit Operation to Maxim Integrated Products, Inc. Under the agreement, the Company has minimum purchase requirements of $10.0 million through 1997 included in the Commitments table above. The Company also has long-term or minimum purchase agreements with various other suppliers. In the normal course of business, the Company and its subsidiaries are parties to various legal claims, actions and complaints, including matters involving patent infringement and other intellectual property claims. Although it is impossible to predict with certainty whether or not the Company and its subsidiaries will ultimately be successful in any of these legal matters or, if not, what the impact might be, the Company believes that disposition of these matters will not have a material adverse effect on the Company's financial position or results of operations. SHAREHOLDERS' EQUITY Stock Option and Incentive Compensation Plans The Company has stock option plans for selected employees. There were 4,773,000 shares reserved for issuance under these plans at May 25, 1996. Under the terms of the plans, incentive stock options are granted at an option price not less than the market value at the date of grant. Nonqualified stock options may not be granted at less than 100% of the fair market value on the valuation date selected by the Board of Directors. The exercise period for the options is not to exceed 10 years. Activity under the option plans was:
(options in thousands) 1996 1995 1994 Outstanding at beginning of year 2,359 2,866 3,324 Granted 980 812 758 Exercised (501) (1,102) (925) Canceled (190) (217) (291) --------------------------------------------- Outstanding at end of year 2,648 2,359 2,866 --------------------------------------------- Options exercisable at end of year 989 869 1,312 Option prices per share: Granted $ 33 - 59 $ 29 - 46 $ 22 - 28 Exercised 13 - 38 13 - 33 13 - 28 Canceled 17 - 55 17 - 37 13 - 42 Exercisable at end of year 13 - 46 13 - 33 13 - 33
30 There were 1,057 employees holding options at May 25, 1996. The Company also has cash and stock incentive compensation plans for certain executives. The plans provide for compensation based on financial performance over one- and three-year periods. SHAREHOLDER RIGHTS AGREEMENT In August 1990, the Company's Board of Directors approved a shareholder rights agreement and declared a dividend of one right for each outstanding common share. Each right entitles the holder to purchase one one-thousandth of a share of Series A No Par Preferred Shares at an exercise price of $60, subject to adjustment. Generally, the rights become exercisable 10 days after a person or group acquires or commences a tender offer that would result in beneficial ownership of 20% or more of the common shares. In addition, the rights become exercisable if any party becomes the beneficial owner of 10% or more of the outstanding common shares and is determined by the Board of Directors to be an adverse party. Upon the occurrence of certain additional events specified in the shareholder rights agreement, each right would entitle its holder to purchase common shares of the Company (or, in some cases, a potential acquiring company) or other property having a value of twice the right's exercise price. The rights, which are not currently exercisable, expire in September, 2000, but may be redeemed by action of the Board prior to that time, under certain circumstances, for $0.01 per right. BENEFIT PLANS PENSION PLANS The Company has defined benefit retirement plans covering most employees. Benefits upon retirement or termination are based on length of service and final average compensation at retirement. The Company's funding policy is to contribute amounts determined annually on an actuarial basis that provide for current and future benefits in accordance with funding requirements of applicable laws and regulations of the countries in which the plans are located. Assets of funded benefit plans are held primarily in trust accounts. The majority of the assets are invested in common stocks, bonds and real estate, with the balance primarily in cash and short- term investments. The following tables set forth the funded status and the amounts recognized in the financial statements for the Company's defined benefit retirement plans:
1996 1995 Assets exceed Accumulated Assets exceed Accumulated accumulated benefits accumulated benefits (in thousands) benefits exceed assets benefits exceed assets Actuarial present value of benefit obligations: Vested benefit obligation $ 48,647 $ 391,149 $ 53,416 $ 341,778 -------------------------------------------------------------- Accumulated benefit obligation $ 52,672 $ 399,571 $ 58,531 $ 361,623 ---------------------------------------------------------------- Projected benefit obligation $ 61,329 $ 453,778 $ 69,927 $ 404,264 Plan assets at fair value 55,982 349,571 66,249 319,411 ---------------------------------------------------------------- Projected benefit obligation in excess of plan assets 5,347 104,207 3,678 84,853 Unrecognized initial net asset (obligation) (342) 4,255 193 5,244 Unrecognized prior service cost (715) 7,943 (962) (9,792) Unrecognized net loss (6,398) (58,968) (2,276) (30,098) ---------------------------------------------------------------- Pension (asset) liability $ (2,108) $ 57,437 $ 633 $ 50,207 ================================================================
Assumptions used in the accounting for the defined benefit plans were:
1996 1995 1994 Overall weighted-average discount rates 7.6% 8.1% 8.2% Overall rates of increase in compensation levels 3.8% 4.8% 4.8% Expected long-term rate of return on plan assets 9.3% 9.3% 9.4%
Net periodic pension expense includes the following components:
(in thousands) 1996 1995 1994 Service cost $ 9,469 $ 8,983 $ 9,346 Interest cost 37,414 33,693 30,458 Actual return on plan assets (76,138) (36,587) (22,721) Net amortization and deferral 40,948 3,987 (9,072) --------------------------------------------- Net periodic pension expense 11,693 10,076 8,011 Other benefit plans 1,454 928 1,114 --------------------------------------------- Pension expense $ 13,147 $ 11,004 $ 9,125 ---------------------------------------------
31 POSTRETIREMENT BENEFITS During 1995, the Company modified its postretirement welfare programs to eliminate company-paid benefits for current and future retirees. Beginning August 1, 1995, employees who retire on or after that date will pay the full cost of their medical and life insurance coverage. The subsidies provided to pre-1995 retirees are being phased out gradually and will be eliminated effective January 1, 1997. Current and future retirees who have accumulated certain insurance credits, however, may continue to apply them toward the purchase of medical and life insurance benefits. These revisions resulted in an unrecognized prior service cost gain of $26.7 million that will be amortized over 10 years as a reduction in postretirement benefit expense. The status of the Company's unfunded postretirement benefit obligation was:
(in thousands) 1996 1995 Accumulated postretirement benefit obligation (APBO): Current retirees $ 10,453 $ 10,981 Active employees eligible to retire 3,467 3,776 Other active employees 3,033 2,894 ---------------------------- Total accumulated obligation 16,953 17,651 Unrecognized prior service cost gain 21,368 24,039 Unrecognized net gain 10,532 11,053 ---------------------------- Accrued postretirement benefits $ 48,853 $ 52,743 ============================
The net postretirement benefit expense includes the following components:
(in thousands) 1996 1995 1994 Service cost $ 168 $ 184 $ 1,008 Interest cost 1,359 1,286 4,405 Net amortization (3,385) (3,587) -- --------------------------------------------- Postretirement benefit expense (credit) $ (1,858) $ (2,117) $ 5,413 =============================================
The discount rate and rate of salary increase used in determining the APBO for 1996 was 7.8% and 3.8%, respectively. For 1995, these rates were 8.3% and 4.8%. The health care cost trend rates used in measuring the APBO at May 25, 1996, ranged from 8.2% to 10.8%, depending on the specific plans, and are assumed to decrease gradually until they reach 5.6% to 5.8% in the year 2003 and remain at 5.3% thereafter. The health care cost trend rates in 1995 ranged from 8.6% to 11.5%, and were assumed to decline to 5.8% over a similar period. The health care cost trend rate assumptions can have a significant effect on the amounts reported. However, because of the nature of the program revisions adopted in 1995, changing the assumptions by one percent would not have a material impact on the APBO at May 25, 1996, and the postretirement credit reported for 1996. EMPLOYEE SAVINGS PLANS The Company has two employee savings plans that qualify as deferred salary arrangements under Section 401(k) of the Internal Revenue Code. Participating U.S. employees may defer up to 15% of their pre-tax earnings subject to certain regulatory limitations. Employee contributions are invested, at the employees' direction, among a variety of investment alternatives. Depending on the plan, the Company currently matches up to 3% of an employee's salary either in Company stock or cash. In addition, the Company also makes a contribution for certain employees equal to 2% of the employee's annual base pay, even if the employee does not currently contribute to a plan. The latter contribution is made regardless of the Company's performance and is invested entirely in Company stock. Total cost for these plans was approximately $12.1 million in 1996, $11.1 million in 1995, and $12.7 million in 1994. DERIVATIVE FINANCIAL INSTRUMENTS The Company, as a part of its management of assets and liabilities, enters into derivative financial instruments to reduce financial market risks. These instruments are used to hedge foreign currency, equity and interest rate exposures of underlying assets and liabilities. These instruments involve elements of market risk which offset the market risk of the underlying assets and liabilities they hedge. The Company does not hold or issue derivative financial instruments for trading purposes. The notional or contract amounts of the derivative financial instruments do not represent amounts exchanged by the parties involved and, thus, are not a measure of the Company's 32 exposure. The Company is potentially subject to risk in the event of nonperformance by counterparties to its derivative financial instruments. However, the Company has entered into these instruments with creditworthy financial institutions and considers the risk of nonperformance to be remote. The fair value of derivative financial instruments approximates the notional amount of the contracts at the reporting date. FOREIGN EXCHANGE RISK MANAGEMENT The Company uses forward exchange contracts and swaps to hedge its foreign exchange risk. At the end of 1996 and 1995, the notional amount of the Company's outstanding contracts was $97.6 million and $54.9 million, respectively. Generally, these contracts have maturities that do not exceed one year and require the Company to exchange foreign currencies for U.S. dollars at maturity. The purpose of the Company's hedging activities is to reduce the risk that the eventual cash flows will be adversely affected by changes in exchange rates. Deferred gains or losses attributable to foreign currency instruments are not material. FAIR VALUE OF FINANCIAL INSTRUMENTS For short-term financial instruments, including cash and cash equivalents, accounts receivable, short-term debt, accounts payable and accrued compensation, the carrying amount approximates the fair value because of the immediate or short-term nature of those instruments. The fair value of marketable equity securities is based on quoted market prices at the reporting date. The fair value of long-term receivables and long-term debt is estimated based on quoted market prices for similar instruments or by discounting expected cash flows at rates currently available to the Company for instruments with similar risks and maturities. The differences between the fair values and carrying amounts of the Company's financial instruments are not material. CONCENTRATIONS OF CREDIT RISK Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of trade accounts receivable. The risk is limited due to the large number of entities comprising the Company's customer base and their dispersion across many different industries and geographies. At May 25, 1996, the Company had no significant concentrations of credit risk. INCOME TAXES The components of earnings before taxes are contained in the Business Segments footnote. The provision for income taxes consisted of:
(in thousands) 1996 1995 1994 Current: Federal $ 9,104 $ 17,779 $ 9,077 State 1,961 4,041 2,900 Non-U.S. 10,789 6,624 3,938 --------------------------------------------- 21,854 28,444 15,915 Deferred: Federal 16,363 4,649 15,167 State 3,338 641 1,684 Non-U.S. 1,125 (5,156) (7,562) --------------------------------------------- 20,826 134 9,289 --------------------------------------------- Total provision $ 42,680 $ 28,578 $ 25,204 =============================================
The provisions differ from the amounts that would result by applying the U.S. statutory rate to earnings before taxes. A reconciliation of the difference is:
(in thousands) 1996 1995 1994 Income taxes based on U.S. statutory rate $ 49,793 $ 38,557 $ 30,344 Change in beginning of year valuation allowance (5,526) (6,842) (5,981) Foreign sales corporations (4,565) (3,196) (3,926) State income taxes, net of U.S. tax 3,445 3,043 2,980 Other - net (467) (2,984) 1,787 --------------------------------------------- Income taxes $ 42,680 $ 28,578 $ 25,204 =============================================
Tax benefits of $5.0 million, $7.3 million and $2.9 million associated with the exercise of employee stock options were allocated to equity in 1996, 1995 and 1994, respectively. 33 Net deferred tax assets and liabilities are included in the following consolidated balance sheet accounts:
(in thousands) 1996 1995 1994 Other current assets $ 40,410 $ 37,097 $ 41,031 Deferred tax assets 28,247 76,418 79,552 --------------------------------------------- Net deferred tax assets $ 68,657 $ 113,515 $ 120,583 =============================================
The temporary differences and carryforwards that give rise to deferred tax assets and liabilities were as follows:
(in thousands) 1996 1995 1994 Deferred tax assets: Reserves and other liabilities $ 48,544 $ 47,789 $ 39,396 AMT and foreign tax credit carryforwards 20,932 21,297 36,886 Accrued postretirement benefits 19,053 21,097 23,196 Accumulated depreciation 14,999 18,894 1,196 Net operating losses of non-U.S. subsidiaries 12,727 16,395 8,388 Accrued pension obligation 3,765 16,699 14,059 Restructuring costs and separation programs -- 3,395 31,551 --------------------------------------------- Gross deferred tax assets 120,020 145,566 154,672 Less valuation allowance (6,929) (12,455) (19,297) --------------------------------------------- Deferred tax assets 113,091 133,111 135,375 Deferred tax liabilities: Unamortized LIFO reserve (5,590) (11,562) (14,792) Software development costs (11,993) -- -- Unrealized gains on marketable equity securities (26,851) (8,034) -- --------------------------------------------- Deferred tax liabilities (44,434) (19,596) (14,792) --------------------------------------------- Net deferred tax assets $ 68,657 $ 113,515 $ 120,583 =============================================
At May 25, 1996, there were $7.6 million of unused foreign tax credits which, if not used, will expire between 1997 and 1998. There were $13.3 million of alternative minimum tax (AMT) credits that can be carried forward indefinitely. U.S. taxes have not been provided on $104.4 million of accumulated unremitted earnings of non-U.S. subsidiaries because such earnings are or will be reinvested in operations or will be offset by appropriate credits for foreign income taxes paid. QUARTERLY FINANCIAL DATA (UNAUDITED) In the opinion of management, this unaudited quarterly financial summary includes all adjustments necessary to present fairly the results for the periods represented (in thousands, except per share amounts):
13 weeks to AUG. 26, 1995 NOV. 25, 1995 FEB. 24, 1996 MAY 25, 1996 Net sales $ 401,022 $ 443,598 $ 433,500 $ 490,738 Gross profit 169,319 186,051 179,214 203,459 Operating income 32,059 39,054 31,451 40,803 Earnings before taxes 32,385 37,587 32,068 40,226 Net earnings $ 22,670 $ 26,310 $ 22,448 $ 28,158 Earnings per share $ 0.68 $ 0.79 $ 0.67 $ 0.86 Dividends per share 0.15 0.15 0.15 0.15 Common stock prices: High $ 52.38 $ 61.88 $ 57.38 $ 46.88 Low 41.50 43.88 40.75 29.75
13 weeks to AUG. 27, 1994 NOV. 26, 1994 FEB. 25 ,1995 MAY 27,1995 Net sales $ 324,852 $ 358,655 $ 371,688 $ 442,767 Gross profit 157,195 163,813 165,635 191,448 Operating income 24,585 27,254 29,905 33,877 Earnings before taxes 22,997 25,068 28,926 33,171 Net earnings $ 17,365 $ 18,617 $ 21,358 $ 24,244 Earnings per share $ 0.54 $ 0.57 $ 0.65 $ 0.74 Dividends per share 0.15 0.15 0.15 0.15 Common stock prices: High $ 32.63 $ 40.00 $ 38.38 $ 47.00 Low 27.63 33.13 32.38 $ 32.00
The Company's common stock is traded on the New York and Pacific Stock Exchanges. There were 4,385 shareholders of record at June 19, 1996. The above quoted market prices are the composite prices reported by The Wall Street Journal rounded to full cents per share. Dividends are paid at the discretion of the Board of Directors dependent upon their judgment of the Company's future earnings, expenditures and financial condition. 34 EX-21 6 EXHIBIT 21 SUBSIDIARIES OF TEKTRONIX, INC. Percentage of Voting Name of Subsidiary and Securities Owned by Jurisdiction in Which Organized Immediate Parent Tektronix Ges.m.b.H. (Austria) 100% Tektronix GmbH (Germany) 100 Tektronix Canada Inc. (Canada) 100 Tektronix Australia Pty. Limited (Australia) 100 Grass Valley Group Pty. Limited (Australia)[Inactive] 100 Tektronix (France) 100 Tektronix N.V. (Belgium) 100 Tektronix, S.A. de C.V. (Mexico) 100 Tektronix A/S (Denmark) 100 Tektronix S.p.A. (Italy) 100 Tektronix Norge A/S (Norway) 100 Tektronix AB (Sweden) 100 Tektronix Oy (Finland) 100 Tektronix Industria e Comercio Ltda. (Brazil) 100 Tektronix Europe B.V. (The Netherlands) 100 GVG Japan, Ltd. (Japan) 100 Tektronix International A.G. (Switzerland) 100 Tektronix Holland N.V. 100 (The Netherlands) Tektronix U.K. Limited 100 (England) Bouwerij Heerenveen N.V. 100 (The Netherlands) Tektronix Espanola, S.A. (Spain) 100 Tektronix Development Company (Oregon) 100 Tektronix Foreign Sales Corporation (Guam) 100 Tektronix China, Limited (Hong Kong) 100 Tektronix Hong Kong Limited (Hong Kong) 100 Tektronix International, Inc. (Oregon) 100 Tektronix Taiwan, Ltd. (Taiwan) 100 Tektronix Oriental Electronics Technology 100 (Beijing) Co., Ltd. (China) Tektronix Properties, Inc. (Oregon) 100 Tektronix Federal Systems, Inc. (Oregon) 100 Tektronix Asia, Ltd. (Oregon) 100 Tektronix Singapore Pte Ltd (Singapore) 100 Tektronix Europe, Inc.(Oregon) 100 Tektronix Korea, Ltd. (Korea) 100 Lightworks Editing Systems Limited (United Kingdom) 100 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subsidiaries - Less than 100% Ownership Tektronix International, Inc. (Parent Company/Oregon Corp. listed above) Yangzhong Tektronix Electronic Instrument Co., Ltd. 70 (China) Shanghai Tektronix Electronic Instrument Co., Ltd. 65 (China) Chongqing Tektronix Electronic Instrument Co., Ltd. 60 (China) Tektronix (India) Limited (India) 62 Sony/Tektronix Corporation (Japan) 50 EX-23 7 EXHIBIT 23 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement Nos. 33-59171, 33-58511, 33-33496, and 33-30648 of Tektronix, Inc. on Form S-8 and Registration Statement Nos. 33-58635, 33-58513, 33-18658, and 33-59648 of Tektronix, Inc. on Form S-3 of our report dated June 19, 1996, incorporated by reference in this Annual Report on Form 10-K of Tektronix, Inc. for the year ended May 25, 1996. DELOITTE & TOUCHE LLP DELOITTE & TOUCHE LLP Portland, Oregon August 21, 1996 EX-24 8 EXHIBIT 24 POWER OF ATTORNEY The undersigned constitutes and appoints JEROME J. MEYER, CARL W. NEUN and JOHN P. KARALIS and each of them, as the undersigned's true and lawful attorneys and agents, with full power of substitution and resubstitution for the undersigned and in the undersigned's name, place and stead, in any and all capacities, to sign the Tektronix, Inc. Annual Report on Form 10-K for the year ended May 25, 1996 and any and all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys and agents, and each of them, full power and authority to do any and all acts and things necessary or advisable to be done, as fully and to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys and agents or either of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated: August 13, 1996 PAUL E. BRAGDON _______________ Paul E. Bragdon POWER OF ATTORNEY The undersigned constitutes and appoints JEROME J. MEYER, CARL W. NEUN and JOHN P. KARALIS and each of them, as the undersigned's true and lawful attorneys and agents, with full power of substitution and resubstitution for the undersigned and in the undersigned's name, place and stead, in any and all capacities, to sign the Tektronix, Inc. Annual Report on Form 10-K for the year ended May 25, 1996 and any and all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys and agents, and each of them, full power and authority to do any and all acts and things necessary or advisable to be done, as fully and to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys and agents or either of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated: August 12, 1996 PAUL C. ELY, JR. ________________ Paul C. Ely, Jr. POWER OF ATTORNEY The undersigned constitutes and appoints JEROME J. MEYER, CARL W. NEUN and JOHN P. KARALIS and each of them, as the undersigned's true and lawful attorneys and agents, with full power of substitution and resubstitution for the undersigned and in the undersigned's name, place and stead, in any and all capacities, to sign the Tektronix, Inc. Annual Report on Form 10-K for the year ended May 25, 1996 and any and all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys and agents, and each of them, full power and authority to do any and all acts and things necessary or advisable to be done, as fully and to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys and agents or either of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated: August 14, 1996 A. M. GLEASON _____________ A. M. Gleason POWER OF ATTORNEY The undersigned constitutes and appoints JEROME J. MEYER, CARL W. NEUN and JOHN P. KARALIS and each of them, as the undersigned's true and lawful attorneys and agents, with full power of substitution and resubstitution for the undersigned and in the undersigned's name, place and stead, in any and all capacities, to sign the Tektronix, Inc. Annual Report on Form 10-K for the year ended May 25, 1996 and any and all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys and agents, and each of them, full power and authority to do any and all acts and things necessary or advisable to be done, as fully and to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys and agents or either of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated: August 13, 1996 WAYLAND R. HICKS ________________ Wayland R. Hicks POWER OF ATTORNEY The undersigned constitutes and appoints JEROME J. MEYER, CARL W. NEUN and JOHN P. KARALIS and each of them, as the undersigned's true and lawful attorneys and agents, with full power of substitution and resubstitution for the undersigned and in the undersigned's name, place and stead, in any and all capacities, to sign the Tektronix, Inc. Annual Report on Form 10-K for the year ended May 25, 1996 and any and all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys and agents, and each of them, full power and authority to do any and all acts and things necessary or advisable to be done, as fully and to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys and agents or either of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated: August 12, 1996 JEROME J. MEYER _______________ Jerome J. Meyer POWER OF ATTORNEY The undersigned constitutes and appoints JEROME J. MEYER, CARL W. NEUN and JOHN P. KARALIS and each of them, as the undersigned's true and lawful attorneys and agents, with full power of substitution and resubstitution for the undersigned and in the undersigned's name, place and stead, in any and all capacities, to sign the Tektronix, Inc. Annual Report on Form 10-K for the year ended May 25, 1996 and any and all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys and agents, and each of them, full power and authority to do any and all acts and things necessary or advisable to be done, as fully and to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys and agents or either of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated: August 12, 1996 KEITH R. MCKENNON _________________ Keith R. McKennon POWER OF ATTORNEY The undersigned constitutes and appoints JEROME J. MEYER, CARL W. NEUN and JOHN P. KARALIS and each of them, as the undersigned's true and lawful attorneys and agents, with full power of substitution and resubstitution for the undersigned and in the undersigned's name, place and stead, in any and all capacities, to sign the Tektronix, Inc. Annual Report on Form 10-K for the year ended May 25, 1996 and any and all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys and agents, and each of them, full power and authority to do any and all acts and things necessary or advisable to be done, as fully and to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys and agents or either of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated: August 11, 1996 A. GARY AMES ____________ A. Gary Ames POWER OF ATTORNEY The undersigned constitutes and appoints JEROME J. MEYER, CARL W. NEUN and JOHN P. KARALIS and each of them, as the undersigned's true and lawful attorneys and agents, with full power of substitution and resubstitution for the undersigned and in the undersigned's name, place and stead, in any and all capacities, to sign the Tektronix, Inc. Annual Report on Form 10-K for the year ended May 25, 1996 and any and all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys and agents, and each of them, full power and authority to do any and all acts and things necessary or advisable to be done, as fully and to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys and agents or either of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated: July 26, 1996 WILLIAM D. WALKER _________________ William D. Walker POWER OF ATTORNEY The undersigned constitutes and appoints JEROME J. MEYER, CARL W. NEUN and JOHN P. KARALIS and each of them, as the undersigned's true and lawful attorneys and agents, with full power of substitution and resubstitution for the undersigned and in the undersigned's name, place and stead, in any and all capacities, to sign the Tektronix, Inc. Annual Report on Form 10-K for the year ended May 25, 1996 and any and all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys and agents, and each of them, full power and authority to do any and all acts and things necessary or advisable to be done, as fully and to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys and agents or either of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated: August 12, 1996 JEAN VOLLUM ___________ Jean Vollum POWER OF ATTORNEY The undersigned constitutes and appoints JEROME J. MEYER, CARL W. NEUN and JOHN P. KARALIS and each of them, as the undersigned's true and lawful attorneys and agents, with full power of substitution and resubstitution for the undersigned and in the undersigned's name, place and stead, in any and all capacities, to sign the Tektronix, Inc. Annual Report on Form 10-K for the year ended May 25, 1996 and any and all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys and agents, and each of them, full power and authority to do any and all acts and things necessary or advisable to be done, as fully and to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys and agents or either of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated: August 12, 1996 MERRILL A. MCPEAK _________________ Merrill A. McPeak POWER OF ATTORNEY The undersigned constitutes and appoints JEROME J. MEYER, CARL W. NEUN and JOHN P. KARALIS and each of them, as the undersigned's true and lawful attorneys and agents, with full power of substitution and resubstitution for the undersigned and in the undersigned's name, place and stead, in any and all capacities, to sign the Tektronix, Inc. Annual Report on Form 10-K for the year ended May 25, 1996 and any and all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys and agents, and each of them, full power and authority to do any and all acts and things necessary or advisable to be done, as fully and to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys and agents or either of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated: August 12, 1996 PAULINE LO ALKER ________________ Pauline Lo Alker EX-27 9 FINANCIAL DATA SCHEDULE
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 1,000 12-MOS MAY-25-1996 MAY-25-1996 36,644 0 381,651 6,342 264,624 753,580 676,543 368,980 1,328,496 365,337 201,955 204,370 0 0 470,952 1,328,496 0 1,768,858 0 1,030,815 0 0 13,985 142,266 42,680 99,586 0 0 0 99,586 3.00 3.00
EX-27.1 10 RESTATED FINANCIAL DATA SCHEDULE
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 1,000 12-MOS MAY-27-1995 MAY-27-1995 31,761 0 319,434 5,676 245,766 666,135 624,318 371,238 1,218,302 387,808 104,984 216,251 0 0 387,964 1,218,302 0 1,497,962 0 819,871 0 0 10,203 110,162 28,578 81,584 0 0 0 81,584 2.50 2.50
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