-----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, IkgKTl3AxdyoP7K6URYagrSObb1clt6vuhi81U/dR1qpSQp2AYskd1SuFGVdJhgI GxSTLYeVDwPTbmVQeCRGaA== /in/edgar/work/0000912057-00-044058/0000912057-00-044058.txt : 20001009 0000912057-00-044058.hdr.sgml : 20001009 ACCESSION NUMBER: 0000912057-00-044058 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000826 FILED AS OF DATE: 20001006 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEKTRONIX INC CENTRAL INDEX KEY: 0000096879 STANDARD INDUSTRIAL CLASSIFICATION: [3825 ] IRS NUMBER: 930343990 STATE OF INCORPORATION: OR FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-04837 FILM NUMBER: 736055 BUSINESS ADDRESS: STREET 1: 14200 SW KARL DRIVE CITY: BEAVERTON STATE: OR ZIP: 97070 BUSINESS PHONE: 5036277111 MAIL ADDRESS: STREET 1: P O BOX 100 CITY: WILSONVILLE STATE: OR ZIP: 97070-1000 10-Q 1 a2027302z10-q.txt 10-Q ============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q [ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarter ended August 26, 2000, 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 (IRS Employer incorporation or organization) Identification No.) 14200 SW KARL BRAUN DRIVE BEAVERTON, OREGON 97077 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (503) 627-7111 NOT APPLICABLE (Former name, former address and former fiscal year, if changed since last report) 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 --- --- AT SEPTEMBER 23, 2000 THERE WERE 47,300,304 COMMON SHARES OF TEKTRONIX, INC. OUTSTANDING. (Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.) TEKTRONIX, INC. AND SUBSIDIARIES - -------------------------------- INDEX - ------
PAGE NO. -------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements: Condensed Consolidated Balance Sheets - 2 August 26, 2000 and May 27, 2000 Condensed Consolidated Statements of Operations - 3 for the Quarter ended August 26, 2000 and the Quarter ended August 28, 1999 Condensed Consolidated Statements of Cash Flows - 4 for the Quarter ended August 26, 2000 and the Quarter ended August 28, 1999 Notes to Condensed Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial 13 Condition and Results of Operations PART II. OTHER INFORMATION Item 3. Quantitative and Qualitative Disclosures About Market Risk 20 Item 4. Submission of Matters to a Vote of Security Holders Item 6. Exhibits and Reports on Form 8-K SIGNATURE 21 1 TEKTRONIX, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) Aug. 26, May 27, 2000 2000 - ----------------------------------------------------------------------------------- ASSETS Current assets: Cash and cash equivalents $ 539,471 $ 683,808 Short-term investments 203,438 99,897 Accounts and notes receivable - net 191,827 188,987 Inventories - net 123,088 114,001 Other current assets 16,981 25,364 ---------- ---------- Total current assets 1,074,805 1,112,057 Property, plant and equipment - net 180,374 188,544 Deferred tax assets 20,937 30,928 Other long-term assets 225,580 203,108 ---------- ---------- Total assets $1,501,696 $1,534,637 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 216,820 $ 221,767 Accrued compensation 59,817 95,623 Deferred revenue 11,341 12,329 Short-term debt 564 505 ---------- ---------- Total current liabilities 288,542 330,224 Long-term debt 150,337 150,369 Other long-term liabilities 77,738 76,450 Shareholders' equity: Common stock 210,646 198,868 Retained earnings 736,966 753,796 Accumulated other comprehensive income 37,467 24,930 ---------- ---------- Total shareholders' equity 985,079 977,594 ---------- ---------- Total liabilities and shareholders' equity $1,501,696 $1,534,637 ========== ==========
The accompanying notes are an integral part of these condensed consolidated financial statements. 2 TEKTRONIX, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Quarter ended Aug. 26, Aug. 28, (In thousands except for per share amounts) 2000 1999 - ----------------------------------------------------------------------------------- Net sales $ 278,191 $ 280,747 Cost of sales 133,229 156,455 --------- --------- Gross profit 144,962 124,292 Research and development expenses 33,813 38,207 Selling, general, and administrative expenses 73,883 71,876 Equity in business ventures' loss 132 318 Non-recurring charges 315 -- Charges related to the sale of the Video and Networking division -- 26,100 --------- --------- Operating income (loss) 36,819 (12,209) Interest expense (3,357) (4,502) Interest income 14,250 295 Other income (expense) - net (5,511) 593 --------- --------- Earnings (loss) before taxes 42,201 (15,823) Income tax expense (benefit) 14,770 (4,906) --------- --------- Net earnings (loss) from continuing operations 27,431 (10,917) Discontinued operations: Net earnings from operations of Color Printing and Imaging division (less applicable income tax expense of $0 and $1,094, respectively.) -- 2,435 --------- --------- Net earnings (loss) $ 27,431 $ (8,482) ========= ========= Net earnings (loss) per share - basic $ 0.58 $ (0.18) Net earnings (loss) per share - diluted 0.56 (0.18) Net earnings (loss) per share from continuing operations - basic 0.58 (0.23) Net earnings (loss) per share from continuing operations - diluted 0.56 (0.23) Net earnings per share from discontinued operations - basic 0.00 0.05 Net earnings per share from discontinued operations - diluted 0.00 0.05 Dividends per share 0.00 0.12 Average shares outstanding - basic 47,689 46,991 Average shares outstanding - diluted 48,739 46,991
The accompanying notes are an integral part of these condensed consolidated financial statements. 3 TEKTRONIX, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Quarter ended Aug. 26, Aug. 28, (In thousands) 2000 1999 - ----------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net earnings (loss) $ 27,431 $ (8,482) Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities: Earnings from discontinued operations -- (2,435) Pre-tax net non-recurring charges 315 -- Charges related to the sale of the Video and Networking division -- 26,100 Depreciation and amortization expense 11,036 11,088 Asset impairments 2,391 -- Loss on the disposition of fixed assets 554 1,804 Bad debt expense 916 223 Deferred income tax expense (benefit) 7,619 (6,354) Equity in business ventures' loss 132 332 Changes in operating assets and liabilities: Accounts receivable (4,050) (11,258) Inventories (11,621) 16,671 Other current assets 671 3,743 Accounts payable (3,143) (23,181) Accrued compensation (32,817) (17,998) Deferred revenue (988) 2,331 Other-net (2,019) (3,400) --------- --------- Net cash used in operating activities (3,573) (10,816) Net cash provided by discontinued operations -- 8,913 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment (8,482) (8,680) Proceeds from sale of fixed assets 3,715 1,044 Short-term investments (103,541) -- --------- --------- Net cash used in investing activities (108,308) (7,636) CASH FLOWS FROM FINANCING ACTIVITIES Net change in short-term debt 59 12,116 Repayment of long-term debt (32) (69) Issuance of common stock 15,433 6,439 Repurchase of common stock (47,916) -- Dividends -- (5,631) --------- --------- Net cash provided by (used in) financing activities (32,456) 12,855 --------- --------- Net increase (decrease) in cash and cash equivalents (144,337) 3,316 Cash and cash equivalents at beginning of period 683,808 39,747 --------- --------- Cash and cash equivalents at end of period $ 539,471 $ 43,063 ========= ========= SUPPLEMENTAL DISCLOSURES OF CASH FLOWS Income taxes paid - net $ 551 $ 679 Interest paid 5,656 7,634
The accompanying notes are an integral part of these condensed consolidated financial statements. 4 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THE COMPANY Tektronix, Inc. (Tektronix or the company), founded in 1946, historically operated in three major business divisions: Measurement, Color Printing and Imaging, and Video and Networking, as well as in five major geographies: the United States; Europe; the Americas, including Mexico, Canada and South America; the Pacific, excluding Japan; and Japan. During fiscal year 2000, the company sold the Color Printing and Imaging and Video and Networking divisions and now operates as a focused test, measurement and monitoring company, providing measurement solutions to customers in many industries, including computers, telecommunications and semiconductors. As a focused Measurement company, Tektronix enables its customers to design, build, deploy and manage next-generation global communications networks and internet technologies. Revenue is derived principally through the development and marketing of a range of products including: oscilloscopes; logic analyzers; communications test equipment, including products for network monitoring and protocol test, broadband transmission test and mobile production test; video test equipment; and accessories. Revenue is also derived through providing support services for products sold worldwide. Headquartered in Beaverton, Oregon, Tektronix employs more than 4,100 people and maintains operations in 25 countries outside the United States. BASIS OF PRESENTATION The condensed consolidated financial statements and notes thereto have been prepared by the company without audit. Certain information and footnote disclosures normally included in annual financial statements, prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted. Management believes that the condensed statements include all necessary adjustments, which are of a normal and recurring nature and are adequate to present financial position, results of operations and cash flows for the interim periods. The condensed information should be read in conjunction with the financial statements and notes thereto incorporated by reference in the company's annual report on Form 10-K for the year ended May 27, 2000. To conform to first quarter fiscal year 2001 presentation, certain information included in the first quarter fiscal year 2000 condensed consolidated financial statements and notes thereto has been reclassified. The company's fiscal year is the 52 or 53 weeks ending the last Saturday in May. Fiscal years 2001 and 2000 are 52 weeks. SALE OF COLOR PRINTING AND IMAGING On January 1, 2000, the company sold substantially all of the assets of the Color Printing and Imaging division to Xerox Corporation (Xerox). The purchase price was $925.0 million in cash, with certain liabilities of the division assumed by Xerox. During the third quarter of fiscal year 2000, Tektronix recorded a net gain of $340.3 million on this sale. The gain was calculated as the excess of the proceeds received over the net book value of the assets transferred, $198.5 million in income tax expense, a $60.0 million accrual for estimated liabilities related to the sale and $14.4 million in transaction and related costs. 5 The company accounted for the Color Printing and Imaging division as a discontinued operation in accordance with Accounting Principles Board (APB) Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions." Summarized results of operations for the division were as follows:
Quarter ended (In thousands except per share amounts) Aug. 28, 1999 - ----------------------------------------------------------------------- Net sales $155,404 -------- Earnings before taxes 3,529 Income tax expense 1,094 -------- Net earnings from discontinued operations $ 2,435 ======== Net earnings per share from discontinued operations - basic and diluted $ 0.05 ========
SALE OF VIDEO AND NETWORKING On August 9, 1999, the company announced that it had reached an agreement to sell substantially all of the operating assets of its Video and Networking division to Grass Valley Group Inc. During the first quarter of fiscal year 2000, Tektronix recorded pre-tax charges of $26.1 million for losses expected to be incurred in connection with the transaction. These charges were calculated based upon the excess of the estimated net book value of assets to be transferred over the proceeds, as well as asset impairments incurred as a result of the sale. On September 24, 1999, the companies closed the transaction. Tektronix received cash of $23.7 million, before transaction costs of $1.1 million, a note receivable of $22.5 million, and a 10% equity interest in Grass Valley Group Inc., which was recorded in Other long-term assets and accounted for under the cost method. The actual loss on the sale was $26.1 million. Management concluded that the sale of the Video and Networking division did not meet the criteria to be recorded as a discontinued operation in accordance with APB Opinion No. 30, as the VideoTele.com business, a portion of the division, was retained by the company. On February 25, 2000, Tektronix and Grass Valley Group Inc. entered into a subsequent agreement. Under this agreement, the company sold unbilled revenue on systems contracts in progress that were not a part of the original transaction. As consideration for the assets sold, the note receivable was amended to increase the principal balance and decrease the stated interest rate from 8% to 7%. In addition, a note receivable was recorded for the sale of certain trade receivables that were also excluded from the original transaction. Charges of $5.5 million were incurred in conjunction with the subsequent agreement and were recorded in Charges related to the sale of Video and Networking on the Condensed Consolidated Statements of Operations. In addition, on May 25, 2000, Tektronix sold its 10% equity interest in Grass Valley Group Inc., to the majority shareholder of that company and received $6.5 million in cash, which approximated book value. REPURCHASE OF COMMON STOCK The company's plan for the use of the net proceeds from the sale of the Color Printing and Imaging division included a $550.0 million share repurchase program. On February 23, 2000, the company purchased 0.1 million shares of its common stock for $44 per share, totaling $4.7 million, through a Dutch Auction tender offer. On March 15, 2000, the Board of Directors approved a program to purchase up to $545.0 million of the company's common stock on the open market or through negotiated transactions. During the first quarter of fiscal year 2001, the company repurchased 0.8 million shares at an average price of $59.27 per share totaling $47.9 million. The company has repurchased a total of 1.5 million shares at an average price of $55.98 per share totaling $83.0 million under the program as of August 26, 2000. 6 NON-RECURRING CHARGES - NET In the third quarter of fiscal year 2000, the company announced and began to implement a series of actions (the 2000 plan) intended to further consolidate worldwide operations and transition the company from a portfolio of businesses to a single smaller business focused on test, measurement and monitoring. Major actions under the 2000 plan include the exit from and consolidation within underutilized facilities, including the write-off of assets that will be abandoned in conjunction with this action, the write-off and disposal of certain excess service and other inventories and focused headcount reductions to streamline the cost structure to that of a smaller focused Measurement business and to eliminate duplicative functions within the company's infrastructure. The company recorded pre-tax non-recurring charges of $64.8 million to account for these actions, including $19.1 million for the impairment of assets, $16.8 million for lease cancellation fees and future payments on exited leased facilities and volume-based contracts, $15.5 million for the write-off and disposal of excess inventories and $13.4 million for severance worldwide. In the second quarter of fiscal year 1999, the company announced and began to implement a series of actions (the 1999 plan) intended to align Tektronix' worldwide operations with market conditions and to improve the profitability of its operations. These actions included a net reduction of approximately 15% of the company's worldwide workforce, the exit from certain facilities and the streamlining of product and service offerings. Under the 1999 plan, the company recorded pre-tax charges of $125.7 million, including restructuring charges of $115.8 million and other non-recurring charges of $9.9 million for related actions. The $115.8 million in restructuring charges included $56.9 million in severance expense, $27.1 million for the write-off and disposal of excess inventory, $17.0 million for the impairment of long-term assets and $14.8 million for lease cancellation fees. The $9.9 million for related actions included $5.1 million of expected sales returns, $0.8 million of bad debt expense and $4.0 million of costs to fulfill commitments to deliver software enhancements on previously sold product, all associated with exiting the non-linear digital editing business. Total pre-tax net non-recurring charges on the Condensed Consolidated Statements of Operations totaled $0.3 million for the quarter ended August 26, 2000. The expense of $0.3 million consisted of a $2.1 million loss on sale of assets and $2.6 million of adjustments to the existing restructuring plans, offset by restructuring reserve reversals of $4.4 million. An expanded discussion of current quarter restructuring reserve activity is included below. The $2.1 million loss on sale of assets resulted from the sale of certain assets by Maxtek Components Corporation (Maxtek), a wholly-owned subsidiary of Tektronix, to Innovacomm Technologies, Inc. (Innovacomm). At the time the company established the restructuring reserves under the 2000 plan, it was anticipated that the assets sold to Innovacomm by Maxtek would be eliminated through closure, thereby necessitating associated reserves for employee severance and certain committed obligations related to facilities. As the opportunity to dispose of these assets through sale subsequently arose, and was determined by management to be more beneficial to the company, the related reserves were deemed no longer necessary and reversed. The reversal of reserves related to these assets totaled approximately $1.8 million and was included in the total reversal of $4.4 million noted below. 7 The pre-tax charges incurred and related actions taken under the 1999 and 2000 plans affected the company's financial position in the following manner:
Equipment Payables and other and other Accrued (In thousands) assets liabilities Inventories compensation - ---------------------------------------------------------------------------------------------- 1999 plan charges $ 18,200 $ 19,894 $ 27,760 $ 54,680 Fiscal year 1999 activity: Cash paid out -- (7,415) -- (20,844) Non-cash disposals or write-offs (17,055) -- (27,070) -- Adjustments to plan (455) 4,049 (690) 2,244 --------- ----------- ----------- ------------ Balance May 29, 1999 $ 690 $ 16,528 $ -- $ 36,080 --------- ----------- ----------- ------------ Fiscal year 2000 activity: 2000 plan charges $ 19,142 $ 16,787 $ 15,460 $ 13,362 Adjustments to plan 361 -- -- (405) Reversal of excess charges -- (600) -- (14,799) Cash paid out -- (13,765) -- (22,893) Non-cash disposals or write-offs (20,193) -- (15,460) -- --------- ----------- ----------- ------------ Balance May 27, 2000 $ -- $ 18,950 $ -- $ 11,345 --------- ----------- ----------- ------------ Fiscal year 2001 activity: Adjustments to plan 2,018 -- -- 543 Reversal of excess charges -- (863) -- (3,495) Cash paid out -- (1,540) -- (2,203) Non-cash disposals or write-offs (2,018) -- -- -- --------- ----------- ----------- ------------ Balance Aug. 26, 2000 $ -- $ 16,547 $ -- $ 6,190 ========= =========== =========== ============
During the first quarter of fiscal year 2001 the equipment and other assets reserve was increased approximately $2.0 million and the accrued compensation reserve was increased approximately $0.5 million. The increase of $2.0 million to the equipment and other assets reserve was primarily to provide for additional estimated impairment costs related to assets previously included in the restructuring plan. The increase of $0.5 million to the accrued compensation reserve was attributable to the subsequent clarification and amendment of an employment agreement. During the first quarter of fiscal year 2001, $0.9 million and $3.5 million of previously accrued amounts were reversed from the payables and other liabilities reserve and the accrued compensation reserve, respectively. The reversal of $0.9 million of the payables and other liabilities reserve was primarily attributable to certain obligations which were assumed by a third party, thereby relieving the company of its obligation. The reversal of $3.5 million of accrued compensation resulted from severance reversals of $1.9 million for 54 individuals who either left the company voluntarily or were re-assigned to future-benefiting operations and $1.6 million of severance related to individuals associated with the assets sold by Maxtek discussed above. Including current and prior period adjustments and reversals, headcount reduction under the 1999 plan totaled 1,302 employees. As of August 26, 2000, severance of approximately $41.2 million has been paid to 1,291 of these employees, with the remaining 11 employees to be paid severance of approximately $0.2 million under contract through 2002. Under the 2000 plan, headcount reduction net of current and prior period adjustments and reversals, totaled 246 employees. As of August 26, 2000, severance of approximately $4.7 million has been paid to 67 of these employees, with the remaining 179 employees to be paid severance of approximately $6.0 million through 2002. 8
EARNINGS (LOSS) PER SHARE Aug. 26, Aug. 28, (In thousands except share amounts) 2000 1999 - --------------------------------------------------------------------------- Net earnings (loss) $ 27,431 $ (8,482) ============ ============ Weighted average shares used for basic earnings (loss) per share 47,689,192 46,991,208 Effect of dilutive stock options 1,049,479 -- ------------ ------------ Weighted average shares used for dilutive earnings (loss) per share 48,738,671 46,991,208 ============ ============ Basic net earnings (loss) per share $ 0.58 $ (0.18) Diluted net earnings (loss) per share $ 0.56 $ (0.18)
Options to purchase an additional 10,250 and 3,573,029 shares of common stock were outstanding at August 26, 2000 and August 28, 1999, respectively, but were not included in the computation of diluted net earnings (loss) per share because their effect would be antidilutive. SHORT-TERM INVESTMENTS Short-term investments include investments with maturities of greater than three months and less than one year from the date of purchase. Those held at August 26, 2000 and May 27, 2000 consisted of:
Aug. 26, May 27, (In thousands) 2000 2000 - --------------------------------------------------------------------------- Corporate notes and bonds $ 114,333 $ 52,977 Commercial paper 57,813 29,353 Asset backed securities 21,026 7,486 Certificates of deposit 10,266 10,081 ------------ ------------ Short-term investments $ 203,438 $ 99,897 ============ ============
ACCOUNTS AND NOTES RECEIVABLE Accounts and notes receivable consisted of:
Aug. 26, May 27, (In thousands) 2000 2000 - --------------------------------------------------------------------------- Trade accounts receivable $ 167,602 $ 167,677 Notes receivable - current portion 14,159 13,865 Other receivables 13,640 12,354 Allowance for doubtful accounts (3,574) (4,909) ------------ ------------ Accounts and notes receivable - net $ 191,827 $ 188,987 ============ ============
Notes receivable - current portion at August 26, 2000 and May 27, 2000 included the current portion of notes and interest receivable due from Grass Valley Group Inc., received as consideration for the sale of Video and Networking assets. Other receivables was comprised of miscellaneous non-trade receivables. 9 INVENTORIES Inventories are stated at the lower of cost or market. Cost is determined based on a currently-adjusted standard basis, which approximates actual cost on a first-in, first-out basis. The company periodically reviews its inventory for obsolete or slow-moving items. Inventories and related reserves consisted of:
Aug. 26, May 27, (In thousands) 2000 2000 - --------------------------------------------------------------------------- Materials and work in process $ 67,377 $ 63,580 Finished goods 71,944 65,601 Inventory reserves (16,233) (15,180) ------------ ------------ Inventories - net $ 123,088 $ 114,001 ============ ============
PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consisted of:
Aug. 26, May 27, (In thousands) 2000 2000 - --------------------------------------------------------------------------- Land $ 1,656 $ 1,656 Buildings 152,550 154,466 Machinery and equipment 267,677 274,251 Accumulated depreciation and amortization (241,509) (241,829) ------------ ------------ Property, plant and equipment - net $ 180,374 $ 188,544 ============ ============
INVESTMENTS IN MARKETABLE EQUITY SECURITIES Investments in marketable equity securities are classified as available-for-sale and reported at fair market value in the Condensed Consolidated Balance Sheets as Other long-term assets. The related unrealized holding gains and losses are excluded from earnings and included, net of deferred income taxes, in Accumulated other comprehensive income on the Condensed Consolidated Balance Sheets. During the quarter ended August 26, 2000, the company wrote-down the cost basis of an available-for-sale security which was determined to be other than temporarily impaired. The total amount of the impairment charge was $2.4 million and was included in Other income (expense) - net in the Condensed Consolidated Statements of Operations.
Aug. 26, May 27, (In thousands) 2000 2000 - ------------------------------------------------------------------------------ Unamortized cost basis of marketable equity securities 4,191 6,704 Gross unrealized holding gains 33,037 9,991 Gross unrealized holding losses -- (1,707) --------- --------- Fair value of marketable equity securities $ 37,228 $ 14,988 ========= =========
10 COMPREHENSIVE INCOME (LOSS) Comprehensive income (loss) and its components, net of tax, are as follows:
Quarter ended Aug. 26, Aug. 28, (In thousands) 2000 1999 - ----------------------------------------------------------------------------------------- Net earnings (loss) $ 27,431 $ (8,482) Other comprehensive income (loss): Currency translation adjustment, net of taxes of $(1,543) and ($33), respectively (2,315) (50) Unrealized gain (loss) on available-for-sale securities, net of taxes of $9,905 and ($146), respectively 14,852 (217) Reclassification adjustment for realized losses, net of taxes of $0 and $8, respectively -- 11 --------- --------- Total comprehensive income (loss) $ 39,968 $ (8,738) ========= =========
BUSINESS SEGMENTS Historically, the company was organized based on the products and services that it offered. Under this organizational structure, the company operated in three main segments: Measurement, Color Printing and Imaging, and Video and Networking. The Color Printing and Imaging division was accounted for as a discontinued operation and as such the results of operations and the financial position of the division are not presented to management for decision-making purposes and are not included in the table below. The company now operates as a single segment - Measurement. Measurement revenue is derived principally through the development and marketing of a range of products including: oscilloscopes; logic analyzers; communications test equipment including products for network monitoring and protocol test, broadband transmission test and mobile production test; video test equipment; and accessories. Revenue is also derived from providing support services for products sold worldwide. The information provided below was obtained from internal information that was provided to the company's executive management group for the purpose of corporate management. Assets, liabilities and expenses attributable to corporate activity were not all allocated to the operating segments. Certain facility, information systems and other expenses were incurred by corporate and allocated to the divisions based on a percentage of sales, number of employees or payroll costs. Depreciation expense by division was not included in the internal information provided to the executive management group and was therefore not presented below. Inter-segment sales were not material and were included in net sales to external customers below.
Quarter ended Aug. 26, Aug. 28, (In thousands) 2000 1999 - ------------------------------------------------------------------------------------- Net sales to external customers by division: Measurement $ 278,191 $ 228,034 Video and Networking -- 52,713 --------- --------- Net sales $ 278,191 $ 280,747 --------- --------- Consolidated net sales to external customers by region: United States $ 141,166 $ 147,211 Europe 58,674 72,348 Pacific 32,529 28,525 Japan 25,139 20,801 Americas 20,683 11,862 --------- --------- Net sales $ 278,191 $ 280,747 --------- ---------
11
Measurement net sales to external customers by region: United States $ 141,166 $ 118,783 Europe 58,674 56,267 Pacific 32,529 23,656 Japan 25,139 19,427 Americas 20,683 9,901 --------- --------- Net sales $ 278,191 $ 228,034 --------- --------- Operating income (loss): Measurement $ 37,134 $ 22,339 Video and Networking -- (8,303) Charges related to the sale of Video and Networking -- (26,100) Non-recurring charges (315) -- All other -- (145) --------- --------- Operating income (loss) $ 36,819 $ (12,209) --------- ---------
INCOME TAXES The provision for income tax expense (benefit) consisted of:
Quarter ended Aug. 26, Aug. 28, (In thousands) 2000 1999 - ------------------------------------------------------------------------------------- United States $ 12,470 $ (1,646) State 2,200 (1,133) Foreign 100 (2,127) --------- --------- Income tax expense (benefit) $ 14,770 $ (4,906) ========= =========
The effective rates used to calculate income tax expense (benefit) for the first quarters of 2001 and 2000 were 35% and 31%, respectively. RECENT ACCOUNTING PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." The statement will require recognition of all derivatives as either assets or liabilities on the balance sheet at fair value. The statement is effective for the company's fiscal year 2002, as deferred by SFAS No. 137, but early adoption is permitted. Management has not yet completed an evaluation of the effects this standard will have on the company's consolidated financial statements. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial Statements." The effective date of the bulletin was delayed according to SAB No. 101A and SAB No. 101B and will be effective for the company's fourth quarter of fiscal year 2001. Management has not yet completed an evaluation of the effects this bulletin will have on the company's consolidated financial statements. 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL Tektronix, Inc. (Tektronix or the company) historically operated in three major business divisions: Measurement, Color Printing and Imaging, and Video and Networking, as well as in five major geographies: the United States; Europe; the Americas, including Mexico, Canada and South America; the Pacific, excluding Japan; and Japan. During fiscal year 2000, the company sold the Color Printing and Imaging and Video and Networking divisions and now operates as a focused test, measurement and monitoring company, providing measurement solutions to customers in many industries, including computers, telecommunications and semiconductors. For additional information on these fiscal year 2000 divestitures, see the Sale of Color Printing and Imaging and the Sale of Video and Networking footnotes included in the Notes to the Condensed Consolidated Financial Statements for the quarter ended August 26, 2000. As a focused Measurement company, Tektronix enables its customers to design, build, deploy and manage next-generation global communications networks and internet technologies. Revenue is derived principally through the development and marketing of a range of products including: oscilloscopes; logic analyzers; communications test equipment, including products for network monitoring and protocol test, broadband transmission test and mobile production test; video test equipment; and accessories. Revenue is also derived through providing support services for products sold worldwide. NON-RECURRING CHARGES - NET Total pre-tax net non-recurring charges on the Condensed Consolidated Statements of Operations totaled $0.3 million for the quarter ended August 26, 2000. The expense of $0.3 million consisted of a $2.1 million loss on sale of assets and $2.6 million of adjustments to the existing restructuring plans, offset by restructuring reserve reversals of $4.4 million. An expanded discussion of current quarter restructuring reserve activity is included below. The $2.1 million loss on sale of assets resulted from the sale of certain assets by Maxtek Components Corporation (Maxtek), a wholly-owned subsidiary of Tektronix, to Innovacomm Technologies, Inc. (Innovacomm). At the time the company established the restructuring reserves under the 2000 plan, it was anticipated that the assets sold to Innovacomm by Maxtek would be eliminated through closure, thereby necessitating associated reserves for employee severance and certain committed obligations related to facilities. As the opportunity to dispose of these assets through sale subsequently arose, and was determined by management to be more beneficial to the company, the related reserves were deemed no longer necessary and reversed. The reversal of reserves related to these assets totaled approximately $1.8 million and was included in the total reversal of $4.4 million noted below. During the first quarter of fiscal year 2001 the equipment and other assets reserve was increased approximately $2.0 million and the accrued compensation reserve was increased approximately $0.5 million. The increase of $2.0 million to the equipment and other assets reserve was primarily to provide for additional estimated impairment costs related to assets previously included in the restructuring plan. The increase of $0.5 million to the accrued compensation reserve was attributable to the subsequent clarification and amendment of an employment agreement. During the first quarter of fiscal year 2001, $0.9 million and $3.5 million of previously accrued amounts were reversed from the payables and other liabilities reserve and the accrued compensation reserve, respectively. The reversal of $0.9 million of the payables and other liabilities reserve was primarily attributable to certain obligations which were assumed by a third party, thereby relieving the company of its obligation. The reversal of $3.5 million of accrued compensation resulted from severance reversals of $1.9 million for 54 individuals who either left the company voluntarily or were re-assigned to future-benefiting operations and $1.6 million of severance related to individuals associated with the assets sold by Maxtek discussed above. 13 Including current and prior period adjustments and reversals, headcount reduction under the 1999 plan totaled 1,302 employees. As of August 26, 2000, severance of approximately $41.2 million has been paid to 1,291 of these employees, with the remaining 11 employees to be paid severance of approximately $0.2 million under contract through 2002. Under the 2000 plan, headcount reduction net of current and prior period adjustments and reversals, totaled 246 employees. As of August 26, 2000, severance of approximately $4.7 million has been paid to 67 of these employees, with the remaining 179 employees to be paid severance of approximately $6.0 million through 2002. RESULTS OF OPERATIONS Consolidated net earnings for the quarter ended August 26, 2000, were $27.4 million as compared to net losses of $8.5 million for the first quarter of fiscal year 2000. Net earnings from discontinued operations were $2.4 million for the first quarter of fiscal year 2000. NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS Net earnings from continuing operations were $27.4 million or $0.56 per diluted share for the first quarter of fiscal year 2001. For the quarter ended a year ago, the company recorded net losses from continuing operations of $10.9 million or $0.23 per diluted share. Excluding the $26.1 million of charges related to the sale of the Video and Networking division, the company would have had net earnings from continuing operations of $7.1 million or $0.15 per diluted share for the first quarter of fiscal year 2000. NET SALES Consolidated net sales of $278.2 million for the first quarter of fiscal year 2001, decreased $2.5 million from consolidated net sales of $280.7 million for the first quarter of fiscal year 2000. This decline was primarily attributable to the sale of the Video and Networking division in fiscal year 2000 which resulted in a decrease of $52.7 million in consolidated sales as compared with the prior year comparable quarter, offset by a $50.2 million increase in Measurement sales over the same quarter a year ago. First quarter fiscal year 2001 Measurement net sales of $278.2 million increased $50.2 million or 22% from Measurement net sales of $228.0 million for the first quarter of fiscal year 2000. Growth was realized in all geographies, with the United States and the Americas experiencing the largest increases of $22.4 million or 19% and $10.8 million or 109%, respectively. Measurement growth in these geographic regions was primarily attributable to continued customer demand for existing products introduced in fiscal year 2000, due to continued strength in key customer industries including semiconductors and telecommunications, and strong customer demand for new products shipped during the first quarter of the fiscal year. ORDERS Consolidated first quarter fiscal year 2001 orders of $306.9 million increased $24.2 million or 9% from consolidated orders of $282.7 million for the first quarter of fiscal year 2000. Growth in orders was the result of a significant increase in Measurement orders, partially offset by the absence of Video and Networking orders in the first quarter of the current year, due to the sale of that division during fiscal year 2000. Measurement first quarter fiscal year 2001 orders of $306.9 million increased $63.2 million or 26% from Measurement orders of $243.7 million for the first quarter of fiscal year 2000. This increase was realized across all geographies except Europe, which declined 6% due mainly to the negative effects of foreign currency exchange during the quarter and the timing of orders between the quarters. The largest increases in orders were realized in the United States and the Pacific, which grew $34.7 million or 27% to $161.3 million and $15.8 million or 56% to $44.1 million, respectively. Growth in these regions can be attributed to customer demand for new products introduced in the quarter, as well as the continued acceptance of existing products. In addition, the company continues to benefit from economic recovery in the Pacific region and overall strength in the semiconductor and telecommunications industries. 14 GROSS PROFIT Consolidated gross profit was $145.0 million for the first quarter of fiscal year 2001, an increase of $20.7 million from $124.3 million for the first quarter of fiscal year 2000. Gross margin increased to 52.1% for the first quarter of fiscal year 2001 from 44.3% for the prior year comparable period. The increase in gross profit of $20.7 million was primarily attributable to the improvement in gross margin as sales for the first quarter of fiscal year 2001 were relatively consistent with the prior year comparable period. Gross margin of 44.3% for the prior year comparable period reflected Measurement gross margin of 48.2%, offset by Video and Networking gross margin of 27.2%. The increase in Measurement gross margin from 48.2% in the prior year comparable period to 52.1% in the first quarter of fiscal year 2001 was primarily the result of a strong mix of higher margin measurement products, many of which were introduced during fiscal year 2000. Management of the company does not currently anticipate that these increased margin levels will be sustainable throughout fiscal year 2001. OPERATING EXPENSES Consolidated operating expenses were $108.1 million for the first quarter of fiscal year 2001, as compared with $136.5 million for the same quarter a year ago. First quarter fiscal year 2000 operating expenses included the $26.1 million loss on the sale of the Video and Networking division as well as the general operating expenses for that division. Measurement operating expenses were $108.1 million for the current quarter, an increase of $20.5 million from measurement expenses of $87.6 million in the first quarter of fiscal year 2000. Research and development expenses increased $6.5 million to $33.8 million in the first quarter of fiscal year 2001, however as a percentage of sales, those expenses remained relatively constant at approximately 12% in both the current and prior year comparable quarter. Selling, general and administrative expenses were $73.9 million or approximately 27% of net sales in the current quarter as compared with $60.0 million or 26% of net sales for the first quarter of fiscal year 2000. The increased level of expense was due primarily to reverse economies-of-scale associated with the transition to a smaller measurement-focused company, the addition of expenses for Gage Applied Sciences, Inc. and Maxtek, two subsidiary companies that were acquired subsequent to the first quarter of fiscal year 2000, and higher incentive-related accruals. NON-OPERATING INCOME AND EXPENSE Interest income was $14.3 million for the first quarter of fiscal year 2001 as compared with $0.3 million in the quarter ended a year ago. The increase in interest income is a result of interest earned on a portion of the proceeds from the sale of the Color Printing and Imaging division. Interest expense for the same periods decreased from $4.5 million to $3.4 million as a result of a reduction in the balance of short-term debt. Other income (expense) decreased from income of $0.6 million for the first quarter of fiscal year 2000 to expense of $5.5 million for the first quarter of fiscal year 2001. The expense in the current quarter is primarily the result of a write-down of marketable equity securities, losses on the disposals of assets and foreign currency losses. FINANCIAL CONDITION CHANGE IN FINANCIAL CONDITION Cash and cash equivalents decreased $144.3 million from year-end due mainly to the investment of an additional $103.5 million in short-term instruments over year-end and the repurchase of approximately 0.8 million shares for $47.9 million during the quarter. Cash flows from operating activities and borrowing capacity are expected to be sufficient to fund operations and capital expenditures through May 2002. Short-term investments were funded with a portion of the cash proceeds from the sale of the Color Printing and Imaging division, which were invested in various types of current investments with maturities greater than 90 days and less than one year. Short-term investments increased $103.5 million during the first quarter of fiscal year 2001, due to additional cash funding. 15 Inventory increased $9.1 million from year-end, with significant increases in materials and work in process and finished goods. Materials and work in process increased $3.8 million as a result of higher stock levels due to increasing lead-times for parts, the industry-wide threat of parts shortages and the related increase in the cost for those parts. Finished goods inventory increased approximately $6.3 million mainly as a result of increases in inventory levels and demo inventories to support the sales of new products. Other current assets decreased $8.4 million due mainly to a $1.2 million overall reduction in the level of general prepaid expenses and the use of approximately $8.1 million in current income tax benefits during the quarter. These decreases were offset by a $0.5 million increase in current foreign income tax benefits, a $0.5 million increase in accrued gains on forward foreign exchange contracts and other non-material increases to miscellaneous current assets. Net property, plant and equipment decreased $8.2 million to $180.4 million at the end of the first quarter of fiscal year 2001. The decrease was due mainly to $6.9 million of net disposals, including $2.0 million of disposals related to the restructuring plan and $10.0 million in depreciation expense for the quarter. These decreases were offset by approximately $8.5 million in capital expenditures during the quarter. Other long-term assets increased $22.5 million over year-end. This significant increase is due primarily to the $24.7 million increase in net holding gains on the company's marketable equity securities resulting from significant increases in the fair value of that stock during the quarter. Accrued compensation decreased $35.8 million from year-end. This significant decrease was due primarily to the payment of fiscal year 2000 performance-related incentives, the reduction of the general payroll accrual due to the timing of the quarter-end and the reversal of certain restructuring-related severance accruals. These decreases were partially offset by the accrual for first quarter fiscal year 2001 performance-related incentives. The $7.5 million increase in shareholders' equity is due mainly to $27.4 million in net earnings for the quarter, $16.4 million in options exercised and a $12.5 million increase in Accumulated other comprehensive income due mainly to increased unrealized holding gains and increased unrealized currency losses, offset by $47.9 million related to share repurchases during the quarter. LIQUIDITY AND CAPITAL RESOURCES At August 26, 2000, the company held $742.9 million in cash and cash equivalents and short-term investments, as well as bank credit facilities totaling $272.3 million, of which $267.4 million was unused. Unused facilities included $117.4 million in miscellaneous lines of credit and $150.0 million under revolving credit agreements with United States and foreign banks. At August 26, 2000, the company's working capital was $786.3 million, an increase of $4.4 million from the end of fiscal year 2000. Current assets decreased $37.3 million during the first quarter of fiscal year 2001, with decreases in cash and cash equivalents and other current assets, offset in part by increases in short-term investments and inventory. Current liabilities decreased $41.7 million during the quarter, primarily due to the $35.8 million decline in accrued compensation. RECENT ACCOUNTING PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." The statement will require recognition of all derivatives as either assets or liabilities on the balance sheet at fair value. The statement is effective for the company's fiscal year 2002, as deferred by SFAS No. 137, but early adoption is permitted. Management has not yet completed an evaluation of the effects this standard will have on the company's consolidated financial statements. 16 In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial Statements." The effective date of the bulletin was delayed according to SAB No. 101A and SAB No. 101B and will be effective for the company's fourth quarter of fiscal year 2001. Management has not yet completed an evaluation of the effects this bulletin will have on the company's consolidated financial statements. FORWARD-LOOKING STATEMENTS Statements and information included in this report that relate to future results and events (including new products) are based on the company's current expectations. Words such as "may," "could," "expects," "believes," "forecasts," "plans," "estimates," "intends" and "anticipates" constitute forward-looking statements subject to a number of risk factors, assumptions and uncertainties that could cause actual results to differ materially from those currently expected or desired. These risks are related to, but are not limited to, timely delivery of competitive products, competition, supplier risks, worldwide economic and market conditions, the transition to a smaller company, comparability of results, intellectual property risks, environmental risks, financial market risk and other risk factors listed here and from time-to-time in the company's filings with the Securities and Exchange Commission and press releases. TIMELY DELIVERY OF COMPETITIVE PRODUCTS Tektronix sells its products to customers that participate in rapidly changing high technology markets, which are characterized by short product life cycles. The company's ability to deliver a timely flow of competitive new products and market acceptance of those products, as well as the ability to increase production or to develop and maintain effective sales channels, is essential to growing the business. Because Tektronix sells test and measurement products that enable its customers to develop new technologies, the company must accurately predict the ever-evolving needs of those customers and deliver appropriate products and technologies at competitive prices to meet customer demands. The company's ability to deliver such products could be affected by engineering or other development program slippage as well as the availability of parts and supplies from third party providers on a timely basis and at reasonable prices. Failure to deliver competitive products in a timely manner and at a reasonable price could have an adverse effect on the results of operations, balance sheet or cash flows of the company. COMPETITION Tektronix participates in the highly competitive test, measurement and monitoring industry, competing directly with Agilent Technologies, Inc., TTC/Wavetek, Wandel and Goltermann, Inc., LeCroy Corporation and others for customers. Competition in the company's business is based primarily on product performance, technology, customer service, product availability and price. Some of the company's competitors may have greater resources to apply to each of these factors and in some cases have built significant reputations with the customer base in each market in which Tektronix competes. The company faces pricing pressures that have had and may continue to have an adverse impact on the company's earnings. If the company is unable to compete effectively on these and other factors, it could have a material adverse effect on the company's results of operations, balance sheet or cash flows. In the current business environment, the company must also compete with these and other companies to attract and retain talented employees who will be key to the ongoing success of the company. Risks relating to this competition could include higher than anticipated compensation expense, additional stock option issuances, new product delays and other related delays in the execution of the company's strategic plan. 17 SUPPLIER RISKS The company's manufacturing operations are dependent on the ability of suppliers to deliver quality components, subassemblies and completed products in time to meet critical manufacturing and distribution schedules. The company periodically experiences constrained supply of certain component parts in some product lines as a result of strong demand in the industry for those parts. Such constraints, if persistent, may adversely affect operating results until alternate sourcing can be developed. Volatility in the prices of these component parts, an inability to secure enough components at reasonable prices to build new products in a timely manner in the quantities and configurations demanded or, conversely, a temporary oversupply of these parts, could adversely affect the company's future operating results. WORLDWIDE ECONOMIC AND MARKET CONDITIONS Tektronix currently maintains operations in the U.S., Europe, the Pacific, the Americas and Japan. During the last fiscal year, nearly one-half of the company's revenues were from international sales. In addition, some of the company's manufacturing operations and key suppliers are located in foreign countries. As a result, the business is subject to the worldwide economic and market conditions risks generally associated with doing business abroad, such as fluctuating exchange rates, the stability of international monetary conditions, tariff and trade policies, domestic and foreign tax policies, foreign governmental regulations, political unrest, disruptions or delays in shipments and changes in other economic conditions. These factors, among others, could influence the company's ability to sell in international markets, as well as its ability to manufacture products or procure supplies. A significant downturn in the global economy could adversely affect the company's results of operations, balance sheet or cash flows. TRANSITION TO A SMALLER COMPANY Tektronix is in the process of transitioning from a portfolio of businesses to a company focused solely on the test, measurement and monitoring market. During fiscal year 2000, Tektronix divested itself of two of its three previously existing business divisions, Video and Networking and Color Printing and Imaging. Risks associated with these divestitures and the overall transition include the retention of some potential liabilities and other exposures related to a larger more diversified business, and the ability to successfully implement the strategic direction and restructuring actions announced in fiscal 1999 and 2000, including consolidating duplicative functions and re-sizing the existing cost structure to that of a smaller company. Failure to successfully resolve issues related to this transition in a timely manner could adversely affect the company's future results of operations, balance sheet or cash flows. COMPARABILITY OF RESULTS During 1999, the company was subject to the effects of the Asian economic crisis and its impact on the entire global economy, which resulted in lower-than-expected sales, orders, margins and growth for the company in that year. During 2000, the global economy improved resulting in favorable comparisons to 1999. Although management expects continued strong growth through fiscal year 2001, it does not expect growth of the magnitude experienced in 2000 on an on-going basis. These and other factors inherent to the company's business, including the effects of estimates, assumptions and allocations used in the preparation of stand-alone Measurement financial statements on the comparability of reported figures and the reliability of ratios and trends calculated based upon these results make it difficult to predict operating results for future quarters. 18 INTELLECTUAL PROPERTY RISKS As a technology-based company, Tektronix' success depends on developing and protecting its intellectual property. Tektronix relies generally on patent, copyright, trademark and trade secret laws in the United States and abroad. Electronic equipment as complex as most of the company's products, however, is generally not patentable in its entirety. Tektronix also licenses intellectual property from third parties and relies on those parties to maintain and protect their technology. The company cannot be certain that actions the company takes to establish and protect proprietary rights will be adequate. If the company is unable to adequately protect its technology, or if the company is unable to continue to obtain or maintain licenses for protected technology from third parties, it could have a material adverse effect on the company's results of operations and financial condition. From time to time in the usual course of business, the company receives notices from third parties regarding intellectual property infringement or takes action against others with regard to intellectual property rights. Even where the company is successful in defending or pursuing such claims, the company may incur significant costs. In the event of a successful claim against the company, Tektronix could lose its rights to needed technology or be required to pay license fees for the infringed rights, either of which could have an adverse impact on the company's business. ENVIRONMENTAL RISKS Tektronix is subject to a variety of federal, state, local and foreign environmental regulations relating to the use, storage, discharge and disposal of its hazardous chemicals used during the company's manufacturing process. The company operates a licensed hazardous waste management facility at its Beaverton campus. If Tektronix fails to comply with any present and future regulations, the company could be subject to future liabilities or the suspension of production. In addition, such regulations could restrict the company's ability to expand its facilities or could require Tektronix to acquire costly equipment, or to incur other significant expenses to comply with environmental regulations. OTHER RISK FACTORS Other risk factors include but are not limited to changes in the mix of products sold, regulatory and tax legislation, changes in effective tax rates, inventory risks due to changes in market demand or the company's business strategies, potential litigation and claims arising in the normal course of business, credit risk of customers, the fact that a substantial portion of the company's sales are generated from orders received during each quarter and other risk factors. The company may make other forward-looking statements from time to time. Forward-looking statements speak only as of the date made. The company undertakes no obligation to publicly release the result of any revisions to forward-looking statements which may be made to reflect subsequent events or circumstances or to reflect the occurrence of unanticipated events. 19 PART II. OTHER INFORMATION ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The company is exposed to financial market risks, including interest rate, equity price, and foreign currency exchange rate risks. At August 26, 2000, the company's debt obligations had fixed interest rates. In management's opinion, a 10% change in interest rates would not be material to the company's results of operations, balance sheet or cash flows. The company is exposed to equity price risk primarily through its marketable equity securities portfolio, including investments in Merix and other companies. The company has not entered into any hedging programs to mitigate equity price risk. In management's opinion, an adverse change of 20% in the value of these securities would not be material to the company's results of operations, balance sheet or cash flows. The company is exposed to foreign currency exchange rate risk primarily through transactions and commitments denominated in foreign currencies. The company utilizes natural hedges as well as derivative financial instruments, primarily forward foreign currency exchange contracts, to mitigate this risk. The company's policy is to only enter into derivative transactions when the company has an identifiable exposure to risk, thus not creating additional foreign currency exchange rate risk. In management's opinion, a 10% adverse change in foreign currency exchange rates would not have a significant effect on the company's results of operations, balance sheet or cash flows. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the company's annual meeting of shareholders on September 21, 2000, the shareholders voted on the election of four directors to the company's board of directors. Gerry B. Cameron, Jerome J. Meyer, and Ralph V. Whitworth were elected to serve three-year terms ending at the 2003 annual meeting of shareholders, and Richard H. Wills was elected to serve a one-year term ending at the 2001 annual meeting of shareholders. The voting for each director was as follows: 38,877,480 shares voted for Gerry B. Cameron, and 3,504,103 withheld; 38,803,027 shares voted for Jerome J. Meyer, and 3,578,556 withheld; 38,860,128 shares voted for Ralph V. Whitworth, and 3,521,455 withheld; and 38,881,972 shares voted for Richard H. Wills, and 3,499,611 withheld. The term of office of the company's other directors continued after the 2000 annual meeting of shareholders, as follows: David N. Campbell and Merrill A. McPeak until the 2001 annual meeting of shareholders; and Pauline Lo Alker, A. Gary Ames, Paul C. Ely, Jr., and Frank C. Gill until the 2002 annual meeting of shareholders. At the meeting, the shareholders also approved the company's 2000 Employee Stock Purchase Plan (the "Plan"). The number of shares voted for approval of the Plan was 42,154,299, the number voted against approval was 102,667, the number abstaining was 124,617 and there were zero (0) broker non-votes. A copy of the Plan is filed herewith as an exhibit. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: (3) (ii) Bylaws, as amended. (27) (i) Financial Data Schedule. (b) Reports on Form 8-K Tektronix filed a report on Form 8-K on June 28, 2000 with respect to a new shareholder rights agreement (reported under Item 5 of Form 8-K). 20 SIGNATURE Pursuant to the requirements 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. October 6, 2000 TEKTRONIX, INC. By COLIN L. SLADE ------------------------------ Colin Slade Vice President and Chief Financial Officer 21 EXHIBIT INDEX Exhibit No. Exhibit Description ----------- ------------------- (3) (ii) Bylaws, as amended. (27) (i) Financial Data Schedule. EX-3 2 a2027302zex-3.txt EX-3 As Amended through September 21, 2000 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 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. 1 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 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. 2 (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, a shareholder's notice must be delivered to or mailed and received at the principal executive office of the corporation not less than 45 days nor more than 120 days prior to the date on which the corporation first mailed its proxy materials for the prior year's annual meeting of shareholders; PROVIDED, HOWEVER, that in the event that the date of the annual meeting is advanced by more than 30 days or delayed (other than as a result of adjournment) by more than 30 days from the anniversary of the previous year's annual meeting, notice by the shareholder to be timely must be delivered not later than the close of business on the later of the 75th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. 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 3 such business not properly brought before the meeting shall not be transacted. For purposes of this section, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934. Section 12. SHAREHOLDER NOMINATION OF DIRECTORS. Not less than 45 days nor more than 120 days prior to the date on which the corporation first mailed its proxy materials for the prior year's 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 the date of the annual meeting is advanced by more than 30 days or delayed (other than as a result of adjournment) by more than 30 days from the anniversary of the previous year's annual meeting, notice by the shareholder to be timely must be delivered not later than the close of business on the later of the 75th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. 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. For purposes of this section, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934. 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 4 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. Section 14. OREGON CONTROL SHARES ACT. Sections 60.801 to 60.816 of the Oregon Business Corporation Act, known as the "Oregon Control Share Act," do not apply to acquisitions of the corporation's voting shares (as defined in the Oregon Control Share Act). 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. Effective as of the June 21, 2000 Board meeting, the number of directors of the corporation shall be eleven, consisting of four Class I directors, four Class II directors, and three Class III directors; effective as of the September 21, 2000 Board meeting, 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 each annual meeting of shareholders following such initial classification and election, directors elected to succeed those directors whose terms 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 5 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. 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 6 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 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 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 7 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. 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. 8 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 shall be a non-executive officer. The Chairman of the Board 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. 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, may 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. Section 6. PRESIDENT. The President shall supervise the operations of the corporation, subject to the direction of the board of directors and the Chairman of the Board. The President shall from time to time report to the board of directors all matters within the President's knowledge affecting the corporation which should be brought to the attention of the board. The President, 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. 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. CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER. The Board of Directors shall determine which officers shall be the Chief Executive Officer and the Chief Financial Officer, respectively. Section 9. 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 Board of Directors may designate one or more officers who 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 9 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 appointing officer 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 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, 10 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, 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. Such certificates shall be signed by the President 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. 11 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. 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. 12 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 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 13 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 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, and as amended with regard to Article II at a meeting of the board of directors of the company held on March 19, 1997, and as amended with regard to Article II at a meeting of the board of directors of the company held on May 15, 1997, and as amended with regard to Article II at a meeting of the board of directors of the company held on June 26, 1997, and as amended with regard to Article II at a meeting of the board of directors of the company held on March 17, 1999, and as amended with regard to Article II at a meeting of the board of directors of the company held on July 6, 1999, and as amended with regard to Article II, IV, and IV-A at a meeting of the board of directors of the company held on January 20, 2000, and as amended with regard to Article I and II at a meeting of the board of directors of the company held on June 21, 2000, and as amended with regard to Article IV at a meeting of the board of directors of the company held on September 21, 2000. JAMES F. DALTON ------------------------------------- Secretary EX-27 3 a2027302zex-27.txt EX-27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS MAY-26-2001 AUG-26-2000 742,909 37,228 195,401 3,574 123,088 1,074,805 421,883 241,509 1,501,696 288,542 150,337 0 0 210,646 774,433 1,501,696 278,191 278,191 133,229 133,229 0 0 3,357 42,201 14,770 27,431 0 0 0 27,431 0.58 0.56 Amount includes $203,438 of short-term investments. Amount represents net inventories. Amount includes retained earnings and other comprehensive income.
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