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 quarterly period ended August 30, 2003, 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 1-04837

_________________

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)

(503) 627-7111
Registrant's telephone number, including area code

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[   ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in rule 12-b-2 of the Exchange Act). Yes [X] No [   ]

AT SEPTEMBER 27, 2003 THERE WERE 84,547,437 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 Statements of Operations (Unaudited) —	3
for the Fiscal Quarter ended August 30, 2003
and the Fiscal Quarter ended August 31, 2002
Condensed Consolidated Balance Sheets (Unaudited) —	4
August 30, 2003 and May 31, 2003
Condensed Consolidated Statements of Cash Flows (Unaudited) —	5
for the Fiscal Quarter ended August 30, 2003
and the Fiscal Quarter ended August 31, 2002
Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2.  Management’s Discussion and Analysis of Financial	17
Condition and Results of Operations
Item 3.  Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.  Controls and Procedures	31
PART II.   OTHER INFORMATION
Item 4.  Submission of Matters to a Vote of Security Holders	32
Item 6.  Exhibits and Reports on Form 8-K	32
SIGNATURES	33

2

Part I   FINANCIAL INFORMATION

Item 1.    Financial Statements

Condensed Consolidated Statements of Operations
(Unaudited)

(In thousands, except per share amounts)
For the fiscal quarters ended	Aug. 30, 2003		Aug. 31, 2002
Net sales	$ 201,438		$ 198,512
Cost of sales	92,330		100,155
Gross profit	109,108		98,357
Research and development expenses	29,102		23,939
Selling, general and administrative expenses	62,525		54,635
Equity in business venture’s loss	—		1,453
Business realignment costs	4,626		9,565
Acquisition related costs	1,316		—
Gain on disposition of assets	(36	)	(15	)
Operating income	11,575		8,780
Interest income	5,932		7,528
Interest expense	(1,122	)	(2,053	)
Other non-operating expense, net	(585	)	(479	)
Income before taxes	15,800		13,776
Income tax expense (benefit)	4,424		(7,679	)
Income from continuing operations	11,376		21,455
Discontinued operations:
Loss from operations of optical parametric test business (less
applicable income tax benefit of $0 and $223)	—		(415	)
Loss on sale of optical parametric test business (less applicable
income tax benefit of $136 and $0)	(253	)	—
Loss from operations of Gage (less applicable income
tax benefit of $212 and $226)	(394	)	(419	)
Loss on sale of Gage (less applicable income tax
benefit of $457 and $0)	(848	)	—
Loss from operations of VideoTele.com (less applicable income tax
benefit of $3 and $453)	(5	)	(842	)
Loss from discontinued operations	(1,500	)	(1,676	)
Net earnings	$     9,876		$   19,779
Income per share from continuing operations — basic and diluted	$       0.13		$       0.24
Loss per share from discontinued operations — basic and diluted	(0.02	)	(0.02	)
Net earnings per share — basic and diluted	$       0.12		$       0.22
Weighted average shares outstanding — basic	84,697		89,474
Weighted average shares outstanding — diluted	85,816		89,808

     The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Condensed Consolidated Balance Sheets
(Unaudited)

(In thousands)	Aug. 30, 2003		May 31, 2003
ASSETS
Current assets:
Cash and cash equivalents	$    145,254		$    190,387
Short-term marketable investments	92,478		106,369
Trade accounts receivable, net of allowance for
doubtful accounts of $3,864 and $3,756, respectively	97,814		100,334
Inventories	86,869		92,868
Other current assets	78,504		83,816
Assets of discontinued operations	—		7,938
Total current assets	500,919		581,712
Property, plant and equipment, net	123,493		127,985
Long-term marketable investments	391,688		415,606
Deferred tax assets	145,764		144,134
Goodwill	72,722		73,736
Other long-term assets	46,144		41,537
Total assets	$ 1,280,730		$ 1,384,710
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$    105,337		$    101,753
Accrued compensation	52,216		58,193
Current portion of long-term debt	1,241		56,584
Deferred revenue	16,521		19,551
Liabilities of discontinued operations	—		651
Total current liabilities	175,315		236,732
Long-term debt	56,475		55,002
Other long-term liabilities	280,491		313,750
Shareholders’ equity:
Common stock, no par value (authorized 200,000
shares; issued and outstanding 84,288 and 84,844
at August 30, 2003 and May 31, 2003, respectively)	225,666		223,233
Retained earnings	701,498		707,191
Accumulated other comprehensive loss	(158,715	)	(151,198	)
Total shareholders’ equity	768,449		779,226
Total liabilities and shareholders’ equity	$ 1,280,730		$ 1,384,710

     The accompanying notes are an integral part of these condensed consolidated financial statements.

4

Condensed Consolidated Statements of Cash Flows
(Unaudited)

(In thousands)
For the fiscal quarters ended	Aug. 30, 2003		Aug. 31, 2002
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings	$     9,876		$   19,779
Adjustments to reconcile net earnings to net cash (used in) provided by
operating activities:
Loss from VideoTele.com discontinued operations	5		842
Loss from sale of optical parametric test business	253		—
Loss from optical parametric test business discontinued operations	—		415
Loss from sale of Gage	848		—
Loss from Gage discontinued operations	394		419
Depreciation and amortization expense	7,252		8,813
(Gain) loss on the disposition/impairment of assets	(36	)	8,255
Gain on the disposition of investments	—		(398	)
Bad debt expense	199		77
Tax benefit of stock option exercises	252		29
Deferred income tax expense (benefit)	9,232		(1,298	)
Equity in business venture’s loss	—		1,453
Changes in operating assets and liabilities:
Accounts receivable	3,095		3,401
Inventories	6,926		10,543
Other current assets	(1,005	)	(10,246	)
Accounts payable	2,390		(12,502	)
Accrued compensation	(6,156	)	(7,450	)
Deferred revenue	(3,030	)	52
Cash funding for domestic pension plan	(30,000	)	(15,000	)
Other long-term assets and liabilities, net	(3,854	)	6,980
Net cash (used in) provided by continuing operating activities	(3,359	)	14,164
Net cash provided by (used in) discontinued operating activities	829		(2,034	)
Net cash (used in) provided by operating activities	(2,530	)	12,130
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment	(4,212	)	(2,707	)
Proceeds from the disposition of fixed assets	1,056		508
Proceeds from maturities and sales of short-term and
long-term available-for-sale securities	177,337		131,090
Purchases of short-term and long-term available-for-sale securities	(148,053	)	(208,096	)
Net cash provided by (used in) investing activities	26,128		(79,205	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in short-term debt	957		—
Repayment of long-term debt	(56,300	)	(41,737	)
Proceeds from employee stock plans	4,395		3,307
Repurchase of common stock	(17,783	)	(49,691	)
Net cash used in financing activities	(68,731	)	(88,121	)
Net decrease in cash and cash equivalents	(45,133	)	(155,196	)
Cash and cash equivalents at beginning of period	190,387		260,773
Cash and cash equivalents at end of period	$ 145,254		$ 105,577
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS
Income taxes paid (refunded), net	$        332		$  (6,479	)
Interest paid	2,111		3,973

     The accompanying notes are an integral part of these condensed consolidated financial statements.

5

Notes to Condensed Consolidated Financial Statements

1.  The Company

     Tektronix, Inc. (“Tektronix” or the “Company”) manufactures, markets and services test, measurement and monitoring solutions to a wide variety of customers in many industries, including computing, communications, semiconductors, broadcast, education, government, military/aerospace, automotive and consumer electronics. Tektronix enables its customers to design, manufacture, deploy, monitor and service next-generation global communications networks, computing and advanced technologies. Revenue is derived principally through the development and marketing of a broad range of products including: oscilloscopes; logic analyzers; communication test equipment, including mobile protocol test equipment and radio frequency test equipment; video test equipment; and related components, support services and accessories. The Company maintains operations in four major geographies: the Americas, including the United States, and Other Americas, including Mexico, Canada and South America; Europe, including the Middle East and Africa; the Pacific, including China, Southeast Asia and India; and Japan.

2.  Financial Statement 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 as permitted by Article 10 of Regulation S-X. The consolidated financial statements include the accounts of Tektronix and its majority-owned subsidiaries. Investments in joint ventures and minority-owned companies where the Company exercises significant influence are accounted for under the equity method with the Company’s percentage of earnings included in Equity in business ventures’ loss on the Condensed Consolidated Statements of Operations. Significant intercompany transactions and balances have been eliminated. Certain prior period amounts have been reclassified to conform to the current period’s presentation with no effect on previously reported earnings. The Company’s fiscal year is the 52 or 53 weeks ending the last Saturday in May. Fiscal year 2004 is 52 weeks, while fiscal year 2003 was 53 weeks. Due to this convention, the first quarter of fiscal year 2003 was 14 weeks compared to the first quarter of fiscal year 2004, which was 13 weeks.

     The presentation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions, including those used to record the results of discontinued operations, affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the revenues and expenses reported during the period. Examples include the allowance for doubtful accounts; estimates of contingent liabilities; intangible asset valuation; inventory valuation; pension plan assumptions; determining when investment impairments are other-than-temporary; and the assessment of the valuation of deferred income taxes and income tax reserves. Actual results may differ from estimated amounts. Management believes that the condensed consolidated financial statements include all necessary adjustments, which are of a normal and recurring nature and are adequate to fairly present the financial position, results of operations and cash flows for the interim periods. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto in the Company’s annual report on Form 10-K for the fiscal year ended May 31, 2003.

3.  Earnings Per Share, Including Pro Forma Effects of Stock-Based Compensation

     Basic earnings per share is calculated based on the weighted average number of common shares outstanding during each period. Diluted earnings per share is calculated based on these same weighted average shares outstanding plus the effect of potential shares issuable upon assumed exercise of common stock equivalents based on the treasury stock method. Common stock equivalents are excluded from the calculation of diluted earnings per share to the extent their effect would be antidilutive.

6

     Earnings per share for the fiscal quarters ended August 30, 2003 and August 31, 2002 were as follows:

(In thousands except per share amounts)	Aug. 30, 2003	Aug. 31, 2002
Net earnings	$  9,876	$19,779
Weighted average shares used for
basic earnings per share	84,697	89,474
Effect of dilutive stock options	1,119	334
Weighted average shares used for
dilutive earnings per share	85,816	89,808
Net earnings per share — basic	$    0.12	$    0.22
Net earnings per share — diluted	$    0.12	$    0.22

     Options to purchase an additional 4,510,898 and 7,107,806 shares of common stock were outstanding at August 30, 2003 and August 31, 2002, respectively, but were not included in the computation of diluted net earnings per share because their effect would have been antidilutive.

     The Company accounts for stock options according to Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees.” Under APB Opinion No. 25, no compensation expense is recognized in the Company’s consolidated financial statements upon issuance of employee stock options because the exercise price of the options equals the market price of the underlying stock on the date of grant. Alternatively, under the fair value method of accounting provided for by Financial Accounting Standards Board Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation,” the measurement of compensation cost is based on the fair value of employee stock options at the grant date and requires the use of option pricing models to value the options. The weighted average estimated fair values of options granted during the fiscal quarters ended August 30, 2003 and August 31, 2002 were $6.15 and $7.49 per share, respectively.

     The pro forma impact to both net earnings and earnings per share from calculating stock-related compensation cost consistent with the fair value alternative of SFAS No. 123 for the fiscal quarters ended August 30, 2003 and August 31, 2002 is indicated below:

(amounts in thousands, except
per share information)	Aug. 30, 2003		Aug. 31, 2002
Net earnings as reported	$      9,876		$      19,779
Stock compensation cost included in net
earnings as reported, net of income taxes	91		83
Stock compensation cost using the fair
value alternative, net of income taxes	(5,115	)	(4,907	)
Pro forma net earnings	$      4,852		$      14,955
Basic EPS — as reported	$        0.12		$          0.22
Basic EPS — pro forma	0.06		0.17
Diluted EPS — as reported	$        0.12		$          0.22
Diluted EPS — pro forma	0.06		0.17

7

   SFAS No. 123 Assumptions

     The fair value of options were estimated as of the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions for the fiscal quarters ended August 30, 2003 and August 31, 2002:

	Aug. 30, 2003		Aug. 31, 2002
Expected life in years	4.0		4.0
Risk-free interest rate	2.57	%	3.87	%
Volatility	31.84	%	45.59	%
Dividend yield	0.0	%	0.0	%

4.   Sony/Tektronix Redemption

     During the second quarter of fiscal year 2003, the Company acquired from Sony Corporation (“Sony”) its 50% interest in Sony/Tektronix Corporation (“Sony/Tektronix”) through redemption of Sony’s shares by Sony/Tektronix for 8 billion Yen (“Sony/Tektronix Acquisition”), or approximately $65.7 million at September 30, 2002. This transaction closed on September 30, 2002, at which time the Company obtained 100% ownership of Sony/Tektronix. This transaction is a long-term strategic investment that will provide the Company stronger access to the Japanese market and the ability to leverage the engineering resources in Japan. The Company accounted for its investment in Sony/Tektronix under the equity method prior to this redemption. Prior to the close of this transaction, the Sony/Tektronix entity entered into an agreement to borrow up to 9 billion Yen, or approximately $73.9 million at an interest rate of 1.75% above the Tokyo Inter Bank Offering Rate (“TIBOR”). Sony/Tektronix used $53.1 million of this credit facility to fund a portion of the redemption of shares from Sony and the remainder will provide operating capital for this Japan subsidiary. The transaction was accounted for by the purchase method of accounting, and accordingly, beginning on the date of acquisition the results of operations, financial position and cash flows of Sony/Tektronix were consolidated in the Company’s financial statements. Assets purchased and liabilities assumed as of the purchase date were as follows (in thousands):

Cash	$  23,915
Accounts receivable	23,333
Inventory	15,476
Deferred tax asset	3,431
Property, plant and equipment	36,752
Goodwill	35,647
Intangible assets	2,200
Other long-term assets	42,469
Total assets	$183,223
Accounts payable and accrued liabilities	$  22,394
Accrued compensation	5,071
Long-term debt	53,506
Other long-term liabilities	62,412
Total liabilities	$143,383

     Pro forma summary results of operations of the Company after intercompany eliminations of the newly created Japan subsidiary as though the acquisition had been completed at the beginning of fiscal year 2003 were as follows:

	Quarter ended
(In thousands, except per share amounts)	Aug. 31, 2002
Net sales	$206,328
Net earnings	17,398
Earnings per share — diluted	$      0.19

     The Company incurred $1.3 million in costs specifically associated with integrating the operations of this subsidiary during the fiscal quarter ended August 30, 2003, which are recorded in Acquisition related costs on the Condensed Consolidated Statements of Operations.

8

5.  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 (“CPID”). The Company accounted for CPID 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.” The sales price was $925.0 million in cash, with certain liabilities of the division assumed by the buyer. During fiscal year 2000, Tektronix recorded a net gain of $340.3 million on this sale. The net 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. The accrual for estimated liabilities related to the sale was $10.4 million as of May 31, 2003. During fiscal year 2003, the Company recorded a gain of $16.3 million, net of income tax expense of $8.8 million, as a result of the resolution of certain estimated liabilities related to the sale. This gain was reported in discontinued operations in the Consolidated Statements of Operations. In fiscal year 2002, the Company recorded a gain of $2.2 million, net of income tax expense of $1.2 million, in Gain on sale of CPID in the Consolidated Statements of Operations as a result of settling and adjusting certain indemnities related to the original sales transaction.

     The Company’s original accrual for estimated liabilities associated with the sale related to specific provisions in the sale agreement for indemnities and warranties as well as settlement of disputes over the value of net assets as of the transaction date. The indemnities and warranties primarily relate to the Company’s obligation for liabilities existing prior to the closing date of January 1, 2000. Subsequent to the close of the transaction, the Company entered into an arbitration process to determine settlement of certain disputes regarding the value of the net assets transferred at the closing date. This arbitration was resolved in the first quarter of fiscal year 2002, resulting in an $18.0 million payment by the Company to the purchaser. This settlement directly reduced the amount of the contingent liability reserve. The accrual was further reduced by reversals of $25.0 million during fiscal year 2003. The reversals were due to the Company changing its estimate of probable exposures under the remaining indemnity and warranty provisions. Specifically, the Company recorded reversals due to a) the expiration of an indemnity period, which passed without the Company receiving claims under the expiring provisions, b) the resolution of certain outstanding potential exposures for amounts less than that anticipated by the Company, and c) other factors which reduced the Company’s estimate of probable exposures under the remaining indemnity and warranty provisions. The reversals have been recorded net of tax effect in Discontinued operations in the Statements of Operations. Other changes in the contingent liability reserve were primarily for cash payments. The remaining balance of this contingent liability is $10.4 million as of August 30, 2003, a significant portion of which may take several years to resolve. If unforeseen events or circumstances arise subsequent to the balance sheet date, changes in the estimate of the contingent liability could be material to the financial statements.

     The Company continues to closely monitor the status of the CPID related contingent liabilities based on information received. The liability will be adjusted as settlements are completed or more information becomes available that will change the likely outcome. Changes to the estimate of liabilities or differences between these estimates and the ultimate amount of settlement will be recorded in Discontinued operations in the Consolidated Statement of Operations in the period such events occur.

6.   Repurchase of Common Stock

     On March 15, 2000, the Board of Directors authorized the purchase of up to $550.0 million of the Company’s common stock on the open market or through negotiated transactions. During the first quarter of fiscal year 2004, the Company repurchased 0.8 million shares for $17.8 million. As of August 30, 2003, the Company repurchased a total of 15.3 million shares at an average price of $21.84 per share totaling $334.2 million under this authorization. The reacquired shares were immediately retired as required under Oregon corporate law.

9

7.  Business Realignment Costs

     Business realignment costs represent actions to realign the Company’s cost structure in response to significant events and primarily include restructuring actions and impairment of assets resulting from reduced business levels. Restructuring actions taken during the first quarter of fiscal year 2004 and in fiscal years 2002 and 2003 were intended to reduce the Company’s worldwide cost structure across all major functions in response to the dramatic economic decline, which severely impacted markets into which the Company sells its products. Major operations impacted include manufacturing, engineering, sales, marketing and administrative functions. The Company expects to achieve future cost savings primarily by reducing employee headcount. In addition to severance, the Company incurred other costs associated with restructuring its organization, which primarily represent facilities contracts and other exit costs associated with aligning the cost structure to appropriate levels. Management believes that the restructuring actions implemented in fiscal years 2002 and 2003 have resulted in the costs savings anticipated for those actions.

     Costs incurred during the current quarter primarily relate to restructuring actions planned by the Company during fiscal year 2003 which were executed in the current quarter. Many of the restructuring actions planned by the Company take significant time to execute, particularly if they are being conducted in countries outside the United States. The Company anticipates incurring additional business realignment costs during fiscal year 2004, including $10 million to $15 million in the second quarter, as planned actions continue to be executed.

     Business realignment costs of $4.6 million in the first quarter of fiscal year 2004 included $3.8 million of severance related costs for 75 employees mostly located in Europe and the Americas, $0.7 million for accelerated depreciation of assets in Europe and $0.3 million for contractual obligations for actions taken during the first quarter of fiscal year 2004 and in fiscal year 2003, offset by $0.2 million of severance reversals related to previously recorded business realignment costs. Expected future annual salary cost savings from actions taken in the first quarter of fiscal year 2004 to reduce employee headcount is estimated to be $4.3 million. At August 30, 2003, the remaining liabilities for employee severance and related benefits for actions taken in fiscal years 2004, 2003 and 2002 were maintained for 33, 25 and 8 employees, respectively.

     Activity for the above described actions during the first quarter of fiscal year 2004 was as follows:

	Balance,							Balance,
	May 31,	Costs		Cash		Non-cash		August 30,
(In thousands)	2003	Incurred		Payments		Adjustments		2003
Fiscal Year 2004 Actions:
Employee severance and
related benefits	$     —	$ 3,839		$(2,633	)	$   —		$1,206
Asset impairments	—	696		—		(696	)	—
Contractual obligations	—	165		(109	)	—		56
Total	—	4,700		(2,742	)	(696	)	1,262
Fiscal Year 2003 Actions:
Employee severance and
related benefits	5,394	(184	)	(3,822	)	—		1,388
Contractual obligations	1,730	110		(269	)	43		1,614
Total	7,124	(74	)	(4,091	)	43		3,002
Fiscal Year 2002 Actions:
Employee severance and
related benefits	494	—		(252	)	—		242
Contractual obligations	434	—		(86	)	—		348
Total	928	—		(338	)	—		590
Total of all actions	$8,052	$ 4,626		$(7,171	)	$(653	)	$4,854

10

8.   Marketable Investments

     Marketable investments are recorded at market value with the resulting gains and losses included, net of tax, in Accumulated other comprehensive loss on the Consolidated Balance Sheets. Realized gains and losses on sales of marketable investments were $0.5 million and $0.9 million, respectively, during the quarter ended August 30, 2003 and $0.6M and $0.3M, respectively, during the quarter ended August 31, 2002 and are included in Other non-operating expense, net.

     Short-term marketable investments held at August 30, 2003 consisted of:

	Amortized	Unrealized	Unrealized		Market
(In thousands)	cost	gains	losses		value
Corporate notes and bonds	$20,132	$   283	$   --		$20,415
Asset backed securities	35,912	287	(165	)	36,034
Mortgage backed securities	1,937	—	(33	)	1,904
Federal agency notes and bonds	28,383	499	—		28,882
U.S. Treasuries	5,137	106	—		5,243
Short-term marketable investments	$91,501	$1,175	$(198	)	$92,478

     Long-term marketable investments held at August 30, 2003 consisted of:

	Amortized	Unrealized	Unrealized		Market
(In thousands)	cost	gains	losses		value
Corporate notes and bonds	$  77,319	$1,417	$  (293	)	$  78,443
Asset backed securities	60,167	1,262	(24	)	61,405
Mortgage backed securities	147,387	993	(1,701	)	146,679
Federal agency notes and bonds	75,061	356	(457	)	74,960
U.S. Treasuries	29,867	337	(3	)	30,201
Long-term marketable investments	$389,801	$4,365	$(2,478	)	$391,688

     Short-term marketable investments held at May 31, 2003 consisted of:

	Amortized	Unrealized	Unrealized		Market
(In thousands)	cost	gains	losses		value
Corporate notes and bonds	$  31,148	$   418	$   —		$  31,566
Asset backed securities	40,078	471	(133	)	40,416
Mortgage backed securities	5,614	91	(82	)	5,623
Federal agency notes and bonds	28,335	429	—		28,764
Short-term marketable investments	$105,175	$1,409	$(215	)	$106,369

     Long-term marketable investments held at May 31, 2003 consisted of:

	Amortized	Unrealized	Unrealized		Market
(In thousands)	cost	gains	losses		value
Corporate notes and bonds	$  91,712	$  2,181	$ —		$  93,893
Asset backed securities	56,633	2,725	(12	)	59,346
Mortgage backed securities	143,378	2,574	(49	)	145,903
Federal agency notes and bonds	78,643	1,798	—		80,441
U.S. Treasuries	35,044	979	—		36,023
Long-term marketable investments	$405,410	$10,257	$(61	)	$415,606

11

     Contractual maturities of long-term marketable investments at August 30, 2003 will be as follows:

	Amortized Cost Basis
After 1 year through 5 years	$242,414
Mortgage backed securities	147,387
	$389,801

     Investments in corporate equity securities are classified as available-for-sale and reported at fair market value on the Consolidated Balance Sheets and are included in Other long-term assets. The related unrealized holding gains and losses are excluded from earnings and included, net of tax, in Accumulated other comprehensive loss on the Consolidated Balance Sheets. Corporate equity securities classified as available-for-sale and the related unrealized holding gains at August 30, 2003 and May 31, 2003 were as follows:

(In thousands)	Aug. 30, 2003	May 31, 2003
Unamortized cost basis of corporate equity securities	$  8,384	$  8,384
Gross unrealized holding gains	12,233	7,707
Fair value of corporate equity securities	$20,617	$16,091

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 consisted of the following:

(In thousands)	Aug. 30, 2003	May 31, 2003
Materials	$  7,999	$  4,314
Work in process	33,565	35,637
Finished goods	45,305	52,917
Inventories	$86,869	$92,868

10.  Other Current Assets

     Other current assets consisted of the following:

(In thousands)	Aug. 30, 2003	May 31, 2003
Held-for-sale assets	$30,115	$29,601
Current deferred tax asset	25,148	23,457
Prepaid expenses	9,054	6,514
Other receivables	8,233	8,289
Income taxes receivable	4,506	15,303
Other current assets	1,448	618
Notes receivable	—	34
Other current assets	$78,504	$83,816

     Held-for-sale assets include office buildings and land located in Shinagawa, Japan, which were acquired in the Sony/Tektronix redemption in fiscal year 2003, and a facility located in Nevada City, California, both of which are currently being marketed for sale. The Company expects to complete the sales of these properties within the next 12 months.

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11.   Property, Plant and Equipment, Net

     Property, plant and equipment, net consisted of the following:

(In thousands)	Aug. 30, 2003		May 31, 2003
Land	$     7,084		$     6,935
Buildings	154,573		153,615
Machinery and equipment	263,629		268,960
Accumulated depreciation and amortization	(301,793	)	(301,525	)
Property, plant and equipment, net	$ 123,493		$ 127,985

12.  Goodwill

     The Company accounts for goodwill and intangible assets in accordance with SFAS No. 141, “Business Combinations” and SFAS No. 142, “Goodwill and Other Intangible Assets.” Accordingly, the Company no longer amortizes goodwill from acquisitions, but continues to amortize other acquisition-related intangibles and costs.

     Changes in goodwill during the quarter ended August 30, 2003 were as follows:

Balance at May 31, 2003	$ 73,736
Currency translation	(1,014	)
Balance at August 30, 2003	$ 72,722

13.  Other Long-Term Assets

     Other long-term assets consisted of the following:

(In thousands)	Aug. 30, 2003	May 31, 2003
Corporate equity securities	$20,617	$16,091
Notes, contracts and leases	9,604	9,370
Pension asset	9,250	9,280
Other intangibles, net	6,520	6,639
Other assets	153	157
Other long-term assets	$46,144	$41,537

14.   Long-Term Debt

     The Company’s long-term debt consisted of the following:

(In thousands)	Aug. 30, 2003		May 31, 2003
TIBOR+1.75% facility due September 29, 2006,
interest at 1.84% on August 30, 2003	$ 55,694		$ 54,393
7.5% notes payable, repaid on August 1, 2003	—		56,300
Other long-term agreements	2,022		893
Current portion	(1,241	)	(56,584	)
Long-term debt	$ 56,475		$ 55,002

     On August 1, 2003, the Company repaid $56.3 million of principal due on the 7.5% notes payable.

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     The TIBOR+1.75% debt facility agreement requires the Company to comply with certain financial covenants measured on tangible net worth and certain financial ratios. This agreement also contains a cross default clause which could trigger acceleration of outstanding debt should the Company default on other financial indebtedness, as defined in the agreement. The Company was in compliance with its debt covenants as of August 30, 2003.

     At August 30, 2003, the Company maintained unsecured bank credit facilities of $134.3 million, of which $77.7 million is available for future drawdowns.

15.  Other Long-Term Liabilities

     Other long-term liabilities consisted of the following:

(In thousands)	Aug. 30, 2003	May 31, 2003
Pension liability	$247,510	$279,162
Postretirement benefits	16,627	17,568
Deferred compensation	10,711	9,943
Other	5,643	7,077
Other long-term liabilities	$280,491	$313,750

     During the quarter ended August 30, 2003, the Company made a cash payment of $30 million to the U.S. cash balance pension plan.

16.   Accumulated Comprehensive Loss

     Comprehensive income and its components, net of tax, are as follows:

	Quarter ended
(In thousands)	Aug. 30, 2003		Aug. 31, 2002
Net earnings	$ 9,876		$ 19,779
Other comprehensive income (loss):
Currency translation adjustment, net of
taxes of ($3,514) and $6,597, respectively	(5,496	)	9,896
Unrealized loss on available-for-
sale securities, net of taxes of
($1,560) and ($1,104), respectively	(2,440	)	(1,656	)
Additional minimum pension liability, net of
taxes of $164 and ($1,174), respectively	419		(2,073	)
Total comprehensive income	$ 2,359		$ 25,946

     Accumulated other comprehensive loss consisted of the following:

			Unrealized
			holding		Additional		Accumulated
	Foreign		gains on		minimum		other
	currency		available-for-		pension		comprehensive
(In thousands)	translation		sale securities		liability		loss
Balance as of May 31, 2003	$24,710		$11,764		$(187,672	)	$(151,198	)
First quarter activity	(5,496	)	(2,440	)	419		(7,517	)
Balance as of August 30, 2003	$19,214		$9,324		$(187,253	)	$(158,715	)

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17.  Business Segments

     The Company’s revenue is derived principally through the development and marketing of a range of test and measurement products in several operating segments that have similar economic characteristics as well as similar customers, production processes and distribution methods. It is impractical to report net sales by product group. Accordingly, the Company reports as a single Measurement segment. Inter-segment sales were not material and were included in net sales to external customers below.

	Quarter ended
(In thousands)	Aug. 30, 2003	Aug. 31, 2002
Consolidated net sales to external customers by region:
The Americas:
United States	$  84,127	$  90,186
Other Americas	5,731	5,297
Europe	40,076	41,622
Pacific	37,493	41,830
Japan	34,011	19,577
Net sales	$201,438	$198,512

18.  Other Non-Operating Expense, Net

	Quarter ended
(In thousands)	Aug. 30, 2003		Aug. 31, 2002
(Loss) gain on disposition of financial assets	$  (490	)	$    398
Currency gains	1,102		190
Other expenses	(1,197	)	(1,067	)
Other non-operating expense, net	$  (585	)	$  (479	)

19.  Product Warranty Accrual

     The Company’s product warranty accrual, included in Accounts payable and accrued liabilities on the Condensed Consolidated Balance Sheet, reflects management’s best estimate of probable liability under its product warranties. Management determines the warranty accrual based on historical experience and other currently available evidence.

     Changes in the product warranty accrual were as follows (in thousands):

Balance, May 31, 2003	$ 8,689
Payments made	--
Change in warranty accruals	(124	)
Balance, August 30, 2003	$ 8,565

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20.  Recent Accounting Pronouncements

     In October 2002, the Emerging Issues Task Force (“EITF”) issued EITF 00-21, “Accounting for Revenue Arrangements with Multiple Deliverables.” This standard addresses revenue recognition accounting by a vendor for arrangements under which it will perform multiple revenue-generating activities. This statement is to be effective for the Company’s fiscal year 2004. The Company adopted the provisions of this statement at the beginning of the first quarter of fiscal year 2004, without a material effect on the Company’s consolidated financial statements.

     In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure — an amendment of FASB Statement No. 123.” This standard amends SFAS No. 123, “Accounting for Stock-Based Compensation,” to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this standard amends the disclosure requirements of Statement 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The transition provisions of SFAS No. 148 are not applicable to the Company since the expense recognition provisions of SFAS No. 123 have not been adopted. The Company has adopted the disclosure provisions of SFAS No. 148.

     In April 2003, Statement of Financial Accounting Standards No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities,” (“SFAS No. 149”) was issued by the FASB. SFAS No. 149 amends SFAS No. 133 to clarify the definition of a derivative and incorporate many of the implementation issues cleared as a result of the Derivatives Implementation Group process. This statement is effective for contracts entered into or modified after June 30, 2003 and should be applied prospectively after that date. The Company adopted the provisions of SFAS No. 149 effective July 1, 2003, without a material effect on the consolidated financial statements.

21.   Contingent Liabilities

     As of August 30, 2003, the Company had $22.2 million recorded as contingent liabilities in Accounts payable and accrued liabilities on the Condensed Consolidated Balance Sheet, which included $10.4 million relating to the sale of CPID discussed in Note 5 above, $4.6 million for environmental exposures and $7.2 million for other contingent liabilities. It is reasonably possible that management’s estimates of contingent liabilities could change in the near term and that such changes could be material to the Company’s consolidated financial statements.

     Included in contingent liabilities is $4.6 million specifically associated with the closure and cleanup of a licensed hazardous waste management facility at the Company’s Beaverton, Oregon campus. The Company established the initial liability in 1998 and bases ongoing estimates on currently available facts and presently enacted laws and regulations. Costs for tank removal and cleanup were incurred in fiscal year 2001. Costs currently being incurred primarily relate to ongoing monitoring and testing of the site. Management’s best estimate of the range of remaining reasonably possible cost associated with this environmental cleanup, testing and monitoring could be as high as $10.0 million. Management believes that the recorded liability represents the low end of the range. These costs are estimated to be incurred over the next several years.

     The remaining $7.2 million of contingent liabilities includes amounts related to intellectual property and employment issues, as well as liabilities related to dispositions of assets other than CPID.

22.   Subsequent Events

   Declaration of Dividends

     On September 25, 2003, the Board of Directors declared a quarterly cash dividend of $0.04 per share. The dividend is payable on November 6, 2003 to shareholders of record at the close of business on October 23, 2003.

   Restructuring of Pension Plan in Japan

     Effective September 30, 2003, the Company substantially settled its liability for the existing defined benefit pension plans in Japan and established new plans to provide retirement benefits to Japan employees. The settlement and curtailment of the existing defined benefit plans were made in accordance with the applicable plan provisions and local statutory requirements. The Company has established a defined contribution plan as the principal plan to provide retirement benefits to employees in Japan. Local regulations limit the benefit that the Company can provide to an individual employee through use of a defined contribution plan. To the extent the Company provides retirement benefits to an individual in an amount greater than that allowed, the excess will be reflected as a benefit in a newly created defined benefit pension plan. As the amount of statutory limit for benefits under the defined contribution plan increases, benefits provided through the defined benefit component will decrease. The Company is still in the process of determining the impact of the settlement and curtailment of the defined benefit pension plans that existed prior to September 30, 2003. The Company anticipates that the effect of the settlement will be a net reduction of the outstanding pension obligation that existed prior to September 30, 2003. This reduction in outstanding pension obligation may have a significant impact on earnings in fiscal year 2004.

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Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

     Statements and information included in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this Quarterly Report on Form 10-Q include statements regarding Tektronix’ expectations, intentions, beliefs and strategies regarding the future, including cost reduction efforts and business realignment expenses related to the economic and technology downturn, settlement of potential claims, and expected benefits from, and restructuring related to, the acquisition of Sony Corporation’s 50% interest in Sony/Tektronix Corporation, which prior to September 30, 2002 was equally owned by Sony Corporation and Tektronix. The Company may make other forward-looking statements from time to time, including in press releases and public conference calls and webcasts. All forward-looking statements made by Tektronix are based on information available to Tektronix at the time the statements are made, and Tektronix assumes no obligation to update any forward-looking statements. It is important to note that actual results are subject to a number of risks and uncertainties that could cause actual results to differ materially from those included in such forward-looking statements. Some of these risks and uncertainties are discussed below in the Risks and Uncertainties section at the end of this Management’s Discussion.

General

     Tektronix manufactures, markets and services test, measurement and monitoring solutions to a wide variety of customers in many industries, including computing, communications, semiconductors, broadcast, education, government, military/aerospace, research, automotive and consumer electronics. Tektronix enables its customers to design, manufacture, deploy, monitor and service next-generation global communications networks, computing and advanced technologies. Revenue is derived principally through the development and marketing of a broad range of products including: oscilloscopes; logic analyzers; signal sources; communication test equipment, including mobile protocol test, wireless field test and spectrum analysis equipment; video test equipment; and related components, support services and accessories. The Company maintains operations in four major geographies: the Americas, including the United States, and Other Americas, including Mexico, Canada and South America; Europe, including the Middle East and Africa; the Pacific, including China, Southeast Asia and India; and Japan.

Sony/Tektronix Redemption

     During the second quarter of fiscal year 2003, the Company acquired from Sony Corporation (“Sony”) its 50% interest in Sony/Tektronix Corporation (“Sony/Tektronix”) through redemption of Sony’s shares by Sony/Tektronix for 8 billion Yen (“Sony/Tektronix Acquisition”), or approximately $65.7 million at September 30, 2002. This transaction closed on September 30, 2002, at which time the Company obtained 100% ownership of Sony/Tektronix. This transaction is a long-term strategic investment that will provide the Company stronger access to the Japanese market and the ability to leverage the engineering resources in Japan. The Company accounted for its investment in Sony/Tektronix under the equity method prior to this redemption. Prior to the close of this transaction, the Sony/Tektronix entity entered into an agreement to borrow up to 9 billion Yen, or approximately $73.9 million at an interest rate of 1.75% above the Tokyo Inter Bank Offering Rate (“TIBOR”). Sony/Tektronix used $53.1 million of this credit facility to fund a portion of the redemption of shares from Sony and the remainder will provide operating capital for this Japan subsidiary. The transaction was accounted for by the purchase method of accounting, and accordingly, beginning on the date of acquisition the results of operations, financial position and cash flows of Sony/Tektronix were consolidated in the Company’s financial statements. Accordingly, the results of operations for the first quarter of the prior year do not include the consolidation of Sony Tektronix (also referred to after the redemption as “Tektronix Japan”). The impact of Tektronix Japan not being consolidated in the comparative prior year period results in certain variances when reviewing

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the Company’s results of operations that are discussed in the First Quarter Fiscal Year 2004 Compared to First Quarter Fiscal Year 2003 section below.

     The Company incurred $1.3 million in costs specifically associated with integrating the operations of this subsidiary during the fiscal quarter ended August 30, 2003, which are recorded in Acquisition related costs on the Consolidated Statements of Operations.

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 (“CPID”). The Company accounted for CPID 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.” The sales price was $925.0 million in cash, with certain liabilities of the division assumed by the buyer. During fiscal year 2000, the Company recorded a net gain of $340.3 million on this sale. The net 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. The accrual for estimated liabilities related to the sale was $10.4 million as of August 30, 2003. See additional disclosure in the Critical Accounting Estimates section of this Management’s Discussion and Analysis.

Business Realignment Costs

     Business realignment costs represent actions to realign the Company’s cost structure in response to significant events and primarily include restructuring actions and impairment of assets resulting from reduced business levels. Restructuring actions taken during the first quarter of fiscal year 2004 and in fiscal years 2002 and 2003 were intended to reduce the Company’s worldwide cost structure across all major functions in response to the dramatic economic decline, which severely impacted markets into which the Company sells its products. Major operations impacted include manufacturing, engineering, sales, marketing and administrative functions. The Company expects to achieve future cost savings primarily by reducing employee headcount. In addition to severance, the Company incurred other costs associated with restructuring its organization, which primarily represent facilities contracts and other exit costs associated with aligning the cost structure to appropriate levels. Management believes that the restructuring actions implemented in fiscal years 2002 and 2003 have resulted in the costs savings anticipated for those actions.

     Costs incurred during the current quarter primarily relate to restructuring actions planned by the Company during fiscal year 2003 which were executed in the current quarter. Many of the restructuring actions planned by the Company take significant time to execute, particularly if they are being conducted in countries outside the United States. The Company anticipates incurring additional business realignment costs during fiscal year 2004, including $10 million to $15 million in the second quarter, as planned actions continue to be executed.

     Business realignment costs of $4.6 million in the first quarter of fiscal year 2004 included $3.8 million of severance related costs for 75 employees mostly located in Europe and the Americas, $0.7 million for accelerated depreciation of assets in Europe and $0.3 million for contractual obligations for actions taken during the first quarter of fiscal year 2004 and in fiscal year 2003, offset by $0.2 million of severance reversals related to previously recorded business realignment costs. Expected future annual salary cost savings from actions taken in the first quarter of fiscal year 2004 to reduce employee headcount is estimated to be $4.3 million. At August 30, 2003, the remaining liabilities for employee severance and related benefits for actions taken in fiscal years 2004, 2003 and 2002 were maintained for 33, 25 and 8 employees, respectively.

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     Activity for the above described actions during the first quarter of fiscal year 2004 was as follows:

	Balance,							Balance,
	May 31,	Costs		Cash		Non-cash		August 30,
(In thousands)	2003	Incurred		Payments		Adjustments		2003
Fiscal Year 2004 Actions:
Employee severance and	$     —	$ 3,839		$(2,633	)	$   —		$1,206
related benefits
Asset impairments	—	696		—		(696	)	—
Contractual obligations	—	165		(109	)	—		56
Total	—	4,700		(2,742	)	(696	)	1,262
Fiscal Year 2003 Actions:
Employee severance and	5,394	(184	)	(3,822	)	—		1,388
related benefits
Contractual obligations	1,730	110		(269	)	43		1,614
Total	7,124	(74	)	(4,091	)	43		3,002
Fiscal Year 2002 Actions:
Employee severance and	494	—		(252	)	—		242
related benefits
Contractual obligations	434	—		(86	)	—		348
Total	928	—		(338	)	—		590
Total of all actions	$8,052	$ 4,626		$(7,171	)	$(653	)	$4,854

Critical Accounting Estimates

     Management has identified the Company’s “critical accounting estimates,” which are those that are most important to the portrayal of the financial condition and operating results of the Company and require difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Significant estimates underlying the accompanying consolidated financial statements and the reported amount of net sales and expenses include contingent liabilities, intangible asset valuation, inventory valuation, pension plan assumptions and the assessment of the valuation of deferred income taxes and income tax contingencies.

   Contingent Liabilities

     The Company is subject to claims or litigation concerning intellectual property, environmental and employment issues, as well as settlement of liabilities related to prior dispositions of assets. As a result, liabilities have been established based upon management’s best estimate of the ultimate outcome of these contingent liabilities. The Company reviews the status of its litigation, indemnities and other contingencies on a regular basis and adjustments are made as information becomes available. As of August 30, 2003, the Company had $22.2 million recorded as contingent liabilities in Accounts payable and accrued liabilities on the Condensed Consolidated Balance Sheet, which included $10.4 million relating to the sale of CPID, $4.6 million for environmental exposures and $7.2 million for other contingent liabilities. It is reasonably possible that management’s estimates of contingent liabilities could change in the near term and that such changes could be material to the Company’s consolidated financial statements.

     The Company is subject to certain contingencies due to contractual obligations entered into at the time of these divestitures and liabilities retained by the Company. Included in these liabilities is a reserve for contingent liabilities related to the sale of CPID on January 1, 2000. The Company’s original accrual for estimated liabilities associated with the sale related to specific provisions in the sale agreement for indemnities and warranties as well as settlement of disputes over the value of net assets as of the transaction date. The indemnities and warranties primarily relate to the Company’s obligation for liabilities existing prior to the closing date of January 1, 2000. Subsequent to the close of the transaction, the Company entered into an arbitration process to determine settlement of certain disputes regarding the value of the net assets transferred at the closing date. This arbitration was resolved in the first quarter of fiscal year 2002, resulting in an $18.0 million payment by the Company to the purchaser. This settlement directly reduced the amount of the contingent liability reserve. The accrual was further reduced by reversals of $25.0 million during fiscal year 2003. The reversals were due to the Company changing its

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estimate of probable exposures under the remaining indemnity and warranty provisions. Specifically, the Company recorded reversals due to a) the expiration of an indemnity period, which passed without the Company receiving claims under the expiring provisions, b) the resolution of certain outstanding potential exposures for amounts less than that anticipated by the Company, and c) other factors which reduced the Company’s estimate of probable exposures under the remaining indemnity and warranty provisions. The reversals were recorded net of tax effect in Discontinued operations in the Statements of Operations for the year ended May 31, 2003. The remaining balance of this contingent liability was $ 10.4 million as of August 30, 2003 and May 31, 2003, a significant portion of which may take several years to resolve. If unforeseen events or circumstances arise subsequent to the balance sheet date, changes in the estimate of the contingent liability could be material to the financial statements.

     The Company continues to closely monitor the status of the CPID related contingent liabilities based on information received. The liability will be adjusted as settlements are completed or more information becomes available that will change the likely outcome. Changes to the estimate of liabilities or differences between these estimates and the ultimate amount of settlement will be recorded in Discontinued operations in the Consolidated Statement of Operations in the period such events occur.

     Included in contingent liabilities is $4.6 million specifically associated with the closure and cleanup of a licensed hazardous waste management facility at the Company’s Beaverton, Oregon campus. The Company established the initial liability in 1998 and bases ongoing estimates on currently available facts and presently enacted laws and regulations. Costs for tank removal and cleanup were incurred in fiscal year 2001. Costs currently being incurred primarily relate to ongoing monitoring and testing of the site. Management’s best estimate of the range of remaining reasonably possible cost associated with this environmental cleanup, testing and monitoring could be as high as $10.0 million. Management believes that the recorded liability represents the low end of the range. These costs are estimated to be incurred over the next several years. If events or circumstances arise that are unforeseen to the Company as of the balance sheet date, actual costs could differ materially from this estimate.

     The remaining $7.2 million of contingent liabilities includes amounts related to intellectual property and employment issues, as well as liabilities related to dispositions of assets other than CPID. If events or circumstances arise that are unforeseen to the Company as of the balance sheet date, actual costs could differ materially from this estimate.

   Intangible assets

     The Company accounts for goodwill and intangible assets in accordance with SFAS No. 141, “Business Combinations” and SFAS No. 142, “Goodwill and Other Intangible Assets.” Accordingly, the Company no longer amortizes goodwill from acquisitions, but continues to amortize other acquisition-related intangibles and costs. As of August 30, 2003, the Company had $72.7 million of goodwill recorded on the Condensed Consolidated Balance Sheet.

     The Company performed its annual goodwill impairment analysis during the second quarter of fiscal year 2003 and identified no impairment. The next impairment review will occur in the second quarter of fiscal year 2004. The goodwill impairment analysis is based on a discounted cash flow approach that uses estimates of future market share and revenues and costs for the reporting units as well as appropriate discount rates. The estimates used are consistent with the plans and estimates that the Company uses to manage the underlying businesses. However, if the Company fails to deliver new products for these groups, if the products fail to gain expected market acceptance, or if market conditions in the related businesses are unfavorable, revenue and cost forecasts may not be achieved, and the Company may incur charges for impairment of goodwill.

     For intangible assets with definite useful lives, the Company amortizes the cost over the estimated useful lives and assesses any impairment by estimating the future cash flow from the associated asset in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” As of August 30, 2003, the Company had $6.5 million of non-goodwill intangible assets recorded in Other long-term assets, which includes patents and licenses for certain technology. If the estimated undiscounted cash flow related to these assets decreases in the future or the useful life is shorter than originally estimated, the Company may incur charges to impair these assets. The impairment is based on the estimated discounted cash flow associated with each asset. An impairment could result if the underlying technology fails to gain market acceptance, the Company fails to deliver new products related to these technology assets, the products fail to gain expected market acceptance or if market conditions in the related businesses are unfavorable.

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   Inventories

     Inventories are stated at the lower of cost or market. Cost is determined based on currently-adjusted standard costs, which approximates actual cost on a first-in, first-out basis. The Company’s inventory included raw materials, work-in-process, finished goods and demonstration equipment of $86.9 million as of August 30, 2003. The Company reviews its recorded inventory and estimates a write-down for obsolete or slow-moving items. These write-downs reduce the inventory value of these obsolete or slow-moving items to their net realizable value. Such estimates are difficult to make under the current economic conditions. The write-down is based on current and forecasted demand. Therefore, if actual demand and market conditions are less favorable than those projected by management, additional write-downs may be required. In addition, excessive amounts of used equipment in the marketplace can negatively impact the net realizable value of the Company’s demonstration equipment. If actual market conditions are different than anticipated, Cost of sales in the Consolidated Statement of Operations may be different than expected in the period in which more information becomes available. The Company recorded charges for inventory obsolescence of approximately $0.8 million during the first quarter of fiscal year 2004.

   Pension plan

     The Company maintains certain defined benefit pension plans to provide pension benefits to employees in certain countries. The largest of the Company’s pension plans is in the United States. As a result of the acquisition of the Sony/Tektronix joint venture, the Company now has a significant defined benefit pension plan in Japan. The Company maintains less significant defined benefit plans in other countries including the United Kingdom, Germany, and Holland.

     Effective September 30, 2003, the Company substantially settled its liability for the existing defined benefit pension plans in Japan and established new plans to provide retirement benefits to Japan employees. The settlement and curtailment of the existing defined benefit plans were made in accordance with the applicable plan provisions and local statutory requirements. The Company has established a defined contribution plan as the principal plan to provide retirement benefits to employees in Japan. Local regulations limit the benefit that the Company can provide to an individual employee through use of a defined contribution plan. To the extent the Company provides retirement benefits to an individual in an amount greater than that allowed, the excess will be reflected as a benefit in a newly created defined benefit pension plan. As the amount of statutory limit for benefits under the defined contribution plan increases, benefits provided through the defined benefit component will decrease. The Company is still in the process of determining the impact of the settlement and curtailment of the defined benefit pension plans that existed prior to September 30, 2003. The Company anticipates that the effect of the settlement will be a net reduction of the outstanding pension obligation that existed prior to September 30, 2003. This reduction in outstanding pension obligation may have a significant impact on earnings in fiscal year 2004.

     Benefit plans are a significant cost of doing business and yet represent obligations that will be settled far in the future and therefore are subject to certain estimates. Pension accounting is intended to reflect the recognition of future benefit costs over the employee’s approximate service period based on the terms of the plans and the investment and funding decisions made by the Company. The accounting standards require that management make assumptions regarding such variables as the expected long-term rate of return on assets and the discount rate used to determine pension obligations.

     The Company applies the long-term rate of return on plan assets assumption to a market related value of plan assets to estimate income recognized by the pension plan assets. This income from return on pension assets is a component of net periodic pension cost. Periodic pension costs include the interest cost on participants’ accumulated benefits and service cost for benefits earned during the period. In prior periods, the income recognized on plan assets has exceeded the periodic pension costs, thereby resulting in net pension income being recognized by the Company. The amount of income recognized is affected by the rate of return assumption employed and the amount of plan assets that the return assumption is applied to. The amount of net pension income recognized by the Company has declined from prior periods due to a decline in the return assumption employed by the Company and reduction in the value of the plan assets, as well as increased pension costs due to a decrease in the discount rate used to calculate pension benefits (see discount rate discussion below). In prior periods, net periodic pension income recognized by the Company has differed materially from the actual experience of the plan assets and liabilities. As of May 31, 2003, the last measurement date, the Company had recorded an unrecognized loss of $187.7 million, net of income taxes of $117.5 million. This unrecognized loss is recorded as a component of Shareholders’ equity in a charge to Other comprehensive loss in the Consolidated Balance Sheet as a result of the additional minimum pension liability discussed below. To the extent the unrecognized loss is not offset by future gains, there may be an impact to net income over future periods to recognize these amounts.

     Excluding the pension related to the newly acquired Japan subsidiary, the Company’s estimated long-term rate of return on plan assets for fiscal year 2004 is approximately 8.6%. A one percent change in the estimated long-term rate of return on plan assets will result in a change in operating income of $5.8 million for fiscal year 2004. Net pension expense, excluding the Japan pension plans, was $0.3 million for the first quarter of fiscal year 2004, which includes the effect of the recognition of the assumed return on plan assets.

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     Assumed discount rates are used in measurements of the projected, accumulated, and vested benefit obligations and the service and interest cost components of net periodic pension cost. Management makes estimates of discount rates to reflect the rates at which the pension benefits could be effectively settled. In making those estimates, management evaluates rates of return on high-quality fixed-income investments currently available and expected to be available during the period to maturity of the pension benefits. The weighted average of discount rates used in determining the Company’s pension obligation as of May 31, 2003 was 5.2%.

     At May 31, 2003, the most recent valuation date, the accumulated benefit obligation exceeded the fair value of plan assets for certain pension plans. In accordance with SFAS 87, “Employers’ Accounting for Pensions,” a minimum pension liability is recognized for the unfunded accumulated benefit obligation. Recognition of an additional minimum liability is required if an unfunded accumulated benefit obligation exists and (a) an asset has been recognized as prepaid pension cost, (b) the liability already recognized as unfunded accrued pension cost is less than the unfunded accumulated benefit obligation, or (c) no accrued or prepaid pension cost has been recognized. The Company has recognized an additional minimum liability in accordance with SFAS 87. Since the additional minimum liability exceeded unrecognized prior service cost, the excess (which would represent a net loss not yet recognized as net periodic pension cost) is reported as a component of other comprehensive loss, net of applicable income tax benefit. The Company initially recorded an additional pension liability at the end of fiscal year 2002, the first measurement date where the accumulated benefit obligation exceeded the fair value of plan assets. As of May 31, 2003, the cumulative additional minimum pension charge included in Accumulated other comprehensive loss was $187.7 million, net of income taxes of $117.5 million. The implication of the additional minimum pension liability is that it may reduce net income in future years by reducing the market related value of plan assets, thereby reducing the asset base upon which the Company recognizes a return. Additionally, the Company may find it necessary to fund additional pension assets, which would increase the market related value of plan assets upon which the Company recognizes a return but would reduce operating cash and future interest earnings on that cash.

     Management will continue to assess the expected long-term rate of return on plan assets and discount rate assumptions based on relevant market conditions as prescribed by accounting principles generally accepted in the United States of America, and will make adjustments to the assumption as appropriate. Pension income or expense is allocated to Cost of sales, Research and development and Selling, general and administrative expenses in the Consolidated Statements of Operations.

     In connection with the Sony/Tektronix acquisition, the Company assumed the net pension liability of the Japan subsidiary. The estimated return on plan assets assumed for this plan is 6.6%. Pension expense was $1.5 million for the first quarter of fiscal year 2004. This net expense is based on estimates, in the same manner discussed for the above plans. As explained above, these plans were substantially terminated through settlement and curtailment on September 30, 2003.

   Income Taxes

     The Company is subject to taxation from federal, state and international jurisdictions. The Company’s annual provision for income taxes and the determination of the resulting deferred tax assets and liabilities involve a significant amount of management judgment and is based on the best information available at the time. The actual income tax liabilities to the jurisdictions with respect to any fiscal year are ultimately

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determined long after the financial statements have been published. The Company maintains reserves for estimated tax exposures in jurisdictions of operation. These tax jurisdictions include federal, state and various international tax jurisdictions. Significant income tax exposures include potential challenges of research and experimentation credits, export-related tax benefits, disposition transactions and intercompany pricing. Exposures are settled primarily through the settlement of audits within these tax jurisdictions, but can also be affected by changes in applicable tax law or other factors, which could cause management of the Company to believe a revision of past estimates is appropriate. Management believes that an appropriate liability has been established for estimated exposures; however, actual results may differ materially from these estimates. The liabilities are frequently reviewed for their adequacy and appropriateness. As of August 30, 2003, the Company was subject to income tax audits for fiscal years 2001, 2002 and 2003. The liabilities associated with these years will ultimately be resolved when events such as the completion of audits by the taxing jurisdictions occur. To the extent the audits or other events result in a material adjustment to the accrued estimates, the effect would be recognized in Income tax expense (benefit) in the Consolidated Statement of Operations in the period of the event.

     In September 2002, the Company negotiated a settlement with the United States Internal Revenue Service (“IRS”) with respect to their audit of fiscal years 1998 through 2000. As a result of the audits settled and the current audit activity in progress, the Company revised its estimated liability for income taxes as of August 31, 2002. The revision resulted in a $12.5 million net reduction of previously estimated liabilities. This had the effect of reducing Accounts payable and accrued liabilities on the Consolidated Balance Sheet and decreased the Income tax expense on the Consolidated Statement of Operations in the first quarter of fiscal year 2003. As of August 30, 2003, the Company maintained estimated liabilities for open IRS and other taxing jurisdiction audits and potential assessments, as discussed above. The settlement of additional open audits or changes in other circumstances could result in further material adjustment to the estimated liability and the associated tax expense in the period in which such events occur.

     Judgment is also applied in determining whether deferred tax assets will be realized in full or in part. When it is more likely than not that all or some portion of specific deferred tax assets such as foreign tax credit carryovers or net operating loss carryforwards will not be realized, a valuation allowance must be established for the amount of the deferred tax assets that are determined not to be realizable. As of August 30, 2003, the Company had established a valuation allowance against deferred tax assets, primarily foreign tax credit carryforwards. The Company has not established valuation allowances against other deferred tax assets based on tax strategies planned to mitigate the risk of impairment to these assets. Accordingly, if the Company’s facts or financial results were to change thereby impacting the likelihood of realizing the deferred tax assets, judgment would have to be applied to determine changes to the amount of the valuation allowance required to be in place on the financial statements in any given period. The Company continually evaluates strategies that could allow the future utilization of its deferred tax assets, including those related to Tektronix Japan. During the third quarter of fiscal year 2003, the Company implemented certain operational changes that were consistent with tax planning strategies that may result in the utilization of certain deferred tax assets for which valuation allowances had previously been established.

First Quarter Fiscal Year 2004 Compared to First Quarter Fiscal Year 2003

   Economic Conditions

     Beginning in the second half of fiscal year 2001, and continuing through fiscal year 2002, economic conditions had a significant negative impact on many markets into which the Company sells products including, but not limited to, optical design and manufacturing, mobile handset manufacturing, automated test equipment, telecommunications and semiconductor design and manufacturing. During fiscal year 2003, these economic conditions continued to affect many of the markets into which the Company sells products, although the impact was less severe than in prior years and certain markets appeared to begin to stabilize. From a geographical perspective, the Company began to see the economic environment stabilize in the United States and Japan. The stabilization of certain markets that began in fiscal year 2003 continued into the first quarter of fiscal year 2004.

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     In response to the reduced level of orders and associated sales, the Company incurred significant business realignment costs during fiscal years 2002 and 2003. The Company continued to incur business realignment costs during the first quarter of fiscal year 2004 to further reduce the Company’s cost structure in order to provide an amount of operating income that management believed was appropriate at the current sales levels. Many of the costs incurred during the first quarter of fiscal year 2004 were associated with actions that were identified during the prior fiscal year, but for which sufficient action had not yet been taken to support the recognition of the associated expense. Many of the restructuring actions planned by the Company take significant time to execute, particularly if they are being conducted in countries outside the United States. The Company anticipates incurring additional business realignment costs during fiscal year 2004, including $10 to $15 million in the second quarter, as planned actions continue to be executed. Management of the Company is unable to predict the ultimate severity and duration of the recent economic conditions or their future affect on the Company.

   Product Orders

     Product orders consist of cancelable commitments to purchase currently produced products by customers with delivery scheduled generally within six months of being recorded. Consolidated product orders for the first quarter of fiscal year 2004 were $209.5 million, an increase of $20.7 million or 11% from product orders of $188.8 million in the first quarter of fiscal year 2003. The increase in orders over the prior year is primarily attributable to the consolidation of Tektronix Japan in the current quarter’s results and large order activity in the current quarter. These increases were partially offset by the current quarter having one less week than the prior year comparable quarter. Tektronix Japan was not consolidated into the prior year comparable period as Tektronix owned only a 50% interest in this entity at that time and accounted for that interest under the equity method of accounting. Following the redemption of the 50% interest not owned by Tektronix this entity became a wholly owned subsidiary of Tektronix and is now consolidated into the results of operations.

     The Americas and Japan experienced the largest increases in orders. Orders from the Americas were $95.1 million, an increase of $10.0 million or 12% from the first quarter of fiscal year 2003, which was primarily due to the United States, which increased to $89.7 million, or 13%, from $79.3 million in the first quarter of fiscal year 2003. Growth in the United States as compared with the prior year is primarily attributable to large order activity in this geography during the current quarter. Orders from Japan were $37.2 million, an increase of $14.7 million or 65% from the first quarter of fiscal year 2003 primarily attributable to the incremental impact from the consolidation of Tektronix Japan in the current quarter. Orders from the Pacific, excluding Japan, were $38.8 million, down $4.7 million or 11% from the first quarter of the fiscal year 2003 due to the timing of orders between quarters. Orders from Europe increased to $38.4 million, a slight increase of $0.6 million or 2% from the first quarter of fiscal year 2003.

   Net Sales

     Consolidated net sales of $201.4 million for the first quarter of fiscal year 2004 increased $2.9 million or 1% from net sales of $198.5 million for the first quarter of fiscal year 2003. The increase in sales of approximately 1% is far less than the approximate 11% increase in orders, which is due to the Company increasing product backlog levels by approximately $20.0 million during the current quarter. Ending product backlog as of August 30, 2003 was approximately $128.0 million.

     The Americas experienced sales declines with net sales of $89.9 million, down $5.6 million or 6% from net sales of $95.5 million in the first quarter of the prior year, which was primarily due to the United States, which declined $6.1 million or 7% to $84.1 million of net sales in the first quarter of fiscal year 2004. The Pacific, excluding Japan, had net sales of $37.5 million, down $4.3 million or 10% from net sales of $41.8 million during the first quarter of fiscal year 2003. Net sales from Japan were $34.0 million, up $14.4 million or 74% from net sales of $19.6 million during the first quarter of fiscal year 2003. Net sales from Europe were $40.1 million, down $1.5 million or 4% from net sales of $41.6 million in the first quarter of fiscal year 2003. The geographical distribution of sales is directly correlated to the geographical distribution of orders. However, as the Company increases or decreases the level of product backlog, this direct correlation may vary between quarters. During the current quarter the Company increased backlog primarily in the Americas region, thereby reducing sales in that region relative to orders.

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   Gross Profit and Gross Margin

     Gross profit for the first quarter of fiscal year 2004 was $109.1 million, an increase of $10.7 million or 11% from gross profit for the first quarter of fiscal year 2003. Gross profit as a percentage of net sales was 54% in the first quarter of fiscal year 2004 compared to 50% in the prior year. The improvement in gross margin was attributable to the positive impact of consolidating Tektronix Japan in the current quarter as well as favorable product mix, reductions in spending and lower inventory obsolescence as compared with the prior year period. Reduced spending is a direct result of actions taken by the Company during fiscal year 2003 and the first quarter of fiscal year 2004 to properly align the cost structure with current operating levels (see additional discussion in the Economic Conditions section above). Charges associated with inventory impairment were approximately $0.8 million in the current quarter as compared with approximately $2.4 million in the prior year period. Inventory impairment was abnormally high in the prior year period due to the decline in revenues that had recently been experienced at that time as well as the Company’s efforts to de-emphasize certain products.

   Operating Expenses

     For the first quarter of fiscal year 2004, operating expenses were $97.5 million, an increase of $7.9 million from $89.6 million for the first quarter of fiscal year 2003. The increase in operating expenses was primarily attributable to the consolidation of Tektronix Japan in the current quarter results. Operating income was $11.6 million, or 6% of net sales during the first quarter of fiscal year 2004, compared with operating income of $8.8 million, or 4% of net sales during the first quarter of fiscal year 2003.

     Research and development expenses were $29.1 million during the first quarter of fiscal year 2004, an increase of $5.2 million from $23.9 million during the first quarter of fiscal year 2003. As a percentage of net sales, research and development expenses increased to 14% in the first quarter of fiscal year 2004 from 12% for the first quarter of fiscal year 2003. The largest item contributing to this increase was the consolidation of Tektronix Japan in the current quarter results. The consolidation of Tektronix Japan resulted in $2.5 million of increased research and development expenses. The remaining increase was primarily attributable to higher spending on new product development activities in the first quarter of fiscal year 2004. The Company is continuously investing in the development of new products and technologies, and the timing of costs varies depending on where the Company is in the development process. These increases are partially offset by an extra week of operations in the first quarter of fiscal year 2003 as well as cost reduction actions taken by the Company during fiscal year 2003 and the first quarter of fiscal year 2004.

     Selling, general and administrative expenses were $62.5 million or 31% of net sales for the first quarter of fiscal year 2004, an increase of $7.9 million from $54.6 million, or 28% of net sales for the prior year. The increase in these expenses was due to the consolidation of Tektronix Japan in the current quarter, which resulted in $8.5 million of additional expense. Without the increase from Tektronix Japan, selling, general and administrative expense decreased from the prior year period. This decrease was the net effect of cost reduction actions taken by the Company and an extra week of operations in the prior year period, offset by annual salary increases and higher sales commission expense in the current quarter.

     Business realignment costs of $4.6 million were incurred in the first quarter of fiscal year 2004 as compared with $9.6 million in the first quarter of the prior year. Costs incurred during the current quarter primarily relate to restructuring actions planned by the Company during fiscal year 2003 which were executed in the current quarter. Many of the restructuring actions planned by the Company take significant time to execute, particularly if they are being conducted in countries outside the United States. The Company anticipates incurring significant additional business realignment costs during fiscal year 2004 as planned actions continue to be executed.

     The $4.6 million of costs in the first quarter of fiscal year 2004 included $3.8 million of severance related costs for 75 employees mostly located in Europe and the Americas, $0.7 million for accelerated depreciation of assets in Europe and $0.3 million for contractual obligations for actions taken during the first quarter of fiscal year 2004 and in fiscal year 2003, offset by $0.2 million of severance reversals related to previously recorded business realignment costs. The $9.6 million of costs in the first quarter of fiscal year 2003 included $8.3 million of an impairment of acquired Bluetooth technology and $1.5 million

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of severance related costs, offset by $0.6 million of reversals related to previously recorded business realignment costs. The Company also incurred $0.4 million in business realignment costs associated with the closure of certain facilities. See the Business Realignment Costs section of the Management’s Discussion and Analysis for further information on these charges.

     The Company incurred acquisition related costs of $1.3 million during the first quarter of fiscal year 2004. These costs represent direct incremental costs incurred as a result of the Sony/Tektronix acquisition completed during the second quarter of fiscal year 2003.

   Non-Operating Income / Expense

     Interest expense was $1.1 million for the first quarter of fiscal year 2004, as compared with $2.1 million in the first quarter of fiscal year 2003. The decrease in interest expense was largely due to a reduction in the average balance of outstanding debt due to the Company’s retirement of $56.3 million of outstanding debt in the first quarter of fiscal year 2004 on the scheduled payment date of August 1, 2003.

     Interest income was $5.9 million in the first quarter of fiscal year 2004 as compared with $7.5 million in the first quarter of fiscal year 2003. The decrease in interest income can be primarily attributed to lower interest rates and lower average balance of cash and marketable investments during the comparative periods.

     Other expense, net was $0.6 million in the first quarter of fiscal year 2004 as compared with $0.5 million in the prior year. This includes items such as foreign currency translation and other miscellaneous fees and expenses.

   Income Taxes

     Income tax (benefit) expense from continuing operations was an expense of $4.4 million for the first quarter of fiscal year 2004 compared to a benefit of $7.7 million for the first quarter of fiscal year 2003. The benefit in fiscal year 2003 included a $12.5 million income tax benefit resulting from the settlement of the IRS audit of the Company’s fiscal years 1998, 1999 and 2000, offset in part by income tax expense of $4.8 million. The effective tax rate in the first quarter of fiscal year 2004 was 28% compared to 35%, excluding the IRS settlements, in the first quarter of fiscal year 2003. The decrease in the effective tax rate was due largely to potential utilization of foreign tax credits over the course of fiscal year 2004.

   Discontinued Operations

     During the fourth quarter of fiscal year 2003, management of the Company approved and initiated an active plan for the sale of Gage Applied Sciences (“Gage”), a wholly owned subsidiary of the Company. Gage is located in Montreal, Canada and produces PC-based instruments products. The divestiture of this entity is consistent with the Company’s strategy of concentrating its resources in core product areas and de-emphasizing products which are determined to be less strategic. This business has been accounted for as a discontinued operation in accordance with SFAS No. 144. During the first quarter of fiscal year 2004, the Company sold the operations of Gage to a third party. The Company recorded an after-tax loss of $0.8 million during the first quarter of fiscal year 2004 to reflect adjustments to the previously estimated after-tax loss of $2.2 million on the disposition of this discontinued operation which was recorded during the fourth quarter of fiscal year 2003 to write-down the net assets, primarily for goodwill, of Gage to net realizable value less estimated selling costs.

     Loss from discontinued operations in the first quarter of fiscal year 2004 includes an additional loss from the sale of the optical parametric test business due to settlement of additional costs arising after the sale, which closed in the third quarter of fiscal year 2003. Loss from discontinued operations in the first quarter of fiscal year 2003 includes operating losses from Gage and the optical parametric test business, as well as operating losses from VideoTele.com which was sold during the second quarter of fiscal year 2003.

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   Net Earnings

     The Company recognized consolidated net earnings of $9.9 million for the first quarter of fiscal year 2004, down from $19.8 million for the first quarter of fiscal year 2003. This decrease was largely due to the $12.5 million tax benefit discussed in the Income Taxes section above.

   Earnings Per Share

     For the first quarter of fiscal year 2004, the Company recognized $0.12 net earnings per basic and diluted share. For the first quarter of fiscal year 2003, the Company recognized basic and diluted earnings per share of $0.22. The decrease in earnings per share is a result of decreased net earnings discussed above offset by the decrease in the weighted average basic and diluted shares outstanding due to share repurchases.

Financial Condition, Liquidity and Capital Resources

   Financial Condition

     The Company’s working capital was $325.6 million and $345.0 million at August 30, 2003 and May 31, 2003, respectively. Current assets decreased by $80.8 million which was largely due to decreases of $45.1 million in cash and cash equivalents and $13.9 million in short-term marketable investments which are discussed under the Liquidity and Capital Resources section below. Current liabilities decreased $61.4 million, due primarily to repayment of $56.3 million of the Company’s 7.5% notes payable on August 1, 2003. Assets and liabilities of discontinued operations were zero as of August 30, 2003 due to the sale of Gage.

     Property, plant and equipment decreased by $4.5 million during the fiscal quarter ended August 30, 2003. This decrease was due primarily to depreciation expense of $7.0 million and accelerated depreciation from business realignment actions of $0.7 million, offset by capital expenditures of $4.2 million.

     During the fiscal quarter ended August 30, 2003, the Company made a cash contribution of $30 million to the U.S. cash balance pension plan. This funding reduced Other long-term liabilities on the Condensed Consolidated Balance Sheet. Depending on the future market performance of the pension plan assets, the Company may make additional large cash contributions to the plan in the future.

     On March 15, 2000, the Board of Directors authorized the purchase of up to $550.0 million of the Company’s common stock on the open market or through negotiated transactions. During the first quarter of fiscal year 2004, the Company repurchased 0.8 million shares for $17.8 million. As of August 30, 2003, the Company repurchased a total of 15.3 million shares at an average price of $21.84 per share totaling $334.2 million under this authorization. The reacquired shares were immediately retired, as required under Oregon corporate law.

   Liquidity and Capital Resources

     As of August 30, 2003, the Company held $629.4 million in cash and cash equivalents and marketable investments, excluding corporate equity securities, a decrease of $82.9 million from the balance of $712.4 million at May 31, 2003. This decrease was primarily due to repayment of $56.3 million of the Company’s 7.5% notes payable and repurchases of the Company’s common stock of $17.8 million. The Company also used $2.5 million of cash for operating activities, which include $30 million to fund the cash balance pension plan in the U.S. Net unrealized gains on marketable investments, excluding corporate equity securities, decreased by $8.5 million as a result of higher market yields as the Company’s marketable investments were primarily debt securities.

     At August 30, 2003, the Company maintained unsecured bank credit facilities totaling $134.3 million, of which $77.7 million was unused. Concurrent with the close of the Sony/Tektronix entity on September 30, 2002, an agreement was entered into to borrow up to 9 billion Yen, or approximately $77.1 million at August 30, 2003, at an interest rate of 1.75% above the Tokyo Inter Bank Offering Rate. This facility, which includes certain financial covenants for both the newly created Japan subsidiary and the Company, expires September 29, 2006. This credit facility was used, in part, to fund a portion of the redemption of shares from Sony and the remainder will provide operating capital for this Japan subsidiary. At August 30, 2003, $55.7 million has been borrowed by the Company under this facility.

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     Cash on hand, cash flows from operating activities and current borrowing capacity are expected to be sufficient to fund operations, acquisitions and potential acquisitions, capital expenditures and contractual obligations through fiscal year 2004.

Recent Accounting Pronouncements

     In October 2002, the Emerging Issues Task Force (“EITF”) issued EITF 00-21, “Accounting for Revenue Arrangements with Multiple Deliverables.” This standard addresses revenue recognition accounting by a vendor for arrangements under which it will perform multiple revenue-generating activities. This statement is to be effective for the Company’s fiscal year 2004. The Company adopted the provisions of this statement at the beginning of the first quarter of fiscal year 2004, without a material effect on the Company’s consolidated financial statements.

     In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure—an amendment of FASB Statement No. 123.” This standard amends SFAS No. 123, “Accounting for Stock-Based Compensation,” to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this standard amends the disclosure requirements of Statement 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The transition provisions of SFAS No. 148 are not applicable to the Company since the expense recognition provisions of SFAS No. 123 have not been adopted. The Company has adopted the disclosure provisions of SFAS No. 148.

     In April 2003, Statement of Financial Accounting Standards No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities,” (“SFAS No. 149”) was issued by the FASB. SFAS No. 149 amends SFAS No. 133 to clarify the definition of a derivative and incorporate many of the implementation issues cleared as a result of the Derivatives Implementation Group process. This statement is effective for contracts entered into or modified after June 30, 2003 and should be applied prospectively after that date. The Company adopted the provisions of SFAS No. 149 effective July 1, 2003, without a material impact on the consolidated financial statements.

Risks and Uncertainties

     Described below are some of the risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements contained in this Quarterly Report. See “Forward-Looking Statements” at the beginning of this Item 2.

   Market Risk and Cyclical Downturns in the Markets in Which Tektronix Competes

     Tektronix’ business depends on capital expenditures of manufacturers in a wide range of industries, including the telecommunications, semiconductor, and computer industries. Each of these industries has historically been very cyclical and has experienced periodic downturns, which have had a material adverse impact on the industries’ demand for equipment, including test and measurement equipment manufactured and marketed by Tektronix. In particular, the telecommunications industry, including but not limited to the optical segment, has experienced a more dramatic decline than other industries. In addition, the severity and length of the downturn may also affect overall access to capital which could adversely affect the Company’s customers across many industries. During periods of reduced and declining demand, Tektronix may need to rapidly align its cost structure with prevailing market conditions while at the same time motivating and retaining key employees. As discussed above in this Item 2, the Company’s sales and orders have been affected by the current downturn in its markets. The ultimate severity and duration of this downturn is unknown. No assurance can be given that Tektronix’ net sales and operating results will not be further adversely impacted by the current or any future downturns or slowdowns in the rate of capital investment in these industries.

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   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 anticipate the ever-evolving needs of those customers and deliver appropriate products and new 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 delays 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, financial condition or cash flows of the Company.

   Competition

     In general, Tektronix competes with a number of companies in specialized areas of other test and measurement products and one large broad line measurement products supplier, Agilent Technologies. Other competitors include Acterna Corporation, Anritsu, LeCroy Corporation, Spirent, Yokogawa and many other smaller companies. 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 may 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, financial condition or cash flows.

   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. In addition, the Company uses certain sole sourced components, which are integral to a variety of products. Disruption in key sole sourced suppliers could have a significant adverse effect on the Company’s results of operations. The Company distributes products of other manufacturers, which comprise a material portion of revenues. To the extent that a distribution agreement is not continued, income could decline to the extent this revenue source was not replaced by other product sales.

   Worldwide Economic and Market Conditions

     The Company maintains operations in four major geographies: the Americas, including the United States, Mexico, and Other Americas, including Canada and South America; Europe, including the Middle East and Africa; the Pacific, including China, Southeast Asia and India; and Japan. During the last fiscal year, more than 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, including China, where the Company expects to further expand its operations. As a result, the business is subject to the worldwide economic and market conditions risks generally associated with doing business globally, 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, wars and acts of terrorism, epidemic disease or other health concerns and changes in other economic or political conditions. These factors, among others, could influence the Company’s ability to sell in global markets, as well as its ability to manufacture products or procure supplies. A significant downturn in the global economy or a particular region could adversely affect the Company’s results of operations, financial position or cash flows.

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   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, particularly in countries where intellectual property rights are not highly developed or protected. 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 affect on the Company’s results of operations, financial position or cash flows. 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 has operated and is in the process of closing a licensed hazardous waste management facility at its Beaverton, Oregon campus. If Tektronix fails to comply with any present or 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.

   Sony/Tektronix Corporation Acquisition

     The acquisition of Sony Corporation’s 50% interest in Sony/Tektronix Corporation was completed at the end of September 2002. Upon completion of the transaction, the Company’s ownership of Sony/Tektronix increased from 50% to 100%, and the Company is now exposed to a greater financial impact from Sony/Tektronix operations located in Japan. In addition, the operation of Sony/Tektronix as a wholly-owned business involves additional risks, including integration costs and operational risks following the acquisition and the risks of doing business as a foreign owner in Japan.

   Possible Volatility of Stock Price

     The price of the Company’s common stock may be subject to wide, rapid fluctuations. Such fluctuations may be due to factors specific to the Company, such as changes in operating results or changes in analysts’ estimates regarding earnings. Fluctuations in the stock price may also be due to factors relating to the telecommunications, semiconductor, and computer industries or to the securities markets in general. Fluctuations in the stock price have often been unrelated to the operating performance of the specific companies whose stocks are traded. Shareholders should be willing to incur the risk of such fluctuations.

   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, implementation of new information systems, significant modifications to existing information systems, the susceptibility of assets in the Company’s pension plans to market risk and other risk factors.

30

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

   Financial Market Risk

     The Company is exposed to financial market risks, including interest rate, equity price and foreign currency exchange rate risks. 

     The Company maintains a short-term and long-term investment portfolio consisting of fixed rate commercial paper, corporate notes and bonds, asset backed securities and mortgage securities. The weighted average maturity of the portfolio, excluding mortgage securities, is two years or less.  Mortgage securities may have a weighted average life of less than seven years and are managed consistent with the Lehman Mortgage Index.  An increase in interest rates of similar instruments would decrease the value of certain of these investments. A 10% adverse change in interest rates would reduce the market value by $ 3.6 million, which would be reflected in Accumulated other comprehensive loss on the Consolidated Balance Sheets until sold.     

     The Company is exposed to equity price risk primarily through its marketable equity securities portfolio, including investments in Merix Corporation, Tut Systems, Inc., 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 reduce the market value by $4.1 million, which would be reflected in Other comprehensive loss on the Consolidated Balance Sheets until sold.

     The Company is exposed to foreign currency exchange rate risk primarily through acquisitions and commitments denominated in foreign currencies. The Company utilizes derivative financial instruments, primarily forward foreign currency exchange contracts, generally with maturities of one to three months, to mitigate this risk where natural hedging strategies cannot be employed. The Company’s policy is to only enter into derivative acquisitions when the Company has an identifiable exposure to risk, thus not creating additional foreign currency exchange rate risk.  At August 30, 2003, the Company held forward foreign currency exchange contracts in Canadian Dollars with a notional amount totaling $3.0 million.  The potential loss in fair value at August 30, 2003, for such contracts resulting from a hypothetical 10% adverse change in applicable foreign currency exchange rates would be approximately $0.3 million.  This loss would be mitigated by corresponding gains on the underlying exposures.

Item 4.  Controls and Procedures

(a)  Management of the Company has evaluated, under the supervision and with the participation of, the chief executive officer and chief financial officer, the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934. Based on that evaluation, the chief executive officer and chief financial officer have concluded that the Company’s disclosure controls and procedures are effective in ensuring that information required to be disclosed is recorded, processed, summarized and reported in a timely manner, and that information was accumulated and communicated to the Company’s management, including the chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.

(b)   There has been no change in the Company’s internal control over financial reporting that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

31

Part II  OTHER INFORMATION

Item 4.   Submission of Matters to a Vote of Security Holders

     At the Company’s annual meeting of shareholders on September 25, 2003, the shareholders voted on the election of two directors to the Company’s board of directors. Gerry B. Cameron and Cyril J. Yansouni were elected to serve three-year terms ending at the 2006 annual meeting of shareholders. The voting for each director was as follows:

	FOR	WITHHELD
Gerry B. Cameron	66,423,526	12,175,389
Cyril J. Yansouni	78,054,724	544,191

     The term of office of the Company’s other directors continued after the 2003 annual meeting of shareholders, as follows: David N. Campbell, Merrill A. McPeak and Richard H. Wills until the 2004 annual meeting of shareholders, and Pauline Lo Alker, A. Gary Ames and Frank C. Gill until the 2005 annual meeting of shareholders.

     At the meeting, a shareholder proposal submitted by Mr. James Gilheany was considered by shareholders.  The proposal sought a recommendation to the board of directors to discontinue manufacturing operations in the People’s Republic of China.  The proposal was not approved by shareholders.  The number of shares voted for approval was 3,243,818, the number voted against approval was 50,906,796, the number abstaining was 15,800,072  and there were 8,648,229 broker non-votes. 

Item 6.   Exhibits and Reports on Form 8-K

(a)  Exhibits
	+(10)(i)	Deferred Compensation Plan, as amended September 8, 2003
	+(10)(ii)	Stock Deferral Plan, as amended September 8, 2003
	+(10)(iii)	Restated Annual Performance Incentive Plan dated June 1, 2003
	(31.1)	302 Certification, Chief Executive Officer
	(31.2)	302 Certification, Chief Financial Officer
	(32.1)	906 Certification, Chief Executive Officer
	(32.2)	906 Certification, Chief Financial Officer

__________

+  Compensatory Plan or Arrangement

(b) Reports on Form 8-K

On September 18, 2003, the Company filed a report on Form 8-K dated September 18, 2003 relating to the results of its first fiscal quarter ended August 30, 2003. Under the Form 8-K, the Company furnished (not filed) under Item 12 a press release relating to the results of its first fiscal quarter ended August 30, 2003 presented in accordance with GAAP, as well as related non-GAAP financial information.

32

SIGNATURES

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 14, 2003	TEKTRONIX, INC.
	By /s/ COLIN L. SLADE
	Colin L. Slade
	Senior Vice President and
	Chief Financial Officer

33

EXHIBIT INDEX

Exhibits No.	Description
+(10)(i)	Deferred Compensation Plan, as amended September 8, 2003
+(10)(ii)	Stock Deferral Plan, as amended September 8, 2003
+(10)(iii)	Restated Annual Performance Incentive Plan dated June 1, 2003
(31.1)	302 Certification, Chief Executive Officer
(31.2)	302 Certification, Chief Financial Officer
(32.1)	906 Certification, Chief Executive Officer
(32.2)	906 Certification, Chief Financial Officer

__________

+ Compensatory Plan or Arrangement

EX-10.(I)

                                                                 Exhibit (10)(i)











                                 TEKTRONIX, INC.

                           DEFERRED COMPENSATION PLAN

                   As Amended by the Administrative Committee
                                September 8, 2003























                              Restated June 1, 2001




                                TABLE OF CONTENTS




                                                                                                         PAGE
                                                                                                     ------------
                                                                                                       

Article I--Purpose and Effective Date......................................................................1

Article II--Definitions....................................................................................1

  2.1      Account.........................................................................................1
  2.2      Administrative Committee........................................................................1
  2.3      Beneficiary.....................................................................................1
  2.4      Board...........................................................................................1
  2.5      Bonus...........................................................................................1
  2.6      Change in Control...............................................................................2
  2.7      Company.........................................................................................2
  2.8      Compensation....................................................................................2
  2.9      Deferral Commitment.............................................................................2
  2.10     Deferral Period.................................................................................3
  2.11     Determination Date..............................................................................3
  2.12     Director........................................................................................3
  2.13     Director Fees...................................................................................3
  2.14     Disability......................................................................................3
  2.15     Earnings Index..................................................................................3
  2.16     Elective Deferred Compensation..................................................................3
  2.17     Employer........................................................................................3
  2.18     Participant.....................................................................................3
  2.19     Participation Agreement.........................................................................4
  2.20     Plan............................................................................................4
  2.21     Rate of Return..................................................................................4
  2.22     Retirement......................................................................................4
  2.23     Salary..........................................................................................4
  2.24     Unforeseen Emergency............................................................................4

Article III--Participation and Deferral Commitments........................................................5

  3.1      Eligibility and Participation...................................................................5
  3.2      Form of Deferral................................................................................5
  3.3      Limitations on Deferral Commitments.............................................................5
  3.4      Commitment Limited by Termination...............................................................6
  3.5      Modification of Deferral Commitment.............................................................6
  3.6      Beginning Account Balances......................................................................6



                                                                             (i)





                                                                                                         PAGE
                                                                                                     ------------
                                                                                                        
Article IV--Deferred Compensation Accounts.................................................................6

  4.1      Accounts........................................................................................6
  4.2      Elective Deferred Compensation..................................................................6
  4.3      Matching Contribution...........................................................................6
  4.4      Pension Makeup..................................................................................7
  4.5      Allocation of Elective Deferred Compensation....................................................7
  4.6      Determination of Accounts.......................................................................7
  4.7      Vesting of Accounts.............................................................................7
  4.8      Statement of Accounts...........................................................................7

Article V--Plan Benefits...................................................................................8

  5.1      Distributions Prior to Termination of Employment................................................8
  5.2      Distributions Following Termination of Service..................................................8
  5.3      Benefit Commencement............................................................................9
  5.4      Accelerated Distribution........................................................................9
  5.5      Deferred Payment of Benefit.....................................................................9
  5.6      Withholding for Taxes...........................................................................9
  5.7      Valuation and Settlement.......................................................................10
  5.8      Payment to Guardian............................................................................10

Article VI--Beneficiary Designation.......................................................................10

  6.1      Beneficiary Designation........................................................................10
  6.2      Changing Beneficiary...........................................................................10
  6.3      No Beneficiary Designation.....................................................................10
  6.4      Effect of Payment..............................................................................10

Article VII--Administration...............................................................................11

  7.1      Committee; Duties..............................................................................11
  7.2      Agents.........................................................................................11
  7.3      Binding Effect of Decisions....................................................................11
  7.4      Indemnity of Committee.........................................................................11

Article VIII--Claims Procedure............................................................................11

  8.1      Claim..........................................................................................11
  8.2      Denial of Claim................................................................................11
  8.3      Review of Claim................................................................................12
  8.4      Final Decision.................................................................................12



                                                                            (ii)





                                                                                                         PAGE
                                                                                                     ------------
                                                                                                      
Article IX--Amendment and Termination of Plan.............................................................12

  9.1      Amendment......................................................................................12
  9.2      Employer's Right to Terminate..................................................................13

Article X--Miscellaneous..................................................................................14

  10.1     Unfunded Plan..................................................................................14
  10.2     Unsecured General Creditor.....................................................................14
  10.3     Trust Fund.....................................................................................14
  10.4     Nonassignability...............................................................................14
  10.5     Not a Contract of Employment...................................................................14
  10.6     Protective Provisions..........................................................................14
  10.7     Governing Law..................................................................................15
  10.8     Validity.......................................................................................15
  10.9     Notice.........................................................................................15
  10.10    Successors.....................................................................................15



                                                                           (iii)



                                 TEKTRONIX, INC.

                           DEFERRED COMPENSATION PLAN



                      Article I--Purpose and Effective Date

         The purpose of this Deferred Compensation Plan is to provide current
tax planning opportunities as well as supplemental funds upon the retirement or
death of Directors and certain employees of Employer. It is intended that the
Plan will aid in attracting and retaining Directors and employees of exceptional
ability by providing them with these benefits. The Plan shall be effective as of
May 27, 2001. This Plan is restated as of June 1, 2001 to include Directors as
eligible Plan Participants.


                             Article II--Definitions

         For the purposes of this Plan, the following terms shall have the
meanings indicated, unless the context clearly indicates otherwise:

2.1      Account

         "Account" means the device used by Employer to measure and determine
the amounts to be paid to a Participant under the Plan. Separate subaccounts may
be maintained to properly reflect the Participant's balance and earnings
thereon. A Participant's Account shall not constitute or be treated as a trust
fund of any kind.

2.2      Administrative Committee

         "Administrative Committee" means the committee appointed to administer
the Plan pursuant to Article VII.

2.3      Beneficiary

         "Beneficiary" means the person, persons or entity entitled under
Article VI to receive any Plan benefits payable after a Participant's death.

2.4      Board

         "Board" means the Board of Directors of the Company.

2.5      Bonus

         "Bonus" means any incentive compensation that is payable to a
Participant in addition to the Participant's Salary.


PAGE 1 - DEFERRED COMPENSATION PLAN


2.6      Change in Control

         A "Change in Control" shall occur when:

               (a) The shareholders of the Company approve one (1) of the
         following ("Approved Transactions") and either (x) such Approved
         Transaction is consummated or (y) the Board determines that
         consummation of such Approved Transaction is likely:

                      (i) Any consolidation, merger or plan of exchange
               involving the Company ("Merger") in which the Company is not the
               continuing or surviving corporation or pursuant to which Stock
               would be converted into cash, securities or other property, other
               than a Merger involving the Company in which the holders of Stock
               immediately prior to the Merger have the same proportionate
               ownership of Stock of the surviving corporation after the Merger;
               or

                      (ii) Any sale, lease, exchange, or other transfer (in one
               (1) transaction or a series of related transactions) of all or
               substantially all of the assets of the Company or the adoption of
               any plan or proposal for the liquidation or dissolution of the
               Company; or

               (b) A tender or exchange offer, other than one made by the
         Company, is made for Stock (or securities convertible into Stock) and
         such offer results in a portion of those securities being purchased and
         the offeror after the consummation of the offer is the beneficial owner
         (as determined pursuant to Section 13(d) of the Securities Exchange Act
         of 1934, as amended (the "Exchange Act")), directly or indirectly, of
         at least twenty percent (20%) of the outstanding Stock (an "Offer"); or

               (c) During any period of twelve (12) months or less, individuals
         who at the beginning of such period constituted a majority of the Board
         cease for any reason to constitute a majority thereof unless the
         nomination or election of such new directors was approved by a vote of
         at least two-thirds (2/3) of the directors then still in office who
         were directors at the beginning of such period.

               The terms used in this 2.6 and not defined elsewhere in the Plan
         shall have the same meanings as such terms have in the Exchange Act and
         the rules and regulations adopted thereunder.

2.7      Company

         "Company" means Tektronix, Inc., an Oregon corporation, or any
successor to the business thereof.

2.8      Compensation

         "Compensation" means the Salary and Bonus or Director Fees that the
Participant earns for services rendered to the Company.

2.9      Deferral Commitment

         "Deferral Commitment" means an election to defer Compensation made by a
Participant pursuant to Article III and for which a separate Participation
Agreement has been submitted by the Participant to the Administrative Committee.

PAGE 2 - DEFERRED COMPENSATION PLAN


2.10     Deferral Period

         For Directors, "Deferral Period" means a twelve (12)-month period
beginning September 1 and ending August 31.

         For employees, it means a calendar year, except the initial Deferral
Period shall begin May 27, 2001 and end December 31, 2001.

2.11     Determination Date

         "Determination Date" means the last day of each calendar month.

2.12     Director

         "Director" means a member of the Company's Board of Directors.

2.13     Director Fees

         "Director Fees" means all Board retainer and committee meeting fees
earned by a Participant and payable in cash (before reduction for amounts
deferred under this Plan or under the Stock Deferral Plan). Director Fees do not
include expenses, reimbursements, or any form of noncash compensation or
benefits.

2.14     Disability

         "Disability" means a physical or mental condition which, in the opinion
of the Administrative Committee, prevents the Participant from satisfactorily
performing the Participant's usual duties for the Company. The Administrative
Committee's decision as to Disability will be based upon medical reports and/or
other evidence satisfactory to the Administrative Committee.

2.15     Earnings Index

         "Earnings Index" means a portfolio or fund selected by the
Administrative Committee from time to time to be used as an index in calculating
Rate of Return.

2.16     Elective Deferred Compensation

         "Elective Deferred Compensation" means the amount of Compensation that
a Participant elects to defer pursuant to a Deferral Commitment.

2.17     Employer

         "Employer" means the Company or any successor to the business thereof,
and any affiliated or subsidiary corporations designated by the Administrative
Committee.

2.18     Participant

         "Participant" means any eligible individual who has elected to defer
Compensation under this Plan.


PAGE 2 - deferred compensation plan


2.19     Participation Agreement

         "Participation Agreement" means the agreement submitted by a
Participant (including the Benefit Payment Election Form) to the Administrative
Committee prior to the beginning of the Deferral Period, with respect to a
Deferral Commitment made for such Deferral Period.

2.20     Plan

         "Plan" means this Tektronix, Inc. Deferred Compensation Plan, as
amended from time to time.

2.21     Rate of Return

         "Rate of Return" means the rate used to determine the amount credited
monthly to a Participant's Account under Article IV. Such rate shall be
determined by the Administrative Committee based upon the net performance of the
Earnings Indices selected by the Participant.

2.22     Retirement

         "Retirement" means an employee's termination of employment with
Employer on or after the employee's attainment of age fifty-five (55) or after
five (5) years of service, or a Board member's termination after age fifty-five
(55).

2.23     Salary

         "Salary" means the Employee's base salary for the Plan Year. Salary
excludes any other form of compensation such as restricted stock, proceeds from
stock options or stock appreciation rights, severance payments, moving expenses,
car or other special allowance, or any other amounts included in an Eligible
Employee's taxable income that is not compensation for services. Deferral
elections shall be computed before taking into account any reduction in taxable
income by Salary reduction under Code Sections 125 or 401(k), or under this
Plan.

2.24     Unforeseen Emergency

         "Unforeseen Emergency" means a severe financial hardship to the
Participant resulting from a sudden and unexpected illness or accident of the
Participant or of a dependent (as defined in Section 152(a) of the Internal
Revenue Code) of the Participant, loss of the Participant's property due to
casualty, or other similar extraordinary and unforeseeable circumstances arising
as a result of events beyond the control of the Participant. The circumstances
that will constitute an unforeseeable emergency will depend upon the facts of
each case, but in any case, payment may not be made to the extent that such
hardship is or may be relieved:

               (a) Through reimbursement or compensation by insurance or
         otherwise,

               (b) By liquidation of the Participant's assets, to the extent the
         liquidation of such assets would not itself cause severe financial
         hardship, or

               (c) By cessation of deferrals under the Plan.

PAGE 4 - DEFERRED COMPENSATION PLAN


               Article III--Participation and Deferral Commitments

3.1      Eligibility and Participation

               (a) Eligibility. Eligibility to participate in the Plan is
         limited to Board members and executives who are Vice Presidents and
         above and any other highly compensated employee selected by the
         Administrative Committee.

               (b) Participation. Eligible employees may elect to participate in
         the Plan with respect to any Deferral Period by submitting a
         Participation Agreement to the Administrative Committee by the December
         31 immediately preceding the Deferral Period, except an election to
         participate in the Plan with respect to the initial Deferral Period
         shall be timely if made by May 18, 2001. Eligible Directors may elect
         to participate in the Plan with respect to any Deferral Period by
         submitting a Participation Agreement to the Administrative Committee by
         the August 31 immediately preceding the Deferral Period.

               (c) Part-Year Participation. When a Director or an employee first
         becomes eligible to defer Compensation during a Deferral Period, a
         Participation Agreement must be submitted to the Administrative
         Committee no later than thirty (30) days following notification to the
         Participant of eligibility to defer, and such Participation Agreement
         shall be effective only with regard to Compensation earned or payable
         following the submission of the Participation Agreement to the
         Administrative Committee.

3.2      Form of Deferral

         A Participant may elect Deferral Commitments in the Participation
Agreement as follows:

               (a) Salary Deferral Commitment. A Salary Deferral Commitment
         shall be related to the Salary payable by Employer to a Participant
         during the Deferral Period. The amount to be deferred shall be stated
         as a flat percentage or dollar amount.

               (b) Bonus Deferral Commitment. A Bonus Deferral Commitment shall
         be related to any Bonus payable to the Participant during the Deferral
         Period. The amount to be deferred shall be stated as a flat percentage
         or dollar amount.

               (c) Director Fees Deferral Commitment. A Director Fees Commitment
         shall relate to the Director Fees earned by the Company to a
         Participant during the Deferral Period. The amount to be deferred shall
         be stated as a flat percentage or dollar amount.

3.3      Limitations on Deferral Commitments

         The following limitations shall apply to Deferral Commitments:

               (a) Minimum. The minimum deferral amount shall be five thousand
         dollars ($5,000) per year. This minimum may be met by participation in
         this Plan or the Tektronix Stock Deferral Plan, or in a combination
         thereof.

               (b) Maximum. The maximum deferral amount shall be ninety percent
         (90%) of Salary and one hundred percent (100%) of Bonus or Director
         Fees. However, when combined, the Deferred Compensation Plan and the
         Stock Deferral Plan deferrals may not exceed ninety percent (90%) of
         Salary and one hundred percent (100%) of Bonus or Director Fees.


PAGE 5 - DEFERRED COMPENSATION PLAN


               (c) Changes in Minimum or Maximum. The Administrative Committee
         may change the minimum or maximum deferral amounts from time to time by
         giving written notice to all Participants. No such change may affect a
         Deferral Commitment made prior to the Administrative Committee's
         action.

3.4      Commitment Limited by Termination

         If a Participant terminates employment with Employer or Board service
prior to the end of the Deferral Period, the Deferral Period and the Deferral
Commitment shall end at the date of termination.

3.5      Modification of Deferral Commitment

         Participants may reduce or suspend their Deferral Commitments based on
an Unforeseen Emergency in accordance with rules established by the
Administrative Committee, provided that the modification applies only to a
Salary, Bonus or Director Fee Deferral payment that is not yet payable.

3.6      Beginning Account Balances

         All Directors who are participating in the Tektronix Non-Employee
Director Deferred Compensation Plan, 1999 Restatement, shall have a beginning
balance in this Plan as of September 1, 2001 equal to the September 1, 2001
balance in that plan.

         Any executive who becomes eligible to participate in this Plan shall
have a beginning Account balance equal to any existing account balance(s) under
the former Tektronix Deferred Compensation Plan, 1992 Restatement, as of the
date the executive is eligible to defer under this Plan. However, any amount
converted into this Plan, and/or into the Tektronix Stock Deferral Plan, will be
converted in the proportions you elect, but no more than one hundred percent
(100%) of the total balance available for conversion.


                   Article IV--Deferred Compensation Accounts

4.1      Accounts

         For record keeping purposes only, an Account shall be maintained for
each Participant. Separate subaccounts shall be maintained to the extent
necessary to properly reflect the Participant's election of Earnings Indices and
total vested or nonvested Account balances. The Account shall be a bookkeeping
device utilized for the sole purpose of determining the benefits payable under
the Plan and shall not constitute a separate fund of assets.

4.2      Elective Deferred Compensation

         A Participant's Elective Deferred Compensation shall be credited to the
Participant's Account at the same time the corresponding nondeferred portion of
the Compensation becomes or would have become payable. Any withholding of taxes
or other amounts with respect to deferred Compensation which is required by
state, federal or local law shall be withheld from the Participant's nondeferred
Compensation to the maximum extent possible with any excess reducing the amount
to be credited to the Participant's Account.

4.3      Matching Contribution

         The Employer shall credit a matching contribution to the Participant's
Account equal to any matching contribution which would have been credited to the
Participant's 401(k) Savings Plan but for the Participant's


PAGE 6 - DEFERRED COMPENSATION PLAN


participation in this Plan. However, when combined with any credit to the
Participant's subaccount in the Tektronix Stock Deferral Plan, the total amount
credited shall be no more than one hundred percent (100%) of the eligible
matching contribution.

4.4      Pension Makeup

         The Employer shall restore an amount equal to any reduction in a
Participant's Qualified Pension Plan benefits resulting from deferrals under
this Plan to the extent that the Qualified Pension Plan benefits are not
restored by any other plan or agreement provided by the Employer. Such
restoration shall be made by crediting to the Participant's Account the amount
by which the Participant's cash balance credit under the Qualified Pension Plan
is lower than the amount that would have been credited in the absence of
deferrals under this Plan. Such amount shall be credited to the Account (with
interest credits, as provided in the Qualified Pension Plan through the end of
the respective calendar year) within ninety (90) days after the calendar year in
which the compensation was deferred which resulted in the lost Qualified Pension
Plan contribution. However, when combined with any credit to the Participant's
subaccount in the Tektronix Stock Deferral Plan, the total amount credited shall
be no more than one hundred percent (100%) of the eligible Qualified Pension
Plan makeup.

4.5      Allocation of Elective Deferred Compensation

               (a) At the time a Participant completes a Deferral Commitment for
         a Deferral Period, the Participant shall also select the Earnings Index
         or Indices in which the Participant wishes to have the deferrals deemed
         invested. The Participant may select any combination of Earnings
         Indices as long as at least five percent (5%), in whole percentages, is
         credited to each of the Earnings Indices selected.

               (b) A Participant may change the amounts allocated to the
         Earnings Indices on the first day of each calendar quarter, provided
         that the Participant submitted notice of the change at least five (5)
         days before the first day of the calendar quarter. The change may apply
         to prospective deferrals only or may include current account balances.

               (c) Changes in Notice and Frequency. The Administrative Committee
         may change the notice requirement and frequency by which Participants
         can reallocate their accounts from time to time by giving written
         notice to all Participants.

4.6      Determination of Accounts

         Each Participant's Account as of each Determination Date shall consist
of the balance of the Participant's Account as of the immediately preceding
Determination Date, plus the Participant's Elective Deferred Compensation
credited during the period, plus earnings calculated using the Rate of Return,
minus the amount of any distributions made since the immediately preceding
Determination Date.

4.7      Vesting of Accounts

         Each Participant shall be one hundred percent (100%) vested at all
times in the Participant's Elective Deferred Compensation and any earnings
thereon. Any matching contributions under Section 4.3 or Qualified Pension Plan
makeup under 4.4 shall vest pursuant to the vesting schedule of the underlying
qualified plan.

4.8      Statement of Accounts

         The Administrative Committee shall give to each Participant a statement
setting forth the balances in the Participant's Account on a quarterly basis and
at such other times as may be determined by the Administrative Committee.


PAGE 7 - DEFERRED COMPENSATION PLAN



                            Article V--Plan Benefits

5.1      Distributions Prior to Termination of Employment

         A Participant's Account may be distributed to the Participant prior to
termination of employment as follows:

               (a) Scheduled Early Withdrawals. A Participant may elect in a
         Participation Agreement to withdraw all or any portion of the amount
         deferred (and earnings thereon) pursuant to that Participation
         Agreement in a single lump sum or from two (2) to five (5)
         substantially equal annual installments commencing the first January
         and on each subsequent January following the date specified in the
         election. Such date shall not be sooner than three (3) years after the
         date the Deferral Period commences in which the scheduled early
         withdrawal was initially elected. Upon a Participant's termination, any
         balance subject to a Scheduled Early Withdrawal election shall be
         distributed in a lump sum within sixty (60) days.

               (b) Hardship Withdrawals. Upon a finding that a Participant has
         suffered an Unforeseen Emergency, the Administrative Committee may, in
         its sole discretion, make distributions from the Participant's Account.
         The amount of such a withdrawal shall be limited to the amount the
         Administrative Committee determines to be reasonably necessary to meet
         the Participant's needs resulting from the Unforeseen Emergency. If any
         payment is made due to Unforeseen Emergency, any existing Deferral
         Commitment shall be null and void and the Participant shall not be
         permitted to make any Deferral Commitment for twelve (12) months. Any
         such hardship withdrawal distribution shall be payable in a single lump
         sum within thirty (30) days after the Administrative Committee approves
         such payment.

5.2      Distributions Following Termination of Service

               (a)    Retirement or Disability Benefit.

                      (i) Benefit Amount. If a Participant terminates service
               with Employer due to Retirement or Disability, Employer shall pay
               to the Participant a benefit equal to the balance in the
               Participant's Account.

                      (ii) Form of Benefit. Subject to Section 5.2(a)(iii),
               benefits under this Section 5.2(a) shall be paid in the form or
               forms selected by the Participant in the Participation Agreement.
               Optional forms of payment include a lump-sum payment or
               substantially equal annual installments of the Account amortized
               over a period of up to fifteen (15) years. The initial payment
               shall be as elected by the Participant, either within sixty (60)
               days of termination or in January following termination, and all
               subsequent payments, if any, shall be in subsequent Januarys. In
               order to provide substantially equal installments, the Committee
               shall assume a rate of return during the period of payment and
               may, at its discretion, adjust the assumed rate and the size of
               future installments based on the actual experience of Earnings
               Indices.

                      (iii) Mandatory Lump-Sum Payments. Notwithstanding Section
               5.2(a)(ii), if an employee terminates employment before age
               fifty-five (55), or with less than five (5) years of service, or
               if a Director terminates Board service before age fifty-five
               (55), or if a Participant's Account is less than fifty thousand
               dollars ($50,000) on the Retirement date, a lump-sum payment will
               be made regardless of the benefit payment the Participant
               elected.

                      (iv) Change in Form of Payment. Notwithstanding the above,
               a Participant may elect to change the form or forms of payment
               designation which shall supersede the form of payment
               designations in all prior Participation Agreements and prior
               elected changes. If the Participant's most


PAGE 8 - DEFERRED COMPENSATION PLAN


               recent change of payment designation has not been filed
               thirteen (13) calendar months prior to the date of employment
               termination, the prior election shall be used to determine the
               form of payment.

                      (v) Termination Benefit. If a Participant terminates
               employment or Board service with Employer for any reason other
               than Retirement, Disability, or death, Employer shall pay to the
               Participant a lump-sum benefit equal to the balance in the
               Participant's Account.

               (b)    Death Benefit.

                      (i) Preretirement. If a Participant terminates employment
               or Board service with Employer due to death, Employer shall pay
               to the Participant's Beneficiary a lump-sum benefit equal to the
               vested balance in the Participant's Account.

                      (ii) Postretirement. If a Participant dies following the
               Participant's Retirement, Employer shall continue to pay any
               remaining benefit payments to the Participant's Beneficiary in
               the form previously elected by the Participant for Retirement
               benefits.

5.3      Benefit Commencement

         Benefits shall commence as soon as practical after termination but in
no case more than sixty (60) days after termination.

5.4      Accelerated Distribution

         Notwithstanding any other provision of the Plan, at any time a
Participant shall be entitled to receive, upon written request to the
Administrative Committee, a lump-sum distribution equal to ninety percent (90%)
of the Account balance as of the Determination Date immediately preceding the
date on which the Administrative Committee receives the written request. The
remaining balance shall be forfeited by the Participant. The amount payable
under this section shall be paid in a lump sum within thirty (30) days following
the receipt of the notice by the Administrative Committee from the Participant.
Such Participant shall not be eligible to participate in the Plan for a period
of one (1) year from the date of distribution.

5.5      Deferred Payment of Benefit

         If part of a Participant's compensation is not deductible under IRC
Section 162(m), then Tektronix may require the Participant to defer payment of
benefits under this Article to avoid the limitation set forth in Section 162(m).
Any deferred benefits under this Section shall be distributed to the Participant
in the first calendar year such amounts would not exceed the limitation as set
out in IRC Section 162(m).

5.6      Withholding for Taxes

         To the extent required by the law in effect at the time payments are
made, Employer shall withhold from payments made hereunder any taxes required to
be withheld by the federal or any state or local government, including any
amounts which the Employer determines are reasonably necessary to pay any
generation-skipping transfer tax which is or may become due. A beneficiary,
however, may elect not to have withholding of federal income tax pursuant to
Section 3405 of the Internal Revenue Code, or any successor provision thereto.


PAGE 9 - DEFERRED COMPENSATION PLAN


5.7      Valuation and Settlement

         The amount of a lump-sum payment and the initial installment payment
shall be based on the value of the Participant's Account on the Determination
Date immediately preceding the lump-sum payment or commencement of installment
payments.

5.8      Payment to Guardian

         The Administrative Committee may direct payment to the duly appointed
guardian, conservator, or other similar legal representative of a Participant or
Beneficiary to whom payment is due. In the absence of such a legal
representative, the Administrative Committee may, in it sole and absolute
discretion, make payment to a person having the care and custody of a minor,
incompetent or person incapable of handling the disposition of property upon
proof satisfactory to the Administrative Committee of incompetency, minority, or
incapacity. Such distribution shall completely discharge the Administrative
Committee from all liability with respect to such benefit.


                       Article VI--Beneficiary Designation

6.1      Beneficiary Designation

         Each Participant shall have the right, at any time, to designate a
Beneficiary (both primary as well as contingent) to whom benefits under this
Plan shall be paid if a Participant dies prior to complete distribution to the
Participant of the benefits due under the Plan. Each Beneficiary designation
shall be in a written form prescribed by the Administrative Committee, and will
be effective only when filed with the Administrative Committee during the
Participant's lifetime.

6.2      Changing Beneficiary

         Any Beneficiary designation may be changed by a Participant without the
consent of the previously named Beneficiary by the filing of a new Beneficiary
designation with the Administrative Committee. The filing of a new Beneficiary
designation shall cancel all Beneficiary designations previously filed. If a
Participant's Compensation is community property, any Beneficiary Designation
shall be valid or effective only as permitted under applicable law.

6.3      No Beneficiary Designation

         In the absence of an effective Beneficiary Designation, or if all
designated Beneficiaries predecease the Participant or die prior to complete
distribution of the Participant's benefits, the Participant's designated
Beneficiary shall be deemed to be the Participant's estate.

6.4      Effect of Payment

         Payment to the Beneficiary shall completely discharge Employer's
obligations under this Plan.


PAGE 10 - DEFERRED COMPENSATION PLAN


                           Article VII--Administration

7.1      Committee; Duties

         The Plan shall be administered by an Administrative Committee
consisting of three (3) or more members as may be appointed from time to time by
the Chief Executive Officer. The Administrative Committee shall have the
authority to interpret and enforce all appropriate rules and regulations for the
administration of the Plan and decide or resolve any and all questions,
including determination of eligibility and interpretations of the Plan, as may
arise in such administration. A majority vote of the Administrative Committee
members in office at the time of the vote shall control any decision. The
required majority action may be taken either by a vote at a meeting or without a
meeting by a signed memorandum. Meetings may be conducted by telephone
conference call. The Administrative Committee may, by majority action, delegate
to one or more of its members the authority to execute and deliver in the name
of the Administrative Committee all communications and documents which the
Administrative Committee is required or authorized to provide under this Plan.
Any party shall accept and rely upon any document executed in the name of the
Administrative Committee. Members of the Administrative Committee may be
Participants under this Plan.

7.2      Agents

         The Administrative Committee may, from time to time, employ agents and
delegate to them such administrative duties as it sees fit, and may from time to
time consult with counsel who may be counsel to the Company.

7.3      Binding Effect of Decisions

         The decision or action of the Administrative Committee with respect to
any question arising out of or in connection with the administration,
interpretation and application of the Plan and the rules and regulations
promulgated hereunder shall be final, conclusive and binding upon all persons
having any interest in the Plan.

7.4      Indemnity of Committee

         The Company shall indemnify and hold harmless the members of the
Administrative Committee against any and all claims, loss, damage, expense or
liability arising from any action or failure to act with respect to this Plan on
account of such person's service on the Administrative Committee, except in the
case of gross negligence or willful misconduct.


                         Article VIII--Claims Procedure

8.1      Claim

         Any person claiming a benefit, requesting an interpretation or ruling
under the Plan, or requesting information under the Plan shall present the
request in writing to the Administrative Committee which shall respond in
writing within thirty (30) days.

8.2      Denial of Claim

         If the claim or request is denied, the written notice of denial shall
state:

               (a) The reason for denial, with specific reference to the Plan
         provisions on which the denial is based.


PAGE 11 - DEFERRED COMPENSATION PLAN



               (b) A description of any additional material or information
         required and an explanation of why it is necessary.

               (c) An explanation of the Plan's claim review procedure.

8.3      Review of Claim

               (a) Any person whose claim or request is denied or who has not
         received a response within thirty (30) days may request review by
         notice given in writing to the Administrative Committee. The claim or
         request shall be reviewed by the Administrative Committee who may, but
         shall not be required to, grant the claimant a hearing. On review, the
         claimant may have representation, examine pertinent documents, and
         submit issues and comments in writing.

               (b) Such notice shall be made within the lesser of ninety (90)
         days of notice of denial or one hundred twenty (120) days of the
         original written claim.

8.4      Final Decision

         The decision on review shall normally be made within sixty (60) days.
If an extension of time is required for a hearing or other special
circumstances, the claimant shall be notified and the time limit shall be one
hundred twenty (120) days. The decision shall be in writing and shall state the
reason and the relevant plan provisions. All decisions on review shall be final
and bind all parties concerned.


                  Article IX--Amendment and Termination of Plan

9.1      Amendment

               (a) The Company may amend the Plan at any time and from time to
         time by written instrument. Except as provided in (b) below, the power
         to amend may be executed only by the Board.

               (b) The Administrative Committee may adopt any technical,
         clerical, conforming or clarifying amendment or other change, provided:

                      (i) The Administrative Committee deems it necessary or
               advisable to:

                             (A) Correct any defect, supply any omission or
                      reconcile any inconsistency in order to carry out the
                      intent and purposes of the Plan;

                             (B) Maintain the Plan's status as a "top-hat" plan
                      for purposes of ERISA; or

                             (C) Facilitate the administration of the Plan;

                      (ii) The amendment or change does not, without the consent
               of the Board, materially increase the cost to the Employer of
               maintaining the Plan; and

                      (iii) Any amendment adopted by the Administrative
               Committee shall be in writing, signed by a member of the
               Committee and promptly reported to the Board.


PAGE 12 - DEFERRED COMPENSATION PLAN


               (c) To the extent permitted under subsection (e) below,
         amendments may have an immediate, prospective or retroactive effective
         date.

               (d) Amendments do not require the consent of any Participant or
Beneficiary.

               (e) Amendments are subject to the following limitations:

                      (i) Preservation of Account Balance. No amendment shall
               reduce the amount credited or to be credited to any Account as of
               the date notice of the amendment is given to Participants.

                      (ii) Changes in Earnings Rate. If the Plan is amended so
               that the Earnings Index is not used to calculate the Rate of
               Return, the rate of earnings to be credited to the Participant's
               Account shall not be less than the monthly equivalent of the
               average nominal annual yield on three (3) month Treasury bills
               for the applicable Determination Period.

                      (iii) After a Change in Control. No amendment shall change
               the methodology used to calculate the Rate of Return in any way
               which will lower the Participant's returns on any amounts
               deferred under Deferral Commitments filed prior to the Change in
               Control.

                      All amounts deferred under Deferral Commitments filed
               prior to a Change in Control shall be paid as originally elected
               by the Participant unless the Participant voluntarily changes
               such distribution elections in accordance with 5.2(a)(iv).

9.2      Employer's Right to Terminate

         The Board may at any time partially or completely terminate the Plan
if, in its judgment, the tax, accounting or other effects of the continuance of
the Plan, or potential payments thereunder would not be in the best interests of
Employer.

               (a) Partial Termination. The Board may partially terminate the
         Plan by instructing the Administrative Committee not to accept any
         additional Deferral Commitments. If such a partial termination occurs,
         the Plan shall continue to operate and be effective with regard to
         Deferral Commitments entered into prior to the effective date of such
         partial termination.

               (b) Complete Termination. The Board may completely terminate the
         Plan by instructing the Administrative Committee not to accept any
         additional Deferral Commitments, and by terminating all ongoing
         Deferral Commitments. If such a complete termination occurs, the Plan
         shall cease to operate and Employer shall pay out each Account. Payment
         shall be made in a lump sum or in the installment schedule elected by
         the Participant for payment upon Retirement, as decided by the Company,
         except as follows. If a Change in Control has occurred prior to the
         termination of the Plan, payment shall be made in the installment
         schedule elected by the Participant for payment upon Retirement.

         Payments shall commence within sixty (60) days after the Board
terminates the Plan and earnings shall continue to be credited on the unpaid
Account balance.


PAGE 13 - deferred compensation plan


                            Article X--Miscellaneous

10.1     Unfunded Plan

         As to employees, this Plan is an unfunded plan maintained primarily to
provide deferred compensation benefits for a select group of "management or
highly-compensated employees" within the meaning of Sections 201, 301 and 401 of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
therefore is exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA.
As to Directors, this Plan is not subject to ERISA because it does not provide
benefits for employees.

10.2     Unsecured General Creditor

         Participants and Beneficiaries shall be unsecured general creditors,
with no secured or preferential right to any assets of Employer or any other
party for payment of benefits under this Plan. Any life insurance policies,
annuity contracts or other property purchased by Employer in connection with
this Plan shall remain its general, unpledged and unrestricted assets.
Employer's obligation under the Plan shall be an unfunded and unsecured promise
to pay money in the future.

10.3     Trust Fund

         At its discretion, the Employer may establish one (1) or more trusts,
with such trustees as the Employer may approve, for the purpose of providing for
the payment of benefits owed under the Plan. Although such a trust shall be
irrevocable, its assets shall be held for payment of all the Company's general
creditors in the event of insolvency or bankruptcy. To the extent any benefits
provided under the Plan are paid from any such trust, Employer shall have no
further obligation to pay them. If not paid from the trust, such benefits shall
remain the obligation of Employer.

10.4     Nonassignability

         Neither a Participant nor any other person shall have any right to
commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise
encumber, transfer, hypothecate or convey in advance of actual receipt the
amounts, if any, payable hereunder, or any part thereof, which are, and all
rights to which are, expressly declared to be unassignable and nontransferable.
No part of the amounts payable shall, prior to actual payment, be subject to
seizure or sequestration for the payment of any debts, judgments, alimony or
separate maintenance owed by a Participant or any other person, nor be
transferable by operation of law in the event of a Participant's or any other
person's bankruptcy or insolvency.

10.5     Not a Contract of Employment

         This Plan shall not constitute a contract of employment between
Employer and the Participant. Nothing in this Plan shall give a Participant the
right to be retained in the service of Employer or to interfere with the right
of Employer to discipline or discharge a Participant at any time.

10.6     Protective Provisions

         A Participant will cooperate with Employer by furnishing any and all
information requested by Employer in order to facilitate the payment of benefits
hereunder, and by taking such physical examinations as Employer may deem
necessary and taking such other action as may be requested by Employer.


PAGE 14 - deferred compensation plan


10.7     Governing Law

         The provisions of this Plan shall be construed and interpreted
according to the laws of the State of Oregon, except as preempted by federal
law.

10.8     Validity

         In case any provision of this Plan shall be held illegal or invalid for
any reason, said illegality or invalidity shall not affect the remaining parts
hereof, but this Plan shall be construed and enforced as if such illegal and
invalid provision had never been inserted herein.

10.9     Notice

         Any notice required or permitted under the Plan shall be sufficient if
in writing and hand delivered or sent by registered or certified mail. Such
notice shall be deemed as given as of the date of delivery or, if delivery is
made by mail, as of the date shown on the postmark on the receipt for
registration or certification. Mailed notice to the Administrative Committee
shall be directed to the Company's address. Mailed notice to a Participant or
Beneficiary shall be directed to the individual's last known address in
Employer's records.

10.10    Successors

         The provisions of this Plan shall bind and inure to the benefit of
Employer and its successors and assigns. The term successors as used herein
shall include any corporate or other business entity which shall, whether by
merger, consolidation, purchase or otherwise acquire all or substantially all of
the business and assets of Employer, and successors of any such corporation or
other business entity.

                                 TEKTRONIX, INC.


                           By:   /s/ JAMES F. DALTON
                                ----------------------------------
                                 Its: Vice President

                        Dated:   September 8, 2003
                                ----------------------------------


PAGE 15 - deferred compensation plan

EX-10.(II)

                                                                Exhibit (10)(ii)














                                 TEKTRONIX, INC.

                               STOCK DEFERRAL PLAN

                   As Amended by the Administrative Committee
                                September 8, 2003














                              Restated June 1, 2001





                                TABLE OF CONTENTS




                                                                                                        PAGE
                                                                                                     -----------

                                                                                                       
Article I--Purpose and Effective Date......................................................................1

Article II--Definitions....................................................................................1

  2.1      Account.........................................................................................1
  2.2      Administrative Committee........................................................................1
  2.3      Beneficiary.....................................................................................1
  2.4      Board...........................................................................................1
  2.5      Bonus...........................................................................................1
  2.6      Change in Control...............................................................................2
  2.7      Company.........................................................................................2
  2.8      Compensation....................................................................................2
  2.9      Deferral Commitment.............................................................................2
  2.10     Deferral Period.................................................................................3
  2.11     Determination Date..............................................................................3
  2.12     Director........................................................................................3
  2.13     Director Fees...................................................................................3
  2.14     Disability......................................................................................3
  2.15     Earnings Index..................................................................................3
  2.16     Elective Deferred Compensation..................................................................3
  2.17     Eligible Stock Option...........................................................................3
  2.18     Employer........................................................................................3
  2.19     Option Gain.....................................................................................4
  2.20     Participant.....................................................................................4
  2.21     Participation Agreement.........................................................................4
  2.22     Plan............................................................................................4
  2.23     Rate of Return..................................................................................4
  2.24     Retirement......................................................................................4
  2.25     Salary..........................................................................................4
  2.26     Stock...........................................................................................4
  2.27     Stock Option Deferral...........................................................................4
  2.28     Stock Option Deferral Amount....................................................................5
  2.29     Unforeseen Emergency............................................................................5

Article III--Participation and Deferral Commitments........................................................5

  3.1      Eligibility and Participation...................................................................5
  3.2      Form of Deferral................................................................................6
  3.3      Limitations on Deferral Commitments.............................................................6
  3.4      Commitment Limited by Termination...............................................................6
  3.5      Modification of Deferral Commitment.............................................................6
  3.6      Beginning Account Balances......................................................................7



                                                                             (i)




                                                                                                        PAGE
                                                                                                     -----------
                                                                                                       
Article IV--Deferred Compensation Accounts.................................................................7

  4.1      Accounts........................................................................................7
  4.2      Elective Deferred Compensation..................................................................7
  4.3      Matching Contribution...........................................................................7
  4.4      Pension Makeup..................................................................................8
  4.5      Determination of Accounts.......................................................................8
  4.6      Vesting of Accounts.............................................................................8
  4.7      Statement of Accounts...........................................................................8

Article V--Plan Benefits...................................................................................8

  5.1      Distributions Prior to Termination of Employment................................................8
  5.2      Distributions Following Termination of Service..................................................9
  5.3      Benefit Commencement............................................................................9
  5.4      Accelerated Distribution.......................................................................10
  5.5      Deferred Payment of Benefit....................................................................10
  5.6      Withholding for Taxes..........................................................................10
  5.7      Valuation and Settlement.......................................................................10
  5.8      Payment to Guardian............................................................................10

Article VI--Beneficiary Designation.......................................................................10

  6.1      Beneficiary Designation........................................................................10
  6.2      Changing Beneficiary...........................................................................11
  6.3      No Beneficiary Designation.....................................................................11
  6.4      Effect of Payment..............................................................................11

Article VII--Administration...............................................................................11

  7.1      Committee; Duties..............................................................................11
  7.2      Agents.........................................................................................11
  7.3      Binding Effect of Decisions....................................................................11
  7.4      Indemnity of Committee.........................................................................12

Article VIII--Claims Procedure............................................................................12

  8.1      Claim..........................................................................................12
  8.2      Denial of Claim................................................................................12
  8.3      Review of Claim................................................................................12
  8.4      Final Decision.................................................................................12



                                                                            (ii)




                                                                                                        PAGE
                                                                                                     -----------
                                                                                                       
Article IX--Amendment and Termination of Plan.............................................................13

  9.1      Amendment......................................................................................13
  9.2      Employer's Right to Terminate..................................................................14

Article X--Miscellaneous..................................................................................14

  10.1     Unfunded Plan..................................................................................14
  10.2     Unsecured General Creditor.....................................................................14
  10.3     Trust Fund.....................................................................................14
  10.4     Nonassignability...............................................................................15
  10.5     Not a Contract of Employment...................................................................15
  10.6     Protective Provisions..........................................................................15
  10.7     Governing Law..................................................................................15
  10.8     Validity.......................................................................................15
  10.9     Notice.........................................................................................15
  10.10    Successors.....................................................................................15



                                                                           (iii)


                                 TEKTRONIX, INC.

                               STOCK DEFERRAL PLAN



                      Article I--Purpose and Effective Date

         The purpose of this Stock Deferral Plan is to provide current tax
planning opportunities as well as supplemental funds upon the retirement or
death of certain Directors and employees of Employer. It is intended that the
Plan will aid in attracting and retaining Directors and employees of exceptional
ability by providing them with these benefits. The Plan shall be effective as of
May 27, 2001. The Plan is restated as of June 1, 2001 to include Directors as
eligible Plan Participants.


                             Article II--Definitions

         For the purposes of this Plan, the following terms shall have the
meanings indicated, unless the context clearly indicates otherwise:

2.1      Account

         "Account" means the device used by Employer to measure and determine
the amounts to be paid to a Participant under the Plan. Separate subaccounts may
be maintained to properly reflect the Participant's balance and earnings
thereon. A Participant's Account shall not constitute or be treated as a trust
fund of any kind.

2.2      Administrative Committee

         "Administrative Committee" means the committee appointed to administer
the Plan pursuant to Article VII.

2.3      Beneficiary

         "Beneficiary" means the person, persons or entity entitled under
Article VI to receive any Plan benefits payable after a Participant's death.

2.4      Board

         "Board" means the Board of Directors of the Company.

2.5      Bonus

         "Bonus" means any incentive compensation that is payable to a
Participant in addition to the Participant's Salary.


PAGE 1 - STOCK DEFERRAL PLAN


2.6      Change in Control

         A "Change in Control" shall occur when:

               (a) The shareholders of the Company approve one (1) of the
         following ("Approved Transactions") and either (x) such Approved
         Transaction is consummated or (y) the Board determines that
         consummation of such Approved Transaction is likely:

                      (i) Any consolidation, merger or plan of exchange
               involving the Company ("Merger") in which the Company is not the
               continuing or surviving corporation or pursuant to which Stock
               would be converted into cash, securities or other property, other
               than a Merger involving the Company in which the holders of Stock
               immediately prior to the Merger have the same proportionate
               ownership of Stock of the surviving corporation after the Merger;
               or

                      (ii) Any sale, lease, exchange, or other transfer (in one
               (1) transaction or a series of related transactions) of all or
               substantially all of the assets of the Company or the adoption of
               any plan or proposal for the liquidation or dissolution of the
               Company; or

               (b) A tender or exchange offer, other than one made by the
         Company, is made for Stock (or securities convertible into Stock) and
         such offer results in a portion of those securities being purchased and
         the offeror after the consummation of the offer is the beneficial owner
         (as determined pursuant to Section 13(d) of the Securities Exchange Act
         of 1934, as amended (the "Exchange Act")), directly or indirectly, of
         at least twenty percent (20%) of the outstanding Stock (an "Offer"); or

               (c) During any period of twelve (12) months or less, individuals
         who at the beginning of such period constituted a majority of the Board
         cease for any reason to constitute a majority thereof unless the
         nomination or election of such new directors was approved by a vote of
         at least two-thirds (2/3) of the directors then still in office who
         were directors at the beginning of such period.

               The terms used in this 2.6 and not defined elsewhere in the Plan
         shall have the same meanings as such terms have in the Exchange Act and
         the rules and regulations adopted thereunder.

2.7      Company

         "Company" means Tektronix, Inc., an Oregon corporation, or any
successor to the business thereof.

2.8      Compensation

         "Compensation" means the Salary, Bonus, Directors' Fees, and Option
Gain that the Participant earns for services rendered to the Company.

2.9      Deferral Commitment

         "Deferral Commitment" means an election to defer Compensation made by a
Participant pursuant to Article III and for which a separate Participation
Agreement has been submitted by the Participant to the Administrative Committee.


PAGE 2 - STOCK DEFERRAL PLAN


2.10     Deferral Period

         For Directors, "Deferral Period" means a twelve (12)-month period
beginning September 1 and ending August 31.

         For employees, it means a calendar year, except the initial Deferral
Period shall begin May 27, 2001 and end December 31, 2001.

2.11     Determination Date

         "Determination Date" means the last day of each calendar month.

2.12     Director

         "Director" means a member of the Company's Board of Directors.

2.13     Director Fees

         "Director Fees" means all Board retainer and committee meeting fees
earned and payable in cash or stock payable to a Participant plus Eligible Stock
Option gains (before reduction for amounts deferred under this Plan or under the
Deferred Compensation Plan). Director Fees do not include expenses,
reimbursements, or benefits.

2.14     Disability

         "Disability" means a physical or mental condition which, in the opinion
of the Administrative Committee, prevents the Participant from satisfactorily
performing the Participant's usual duties for the Company. The Administrative
Committee's decision as to Disability will be based upon medical reports and/or
other evidence satisfactory to the Administrative Committee.

2.15     Earnings Index

         "Earnings Index" means the Tektronix Common Shares to be used as an
index in calculating Rate of Return.

2.16     Elective Deferred Compensation

         "Elective Deferred Compensation" means the amount of Compensation that
a Participant elects to defer pursuant to a Deferral Commitment.

2.17     Eligible Stock Option

         "Eligible Stock Option" means one (1) or more nonqualified stock
option(s) under a Company stock option plan that is determined by the Committee
to be eligible for gain deferral pursuant to this Plan.

2.18     Employer

         "Employer" means the Company or any successor to the business thereof,
and any affiliated or subsidiary corporations designated by the Administrative
Committee.


PAGE 3 - STOCK DEFERRAL PLAN



2.19     Option Gain

         "Option Gain" means the amount by which the fair market value of
exercised Tektronix Common Share options exceeds the exercise price.

2.20     Participant

         "Participant" means any eligible individual who has elected to defer
Compensation under this Plan.

2.21     Participation Agreement

         "Participation Agreement" means the agreement submitted by a
Participant (including the Benefit Payment Election Form) to the Administrative
Committee prior to the beginning of the Deferral Period, with respect to a
Deferral Commitment made for such Deferral Period.

2.22     Plan

         "Plan" means this Tektronix, Inc. Stock Deferral Plan, as amended from
time to time.

2.23     Rate of Return

         "Rate of Return" means the rate used to determine the amount credited
monthly to a Participant's Account under Article IV. Such rate shall be
determined by the Administrative Committee based upon the net performance of the
Earnings Index of the Tektronix Common Shares.

2.24     Retirement

         "Retirement" means an employee's termination of employment with
Employer on or after the employee's attainment of age fifty-five (55) or after
five (5) years of service, or a Board member's termination after age fifty-five
(55).

2.25     Salary

         "Salary" means the Employee's base salary for the Plan Year. Salary
excludes any other form of compensation such as restricted stock, proceeds from
stock options or stock appreciation rights, severance payments, moving expenses,
car or other special allowance, or any other amounts included in an Eligible
Employee's taxable income that is not compensation for services. Deferral
elections shall be computed before taking into account any reduction in taxable
income by Salary reduction under Code Sections 125 or 401(k), or under this
Plan.

2.26     Stock

         "Stock" means Tektronix, Inc. Common Shares.

2.27     Stock Option Deferral

         "Stock Option Deferral" means a stock-for-stock exercise of an Eligible
Stock Option having an aggregate fair market value in excess of the total stock
purchase price necessary to exercise such options.


PAGE 4 - STOCK DEFERRAL PLAN



2.28     Stock Option Deferral Amount

         "Stock Option Deferral Amount" means the amount of a Participant's
Option Gains deferred in connection with an Eligible Stock Option exercise and
Stock Option Deferral in accordance with Section 4.2(c) of this Plan.

2.29     Unforeseen Emergency

         "Unforeseen Emergency" means a severe financial hardship to the
Participant resulting from a sudden and unexpected illness or accident of the
Participant or of a dependent (as defined in Section 152(a) of the Internal
Revenue Code) of the Participant, loss of the Participant's property due to
casualty, or other similar extraordinary and unforeseeable circumstances arising
as a result of events beyond the control of the Participant. The circumstances
that will constitute an unforeseeable emergency will depend upon the facts of
each case, but in any case, payment may not be made to the extent that such
hardship is or may be relieved:

               (a) Through reimbursement or compensation by insurance or
         otherwise,

               (b) By liquidation of the Participant's assets, to the extent the
         liquidation of such assets would not itself cause severe financial
         hardship, or

               (c) By cessation of deferrals under the Plan.


               Article III--Participation and Deferral Commitments

3.1      Eligibility and Participation

               (a) Eligibility. Eligibility to participate in the Plan is
         limited to Board Directors and Vice Presidents and above and any other
         highly compensated employee selected by the Administrative Committee.

               (b) Participation. Eligible employees and Board members may elect
         to participate in the Plan with respect to any Deferral Period by
         submitting a Participation Agreement to the Administrative Committee by
         the December 31 immediately preceding the Deferral Period, except an
         election to participate in the Plan with respect to the initial
         Deferral Period shall be timely if made by May 18, 2001. Eligible
         Directors may elect to participate in the Plan with respect to any
         Deferral Period by submitting a Participation Agreement to the
         Administrative Committee by the August 31 immediately preceding the
         Deferral Period.

               (c) Part-Year Participation. When a Director or an employee first
         becomes eligible to defer Compensation during a Deferral Period, a
         Participation Agreement must be submitted to the Administrative
         Committee no later than thirty (30) days following notification to the
         Participant of eligibility to defer, and such Participation Agreement
         shall be effective only with regard to Compensation earned or payable
         following the submission of the Participation Agreement to the
         Administrative Committee.


PAGE 5 - STOCK DEFERRAL PLAN


3.2      Form of Deferral

         A Participant may elect Deferral Commitments in the Participation
Agreement as follows:

               (a) Salary Deferral Commitment. A Salary Deferral Commitment
         shall be related to the Salary payable by Employer to a Participant
         during the Deferral Period. The amount to be deferred into the
         Participant's Stock subaccount shall be stated as a flat percentage or
         dollar amount.

               (b) Bonus Deferral Commitment. A Bonus Deferral Commitment shall
         be related to any Bonus payable to the Participant during the Deferral
         Period. The amount to be deferred into the Participant's Stock
         subaccount shall be stated as a flat percentage or dollar amount.

               (c) Stock Option Deferral Commitment. To the extent permitted by
         the Committee, a Participant may elect to defer into his or her Stock
         subaccount all or a portion of his or her Option Gain, subject to such
         terms and conditions as the Committee may establish.

               (d) Director Fees Deferral Commitment. A Director Fees Commitment
         shall relate to the payment of stock for Board services, Eligible Stock
         Option gains and Board fee payable in cash earned by a Participant
         during the Deferral Period. The amount to be deferred into the
         Participant's Stock subaccount shall be stated as a flat percentage or
         dollar amount.

3.3      Limitations on Deferral Commitments

         The following limitations shall apply to Deferral Commitments:

               (a) Minimum. The minimum deferral amount shall be five thousand
         dollars ($5,000) per year. This minimum may be met by participation in
         this Plan or in the Tektronix Deferred Compensation Plan, or in a
         combination thereof.

               (b) Maximum. The maximum deferral amount shall be ninety percent
         (90%) of Salary and one hundred percent (100%) of Bonus or Director
         Fees. However, when combined, deferrals into the Stock Deferral Plan
         and the Deferred Compensation Plan may not exceed ninety percent (90%)
         of Salary and one hundred percent (100%) of Bonus, or Director Fees.

               (c) Changes in Minimum or Maximum. The Administrative Committee
         may change the minimum or maximum deferral amounts from time to time by
         giving written notice to all Participants. No such change may affect a
         Deferral Commitment made prior to the Administrative Committee's
         action.

3.4      Commitment Limited by Termination

         If a Participant terminates employment or Board service with Employer
prior to the end of the Deferral Period, the Deferral Period and the Deferral
Commitment shall end at the date of termination.

3.5      Modification of Deferral Commitment

         Participants may reduce or suspend their Deferral Commitments based on
an Unforeseen Emergency in accordance with rules established by the
Administrative Committee, provided that the modification applies only to a
Director's Fee, Salary, Bonus or Stock Option Deferral payment that is not yet
payable.


PAGE 6 - STOCK DEFERRAL PLAN


3.6      Beginning Account Balances

         Any Director who becomes eligible to participate in this Plan shall
have a Beginning Account Balance equal to any existing stock account balance(s)
as of September 1, 2001 under the former Tektronix Non-Employee Directors' Stock
Compensation Plan.

         Any executive who becomes eligible to participate in this Plan shall
have a beginning Account balance equal to any existing account balance(s) under
the former Tektronix Deferred Compensation Plan, 1992 Restatement, as of the
date the executive is eligible to defer under this Plan. However, any amount
converted into this plan, and/or into the Tektronix Deferred Compensation Plan,
will be converted in the proportions you elect, but no more than one hundred
percent (100%) of the total balance available for conversion.


                   Article IV--Deferred Compensation Accounts

4.1      Accounts

         For record keeping purposes only, an Account shall be maintained for
each Participant. Separate subaccounts shall be maintained to the extent
necessary to properly reflect the Participants' Tektronix Common Share total
vested or nonvested Account balances. The Account shall be a bookkeeping device
utilized for the sole purpose of determining the benefits payable under the Plan
and shall not constitute a separate fund of assets.

4.2      Elective Deferred Compensation

               (a) A Participant's Elective Deferred Compensation shall be
         credited to the Participant's Account with shares of phantom stock with
         a value equal to the corresponding Compensation deferred as of the last
         day of the calendar quarter in which the Compensation would have been
         payable. The number of shares credited to the account shall be based on
         the average of the closing price of the Company's stock for the last
         trading day of each month in the quarter. Any withholding of taxes or
         other amounts with respect to deferred Compensation which is required
         by state, federal or local law shall be withheld from the Participant's
         nondeferred Compensation to the maximum extent possible with any excess
         reducing the amount to be credited to the Participant's Account.

               (b) As soon as practicable after Stock would have otherwise been
         issued to the Participant in connection with the exercise of an
         Eligible Stock Option, the Committee shall credit a Stock subaccount of
         the Participant's Account with shares of phantom stock with a value
         equivalent to the Option Gain which has been deferred by the
         Participant in accordance with the Participant's election; that is, the
         portion of the Participant's Option Gain that the Participant has
         elected to defer shall be credited to the Stock subaccount of the
         Participant's Account.

4.3      Matching Contribution

         The Employer shall credit a matching contribution to the Participant's
Account equal to any matching contribution which would have been credited to the
Participant's 401(k) Savings Plan but for the Participant's participation in
this Plan. However, when combined with any credit to the Participant's
subaccount in the Tektronix Deferred Compensation Plan, the total amount
credited shall be no more than one hundred percent (100%) of the eligible
matching contribution.


PAGE 7 - STOCK DEFERRAL PLAN


4.4      Pension Makeup

         The Employer shall restore an amount equal to any reduction in a
Participant's Qualified Pension Plan benefits resulting from deferrals under
this Plan to the extent that the Qualified Pension Plan benefits are not
restored by any other plan or agreement provided by the Employer. Such
restoration shall be made by crediting to the Participant's Account the amount
by which the Participant's cash balance credit under the Qualified Pension Plan
is lower than the amount that would have been credited in the absence of
deferrals under this Plan. Such amount shall be credited to the Account (with
interest credits, as provided in the Qualified Pension Plan through the end of
the respective calendar year) within ninety (90) days after the calendar year in
which the compensation was deferred which resulted in the lost Qualified Pension
Plan contribution. However, when combined with any credit to the Participant's
subaccount in the Tektronix Deferred Compensation Plan, the total amount
credited shall be no more than one hundred percent (100%) of the Qualified
Pension Plan makeup.

4.5      Determination of Accounts

         Each Participant's Account as of each Determination Date shall consist
of the balance of the Participant's Account as of the immediately preceding
Determination Date, plus the Participant's Elective Deferred Compensation
credited during the period, plus earnings calculated using the Rate of Return,
minus the amount of any distributions made since the immediately preceding
Determination Date.

4.6      Vesting of Accounts

         Each Participant shall be one hundred percent (100%) vested at all
times in the Participant's Elective Deferred Compensation and any earnings
thereon. Any matching contributions under Section 4.3 or Qualified Pension Plan
makeup under 4.4 shall vest pursuant to the vesting schedule of the underlying
qualified plan.

4.7      Statement of Accounts

         The Administrative Committee shall give to each Participant a statement
setting forth the balances in the Participant's Account on a quarterly basis and
at such other times as may be determined by the Administrative Committee.

                            Article V--Plan Benefits
5.1      Distributions Prior to Termination of Employment

         A Participant's Account may be distributed to the Participant prior to
termination of employment as follows:

               (a) Scheduled Early Withdrawals. A Participant may elect in a
         Participation Agreement to withdraw all or any portion of the amount
         deferred (and earnings thereon) pursuant to that Participation
         Agreement in a single lump sum or from two (2) to five (5)
         substantially equal annual installments commencing the first January
         and on each subsequent January following the date specified in the
         election. Such date shall not be sooner than three (3) years after the
         date the Deferral Period commences in which the scheduled early
         withdrawal was initially elected. Upon a Participant's termination, any
         balance subject to a Scheduled Early Withdrawal election shall be
         distributed in a lump sum within sixty (60) days.

               (b) Hardship Withdrawals. Upon a finding that a Participant has
         suffered an Unforeseen Emergency, the Administrative Committee may, in
         its sole discretion, make distributions from the Participant's Account.
         The amount of such a withdrawal shall be limited to the amount the
         Administrative Committee determines to be reasonably necessary to meet
         the Participant's needs resulting from the Unforeseen Emergency. If any
         payment is made due to Unforeseen Emergency, any existing Deferral
         Commitment shall be null and void and the Participant shall not be
         permitted to make any Deferral Commitment for twelve (12) months. Any
         such hardship withdrawal distribution shall be payable in a single lump
         sum within thirty (30) days after the Administrative Committee approves
         such payment.

PAGE 8 - STOCK DEFERRAL PLAN



         5.2   Distributions Following Termination of Service


               (a)    Retirement or Disability Benefit.

                      (i) Benefit Amount. If a Participant terminates service
               with Employer due to Retirement or Disability, Employer shall pay
               to the Participant a benefit equal to the balance in the
               Participant's Account.

                      (ii) Form of Benefit. Subject to Section 5.2(a)(iii),
               benefits under this Section 5.2(a) shall be paid in the form or
               forms selected by the Participant in the Participation Agreement.
               Optional forms of payment include a lump-sum payment or
               substantially equal annual installments of the Account amortized
               over a period of up to fifteen (15) years. The initial payment
               shall be as elected by the Participant, either within sixty (60)
               days of termination or in January following termination, and all
               subsequent payments, if any, shall be in subsequent Januarys. In
               order to provide substantially equal installments, the Committee
               shall assume a rate of return during the period of payment and
               may, at its discretion, adjust the assumed rate and the size of
               future installments based on the actual experience of Earnings
               Index of the Tektronix Common Shares.

                      (iii) Mandatory Lump-Sum Payments. Notwithstanding Section
               5.2(a)(ii), if an employee terminates employment before age
               fifty-five (55), or with less than five (5) years of service, or
               if a Director terminates Board service before age fifty-five
               (55), or if a Participant's Account is less than fifty thousand
               dollars ($50,000) on the Retirement date, a lump-sum benefit will
               be made regardless of the distribution method the Participant
               elected.

                      (iv) Change in Form of Payment. Notwithstanding the above,
               a Participant may elect to change the form or forms of payment
               designation which shall supersede the form of payment
               designations in all prior Participation Agreements and prior
               elected changes. If the Participant's most recent change of
               payment designation has not been filed thirteen (13) calendar
               months prior to the date of employment termination, the prior
               election shall be used to determine the form of payment.

                      (v) Termination Benefit. If a Participant terminates
               employment or Board service with Employer for any reason other
               than Retirement, Disability, or death, Employer shall pay to the
               Participant a lump-sum benefit equal to the balance in the
               Participant's Account.

               (b)    Death Benefit.

                      (i) Preretirement. If a Participant terminates employment
               or Board service with Employer due to death, Employer shall pay
               to the Participant's Beneficiary a lump-sum benefit equal to the
               vested balance in the Participant's Account.

                      (ii) Postretirement. If a Participant dies following the
               Participant's Retirement, Employer shall continue to pay any
               remaining benefit payments to the Participant's Beneficiary in
               the form previously elected by the Participant for Retirement
               benefits.

               (c) All balances in a Participant's Stock subaccount shall be
               paid in Stock.

5.3      Benefit Commencement

         Benefits shall commence as soon as practical after termination but in
no case more than sixty (60) days after termination.

PAGE 9 - STOCK DEFERRAL PLAN


5.4      Accelerated Distribution

         Notwithstanding any other provision of the Plan, at any time a
Participant shall be entitled to receive, upon written request to the
Administrative Committee, a lump-sum distribution equal to ninety percent (90%)
of the Account balance as of the Determination Date immediately preceding the
date on which the Administrative Committee receives the written request. The
remaining balance shall be forfeited by the Participant. The amount payable
under this section shall be paid in a lump-sum benefit within thirty (30) days
following the receipt of the notice by the Administrative Committee from the
Participant. Such Participant shall not be eligible to participate in the Plan
for a period of one (1) year from the date of distribution.

5.5      Deferred Payment of Benefit

         If part of a Participant's compensation is not deductible under IRC
Section 162(m), then Tektronix may require the Participant to defer payment of
benefits under this Article to avoid the limitation set forth in Section 162(m).
Any deferred benefits under this Section shall be distributed to the Participant
in the first calendar year such amounts would not exceed the limitation as set
out in IRC Section 162(m).

5.6      Withholding for Taxes

         To the extent required by the law in effect at the time payments are
made, Employer shall withhold from payments made hereunder any taxes required to
be withheld by the federal or any state or local government, including any
amounts which the Employer determines are reasonably necessary to pay any
generation-skipping transfer tax which is or may become due. A beneficiary,
however, may elect not to have withholding of federal income tax pursuant to
Section 3405 of the Internal Revenue Code, or any successor provision thereto.

5.7      Valuation and Settlement

         The amount of a lump-sum payment and the initial installment payment
shall be based on the value of the Participant's Account on the Determination
Date immediately preceding the lump-sum payment or commencement of installment
payments.

5.8      Payment to Guardian

         The Administrative Committee may direct payment to the duly appointed
guardian, conservator, or other similar legal representative of a Participant or
Beneficiary to whom payment is due. In the absence of such a legal
representative, the Administrative Committee may, in it sole and absolute
discretion, make payment to a person having the care and custody of a minor,
incompetent or person incapable of handling the disposition of property upon
proof satisfactory to the Administrative Committee of incompetency, minority, or
incapacity. Such distribution shall completely discharge the Administrative
Committee from all liability with respect to such benefit.


                       Article VI--Beneficiary Designation

6.1      Beneficiary Designation

         Each Participant shall have the right, at any time, to designate a
Beneficiary (both primary as well as contingent) to whom benefits under this
Plan shall be paid if a Participant dies prior to complete distribution to the
Participant of the benefits due under the Plan. Each Beneficiary designation
shall be in a written form prescribed by


PAGE 10 - STOCK DEFERRAL PLAN



the Administrative Committee, and will be effective only when filed with the
Administrative Committee during the Participant's lifetime.

6.2      Changing Beneficiary

         Any Beneficiary designation may be changed by a Participant without the
consent of the previously named Beneficiary by the filing of a new Beneficiary
designation with the Administrative Committee. The filing of a new Beneficiary
designation shall cancel all Beneficiary designations previously filed. If a
Participant's Compensation is community property, any Beneficiary Designation
shall be valid or effective only as permitted under applicable law.

6.3      No Beneficiary Designation

         In the absence of an effective Beneficiary Designation, or if all
designated Beneficiaries predecease the Participant or die prior to complete
distribution of the Participant's benefits, the Participant's designated
Beneficiary shall be deemed to be the Participant's estate.

6.4      Effect of Payment

         Payment to the Beneficiary shall completely discharge Employer's
obligations under this Plan.


                           Article VII--Administration

7.1      Committee; Duties

         The Plan shall be administered by an Administrative Committee
consisting of three (3) or more members as may be appointed from time to time by
the Chief Executive Officer. The Administrative Committee shall have the
authority to interpret and enforce all appropriate rules and regulations for the
administration of the Plan and decide or resolve any and all questions,
including determination of eligibility and interpretations of the Plan, as may
arise in such administration. A majority vote of the Administrative Committee
members in office at the time of the vote shall control any decision. The
required majority action may be taken either by a vote at a meeting or without a
meeting by a signed memorandum. Meetings may be conducted by telephone
conference call. The Administrative Committee may, by majority action, delegate
to one or more of its members the authority to execute and deliver in the name
of the Administrative Committee all communications and documents which the
Administrative Committee is required or authorized to provide under this Plan.
Any party shall accept and rely upon any document executed in the name of the
Administrative Committee. Members of the Administrative Committee may be
Participants under this Plan.

7.2      Agents

         The Administrative Committee may, from time to time, employ agents and
delegate to them such administrative duties as it sees fit, and may from time to
time consult with counsel who may be counsel to the Company.

7.3      Binding Effect of Decisions

         The decision or action of the Administrative Committee with respect to
any question arising out of or in connection with the administration,
interpretation and application of the Plan and the rules and regulations
promulgated hereunder shall be final, conclusive and binding upon all persons
having any interest in the Plan.


PAGE 11 - STOCK DEFERRAL PLAN



7.4      Indemnity of Committee

         The Company shall indemnify and hold harmless the members of the
Administrative Committee against any and all claims, loss, damage, expense or
liability arising from any action or failure to act with respect to this Plan on
account of such person's service on the Administrative Committee, except in the
case of gross negligence or willful misconduct.


                         Article VIII--Claims Procedure

8.1      Claim

         Any person claiming a benefit, requesting an interpretation or ruling
under the Plan, or requesting information under the Plan shall present the
request in writing to the Administrative Committee which shall respond in
writing within thirty (30) days.

8.2      Denial of Claim

         If the claim or request is denied, the written notice of denial shall
state:

               (a) The reason for denial, with specific reference to the Plan
         provisions on which the denial is based.

               (b) A description of any additional material or information
         required and an explanation of why it is necessary.

               (c) An explanation of the Plan's claim review procedure.

8.3      Review of Claim

               (a) Any person whose claim or request is denied or who has not
         received a response within thirty (30) days may request review by
         notice given in writing to the Administrative Committee. The claim or
         request shall be reviewed by the Administrative Committee who may, but
         shall not be required to, grant the claimant a hearing. On review, the
         claimant may have representation, examine pertinent documents, and
         submit issues and comments in writing.

               (b) Such notice shall be made within the lesser of ninety (90)
         days of notice of denial or one hundred twenty (120) days of the
         original written claim.

8.4      Final Decision

         The decision on review shall normally be made within sixty (60) days.
If an extension of time is required for a hearing or other special
circumstances, the claimant shall be notified and the time limit shall be one
hundred twenty (120) days. The decision shall be in writing and shall state the
reason and the relevant plan provisions. All decisions on review shall be final
and bind all parties concerned.


PAGE 12 - STOCK DEFERRAL PLAN


                  Article IX--Amendment and Termination of Plan

9.1      Amendment

               (a) The Company may amend the Plan at any time and from time to
         time by written instrument. Except as provided in (b) below, the power
         to amend may be executed only by the Board.

               (b) The Administrative Committee may adopt any technical,
         clerical, conforming or clarifying amendment or other change, provided:

                      (i) The Administrative Committee deems it necessary or
               advisable to:

                             (A) Correct any defect, supply any omission or
                      reconcile any inconsistency in order to carry out the
                      intent and purposes of the Plan;

                             (B) Maintain the Plan's status as a "top-hat" plan
                      for purposes of ERISA; or

                             (C) Facilitate the administration of the Plan;

                      (ii) The amendment or change does not, without the consent
               of the Board, materially increase the cost to the Employer of
               maintaining the Plan; and

                      (iii) Any amendment adopted by the Administrative
               Committee shall be in writing, signed by a member of the
               Committee and promptly reported to the Board.

               (c) To the extent permitted under subsection (e) below,
         amendments may have an immediate, prospective or retroactive effective
         date.

               (d) Amendments do not require the consent of any Participant or
         Beneficiary.

               (e) Amendments are subject to the following limitations:

                      (i) Preservation of Account Balance. No amendment shall
               reduce the amount credited or to be credited to any Account as of
               the date notice of the amendment is given to Participants.

                      (ii) Changes in Earnings Rate. If the Plan is amended so
               that the Earnings Index is not used to calculate the Rate of
               Return, the rate of earnings to be credited to the Participant's
               Account shall not be less than the monthly equivalent of the
               average nominal annual yield on three (3) month Treasury bills
               for the applicable Determination Period.

                      (iii) After a Change in Control. No amendment shall change
               the methodology used to calculate the Rate of Return in any way
               which will lower the Participant's returns on any amounts
               deferred under Deferral Commitments filed prior to the Change in
               Control.

                      All amounts deferred under Deferral Commitments filed
               prior to a Change in Control shall be paid as originally elected
               by the Participant unless the Participant voluntarily changes
               such distribution elections in accordance with 5.2(a)(iv).


PAGE 13 - STOCK DEFERRAL PLAN



9.2      Employer's Right to Terminate

         The Board may at any time partially or completely terminate the Plan
if, in its judgment, the tax, accounting or other effects of the continuance of
the Plan, or potential payments thereunder would not be in the best interests of
Employer.

               (a) Partial Termination. The Board may partially terminate the
         Plan by instructing the Administrative Committee not to accept any
         additional Deferral Commitments. If such a partial termination occurs,
         the Plan shall continue to operate and be effective with regard to
         Deferral Commitments entered into prior to the effective date of such
         partial termination.

               (b) Complete Termination. The Board may completely terminate the
         Plan by instructing the Administrative Committee not to accept any
         additional Deferral Commitments, and by terminating all ongoing
         Deferral Commitments. If such a complete termination occurs, the Plan
         shall cease to operate and Employer shall pay out each Account. Payment
         shall be made in a lump sum or in the installment schedule elected by
         the Participant for payment upon Retirement, as decided by the Company,
         except as follows. If a Change in Control has occurred prior to the
         termination of the Plan, payment shall be made in the installment
         schedule elected by the Participant for payment upon Retirement.

         Payments shall commence within sixty (60) days after the Board
terminates the Plan and earnings shall continue to be credited on the unpaid
Account balance.


                            Article X--Miscellaneous

10.1     Unfunded Plan

         As to employees, this Plan is an unfunded plan maintained primarily to
provide deferred compensation benefits for a select group of "management or
highly compensated employees" within the meaning of Sections 201, 301 and 401 of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
therefore is exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA.
As to Directors, this Plan is not subject to ERISA because it does not provide
benefits for employees.

10.2     Unsecured General Creditor

         Participants and Beneficiaries shall be unsecured general creditors,
with no secured or preferential right to any assets of Employer or any other
party for payment of benefits under this Plan. Any life insurance policies,
annuity contracts or other property purchased by Employer in connection with
this Plan shall remain its general, unpledged and unrestricted assets.
Employer's obligation under the Plan shall be an unfunded and unsecured promise
to pay money in the future.

10.3     Trust Fund

         At its discretion, the Employer may establish one (1) or more trusts,
with such trustees as the Employer may approve, for the purpose of providing for
the payment of benefits owed under the Plan. Although such a trust shall be
irrevocable, its assets shall be held for payment of all the Company's general
creditors in the event of insolvency or bankruptcy. To the extent any benefits
provided under the Plan are paid from any such trust, Employer shall have no
further obligation to pay them. If not paid from the trust, such benefits shall
remain the obligation of Employer.


PAGE 14 - STOCK DEFERRAL PLAN



10.4     Nonassignability

         Neither a Participant nor any other person shall have any right to
commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise
encumber, transfer, hypothecate or convey in advance of actual receipt the
amounts, if any, payable hereunder, or any part thereof, which are, and all
rights to which are, expressly declared to be unassignable and nontransferable.
No part of the amounts payable shall, prior to actual payment, be subject to
seizure or sequestration for the payment of any debts, judgments, alimony or
separate maintenance owed by a Participant or any other person, nor be
transferable by operation of law in the event of a Participant's or any other
person's bankruptcy or insolvency.

10.5     Not a Contract of Employment

         This Plan shall not constitute a contract of employment between
Employer and the Participant. Nothing in this Plan shall give a Participant the
right to be retained in the service of Employer or to interfere with the right
of Employer to discipline or discharge a Participant at any time.

10.6     Protective Provisions

         A Participant will cooperate with Employer by furnishing any and all
information requested by Employer in order to facilitate the payment of benefits
hereunder, and by taking such physical examinations as Employer may deem
necessary and taking such other action as may be requested by Employer.

10.7     Governing Law

         The provisions of this Plan shall be construed and interpreted
according to the laws of the State of Oregon, except as preempted by federal
law.

10.8     Validity

         In case any provision of this Plan shall be held illegal or invalid for
any reason, said illegality or invalidity shall not affect the remaining parts
hereof, but this Plan shall be construed and enforced as if such illegal and
invalid provision had never been inserted herein.

10.9     Notice

         Any notice required or permitted under the Plan shall be sufficient if
in writing and hand delivered or sent by registered or certified mail. Such
notice shall be deemed as given as of the date of delivery or, if delivery is
made by mail, as of the date shown on the postmark on the receipt for
registration or certification. Mailed notice to the Administrative Committee
shall be directed to the Company's address. Mailed notice to a Participant or
Beneficiary shall be directed to the individual's last known address in
Employer's records.

10.10    Successors

         The provisions of this Plan shall bind and inure to the benefit of
Employer and its successors and assigns. The term successors as used herein
shall include any corporate or other business entity which shall, whether by


PAGE 15 - STOCK DEFERRAL PLAN



merger, consolidation, purchase or otherwise acquire all or substantially all of
the business and assets of Employer, and successors of any such corporation or
other business entity.

                                    TEKTRONIX, INC.


                               By:  /s/ JAMES F. DALTON
                                    --------------------------------------
                                    Its:    Vice President

                            Dated:  September 8, 2003
                                    --------------------------------------

PAGE 16 - STOCK DEFERRAL PLAN

EX-10.(III)

                                                               Exhibit (10)(iii)











                                 TEKTRONIX, INC.


                   Tektronix Annual Performance Incentive Plan


                                2003 Restatement



                                  June 1, 2003













Tektronix, Inc.
an Oregon Corporation
P.O. Box 500
Beaverton, OR 97077






                                TABLE OF CONTENTS





                                                                                                                Page

                                                                                                              
ARTICLE 1 Name....................................................................................................3

ARTICLE 2 Purpose.................................................................................................3

ARTICLE 3 Amendment or Termination................................................................................3

ARTICLE 4 Administration..........................................................................................3

ARTICLE 5 Eligibility- and Participation; Performance Targets.....................................................4

         5.01     Eligible Employees; Selection...................................................................4

         5.02     Performance Targets.............................................................................4

ARTICLE 6 Accounting Calculations.................................................................................4

ARTICLE 7 Change of Eligible Employment...........................................................................5

         7.01     General Rule....................................................................................5

         7.02     Job Changes.....................................................................................5

         7.03     Death, Disability and other Termination.........................................................6

ARTICLE 8 Nontransferability......................................................................................6

ARTICLE 9 Payment.................................................................................................6

         9.01     Timing..........................................................................................6

         9.02     Deferring Award.................................................................................6

ARTICLE 10 Terms..................................................................................................7

ARTICLE 11 Claims Procedure.......................................................................................7

ARTICLE 12 Not a Contract of Employment...........................................................................8

ARTICLE 13 Effective Date.........................................................................................8





                                 TEKTRONIX, INC.

                   TEKTRONIX ANNUAL PERFORMANCE INCENTIVE PLAN

                                2003 RESTATEMENT

Tektronix, Inc.
an Oregon Corporation
14200 S.W. Karl Braun Drive
P.O. Box 500
Beaverton, OR 97077

         The Plan, as adopted, restated and amended through September 11, 2001,
is restated in its entirety effective as of June 1, 2003.

                                    ARTICLE 1

                                      NAME

          The name of this Plan is the Tektronix Annual Performance Incentive
Plan.

                                    ARTICLE 2

                                     PURPOSE

         The purpose of this Plan is to promote the interests of the
shareholders by providing, for eligible employees of Tektronix and its
subsidiaries, an element of regular compensation that is contingent upon the
attainment of established performance targets. Such an incentive is necessary in
order to give due emphasis to performance targets and to attract and retain
highly qualified employees.

                                   ARTICLE 3

                            AMENDMENT OR TERMINATION

         The Organization and Compensation Committee of the Board of Directors
("the Committee") may amend or terminate this Plan at any time.

                                   ARTICLE 4

                                 ADMINISTRATION

         The Chief Executive Officer of Tektronix shall appoint one or more
employees of Tektronix as Administrator of the Plan. The Administrator shall
interpret and administer the Plan and, for that purpose, may make, amend or
revoke rules and regulations at any time.


                                       3


                                   ARTICLE 5

               ELIGIBILITY- AND PARTICIPATION; PERFORMANCE TARGETS

5.01     Eligible Employees; Selection.

An officer, executive, or employee of Tektronix or its subsidiaries shall
participate, if selected, as set forth below.

(a)       The Committee will select corporate officers ("officers") for
          participation each fiscal year.

(b)       The Chief Executive Officer shall select employees who are not
          officers ("non-officers"). Generally, Senior Managers and select
          Senior Level Individual Contributors will be eligible for
          participation.

(c)       Selections shall be made annually as soon as practicable after the
          beginning of the fiscal year.

(d)       Selected officers and non-officers shall be notified of their
          selection to participate as soon as practical.

(e)       Officers or employees who enter eligible positions after the start of
          the fiscal year as newly hired or through promotion or transfer may be
          selected for participation.

         5.02 Performance Targets

(a)      The performance period under this Plan shall be the Tektronix fiscal
         year.

(b)      The terms for measurement of performance and payment of incentives,
         including award formulas and amounts, shall be those set each fiscal
         year by the Committee for officers and by the Chief Executive officer
         for non-officers. Such performance measures and associated values will
         be established as soon as feasible in each fiscal year.

(c)      To accommodate and adjust for the effects of structural changes within
         Tektronix during any performance period (including, by way of
         illustration, the transfer of an organization or a portion of an
         organization from one cost center to another), the terms established
         pursuant to this Section 5.02 may be changed by restating both planned
         and actual performance to account for the structural change. Any such
         change in terms shall require the prior approval of the Committee for
         officers or the Chief Executive Officer for non-officers.

                                    ARTICLE 6

                             ACCOUNTING CALCULATIONS


                                       4


         All calculations of values and related determinations of assets,
operating results and other accounting matters shall be made by the Chief
Financial officer for the Administrator. Calculations shall be based on
Tektronix's books of account using generally accepted accounting principles
consistently applied. At the discretion of the Committee for officers or the
Chief Executive officer for non-officers, calculations may exclude items
determined by the committee or Chief Executive Officer to be nonrecurring or to
result from changes in accounting policy.

         Determinations once made shall be final and binding on all parties and
shall not be changed because of any later occurrence, discovery of facts, or
adjustments to accounts, unless due to mathematical or clerical error.

                                   ARTICLE 7

                          CHANGE OF ELIGIBLE EMPLOYMENT

         7.01 General Rule

         Except as provided in Section 7.03, if a selected officer or employee
does not remain continuously employed by Tektronix until the last day of the
fiscal year, the award shall terminate and all rights to it shall cease. If
rehired into an APIP eligible position later in the same fiscal year, the APIP
award will be calculated only on earnings from the date of rehire.

         7.02 Job Changes

         Participants who are eligible for APIP do not participate in either
commission plans or Results Share. Eligibility for APIP or Results Share will be
determined quarterly. No participant may be eligible for both APIP and Results
Share during the same fiscal quarter. The position held by a participant at the
end of each quarter determines APIP or Results Share participation for the
entire quarter, except if moving into or from a commissioned position:

(a)      If a participant moves from an APIP eligible position to a Results
         Share eligible position before the end of a quarter, all eligible
         earnings during that quarter will be counted in calculating a Results
         Share award - regardless of what point in the quarter the participant
         entered the Results Share eligible position.

(b)      If a participant moves from a Results Share to an APIP eligible
         position before the end of a quarter, all eligible earnings during that
         quarter will be counted in calculating the APIP award.

(c)      If a participant transfers from one APIP eligible position to another,
         the target leverage will be based on the position in which the
         participant is classified at the end of the quarter.


                                       5


(d)      If a participant moves from an APIP eligible position to a commission
         eligible position, APIP earnings will be prorated based on eligible
         earnings up to the effective date of the move into a commissions plan.

(e)      If a participant transfers from a commissions plan to APIP, the APIP
         award will be prorated and based on eligible earnings starting with the
         date the participant actually entered the APIP plan through the end of
         the quarter.

7.03     Death, Disability and other Termination

         If an interruption of continuous employment under 7.01 occurs during a
performance period under the following circumstances, the participant or the
estate of a deceased participant shall be entitled to an award:

(a)      Upon death or disability; or

(b)      Under unusual circumstances that the Chief Executive Officer (for
         non-officers) or the Committee (for officers) decides justify granting
         an award.

         Disability means permanent and total disability as defined under the
long term disability program maintained by the participant's employer at the
time of termination of employment.

                                    ARTICLE 8

                               NONTRANSFERABILITY

         Except for amounts owing to or claimed by Tektronix or any subsidiary
of Tektronix, no interest of any participant may be assigned, transferred,
seized by legal process or subjected to the claims of creditors in any way.

                                    ARTICLE 9

                                     PAYMENT

         9.01 Timing

         The amount of each incentive award will be paid as soon as practicable
after the close of the fiscal year, unless Section 9.02 applies.

         9.02 Deferring Award

         If the participant has previously elected under a Deferred
Compensation Plan (U.S. participants' only) maintained by Tektronix to defer
receipt of the payment, the time and manner of payment shall be controlled by
the Deferred Compensation Plan and the participant's deferral election.

         9.03     Payments made from


                                       6


         Payments will be made from Tektronix or the subsidiary in which the
participant is employed, as determined by the Administrator.

                                   ARTICLE 10

                                      TERMS

         10.01 Terms Used

         Where specific compensation terms and other such provisions of an
annual incentive design are used in determining performance incentive amounts or
criteria, they shall be understood to be those compensation and incentive plan
concepts in accordance with U.S. terms and determined by the plan administrator,
as the case may be, for the relevant performance period.

         10.02  Eligible Earnings

         Eligible earnings for calculating APIP awards in the U.S. are made up
of the following pay elements: Regular or base pay, holiday, sick, health bank,
vacation, vacation bank, volunteer time, paid leave, paid non-work, jury duty,
military, and time off without pay due to required shutdown. Eligible earnings
for calculating APIP awards for non-U.S. participants will include the local pay
elements that most closely correspond to those used in the U.S.

                                   ARTICLE 11

                                CLAIMS PROCEDURE

         Any person claiming a benefit, requesting an interpretation or ruling
under the Plan, or requesting information under the Plan shall present the
request in writing to the Administrator, who shall respond in writing as soon as
practicable.

         If the claim or request is denied, the written notice of denial shall
state the following:

(a)      The reasons for the denial, with specific reference to the Plan
         provisions on which the denial is based.

(b)      A description of any additional material or information required and an
         explanation of why it is necessary.

(c)      An explanation of the Plan's claims review procedure.

         Any person whose claim or request is denied or who has not received a
response within 30 days may request review by notice in writing to the
Administrator who may, but who shall not be required to, grant the claimant a
hearing. On review, whether or not there is a hearing, the claimant may have
representation, examine pertinent: documents and submit issues and comments in
writing.


                                       7


         The decision on review ordinarily shall be made within 60 days. If an
extension of time is required for a hearing or other special circumstances, the
claimant shall be notified and the time limit shall be 120 days. The decision
shall be in writing and shall state the reasons and the relevant Plan
provisions. All decisions on review shall be final and binding on all parties
concerned.

                                   ARTICLE 12

                          NOT A CONTRACT OF EMPLOYMENT

         Nothing in this Plan shall confer on any participant, or be construed
to confer on any participant, the right to continued employment or an acquired
right to any compensation under the Plan. The Plan shall not prevent the
termination of any participant's employment at any time for any reason.

                                   ARTICLE 13

                                 EFFECTIVE DATE

         This restatement shall be effective June 1, 2003.






























                                       8

EX-31.1

                                                                    EXHIBIT 31.1

                            CERTIFICATION PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Richard H. Wills, certify that:

         (1) I have reviewed this quarterly report on Form 10-Q of Tektronix,
Inc., for the fiscal quarter ending August 30, 2003;

         (2) Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;

         (3) Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;

         (4) The registrant's other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

                  (a) Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being
prepared;

                  (b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and

                  (c) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and

         (5) The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):

                  (a) All significant deficiencies and material weaknesses in
the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and

                  (b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant's
internal control over financial reporting.

Dated:      October 14, 2003


/s/ RICHARD H. WILLS
- ------------------------------------
Richard H. Wills
President and Chief Executive Officer

EX-31.2

                                                                    EXHIBIT 31.2

                            CERTIFICATION PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Colin L. Slade, certify that:

         (1) I have reviewed this quarterly report on Form 10-Q of Tektronix,
Inc., for the fiscal quarter ending August 30, 2003;

         (2) Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;

         (3) Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;

         (4) The registrant's other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

                  (a) Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being
prepared;

                  (b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and

                  (c) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and

         (5) The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):

                  (a) All significant deficiencies and material weaknesses in
the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and

                  (b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant's
internal control over financial reporting.

Dated:      October 14, 2003


/s/  COLIN L. SLADE
- --------------------------------------------
Colin L. Slade
Senior Vice President and Chief Financial Officer

EX-32.1

                                                                    EXHIBIT 32.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

         In connection with the Quarterly Report of Tektronix, Inc. (the
"Company") on Form 10-Q for the fiscal quarter ended August 30, 2003 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Richard H. Wills, President and Chief Executive Officer of the Company,
certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

         (1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

         (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.


Dated:    October 14, 2003



/s/ RICHARD H. WILLS
- ------------------------------------
Richard H. Wills
President and Chief Executive Officer

EX-32.2

                                                                    EXHIBIT 32.2

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

         In connection with the Quarterly Report of Tektronix, Inc. (the
"Company") on Form 10-Q for the fiscal quarter ended August 30, 2003 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Colin L. Slade, Senior Vice President and Chief Financial Officer of the
Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906
of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

         (1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

         (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.


Dated:      October 14, 2003



/s/  COLIN L. SLADE
- --------------------
Colin L. Slade
Senior Vice President and Chief Financial Officer