<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended May 25, 1996 or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ______ to ______
Commission file number 1-4837
TEKTRONIX, INC.
(Exact name of Registrant as specified in its charter)
Oregon 93-0343990
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
26600 S.W. Parkway Avenue
Wilsonville, Oregon 97070
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (503) 627-7111
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
___________________ ________________________
Common Shares, New York Stock Exchange
without par value Pacific Stock Exchange
Series A No Par Preferred New York Stock Exchange
Shares Purchase Rights Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes_____X_____. No__________.
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-
affiliates of the Registrant was approximately $1,223,211,765 at August 5,
1996.
At August 5, 1996 there were 32,793,086 Common Shares of the
Registrant outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
___________________________________
Document Part of 10-K into which incorporated
________ ____________________________________
Registrant's Proxy Statement Part III
dated August 14, 1996
1996 Annual Report to Shareholders Parts I, II and IV
<PAGE>
PART I
Item 1. Business.
Tektronix is an Oregon corporation organized in 1946. Its
principal executive offices are located at 26600 S.W. Parkway
Avenue, Wilsonville, Oregon 97070, approximately 18 miles south of
Portland. Its telephone number is (503) 627-7111. References
herein to "Tektronix" or the "Company" are to Tektronix, Inc. and
its wholly-owned subsidiaries unless the context indicates
otherwise.
Tektronix' products cover a wide range of electronic
equipment. Measurement business products include general purpose
test instruments, such as digital and analog oscilloscopes, logic
analyzers, digital multimeters, VXI card-modular products, and
probes; RF and wireless test instruments, such as spectrum
analyzers, communication test sets and high frequency signal
sources; telecommunications instruments, such as optical time domain
reflectometers (OTDRs), and cable testers; and television test
instruments, such as audio and video measurement sets, waveform
monitors, vectorscopes, signal generators, and RF/cable measurement
products. Color printing and imaging products include color
printers, ink and related products and supplies. Video and
networking products include studio production equipment, signal
processing and distribution equipment, transmission systems, video
editing systems, video disk recorders, netstations (X terminals) and
related products.
Products
________
The table below sets forth the contribution to total net
sales of the Company's product groupings for the last three fiscal
years (in thousands of dollars).
<TABLE>
<CAPTION>
Measurement Color Printing Video and
Business and Imaging Networking Other
Products Products Products (2) Products (3)
________________ _______________ __________________ ________________
Amount Percent Amount Percent Amount Percent Amount Percent
______ _______ ______ _______ _______ _______ ______ _______
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1994 (1) $671,042 50.0% $313,475 23.4% $259,347 19.3% $98,632 7.3%
1995 (1) $731,061 48.8% $454,961 30.4% $303,213 20.2% $ 8,727 .6%
1996 (1) $812,250 45.9% $561,642 31.8% $394,966 22.3% $ - 0.0%
_______
<FN>
<F1>(1) During 1995 and 1996 the Company acquired Microwave Logic, Inc.
(MLI), Lightworks Editing Systems Limited and Lightworks Editing
Systems, Inc. under poolings of interests, and the Company's financial
results for 1994 and 1995 have been restated to include MLI and
Lightworks results for these fiscal years.
<F2>(2) This is a combination of the Video Systems and Network Displays
products groups which were reported as separate groups in 1994.
<F3>(3) The Other Products grouping includes the historic net sales to
third parties by the non-strategic components and other business
operations that the Company divested in 1994 and 1995.
</FN>
</TABLE>
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Measurement Business Products
_____________________________
Because of their wide range of capabilities, measurement
business products are used in a variety of applications, including
research, design, testing, installation, manufacturing and service in
the computer, military, commercial aerospace, telecommunications,
television, process control and automotive industries.
Tektronix pioneered the development of high precision
oscilloscopes over 50 years ago, and the oscilloscope is the Company's
primary measurement product. Oscilloscopes are used by engineers and
technicians when an electrical signal needs to be viewed, measured,
tested or calibrated. Oscilloscopes are used extensively in the
computer, communications, aerospace and other industries for design,
manufacturing and maintenance. In addition to electrical signals,
oscilloscopes can be adapted to measure mechanical motion (vibration),
sound, light, heat, pressure, strain and velocity.
Oscilloscopes produce graphic representations of electrical
signals on a cathode ray tube or other display device. Normally, the
display shows the signal as a graph of its amplitude over a certain
period of time, which may range from minutes to less than a billionth of
a second. Oscilloscopes provide a convenient way to visually monitor
and interpret analog electrical fluctuations, mechanical motion and
sound.
The development of the microprocessor and associated growth in
microprocessor-based devices stimulated both the existing analog markets
and new digital markets. In addition, the microprocessor made possible
significant improvements in oscilloscope design and performance. Many
of the oscilloscopes and other measurement products manufactured by
Tektronix feature digital storage and conversion functions, programmable
operations, the ability to work in conjunction with personal computers
and workstations and combinations of these capabilities. In addition,
trends toward smaller microelectronic devices have opened new
segments for specialized measurement equipment, such as connectors,
probes, adapters,and cameras and plotters to record displayed waveforms.
Recently, Tektronix has designed a substantial portion of its
oscilloscope product line to provide a consistent "architecture" across
products and to enhance ease of use. Because the Company manufactures
oscilloscopes in a wide range of configurations, bandwidths and other
performance characteristics and in sizes ranging from hand-held to large
laboratory units, this design provides customers with reduced learning
time and higher productivity. The design also reduces the time required
by the Company to develop new products because many essential user
interface aspects have been standardized. Some elements of this design
also have been patented and provide the Company with certain competitive
advantages.
The Company also offers modular instruments delivered on
printed circuit cards that can be mixed and matched by customers and
plugged directly into the backplane of industry-standard VXI-
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based card cages. These are controlled by personal computers or workstations to
form complete instrument systems tailored to customers' particular
requirements. A number of measurement products are now available in the
VXI standard, which products are used primarily in manufacturing
applications. Tektronix has been instrumental in the development of
VXI-based hardware and software industry standards.
Measurement business products also include video and audio
test products. Video and audio test products include vectorscopes,
waveform monitors, signal generators, automated test equipment,
demodulators, aural modulation monitors and synchronizers which are used
primarily by the television industry to test and display the quality of
video and audio signals. The resolution of images and the fidelity of
sounds, as well as the stability of the signals that carry them, are
essential to program quality. Tektronix' video and audio test products
excel at the many forms of test and measurement vital to creating and
maintaining signals of the highest quality.
Market changes are driving the development of new categories
of products from Tektronix. The proliferation of electronic technology
requires technicians and field engineers to use smart electronic tools
for servicing, maintaining and troubleshooting problems in electrical
equipment. Tektronix' broad line of hand-held instruments, sold through
distributors, are smart, rugged products designed specifically to
address these needs.
Tektronix offers a full range of sophisticated, easy-to-use
handheld instruments, including digital multimeters and the
award-winning TekScope, a handheld oscilloscope/digital multimeter
combination. Tektronix' handheld instruments range in price from below
$100 up to about $2,500.
The Company also makes benchtop basic instruments.
Applications include education, light manufacturing, electronic
troubleshooting and basic electronic design.
Logic analyzers are a principal tool for electronic designers,
engineers and technicians in testing and trouble-shooting computers,
computer peripheral devices and digital electronic systems and
instruments. Logic analyzers capture, display and examine streams of
data coded as binary digits (bits), which are transmitted simultaneously
over many channels. The Company offers several lines of logic analyzers,
including the 3000 Series, a standalone, mid-range analyzer targeted at
medium sized designs, the newer TLA 500 Series, a high performance,
mid-priced anlayzer optimized for embedded software debug, and the DAS
Digital Analysis System, a broad application logic analyzer that
combines logic analysis and pattern generation by using card modular
plug-in units to permit a range of performance in one system. DAS
systems are also used by software engineers in the development and
optimization of microprocessor-based designs.
Spectrum analyzers are used in communications and other
industries to display and measure signal amplitude versus frequency
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rather than amplitude versus time (the latter being what an oscilloscope
displays). It is an essential tool used to design, check and adjust
communications transmitting and receiving equipment.
Products designed for the telecommunications industry play an
increasingly important role in the Company's measurement business
portfolio. Tektronix is a leading supplier of a broad range of test
solutions for emerging networks, designed for ensuring integrity and
optimizing performance of networks, and verifying design and assuring
quality of communications equipment. Cable testers and fiber optic
testers use time-domain-reflectometry techniques to locate faults in
metallic and fiber optic cables. Essentially, these instruments send
signals from one end of a cable and then measure the reflection time of
the signals to determine the location of the fault. Cable testers and
fiber optic testers are widely used in the telecommunication and cable
television industries. The Company also has developed a series of
products for SDH or SONET transmission testing in the telecommunications
industry, and has developed an MPEG based signal generator and analyzer.
The Company's 1995 acquisition of Microwave Logic, Inc., which
was merged into Tektronix in May of 1996, strengthens the Company's
offerings in this product area, as well as in the area of ATM
asynchronous transfer mode products. Tektronix also sells and supports
German manufacturer Rohde and Schwarz' wireless communications and TV
products in the United States and Canada, including the first
measurement solutions for Personal Communications Services (PCS), mobile
phones and base stations available to North American manufacturers.
Rohde and Schwarz also works with Tektronix to facilitate distribution
in Russia, the Middle East and Eastern European countries.
Tektronix' distributorship arrangement with Advantest, the
Japanese instruments manufacturer, expands the company's offering within
North America and Mexico, adding more than 100 solutions to the
communications test product portfolio.
Other measurement business products include digitizers, signal
sources, curve tracers, wireless and modular lines of general purpose
test instruments.
Color Printing and Imaging Products
___________________________________
Tektronix' color printing and imaging products include color
printers and related products and supplies. Color printers produce full
color hard copies of images produced by personal computers, workstations
and terminals. The Company's Phaser brand printers are compatible with
the PostScript industry standard page description language, which
specifies how an image is transferred to hard copy. By adopting the
Postscript standard, color printers can be used in conjunction with a
wide range of third-party graphics software. Tektronix produces Phaser
color printers using thermal wax, liquid ink jet, dye sublimation and
laser technologies. In addition, Tektronix has developed a proprietary
printing technology that uses sticks of solid ink, of the Company's
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own formulation, that are melted and then jetted onto the paper. This
technology produces vivid and stable images, allows printing on plain
rather than coated paper, and can be applied to a wide range of sizes
and gauges of paper. Tektronix' printers are controlled by software
designed and implemented by the Company.
The use of color in computing and printing has been stimulated
by enhancements in the underlying microprocessor technology of personal
computers and workstations, by increasingly larger system and peripheral
storage capabilities, and by enhancements in computer display
capability. As personal computers increasingly become capable of
displaying complex, colorful images, there has been an accompanying
growth in demand for printers that can print such images in color.
Tektronix has been manufacturing and selling color printers
for over eleven years. Early users were graphics artists, engineers and
scientists. More recently, workgroup office users have also become
significant users of the Company's color printers.
In January of 1996, the Company introduced its Phaser 550, a
new desktop color laser printer that provides a high print speed and
high resolution on letter and legal size paper and transparencies. The
Phaser 550 printer combines laser-class speed, low cost per page, and
high quality output intended to broaden the appeal of color for the
average business user and help move color into the office printing
environment. This product compliments the Company's Phaser 340,
introduced in 1995, which is a solid ink printer with laser-class speed.
The Company continues to produce high quality output color printers for
the specialty graphics and office markets.
While the market for color printers is currently growing
rapidly, it is still much smaller than the market for monochrome
printers. Moreover, it is characterized by intense and increasing
competition, resulting in a competitive pricing environment. Because
the market for color hard copy is still small compared to the market for
monochrome printers, distribution of products from manufacturer to end
user is less efficient. The Company expects distribution channels to
expand as color hard copy becomes a more prominent feature in computer
applications.
Also included in color printing and imaging products are
supplies for use with the Company's color printers, including inks,
toner, transfer ribbons, maintenance kits and media (paper and
transparencies). These supplies are a very significant source of
ongoing color printing and imaging revenue and profit. The Company also
manufactures a scanner accessory that enables a color printer to
function as a color copier.
Video and Networking Products
_____________________________
As television continues to expand its offering content and
distribution, markets have emerged for products capable of supporting
development of content through the integration of computer applications.
These trends, coupled with the increasing use of cable and satellite to
distribute content, are expanding the
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market for Tektronix' video products. These trends may result in increased
demand for lower cost production products based on industry standard
platforms and for systems that support the development and distribution
of new forms of content.
Most video products are produced at the Company's facility in
Grass Valley, California. The subsidiary owning this property was
merged into the Company in January of 1996. Grass Valley products are
used by the television industry for program production and distribution.
Products include studio production equipment, signal processing and
distribution equipment and transmission systems. Studio production
equipment is used in the creative process of television program
production and assembly. Production equipment products include
production switchers, special effects devices and editing controllers.
Production switchers allow an operator to select signals from various
sources, such as cameras, video tape recorders and network or remote
transmissions, and to combine these signals into the continuous program
seen by the viewing audience. Signal processing and distribution
equipment is used in the process of moving signals within a television
production facility or between facilities. Such equipment includes
routing switchers, amplifiers, timing systems and signal conversion
devices. Transmission systems are used in the process of transporting
signals between facilities. Transmission system products include fiber
optic video transmitter/receiver systems, digital video coders/decoders,
cross-connect switches and interactive conferencing systems including
distance learning systems. Customers for Grass Valley products include
the television networks, local television stations, post-production
houses (which assemble commercials and television programs from recorded
footage), telephone and cable companies and corporate and educational
users.
Lightworks Editing Systems Limited, a United Kingdom company
which was acquired by the Company in fiscal year 1996, designs,
manufactures and distributes non-linear editing systems used for film
and video editing. Video products also include the Company's Profile
disk-based, multi-channel video storage and playback system. In
contrast to conventional tape storage technology, the Profile system
provides instant access to stored video images and better reliability
due to the durability of the media.
The Company's main networking product is a line of
netstations, which are X windows-based graphics terminals that provide
multiple windowing and networking capability. Also commonly referred to
as X terminals, netstations allow users to communicate with one or more
host computers and other devices such as printers, that make up a
networked computing system. Most applications include a central
"server" (containing applications and data) connected to multiple
netstations, thereby allowing a number of users to access those
applications and data. The Company no longer manufactures its older
line of proprietary graphics terminals, but it still has a service
business for its installed base for such products. This service
business has continually declined as the installed base of these
proprietary graphics
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terminals declines.
Netstation products are based on standard architecture
originally developed by the Massachusetts Institute of Technology.
Consequently, it is difficult for any manufacturer to develop a
proprietary advantage in either the underlying hardware or in elements
of the operating system, and competition in the netstation market is
accordingly intense. The Company's terminals have historically been
used in technical applications such as mechanical engineering design,
drafting and mapping. As a result, the Company has enjoyed a strong
position in the technical and scientific segments of the market.
Recently, the market has expanded and shifted to commercial applications
from scientific and engineering applications. In accordance with this
trend, recent additions to the Company's netstation product line focus
on new commercial and business applications, as well as engineering
applications. Commercial customers now account for a major portion of
the Company's netstation revenues.
The Company's networking products also include WinDD
software, which allows workstation or netstation users on a Unix
network to run Microsoft Windows based applications in native mode (that
is, without translation or emulation).
Manufacturing
_____________
During fiscal 1994, the Company sold its integrated circuits
operation to Maxim Integrated Products, Inc. and transferred its hybrid
circuits operation to a joint venture with Maxim, and in early 1995
completed the sale of approximately 65% of the stock of its printed
circuit board operation in the initial public offering of Merix
Corporation. As a result of these activities and other recent component
operation divestitures, the Company's manufacturing operations are no
longer highly integrated. The Company has entered into supply agreements
with each of the companies now operating the respective component
operations.
Tektronix also purchases raw materials, additional components,
data processing equipment and computer peripheral devices for use in its
products and systems. In addition, the Company purchases components of
its products from a variety of third party suppliers. Such purchased
materials and components are generally available to Tektronix as needed.
Although shortages are experienced from time to time, the Company
currently believes that it will be able to acquire the required
components as needed. Because some of these components are unique,
disruptions in supply can have an effect on Company operations.
Tektronix owns substantially all of its manufacturing
facilities. Its primary manufacturing facilities are located in or near
the Portland, Oregon metropolitan area. Some of Tektronix' products,
components and accessories are assembled in the Peoples Republic of
China. A logistics center is maintained in Heerenveen, The Netherlands.
The Grass Valley products are manufactured near Grass Valley,
California. The Lightworks video editing products
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are manufactured in Reading, U.K. See Item 2, "Properties", for a more
detailed description of the Company's manufacturing facilities.
Certain Tektronix products are manufactured for the Japanese
market at a plant in Gotemba, Japan by Sony/Tektronix Corporation, a
Japanese corporation equally owned by Tektronix and Sony Corporation.
Sony/Tektronix also designs and manufactures arbitrary waveform and
function generators and benchtop semiconductor testers in Japan for
sale worldwide by Tektronix.
Sales and Distribution
______________________
Tektronix maintains its own worldwide sales and field
maintenance organization, staffed with technically trained personnel.
Sales in the United States, Canada, Brazil, the United Kingdom, Germany,
France, Italy, Spain, The Netherlands, Belgium, Sweden, Denmark, Norway,
Finland, Switzerland, The Republic of Ireland, Australia, Austria, Hong
Kong, Taiwan, Korea, Singapore, China and Mexico are made through the
Company and its subsidiaries and their field offices or distribution
channels located in principal market areas. In most countries, all sales
are made either directly by Tektronix or by independent distributors to
whom Tektronix provides direct technical and administrative assistance.
Certain of the Company's independent distributors also sell products
manufactured by the Company's competitors. Sales of joint venture
products in the Peoples Republic of China are made by three companies
which are joint ventures between Tektronix and three different Peoples
Republic of China corporations. Except for Grass Valley products, sales
in Japan are made by Sony/Tektronix Corporation. Sales in India are
made by Tektronix (India) Limited, an Indian company which is 62% owned
by Tektronix and the balance held publicly. A number of the Tektronix
field offices in the U.S. also perform major maintenance and
reconditioning operations. Tektronix' principal customers are electronic
and computer equipment manufacturers and service providers, private
industrial concerns engaged in commercial or governmental projects,
military and nonmilitary agencies of the United States and of foreign
countries, public utilities, educational institutions, radio and
television stations and networks, graphics arts companies and users of
sophisticated office products. Certain products are sold both to
equipment users and to original equipment manufacturers.
During the last fiscal year, United States Government agencies
accounted directly for approximately 1.4 percent of Tektronix'
consolidated sales as compared with approximately two percent for the
prior year. During the last five years, direct sales to United States
Government agencies ranged from one to six percent. The balance of
sales during each year was distributed among several thousand other
customers, with no other single customer accounting for as much as three
percent. The Company believes that sales directly related to United
States Government expenditures (excluding sales to the United States
Government) were approximately two percent of Tektronix' consolidated
sales for the last fiscal year. Contracts involving the United States
Government are subject, as is customary, to termination by the
Government at its convenience.
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Most Tektronix product sales are sold as standard catalog
items. Tektronix attempts to fill its orders as promptly as possible.
In video and networking, the Company is moving towards complete system
sales.
At May 25, 1996, Tektronix' unfilled product orders amounted
to approximately $163 million, as compared to approximately $167 million
at May 27, 1995. Tektronix expects that substantially all unfilled
product orders at May 25, 1996 will be filled during its current fiscal
year. Orders received by the Company are subject to cancellation by the
customer.
International Sales
___________________
The following table sets forth the breakdown between U.S. and
international sales, based upon purchaser location, for each of the last
three fiscal years (in thousands of dollars):
<TABLE>
<CAPTION>
U.S. Sales International Sales
___________________ ___________________
Amount Percent Amount Percent
______ _______ ______ _______
<S> <C> <C> <C> <C>
1994 $751,401 56.0% $591,095 44.0%
1995 $766,991 51.2% $730,971 48.8%
1996 $890,930 50.4% $877,928 49.6%
</TABLE>
See "Business Segments" in the Notes to Consolidated Financial
Statements at page 27 of the Company's 1996 Annual Report to
Shareholders, containing information on sales, operating income and
assets by geographic area based upon the location of the seller, which
is incorporated by reference.
Tektronix products are sold worldwide. European sales are
made principally in Germany, France, the United Kingdom, Switzerland,
Italy, Spain, Sweden, and The Netherlands. Other international sales
are principally in Japan, Korea, Canada and Australia. International
sales include both export sales from the United States and sales by
non-U.S. subsidiaries. Fluctuating exchange rates and other factors
beyond the control of Tektronix, such as the stability of international
monetary conditions, tariff and trade policies and domestic and foreign
tax and economic policies, affect the level and profitability of
international sales. The Company does not believe it is materially
exposed to exchange rate fluctuation, although the Company is unable to
predict the effect of these factors on its business. The Company hedges
against certain currency exposures in order to minimize their impact.
Research and Development
________________________
Tektronix operates in an industry characterized by rapid
technological change and research and development are important elements
in its business. Expenditures during fiscal years ended May 28, 1994,
May 27, 1995 and May 25, 1996 for research and development amounted to
approximately $159,377,000, $166,171,000, and $164,292,000 respectively.
Almost all of these funds were Company generated.
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Research and development activities are conducted by research
and design groups and specialized product development groups within the
three product groups. These activities include: (i) research on basic
devices and techniques (ii) the design and development of products and
components and specialized equipment and (iii) the development of
processes needed for production. Most of Tektronix' research and
development is devoted to enhancing and developing its own products.
Patents and Intellectual Property
_________________________________
It is Tektronix' policy to seek patents in the United States
and appropriate foreign countries for its significant patentable
developments. However, electronic equipment as complex as most
Tektronix products is generally not patentable in its entirety. The
Company also seeks to protect significant trademarks and software
through trademark and copyright registration. The Company has entered
into license arrangements for components important to the manufacturing
of some of its printers. The Company's printer business relies on an
integrated strategy of licensed and internally developed technology to
produce its industry leading products. This technology includes
software, equipment, printing process and ink developments. As with any
company whose business involves intellectual property, Tektronix is
subject to claims of infringement. There are no material pending
claims.
Competition
___________
The electronics industry continues to become more
competitive, both in the United States and abroad. Primary
competitive factors are product performance, technology, customer
service, product availability and price. Tektronix believes that its
reputation in the marketplace is a significant positive competitive
factor. With respect to many of its products, the Company competes with
companies that have substantially larger resources.
Tektronix is the world's largest manufacturer of oscilloscopes
and no single competitor offers as complete a product line. The Company
is also the leader in sales of test and measurement equipment for the
television industry. Tektronix competes with a number of companies in
specialized areas of other test and measurement products, and it
competes with one very large company that sells a broad line of test and
measurement products.
Tektronix is also the leader in unit sales of office workgroup
laser-class color printers, including color laser, solid ink jet and
thermal wax color printers.
Tektronix competes with a number of large, worldwide
electronics firms that manufacture specialized equipment for the
television industry, both with respect to its television test and
measurement products and its Grass Valley products. Grass Valley
products include leading high-performance production switchers and
high-performance distribution/processing equipment.
Tektronix is a leading supplier of netstations.
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Employees
_________
At May 25, 1996, Tektronix had 7,929 employees, of whom 1,572
were located in foreign countries. Tektronix' employees in the United
States and most foreign countries are not covered by collective
bargaining agreements. The Company believes that relations with its
employees are good.
Environment
___________
The Company's facilities are subject to numerous laws and
regulations concerning the discharge of materials into the environment,
or otherwise relating to protection of the environment. Compliance with
these laws has not had and is not expected to have a material effect
upon the capital expenditures, earnings or competitive position of the
Company.
Executive Officers of the Company
_________________________________
The following are the executive officers of the Company:
<TABLE>
<CAPTION>
Has Served As
An Executive
Officer of
Name Position Age Tektronix Since
____ ________ ___ _______________
<S> <C> <C> <C>
Jerome J. Meyer Chairman of the 58 1990
Board, Chief
Executive Officer
and President
William D. Walker Vice Chairman of 65 1992 (also
the Board, Director served in
1990 and
from 1969
to 1984)
John P. Karalis Senior Vice President, 58 1992
Corporate Development
and Secretary
Carl W. Neun Senior Vice President 52 1993
and Chief Financial
Officer
Daniel R. Brophy Vice President and 58 1996
President, Americas
Operations
Lucie J. Fjeldstad Vice President and 52 1995
President, Video and
Networking Division
</TABLE>
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<TABLE>
<CAPTION>
Has Served As
An Executive
Officer of
Name Position Age Tektronix Since
____ ________ ___ _______________
<S> <C> <C> <C>
Gerald Perkel Vice President and 40 1995
President, Color
Printing and
Imaging Division
Daniel Terpack Vice President and 55 1993
President, Measurement
Business Division
Timothy E. Vice President and 43 1991
Thorsteinson President, Pacific
Operations
John W. Vold Vice President and 66 1991
President, European
Operations
</TABLE>
The executive officers are elected by the board of directors
of the Company at its annual meeting, except for interim elections to
fill vacancies. Executive officers hold their positions until the next
annual meeting or until their successors are elected, or until such
tenure is terminated by death, resignation or removal in the manner
provided in the bylaws. There are no arrangements or understandings
between executive officers or any other person pursuant to which the
executive officers were elected and none of the executive officers are
related.
All of the executive officers named have been employed by
Tektronix in management positions for the last five years except: Mr.
Timothy E. Thorsteinson who joined Tektronix in October 1991 and from
1990 to 1991 was Director of Quality Performance of National
Semiconductor Corporation ("National Semiconductor") and prior to that
time held a number of management positions in human resources management
at National Semiconductor; Mr. John P. Karalis who joined Tektronix in
September 1992 and prior to that time was with the law firm of Brown and
Bain (from 1989 to 1992) and Vice President and General Counsel of Apple
Computer, Inc. (from 1987 to 1989); Mr. Carl W. Neun who joined
Tektronix in March 1993 and prior to that time served as Senior Vice
President of Administration and Chief Financial Officer of Conner
Peripherals, Inc., (from 1987 to 1993); Ms. Lucie Fjeldstad who joined
Tektronix in January 1995 and prior to that time was President and CEO
of Fjeldstad International (from 1993 to 1995) and Vice President and
General Manager, Multimedia of IBM Corporation (from 1990 to 1993); Mr.
William D. Walker, who is not an employee of the Company and has been a
director of the Company since 1980; and Mr. Daniel R. Brophy, who joined
the company in December 1994 and prior to that time served as Assistant
Vice President of Ascom Timeplex, a division of Ascom Holding AG, an
international telecommunications company.
12
<PAGE>
Item 2. Properties.
A brief description of the location and general
characteristics of the significant properties occupied by Tektronix in
August of 1996 is set forth below. Tektronix believes that its
operations are in compliance in all material respects with requirements
relating to environmental quality, safety and energy conservation.
Tektronix owns a 265 acre industrial park (the "Howard Vollum
Park") near Beaverton, Oregon. The Howard Vollum Park includes 23
buildings arranged in a campus-like setting and containing an aggregate
of approximately 2.6 million gross square feet of enclosed floor space.
A substantial portion of the company's product manufacturing and
administrative activities are located at Howard Vollum Park. Most of
the Company's Measurement Business Division and a variety of the Video
Networking Division products are manufactured at Howard Vollum Park.
The Company leases certain excess space at the Howard Vollum Park to
other corporations. The Company also owns property near Howard Vollum
Park which is leased to another corporation.
The Company's Color Printing and Imaging Division, and
corporate headquarters occupy three buildings containing approximately
596,000 square feet on a 167 acre tract owned by the Company in
Wilsonville, Oregon, approximately 16 miles south of Howard Vollum
Park. An additional 192,000 square foot building on the Company's
Wilsonville property is currently leased to another corporation.
Tektronix' Video and Networking Division also has operating
facilities in Grass Valley, California, which includes ten buildings
containing a total of approximately 190,000 square feet of floor space
on a 320 acre site, and three buildings containing a total of
approximately 151,000 square feet on the Company's 116 acre tract of
land in the neighboring town of Nevada City. The Company intends to
consolidate these operations on the Nevada City site, and the 320 acre
Grass Valley site is currently offered for sale.
The buildings described above were constructed after 1957 and
are maintained in good condition. Warehouses, production facilities and
other critical operations are protected by fire sprinkler installations.
Most manufacturing, office and engineering areas are air-conditioned.
The Company believes that its facilities described above are adequate
for their intended uses.
Tektronix owns a 43 acre site six miles east of Vancouver,
Washington (Vancouver is across the Columbia River from Portland,
Oregon). The Company has leased the 485,000 square foot manufacturing
facility that is situated on the site to another corporation.
A 109,000 square foot logistics center owned by Tektronix is
located on 23 acres of land in Heerenveen, The Netherlands.
Field offices near London (83,000 square feet) and Sydney,
Australia (23,000 square feet) are located in buildings owned by the
Company. The Lightworks video editing manufacturing operations are
13
<PAGE>
located on leased premises in Reading, U.K. Field Offices in other
foreign countries occupy leased premises.
Tektronix also owns a seven-acre site in Hoddesdon, England,
with manufacturing buildings containing about 47,000 square feet which
is leased to another corporation. Tektronix is attempting to sell this
facility.
Tektronix' US Sales and Service field offices aggregate
approximately 245,000 square feet of leased space. A surplus office in
Chicago, Illinois, consisting of approximately 60,000 square feet is
offered for sale. Tektronix also owns an approximately 9,000 square
foot facility in Nanticoke, Pennsylvania.
Item 3. Legal Proceedings.
Fluke Corporation filed suit against the Company in the
Federal District Court for the Western District of Washington, alleging
the Company violated trademark and unfair competition laws by copying
certain trade dress of one of Fluke's digital multimeter product lines.
The Court has issued a preliminary injunction prohibiting the Company
from selling, distributing, advertising or promoting its 800 Series
digital multimeters in the United States. The Company will comply with
the order which it intends to appeal. It is not anticipated that the
order will have a material adverse effect on the Company's operating
results.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during
the fourth quarter of the fiscal year covered by this report.
Forward Looking Statements
__________________________
Information included in this Report on Form 10-K relating to
orders, sales and earnings expectations constitute forward-looking
statements that involve a number of risks and uncertainties. From
time to time, information provided by the Company, or statements made by
its employees, may contain other forward-looking statements. As with
many high technology companies, factors that could cause the company's
actual results or activities to differ materially from these forward
looking statements include but are not limited to: general economic
conditions, and business conditions in the electronics industry,
including the effect on purchases by the Company's customers;
competitive factors, including pricing pressures, technological
developments and products offered by competitors; changes in product and
sales mix, including an increase in indirect and systems sales by the
Company and the related effects on gross margins; the company's ability
to deliver a timely flow of competitive new products and market
acceptance of these products; the availability of parts and supplies
from third party suppliers on a timely basis and at reasonable prices;
inventory risks due to changes in market demand or the Company's
business strategies; changes in effective tax rates; customer demand;
currency fluctuations; the fact that a substantial portion of the Company's
14
<PAGE>
sales are generated from orders received during the quarter, making
prediction of quarterly revenues and earnings difficult; and other
risk factors listed from time to time in the Company's reports
filed with the Securities and Exchange Commission and press releases.
Additional risk factors specific to the Company's current
plans and expectations that could cause the Company's actual results or
activities to differ materially from those stated include: the
significant organizational and operational challenges that could
adversely affect the Company's ability to integrate and transform its
Video and Networking business successfully in the planned time frame;
the timely introduction of new products scheduled during the Company's
fiscal year which could be affected by engineering or other development
program slippages, the ability to ramp up production or to develop
effective sales channels, and demand for and acceptance of those and
other Company products by the Company's customers which could be
affected by the current uncertainties in economic conditions around the
world and by activities of the Company's competitors.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters.
The information required by this item is included on page 25
of the Company's 1996 Annual Report to Shareholders and is incorporated
herein by reference.
Item 6. Selected Financial Data.
The information required by this item is included on page 35
of the Company's 1996 Annual Report to Shareholders and is incorporated
herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
The information required by this item is included on pages 16
through 20 of the Company's 1996 Annual Report to Shareholders and is
incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data.
The information required by this item is included on pages 22
through 35 of the Company's 1996 Annual Report to Shareholders and is
incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
None.
15
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information required by this item regarding directors is
included under "Board of Directors" and "Election of Directors" on pages
3 to 8 of the Company's Proxy Statement dated August 14, 1996.
The information required by this item regarding officers is
contained under "Executive Officers of the Company" in Item 1 of Part I
hereof.
The information required by Item 405 of Regulation S-K is
included under "Section 16(a) Compliance. Beneficial Ownership
Reporting" on page 19 of the Company's Proxy Statement dated August 14,
1996.
Item 11. Executive Compensation.
The information required by this item is included under
"Directors' Compensation" and "Executive Compensation" on pages 7 to 13
of the Company's Proxy Statement dated August 14, 1996.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The information required by this item is included under
"Ownership of Shares" and "Election of Directors" on page 2 and 4 to 7
of the Company's Proxy Statement dated August 14, 1996.
Item 13. Certain Relationships and Related Transactions.
None.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K.
(a) (1) Financial Statements.
____________________
The following documents are included in the Company's 1996
Annual Report to Shareholders at the pages indicated and are
incorporated herein by reference:
<TABLE>
<CAPTION>
Page in 1996 Annual
Report to Shareholders
______________________
<S> <C>
Independent Auditors' Report 21
Consolidated Statements of Operations 22
Consolidated Balance Sheets 23
Consolidated Statements of Cash Flows 24
Consolidated Statements of Shareholders' 25
Equity
Notes to Consolidated Financial Statements 26 to 34
</TABLE>
16
<PAGE>
(2) Financial Statement Schedules.
No financial statement schedules are required to be filed
with this report.
Separate financial statements for the registrant have been
omitted because the registrant is primarily an operating company
and the subsidiaries included in the consolidated financial
statements are substantially totally held. All subsidiaries of the
registrant are included in the consolidated financial statements.
Summarized financial information for 50 percent or less owned
persons in which the registrant has an interest is included in the
Notes to Consolidated Financial Statements appearing in the
Company's Annual Report to Shareholders.
(3) Exhibits:
(3)(i) Restated Articles of Incorporation, as
amended. Incorporated by reference to
Exhibit (3) of Form 10-Q dated September
28, 1990, SEC File No. 1-4837.
(ii) Bylaws, as amended.
(4)(i) Indenture dated as of November 16, 1987, as
amended by First Supplemental Indenture Dated
as of July 13, 1993, covering the registrant's
7-1/2% notes due August 1, 2003,and the
registrant's 7-5/8% notes due August 15, 2002.
Indenture incorporated by reference to Exhibit
4(i) of Form 10-K dated August 22, 1990,
SEC File No. 1-4837.
(ii) Pursuant to Item 601(b)(4)(iii) of Regulation
S-K, the registrant agrees to furnish to the
Commission upon request copies of agreements
relating to other indebtedness.
+(10)(i) 1982 Stock Option Plan, as amended.
Incorporated by reference to Exhibit 10(iii)
of Form 10-K dated August 22, 1989, SEC File
No. 1-4837.
+(ii) Stock Incentive Plan, as amended.
Incorporated by reference to Exhibit 10(ii)of
Form 10-Q dated April 9, 1993, SEC File
No. 1-4837.
+(iii) Restated Annual Performance Improvement Plan.
Incorporated by reference to Exhibit 10(i) of
Form 10-Q dated April 9, 1993, SEC File No.
1-4837.
17
<PAGE>
+(iv) Restated Deferred Compensation Plan.
Incorporated by reference to Exhibit 10(i)of
Form 10-Q dated December 20, 1984, SEC File
No. 1-4837.
+(v) Retirement Equalization Plan, Restatement
+(vi) Severance Agreement entered into between the
Company and its named officers. Incorporated
by reference to Exhibit 10(viii)of Form 10-K
dated August 18, 1993, SEC File No. 1-4837.
+(vii) Indemnity Agreement entered into between the
Company and its named officers and directors.
Incorporated by reference to Exhibit 10(ix)
of Form 10-K dated August 18, 1993, SEC File
No. 1-4837.
+(viii) Executive Severance Agreement entered into
between the Company and its named officers.
Incorporated by reference to Exhibit 10(ix)
of Form 10-K dated August 9, 1995, SEC File
No. 1-4837.
+(ix) Executive Compensation and Benefits
Agreement dated as of October 24, 1990.
Incorporated by reference to Exhibit
10(ii) of Form 10-Q dated December 21,
1990, SEC File No. 1-4837.
+ (x) Executive Compensation and Benefits Agreement
dated as of March 29, 1993. Incorporated by
reference to Exhibit 10(xiv) of Form 10-K
dated August 11, 1994, SEC File No. 1-4837.
+ (xi) Rights Agreement dated as of August 16, 1990.
Incorporated by reference to Exhibit 1 of
Form 8-K dated August 27, 1990, SEC File
No. 1-4837.
+(xii) Non-Employee Directors' Deferred Compensation
Plan, 1995 Restatement dated July 1, 1995.
Incorporated by reference to Exhibit 10 (xv)
of Form 10-K dated August 9, 1995, SEC File
No. 1-4837.
+(xiii) Non-Employee Directors Stock Compensation
Plan. Incorporated by reference to Exhibit
10(xvi) of Form 10-K dated August 9, 1995,
SEC File No. 1-4837.
18
<PAGE>
+(xiv) Executive Severance Agreement, as amended.
Incorporated by reference to Exhibit 10(i)
of Form 10-Q dated October 7, 1994, SEC File
No. 1-4837.
+(xv) Amendment to Supplemental Executive
Retirement Agreement. Incorporated by
reference to Exhibit 10(ii) of Form 10-Q
dated October 7, 1994, SEC File No. 1-4837.
+(xvi) Employment Agreement dated January 20, 1995.
(13) Portions of the 1996 Annual Report to
Shareholders that are incorporated herein by
reference.
(21) Subsidiaries of the registrant.
(23) Independent Auditors' Consent.
(24) Powers of Attorney.
(27) Financial Data Schedule.
(i) Restated Financial Data Schedule.
+ Compensatory Plan or Arrangement
(b) No reports on Form 8-K have been filed during the last
quarter of the period covered by this Report.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TEKTRONIX, INC.
By CARL W. NEUN
______________________
Carl W. Neun
Senior Vice President and
Chief Financial Officer
Dated: August 20, 1996
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
_________ ________ ____
<S> <C> <C>
JEROME J. MEYER* Chairman, Chief August 20, 1996
Jerome J. Meyer Executive Officer,
and President
CARL W. NEUN* Senior Vice President August 20, 1996
Carl W. Neun and Chief Financial
Officer, Principal
Financial and
Accounting Officer
PAULINE LO ALKER* Director August 20, 1996
Pauline Lo Alker
A. GARY AMES* Director August 20, 1996
A. Gary Ames
PAUL E. BRAGDON* Director August 20, 1996
Paul E. Bragdon
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Signature Capacity Date
_________ ________ ____
<S> <C> <C>
PAUL C. ELY, JR.* Director August 20, 1996
Paul C. Ely, Jr.
A. M. GLEASON* Director August 20, 1996
A. M. Gleason
WAYLAND R. HICKS* Director August 20, 1996
Wayland R. Hicks
KEITH R. MCKENNON* Director August 20, 1996
Keith R. McKennon
MERRILL A. MCPEAK* Director August 20, 1996
Merrill A. McPeak
JEAN VOLLUM* Director August 20, 1996
Jean Vollum
WILLIAM D. WALKER Director August 20, 1996
William D. Walker
*By JOHN P. KARALIS August 20, 1996
John P. Karalis
as attorney-in-fact
</TABLE>
21
<PAGE>
EXHIBIT LIST
(3)(i) Restated Articles of Incorporation, as
amended. Incorporated by reference to
Exhibit (3) of Form 10-Q dated September
28, 1990, SEC File No. 1-4837.
(ii) Bylaws, as amended.
(4)(i) Indenture dated as of November 16, 1987, as
amended by First Supplemental Indenture Dated
as of July 13, 1993, covering the registrant's
7-1/2% notes due August 1, 2003,and the
registrant's 7-5/8% notes due August 15, 2002.
Indenture incorporated by reference to Exhibit
4(i) of Form 10-K dated August 22, 1990,
SEC File No. 1-4837.
(ii) Pursuant to Item 601(b)(4)(iii) of Regulation
S-K, the registrant agrees to furnish to the
Commission upon request copies of agreements
relating to other indebtedness.
+(10)(i) 1982 Stock Option Plan, as amended.
Incorporated by reference to Exhibit 10(iii)
of Form 10-K dated August 22, 1989, SEC File
No. 1-4837.
+(ii) Stock Incentive Plan, as amended.
Incorporated by reference to Exhibit 10(ii)of
Form 10-Q dated April 9, 1993, SEC File
No. 1-4837.
+(iii) Restated Annual Performance Improvement Plan.
Incorporated by reference to Exhibit 10(i) of
Form 10-Q dated April 9, 1993, SEC File No.
1-4837.
<PAGE>
+(iv) Restated Deferred Compensation Plan.
Incorporated by reference to Exhibit 10(i)of
Form 10-Q dated December 20, 1984, SEC File
No. 1-4837.
+(v) Retirement Equalization Plan, Restatement
+(vi) Severance Agreement entered into between the
Company and its named officers. Incorporated
by reference to Exhibit 10(viii)of Form 10-K
dated August 18, 1993, SEC File No. 1-4837.
+(vii) Indemnity Agreement entered into between the
Company and its named officers and directors.
Incorporated by reference to Exhibit 10(ix)
of Form 10-K dated August 18, 1993, SEC File
No. 1-4837.
+(viii) Executive Severance Agreement entered into
between the Company and its named officers.
Incorporated by reference to Exhibit 10(ix)
of Form 10-K dated August 9, 1995, SEC File
No. 1-4837.
+(ix) Executive Compensation and Benefits
Agreement dated as of October 24, 1990.
Incorporated by reference to Exhibit
10(ii) of Form 10-Q dated December 21,
1990, SEC File No. 1-4837.
+ (x) Executive Compensation and Benefits Agreement
dated as of March 29, 1993. Incorporated by
reference to Exhibit 10(xiv) of Form 10-K
dated August 11, 1994, SEC File No. 1-4837.
+ (xi) Rights Agreement dated as of August 16, 1990.
Incorporated by reference to Exhibit 1 of
Form 8-K dated August 27, 1990, SEC File
No. 1-4837.
+(xii) Non-Employee Directors' Deferred Compensation
Plan, 1995 Restatement dated July 1, 1995.
Incorporated by reference to Exhibit 10 (xv)
of Form 10-K dated August 9, 1995, SEC File
No. 1-4837.
+(xiii) Non-Employee Directors Stock Compensation
Plan. Incorporated by reference to Exhibit
10(xvi) of Form 10-K dated August 9, 1995,
SEC File No. 1-4837.
<PAGE>
+(xiv) Executive Severance Agreement, as amended.
Incorporated by reference to Exhibit 10(i)
of Form 10-Q dated October 7, 1994, SEC File
No. 1-4837.
+(xv) Amendment to Supplemental Executive
Retirement Agreement. Incorporated by
reference to Exhibit 10(ii) of Form 10-Q
dated October 7, 1994, SEC File No. 1-4837.
+(xvi) Employment Agreement dated January 20, 1995.
(13) Portions of the 1996 Annual Report to
Shareholders that are incorporated herein by
reference.
(21) Subsidiaries of the registrant.
(23) Independent Auditors' Consent.
(24) Powers of Attorney.
(27) Financial Data Schedule.
(i) Restated Financial Data Schedule.
<PAGE>
EXHIBIT 3 (ii)
As Amended through June 19, 1996
BYLAWS
OF
TEKTRONIX, INC.
ARTICLE I
SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of shareholders shall
be held on the date and at the time each year as shall be fixed by the board of
directors and stated in the notice of meeting, for the purpose of electing
directors and for the transaction of such other business as may properly come
before the meeting.
Section 2. Special Meetings. Special meetings of the shareholders
may be called by the Chairman of the Board or by the board of directors, and
shall be called by the Chairman of the Board at the request of the holders
of not less than one tenth of all the outstanding shares of the corporation
entitled to vote at the meeting.
Section 3. Place of Meetings. The place of each annual meeting
and any special meeting of the shareholders shall be determined by the board
of directors.
Section 4. Notice of Meeting. Written or printed notice stating the
date, time and place of the shareholders meeting and, in the case of a special
meeting or a meeting for which special notice is required by law, the
purposes for which the meeting is called, shall be delivered by the corporation
to each shareholder entitled to vote at the meeting and, if required by law,
to any other shareholders entitled to receive notice, not earlier than sixty
days nor less than thirty days before the meeting date. If mailed, the notice
shall be deemed delivered when it is mailed to the shareholder with postage
prepaid at the shareholder's address shown in the corporation's record of
shareholders.
Section 5. Closing of Transfer Records or Fixing of Record Date. The
board of directors may fix a future date as the record date to determine the
shareholders entitled to notice of a shareholders meeting, demand a special
meeting, vote, take any other action or receive payment of any share or cash
dividend or other distribution. This date shall not be earlier than seventy
days or, in the case of a meeting, later than thirty-five days before the
meeting or action requiring a determination of shareholders. The record date
for any meeting, vote or other action of the shareholders shall be the same
for all voting groups. If not otherwise fixed by the board of directors,
the record
1
<PAGE>
date to determine shareholders entitled to notice of and to vote at an annual
or special shareholders meeting is the close of business on the day before the
notice is first mailed or delivered to shareholders. If not otherwise fixed by
the board of directors, the record date to determine shareholders entitled to
receive payment of any share or cash dividend or other distribution is the close
of business on the day the board of directors authorizes the share or cash
dividend or other distribution.
Section 6. Voting Lists. After a record date for a meeting is fixed,
the corporation shall prepare an alphabetical list of all shareholders entitled
to notice of the shareholders meeting. The list shall be arranged by voting
group and, within each voting group, by class or series of shares, and it shall
show the address of and number of shares held by each shareholder. The
shareholders list shall be available for inspection by any shareholder, upon
proper demand as may be required by law, beginning two business days after
notice of the meeting is given and continuing through the meeting, at the
corporation's principal office or at a place identified in the meeting notice
in the city where the meeting will be held. The corporation shall make the
shareholders list available at the meeting, and any shareholder or the
shareholder's agent or attorney shall be entitled to inspect the list at any
time during the meeting or any adjournment. Refusal or failure to prepare
or make available the shareholders list does not affect the validity of
action taken at the meeting.
Section 7. Quorum; Adjournment.
(a) Shares entitled to vote as a separate voting group may take
action on a matter at a meeting only if a quorum of those shares exists with
respect to that matter. A majority of the votes entitled to be cast on the
matter by the voting group constitutes a quorum of that voting group for
action on that matter.
(b) A majority of votes represented at the meeting, although less
than a quorum, may adjourn the meeting from time to time to a different time
and place without further notice to any shareholder of any adjournment. At
an adjourned meeting at which a quorum is present, any business may be
transacted that might have been transacted at the meeting originally held.
(c) Once a share is represented for any purpose at a meeting,
it shall be present for quorum purposes for the remainder of the meeting and
for any adjournment of that meeting unless a new record date is or must be
set for the adjourned meeting. A new record date must be set if the meeting
is adjourned to a date more than 120 days after the date fixed for the original
meeting.
Section 8. Voting. If a quorum exists, action on a matter, other
than the election of directors, by a voting group is approved if the votes cast
within the voting group favoring the action exceed the votes cast opposing the
action, unless a greater number of affirmative votes is required by law or the
Restated Articles of Incorporation. Unless otherwise provided in the Restated
Articles of Incorporation, directors are
2
<PAGE>
elected by a plurality of the votes cast by the shares entitled to vote in the
election at a meeting at which a quorum is present.
Section 9. Proxies. At all meetings of shareholders, a shareholder
may vote by proxy executed in writing by the shareholder or by his duly
authorized attorney in fact. Such proxy shall be filed with the secretary of
the corporation before or at the time of the meeting. No proxy shall be valid
after eleven months from the date of its execution, unless otherwise provided
in the proxy.
Section 10. Voting of Shares by Certain Holders.
(a) Shares standing in the name of another corporation may be voted
by such officer, agent or proxy as the bylaws of such corporation may prescribe,
or, in the absence of such provision, as the board of directors of such other
corporation may determine.
(b) Shares held by an administrator, executor, guardian or
conservator may be voted by him, either in person or by proxy, without a
transfer of such shares into his name. Shares standing in the name of a
trustee may be voted by him, either in person or by proxy, but no trustee
shall be entitled to vote shares held by him without a transfer of such
shares into his name.
(c) Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name if authority so to
do be contained in an appropriate order of the court by which such receiver was
appointed.
(d) A shareholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name of the pledgee,
and thereafter the pledgee shall be entitled to vote the shares so transferred.
(e) Neither treasury shares nor shares held by the corporation in a
fiduciary capacity, nor shares held by another corporation if a majority of the
shares entitled to vote for the election of directors of such other corporation
is held by the corporation, shall be voted at any meeting or counted in
determining the total number of outstanding shares at any given time.
Section 11. Proper Business for Shareholders' Meeting. To be
properly brought before the meeting, business must be either (a) specified
in the notice of meeting (or any supplement thereto) given by or at the
direction of the board of directors, (b) otherwise properly brought before a
meeting by or at the direction of the board of directors, or (c) otherwise
properly brought before the meeting by a shareholder. In addition to any
other applicable requirements, for business to be properly brought before an
annual meeting by a shareholder, the shareholder must have given timely notice
thereof in writing to the Secretary of the corporation. To be timely,
3
<PAGE>
a shareholder's notice must be delivered to or mailed and received at the
principal executive office of the corporation not less than 50 days nor more
than 75 days prior to the meeting; provided, however, that in the event that
less than 65 days' notice or prior public disclosure of the date of the meeting
is given or made to shareholders, notice by the shareholder to be timely must
be so received not later than the close of business on the 10th day following
the day on which such notice of the date of the annual meeting was mailed or
such public disclosure was made, whichever first occurs. A shareholder's
notice to the Secretary shall set forth (a) one or more matters appropriate
for shareholder action that the shareholder proposes to bring before
the meeting, (b) a brief description of the matters desired to be brought
before the meeting and the reasons for conducting such business at the meeting,
(c) the name and record address of the shareholder, (d) the class and number
of shares of the corporation that the shareholder owns or is entitled to vote
and (e) any material interest of the shareholder in such matters.
Notwithstanding anything in these bylaws to the contrary, no business shall
be conducted at the annual meeting except in accordance with the procedure
set forth in this Section 11; provided, however, that nothing in this Section
11 shall be deemed to preclude discussion by any shareholder of any business
properly brought before the annual meeting. The Chairman of the Board shall,
if the facts warrant, determine and declare to the meeting that the business
was not properly brought before the meeting in accordance with the provisions
of this Section 11, and if the Chairman of the Board should so determine,
shall so declare to the meeting any such business not properly brought before
the meeting shall not be transacted.
Section 12. Shareholder Nomination of Directors. Not less than 50
days nor more than 75 days prior to the date of any annual meeting of
shareholders, any shareholder who intends to make a nomination at the annual
meeting shall deliver a notice to the Secretary of the corporation setting
forth (a) as to each nominee whom the shareholder proposes to nominate for
election or reelection as a director, (i) the name, age, business address
and residence address of the nominee, (ii) the principal occupation or
employment of the nominee, (iii) the class and number of shares of capital
stock of the corporation that are beneficially owned by the nominee and (iv)
any other information concerning the nominee that would be required, under
the rules of the Securities and Exchange Commission, in a proxy statement
soliciting proxies for the election of such nominee; and (b) as to the
shareholder giving the notice, (i) the name and record address of the
shareholder and (ii) the class and number of shares of capital stock of
the corporation that are beneficially owned by the shareholder; provided,
however, that in the event that less than 65 days' notice or prior public
disclosure of the date of the annual meeting is given or made to shareholders,
notice by the shareholder to be timely must be so delivered not later than the
close of business on the 10th day following the day on which such notice of the
date of the meeting was mailed or such public disclosure was made, whichever
first occurs. Such notice shall include a signed consent to serve as a
director of the corporation, if elected, of each such nominee. The corporation
may require any proposed nominee to furnish such other information as may
reasonably be required by the corporation to determine the eligibility of such
proposed nominee to serve as a director of the corporation.
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Section 13. Shareholder Nomination of Directors - Special Meetings.
Any shareholder who intends to make a nomination at any special meeting of
shareholders held for the purpose of electing directors shall deliver a timely
notice to the Secretary of the corporation setting forth (a) as to each nominee
whom the shareholder proposes to nominate for election or reelection as a
director, (i) the name, age, business address and residence address of the
nominee, (ii) the principal occupation or employment of the nominee, (iii) the
class and number of shares of capital stock of the corporation that are
beneficially owned by the nominee and (iv) any other information concerning the
nominee that would be required, under the rules of the Securities and Exchange
Commission, in a proxy statement soliciting proxies for the election of such
nominee; and (b) as to the shareholder giving the notice, (i) the name and
record address of the shareholder and (ii) the class and number of shares of
capital stock of the corporation that are beneficially owned by the shareholder.
To be timely for these purposes, such notice must be given (a) if given by the
shareholder (or any of the shareholders) who or that made a demand for a meeting
pursuant to which such meeting is to be held, concurrently with the delivery of
such demand, and (b) otherwise, not later than the close of business on the 10th
day following the day on which the notice of the special meeting was mailed.
Such notice shall include a signed consent to serve as a director of the
corporation, if elected, of each such nominee. The corporation may require
any proposed nominee to furnish such other information as may reasonably be
required by the corporation to determine the eligibility of such proposed
nominee to serve as a director of the corporation.
ARTICLE II
BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the
corporation shall be managed by its board of directors.
Section 2. Number, Tenure and Qualifications. The directors of the
corporation shall be divided into three classes of directors designated Class I,
Class II and Class III. Until immediately prior to the 1996 annual meeting of
shareholders, the number of directors of the corporation shall be eleven,
consisting of four Class I directors, three Class II directors and four Class
III directors. Effective immediately prior to the 1996 annual meeting of
shareholders, the number of directors of the corporation shall be ten,
consisting of four Class I directors, three Class II directors and three
Class III directors. At the 1986 annual meeting of shareholders, Class I
directors were elected to a term of office expiring at the 1987 annual meeting
of shareholders, Class II directors were elected to a term of office expiring
at the 1988 annual meeting of shareholders, and Class III directors were
elected to a term of office expiring at the 1989 annual meeting of shareholders,
and in each case until their successors are elected and qualified. At each
annual meeting of shareholders following such initial classification and
election, directors elected to succeed those directors whose terms
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expire shall be elected to serve three-year terms and until their successors
are elected and qualified, so that the term of one class of directors will
expire each year. When the number of directors is changed by amendment of
this Section 2, any newly created directorships, or any decrease in
directorships, shall be so apportioned among the classes so as to make all
classes as nearly equal as possible, provided that no decrease in the number
of directors constituting the Board of Directors shall shorten the term of
any incumbent director. Directors need not be residents of the State of
Oregon or shareholders of the corporation.
Section 3. Annual and Regular Meetings. The annual meeting of the
board of directors may be held before or after the annual meeting of
shareholders, on the day and at the time and place designated by the Chairman
of the Board. The board of directors may provide by resolution, the time and
place, either within or without the State of Oregon, for the holding of regular
meetings without notice other than such resolution.
Section 4. Special Meetings. Special meetings of the board of
directors may be called by or at the request of the Chairman of the Board or any
two directors. The person or persons authorized to call special meetings of the
board of directors may fix any place, either within or without the State of
Oregon, as the place for holding any special meeting of the board of directors
called by them.
Section 5. Notice. Notice of the date, time and place of any special
meeting of the board of directors shall be given at least three days prior to
the meeting by notice communicated in person, by telephone, telegraph, teletype,
other form of wire or wireless communication, mail or private carrier. If
written, notice shall be effective at the earliest of (a) when received, (b)
five days after its deposit in the United States mail, as evidenced by the
postmark, if mailed postpaid and correctly addressed, or (c) on the date shown
on the return receipt, if sent by registered or certified mail, return receipt
requested and the receipt is signed by or on behalf of the addressee. Notice
by all other means shall be deemed effective when received by or on behalf of
the director. Notice of any regular or special meeting need not describe the
purposes of the meeting unless required by law or the Restated Articles of
Incorporation.
Section 6. Quorum. A majority of the number of directors fixed by
Section 2 of this Article II shall constitute a quorum for the transaction of
business at any meeting of the board of directors, but if less than such
majority is present at a meeting, a majority of the directors present may
adjourn the meeting from time to time without further notice.
Section 7. Manner of Acting. The act of the majority of the
directors present at a meeting at which a quorum is present shall be the act
of the board of directors, unless a greater number is required by law or
these bylaws.
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Section 8. Vacancies. Any vacancy on the board of directors,
including a vacancy resulting from an increase in the number of directors,
may be filled by the shareholders, the board of directors, the remaining
directors if less than a quorum (by the vote of a majority thereof) or by a
sole remaining director. Any vacancy not filled by the directors shall be
filled by election at an annual meeting or at a special meeting of shareholders
called for that purpose. A vacancy that will occur at a specified later date,
by reason of a resignation or otherwise, may be filled before the vacancy
occurs, but the new director may not take office until the vacancy occurs.
Section 9. Compensation. By resolution of the board of directors,
the directors may be paid their expenses, if any, of attendance at each meeting
of the board of directors, and may be paid a fixed sum for attendance at each
meeting of the board of directors or a stated salary as director. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
Section 10. Presumption of Assent. A director of the corporation
who is present at a meeting of the board of directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
taken unless his dissent shall be entered in the minutes of the meeting or
unless he shall file his written dissent to such action with the person acting
as the secretary of the meeting before the adjournment thereof or shall forward
such dissent by registered mail to the secretary of the corporation immediately
after the adjournment of the meeting. Such right to dissent shall not apply
to a director who voted in favor of such action. It shall be the duty of the
person acting as secretary of the meeting to record in the minutes any negative
votes, abstentions or dissents if requested to do so by the director so voting,
abstaining or dissenting.
Section 11. Informal Action by Directors. Any action required to be
taken at a meeting of directors, or any action which may be taken at a meeting
of directors, may be taken without a meeting if a consent in writing
setting forth the action so taken shall be signed by all the directors
entitled to vote with respect to the subject matter thereof. Such consent
shall have the same effect as a unanimous vote of the directors.
Section 12. Removal. The shareholders may remove one or more
directors with or without cause at a meeting called expressly for that purpose,
unless the Restated Articles of Incorporation provide for removal for cause
only.
Section 13. Transactions with Directors. Any contract or other
transaction between the corporation and one or more of its directors, or between
the corporation and another party in which one or more of its directors are
interested shall be valid notwithstanding the presence or participation of such
director or directors in a meeting of the board of directors which acts upon or
in reference to such contract or transaction, if the fact of such interest shall
be disclosed or known to the board of directors and it shall authorize and
approve such contract or transaction by a vote of a majority of the
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directors present. Such interested director or directors may be counted in
determining whether a quorum is present at any such meeting, but shall not be
counted in calculating the majority necessary to carry such vote. This section
shall not invalidate any contract or other transaction which would otherwise be
valid under applicable law.
Section 14. Meeting by Telephone Conference Call. A meeting of the
board of directors may be held by means of conference telephone or similar
communications equipment through which all persons participating in the meeting
can hear each other. Participation in a meeting pursuant to this section shall
constitute presence in person at the meeting. Notice (including waiver of
notice) and quorum requirements as specified in Sections 5 and 6 of this
Article shall apply to meetings pursuant to this section. A record shall be
kept of the action taken for insertion into the minute book.
ARTICLE III
COMMITTEES
Section 1. Designation. The board of directors, by resolution
adopted by a majority of the number of directors fixed by Section 2 of Article
II of these bylaws, may designate from among its members an executive committee
and one or more other committees. The designation of a committee, and the
delegation of authority to it, shall not operate to relieve the board of
directors, or any member thereof, of any responsibility imposed upon it or him
by law. No member of any committee shall continue to be a member thereof after
he ceases to be a director of the corporation. The board of directors shall
have the power at any time, by resolution adopted by a majority of the number
of directors fixed by Section 2 of Article II of these bylaws, to increase or
decrease the number of members of any committee, to fill vacancies thereon, to
change any member thereof, and to change the functions or terminate the
existence thereof.
Section 2. Powers. During the interval between meetings of the board
of directors, and subject to such limitations as may be imposed by resolution of
the board of directors, the executive committee shall have and may exercise all
the authority of the board of directors in the management of the corporation.
Any other committee shall have such authority of the board of directors as the
board shall delegate by resolution adopted by a majority of the number of
directors fixed by Section 2 of Article II of these bylaws. Notwithstanding
the foregoing, neither the executive committee nor any other committee shall
have the authority of the board of directors in reference to amending the
articles of incorporation; adopting a plan of merger or consolidation;
recommending to the shareholders the sale, lease, exchange, mortgage, pledge
or other disposition of all or substantially all the property and assets of the
corporation otherwise than in the usual and regular course of its business;
recommending to the shareholders a voluntary dissolution of the
corporation or revocation thereof; or amending the
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bylaws of the corporation. Reports on actions taken by a committee shall
be submitted to the next succeeding meeting of the board of directors.
Section 3. Procedure; Meetings; Quorum. Each committee shall appoint
a chairman from among its members and a secretary who may, but need not, be a
member of the committee or of the board of directors. The chairman shall
preside at all committee meetings and the secretary shall keep a record of its
proceedings. Regular meetings of a committee, of which no notice shall be
necessary, shall be held on such days and at such places as shall be fixed by
resolution adopted by a majority of the committee. Special meetings of a
committee shall be called at the request of any member of the committee, and
shall be held upon notice by letter or telegram mailed or delivered for
transmission not later than during the second day preceding the day of the
meeting, or by word of mouth or telephone received not later than the day
immediately preceding the day of the meeting. Any notice required by this
section may be waived in writing signed by the member or members entitled to
the notice, whether before, or after the meeting time stated therein.
Attendance of any member of a committee at a special meeting shall constitute
a waiver of notice of such meeting. A majority of the committee, from time
to time, shall be necessary to constitute a quorum for the transaction of
business, and the act of a majority of the members present at a meeting at
which a quorum is present shall be the act of the committee. The board of
directors may vote to the members of any committee a reasonable fee as
compensation for attendance at meetings of such committee.
Section 4. Meeting by Telephone Conference Call. A meeting of a
committee may be held by means of conference telephone or similar telephone
communications equipment through which all persons participating in the meeting
can hear each other. Participation in the meeting pursuant to this section
shall constitute presence in person at the meeting. Notice (including waiver
of notice) and quorum requirements as specified in Section 3 of this Article
shall apply to meetings pursuant to this section. A record shall be kept of
action taken for insertion into the minute book.
Section 5. Informal Action by Committee. Any action which may be
taken at a meeting of a committee may be taken without a meeting if a consent
in writing setting forth the actions so taken shall be signed by all members
of the committee entitled to vote with respect to the subject matter thereof.
The action shall be effective on the date when the last signature is placed
on the consent or at such earlier time as is set forth therein. The consent
shall have the same effect as a unanimous vote of the committee.
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ARTICLE IV
OFFICERS
Section 1. Number. The officers of the corporation shall be a
Chairman of the Board of Directors (the "Chairman of the Board"); a President;
a Secretary; and such other officers and assistant officers as may be
elected or appointed from time to time by the board of directors. The
officers of the corporation shall have such powers and duties as may be
prescribed by the board of directors. Any two or more offices may be held by
the same person.
Section 2. Election and Term of Office. The officers of the
corporation shall be elected annually by the board of directors at the first
meeting of the board of directors held after the annual meeting of the
shareholders. If the election of officers shall not be held at the meeting, it
shall be held as soon thereafter as is convenient. Each officer shall hold
office until a successor shall have been duly elected and shall have qualified
or until the officer's death, resignation or removal in the manner hereinafter
provided.
Section 3. Removal. Any officer or agent elected or appointed
by the board of directors may be removed by the board of directors at any
time with or without cause. Election or appointment of an officer or agent
shall not of itself create contract rights.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the board
of directors for the unexpired portion of the term.
Section 5. Chairman of the Board. The Chairman of the Board of
Directors shall be the chief executive officer of the corporation and, subject
to the control of the board of directors, shall in general supervise and
control all of the business and affairs of the corporation. The Chairman of
the Board may execute in behalf of the corporation all contracts, agreements,
stock certificates and other instruments. The Chairman of the Board shall from
time to time report to the board of directors all matters within the Chairman's
knowledge affecting the corporation which should be brought to the attention of
the board. The Chairman of the Board, or such other individuals as may be
designated by the Board of Directors from time to time, shall vote all shares
of stock in other corporations owned by the corporation, and shall be empowered
to execute proxies, waivers of notice, consents and other instruments in the
name of the corporation with respect to such stock. He shall preside at all
meetings of the board of directors and shareholders. The Chairman of the Board
shall perform such other duties as may be prescribed from time to time by the
board of directors.
Section 6. President. The President shall be the chief operating
officer of the corporation and shall supervise the operations of the
corporation, subject to the
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direction of the board of directors and the Chairman of the Board. The
President shall perform such other duties as may be prescribed from time to
time by the board of directors or the Chairman of the Board.
Section 7. Secretary. The Secretary shall keep the minutes of all
meetings of the directors and shareholders, and shall have custody of the minute
books and other records pertaining to the corporate business. The
Secretary shall countersign all stock certificates and other instruments
requiring the seal of the corporation and shall perform such other duties as
may be prescribed from time to time by the board of directors.
Section 8. Salaries. The salaries of the officers shall be fixed
from time to time by the board of directors and no officer shall be prevented
from receiving such salary because the officer is also a director of the
corporation.
ARTICLE IV-A
NON-CORPORATE OFFICERS
A. The Chairman of the Board of the corporation shall have the power, in
the exercise of his or her discretion, to appoint persons to hold positions and
titles such as vice president, treasurer, assistant vice president, assistant
secretary, president of a division, or similar titles as the business of the
corporation may require, subject to such limits in appointment power as the
board of directors may determine. Each such appointee shall have such title,
shall serve in such capacity, and shall have such authority and perform such
duties as the Chairman of the Board of the corporation shall determine; provided
that no such appointee shall have executive powers, be in charge of a principal
business unit, division or function or perform similar policy making functions.
The board of directors shall be advised of any such appointment at a meeting of
the board of directors, and the appointment shall be noted in the minutes of
the meeting. The minutes shall state that such persons are non-corporate
officers appointed pursuant to this Article IV-A of these bylaws.
B. Any such appointee, absent specific election by the board of directors
as an elected corporate officer (i) shall not be considered an officer elected
by the board of directors pursuant to Article IV of these bylaws, (ii) shall
not be considered an 'officer' of the corporation for the purposes of Rule 3b-2
promulgated under the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder (collectively, the "Act"), or an
'executive officer' of the corporation for the purposes of Rule 3b-7 promulgated
under the Act, and similarly shall not be considered an 'officer' of the
corporation for the purposes of Section 16 of the Act, or an 'executive officer'
of the corporation for the purposes of Section 14 of the Act, and (iii) shall
be empowered to represent himself or herself to third parties as an appointed
vice president, etc., only, and shall be empowered to execute documents, bind
the
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corporation, or otherwise act on behalf of the corporation only as authorized
by the Chairman of the Board or the President of the corporation or by
resolution of the board of directors. An elected corporate officer of the
corporation may also be appointed to a position pursuant to this Article IV-A.
C. A person appointed to a position pursuant to this Article IV-A may be
removed at any time by the Chairman of the Board or by the board of directors of
the corporation.
ARTICLE V
INDEMNITY OF DIRECTORS AND OFFICERS
A. The corporation shall indemnify to the fullest extent then permitted
by law any person who is made, or threatened to be made, a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative, investigative or otherwise (including an action, suit
or proceeding by or in the right of the corporation) by reason of the fact that
the person is or was a director or officer of the corporation or is or was
serving at the request of the corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise against all
expenses (including attorneys' fees), judgments, amounts paid in settlement and
fines actually and reasonably incurred in connection therewith.
B. Expenses incurred in connection with an action, suit or proceeding may
be paid or reimbursed by the corporation in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or on behalf
of the director or officer to repay such amounts if it shall ultimately be
determined that such person is not entitled to be indemnified by the
corporation.
C. The indemnification provided hereby shall not be deemed exclusive of
any other rights to which those indemnified may be entitled under the Restated
Articles of Incorporation, any statute, agreement, or vote of shareholders or
directors or otherwise, both as to action in any official capacity and as to
action in another capacity while holding an office, and shall continue as to a
person who has ceased to be a director or officer and shall inure to the benefit
of the heirs, executors and administrators of such person.
D. The corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or fiduciary with respect to any employee benefit plans of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent, or as a fiduciary of an employee benefit
plan, of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against and incurred by the person in
any such capacity, or arising out of the person's status as such,
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whether or not the corporation would have the power to indemnify the person
against such liability under the provisions of the Restated Articles of
Incorporation or the Oregon Business Corporation Act.
E. Any person other than a director or officer who is or was an employee
or agent of the corporation, or fiduciary within the meaning of the Employee
Retirement Income Security Act of 1974 with respect to any employee benefit
plans of the corporation, or is or was serving at the request of the corporation
as an employee or agent of another corporation, partnership, joint venture,
trust or other enterprise may be indemnified to such extent as the board of
directors in its discretion at any time or from time to time may authorize.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts. The board of directors may authorize any
officer or officers, agent or agents, to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the corporation, and
such authority may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the
corporation and no evidence of indebtedness shall be issued in its name unless
authorized by a resolution of the board of directors. Such authority may be
general or confined to specific instances.
Section 3. Checks, Draft, etc. All checks, drafts or other orders
for the payment of money, notes or other evidences of indebtedness issued in
the name of the corporation, shall be signed by such officer or officers, agent
or agents of the corporation and in such manner as shall from time to time be
determined by or pursuant to resolution of the board of directors.
Section 4. Deposits. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such banks, trust companies or other depositories as the board of directors
may select.
ARTICLE VII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. Certificates for Shares. Certificates representing shares
of the corporation shall be in such form as shall be determined by the board of
directors.
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Such certificates shall be signed by the Chairman of the Board or a Vice
President and by the Secretary or an Assistant Secretary and may be sealed with
the seal of the corporation or a facsimile thereof. All certificates for shares
shall be consecutively numbered or otherwise identified. The name and address
of the person to whom the shares represented thereby are issued, with the number
of shares and date of issue, shall be entered on the share transfer records of
the corporation. All certificates surrendered to the corporation for transfer
shall be cancelled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
cancelled, except that in case of a lost, destroyed or mutilated certificate
a new one may be issued therefore upon such terms and indemnity to the
corporation as the board of directors may prescribe.
Section 2. Transfer of Shares. Transfer of shares of the corporation
shall be made only on the share transfer records of the corporation by the
holder of record thereof or by his legal representative, who shall furnish
proper evidence of authority to transfer, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the secretary
of the corporation. The person in whose name shares stand on the books of the
corporation shall be deemed by the corporation to be the owner thereof for all
purposes.
Section 3. Transfer Agent and Registrar. The board of directors may
from time to time appoint one or more transfer agents and one or more registrars
for the shares of the corporation, with such powers and duties as the board of
directors shall determine by resolution. The signatures of the president or
vice president and the secretary or assistant secretary upon a certificate may
be facsimiles if the certificate is countersigned by a transfer agent or
registered by a registrar other than the corporation itself or an employee of
the corporation.
Section 4. Officer Ceasing to Act. In case any officer who has
signed or whose facsimile signature has been placed upon a stock certificate
shall have ceased to be such officer before such certificate is issued, it may
be issued by the corporation with the same effect as if he were such officer at
the date of its issuance.
Section 5. Fractional Shares. The corporation shall not issue
certificates for fractional shares.
ARTICLE VIII
FISCAL YEAR
The fiscal year of the corporation shall end on the last Saturday
in May of each year.
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ARTICLE IX
DIVIDENDS
The board of directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law.
ARTICLE X
SEAL
The seal of the corporation shall be in the form of a circle
containing therein "TEKTRONIX, INC. CORPORATE SEAL OREGON."
ARTICLE XI
AMENDMENTS
These bylaws may be altered, amended or repealed and new bylaws may be
adopted by the board of directors at any regular or special meeting.
I HEREBY CERTIFY that the foregoing are the bylaws of TEKTRONIX, INC.
adopted at a meeting of the board of directors of the company held on September
9, 1963, and as amended with regard to Article IV at a meeting of the board of
directors of the company held on December 22, 1966, and as amended with regard
to Article IV at a meeting of the board of directors of the company held on
January 30, 1969, and as amended with regard to Article II at a meeting of the
board of directors of the company held on July 17, 1969, and as amended with
regard to Article IV at a meeting of the board of directors of the company held
on September 24, 1970, and as amended with regard to Article IV at a meeting of
the board of directors of the company held on September 30, 1971, and as amended
with regard to Article V at a meeting of the board of directors of the company
held on September 27, 1973, and as amended with regard to Article IV at a
meeting of the board of directors of the company held on September 26, 1974,
and as amended with regard to Article I at a meeting of the board of directors
of the company held on April 28, 1977, and as amended with regard to Article I
at a meeting of the board of directors of the company held on May 20, 1977, and
as amended with regard to Article IV at a meeting of the board of directors of
the company held on January 18, 1979, and as amended with regard to Article II
at a meeting of the board of directors of the company held on February 28, 1980,
and as amended with regard to Article II at a meeting of the board of directors
of the company held on May 22, 1980, and as amended with regard to Articles I,
II and III at a meeting of the board of directors of the company held on
June 25, 1980, and as amended with regard to
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Article II at a meeting of the board of directors of the company held on
September 9, 1980, with the amendment to be effective September 27, 1980, and
as amended with regard to Article I at a meeting of the board of directors of
the company held on July 23, 1981, and approved by the shareholders at a meeting
held on September 26, 1981, and as amended with regard to Article VI at a
meeting of the board of directors of the company held on May 3, 1983, and as
amended with regard to Article II at a meeting of the board of directors of
the company held on June 30, 1983, and as amended with regard to Articles III
and IV at a meeting of the board of directors of the company held on March 1,
1984, and as amended with regard to Article I at a meeting of the board of
directors of the company held on December 6, 1984, and as amended with regard
to Article II at a meeting of the board of directors of the company held on
August 13, 1985, and as amended with regard to Article II at a meeting of the
board of directors of the company held on October 24, 1985, and as amended with
regard to Article II at a meeting of the board of directors of the company held
on July 17, 1986, and as amended with regard to Article V at a meeting of the
board of directors of the company held on September 27, 1986, and as amended
with regard to Article II at a meeting of the board of directors of the company
held on June 23, 1988, and as amended with regard to Article II at a meeting of
the board of directors of the company held on July 21, 1988, and as amended
with regard to Article II at a meeting of the board of directors of the company
held on July 20, 1989, and as amended with regard to Articles I, II and IV at
a meeting of the board of directors of the company held on November 29, 1989,
and as amended with regard to Articles II and IV at a meeting of the board of
directors of the company held on April 25, 1990, and as amended with regard to
Article I at a meeting of the board of directors of the company held on June 20,
1990, and as amended with regard to Article II at a meeting of the board of
directors of the company held on July 19, 1990, and as amended with regard to
Articles II and IV at a meeting of the board of directors of the company held
on October 24, 1990, and as amended with regard to Article II at a meeting of
the board of directors of the company held on March 20, 1991, and as amended
with regard to Article I at a meeting of the board of directors of the
company held on July 17, 1991, and as amended with regard to Articles I, II, IV,
and VII at a meeting of the board of directors of the company held on September
26, 1991, and as amended with regard to Article II at a meeting of the board of
directors of the company held on January 29, 1992, and as amended with regard to
Article II by action of the board of directors of the company without a meeting,
effective July 10, 1992, and as amended with regard to Article IV at a meeting
of the board of directors of the company held on September 23, 1992, and as
amended with regard to Article II by action of the board of directors of the
company without a meeting, effective September 24, 1992, and as amended with
regard to Article I at a meeting of the board of directors of the company held
on October 18, 1992, and as amended with regard to Article II at a meeting of
the board of directors of the company held on December 2, 1992, and as amended
with regard to Article IV-A at a meeting of the board of directors of the
company held on March 31, 1993, and as amended with regard to Articles I and II
at a meeting of the board of directors of the company held on June 23, 1994,
and as amended with regard to Article II at a meeting of the board of directors
of the company held on December 15, 1994, and as amended with regard to Article
II by action of the
16
<PAGE>
board of directors of the company without a meeting, effective March 1, 1995,
and as amended with regard to Article I at a meeting of the board of directors
of the company held on September 20, 1995, and as amended with regard to
Article II at a meeting of the board of directors of the company held on
January 17, 1996, and as amended with regard to Articles II and IV at a meeting
of the board of directors of the company held on June 19, 1996.
JOHN P. KARALIS
_______________
John P. Karalis
Secretary
TEKTRONIX, INC.
RETIREMENT EQUALIZATION PLAN
(January 1, 1996 Restatement)
Tektronix, Inc.
an Oregon corporation
PO Box 500
Beaverton, Oregon 97077 Tektronix
Tektronix provides pension benefits for its employees through
the Tektronix Pension Plan (the "Basic Plan"). Benefits under the
Basic Plan are limited by maximum benefit rules under applicable law
and regulations. Tektronix wishes to supplement Basic Plan benefits
for a select group of management and highly compensated employees to
make up for benefit amounts that are not payable under the Basic
Plan because of benefit limits imposed by law. This Plan is
intended to constitute an "excess benefit plan" (as defined in
section 3(36) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")).
In order to accomplish the above purposes, Tektronix hereby
amends and restates the Tektronix, Inc. Retirement Equalization Plan
(the "Plan"), as follows:
1. Administration.
This Plan shall be administered by the Administrative Committee
under the Basic Plan (the "Committee"). The Committee may delegate
any or all of its duties with respect to the Plan (other than its
duty to review denied claims or requests under Section 4.4) and/or
the administration of benefit payments to Tektronix (acting through
its Human Resources Department) or a third party acting as agent of
the Committee. The Committee shall interpret the Plan and make
determinations about participation and benefits. Any decision by
the Committee within its authority shall be final and binding on all
parties.
2. Benefits.
2.1 Eligibility. Any participant in this Plan, or (in the
event of death) his or her spouse, beneficiary or contingent
annuitant under the Basic Plan, who becomes entitled to a benefit
under the Basic Plan shall be eligible for a benefit under
Section 2.3 only if his or her Basic Plan benefit is limited by
Basic Plan provisions required by sections 401(a)(17) or 415 of the
Internal Revenue Code (the "Code").
2.2 Participation. An employee shall be a participant in this
Plan if he or she is designated as being eligible for a benefit
under Section 2.3 by
<PAGE>
(i) the Board of Directors of Tektronix (the "Board") or
the Organization and Compensation Committee (the "O&C
Committee") of the Board, in the case of an elected officer of
Tektronix; or
(ii) the Chief Executive Officer, in the case of any other
management or highly compensated employee (including an
appointed officer) of Tektronix;
provided, however, that no employee shall be considered a
participant in this Plan unless and until he or she has received
written notice of his or her designation. Notwithstanding the
foregoing, no employee shall be designated as a participant in this
Plan unless his or her "annual base pay rate" (as defined in the
Basic Plan) exceeds $150,000 (as adjusted pursuant to section
401(a)(17) of the Code) (the "Minimum Rate"). Once an employee has
become a participant pursuant to this Section 2.2, he or she will
remain a participant throughout the remainder of his or her
employment with Tektronix; provided, however, that no participant
shall accrue any additional benefit under this Plan during any
calendar year for which his or her total compensation is less than
the Minimum Rate.
2.3 Amount and Payment.
(a) The benefit payable under this Plan shall be the
difference between the benefit actually paid under the Basic
Plan and the amount that would have been paid in the absence of
the limits imposed by sections 401(a)(17) and 415 of the Code.
(b) Benefit payments under this Plan shall be paid at the
time and in the form that benefits are paid to the recipient
under the Basic Plan.
(c) In no event shall any employee who was a participant
in this Plan as of the date on which the 1996 Restatement was
executed receive a benefit under this Plan which is less than
the amount he or she would have received under Section 3.2(b)
if the Plan had been terminated effective as of that date.
3. Amendment; Termination
3.1 Amendment. Tektronix may amend this Plan at any time so
long as the rights preserved on termination under Section 3.2 are
not reduced. The power to amend this Plan may be exercised by
either the Board or the O&C Committee.
3.2 Termination. Tektronix may terminate the Plan at any
time, as follows:
(a) Termination shall be effected by notice to the
Committee, which shall provide written notice of the
<PAGE>
termination to active, terminated or retired participants, and
the spouses, beneficiaries or contingent annuitants of deceased
participants. The termination date shall not be earlier than
the first day of the month in which such notice is given.
(b) After the effective date of termination of this Plan,
no employee shall be eligible for any benefit under Section 2
except to the extent that such benefit is then accrued. A
participant's accrued benefit shall be calculated based on the
portion of his or her normal retirement benefit under this
Plan, as projected to his or her normal retirement date in
accordance with the procedures and actuarial assumptions in
effect under the Basic Plan as of the effective date of
termination, that had accrued as of that date.
(c) The power to terminate this Plan may be exercised by
either the Board or the O&C Committee.
4. Claims Procedure
4.1 Initial Claim. Any person claiming a benefit or
requesting an interpretation, ruling or information under this Plan
shall present the request in writing to the Committee Secretary who
shall respond in writing as soon as is practicable.
4.2 Response to Initial Claim. If the claim or request is
denied, the written notice of denial shall state the following:
(a) The reasons for denial, with specific reference to
the terms of the Plan provisions on which this denial is based.
(b) A description of any additional material or
information required and an explanation of why it is necessary.
(c) An explanation of the Plan's claims review
procedures.
4.3 Initial Notice of Denial. The initial notice of denial
shall normally be given within 90 days of the review of the claim.
If special circumstances require an extension of time, the claimant
shall be so notified and the time limit shall be 180 days.
4.4 Review of Denied Claims. Any person whose claim or
request is denied or who has not received a response within 30 days
may request review by notice in writing to the Committee Secretary.
The original decision will be reviewed by the Committee, which may,
but shall not be required to, have the claimant appear before them.
On review, whether or not there is a hearing, the claimant may have
representation, examine pertinent documents and submit issues and
comments in writing.
<PAGE>
4.5 Decision on Review. The decision on review shall normally
be made within 60 days. If an extension of time is required for a
hearing or other special circumstances, the claimant shall be so
notified and the time limit shall be 120 days. The decision shall
be in writing and shall state the reasons and the relevant plan
provisions. All decisions on review shall be final and bind all
parties concerned.
5. General Provisions
5.1 Nonassignability. No interest under this Plan of any
participant, or (in the event of death) of his or her spouse,
beneficiary or contingent annuitant under the Basic Plan, may be
assigned, transferred, seized by legal process or subjected to the
claims of creditors in any way.
5.2 Notices. Any notice under this Plan shall be in writing
and shall be effective when actually delivered or, if mailed, when
deposited postpaid as first class mail. Mail shall be directed to
Tektronix at the address stated in this Plan, to the participant at
the address shown on the Tektronix employment records, or to such
other address as a party shall specify by notice to the other
parties or as the Committee may determine to be appropriate.
Notices to the Committee shall be sent to Tektronix's address.
5.3 Not Contract of Employment. Nothing in this Plan shall
give any employee the right to continue employment. The Plan shall
not prevent discharge of any employee at any time for any reason.
5.4 Funding Status. The benefits under the Plan shall not be
"funded" (within the meaning of section 401(a)(1) of ERISA), but
shall constitute liabilities of Tektronix, and/or of any grantor
trust maintained in conjunction with this Plan, that are payable
when due.
5.5 Applicable Law. This Plan shall be construed according to
Oregon law, except to the extent preempted by ERISA or other
applicable federal law.
6. Effective Date
This amendment and restatement of the Plan shall be effective
as of January 1, 1996, except as specified in Section 2.3(c).
7. Execution
In Witness Whereof, Tektronix, by its duly authorized officer,
has executed this 1996 Restatement of the Plan on the date set forth
below.
TEKTRONIX, INC.
By JEROME J. MEYER
___________________
Jerome J. Meyer
Title Chairman & CEO
Date April 15, 1996
January 20, 1995
Ms. Lucie J. Fjeldstad
116 South Lake Drive
Stamford, Connecticut 06901
Dear Lucie:
It is with great pleasure that I write to confirm the terms of your
employment by Tektronix, Inc., in the position of President, Video
Systems of Tektronix, Inc.
1. Start Date. Position. Your employment with Tektronix started
effective January 16, 1995. Subject to the usual and customary
restrictions relating to the election, tenure, removal and
replacement of corporate officers, you have been elected and will
serve as a vice president of Tektronix with the title President,
Video Systems, reporting to the Chief Executive Officer of
Tektronix, Jerry Meyer. You agree to perform such acts and duties as
the Chief Executive Officer, or his designee, shall reasonably
direct; to comply with all applicable policies and procedures of
Tektronix and its affiliates; and to devote your working time,
energy and skills to your assignment and to the performance of your
duties to Tektronix.
2. Compensation. You will be paid a base salary, payable biweekly,
at an annual rate of $350,000. You will participate in the Tektronix
Results Sharing program, which provides employees with a cash payout
when specific financial targets are achieved, as well as in the
general Tektronix' employee benefits programs, including group
insurance, 401(k) plan, and time off program. You will accrue
vacation time each regular accrual period under the time off program
at an annual rate of 4 weeks (20 days) per year.
You will be paid a one-time hire-on payment of $250,000 within
thirty (30) days after your start date. This hire-on payment will
be refundable in full if you terminate your employment with
Tektronix prior to the second anniversary of your start date.
You will also be a participant in Tektronix' Annual Performance
Improvement Plan (APIP). The APIP plan provides cash payment
opportunities contingent on attainment of established performance
targets. To the full extent permitted by the plan, your performance
targets will be set relative to performance of the video systems
unit (or other unit for which you may have responsibility). Your
targeted amount for the Tektronix 1995 fiscal year (approximately
June 1994 through May 1995, FY95) will be 50% of your base pay. Your
APIP payment for FY95 will be prorated, based on the portion of FY95
you are employed by Tektronix, but will not be less than 50% of your
annual base salary rate prorated based on the portion of FY95 that
you are employed by Tektronix. Your APIP award for the first half of
the Tektronix 1996 fiscal year (approximately June 1995 through
November 1995) will be specially, separately computed (on a prorated
basis at the end of the fiscal
<PAGE>
Ms. Lucie J. Fjeldstad -2- January 20, 1995
year) and will not be less than 50% of one-half of your base annual
pay rate. Except as set out above, all awards and payments under the
APIP plan (including the total award for the overall Tektronix 1996
fiscal year) will be made at the times and on the conditions set out
in the plan, and your future APIP participation and targeted amounts
will be in accordance with the terms of the APIP plan. In addition,
if you voluntarily terminate your employment or if your employment
is terminated by Tektronix for cause or by reason of death or
disability at any time prior to the date award payments are made by
Tektronix, your participation will terminate and all rights to any
award (including any minimum awards described above) will cease.
You will also be eligible to participate in the Tektronix Executive
Financial Counseling and Executive Physical programs and, commencing
with Tektronix 1996 fiscal year, you will participate in the
Executive Long-Term Incentive Compensation Program (LTIP) in
accordance with its terms. Your first LTIP award grant will occur
in June 1995 and will include performance shares and stock options
in accordance with the LTIP plan. We will propose to our Board that
your LTIP performance shares will be based on shareholder return and
economic valued added (EVA) computed separately for your business
unit. We will also provide you with our standard officers and
directors indemnity agreement.
Participation in all benefits and programs (including APIP and LTIP)
are in accordance with the terms of those benefits and programs as
in effect from time to time and subject to any changes generally
applicable to other similarly situated participating Tektronix
employees. All amounts payable to you under this Agreement are
subject to applicable withholdings.
3. Stock Option and Stock Bonus Awards.
Stock Option. You have been granted a non-qualified stock option to
purchase 75,000 shares of Tektronix common stock pursuant to the
Tektronix Stock Incentive Plan. Subject to the provisions of the
plan, including the requirement of your continued employment, the
option will continue in effect for ten years and seven days, with
the options vesting as follows: options to purchase 25,000 shares on
each of the first, second and third anniversaries of the date of
grant. The option price (which will be the closing price at close of
the market on the last trading day prior to your start date) and
other terms have been established by the Board of Directors in
accordance with the plan. A separate stock option agreement,
substantially in the standard form used under the plan, will be
prepared reflecting your option grant.
Stock Bonus. You have been granted a stock bonus award of 28,000
shares of Tektronix common stock pursuant to the Tektronix Stock
Incentive Plan. Eight thousand (8,000) of the shares will vest on
the first anniversary of the date of the award. Ten thousand
(10,000) shares will vest on the second anniversary of the date of
the award provided that your sales and profit targets for the video
systems unit have been achieved as set for that year. The final ten
thousand (10,000) shares will vest on the third anniversary of the
date of the award provided that your sales and profit targets for
the video systems unit have been achieved as set for that year.
Vesting during the second and third periods will be on a total basis
with no proration for partial achievement. Shares which do not vest
during the second or third vesting period due to failure to meet
your sales and profit targets will be forfeited. Unvested bonus shares
will also be subject to forfeiture to Tektronix if your employment
terminates for any reason during a forfeiture period of three years
following the date of the award.
<PAGE>
Ms. Lucie J. Fjeldstad - 3 - January 20, 1995
Dividends will accrue and be paid to you, with interest, as shares
vest. You will have voting rights for all unforfeited stock, vested
and unvested, during the three-year period. This award is also
subject to certain restrictions stated in the plan and outlined in a
separate stock bonus agreement, substantially in the standard form
used under the plan, to be prepared reflecting your stock bonus
grant.
The effective date of the stock option and stock bonus awards will
be your start date.
4. Severance Arrangements. As we have discussed, Tektronix is an
"at will" employer. Basically, this means that your position is not
intended to be for any fixed term and either you or Tektronix can
terminate it at any time and for any reason. You and Tektronix will
execute an Executive Severance Agreement and a Change in Control
Agreement in the forms attached which provide for certain benefits
upon termination by Tektronix as described in those agreements.
5. Relocation. Tektronix will reimburse you for reasonable travel
costs, lodging, and meals incurred in your personal move to
Portland, Oregon, temporary housing in the Portland metropolitan
area for a period of up to 90 days after your start date, and for
reasonable costs of moving (and storing, if needed) your household
goods to Portland. All relocation benefits will be provided in
accordance with the Tektronix Relocation Policy. As an additional
relocation benefit, if you sell your home located at the above
address in Stamford, Connecticut, in a bona fide third party
transaction which closes within 6 months after your start date,
Tektronix will pay you the amount the gross sales price (including
any consideration to be received by you in any form) is below $1
million; provided that Tektronix' payment obligation shall not
exceed $150,000 in total.
Relocation assistance is provided for your benefit in connection
with your employment at Tektronix. You have signed and returned a
promissory note in the form enclosed related to repayment of
relocation benefits (including the sales price protection regarding
your Connecticut home) in the event of your voluntary termination
from Tektronix within 24 months after the start date of your
employment with Tektronix.
Also note that you may be subject to some tax liability as a result
of reimbursements made to you under this relocation assistance
program. Current tax regulations require individuals to report
reimbursements as gross income on their federal tax return. A tax
deduction may be allowed for some of the reimbursed expenses.
6. Enclosures. You have signed and delivered the following forms
to Tektronix prior to your start date:
Tektronix Emplovment Agreement. This agreement relates to the
nondisclosure of confidential information and ownership of
inventions. Tektronix requires that all employees sign this
agreement.
Emplovment Eligibilitv Verification Form (Form I-9).
<PAGE>
Ms. Lucie J. Fjeldstad - 4 - January 20, 1995
7. Entire Agreement: Modification. This letter contains the entire
agreement between you and Tektronix concerning your employment and
supersedes any other discussions, agreements, representations or
warranties of any kind, including the letter agreement between us
dated January 6, 1995. Any modification of this agreement will only
be effective if done in writing and signed by you and Tektronix. If
for any reason any provision of this agreement shall be held
invalid, that invalidity will not affect the remainder of this
agreement.
8. Governing Law: Arbitration. This agreement is governed by the
laws of Oregon (excluding conflicts of laws). You and Tektronix
agree that any dispute or controversy concerning this agreement will
be settled exclusively by arbitration in Portland, Oregon, in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association or such comparable rules as you and
Tektronix may agree upon. The prevailing party, as determined by the
arbitrator, will be entitled to its reasonable attorneys' fees and
costs. Any judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof.
9. No Conflicts. You represent that you have no obligations which
conflict with your full performance of your duties to Tektronix.
Although you have provided us with clarification of your obligations
to IBM, including regarding the ownership of any intellectual
property or inventions which may be created by you, we continue to
be entitled to rely on your representations that no conflicts exist.
Please acknowledge your agreement with the terms of your employment
by signing the original of this letter in the space provided and
return it to my attention.
Congratulations and we look forward to working with you at
Tektronix.
Sincerely yours,
/s/ TIMOTHY E. THORSTEINSON
____________________________
Timothy E. Thorsteinson
Vice President
Total Quality/Corporate Human Resources
enclosures
I agree that the terms of my employment by Tektronix are as outlined
in this letter.
/s/ LUCIE J. FJELDSTAD 2-6-95
______________________ _______
Lucie J. Fjeldstad Date
MANAGEMENT REVIEW
RESULTS OF OPERATIONS
OVERVIEW Tektronix recorded net earnings of $99.6
million, or $3.00 per share, in its fiscal year ended May 25, 1996, an
increase of 22% over fiscal 1995 earnings of $81.6 million, or $2.50
per share. Net earnings in 1995 were 33% higher than 1994 earnings of
$61.5 million, or $1.90 per share. All years have been restated to
account for the acquisitions of Microwave Logic, Inc. in 1995, and of
Lightworks Editing Systems Limited and Lightworks Editing Systems, Inc.
in 1996, under the pooling of interests method of accounting.
NET SALES AND PRODUCT ORDERS Net sales and product orders for
1996 were the highest in the Company's history. Net sales in 1996
were $1.769 billion, up 18% from $1.498 billion in 1995. Sales to
customers in the United States of $890.9 million were 17% above the
level for the prior year, and represented 50% of total sales. The
improved domestic sales level is primarily the result of the
acceptance of new products. International sales rose 21% from $724.7
million to $877.9 million, with improvement in all geographic regions,
particularly in the Pacific, where the Company made significant new
investments during the year, and in Japan. Product orders for 1996
were $1.658 billion, an increase of 17% over 1995. Net sales in 1995
were 12% higher than 1994. U.S. sales of $764.5 million in 1995 were
14% above the level of sales from continuing businesses in the prior
year. International sales rose 26%, from $574.6 million in 1994 to
$724.7 million in 1995, with improvement in all geographic regions.
Net sales are expected to grow about 15% in 1997, with more of the
growth expected in the second half of the fiscal year with the
introduction of several new products.
The Company's net sales are divided into three product classes.
Net sales for the last three years in each product class are as
follows:
<TABLE>
<CAPTION>
(in thousands) 1996 1995 1994
<S> <C> <C> <C>
Measurement Business $ 812,250 $ 731,061 $ 671,042
Color Printing and Imaging 561,642 454,961 313,475
Video and Networking 394,966 303,213 259,347
Other -- 8,727 98,632
</TABLE>
Measurement Business sales accounted for 46% of total sales, and grew
11% from the prior year, due to the acceptance of new products,
particularly in oscilloscopes, including the new digital oscilloscopes
introduced in 1995, signal source products, handheld electronic tools
and telecommunications products. Sales growth was constrained somewhat
by component shortages in the second half of the year. Product orders
increased 13% to $754.0 million. With the increase in order rates and
continued improvement in parts shortages, the Company expects order
and revenue growth in the 5% to 10% range for 1997. Measurement
Business sales in 1995 were 9% higher than 1994 due to well-received
new product introductions in several product lines.
Color Printing and Imaging sales increased 23% from 1995, based on the
continued office market acceptance of the Phaser 340 printer and the
introduction of the Phaser 550 color laser printer during the year. Color
Printing and Imaging sales made up 32% of total sales. Product orders rose
22% to $531.1 million. The Company expects overall Color Printing and
Imaging sales and order growth in the range of 20% for 1997, with the
growth rate lower in the first half of the year, then increasing due to
further penetration of the office market and a strengthening position in
specialty graphic arts printers through new product introductions. Color
Printing and Imaging sales in 1995 increased 45% over 1994 due to market
acceptance of new products and increased market penetration in Europe.
Video and Networking sales increased 30% from 1995 due to strength in the
Profile video disk recorder, Netstations and Grass Valley TV production
equipment. Product orders, at $372.4 million, increased 20% from the prior
year. Order growth in the latter part of the year was affected by the
discontinuance of certain product lines, such as Video Desktop and Sabre
editing systems, as a part of the integration and transformation of video
operations. The Company expects sales and order growth in the range of 15%
to 20% for 1997, with more of the growth expected to come in the second
half of the fiscal year, due to anticipated strong demand in professional
video markets and important new video product introductions starting late
in the first half of the year. Video and Networking sales rose 17% in 1995
from 1994 due to the introduction of new products, partially offset by a
decline in service revenue.
17
<PAGE>
OPERATING COST AND EXPENSES Manufacturing cost of sales
increased as a percentage of net sales to 58.3% in 1996 from 54.7% in
1995. The increase in cost of sales as a percentage of net sales was
due to the use of alternative distribution channels, the impact of
increased systems integration sales from Video and Networking and
changes in product mix. Cost of sales as a percentage of net sales
increased to 54.7% in 1995 from 53.9% in 1994, caused primarily by
increased sales through alternative distribution channels, the impacts
of a stronger Japanese Yen on certain component costs and higher
performance-based compensation. During 1997, the Company expects to
maintain gross margins at approximately 1996 levels.
Research and development (R&D) expenses declined slightly and
represented 9.3% of sales compared with 11.1% in 1995 and 11.9% in
1994. The reduction in R&D spending in 1996 occurred as the Company
concentrated on more focused projects and experienced delays in hiring
for certain technical positions. Selling, general and administrative
(SG&A) expenses were 24.6% of sales compared to 26.7% in 1995 and
27.6% in 1994. R&D and SG&A expenses declined as a percentage of
sales primarily due to higher sales volume and effective cost
controls, particularly in administrative functions. Over the course
of 1997, the Company plans to increase spending on R&D towards 10% of
sales, and to continue to reduce the percentage of sales spent on SG&A
by maintaining effective expense controls.
Equity in business ventures' earnings increased to $5.1 million from
$4.3 million in 1995 primarily due to the Company's equity in the
earnings of Merix Corporation and Maxtek Components Corporation. The
1994 loss relates primarily to the Company's interest in Sony/Tektronix
Corporation, which showed about break-even results in 1995 and 1996.
Operating income as a percentage of sales increased year over year,
rising from 6.5% in 1994 to 7.7% in 1995 and 8.1% in 1996, as lower
operating expenses as a percentage of sales more than offset declining
gross margins. Operating margins are expected to improve further in
1997 due to the stabilization of gross margins, coupled with continued
efficiencies in SG&A. The Video and Networking integration activities
are expected to be substantially completed in the first quarter, with
anticipated return to profitability by the end of the second quarter of
1997.
Interest expense increased in 1996 over the level of the prior two
years primarily because of higher borrowings to fund working capital
needs. Other income was $12.9 million in 1996 compared with income of
$4.7 million in 1995 and $9.1 million in 1994. The improvement
primarily reflected higher gains on sales of stock in other companies.
The Company continues to hold equity positions in some of these
companies that it expects to liquidate over time.
The Company recorded taxes on 1996 results at the annual effective
rate of 30%, compared with 26% in the prior year. The Company expects
the annual effective tax rate to increase to about 32% in 1997
primarily due to lower anticipated tax credits.
Net earnings of $99.6 million for 1996 were 22% higher than the prior
year due to the increase in sales and the improvement in operating
margins, partly offset by the higher effective tax rate. The growth
in sales in 1995 generated a 33% increase in net earnings over 1994.
The Company expects net earnings to increase by 10% to 20% in 1997,
despite the anticipated higher effective tax rate, with most of the
growth expected to come in the second half of the fiscal year as the
Company introduces several new products.
[Bar chart depicting operating income as a percentage of net sales]
1992 4.1%
1993 -6.0%
1994 6.5%
1995 7.7%
1996 8.1%
18
<PAGE>
FINANCIAL CONDITION
The Company's financial condition is strong. Cash flows from
operating activities and borrowing capacity from existing lines of
credit are expected to be sufficient to meet current and anticipated
future needs. At May 25, 1996, the Company maintained bank credit
facilities totaling $311.9 million, of which $192.4 million was
available out of unused facilities, which include $149.8 million in
lines of credit and $69.3 million in revolving credit agreements from
United States and foreign banks. Additional details, including
maturity dates of agreements and certain financial covenants, are
included under "Short-term and long-term debt" in the Notes to
Consolidated Financial Statements.
Current assets increased by $87.4 million due primarily to higher
accounts receivable and inventories. Accounts receivable were up
$61.6 million primarily because of higher sales in the fourth quarter
of 1996 compared with the same quarter of 1995, with a higher
proportion of this year's sales in the last month as parts
availability improved. Inventories rose by $18.9 million in response
to higher order rates and the buildup of certain components due to
longer vendor lead times.
Net property, plant and equipment increased by $54.5 million due to
capital expenditures related to facilities consolidation and
implementation of information systems. The Company believes a
similar level of capital expenditures will continue into 1997.
Property held for sale decreased by $17.0 million as several
properties were sold. The Company plans additional disposals in
1997. Deferred tax assets declined $48.2 million due to several
factors, including the current pension funding, discussed further in
the following paragraph, the provision for deferred taxes on
unrealized holding gains on equity investments and the reversal of
other temporary differences between book and tax income. Other long-
term assets rose by $33.4 million due primarily to the increase in
market value of the Company's equity investments.
Current liabilities decreased by $22.5 million primarily due to a
reduction in short-term debt offset by an increase in accrued
compensation. The Company has classified commercial paper borrowings
of $50.0 milllion as long-term debt as it has the intent to refinance
these borrowings as they mature, and the ability to do so under the
revolving credit agreement that matures in July, 2000. Accrued
compensation increased by $13.4 million because of the reclassification
of long-term pension liabilities to current, partly offset by the
payment of severance obligations at the beginning of the year. Long-
term debt increased as a result of the Company's issuance of $50
million in notes due August 15, 2002, and the reclassification of
commercial paper discussed above. Other long-term liabilities declined
$35.4 million due to the reclassification of some long-term pension
liabilities to current as the Company will make a contribution to its
principal United States pension plan for the first time since 1986.
Shareholders' equity increased by $71.1 million or 12% due to earnings
net of dividends, the increased unrealized holding gains arising from
the higher market value of the Company's equity investments and stock
options exercised, partly offset by the repurchase of approximately
840,000 of the Company's common shares and reduced currency adjustments
due to the appreciating United States dollar.
[bar chart depicting capital expenditures in millions]
1992 66.0
1993 58.9
1994 71.9
1995 103.8
1996 106.7
[bar chart depicting facilities in use in millions of square feet]
1992 6.1
1993 5.6
1994 5.0
1995 4.3
1996 4.1
19
<PAGE>
DERIVATIVES AND FOREIGN EXCHANGE
The Company has exposure to interest rate risk, primarily from its use
of short-term and long-term borrowings to finance operations, and to
investment risk, primarily from its equity investment portfolio. In
1996, the Company did not enter into any significant derivatives to
hedge against these interest rate or investment risks.
The Company is also exposed to exchange rate risk on transactions and
commitments denominated in foreign currencies and uses forward
exchange contracts and swaps to offset this risk. Changes in foreign
exchange rates are not expected to have a significant effect on the
Company's financial position or results of operations. The Company's
policy is to only enter into derivative transactions when it has an
identifiable exposure to risk, and to only enter into such
transactions with creditworthy financial institutions.
ACCOUNTING CHANGES
In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 121, 'Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of'. SFAS No. 123, 'Accounting for Stock-Based
Compensation', was issued in October, 1995. The impacts of the
adoption of these pronouncements in 1997 are discussed under
"Accounting policies" in the Notes to Consolidated Financial
Statements.
FORWARD LOOKING STATEMENTS
Information included in the Chairman's Letter to Shareholders, this
Management Review and elsewhere in this annual report relating to
expectations as to revenues, orders, earnings, SG&A, R&D and other
expense levels, gross and operating margins and tax rates, as well as
anticipated new product introductions, constitute forward looking
statements that involve a number of risks and uncertainties. As with
many high technology companies, factors that could cause the Company's
actual results or activities to differ materially from these forward
looking statements include but are not limited to: general economic
conditions, and business conditions in the electronics industry,
including the effect on purchases by the Company's customers;
competitive factors, including pricing pressures, technological
developments and products offered by competitors; changes in product
and sales mix, including an increase in indirect and systems sales by
the Company and the related effects on gross margins; the Company's
ability to deliver a timely flow of competitive new products and
market acceptance of these products; the availability of parts and
supplies from third party suppliers on a timely basis and at
reasonable prices; inventory risks due to changes in market demand or
the Company's business strategies; changes in effective tax rates;
customer demand; currency fluctuations; the fact that a substantial
portion of the Company's sales are generated from orders received
during the quarter, making prediction of quarterly revenues and
earnings difficult; and other risk factors listed from time-to-time in
the Company's reports filed with the Securities and Exchange
Commission and press releases.
Additional risk factors specific to the Company's current plans and
expectations that could cause the Company's actual results or
activities to differ materially from those stated include: the
significant organizational and operational challenges that could
adversely affect the Company's ability to integrate and transform its
Video and Networking business successfully in the planned time frame;
the timely introduction of new products scheduled during the Company's
fiscal year which could be affected by engineering or other
development program slippages, the ability to ramp up production or to
develop effective sales channels, and demand for and acceptance of
those and other Company products by the Company's customers which
could be affected by the current uncertainties in economic conditions
around the world and by activities of the Company's competitors.
20
<PAGE>
MANAGEMENT'S LETTER
The consolidated financial statements of Tektronix, Inc. and
subsidiaries have been prepared by management and have been audited
by Tektronix' independent auditors, Deloitte & Touche LLP.
Management is responsible for the consolidated financial
statements, which have been prepared in conformity with generally
accepted accounting principles and include amounts based on
management's judgment.
Management is also responsible for maintaining internal control,
including systems designed to provide reasonable assurance that
assets are safeguarded and that transactions are executed and
recorded in accordance with established policies and procedures.
Tektronix' controls and systems were developed by Tektronix
management and have the full support and endorsement of the Board
of Directors. Compliance is mandatory.
The Board of Directors is responsible for the Company's financial
and accounting policies, practices and reports. Its Audit
Committee, composed entirely of outside directors, meets regularly
with the independent auditors, representatives of management, and
the internal auditors to review accounting, reporting, auditing and
internal control matters. Both the independent auditors and the
internal auditors have free access to the Audit Committee, with and
without management representatives in attendance.
PAUL E. BRAGDON
PAUL E. BRAGDON
Chairman of Tektronix Audit Committee
CARL W. NEUN
CARL W. NEUN
Senior Vice President and
Chief Financial Officer of Tektronix, Inc.
INDEPENDENT AUDITORS' REPORT
To the Directors and Shareholders of Tektronix, Inc.:
We have audited the accompanying consolidated balance sheets of
Tektronix, Inc. and subsidiaries as of May 25, 1996 and May 27,
1995, and the related consolidated statements of operations,
shareholders' equity, and cash flows for the years ended May 25,
1996, May 27, 1995, and May 28, 1994. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits. The consolidated financial
statements give retroactive effect to the merger of Tektronix,
Inc., and Lightworks Editing Systems Limited and Lightworks Editing
System, Inc., which has been accounted for as a pooling of
interests as described in the Notes to Consolidated Financial
Statements.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of
Tektronix, Inc. and subsidiaries at May 25, 1996 and May 27, 1995,
and the results of their operations and their cash flows for the
years ended May 25, 1996, May 27, 1995, and May 28, 1994, in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Portland, Oregon
June 19, 1996
21
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS in thousands, except per share amounts
<CAPTION>
FOR THE YEAR ENDED MAY 25, 1996 MAY 27, 1995 MAY 28, 1994
<S> <C> <C> <C>
Net sales $ 1,768,858 $ 1,497,962 $ 1,342,496
Cost of sales 1,030,815 819,871 723,437
---------------------------------------------
Gross profit 738,043 678,091 619,059
Research and development expenses 164,292 166,171 159,377
Selling, general and administrative expenses 435,465 400,567 370,325
Equity in business ventures' earnings (loss) 5,081 4,268 (1,601)
---------------------------------------------
Operating income 143,367 115,621 87,756
Interest expense 13,985 10,203 10,139
Other income - net 12,884 4,744 9,080
---------------------------------------------
Earnings before taxes 142,266 110,162 86,697
Income taxes 42,680 28,578 25,204
---------------------------------------------
Net earnings $ 99,586 $ 81,584 $ 61,493
=============================================
Earnings per share $ 3.00 $ 2.50 $ 1.90
Dividends per share 0.60 0.60 0.60
Average shares outstanding 33,197 32,578 32,333
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
22
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS in thousands
<CAPTION>
MAY 25, 1996 MAY 27, 1995
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 36,644 $ 31,761
Accounts receivable - net 375,309 313,758
Inventories 264,624 245,766
Other current assets 77,003 74,850
----------------------------
Total current assets 753,580 666,135
Property, plant and equipment:
Land 6,721 7,234
Buildings 194,644 170,583
Machinery and equipment 475,178 446,501
----------------------------
676,543 624,318
Accumulated depreciation and amortization (368,980) (371,238)
----------------------------
Property, plant and equipment - net 307,563 253,080
Property held for sale 18,903 35,912
Deferred tax assets 28,247 76,418
Other long-term assets 220,203 186,757
----------------------------
Total assets $ 1,328,496 $ 1,218,302
============================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 44,645 $ 87,623
Accounts payable 178,353 173,537
Accrued compensation 120,044 106,660
Deferred revenue 22,295 19,988
----------------------------
Total current liabilities 365,337 387,808
Long-term debt 201,955 104,984
Other long-term liabilities 85,882 121,295
Commitments and contingencies -- --
Shareholders' equity:
Preferred stock, no par value (authorized 1,000 shares;
none issued) -- --
Common stock, no par value (authorized 80,000 shares;
issued and outstanding 32,687 in 1996, and
33,083 in 1995) 204,370 216,251
Retained earnings 378,606 298,964
Currency adjustment 52,069 76,948
Unrealized holding gains - net 40,277 12,052
----------------------------
Total shareholders' equity 675,322 604,215
----------------------------
Total liabilities and shareholders' equity $ 1,328,496 $ 1,218,302
============================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
23
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS in thousands
<CAPTION>
FOR THE YEAR ENDED MAY 26, 1996 MAY 27, 1995 MAY 28, 1994
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 99,586 $ 81,584 $ 61,493
Adjustments to reconcile net earnings to cash
from operating activities:
Depreciation expense 47,138 40,857 55,298
Deferred taxes 26,041 (966) 9,843
Gains on sale of assets and investments (18,353) (9,923) (14,402)
Accounts receivable (66,647) (29,991) (25,746)
Inventories (19,681) (64,923) (2,141)
Accounts payable 1,037 (5,059) 13,240
Accrued compensation 14,026 24,602 (25,750)
Other liabilities (33,622) (22,866) (17,636)
Other long-term assets (1,424) (48,102) (11,005)
Other - net 1,105 (23,245) 8,595
---------------------------------------------
Net cash provided (used) by operating activities 49,206 (58,032) 51,789
---------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment (106,709) (103,818) (71,933)
Proceeds from sale of assets 19,776 43,482 51,978
Proceeds from sale of investments 23,263 23,920 26,285
---------------------------------------------
Net cash provided (used) by investing activities (63,670) (36,416) 6,330
---------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in short-term debt 7,339 67,092 (45,625)
Issuance of long-term debt 50,000 1,396 105,331
Repayment of long-term debt (3,020) (602) (77,929)
Issuance of common stock 18,104 40,480 23,706
Repurchase of common stock (29,985) (8,382) (33,831)
Dividends (19,944) (18,435) (18,129)
---------------------------------------------
Net cash provided (used) by financing activities 22,494 81,549 (46,477)
---------------------------------------------
Effect of exchange rate changes (3,147) 1,207 1,771
---------------------------------------------
Increase (decrease) in cash and cash equivalents 4,883 (11,692) 13,413
Cash and cash equivalents at beginning of year 31,761 43,453 30,040
---------------------------------------------
Cash and cash equivalents at end of year $ 36,644 $ 31,761 $ 43,453
=============================================
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS:
Income taxes paid $ 18,669 $ 10,018 $ 6,379
Interest paid 16,594 13,775 10,809
NON-CASH INVESTING ACTIVITIES:
Fair value adjustment to securities available-for-sale $ 47,042 $ 20,086 $ --
Income tax effect related to fair value adjustment 18,817 8,034 --
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
24
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY in thousands
<CAPTION>
UNREALIZED
COMMON STOCK RETAINED CURRENCY HOLDING
SHARES AMOUNT EARNINGS ADJUSTMENT GAINS-NET TOTAL
<S> <C> <C> <C> <C> <C> <C>
BALANCE MAY 29, 1993 32,410 $194,278 $192,451 $ 50,739 $ -- $437,468
Shares issued to
employees 1,125 23,706 23,706
Shares repurchased (1,338) (33,831) (33,831)
Net earnings 61,493 61,493
Dividends-
$0.60 per share (18,129) (18,129)
Currency adjustment 2,072 2,072
--------------------------------------------------------------------
BALANCE MAY 28, 1994 32,197 184,153 235,815 52,811 -- 472,779
Shares issued to
employees 1,179 40,480 40,480
Shares repurchased (293) (8,382) (8,382)
Net earnings 81,584 81,584
Dividends-
$0.60 per share (18,435) (18,435)
Currency adjustment 24,137 24,137
Unrealized holding
gains - net 12,052 12,052
--------------------------------------------------------------------
BALANCE MAY 27, 1995 33,083 216,251 298,964 76,948 12,052 604,215
Shares issued to
employees 444 18,104 18,104
Shares repurchased (840) (29,985) (29,985)
Net earnings 99,586 99,586
Dividends-
$0.60 per share (19,944) (19,944)
Currency adjustment (24,879) (24,879)
Unrealized holding
gains - net 28,225 28,225
--------------------------------------------------------------------
BALANCE MAY 25, 1996 32,687 $204,370 $378,606 $ 52,069 $ 40,277 $675,322
====================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
25
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ACCOUNTING POLICIES
THE COMPANY Tektronix, Inc. is a global high-
technology company based on a portfolio of measurement, color
printing, and video and networking businesses. Headquartered in
Wilsonville, Oregon, Tektronix employs more than 7,900 people
worldwide and maintains operations in 23 countries outside the
United States. Tektronix was founded in 1946.
FINANCIAL STATEMENT PRESENTATION The consolidated financial
statements include the accounts of Tektronix, Inc. and its
subsidiaries (the Company). Investments in joint ventures and
minority-owned companies where the Company exercises significant
influence are accounted for on the equity basis. Significant
intercompany transactions and balances have been eliminated.
Certain items have been reclassified to conform with the current
year's presentation with no effect on previously reported earnings.
Per share amounts are based on the weighted average number of
shares outstanding during the year.
The presentation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results
could differ from those estimates.
FISCAL YEAR The Company's fiscal year is the 52
or 53 weeks ending the last Saturday in May. Fiscal years 1996,
1995 and 1994 were 52 weeks.
FOREIGN CURRENCY TRANSLATION For most non-U.S. subsidiaries,
assets and liabilities are translated into U.S. dollars at current
exchange rates, and net earnings are translated at average exchange
rates for the year. Gains and losses resulting from the translation
of net assets are reported as a separate component of shareholders'
equity. For non-U.S. subsidiaries in highly inflationary countries,
net monetary assets are translated at current exchange rates and
net nonmonetary assets are translated at historical rates, with the
translation gains and losses included in net earnings. Gains and
losses from foreign currency transactions are included in net
earnings currently.
DERIVATIVES Gains and losses on forward foreign
exchange contracts used to hedge existing assets and liabilities
are recognized in income each period and generally offset losses
and gains on the assets and liabilities being hedged. Gains and
losses related to hedges of firm commitments are deferred and
included in the basis of the transaction when it is completed.
CASH AND CASH EQUIVALENTS Cash and cash equivalents
include cash deposits in banks and highly liquid investments with
original maturities of three months or less at the time of
purchase.
INVENTORIES Inventories are stated at the lower
of cost or market. Cost is determined on the first-in, first-out
(FIFO) basis.
PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are
stated at cost. Depreciation is based on the estimated useful
lives of the assets, ranging from 10 to 48 years for buildings and
3 to 7 years for machinery and equipment, and is generally provided
using the straight-line method.
Property held for sale is stated at the lower of cost or
estimated fair value less costs to sell and includes certain
properties no longer used in the Company's operations.
INVESTMENTS Investments in marketable equity
securities are classified as available-for-sale and reported at
fair value in the consolidated balance sheet under other long-term
assets. The unrealized holding gains and losses are excluded from
earnings and reported, net of deferred income taxes, as a separate
component of shareholders' equity.
INTANGIBLE ASSETS Intangible assets are included in
other long-term assets at cost. Amortization is provided on a
straight-line basis over periods not exceeding ten years.
INCOME TAXES Deferred income taxes, reflecting the
impact of temporary differences between the assets and liabilities
recognized for financial reporting purposes and amounts recognized
for tax purposes, are based on tax laws currently enacted. Deferred
tax assets are reduced by a valuation allowance when it is more
likely than not that some portion of the deferred tax assets will
not be realized.
26
<PAGE>
ENVIRONMENTAL COSTS The Company accrues environmental
costs when it is probable that the Company has incurred a liability
and the amount can be reasonably estimated. Environmental costs are
expensed or capitalized as appropriate, depending on their future
economic benefit.
FUTURE ACCOUNTING CHANGES In March, 1995, the Financial
Accounting Standards Board issued Statement of Financial Accounting
Standards (SFAS) No. 121, 'Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to Be Disposed Of'. This
statement establishes accounting standards for recognizing the
impairment of certain long-term assets whenever circumstances
indicate the carrying amounts may not be recoverable. Adoption of
SFAS No. 121 in 1997 will not have a material effect on the
Company's financial position or results of operations.
SFAS No. 123, 'Accounting for Stock-Based Compensation', was issued in
October, 1995. This statement establishes an alternative method of
accounting that requires recognizing as expense the fair value of
employee stock options and other stock-based awards at the grant
date. SFAS No. 123 also allows the continuation of the current
accounting treatment under which the Company does not recognize
compensation expense for the stock options it awards to employees.
Since the Company is electing to retain its current method, it will
be required to present pro forma disclosures in its 1997 financial
statements as if the fair value based method had been applied.
ACQUISITIONS
In March, 1995, the Company acquired all of the outstanding shares
of Microwave Logic, Inc. (MLI) in exchange for 283,000 shares of the
Company's common stock. In June, 1995, the Company acquired all of
the outstanding shares of Lightworks Editing Systems Limited and
Lightworks Editing Systems, Inc. (Lightworks) in exchange for
1,644,000 shares of the Company's common stock. Both acquisitions
were accounted for as a pooling of interests and, accordingly, the
consolidated financial statements have been restated to include the
results of operations and financial position of MLI and Lightworks
for all years presented.
BUSINESS SEGMENTS
The Company and its affiliates operate predominately in a single
industry segment: the design, manufacture, sale and service of
electronic measurement, design and display instruments and systems
used in science, industry and education. Geographically, the
Company operates primarily in the industrialized world. Net sales,
earnings before taxes and total assets in the United States, Europe
and other geographical areas were:
<TABLE>
<CAPTION>
(in thousands) 1996 1995 1994
<S> <C> <C> <C>
Net sales:
United States sales to customers $ 890,930 $ 766,991 $ 751,401
United States export sales to customers 271,446 224,657 187,783
United States transfers to affiliates 720,969 434,959 313,004
---------------------------------------------
United States sales 1,883,345 1,426,607 1,252,188
---------------------------------------------
European sales to customers 470,840 392,070 315,471
European transfers to affiliates 3,183 3,783 4,031
---------------------------------------------
European sales 474,023 395,853 319,502
---------------------------------------------
Other area sales to customers 135,642 114,244 87,841
Other area transfers to affiliates 23,815 15,184 9,427
---------------------------------------------
Other area sales 159,457 129,428 97,268
Eliminations (747,967) (453,926) (326,462)
---------------------------------------------
Net sales $ 1,768,858 $ 1,497,962 $ 1,342,496
=============================================
Earnings before taxes:
United States $ 124,618 $ 123,800 $ 98,180
Europe 25,867 (6,618) 3,698
Other areas 8,174 6,678 1,992
Corporate and eliminations (16,393) (13,698) (17,173)
---------------------------------------------
Earnings before taxes $ 142,266 $ 110,162 $ 86,697
=============================================
Total assets:
United States $ 988,578 $ 851,435 $ 711,266
Europe 198,220 217,808 175,532
Other areas 69,883 47,530 34,170
Corporate and eliminations 71,815 101,529 81,879
---------------------------------------------
Total assets $ 1,328,496 $ 1,218,302 $ 1,002,847
=============================================
</TABLE>
27
<PAGE>
Transfers of products and services are made at arms-length prices
between geographic areas. The profit on transfers between
geographic areas is not recognized until sales are made to
unaffiliated customers. Area earnings before taxes include all
directly incurred and allocable costs, except identified corporate
expenses. Assets are those that are specifically associated with
the operations of each geographic area.
Net sales to the United States government were not more than 3% of
consolidated net sales in any of the past three years, and no other
customer accounted for more than 2% of sales.
NON-U.S. AFFILIATES
The Company has operating subsidiaries located in Australia,
Austria, Belgium, Brazil, Canada, China, Denmark, Finland, France,
Germany, Hong Kong, India, Italy, Korea, Mexico, The Netherlands,
Norway, Singapore, Spain, Sweden, Switzerland, Taiwan, and the
United Kingdom (with a branch in Ireland). The assets, liabilities,
net sales and earnings of non-U.S. subsidiaries are included in the
consolidated financial statements in these amounts:
<TABLE>
<CAPTION>
(in thousands) 1996 1995 1994
<S> <C> <C> <C>
Current assets $ 207,333 $ 223,651 $ 147,090
Property, plant and equipment - net 34,295 28,214 42,976
Other long-term assets 11,835 18,420 2,339
Current liabilities 65,303 93,104 65,086
Other long-term liabilities 18,030 33,991 14,456
---------------------------------------------
Net sales $ 606,482 $ 506,314 $ 403,312
Gross profit 132,237 130,598 112,574
Operating income 36,502 4,192 3,184
Earnings before taxes 34,041 60 5,690
Net earnings (loss) 22,738 (908) 9,314
</TABLE>
The Company has a 50% investment in a business venture in Japan.
During 1995, the Company purchased an additional interest in a
business venture in India and consolidates that company's results
and financial position. The Company's share of the assets,
liabilities, net sales and net loss of its unconsolidated
affiliates, as well as the Company's arms-length sales to,
purchases from, and accounts receivable consisted of:
<TABLE>
<CAPTION>
(in thousands) 1996 1995 1994
<S> <C> <C> <C>
Current assets $ 74,946 $ 84,787 $ 67,147
Property, plant and equipment - net 23,371 28,080 24,640
Other long-term assets 12,743 14,123 10,269
Current liabilities 32,775 29,002 20,537
Other long-term liabilities 9,323 10,148 7,549
---------------------------------------------
Net sales $ 147,860 $ 115,339 $ 94,246
Gross profit 44,756 40,548 33,808
Operating income (loss) 113 (1,486) (4,080)
Earnings (loss) before taxes 53 96 (2,971)
Net (loss) (306) (124) (1,601)
---------------------------------------------
Sales to $ 114,307 $ 84,618 $ 67,535
Purchases from 13,650 10,259 5,585
Accounts receivable 9,524 5,199 11,117
</TABLE>
There are no significant restrictions which prevent dividends to
the parent company from non-U.S. affiliates. The Company received
dividends from business ventures of $4.7 million in 1996. There
were no dividends received in 1995 and 1994.
ACCOUNTS RECEIVABLE
Accounts receivable have been reduced by an allowance for doubtful
accounts, which was $6.3 million in 1996 and $5.7 million in 1995.
The net charges to this reserve for uncollected credit sales have
not been material.
INVENTORIES
Inventories consisted of:
<TABLE>
<CAPTION>
(in thousands) 1996 1995
<S> <C> <C>
Materials and work in process $ 141,798 $ 144,259
Finished goods 122,826 101,507
----------------------------
Inventories $ 264,624 $ 245,766
============================
</TABLE>
28
<PAGE>
OTHER LONG-TERM ASSETS
Other long-term assets consisted of:
<TABLE>
<CAPTION>
(in thousands) 1996 1995
<S> <C> <C>
Investment in business ventures $ 97,409 $ 115,350
Investment in marketable equity securities 78,117 29,392
Licensing agreements and other intangibles - net 28,873 22,653
Other 15,804 19,362
----------------------------
Other long-term assets $ 220,203 $ 186,757
============================
</TABLE>
The Company's portion of undistributed earnings in business
ventures in 1996 and 1995 was $19.2 million and $18.7 million,
respectively. The company has a 35% equity interest in Merix
Corporation. At May 25, 1996, the carrying value of that interest
was $21.0 million, with a fair value, based upon quoted market
price, of $63.7 million.
Proceeds from the sales of marketable equity securities in 1996 and
1995 were $23.3 million and $16.7 million, respectively. Realized
gains were computed based on the average cost of the underlying
securities. At the end of 1996 and 1995, net unrealized holding
gains of $67.1 million (less deferred taxes of $26.8 million) and
$20.1 million (less deferred taxes of $8.0 million),respectively,
were included as a separate component of shareholders' equity.
Licensing agreements and other intangibles have been reduced by
accumulated amortization of $10.9 million in 1996 and $12.3 million
in 1995.
SHORT-TERM AND LONG-TERM DEBT
The Company's short-term debt consisted of:
<TABLE>
<CAPTION>
(in thousands) 1996 1995
<S> <C> <C>
Commercial paper $ 30,663 $ 34,910
Lines of credit 12,564 23,113
Revolving credit agreement -- 28,000
----------------------------
Short-term instruments 43,227 86,023
Current maturities of long-term debt 1,418 1,600
----------------------------
Short-term debt $ 44,645 $ 87,623
============================
</TABLE>
The Company has a $150.0 million revolving credit agreement with
Morgan Guaranty Trust Company of New York as agent that matures in
July, 2000. The Company has an agreement with U.S. National Bank of
Oregon to issue up to $100.0 million in commercial paper, backed by
the revolving credit agreement. At May 25, 1996, the Company
maintained bank credit facilities of $311.9 million, of which
$192.4 million was available out of unused facilities, which
include $149.8 million in lines of credit and $69.3 million in the
revolving credit agreement. At May 25, 1996, the interest rates
averaged 5.7% on commercial paper and 3.4% on utilized lines of
credit.
The Company's long-term debt consisted of:
<TABLE>
<CAPTION>
(in thousands) 1996 1995
<S> <C> <C>
7.5% Notes due August 1, 2003 $ 100,000 $ 100,000
7.625% Notes due August 15, 2002 50,000 --
Commercial paper 49,986 --
Other long-term agreements 3,387 6,584
----------------------------
Long-term instruments 203,373 106,584
Current maturities (1,418) (1,600)
----------------------------
Long-term debt $ 201,955 $ 104,984
============================
</TABLE>
Certain of the Company's debt agreements require the maintenance of
specified interest rate coverage ratios and a minimum consolidated
tangible net worth. At May 25, 1996, the Company had unrestricted
retained earnings of $97.3 million after meeting those
requirements.
The Company has classified commercial paper borrowings of $50.0
million as long-term debt as it has the intent to refinance these
borrowings as they mature, and the ability to do so under the
revolving credit agreement that matures in July, 2000.
Aggregate long-term debt payments will be $1.4 million in 1997,
$1.3 million in 1998, $0.7 million in 1999, none in 2000 and $50.0
million in 2001.
29
<PAGE>
OTHER LONG-TERM LIABILITIES
Other long-term liabilities consisted of:
<TABLE>
<CAPTION>
(in thousands) 1996 1995
<S> <C> <C>
Accrued postretirement benefits $ 46,953 $ 49,233
Accrued pension 23,037 53,085
Other 15,892 18,977
----------------------------
Other long-term liabilities $ 85,882 $ 121,295
============================
</TABLE>
OTHER INCOME - NET
Other income - net consisted of:
<TABLE>
<CAPTION>
(in thousands) 1996 1995 1994
<S> <C> <C> <C>
Gain on sale of marketable equity securities $ 20,198 $ 14,314 $ 13,309
Charitable contributions (2,590) (2,562) (2,824)
Currency losses (1,322) (2,231) (1,980)
Other (3,402) (4,777) 575
---------------------------------------------
Other income - net $ 12,884 $ 4,744 $ 9,080
=============================================
</TABLE>
COMMITMENTS AND CONTINGENCIES
Rental expense was $25.3 million in 1996, $28.0 million in 1995,
and $20.7 million in 1994. The future minimum obligations under
operating leases and other commitments having an initial or
remaining noncancelable term in excess of one year as of May 25,
1996, were:
<TABLE>
<CAPTION>
(in thousands) operating leases commitments
<S> <C> <C>
1997 $ 17,156 $ 18,462
1998 11,302 4,487
1999 6,939 1,846
2000 3,775 1,443
2001 1,616 436
Future years 3,875 --
----------------------------
Total $ 44,663 $ 26,674
============================
</TABLE>
The Company signed a supply agreement pursuant to the 1994 sale of
its Integrated Circuit Operation to Maxim Integrated Products, Inc.
Under the agreement, the Company has minimum purchase requirements
of $10.0 million through 1997 included in the Commitments table
above. The Company also has long-term or minimum purchase
agreements with various other suppliers.
In the normal course of business, the Company and its subsidiaries
are parties to various legal claims, actions and complaints,
including matters involving patent infringement and other
intellectual property claims. Although it is impossible to predict
with certainty whether or not the Company and its subsidiaries will
ultimately be successful in any of these legal matters or, if not,
what the impact might be, the Company believes that disposition of
these matters will not have a material adverse effect on the
Company's financial position or results of operations.
SHAREHOLDERS' EQUITY
Stock Option and Incentive Compensation Plans The Company has
stock option plans for selected employees. There were 4,773,000
shares reserved for issuance under these plans at May 25, 1996.
Under the terms of the plans, incentive stock options are granted
at an option price not less than the market value at the date of
grant. Nonqualified stock options may not be granted at less than
100% of the fair market value on the valuation date selected by the
Board of Directors. The exercise period for the options is not to
exceed 10 years.
Activity under the option plans was:
<TABLE>
<CAPTION>
(options in thousands) 1996 1995 1994
<S> <C> <C> <C>
Outstanding at beginning of year 2,359 2,866 3,324
Granted 980 812 758
Exercised (501) (1,102) (925)
Canceled (190) (217) (291)
---------------------------------------------
Outstanding at end of year 2,648 2,359 2,866
---------------------------------------------
Options exercisable at end of year 989 869 1,312
Option prices per share:
Granted $ 33 - 59 $ 29 - 46 $ 22 - 28
Exercised 13 - 38 13 - 33 13 - 28
Canceled 17 - 55 17 - 37 13 - 42
Exercisable at end of year 13 - 46 13 - 33 13 - 33
</TABLE>
30
<PAGE>
There were 1,057 employees holding options at May 25, 1996. The
Company also has cash and stock incentive compensation plans for
certain executives. The plans provide for compensation based on
financial performance over one- and three-year periods.
SHAREHOLDER RIGHTS AGREEMENT In August 1990, the Company's
Board of Directors approved a shareholder rights agreement and
declared a dividend of one right for each outstanding common share.
Each right entitles the holder to purchase one one-thousandth of a
share of Series A No Par Preferred Shares at an exercise price of
$60, subject to adjustment. Generally, the rights become
exercisable 10 days after a person or group acquires or commences a
tender offer that would result in beneficial ownership of 20% or
more of the common shares. In addition, the rights become
exercisable if any party becomes the beneficial owner of 10% or
more of the outstanding common shares and is determined by the
Board of Directors to be an adverse party. Upon the occurrence of
certain additional events specified in the shareholder rights
agreement, each right would entitle its holder to purchase common
shares of the Company (or, in some cases, a potential acquiring
company) or other property having a value of twice the right's
exercise price. The rights, which are not currently exercisable,
expire in September, 2000, but may be redeemed by action of the
Board prior to that time, under certain circumstances, for $0.01
per right.
BENEFIT PLANS
PENSION PLANS The Company has defined benefit
retirement plans covering most employees. Benefits upon retirement
or termination are based on length of service and final average
compensation at retirement.
The Company's funding policy is to contribute amounts determined
annually on an actuarial basis that provide for current and future
benefits in accordance with funding requirements of applicable laws
and regulations of the countries in which the plans are located.
Assets of funded benefit plans are held primarily in trust
accounts. The majority of the assets are invested in common stocks,
bonds and real estate, with the balance primarily in cash and short-
term investments.
The following tables set forth the funded status and the amounts
recognized in the financial statements for the Company's defined
benefit retirement plans:
<TABLE>
<CAPTION>
1996 1995
Assets exceed Accumulated Assets exceed Accumulated
accumulated benefits accumulated benefits
(in thousands) benefits exceed assets benefits exceed assets
<S> <C> <C> <C> <C>
Actuarial present value of
benefit obligations:
Vested benefit obligation $ 48,647 $ 391,149 $ 53,416 $ 341,778
--------------------------------------------------------------
Accumulated benefit
obligation $ 52,672 $ 399,571 $ 58,531 $ 361,623
----------------------------------------------------------------
Projected benefit obligation $ 61,329 $ 453,778 $ 69,927 $ 404,264
Plan assets at fair value 55,982 349,571 66,249 319,411
----------------------------------------------------------------
Projected benefit obligation
in excess of plan assets 5,347 104,207 3,678 84,853
Unrecognized initial net
asset (obligation) (342) 4,255 193 5,244
Unrecognized prior service cost (715) 7,943 (962) (9,792)
Unrecognized net loss (6,398) (58,968) (2,276) (30,098)
----------------------------------------------------------------
Pension (asset) liability $ (2,108) $ 57,437 $ 633 $ 50,207
================================================================
</TABLE>
Assumptions used in the accounting for the defined benefit plans were:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Overall weighted-average discount rates 7.6% 8.1% 8.2%
Overall rates of increase in compensation levels 3.8% 4.8% 4.8%
Expected long-term rate of return on plan assets 9.3% 9.3% 9.4%
</TABLE>
Net periodic pension expense includes the following components:
<TABLE>
<CAPTION>
(in thousands) 1996 1995 1994
<S> <C> <C> <C>
Service cost $ 9,469 $ 8,983 $ 9,346
Interest cost 37,414 33,693 30,458
Actual return on plan assets (76,138) (36,587) (22,721)
Net amortization and deferral 40,948 3,987 (9,072)
---------------------------------------------
Net periodic pension expense 11,693 10,076 8,011
Other benefit plans 1,454 928 1,114
---------------------------------------------
Pension expense $ 13,147 $ 11,004 $ 9,125
---------------------------------------------
</TABLE>
31
<PAGE>
POSTRETIREMENT BENEFITS During 1995, the Company modified its
postretirement welfare programs to eliminate company-paid benefits
for current and future retirees. Beginning August 1, 1995,
employees who retire on or after that date will pay the full cost
of their medical and life insurance coverage. The subsidies
provided to pre-1995 retirees are being phased out gradually and
will be eliminated effective January 1, 1997. Current and future
retirees who have accumulated certain insurance credits, however,
may continue to apply them toward the purchase of medical and life
insurance benefits. These revisions resulted in an unrecognized
prior service cost gain of $26.7 million that will be amortized
over 10 years as a reduction in postretirement benefit expense.
The status of the Company's unfunded postretirement benefit obligation was:
<TABLE>
<CAPTION>
(in thousands) 1996 1995
<S> <C> <C>
Accumulated postretirement benefit obligation (APBO):
Current retirees $ 10,453 $ 10,981
Active employees eligible to retire 3,467 3,776
Other active employees 3,033 2,894
----------------------------
Total accumulated obligation 16,953 17,651
Unrecognized prior service cost gain 21,368 24,039
Unrecognized net gain 10,532 11,053
----------------------------
Accrued postretirement benefits $ 48,853 $ 52,743
============================
</TABLE>
The net postretirement benefit expense includes the following components:
<TABLE>
<CAPTION>
(in thousands) 1996 1995 1994
<S> <C> <C> <C>
Service cost $ 168 $ 184 $ 1,008
Interest cost 1,359 1,286 4,405
Net amortization (3,385) (3,587) --
---------------------------------------------
Postretirement benefit expense (credit) $ (1,858) $ (2,117) $ 5,413
=============================================
</TABLE>
The discount rate and rate of salary increase used in determining
the APBO for 1996 was 7.8% and 3.8%, respectively. For 1995, these
rates were 8.3% and 4.8%. The health care cost trend rates used in
measuring the APBO at May 25, 1996, ranged from 8.2% to 10.8%,
depending on the specific plans, and are assumed to decrease
gradually until they reach 5.6% to 5.8% in the year 2003 and remain
at 5.3% thereafter. The health care cost trend rates in 1995 ranged
from 8.6% to 11.5%, and were assumed to decline to 5.8% over a
similar period. The health care cost trend rate assumptions can
have a significant effect on the amounts reported. However, because
of the nature of the program revisions adopted in 1995, changing
the assumptions by one percent would not have a material impact on
the APBO at May 25, 1996, and the postretirement credit reported
for 1996.
EMPLOYEE SAVINGS PLANS The Company has two employee savings
plans that qualify as deferred salary arrangements under Section
401(k) of the Internal Revenue Code. Participating U.S. employees
may defer up to 15% of their pre-tax earnings subject to certain
regulatory limitations. Employee contributions are invested, at the
employees' direction, among a variety of investment alternatives.
Depending on the plan, the Company currently matches up to 3% of an
employee's salary either in Company stock or cash. In addition, the
Company also makes a contribution for certain employees equal to 2%
of the employee's annual base pay, even if the employee does not
currently contribute to a plan. The latter contribution is made
regardless of the Company's performance and is invested entirely in
Company stock. Total cost for these plans was approximately $12.1
million in 1996, $11.1 million in 1995, and $12.7 million in 1994.
DERIVATIVE FINANCIAL INSTRUMENTS
The Company, as a part of its management of assets and liabilities,
enters into derivative financial instruments to reduce financial
market risks. These instruments are used to hedge foreign currency,
equity and interest rate exposures of underlying assets and
liabilities. These instruments involve elements of market risk
which offset the market risk of the underlying assets and
liabilities they hedge. The Company does not hold or issue
derivative financial instruments for trading purposes.
The notional or contract amounts of the derivative financial
instruments do not represent amounts exchanged by the parties
involved and, thus, are not a measure of the Company's
32
<PAGE>
exposure. The Company is potentially subject to risk in the event
of nonperformance by counterparties to its derivative financial
instruments. However, the Company has entered into these
instruments with creditworthy financial institutions and considers
the risk of nonperformance to be remote. The fair value of
derivative financial instruments approximates the notional amount
of the contracts at the reporting date.
FOREIGN EXCHANGE RISK MANAGEMENT The Company uses forward
exchange contracts and swaps to hedge its foreign exchange risk. At
the end of 1996 and 1995, the notional amount of the Company's
outstanding contracts was $97.6 million and $54.9 million,
respectively. Generally, these contracts have maturities that do
not exceed one year and require the Company to exchange foreign
currencies for U.S. dollars at maturity. The purpose of the
Company's hedging activities is to reduce the risk that the
eventual cash flows will be adversely affected by changes in
exchange rates. Deferred gains or losses attributable to foreign
currency instruments are not material.
FAIR VALUE OF FINANCIAL INSTRUMENTS
For short-term financial instruments, including cash and cash
equivalents, accounts receivable, short-term debt, accounts payable
and accrued compensation, the carrying amount approximates the fair
value because of the immediate or short-term nature of those
instruments. The fair value of marketable equity securities is
based on quoted market prices at the reporting date. The fair value
of long-term receivables and long-term debt is estimated based on
quoted market prices for similar instruments or by discounting
expected cash flows at rates currently available to the Company for
instruments with similar risks and maturities. The differences
between the fair values and carrying amounts of the Company's
financial instruments are not material.
CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of trade accounts
receivable. The risk is limited due to the large number of entities
comprising the Company's customer base and their dispersion across
many different industries and geographies. At May 25, 1996, the
Company had no significant concentrations of credit risk.
INCOME TAXES
The components of earnings before taxes are contained in the
Business Segments footnote. The provision for income taxes
consisted of:
<TABLE>
<CAPTION>
(in thousands) 1996 1995 1994
<S> <C> <C> <C>
Current:
Federal $ 9,104 $ 17,779 $ 9,077
State 1,961 4,041 2,900
Non-U.S. 10,789 6,624 3,938
---------------------------------------------
21,854 28,444 15,915
Deferred:
Federal 16,363 4,649 15,167
State 3,338 641 1,684
Non-U.S. 1,125 (5,156) (7,562)
---------------------------------------------
20,826 134 9,289
---------------------------------------------
Total provision $ 42,680 $ 28,578 $ 25,204
=============================================
</TABLE>
The provisions differ from the amounts that would result by
applying the U.S. statutory rate to earnings before taxes. A
reconciliation of the difference is:
<TABLE>
<CAPTION>
(in thousands) 1996 1995 1994
<S> <C> <C> <C>
Income taxes based on U.S. statutory rate $ 49,793 $ 38,557 $ 30,344
Change in beginning of year valuation allowance (5,526) (6,842) (5,981)
Foreign sales corporations (4,565) (3,196) (3,926)
State income taxes, net of U.S. tax 3,445 3,043 2,980
Other - net (467) (2,984) 1,787
---------------------------------------------
Income taxes $ 42,680 $ 28,578 $ 25,204
=============================================
</TABLE>
Tax benefits of $5.0 million, $7.3 million and $2.9 million associated
with the exercise of employee stock options were allocated to equity
in 1996, 1995 and 1994, respectively.
33
<PAGE>
Net deferred tax assets and liabilities are included in the following
consolidated balance sheet accounts:
<TABLE>
<CAPTION>
(in thousands) 1996 1995 1994
<S> <C> <C> <C>
Other current assets $ 40,410 $ 37,097 $ 41,031
Deferred tax assets 28,247 76,418 79,552
---------------------------------------------
Net deferred tax assets $ 68,657 $ 113,515 $ 120,583
=============================================
</TABLE>
The temporary differences and carryforwards that give rise to
deferred tax assets and liabilities were as follows:
<TABLE>
<CAPTION>
(in thousands) 1996 1995 1994
<S> <C> <C> <C>
Deferred tax assets:
Reserves and other liabilities $ 48,544 $ 47,789 $ 39,396
AMT and foreign tax credit carryforwards 20,932 21,297 36,886
Accrued postretirement benefits 19,053 21,097 23,196
Accumulated depreciation 14,999 18,894 1,196
Net operating losses of non-U.S. subsidiaries 12,727 16,395 8,388
Accrued pension obligation 3,765 16,699 14,059
Restructuring costs and separation programs -- 3,395 31,551
---------------------------------------------
Gross deferred tax assets 120,020 145,566 154,672
Less valuation allowance (6,929) (12,455) (19,297)
---------------------------------------------
Deferred tax assets 113,091 133,111 135,375
Deferred tax liabilities:
Unamortized LIFO reserve (5,590) (11,562) (14,792)
Software development costs (11,993) -- --
Unrealized gains on marketable equity securities (26,851) (8,034) --
---------------------------------------------
Deferred tax liabilities (44,434) (19,596) (14,792)
---------------------------------------------
Net deferred tax assets $ 68,657 $ 113,515 $ 120,583
=============================================
</TABLE>
At May 25, 1996, there were $7.6 million of unused foreign tax
credits which, if not used, will expire between 1997 and 1998.
There were $13.3 million of alternative minimum tax (AMT) credits
that can be carried forward indefinitely.
U.S. taxes have not been provided on $104.4 million of accumulated
unremitted earnings of non-U.S. subsidiaries because such earnings
are or will be reinvested in operations or will be offset by
appropriate credits for foreign income taxes paid.
QUARTERLY FINANCIAL DATA (UNAUDITED)
In the opinion of management, this unaudited quarterly financial
summary includes all adjustments necessary to present fairly the
results for the periods represented (in thousands, except per share
amounts):
<TABLE>
<CAPTION>
13 weeks to AUG. 26, 1995 NOV. 25, 1995 FEB. 24, 1996 MAY 25, 1996
<S> <C> <C> <C> <C>
Net sales $ 401,022 $ 443,598 $ 433,500 $ 490,738
Gross profit 169,319 186,051 179,214 203,459
Operating income 32,059 39,054 31,451 40,803
Earnings before taxes 32,385 37,587 32,068 40,226
Net earnings $ 22,670 $ 26,310 $ 22,448 $ 28,158
Earnings per share $ 0.68 $ 0.79 $ 0.67 $ 0.86
Dividends per share 0.15 0.15 0.15 0.15
Common stock prices:
High $ 52.38 $ 61.88 $ 57.38 $ 46.88
Low 41.50 43.88 40.75 29.75
</TABLE>
<TABLE>
<CAPTION>
13 weeks to AUG. 27, 1994 NOV. 26, 1994 FEB. 25 ,1995 MAY 27,1995
<S> <C> <C> <C> <C>
Net sales $ 324,852 $ 358,655 $ 371,688 $ 442,767
Gross profit 157,195 163,813 165,635 191,448
Operating income 24,585 27,254 29,905 33,877
Earnings before taxes 22,997 25,068 28,926 33,171
Net earnings $ 17,365 $ 18,617 $ 21,358 $ 24,244
Earnings per share $ 0.54 $ 0.57 $ 0.65 $ 0.74
Dividends per share 0.15 0.15 0.15 0.15
Common stock prices:
High $ 32.63 $ 40.00 $ 38.38 $ 47.00
Low 27.63 33.13 32.38 $ 32.00
</TABLE>
The Company's common stock is traded on the New York and Pacific
Stock Exchanges. There were 4,385 shareholders of record at June
19, 1996. The above quoted market prices are the composite prices
reported by The Wall Street Journal rounded to full cents per
share.
Dividends are paid at the discretion of the Board of Directors
dependent upon their judgment of the Company's future earnings,
expenditures and financial condition.
34
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF TEKTRONIX, INC.
Percentage of Voting
Name of Subsidiary and Securities Owned by
Jurisdiction in Which Organized Immediate Parent
Tektronix Ges.m.b.H. (Austria) 100%
Tektronix GmbH (Germany) 100
Tektronix Canada Inc. (Canada) 100
Tektronix Australia Pty. Limited (Australia) 100
Grass Valley Group Pty. Limited (Australia)[Inactive] 100
Tektronix (France) 100
Tektronix N.V. (Belgium) 100
Tektronix, S.A. de C.V. (Mexico) 100
Tektronix A/S (Denmark) 100
Tektronix S.p.A. (Italy) 100
Tektronix Norge A/S (Norway) 100
Tektronix AB (Sweden) 100
Tektronix Oy (Finland) 100
Tektronix Industria e Comercio Ltda. (Brazil) 100
Tektronix Europe B.V. (The Netherlands) 100
GVG Japan, Ltd. (Japan) 100
Tektronix International A.G. (Switzerland) 100
Tektronix Holland N.V. 100
(The Netherlands)
Tektronix U.K. Limited 100
(England)
Bouwerij Heerenveen N.V. 100
(The Netherlands)
Tektronix Espanola, S.A. (Spain) 100
Tektronix Development Company (Oregon) 100
<PAGE>
Tektronix Foreign Sales Corporation (Guam) 100
Tektronix China, Limited (Hong Kong) 100
Tektronix Hong Kong Limited (Hong Kong) 100
Tektronix International, Inc. (Oregon) 100
Tektronix Taiwan, Ltd. (Taiwan) 100
Tektronix Oriental Electronics Technology 100
(Beijing) Co., Ltd. (China)
Tektronix Properties, Inc. (Oregon) 100
Tektronix Federal Systems, Inc. (Oregon) 100
Tektronix Asia, Ltd. (Oregon) 100
Tektronix Singapore Pte Ltd (Singapore) 100
Tektronix Europe, Inc.(Oregon) 100
Tektronix Korea, Ltd. (Korea) 100
Lightworks Editing Systems Limited (United Kingdom) 100
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subsidiaries - Less than 100% Ownership
Tektronix International, Inc.
(Parent Company/Oregon Corp. listed above)
Yangzhong Tektronix Electronic Instrument Co., Ltd. 70
(China)
Shanghai Tektronix Electronic Instrument Co., Ltd. 65
(China)
Chongqing Tektronix Electronic Instrument Co., Ltd. 60
(China)
Tektronix (India) Limited (India) 62
Sony/Tektronix Corporation (Japan) 50
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement
Nos. 33-59171, 33-58511, 33-33496, and 33-30648 of Tektronix, Inc. on
Form S-8 and Registration Statement Nos. 33-58635, 33-58513, 33-18658,
and 33-59648 of Tektronix, Inc. on Form S-3 of our report dated June
19, 1996, incorporated by reference in this Annual Report on Form 10-K
of Tektronix, Inc. for the year ended May 25, 1996.
DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Portland, Oregon
August 21, 1996
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
The undersigned constitutes and appoints JEROME J. MEYER, CARL W.
NEUN and JOHN P. KARALIS and each of them, as the undersigned's
true and lawful attorneys and agents, with full power of
substitution and resubstitution for the undersigned and in the
undersigned's name, place and stead, in any and all capacities, to
sign the Tektronix, Inc. Annual Report on Form 10-K for the year
ended May 25, 1996 and any and all amendments thereto, and to file
the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys and agents, and each of them, full
power and authority to do any and all acts and things necessary or
advisable to be done, as fully and to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys and agents or either of them, or
their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Dated: August 13, 1996
PAUL E. BRAGDON
_______________
Paul E. Bragdon
<PAGE>
POWER OF ATTORNEY
The undersigned constitutes and appoints JEROME J. MEYER, CARL W.
NEUN and JOHN P. KARALIS and each of them, as the undersigned's
true and lawful attorneys and agents, with full power of
substitution and resubstitution for the undersigned and in the
undersigned's name, place and stead, in any and all capacities, to
sign the Tektronix, Inc. Annual Report on Form 10-K for the year
ended May 25, 1996 and any and all amendments thereto, and to file
the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys and agents, and each of them, full
power and authority to do any and all acts and things necessary or
advisable to be done, as fully and to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys and agents or either of them, or
their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Dated: August 12, 1996
PAUL C. ELY, JR.
________________
Paul C. Ely, Jr.
<PAGE>
POWER OF ATTORNEY
The undersigned constitutes and appoints JEROME J. MEYER, CARL W.
NEUN and JOHN P. KARALIS and each of them, as the undersigned's
true and lawful attorneys and agents, with full power of
substitution and resubstitution for the undersigned and in the
undersigned's name, place and stead, in any and all capacities, to
sign the Tektronix, Inc. Annual Report on Form 10-K for the year
ended May 25, 1996 and any and all amendments thereto, and to file
the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys and agents, and each of them, full
power and authority to do any and all acts and things necessary or
advisable to be done, as fully and to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys and agents or either of them, or
their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Dated: August 14, 1996
A. M. GLEASON
_____________
A. M. Gleason
<PAGE>
POWER OF ATTORNEY
The undersigned constitutes and appoints JEROME J. MEYER, CARL W.
NEUN and JOHN P. KARALIS and each of them, as the undersigned's
true and lawful attorneys and agents, with full power of
substitution and resubstitution for the undersigned and in the
undersigned's name, place and stead, in any and all capacities, to
sign the Tektronix, Inc. Annual Report on Form 10-K for the year
ended May 25, 1996 and any and all amendments thereto, and to file
the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys and agents, and each of them, full
power and authority to do any and all acts and things necessary or
advisable to be done, as fully and to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys and agents or either of them, or
their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Dated: August 13, 1996
WAYLAND R. HICKS
________________
Wayland R. Hicks
<PAGE>
POWER OF ATTORNEY
The undersigned constitutes and appoints JEROME J. MEYER, CARL W.
NEUN and JOHN P. KARALIS and each of them, as the undersigned's
true and lawful attorneys and agents, with full power of
substitution and resubstitution for the undersigned and in the
undersigned's name, place and stead, in any and all capacities, to
sign the Tektronix, Inc. Annual Report on Form 10-K for the year
ended May 25, 1996 and any and all amendments thereto, and to file
the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys and agents, and each of them, full
power and authority to do any and all acts and things necessary or
advisable to be done, as fully and to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys and agents or either of them, or
their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Dated: August 12, 1996
JEROME J. MEYER
_______________
Jerome J. Meyer
<PAGE>
POWER OF ATTORNEY
The undersigned constitutes and appoints JEROME J. MEYER, CARL W.
NEUN and JOHN P. KARALIS and each of them, as the undersigned's
true and lawful attorneys and agents, with full power of
substitution and resubstitution for the undersigned and in the
undersigned's name, place and stead, in any and all capacities, to
sign the Tektronix, Inc. Annual Report on Form 10-K for the year
ended May 25, 1996 and any and all amendments thereto, and to file
the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys and agents, and each of them, full
power and authority to do any and all acts and things necessary or
advisable to be done, as fully and to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys and agents or either of them, or
their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Dated: August 12, 1996
KEITH R. MCKENNON
_________________
Keith R. McKennon
<PAGE>
POWER OF ATTORNEY
The undersigned constitutes and appoints JEROME J. MEYER, CARL W.
NEUN and JOHN P. KARALIS and each of them, as the undersigned's
true and lawful attorneys and agents, with full power of
substitution and resubstitution for the undersigned and in the
undersigned's name, place and stead, in any and all capacities, to
sign the Tektronix, Inc. Annual Report on Form 10-K for the year
ended May 25, 1996 and any and all amendments thereto, and to file
the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys and agents, and each of them, full
power and authority to do any and all acts and things necessary or
advisable to be done, as fully and to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys and agents or either of them, or
their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Dated: August 11, 1996
A. GARY AMES
____________
A. Gary Ames
<PAGE>
POWER OF ATTORNEY
The undersigned constitutes and appoints JEROME J. MEYER, CARL W.
NEUN and JOHN P. KARALIS and each of them, as the undersigned's
true and lawful attorneys and agents, with full power of
substitution and resubstitution for the undersigned and in the
undersigned's name, place and stead, in any and all capacities, to
sign the Tektronix, Inc. Annual Report on Form 10-K for the year
ended May 25, 1996 and any and all amendments thereto, and to file
the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys and agents, and each of them, full
power and authority to do any and all acts and things necessary or
advisable to be done, as fully and to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys and agents or either of them, or
their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Dated: July 26, 1996
WILLIAM D. WALKER
_________________
William D. Walker
<PAGE>
POWER OF ATTORNEY
The undersigned constitutes and appoints JEROME J. MEYER, CARL W.
NEUN and JOHN P. KARALIS and each of them, as the undersigned's
true and lawful attorneys and agents, with full power of
substitution and resubstitution for the undersigned and in the
undersigned's name, place and stead, in any and all capacities, to
sign the Tektronix, Inc. Annual Report on Form 10-K for the year
ended May 25, 1996 and any and all amendments thereto, and to file
the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys and agents, and each of them, full
power and authority to do any and all acts and things necessary or
advisable to be done, as fully and to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys and agents or either of them, or
their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Dated: August 12, 1996
JEAN VOLLUM
___________
Jean Vollum
<PAGE>
POWER OF ATTORNEY
The undersigned constitutes and appoints JEROME J. MEYER, CARL W.
NEUN and JOHN P. KARALIS and each of them, as the undersigned's
true and lawful attorneys and agents, with full power of
substitution and resubstitution for the undersigned and in the
undersigned's name, place and stead, in any and all capacities, to
sign the Tektronix, Inc. Annual Report on Form 10-K for the year
ended May 25, 1996 and any and all amendments thereto, and to file
the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys and agents, and each of them, full
power and authority to do any and all acts and things necessary or
advisable to be done, as fully and to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys and agents or either of them, or
their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Dated: August 12, 1996
MERRILL A. MCPEAK
_________________
Merrill A. McPeak
<PAGE>
POWER OF ATTORNEY
The undersigned constitutes and appoints JEROME J. MEYER, CARL W.
NEUN and JOHN P. KARALIS and each of them, as the undersigned's
true and lawful attorneys and agents, with full power of
substitution and resubstitution for the undersigned and in the
undersigned's name, place and stead, in any and all capacities, to
sign the Tektronix, Inc. Annual Report on Form 10-K for the year
ended May 25, 1996 and any and all amendments thereto, and to file
the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys and agents, and each of them, full
power and authority to do any and all acts and things necessary or
advisable to be done, as fully and to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys and agents or either of them, or
their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Dated: August 12, 1996
PAULINE LO ALKER
________________
Pauline Lo Alker
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAY-25-1996
<PERIOD-END> MAY-25-1996
<CASH> 36,644
<SECURITIES> 0
<RECEIVABLES> 381,651
<ALLOWANCES> 6,342
<INVENTORY> 264,624
<CURRENT-ASSETS> 753,580
<PP&E> 676,543
<DEPRECIATION> 368,980
<TOTAL-ASSETS> 1,328,496
<CURRENT-LIABILITIES> 365,337
<BONDS> 201,955
<COMMON> 204,370
0
0
<OTHER-SE> 470,952
<TOTAL-LIABILITY-AND-EQUITY> 1,328,496
<SALES> 0
<TOTAL-REVENUES> 1,768,858
<CGS> 0
<TOTAL-COSTS> 1,030,815
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,985
<INCOME-PRETAX> 142,266
<INCOME-TAX> 42,680
<INCOME-CONTINUING> 99,586
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 99,586
<EPS-PRIMARY> 3.00
<EPS-DILUTED> 3.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAY-27-1995
<PERIOD-END> MAY-27-1995
<CASH> 31,761
<SECURITIES> 0
<RECEIVABLES> 319,434
<ALLOWANCES> 5,676
<INVENTORY> 245,766
<CURRENT-ASSETS> 666,135
<PP&E> 624,318
<DEPRECIATION> 371,238
<TOTAL-ASSETS> 1,218,302
<CURRENT-LIABILITIES> 387,808
<BONDS> 104,984
<COMMON> 216,251
0
0
<OTHER-SE> 387,964
<TOTAL-LIABILITY-AND-EQUITY> 1,218,302
<SALES> 0
<TOTAL-REVENUES> 1,497,962
<CGS> 0
<TOTAL-COSTS> 819,871
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,203
<INCOME-PRETAX> 110,162
<INCOME-TAX> 28,578
<INCOME-CONTINUING> 81,584
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 81,584
<EPS-PRIMARY> 2.50
<EPS-DILUTED> 2.50
</TABLE>
