UNITED STATES
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 29, 2004, or |
|_| | Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from __________ to __________ |
Commission file number 1-04837
TEKTRONIX, INC.
(Exact name of Registrant as specified in its charter)
Oregon | 93-0343990 | |||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||
14200 S.W. Karl Braun Drive Beaverton, Oregon | 97077 | |||||
(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:
Title of each class | Name of each exchange on which registered | |||||
---|---|---|---|---|---|---|
Common Shares, without par value | New York Stock Exchange | |||||
Series B No Par Preferred Shares Purchase Rights | New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act:None
DOCUMENTS INCORPORATED BY REFERENCE
Document | Part of 10-K into which incorporated | |||||
---|---|---|---|---|---|---|
Registrant’s Proxy Statement dated August 19, 2004 | Part III |
TEKTRONIX, INC.
TABLE OF CONTENTS
Page | ||||||||
---|---|---|---|---|---|---|---|---|
Forward-Looking Statements | 1 | |||||||
PART I | ||||||||
Item 1 | Business | 2 | ||||||
Item 2 | Properties | 9 | ||||||
Item 3 | Legal Proceedings | 10 | ||||||
Item 4 | Submission of Matters to a Vote of Security Holders | 10 | ||||||
PART II | ||||||||
Item 5 | Market for the Registrant’s Common Equity and Related Stockholder Matters | 10 | ||||||
Item 5A | Purchase of Equity Securities | 11 | ||||||
Item 6 | Selected Financial Data | 12 | ||||||
Item 7 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 12 | ||||||
Item 7A | Quantitative and Qualitative Disclosures About Market Risk | 38 | ||||||
Item 8 | Financial Statements and Supplementary Data | 39 | ||||||
Item 9 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 74 | ||||||
Item 9A | Controls and Procedures | 74 | ||||||
PART III | ||||||||
Item 10 | Directors and Executive Officers of the Registrant | 74 | ||||||
Item 11 | Executive Compensation | 75 | ||||||
Item 12 | Security Ownership of Certain Beneficial Owners and Management | 75 | ||||||
Item 13 | Certain Relationships and Related Transactions | 75 | ||||||
Item 14 | Principal Accountant Fees and Services | 75 | ||||||
PART IV | ||||||||
Item 15 | Exhibits, Financial Statement Schedules, and Reports on Form 8-K | 75 | ||||||
SIGNATURES | 78 | |||||||
SCHEDULE II - Valuation and Qualifying Accounts | 79 |
Forward-Looking Statements
1
PART I
Item 1. Business.
General
2
Products
3
the market by offering oscilloscopes at most price/performance levels, and to introduce new classes of oscilloscopes that take its market leading technologies and apply them to complex issues in specific applications.
4
or VoIP) technologies, and traditional networks. Inet has approximately 500 employees worldwide and had 2003 sales of $104 million. Tektronix believes that this acquisition will significantly enhance its position in the overall network monitoring and protocol test market and will accelerate the delivery of products and solutions for network operators and equipment manufacturers seeking to implement next generation technologies such as General Packet Radio Service (GPRS) Universal Mobile Telecommunications Systems (UMTS) and VoIP. The transaction is subject to a number of contingencies, including obtaining regulatory approvals and approval by Inet shareholders. Subject to satisfaction of these contingencies, the transaction is expected to close during the second quarter of fiscal year 2005. On July 16, 2004, Tektronix filed a Form S-4 with the SEC which provides additional information on this proposed transaction. The Form S-4 has not yet been declared effective by the SEC and is subject to completion based on the SEC’s review. Please refer to the “Acquisitions” section in Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information.
Manufacturing
5
Sales and Distribution
Geographic Areas of Operations
6
Research and Development
Patents and Intellectual Property
Employees
Environment
7
Executive Officers of the Company
Name | Position | Age | Has served as an executive officer of Tektronix since | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Richard H. Wills | Chairman of the Board, President and Chief Executive Officer | 49 | 1997 | |||||||||||
Colin L. Slade | Senior Vice President and Chief Financial Officer | 50 | 2000 | |||||||||||
David S. Churchill | Vice President, Communications and Video Business | 47 | 2002 | |||||||||||
James F. Dalton | Vice President, Corporate Development, General Counsel and Secretary | 45 | 1998 | |||||||||||
Susan G. Kirby | Vice President, Human Resources | 53 | 2004 | |||||||||||
John T. Major | Vice President, Worldwide Manufacturing | 45 | 2004 | |||||||||||
Richard D. McBee | Vice President, Worldwide Sales, Service and Marketing | 41 | 2001 | |||||||||||
Craig L. Overhage | Vice President, Instruments Business | 42 | 2002 |
8
the position of Director of Marketing—Design, Service, and Test Business from July 1997 to December 1998, Vice President of Advertising & Internet Services from December 1998 through May 1999, and Vice President of the Instruments Business from June 1999 to May 2001.
Item 2. Properties.
9
and manufacturing space for communications test products is also leased in Berlin, Germany and Padova, Italy. Manufacturing space related to some oscilloscope products is leased in China. The Company also owns a facility in Bangalore, India that is used for software design.
Location | Owned Space | Leased Space | Total Space | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
United States: | ||||||||||||||
Beaverton, OR | 1,309,452 | 102,192 | 1,411,644 | |||||||||||
Nevada City, CA | 150,688 | — | 150,688 | |||||||||||
Chelmsford, MA | — | 43,380 | 43,380 | |||||||||||
Sales Offices | — | 26,239 | 26,239 | |||||||||||
Other Americas | — | 104,206 | 104,206 | |||||||||||
Europe | — | 304,004 | 304,004 | |||||||||||
Asia/Pacific | 15,832 | 254,891 | 270,723 | |||||||||||
Japan | 140,189 | 57,041 | 197,230 | |||||||||||
Totals | 1,616,161 | 891,953 | 2,508,114 |
Item 3. Legal Proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
PART II
Item 5. Market for the Registrant’s Common Equity and Related Stockholder Matters.
10
Quarter | High | Low | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Year Ending May 29, 2004: | ||||||||||
Fourth Quarter | $ | 34.16 | $ | 28.61 | ||||||
Third Quarter | 34.49 | 26.52 | ||||||||
Second Quarter | 27.58 | 23.38 | ||||||||
First Quarter | 23.64 | 20.10 | ||||||||
Year Ending May 31, 2003: | ||||||||||
Fourth Quarter | $ | 21.08 | $ | 16.05 | ||||||
Third Quarter | 19.52 | 15.81 | ||||||||
Second Quarter | 19.95 | 14.70 | ||||||||
First Quarter | 20.34 | 16.55 |
Item 5A. Purchases of Equity Securities
Fiscal Period | Total Number of Shares | Average Price Paid Per Share | Total Amount Paid | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Dollar Value of Shares that May Yet Be Purchased | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
February 29, 2004 to March 27, 2004 | 496,200 | $ | 30.18 | $ | 14,976,101 | 16,355,089 | $ | 184,742,194 | ||||||||||||||
March 28, 2004 to April 24, 2004 | 111,390 | 32.06 | 3,570,779 | 16,466,479 | 181,171,415 | |||||||||||||||||
April 25, 2004 to May 29, 2004 | 667,800 | 29.92 | 19,978,097 | 17,134,279 | $ | 161,193,318 | ||||||||||||||||
Total | 1,275,390 | $ | 30.21 | $ | 38,524,977 |
11
Item 6. Selected Financial Data.
CONSOLIDATED FINANCIAL PERFORMANCE
Amounts in millions except per share data
2004 | 2003 | 2002 | 2001 | 2000* | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net sales | $ | 920.6 | $ | 791.0 | $ | 810.3 | $ | 1,198.2 | $ | 1,110.8 | ||||||||||||||||
Gross margin % | 56.8 | % | 51.3 | % | 49.4 | % | 52.1 | % | 46.9 | % | ||||||||||||||||
Earnings from continuing operations | $ | 118.2 | $ | 35.1 | $ | 33.6 | $ | 144.3 | $ | 20.8 | ||||||||||||||||
Earnings per share from continuing operations—basic | $ | 1.40 | $ | 0.40 | $ | 0.37 | $ | 1.53 | $ | 0.22 | ||||||||||||||||
Earnings per share from continuing operations—diluted | $ | 1.37 | $ | 0.40 | $ | 0.36 | $ | 1.50 | $ | 0.22 | ||||||||||||||||
Weighted average shares outstanding: | ||||||||||||||||||||||||||
Basic | 84.7 | 87.1 | 91.4 | 94.5 | 94.6 | |||||||||||||||||||||
Diluted | 86.0 | 87.4 | 92.3 | 96.1 | 96.3 | |||||||||||||||||||||
Dividends per share | $ | 0.12 | $ | — | $ | — | $ | — | $ | 0.18 | ||||||||||||||||
Total assets | $ | 1,330.7 | $ | 1,384.7 | $ | 1,378.9 | $ | 1,542.2 | $ | 1,543.6 | ||||||||||||||||
Long-term debt, excluding current portion | $ | 0.5 | $ | 55.0 | $ | 57.3 | $ | 127.8 | $ | 150.2 |
_______________
*Financial data in this year includes the results of operations and the financial position of the Video and Networking Division, which was sold in September 1999.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Introduction and Overview
12
of the Japan subsidiary acquired through acquisition of Sony/Tektronix Corporation and also recognized certain costs and credits directly associated with the integration of this subsidiary.
Acquisitions
13
Discontinued Operations
14
transaction and related costs. For additional discussion of the CPID sale transaction and subsequent resolution of the related contingencies see Note 6 to the Consolidated Financial Statements in Item 8 of this Form 10-K.
15
disposition of this discontinued operation which was recorded during the fourth quarter of fiscal year 2003 to write-down the net assets, primarily goodwill, of Gage to net realizable value less estimated selling costs.
Business Realignment Costs
16
Balance May 31, 2003 | Costs incurred | Cash payments | Non-cash adjustments | Balance May 29, 2004 | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||||||||||||||
Fiscal Year 2004 Actions: | |||||||||||||||||||||||
Employee severance and related benefits | $ | — | $ | 17,351 | $ | (12,016 | ) | $ | — | $ | 5,335 | ||||||||||||
Asset impairments | — | 1,610 | — | (1,610 | ) | — | |||||||||||||||||
Contractual obligations | — | 1,514 | (1,105 | ) | — | 409 | |||||||||||||||||
Accumulated currency translation loss | — | 2,594 | — | (2,594 | ) | — | |||||||||||||||||
Total | — | 23,069 | (13,121 | ) | (4,204 | ) | 5,744 | ||||||||||||||||
Fiscal Year 2003 Actions: | |||||||||||||||||||||||
Employee severance and related benefits | 5,394 | (623 | ) | (4,477 | ) | — | 294 | ||||||||||||||||
Asset impairments | — | (53 | ) | — | 53 | — | |||||||||||||||||
Contractual obligations | 1,730 | 447 | (1,085 | ) | 148 | 1,240 | |||||||||||||||||
Total | 7,124 | (229 | ) | (5,562 | ) | 201 | 1,534 | ||||||||||||||||
Fiscal Year 2002 Actions: | |||||||||||||||||||||||
Employee severance and related benefits | 494 | 172 | (514 | ) | — | 152 | |||||||||||||||||
Contractual obligations | 434 | (57 | ) | (323 | ) | — | 54 | ||||||||||||||||
Total | 928 | 115 | (837 | ) | — | 206 | |||||||||||||||||
Other | — | (190 | ) | (9 | ) | 199 | — | ||||||||||||||||
Total of all actions | $ | 8,052 | $ | 22,765 | $ | (19,529 | ) | $ | (3,804 | ) | $ | 7,484 |
Critical Accounting Estimates
17
$10.4 million, a significant portion of which may take several years to resolve. The Company continues to monitor the status of the CPID related contingencies based on information received. If unforeseen events or circumstances arise subsequent to the balance sheet date, changes in the estimate of these contingencies could be material to the financial statements. For additional discussion of the CPID related contingencies, see Note 6 to the Consolidated Financial Statements in Item 8 of this Form 10-K.
18
with SFAS No. 144. As of May 29, 2004, the Company had $2.7 million of non-goodwill intangible assets recorded in Other long-term assets, which includes patents and licenses for certain technology. If the estimated undiscounted cash flow related to these assets decreases in the future or the useful life is shorter than originally estimated, the Company may incur charges to impair these assets. The impairment would be based on the estimated discounted cash flow associated with each asset. Impairment could result if the underlying technology fails to gain market acceptance, the Company fails to deliver new products related to these technology assets, the products fail to gain expected market acceptance or if market conditions in the related businesses are unfavorable.
19
Defined benefit plans | Defined contribution plan | Total | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||||||
Reduction (increase) in pension liability, net | $ | 55,583 | $ | (3,891 | ) | $ | 51,692 | ||||||||
Write-off of pension asset for unrecognized prior service cost | (9,566 | ) | — | (9,566 | ) | ||||||||||
Reduction in minimum pension charge in Accumulated other comprehensive loss | (3,126 | ) | — | (3,126 | ) | ||||||||||
Deferred income taxes on minimum pension charge | (2,259 | ) | — | (2,259 | ) | ||||||||||
Net pension curtailment and settlement gain | $ | 40,632 | $ | (3,891 | ) | $ | 36,741 |
20
liability was recognized for the unfunded accumulated benefit obligation. Recognition of an additional minimum liability is required if an unfunded accumulated benefit obligation exists and (a) an asset has been recognized as prepaid pension cost, (b) the liability already recognized as unfunded accrued pension cost is less than the unfunded accumulated benefit obligation, or (c) no accrued or prepaid pension cost has been recognized. The Company has recognized an additional minimum liability in accordance with SFAS No. 87. Since the additional minimum liability exceeded unrecognized prior service cost, the excess (which would represent a net loss not yet recognized as net periodic pension cost) is reported as a component of Accumulated other comprehensive loss, net of applicable income tax benefit. The Company initially recorded an additional pension liability at the end of fiscal year 2002, the first measurement date where the accumulated benefit obligation exceeded the fair value of plan assets. As of May 29, 2004, the cumulative additional minimum pension charge included in Accumulated other comprehensive loss was $173.7 million, net of income tax benefit of $107.9 million. The implication of the additional minimum pension liability is that it may reduce net income in future years by reducing the market related value of plan assets, thereby reducing the asset base upon which the Company recognizes a return. The Company may find it necessary to fund additional pension assets, which would increase the market related value of plan assets upon which the Company recognizes a return but would reduce operating cash and future interest earnings on that cash. Subsequent to the current fiscal year, the Company made a voluntary contribution of $46.5 million to the U.S. Cash Balance Plan in June 2004.
21
realizing the deferred tax assets, judgment would have to be applied to determine changes to the amount of the valuation allowance required to be in place on the financial statements in any given period. The Company continually evaluates strategies that could allow the future utilization of its deferred tax assets.
RESULTS OF OPERATIONS
% Change | | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
For the fiscal years ended | |||||||||||||||||||||||
May 29, 2004 | May 31, 2003 | May 25, 2002 | FY2004 v FY2003 | FY2003 v FY2002 | |||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||||||
Product orders | $ | 907,757 | $ | 750,257 | $ | 687,381 | 21 | % | 9 | % | |||||||||||||
Product backlog at end of year | 142,250 | 107,926 | 80,938 | 32 | % | 33 | % | ||||||||||||||||
Net sales | 920,620 | 791,048 | 810,300 | 16 | % | (2 | %) | ||||||||||||||||
Cost of sales | 397,577 | 385,305 | 409,676 | 3 | % | (6 | %) | ||||||||||||||||
Gross profit | 523,043 | 405,743 | 400,624 | 29 | % | 1 | % | ||||||||||||||||
Research and development expenses | 130,386 | 101,137 | 112,389 | 29 | % | (10 | %) | ||||||||||||||||
Selling, general and administrative expenses | 277,993 | 247,605 | 220,784 | 12 | % | 12 | % | ||||||||||||||||
Equity in business venture’s loss | — | 2,893 | 3,971 | (100 | %) | (27 | %) | ||||||||||||||||
Business realignment costs | 22,765 | 34,551 | 26,992 | (34 | %) | 28 | % | ||||||||||||||||
Acquisition related (credits) costs, net | (51,025 | ) | 3,521 | — | >(100 | %) | >100 | % | |||||||||||||||
Gain on the sale of the Video and Networking division | — | — | (818 | ) | — | (100 | %) | ||||||||||||||||
Loss on sale of fixed assets | 1,134 | 108 | 5,808 | >100 | % | (98 | %) | ||||||||||||||||
Operating income | 141,790 | 15,928 | 31,498 | >100 | % | (49 | %) | ||||||||||||||||
Other non-operating income, net | 25,522 | 17,377 | 20,127 | 47 | % | (14 | %) | ||||||||||||||||
Earnings before taxes | 167,312 | 33,305 | 51,625 | >100 | % | (35 | %) | ||||||||||||||||
Income tax expense (benefit) | 49,087 | (1,843 | ) | 18,069 | >(100 | %) | >(100 | %) | |||||||||||||||
Net earnings from continuing operations | 118,225 | 35,148 | 33,556 | >100 | % | 5 | % | ||||||||||||||||
Loss from discontinued operations, net of income taxes | (2,130 | ) | (9,819 | ) | (867 | ) | (78 | %) | >100 | % | |||||||||||||
Net earnings | $ | 116,095 | $ | 25,329 | $ | 32,689 | >100 | % | (23 | %) | |||||||||||||
Net earnings per share from continuing operations—basic | $ | 1.40 | $ | 0.40 | $ | 0.37 | >100 | % | 8 | % | |||||||||||||
Net earnings per share from continuing operations—diluted | 1.37 | 0.40 | 0.36 | >100 | % | 11 | % | ||||||||||||||||
Loss per share from discontinued operations—basic | (0.03 | ) | (0.11 | ) | (0.01 | ) | (73 | %) | >100 | % | |||||||||||||
Loss per share from discontinued operations—diluted | (0.02 | ) | (0.11 | ) | (0.01 | ) | (82 | %) | >100 | % | |||||||||||||
Net earnings per share—basic | 1.37 | 0.29 | 0.36 | >100 | % | (19 | %) | ||||||||||||||||
Net earnings per share—diluted | $ | 1.35 | $ | 0.29 | $ | 0.35 | >100 | % | (17 | %) | |||||||||||||
Weighted average shares outstanding—basic | 84,720 | 87,105 | 91,439 | ||||||||||||||||||||
Weighted average shares outstanding—diluted | 86,038 | 87,367 | 92,263 |
Fiscal Year 2004 Compared to Fiscal Year 2003
22
23
the local economy, the consolidation of the Japan subsidiary for more periods during the current fiscal year, as discussed above, good response to new products and the favorable impact of foreign currency exchange rate fluctuations. The growth in the Europe region was driven partially by the stabilization of certain economies and markets within that region as well as good response to new products, but also from the favorable impact of foreign currency exchange rate fluctuations. The favorable impact of foreign currency exchange rates was attributable for total year over year growth of approximately $16.5 million, or 2%, mostly attributable to currency fluctuation in European and Japan. Growth in the United States was driven by the continued economic recovery of the markets into which the Company sells its products.
24
25
2004 | 2003 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||
Gain on Japan pension restructuring | $ | (36,741 | ) | $ | — | ||||||
Gain on sale of Shinagawa, Japan property | (22,525 | ) | — | ||||||||
Other Shinagawa, Japan asset disposals | 216 | — | |||||||||
Impairment of Gotemba, Japan property held-for-sale | 3,063 | — | |||||||||
Transition costs | 4,962 | 3,521 | |||||||||
Acquisition related (credits) costs, net | $ | (51,025 | ) | $ | 3,521 |
26
27
Fiscal Year 2003 Compared to Fiscal Year 2002
28
comparatively large when compared to the orders for that fiscal year. Second, the decline in sales from fiscal year 2002 to 2003 was partially offset by the acquisition of the Japan subsidiary, which provided approximately $42 million of additional sales.
29
Results prior to the date of acquisition were included in Equity in business venture’s loss at Tektronix’ ownership percentage. Results subsequent to the acquisition date had been consolidated in the operating results of the Company. See the discussion in the Acquisitions section of the Management’s Discussion and Analysis for further information on this acquisition. Equity in business venture’s loss was $2.9 million for fiscal year 2003, compared with equity losses of $4.0 million in fiscal year 2002.
30
31
Liquidity and Capital Resources
2004 | 2003 | 2002 | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||||||
Cash provided by (used in): | |||||||||||||||
Operating activities | $ | 133,889 | $ | 70,753 | $ | 86,757 | |||||||||
Investing activities | (11,726 | ) | (4,719 | ) | (55,553 | ) | |||||||||
Financing activities | (167,194 | ) | (143,455 | ) | (59,556 | ) |
32
Total | Less than 1 year | 1–3 years | 4–5 years | After 5 years | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Long-term debt | $ | 916 | $ | 420 | $ | 496 | $ | — | $ | — | ||||||||||||
Operating leases (1) | 35,817 | 15,681 | 15,507 | 3,412 | 1,217 | |||||||||||||||||
Non-cancelable purchase commitments (1) | 8,714 | 8,023 | 691 | — | — | |||||||||||||||||
Defined contribution plan in Japan (2) | 14,641 | 2,092 | 4,181 | 4,181 | 4,187 | |||||||||||||||||
Employee severance (3) | 5,781 | 5,781 | — | — | — | |||||||||||||||||
Retention bonuses in Gotemba, Japan (4) | 3,700 | — | 3,700 | — | — | |||||||||||||||||
$ | 69,569 | $ | 31,997 | $ | 24,575 | $ | 7,593 | $ | 5,404 |
_______________
(1) | The non-cancelable operating leases and purchase commitments are not reflected on the consolidated balance sheet under accounting principles generally accepted in the United States of America. |
(2) | Represents the current balance of the funding commitment upon establishment of the new defined contribution plan to be paid in annual installments over a remaining period of seven years. |
(3) | Represents the current balance of employee severance obligations from business realignment actions. The majority of the payments are expected to be paid within the next fiscal year, however, payments outside of the U.S., especially in Europe, may extend beyond one year. |
(4) | Represents estimated future payment of retention bonuses to employees in Gotemba, Japan who accepted the voluntary incentive program to remain with the Company through August 2005 while the Company completes its plan to transition manufacturing operations to other locations. |
May 29, 2004 | May 31, 2003 | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | 149,011 | $ | 190,387 | ||||||||||
Short-term marketable investments | 90,956 | 109,885 | ||||||||||||
Trade accounts receivable, net of allowance for doubtful accounts of $3,013 and $3,756, respectively | 133,150 | 100,334 | ||||||||||||
Inventories | 102,101 | 92,868 | ||||||||||||
Other current assets | 69,812 | 83,816 | ||||||||||||
Assets of discontinued operations | — | 7,938 | ||||||||||||
Total current assets | 545,030 | 585,228 | ||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable and accrued liabilities | 133,628 | 101,753 | ||||||||||||
Accrued compensation | 89,212 | 58,193 | ||||||||||||
Current portion of long-term debt | 420 | 56,584 | ||||||||||||
Deferred revenue | 25,247 | 19,551 | ||||||||||||
Liabilities of discontinued operations | — | 651 | ||||||||||||
Total current liabilities | 248,507 | 236,732 | ||||||||||||
Working capital | $ | 296,523 | $ | 348,496 |
33
Recent Accounting Pronouncements
34
No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions.” The new rules require additional disclosures about the assets, obligations, cash flows, and net periodic benefit cost of defined benefit pension plans and other postretirement benefit plans. The required information will be provided separately for pension plans and for other postretirement benefit plans. The new disclosures are included in the Company’s fiscal year 2004 consolidated financial statements and certain interim disclosures will commence with the first quarter of fiscal year 2005.
Risks and Uncertainties
35
introduces new products designed to maintain that leadership, as well as to penetrate new markets. Failure to develop and introduce new products that maintain a leadership position or that fail to penetrate new markets, may adversely affect operating results.
36
• | The necessity of coordinating geographically separated organizations |
• | Integrating personnel with diverse business backgrounds |
• | Integrating Inet’s technology and products |
• | Combining different corporate cultures |
• | Retaining key employees |
• | Maintaining customer satisfaction and current bid processes |
• | Maintaining product development schedules |
• | Coordinating sales and marketing activities |
• | Preserving important distribution relationships |
• | Diversion of management’s attention with consequent negative impact upon the Company’s execution of its overall strategy |
• | Failure to realize upon expected cost savings and other synergies from the merger |
37
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
38
Item 8. Financial Statements and Supplementary Data.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
Tektronix, Inc.
/s/ DELOITTE & TOUCHE LLP
Portland, Oregon
August 11, 2004
39
Consolidated Statements of Operations
For the fiscal years ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 29, 2004 | May 31, 2003 | May 25, 2002 | |||||||||||||
(In thousands, except per share amounts) | |||||||||||||||
Net sales | $ | 920,620 | $ | 791,048 | $ | 810,300 | |||||||||
Cost of sales | 397,577 | 385,305 | 409,676 | ||||||||||||
Gross profit | 523,043 | 405,743 | 400,624 | ||||||||||||
Research and development expenses | 130,386 | 101,137 | 112,389 | ||||||||||||
Selling, general and administrative expenses | 277,993 | 247,605 | 220,784 | ||||||||||||
Equity in business venture’s loss | — | 2,893 | 3,971 | ||||||||||||
Business realignment costs | 22,765 | 34,551 | 26,992 | ||||||||||||
Acquisition related (credits) costs, net | (51,025 | ) | 3,521 | — | |||||||||||
Gain on sale of the Video and Networking division | — | — | (818 | ) | |||||||||||
Loss on sale of fixed assets | 1,134 | 108 | 5,808 | ||||||||||||
Operating income | 141,790 | 15,928 | 31,498 | ||||||||||||
Interest income | 21,565 | 27,997 | 34,621 | ||||||||||||
Interest expense | (2,208 | ) | (6,874 | ) | (10,214 | ) | |||||||||
Other non-operating income (expense), net | 6,165 | (3,746 | ) | (4,280 | ) | ||||||||||
Earnings before taxes | 167,312 | 33,305 | 51,625 | ||||||||||||
Income tax expense (benefit) | 49,087 | (1,843 | ) | 18,069 | |||||||||||
Net earnings from continuing operations | 118,225 | 35,148 | 33,556 | ||||||||||||
Loss from discontinued operations, net of income taxes | (2,130 | ) | (9,819 | ) | (867 | ) | |||||||||
Net earnings | $ | 116,095 | $ | 25,329 | $ | 32,689 | |||||||||
Net earnings per share from continuing operations—basic | $ | 1.40 | $ | 0.40 | $ | 0.37 | |||||||||
Net earnings per share from continuing operations—diluted | 1.37 | 0.40 | 0.36 | ||||||||||||
Loss per share from discontinued operations—basic | (0.03 | ) | (0.11 | ) | (0.01 | ) | |||||||||
Loss per share from discontinued operations—diluted | (0.02 | ) | (0.11 | ) | (0.01 | ) | |||||||||
Earnings per share—basic | 1.37 | 0.29 | 0.36 | ||||||||||||
Earnings per share—diluted | $ | 1.35 | $ | 0.29 | $ | 0.35 | |||||||||
Weighted average shares outstanding—basic | 84,720 | 87,105 | 91,439 | ||||||||||||
Weighted average shares outstanding—diluted | 86,038 | 87,367 | 92,263 |
The accompanying notes are an integral part of these consolidated financial statements.
40
Consolidated Balance Sheets
May 29, 2004 | May 31, 2003 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 149,011 | $ | 190,387 | |||||||
Short-term marketable investments | 90,956 | 109,885 | |||||||||
Trade accounts receivable, net of allowance for doubtful accounts of $3,013 and $3,756, respectively | 133,150 | 100,334 | |||||||||
Inventories | 102,101 | 92,868 | |||||||||
Other current assets | 69,812 | 83,816 | |||||||||
Assets of discontinued operations | — | 7,938 | |||||||||
Total current assets | 545,030 | 585,228 | |||||||||
Property, plant and equipment, net | 105,310 | 129,757 | |||||||||
Long-term marketable investments | 463,878 | 412,090 | |||||||||
Deferred tax assets | 105,886 | 144,134 | |||||||||
Goodwill, net | 79,774 | 73,736 | |||||||||
Other long-term assets | 30,825 | 39,765 | |||||||||
Total assets | $ | 1,330,703 | $ | 1,384,710 | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable and accrued liabilities | $ | 133,628 | $ | 101,753 | |||||||
Accrued compensation | 89,212 | 58,193 | |||||||||
Current portion of long-term debt | 420 | 56,584 | |||||||||
Deferred revenue | 25,247 | 19,551 | |||||||||
Liabilities of discontinued operations | — | 651 | |||||||||
Total current liabilities | 248,507 | 236,732 | |||||||||
Long-term debt | 496 | 55,002 | |||||||||
Other long-term liabilities | 211,120 | 313,750 | |||||||||
Commitments and contingencies | |||||||||||
Shareholders’ equity: | |||||||||||
Preferred stock, no par value (authorized 1,000 shares; none issued) | — | — | |||||||||
Common stock, no par value (authorized 200,000 shares; issued and outstanding 84,179 and 84,844, respectively) | 257,267 | 223,233 | |||||||||
Retained earnings | 748,381 | 707,191 | |||||||||
Accumulated other comprehensive loss | (135,068 | ) | (151,198 | ) | |||||||
Total shareholders’ equity | 870,580 | 779,226 | |||||||||
Total liabilities and shareholders’ equity | $ | 1,330,703 | $ | 1,384,710 |
The accompanying notes are an integral part of these consolidated financial statements.
41
Consolidated Statements of Cash Flows
For the fiscal years ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 29, 2004 | May 31, 2003 | May 25, 2002 | |||||||||||||
(In thousands) | |||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||||||
Net earnings | $ | 116,095 | $ | 25,329 | $ | 32,689 | |||||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||||||||
Loss from discontinued operations | 2,130 | 9,819 | 867 | ||||||||||||
Gain on sale of the Video and Networking division | — | — | (818 | ) | |||||||||||
Gain on Japan pension restructuring | (36,741 | ) | — | — | |||||||||||
Depreciation and amortization expense | 29,796 | 33,545 | 39,597 | ||||||||||||
Net (gain) loss on the disposition/impairment of assets | (18,312 | ) | 9,212 | 5,808 | |||||||||||
Net (gain) loss on the disposition/impairment of marketable equity securities | (7,293 | ) | — | 2,211 | |||||||||||
Bad debt expense (benefit) | 671 | (703 | ) | 1,064 | |||||||||||
Tax benefit of stock option exercises | 6,983 | 474 | 784 | ||||||||||||
Deferred income tax expense (benefit) | 2,428 | (1,013 | ) | (1,712 | ) | ||||||||||
Equity in business venture’s loss | — | 2,893 | 3,971 | ||||||||||||
Changes in operating assets and liabilities: | �� | ||||||||||||||
Accounts receivable | (32,713 | ) | 18,010 | 43,862 | |||||||||||
Inventories | (8,306 | ) | 37,132 | 27,825 | |||||||||||
Other current assets | 14,995 | 2,816 | 10,908 | ||||||||||||
Accounts payable and accrued liabilities | 30,218 | (32,697 | ) | (67,909 | ) | ||||||||||
Accrued compensation | 30,840 | (3,818 | ) | (39,230 | ) | ||||||||||
Cash funding for domestic pension plan | (30,000 | ) | (15,000 | ) | — | ||||||||||
Deferred revenue | 5,696 | 2,743 | 2,655 | ||||||||||||
Other long-term assets and liabilities, net | 26,573 | (10,607 | ) | 33,168 | |||||||||||
Net cash provided by continuing operating activities | 133,060 | 78,135 | 95,740 | ||||||||||||
Net cash provided by (used in) discontinued operating activities | 829 | (7,382 | ) | (8,983 | ) | ||||||||||
Net cash provided by operating activities | 133,889 | 70,753 | 86,757 | ||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||||
Acquisition of businesses, net of cash acquired | — | 23,915 | (20,369 | ) | |||||||||||
Acquisition of property, plant and equipment | (18,617 | ) | (17,153 | ) | (14,539 | ) | |||||||||
Proceeds from the disposition of fixed assets | 49,729 | 7,082 | 2,279 | ||||||||||||
Proceeds from sale of optical parametric test business | — | 1,000 | — | ||||||||||||
Proceeds from the sale of corporate equity securities | 9,530 | — | — | ||||||||||||
Proceeds from the sale of short-term and long-term available-for-sale securities | 460,650 | 478,063 | 213,929 | ||||||||||||
Purchases of short-term and long-term available-for-sale securities | (513,018 | ) | (497,626 | ) | (248,667 | ) | |||||||||
Proceeds from maturities of short-term and long-term held-to-maturity securities | — | — | 394,951 | ||||||||||||
Purchases of short-term and long-term held-to-maturity securities | — | — | (383,137 | ) | |||||||||||
Net cash used in investing activities | (11,726 | ) | (4,719 | ) | (55,553 | ) | |||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||||
Net change in short-term debt | — | — | (1,018 | ) | |||||||||||
Repayment of long-term debt | (118,498 | ) | (42,760 | ) | (27,735 | ) | |||||||||
Dividends paid | (10,176 | ) | — | — | |||||||||||
Proceeds from employee stock plans | 33,860 | 7,668 | 11,239 | ||||||||||||
Repurchase of common stock | (72,380 | ) | (108,363 | ) | (42,042 | ) | |||||||||
Net cash used in financing activities | (167,194 | ) | (143,455 | ) | (59,556 | ) | |||||||||
Effect of exchange rate changes on cash | 3,655 | 7,035 | 1,770 | ||||||||||||
Net decrease in cash and cash equivalents | (41,376 | ) | (70,386 | ) | (26,582 | ) | |||||||||
Cash and cash equivalents at beginning of period | 190,387 | 260,773 | 287,355 | ||||||||||||
Cash and cash equivalents at end of period | $ | 149,011 | $ | 190,387 | $ | 260,773 | |||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS | |||||||||||||||
Income taxes (refunded) paid, net | $ | (18,731 | ) | $ | (7,593 | ) | $ | 2,940 | |||||||
Interest paid | 3,367 | 5,899 | 9,655 | ||||||||||||
NON-CASH INVESTING AND FINANCING ACTIVITIES | |||||||||||||||
Assets acquired from Sony/Tektronix | — | 159,308 | — | ||||||||||||
Assumption of long-term debt from Sony/Tektronix acquisition | — | 53,506 | — | ||||||||||||
Assumption of other liabilities from Sony/Tektronix acquisition | — | 89,877 | — | ||||||||||||
Non-cash proceeds from sale of VideoTele.com | — | 7,303 | — |
The accompanying notes are an integral part of these consolidated financial statements.
42
Consolidated Statements of Shareholders’ Equity
Common Stock | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Shares | Amount | Retained earnings | Accumulated other comprehensive income (loss) | Total | |||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Balance May 26, 2001 | 92,077 | $ | 225,003 | $ | 778,428 | $ | 9,914 | $ | 1,013,345 | ||||||||||||||
Components of comprehensive income (loss): | |||||||||||||||||||||||
Net earnings | — | — | 32,689 | — | 32,689 | ||||||||||||||||||
Minimum pension liability (net of tax of ($57,055)) | — | — | — | (91,716 | ) | (91,716 | ) | ||||||||||||||||
Currency adjustment (net of tax of $2,232) | — | — | — | 3,454 | 3,454 | ||||||||||||||||||
Cash flow hedge loss (net of tax of ($42)) | — | — | — | (65 | ) | (65 | ) | ||||||||||||||||
Unrealized holding gains-net (net of tax of $185) | — | — | — | 290 | 290 | ||||||||||||||||||
Total comprehensive loss | (55,348 | ) | |||||||||||||||||||||
Shares issued to employees, net of forfeitures | 498 | 11,239 | — | — | 11,239 | ||||||||||||||||||
Shares repurchased in open market | (2,066 | ) | (5,207 | ) | (36,835 | ) | — | (42,042 | ) | ||||||||||||||
Balance May 25, 2002 | 90,509 | 231,035 | 774,282 | (78,123 | ) | 927,194 | |||||||||||||||||
Components of comprehensive income (loss): | |||||||||||||||||||||||
Net earnings | — | — | 25,329 | — | 25,329 | ||||||||||||||||||
Minimum pension liability (net of tax of ($60,488)) | — | — | — | (95,956 | ) | (95,956 | ) | ||||||||||||||||
Currency adjustment (net of tax of $12,321) | — | — | — | 19,271 | 19,271 | ||||||||||||||||||
Unrealized holding gains-net (net of tax of $2,308) | — | — | — | 3,610 | 3,610 | ||||||||||||||||||
Total comprehensive loss | (47,746 | ) | |||||||||||||||||||||
Shares issued to employees, net of forfeitures | 559 | 8,462 | (321 | ) | — | 8,141 | |||||||||||||||||
Shares repurchased in open market | (6,224 | ) | (16,264 | ) | (92,099 | ) | — | (108,363 | ) | ||||||||||||||
Balance May 31, 2003 | 84,844 | 223,233 | 707,191 | (151,198 | ) | 779,226 | |||||||||||||||||
Components of comprehensive income (loss): | |||||||||||||||||||||||
Net earnings | — | — | 116,095 | — | 116,095 | ||||||||||||||||||
Minimum pension liability (net of tax of $9,661) | — | — | — | 13,924 | 13,924 | ||||||||||||||||||
Currency adjustment (net of tax of $6,703) | — | — | — | 10,482 | 10,482 | ||||||||||||||||||
Unrealized holding loss (net of tax of ($5,292)) | — | — | — | (8,276 | ) | (8,276 | ) | ||||||||||||||||
Total comprehensive income | 132,225 | ||||||||||||||||||||||
Dividends paid | — | — | (10,176 | ) | — | (10,176 | ) | ||||||||||||||||
Shares issued to employees, net of forfeitures | 1,991 | 41,685 | — | — | 41,685 | ||||||||||||||||||
Shares repurchased in open market | (2,656 | ) | (7,651 | ) | (64,729 | ) | — | (72,380 | ) | ||||||||||||||
Balance May 29, 2004 | 84,179 | $ | 257,267 | $ | 748,381 | $ | (135,068 | ) | $ | 870,580 |
43
Notes to Consolidated Financial Statements
1. The Company
2. Summary of Significant Accounting Policies
44
held-to-maturity and were recorded at their amortized cost. The specific identification method is used to recognize realized gains and losses on the sale of marketable investments.
45
estimate can only be identified within a range and no specific amount within that range is determined more likely than any other amount within the range, the minimum of the range is accrued. Actual costs incurred may vary from these estimates due to the inherent uncertainties involved. Accrued environmental costs are recorded in Accounts payable and accrued liabilities on the Consolidated Balance Sheets.
3. Recent Accounting Pronouncements
46
the implementation issues cleared as a result of the Derivatives Implementation Group process. This statement was effective for contracts entered into or modified after June 30, 2003 and has been applied prospectively after that date. The Company adopted the provisions of SFAS No. 149 effective July 1, 2003, without a material impact on the Company’s consolidated financial statements.
4. Earnings Per Share, Including Pro Forma Effects of Stock-Based Compensation
2004 | 2003 | 2002 | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands except per share amounts) | |||||||||||||||
Net earnings | $ | 116,095 | $ | 25,329 | $ | 32,689 | |||||||||
Weighted average shares used for basic earnings per share | 84,720 | 87,105 | 91,439 | ||||||||||||
Effect of dilutive stock options | 1,318 | 262 | 824 | ||||||||||||
Weighted average shares used for dilutive earnings per share | 86,038 | 87,367 | 92,263 | ||||||||||||
Net earnings per share—basic | $ | 1.37 | $ | 0.29 | $ | 0.36 | |||||||||
Net earnings per share—diluted | $ | 1.35 | $ | 0.29 | $ | 0.35 |
47
Based Compensation,” the measurement of compensation cost is based on the fair value of employee stock options at the grant date and requires the use of option pricing models to value the options. The weighted average estimated fair value of options granted during fiscal years 2004, 2003 and 2002 was $9.72, $5.87 and $12.26 per share, respectively.
2004 | 2003 | 2002 | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(amounts in thousands, except per share information) | |||||||||||||||
Net earnings as reported | $ | 116,095 | $ | 25,329 | $ | 32,689 | |||||||||
Stock compensation cost included in net earnings as reported, net of income taxes | 595 | 612 | 305 | ||||||||||||
Stock compensation cost using the fair value alternative, net of income taxes | (17,944 | ) | (20,949 | ) | (19,220 | ) | |||||||||
Pro forma net earnings | $ | 98,746 | $ | 4,992 | $ | 13,774 | |||||||||
Basic EPS—as reported | $ | 1.37 | $ | 0.29 | $ | 0.36 | |||||||||
Basic EPS—pro forma | 1.17 | 0.06 | 0.15 | ||||||||||||
Diluted EPS—as reported | $ | 1.35 | $ | 0.29 | $ | 0.35 | |||||||||
Diluted EPS—pro forma | 1.15 | 0.06 | 0.15 |
2004 | 2003 | 2002 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Expected life in years | 5.0 | 4.0 | 4.0 | |||||||||||
Risk-free interest rate | 2.96 | % | 3.10 | % | 4.40 | % | ||||||||
Volatility | 31.45 | % | 37.20 | % | 69.30 | % | ||||||||
Dividend yield | 0.48 | % | 0.00 | % | 0.00 | % |
5. Sony/Tektronix Redemption
48
Cash | $ | 23,915 | ||||
Accounts receivable | 23,333 | |||||
Inventory | 15,476 | |||||
Deferred tax asset | 3,431 | |||||
Property, plant and equipment | 36,752 | |||||
Goodwill | 35,647 | |||||
Intangible assets | 2,200 | |||||
Other long-term assets | 42,469 | |||||
Total assets | $ | 183,223 | ||||
Accounts payable and accrued liabilities | $ | 22,394 | ||||
Accrued compensation | 5,071 | |||||
Long-term debt | 53,506 | |||||
Other long-term liabilities | 62,412 | |||||
Total liabilities | $ | 143,383 |
2003 | 2002 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands, except per share amounts) | |||||||||||
Net sales | $ | 807,129 | $ | 869,233 | |||||||
Net earnings | 23,190 | 26,198 | |||||||||
Earnings per share—diluted | $ | 0.27 | $ | 0.28 |
49
6. Discontinued Operations
2004 | 2003 | 2002 | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||||||
Loss on sale of VideoTele.com (less applicable income tax benefit of $48, $344, and $0) | $ | (89 | ) | $ | (639 | ) | $ | — | |||||||
Loss from operations of VideoTele.com (less applicable income tax benefit of $0, $1,413 and $1,007) | — | (2,624 | ) | (1,869 | ) | ||||||||||
Loss on sale of optical parametric test business (less applicable income tax benefit of $195, $9,222 and $0) | (363 | ) | (17,127 | ) | — | ||||||||||
Loss from operations of optical parametric test business (less applicable income tax benefit of $0, $1,376 and $111) | — | (2,556 | ) | (206 | ) | ||||||||||
Loss on sale of Gage (less applicable income tax benefit of $692, $1,174 and $0) | (1,284 | ) | (2,180 | ) | — | ||||||||||
Loss from operations of Gage (less applicable income tax benefit of $212, $508 and $554) | (394 | ) | (943 | ) | (1,029 | ) | |||||||||
Gain on sale of Color Printing and Imaging (less applicable income tax expense of $0, $8,750 and $1,204) | — | 16,250 | 2,237 | ||||||||||||
Loss from discontinued operations, net of income taxes | $ | (2,130 | ) | $ | (9,819 | ) | $ | (867 | ) |
50
51
7. Business Realignment Costs
52
53
Balance May 31, 2003 | Costs incurred | Cash payments | Non-cash adjustments | Balance May 29, 2004 | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||||||||||||||
Fiscal Year 2004 Actions: | |||||||||||||||||||||||
Employee severance and related benefits | $ | — | $ | 17,351 | $ | (12,016 | ) | $ | — | $ | 5,335 | ||||||||||||
Asset impairments | — | 1,610 | — | (1,610 | ) | — | |||||||||||||||||
Contractual obligations | — | 1,514 | (1,105 | ) | — | 409 | |||||||||||||||||
Accumulated currency translation loss, net | — | 2,594 | — | (2,594 | ) | — | |||||||||||||||||
Total | — | 23,069 | (13,121 | ) | (4,204 | ) | 5,744 | ||||||||||||||||
Fiscal Year 2003 Actions: | |||||||||||||||||||||||
Employee severance and related benefits | 5,394 | (623 | ) | (4,477 | ) | — | 294 | ||||||||||||||||
Asset impairments | — | (53 | ) | — | 53 | — | |||||||||||||||||
Contractual obligations | 1,730 | 447 | (1,085 | ) | 148 | 1,240 | |||||||||||||||||
Total | 7,124 | (229 | ) | (5,562 | ) | 201 | 1,534 | ||||||||||||||||
Fiscal Year 2002 Actions: | |||||||||||||||||||||||
Employee severance and related benefits | 494 | 172 | (514 | ) | — | 152 | |||||||||||||||||
Contractual obligations | 434 | (57 | ) | (323 | ) | — | 54 | ||||||||||||||||
Total | 928 | 115 | (837 | ) | — | 206 | |||||||||||||||||
Other | — | (190 | ) | (9 | ) | 199 | — | ||||||||||||||||
Total of all actions | $ | 8,052 | $ | 22,765 | $ | (19,529 | ) | $ | (3,804 | ) | $ | 7,484 |
Balance May 25, 2002 | Costs incurred | Cash payments | Non-cash adjustments | Balance May 31, 2003 | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||||||||||||||
Fiscal Year 2003 Actions: | |||||||||||||||||||||||
Employee severance and related benefits | $ | — | $ | 27,322 | $ | (18,593 | ) | $ | (3,335 | ) | $ | 5,394 | |||||||||||
Asset impairments | — | 9,341 | — | (9,341 | ) | — | |||||||||||||||||
Contractual obligations | — | 2,212 | (559 | ) | 77 | 1,730 | |||||||||||||||||
Accumulated currency translation gain, net | — | (1,328 | ) | — | 1,328 | — | |||||||||||||||||
Total | — | 37,547 | (19,152 | ) | (11,271 | ) | 7,124 | ||||||||||||||||
Fiscal Year 2002 Actions: | |||||||||||||||||||||||
Employee severance and related benefits | 7,511 | (417 | ) | (6,600 | ) | — | 494 | ||||||||||||||||
Contractual obligations | 2,853 | (2,130 | ) | (788 | ) | 499 | 434 | ||||||||||||||||
Total | 10,364 | (2,547 | ) | (7,388 | ) | 499 | 928 | ||||||||||||||||
Other | 1,196 | (449 | ) | (808 | ) | 61 | — | ||||||||||||||||
Total of all actions | $ | 11,560 | $ | 34,551 | $ | (27,348 | ) | $ | (10,711 | ) | $ | 8,052 |
54
Balance May 26, 2001 | Costs incurred | Cash payments | Non-cash adjustments | Balance May 25, 2002 | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||||||||||||||
Fiscal Year 2002 Actions: | |||||||||||||||||||||||
Employee severance and related benefits | $ | — | $ | 20,917 | $ | (13,406 | ) | $ | — | $ | 7,511 | ||||||||||||
Asset impairments | — | 906 | — | (906 | ) | — | |||||||||||||||||
Contractual obligations | — | 3,882 | (1,029 | ) | — | 2,853 | |||||||||||||||||
Accumulated currency translation loss, net | — | 2,730 | — | (2,730 | ) | — | |||||||||||||||||
Total | — | 28,435 | (14,435 | ) | (3,636 | ) | 10,364 | ||||||||||||||||
Other | 5,061 | (1,443 | ) | (2,422 | ) | — | 1,196 | ||||||||||||||||
Total of all actions | $ | 5,061 | $ | 26,992 | $ | (16,857 | ) | $ | (3,636 | ) | $ | 11,560 |
8. Marketable Investments
Amortized cost | Unrealized gains | Unrealized losses | Market value | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||||||||||||||
Corporate notes and bonds | $ | 46,899 | $ | 191 | $ | (118 | ) | $ | 46,972 | ||||||||||||||
Asset backed securities | 30,657 | 1 | (363 | ) | 30,295 | ||||||||||||||||||
Mortgage backed securities | 5,358 | — | (52 | ) | 5,306 | ||||||||||||||||||
U.S. Agency | 2,972 | 2 | — | 2,974 | |||||||||||||||||||
U.S. Treasuries | 5,313 | 96 | — | 5,409 | |||||||||||||||||||
Short-term marketable investments | $ | 91,199 | $ | 290 | $ | (533 | ) | $ | 90,956 |
Amortized cost | Unrealized gains | Unrealized losses | Market value | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||||||||||||||
Corporate notes and bonds | $ | 89,562 | $ | 817 | $ | (587 | ) | $ | 89,792 | ||||||||||||||
Asset backed securities | 76,052 | 999 | (261 | ) | 76,790 | ||||||||||||||||||
Mortgage backed securities | 176,266 | 715 | (2,684 | ) | 174,297 | ||||||||||||||||||
Federal agency notes and bonds | 79,878 | 155 | (962 | ) | 79,071 | ||||||||||||||||||
U.S. Treasuries | 44,166 | — | (238 | ) | 43,928 | ||||||||||||||||||
Long-term marketable investments | $ | 465,924 | $ | 2,686 | $ | (4,732 | ) | $ | 463,878 |
Amortized cost | Unrealized gains | Unrealized losses | Market value | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||||||||||||||
Corporate notes and bonds | $ | 32,512 | $ | 418 | $ | — | $ | 32,930 | |||||||||||||||
Asset backed securities | 40,495 | 471 | (133 | ) | 40,833 | ||||||||||||||||||
Mortgage backed securities | 6,343 | 91 | (82 | ) | 6,352 | ||||||||||||||||||
U.S. Agency | 10,789 | 324 | — | 11,113 | |||||||||||||||||||
Federal agency notes and bonds | 18,326 | 104 | — | 18,430 | |||||||||||||||||||
U.S. Treasuries | 227 | — | — | 227 | |||||||||||||||||||
Short-term marketable investments | $ | 108,692 | $ | 1,408 | $ | (215 | ) | $ | 109,885 |
55
Amortized cost | Unrealized gains | Unrealized losses | Market value | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||||||||||||||
Corporate notes and bonds | $ | 90,465 | $ | 2,181 | $ | — | $ | 92,646 | |||||||||||||||
Asset backed securities | 56,217 | 2,725 | (13 | ) | 58,929 | ||||||||||||||||||
Mortgage backed securities | 142,649 | 2,574 | (49 | ) | 145,174 | ||||||||||||||||||
U.S. Agency | 53,239 | 1,013 | — | 54,252 | |||||||||||||||||||
Federal agency notes and bonds | 24,508 | 785 | — | 25,293 | |||||||||||||||||||
U.S. Treasuries | 34,817 | 979 | — | 35,796 | |||||||||||||||||||
Long-term marketable investments | $ | 401,895 | $ | 10,257 | $ | (62 | ) | $ | 412,090 |
Amortized Cost Basis | ||||||
---|---|---|---|---|---|---|
(in thousands) | ||||||
After 1 year through 5 years | $ | 289,658 | ||||
Mortgage backed securities | 176,266 | |||||
$ | 465,924 |
12 months or more | Less than 12 months | Total | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Gross Estimated Fair Value | Unrealized Losses | Gross Estimated Fair Value | Unrealized Losses | Gross Estimated Fair Value | Unrealized Losses | ||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||
Corporate notes and bonds | $ | — | $ | — | $ | 97,330 | $ | 705 | $ | 97,330 | $ | 705 | |||||||||||||||
Asset backed securities | 3,499 | 55 | 43,409 | 569 | 46,908 | 624 | |||||||||||||||||||||
Mortgage backed securities | 544 | 18 | 140,489 | 2,718 | 141,033 | 2,736 | |||||||||||||||||||||
Federal agency notes and bonds | — | — | 75,645 | 962 | 75,645 | 962 | |||||||||||||||||||||
U.S. Treasuries | — | — | 44,107 | 238 | 44,107 | 238 | |||||||||||||||||||||
Total | $ | 4,043 | $ | 73 | $ | 400,980 | $ | 5,192 | $ | 405,023 | $ | 5,265 |
2004 | 2003 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||
Unamortized cost basis of corporate equity securities | $ | 6,178 | $ | 8,384 | |||||||
Gross unrealized holding gains | 7,818 | 7,707 | |||||||||
Fair value of corporate equity securities | $ | 13,996 | $ | 16,091 |
56
9. Concentrations of Credit Risk
10. Inventories
2004 | 2003 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||
Materials | $ | 10,379 | $ | 13,092 | |||||||
Work in process | 40,923 | 26,859 | |||||||||
Finished goods | 50,799 | 52,917 | |||||||||
Inventories | $ | 102,101 | $ | 92,868 |
11. Other Current Assets
2004 | 2003 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||
Held-for-sale assets | $ | 16,075 | $ | 29,601 | |||||||
Current deferred tax asset | 37,703 | 23,457 | |||||||||
Prepaid expenses | 7,293 | 6,514 | |||||||||
Other receivables | 7,820 | 8,289 | |||||||||
Income taxes receivable | 6 | 15,303 | |||||||||
Other current assets | 911 | 618 | |||||||||
Notes receivable | 4 | 34 | |||||||||
Other current assets | $ | 69,812 | $ | 83,816 |
57
12. Property, Plant and Equipment
2004 | 2003 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) | |||||||||||
Land | $ | 698 | $ | 6,935 | |||||||
Buildings | 133,304 | 153,615 | |||||||||
Machinery and equipment | 255,669 | 272,238 | |||||||||
Accumulated depreciation and amortization | (284,361 | ) | (303,031 | ) | |||||||
Property, plant and equipment, net | $ | 105,310 | $ | 129,757 |
13. Goodwill, Net
Balance at May 25, 2002 | $ | 31,575 | ||||
Sony/Tektronix acquisition | 35,647 | |||||
Currency translation | 6,514 | |||||
Balance at May 31, 2003 | 73,736 | |||||
Currency translation | 6,038 | |||||
Balance at May 29, 2004 | $ | 79,774 |
58
14. Other Long-Term Assets
2004 | 2003 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||
Corporate equity securities | $ | 13,996 | $ | 16,091 | |||||||
Notes, contracts and leases | 10,845 | 9,370 | |||||||||
Pension asset | — | 9,280 | |||||||||
Other intangibles, net | 2,706 | 3,910 | |||||||||
Other assets | 3,278 | 1,114 | |||||||||
Other long-term assets | $ | 30,825 | $ | 39,765 |
15. Accounts Payable and Accrued Liabilities
2004 | 2003 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||
Trade accounts payable | $ | 47,442 | $ | 29,136 | |||||||
Other accounts payable | 34,560 | 35,124 | |||||||||
Accounts payable | 82,002 | 64,260 |
16. Long-Term Debt
2004 | 2003 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||
TIBOR+1.75% facility | $ | — | $ | 54,393 | |||||||
7.5% notes repaid on August 1, 2003 | — | 56,300 | |||||||||
Other long-term agreements | 916 | 893 | |||||||||
Less: current portion | (420 | ) | (56,584 | ) | |||||||
Long-term debt | $ | 496 | $ | 55,002 |
59
17. Other Long-Term Liabilities
2004 | 2003 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||
Pension liability | $ | 178,026 | $ | 279,162 | |||||||
Postretirement benefits | 13,839 | 17,568 | |||||||||
Deferred compensation | 10,707 | 9,943 | |||||||||
Other | 8,548 | 7,077 | |||||||||
Other long-term liabilities | $ | 211,120 | $ | 313,750 |
18. Commitments and Contingencies
Operating leases | Purchase Commitments | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||
2005 | $ | 15,681 | $ | 8,023 | |||||||
2006 | 9,016 | 677 | |||||||||
2007 | 6,491 | 14 | |||||||||
2008 | 2,163 | — | |||||||||
2009 | 1,249 | — | |||||||||
Future years | 1,217 | — | |||||||||
Total | $ | 35,817 | $ | 8,714 |
60
and monitoring could be as high as $10.0 million. Management believes that the recorded liability represents the low end of the range. These costs are estimated to be incurred over the next several years.
19. Fair Value of Financial Instruments
May 29, 2004 | May 31, 2003 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Carrying amount | Fair value | Carrying amount | Fair value | ||||||||||||||||
(In thousands) | |||||||||||||||||||
TIBOR+1.75% facility | $ | — | $ | — | $ | 54,393 | $ | 54,393 | |||||||||||
7.5% notes repaid August 1, 2003 | — | — | 56,300 | 56,576 |
20. Stock Compensation Plans
61
Equity Compensation Plan Information | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance (excluding shares listed in (a)) | ||||||||||||
(a) | (b) | (c) | |||||||||||||
Equity Compensation Plans Approved by Shareholders | |||||||||||||||
2002 Stock Incentive Plan | 4,638,333 | $ | 18.34 | 3,977,960 | |||||||||||
1998 Stock Option Plan | 2,078,460 | $ | 21.92 | — | |||||||||||
1989 Stock Incentive Plan | 4,461,827 | $ | 29.06 | — | |||||||||||
Employee Stock Purchase Plan | 107,454 | $ | 26.15 | 440,327 | |||||||||||
Equity Compensation Plan Not Approved by Shareholders 2001 Stock Option Plan | 36,282 | $ | 25.69 | 141,453 | |||||||||||
Total | 11,322,356 | $ | 23.31 | 4,559,740 |
Outstanding | Exercisable | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Number of shares in thousands | Weighted average exercise price | Number of shares in thousands | Weighted average exercise price | ||||||||||||||||
May 26, 2001 | 5,858 | $ | 26.21 | 2,173 | $ | 17.97 | |||||||||||||
Granted | 3,985 | 22.12 | |||||||||||||||||
Exercised | (221 | ) | 14.60 | ||||||||||||||||
Cancelled | (379 | ) | 30.16 | ||||||||||||||||
May 25, 2002 | 9,243 | 24.50 | 3,772 | 21.73 | |||||||||||||||
Granted | 2,770 | 17.56 | |||||||||||||||||
Exercised | (139 | ) | 11.14 | ||||||||||||||||
Cancelled | (774 | ) | 25.57 | ||||||||||||||||
May 31, 2003 | 11,100 | 22.87 | 4,914 | 23.49 | |||||||||||||||
Granted | 2,360 | 30.99 | |||||||||||||||||
Exercised | (1,604 | ) | 18.05 | ||||||||||||||||
Cancelled | (641 | ) | 24.69 | ||||||||||||||||
May 29, 2004 | 11,215 | $ | 25.16 | 5,135 | $ | 25.17 |
62
Outstanding | Exercisable | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Range of exercise prices | Number of shares in thousands | Weighted average remaining contractual life (years) | Weighted average exercise price | Number of shares in thousands | Weighted average exercise price | ||||||||||||||||||
$12.21 – $17.12 | 1,021 | 6.27 | $ | 16.61 | 566 | $ | 16.22 | ||||||||||||||||
17.17 – 17.51 | 2,287 | 8.58 | 17.50 | 547 | 17.47 | ||||||||||||||||||
17.55 – 24.48 | 3,669 | 6.97 | 22.52 | 2,416 | 21.86 | ||||||||||||||||||
24.59 – 31.55 | 2,394 | 9.41 | 30.89 | 213 | 26.52 | ||||||||||||||||||
$31.69 – $40.69 | 1,844 | 6.47 | 37.21 | 1,393 | 37.36 | ||||||||||||||||||
11,215 | 7.67 | $ | 25.16 | 5,135 | $ | 25.17 |
21. Shareholders’ Equity
63
share of common stock and each share issued thereafter, including under the plans, includes one-half of a right. Each right entitles the holder to purchase one one-thousandth of a share of Series B preferred shares at a purchase price of $375, subject to adjustment. The rights become exercisable ten days after a person or group acquires, or commences a tender offer that would result in, beneficial ownership of 15% or more of the outstanding common shares of the Company. Upon the occurrence of certain events described in the rights agreement, each right entitles its holder to purchase common shares of the Company, or in certain circumstances common shares of the acquiring company, or other property having a value of twice the right’s exercise price. However, rights that are beneficially owned by an acquiring person become null and void. The rights may be redeemed at a price of $0.001 per right at any time before a person becomes an acquiring person, and any time after a person becomes an acquiring person, the Company may exchange each right at a ratio of one common share, or one one-thousandth of a preferred share per right. The rights expire on September 7, 2010.
Foreign currency translation | Unrealized holding gains on available-for- sale securities | Additional minimum pension liability | Accumulated other comprehensive loss | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||||||||||
Balance as of May 25, 2002 | $ | 5,439 | $ | 8,154 | $ | (91,716 | ) | $ | (78,123 | ) | |||||||||
Fiscal year 2003 activity | 19,271 | 3,610 | (95,956 | ) | (73,075 | ) | |||||||||||||
Balance as of May 31, 2003 | 24,710 | 11,764 | (187,672 | ) | (151,198 | ) | |||||||||||||
Fiscal year 2004 activity | 10,482 | (8,276 | ) | 13,924 | 16,130 | ||||||||||||||
Balance as of May 29, 2004 | $ | 35,192 | $ | 3,488 | $ | (173,748 | ) | $ | (135,068 | ) |
22. Derivative Financial Instruments and Risk Management
64
23. Business Segments
2004 | 2003 | 2002 | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||||||
Consolidated net sales to external customers by region: | |||||||||||||||
The Americas | |||||||||||||||
United States | $ | 386,369 | $ | 332,710 | $ | 393,009 | |||||||||
Other Americas | 27,704 | 20,266 | 30,492 | ||||||||||||
Europe | 190,235 | 167,726 | 176,307 | ||||||||||||
Pacific | 167,651 | 163,181 | 143,192 | ||||||||||||
Japan | 148,661 | 107,165 | 67,300 | ||||||||||||
Net sales | $ | 920,620 | $ | 791,048 | $ | 810,300 | |||||||||
Operating income: | |||||||||||||||
Measurement | $ | 113,530 | $ | 54,000 | $ | 57,672 | |||||||||
Gain on sale of Video and Networking division | — | — | 818 | ||||||||||||
Business realignment costs | (22,765 | ) | (34,551 | ) | (26,992 | ) | |||||||||
Acquisition related credits (costs), net | 51,025 | (3,521 | ) | — | |||||||||||
Operating income | $ | 141,790 | $ | 15,928 | $ | 31,498 |
2004 | 2003 | 2002 | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||||||
Long-lived assets: | |||||||||||||||
United States | $ | 570,261 | $ | 532,762 | $ | 487,550 | |||||||||
International | 109,526 | 131,025 | 49,641 | ||||||||||||
Deferred tax assets | 105,886 | 144,134 | 64,522 | ||||||||||||
Long-lived assets | $ | 785,673 | $ | 807,921 | $ | 601,713 |
65
24. Other Non-Operating Income (Expense), Net
2004 | 2003 | 2002 | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||||||
Gain on sale of corporate equity securities | $ | 7,290 | $ | — | $ | — | |||||||||
Loss on disposition of financial assets | (120 | ) | (53 | ) | (1,000 | ) | |||||||||
Currency gains (losses) | 659 | (134 | ) | (1,677 | ) | ||||||||||
Other expense, net | (1,664 | ) | (3,559 | ) | (1,603 | ) | |||||||||
Other non-operating income (expense), net | $ | 6,165 | $ | (3,746 | ) | $ | (4,280 | ) |
25. Product Warranty Accrual
Balance, May 25, 2002 | $ | 11,033 | ||||
Payments made | (11,198 | ) | ||||
Provision for warranty expense | 8,854 | |||||
Balance, May 31, 2003 | 8,689 | |||||
Payments made | (10,694 | ) | ||||
Provision for warranty expense | 10,964 | |||||
Balance, May 29, 2004 | $ | 8,959 |
26. Income Taxes
2004 | 2003 | 2002 | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||||||
Current: | |||||||||||||||
Federal | $ | 39,338 | $ | (10,429 | ) | $ | 5,582 | ||||||||
State | 1,434 | 300 | 619 | ||||||||||||
Non-U.S. | 5,887 | 9,299 | 13,580 | ||||||||||||
46,659 | (830 | ) | 19,781 | ||||||||||||
Deferred: | |||||||||||||||
Federal | 6,015 | (149 | ) | 2,237 | |||||||||||
State | 1,509 | 1,909 | 390 | ||||||||||||
Non-U.S. | (5,096 | ) | (2,773 | ) | (4,339 | ) | |||||||||
2,428 | (1,013 | ) | (1,712 | ) | |||||||||||
Total income tax expense (benefit) | $ | 49,087 | $ | (1,843 | ) | $ | 18,069 |
66
2004 | 2003 | 2002 | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||||||
Income taxes based on U.S. statutory rate | $ | 58,559 | $ | 11,657 | $ | 18,069 | |||||||||
State income taxes, net of U.S. tax | 1,913 | 1,436 | 656 | ||||||||||||
Foreign sales corporation | — | — | (1,826 | ) | |||||||||||
Extraterritorial income exclusion | (1,413 | ) | (2,450 | ) | — | ||||||||||
Changes in valuation allowance | (1,776 | ) | (5,844 | ) | 319 | ||||||||||
Reversal of prior years’ provisions | (6,306 | ) | (12,500 | ) | — | ||||||||||
Other-net | (1,890 | ) | 5,858 | 851 | |||||||||||
Total income tax expense (benefit) | $ | 49,087 | $ | (1,843 | ) | $ | 18,069 |
2004 | 2003 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||
Other current assets | $ | 37,703 | $ | 23,457 | |||||||
Deferred tax assets | 105,886 | 144,134 | |||||||||
Net deferred tax assets | $ | 143,589 | $ | 167,591 |
2004 | 2003 | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||
Deferred tax assets: | |||||||||||
Reserves and other liabilities | $ | 64,761 | $ | 53,467 | |||||||
Accrued pension obligation | 45,031 | 85,403 | |||||||||
Foreign tax credit carryforwards | 22,160 | 24,395 | |||||||||
Accumulated depreciation | 11,622 | 1,276 | |||||||||
Net operating loss carryforwards | 8,639 | 6,988 | |||||||||
Other credit carryforwards | 8,405 | 6,413 | |||||||||
Accrued postretirement benefits | 6,177 | 7,794 | |||||||||
Intangibles | 2,545 | 12,781 | |||||||||
Restructuring costs and separation programs | 260 | 2,039 | |||||||||
Gross deferred tax assets | 169,600 | 200,556 | |||||||||
Less: valuation allowance | (23,183 | ) | (24,959 | ) | |||||||
Deferred tax assets | 146,417 | 175,597 | |||||||||
Deferred tax liabilities: | |||||||||||
Unrealized gains on marketable equity securities | (2,229 | ) | (7,520 | ) | |||||||
Software development costs | (599 | ) | (486 | ) | |||||||
Deferred tax liabilities | (2,828 | ) | (8,006 | ) | |||||||
Net deferred tax assets | $ | 143,589 | $ | 167,591 |
67
27. Benefit Plans
Pension Benefits | Pension Benefits | Postretirement Benefits | ||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2004 | 2003 | 2004 | 2003 | |||||||||||||||||||||||||||||
U.S. and Other | Japan | Total | U.S. and Other | Japan | Total | |||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||
Change in Benefit Obligation | ||||||||||||||||||||||||||||||||
Beginning balance | $ | 644,521 | $ | 128,854 | $ | 773,375 | $ | 547,775 | $ | — | $ | 547,775 | $ | 16,323 | $ | 13,411 | ||||||||||||||||
Consolidation of Japan benefit plans | — | — | — | — | 119,888 | 119,888 | — | — | ||||||||||||||||||||||||
Service cost | 5,000 | 2,169 | 7,169 | 6,134 | 3,864 | 9,998 | 104 | 78 | ||||||||||||||||||||||||
Interest cost | 36,941 | 883 | 37,824 | 38,785 | 1,802 | 40,587 | 930 | 947 | ||||||||||||||||||||||||
Actuarial (gain) loss | (3,274 | ) | — | (3,274 | ) | 71,263 | 10,857 | 82,120 | (67 | ) | 4,035 | |||||||||||||||||||||
Curtailment/settlement | — | (121,755 | ) | (121,755 | ) | — | (9,755 | ) | (9,755 | ) | — | |||||||||||||||||||||
Benefit payments | (44,790 | ) | (3,930 | ) | (48,720 | ) | (39,282 | ) | (1,538 | ) | (40,820 | ) | (2,092 | ) | (2,148 | ) | ||||||||||||||||
Exchange rate changes | 7,623 | 9,091 | 16,714 | 17,363 | 3,433 | 20,796 | — | — | ||||||||||||||||||||||||
Participant contributions | 147 | 166 | 313 | 164 | 303 | 467 | — | — | ||||||||||||||||||||||||
Other | — | — | — | 2,319 | — | 2,319 | — | — | ||||||||||||||||||||||||
Ending balance | 646,168 | 15,478 | 661,646 | 644,521 | 128,854 | 773,375 | 15,198 | 16,323 |
68
Pension Benefits | Pension Benefits | Postretirement Benefits | ||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2004 | 2003 | 2004 | 2003 | |||||||||||||||||||||||||||||
U.S. and Other | Japan | Total | U.S. and Other | Japan | Total | |||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||
Change in Plan Assets | ||||||||||||||||||||||||||||||||
Beginning balance | $ | 432,825 | $ | 43,247 | $ | 476,072 | $ | 464,272 | $ | — | $ | 464,272 | $ | — | $ | — | ||||||||||||||||
Consolidation of Japan benefit plans | — | — | — | — | 49,332 | 49,332 | — | — | ||||||||||||||||||||||||
Actual return | 54,245 | 921 | 55,166 | (22,369 | ) | (7,575 | ) | (29,944 | ) | — | — | |||||||||||||||||||||
Employer contributions | 31,809 | 2,906 | 34,715 | 16,823 | 1,657 | 18,480 | 2,092 | 2,148 | ||||||||||||||||||||||||
Benefit payments | (44,245 | ) | (50 | ) | (44,295 | ) | (38,828 | ) | (271 | ) | (39,099 | ) | (2,092 | ) | (2,148 | ) | ||||||||||||||||
Participant contributions | 147 | — | 147 | — | — | — | — | — | ||||||||||||||||||||||||
Curtailment/settlement | — | (49,979 | ) | (49,979 | ) | — | (1,200 | ) | (1,200 | ) | — | — | ||||||||||||||||||||
Exchange rate changes | 4,917 | 2,955 | 7,872 | 11,179 | 1,304 | 12,483 | — | — | ||||||||||||||||||||||||
Other | — | — | — | 1,748 | — | 1,748 | — | — | ||||||||||||||||||||||||
Ending balance | 479,698 | — | 479,698 | 432,825 | 43,247 | 476,072 | — | — | ||||||||||||||||||||||||
Net unfunded status of the plan | 166,470 | 15,478 | 181,948 | 211,696 | 85,607 | 297,303 | 15,198 | 16,323 | ||||||||||||||||||||||||
Unrecognized initial net obligation | (338 | ) | — | (338 | ) | (435 | ) | — | (435 | ) | — | — | ||||||||||||||||||||
Unrecognized prior service cost | 12,067 | 216 | 12,283 | 14,380 | (9,280 | ) | 5,100 | — | 2,671 | |||||||||||||||||||||||
Unrecognized net (loss) gain | (296,954 | ) | (543 | ) | (297,497 | ) | (312,991 | ) | (24,310 | ) | (337,301 | ) | 641 | 574 | ||||||||||||||||||
Net (prepaid) liability recognized | $ | (118,755 | ) | $ | 15,151 | $ | (103,604 | ) | $ | (87,350 | ) | $ | 52,017 | $ | (35,333 | ) | $ | 15,839 | $ | 19,568 | ||||||||||||
Amounts recognized in the consolidated balance sheets: | ||||||||||||||||||||||||||||||||
Other long-term assets | $ | — | $ | — | $ | — | $ | — | $ | (9,280 | ) | $ | (9,280 | ) | $ | — | $ | — | ||||||||||||||
Other long-term liabilities | 162,875 | 15,151 | 178,026 | 212,827 | 66,335 | 279,162 | 13,839 | 17,568 | ||||||||||||||||||||||||
Accrued compensation | — | — | — | — | — | — | 2,000 | 2,000 | ||||||||||||||||||||||||
Accumulated other comprehensive loss | (281,630 | ) | — | (281,630 | ) | (300,177 | ) | (5,038 | ) | (305,215 | ) | — | — | |||||||||||||||||||
Net (prepaid) liability recognized | $ | (118,755 | ) | $ | 15,151 | $ | (103,604 | ) | $ | (87,350 | ) | $ | 52,017 | $ | (35,333 | ) | $ | 15,839 | $ | 19,568 |
69
assets were $622.9 million, $614.8 million, and $440.4 million, respectively, for fiscal year 2004 and $737.1 million, $708.8 million, and $437.5 million, respectively, for fiscal year 2003.
2004 | 2003 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Publicly traded equity investments | 67 | % | 58 | % | ||||||
Debt securities | 17 | 22 | ||||||||
Real estate | 8 | 9 | ||||||||
Private equity investments | 7 | 11 | ||||||||
Cash and other | 1 | — | ||||||||
100 | % | 100 | % |
2004 | 2003 | 2002 | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
U.S. and Other | Japan | Total | U.S. and Other | Japan | Total | |||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||
Pension Benefits | ||||||||||||||||||||||||||||
Service cost | $ | 5,000 | $ | 2,169 | $ | 7,169 | $ | 6,134 | $ | 3,864 | $ | 9,998 | $ | 6,836 | ||||||||||||||
Interest cost | 36,941 | 883 | 37,824 | 38,785 | 1,802 | 40,587 | 37,640 | |||||||||||||||||||||
Expected return on plan assets | (49,872 | ) | (921 | ) | (50,793 | ) | (52,684 | ) | (2,107 | ) | (54,791 | ) | (54,207 | ) | ||||||||||||||
Amortization of transition asset | 111 | — | 111 | 123 | 2 | 125 | 106 | |||||||||||||||||||||
Amortization of prior service cost | (2,296 | ) | 227 | (2,069 | ) | (2,231 | ) | 631 | (1,600 | ) | (2,206 | ) | ||||||||||||||||
Curtailment/settlement loss | — | — | — | — | 3,318 | 3,318 | 169 | |||||||||||||||||||||
Recognized actuarial net loss (gain) | 10,743 | 431 | 11,174 | 145 | 638 | 783 | (347 | ) | ||||||||||||||||||||
Other benefit plans | 2,608 | — | 2,608 | 1,155 | — | 1,155 | 839 | |||||||||||||||||||||
Net benefit expense (credit) | $ | 3,235 | $ | 2,789 | $ | 6,024 | $ | (8,573 | ) | $ | 8,148 | $ | (425 | ) | $ | (11,170 | ) | |||||||||||
Postretirement Benefits | ||||||||||||||||||||||||||||
Service cost | $ | 104 | $ | — | $ | 104 | $ | 78 | $ | — | $ | 78 | $ | 120 | ||||||||||||||
Interest cost | 930 | — | 930 | 947 | — | 947 | 1,039 | |||||||||||||||||||||
Amortization of prior service cost | (2,671 | ) | — | (2,671 | ) | (2,671 | ) | — | (2,671 | ) | (2,671 | ) | ||||||||||||||||
Recognized net gain | — | — | — | (382 | ) | — | (382 | ) | (373 | ) | ||||||||||||||||||
Net benefit credit | $ | (1,637 | ) | $ | — | $ | (1,637 | ) | $ | (2,028 | ) | $ | — | $ | (2,028 | ) | $ | (1,885 | ) |
70
Pension Benefits | Postretirement Benefits | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2004 | 2003 | 2004 | 2003 | ||||||||||||||||
Discount rate | 6.1 | % | 5.2 | % | 6.3 | % | 6.0 | % | |||||||||||
Rate of compensation increase | 3.6 | % | 3.3 | % | 3.8 | % | 3.8 | % |
Pension Benefits | Postretirement Benefits | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2004 | 2003 | 2002 | 2004 | 2003 | 2002 | ||||||||||||||||||||||
Discount rate | 5.6 | % | 6.6 | % | 7.2 | % | 6.0 | % | 7.5 | % | 7.5 | % | |||||||||||||||
Rate of compensation increase | 3.5 | % | 3.4 | % | 3.7 | % | 3.8 | % | 3.8 | % | 3.8 | % | |||||||||||||||
Expected long-term return on plan assets | 8.1 | % | 8.8 | % | 9.6 | % | N/A | N/A | N/A |
N/A—not applicable
71
Defined benefit plans | Defined contribution plan | Total | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||||||
Reduction (increase) in pension liability, net | $ | 55,583 | $ | (3,891 | ) | $ | 51,692 | ||||||||
Write-off of pension asset for unrecognized prior service cost | (9,566 | ) | — | (9,566 | ) | ||||||||||
Reduction in minimum pension charge in other comprehensive loss | (3,126 | ) | — | (3,126 | ) | ||||||||||
Deferred income taxes on minimum pension charge | (2,259 | ) | — | (2,259 | ) | ||||||||||
Net pension curtailment and settlement gain | $ | 40,632 | $ | (3,891 | ) | $ | 36,741 |
28. Subsequent Events
72
Quarterly Financial Data (unaudited)
Quarter ended | May 29, 2004 | Feb. 28, 2004 | Nov. 29, 2003 | Aug. 30, 2003 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net sales | $ | 257,755 | $ | 243,506 | $ | 217,921 | $ | 201,438 | ||||||||||
Gross profit | 150,918 | 141,180 | 121,837 | 109,108 | ||||||||||||||
Operating income (a) | 31,687 | 52,476 | 46,052 | 11,575 | ||||||||||||||
Income before taxes | 36,232 | 64,573 | 50,707 | 15,800 | ||||||||||||||
Income from continuing operations | 26,469 | 43,871 | 36,509 | 11,376 | ||||||||||||||
Loss from discontinued operations | (350 | ) | (258 | ) | (22 | ) | (1,500 | ) | ||||||||||
Net earnings | 26,119 | 43,613 | 36,487 | 9,876 | ||||||||||||||
Earnings per share from continuing operations—basic | 0.31 | 0.52 | 0.43 | 0.13 | ||||||||||||||
Earnings per share from continuing operations—diluted | 0.31 | 0.50 | 0.42 | 0.13 | ||||||||||||||
Loss per share from discontinued operations—basic and diluted | — | — | — | (.02 | ) | |||||||||||||
Earnings per share—basic | 0.31 | 0.51 | 0.43 | 0.13 | ||||||||||||||
Earnings per share—diluted | 0.30 | 0.50 | 0.42 | 0.13 | ||||||||||||||
Average shares outstanding: | ||||||||||||||||||
Basic | 84,707 | 84,921 | 84,553 | 84,697 | ||||||||||||||
Diluted | 86,277 | 87,682 | 86,427 | 85,816 | ||||||||||||||
Common stock prices: | ||||||||||||||||||
High | $ | 34.16 | $ | 34.49 | $ | 27.58 | $ | 23.64 | ||||||||||
Low | 28.61 | 26.52 | 23.38 | 20.10 |
Quarter ended | May 31, 2003 | Mar. 1, 2003 | Nov. 30, 2002 | Aug. 31, 2002 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net sales | $ | 202,321 | $ | 186,645 | $ | 203,570 | $ | 198,512 | ||||||||||
Gross profit | 106,650 | 99,467 | 101,273 | 98,353 | ||||||||||||||
Operating income (loss) (a) | 3,704 | (4,885 | ) | 8,329 | 8,780 | |||||||||||||
Income before taxes | 6,257 | 360 | 12,912 | 13,776 | ||||||||||||||
Income from continuing operations (b) | 4,255 | 1,046 | 8,392 | 21,455 | ||||||||||||||
Loss from discontinued operations (c), (d) | (1,361 | ) | (3,123 | ) | (3,659 | ) | (1,676 | ) | ||||||||||
Net earnings (loss) | 2,894 | (2,077 | ) | 4,733 | 19,779 | |||||||||||||
Earnings per share from continuing operations—basic and diluted | 0.05 | 0.01 | 0.10 | 0.24 | ||||||||||||||
Loss per share from discontinued operations—basic and diluted | (0.02 | ) | (0.04 | ) | (0.04 | ) | (0.02 | ) | ||||||||||
Earnings (loss) per share—basic and diluted | 0.03 | (0.02 | ) | 0.05 | 0.22 | |||||||||||||
Average shares outstanding: | ||||||||||||||||||
Basic | 84,886 | 86,750 | 87,127 | 89,474 | ||||||||||||||
Diluted | 85,251 | 86,945 | 87,335 | 89,808 | ||||||||||||||
Common stock prices: | ||||||||||||||||||
High | $ | 21.08 | $ | 19.52 | $ | 19.95 | $ | 20.34 | ||||||||||
Low | 16.05 | 15.81 | 14.70 | 16.55 |
73
Notes to Quarterly Financial Data (unaudited):
(a) | The Company incurred business realignment costs of $4.7 million, $11.7 million, $3.7 million and $2.7 million during the first, second, third and fourth quarters of fiscal year 2004, respectively. The Company incurred acquisition related (credits), costs, net of $1.4 million, $(35.7) million, $(18.0) million and $1.4 million during the first, second, third and fourth quarters of fiscal year 2004, respectively. The Company incurred business realignment costs of $9.6 million, $3.2 million, $14.2 million and $7.6 million during the first, second, third and fourth quarters of fiscal year 2003, respectively. The Company incurred acquisition related (credits), costs, net of zero, $1.8 million, $0.8 million and $0.9 million during the first, second, third and fourth quarters of fiscal year 2003, respectively. |
(b) | During the first quarter of fiscal year 2003, the Company revised its estimated liability for income taxes as of August 31, 2002. The revision resulted in a $12.5 million net reduction of previously estimated liabilities. |
(c) | During the third quarter of fiscal year 2003, the Company recorded a gain of $13.0 million, net of income tax expense of $7.0 million, as a result of the resolution of certain estimated liabilities related to the sale of CPID. |
(d) | During the third quarter of fiscal year 2003, management approved and initiated an active plan for the sale of its optical parametric test business. The net carrying value of assets, primarily goodwill and other intangible assets, was adjusted to estimated selling price less costs to sell which resulted in a $15.3 million write-down, net of income tax benefit of $8.4 million. |
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Item 9A. Controls and Procedures.
(a) | Management of the Company has evaluated, under the supervision and with the participation of, the chief executive officer and chief financial officer, the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934. Based on that evaluation, the chief executive officer and chief financial officer have concluded that the Company’s disclosure controls and procedures are effective in ensuring that information required to be disclosed is recorded, processed, summarized and reported in a timely manner, and that information was accumulated and communicated to the Company’s management, including the chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure. |
(b) | There has been no change in the Company’s internal control over financial reporting that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. |
PART III
Item 10. Directors and Executive Officers of the Registrant.
74
Item 11. Executive Compensation.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Item 13. Certain Relationships and Related Transactions.
Item 14. Principal Accountant Fees and Services.
PART IV
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) | The following documents are filed as part of the Annual Report on Form 10-K: |
(1) | Financial Statements. |
Page | ||||||
---|---|---|---|---|---|---|
Report of Independent Registered Public Accounting Firm | 39 | |||||
Consolidated Statements of Operations | 40 | |||||
Consolidated Balance Sheets | 41 | |||||
Consolidated Statements of Cash Flows | 42 | |||||
Consolidated Statements of Shareholders’ Equity | 43 | |||||
Notes to Consolidated Financial Statements | 44 through 74 |
(2) | Financial Statement Schedules. |
Schedule II—Valuation and Qualifying Accounts | Page 79 |
(3) | Exhibits: |
(3 | ) (i) | Restated Articles of Incorporation of the Company, as amended. | ||||||||
(ii) | Bylaws of the Company, as amended. Incorporated by reference to Exhibit 3(ii) of Form 10-K filed August 14, 2003, SEC File No. 1-04837. |
75
(4) | (i) | 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. | ||||||||
(ii) | Rights Agreement dated as of June 21, 2000, between Tektronix, Inc. and ChaseMellon Shareholder Services, L.L.C. Incorporated by reference to Exhibit (4) of Form 8-K filed June 28, 2000, SEC File No. 1-04837. | |||||||||
(10) | +(i) | Stock Incentive Plan, as amended. Incorporated by reference to Exhibit 10(ii) of Form 10-Q filed April 12, 1993, SEC File No. 1-04837. | ||||||||
+(ii) | Restated Annual Performance Incentive Plan, as amended. Incorporated by reference to Exhibit 10(iii) of Form 10-Q filed October 14, 2003, SEC File No. 1-04837. | |||||||||
+(iii) | Restated Deferred Compensation Plan. Incorporated by reference to Exhibit 10(i) of Form 10-Q filed December 21, 1984, SEC File No. 1-04837. | |||||||||
+(iv) | Retirement Equalization Plan, Restatement. Incorporated by reference to Exhibit (10)(v) of Form 10-K filed August 22, 1996, SEC File No. 1-04837. | |||||||||
+(v) | Indemnity Agreement entered into between the Company and its named officers and directors. Incorporated by reference to Exhibit 10(ix) of Form 10-K filed August 20, 1993, SEC File No. 1-04837. | |||||||||
+(vi) | Executive Severance Agreement dated May 17, 2001 entered into between the Company and its Chief Executive Officer, Richard H. Wills. Incorporated by reference to Exhibit 10(vii) of Form 10-K filed August 2, 2001, SEC File No. 1-04837. | |||||||||
+(vii) | Form of Executive Severance Agreement entered into between the Company and its other named officers (other than the Chief Executive Officer) | |||||||||
+(viii) | 2001 Non-Employee Directors Compensation Plan. Incorporated by reference to Exhibit 10 of Form 10-Q filed October 1, 2001, SEC File No. 1-04837. | |||||||||
+(ix) | 1998 Stock Option Plan, as amended. Incorporated by reference to Exhibit 10(i) of Form 10-Q filed October 8, 1999, SEC File No. 1-04837. | |||||||||
+(x) | Deferred Compensation Plan, as amended. Incorporated by reference to Exhibit 10(i) of Form 10-Q filed October 14, 2003, SEC File No. 1-04837. | |||||||||
+(xi) | Stock Deferral Plan, as amended. Incorporated by reference to Exhibit 10(ii) of Form 10-Q filed October 14, 2003, SEC File No. 1-04837 | |||||||||
+(xii) | Executive Compensatory Arrangement. Incorporated by reference to Exhibit 10(xiv) of Form 10-K filed August 12, 2002, SEC File No. 1-04837. | |||||||||
+(xiii) | 2001 Stock Option Plan. Incorporated by reference to Exhibit 10(xiv) of Form 10-K filed August 14, 2003, SEC File No. 1-04837. | |||||||||
+(xiv) | 2002 Stock Incentive Plan. Incorporated by reference to Exhibit 10 of Form 10-Q filed October 4, 2002, SEC File No. 1-04837. | |||||||||
+(xv) | Agreement and plan of merger dated as of June 29, 2004, among Tektronix, Inc., Inet Technologies, Inc., Impala Merger Corp. and Impala Acquisition Co. LLC. Incorporated by reference to Exhibit (2) of Form 8-K filed June 30, 2004, SEC File No. 1-04837. | |||||||||
(14) | (i) | Code of Ethics | ||||||||
(ii) | Business Practices Guidelines | |||||||||
(21) | Subsidiaries of the registrant. | |||||||||
(23) | Independent Auditors’ Consent. | |||||||||
(24) | Powers of Attorney. | |||||||||
(31.1) | 302 Certification, Chief Executive Officer. | |||||||||
(31.2) | 302 Certification, Chief Financial Officer. | |||||||||
(32.1) | 906 Certification, Chief Executive Officer. | |||||||||
(32.2) | 906 Certification, Chief Financial Officer. |
76
(b) | Reports on Form 8-K. |
77
SIGNATURES
By: | /s/ COLIN L. SLADE Colin L. Slade, Senior Vice President and Chief Financial Officer |
Dated: August 12, 2004
Signature | Capacity | Date | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
/s/ RICHARD H. WILLS* Richard H. Wills | Chairman of the Board, President, and Chief Executive Officer | August 12, 2004 | ||||||||
/s/ COLIN L. SLADE Colin L. Slade | Senior Vice President and Chief Financial Officer, Principal Financial and Accounting Officer | August 12, 2004 | ||||||||
/s/ PAULINE LO ALKER* Pauline Lo Alker | Director | August 12, 2004 | ||||||||
/s/ A. GARY AMES* A. Gary Ames | Director | August 12, 2004 | ||||||||
/s/ GERRY B. CAMERON* Gerry B. Cameron | Director | August 12, 2004 | ||||||||
/s/ DAVID N. CAMPBELL* David N. Campbell | Director | August 12, 2004 | ||||||||
/s/ FRANK C. GILL* Frank C. Gill | Director | August 12, 2004 | ||||||||
/s/ MERRILL A. MCPEAK* Merrill A. McPeak | Director | August 12, 2004 | ||||||||
/s/ CYRIL J. YANSOUNI* Cyril J. Yansouni | Director | August 12, 2004 | ||||||||
* By/s/ JAMES F. DALTON James F. Dalton as attorney-in-fact | August 12, 2004 |
78
Tektronix, Inc. and Subsidiaries
Schedule II—Valuation and Qualifying Accounts
For the years ended May 25, 2002, May 31, 2003 and May 29, 2004
(Dollars in Thousands)
Description | Beginning balance | Charged to costs and expenses | Charged to other accounts | Deductions | Ending balance | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2002: | ||||||||||||||||||||||
Allowance for doubtful accounts | $ | 4,488 | $ | 1,064 | $ | — | $ | 521 | $ | 5,031 | ||||||||||||
Deferred tax assets valuation allowance | 30,484 | 319 | — | — | 30,803 | |||||||||||||||||
2003: | ||||||||||||||||||||||
Allowance for doubtful accounts | $ | 5,031 | $ | (703 | ) | $ | — | $ | 572 | $ | 3,756 | |||||||||||
Deferred tax assets valuation allowance | 30,803 | (5,844 | ) | — | — | 24,959 | ||||||||||||||||
2004: | ||||||||||||||||||||||
Allowance for doubtful accounts | $ | 3,756 | $ | 671 | $ | — | $ | (1,414 | ) | $ | 3,013 | |||||||||||
Deferred tax assets valuation allowance | 24,959 | (1,776 | ) | — | — | 23,183 |
79
EXHIBIT INDEX
Exhibit No. | Exhibit Description | ||||
---|---|---|---|---|---|
(3) | (i) | Restated Articles of Incorporation of the Company, as amended. | |||
(ii) | Bylaws of the Company, as amended. Incorporated by reference to Exhibit 3(ii) of Form 10-K filed August 14, 2003, SEC File No. 1-04837. | ||||
(4) | (i) | 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. | |||
(ii) | Rights Agreement dated as of June 21, 2000, between Tektronix, Inc. and ChaseMellon Shareholder Services, L.L.C. Incorporated by reference to Exhibit (4) of Form 8-K filed June 28, 2000, SEC File No. 1-04837. | ||||
(10) | +(i) | Stock Incentive Plan, as amended. Incorporated by reference to Exhibit 10(ii) of Form 10-Q filed April 12, 1993, SEC File No. 1-04837. | |||
+(ii) | Restated Annual Performance Incentive Plan, as amended. Incorporated by reference to Exhibit 10(iii) of Form 10-Q filed October 14, 2003, SEC File No. 1-04837. | ||||
+(iii) | Restated Deferred Compensation Plan. Incorporated by reference to Exhibit 10(i) of Form 10-Q filed December 21, 1984, SEC File No. 1-04837. | ||||
+(iv) | Retirement Equalization Plan, Restatement. Incorporated by reference to Exhibit (10)(v) of Form 10-K filed August 22, 1996, SEC File No. 1-04837. | ||||
+(v) | Indemnity Agreement entered into between the Company and its named officers and directors. Incorporated by reference to Exhibit 10(ix) of Form 10-K filed August 20, 1993, SEC File No. 1-04837. | ||||
+(vi) | Executive Severance Agreement dated May 17, 2001 entered into between the Company and its Chief Executive Officer, Richard H. Wills. Incorporated by reference to Exhibit 10(vii) of Form 10-K filed August 2, 2001, SEC File No. 1-04837. | ||||
+(vii) | Form of Executive Severance Agreement entered into between the Company and its other named officers (other than the Chief Executive Officer) | ||||
+(viii) | 2001 Non-Employee Directors Compensation Plan. Incorporated by reference to Exhibit 10 of Form 10-Q filed October 1, 2001, SEC File No. 1-04837. | ||||
+(ix) | 1998 Stock Option Plan, as amended. Incorporated by reference to Exhibit 10(i) of Form 10-Q filed October 8, 1999, SEC File No. 1-04837. | ||||
+(x) | Deferred Compensation Plan, as amended. Incorporated by reference to Exhibit 10(i) of Form 10-Q filed October 14, 2003, SEC File No. 1-04837. | ||||
+(xi) | Stock Deferral Plan, as amended. Incorporated by reference to Exhibit 10(ii) of Form 10-Q filed October 14, 2003, SEC File No. 1-04837 | ||||
+(xii) | Executive Compensatory Arrangement. Incorporated by reference to Exhibit 10(xiv) of Form 10-K filed August 12, 2002, SEC File No. 1-04837. | ||||
+(xiii) | 2001 Stock Option Plan. Incorporated by reference to Exhibit 10(xiv) of Form 10-K filed August 14, 2003, SEC File No. 1-04837. | ||||
+(xiv) | 2002 Stock Incentive Plan. Incorporated by reference to Exhibit 10 of Form 10-Q filed October 4, 2002, SEC File No. 1-04837. | ||||
+(xv) | Agreement and plan of merger dated as of June 29, 2004, among Tektronix, Inc., Inet Technologies, Inc., Impala Merger Corp. and Impala Acquisition Co. LLC. Incorporated by reference to Exhibit (2) of Form 8-K filed June 30, 2004, SEC File No. 1-04837. | ||||
(14) | (i) | Code of Ethics | |||
(ii) | Business Practices Guidelines | ||||
(21) | Subsidiaries of the registrant. | ||||
(23) | Independent Auditors’ Consent. | ||||
(24) | Powers of Attorney. | ||||
(31.1) | 302 Certification, Chief Executive Officer. | ||||
(31.2) | 302 Certification, Chief Financial Officer. | ||||
(32.1) | 906 Certification, Chief Executive Officer. | ||||
(32.2) | 906 Certification, Chief Financial Officer. |