================================================================================
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, 1999 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 (Zip Code)
offices)
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
Series A No Par Preferred New York Stock Exchange
Shares Purchase Rights
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 nonaffiliates of the
Registrant was approximately $879,268,521 at August 2, 1999.
At August 2, 1999 there were 47,077,115 Common Shares of the Registrant
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
Part of 10-K into
Document which incorporated
-------- ------------------
Registrant's Proxy Statement Part III
dated August 20, 1999
1999 Annual Report to Shareholders Parts I, II and IV
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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 manufactures and distributes electronic products within three
broad segments through three major business divisions: Measurement, Color
Printing and Imaging, and Video and Networking. Measurement products include a
broad range of instruments designed to allow an engineer or technician to view,
measure, test or calibrate electrical circuits, mechanical motion, sound or
radio waves. Color Printing and Imaging products include a comprehensive line of
computer network capable color printers, ink and related supplies. Video and
Networking products include video distribution, production, storage and newsroom
automation products.
On June 24, 1999, Tektronix, Inc. announced that its Board of Directors
approved a plan to separate the Company into two independent publicly traded
companies. One will contain Tektronix' Measurement Business Division, and the
other will contain the Color Printing and Imaging Division. Tektronix plans an
initial public offering for approximately 15% of the new color printing and
imaging company prior to the end of the current fiscal year. The remaining
shares would be distributed to Tektronix shareholders at some time after the
offering.
On August 9, 1999, the Company announced that it had reached an agreement
to sell substantially all of the Company's Video and Networking Division,
excluding the VideoTele.com product family, to a private investment group. The
VideoTele.com product family merged into the Measurement Business Division
effective May 30, 1999. The new privately held company will be named Grass
Valley Group Inc., and Tektronix will hold a 10 percent equity interest. The
companies have signed a tentative agreement, subject to adjustments at the date
of consummation, and expect to close the transaction by the end of September
1999.
Products
--------
The table below sets forth the business divisions' contributions to total
net sales of the Company for the last three fiscal years (in thousands of
dollars).
Measurement Color Printing Video and
Business and Imaging Networking
------------------- ------------------- -------------------
Amount Percent Amount Percent Amount Percent
--------- ------- --------- ------- --------- -------
1997 $ 852,827 44.0% $ 638,456 32.9% $ 448,799 23.1%
1998 $ 962,858 46.2% $ 728,697 34.9% $ 394,247 18.9%
1999 $ 844,882 45.4% $ 725,354 39.0% $ 291,254 15.6%
Revenues, earnings from operations and other financial data of the
Company's business segments for the three years ended May 29, 1999, are set
forth on page 34 of the Company's 1999 Annual Report to Shareholders and are
incorporated herein by reference.
Measurement Business Products
-----------------------------
Tektronix has provided high quality test and measurement equipment for more
than fifty years. 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 semiconductor,
computer, telecommunications, video, communication network, aerospace, consumer
electronics and education industries.
1
Semiconductors and Computers
Tektronix' Measurement Business products, including oscilloscopes and logic
analyzers are used by customers in connection with the development of
high-performance semiconductors and computers.
o Tektronix pioneered the development of high precision oscilloscopes
over 50 years ago and holds the leading market share in this category.
The oscilloscope is the primary debug tool for the design engineer.
Oscilloscopes are used when an electrical signal needs to be viewed,
measured, tested or verified. Tektronix oscilloscopes are available in
a wide range of configurations (handheld to desktop), bandwidths and
other performance characteristics. Tektronix has designed a
substantial portion of its oscilloscope product line to provide
consistent "architecture." This consistency allows customers reduced
learning time and reduces the time required by the Company to develop
new products. Oscilloscopes are useful across a wide range of
industries in manufacturing, test and design applications and can be
adapted to measure mechanical motion (vibration), sound, light, heat,
pressure, strain and velocity.
Introduced by Tektronix in fiscal 1999, the next generation Digital
Phosphor Oscilloscope technology gives design engineers a new tool for
quickly finding faults in complex electronic circuits, such as those
in cell phones, pagers, high speed modems and embedded digital
electronics.
o Logic analyzers are also important debug tools for the design engineer
to capture, display and examine streams of data coded as binary digits
(bits), including streams that occur simultaneously over many
channels. Tektronix logic analyzers, the TLA 700 series, utilize
Microsoft's Windows operating system and offer performance leadership
to develop next generation microprocessor systems and high speed
computer architectures.
Communications and Video
Reliable, accurate, and repeatable testing is the only way to offer high
quality links that support ever-expanding communications services. The products
developed by companies in the semiconductor and computer industries are critical
components of products created by communications and video equipment
manufacturers. Tektronix Measurement Business products, including protocol
analyzers, transmission test sets, radio frequency (RF) analyzers and digital
video test products are used in the communications and video industries.
o The Tektronix protocol analysis product line was acquired from Siemens
in 1997. These industry-leading products monitor and simulate the
exchange of data between telecommunications and information technology
facilities, measuring and testing standardized interfaces of network
components and instruments.
o Transmission test products help operators verify network functionality
from the physical to the protocol layers. Tektronix offers a full
complement of communications test sets for optical DWDM systems to
ensure transmission quality. For optical-layer testing, Tektronix
provides optical spectrum analyzers, power meters, optical time domain
reflectometers (OTDRs), and wave length meters. Products used for
physical-layer test include oscilloscopes, BERTs, O/E converters, and
logic analyzers. Link-layer test equipment includes the ST2400
SDH/SONET Test Set and the CTS850 SDH/PDH and Jitter/Wander Test Set.
o RF analyzers display and measure signal amplitude versus frequency
rather than amplitude versus time (as is the case for oscilloscopes).
These products are used to design, check and adjust communications
transmitting and receiving equipment. In addition to manufacturing its
own line of RF analyzers, Tektronix sells and supports the wireless RF
test products from Rohde & Schwarz in the United States, Canada and
Mexico. In particular, these products provide solutions in the areas
of Personal Communications Services (PCS) mobile phones and base
stations. Tektronix also distributes RF test products from Advantest
in the United States, Canada and Mexico.
2
o Digital video test products include MPEG digital video compression
testers and picture quality analysis and monitoring products.
Tektronix also offers the broadest line of digital test and
measurement instruments for video and audio, ranging from handheld
devices to full rack instruments. Tektronix has a long history with
the television broadcast industry and has been awarded eight Emmy
awards for technical excellence.
Communication Network Operations
As the telecom industry evolves to digital video and Internet-based data
networks, operators must be able to perform complete compliance testing for the
many standards that govern telecom transmission -- on the physical,
transmission, protocol, and other layers. The equipment created by
communications and video equipment manufacturers is used by the communications
network operators to operate the global networks that carry Internet, video and
wired/wireless voice traffic. Many Tektronix Measurement Business products,
including cable and fiber optic test products, network monitoring, and high
quality streaming video products, are used in this industry, with equipment
manufacturers recommending test products that are appropriate for the
installation and maintenance of the communications and video equipment they
produce.
o Tektronix network monitoring technologies and related product lines
were acquired in February 1999 from Necsy SpA, located in Padova,
Italy. These products perform services designed to measure voice, data
and fax transmission quality for fixed and mobile networks. Other
products include systems to stress mobile networks from air interface
to base station and perform tests for software verification, load,
roaming and system integration for all components in the system.
o VideoTele.com products support the transmission, storage and
distribution of video over networks, addressing the growing need to
move digital video data. The VideoTele.com (VTC) business within the
Measurement Business Division provides high quality streaming video
products to networking, telecommunications and broadcast service
providers who deploy broadcast-quality video through their standard
network infrastructure for remote video collaboration and video
trunking.
Color Printing and Imaging Products
-----------------------------------
Tektronix' color printing and imaging products include color printers and
related supplies. Color printers produce full color hard copies of images
produced by personal computers, workstations and terminals. The use of color in
computing and printing has been stimulated by enhancements in the underlying
microprocessor technology of personal computers and workstations, by large
system and peripheral storage capabilities, by enhancements in computer display
capability, and by the increased use of the Internet and business intranets. As
businesses look to enhance productivity and corporate branding and identity,
they are increasingly depending on fast color printing for a wide range of
documents, including letterhead, presentations created by computer programs such
as Microsoft's PowerPoint, printed Web pages and newsletters.
Tektronix has been manufacturing and distributing color printers for over
thirteen years. Early users were graphics artists, engineers and scientists.
Workgroup office users have now become significant users of the Company's color
printers. The Company's Phaser(R) printers, are compatible with the industry
standard Adobe PostScript 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. Phaser color printers utilize laser technology and a proprietary
printing technology that consumes solid ink sticks marketed as ColorStix(R). The
solid ink, of the Company's own formulation, is melted and then jetted onto
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. Solid ink color printers combine laser-class speed, low cost
per page, and high quality output. Tektronix' printers are controlled by
software designed and implemented by the Company.
3
Color printing products include:
o The Phaser 740 and 780 color laser printers and the Phaser 840 color
solid ink printer with a variety of configurations designed to meet
customer needs from general office use to graphics design.
o Related supplies, including solid ink, transparencies, and laser toner
cartridges.
Video and Networking Products
-----------------------------
Driven by government mandates for digital signal transmission, emerging
opportunities in cable and digital satellite channels, and the rise of the
Internet as a content-distribution medium, broadcasters and video professionals
are steadily converting their content production and distribution facilities
from analog to digital technologies. With airtime worth hundreds of thousands of
dollars per second and viewers willing to switch channels at the first hint of
an interruption, these facilities must have high levels of reliability and
performance. Tektronix' video products are used in the transition to digital at
major broadcast outlets and video production companies around the world.
The Company's video products, which are produced at its facilities in
Nevada City, California, are used by the television industry for production and
distribution of digital content or programming. Tektronix offers award-winning
production equipment, including switchers, routers, modular products, and
digital video servers.
Tektronix Grass Valley brand of production switchers take video signals
from a variety of sources (for example, archived video from a Tektronix
Profile(R) digital video server, shots from a camera in the field, and another
set in the studio), combine or mix them with effects (such as the background
behind a weatherman), and send them to different places in the studio or
actually air them. Tektronix Grass Valley routing or master control products
provide a central point for video, audio and data to enter and then be switched
to another location. Signals from various sources (for example, cameras, digital
disks, VTRs, etc.) in broadcast facilities need to be "routed" to other
locations to create a finished product. Tektronix Grass Valley modular products
are sometimes referred to as facility "glue," because they combine video signals
coming into, going out of, and moving around television facilities. Modular
products are relatively small and inexpensive devices that fall into a number of
general categories (for example, distribution amplifiers, timing products,
converters such as encoders and decoders, and signal processors). Modular
products convert, translate, distribute and process various video and audio
signals so that they may be used by other devices.
Tektronix' Profile digital video server is used in the worldwide
broadcast/video digital transition. The Profile digital video server is
basically a computer-based digital video recorder which eliminates manual
exchange of and maintenance costs associated with video tapes. The Profile
digital video server saves time for deadline-driven journalists and broadcasters
who need to instantaneously and simultaneously view and edit material. For
example, the server allows the editing and playback of stories and highlights
while they are being fed from the field to the station. Profile's ability to
store and manipulate vast amounts of video "data" is key to helping
broadcasters, cable networks, direct-to-home satellite services, and
professional TV production facilities make the transition to digital. Profile
products also contribute to creating network revenue, as they are used to insert
commercials into broadcasts and to "regionalize" national broadcasts for local
audiences.
Video and networking products include:
o Video distribution products covering multiple video formats used by
the broadcast industry in standard and high-definition television,
including master control switchers and routing and control systems.
o Video production products used by broadcasters and their production
artists for live broadcast, mobile news, sports production and
post-production applications, including video production switchers and
video editing and special effects tools.
4
o Profile digital video servers used for signal storage and media
access.
o Newsroom automation products. These products are primarily
manufactured by Avstar Systems, LLC and distributed exclusively by
Tektronix.
During the second quarter of fiscal 1999, the Company sold to Network
Computing Devices, Inc., the assets associated with the Network Displays
business unit of the Video and Networking Division.
During the third quarter of fiscal 1999, the Company entered into an
agreement with Avid Technology, Inc. to jointly form Avstar Systems, LLC, a
venture to fund and develop newsroom computer systems and related software
applications by combining companies' newsroom computer systems technology and
personnel. Avstar Systems products are available exclusively through Tektronix'
worldwide sales channels.
During fiscal 1999, Video and Networking discontinued development,
manufacturing and sales of non-linear digital editing products sold under the
Lightworks name.
Manufacturing
-------------
During fiscal 1994, the Company sold its integrated circuits operation to
Maxim Integrated Products, Inc. (Maxim) and transferred its hybrid circuits
operation to a joint venture with Maxim. In early 1995, the Company 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 component operation divestitures, the Company's
manufacturing operations are no longer highly integrated. The Company purchases
components from each of the aforementioned companies. Tektronix currently holds
27% of the outstanding common stock of Merix.
Tektronix also purchases raw materials, additional components, data
processing equipment and computer peripheral devices for use in its products and
systems from a variety of third-party suppliers. Although supply shortages are
experienced from time to time, the Company currently believes that it will be
able to acquire the required materials and components as needed. Because some of
these components are unique, disruptions in supply can have an effect on the
Company's manufacturing operations.
Tektronix owns substantially all of its manufacturing facilities. Its
primary manufacturing facilities are located in or near the Portland, Oregon
metropolitan area. Additional software and product development occurs in Boston,
Massachusetts and Bangalore, India. Some of Tektronix' products, components and
accessories are assembled in the People's Republic of China. A logistics center
is maintained in Heerenveen, The Netherlands. Grass Valley products are
manufactured in Nevada City, California. In June of 1998, the Company purchased
certain assets of CAM Advanced Technologies (M) Sdn Bhd, a printer component
manufacturer with manufacturing facilities in Penang, Malaysia. The acquisition
allows for lower cost color printer component manufacturing capacity.
Telecommunications test products are manufactured at a plant in Berlin acquired
in connection with the purchase from Siemens described above. See Item 2,
"Properties," for additional information regarding 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 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, Poland,
Spain, The Netherlands, Belgium, Sweden, Denmark, Norway, Finland, Switzerland,
Australia, Austria, Hong Kong, Taiwan, Korea, Singapore, China, India, Argentina
and Mexico are made through the Company, its subsidiaries and their field
offices, or independent distributors and resellers located in principal market
areas. Certain of the Company's independent distributors also sell products
manufactured
5
by the Company's competitors. Except for Grass Valley and VTC products, sales in
Japan are made by Sony/Tektronix Corporation. Grass Valley products are sold in
Japan through a subsidiary. Tektronix' principal customers are electronic and
computer equipment component manufacturers and service providers, communications
companies, 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 to both equipment users and original
equipment manufacturers.
Most Tektronix product sales are sold as standard catalog items. Tektronix
attempts to fill its orders as promptly as possible.
At May 29, 1999, Tektronix' unfilled product orders amounted to
approximately $137 million, as compared to approximately $134 million at May 30,
1998. Tektronix expects that substantially all unfilled product orders at May
29, 1999 will be filled during its current fiscal year. Orders received by the
Company are subject to cancellation by the customer.
International Sales
-------------------
The following table sets forth the breakdown between U.S. and international
sales, based upon purchaser location, for each of the last three fiscal years
(in thousands of dollars):
U.S. Sales International Sales
--------------------- ---------------------
Amount Percent Amount Percent
----------- ------- ----------- -------
1997 $ 1,027,294 53.0% $ 912,788 47.0%
1998 $ 1,077,649 51.7% $ 1,008,153 48.3%
1999 $ 946,036 50.8% $ 915,454 49.2%
See "Business Segments" in the Notes to Consolidated Financial Statements
on page 34 of the Company's 1999 Annual Report to Shareholders, containing
information on sales and long-lived assets by geographic area (with sales based
upon the location of the purchaser), which is incorporated by reference.
Tektronix products are sold worldwide. European sales are made principally
to customers in Germany, France, the United Kingdom, Switzerland, Italy, Spain,
Sweden, and The Netherlands. Other international sales are principally to
customers located principally in Japan, Korea, Canada, Australia, the People's
Republic of China and Hong Kong. International sales include both export sales
from the United States and sales by non-U.S. subsidiaries. Fluctuating foreign
currency 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 foreign currency exchange rate fluctuation, although the
Company is unable to predict the effect of these factors on its business. The
Company hedges certain foreign currency exchange rate 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 for research and development during fiscal years ended May 31,
1997, May 30, 1998 and May 29, 1999 amounted to approximately $188,192,000,
$203,312,000 and $204,655,000, respectively. Substantially all of these funds
were Company generated.
Research and development activities are conducted by research and design
groups and specialized product development groups within the three business
divisions. 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.
6
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 of 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 processes 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 customer service,
product performance, technology, 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,
and a leader in the rapidly growing telecommunications market. In general,
Tektronix competes with a number of companies in specialized areas of other test
and measurement products and one large broad line measurement products supplier,
Agilent (formerly the measurement business of Hewlett Packard).
Tektronix is also the leader in unit sales of office workgroup laser-class
color printers, including color laser and solid ink jet color printers. 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 printers 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.
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 the leading supplier of multi-channel disk-based recording
devices to the professional television industry.
Employees
---------
At May 29, 1999, Tektronix had 7,571 employees, of whom 2,178 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. The Company operates a licensed
hazardous waste management facility at its Beaverton campus. Although future
regulatory actions cannot be predicted with certainty, compliance with
environmental laws has not had and
7
is not expected to have a material effect upon the capital expenditures,
earnings or competitive position of the Company.
Executive Officers of the Company
---------------------------------
The following are the executive officers of the Company:
Has Served As
An Executive
Officer of
Name Position Age Tektronix Since
- ------------------- --------------------------------- --- ---------------
Jerome J. Meyer Chairman of the Board, 61 1990
Chief Executive Officer
and President
William D. Walker Vice Chairman of the Board, 68 1992 (also
Director served in 1990
and from 1969
to 1984)
Carl W. Neun Senior Vice President 55 1993
and Chief Financial Officer
James F. Dalton Vice President, General 40 1998
Counsel and Secretary
Gerald K. Perkel Vice President and President, 43 1995
Color Printing and Imaging
Division
Richard H. Wills Vice President and President, 44 1997
Measurement Business Division
Timothy E. Vice President and 46 1991
Thorsteinson President, Video and
Networking Division
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 named executive officers have been employed by Tektronix in
management positions for the last five years except for Mr. William D. Walker,
who is not an employee of the Company and has been a director of the Company
since 1980.
Item 2. Properties.
The Company's offices are located at 26600 S.W. Parkway, Wilsonville,
Oregon. Listed below are the principal facilities. All properties are maintained
in good working order and, except for those held for sale or lease, are
substantially utilized and are suitable for the conduct of its business. The
Company believes that its facilities are adequate for their intended uses.
Tektronix owns an industrial park (the "Howard Vollum Park") near
Beaverton, Oregon. The Howard Vollum Park includes 20 buildings arranged in a
campus-like setting and containing an aggregate of approximately 2.2 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 has entered into an agreement to sell
approximately 55 acres on
8
the Vollum site, subject to a number of contingencies. The Company owns an 8.8
acre parcel of unimproved land, located immediately to the west of Howard Vollum
Park. This parcel is in the process of being sold. Within the past six months,
Tektronix made a road dedication of 19 acres to Washington County.
A facility leased in Bend, Oregon contains 42,000 square feet of vacant
manufacturing space currently available for sub-lease.
The Company's Color Printing and Imaging Division and corporate
headquarters occupy four buildings containing approximately 800,000 square feet
on property owned by the Company in Wilsonville, Oregon, approximately 16 miles
south of Howard Vollum Park.
Tektronix' Video and Networking Division also has operating facilities in
Nevada City, California comprised of approximately 151,000 square feet on owned
property. The Company has entered into an agreement to sell the Video and
Networking Division and to lease the Nevada City site to the new company.
The buildings described above were constructed after 1957. Warehouses,
production facilities and other critical operations are protected by fire
sprinkler installations. Most manufacturing, office and engineering areas are
air-conditioned.
A 92,600 square foot logistics center leased by Tektronix is located in
Heerenveen, The Netherlands. Tektronix owns a manufacturing plant for color
printer components, consisting of approximately 160,000 square feet in Penang,
Malaysia.
Field offices near London (83,000 square feet) and Sydney, Australia
(23,000 square feet) are located in buildings owned by the Company. Both of
these offices are currently in use but are for sale. Tektronix expects to close
the sales of these properties within the next six months. Field Offices in other
foreign countries occupy leased premises of approximately 911,000 square feet.
Tektronix' U.S. Sales and Service field offices aggregate approximately
239,666 square feet of leased space, of which 28,000 square feet is vacant.
Tektronix also owns a facility in Nanticoke, Pennsylvania (approximately 9,000
square feet), which is leased to another company.
Item 3. Legal Proceedings.
There are no material pending legal proceedings.
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
--------------------------
Statements and information included in this Form 10-K that relate to the
Company's goals, strategies and expectations as to future results, events and
expectations are based on the Company's current expectations. They constitute
forward-looking statements subject to a number of risk factors that could cause
actual results to differ materially from those currently expected or desired.
As with many high technology companies, risk 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: worldwide economic
and business conditions in the electronics industry, including the continuing
effects of the Asian economic crisis and its secondary effects on demand for the
Company's products; competitive factors, including pricing pressures,
technological developments and new products offered by competitors; changes in
product and sales mix, and the related effects on gross margins; the Company's
ability to deliver
9
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; and 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.
Risk factors related to the plan to separate the Measurement and Color
Printing and Imaging businesses include, but are not limited to: the ability of
Tektronix to successfully separate and operate the Measurement and Color
Printing and Imaging businesses and complete the strategic restructuring plan;
the potential disruption in the Company's business and to its employee base
during this process; risks that a proposed initial public offering for the
separated Color Printing and Imaging entity and the subsequent distribution of
stock to Tektronix shareholders will not be feasible or will not be successfully
consummated; and risks that the Company will be unable to complete the sale of
the Video and Networking Division.
Tektronix has other risk factors in its business, including but not limited
to: the Company's ability to successfully implement the strategic direction and
restructuring actions announced in fiscal 1999, including reducing its
expenditures; the effects of year 2000 compliance issues; the timely
introduction of new products scheduled during the current year, which could be
affected by engineering or other development program slippage, the ability to
ramp up production or to develop effective sales channels; customers' acceptance
of and demand for new products; changes in the regulatory environment affecting
the transition to high-definition television within the time frame anticipated
by the Company; the significant operational and strategic uncertainties the
Company faces within the Video and Networking Division; and other risk factors.
The Company may make other forward-looking statements from time to time.
Forward-looking statements speak only as of the date made. The Company
undertakes no obligation to publicly release the result of any revisions to
forward-looking statements which may be made to reflect subsequent events or
circumstances or to reflect the occurrence of unanticipated events.
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 39 of the
Company's 1999 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 40 of the
Company's 1999 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 19 through 24 of
the Company's 1999 Annual Report to Shareholders and is incorporated herein by
reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The information required by this item is included on pages 22 and 23 of the
Company's 1999 Annual Report to Shareholders and is incorporated herein by
reference.
10
Item 8. Financial Statements and Supplementary Data.
The information required by this item is included on pages 26 through 39 of
the Company's 1999 Annual Report to Shareholders and is incorporated herein by
reference.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
None.
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 through 9 of the
Company's Proxy Statement dated August 20, 1999.
The information required by this item regarding executive 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) Beneficial Ownership Reporting Compliance" on page 20 of the
Company's Proxy Statement dated August 20, 1999.
Item 11. Executive Compensation.
The information required by this item is included under "Directors'
Compensation" and "Executive Compensation" on pages 9 through 14 of the
Company's Proxy Statement dated August 20, 1999.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information required by this item is included under "Security Ownership
of Certain Beneficial Owners" and "Election of Directors" on pages 1 and 2 and 7
though 9 of the Company's Proxy Statement dated August 20, 1999.
Item 13. Certain Relationships and Related Transactions.
None.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8 - K
(a) The following documents are filed as part of this report:
(1) Financial Statements.
The following documents are included in the Company's 1999 Annual Report to
Shareholders at the pages indicated and are incorporated herein by reference:
Page in 1999 Annual
Report to Shareholders
----------------------
Independent Auditors' Report 25
Consolidated Statements of Operations 26
Consolidated Balance Sheets 27
Consolidated Statements of Cash Flows 28
Consolidated Statements of Shareholders' Equity 29
Notes to Consolidated Financial Statements 30 through 39
11
(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, and for which summarized
financial information must be provided, 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 October 9, 1998, 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.
(iii) 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.
(10)+(i) 1982 Stock Option Plan, as amended. Incorporated by
reference to Exhibit 10(iii) of Form 10-K dated August
22, 1989, SEC File No. 1-4837.
+(ii) Stock Incentive Plan, as amended. Incorporated by
reference to Exhibit 10(ii)of Form 10-Q dated April 9,
1993, SEC File No. 1-4837.
+(iii) Restated Annual Performance Improvement Plan.
Incorporated by reference to Exhibit 10(i) of Form 10-Q
dated April 9, 1993, SEC File No. 1-4837.
+(iv) Restated Deferred Compensation Plan. Incorporated by
reference to Exhibit 10(i)of Form 10-Q dated December
20, 1984, SEC File No. 1-4837.
+(v) Retirement Equalization Plan, Restatement. Incorporated
by reference to Exhibit (10)(v) of Form 10-K dated
August 20, 1996, SEC File No. 1-4837.
+(vi) 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,
1996, SEC File No. 1-4837.
+(vii) Form of 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.
+(viii) Executive Compensation and Benefits Agreement (Jerome J.
Meyer) 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.
+(ix) Amendment to Supplemental Executive Retirement Agreement
(Jerome J. Meyer). Incorporated by reference to Exhibit
10(ii) of Form 10-Q dated October 7, 1994, SEC File No.
1-4837.
12
+(x) Amendment to Supplemental Executive Retirement Agreement
(Jerome J. Meyer) dated June 16, 1998. Incorporated by
reference to Exhibit (10)(x) of Form 10-K for the fiscal
year ended May 30, 1998, SEC File No. 1-4837.
+(xi) Executive Compensation and Benefits Agreement (Carl W.
Neun) 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.
+(xii) Amendment to Supplemental Executive Retirement Agreement
(Carl W. Neun) dated September 24, 1997. Incorporated by
reference to Exhibit 10(i) of Form 10-Q dated January 13,
1998, SEC File No. 1-4837.
(xiii) 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.
+(xiv) 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.
+(xv) Supplemental Executive Retirement Plan for named
executive officers dated September 26, 1996. Incorporated
by reference to Exhibit 10(xvi) of Form 10-K dated May
31, 1997, SEC File No. 1-4837.
+(xvi) Severance and Bonus Agreement with Tim Thorsteinson,
dated April 9, 1999.
+(xvii) Amendment to Non-Employee Directors Stock Compensation
Plan, effective June 23, 1999.
+(xviii) 1998 Stock Option Plan. Incorporated by reference to
Exhibit 10(i) of Form 10-Q for the quarter ended August
19, 1998, SEC File No. 1-4837.
(xix) Standstill Agreement among the Company and Relational
Investors, et al, dated July 6, 1999. Incorporated by
reference to Exhibit 5 of Schedule 13D filed July 6,
1999, SEC File No. 5-10548.
(13) Portions of the 1999 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.
- --------------
+ 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.
13
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 26, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Capacity Date
- --------- -------- ----
JEROME J. MEYER* Chairman, Chief August 26, 1999
- ----------------------------- Executive Officer,
Jerome J. Meyer and President
CARL W. NEUN Senior Vice President August 26, 1999
- ----------------------------- and Chief Financial
Carl W. Neun Officer, Principal
Financial and
Accounting Officer
PAULINE LO ALKER * Director August 26, 1999
- -----------------------------
Pauline Lo Alker
A. GARY AMES * Director August 26, 1999
- -----------------------------
A. Gary Ames
GERRY B. CAMERON * Director August 26, 1999
- -----------------------------
Gerry B. Cameron
DAVID N. CAMPBELL * Director August 26, 1999
- -----------------------------
David N. Campbell
PAUL C. ELY, JR. * Director August 26, 1999
- -----------------------------
Paul C. Ely, Jr.
14
Signature Capacity Date
- --------- -------- ----
FRANK C. GILL * Director August 26, 1999
- -----------------------------
Frank C. Gill
A.M. GLEASON * Director August 26, 1999
- -----------------------------
A.M. Gleason
MERRILL A. MCPEAK * Director August 26, 1999
- -----------------------------
Merrill A. McPeak
RALPH V. WHITWORTH * Director August 26, 1999
- -----------------------------
Ralph V. Whitworth
*By JAMES F. DALTON August 26, 1999
-----------------------------
James F. Dalton
as attorney-in-fact
15
EXHIBIT INDEX
-------------
Exhibit
Number Description
------- -----------
(3)(i) Restated Articles of Incorporation, as amended.
Incorporated by reference to Exhibit (3) of Form 10-Q
dated October 9, 1998, 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.
(iii) 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.
(10)+(i) 1982 Stock Option Plan, as amended. Incorporated by
reference to Exhibit 10(iii) of Form 10-K dated August
22, 1989, SEC File No. 1-4837.
+(ii) Stock Incentive Plan, as amended. Incorporated by
reference to Exhibit 10(ii)of Form 10-Q dated April 9,
1993, SEC File No. 1-4837.
+(iii) Restated Annual Performance Improvement Plan.
Incorporated by reference to Exhibit 10(i) of Form 10-Q
dated April 9, 1993, SEC File No. 1-4837.
+(iv) Restated Deferred Compensation Plan. Incorporated by
reference to Exhibit 10(i)of Form 10-Q dated December
20, 1984, SEC File No. 1-4837.
+(v) Retirement Equalization Plan, Restatement. Incorporated
by reference to Exhibit (10)(v) of Form 10-K dated
August 20, 1996, SEC File No. 1-4837.
+(vi) 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 25,
1996, SEC File No. 1-4837.
+(vii) Form of 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.
+(viii) Executive Compensation and Benefits Agreement (Jerome J.
Meyer) 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.
Exhibit
Number Description
------- -----------
+(ix) Amendment to Supplemental Executive Retirement Agreement
(Jerome J. Meyer). Incorporated by reference to Exhibit
10(ii) of Form 10-Q dated October 7, 1994, SEC File No.
1-4837.
+(x) Amendment to Supplemental Executive Retirement Agreement
(Jerome J. Meyer) dated June 16, 1998. Incorporated by
reference to Exhibit (10)(x) of Form 10-K for the fiscal
year ended May 30, 1998, SEC File No. 1-4837.
+(xi) Executive Compensation and Benefits Agreement (Carl W.
Neun) 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.
+(xii) Amendment to Supplemental Executive Retirement Agreement
(Carl W. Neun) dated September 24, 1997. Incorporated by
reference to Exhibit 10(i) of Form 10-Q dated January 13,
1998, SEC File No. 1-4837.
(xiii) 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.
+(xiv) 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.
+(xv) Supplemental Executive Retirement Plan for named
executive officers dated September 26, 1996. Incorporated
by reference to Exhibit 10(xvi) of Form 10-K dated May
31, 1997, SEC File No. 1-4837.
+(xvi) Severance and Bonus Agreement with Tim Thorsteinson,
dated April 9, 1999.
+(xvii) Amendment to Non-Employee Directors Stock Compensation
Plan, effective June 23, 1999.
+(xviii) 1998 Stock Option Plan. Incorporated by reference to
Exhibit 10(i) of Form 10-Q for the quarter ended August
19, 1998, SEC File No. 1-4837.
(xix) Standstill Agreement among the Company and Relational
Investors, et al, dated July 6, 1999. Incorporated by
reference to Exhibit 5 of Schedule 13D filed July 6,
1999, SEC File No. 5-10548.
(13) Portions of the 1999 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.
- --------------
+ Compensatory Plan or Arrangement