---

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UNITED
  STATESSECURITIES
  AND EXCHANGE COMMISSION**Washington, D.C. 20549**

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Form 10-Q

|X|
      QUARTERLY REPORT
        PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
        EXCHANGE ACT OF 1934For
          the quarter ended November 30, 2002, or,|_|
      TRANSITION
        REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIESEXCHANGE
        ACT OF 1934


For the
  transition period from _____________________ to _____________________.

Commission
  File Number 1-4837

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TEKTRONIX,
  INC.(Exact name of registrant
  as specified in its charter)



|OREGON                                                                     | 93-0343990                             
|-------------------------------------------------------------------------- | ---------------------------------------
|                                                                           |                                        
|(State or
      other jurisdiction of
      incorporation or organization) | (IRS Employer
      Identification No.)
|                                                                           |                                        
|                                                                           |                                        
|14200 SW KARL BRAUN
      DRIVEBEAVERTON,
      OREGON                     | 97077                                  
|(Address
      of principal executive offices)                             | (Zip Code)                             

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

NOT APPLICABLE(Former name, former
  address and former fiscal year, if changed since last report)

Indicate by check mark whether
  the registrant (1) has filed all reports required to be filed by Section 13
  or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
  (or for such shorter period that the registrant was required to file such reports),
  and (2) has been subject to such filing requirements for the past 90 days. Yes |X|  
  No |_|

AT NOVEMBER 30, 2002 THERE
  WERE 86,937,572 COMMON SHARES OF TEKTRONIX, INC. OUTSTANDING.(Indicate the number
  of shares outstanding of each of the issuers classes of common stock,
  as of the latest practicable date.)

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|TEKTRONIX,
      INC. AND SUBSIDIARIES |                                                                       
|-------------------------------------- | ----------------------------------------------------------------------
|                                       |                                                                       
|INDEX                                  |                                                                       
|                                       |                                                                       
|                                       |                                                                       
|                                       |                                                                       
|PART I.FINANCIAL
      INFORMATION     |                                                                       
|                                       |                                                                       
|Item
      1.                          | Financial Statements:                                                 
|                                       |                                                                       
|                                       | Condensed
      Consolidated Statements of Operations (Unaudited) -   
|                                       | for
      the Quarter ended November 30, 2002                         
|                                       | and
      the Quarter ended November 24, 2001                         
|                                       |                                                                       
|                                       | for
      the Two Quarters ended November 30, 2002                    
|                                       | and
      the Two Quarters ended November 24, 2001                    
|                                       |                                                                       
|                                       | Condensed
      Consolidated Balance Sheets (Unaudited) -             
|                                       | November
      30, 2002 and May 25, 2002                              
|                                       |                                                                       
|                                       | Condensed
      Consolidated Statements of Cash Flows (Unaudited) -   
|                                       | for
      the Two Quarters ended November 30, 2002                    
|                                       | and
      the Two Quarters ended November 24, 2001                    
|                                       |                                                                       
|                                       | Notes to
      Condensed Consolidated Financial Statements (Unaudited)
|                                       |                                                                       
|Item
      2.                          | Managements Discussion
      and Analysis of Financial               
|                                       | Condition
      and Results of Operations                             
|                                       |                                                                       
|Item
      3.                          | Quantitative and Qualitative
      Disclosures About Market Risk      
|                                       |                                                                       
|Item
      4.                          | Controls and Procedures                                               
|                                       |                                                                       
|PART II.OTHER
      INFORMATION        |                                                                       
|                                       |                                                                       
|Item
      6.                          | Exhibits and Reports
      on Form 8-K                                
|                                       |                                                                       
|SIGNATURE AND
      CERTIFICATIONS     | 30                                                                    

1

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Part I

Item 1.     Financial
  Statements

Condensed
  Consolidated Statements of Operations
  (Unaudited)

|                                                             | Quarter
      ended |         | Two
      Quarters ended
|------------------------------------------------------------ | ------------------- | ------- | ------------------------
|(in thousands, except
      per share amounts)               | Nov. 30, 2002       |         | Nov. 24, 2001           
|                                                            
|Net sales                                                    | $                   | 204,580 |                         
|Cost of
      sales                                          |                     | 103,513 |                         
|                                                             |                     |         |                         
|Gross
      profit                                           |                     | 101,067 |                         
|Research
      and development expenses                      |                     | 25,090  |                         
|Selling,
      general and administrative expenses           |                     | 63,826  |                         
|Equity in
      business ventures loss                      |                     | 1,440   |                         
|Business
      realignment costs                             |                     | 3,259   |                         
|Acquisition
      related costs                              |                     | 1,832   |                         
|(Gain) loss
      on disposal of fixed assets                |                     | (492    | )                       
|                                                             |                     |         |                         
|Operating
      income                                       |                     | 6,112   |                         
|Interest
      income                                        |                     | 7,327   |                         
|Interest
      expense                                       |                     | (1,276  | )                       
|Other (expense)
      income, net                            |                     | (1,541  | )                       
|                                                             |                     |         |                         
|Income
      before taxes                                    |                     | 10,622  |                         
|Income tax
      (benefit) expense                           |                     | 3,718   |                         
|                                                             |                     |         |                         
|Income
      from continuing operations                      |                     | 6,904   |                         
|Discontinued
      operations:                               |                     |         |                         
|Loss
      on sale of VideoTele.com (less applicable income  |                     |         |                         
|tax
      benefit of $210)                                   |                     | (390    | )                       
|(Loss)
      earnings from operations of VideoTele.com (less |                     |         |                         
|applicable
      income tax (benefit) expense of ($960),     |                     |         |                         
|$311,
      ($1,413) and $412)                               |                     | (1,782  | )                       
|Gain on
      sale of Color Printing and Imaging             |                     |         |                         
|(less
      applicable income tax expense of $504)           |                     | -       |                         
|                                                             |                     |         |                         
|Net
      earnings                                           | $                   | 4,732   |                         
|                                                             |                     |         |                         
|Net earnings
      per share  basic and diluted             | $                   | 0.05    |                         
|Income per
      share from continuing operations            |                     |         |                         
|
      basic and diluted                                    |                     | 0.08    |                         
|(Loss) earnings
      per share from discontinued            |                     |         |                         
|operations
       basic and diluted                         |                     | (0.02   | )                       
|Weighted
      average shares outstanding  basic            |                     | 87,127  |                         
|Weighted
      average shares outstanding  diluted          |                     | 87,335  |                         

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

2

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Condensed
  Consolidated Balance Sheets
  (Unaudited)

|(In
      thousands)                                        | Nov.
      30, 2002 |           |   | May
      25, 2002 |  
|----------------------------------------------------------- | ------------------- | --------- | - | ------------------ | -
|                                                           
|                                                            |                     |           |   |                    |  
|ASSETS                                                      |                     |           |   |                    |  
|Current
      assets:                                       |                     |           |   |                    |  
|Cash
      and cash equivalents                             | $                   | 170,241   |   |                    | $
|Short-term
      marketable investments                     |                     | 171,369   |   |                    |  
|Trade
      accounts receivable, net of allowance for       |                     |           |   |                    |  
|doubtful
      accounts of $4,946 and $5,058, respectively  |                     | 103,915   |   |                    |  
|Inventories                                                 |                     | 112,814   |   |                    |  
|Assets
      of discontinued operations                     |                     | -         |   |                    |  
|Other
      current assets                                  |                     | 72,020    |   |                    |  
|                                                            |                     |           |   |                    |  
|Total
      current assets                                  |                     | 630,359   |   |                    |  
|                                                            |                     |           |   |                    |  
|Property,
      plant and equipment, net                    |                     | 164,039   |   |                    |  
|Long-term
      marketable investments                      |                     | 371,440   |   |                    |  
|Deferred
      tax assets                                   |                     | 89,433    |   |                    |  
|Other
      long-term assets                                |                     | 139,599   |   |                    |  
|                                                            |                     |           |   |                    |  
|Total
      assets                                          | $                   | 1,394,870 |   |                    | $
|                                                            |                     |           |   |                    |  
|                                                            |                     |           |   |                    |  
|LIABILITIES
      AND SHAREHOLDERS EQUITY                  |                     |           |   |                    |  
|Current
      liabilities:                                  |                     |           |   |                    |  
|Accounts
      payable and accrued liabilities              | $                   | 140,037   |   |                    | $
|Accrued
      compensation                                  |                     | 59,258    |   |                    |  
|Current
      portion of long-term debt                     |                     | 57,675    |   |                    |  
|Deferred
      revenue                                      |                     | 16,454    |   |                    |  
|Liabilities
      of discontinued operations                |                     | -         |   |                    |  
|                                                            |                     |           |   |                    |  
|Total
      current liabilities                             |                     | 273,424   |   |                    |  
|                                                            |                     |           |   |                    |  
|Long-term
      debt                                        |                     | 54,063    |   |                    |  
|Other
      long-term liabilities                           |                     | 176,981   |   |                    |  
|                                                            |                     |           |   |                    |  
|Shareholders
      equity:                                 |                     |           |   |                    |  
|Common
      stock, no par value (authorized 400,000        |                     |           |   |                    |  
|shares;
      issued and outstanding 86,938 at November 30, |                     |           |   |                    |  
|2002
      and 90,509 at May 25, 2002)                      |                     | 224,834   |   |                    |  
|Retained
      earnings                                     |                     | 739,448   |   |                    |  
|Accumulated
      other comprehensive loss                  |                     | (73,880   | ) |                    |  
|                                                            |                     |           |   |                    |  
|Total
      shareholders equity                            |                     | 890,402   |   |                    |  
|                                                            |                     |           |   |                    |  
|Total
      liabilities and shareholders equity            | $                   | 1,394,870 |   |                    | $
|                                                            |                     |           |   |                    |  

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

3

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Condensed
  Consolidated Statements of Cash Flows
  (Unaudited)

|                                                                      | Two
      Quarters ended
|--------------------------------------------------------------------- | ------------------------
|(In thousands)                                                        | Nov.
      30, 2002     
|                                                                     
|CASH
      FLOWS FROM OPERATING ACTIVITIES                            |                         
|Net earnings                                                          | $                       
|Adjustments
      to reconcile net earnings to net cash provided by   |                         
|(used
      in) operating activities:                                 |                         
|Gain
      on the sale of Color Printing and Imaging                  | -                       
|Loss
      on the sale of VideoTele.com                               |                         
|Loss
      (earnings) from discontinued operations                    | 2,624                   
|Depreciation
      and amortization expense                           |                         
|Loss
      on the disposition/impairment of assets                    |                         
|Loss
      on the disposition of marketable equity securities         | -                       
|Bad
      debt expense                                                |                         
|Deferred
      income tax (expense) benefit                           |                         
|Equity
      in business ventures loss                               |                         
|Changes
      in operating assets and liabilities:                    |                         
|Accounts
      receivable                                             |                         
|Inventories                                                           |                         
|Other
      current assets                                            |                         
|Accounts
      payable                                                |                         
|Accrued
      compensation                                            |                         
|Deferred
      revenue                                                |                         
|Other
      long-term assets and liabilities, net                     | (17,458                 
|                                                                      |                         
|Net
      cash provided by (used in) continuing operating activities  | 33,800                  
|Net cash provided
      by discontinued operating activities          | 693                     
|                                                                      |                         
|Net cash
      provided by (used in) operating activities             |                         
|                                                                      |                         
|CASH
      FLOWS FROM INVESTING ACTIVITIES                            |                         
|Cash acquired
      in Sony/Tektronix acquisition                     |                         
|Acquisition
      of property, plant and equipment                    |                         
|Proceeds
      from the disposition of fixed assets                   |                         
|Net sales
      of short-term marketable investments                  |                         
|Net purchases
      of long-term marketable investments               |                         
|                                                                      |                         
|Net cash
      (used in) provided by investing activities             |                         
|CASH
      FLOWS FROM FINANCING ACTIVITIES                            |                         
|Net change
      in short-term debt                                   |                         
|Repayment
      of long-term debt                                     |                         
|Proceeds
      from employee stock plans                              |                         
|Repurchase
      of common stock                                      |                         
|                                                                      |                         
|Net cash
      used in financing activities                           |                         
|Net (decrease)
      increase in cash and cash equivalents            |                         
|Cash and
      cash equivalents at beginning of period                |                         
|                                                                      |                         
|Cash and
      cash equivalents at end of period                      | $                       
|                                                                      |                         
|SUPPLEMENTAL
      DISCLOSURES OF CASH FLOWS                          |                         
|Income taxes
      (refunded) paid                                    | $                       
|Interest
      paid                                                   |                         
|NON-CASH
      INVESTING AND FINANCING ACTIVITIES                     |                         
|Assets acquired
      from Sony/Tektronix (excluding cash received)   | 159,308                 
|Assumption
      of long-term debt from Sony/Tektronix acquisition    | 53,506                  
|Assumption
      of other liabilities from Sony/Tektronix acquisition | 89,877                  

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

4

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Notes
  to Condensed Consolidated Financial Statements

1.  The
  Company

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

2.  Financial
  Statement Presentation

The
  condensed consolidated financial statements and notes thereto have been prepared
  by the Company without audit. Certain information and footnote disclosures normally
  included in annual financial statements, prepared in accordance with accounting
  principles generally accepted in the United States of America, have been condensed
  or omitted. The consolidated financial statements include the accounts of Tektronix
  and its majority-owned subsidiaries. Investments in joint ventures and minority-owned
  companies where the Company exercises significant influence are accounted for
  under the equity method with the Companys percentage of earnings included
  in Equity in business ventures loss on the Condensed Consolidated Statements
  of Operations. Significant intercompany transactions and balances have been
  eliminated. Certain prior year amounts have been reclassified to conform to
  the current years presentation with no effect on previously reported earnings.
  The Companys fiscal year is the 52 or 53 weeks ending the last Saturday
  in May. Fiscal year 2003 is 53 weeks, while fiscal year 2002 was 52 weeks. Due
  to this convention, the first quarter of fiscal year 2003 was 14 weeks compared
  to the first quarter of fiscal year 2002, which was 13 weeks. The second quarter
  of fiscal years 2003 and the comparative prior year quarter each include 13
  weeks.

The
  presentation of financial statements in conformity with accounting principles
  generally accepted in the United States of America requires management to make
  estimates and assumptions. These estimates and assumptions, including those
  used to record the results of discontinued operations, affect the reported amounts
  of assets and liabilities and disclosure of contingent assets and liabilities
  at the date of the consolidated financial statements and the revenues and expenses
  reported during the period. Actual results may differ from estimated amounts.
  Management believes that the condensed consolidated statements include all necessary
  adjustments, which are of a normal and recurring nature and are adequate to
  fairly present the financial position, results of operations and cash flows
  for the interim periods. The condensed information should be read in conjunction
  with the financial statements and notes thereto in the Companys annual
  report on Form 10-K for the year ended May 25, 2002.

3. 
  Recent Transactions

Sony/Tektronix
  Redemption

During
  the second quarter, the Company acquired from Sony Corporation (Sony),
  its 50% interest in Sony/Tektronix Corporation (Sony/Tektronix)
  through a redemption of Sonys shares by Sony/Tektronix for 8 billion Yen
  (Sony/Tektronix Acquisition), or approximately $65.7 million at
  September 30, 2002. This transaction closed on September 30, 2002, at which
  time the Company obtained 100% ownership of Sony/Tektronix. This transaction
  is a long-term strategic investment that will provide the Company stronger access
  to the Japanese market and the ability to leverage the

5

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engineering
  resources in Japan. The Company accounted for its investment in Sony/Tektronix
  under the equity method prior to this redemption. Prior to the close of this
  transaction, the Sony/Tektronix entity entered into an agreement to borrow up
  to 9 billion Yen, or approximately $73.9 million at an interest rate of 1.75%
  above the Tokyo Inter Bank Offering Rate. This facility, which includes certain
  financial covenants for this Japan subsidiary and the Company, expires September
  29, 2006. Sony/Tektronix utilized $53.1 million of this credit facility to fund
  a portion of the redemption of shares from Sony and the remainder will provide
  operating capital for this Japan subsidiary. The transaction was accounted for
  by the purchase method of accounting, and accordingly, beginning on the date
  of acquisition the results of operations, financial position and cash flows
  of Sony/Tektronix were consolidated in the Companys financial statements.
  Assets purchased and liabilities assumed as of the purchase date were as follows:

|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 | 

The
  allocation of purchase price to the pension liability assumed in the transaction
  was based on the best available data as of the transaction date, but has not
  been finalized as of November 30, 2002. The allocation of purchase price to
  the pension liability will be adjusted upon completion of the appropriate analysis
  of such liabilities. The pension liability is included in Other long-term liabilities
  on the Condensed Consolidated Balance Sheet as of November 30, 2002.

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

|                                               | Quarter
      ended |         | Two
      Quarters ended
|---------------------------------------------- | ------------------- | ------- | ------------------------
|(In thousands,
      except per share amounts) | Nov.
      30, 2002 |         | Nov.
      24, 2001     
|                                              
|Net sales                                      | $                   | 212,860 |                         
|Net earnings                                   |                     | 3,607   |                         
|Earnings
      per share - diluted             | $                   | 0.04    |                         

Subsequent
  to closing, the Company incurred $1.8 million in costs specifically associated
  with integrating the operations of this subsidiary which are recorded in Acquisition
  related costs on the Condensed Consolidated Statements of Operations.

Sale
  of VideoTele.com

On
  November 7, 2002, the Company completed the sale of the VideoTele.com (VT.c)
  subsidiary. VT.c was sold to Tut Systems, Inc. (Tut), a publicly
  traded company, for 3,283,597 shares of Tut common stock valued at $4.2 million
  and a note receivable for $3.2 million due in November 2007. The common stock
  is classified as an available-for-sale security and represents a 19.9% interest
  in Tut and therefore is accounted for on the cost basis. Both the common stock
  and the note receivable are included in Other long-term assets in the Condensed
  Consolidated Balance Sheet as of November 30, 2002. Under the terms of the sale
  agreement, the Company is restricted from selling the common stock for a period
  of 1 year. The note receivable accrues interest at an annual rate of 8%. As
  a result of this transaction, employees of VT.c on the transaction date became
  employees of the post-merger entity at the time of the closing. The sale of
  VT.c has been accounted for as a discontinued operation in accordance with SFAS
  No. 144. Accordingly, the results of VT.c operations prior to the transaction
  date, and the loss on this sale of $0.4 million, are excluded form continuing
  operations and recorded as discontinued operations, net of tax, in the Condensed
  Consolidated Statements of Operations.

6

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Sale
  of Optical Transmission Test Products

On
  November 5, 2002 the Company completed the sale of certain assets related to
  the Companys optical transmission test products to Digital Lightwave,
  Inc. (DLI). The assets sold include inventory, fixed assets and
  technology related to the specific products. Total proceeds on this sale are
  $10.0 million with $9.0 million received at the time of closing with an additional
  $1.0 million to be held in escrow for a period of 12 months pending the resolution
  of certain contingencies. Of the assets sold, $3.4 million were fixed assets
  and the proceeds received equaled the net book value resulting in no gain or
  loss on the sale of fixed assets. The remaining proceeds of $6.6 million related
  to the sale of inventory and technology, and are included in Net Sales in the
  Condensed Consolidated Statement of Operations. The net book value of inventory
  and technology assets sold was $6.2 at the time of the sale. In addition, DLI
  assumed warranty and other related liabilities of $0.6 million. The Company
  has also established a contingent liability for resolution of sale related contingencies
  of $1.0 million. The net book value of the assets sold and the contingent liability
  reserve have been recorded as Cost of sales in the Condensed Consolidated Statement
  of Operations. Liabilities assumed by DLI have been recorded as a reduction
  to cost of sales.

The
  Company had previously accrued certain liabilities related to actions intended
  to reduce the operating costs associated with the design, production and sale
  of the optical transmission test products. As a result of the sale to DLI, certain
  of these liabilities have been mitigated and accordingly, the Company reversed
  $2.1 million of previously accrued expenses as a reduction to Business realignment
  costs in the Condensed Consolidated Statement of Operations.

4.  Sale of
  Color Printing and Imaging

On
  January 1, 2000, the Company sold substantially all of the assets of the Color
  Printing and Imaging division (CPID) to Xerox. The Company accounted
  for CPID as a discontinued operation in accordance with Accounting Principles
  Board (APB) Opinion No. 30, Reporting the Results of Operations
   Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
  Unusual and Infrequently Occurring Events and Transactions. The sales
  price was $925.0 million in cash, with certain liabilities of the division assumed
  by Xerox. During fiscal year 2000, Tektronix recorded a net gain of $340.3 million
  on this sale. The net gain was calculated as the excess of the proceeds received
  over the net book value of the assets transferred, $198.5 million in income
  tax expense, a $60.0 million accrual for estimated liabilities related to the
  sale and $14.4 million in transaction and related costs. The accrual for estimated
  liabilities related to the sale was $35.6 million and $36.0 million as of November
  30, 2002 and May 25, 2002, respectively. In the first quarter of fiscal year
  2002, the Company recorded $1.4 million in Gain on sale of CPID as a result
  of settling certain indemnities related to the original sales transaction.

5.  Repurchase
  of Common Stock

On
  March 15, 2000, the Board of Directors authorized the purchase of up to $550.0
  million of the Companys common stock on the open market or through negotiated
  transactions. During the second quarter of fiscal year 2003, the Company repurchased
  1.1 million shares for $19.6 million. During the first two quarters of fiscal
  year 2003, the Company has repurchased a total of 3.8 million shares for $69.3
  million. As of November 30, 2002, the Company has repurchased a total of 12.1
  million shares at an average price of $22.92 per share totaling $277.4 million
  under this authorization.

6.  Business
  Realignment Costs

During
  the second quarter of fiscal year 2003, the Company incurred $3.3 million of
  business realignment costs including $0.8 million resulting from the impairment
  of an intangible asset and $4.8 million of severance resulting from actions
  to realign the Companys cost structure, offset by $2.3 million of reversals
  related to previously recorded business realignment costs. The intangible asset
  impairment relates to acquired Bluetooth technology and was impaired due to
  a lower than previously anticipated market potential for the Company's products
  related to this technology. The impairment was determined using the present
  value of estimated cash flows related to the asset. The $4.8 million of severance
  related business realignment costs resulted from the

7

---



termination
  of 150 employees. The $2.3 million reversal was primarily the result of previously
  accrued expenditures, which have been mitigated by the sale of the Companys
  optical transmission test product line. These reversal items are primarily facilities
  related.

During
  the first two quarters of fiscal year 2003, the Company incurred $12.8 million
  of business realignment costs including $9.1 million resulting from the impairment
  of the intangible asset discussed above, $6.3 million of severance for the termination
  of 187 employees resulting from actions to realign the Companys cost structure,
  and $0.4 million of costs associated with the closure of certain facilities.
  These costs were offset by $3.0 million of reversals of previous business realignment
  costs. These actions do not relate to the previously announced 2000 Plan discussed
  below.

As
  of November 30, 2002, the Company maintained liabilities of $7.7 million related
  to the severance expenses of 187 employees and $2.2 million related to the exit
  from certain operations for business realignment activities recorded in fiscal
  years 2002 and 2003.

The
  2000 Plan

In
  the third quarter of fiscal year 2000, the Company announced and began to implement
  a series of actions (the 2000 Plan) intended to consolidate worldwide
  operations and transition the Company from a portfolio of businesses to a single
  smaller business focused on test, measurement and monitoring products, resulting
  in a pre-tax charge of $64.8 million. As of November 30, 2002, the remaining
  accrued liabilities under the 2000 Plan totaled $0.8 million.

7.  Earnings
  Per Share

|                                              |                    | Quarter
      ended |  |  |                    | Two
      Quarters ended | 
|--------------------------------------------- | ------------------ | ------------------- |  |  | ------------------ | ------------------------ | 
|(In
      thousands except per share amounts) | Nov.
      30,2002 |                     |  |  | Nov.
      24,2001 |                          | 
|                                             
|Net earnings                                  | $                  | 4,732               |  |  | $                  | 7,929                    | 
|                                              |                    |                     |  |  |                    |                          | 
|Weighted
      average shares used for        |                    |                     |  |  |                    |                          | 
|basic
      earnings per share                |                    | 87,127              |  |  |                    | 91,531                   | 
|Effect of
      dilutive stock options        |                    | 208                 |  |  |                    | 438                      | 
|                                              |                    |                     |  |  |                    |                          | 
|Weighted
      average shares used for        |                    |                     |  |  |                    |                          | 
|dilutive
      earnings per share             |                    | 87,335              |  |  |                    | 91,969                   | 
|                                              |                    |                     |  |  |                    |                          | 
|Net earnings
      per share - basic          | $                  | 0.05                |  |  | $                  | 0.09                     | 
|Net earnings
      per share - diluted        | $                  | 0.05                |  |  | $                  | 0.09                     | 
|                                              |                    |                     |  |  |                    |                          | 
|Antidilutive
      options*                   |                    | 7,098               |  |  |                    | 4,750                    | 

*
  Options which are antidilutive were not included in the computation of diluted
  net earnings per share.

8.  Marketable
  Investments

The Company records its investments as available-for-sale securities which allows
  the Company tomaximize
  the investment returns by reacting to fluctuations in interest rates. This requires
  the investments to be recorded at market value with the resulting gains and
  losses included, net of tax, in Accumulated other comprehensive loss on the
  Condensed Consolidated Balance Sheets.

Short-term
  marketable investments held at November 30, 2002 consisted of:

|(In thousands)                  | Amortized
      cost |        | Unrealized
      gains |  | Unrealized
      losses |       | Market
      value
|------------------------------- | -------------------- | ------ | ---------------------- |  | ----------------------- | ----- | ------------------
|                                |                      |        |                        |  |                         |       |                   
|Certificates
      of deposit   | $                    | 5,099  |                        |  | $                       | 7     |                   
|Corporate
      notes and bonds |                      | 80,957 |                        |  |                         | 1,007 |                   
|Asset backed
      securities   |                      | 56,691 |                        |  |                         | 62    |                   

8

---



|Mortgage
      backed securities                                               | 415           |         |                 | -   |                  |       | (9          | )           |   | 406    |  
|------------------------------------------------------------------------------ | ------------- | ------- | --------------- | --- | ---------------- | ----- | ----------- | ----------- | - | ------ | -
|Federal
      agency notes and bonds                                           | 27,165        |         |                 | 190 |                  |       | -           |             |   | 27,355 |  
|                                                                               |               |         |                 |     |                  |       |             |             |   |        |  
|Short-term
      marketable investments                                        | $             | 170,327 |                 |     | $                | 1,266 |             |             | $ | (224   | )
|                                                                               |               |         |                 |     |                  |       |             |             |   |        |  
|                                                                               |               |         |                 |     |                  |       |             |             |   |        |  
|Short-term
      marketable investments held at May 25, 2002 consisted of:     |               |         |                 |     |                  |       |            
|                                                                               |               |         |                 |     |                  |       |             |             |   |        |  
|(In
      thousands)                                                           | Amortizedcost |         | Unrealizedgains |     | Unrealizedlosses |       |             | Marketvalue |  
|                                                                              
|                                                                               |               |         |                 |     |                  |       |             |             |  
|Commercial
      paper                                                         | $             | 10,962  |                 |     | $                | -     |             |             | $ | -      |  
|Certificates
      of deposit                                                  |               | 9,358   |                 |     |                  | 6     |             |             |   | -      |  
|Corporate
      notes and bonds                                                |               | 87,056  |                 |     |                  | 1,099 |             |             |   | (46    | )
|Asset backed
      securities                                                  |               | 65,841  |                 |     |                  | 234   |             |             |   | (291   | )
|Mortgage
      backed securities                                               |               | 4,555   |                 |     |                  | -     |             |             |   | (26    | )
|Federal
      agency notes and bonds                                           |               | 14,878  |                 |     |                  | 18    |             |             |   | -      |  
|                                                                               |               |         |                 |     |                  |       |             |             |   |        |  
|Short-term
      marketable investments                                        | $             | 192,650 |                 |     | $                | 1,357 |             |             | $ | (363   | )
|                                                                               |               |         |                 |     |                  |       |             |             |   |        |  
|                                                                               |               |         |                 |     |                  |       |             |             |   |        |  
|Long-term
      marketable investments held at November 30, 2002 consisted of: |               |         |                 |     |                  |      
|                                                                               |               |         |                 |     |                  |       |             |             |   |        |  
|(In
      thousands)                                                           | Amortizedcost |         | Unrealizedgains |     | Unrealizedlosses |       | Marketvalue |            
|                                                                              
|                                                                               |               |         |                 |     |                  |       |             |             |  
|Corporate
      notes and bonds                                                | $             | 65,466  |                 |     | $                | 1,265 |             |             | $ | -      |  
|Asset backed
      securities                                                  |               | 59,501  |                 |     |                  | 1,610 |             |             |   | -      |  
|Mortgage
      backed securities                                               |               | 144,615 |                 |     |                  | 2,090 |             |             |   | -      |  
|Federal
      agency notes and bonds                                           |               | 74,478  |                 |     |                  | 1,008 |             |             |   | (12    | )
|U.S. Treasuries                                                                |               | 20,767  |                 |     |                  | 652   |             |             |   | -      |  
|                                                                               |               |         |                 |     |                  |       |             |             |   |        |  
|Long-term
      marketable investments                                         | $             | 364,827 |                 |     | $                | 6,625 |             |             | $ | (12    | )
|                                                                               |               |         |                 |     |                  |       |             |             |   |        |  
|                                                                               |               |         |                 |     |                  |       |             |             |   |        |  
|Long-term
      marketable investments held at May 25, 2002 consisted of:      |               |         |                 |     |                  |       |            
|                                                                               |               |         |                 |     |                  |       |             |             |   |        |  
|(In
      thousands)                                                           | Amortizedcost |         | Unrealizedgains |     | Unrealizedlosses |       | Marketvalue |            
|                                                                              
|                                                                               |               |         |                 |     |                  |       |             |             |  
|Corporate
      notes and bonds                                                | $             | 52,059  |                 |     | $                | 951   |             |             | $ | (10    | )
|Asset backed
      securities                                                  |               | 48,929  |                 |     |                  | 663   |             |             |   | (3     | )
|Mortgage
      backed securities                                               |               | 90,510  |                 |     |                  | 665   |             |             |   | (54    | )
|Federal
      agency notes and bonds                                           |               | 85,891  |                 |     |                  | 519   |             |             |   | (11    | )
|U.S. Treasuries                                                                |               | 20,984  |                 |     |                  | 15    |             |             |   | (4     | )
|                                                                               |               |         |                 |     |                  |       |             |             |   |        |  
|Long-term
      marketable investments                                         | $             | 298,373 |                 |     | $                | 2,813 |             |             | $ | (82    | )
|                                                                               |               |         |                 |     |                  |       |             |             |   |        |  

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

|(In
      thousands)                                        | Nov.
      30,2002 |        | May
      25,2002
|----------------------------------------------------------- | ------------------ | ------ | -----------------
|                                                           
|Unamortized
      cost basis of corporate equity securities | $                  | 8,614  |                  
|Gross unrealized
      holding gains                        |                    | 4,133  |                  
|                                                            |                    |        |                  
|Fair
      value of corporate equity securities             | $                  | 12,747 |                  

9

---



9.  Inventories

Inventories
  are stated at the lower of cost or market. Cost is determined based on a currently-adjusted
  standard basis, which approximates actual cost on a first-in, first-out basis.
  The Company periodically reviews its inventory for obsolete or slow-moving items.
  Inventories consisted of the following:

|(In thousands)                                                  |                    | Nov.
      30,2002        |         |                   |   | May
      25,2002        |  
|--------------------------------------------------------------- | ------------------ | ------------------------- | ------- | ----------------- | - | ------------------------ | -
|                                                               
|Materials                                                       | $                  | 5,904                     |         |                   | $ | 5,720                    |  
|Work
      in process                                           |                    | 42,086                    |         |                   |   | 45,867                   |  
|Finished
      goods                                            |                    | 64,824                    |         |                   |   | 69,979                   |  
|                                                                |                    |                           |         |                   |  
|Inventories                                                     | $                  | 112,814                   |         |                   | $ | 121,566                  |  
|                                                                |                    |                           |         |                   |  
|10. Property,
      Plant and Equipment                         |                    |                           |         |                   |   |                          |  
|                                                                |                    |                           |         |                   |   |                          |  
|Property,
      plant and equipment consisted of the following: |                    |                           |         |                   |   |                          |  
|                                                                |                    |                           |         |                   |  
|(In
      thousands)                                            | Nov.
      30,2002 |                           |         | May
      25,2002 |  
|                                                               
|Land                                                            | $                  | 15,058                    |         |                   | $ | 1,656                    |  
|Buildings                                                       |                    | 192,962                   |         |                   |   | 145,625                  |  
|Machinery
      and equipment                                   |                    | 274,002                   |         |                   |   | 253,326                  |  
|Accumulated
      depreciation                                  |                    | (317,983                  | )       |                   |   | (260,159                 | )
|                                                                |                    |                           |         |                   |  
|Property,
      plant and equipment, net                        | $                  | 164,039                   |         |                   | $ | 140,448                  |  
|                                                                |                    |                           |         |                   |  
|11.
       Other Long-Term Assets                               |                    |                           |         |                   |   |                          |  
|                                                                |                    |                           |         |                   |   |                          |  
|Other
      long-term assets consisted of the following:        |                    |                           |         |                   |   |                          |  
|                                                                |                    |                           |         |                   |   |                          |  
|(In
      thousands)                                            |                    | Nov.
      30,
      2002 |         |                   |   | May
      25,
      2002 |  
|                                                               
|Goodwill,
      net                                             | $                  |                           | 95,051  |                   |   | $                        |  
|Corporate
      equity securities                               |                    |                           | 12,747  |                   |   |                          |  
|Notes,
      contracts and leases                               |                    |                           | 8,824   |                   |   |                          |  
|Investment
      in Sony/Tektronix Corporation                  |                    |                           | -       |                   |   |                          |  
|Other                                                           |                    |                           | 22,977  |                   |   |                          |  
|                                                                |                    |                           |         |                   |  
|Other
      long-term assets                                    | $                  |                           | 139,599 |                   |   | $                        |  
|                                                                |                    |                           |         |                   |  

The
  Company adopted the Financial Accounting Standards Board (FASB)
  Statements of Financial Accounting Standards (SFAS) No. 141, Business
  Combinations and SFAS No. 142, Goodwill and Other Intangible Assets
  on accounting for business combinations and goodwill as of the beginning of
  fiscal year 2002. Accordingly, the Company no longer amortizes goodwill from
  acquisitions, but continues to amortize other acquisition-related intangibles
  and costs. As of November 30, 2002, the Company has $95.1 million of goodwill
  recorded in Other long-term assets on the Condensed Consolidated Balance Sheet.

In
  conjunction with the implementation of the new accounting rules for goodwill,
  the Company completed a goodwill impairment analysis as of the beginning of
  fiscal year 2002 with an update during the second quarter ended November 24,
  2001, and found no impairment. As required by the new rules, the Company performed
  an impairment analysis during the second quarter ended November 30, 2002, and
  again found no impairment. The impairment review is based on a discounted cash
  flow approach

10

---



that uses
  estimates of future market performance and revenues and costs for the reporting
  units as well as appropriate discount rates. The estimates used are consistent
  with the plans and estimates that the Company uses to manage the underlying
  businesses.

12. Other Long-Term
  Liabilities

Other
  long-term liabilities consisted of the following:

|(In
      thousands)                               | Nov.
      30,
      2002 |                           |   | May
      25,
      2002 |  
|-------------------------------------------------- | ------------------------- | ------------------------- | - | ------------------------ | -
|                                                  
|Pension
      liability                            | $                         | 136,807                   |   |                          | $
|Deferred
      compensation                        |                           | 35,726                    |   |                          |  
|Other                                              |                           | 4,448                     |   |                          |  
|                                                   |                           |                           |   |                          |  
|Other
      long-term liabilities                  | $                         | 176,981                   |   |                          | $
|                                                   |                           |                           |   |                          |  
|                                                   |                           |                           |   |                          |  
|13.
      Long-Term Debt                           |                           |                           |   |                          |  
|                                                   |                           |                           |   |                          |  
|Long-term
      debt consisted of the following:   |                           |                           |   |                          |  
|                                                   |                           |                           |   |                          |  
|(In
      thousands)                               |                           | Nov.
      30,
      2002 |   |                          |  
|                                                  
|TIBOR
      +1.75% facility due September 29, 2006 | $                         | 53,471                    |   |                          | $
|7.5% notes
      due August 1, 2003                |                           | 57,300                    |   |                          |  
|7.625%
      notes due August 15, 2002             |                           | -                         |   |                          |  
|Other
      long-term agreements                   |                           | 967                       |   |                          |  
|Less:
      current portion                        |                           | (57,675                   | ) |                          |  
|                                                   |                           |                           |   |                          |  
|Long-term
      debt                               | $                         | 54,063                    |   |                          | $
|                                                   |                           |                           |   |                          |  

14. Comprehensive
  Income

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

|                                                   |   | Quarter
      ended       |   |  |   | Two
      Quarters ended  |  
|-------------------------------------------------- | - | ------------------------- | - |  | - | ------------------------- | -
|(In
      thousands)                               |   | Nov.
      30,
      2002 |   |  |   | Nov.
      24,
      2001 |  
|                                                  
|Net earnings                                       | $ | 4,732                     |   |  | $ | 7,929                     |  
|Other comprehensive
      income:                  |   |                           |   |  |   |                           |  
|Currency
      translation adjustment, net of      |   |                           |   |  |   |                           |  
|taxes
      of $150, ($1,653) , $6,747             |   |                           |   |  |   |                           |  
|and
      ($113), respectively                     |   | 225                       |   |  |   | (2,479                    | )
|Unrealized
      (loss) gain on available-for-     |   |                           |   |  |   |                           |  
|sale
      securities, net of taxes of $459,       |   |                           |   |  |   |                           |  
|($2,304),
      ($645) and ($1,104),               |   |                           |   |  |   |                           |  
|respectively                                       |   | 689                       |   |  |   | (3,752                    | )
|Additional
      minimum pension liability, net of |   |                           |   |  |   |                           |  
|taxes
      of ($1,527), zero, ($2,700)            |   |                           |   |  |   |                           |  
|and
      zero, respectively                       |   | (2,800                    | ) |  |   | -                         |  
|                                                   |   |                           |   |  |   |                           |  
|Total comprehensive
      income                   | $ | 2,846                     |   |  | $ | 1,698                     |  
|                                                   |   |                           |   |  |   |                           |  

Accumulated
  other comprehensive loss consisted of the following:

11

---



|(In
      thousands)              |   | Foreign
      currency
      translation |  |  | Unrealized
      holding gains
      (losses) on
      available-for-
      sale securities |        |   |  | Additional
      minimum
      pension
      liability |         |   | Accumulated
      other
      comprehensive
      loss |  
|--------------------------------- | - | ---------------------------------------- |  |  | ------------------------------------------------------------------------------------------- | ------ | - |  | ------------------------------------------------------ | ------- | - | ------------------------------------------------------ | -
|                                 
|Balance
      as of May 25, 2002  | $ | 5,461                                    |  |  | $                                                                                           | 8,154  |   |  | $                                                      | (91,739 | ) |                                                        | $
|First quarter
      activity      |   | 9,859                                    |  |  |                                                                                             | (1,656 | ) |  |                                                        | (2,073  | ) |                                                        |  
|Second quarter
      activity     |   | 225                                      |  |  |                                                                                             | 688    |   |  |                                                        | (2,799  | ) |                                                        |  
|                                  |   |                                          |  |  |                                                                                             |        |   |  |                                                        |         |  
|Balance
      as of Nov. 30, 2002 | $ | 15,545                                   |  |  | $                                                                                           | 7,186  |   |  | $                                                      | (96,611 | ) |                                                        | $
|                                  |   |                                          |  |  |                                                                                             |        |   |  |                                                        |         |  

15. Business Segments

The
  Companys revenue is derived principally through the development and marketing
  of a range oftest and
  measurement products in several operating segments that have similar economic
  characteristics as well as similar customers, production processes and distribution
  methods. Accordingly, the Company reports as a single Measurement segment. It
  is impracticable to report net sales by product group.

|                                                              | Quarter
      ended       |         |  | Two
      Quarters ended  |  
|------------------------------------------------------------- | ------------------------- | ------- |  | ------------------------- | -
|(In
      thousands)                                          | Nov.
      30,
      2002 |         |  | Nov.
      24,
      2001 |  
|                                                             
|                                                              |                           |         |  |                           |  
|Consolidated
      net sales to external customers by region:
|                                                              |                           |         |  |                           |  
|Americas                                                      |                           |         |  |                           |  
|United
      States                                           | $                         | 95,564  |  |                           | $
|Other
      Americas                                          |                           | 5,633   |  |                           |  
|Europe                                                        |                           | 43,672  |  |                           |  
|Pacific                                                       |                           | 41,480  |  |                           |  
|Japan                                                         |                           | 18,231  |  |                           |  
|                                                              |                           |         |  |                           |  
|Net
      sales                                               | $                         | 204,580 |  |                           | $
|                                                              |                           |         |  |                           |  

16. Recent Accounting
  Pronouncements

In
  August 2001, the Financial Accounting Standards Board (FASB) issued
  Statement of FinancialAccounting
  Standard (SFAS) No. 144, Accounting for the Impairment or
  Disposal of Long-Lived Assets. This Statement supersedes FASB Statement
  No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
  Assets to Be Disposed Of, and the accounting and reporting provisions
  of APB Opinion No. 30, Reporting the Results of Operations--Reporting
  the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual
  and Infrequently Occurring Events and Transactions, for the disposal of
  a segment of a business. SFAS No. 144 maintains the method for recording an
  impairment on assets to be held under SFAS No. 121 and establishes a single
  accounting model based on the framework established in SFAS No. 121 for long-lived
  assets to be disposed of by sale. This statement also broadens the presentation
  of discontinued operations to include more disposal transactions. The provisions
  of SFAS No. 144 are effective for financial statements issued for fiscal year
  2003. The Company adopted the provisions of this statement, which did not have
  a material impact on the financial results of the Company, as of the beginning
  of the first quarter of fiscal year 2003.

In
  July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
  with Exit or Disposal Activities. The standard requires companies to recognize
  costs associated with exit or disposal activities when they are incurred rather
  than at the date of a commitment to an exit or disposal plan. Costs covered
  by the standard include lease termination costs and certain employee severance
  costs that are associated with a restructuring, discontinued operation, plant
  closing, or other exit or disposal activity.

12

---



This statement
  is to be applied prospectively to exit or disposal activities initiated after
  December 31, 2002. Management believes the adoption of the provisions of this
  statement will not have a material effect on the Companys consolidated
  financial statements.

In
  October 2002, the Emerging Issues Task Force (EITF) issued EITF
  00-21, Accounting for Revenue Arrangements with Multiple Deliverables.
  This standard addresses revenue recognition accounting by a vendor for arrangements
  under which it will perform multiple revenue-generating activities. This statement
  is to be effective for the Companys fiscal year 2004. Management believes
  the adoption of the provisions of this statement will not have a material effect
  on the Companys consolidated financial statements.

17.
  Subsequent Events

Subsequent
  to November 30, 2002, the Company announced a plan to solicit voluntary retirements
  from employees of Tektronix Japan. This Japan subsidiary was acquired through
  the Sony/Tektronix Acquisition, which is described in Note 3, Recent Transactions.
  Under this voluntary plan, early retirement applications must be received and
  will be approved during the third quarter of fiscal year 2003.

Management
  of the Company anticipates the costs associated with the announced Japan restructuring
  plan approximates $10.0 million. However, management cannot predict with any
  degree of certainty the ultimate cost associated with this plan, as the cost
  will be dependent on receiving volunteers from the applicable employee base.

13

---



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

Forward-Looking
  Statements

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

General

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

Recent
  Transactions

Sony/Tektronix
  Redemption

During
  the second quarter, the Company acquired from Sony Corporation (Sony),
  its 50% interest in Sony/Tektronix Corporation (Sony/Tektronix)
  through a redemption of Sonys shares by Sony/Tektronix for 8 billion Yen
  (Sony/Tektronix Acquisition), or approximately $65.7 million at
  September 30, 2002. This transaction closed on September 30, 2002, at which
  time the Company obtained 100% ownership of Sony/Tektronix. This transaction
  is a long-term strategic investment that will provide the Company stronger access
  to the Japanese market and the ability to leverage the engineering resources
  in Japan. The Company accounted for its investment in Sony/Tektronix under the
  equity method prior to this redemption. Prior to the close of this transaction,
  the Sony/Tektronix entity entered into an agreement to borrow up to 9 billion
  Yen, or approximately $73.9 million at an interest rate of 1.75% above the Tokyo
  Inter Bank Offering Rate. This facility, which includes certain financial covenants
  for this Japan subsidiary and the Company, expires September 29, 2006. Sony/Tektronix
  utilized $53.1 million of this credit facility to fund a portion of the redemption
  of shares from Sony and the remainder will provide operating capital for this
  Japan subsidiary. The transaction was accounted for by the purchase method of
  accounting, and accordingly, beginning on the date of acquisition the results
  of operations, financial position and cash flows of Sony/Tektronix were consolidated
  in the Companys financial statements.

Subsequent
  to closing, the Company incurred $1.8 million in costs specifically associated
  with integrating the operations of this subsidiary which are recorded in Acquisition
  related costs on the Condensed Consolidated Statements of Operations.

14

---

Sale of VideoTele.com

On
  November 7, 2002, the Company completed the sale of the VideoTele.com (VT.c)
  subsidiary. VT.c was sold to Tut Systems, Inc (Tut), a publicly
  traded company, for 3,283,597 shares of Tut common stock and a note receivable
  for $3,232,932 due in November 2007. The common stock is classified as an available-for-sale
  security and both the common stock and the note receivable are included in Other
  long-term assets in the Condensed Consolidated Balance Sheet as of November
  30, 2002. Under the terms of the sale agreement, the Company is restricted from
  selling the common stock for a period of 1 year. The note receivable accrues
  interest at an annual rate of 8%. As a result of this transaction, employees
  of VT.c on the transaction date became employees of the post-merger entity at
  the time of the closing. The sale of VT.c has been accounted for as a discontinued
  operation in accordance with SFAS No. 144. Accordingly, the results of VT.c
  operations prior to the transaction date, and the loss on this sale of $0.4
  million, are excluded from continuing operations and recorded as discontinued
  operations, net of tax, in the Condensed Consolidated Statements of Operations.

Sale of Optical Transmission
  Test Products

On
  November 5, 2002 the Company completed the sale of certain assets related to
  the Companys optical transmission test products to Digital Lightwave,
  Inc. (DLI). The assets sold include inventory, fixed assets and
  technology related to these specific optical products. Total proceeds on this
  sale were $10.0 million with $9 million received at the time of closing with
  an additional $1 million to be held in escrow pending the resolution of certain
  contingencies. Of the assets sold, $3.4 million were fixed assets and the proceeds
  received equaled the net book value resulting in no gain or loss on the sale
  of fixed assets. The remaining proceeds of $6.6 million related to the sale
  of inventory and technology, and are included in Net Sales in the Condensed
  Consolidated Statement of Operations. The net book value of inventory and technology
  assets sold was $6.2 at the time of the sale. In addition, DLI assumed warranty
  and other related liabilities of $0.6 million. The Company has also established
  a contingent liability for resolution of sale related contingencies of $1.0
  million. The net book value of the assets sold and the contingent liability
  reserve have been recorded as Cost of sales in the Condensed Consolidated Statement
  of Operations. Liabilities assumed by DLI have been recorded as a reduction
  to cost of sales.

The
  Company had previously accrued certain liabilities related to actions intended
  to reduce the operating costs associated with the design, production and sale
  of the optical transmission test products. As a result of the sale to DLI, certain
  of these liabilities have been mitigated and accordingly, the Company reversed
  $2.1 million of previously accrued expenses as a reduction to Business realignment
  costs in the Condensed Consolidated Statement of Operations.

Business
  Realignment Costs

During
  the second quarter of fiscal year 2003, the Company incurred $3.3 million of
  business realignment costs including $0.8 million resulting from the impairment
  of an intangible asset and $4.8 million of severance resulting from actions
  to realign the Companys cost structure, offset by $2.3 million of reversals
  related to previously recorded business realignment costs. The intangible asset
  impairment relates to acquired Bluetooth technology and was impaired due to
  a lower than previously anticipated market potential for the Company's products
  related to this technology. The impairment was determined using the present
  value of estimated cash flows related to the asset. The $4.8 million of severance
  related business realignment costs resulted from the termination of 150 employees.
  The $2.3 million reversal was primarily the result of previously accrued expenditures,
  which have been mitigated by the sale of the Companys optical transmission
  test products. These reversal items are primarily facilities related.

During
  the first two quarters of fiscal year 2003, the Company incurred $12.8 million
  of business realignment costs including $9.1 million resulting from the impairment
  of the Bluetooth intangible asset discussed above, $6.3 million of severance
  for the termination of 187 employees resulting from actions to realign the Companys
  cost structure, and $0.4 million of costs associated with the closure of certain
  facilities. These costs were offset by $3.0 million of reversals of previous
  business realignment costs.

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Critical
  Accounting Estimates

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

Contingent
  Liabilities

The
  Company is subject to claims or litigation concerning intellectual property,
  environmental and employment issues, as well as settlement of liabilities related
  to prior dispositions of assets. As a result, liabilities have been established
  based upon managements best estimate of the ultimate outcome of these
  contingent liabilities. The Company reviews the status of its litigation, indemnities
  and other contingencies on a regular basis and adjustments are made as information
  becomes available. As of November 30, 2002, the Company had $45.6 million recorded
  as contingent liabilities in Accounts payable and accrued liabilities on the
  Condensed Consolidated Balance Sheet.

As
  a result of divestiture activities, the Company is subject to certain indemnities
  and other contingencies due to contractual obligations entered into at the time
  of these divestitures. Included in these liabilities is a reserve for contingent
  liabilities related to the sale of CPID to Xerox on January 1, 2000. As of November
  30, 2002, the Company had $35.6 million recorded as a reserve for liabilities
  associated with the sale of CPID, which is included in the $45.6 million of
  total contingent liabilities noted above. The $35.6 million of reserves primarily
  relates to liabilities retained by the Company at the time of sale and contingent
  contractual indemnities.

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

The
  remaining $10.0 million of contingent liabilities includes amounts related to
  environmental, intellectual property and employment issues, as well as liabilities
  related to other prior dispositions of assets.

Intangible
  assets

The
  Company adopted the Financial Accounting Standards Board (FASB)
  Statements of Financial Accounting Standards (SFAS) No. 141, Business
  Combinations and SFAS No. 142, Goodwill and Other Intangible Assets
  on accounting for business combinations and goodwill as of the beginning of
  fiscal year 2002. Accordingly, the Company no longer amortizes goodwill from
  acquisitions, but continues to amortize other acquisition-related intangibles
  and costs. As of November 30, 2002, the Company has $95.1 million of goodwill
  recorded in Other long-term assets on the Condensed Consolidated Balance Sheet.

In
  conjunction with the implementation of the new accounting rules for goodwill,
  the Company completed a goodwill impairment analysis as of the beginning of
  fiscal year 2002 with an update during the second quarter ended November 24,
  2001, and identified no impairment. As required by the new rules, the Company
  performed an impairment analysis during the second quarter ended November 30,
  2002, and again identified no impairment. The impairment review is based on
  a discounted cash flow approach that uses estimates of future market share and
  revenues and costs for the reporting units as well as appropriate discount rates.
  The estimates used are consistent with the plans and estimates that the Company
  uses to manage the underlying businesses. However, if the Company fails to deliver
  new products for these groups, if the products fail to gain expected market
  acceptance, or if market conditions in the related businesses are unfavorable,
  revenue and cost forecasts may not be achieved, and the Company may incur charges
  for impairment of goodwill.

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For
  non-goodwill intangible assets, the Company amortizes the cost over the estimated
  useful life and assesses any impairment by estimating the future cash flow from
  the associated asset in accordance with SFAS No. 144, Accounting for the
  Impairment or Disposal of Long-Lived Assets. As of November 30, 2002,
  the Company had $10.5 million of non-goodwill intangible assets recorded in
  Other long-term assets, which includes patents and licenses for certain technology.
  If the estimated undiscounted cash flow related to these assets decreases in
  the future or the useful life is shorter than originally estimated, the Company
  may incur charges to impair these assets. The impairment is based on the estimated
  discounted cash flow associated with the asset. An impairment could result if
  the underlying technology fails to gain market acceptance, the Company fails
  to deliver new products related to these technology assets, the products fail
  to gain expected market acceptance or if market conditions in the related businesses
  are unfavorable.

During
  fiscal year 2003, the Company impaired an intangible asset related to acquired
  Bluetooth technology resulting in an expense of $9.1 million, which is included
  in Business realignment costs in the Condensed Consolidated Statement of Operations.

Inventories

Inventories
  are stated at the lower of cost or market. Cost is determined based on currently-adjusted
  standard costs, which approximates actual cost on a first-in, first-out basis.
  The Companys inventory includes raw materials, work-in-process, finished
  goods and demonstration equipment of $112.8 million as of November 30, 2002.
  The Company reviews its recorded inventory and estimates a write-down for obsolete
  or slow-moving items. These write-downs reduce the inventory value of these
  obsolete or slow-moving items to their net realizable value. Such estimates
  are difficult to make under the current economic conditions. The write-down
  is based on current and forecasted demand and therefore, if actual demand and
  market conditions are less favorable than those projected by management, additional
  write-downs may be required. In addition, excessive amounts of the used equipment
  in the marketplace can negatively impact the net realizable value of the Companys
  demonstration equipment. If actual market conditions are different than anticipated,
  Cost of sales in the Condensed Consolidated Statement of Operations may be different
  than expected in the period in which more information becomes available.

Pension
  plan

Benefit
  plans are a significant cost of doing business and yet represent obligations
  that will be settled far in the future and therefore are subject to certain
  estimates. Pension accounting is intended to reflect the recognition of future
  benefit costs over the employee's approximate service period based on the terms
  of the plans and the investment and funding decisions made by the Company. The
  accounting standards require that management make assumptions regarding such
  variables as the expected long-term rate of return on assets and the rate applied
  to determine service cost and interest cost to arrive at pension income and
  cost for the year. Excluding the pension plan related to the newly acquired
  Japan subsidiary, the Companys estimated long-term rate of return on plan
  assets for fiscal year 2003 is 9.1%. A one percent change in the estimated long-term
  rate of return on plan assets would have resulted in a change in operating income
  of $2.9 million for the two quarters ended November 30, 2002. In connection
  with the Sony/Tektronix Acquisition, the Company assumed the assets and liabilities
  of the Japan subsidiary. The estimated return on plan assets related to this
  plan is 6.5%. Only two months of operations were included in the Consolidated
  Statement of Operations as of November 30, 2002. Management will continue to
  assess the expected long-term rate of return on plan assets assumption based
  on relevant market conditions as prescribed by accounting principles generally
  accepted in the United States of America, and will make adjustments to the assumption
  as appropriate. Pension income or expense is allocated to Cost of sales, Research
  and development and Selling, general and administrative expenses in the Condensed
  Consolidated Statements of Operations.

Income
  Taxes

The
  Company is subject to taxation from federal, state and international jurisdictions.
  The Companys annual provision for income taxes and the determination of
  the resulting deferred tax assets and liabilities involves a significant amount
  of management judgment and is based on the best information available at the
  time. The actual income tax liabilities to the jurisdictions with respect to
  any fiscal year are ultimately determined long after the financial statements
  have been published. The Company believes that adequate liabilities have been
  established for any additional tax and interest that may be assessed. The

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liabilities
  are frequently reviewed for their adequacy. As of November 30, 2002, the Company
  was subject to income tax audits for fiscal years 1998 through 2002. Included
  in these years subject to audit are the sales of the Color Printing and Imaging
  Division and the Video and Networking Division, which were complex transactions
  from a tax perspective. The liabilities associated with these years will ultimately
  be resolved when events such as the completion of audits by the taxing jurisdictions
  occur. To the extent the audits or other events result in a material adjustment
  to the accrued estimates, the effect would be recognized in Income tax (benefit)
  expense in the Condensed Consolidated Statement of Operations in the period
  of the event.

Subsequent
  to August 31, 2002, the Company negotiated a settlement with the United States
  Internal Revenue Service (IRS) with respect to their audit of the
  fiscal years 1998 through 2000. As a result of the audits settled and the current
  audit activity in progress, the Company revised its estimated liability for
  income taxes as of August 31, 2002. The revision resulted in a $12.5 million
  net reduction of previously estimated liabilities. This had the effect of reducing
  Accounts payable and accrued liabilities on the Condensed Consolidated Balance
  Sheet and decreased the Income tax expense on the Condensed Consolidated Statement
  of Operations in the first quarter of fiscal year 2003. With the completion
  of the IRS audit for fiscal years 1998 through 2000, the Companys open
  years for United States federal purposes are now 2001 and 2002. As of November
  30, 2002, the Company maintains estimated liabilities for open IRS and other
  taxing jurisdiction assessments, as discussed above. The settlement of additional
  open audits or changes in other circumstances could result in further material
  adjustment to the estimated liability and the associated tax expense in the
  period in which such events occur.

Judgment
  is also applied in determining whether deferred tax assets will be realized
  in full or in part. When it is more likely than not that all or some portion
  of specific deferred tax assets such as foreign tax credit carryovers or net
  operating loss carryforwards will not be realized, a valuation allowance must
  be established for the amount of the deferred tax assets that are determined
  not to be realizable. As of November 30, 2002, the Company had established a
  valuation allowance against deferred tax assets, and had not established valuation
  allowances against other deferred tax assets based on tax strategies planned
  to mitigate the risk of impairment to these assets. Accordingly, if the Companys
  facts or financial results were to change thereby impacting the likelihood of
  realizing the deferred tax assets, judgment would have to be applied to determine
  changes to the amount of the valuation allowance required to be in place on
  the financial statements in any given period. The Company continually evaluates
  strategies that could allow the future utilization of its deferred tax assets,
  including those related to Tektronix Japan.

Second Quarter Fiscal
  Year 2003 Compared to Second Quarter Fiscal Year 2002

Economic
  Conditions

Beginning
  in fiscal year 2001 and continuing during fiscal year 2002, economic conditions
  have had a negative impact on many markets into which the Company sells products
  including, but not limited to, optical design and manufacturing, mobile handset
  manufacturing, automated test equipment, telecommunications and semiconductor
  design and manufacturing. Capital spending within these industries, the area
  that most impacts the Company, declined significantly in fiscal year 2002. The
  telecommunications and optical industries experienced the most substantial downturns
  during fiscal year 2002. These conditions adversely impacted the Company throughout
  fiscal year 2002, and have continued into fiscal year 2003. In response to the
  reduced level of orders and associated sales, the Company incurred business
  realignment costs of $27.0 million during fiscal year 2002. These costs were
  incurred in an effort to reduce fixed costs in future periods by reducing headcount
  and restructuring operations in certain foreign and domestic locations. During
  the first two quarters of fiscal year 2003, the Company incurred business realignment
  costs of $12.8 million, as discussed above. Management of the Company anticipates
  that business realignment costs will increase in the third quarter of fiscal
  year 2003 to approximately $15.0 million for that quarter. This increase is
  in part associated with the restructuring of the Japan subsidiary acquired through
  the Sony/Tektronix Acquisition. Management of the Company is unable to predict
  the ultimate severity and duration of the recent economic conditions or their
  impact on the Company.

Product
  Orders

Product
  orders consist of cancelable commitments to purchase currently produced products
  by customers with delivery scheduled generally within six months of being recorded.
  Consolidated product

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orders for
  the second quarter of fiscal year 2003 were $181.0 million, an increase of $0.7
  million from product orders of $180.3 million in the second quarter of fiscal
  year 2002. The slight increase is due to the $7.2 million incremental impact
  of orders recorded by the newly acquired Japan subsidiary, which was partially
  offset by the continued declining economic conditions as discussed above. Consolidated
  product orders for the first two quarters of fiscal year 2003 were $371.9 million,
  an increase of $27.0 million or 8% from product orders of $344.9 million in
  the first two quarters of fiscal year 2002. This increase was primarily due
  to an extra week of operations in the Companys first quarter of fiscal
  year 2003, which had 14 weeks as compared to 13 weeks in the first quarter of
  the prior year, as well as higher than average cancellations in the first quarter
  of fiscal year 2002. Additionally, the incremental impact of $7.2 million from
  acquisition of the Japan subsidiary contributed to this increase over the prior
  year comparable period.

In
  the second quarter, orders from the Americas were $79.1 million, a decrease
  of $7.7 million or 9% from the second quarter of the prior year. This decrease
  was primarily attributable to the United States, which decreased to $74.0 million,
  or 8%, from $80.1 million in the prior year. The decline in the United States
  as compared with the prior year is primarily related to the continued decline
  in the economic conditions of the end markets into which the Company sells its
  products. See the Economic Conditions section above.

Orders
  from Japan were $17.9 million, an increase of $5.2 million or 41% from the second
  quarter fiscal year 2002 orders. The increase in Japan is primarily due to the
  incremental impact of inclusion of orders from the newly acquired Japan subsidiary.
  In addition, orders from the Pacific, excluding Japan, were $39.6 million, up
  $5.7 million or 17% from the second quarter of the prior year. Orders from Europe
  declined to $44.4 million, a decrease of $2.4 million or 5% from the second
  quarter of fiscal year 2002 as a result of difficult economic conditions in
  the Europe region.

For
  the first two quarters of fiscal year 2003, orders from the Americas were $165.3
  million, an increase of $8.7 million or 6% from the first quarter of the prior
  year, which was primarily due to the United States, which increased to $154.3
  million, or 8%, from $142.7 million in the prior year. Growth in the United
  States as compared with the prior year is primarily attributable to the extra
  week in the current fiscal year as well as higher than average cancellations
  in the first quarter of fiscal year 2002. Orders from Japan were $40.6 million,
  an increase of $13.2 million or 48% from the first two quarters of fiscal year
  2002. This increase in Japan orders is primarily due to the $7.2 million incremental
  impact from inclusion of orders from the newly acquired Japan subsidiary in
  the second quarter of fiscal year 2003. In addition, orders from the Pacific,
  excluding Japan, were $83.3 million, up $12.1 million or 17% from the first
  two quarters of the prior year. Orders from Europe declined to $82.7 million,
  a decrease of $7.1 million or 8% from the first two quarters of fiscal year
  2002 as a result of continued difficult economic conditions in the Europe region.

Net
  Sales

Net
  sales for the second quarter of fiscal year 2003 were $204.6 million, a decrease
  of $3.0 million from net sales of $207.6 million in the second quarter of fiscal
  year 2002. Net sales for the first two quarters of fiscal year 2003 were $405.9
  million, a decrease of $9.4 million from net sales of $415.3 million in the
  first two quarters of fiscal year 2002. The decreases in net sales are primarily
  attributable to continued weakness in the markets into which the Company sells
  it products as well as constrained backlog in the current year as compared with
  the prior year. As backlog levels are reduced, the Company becomes more reliant
  on the timing of order receipts within the quarter to convert orders to sales.
  The decline in sales was partially offset by a $6.2 million increase resulting
  from the incremental impact of consolidation of the newly acquired Japan subsidiary
  and $6.6 million of sales related to the sale of optical transmission test products
  described above in Recent Transactions.

In
  the second quarter of the current year, net sales from the Americas, including
  the United States, were $101.2 million, nearly flat with sales of $101.5 million
  in the second quarter of the prior year. Net sales from Japan were $18.2 million,
  an increase of $4.7 million or 35% from the second quarter fiscal year 2002
  sales, primarily due to a $6.2 million increase resulting from the incremental
  impact of consolidation of the newly acquired Japan subsidiary. In addition,
  sales from the Pacific, excluding Japan, were $41.5 million, up $2.3 million
  or 6% from the second quarter of the prior year. Sales from Europe declined
  to $43.7 million, a decrease of $9.7 million or 18% from the second quarter
  of fiscal year

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2002. The
  increase in sales in the Pacific, excluding Japan, and the decrease in Europe
  are consistent with the trend of orders in these regions during these comparative
  time frames.

For
  the first two quarters of fiscal year 2003, net sales from the Americas were
  $198.0 million, a decrease of $22.9 million or 10% from the first two quarters
  of the prior year. This decrease was comprised of the United States, which decreased
  to $187.0 million, down 9%, from $204.4 million in the prior year and the Other
  Americas, which decreased to sales of $11.0 million, down 33% from $16.5 million
  in the prior year. The decrease in the Americas was primarily the result of
  lower backlog levels, which constrained the Companys ability to generate
  sales through the reduction of backlog. As noted above, orders in the Americas
  region increased slightly during this time frame.

Net
  sales from Japan were $37.9 million, an increase of $5.8 million or 18% from
  sales in the first two quarters of fiscal year 2002, primarily due to a $6.2
  million increase resulting from the incremental impact of consolidation of the
  newly acquired Japan subsidiary In addition, sales from the Pacific, excluding
  Japan, were $83.5 million, up $16.8 million or 25% from the first two quarters
  of the prior year. This increase is the result of increased orders in this region
  during these comparative periods. Sales from Europe declined to $86.6 million,
  a decrease of $9.0 million or 9% from the first two quarters of fiscal year
  2002 as a result of the decline in orders during these comparative periods.

Gross
  Profit and Gross Margin

Consolidated
  gross profit was $101.1 million for the second quarter of fiscal year 2003,
  a decrease of 2% from gross profit of $103.1 million for the second quarter
  of fiscal year 2002. This decrease was primarily due to the lower sales volume
  in the current quarter and to a lesser degree a slight reduction in gross margin
  from 49.7% in the second quarter of fiscal year 2002 to 49.4% in the second
  quarter of the current year. This decrease in gross margin is the net effect
  of the negative impact of $6.6 million of sales with zero gross profit, offset
  by the favorable impact from incremental margins resulting from the consolidation
  of the newly acquired Japan subsidiary. The $6.6 million of sales with zero
  associated gross profit was generated by the sale of the inventory and related
  technology of the optical transmission test products to DLI noted above in recent
  transactions.

Operating
  Expenses

For
  the second quarter of fiscal year 2003, operating expenses were $95.9 million,
  an increase of $2.7 million from $97.7 million for the second quarter of fiscal
  year 2002. This resulted in operating income of $6.1 million, or 3% of net sales
  during the second quarter of the current year, compared with operating income
  of $5.4 million, or 3% of net sales in the same quarter of the prior year.

For
  the first two quarters of fiscal year 2003, operating expenses were $187.2 million,
  a decrease of $6.9 million from $194.1 million for the first two quarters of
  fiscal year 2002. This resulted in operating income of $13.6 million, or 3%
  of net sales during the first two quarters of the current year, compared with
  operating income of $12.6 million, or 3% of net sales in the same period of
  the prior year.

During
  the quarter and two quarters ended November 30, 2002, the Companys operating
  expenses included $10.6 million of incremental operating expenses resulting
  from the consolidation of the newly acquired Japan subsidiary. Included in operating
  expenses is Equity in business ventures loss, which represents Tektronix percentage
  share of net income for investments accounted for under the equity method. For
  the periods presented, Equity in business ventures loss included only Tektronix
  50% share of income from Sony/Tektronix. As the results of Sony/Tektronix will
  now be consolidated into the Tektronix results of operations. Equity in business
  ventures loss in future periods will not include the results attributable to
  Sony/Tektronix.

Research
  and development expenses were $25.1 million during the second quarter of fiscal
  year 2003, a decrease of $4.9 million from $30.0 million in the same quarter
  in the prior year. As a percentage of net sales, research and development expenses
  decreased to 12% in the second quarter of the current year from 14% a year ago.
  During the first two quarters of fiscal year 2003, Research and development
  expenses were $50.0 million or 12% of net sales, as compared with $62.2 million
  or 15% of net sales in the same period of the prior year. These decreases are
  the net result of higher spending associated with the timing of new product
  launches in the first two quarters of fiscal year 2002 partially offset by an
  extra week of operations

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in the first
  quarter of fiscal year 2003 and $1.7 million from the incremental impact of
  consolidating the newly acquired Japan subsidiary.

Selling,
  general and administrative expenses were $63.8 million or 31% of net sales for
  the second quarter of fiscal year 2003, an increase of $4.5 million from $59.3
  million, or 29% of net sales for the prior year. The increase was primarily
  due to $7.7 million of incremental expenses incurred by Tektronix Japan as well
  as the impact of pay raises granted to employees in the current quarter, partially
  offset by the positive impact of continued cost reduction actions taken during
  fiscal year 2002 and the first two quarters of fiscal year 2003. During the
  first two quarters of fiscal year 2003, Selling, general and administrative
  expenses were $120.2 million or 30% of net sales, as compared with $114.1 million
  or 28% in the same period in the prior year. The increase was primarily due
  to higher labor related spending as a result of the extra week of operations
  included in the first quarter of fiscal year 2003, raises granted to employees
  in the current quarter and the $7.7 million of incremental expenses associated
  with the consolidation of Tektronix Japan. These increases were partially offset
  by the positive impact of cost reduction actions taken during fiscal year 2002
  and the first two quarters of fiscal year 2003.

Equity
  in business ventures loss represents the Companys 50% share of net
  loss from Sony/Tektronix. During the second quarter of fiscal year 2003, the
  Company completed the acquisition of Sony/Tektronix. Results prior to the date
  of acquisition are included in Equity in business ventures loss at Tektronix
  ownership percentage. Results subsequent to the acquisition date have been consolidated
  in the operating results of the Company. See the discussion in Recent Transactions
  section of the Managements Discussion and Analysis for further information
  on this acquisition. Equity in business ventures loss was $1.4 million
  for the second quarter of fiscal year 2003, compared with equity losses of $0.6
  million in the same quarter a year ago. In the first two quarters of fiscal
  year 2003, Equity in business ventures loss was $2.9 million as compared
  with $1.6 million in the first two quarters of fiscal year 2002. These increases
  are the result of increased losses at Sony/Tektronix as a result of the continued
  weakening of economic conditions in the Japan region.

During
  the second quarter of fiscal year 2003, the Company incurred $3.3 million of
  business realignment costs including $0.8 million resulting from the impairment
  of an intangible asset and $4.8 million of severance resulting from actions
  to realign the Companys cost structure, offset by $2.3 million of reversals
  related to previously recorded business realignment costs. The intangible asset
  impairment relates to acquired Bluetooth technology and was impaired due to
  a lower than previously anticipated market potential for the Company's products
  related to this technology. The impairment was determined using the present
  value of estimated cash flows related to the asset. The $4.8 million of severance
  related business realignment costs resulted from the termination of 150 employees.
  The $2.3 million reversal was primarily the result of previously accrued expenditures,
  which have been mitigated by the sale of the Companys optical transmission
  test product line. These reversal items are primarily facilities related.

During
  the first two quarters of fiscal year 2003, the Company incurred $12.8 million
  of business realignment costs including $9.1 million resulting from the impairment
  of the intangible asset discussed above, $6.3 million of severance for the termination
  of 187 employees resulting from actions to realign the Companys cost structure,
  and $0.4 million of costs associated with the closure of certain facilities.
  These costs were offset by $3.0 million of reversals of previous business realignment
  costs.

During
  the second quarter of fiscal year 2003, the Company incurred $1.8 million of
  Acquisition related costs. These costs relate to the Sony/Tektronix Acquisition
  completed during the second quarter of fiscal year 2003. See the discussion
  in Recent Transactions section of the Managements Discussion and Analysis
  for further information on this acquisition.

For
  the second quarter and the two quarters ended November 30, 2002, the Company
  recognized a gain on disposal of fixed assets of $0.5 million. This compares
  with a loss on sale of fixed assets of $3.4 million for the second quarter of
  the prior year and $3.8 million for the first two quarters of the prior fiscal
  year. The change from these prior year comparative periods is due to the $3.6
  million impairment of a building in the second quarter of the prior fiscal year.

Non-Operating
  Income / Expense

Interest
  expense was $1.3 million for the second quarter of fiscal year 2003, as compared
  with $2.6 million in the same quarter of the prior year. For the two quarters
  ended November 30, 2002, interest expense was $3.3 million as compared with
  $5.3 million in the same period of the prior year. The overall decrease in interest
  expense is due to a reduction in the average balance of outstanding debt due
  to the Companys retirement of outstanding long-term debt and the extinguishment
  of $41.8 million of long-term debt at the scheduled payment date of August 15,
  2002.

21

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Interest
  income was $7.3 million in the second quarter of fiscal year 2003 as compared
  with $8.5 million in the same quarter a year ago. For the two quarters ended
  November 30, 2002, interest income was $14.9 million as compared with $18.6
  million in the same period of the prior year. The decrease in interest income
  can be primarily attributed to lower returns on investments in the first two
  quarters of fiscal year 2003 as compared to investment returns in the same period
  of fiscal year 2002 due to decreases in interest rates and to a lesser degree,
  a lower average balance of cash and marketable investments during the comparative
  periods.

Other
  expense, net was $1.5 million in the second quarter of fiscal year 2003 as compared
  with zero in the prior year. For the two quarters ended November 30, 2002, other
  expense was $2.0 million as compared with $3.6 million in the same period of
  the prior year. This includes items such as foreign currency translation and
  other miscellaneous fees and expenses.

Income
  Taxes

Income
  tax (benefit) expense from continuing operations was an expense of $3.7 million
  in the second quarter of fiscal year 2003 as compared with expense of $3.9 million
  in the same quarter of the prior year. For the first two quarters of fiscal
  year 2003, the income tax benefit was $4.4 million as compared with expense
  of $7.8 million in the first two quarters of fiscal year 2002. The benefit recognized
  in the first quarter of fiscal year 2003 was a $12.5 million income tax benefit
  resulting from the settlement of the IRS audit of the Companys fiscal
  years 1998, 1999 and 2000. The effective tax rate in both periods, excluding
  the IRS settlements, was 35%. Included in the Companys income tax expense
  (benefit) for the quarter and two quarters ended November 30, 2002, were $1.6
  million of income tax benefits related to the operations of Tektronix Japan
  acquired in the second quarter of fiscal year 2003. For further discussion on
  this acquisition see the Recent Transactions section of this Managements
  Discussion and Analysis.

Discontinued
  Operations

In
  the second quarter of fiscal year 2003, the Company recognized loss from discontinued
  operations of $2.2 million related to the VT.c subsidiary, which was sold on
  November 7, 2002 as described in the Recent Transactions section above. $0.4
  million of this loss was the result of the sale of the operations while the
  remaining $1.8 million was the actual operations for VT.c during the quarter
  prior to the sale. For the quarter ended November 24, 2001, VT.c had earnings
  of $0.6 million which were classified as discontinued operations.

For
  the first two quarters of fiscal year 2003, the Company recognized loss from discontinued
  operations of $3.0 million related to the VT.c subsidiary. $0.4 million of this
  loss was the result of the sale of the operations while the remaining $2.6 million
  was the actual operations for VT.c during the year prior to the sale. For the
  two quarters ended November 24, 2001, VT.c had net earnings of $0.8 million
  which were classified as discontinued operations. The Company also reached settlement
  on certain outstanding contingencies related to the sale of the Color Printing
  and Imaging division to Xerox Corporation. The settlement of these contingencies
  resulted in an additional gain on the sale of $0.9 million net of tax.

Net
  Earnings

The
  Company recognized consolidated net earnings of $4.7 million for the quarter
  ended November 30, 2002, down from $8.0 million for the quarter ended November
  24, 2001. This decrease was primarily due to the $2.2 million loss associated
  with discontinued operations recorded in the second quarter of fiscal year 2003.
  For the two quarters ended November 30, 2002, the Company recognized consolidated
  net earnings of $24.5 million, up from $16.2 million recorded for the same period
  in the prior year. This increase was primarily due to the $12.5 million income
  tax benefit recorded in fiscal year 2003, partially offset by $3.0 million of
  loss associated with discontinued operations recorded in the two quarters ended
  November 30, 2002.

22

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Earnings
  Per Share

For
  the quarter ended November 30, 2002, the Company recognized $0.05 net earnings
  per basic and diluted share. For the quarter ended November 24, 2001, the Company
  recognized basic and diluted earnings per share of $0.09. The decrease in earnings
  per share is a result of decreased net earnings discussed above, partially offset
  by a decrease in the weighted average basic and diluted shares outstanding due
  to shares repurchased by the Company during fiscal year 2002 and the first two
  quarters of fiscal year 2003.

For
  the two quarters ended November 30, 2002, the Company recognized $0.28 net earnings
  per basic and diluted share. For the two quarters ended November 24, 2001, the
  Company recognized basic and diluted earnings per share of $0.18. The increase
  in earnings per share is a result of increased net earnings discussed above
  and a decrease in the weighted average basic and diluted shares outstanding
  due to shares repurchased by the Company during fiscal year 2002 and the first
  two quarters of fiscal year 2003.

23

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Financial
  Condition, Liquidity and Capital Resources

Financial
  Condition

At
  November 30, 2002, the Companys working capital was $356.9 million, a
  decrease of $119.6 million from the end of fiscal year 2002. Current assets
  decreased $119.6 million primarily due to a decrease in cash and cash equivalents
  as the Company converted $70.3 million of its cash and cash equivalents to long-term
  marketable investments. In addition, the Company extinguished $41.8 million
  of debt at its due date in August 2002 and repurchased $69.3 million of its
  common stock. The Company also had $14.4 million of assets related to the VT.c
  subsidiary as of May 25, 2002, which was sold during the quarter ended November
  30, 2002. These decreases were partially offset by $34.5 million in cash provided
  by operations and $66.2 million of current assets consolidated as a result of
  the Sony/Tektronix Acquisition. Inventories decreased $8.8 million to $112.8
  million as a result of reduction of inventory related to the sale of the optical transmission test products
  described above in Recent Transactions, the Companys ongoing efforts to reduce levels
  of demonstration equipment, improve inventory turns, and to a lesser extent,
  inventory write-offs incurred during the first two quarters. This was partially offset by the addition of $17.3 million
  of inventory consolidated as a result of the Sony/Tektronix Acquisition. Current liabilities
  remained flat at $273.4 million as of November 30, 2002. Accounts payable decreased
  $14.3 million due to a reduction in the taxes payable and relatively lower operating
  expenses during the period. This was offset by the assumption of $22.4 million
  in accounts payable and accrued liabilities consolidated as a result of the
  Sony/Tektronix Acquisition. Accrued compensation increased to $59.3 million
  in the first two quarters of fiscal year 2003 due to $5.1 million of accrued compensation
  from the Sony/Tektronix Acquisition offset by the payment of incentive compensation
  earned in the prior year. The Current portion of long-term debt increased $15.9
  million, which is primarily due to the reclassification from long-term to short-term
  of the $57.3 million due August 2003, reduced by the $41.8 million payment of
  debt on August 15, 2002.

Property,
  plant and equipment, net, increased $23.6 million during the first two quarters
  of fiscal year 2003 to $164.0 million. The increase was due mainly to $36.8
  million of fixed assets acquired in the Sony/Tektronix Acquisition and approximately
  $7.8 million in capital expenditures during the same period. This increase was
  partially offset by $16.4 million of depreciation expense and $3.4 million disposed
  of in the sale of the optical transmission test product line.

The
  Company funded the U.S. pension plan with $15.0 million during the first quarter
  of fiscal year 2003 based on an agreement with the Pension Benefit Guaranty
  Company. This funding reduced Other long-term liabilities on the Condensed Consolidated
  Balance Sheet. The Company consolidated additional pension liability of $61.1
  million from the Sony/Tektronix Acquisition, which is included in Other long-term
  liabilities in the Condensed Consolidated Balance Sheet.

On
  March 15, 2000, the Board of Directors authorized the purchase of up to $550.0
  million of the Companys common stock on the open market or through negotiated
  transactions. During the second quarter of fiscal year 2003, the Company repurchased
  1.1 million shares for $19.6 million. During the first two quarters of fiscal
  year 2003, the Company has repurchased a total of 3.8 million shares for $69.3
  million. As of November 30, 2002, the Company has repurchased a total of 12.1
  million shares at an average price of $22.92 per share totaling $277.4 million
  under this authorization. The Company will continue to repurchase shares under
  this authorization when deemed economically beneficial.

Liquidity
  and Capital Resources

As
  of November 30, 2002, the Company held $713.1 million in cash and cash equivalents
  and marketable investments excluding corporate equity securities, a decrease
  of $43.0 million from the balance of $756.1 million at May 25, 2002. Activity
  during the first two quarters of fiscal year 2003 included the repurchase of
  common stock, the extinguishment of debt and the funding of the pension plan.
  These uses of cash were offset by net earnings and other positive operating
  cash flows.

The
  Company consolidated $53.1 million of long-term debt through the Sony/Tektronix
  Acquisition, which is due on September 29, 2006. At November 30, 2002, the Company
  maintained unsecured bank credit facilities totaling $146.0 million, of which
  $91.2 million was unused.

Cash
  on hand, cash flows from operating activities and current borrowing capacity
  are expected to be sufficient to fund operations, acquisitions and potential
  acquisitions, capital expenditures and contractual obligations for the next
  12 months.

24

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Recent
  Accounting Pronouncements

In
  August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
  or Disposal of Long-Lived Assets. This Statement supersedes FASB Statement
  No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
  Assets to Be Disposed Of, and the accounting and reporting provisions
  of APB Opinion No. 30, Reporting the Results of Operations--Reporting
  the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual
  and Infrequently Occurring Events and Acquisitions, for the disposal of
  a segment of a business. SFAS No. 144 maintains the method for recording an
  impairment on assets to be held under SFAS No. 121 and establishes a single
  accounting model based on the framework established in SFAS No. 121 for long-lived
  assets to be disposed of by sale. This statement also broadens the presentation
  of discontinued operations to include more disposal activities. The provisions
  of SFAS No. 144 are effective for financial statements issued for fiscal year
  2003. The Company adopted the provisions of this statement, which did not have
  a material impact on the financial results of the Company, as of the beginning
  of the first quarter of fiscal year 2003.

In
  July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
  with Exit or Disposal Activities. The standard requires companies to recognize
  costs associated with exit or disposal activities when they are incurred rather
  than at the date of a commitment to an exit or disposal plan. Costs covered
  by the standard include lease termination costs and certain employee severance
  costs that are associated with a restructuring, discontinued operation, plant
  closing, or other exit or disposal activity. This statement is to be applied
  prospectively to exit or disposal activities initiated after December 31, 2002.
  Management believes the adoption of the provisions of this statement will not
  have a material effect on the Companys consolidated financial statements.

In
  October 2002, the Emerging Issues Task Force (EITF) issued EITF
  00-21, Accounting for Revenue Arrangements with Multiple Deliverables.
  This standard addresses revenue recognition accounting by a vendor for arrangements
  under which it will perform multiple revenue-generating activities. This statement
  is to be effective for the Companys fiscal year 2004. Management believes
  the adoption of the provisions of this statement will not have a material effect
  on the Companys consolidated financial statements.

Risks
  and Uncertainties

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

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

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

25

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Timely
  Delivery of Competitive Products

Tektronix
  sells its products to customers that participate in rapidly changing high technology
  markets, which are characterized by short product life cycles. The Companys
  ability to deliver a timely flow of competitive new products and market acceptance
  of those products, as well as the ability to increase production or to develop
  and maintain effective sales channels, is essential to growing the business.
  Because Tektronix sells test and measurement products that enable its customers
  to develop new technologies, the Company must accurately predict the ever-evolving
  needs of those customers and deliver appropriate products and technologies at
  competitive prices to meet customer demands. The Companys ability to deliver
  such products could be affected by engineering or other development program
  delays as well as the availability of parts and supplies from third party providers
  on a timely basis and at reasonable prices. Failure to deliver competitive products
  in a timely manner and at a reasonable price could have an adverse effect on
  the results of operations, financial condition or cash flows of the Company.

Competition

In
  general, Tektronix competes with a number of companies in specialized areas
  of other test and measurement products and one large broad line measurement
  products supplier, Agilent Technologies. Other competitors include Acterna Corporation,
  Anritsu, LeCroy Corporation, Spirent, Yokogawa and many other smaller companies.
  Competition in the Companys business is based primarily on product performance,
  technology, customer service, product availability and price. Some of the Companys
  competitors may have greater resources to apply to each of these factors and
  in some cases have built significant reputations with the customer base in each
  market in which Tektronix competes. The Company may face pricing pressures that
  may have an adverse impact on the Companys earnings. If the Company is
  unable to compete effectively on these and other factors, it could have a material
  adverse effect on the Companys results of operations, financial condition
  or cash flows.

Supplier
  Risks

The
  Companys manufacturing operations are dependent on the ability of suppliers
  to deliver quality components, subassemblies and completed products in time
  to meet critical manufacturing and distribution schedules. The Company periodically
  experiences constrained supply of certain component parts in some product lines
  as a result of strong demand in the industry for those parts. Such constraints,
  if persistent, may adversely affect operating results until alternate sourcing
  can be developed. Volatility in the prices of these component parts, an inability
  to secure enough components at reasonable prices to build new products in a
  timely manner in the quantities and configurations demanded or, conversely,
  a temporary oversupply of these parts, could adversely affect the Companys
  future operating results. In addition, the Company uses certain sole sourced
  components which are integral to a variety of products. Disruption in key sole
  sourced suppliers could have a significant adverse effect on the Companys
  results of operations.

Worldwide
  Economic and Market Conditions

The
  Company maintains operations in four major geographies: the Americas, including
  the United States, Mexico, Canada and South America; Europe, including the Middle
  East and Africa; the Pacific, excluding Japan; and Japan. During the last fiscal
  year, nearly one half of the Companys revenues were from international
  sales. In addition, some of the Companys manufacturing operations and
  key suppliers are located in foreign countries. As a result, the business is
  subject to the worldwide economic and market conditions risks generally associated
  with doing business globally, such as fluctuating exchange rates, the stability
  of international monetary conditions, tariff and trade policies, domestic and
  foreign tax policies, foreign governmental regulations, political unrest, wars
  and other acts of terrorism and changes in other economic or political conditions.
  These factors, among others, could influence the Companys ability to sell
  in global markets, as well as its ability to manufacture products or procure
  supplies. A significant downturn in the global economy could adversely affect
  the Companys results of operations, financial position or cash flows.

26

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Intellectual
  Property Risks

As
  a technology-based company, Tektronix success depends on developing and
  protecting its intellectual property. Tektronix relies generally on patent,
  copyright, trademark and trade secret laws in the United States and abroad.
  Electronic equipment as complex as most of the Companys products, however,
  is generally not patentable in its entirety. Tektronix also licenses intellectual
  property from third parties and relies on those parties to maintain and protect
  their technology. The Company cannot be certain that actions the Company takes
  to establish and protect intellectual property rights will be adequate. If the
  Company is unable to adequately protect its technology, or if the Company is
  unable to continue to obtain or maintain licenses for protected technology from
  third parties, it could have a material adverse affect on the Companys
  results of operations, financial position or cash flows. From time to time in
  the usual course of business, the Company receives notices from third parties
  regarding intellectual property infringement or takes action against others
  with regard to intellectual property rights. Even where the Company is successful
  in defending or pursuing such claims, the Company may incur significant costs.
  In the event of a successful claim against the Company, Tektronix could lose
  its rights to needed technology or be required to pay license fees for the infringed
  rights, either of which could have an adverse impact on the Companys business.

Environmental
  Risks

Tektronix
  is subject to a variety of federal, state, local and foreign environmental regulations
  relating to the use, storage, discharge and disposal of its hazardous chemicals
  used during the Companys manufacturing process. The Company has operated
  and is in the process of closing a licensed hazardous waste management facility
  at its Beaverton, Oregon campus. If Tektronix fails to comply with any present
  and future regulations, the Company could be subject to future liabilities or
  the suspension of production. In addition, such regulations could restrict the
  Companys ability to expand its facilities or could require Tektronix to
  acquire costly equipment, or to incur other significant expenses to comply with
  environmental regulations.

Sony/Tektronix
  Corporation Acquisition

Acquisition
  of Sony Corporations 50% interest in Sony/Tektronix Corporation was completed
  at the end of September 2002. Upon completion of the acquisition, the Companys
  ownership of Sony/Tektronix increased from 50% to 100%, and the Company is now
  exposed to a greater financial impact from Sony/Tektronix operations. The acquisition
  will likely negatively impact the Companys results of operations during
  fiscal year 2003. In addition, operation of Sony/Tektronix as a wholly owned
  business will involve additional risks, including integration risks, the risks
  of doing business as a foreign owner in Japan and risks related to the economic
  environment in Japan.

Possible
  Volatility of Stock Price

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

Other
  Risk Factors

Other
  risk factors include but are not limited to changes in the mix of products sold,
  regulatory and tax legislation, changes in effective tax rates, inventory risks
  due to changes in market demand or the Companys business strategies, potential
  litigation and claims arising in the normal course of business, credit risk
  of customers, the fact that a substantial portion of the Companys sales
  are generated from orders received during each quarter and other risk factors.

27

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Item 3. Quantitative
  and Qualitative Disclosures About Market Risk

Financial
  Market Risk

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

The
  Company maintains a short-term and long-term investment portfolio consisting
  of fixed rate commercial paper, corporate notes and bonds, asset backed securities
  and mortgage securities. The weighted average maturity of the portfolio, excluding
  mortgage securities, is two years or less. Mortgage securities may have a weighted
  average life of less than seven years and are managed consistent with the Lehman
  Mortgage Index. An increase in interest rates would decrease the value of certain
  of these investments. A 10% adverse change in interest rates would reduce the
  market value by $2.4 million, which would be reflected in Other comprehensive
  loss on the Condensed Consolidated Balance Sheets until sold.

At
  November 30, 2002, the Companys bond debt obligation had a fixed interest
  rate. The fair value of the bond debt instrument at November 30, 2002 was $59.0
  million compared to the carrying value of $57.3 million. The Companys
  bank loan obligation has a variable interest rate. The fair value of the bank
  loan approximates the carrying value. A hypothetical 10% adverse change in interest
  rates would have a $0.1 million negative impact on the combined fair value,
  which would not be reflected in the Companys financial statements.

The
  Company is exposed to equity price risk primarily through its marketable equity
  securities portfolio, including investments in Merix Corporation, Tut Systems,
  Inc., and other companies. The Company has not entered into any hedging programs
  to mitigate equity price risk. In managements opinion, an adverse change
  of 20% in the value of these securities would reduce the market value by $2.7
  million, which would be reflected in Other comprehensive loss on the Condensed
  Consolidated Balance Sheets until sold.

The
Company is exposed to foreign currency
  exchange rate risk primarily through acquisitions and commitments denominated
  in foreign currencies. The Company utilizes derivative financial instruments,
  primarily forward foreign currency exchange contracts, generally with maturities
  of one to three months, to mitigate this risk where natural hedging strategies
  cannot be employed. The Companys policy is to only enter into derivative
  acquisitions when the Company has an identifiable exposure to risk, thus not
  creating additional foreign currency exchange rate risk. The potential loss
  in fair value at November 30, 2002, for such contracts resulting from a hypothetical
  10% adverse change in all foreign currency exchange rates is approximately $2.4
  million. This loss would be mitigated by corresponding gains on the underlying
  exposures.

Item 4. Controls and
  Procedures

(a)
  Evaluation of disclosure controls and procedures. The Companys chief executive
  officer and chief financial officer, after evaluating the effectiveness of the
  Companys disclosure controls and procedures (as defined in
  the Securities Exchange Act of 1934 Rules 13a-14(c) and 15-d-14(c)) as of a
  date (the Evaluation Date) within 90 days before the filing date
  of this quarterly report, have concluded that as of the Evaluation Date, the
  Companys disclosure controls and procedures were effective and designed
  to ensure that material information relating to the Company and the Companys
  consolidated subsidiaries would be made known to them by others within those
  entities.

(b)
  Changes in internal controls. There were no significant changes in the Companys
  internal controls or in other factors that could significantly affect those
  controls subsequent to the Evaluation Date.

28

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Part
  II OTHER INFORMATION

Item 6. Exhibits and
  Reports on Form 8-K

(a)
  Exhibits

(99.1)
    Certification of Richard H. Wills

(99.2)
    Certification of Colin L. Slade

(b)
  No reports on Form 8-K have been filed during the quarter for which this report
  is filed.

29

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SIGNATURE

Pursuant
  to the requirements of the Securities Exchange Act of 1934, the Registrant has
  duly caused this report to be signed on its behalf by the undersigned thereunto
  duly authorized.



|December
      26, 2002 | TEKTRONIX,
      INC.
|----------------------- | ---------------------
|                        |                      
|                        | By                   
|                        |                      
|                        |                      



30

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I, Richard H. Wills, President
  and Chief Executive Officer of the Company, certify that:

1. I
  have reviewed this quarterly report on Form 10-Q of Tektronix, Inc.;

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

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

4. 
  The registrant's other certifying officers and I are responsible for establishing
  and maintaining disclosure controls and procedures (as defined in Exchange Act
  Rules 13a-14 and 15d-14) for the registrant and we have:

> a) designed such disclosure
>     controls and procedures to ensure that material information relating to the
>     registrant, including its consolidated subsidiaries, is made known to us by
>     others within those entities, particularly during the period in which this
>     quarterly report is being prepared;
>   b) evaluated the effectiveness
>     of the registrant's disclosure controls and procedures as of a date within
>     90 days prior to the filing date of this quarterly report (the "Evaluation
>     Date"); and
>   c) presented in this quarterly
>     report our conclusions about the effectiveness of the disclosure controls
>     and procedures based on our evaluation as of the Evaluation Date;

5. 
  The registrant's other certifying officers and I have disclosed, based on our
  most recent evaluation, to the registrant's auditors and the audit committee
  of registrant's board of directors (or persons performing the equivalent function):

> a) all significant deficiencies
>     in the design or operation of internal controls which could adversely affect
>     the registrant's ability to record, process, summarize and report financial
>     data and have identified for the registrant's auditors any material weaknesses
>     in internal controls; and
>   b) any fraud, whether or
>     not material, that involves management or other employees who have a significant
>     role in the registrant's internal controls; and

6. 
  The registrant's other certifying officers and I have indicated in this quarterly
  report whether or not there were significant changes in internal controls or
  in other factors that could significantly affect internal controls subsequent
  to the date of our most recent evaluation, including any corrective actions
  with regard to significant deficiencies and material weaknesses.



|Date: December
      26, 2002 |                                                                       | 
|----------------------------- | --------------------------------------------------------------------- | 
|                              | /s/
      RICHARD H. WILLS                                            | 
|                              |                                                                       | 
|                              | Richard
        H. WillsPresident and Chief Executive
        Officer | 

31

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I, Colin L. Slade, Senior
  Vice President and Chief Financial Officer, certify that:

1. I
  have reviewed this quarterly report on Form 10-Q of Tektronix, Inc.;

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

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

4. 
  The registrant's other certifying officers and I are responsible for establishing
  and maintaining disclosure controls and procedures (as defined in Exchange Act
  Rules 13a-14 and 15d-14) for the registrant and we have:

> a) designed such disclosure
>     controls and procedures to ensure that material information relating to the
>     registrant, including its consolidated subsidiaries, is made known to us by
>     others within those entities, particularly during the period in which this
>     quarterly report is being prepared;
>   b) evaluated the effectiveness
>     of the registrant's disclosure controls and procedures as of a date within
>     90 days prior to the filing date of this quarterly report (the "Evaluation
>     Date"); and
>   c) presented in this quarterly
>     report our conclusions about the effectiveness of the disclosure controls
>     and procedures based on our evaluation as of the Evaluation Date;

5. 
  The registrant's other certifying officers and I have disclosed, based on our
  most recent evaluation, to the registrant's auditors and the audit committee
  of registrant's board of directors (or persons performing the equivalent function):

> a) all significant deficiencies
>     in the design or operation of internal controls which could adversely affect
>     the registrant's ability to record, process, summarize and report financial
>     data and have identified for the registrant's auditors any material weaknesses
>     in internal controls; and
>   b) any fraud, whether or
>     not material, that involves management or other employees who have a significant
>     role in the registrant's internal controls; and

6. 
  The registrant's other certifying officers and I have indicated in this quarterly
  report whether or not there were significant changes in internal controls or
  in other factors that could significantly affect internal controls subsequent
  to the date of our most recent evaluation, including any corrective actions
  with regard to significant deficiencies and material weaknesses.



|Date: December
      26, 2002 |                                                                                 | 
|----------------------------- | ------------------------------------------------------------------------------- | 
|                              | /s/
      COLIN L. SLADE                                                        | 
|                              |                                                                                 | 
|                              | Colin
        L. SladeSenior Vice President
        and Chief Financial Officer | 



32

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EXHIBIT INDEX

|Exhibits No. | Exhibit Description                                                                                                                                                                       
|------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|             |                                                                                                                                                                                           
|(99.1)       | Certification of Richard H. Wills, Principal Executive Officer of Tektronix, Inc. Pursuant to 18 U.S.C. Section 1350 As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|             |                                                                                                                                                                                           
|(99.2)       | Certification of Colin L. Slade, Principal Financial Officer of Tektronix, Inc. Pursuant to 18 U.S.C. Section 1350 As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  

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