---

---

UNITED
STATESSECURITIES
AND EXCHANGE COMMISSIONWashington,
D.C. 20549

_________________

Form
10-Q

|[X] |  | QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- |  | ---------------------------------------------------------------------------------------

For
the quarterly period ended August 30, 2003, or,

|[   ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|----- |  | ----------------------------------------------------------------------------------------

| |  | For the
transition period from ________________ to _____________________.
| |  | -------------------------------------------------------------------------

Commission
File Number 1-04837

_________________

TEKTRONIX, INC.

(Exact name
of registrant as specified in its charter)

|                                | 
|------------------------------- | 
|OREGON                          | 
|                                | 
|(State or other jurisdiction of | 
|incorporation or organization)  | 

|                                         | 
|---------------------------------------- | 
|14200 SW KARL BRAUN DRIVE                | 
|BEAVERTON, OREGON                        | 
|(Address of principal executive offices) | 

(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[   ]

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

AT SEPTEMBER
27, 2003 THERE WERE 84,547,437 COMMON SHARES OF TEKTRONIX, INC. OUTSTANDING.(Indicate
the number of shares outstanding of each of the issuer's classes of common stock, as of
the latest  practicable date.)

---

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TEKTRONIX, INC.
AND SUBSIDIARIES

INDEX

|                                                                    | PAGE NO.
|------------------------------------------------------------------- | --------
|                                                                    |         
|PART I.   FINANCIAL INFORMATION                                     |         
|                                                                    |         
|Item 1.  Financial Statements:                                      |         
|                                                                    |         
|Condensed Consolidated Statements of Operations (Unaudited)        |         
|for the Fiscal Quarter ended August 30, 2003                        |         
|and the Fiscal Quarter ended August 31, 2002                        |         
|                                                                    |         
|Condensed Consolidated Balance Sheets (Unaudited)                  |         
|August 30, 2003 and May 31, 2003                                    |         
|                                                                    |         
|Condensed Consolidated Statements of Cash Flows (Unaudited)        |         
|for the Fiscal Quarter ended August 30, 2003                        |         
|and the Fiscal Quarter ended August 31, 2002                        |         
|                                                                    |         
|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 4.  Submission of Matters to a Vote of Security Holders        |         
|                                                                    |         
|Item 6.  Exhibits and Reports on Form 8-K                           |         
|                                                                    |         
|SIGNATURES                                                          |         

2

---

Part
I   FINANCIAL INFORMATION

Item
1.    Financial Statements

Condensed
Consolidated Statements of Operations(Unaudited)

|                                                                  |  |              
|----------------------------------------------------------------- |  | -------------
|(In thousands, except per share amounts)                          |  |              
|For the fiscal quarters ended                                     |  | Aug. 30, 2003
|                                                                  |  |              
|Net sales                                                         |  | $ 201,438    
|Cost of sales                                                     |  | 92,330       
|                                                                  |  |              
|Gross profit                                                      |  | 109,108      
|                                                                  |  |              
|Research and development expenses                                 |  | 29,102       
|Selling, general and administrative expenses                      |  | 62,525       
|Equity in business ventures loss                                 |  |             
|Business realignment costs                                        |  | 4,626        
|Acquisition related costs                                         |  | 1,316        
|Gain on disposition of assets                                     |  | (36          
|                                                                  |  |              
|Operating income                                                  |  | 11,575       
|                                                                  |  |              
|Interest income                                                   |  | 5,932        
|Interest expense                                                  |  | (1,122       
|Other non-operating expense, net                                  |  | (585         
|                                                                  |  |              
|Income before taxes                                               |  | 15,800       
|                                                                  |  |              
|Income tax expense (benefit)                                      |  | 4,424        
|                                                                  |  |              
|Income from continuing operations                                 |  | 11,376       
|                                                                  |  |              
|Discontinued operations:                                          |  |              
|                                                                  |  |              
|Loss from operations of optical parametric test business (less    | 
|applicable income tax benefit of $0 and $223)                     |  |             
|                                                                  |  |              
|Loss on sale of optical parametric test business (less applicable |  |              
|income tax benefit of $136 and $0)                                |  | (253         
|                                                                  |  |              
|Loss from operations of Gage (less applicable income              |  |              
|tax benefit of $212 and $226)                                     |  | (394         
|                                                                  |  |              
|Loss on sale of Gage (less applicable income tax                  |  |              
|benefit of $457 and $0)                                           |  | (848         
|                                                                  |  |              
|Loss from operations of VideoTele.com (less applicable income tax |  |              
|benefit of $3 and $453)                                           |  | (5           
|                                                                  |  |              
|Loss from discontinued operations                                 |  | (1,500       
|                                                                  |  |              
|Net earnings                                                      |  | $     9,876  
|                                                                  |  |              
|Income per share from continuing operations  basic and diluted   |  | $       0.13 
|                                                                  |  |              
|Loss per share from discontinued operations  basic and diluted   |  | (0.02        
|                                                                  |  |              
|Net earnings per share  basic and diluted                        |  | $       0.12 
|                                                                  |  |              
|Weighted average shares outstanding  basic                       |  | 84,697       
|                                                                  |  |              
|Weighted average shares outstanding  diluted                     |  | 85,816       

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

3

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Condensed
Consolidated Balance Sheets(Unaudited)

|                                                     |  |              
|---------------------------------------------------- |  | -------------
|(In thousands)                                       |  | Aug. 30, 2003
|                                                     |  |              
|ASSETS                                               |  |              
|Current assets:                                      | 
|Cash and cash equivalents                            |  | $    145,254 
|Short-term marketable investments                    |  | 92,478       
|Trade accounts receivable, net of allowance for      |  |              
|doubtful accounts of $3,864 and $3,756, respectively |  | 97,814       
|Inventories                                          |  | 86,869       
|Other current assets                                 |  | 78,504       
|Assets of discontinued operations                    |  |             
|                                                     |  |              
|Total current assets                                 |  | 500,919      
|                                                     |  |              
|Property, plant and equipment, net                   |  | 123,493      
|Long-term marketable investments                     |  | 391,688      
|Deferred tax assets                                  |  | 145,764      
|Goodwill                                             |  | 72,722       
|Other long-term assets                               |  | 46,144       
|                                                     |  |              
|Total assets                                         |  | $ 1,280,730  
|                                                     |  |              
|                                                     |  |              
|LIABILITIES AND SHAREHOLDERS EQUITY                 | 
|                                                     |  |              
|Current liabilities:                                 |  |              
|Accounts payable and accrued liabilities             |  | $    105,337 
|Accrued compensation                                 |  | 52,216       
|Current portion of long-term debt                    |  | 1,241        
|Deferred revenue                                     |  | 16,521       
|Liabilities of discontinued operations               |  |             
|                                                     |  |              
|Total current liabilities                            |  | 175,315      
|                                                     |  |              
|Long-term debt                                       |  | 56,475       
|Other long-term liabilities                          |  | 280,491      
|                                                     |  |              
|Shareholders equity:                                |  |              
|Common stock, no par value (authorized 200,000       |  |              
|shares; issued and outstanding 84,288 and 84,844     |  |              
|at August 30, 2003 and May 31, 2003, respectively)   |  | 225,666      
|Retained earnings                                    |  | 701,498      
|Accumulated other comprehensive loss                 |  | (158,715     
|                                                     |  |              
|Total shareholders equity                           |  | 768,449      
|                                                     |  |              
|Total liabilities and shareholders equity           |  | $ 1,280,730  
|                                                     |  |              

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

4

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Condensed
Consolidated Statements of Cash Flows(Unaudited)

|                                                                        |  |              
|----------------------------------------------------------------------- |  | -------------
|(In thousands)                                                          |  |              
|For the fiscal quarters ended                                           |  | Aug. 30, 2003
|                                                                        |  |              
|CASH FLOWS FROM OPERATING ACTIVITIES                                    |  |              
|Net earnings                                                            |  | $     9,876  
|Adjustments to reconcile net earnings to net cash (used in) provided by |  |              
|operating activities:                                                   |  |              
|Loss from VideoTele.com discontinued operations                         |  | 5            
|Loss from sale of optical parametric test business                      |  | 253          
|Loss from optical parametric test business discontinued operations      |  |             
|Loss from sale of Gage                                                  |  | 848          
|Loss from Gage discontinued operations                                  |  | 394          
|Depreciation and amortization expense                                   |  | 7,252        
|(Gain) loss on the disposition/impairment of assets                     |  | (36          
|Gain on the disposition of investments                                  |  |             
|Bad debt expense                                                        |  | 199          
|Tax benefit of stock option exercises                                   |  | 252          
|Deferred income tax expense (benefit)                                   |  | 9,232        
|Equity in business ventures loss                                       |  |             
|                                                                        |  |              
|Changes in operating assets and liabilities:                            | 
|Accounts receivable                                                     |  | 3,095        
|Inventories                                                             |  | 6,926        
|Other current assets                                                    |  | (1,005       
|Accounts payable                                                        |  | 2,390        
|Accrued compensation                                                    |  | (6,156       
|Deferred revenue                                                        |  | (3,030       
|Cash funding for domestic pension plan                                  |  | (30,000      
|Other long-term assets and liabilities, net                             |  | (3,854       
|                                                                        |  |              
|Net cash (used in) provided by continuing operating activities          |  | (3,359       
|Net cash provided by (used in) discontinued operating activities        |  | 829          
|                                                                        |  |              
|Net cash (used in) provided by operating activities                     |  | (2,530       
|                                                                        |  |              
|CASH FLOWS FROM INVESTING ACTIVITIES                                    | 
|Acquisition of property, plant and equipment                            |  | (4,212       
|Proceeds from the disposition of fixed assets                           |  | 1,056        
|Proceeds from maturities and sales of short-term and                    |  |              
|long-term available-for-sale securities                                 |  | 177,337      
|Purchases of short-term and long-term available-for-sale securities     |  | (148,053     
|                                                                        |  |              
|Net cash provided by (used in) investing activities                     |  | 26,128       
|                                                                        |  |              
|CASH FLOWS FROM FINANCING ACTIVITIES                                    |  |              
|Net change in short-term debt                                           |  | 957          
|Repayment of long-term debt                                             |  | (56,300      
|Proceeds from employee stock plans                                      |  | 4,395        
|Repurchase of common stock                                              |  | (17,783      
|                                                                        |  |              
|Net cash used in financing activities                                   |  | (68,731      
|Net decrease in cash and cash equivalents                               |  | (45,133      
|Cash and cash equivalents at beginning of period                        |  | 190,387      
|                                                                        |  |              
|Cash and cash equivalents at end of period                              |  | $ 145,254    
|                                                                        |  |              
|                                                                        |  |              
|SUPPLEMENTAL DISCLOSURES OF CASH FLOWS                                  |  |              
|Income taxes paid (refunded), net                                       |  | $        332 
|Interest paid                                                           |  | 2,111        

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

5

---

Notes
to Condensed Consolidated Financial Statements

1.  The
Company

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

2.  Financial
Statement Presentation

The
condensed consolidated financial statements and notes thereto have been prepared  by the
Company without audit. Certain information and footnote disclosures  normally included in
annual financial statements, prepared in accordance with  accounting principles generally
accepted in the United States of America, have  been condensed or omitted as permitted by
Article 10 of Regulation S-X. The  consolidated financial statements include the accounts
of Tektronix and its  majority-owned subsidiaries. Investments in joint ventures and
minority-owned  companies where the Company exercises significant influence are accounted
for  under the equity method with the Companys percentage of earnings included  in
Equity in business ventures loss on the Condensed Consolidated Statements  of
Operations. Significant intercompany transactions and balances have been  eliminated.
Certain prior period amounts have been reclassified to conform to  the current periods
presentation with no effect on previously reported earnings. The Companys fiscal
year is the  52 or 53 weeks ending the last Saturday in May. Fiscal year 2004 is 52
weeks,  while fiscal year 2003 was 53 weeks. Due to this convention, the first quarter
of fiscal year 2003 was 14 weeks compared to the first quarter of fiscal year  2004,
which was 13 weeks.

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

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

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

6

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

|                                        |  |              
|--------------------------------------- |  | -------------
|(In thousands except per share amounts) |  | Aug. 30, 2003
|                                        |  |              
|Net earnings                            |  | $  9,876     
|                                        |  |              
|Weighted average shares used for        | 
|basic earnings per share                |  | 84,697       
|Effect of dilutive stock options        |  | 1,119        
|                                        |  |              
|Weighted average shares used for        | 
|dilutive earnings per share             |  | 85,816       
|                                        |  |              
|Net earnings per share  basic          |  | $    0.12    
|Net earnings per share  diluted        |  | $    0.12    

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

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

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

|                                          |  |              
|----------------------------------------- |  | -------------
|(amounts in thousands, except             |  |              
|per share information)                    |  | Aug. 30, 2003
|                                          |  |              
|Net earnings as reported                  |  | $      9,876 
|Stock compensation cost included in net   | 
|earnings as reported, net of income taxes |  | 91           
|Stock compensation cost using the fair    |  |              
|value alternative, net of income taxes    |  | (5,115       
|                                          |  |              
|Pro forma net earnings                    |  | $      4,852 
|                                          |  |              
|Basic EPS  as reported                   |  | $        0.12
|Basic EPS  pro forma                     |  | 0.06         
|                                          |  |              
|Diluted EPS  as reported                 |  | $        0.12
|Diluted EPS  pro forma                   |  | 0.06         

7

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SFAS
No. 123 Assumptions

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

|                        |  |              
|----------------------- |  | -------------
|                        |  | Aug. 30, 2003
|                        |  |              
|Expected life in years  |  | 4.0          
|Risk-free interest rate |  | 2.57         
|Volatility              |  | 31.84        
|Dividend yield          |  | 0.0          

4.  
Sony/Tektronix Redemption

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

|                                         | 
|---------------------------------------- | 
|Cash                                     | 
|Accounts receivable                      | 
|Inventory                                | 
|Deferred tax asset                       | 
|Property, plant and equipment            | 
|Goodwill                                 | 
|Intangible assets                        | 
|Other long-term assets                   | 
|                                         | 
|Total assets                             | 
|                                         | 
|                                         | 
|Accounts payable and accrued liabilities | 
|Accrued compensation                     | 
|Long-term debt                           | 
|Other long-term liabilities              | 
|                                         | 
|Total liabilities                        | 
|                                         | 

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

|                                         | Quarter ended
|---------------------------------------- | -------------
|(In thousands, except per share amounts) |              
|                                         |              
|Net sales                                |              
|Net earnings                             |              
|Earnings per share  diluted             |              
|                                         |              

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

8

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5.  Sale of
Color Printing and Imaging

On
January 1, 2000, the Company sold substantially all of the assets of the Color
Printing and Imaging division (CPID). The Company accounted for CPID
as a discontinued operation in accordance with Accounting Principles Board
(APB) Opinion No. 30, Reporting the Results of Operations  Reporting
the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions.
The sales price was $925.0 million in cash, with certain liabilities of the
division assumed by the buyer. During fiscal year 2000, Tektronix recorded a net
gain of $340.3 million on this sale. The net gain was calculated as the excess
of the proceeds received over the net book value of the assets transferred,
$198.5 million in income tax expense, a $60.0 million accrual for estimated
liabilities related to the sale and $14.4 million in transaction and related
costs. The accrual for estimated liabilities related to the sale was $10.4
million as of May 31, 2003.
During fiscal year 2003, the Company recorded a gain of $16.3 million, net of
income tax expense of $8.8 million, as a result of the resolution of certain
estimated liabilities related to the sale. This gain was reported in
discontinued operations in the Consolidated Statements of Operations. In fiscal
year 2002, the Company recorded a gain of $2.2 million, net of income tax
expense of $1.2 million, in Gain on sale of CPID in the Consolidated Statements
of Operations as a result of settling and adjusting certain indemnities related
to the original sales transaction.

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

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

6.  
Repurchase of Common Stock

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

9

---

7.  Business
Realignment Costs

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

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

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

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

|                          |  |          |  |          |  
|------------------------- |  | -------- |  | -------- | -
|                          |  | Balance, |  |          |  
|                          |  | May 31,  |  | Costs    |  
|(In thousands)            |  | 2003     |  | Incurred |  
|                          | 
|Fiscal Year 2004 Actions: |  |          |  |          |  
|Employee severance and    | 
|related benefits          |  | $       |  | $ 3,839  |  
|Asset impairments         |  |         |  | 696      |  
|Contractual obligations   |  |         |  | 165      |  
|                          |  |          |  |          |  
|Total                     |  |         |  | 4,700    |  
|                          |  |          |  |          |  
|Fiscal Year 2003 Actions: | 
|Employee severance and    |  |          |  |          |  
|related benefits          |  | 5,394    |  | (184     | )
|Contractual obligations   |  | 1,730    |  | 110      |  
|                          |  |          |  |          |  
|Total                     |  | 7,124    |  | (74      | )
|                          |  |          |  |          |  
|Fiscal Year 2002 Actions: | 
|Employee severance and    |  |          |  |          |  
|related benefits          |  | 494      |  |         |  
|Contractual obligations   |  | 434      |  |         |  
|                          |  |          |  |          |  
|Total                     |  | 928      |  |         |  
|                          |  |          |  |          |  
|Total of all actions      |  | $8,052   |  | $ 4,626  |  
|                          |  |          |  |          |  

10

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8.  
Marketable Investments

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

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

|                                  |  |           |  |           
|--------------------------------- |  | --------- |  | ----------
|                                  |  | Amortized |  | Unrealized
|(In thousands)                    |  | cost      |  | gains     
|                                  |  |           |  |           
|Corporate notes and bonds         |  | $20,132   |  | $   283   
|Asset backed securities           |  | 35,912    |  | 287       
|Mortgage backed securities        |  | 1,937     |  |          
|Federal agency notes and bonds    |  | 28,383    |  | 499       
|U.S. Treasuries                   |  | 5,137     |  | 106       
|                                  |  |           |  |           
|Short-term marketable investments |  | $91,501   |  | $1,175    
|                                  |  |           |  |           

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

|                                 |  |           |  |           
|-------------------------------- |  | --------- |  | ----------
|                                 |  | Amortized |  | Unrealized
|(In thousands)                   |  | cost      |  | gains     
|                                 |  |           |  |           
|Corporate notes and bonds        |  | $  77,319 |  | $1,417    
|Asset backed securities          |  | 60,167    |  | 1,262     
|Mortgage backed securities       |  | 147,387   |  | 993       
|Federal agency notes and bonds   |  | 75,061    |  | 356       
|U.S. Treasuries                  |  | 29,867    |  | 337       
|                                 |  |           |  |           
|Long-term marketable investments |  | $389,801  |  | $4,365    
|                                 |  |           |  |           

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

|                                  |  |           |  |           
|--------------------------------- |  | --------- |  | ----------
|                                  |  | Amortized |  | Unrealized
|(In thousands)                    |  | cost      |  | gains     
|                                  |  |           |  |           
|Corporate notes and bonds         |  | $  31,148 |  | $   418   
|Asset backed securities           |  | 40,078    |  | 471       
|Mortgage backed securities        |  | 5,614     |  | 91        
|Federal agency notes and bonds    |  | 28,335    |  | 429       
|                                  |  |           |  |           
|Short-term marketable investments |  | $105,175  |  | $1,409    
|                                  |  |           |  |           

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

|                                 |  |           |  |           
|-------------------------------- |  | --------- |  | ----------
|                                 |  | Amortized |  | Unrealized
|(In thousands)                   |  | cost      |  | gains     
|                                 |  |           |  |           
|Corporate notes and bonds        |  | $  91,712 |  | $  2,181  
|Asset backed securities          |  | 56,633    |  | 2,725     
|Mortgage backed securities       |  | 143,378   |  | 2,574     
|Federal agency notes and bonds   |  | 78,643    |  | 1,798     
|U.S. Treasuries                  |  | 35,044    |  | 979       
|                                 |  |           |  |           
|Long-term marketable investments |  | $405,410  |  | $10,257   
|                                 |  |           |  |           

11

---

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

|                             | Amortized Cost Basis
|---------------------------- | --------------------
|                             |                     
|After 1 year through 5 years |                     
|Mortgage backed securities   |                     
|                             |                     
|                             |                     
|                             |                     

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

|                                                      |  |              
|----------------------------------------------------- |  | -------------
|(In thousands)                                        |  | Aug. 30, 2003
|                                                      |  |              
|Unamortized cost basis of corporate equity securities |  | $  8,384     
|Gross unrealized holding gains                        |  | 12,233       
|                                                      |  |              
|Fair value of corporate equity securities             |  | $20,617      
|                                                      |  |              

9.  
Inventories

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

|                |  |              
|--------------- |  | -------------
|(In thousands)  |  | Aug. 30, 2003
|                |  |              
|Materials       |  | $  7,999     
|Work in process |  | 33,565       
|Finished goods  |  | 45,305       
|                |  |              
|Inventories     |  | $86,869      
|                |  |              

10.  Other
Current Assets

Other
current assets consisted of the following:

|                           |  |              
|-------------------------- |  | -------------
|(In thousands)             |  | Aug. 30, 2003
|                           |  |              
|Held-for-sale assets       |  | $30,115      
|Current deferred tax asset |  | 25,148       
|Prepaid expenses           |  | 9,054        
|Other receivables          |  | 8,233        
|Income taxes receivable    |  | 4,506        
|Other current assets       |  | 1,448        
|Notes receivable           |  |             
|                           |  |              
|Other current assets       |  | $78,504      
|                           |  |              

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

12

---

11.  
Property, Plant and Equipment, Net

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

|                                          |  |              
|----------------------------------------- |  | -------------
|(In thousands)                            |  | Aug. 30, 2003
|                                          |  |              
|Land                                      |  | $     7,084  
|Buildings                                 |  | 154,573      
|Machinery and equipment                   |  | 263,629      
|Accumulated depreciation and amortization |  | (301,793     
|                                          |  |              
|Property, plant and equipment, net        |  | $ 123,493    
|                                          |  |              

12.  Goodwill

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

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

|                           | 
|-------------------------- | 
|Balance at May 31, 2003    | 
|Currency translation       | 
|                           | 
|Balance at August 30, 2003 | 
|                           | 

13.  Other
Long-Term Assets

Other
long-term assets consisted of the following:

|                            |  |              
|--------------------------- |  | -------------
|(In thousands)              |  | Aug. 30, 2003
|                            |  |              
|Corporate equity securities |  | $20,617      
|Notes, contracts and leases |  | 9,604        
|Pension asset               |  | 9,250        
|Other intangibles, net      |  | 6,520        
|Other assets                |  | 153          
|                            |  |              
|Other long-term assets      |  | $46,144      
|                            |  |              

14.  
Long-Term Debt

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

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

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

13

---

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

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

15.  Other
Long-Term Liabilities

Other
long-term liabilities consisted of the following:

|                            |  |              
|--------------------------- |  | -------------
|(In thousands)              |  | Aug. 30, 2003
|                            |  |              
|Pension liability           |  | $247,510     
|Postretirement benefits     |  | 16,627       
|Deferred compensation       |  | 10,711       
|Other                       |  | 5,643        
|                            |  |              
|Other long-term liabilities |  | $280,491     
|                            |  |              

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

16.  
Accumulated Comprehensive Loss

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

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

Accumulated
other comprehensive loss consisted of the following:

|                              |  |             |   |                
|----------------------------- |  | ----------- | - | ---------------
|                              |  |             |   | Unrealized     
|                              |  |             |   | holding        
|                              |  | Foreign     |   | gains on       
|                              |  | currency    |   | available-for- 
|(In thousands)                |  | translation |   | sale securities
|                              |  |             |   |                
|Balance as of May 31, 2003    |  | $24,710     |   | $11,764        
|First quarter activity        |  | (5,496      | ) | (2,440         
|                              |  |             |   |                
|Balance as of August 30, 2003 |  | $19,214     |   | $9,324         
|                              |  |             |   |                

14

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17.  Business
Segments

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

|                                                        |  | Quarter ended | 
|------------------------------------------------------- |  | ------------- | 
|(In thousands)                                          |  | Aug. 30, 2003 | 
|                                                        |  |               | 
|                                                        | 
|Consolidated net sales to external customers by region: | 
|                                                        | 
|The Americas:                                           | 
|United States                                           |  | $  84,127     | 
|Other Americas                                          |  | 5,731         | 
|Europe                                                  |  | 40,076        | 
|Pacific                                                 |  | 37,493        | 
|Japan                                                   |  | 34,011        | 
|                                                        |  |               | 
|Net sales                                               |  | $201,438      | 
|                                                        |  |               | 

18.  Other
Non-Operating Expense, Net

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

19.  Product
Warranty Accrual

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

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

|                            | 
|--------------------------- | 
|Balance, May 31, 2003       | 
|Payments made               | 
|Change in warranty accruals | 
|                            | 
|Balance, August 30, 2003    | 
|                            | 

15

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20.  Recent
Accounting Pronouncements

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

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

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

21.  
Contingent Liabilities

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

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

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

22.  
Subsequent Events

Declaration
of Dividends

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

Restructuring
of Pension Plan in Japan

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

16

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

Forward-Looking
Statements

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

General

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

Sony/Tektronix
Redemption

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

17

---

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

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

Sale
of Color Printing and Imaging

On
January 1, 2000, the Company sold substantially all of the assets of the Color
Printing and Imaging division (CPID). The Company accounted for CPID
as a discontinued operation in accordance with Accounting Principles Board
(APB) Opinion No. 30, Reporting the Results of Operations
 Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions.
The sales price was $925.0 million in cash, with certain liabilities of the
division assumed by the buyer. During fiscal year 2000, the Company recorded a
net gain of $340.3 million on this sale. The net gain was calculated as the
excess of the proceeds received over the net book value of the assets
transferred, $198.5 million in income tax expense, a $60.0 million accrual for
estimated liabilities related to the sale and $14.4 million in transaction and
related costs. The accrual for estimated liabilities related to the sale was
$10.4 million as of August 30, 2003. See additional disclosure in the Critical
Accounting Estimates section of this Managements Discussion and Analysis.

Business
Realignment Costs

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

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

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

18

---

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

|                          |  |          |  |          |  
|------------------------- |  | -------- |  | -------- | -
|                          |  | Balance, |  |          |  
|                          |  | May 31,  |  | Costs    |  
|(In thousands)            |  | 2003     |  | Incurred |  
|                          | 
|Fiscal Year 2004 Actions: |  |          |  |          |  
|Employee severance and    |  | $       |  | $ 3,839  |  
|related benefits          | 
|Asset impairments         |  |         |  | 696      |  
|Contractual obligations   |  |         |  | 165      |  
|                          |  |          |  |          |  
|Total                     |  |         |  | 4,700    |  
|                          |  |          |  |          |  
|                          | 
|Fiscal Year 2003 Actions: | 
|Employee severance and    |  | 5,394    |  | (184     | )
|related benefits          |  |          |  |          |  
|Contractual obligations   |  | 1,730    |  | 110      |  
|                          |  |          |  |          |  
|Total                     |  | 7,124    |  | (74      | )
|                          |  |          |  |          |  
|                          | 
|Fiscal Year 2002 Actions: | 
|Employee severance and    |  | 494      |  |         |  
|related benefits          |  |          |  |          |  
|Contractual obligations   |  | 434      |  |         |  
|                          |  |          |  |          |  
|Total                     |  | 928      |  |         |  
|                          |  |          |  |          |  
|Total of all actions      |  | $8,052   |  | $ 4,626  |  
|                          |  |          |  |          |  

Critical Accounting Estimates

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

Contingent Liabilities

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

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

19

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

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

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

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

Intangible assets

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

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

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

20

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Inventories

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

Pension plan

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

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

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

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

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

21

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

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

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

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

Income Taxes

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

22

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

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

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

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

Economic
Conditions

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

23

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

Product
Orders

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

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

Net
Sales

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

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

24

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Gross
Profit and Gross Margin

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

Operating
Expenses

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

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

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

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

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

25

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

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

Non-Operating
Income / Expense

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

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

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

Income
Taxes

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

Discontinued
Operations

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

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

26

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Net
Earnings

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

Earnings
Per Share

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

Financial
Condition, Liquidity and Capital Resources

Financial
Condition

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

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

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

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

Liquidity
and Capital Resources

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

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

27

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

Recent
Accounting Pronouncements

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

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

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

Risks
and Uncertainties

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

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

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

28

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Timely
Delivery of Competitive Products

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

Competition

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

Supplier
Risks

The
Companys manufacturing operations are dependent on the ability of
suppliers to deliver quality components, subassemblies and completed products in
time to meet critical manufacturing and distribution schedules. The Company
periodically experiences constrained supply of certain component parts in some
product lines as a result of strong demand in the industry for those parts. Such
constraints, if persistent, may adversely affect operating results until
alternate sourcing can be developed. Volatility in the prices of these component
parts, an inability to secure enough components at reasonable prices to build
new products in a timely manner in the quantities and configurations demanded
or, conversely, a temporary oversupply of these parts, could adversely affect
the Companys future operating results. In addition, the Company uses
certain sole sourced components, which are integral to a variety of products.
Disruption in key sole sourced suppliers could have a significant adverse effect
on the Companys results of operations. The Company distributes products of
other manufacturers, which comprise a material portion of revenues. To the
extent that a distribution agreement is not continued, income could decline to
the extent this revenue source was not replaced by other product sales.

Worldwide
Economic and Market Conditions

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

29

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Intellectual Property Risks

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

Environmental Risks

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

Sony/Tektronix Corporation Acquisition

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

Possible Volatility of Stock Price

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

Other Risk Factors

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

30

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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
of similar instruments would decrease the value of certain of these investments.
A 10% adverse change in interest rates would reduce the market value by $ 3.6
million, which would be reflected in Accumulated other comprehensive loss on the
Consolidated Balance Sheets until sold.

The
Company is exposed to equity price risk primarily through its marketable equity
securities portfolio, including investments in Merix Corporation, Tut Systems,
Inc., and other companies. The Company has not entered into any hedging programs
to mitigate equity price risk. In managements opinion, an adverse change
of 20% in the value of these securities would reduce the market value by $4.1
million, which would be reflected in Other comprehensive loss on the
Consolidated Balance Sheets until sold.

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

Item 4.  Controls and Procedures

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

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

31

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Part
II  OTHER INFORMATION

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

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

|                  | FOR |            | WITHHELD
|----------------- | --- | ---------- | --------
|Gerry B. Cameron  |     | 66,423,526 |         
|Cyril J. Yansouni |     | 78,054,724 |         

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

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

Item 6.  
Exhibits and Reports on Form 8-K

|              |           
|------------- | ----------
|              |           
|(a)  Exhibits
|              |           
|              | +(10)(i)  
|              |           
|              | +(10)(ii) 
|              |           
|              | +(10)(iii)
|              |           
|              | (31.1)    
|              |           
|              | (31.2)    
|              |           
|              | (32.1)    
|              |           
|              | (32.2)    

__________

+  Compensatory
Plan or Arrangement

(b)
Reports on Form 8-K

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

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SIGNATURES

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

|                 | 
|---------------- | 
|October 14, 2003 | 
|                 | 
|                 | 
|                 | 
|                 | 
|                 | 

33

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EXHIBIT
INDEX

|             | 
|------------ | 
|Exhibits No. | 
|             | 
|             | 
|+(10)(i)     | 
|             | 
|+(10)(ii)    | 
|             | 
|+(10)(iii)   | 
|             | 
|(31.1)       | 
|             | 
|(31.2)       | 
|             | 
|(32.1)       | 
|             | 
|(32.2)       | 

__________

+  Compensatory
Plan or Arrangement