10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended May 27, 2006
	or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to
Commission file number 1-04837

TEKTRONIX, INC.

(Exact name of registrant as specified in its charter)

Oregon	93-0343990
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
14200 S.W. Karl Braun Drive Beaverton, Oregon (Address of principal executive offices)	97077 (Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Shares, without par value	New York Stock Exchange
Series B No Par Preferred Shares Purchase Rights	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ     No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o     No þ

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 þ     No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one).

Large accelerated filer þ Accelerated filer o Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o     No þ

The aggregate market value of the voting stock held by nonaffiliates of the registrant was approximately $2.1 billion at November 26, 2005, the last business day of the registrant’s most recently completed second fiscal quarter.

At July 17, 2006, there were 83,131,753 Common Shares of the registrant outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Document	Part of 10-K into which incorporated
Registrant’s Proxy Statement dated August 17, 2006		Part III

TEKTRONIX, INC.

TABLE OF CONTENTS

		Page
Forward-Looking Statements			1
PART I
Item 1.	Business		2
Item 1A.	Risk Factors		9
Item 1B.	Unresolved Staff Comments		13
Item 2.	Properties		13
Item 3.	Legal Proceedings		13
Item 4.	Submission of Matters to a Vote of Security Holders		14
PART II
Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		14
Item 6.	Selected Financial Data		15
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		46
Item 8.	Financial Statements and Supplementary Data		47
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		90
Item 9A.	Controls and Procedures		90
Item 9B.	Other Information		92
PART III
Item 10.	Directors and Executive Officers of the Registrant		92
Item 11.	Executive Compensation		92
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		92
Item 13.	Certain Relationships and Related Transactions		92
Item 14.	Principal Accounting Fees and Services		92
PART IV
Item 15.	Exhibits and Financial Statement Schedules		93
SIGNATURES			95
SCHEDULE II — Valuation and Qualifying Accounts			96
EXHIBIT 10(II)(A)
EXHIBIT 10(X)
EXHIBIT 10(XI)
EXHIBIT 14(II)
EXHIBIT 21
EXHIBIT 23
EXHIBIT 24
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

Forward-Looking Statements

Statements and information included in this Annual Report on Form 10-K by Tektronix, Inc. (“Tektronix”, “we”, “us” or “our”) 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 Annual Report on Form 10-K include statements regarding Tektronix’ expectations, intentions, beliefs, and strategies regarding the future, including statements regarding trends, cyclicality, and growth in the markets Tektronix sells into, strategic direction, expenditures in research and development, future effective tax rate, new product introductions, changes to manufacturing processes, the cost of compliance with environmental and other laws, liquidity position, ability to generate cash from continuing operations, expected growth, the potential impact of adopting new accounting pronouncements, financial results including sales, earnings per share and gross margins, obligations under Tektronix’ retirement benefit plans, savings or additional costs from business realignment programs, and the adequacy of accruals.

When used in this report, the words “believes”, “expects”, “anticipates”, “intends”, “assumes”, “estimates”, “evaluates”, “opinions”, “forecasts”, “may”, “could”, “future”, “forward”, “potential”, “probable”, and similar expressions are intended to identify forward-looking statements.

These forward-looking statements involve risks and uncertainties. We 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 Item 1A Risk Factors of Part I of this Form 10-K.

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PART I

Item 1.   Business.

The Company

Tektronix is a leading supplier of test, measurement, and monitoring products, solutions and services to the communications, computer, and semiconductor industries worldwide. With over 60 years of experience, Tektronix provides general purpose test and measurement; video test, measurement, and monitoring; and communications network management and diagnostic products that enable our customers to design, build, deploy, and manage next-generation global communications networks, computing, pervasive, and advanced technologies. Tektronix derives revenue principally by developing, manufacturing, and selling a broad range of products and related components, support services, and accessories.

Tektronix is organized around two business platforms: the Instruments Business and the Communications Business. The Instruments Business includes general purpose test and measurement products and video test, measurement, and monitoring products. The Communications Business includes telecommunications network management solutions and services and network diagnostics products.

We maintain operations and conduct business in four major geographies: the Americas, Europe, the Pacific, and Japan.

Tektronix is an Oregon corporation organized in 1946. Our headquarters is located in Beaverton, Oregon, and we conduct our operations worldwide through wholly-owned subsidiaries. See Item 1 Business — Geographic Areas of Operations. A reference in this 10-K to “Tektronix” is to Tektronix, Inc. and its consolidated subsidiaries, unless the context indicates otherwise.

Tektronix common stock is listed on the New York Stock Exchange under the symbol “TEK.” See Item 5 Market for the Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities.

Tektronix’ website is www.tektronix.com. We make Tektronix’ annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed with or furnished to the United States Securities and Exchange Commission (“SEC”) available to the public free of charge on our website as soon as reasonably practicable after making such filings. Tektronix’ Corporate Governance Guidelines, Business Practices Guidelines, Code of Ethics for Financial Managers, Hiring Guidelines for Independent Auditor Employees and the charters of Tektronix’ Audit Committee, Nominating and Corporate Governance Committee, and Organization and Compensation Committee are also available on our website. Copies of these documents will be mailed to any shareholder, free of charge, upon request. Requests should be directed to: Manager, Investor Relations, Tektronix, Inc., 14200 SW Karl Braun Drive, M/S 55-544, Beaverton, OR 97077-0001. Any amendment to, or waiver from, a provision of Tektronix’ Business Practices Guidelines or Code of Ethics for Financial Managers that applies to Tektronix’ chief executive officer, principal financial officer, principal accounting officer, or controller will be disclosed on Tektronix’ website.

Our Markets and Customers

Tektronix develops, manufactures, markets, and services test, measurement, and monitoring solutions to a wide variety of customers in many industries, including communications, computing, semiconductors, education, government, military/aerospace, research, automotive, and consumer electronics.

Based on independent research and internal market analysis for calendar year 2005, the overall test and measurement market is a $12 billion market, divided into three major market segments: general purpose test, communications test and monitoring, and automated test equipment (“ATE”). The general purpose test segment is the broadest of the three segments and represents a wide range of tools used by customers across many industries and applications. The communications test segment is focused on application-specific products and solutions for communication equipment manufacturers and network operators. The ATE segment is primarily focused on

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manufacturing test for semiconductors and circuit board testing. Our products address the needs of the general purpose test and communications test market segments.

We focus our efforts on developing products primarily for the communications, computing, and underlying semiconductor design markets. By focusing our efforts on the core technology drivers within these markets, we believe we will also develop products and expertise to meet the needs of many other markets, including education, government, military/aerospace, research, automotive, and consumer electronics.

We believe the core drivers within our markets include the pervasiveness of wireless technologies and infrastructure; the convergence of voice, data, and video in both fixed and mobile modern communications networks; growth in consumer electronics; and the emergence of new technologies and standards including high speed serial interfaces and digital video. In addition, we believe that military/aerospace technology needs from governments worldwide as well as Asia’s influence on standards and investments in technology will drive and shape our markets.

Our Strategic Focus

Our strategy is to focus our efforts on select product categories where Tektronix has a market leadership position or where we believe Tektronix can grow to a market leadership position. We have three supporting strategies to drive long term growth: grow market share in core product categories where Tektronix already has a strong market position, leverage existing strengths into adjacent product categories, and expand our addressable market.

The product categories where we believe Tektronix has a strong existing market position include oscilloscopes, logic analyzers, video test, network management and network diagnostics. We are leveraging our core strengths in technology, manufacturing, and distribution to develop a strong market position in two adjacent product categories, signal sources and spectrum analyzers. Finally, we are expanding the addressable market for these categories by introducing application-specific products, focusing on market segments with faster growth, and investing in geographic expansion, particularly in China, India and Eastern Europe.

As a result of investments in this strategy, we believe that near term growth for Tektronix will be driven by two primary factors.

The first factor is an increase in the number of products expected to be introduced across the majority of our product categories. This pipeline of new products is enabled by increased investment we have made in research and development funded by improved gross margins, and improved effectiveness of that investment. We believe that these new products will allow us to continue to gain market share and grow our business.

The second factor is our ability to win customers in the transition to modern telecommunication networks. We believe there is a significant amount of investment by network operators worldwide to deploy and manage next-generation mobile data emerging technologies. Our strategy is to capitalize on this transition to modern networks by leveraging the technology in our network diagnostics and network management products to win a majority of the opportunities at Tier 1 network operators.

To accomplish this strategy, we invest significant resources in internal product development, where Tektronix has a long history of successful product and technology innovation. In addition, we may pursue strategic acquisitions to gain access to technology, products, or markets. Finally, we continue to leverage our strong industry brand, customer relationships, and global distribution channel to enable Tektronix to be successful in our markets.

The electronics industry continues to be very competitive, both in the United States and abroad. We face competition from one broad-line competitor, Agilent Technologies, which competes with Tektronix in multiple product categories, and from a number of companies in specialized areas of other test and measurement products, as described below. Primary competitive factors include product performance, technology, product availability, price, and customer service. We believe that our reputation in the marketplace is a significant positive competitive factor.

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Our Products

Our products include a broad range of technology based tools and solutions for scientists, engineers, technicians, and network operators who analyze, test, and monitor electronic, optical and radio frequency (“RF”) devices, components, systems, and subsystems so that technology innovation can be developed, manufactured, deployed, monitored, and maintained.

Our Instruments Business consists of general purpose test products, including oscilloscopes, logic analyzers, signal sources and spectrum analyzers; and a variety of video test, measurement and monitoring products. Our Communications Business includes network diagnostic equipment, network management solutions, and related support services for both fixed and mobile networks. See Note 22 “Business Segments” of the Notes to the Consolidated Financial Statements in Item 8 Financial Statements and Supplementary Data, which contains information on sales by groups of similar products.

General Purpose Test Products.  Our general purpose test products include oscilloscopes, logic analyzers, signal sources and spectrum analyzers. Based on independent research and our internal market analysis, Tektronix is the recognized market leader in worldwide sales of oscilloscopes. Oscilloscopes are the primary general purpose electronic debug tools. Logic analyzers are debug tools used by design engineers to capture, display, and analyze streams of digital data that occur simultaneously over many channels. We have recently increased our focus on two adjacent product categories, signal sources and spectrum analyzers. Signal sources are general purpose stimulus products primarily used in the design and manufacturing of electronic components, subassemblies, and end products in a wide variety of industries. We provide a unique class of spectrum analyzer products, called real-time spectrum analyzers. These products are primarily used in the design and manufacturing of electronic components, subassemblies, and end products which utilize digital RF technology. Real-time spectrum analyzers enable customers to perform simultaneous frequency, time, and modulation domain measurements on radio frequency signals. They are used in a wide range of industries and applications including, but not limited to, cellular, wireless local area networks, surveillance, radar, and all other products using digital radio technology.

Due to the increased pace of technology and the widespread use of wireless technologies, the test measurement requirements for rapidly evolving technologies and standards have changed and have become more complex. We offer tools that support and enable these latest technologies and standards.

Our strategy is to leverage our leadership position to develop and maintain a strong market position in each category we participate in by developing leadership products and leveraging Tektronix’ core strengths.

Our primary competitors are Agilent Technologies, LeCroy Corporation, Rohde & Schwarz, Yokogawa Electric Corporation, and many smaller regional competitors.

Video Test Products.  We are a leading supplier of test and measurement equipment to video equipment manufacturers, content developers, and traditional TV broadcasters, based on independent research and our internal market analysis. Our equipment is used to ensure delivery of the best possible video experience to the viewer, whether through traditional analog television, or through digital terrestrial, satellite, cable, or broadband services.

Our product offerings include waveform monitors, video signal generators, and compressed digital video test products. These products are used in video equipment design and manufacturing, video content production, and video transmission and distribution.

Our strategy is to leverage our leadership position in traditional video applications to provide tools that enable the quality control and management of video content as it is created, manipulated, and transmitted through any communications network — including broadcast, broadband, and telecommunications networks.

We compete with a number of large, worldwide electronics firms that manufacture specialized equipment for the television industry, as well as many regional and local competitors. Our competitors include Harris Corporation, Leader Instruments Corporation and Rohde & Schwarz.

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Network Management and Diagnostics.  Network management and diagnostic tools enable network equipment manufacturers and operators to develop, deploy, and manage mobile and fixed line networks. Network management tools provide continuous performance management to optimize the service performance of an entire communications network. Diagnostic tools test and monitor the signaling protocols in next-generation communication networks and services.

Due to the convergence of voice, data, and video into the latest generation IP multi-service mobile and fixed networks, the requirements for monitoring and testing networks and elements in operation have changed and have become more complex. We offer test and monitoring tools that support these latest technologies, networks, and services. Using Tektronix’ high performance hardware platforms and software applications, even the most complex measurements can be conducted in real-time and across geographically and technologically diversified networks. These are key attributes to maximizing the efficiency of the people using our tools and optimizing the revenue generating capability of the elements and networks being tested.

Our strategy is to focus on next-generation mobile data such as General Packet Radio Service (“GPRS”), 3G Universal Mobile Telecommunications Systems (“UMTS”), and fixed line voice over Internet protocol (“VoIP”) applications, leverage our relationship with Tier 1 network operators and equipment manufacturers, displace competitors in the technology transition to modern communications networks, and provide a seamless portfolio of offerings from development in the lab through live communication networks and across different networks, technologies, and services.

Our primary competitors in this market include Agilent Technologies, Anritsu Corporation, Catapult Communications Corporation, JDS Uniphase Corporation, NetHawk Group, Spirent Communications, and in-house providers.

Service.  We offer service programs to repair and calibrate our products with service personnel throughout the Americas, Europe, the Pacific, and Japan. We also offer service and maintenance services for our network management products. These programs provide customers with short term support in response to a number of possible circumstances. Additionally, we offer support packages for a number of our software applications.

Accessories.  We offer a broad range of accessories for our products, including probes, optical accessories and application software.

Maxtek Components Corporation.  Maxtek Components Corporation, a wholly-owned subsidiary of Tektronix, manufactures sophisticated hybrid circuits for our internal use and for external sale primarily to customers in the automated test equipment and medical equipment industries, and for military applications.

Manufacturing

Our manufacturing activities primarily consist of assembling and testing products to customer orders. We also perform installation and integration activities at customer sites associated with our network management products. Most product design, assembly, testing, and configuration is performed in-house. However, many major components, sub-assemblies, and peripheral devices are acquired from numerous third-party suppliers. To procure these components, Tektronix draws on an integrated global supply base leveraged across the corporation. Because some of these components are unique, disruptions in supply could have an adverse effect on our manufacturing operations. Although supply shortages are experienced from time to time, we currently believe that Tektronix will be able to acquire the required materials and components as needed.

Our manufacturing organization, working in conjunction with product development, invests in collaborative engineering processes to accelerate the launch of new products designed for both market and life cycle success. In addition, manufacturing invests in process innovation and structured continuous improvement.

Our primary manufacturing activities occur at facilities located in Beaverton, Oregon and Shanghai, China. In addition, we perform light assembly and software configuration activities in Berlin, Germany, and Richardson, Texas. We perform installation and integration activities for our network management products at customer sites using internal direct labor and third-party integration providers. These installation and integration activities occur in the Americas, Europe, the Pacific and Japan.

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Our manufacturing strategy is to optimize each manufacturing location to specific capabilities and expertise. Our Beaverton, Oregon facility is focused on high complexity and high mix, lower volume products and includes capability for rapid prototyping and development. Our Shanghai, China facility is focused on high volume and lower mix, low cost products and accessories.

Sales and Distribution

We maintain our own direct sales and field maintenance organization, staffed with technically trained personnel throughout the world. Sales to end customers are made through our direct sales organization, or independent distributors and resellers located in principal market areas. Some of Tektronix’ independent distributors also sell products manufactured by Tektronix’ competitors.

Our principal customers are electronic and computer equipment manufacturers and service providers, communication network equipment manufacturers, network operators, semiconductor manufacturers, private industrial concerns engaged in commercial or governmental projects, military and nonmilitary agencies of the United States and of foreign countries, educational institutions, and radio and television stations and networks. Certain products are sold to both equipment users and original equipment manufacturers.

Our distribution strategy is to align the sales channel with our customer base, concentrating direct selling efforts in large or strategic geographies and markets, and utilizing distributors or other partners to expand geographic and customer reach.

Most of our products are sold as standard catalog items. Network management products require customization, system installation, and customer acceptance.

At May 27, 2006, our unfilled product orders amounted to approximately $244.6 million, as compared to approximately $171.2 million for unfilled product orders at May 28, 2005. A large majority of the unfilled orders will be delivered to customers within one year. In our network management business, we may receive orders that include a multi-year service contract or where we are required to perform development that could delay delivery of all or a portion of an order beyond the upcoming fiscal year. Most orders are subject to cancellation or rescheduling by customers with little or no penalty, and accordingly, backlog on any particular date is not necessarily a reliable indicator of actual sales for any subsequent period. We maintain a general target for backlog for our general purpose test, video test, and network diagnostic products of 6 to 8 weeks. Backlog for our network management products, which are subject to software customization, installation and customer acceptance before revenue is recognized, is generally 6 to 12 months.

Geographic Areas of Operations

We conduct operations and business worldwide on a geographic basis, with those regions known as the Americas, Europe, the Pacific, and Japan. Tektronix’ headquarters is located in Beaverton, Oregon. International sales include both export sales from United States subsidiaries and sales by non-U.S. subsidiaries. See Note 22 “Business Segments” of the Notes to the Consolidated Financial Statements in Item 8 Financial Statements and Supplementary Data, which contains information on sales based upon the location of the purchaser and long-lived assets by geographic area.

Fluctuating foreign currency exchange rates and other factors beyond the control of Tektronix, such as the stability of international monetary conditions, tariff and trade policies, and domestic and foreign tax and economic policies, affect the level and profitability of international sales. However, we are unable to predict the effect of these factors on our business. We hedge specifically identified foreign currency exchange rate exposures in order to minimize the impact of fluctuations.

Research and Development

We operate in an industry characterized by rapid technological change, and research and development are important elements in our business. We devote a significant portion of our resources to design and develop new and

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enhanced products that meet customer needs and can be manufactured cost effectively and sold at competitive prices. In addition, we use contract engineering for some software development and other design services. To focus these efforts, we seek to maintain close relationships with our customers to develop products that meet their needs. Research and design groups and specialized product development groups conduct research and development activities. These activities include: (i) research on basic devices and techniques, (ii) the design and development of products, components, and specialized equipment and (iii) the development of processes needed for production. The vast majority of our research and development is devoted to enhancing and developing our own products.

Research and development activities occur in Beaverton, Oregon. Additional software and product development occurs in Richardson, Texas; Berlin, Germany; Shanghai, China; Bangalore, India; Tokyo, Japan; Cambridge and Bristol, England; and Padova, Italy.

Expenditures for research and development during fiscal years 2006, 2005, and 2004 were $183.4 million, $163.5 million, and $130.4 million, respectively. Substantially all of these funds were generated by Tektronix. During fiscal year 2005, we also incurred a charge of $32.2 million for acquired in-process research and development in connection with the acquisition of Inet. See “Acquisitions” in Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations of Part II of this Form 10-K.

Patents and Intellectual Property

Tektronix holds approximately 667 patents in the United States, which cover a wide range of products and technologies and have various expiration dates. While our intellectual property rights are important to our success, we believe that our business as a whole is not materially dependent on any patent, trademark, license or other intellectual property right. It is our strategy to seek patents in the United States and appropriate other countries for our significant patentable developments. However, electronic equipment as complex as most of our products generally are not patentable in their entirety. We also seek to protect significant trademarks and software through trademark registration and copyright. As with any company whose business involves intellectual property, we are subject to claims of infringement and there can be no assurance that any of our proprietary rights will not be challenged, invalidated, or circumvented, or that these rights will provide significant competitive advantage.

Employees

At May 27, 2006, Tektronix had 4,359 employees, of whom 1,634 were located in countries other than the United States. At May 28, 2005, Tektronix had 4,334 employees, of whom 1,648 were located in countries other than the United States. Our employees in the United States and most other countries are not covered by collective bargaining agreements. We believe that relations with our employees are good.

Environment

Our facilities and operations are subject to numerous laws and regulations concerning the discharge of materials into the environment, or otherwise relating to protection of the environment. We previously operated a licensed hazardous waste management facility at our Beaverton campus. We have entered into a consent order with the Oregon Department of Environmental Quality permitting closure of the facility, and requiring us to engage in ongoing monitoring and cleanup activities, primarily in the nature of remediation of subsurface contamination occurring over many years. For additional information, see “Critical Accounting Estimates — Contingencies” in Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations of Part II of this Form 10-K. Although the sources of that contamination have been remedied and Tektronix continues to work closely with environmental authorities for its clean-up, no assurances can be given Tektronix will not, as a result of changes in the law or the regulatory environment in general, be required to incur significant additional expenditures. Tektronix is currently awaiting approval of a work plan and risk assessment for a feasibility study from the Oregon Department of Environmental Quality. We expect approval for the work plan and risk assessment and completion of the feasibility study during fiscal year 2007, which could increase our recorded liability. If events or circumstances arise that are unforeseen to us as of the balance sheet date, actual costs could differ materially from the recorded liability.

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We believe that our operations and facilities comply in all material respects with applicable environmental laws and worker health and safety laws, and although future regulatory actions cannot be predicted with certainty, compliance with environmental laws has not had and is not expected to have a material effect upon capital expenditures, earnings, or the competitive position of Tektronix.

Executive Officers of Tektronix

The following are the executive officers of Tektronix:

				Has Served
				as an
				Executive Officer
				of Tektronix
Name	Position	Age		Since
Richard H. Wills	Chairman of the Board, President and Chief Executive Officer		51		1997
Colin L. Slade	Senior Vice President and Chief Financial Officer		52		2000
Richard D. McBee	Senior Vice President, Communications Business		43		2001
James F. Dalton	Senior Vice President, Corporate Development, General Counsel and Secretary		47		1998
Craig L. Overhage	Senior Vice President, Instruments Business		44		2001
Susan G. Kirby	Vice President, Human Resources		56		2004
John T. Major	Vice President, Worldwide Manufacturing		46		2004

The executive officers are elected by the board of directors of Tektronix at its annual meeting, except for interim elections to fill vacancies or newly created positions. Executive officers hold their positions until the next annual meeting, until their successors are elected, or until such tenure is terminated by death, resignation, or removal in the manner provided in the bylaws. There are no arrangements or understandings between executive officers or any other person pursuant to which the executive officers were elected, and none of the executive officers are related.

All of the named executive officers have been employed by Tektronix in management positions for at least the last five years, with the exception of Mr. Major, who joined Tektronix in October 2003 and became an executive officer in May 2004.

Richard H. (Rick) Wills is Chairman of the Board, President and Chief Executive Officer of Tektronix. Mr. Wills joined Tektronix in 1979. From 1991 through 1993, he was Oscilloscope Product Line Director. He held the position of Worldwide Director of Marketing for the Measurement Business Division in 1993 and 1994 and was Vice President and General Manager of the Measurement Division’s Design Service and Test Business Unit from 1995 to 1997. Mr. Wills was President of the Tektronix Americas Operations during the last half of 1997. In December 1997, he was elected President, European Operations, and in 1999 he was elected President of Tektronix’ Measurement Business. Mr. Wills was elected a director of Tektronix on January 20, 2000, when he was elected President and Chief Executive Officer of Tektronix. He was elected Chairman of the Board on September 20, 2001.

Colin L. Slade became the Chief Financial Officer of Tektronix in January 2000 and was promoted to Senior Vice President in September 2001. Mr. Slade joined Tektronix in June 1987. He held the position of Division Controller from 1988 to 1992, Group Controller from August 1992 to September 1994, Vice President and Corporate Controller from October 1994 through April 1999, and Vice President of Finance from May 1999 to January 2000.

Richard D. McBee became Senior Vice President of the Communications Business in June 2005. He previously held the position of Vice President of Worldwide Sales, Service, and Marketing beginning in March 2001 and was promoted to Senior Vice President in March 2005. Mr. McBee joined Tektronix in May 1991 and held various management positions in marketing and sales until 1995. He held the position of Director of Marketing for the Instruments Business from November 1995 through August 1997, General Manager of Tektronix Canada until May 1999, Vice President of Strategic Initiatives until November 1999, and Vice President of Global Marketing and

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Strategic Initiatives until January 2000. He then was appointed Vice President of Worldwide Sales and Marketing, and in March 2001, became Vice President of Worldwide Sales, Service, and Marketing.

James F. Dalton has served as Vice President, General Counsel, and Secretary since April 1997. He is also Vice President of Corporate Development, and was promoted to Senior Vice President in March 2005. Mr. Dalton joined Tektronix in April 1989. He held the position of Business Development Manager from April 1993 through May 1995 and Director of Corporate Development from June 1995 to March 1997.

Craig L. Overhage has served as Vice President of the Instruments Business since May 2001 and was promoted to Senior Vice President in March 2005. Mr. Overhage joined Tektronix in January 1984 and held various engineering and management positions until 1993, when he was appointed Senior Program Manager. In June 1997 he was appointed Logic Analyzer Product Line Manager, and from September 1999 to May 2001 he was Vice President of the Digital Systems Business.

Susan G. Kirby has served as Vice President, Human Resources since February 2004. Ms. Kirby joined Tektronix in 1981 and has held a variety of positions. Before being appointed to her current position, she served as Vice President, Treasurer and Investor Relations since 2001. From 2000 to 2001, she held the position of Director of Investor Relations, and from 1999 to 2000, she served as International Controller and Director of Operations. From 1997 to 1999, she was the Pacific Region Controller.

John T. Major has served as Vice President of Worldwide Manufacturing since February 2004. Mr. Major joined Tektronix in October 2003 as Vice President and General Manager of Worldwide Customer Service until being appointed to his current position. He served as Vice President of Customer Service for the Xerox Corporation from January 1, 2000 to October 1, 2003, and as Director of Print Heads and Ink Manufacturing in the CPID Business at Tektronix from 1999 to 2000.

Item 1A.   Risk Factors.

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 Annual Report. See “Forward-Looking Statements” that precedes Part I of this Form 10-K.

We compete in a cyclical market.

Our business depends on capital expenditures of customers in a wide range of industries, including the telecommunications, semiconductor, and computer industries. Each of these industries has historically been cyclical and has experienced periodic downturns, which have had a material adverse impact on the demand for equipment and services manufactured and marketed by us. During periods of reduced and declining demand, we may need to rapidly align our cost structure with prevailing market conditions while at the same time motivate and retain key employees. Our net sales and operating results could be adversely affected by the reversal of any favorable trends or any future downturns or slowdowns in the rate of capital investment in these industries. In addition, the telecommunications industry has been going through a period of consolidation in which several major telecommunications operators and equipment manufacturers have either merged with each other or been acquired. This consolidation activity may affect the overall level of capital expenditures made by these operators for test and measurement equipment, and may also affect the relative competitive position between us and our competitors in this market.

The industries we serve experience rapid changes in technology.

We sell our products to customers that participate in rapidly changing high technology markets, which are characterized by short product life cycles. Our 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 we sell test, measurement and monitoring products that enable our customers to develop new technologies, we must accurately anticipate the ever-evolving

9

needs of those customers and deliver appropriate products and technologies at competitive prices to meet customer demands. Our ability to deliver those 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. In addition, we face risks associated with designing products and obtaining components that are compliant with the “Restriction of Hazardous Substances” worldwide regulatory provisions, which include removing lead from current and future product designs. We also expect spending for traditional networks to continue to decrease, which requires that we continue to develop products and applications for networks based on emerging next-generation wireless and packet-based technologies and standards. We may not successfully develop or acquire additional competitive products for these emerging technologies and standards. Failure to timely develop or acquire competitive and reasonably priced products that are compliant with evolving regulatory standards could have an adverse effect on our results of operations, financial condition, or cash flows.

Competition is intense, may intensify and could result in increased downward pricing pressure, reduced margins and the loss of market share.

We compete 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 Anritsu Corporation, Catapult Communications Corporation, Harris Corporation, JDS Uniphase Corporation, LeCroy Corporation, NetHawk Group, Rohde & Schwarz, Spirent Communications, Yokogawa Electric Corporation, and many other smaller companies. In general, the test and measurement industry is a highly competitive market based primarily on product performance, technology, customer service, product availability, and price. Some of our 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 we compete. We face pricing pressures that may have an adverse impact on our earnings. If we are unable to compete effectively on these and other factors, it could have a material adverse effect on our results of operations, financial condition, or cash flows. In addition, we enjoy a leadership position in various core product categories, and continually develop and introduce new products designed to maintain that leadership, as well as to penetrate new markets. Failure to develop and introduce new products that maintain a leadership position or that fail to penetrate new markets may adversely affect operating results.

We obtain various key components, services and licenses from sole and limited source suppliers.

Our manufacturing operations are dependent on the ability of suppliers to deliver high quality components, subassemblies and completed products in time to meet critical manufacturing and distribution schedules. We periodically experience constrained supply of component parts in some product lines as a result of strong demand in the industry for those parts. We buy a significant portion of our circuit boards from one supplier and a significant portion of our Application Specific Integrated Chips (“ASICs”) from two suppliers. Both circuit boards and ASICs are important components of our products and are built to Tektronix’ specifications. We believe other suppliers could build the circuit boards, however there are a limited number of suppliers that could build ASICs to Tektronix’ specifications. These constraints, if persistent, may adversely affect operating results until alternate sourcing can be developed. There is increased risk of supplier constraints in periods where we are increasing production volume to meet customer demands. 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 our future operating results. In addition, we use various sole source components that are integral to a variety of products. Disruption in key sole source suppliers could have a significant adverse effect on our results of operations.

We are dependent on various third-party logistics providers to distribute our products throughout the world. Any disruptions in their ability to ship products to our customers could have a significant adverse effect on our results of operations.

We rely upon software licensed from third parties. If we are unable to maintain these software licenses on commercially reasonable terms, our business, financial condition, results of operations, or cash flow could be harmed.

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Changes or delays in the implementation or customer acceptance of our products could harm our financial results.

Revenues for a significant portion of our network management solution products are typically recognized upon the completion of system installation or customer acceptance. Delays caused by us or our customers in the commencement or completion of scheduled product installations and acceptance testing may occur from time to time. Changes or delays in the implementation or customer acceptance of our products could harm our financial results.

There are additional product risks associated with sales of the network management products. Sales of our network management products often involve large contracts and custom development criteria. Because a significant portion of our total revenues on a quarterly basis is derived from projects requiring explicit acceptance by the customer, product installation and/or development delays could materially harm our financial results for a particular period. Additionally, we may be subject to penalties or other customer claims for failure to meet contractually agreed upon milestones or deadlines, which could include cancellation of an order and impairment of the associated inventory.

Our network management business and reputation could suffer if we do not prevent security breaches.

We have included security features in some of the network management products that are intended to protect the privacy and integrity of customer data. Despite the existence of these security features, these products may be vulnerable to breaches in security due to unknown defects in the security mechanisms, as well as vulnerabilities inherent in the operating system or hardware platform on which the product runs or the networks linked to that platform. Security vulnerabilities, regardless of origin, could jeopardize the security of information stored in and transmitted through the computer systems of our customers. Any security problem may require significant expenditures to solve and could materially harm our reputation and product acceptance.

A significant portion of our revenues are from international customers, and, as a result, our business may be harmed by political and economic conditions in foreign markets and the challenges associated with operating internationally.

We maintain operations and conduct business in four major geographies: the Americas, Europe, the Pacific, and Japan. Some of our manufacturing operations and key suppliers are located in foreign countries, including China, where we expect to further expand our operations. As a result, business is subject to the worldwide economic and market condition risks generally associated with doing business globally, such as fluctuating exchange rates; the stability of international monetary conditions; tariff and trade policies; export license requirements and technology export restrictions; import regulations; domestic and foreign tax policies; foreign governmental regulations; political unrest, wars and acts of terrorism; epidemic disease and other health concerns; and changes in other economic and political conditions. These factors, among others, could restrict or adversely affect our ability to sell in global markets, as well as our ability to manufacture products or procure supplies, and could subject us to additional costs. In addition, a significant downturn in the global economy or a particular region could adversely affect our results of operations, financial condition, or cash flows.

Our success depends on our ability to maintain and protect our intellectual property and the intellectual property licensed from others.

As a technology-based company, our success depends on developing and protecting our intellectual property. We rely generally on patent, copyright, trademark and trade secret laws in the United States and abroad. Electronic equipment as complex as most of our products, however, is generally not patentable in its entirety. We also license intellectual property from third parties and rely on those parties to maintain and protect their technology. We cannot be certain that actions we take to establish and protect proprietary rights will be adequate, particularly in countries (including China) where intellectual property rights are not highly developed or protected. If we are unable to adequately protect our technology, or if we are unable to continue to obtain or maintain licenses for protected technology from third parties, it could have a material adverse effect on our results of operations, financial condition, or cash flows. From time to time in the usual course of business, we receive notices from third parties

11

regarding intellectual property infringement or take action against others with regard to intellectual property rights. Even where we are successful in defending or pursuing infringement claims, we may incur significant costs. In the event of a successful claim against us, we could lose our rights to needed technology or be required to pay license fees for the infringed rights, either of which could have an adverse impact on our business.

We are subject to environmental regulations.

We are subject to a variety of federal, state, local and foreign environmental regulations relating to the use, storage, discharge and disposal of hazardous chemicals used during our manufacturing process.

We have closed a licensed hazardous waste management facility at our Beaverton, Oregon campus and have entered into a consent order with the Oregon Department of Environmental Quality requiring certain remediation actions. If we fail to comply with the consent order or any present or future regulations, we could be subject to future liabilities or the suspension of production. In addition, environmental regulations could restrict our ability to expand our facilities or could require us to acquire costly equipment, or to incur other significant expenses to comply with environmental regulations.

Our defined benefit pension plans are subject to financial market risks.

Our defined benefit pension plan obligations are affected by changes in market interest rates and the majority of plan assets are invested in publicly traded debt and equity securities, which are affected by market risks. Significant changes in market interest rates, decreases in the fair value of plan assets and investment losses on plan assets may adversely impact our operating results. See “Critical Accounting Estimates — Pension Plans” in Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations of Part II of this Form 10-K below for additional discussion.

Our reported results of operations will be materially and adversely affected by our adoption of SFAS 123R.

Statement of Financial Accounting Standards (“SFAS”) No. 123 (Revised 2004), “Share-Based Payment” (“SFAS 123R”), which will be effective in our first quarter of fiscal year 2007, will result in our recognition of substantial compensation expense relating to our stock incentive plan and employee stock purchase plan. We currently use the intrinsic value method to measure compensation expense for stock-based awards to our employees. Under this standard, we generally have not recognized any compensation expense related to stock option grants we issue under our stock incentive plans or the discounts we provide under our employee stock purchase plan. Under the new rules, we will be required to adopt a fair value-based method for measuring the compensation expense related to employee stock awards, which will lead to substantial additional compensation expense and will have a material adverse effect on our reported results of operations. See Note 4 of the Notes to Consolidated Financial Statements under Part II Item 8 Financial Statements and Supplementary Data of this Report for the pro forma impact on net earnings and earnings per share from calculating stock-related compensation cost under the fair value alternative of SFAS No. 123. However, the calculation of compensation cost for share-based payment transactions after the effective date of SFAS No. 123R may be different from the calculation of compensation cost under SFAS No. 123, but such differences have not yet been quantified.

We face other risk factors.

Our business could be impacted by macroeconomic factors. The recent volatility in energy prices and rising interest rates could have a negative impact on the economy overall and could adversely affect our results of operations, financial condition, or cash flows.

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 our business strategies, potential litigation and claims arising in the normal course of business, credit risk of customers, the fact that a substantial portion of our sales during a quarter are generated from orders received during that quarter, and significant modifications to existing information systems. If any of these risks occur, they could adversely affect our results of operations, financial condition, or cash flows.

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Item 1B.   Unresolved Staff Comments.

None.

Item 2.   Properties.

Tektronix’ headquarters and primary manufacturing facilities are located in Beaverton, Oregon. All properties are maintained in good working order and, except for those leased to other companies, are substantially utilized and are suitable for the conduct of its business. Management believes that our facilities are adequate for their intended uses.

The Beaverton facilities are located in a business park (the “Howard Vollum Business Park”), which is owned by Tektronix. The Howard Vollum Business Park includes numerous buildings arranged in a campus-like setting and contains an aggregate of approximately 1.3 million gross square feet of enclosed floor space. Warehouses, production facilities, and other critical operations are protected by fire sprinkler installations. Tektronix leases approximately 241,000 square feet in Richardson, Texas, assumed in the Inet acquisition, of which 213,000 square feet is used for operations and 28,000 square feet is vacant.

Tektronix leases 41,000 square feet of office space in Tokyo, Japan that is used for design, sales, marketing, and administrative activities and leases 11,700 square feet in Ninomiya, Japan for product service and repair. Tektronix leases 100,000 square feet of facilities in Shanghai, China mainly for manufacturing purposes.

Research and development for some video test products using MPEG compression technology, as well as the marketing efforts for those products, occurs at a leased facility located in Cambridge, England. Space is leased in Bristol, England for video test software development. Design and manufacturing space for communications test products is also leased in Berlin, Germany and Padova, Italy. Tektronix owns a facility in Bangalore, India that is used for software design.

Tektronix leases sales and service field offices throughout the world. The following is a summary of worldwide owned and leased space (in square feet):

Location	Owned Space		Leased Space		Total Space
United States:
Beaverton, OR		1,304,094		500		1,304,594
Richardson, TX		—		241,372		241,372
Sales Offices		—		27,249		27,249
Other Americas		—		10,636		10,636
Europe		—		235,627		235,627
Pacific		15,832		233,226		249,058
Japan		—		69,497		69,497
Other		—		43,380		43,380
Totals		1,319,926		861,487		2,181,413

Item 3.   Legal Proceedings.

The U.S. Office of Export Enforcement and the Department of Justice are conducting investigations into Tektronix’ compliance with export regulations with respect to certain sales made in Asia. We are fully cooperating with the investigations. The government could pursue a variety of sanctions against Tektronix, including monetary penalties and restrictions on our exportation of certain products. Based on the status of the investigations as of the date of this report, we do not anticipate that the results of the investigations will have a material adverse effect on Tektronix’ business, results of operations, financial condition, or cash flows.

Tektronix is involved in various other litigation matters, claims, and investigations that occur in the normal course of business, including but not limited to patent, commercial, personnel, and other matters. While the results of such matters cannot be predicted with certainty, we believe that their final outcome will not have a material adverse impact on Tektronix’ business, results of operations, financial condition, or cash flows.

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

No matter was submitted to a vote of the security holders of Tektronix during the fourth quarter of the fiscal year covered by this report.

PART II

Item 5.   Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Tektronix common stock is traded on the New York Stock Exchange under the symbol “TEK.” There were 3,634 shareholders of record as of July 17, 2006, and on that date there were 83,131,753 common shares outstanding. Many of Tektronix’ shares are held by brokers and other institutions on behalf of shareholders, and the number of such beneficial owners represented by the record holders is not known or readily estimable. The closing price on July 17, 2006 was $26.99.

The following table summarizes the high and low closing sales prices for the common stock as reported by the New York Stock Exchange in each quarter during the last two fiscal years:

Quarter	High		Low
Year Ending May 27, 2006:
Fourth Quarter	$	36.70	$	30.26
Third Quarter		31.41		25.36
Second Quarter		26.63		22.73
First Quarter		25.29		22.56
Year Ending May 28, 2005:
Fourth Quarter	$	29.10	$	21.17
Third Quarter		31.95		28.00
Second Quarter		33.99		28.35
First Quarter		34.94		26.49

From the first quarter of fiscal year 2000 through the first quarter of fiscal year 2004, Tektronix did not pay a dividend on its common stock. Beginning with the second quarter of fiscal year 2004, Tektronix declared and paid a quarterly cash dividend of $0.04 per common share, for a total of $0.12 per common share for the full fiscal year 2004. The quarterly cash dividend was increased to $0.06 per common share beginning with the second quarter of fiscal year 2005, for a total of $0.22 per common share for the full fiscal year 2005. In fiscal year 2006, Tektronix declared and paid a quarterly cash dividend of $0.06 per common share, for a total of $0.24 per common share for the full fiscal year 2006. Tektronix may or may not pay dividends in the future and, if dividends are paid, Tektronix may pay more or less than $0.06 per share per quarter.

Information required by this item regarding equity compensation plans is included in Note 19 of the Notes to Consolidated Financial Statements in Item 8 Financial Statements and Supplementary Data of this report.

Repurchases of Tektronix common stock are made under authorizations totaling $950.0 million approved by the Board of Directors in fiscal years 2000 and 2005. These authorizations allow Tektronix, at management’s discretion, to selectively repurchase its common stock from time to time in the open market or in privately negotiated transactions depending on market price and other factors. The share repurchase authorization has no stated expiration date. During fiscal years 2006 and 2005, we repurchased a total of 4.8 million and 7.8 million shares, respectively, at an average price per share of $25.02 and $26.63, respectively, for $120.8 million and $208.4 million, respectively. As of May 27, 2006, we have repurchased a total of 29.8 million shares at an average price of $24.10 per share totaling $718.0 million under these authorizations. The reacquired shares were immediately retired, as required under Oregon corporate law.

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Purchases of Tektronix common stock during the fourth quarter ended May 27, 2006 were as follows:

							Cumulative
							Number
							of Shares		Maximum Dollar
	Total		Average				Purchased as		Value of Shares
	Number		Price		Total		Part of Publicly		that May
	of Shares		Paid Per		Amount		Announced Plans		Yet Be
Fiscal Period	Purchased		Share		Paid		or Programs		Purchased
February 26, 2006 to March 25, 2006		—	$	—	$	—		29,344,279	$	246,429,078
March 26, 2006 to April 22, 2006		22,000		34.50		759,108		29,366,279		245,669,970
April 23, 2006 to May 27, 2006		423,500		32.35		13,698,604		29,789,779	$	231,971,366
Total		445,500	$	32.45	$	14,457,712

Item 6.   Selected Financial Data.

The following selected financial data, which were derived from audited consolidated financial statements, should be read in conjunction with Tektronix’ consolidated financial statements and related notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Annual Report on Form 10-K. Earnings from continuing operations include business realignment costs and acquisition related costs (credits) and amortization.

CONSOLIDATED FINANCIAL PERFORMANCE

Amounts in millions, except per share data

	2006 (a)			2005 (a)			2004			2003			2002
Net sales	$	1,039.9		$	1,034.7		$	920.6		$	791.0		$	810.3
Gross margin %		59.8	%		59.8	%		56.8	%		51.3	%		49.4	%
Earnings from continuing operations (b) (c)	$	90.9		$	78.9		$	118.2		$	35.1		$	33.6
Earnings per share:
Continuing operations — basic	$	1.09		$	0.91		$	1.40		$	0.40		$	0.37
Continuing operations — diluted	$	1.08		$	0.89		$	1.37		$	0.40		$	0.36
Weighted average shares outstanding:
Basic		83.3			86.8			84.7			87.1			91.4
Diluted		84.4			88.2			86.0			87.4			92.3
Cash dividends declared per share	$	0.24		$	0.22		$	0.12		$	—		$	—
Total assets	$	1,634.1		$	1,460.3		$	1,348.5		$	1,384.7		$	1,378.9
Long-term debt, excluding current portion	$	—		$	0.1		$	0.5		$	55.0		$	57.3

(a)	Financial data for fiscal years 2006 and 2005 included twelve months and eight months, respectively, of the results of operations of Inet which was acquired on September 30, 2004.
(b)	Included business realignment costs of $9.8 million, $3.1 million, $22.8 million, $34.6 million, and $27.0 million for fiscal years 2006, 2005, 2004, 2003, and 2002, respectively.
(c)	Included acquisition related costs (credits) and amortization of $8.6 million, $41.6 million, $(51.0) million, and $3.5 million for fiscal years 2006, 2005, 2004 and 2003, respectively. See Note 5 of the Notes to the Consolidated Financial Statements in Item 8 Financial Statements and Supplementary Data for further information.

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Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Introduction and Overview

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide investors with an understanding of the operating performance and financial condition of Tektronix. A discussion of our business, including our strategy, products, and competition, is included in Part I of this Form 10-K above.

Business Overview

Tektronix is a leading supplier of test, measurement, and monitoring products, solutions, and services to the communications, computer, and semiconductor industries worldwide. We enable our customers to design, build, deploy, and manage next-generation global communications networks, computing, pervasive, and advanced technologies. We derive revenue principally by developing, manufacturing, and selling a broad range of products and related components, support services, and accessories.

Our strategy is to focus our efforts on select product categories where Tektronix has a market leadership position or where we believe Tektronix can grow to a market leadership position. We have three supporting strategies to drive long term growth: grow market share in core product categories where Tektronix already has a strong market position, leverage existing strengths into adjacent product categories, and expand our addressable market. As a result of investments in this strategy, we believe that near term growth for Tektronix will be driven by an increase in the number of products expected to be introduced across the majority of our product categories, and by our ability to win customers in the transition to modern telecommunication networks.

Tektronix is organized around two business platforms: the Instruments Business and the Communications Business. The Instruments Business includes general purpose test and measurement products and video test, measurement, and monitoring products. The Communications Business includes telecommunications network management solutions and services and network diagnostics products.

We maintain operations and conduct business in four major geographies: the Americas, Europe, the Pacific, and Japan.

Tektronix’ results of operations and financial condition may be affected by a variety of factors. In our opinion, the most significant of these factors include the economic strength of the technology markets into which we sell our products, our ability to develop compelling technology solutions and deliver these to the marketplace in a timely manner, and the actions of competitors. The significant risk factors affecting Tektronix are discussed further in Item 1A Risk Factors of Part I of this Form 10-K above.

The markets that we serve are very diverse and include a cross-section of technology industries. Accordingly, our business is cyclical and tends to correlate to the overall performance of the technology sector. During the latter part of fiscal year 2003, we began to experience the stabilization of certain markets that had been depressed as a result of the general downturn in the technology sector. Fiscal year 2004 saw a more broad-based recovery. During fiscal year 2005, growth rates moderated as compared to the prior fiscal year. In the fourth quarter of fiscal year 2005 and into the first quarter of fiscal year 2006 orders softened in a number of our product areas and in most regions. Toward the end of the first quarter of fiscal year 2006, our markets began to strengthen and that strengthening continued through the remainder of fiscal year 2006.

We face significant competition in many of the markets in which we sell our products. Tektronix competes on many factors including product performance, technology, product availability, and price. To compete effectively, we must deliver compelling products to the market in a timely manner. Accordingly, we make significant investments into the research and development of new products and the sales channels necessary to deliver products to the market. Even during periods where economic conditions have reduced our revenues, such as those experienced in fiscal years 2002 and 2003, we continued to invest significantly in the development of new products and sales channels. A discussion of our products and competitors is included in Item 1 Business of Part I of this Form 10-K above.

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Acquisitions

On September 30, 2004, Tektronix acquired Inet Technologies, Inc., a company that engaged primarily in network monitoring. The acquisition of Inet has further expanded our network management and diagnostics product offerings. The acquisition of Inet is described below in this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

On June 13, 2005, Tektronix acquired TDA Systems, a small supplier of time domain software tools for high speed serial data customers. The purchase price was approximately $4.6 million, including $2.1 million in shares of Tektronix common stock and $2.0 million in contingent cash consideration held in escrow to be paid over a two year period.

On November 8, 2005, Tektronix acquired Vqual Ltd., a leading provider of software tools for analysis, test, and optimization of compressed digital media, based in Bristol, England. This acquisition will enable Tektronix to offer its customers a complete suite of in-house compressed video analysis products. The purchase price was approximately $7.4 million and is subject to upward adjustment based on achievement of predetermined sales levels through July 2007.

We provide further details below for the Inet Technologies, Inc. acquisition.

Inet Technologies, Inc.

During the second quarter of fiscal year 2005, Tektronix acquired Inet Technologies, Inc. (“Inet”), a leading global provider of communications software solutions that enable network operators to more strategically and profitably operate their businesses. Inet’s products address next-generation mobile and fixed networks, including mobile data and voice over packet (also referred to as voice over Internet protocol or VoIP) technologies, and traditional networks. Inet’s Unified Assurance Solutions enable network operators to simultaneously manage their voice and data services at the network, service, and customer layers by capturing, correlating, and analyzing network wide traffic in real time. Inet’s diagnostic products assist equipment manufacturers and network operators to quickly and cost effectively design, deploy, and maintain current and next-generation networks and network elements. Inet had approximately 500 employees worldwide and had sales of $104 million for the year ended December 31, 2003. Through this acquisition Tektronix significantly enhanced its position in the overall network management and diagnostic market and will accelerate the delivery of products and solutions for network operators and equipment manufacturers seeking to implement next-generation technologies such as General Packet Radio Service (GPRS), Universal Mobile Telecommunications Systems (UMTS), and VoIP.

Tektronix acquired all of Inet’s outstanding common stock for $12.50 per share consisting of $6.25 per share in cash and $6.25 per share in Tektronix common stock. The cash consideration of $247.6 million, the value of Tektronix common stock of $247.5 million, and the fair values of stock options and restricted share rights assumed are included in the purchase price that was allocated to the underlying assets acquired and liabilities assumed based on their estimated fair values. The purchase price allocation is subject to further changes primarily related to resolution of tax contingencies associated with ongoing tax audits for pre-acquisition periods. The purchase price and resulting allocation to the underlying assets acquired, net of deferred income taxes, are presented below as of May 27, 2006.

The following table presents the total purchase price (in thousands):

Cash paid	$	247,561
Stock issued		247,543
Stock options assumed		9,658
Restricted share rights assumed		321
Transaction costs		5,224
Unearned stock-based compensation		(3,403	)
Liabilities assumed		36,735
Total purchase price	$	543,639

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The following table presents the allocation of the purchase price to the assets acquired, net of deferred income taxes, based on their fair values (in thousands):

Cash and cash equivalents	$	158,821
Accounts receivable		18,504
Inventories		18,025
Tax benefit from transaction costs		1,209
Other current assets		6,708
Property, plant, and equipment		10,662
Intangible assets		121,953
Goodwill		219,653
Other long term assets		811
In-process research and development		32,237
Deferred income taxes		(44,944	)
Total assets acquired, net of deferred income taxes	$	543,639

The following table presents the details of the intangible assets purchased in the Inet acquisition as of May 27, 2006:

	(In years)
	Weighted Average			Accumulated
	Useful Life	Cost		Amortization			Net
		(In thousands)
Developed technology	4.8	$	87,004	$	(30,824	)	$	56,180
Customer relationships	4.8		22,597		(8,031	)		14,566
Covenants not to compete	4.0		1,200		(500	)		700
Tradename	Not amortized		11,152		—			11,152
Total intangible assets purchased		$	121,953	$	(39,355	)	$	82,598

Amortization expense in fiscal years 2006 and 2005 for intangible assets purchased in the Inet acquisition has been recorded on the Consolidated Statements of Operations as follows:

	2006		2005
	(In thousands)
Cost of sales	$	18,495	$	12,329
Acquisition related costs (credits) and amortization		5,117		3,414
Total	$	23,612	$	15,743

The amortization expense for fiscal years 2006 and 2005 was for twelve months and eight months, respectively.

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The estimated amortization expense of intangible assets purchased in the Inet acquisition in future years will be recorded on the Consolidated Statements of Operations as follows:

			Acquisition Related
	Cost of		Costs (Credits)
	Sales		and Amortization		Total
	(In thousands)
Fiscal Year
2007	$	18,495	$	5,117	$	23,612
2008		16,670		4,621		21,291
2009		15,759		4,174		19,933
2010		5,256		1,354		6,610
Total	$	56,180	$	15,266	$	71,446

In fiscal year 2005, the $32.2 million allocated to the in-process research and development (“IPR&D”) asset was written off at the date of the acquisition in accordance with Financial Accounting Standards Board (“FASB”) Interpretation No. 4, “Applicability of FASB Statement No. 2 to Business Combinations Accounted for by the Purchase Method.” This write-off was included in acquisition related costs (credits) and amortization on the Consolidated Statements of Operations. The fair value of IPR&D was based on the net present value of estimated future cash flows. Significant assumptions used in the valuation of IPR&D included a risk adjusted discount rate of 10.2%, revenue and expense projections, development life cycle and future entry of products to the market. As of the acquisition date, there were eight research and development projects in process that were approximately 87% complete. The total estimated cost to complete these projects was approximately $0.8 million at the acquisition date. In the first quarter of fiscal year 2006, Tektronix had completed these eight research and development projects.

The Consolidated Statements of Operations included the results of operations of Inet since September 30, 2004. The following (unaudited) pro forma consolidated results of operations have been prepared as if the acquisition of Inet had occurred at June 1, 2003, the beginning of Tektronix’ fiscal year 2004.

	2005		2004
	(In thousands, except per share amounts)
Pro forma
Net sales	$	1,071,333	$	1,033,346
Net earnings		112,338		115,890
Earnings per share:
Basic	$	1.26	$	1.26
Diluted	$	1.24	$	1.24

The $32.2 million write-off of IPR&D in fiscal year 2005 was excluded from the calculation of net earnings and net earnings per share in the table shown above.

The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisition been consummated as of that time, and it is not intended to be a projection of future results.

Sony/Tektronix Redemption

Prior to September 30, 2002, Tektronix and Sony Corporation (“Sony”) were equal owners of Sony/Tektronix Corporation (“Sony/Tektronix”), a joint venture originally established to distribute Tektronix products in Japan. During the second quarter of fiscal year 2003, we acquired from Sony its 50% interest in Sony/Tektronix through redemption of Sony’s shares by Sony/Tektronix for 8 billion Yen, or approximately $65.7 million at September 30, 2002. This transaction closed on September 30, 2002, at which time we obtained 100% ownership of Sony/Tektronix. Subsequent to the close of this transaction, this subsidiary is referred to as “Tektronix Japan” within this Management’s Discussion and Analysis of Financial Condition and Results of Operations. This transaction was a

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long-term strategic investment to provide Tektronix with stronger access to the Japanese market and the ability to leverage the engineering resources in Japan. 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 Tektronix Japan were consolidated in Tektronix’ financial statements.

In fiscal year 2006, acquisition related costs associated with the Sony/Tektronix redemption were not significant. In fiscal year 2005, we incurred $2.9 million in costs specifically associated with integrating the operations of this subsidiary, which were largely due to voluntary retention bonuses that began in the fourth quarter of fiscal year 2004 as discussed below. In fiscal year 2004, we incurred $5.0 million in costs specifically associated with integrating the operations of this subsidiary, including $0.6 million for voluntary retention bonuses which we offered to 48 employees in Gotemba, Japan as an incentive to remain with Tektronix while we transitioned Japan manufacturing operations to other locations. Accordingly, we began recognizing a liability of approximately $3.6 million that was accrued ratably over the manufacturing transition period. The costs described above are included in Acquisition related costs (credits) and amortization on the Consolidated Statements of Operations.

In fiscal year 2004, we also restructured the Japan pension plans and recorded a net gain from the restructuring of $36.7 million; sold property located in Shinagawa, Japan, which resulted in a net gain of $22.5 million; and recognized an impairment loss of $3.1 million on assets held for sale located in Gotemba, Japan. These net gains and losses are included in Acquisition related costs (credits) and amortization on the Consolidated Statements of Operations.

Business Realignment Costs

Business realignment costs represent actions to realign our cost structure in response to significant events and primarily include restructuring actions and impairment of assets resulting from reduced business levels or related to significant acquisitions or divestitures. Business realignment actions taken in recent fiscal years were intended to reduce our worldwide cost structure across all major functions. Major operations impacted include manufacturing, engineering, sales, marketing and administrative functions. In addition to severance, we incurred other costs associated with restructuring our organization, which primarily represented facilities contracts and other exit costs associated with aligning the cost structure to appropriate levels. Restructuring actions can take significant time to execute, particularly if they are being conducted in countries outside the United States. We believe that the restructuring actions implemented in recent fiscal years have resulted in the cost savings anticipated for those actions.

Business realignment costs incurred during fiscal year 2006 primarily reflected actions taken in response to softening in orders in some of our product areas at the end of fiscal year 2005 and the beginning of the first quarter of fiscal year 2006. We also took actions to realize business synergies as a result of the acquisition of Inet.

Business realignment costs of $9.8 million during fiscal year 2006 included severance and related costs of $11.1 million for 120 employees, $0.3 million for contractual obligations and a net $1.6 million credit for currency gains primarily related to the closure of three subsidiaries in Europe. At May 27, 2006, liabilities remained for the severance and related benefits of 41 employees.

Business realignment costs of $3.1 million during fiscal year 2005 were primarily for severance and related costs for residual activity in Europe. For fiscal year 2005, business realignment costs included severance and related costs of $2.2 million for 37 employees, $0.9 million for contractual obligations, and $0.2 million for accelerated depreciation of assets, offset by a $0.2 million credit from net accumulated currency translation gains. At May 28, 2005, liabilities of $1.3 million remained for the severance and related benefits of 15 employees for actions taken in fiscal years 2005, 2004, and 2003. The remaining $1.0 million liability was for continuing payments on contractual obligations, some of which span several years.

Business realignment costs of $22.8 million in fiscal year 2004 included $16.7 million of severance related costs for 274 employees mostly located in Europe and the United States and adjustments to estimates in prior fiscal years, $2.6 million for accumulated currency translation losses, net, related to the substantial closure of subsidiaries

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in Brazil, Australia, Denmark and a surplus facility in China, $1.9 million for contractual obligations for leased facilities in Europe and the United States, and $1.6 million for accelerated depreciation and write-down of assets in Europe and the United States. Annual salary cost savings from actions taken in fiscal year 2004 to reduce employee headcount were $14.7 million.

Activity for the above described actions during fiscal year 2006 was as follows:

			Costs
	Balance		Incurred								Balance
	May 28,		and Other			Cash			Non-cash		May 27,
	2005		Adjustments			Payments			Adjustments		2006
	(In thousands)
Fiscal Year 2006 Actions:
Employee severance and related benefits	$	—	$	11,142		$	(6,275	)	$	—	$	4,867
Contractual obligations		—		259			(259	)		—		—
Accumulated currency translation gain, net		—		(1,603	)		—			1,603		—
Total		—		9,798			(6,534	)		1,603		4,867
Fiscal Year 2005 Actions:
Employee severance and related benefits		568		(143	)		(414	)		—		11
Contractual obligations		103		49			(152	)		—		—
Total		671		(94	)		(566	)		—		11
Fiscal Year 2004 Actions:
Employee severance and related benefits		681		98			(208	)		42		613
Total		681		98			(208	)		42		613
Fiscal Year 2003 and 2002 Actions:
Employee severance and related benefits		2		—			—			1		3
Contractual obligations		926		45			(460	)		—		511
Total		928		45			(460	)		1		514
Total of all actions	$	2,280	$	9,847		$	(7,768	)	$	1,646	$	6,005

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Activity for the above described actions during fiscal year 2005 was as follows:

			Costs
	Balance		Incurred									Balance
	May 29,		and Other			Cash			Non-cash			May 28,
	2004		Adjustments			Payments			Adjustments			2005
	(In thousands)
Fiscal Year 2005 Actions:
Employee severance and related benefits	$	—	$	2,447		$	(1,879	)	$	—		$	568
Asset impairments		—		345			—			(345	)		—
Contractual obligations		—		525			(639	)		217			103
Accumulated currency translation gain		—		(236	)		—			236			—
Total		—		3,081			(2,518	)		108			671
Fiscal Year 2004 Actions:
Employee severance and related benefits		5,335		(235	)		(4,419	)		—			681
Asset impairments		—		(97	)		—			97			—
Contractual obligations		409		327			(737	)		1			—
Total		5,744		(5	)		(5,156	)		98			681
Fiscal Year 2003 Actions:
Employee severance and related benefits		294		(20	)		(272	)		—			2
Contractual obligations		1,240		35			(479	)		109			905
Total		1,534		15			(751	)		109			907
Fiscal Year 2002 Actions:
Employee severance and related benefits		152		9			(161	)		—			—
Contractual obligations		54		—			(33	)		—			21
Total		206		9			(194	)		—			21
Total of all actions	$	7,484	$	3,100		$	(8,619	)	$	315		$	2,280

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

			Costs
	Balance		Incurred									Balance
	May 31,		and Other			Cash			Non-cash			May 29,
	2003		Adjustments			Payments			Adjustments			2004
	(In thousands)
Fiscal Year 2004 Actions:
Employee severance and related benefits	$	—	$	17,351		$	(12,016	)	$	—		$	5,335
Asset impairments		—		1,610			—			(1,610	)		—
Contractual obligations		—		1,514			(1,105	)		—			409
Accumulated currency translation loss, net		—		2,594			—			(2,594	)		—
Total		—		23,069			(13,121	)		(4,204	)		5,744
Fiscal Year 2003 Actions:
Employee severance and related benefits		5,394		(623	)		(4,477	)		—			294
Asset impairments		—		(53	)		—			53			—
Contractual obligations		1,730		447			(1,085	)		148			1,240
Total		7,124		(229	)		(5,562	)		201			1,534
Fiscal Year 2002 Actions:
Employee severance and related benefits		494		172			(514	)		—			152
Contractual obligations		434		(57	)		(323	)		—			54
Total		928		115			(837	)		—			206
Other		—		(190	)		(9	)		199			—
Total of all actions	$	8,052	$	22,765		$	(19,529	)	$	(3,804	)	$	7,484

Critical Accounting Estimates

We have identified the “critical accounting estimates,” which are those that are most important to our portrayal of the financial condition and operating results, 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 revenue recognition, contingencies, intangible asset valuation, pension plan assumptions, assessment of the valuation of deferred income taxes and income tax contingencies, and stock-based compensation assumptions.

Revenue Recognition

We recognize product revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collection is probable. Delivery is considered to have occurred when title and risk of loss have transferred to the customer. These criteria are met for the majority of our product sales at the time the product is shipped. Upon shipment, we also provide for estimated costs that may be incurred for product warranties and for sales returns. When other significant obligations or acceptance terms remain after products are delivered, revenue is recognized only after such obligations are fulfilled or acceptance by the customer has occurred.

Contracts for our network management solution products often involve multiple deliverables. We determine the fair value of each of the contract deliverables using vendor-specific objective evidence (“VSOE”). VSOE for each element of the contract is based on the price for which we sell the element on a stand-alone basis. In addition to hardware and software products, elements of the contracts include product support services such as the correction of software problems, hardware replacement, telephone access to our technical personnel and the right to receive unspecified product updates, upgrades, and enhancements, when and if they become available. Revenues from these services, including post- contract support included in initial licensing fees, are recognized ratably over the service

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periods. Post-contract support included in the initial licensing fee is allocated from the total contract amount based on the fair value of these services determined using VSOE.

If we determine that we do not have VSOE on an undelivered element of an arrangement, we will not recognize revenue until all elements of the arrangement that do not have VSOE are delivered. This occurrence could materially impact our financial results because of the significant dollar amount of many of our contracts and the significant portion of total revenues that a single contract may represent in any particular period.

Revenue earned from service is recognized ratably over the contractual service periods or as the services are performed. Shipping and handling costs are recorded as Cost of sales on the Consolidated Statements of Operations. Amounts billed or collected in advance of the period in which the related product or service qualifies for revenue recognition are recorded as Deferred revenue on the Consolidated Balance Sheets.

Contingencies

We are subject to claims and litigation concerning intellectual property, environmental and employment issues, settlement of contingencies related to prior dispositions of assets, and regulatory actions related to customs and export control matters. Accruals have been established based upon our best estimate of the ultimate outcome of these matters. We review the status of any claims, litigation, and other contingencies on a regular basis, and adjustments are made as additional information becomes available. As of May 27, 2006, $8.8 million of contingencies were recorded in Accounts payable and accrued liabilities on the Consolidated Balance Sheets, which included $5.0 million of contingencies relating to the sale of the Color Printing and Imaging Division (“CPID”) described below, $2.0 million for environmental exposures, and $1.8 million for other contingent liabilities. It is reasonably possible that our estimates of contingencies could change in the near term and that such changes could be material to the consolidated financial statements.

At the time of the sale of CPID on January 1, 2000, we deferred the recognition of $60.0 million of gain on the sale and recorded contingencies of $60.0 million. In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 5, “Accounting for Contingencies,” our policy is to defer recognition of a gain where we believe contingencies exist which may result in that gain being recognized prior to realization.

The $60.0 million of contingencies represented the deferral of a portion of the gain on sale that we believed was not realizable due to certain contingencies contained in the final sale agreement. Of the original $60.0 million of contingencies, $22.6 million has been utilized to settle claims and $32.4 million was recognized in subsequent periods, including $5.4 million in the third quarter of fiscal year 2005. Since January 1, 2000, we have analyzed the amount of deferred gain in relation to outstanding contingencies and recognized additional gain periodically when objective evidence indicated that such contingencies were believed to be resolved.

As of May 27, 2006 and May 28, 2005, the balance of the contingencies related to the CPID disposition was $5.0 million. This contingency may take several years to resolve. We continue to monitor the status of the CPID related contingencies based on information received.

Included in contingent liabilities was $2.0 million specifically associated with the closure and cleanup of a licensed hazardous waste management facility at our Beaverton, Oregon, campus. The initial liability was established in 1998, and we base 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. We currently estimate that the range of remaining reasonably possible cost associated with this environmental cleanup, testing and monitoring could be as high as $10.0 million. We believe that the recorded liability represents the low end of a reasonable range of estimated liability associated with these environmental issues. These costs are expected to be incurred over the next several years. Tektronix is currently awaiting approval of a work plan and risk assessment for a feasibility study from the Oregon Department of Environmental Quality. We expect approval for the work plan and risk assessment and completion of the feasibility study during fiscal year 2007, which could increase our recorded liability. If events or circumstances arise that are unforeseen to us as of the balance sheet date, actual costs could differ materially from the recorded liability.

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The remaining $1.8 million of contingency accruals included amounts primarily related to intellectual property, employment issues and regulatory matters. If events or circumstances arise that we did not foresee as of the balance sheet date, actual costs could differ materially from the above described estimates of contingencies.

Goodwill and Intangible Assets

Goodwill and intangible assets are accounted for in accordance with SFAS No. 141, “Business Combinations,” and SFAS No. 142, “Goodwill and Other Intangible Assets.” Accordingly, we do not amortize goodwill and intangible assets with indefinite useful lives, but we amortize other acquisition related intangibles with finite useful lives.

SFAS No. 142 requires goodwill not to be amortized, but to be reviewed for impairment annually and more frequently if events or circumstances indicate that the goodwill may be impaired. The impairment test uses a two-step process. The first step identifies potential impairment by comparing the fair value of the reporting unit with its carrying amount. If the carrying amount of the reporting unit exceeds its fair value, then the second step is performed to determine the amount of impairment loss, if any. As of May 27, 2006, the balance of goodwill, net was $307.2 million, which was recorded on the Consolidated Balance Sheets. The major component of the goodwill balance was $219.7 million resulting from the Inet acquisition.

For intangible assets with finite useful lives that are not software-related, we amortize the cost over the estimated useful lives and assess 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.” If the estimated undiscounted cash flow related to these assets decreases in the future or the useful life is shorter than originally estimated, we may incur charges to impair these assets. The impairment would be based on the estimated discounted cash flow associated with each asset. Impairment could result if the underlying technology fails to gain market acceptance, we fail 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.

For software-related intangible assets with finite useful lives, Tektronix amortizes the cost over the estimated economic life of the software product and assesses impairment in accordance with SFAS No. 86, “Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed.” At each balance sheet date, the unamortized cost of the software-related intangible asset is compared to its net realizable value. The net realizable value is the estimated future gross revenues from the software product reduced by the estimated future costs of completing and disposing of that product, including the costs of performing maintenance and customer support. The excess of the unamortized cost over the net realizable value would then be recognized as an impairment loss. Amortization expense for intangible assets that are software-related developed technology is recorded as Cost of sales on the Consolidated Statements of Operations.

We do not amortize intangible assets with indefinite useful lives. However, we reevaluate these intangible assets each reporting period. If we subsequently determine that a nonamortizable intangible asset has a finite useful life, the intangible asset will be written down to the lower of its fair value or carrying amount and then amortized over its remaining useful life on a prospective basis. We review nonamortizable intangible assets annually for impairment and more frequently if events or circumstances indicate that the intangible asset may be impaired. The impairment test includes a comparison of the fair value of the nonamortizable intangible asset with its carrying value. An impairment loss would be recognized as a charge to continuing operations if the carrying value exceeds the fair value of the nonamortizable intangible asset. The balance of nonamortizable intangible assets of $11.2 million as of May 27, 2006 resulted primarily from the Inet acquisition during the second quarter of fiscal year 2005. Accordingly, the nonamortizable intangible assets were recorded at their fair values and no events or circumstances have arisen that would indicate that the nonamortizable intangible assets may be impaired.

As of May 27, 2006, we had $86.8 million of non-goodwill intangible assets recorded in Other long-term assets on the Consolidated Balance Sheets, which includes intangible assets from the acquisition of Inet, acquired patent intangibles and licenses for certain technology.

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We perform our annual goodwill and nonamortizable intangible asset impairment test in the second quarter of each fiscal year. There were no impairment charges associated with goodwill and intangible assets in fiscal years 2006, 2005 and 2004.

Pension Plans

Tektronix offers defined benefit pension plan benefits to employees in certain countries. The Cash Balance pension plan in the United States is our largest defined benefit pension plan. Employees hired after July 31, 2004 do not participate in the U.S. Cash Balance pension plan. We maintain less significant defined benefit plans in other countries including the United Kingdom, Germany, Netherlands, Japan, and Taiwan.

Pension plans are a significant cost of doing business and the related obligations are expected to be settled far in the future. Accounting for defined benefit pension plans results in the current recognition of liabilities and net periodic pension cost over employees’ expected service periods based on the terms of the plans and the impact of our investment and funding decisions. The measurement of pension obligations and recognition of liabilities and costs require significant assumptions. Two critical assumptions, the discount rate and the expected long-term rate of return on the assets of the plan, have had a significant impact on our financial condition and results of operations.

We measure pension obligations, fair value of plan assets, and the impact of significant assumptions at the end of each fiscal year. At May 27, 2006, the accumulated benefit obligation was less than the fair value of plan assets for certain pension plans. In accordance with SFAS No. 87, “Employers’ Accounting for Pensions,” we recognized a prepaid pension cost asset due to the overfunded accumulated benefit obligation associated with these plans. Other plans remain in underfunded status and are recorded as a pension liability. At May 27, 2006 the combined total of all Tektronix’ pension plans was in a net underfunded position.

Discount rate assumptions are used to measure pension obligations for the recognition of pension liability and prepaid pension cost on the balance sheet, and for the service cost and interest cost components of net periodic pension cost. The discount rates reflect estimates of the rates at which the pension benefits could be effectively settled. In making those estimates, we evaluate rates of return on high-quality fixed-income investments currently available and expected to be available during the settlement of future pension benefits. The weighted average of discount rates used in determining our pension obligation as of May 27, 2006, was 5.9% as compared to 5.3% at the end of the prior fiscal year.

Discount rates of 6.25% and 5.50% were used as of May 27, 2006 and May 28, 2005, respectively, to determine the projected benefit obligation for the U.S. Cash Balance pension plan. The increase in the discount rate contributed to a reduction in the accumulated benefit obligation for the U.S. Cash Balance Plan such that it was less than the fair value of the plan assets, resulting in an overfunded position. In accordance with SFAS No. 87, “Employers Accounting for Pensions”, as a result of this overfunded position, we eliminated the associated additional minimum pension liability, eliminated the charge to other comprehensive income, and recognized a prepaid pension cost asset. The prepaid pension cost asset primarily reflects cumulative unrecognized losses on plan assets, and historical changes in the discount rate and other actuarial assumptions, and is being amortized to the income statement. See Note 26 “Benefit Plans” of the Notes to the Consolidated Financial Statements in Item 8 Financial Statements and Supplementary Data for further information.

A decrease of 25 basis points in the discount rate as of May 27, 2006 would increase the projected benefit obligation for the U.S. Cash Balance pension plan by $9.2 million, which could affect the funded status of the plan. This decrease of 25 basis points in the discount rate would not significantly increase pension expense.

The long-term rate of return on plan assets assumption is applied to the market-related value of plan assets to estimate income from return on plan assets. This income from return on plan assets offsets the various cost components of net periodic pension cost. The various cost components of net periodic pension cost primarily include interest cost on accumulated benefits, service cost for benefits earned during the period, and amortization of unrecognized gains and losses. Cumulative income recognized from the long-term rate of return on plan assets assumption has differed materially from the actual returns on plan assets. This has resulted in a net unrecognized loss on plan assets. The amount of net pension expense recognized has increased from prior periods primarily due to higher amortization of previously unrecognized losses resulting from the decline in the fair value of plan assets. To

26

the extent this unrecognized loss is not offset by future unrecognized gains, there will continue to be a negative impact to net earnings as this amount is amortized as a cost component of net periodic pension cost.

Our estimated weighted average long-term rate of return on plan assets for all plans for fiscal year 2006 is approximately 8.3%. A one percentage point change in the estimated long-term rate of return on plan assets would have resulted in a change in operating income of $6.0 million for fiscal year 2006.

During fiscal year 2006, we made voluntary contributions of $48.4 million to the U.S. Cash Balance pension plan and $6.4 million to the United Kingdom pension plan. Depending on the market performance of the pension plans assets, we may make additional cash contributions to the plans in the future.

We will continue to assess assumptions for the expected long-term rate of return on plan assets and discount rate based on relevant market conditions as prescribed by accounting principles generally accepted in the United States of America and will make adjustments to the assumptions as appropriate. Net pension expense was $10.9 million in fiscal year 2006, which included the effect of the recognition of service cost, interest cost, the expected return on plan assets, and amortization of a portion of the unrecognized loss noted above. Net pension expense was allocated to Cost of sales, Research and development, and Selling, general and administrative expenses on the Consolidated Statements of Operations.

Income Taxes

We are subject to taxation from federal, state, and international jurisdictions. Our annual provision for income taxes and the determination of the resulting deferred tax assets and liabilities involve a significant amount of management judgment and are based on the best information available at the time. The actual income tax liabilities to the jurisdictions with respect to any fiscal year are ultimately determined long after the financial statements have been published. We maintain 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 us to believe a revision of past estimates is appropriate.

In April of 2005, we reached a preliminary agreement with the Internal Revenue Service (“IRS”) with respect to its examination of Tektronix’ fiscal years 2001, 2002, and 2003. At that time, we made a payment of $12.7 million with respect to this audit pending final approval of the audit findings from the congressional Joint Committee on Taxation. In August of 2005, we were notified that the congressional Joint Committee on Taxation had completed its review, and had accepted the conclusions contained in the IRS Audit Report associated with the examination of those fiscal years. The settlement of this audit resulted in a net decrease of approximately $2.0 million of related reserves.

We are subject to ongoing examinations of our tax returns by the IRS and other tax authorities in various jurisdictions. The liabilities associated with fiscal years subject to income tax audits 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 on the Consolidated Statements of Operations in the period of the event. We believe that an appropriate liability has been established for estimated exposures; however, actual results may differ materially from these estimates. The liabilities are regularly reviewed for their adequacy and appropriateness.

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. At the end of fiscal year 2005, we maintained a valuation allowance against certain deferred tax assets, primarily foreign tax credit carryforwards. During fiscal year 2006, we were able to utilize the majority of these foreign tax credit carryforwards due to the financial results in various geographies and identified tax planning strategies. As of May 27, 2006, a valuation allowance of $1.7 million was maintained for selective foreign net operating loss and credit carryforwards because we do

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not expect to have significant taxable income in the relevant jurisdiction in future periods to realize the benefit of these deferred tax assets. We have not established valuation allowances against other deferred tax assets based on identified tax strategies planned to mitigate the risk of impairment to these assets. Accordingly, if our 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. We continually evaluate strategies that could allow the future utilization of our deferred tax assets.

Stock-based Compensation

In December 2004, the FASB issued SFAS No. 123 (Revised 2004), “Share-Based Payment” (“SFAS No. 123R”). This new pronouncement, as interpreted, requires compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. SFAS No. 123R covers a wide range of share-based compensation arrangements including stock options, restricted stock plans, performance-based awards, stock appreciation rights, and employee stock purchase plans. SFAS No. 123R replaces SFAS No. 123, and supersedes Accounting Principles Board Opinion (“APB”) No. 25, “Accounting for Stock Issued to Employees.”

We currently account for stock options according to APB No. 25, “Accounting for Stock Issued to Employees.” Under APB No. 25, no compensation expense is recognized on Tektronix’ 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 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. See Note 4 of the Notes to Consolidated Financial Statements in Item 8 Financial Statements and Supplementary Data for the pro forma impact on net earnings and earnings per share from calculating stock-related compensation cost under the fair value alternative of SFAS No. 123. However, the calculation of compensation cost for share-based payment transactions after the effective date of SFAS No. 123R may be different from the calculation of compensation cost under SFAS No. 123, but such differences have not yet been quantified.

Beginning in the first quarter of fiscal year 2007, Tektronix will adopt the provisions of SFAS No. 123R under the modified prospective transition method using the Black-Scholes option pricing model. This new standard requires a number of subjective and complex assumptions including stock price volatility, employee exercise behavior and patterns, and related tax effects. We continue to evaluate the requirements and impact of SFAS No. 123R on our consolidated financial statements.

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RESULTS OF OPERATIONS

	For the Fiscal Years Ended									% Change
	May 27,			May 28,			May 29,			FY2006 v			FY2005 v
	2006			2005			2004			FY2005			FY2004
	(In thousands, except per share amounts)
Product orders	$	1,066,176		$	945,308		$	907,757			13	%		4	%
Product backlog at end of year		244,637			171,229			142,250			43	%		20	%
Net sales	$	1,039,870		$	1,034,654		$	920,620			1	%		12	%
Cost of sales		418,428			415,878			397,577			1	%		5	%
Gross profit		621,442			618,776			523,043			0	%		18	%
Gross margin		59.8	%		59.8	%		56.8	%
Research and development expenses		183,414			163,474			130,386			12	%		25	%
Selling, general and administrative expenses		302,344			300,925			277,993			0	%		8	%
Business realignment costs		9,847			3,100			22,765			>100	%		(86	)%
Acquisition related costs (credits) and amortization		8,567			41,553			(51,025	)		(79	)%		*
Loss (gain) on disposition of assets, net		(1,433	)		(1,700	)		1,134			(16	)%		*
Operating income		118,703			111,424			141,790			7	%		(21	)%
Interest income		13,585			17,144			21,565			(21	)%		(21	)%
Interest expense		(483	)		(820	)		(2,208	)		(41	)%		(63	)%
Other non-operating income (expense), net		(3,377	)		(3,564	)		6,165			(5	)%		*
Earnings before taxes		128,428			124,184			167,312			3	%		(26	)%
Income tax expense		37,536			45,333			49,087			(17	)%		(8	)%
Net earnings from continuing operations operations		90,892			78,851			118,225			15	%		(33	)%
Gain (loss) from discontinued operations, net of income taxes		1,463			2,745			(2,130	)		(47	)%		*
Net earnings	$	92,355		$	81,596		$	116,095			13	%		(30	)%
Earnings (loss) per share:
Continuing operations — basic	$	1.09		$	0.91		$	1.40			20	%		(35	)%
Continuing operations — diluted	$	1.08		$	0.89		$	1.37			21	%		(35	)%
Discontinued operations — basic	$	0.02		$	0.03		$	(0.03	)		(33	)%		*
Discontinued operations — diluted	$	0.02		$	0.03		$	(0.02	)		(33	)%		*
Net earnings — basic	$	1.11		$	0.94		$	1.37			18	%		(31	)%
Net earnings — diluted	$	1.09		$	0.93		$	1.35			17	%		(31	)%
Weighted average shares outstanding
Basic		83,323			86,803			84,720
Diluted		84,381			88,151			86,038

* not meaningful

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Fiscal Year 2006 Compared to Fiscal Year 2005

Fiscal years 2006 and 2005 each included 52 weeks. Fiscal year 2006 included a full year of results of operations from the acquisition of Inet, while fiscal year 2005 included only eight months of Inet results.

Executive Summary

Fiscal year 2006 began with a mixed market environment. In the first quarter we saw orders growth in some product lines and decline in others. In the second quarter, business levels improved and orders grew sequentially in the second quarter and in the subsequent quarters. For the fiscal year, orders were $1.07 billion and sales were $1.04 billion, the highest annual orders and sales levels since fiscal year 2001. These results were primarily due to the strength of new products in our Instruments Business, our ability to win large orders in our Communications Business, and the impact of a full year of business from the Inet acquisition. Orders grew 13% compared to fiscal year 2005. Sales increased just slightly over the prior fiscal year, but backlog increased by over $73.4 million. Earnings increased year over year to $92.4 million from $81.6 million in the prior fiscal year driven primarily by a reduction in acquisition related expenses, partly offset by an increase in engineering and selling, general and administrative expenses.

Product Orders

The following table presents product orders from Instruments Business and Communications Business:

	Fiscal Years Ended
	May 27,		May 28,
	2006		2005		% Change
	(In thousands)
Instruments Business	$	746,512	$	737,268		1	%
Communications Business		319,664		208,040		54	%
Total product orders	$	1,066,176	$	945,308		13	%

For fiscal year 2006, orders increased by $120.9 million or 13% from the prior fiscal year. Instruments Business orders increased 1% while Communications Business orders increased 54%. Of the $120.9 million, $49.1 million was driven by a full year of impact from the Inet acquisition, as compared to only eight months of Inet orders in fiscal year 2005. In fiscal year 2006, the U.S. Dollar strengthened against major foreign currencies, reducing fiscal year 2006 orders by $21.4 million as compared to the prior fiscal year.

Prior to fiscal year 2006, Communications Business orders excluded service and maintenance renewal orders. Beginning in the first quarter of fiscal year 2006, we included service renewal orders for our network management products in our reported orders and backlog. Accordingly, prior fiscal year comparative periods have been adjusted to reflect orders and backlog under this same definition. Orders for each business are discussed separately below.

Instruments Business

Orders for Instruments Business products consist of cancelable customer commitments to purchase currently produced products with delivery scheduled generally within six months of being recorded. Instruments Business orders exclude service and repair orders placed separately from the product orders.

During fiscal year 2006, Instruments Business product orders increased by $9.2 million or 1% from the prior fiscal year. Instruments Business was impacted by the market softening that began in the fourth quarter of fiscal year 2005 and continued into the first quarter of fiscal year 2006. In addition, there may have been a competitive impact on some product areas during fiscal year 2006. In the first quarter of fiscal year 2006, Instruments Business orders declined compared to the same period in the prior fiscal year. In the second quarter of fiscal year 2006, business levels improved which resulted in second quarter orders that were comparable to the same quarter in fiscal year 2005. In the third quarter of fiscal year 2006, we believe we strengthened our competitive position with the introduction of more new products. For the third and fourth quarters of fiscal year 2006, orders growth was 8% and 7%, respectively, compared to the same periods in the prior fiscal year.

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Communications Business

Orders for Communications Business products consist of cancelable customer commitments to purchase network management and diagnostic solutions with delivery scheduled generally within six months of being recorded. Large network management orders typically involve multiple deliverables which may be delivered over a period longer than six months.

Prior to fiscal year 2006, Communications Business orders excluded service and maintenance renewal orders. Beginning in the first quarter of fiscal year 2006, we included service renewal orders for our network management products in our reported orders and backlog. Accordingly, prior fiscal year comparative periods have been adjusted to reflect orders and backlog under this same definition. The majority of our network management service renewals have contract periods of one year. Revenue for these orders is recognized ratably over the contract period. Any unrecognized portion of these orders is included as a component of order backlog. The unrecognized portion of service contracts that have been billed is included in Deferred revenue on the Condensed Consolidated Balance Sheets.

During fiscal year 2006, Communications Business orders increased by $111.6 million, or 54% from the prior fiscal year. The majority of the growth was driven by the success of our network management product offerings in a strong telecommunications market. We received a number of individually large orders in fiscal year 2006 in the network management business. Orders in the remaining portion of the Communications Business declined by 1% for fiscal year 2006 as compared to the prior fiscal year, primarily due to some softness in the mobile diagnostics segment of the market and some competitive impact. In addition, fiscal year 2006 reflected twelve months of orders from the Inet acquisition as compared to only eight months in the prior fiscal year. The impact of the additional four months was $49.1 million.

The following table presents total product orders by region:

	Fiscal Years Ended
	May 27,		May 28,
	2006		2005		% Change
	(In thousands)
United States	$	358,988	$	319,136		12	%
International		707,188		626,172		13	%
Total product orders	$	1,066,176	$	945,308		13	%

For fiscal year 2006, orders in the United States grew 12% compared to fiscal year 2005. Growth internationally was 13% for the same period. The growth was driven by the additional four months of Inet results and our success at winning orders from telecommunication companies investing in next-generation networks. Excluding Inet, orders in the United States and in International regions increased just slightly in fiscal year 2006 as compared to fiscal year 2005, with 0.4% and 1.2% orders growth respectively, in those regions. The flat orders were driven by the same factors that impacted Instruments Business orders and the non-Inet portion of the Communications Business, both discussed above.

Net Sales

Changes in net sales are impacted by changes in product orders and changes in product backlog levels, as well as currency fluctuations and other adjustments that impact the timing of revenue recognition, especially revenue associated with our network management products. For more information on revenue recognition, refer to the discussion in Critical Accounting Estimates. In addition to product sales, net sales also include service revenues and sales from Maxtek, our wholly-owned components manufacturing subsidiary that produces components for external customers as well as Tektronix.

Consolidated net sales of $1.04 billion during fiscal year 2006 increased by less than 1% over the prior fiscal year. Sales increased by less than orders due to an increase in backlog in the current fiscal year and a decrease in backlog in the prior fiscal year, excluding the impact of backlog acquired in the Inet acquisition. Backlog is discussed in greater detail below.

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Total product backlog at May 27, 2006 was $244.6 million, an increase of $73.4 million in the current fiscal year, as compared to a decrease of $26.6 million in the prior fiscal year, excluding the impact of $55.6 million of Inet backlog acquired in fiscal year 2005 without corresponding orders. Excluding backlog associated with Inet products, product backlog was $102.5 million at May 27, 2006, an increase of $5.2 million in the current fiscal year, as compared to a decrease of $44.9 million in the prior fiscal year. A large majority of the unfilled orders will be delivered to customers within one year. In our network management business, we may receive orders that include a multi-year service contract or where we are required to perform development that could delay delivery of all or a portion of an order beyond the upcoming fiscal year.

Product backlog levels are affected by the timing of product orders received within the fiscal year and the delivery of those products. The geographical distribution of sales is directly correlated to the geographical distribution of orders. However, as we increase or decrease the level of product backlog within any given fiscal year, this direct correlation may vary. We maintain a general target for backlog for our general purpose test, video test, and network diagnostic products of 6 to 8 weeks. Backlog for our network management products, which are subject to software customization, installation and customer acceptance before revenue is recognized, is generally 6 to 12 months.

Gross Profit and Gross Margin

Gross profit of $621.4 million increased $2.7 million for fiscal year 2006 as compared to the prior fiscal year. Gross profit increased largely due to the increase in net sales, a reduction in incentives expenses, and an improvement in product mix in fiscal year 2006 compared to the prior fiscal year. These improvements were partially offset by higher amortization of acquisition related intangibles due to a full-year of Inet business; higher sustaining engineering expense driven by the “Restriction of Hazardous Substances” worldwide regulatory provisions; and higher freight and duty driven by an increase in manufacturing outside of the United States.

Gross margin is the measure of gross profit as a percentage of net sales. Gross margin for fiscal year 2006 was 59.8%, the same as for fiscal year 2005. Gross margin is affected by a variety of factors including product cost, mix of product shipments, sales volumes, product pricing, foreign currency, inventory impairments and other costs such as warranty repair, sustaining engineering, and freight and duty. Unfavorable currency impacts, increased freight and duty, sustaining expenses, and higher amortization of acquisition related intangibles were offset by the slightly higher volume, better product mix, and lower incentives in fiscal year 2006 as compared to fiscal year 2005. New products introduced late in fiscal year 2006 had initially higher production costs than expected in the long term. We expect the higher production costs to normalize over the first two quarters of fiscal year 2007.

Amortization of acquisition related intangibles charged to cost of sales increased $6.6 million in fiscal year 2006. The increase was largely attributed to twelve months of amortization of Inet intangibles in fiscal year 2006 as compared to eight months in fiscal year 2005. Gross margin was favorably impacted by $2.0 million in fiscal year 2006 as compared to fiscal year 2005 due to lower inventory step-up adjustments to fair value from the Inet acquisition. For additional information on the amortization of acquisition related intangible assets see the Acquisition of Inet Technologies, Inc. section above in this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Operating Expenses

Operating expenses include research and development expenses; selling, general and administrative expenses; business realignment costs; acquisition related costs (credits) and amortization; and net gains and losses from the sale of fixed assets. Each of these categories of operating expenses is discussed further below. It should be noted that although a portion of operating expenses is variable and therefore will fluctuate with operating levels, many costs are fixed in nature and are therefore subject to increase due to inflation and annual labor cost increases. Additionally, we must continue to invest in the development of new products and the infrastructure to market and sell those products even during periods where operating results reflect only nominal growth, are flat or declining. Accordingly, as we make cost reductions in response to changes in business levels or other specific business events, these reductions can be partially or wholly offset by these other increases to the fixed cost structure.

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Research and development (“R&D”) expenses are incurred for the design and testing of new products, technologies and processes, including pre-production prototypes, models and tools. Such costs include labor and employee benefits, contract services, materials, equipment and facilities. R&D expenses were $183.4 million during fiscal year 2006, an increase of $19.9 million as compared to the prior fiscal year. This increase was primarily attributable to the impact of the additional four months of Inet R&D expenses in the current fiscal year as compared to the prior fiscal year.

We continuously invest in the development of new products and technologies, and the timing of these costs varies depending on the stage of the development process. At times, Tektronix may focus certain engineering resources on the maintenance of the current product portfolio (sustaining engineering), which is expensed in Cost of goods sold on the Consolidated Statements of Operations.

Selling, general and administrative (“SG&A”) expenses were $302.3 million during fiscal year 2006, an increase of $1.4 million, as compared to the prior fiscal year. This increase was primarily attributable to the impact of the additional four months of Inet SG&A expenses in the current fiscal year as compared to the prior fiscal year partially offset by an $11.1 million decrease in SG&A expense in the remainder of the business. The decrease is primarily due to lower litigation expense and lower discretionary spending.

Acquisition related costs (credits) and amortization are incurred as a direct result of the integration of significant acquisitions. The acquisition related costs of $8.6 million for fiscal year 2006 primarily related to the acquisition of Inet and represented the amortization of acquired intangible assets and transition costs. Acquisition related costs in fiscal year 2005 of $41.6 million included a $32.2 million write-off of IPR&D, $3.4 million for amortization of intangible assets, $2.2 million for transition expenses and $0.8 million for amortization of unearned stock-based compensation resulting from the Inet acquisition accounting. The Inet purchase price and the allocation of the purchase price are discussed in the Acquisition of Inet Technologies, Inc. section above in this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Also included in fiscal year 2006 were transition expenses of $0.4 million related to our redemption of Sony/Tektronix in fiscal year 2003, and $0.7 million related to other acquisitions. The transition expenses of $0.4 million in fiscal year 2006 and $2.9 million in fiscal year 2005 related to our redemption of Sony/Tektronix in fiscal year 2003 primarily reflected the accrual for voluntary retention bonuses offered to certain employees in Gotemba, Japan as an incentive to remain with Tektronix while we completed our plan to transition manufacturing operations to other locations.

A tabular summary of the activity in Acquisition related costs (credits) and amortization for fiscal years 2006, and 2005 was as follows:

	2006		2005
	(In thousands)
Inet Acquisition:
Write-off of IPR&D	$	—	$	32,237
Amortization of acquired intangible assets		5,117		3,414
Amortization of unearned stock-based compensation		339		785
Transition costs		1,955		2,224
Sony/Tektronix Redemption:
Transition costs		447		2,893
Other acquisitions:
Write-off of IPR&D		365		—
Amortization of acquired intangible assets		77		—
Transition costs		267		—
Acquisition related costs (credits) and amortization	$	8,567	$	41,553

Business realignments costs represent actions to realign Tektronix’ cost structure in response to significant changes in operating levels or a significant acquisition or divestiture. These costs primarily comprise severance costs for reductions in employee headcount and costs associated with the closure of facilities and subsidiaries. In

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recent years, business realignment costs have primarily been associated with the realignment of Tektronix’ cost structure in response to the dramatic economic decline experienced in the technology sector beginning during fiscal years 2001, and continuing into fiscal year 2003, as well as restructuring costs associated with Tektronix’ redemption of Sony/Tektronix. In many cases, and especially in foreign countries, these actions may take significant time to execute.

During fiscal year 2006 Tektronix incurred business realignment costs of $9.8 million, an increase from expense of $3.1 million in the prior fiscal year. The increase from the prior fiscal year is primarily the result of actions to realize business synergies associated with the Inet acquisition and expenses incurred in Japan. For a full description of the components of business realignment costs please refer to the Business Realignment Costs section above in this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The net gain on disposition of assets during fiscal year 2006 was primarily due to the sale of property located in Nevada City, California. Net proceeds of $2.1 million were received from the sale of the Nevada City assets with a carrying value of $0.5 million, resulting in a gain on sale of $1.6 million. This gain was partially offset by losses on asset dispositions incurred in the ordinary course of business.

Non-Operating Income/Expense

Interest income was $13.6 million during fiscal year 2006, a decrease of 21% from the prior fiscal year. The decrease in interest income was due to a lower average balance of cash and investments during the current fiscal year resulting from our use of cash for planned pension funding, the repurchase of Tektronix common stock, and the payout of incentives accrued in the prior fiscal year, partially offset by higher yields on invested cash.

Interest expense during fiscal years 2006 and 2005 was not significant.

During fiscal year 2006, we incurred Other non-operating expense, net of $3.4 million as compared to $3.6 million in the prior fiscal year. The decrease in Other non-operating expense, net was due to lower litigation expense in the current fiscal year as compared to the prior fiscal year, as well as a gain of $2.7 million that was realized in fiscal year 2005 from the sale of 1.4 million shares of Tut Systems, Inc. common stock.

Income Taxes

Income tax expense for fiscal year 2006 was $37.5 million, which represents an effective tax rate of 29%. This included the impact of purchase accounting adjustments from the Inet acquisition, such as the amortization of acquisition related items, as well as the generation of research credits and the utilization of previously impaired foreign tax credit carryovers. Excluding the impact of the Inet purchase accounting adjustments, the effective tax rate for fiscal year 2006 was 30%, the same as for fiscal year 2005. Given the utilization of foreign tax credit carryovers in fiscal year 2006, and the expiration of the R&D tax credit legislation at the end of calendar year 2005, the effective tax rate could increase in future periods, offset by our ability to identify and implement various tax strategies.

The effective tax rate is impacted by a variety of estimates, including the amount of taxable income for the fiscal year, the mix of that income between foreign and domestic sources, and the estimate of tax benefits to be received from the extraterritorial income exclusion, the domestic manufacturer’s deduction, and federal and state research credits. In addition, the effective tax rate is impacted by the conclusion of audits by taxing jurisdictions, which may differ from previous estimates associated with the audits. To the extent our estimates and other amounts or circumstances change, the effective tax rate may change accordingly.

Discontinued Operations

The gain from discontinued operations during fiscal year 2006 was $1.5 million associated with the resolution of a contingency and an insurance settlement. The net gain from discontinued operations during fiscal year 2005 primarily resulted from the resolution of certain contingencies associated with the sale of CPID which is described under “Critical Accounting Estimates — Contingencies.”

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See Note 6 of the Notes to the Consolidated Financial Statements in Item 8 Financial Statements and Supplementary Data for further discussion of discontinued operations.

Net Earnings

For fiscal year 2006, we recognized consolidated net earnings of $92.4 million, an increase of $10.8 million from net earnings of $81.6 million for fiscal year 2005. Earnings increased year over year due to a reduction in acquisition related expenses, partly offset by an increase in R&D, SG&A, and business realignment costs.

Earnings Per Share

The increase in earnings per share was a result of the increased net earnings discussed above, and to a lesser extent, due to lower weighted average shares outstanding in the current fiscal year which included shares issued for employee stock plans offset by share repurchases.

Fiscal Year 2005 Compared to Fiscal Year 2004

Fiscal years 2005 and 2004 each included 52 weeks. Fiscal year 2005 also included eight months of results of operations from the acquisition of Inet.

Economic Conditions

During fiscal year 2004, we experienced a phased recovery of our end markets that began at the end of the prior fiscal year, with growth increasing across all regions and most product lines throughout the year. We also saw market share gains in most of our product categories during calendar year 2004.

We saw growth in demand broadly across the business primarily in the first three quarters of fiscal year 2005. In the fourth quarter of fiscal year 2005, we saw our order growth rate decline across most of our product categories and did not experience the normal increase associated with our fourth quarter.

From a regional standpoint, we saw the strongest growth in our core business year over year in Japan and the Pacific. The United States region orders decreased largely due to the discontinuation of the Rohde & Schwarz distribution agreement, and Europe region orders increased year over year due to the addition of the Inet products. The weakness of the U.S. Dollar against major foreign currencies, such as the Euro and Yen, during fiscal year 2005 also had a favorable impact on the overall value of orders and sales.

We incurred significantly less business realignment costs during fiscal year 2005 as compared to fiscal year 2004. Many of the costs incurred during fiscal years 2005 and 2004 were associated with actions that were identified in previous fiscal years, but for which sufficient action had not yet been taken to support the recognition of the associated expense. These actions were identified in previous fiscal years as a result of reduced levels of orders and associated sales. Restructuring actions can take significant time to execute, particularly if they are being conducted in countries outside the United States.

Acquisition of Inet Technologies, Inc.

We completed the acquisition of Inet on September 30, 2004. Accordingly, the results of operations for fiscal year 2005 included eight months of activity from this business. As there was no Inet-related activity in previous fiscal years, an understanding of the impact from the acquisition of Inet is an important component to understand fiscal year 2005 results of operations. In our description of the results of operations that follow, we quantified the impact of the Inet acquisition where meaningful.

Discontinuation of Rohde and Schwarz Distribution Agreement

On March 18, 2004, we announced the discontinuation of an existing distribution agreement with Rohde and Schwarz (“R&S”), under which Tektronix served as the exclusive distributor for R&S’ communication test products in the United States and Canada. The discontinuation of this distribution agreement was effective June 1, 2004. Tektronix had served in this distribution role for R&S since October 1993. Substantially all product backlog related

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to R&S distributed product at the end of fiscal year 2004 was shipped and recognized as revenue during the first quarter of fiscal year 2005. Accordingly, we did not derive significant revenue from the shipment of R&S products in quarters after the first quarter of fiscal year 2005. During fiscal years 2005 and 2004, we generated net sales of $23.1 million and $87.3 million, respectively, from R&S distributed products. As Tektronix was a distributor of these products, the corresponding sales generated lower gross margins compared to sales of products manufactured by Tektronix. During fiscal year 2005 and 2004, gross margins on these distribution sales were 27.3% and 22.3%, respectively.

Product Orders

The following table presents product orders from Instruments Business and Communications Business:

	Fiscal Years Ended
	May 28,		May 29,
	2005		2004		% Change
	(In thousands)
Instruments Business	$	737,268	$	682,331		8	%
Communications Business		208,040		225,426		(8	)%
Total product orders	$	945,308	$	907,757		4	%

Beginning in the first quarter of fiscal year 2006, we included service renewal orders for our network management products in our reported orders and backlog. Accordingly, prior fiscal year comparative periods have been adjusted to reflect orders and backlog under this same definition. Orders for each business are discussed separately below.

During fiscal year 2005, total product orders increased by $37.6 million, or 4%, from the prior fiscal year. The increase in product orders was attributable to the net impact of additional orders of $104.8 million from the acquisition of Inet, and growth in our other product categories, primarily driven by growth in our Instruments Business, partially offset by a decrease in orders from the discontinuation of the R&S distribution agreement. Growth in Instruments Business was primarily attributable to good acceptance of new products, particularly our oscilloscope and logic analyzer products, and improvement in the underlying markets. In addition, product orders were favorably impacted by the weaker U.S. Dollar, which resulted in approximately $18.8 million of product order growth over the prior fiscal year.

Instruments Business

Orders for Instruments Business products consist of cancelable customer commitments to purchase currently produced products with delivery scheduled generally within six months of being recorded. Instruments Business orders exclude service and repair orders placed separately from the product orders.

During fiscal year 2005, Instruments Business product orders increased by $54.9 million or 8% from the prior fiscal year. The growth was primarily attributable to good acceptance of new products and improvement in the underlying markets, especially in the first three quarters of fiscal year 2005. The market softening that began in the fourth quarter of fiscal year 2005 was reflected in mixed orders results in the Instruments Business, with some product lines showing orders growth and others decline as compared to the same quarter in the prior fiscal year.

Communications Business

Orders for Communications Business products consist of cancelable customer commitments to purchase network management and diagnostic solutions with delivery scheduled generally within six months of being recorded. Large network management orders typically involve multiple deliverables which may be delivered over a period longer than six months.

Prior to fiscal year 2006, Communications Business orders excluded service and maintenance renewal orders. Beginning in the first quarter of fiscal year 2006, we included service renewal orders for our network management products in our reported orders. Accordingly, prior fiscal year comparative periods have been adjusted to reflect

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orders under this same definition. The majority of our network management service renewals have contract periods of one year. Revenue for these orders is recognized ratably over the contract period. Any unrecognized portion of these orders is included as a component of order backlog. The unrecognized portion of service contracts that have been billed is included in Deferred revenue on the Condensed Consolidated Balance Sheets.

During fiscal year 2005, Communications Business orders decreased by $17.4 million or 8% from the prior fiscal year. This decrease in orders was driven primarily by the discontinuation of the Rohde and Schwarz distribution agreement at the end of fiscal year 2004. Orders for R&S products were $96.2 million in fiscal year 2004. In addition, there were some individually large orders for network diagnostics products in fiscal year 2004 that did not repeat in fiscal year 2005. These decreases in orders were partially offset by the impact of eight months of orders in fiscal year 2005 from the Inet acquisition.

The following table presents total product orders by region:

	Fiscal Years Ended
	May 28,		May 29,
	2005		2004		% Change
	(In thousands)
United States	$	319,136	$	374,094		(15	)%
International		626,172		533,663		17	%
Total product orders	$	945,308	$	907,757		4	%

International product orders increased 17% while product orders in the United States decreased 15%. International growth occurred in Europe, the Pacific and Japan. Growth in Europe was primarily attributable to the acquisition of Inet, which has significant large customers in that region. In addition, Europe was favorably impacted by fluctuations in the foreign exchange rate of the Euro against the U.S. Dollar. Excluding the additional products from Inet, European orders declined slightly year over year. The growth in our international regions was largely offset by the decline in the United States. The primary factor that caused the decline in the United States was the discontinuation of the R&S distribution agreement, under which we distributed the R&S products in North America, primarily in the United States. The decline in the United States associated with R&S was partially offset by orders from Inet-related products.

Net Sales

Changes in net sales are impacted by changes in product orders and changes in product backlog levels, as well as currency fluctuations and other adjustments that impact the timing of revenue recognition, especially revenue associated with our network management products. For more information on revenue recognition, refer to the discussion in Critical Accounting Estimates. In addition to product sales, net sales also include service revenues and sales from Maxtek, our wholly-owned components manufacturing subsidiary that produces components for external customers as well as Tektronix.

Consolidated net sales of $1.03 billion during fiscal year 2005 increased by 12% over the prior fiscal year. International net sales increased 20% as compared to the prior fiscal year and net sales in the United States increased 2%. The increase in net sales in both the United States and internationally was largely due to additional sales from Inet-related products and changes in backlog of Tektronix other products, discussed below, partially offset by a reduction in sales related to the discontinuation of the R&S distribution agreement. The weakening of the U.S. Dollar against major foreign currencies also had an $18.6 million favorable impact on net sales. In addition to product sales, net sales also include service revenues and sales from Maxtek, our wholly-owned components manufacturing subsidiary that produces components for external customers as well as for Tektronix.

Total product backlog at May 28, 2005 was $171.2 million, an increase of $29.0 million in fiscal year 2005 as compared to an increase of $37.8 million in the prior fiscal year. This ending backlog included $55.6 million of backlog acquired with Inet without corresponding orders. Excluding backlog associated with Inet and R&S distributed products, product backlog was $97.3 million at May 28, 2005, a decrease of $22.0 million in fiscal year 2005 as compared to an increase of $29.5 million in the prior fiscal year.

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Product backlog levels are affected by the timing of product orders received within the fiscal year and the delivery of those products. The geographical distribution of sales is directly correlated to the geographical distribution of orders. However, as we increase or decrease the level of product backlog within any given fiscal year, this direct correlation may vary. Total product backlog as of May 28, 2005 was approximately 8 weeks of product sales.

Gross Profit and Gross Margin

Gross profit for fiscal year 2005 was $618.8 million, an increase of 18% over the prior fiscal year. The increase in gross profit was attributable to the increase in sales volume in fiscal year 2005 as well as the increase in gross margin on those sales.

Gross margin is the measure of gross profit as a percentage of net sales. Gross margin for fiscal year 2005 was 59.8%, an increase of 3.0 points over the prior fiscal year. Gross margin is affected by a variety of factors including, among other items, mix of product shipments, sales volumes, product pricing, foreign currency, inventory impairments and other costs such as warranty repair and sustaining engineering. The improvement in gross margin in fiscal year 2005 was primarily attributable to favorable product mix, largely related to the decline in sales of lower margin R&S products. Also contributing to the year-over-year increase was $13.9 million resulting from the favorable impact of changes in foreign currency exchange rates.

The improvements in gross margin in fiscal year 2005 were partially offset by $14.8 million from charges resulting from the acquisition of Inet, which primarily included the amortization of acquisition related intangible assets. For additional information on the amortization of acquisition related intangible assets see the Acquisition of Inet Technologies, Inc. section above in this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

During fiscal year 2005 and 2004, gross margins on R&S distribution sales were 27.3% and 22.3%, respectively. As noted above, we discontinued acting as the distributor of these products in the United States and Canada effective June 1, 2004.

Operating Expenses

Operating expenses include research and development expenses; selling, general and administrative expenses; business realignment costs; acquisition related costs (credits) and amortization; and net gains and losses from the sale of fixed assets. Each of these categories of operating expenses is discussed further below. It should be noted that although a portion of operating expenses is variable and therefore will fluctuate with operating levels, many costs are fixed in nature and are therefore subject to increase due to inflation and annual labor cost increases. Additionally, we must continue to invest in the development of new products and the infrastructure to market and sell those products even during periods where operating results reflect only nominal growth, are flat or declining. Accordingly, as we make cost reductions in response to changes in business levels or other specific business events, these reductions can be partially or wholly offset by these other increases to the fixed cost structure.

Research and development (“R&D”) expenses are incurred for the design and testing of new products, technologies and processes, including pre-production prototypes, models and tools. Such costs include labor and employee benefits, contract services, materials, equipment and facilities. R&D expenses were $163.5 million during fiscal year 2005, an increase of 25% as compared to the prior fiscal year. This increase was primarily attributable to the impact of consolidating eight months of Inet R&D expenses in fiscal year 2005 as compared to the prior fiscal year as well as higher labor related expense and elevated levels of spending on new product development. Approximately $20.9 million of the increase in fiscal year 2005 was due to the inclusion of R&D expenses from the Inet acquisition. The remaining increase in fiscal year 2005 was primarily attributable to increased spending on new product development. Labor related spending increased approximately $6.3 million.

We continuously invest in the development of new products and technologies, and the timing of these costs varies depending on the stage of the development process. At times, Tektronix may focus certain engineering

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resources on the maintenance of the current product portfolio (sustaining engineering), which is expensed in Cost of goods sold on the Consolidated Statements of Operations. During fiscal year 2005 we used proportionally more of these engineering resources in new product development, thereby increasing research and development expense. Additionally, we incurred higher expenses associated with engineering materials as a result of the current projects’ stages of development. As Tektronix was a distributor of R&S products, there was no research and development expense associated with the sale of these products.

Selling, general and administrative (“SG&A”) expenses were $300.9 million during fiscal year 2005, an increase of 8% as compared to the prior fiscal year. This increase in SG&A was primarily attributable to additional expense of $20.4 million associated with the consolidation of the results of operations of Inet for eight months in fiscal year 2005.

The increase in SG&A, not resulting from the Inet acquisition, in fiscal year 2005 of $2.5 million was largely attributable to increased spending on our project to comply with the provisions of Section 404 of Sarbanes-Oxley Act of 2002. The increase on the overall SG&A expenses was offset by lower spending in other areas, largely related to lower commissions and other incentives in fiscal year 2005 due to the strong performance in the prior fiscal year comparable periods.

Acquisition related costs (credits) and amortization are incurred as a direct result of the integration of significant acquisitions. The acquisition related costs of $41.6 million for fiscal year 2005 primarily related to the acquisition of Inet. These Inet acquisition related costs included the $32.2 million write-off IPR&D, $3.4 million for amortization of intangible assets, $2.2 million for transition expenses and $0.8 million for amortization of unearned stock-based compensation resulting from the Inet acquisition accounting. The Inet purchase price and the allocation of the purchase price are discussed in the Acquisition of Inet Technologies, Inc. section above in this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Also included in fiscal year 2005 were transition expenses of $2.9 million related to our redemption of Sony/Tektronix in fiscal year 2003 mostly to accrue for voluntary retention bonuses to certain employees in Gotemba, Japan as an incentive to remain with Tektronix while we completed our plan to transition manufacturing operations to other locations. Accordingly, Tektronix recognized a liability for retention bonuses for 48 employees totaling $3.6 million.

During fiscal year 2004, the net acquisition related credit of $51.0 million was largely attributable to a net gain of $19.2 million on properties in Japan, primarily from the sale of the Japan headquarters building, and the $36.7 million gain on pension restructuring resulted from the substantial settlement of the defined benefit pension plans in Japan.

A tabular summary of the activity for fiscal year 2005 and 2004 is as follows:

	2005		2004
	(In thousands)
Inet Acquisition:
Write-off of IPR&D	$	32,237	$	—
Amortization of acquired intangible assets		3,414		—
Amortization of unearned stock-based compensation		785		—
Transition costs		2,224		—
Sony/Tektronix Redemption:
Gain on Japan pension restructuring		—		(36,741	)
Gain on sale of Shinagawa, Japan property		—		(22,525	)
Other Shinagawa, Japan asset disposals		—		216
Impairment of Gotemba, Japan property held-for-sale		—		3,063
Transition costs		2,893		4,962
Acquisition related costs (credits) and amortization	$	41,553	$	(51,025	)

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In fiscal year 2005 Tektronix incurred business realignment costs of $3.1 million, a reduction from expense of $22.8 million in the prior fiscal year. The reduction from the prior fiscal year was the result of the previously planned actions being executed and recognized with fewer additional actions needing to be planned as business levels stabilized. Business realignment costs associated with the redemption of Sony/Tektronix were $0.2 million in fiscal year 2005 for severance related costs and $0.1 million in fiscal year 2004. For a full description of the components of business realignment costs please refer to the Business Realignment Costs section above in this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The net gain on disposition of assets during fiscal year 2005 was primarily due to the sale of property located in Nevada City, California in the first quarter. Net proceeds of $9.9 million were received from the sale of the Nevada City assets with a carrying value of $7.7 million, resulting in a gain on sale of $2.2 million. This gain was partially offset by losses and impairments incurred in the ordinary course of business. The net loss on disposition of assets in the prior fiscal year was not significant.

Non-Operating Income/Expense

Interest income was $17.1 million during fiscal year 2005, a decrease of 21% from the prior fiscal year. The decrease in interest income was due to a lower average balance of cash and investments in fiscal year 2005 resulting from our use of cash to repurchase outstanding common stock and for the acquisition of Inet.

Interest expense during fiscal year 2005 was not significant. The decrease in interest expense from the prior fiscal year was largely due to the retirement of $56.3 million of outstanding debt in the first quarter of fiscal year 2004 and full repayment of the outstanding principal balance on the TIBOR+1.75% debt facility during the third quarter of fiscal year 2004.

During fiscal year 2005, we incurred Other non-operating expense, net of $3.6 million as compared to Other non-operating income, net of $6.2 million in the prior fiscal year. Other non-operating income, net in the prior fiscal year included a net realized gain of $7.3 million recorded during the third quarter in conjunction with the sale of 0.4 million shares of common stock of Merix Corporation. During fiscal year 2005, we were negatively impacted by foreign currency losses which largely contributed to the remaining variance from the prior fiscal year.

Income Taxes

Income tax expense for fiscal year 2005 was $45.3 million, which represented an effective tax rate of 37%. Income tax expense in fiscal year 2005 did not include a tax benefit from the $32.2 million write-off of IPR&D from the Inet acquisition. In addition, the impact of purchase accounting adjustments from the Inet acquisition, such as the amortization of acquisition related items and non-cash expense for the inventory step up to fair value, were tax effected at the statutory rate. Excluding the impact of the write-off of IPR&D and Inet purchase accounting adjustments, the effective tax rate for fiscal year 2005 was 30%, as compared to a slightly lower effective tax rate of 29% for the prior fiscal year.

The effective tax rate is impacted by a variety of estimates, including the amount of taxable income for the fiscal year, the mix of that income between foreign and domestic sources and expected utilization of previously impaired foreign tax credits. As these tax credits are utilized, the effective tax rate could increase in future periods, offset by our ability to identify and implement additional tax strategies. In addition, the effective tax rate is impacted by the conclusion of audits by taxing jurisdictions, which may differ from previous estimates associated with the audits. To the extent our estimates and other amounts or circumstances change, the effective tax rate may change accordingly.

Discontinued Operations

The net gain from discontinued operations during fiscal year 2005 primarily resulted from the resolution of certain contingencies associated with the sale of CPID which is described under “Critical Accounting Estimates — Contingencies.”

The net loss from discontinued operations during fiscal year 2004 was largely due to the sale of Gage Applied Sciences (“Gage”), a wholly-owned subsidiary of Tektronix. We approved and initiated an active plan for the sale of

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Gage in fiscal year 2003. This business was accounted for as a discontinued operation in accordance with SFAS No. 144. During the first quarter of fiscal year 2004, we sold the operations of Gage to a third party. We 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 initially recorded during the fourth quarter of fiscal year 2003 to write-down the net assets of Gage, primarily for goodwill, to net realizable value less estimated selling costs.

See Note 6 of the Notes to the Consolidated Financial Statements in Item 8 Financial Statements and Supplementary Data for further discussion of discontinued operations.

Net Earnings

For fiscal year 2005, we recognized consolidated net earnings of $81.6 million, a decrease of $34.5 million from net earnings of $116.1 million for fiscal year 2004. This decrease was largely due to the impact of the Inet acquisition, which included the write-off of IPR&D and amortization of acquisition related items. In addition, the impacts of the significant increases in sales and gross profit in fiscal year 2005 were significantly offset by the prior fiscal year net gains from the Japan pension settlement and from the sale of Japan properties.

Earnings Per Share

The decrease in earnings per share is a result of the decreased net earnings discussed above, and to a lesser extent, slightly higher weighted average shares outstanding in fiscal year 2005 which includes shares issued for the Inet acquisition and employee stock plans, offset by share repurchases.

Liquidity and Capital Resources

Sources and Uses of Cash

Cash Flows.  The following table is a summary of our Consolidated Statements of Cash Flows:

	2006			2005
	(In thousands)
Cash provided by (used in):
Operating activities	$	95,541		$	90,328
Investing activities		77,230			97,440
Financing activities		(88,665	)		(207,057	)

Operating Activities.  Cash provided by operating activities amounted to $95.5 million and $90.3 million for fiscal years 2006 and 2005, respectively. Cash provided by operating activities is net earnings adjusted for certain non-cash items and changes in assets and liabilities.

In fiscal year 2006, our operating cash flows resulted primarily from the net income generated during the period, an increase in accounts payable and accrued liabilities, and the positive impact of non-cash items reflected in net income such as amortization of acquisition related intangible assets and depreciation and amortization expense. These increases were partially offset by increases in inventories and trade accounts receivable, and contributions made to our defined benefit plans. See “Critical Accounting Estimates — Pension Plans” in Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations of Part II of this Form 10-K above for additional information on our defined benefit plans contributions.

In fiscal year 2005, the cash provided by operating activities was primarily due to net income generated during the period, and increases in deferred revenue and other assets and liabilities, as well as the positive impact of non-cash items reflected in net income such as the write off of IPR&D, amortization of acquisition related intangible assets and depreciation and amortization expense. These increases were partially offset by increases in inventories, decreases in accounts payable and accrued liabilities and accrued compensation, and contributions made to our defined benefit plans.

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Other adjustments to reconcile net earnings to net cash provided by operating activities in the current fiscal year such as amortization of acquisition related items are presented on the Consolidated Statements of Cash Flows.

Investing Activities.  Net cash provided by investing activities amounted to $77.2 million and $97.4 million in fiscal years 2006 and 2005, respectively. Cash flows from our investing activities were the result of purchasing and selling marketable investments, acquisition of businesses, dispositions of property, plant and equipment, and proceeds from the sale of corporate equity securities.

In fiscal years 2006 and 2005, net cash provided by purchases and sales of marketable investments was $119.0 million and $199.6 million, respectively. The higher cash provided in fiscal year 2005 was primarily used for our acquisition of Inet.

Cash used for the acquisition of businesses was $8.0 million for two acquisitions in fiscal year 2006 and $93.9 million for the acquisition of Inet in fiscal year 2005. See “Acquisitions” in Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations of Part II of this Form 10-K above for additional information on these acquisitions.

Proceeds from the disposition of property, plant and equipment were $2.5 million and $19.8 million in fiscal years 2006 and 2005, respectively. In fiscal year 2006, the proceeds were primarily from the sale of the smaller parcel of property we owned in Nevada City, California. In fiscal year 2005, we received $9.9 million in proceeds from the sale of the larger parcel of property in Nevada City, California and $8.8 million from the sale of property in Gotemba, Japan.

Cash used in the acquisition of property, plant and equipment to be used in the normal course of business was $36.3 million and $32.5 million in fiscal years 2006 and 2005, respectively.

Proceeds from the sale of corporate equity securities were insignificant in fiscal year 2006. In fiscal year 2005, we received $4.4 million of proceeds from the sale of common stock of Tut Systems, Inc.

Financing Activities.  Cash used in financing activities amounted to $88.7 million and $207.1 million in fiscal years 2006 and 2005, respectively. Cash flows from our financing activities were primarily the result of repurchase of Tektronix common stock and dividend payments, partially offset by proceeds from employee stock plans.

In fiscal years 2006 and 2005, cash used for the repurchase of Tektronix common stock was $120.8 million and $208.4 million, respectively. During fiscal year 2006, 4.8 million shares of Tektronix common stock were repurchased at an average price of $25.02 per share. In fiscal year 2005, 7.8 million shares of common stock were repurchased at an average price of $26.63 per share.

The above noted repurchases of Tektronix common stock were made under authorizations totaling $950.0 million approved by the Board of Directors. These authorizations to purchase common stock on the open market or through negotiated transactions comprised $550.0 million in fiscal year 2000 and $400.0 million in fiscal year 2005. As of May 27, 2006, our cumulative repurchases totaled $718.0 million for 29.8 million shares at an average price of $24.10 per share. The reacquired shares were immediately retired, in accordance with Oregon corporate law. As of May 27, 2006 $232.0 million remained open under these authorizations.

Proceeds from employee stock plans were $52.5 million and $21.2 million in fiscal years 2006 and 2005, respectively.

Dividend payments were $20.0 million and $19.4 million in fiscal years 2006 and 2005, respectively. The slight increase in dividend payments was due to a 50% increase in the quarterly cash dividend per share from $0.04 to $0.06 in the second quarter of fiscal year 2005, offset by a lower number of shares outstanding in fiscal year 2006.

Subsequent to the end of fiscal year 2006, on June 22, 2006, we declared a quarterly cash dividend of $0.06 per share for the first quarter of fiscal year 2007. The dividend was paid on July 24, 2006 to shareholders of record as of the close of market on July 7, 2006.

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At May 27, 2006, we maintained unsecured bank credit facilities totaling $56.5 million, of which $46.0 million was unused. These facilities do not have an expiration date or a fixed interest rate. In addition, no covenants are required by the banks.

Contractual Obligations

The contractual obligation summary below represents our estimates of future payment under fixed contractual obligations and commitments. The actual payments may differ from these estimates due to changes in our business needs, cancellation provisions, and other factors. We cannot provide certainty regarding the timing of the payment schedule and the amounts of payments.

The following table summarizes Tektronix’ contractual obligations at May 27, 2006:

	Total		2007		2008		2009		2010		2011		Thereafter
	(In thousands)
Operating leases (1)	$	63,842	$	19,720	$	16,881	$	12,391	$	9,520	$	2,320	$	3,010
Non-cancelable purchase commitments (1)		131,819		130,921		732		166		—		—		—
Defined contribution plan in Japan (2)		8,385		1,677		1,677		1,677		1,677		1,677		—
Employee severance (3)		5,494		5,494		—		—		—		—		—
	$	209,540	$	157,812	$	19,290	$	14,234	$	11,197	$	3,997	$	3,010

(1)	The non-cancelable operating leases and purchase commitments are not reflected on the consolidated balance sheet under accounting principles generally accepted in the United States of America.
(2)	Represents the current balance of the funding commitment upon establishment of the defined contribution plan to be paid in annual installments over a remaining period of five years.
(3)	Represents the current balance of employee severance obligations from business realignment actions. The majority of the payments are expected to be paid within the next fiscal year; however, payments outside of the United States, especially in Europe, may extend beyond one year.

Working Capital

The following table summarizes working capital as of May 27, 2006 and May 28, 2005:

	2006		2005
	(In thousands)
Current assets:
Cash and cash equivalents	$	215,587	$	131,640
Short-term marketable investments		121,346		120,881
Trade accounts receivable, net of allowance for doubtful accounts of $3,079 and $3,406, respectively		174,599		155,332
Inventories		156,351		131,096
Other current assets		69,002		80,177
Total current assets		736,885		619,126
Current liabilities:
Accounts payable and accrued liabilities		133,323		115,058
Accrued compensation		71,718		78,938
Deferred revenue		66,677		57,509
Total current liabilities		271,718		251,505
Working capital	$	465,167	$	367,621

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Working capital increased in the current fiscal year by $97.5 million. Current assets increased in the current fiscal year by $117.8 million, largely as a result of an $83.9 million increase in cash and cash equivalents. The $19.3 million increase in accounts receivable was due to the timing of shipments at the end of the fourth quarter of the current fiscal year. The $25.3 million increase in inventories was due to the timing of shipments of finished goods inventory and timing of materials purchases largely related to new product activity. Other current assets decreased by $11.2 million, largely from the receipt of income tax refunds and decreases in current deferred tax assets.

Current liabilities increased $20.2 million, primarily from an increase of $18.3 million in accounts payable and accrued liabilities due to timing of manufacturing purchases and a decrease of $7.2 million in accrued compensation largely related to the payout of prior fiscal year incentives and lower accrual of fiscal year 2006 incentives. In addition, deferred revenue increased $9.2 million, largely as a result of deferred revenue from products related to the Inet acquisition, Maxtek, and Tektronix Japan, as well as higher customer prepayments.

Significant changes in cash and cash equivalents and marketable investments are discussed in the Sources and Uses of Cash section above. Cash on hand, cash flows from operating activities and current borrowing capacity are expected to be sufficient to fund operations, acquisitions, capital expenditures, and contractual obligations through fiscal year 2007.

Recent Accounting Pronouncements

In November 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Account Standards (“SFAS”) No. 151, “Inventory Costs, an amendment of ARB No. 43, Chapter 4.” SFAS No. 151 amends the guidance in Accounting Research Bulletins (“ARB”) No. 43, Chapter 4, “Inventory Pricing,” to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Paragraph 5 of ARB No. 43, Chapter 4, previously stated that “... under some circumstances, items such as idle facility expense, excessive spoilage, double freight, and rehandling costs may be so abnormal as to require treatment as current period charges....” SFAS No. 151 requires that those items be recognized as current period charges regardless of whether they meet the criterion of “so abnormal.” In addition, SFAS No. 151 requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. The provisions of SFAS No. 151 will apply to inventory costs beginning in fiscal year 2007. The adoption of SFAS No. 151 is not expected to have a material effect on the consolidated financial statements of Tektronix.

In December 2004, the FASB issued SFAS No. 123 (Revised 2004), “Share-Based Payment” (“SFAS No. 123R”). This new pronouncement requires compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. SFAS No. 123R covers a wide range of share-based compensation arrangements including stock options, restricted stock plans, performance-based awards, stock appreciation rights, and employee stock purchase plans. SFAS No. 123R replaces SFAS No. 123, “Accounting for Stock-Based Compensation,” and supersedes Accounting Principles Board Opinion (“APB”) No. 25, “Accounting for Stock Issued to Employees.” SFAS No. 123, as originally issued in 1995, established as preferable a fair-value-based method of accounting for share-based payment transactions with employees. However, SFAS No. 123 permitted entities the option of continuing to apply the guidance in APB No. 25, as long as the footnotes to financial statements disclosed what net income would have been had the preferable fair-value-based method been used.

Beginning in the first quarter of fiscal year 2007, Tektronix will adopt the provisions of SFAS No. 123R under the modified prospective transition method using the Black-Scholes option pricing model. This new standard requires a number of subjective and complex assumptions including stock price volatility, employee exercise behavior and patterns, and related tax effects. We continue to evaluate the requirements and impact of SFAS No. 123R on our consolidated financial statements. The adoption of SFAS No. 123R is expected to have a material effect on the consolidated financial statements of Tektronix. See Note 4 of the Notes to Consolidated Financial Statements in Item 8 Financial Statements and Supplementary Data for the pro forma impact on net

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earnings and earnings per share from calculating stock-related compensation cost under the fair value alternative of SFAS No. 123. However, the calculation of compensation cost for share-based payment transactions after the effective date of SFAS No. 123R may be different from the calculation of compensation cost under SFAS No. 123, but such differences have not yet been quantified.

In April 2005, the FASB issued FASB Interpretation (“FIN”) 47 “Accounting for Conditional Asset Retirement Obligations.” This interpretation clarifies that the entity is required to record a liability in financial statement for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. The “conditional asset retirement obligation” terminology used in SFAS No. 143, “Accounting for Asset Retirement Obligations,” refers to a legal obligation to perform an asset retirement activity in which the timing and (or) method of settlement are conditional on a future event that may or may not be within the control of the entity. Tektronix adopted this FIN 47 beginning with the first quarter of fiscal year 2006 without a material effect on the consolidated financial statements of Tektronix.

In June 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections — a replacement of APB No. 20 and FASB Statement No. 3.” This SFAS No. 154 supersedes APB No. 20, “Accounting Changes,” and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements.” This statement applies to all voluntary changes in accounting principle and changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. SFAS No. 154 requires retrospective application to prior periods’ financial statements of changes in accounting principle, unless this would be impracticable. When it is impracticable to determine the period-specific effects of an accounting change on one or more individual prior periods presented, this statement requires that the new accounting principle be applied to the balances of assets and liabilities as of the beginning of the earliest period for which retrospective application is practicable. This statement also requires that if an entity changes its method of depreciation, amortization, or depletion for long-lived, nonfinancial assets, the change must be accounted for as a change in accounting estimate. This statement will be effective in fiscal year 2007. Management does not expect this statement to have a material effect on the consolidated financial statements.

In June 2005, the FASB issued FASB Staff Position (“FSP”) 143-1, “Accounting for Electronic Equipment Waste Obligations.” This FSP 143-1 addresses the accounting related to obligations associated with Directive 2002/96/EC on Waste Electrical and Electronic Equipment adopted by the European Union (EU). This FSP 143-1 was effective the later of the end of the first quarter of fiscal year 2006 or the date of adoption of the law by the applicable EU-member country. Tektronix adopted this FSP FAS 143-1 beginning with the first quarter of fiscal year 2006 without a material effect on the consolidated financial statements of Tektronix.

In November 2005, the FASB issued FASB Staff Position (“FSP”) FAS 115-1 and FAS 124-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments.” FSP FAS 115-1 and FAS 124-1 addresses the determination as to when an investment is considered impaired, whether that impairment is other than temporary, and the measurement of an impairment loss. It also includes accounting considerations subsequent to the recognition of an other-than-temporary impairment and requires certain disclosures about unrealized losses that have not been recognized as other-than-temporary impairments. Tektronix has adopted this FSP FAS 115-1 and FAS 124-1 without a material effect on the consolidated financial statements of Tektronix.

In July 2006, the FASB issued FASB Interpretation (“FIN”) 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109.” This interpretation clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes.” It prescribes a recognition threshold and measurement attribute for financial statement disclosure of tax positions taken or expected to be taken on a tax return. This interpretation is effective for fiscal years beginning after December 15, 2006. Tektronix will be required to adopt this interpretation in the first quarter of fiscal year 2008. Management is currently evaluating the requirements of FIN 48 and has not yet determined the impact on the consolidated financial statements.

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Item 7A.   Quantitative and Qualitative Disclosures About Market Risk

Financial Market Risk

Tektronix is exposed to financial market risks, including interest rate and foreign currency exchange rate risks.

Tektronix maintains a short-term and long-term investment portfolio consisting of fixed rate commercial paper, corporate notes and bonds, U.S. Treasury and agency notes, 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% rise in interest rates as of May 27, 2006 would reduce the market value by $1.3 million, which would be reflected in Accumulated other comprehensive income (loss) on the Consolidated Balance Sheets until sold.

Tektronix is exposed to foreign currency exchange rate risk primarily through commitments denominated in foreign currencies. Tektronix 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. Tektronix’ policy is to only enter into derivative transactions when Tektronix has an identifiable exposure to risk, thus not creating additional foreign currency exchange rate risk. At May 27, 2006, a 10% adverse movement in exchange rates would result in a $3.8 million loss on Euro, British Pound, and Yen forward contracts with a notional amount of $37.9 million.

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Item 8.   Financial Statements and Supplementary Data.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Tektronix, Inc.

Beaverton, Oregon

We have audited the accompanying consolidated balance sheets of Tektronix, Inc. and subsidiaries (the “Company”) as of May 27, 2006 and May 28, 2005, and the related consolidated statements of operations, shareholders’ equity, and cash flows for the fiscal years ended May 27, 2006, May 28, 2005, and May 29, 2004. Our audits also included the consolidated financial statement schedule listed in the Index at Item 15(a)2. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Tektronix, Inc. and subsidiaries as of May 27, 2006 and May 28, 2005, and the results of their operations and their cash flows for the fiscal years ended May 27, 2006, May 28, 2005, and May 29, 2004, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company’s internal control over financial reporting as of May 27, 2006, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 2, 2006 expressed an unqualified opinion on management’s assessment of the effectiveness of the Company’s internal control over financial reporting and an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/  Deloitte & Touche llp

Portland, Oregon

August 2, 2006

47

Consolidated Statements of Operations

	For the Fiscal Years Ended
	May 27,			May 28,			May 29,
	2006			2005			2004
	(In thousands, except per share amounts)
Net sales	$	1,039,870		$	1,034,654		$	920,620
Cost of sales		418,428			415,878			397,577
Gross profit		621,442			618,776			523,043
Research and development expenses		183,414			163,474			130,386
Selling, general and administrative expenses		302,344			300,925			277,993
Business realignment costs		9,847			3,100			22,765
Acquisition related costs (credits) and amortization		8,567			41,553			(51,025	)
Loss (gain) on disposition of assets, net		(1,433	)		(1,700	)		1,134
Operating income		118,703			111,424			141,790
Interest income		13,585			17,144			21,565
Interest expense		(483	)		(820	)		(2,208	)
Other non-operating income (expense), net		(3,377	)		(3,564	)		6,165
Earnings before taxes		128,428			124,184			167,312
Income tax expense		37,536			45,333			49,087
Net earnings from continuing operations		90,892			78,851			118,225
Gain (loss) from discontinued operations, net of income taxes		1,463			2,745			(2,130	)
Net earnings	$	92,355		$	81,596		$	116,095
Earnings (loss) per share:
Continuing operations — basic	$	1.09		$	0.91		$	1.40
Continuing operations — diluted	$	1.08		$	0.89		$	1.37
Discontinued operations — basic	$	0.02		$	0.03		$	(0.03	)
Discontinued operations — diluted	$	0.02		$	0.03		$	(0.02	)
Net earnings — basic	$	1.11		$	0.94		$	1.37
Net earnings — diluted	$	1.09		$	0.93		$	1.35
Weighted average shares outstanding:
Basic		83,323			86,803			84,720
Diluted		84,381			88,151			86,038
Cash dividends declared per share	$	0.24		$	0.22		$	0.12

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

48

Consolidated Balance Sheets

	May 27,		May 28,
	2006		2005
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	215,587	$	131,640
Short-term marketable investments		121,346		120,881
Trade accounts receivable, net of allowance for doubtful accounts of $3,079 and $3,406, respectively		174,599		155,332
Inventories		156,351		131,096
Other current assets		69,002		80,177
Total current assets		736,885		619,126
Property, plant and equipment, net		127,510		120,546
Long-term marketable investments		103,839		226,892
Deferred tax assets		—		56,560
Goodwill, net		307,189		301,934
Pension asset		239,128		868
Other long-term assets		119,539		134,417
Total assets	$	1,634,090	$	1,460,343
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	133,323	$	115,058
Accrued compensation		71,718		78,938
Deferred revenue		66,677		57,509
Total current liabilities		271,718		251,505
Deferred income taxes		65,935		—
Long-term liabilities		108,868		223,015
Commitments and contingencies (Note 17)		—		—
Shareholders’ equity:
Preferred stock, no par value (authorized 1,000 shares; none issued)		—		—
Common stock, no par value (authorized 200,000 shares; issued and outstanding 83,719 and 85,144, respectively)		540,718		501,886
Retained earnings		620,465		639,720
Accumulated other comprehensive income (loss)		26,386		(155,783	)
Total shareholders’ equity		1,187,569		985,823
Total liabilities and shareholders’ equity	$	1,634,090	$	1,460,343

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

49

Consolidated Statements of Cash Flows

	For the Fiscal Years Ended
	May 27,			May 28,			May 29,
	2006			2005			2004
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings	$	92,355		$	81,596		$	116,095
Adjustments to reconcile net earnings to net cash provided by operating activities:
Amortization of acquisition related intangible assets		24,121			15,743			—
Depreciation and amortization expense		27,977			29,157			29,796
Tax benefit of stock option exercises		8,401			3,931			6,983
Deferred income tax expense		12,567			19,323			2,428
Loss (gain) from discontinued operations		(1,463	)		(2,745	)		2,130
Net gain on the disposition/impairment of assets		(1,433	)		(2,613	)		(18,312	)
Write-off of in-process research and development		365			32,237			—
Gain on Japan pension restructuring		—			—			(36,741	)
Net loss (gain) on the disposition of marketable equity securities		90			(2,696	)		(7,293	)
Changes in operating assets and liabilities:
Trade accounts receivable, net		(18,748	)		(3,678	)		(32,042	)
Inventories		(25,253	)		(10,970	)		(8,306	)
Other current assets		10,160			1,794			14,995
Accounts payable and accrued liabilities		17,002			(38,521	)		30,218
Accrued compensation		(7,233	)		(14,290	)		30,840
Cash funding for defined benefit plans		(54,800	)		(49,318	)		(34,715	)
Deferred revenue		9,093			16,487			5,696
Other long-term assets and liabilities, net		877			14,891			31,288
Net cash provided by continuing operating activities		94,078			90,328			133,060
Net cash provided by discontinued operating activities		1,463			—			829
Net cash provided by operating activities		95,541			90,328			133,889
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of businesses, net of cash acquired		(8,040	)		(93,949	)		—
Acquisition of property, plant and equipment		(36,283	)		(32,464	)		(18,617	)
Proceeds from the disposition of property and equipment		2,495			19,802			49,729
Proceeds from the sale of corporate equity securities		10			4,404			9,530
Proceeds from maturities and sales of marketable investments		185,987			307,859			460,650
Purchases of short-term and long-term marketable investments		(66,939	)		(108,212	)		(513,018	)
Net cash provided by (used in) investing activities		77,230			97,440			(11,726	)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of long-term debt		(353	)		(425	)		(118,498	)
Dividends paid		(20,014	)		(19,362	)		(10,176	)
Proceeds from employee stock plans		52,496			21,157			33,860
Repurchase of common stock		(120,794	)		(208,427	)		(72,380	)
Net cash used in financing activities		(88,665	)		(207,057	)		(167,194	)
Effect of exchange rate changes on cash		(159	)		1,918			3,655
Net increase (decrease) in cash and cash equivalents		83,947			(17,371	)		(41,376	)
Cash and cash equivalents at beginning of period		131,640			149,011			190,387
Cash and cash equivalents at end of period	$	215,587		$	131,640		$	149,011

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

50

Consolidated Statements of Shareholders’ Equity

										Accumulated
										Other
	Common Stock						Retained			Comprehensive
	Shares			Amount			Earnings			Income (Loss)			Total
	(In thousands)
Balance May 31, 2003		84,844		$	223,233		$	707,191		$	(151,198	)	$	779,226
Components of comprehensive income (loss):
Net earnings		—			—			116,095			—			116,095
Minimum pension liability (net of tax of $9,661)		—			—			—			13,924			13,924
Currency adjustment		—			—			—			10,482			10,482
Unrealized holding loss (net of tax of ($5,292))		—			—			—			(8,276	)		(8,276	)
Total comprehensive income														132,225
Dividends paid		—			—			(10,176	)		—			(10,176	)
Shares issued to employees, net of forfeitures		1,991			33,860			—			—			33,860
Tax benefit of stock option exercises		—			6,983			—			—			6,983
Amortization of unearned stock-based compensation		—			842			—			—			842
Shares repurchased in open market		(2,656	)		(7,651	)		(64,729	)		—			(72,380	)
Balance May 29, 2004		84,179			257,267			748,381			(135,068	)		870,580
Components of comprehensive income (loss):
Net earnings		—			—			81,596			—			81,596
Minimum pension liability (net of tax of ($15,745))		—			—			—			(24,689	)		(24,689	)
Currency adjustment		—			—			—			6,935			6,935
Unrealized holding loss (net of tax of ($1,892))		—			—			—			(2,961	)		(2,961	)
Total comprehensive income														60,881
Dividends paid		—			—			(19,362	)		—			(19,362	)
Shares issued to employees, net of forfeitures		1,191			21,157			—			—			21,157
Shares issued in Inet acquisition		7,602			247,543			—			—			247,543
Stock options and share rights assumed from Inet acquisition		—			9,979			—			—			9,979
Unearned stock-based compensation from Inet acquisition		—			(3,403	)		—			—			(3,403	)
Tax benefit of stock option exercises		—			3,931			—			—			3,931
Amortization of unearned stock-based compensation		—			2,944			—			—			2,944
Shares repurchased in open market		(7,828	)		(37,532	)		(170,895	)		—			(208,427	)
Balance May 28, 2005		85,144			501,886			639,720			(155,783	)		985,823
Components of comprehensive income (loss):
Net earnings		—			—			92,355			—			92,355
Minimum pension liability (net of tax of $109,907)		—			—			—			186,960			186,960
Currency adjustment		—			—			—			(4,523	)		(4,523	)
Unrealized holding loss (net of tax of ($158))		—			—			—			(268	)		(268	)
Total comprehensive income														274,524
Dividends paid		—			—			(20,014	)		—			(20,014	)
Shares issued to employees, net of forfeitures		3,316			52,496			—			—			52,496
Shares issued in other acquisitions		87			2,075			—			—			2,075
Tax benefit of stock option exercises		—			8,401			—			—			8,401
Amortization of unearned stock-based compensation		—			5,058			—			—			5,058
Shares repurchased in open market		(4,828	)		(29,198	)		(91,596	)		—			(120,794	)
Balance May 27, 2006		83,719		$	540,718		$	620,465		$	26,386		$	1,187,569

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

51

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   The Company

Tektronix is a leading supplier of test, measurement, and monitoring products, solutions and services to the communications, computer, and semiconductor industries worldwide. With over 60 years of experience, Tektronix provides general purpose test and measurement, video test, measurement, and monitoring, and communications network management and diagnostic products that enable our customers to design, build, deploy, and manage next-generation global communications networks, computing, pervasive, and advanced technologies. Tektronix derives revenue principally by developing, manufacturing, and selling a broad range of products and related components, support services, and accessories.

Tektronix is organized around two business platforms: the Instruments Business and the Communications Business. The Instruments Business includes general purpose test and measurement products and video test, measurement, and monitoring products. The Communications Business includes telecommunications network management solutions and services and network diagnostics products.

Tektronix maintains operations and conducts business in four major geographies: the Americas, Europe, the Pacific, and Japan.

2.   Summary of Significant Accounting Policies

Financial statement presentation

The consolidated financial statements include the accounts of Tektronix and its subsidiaries. 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. Tektronix’ fiscal year is the 52 or 53 weeks ending the last Saturday in May. Fiscal years 2006, 2005, and 2004 included 52 weeks.

Use of estimates

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 revenue recognition; the allowance for doubtful accounts; product warranty accrual; estimates of contingencies; 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 contingencies. Actual results may differ from estimated amounts.

Cash and cash equivalents

Cash and cash equivalents include cash deposits in banks and highly-liquid investments with maturities of three months or less at the time of purchase. Tektronix places its temporary cash investments with high credit quality financial institutions. The majority of cash deposits and temporary cash investments are not covered by available depository insurance.

Trade accounts receivable, net

Trade accounts receivable, which are reduced by an allowance for doubtful accounts, are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is Tektronix’ best estimate of the amount of probable credit losses in the existing accounts receivable. Tektronix determines the allowance for doubtful accounts based on past transactions history, customer specific experience, and other factors.

52

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Marketable investments

Short-term marketable investments include debt securities with maturities of greater than three months at the date of acquisition and less than one year at the balance sheet date. Long-term marketable investments include investments with maturities of greater than one year.

At May 27, 2006 and May 28, 2005, marketable investments were classified as available-for-sale and reported at fair market value with the related unrealized holdings gains and losses excluded from earnings and included, net of deferred income taxes, in Accumulated other comprehensive income (loss) on the Consolidated Balance Sheets. The specific identification method is used to recognize realized gains and losses on the sale of marketable investments.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined based on a standard cost method, which approximates actual cost on a first-in, first-out basis. Market is determined based on net realizable value. Tektronix periodically reviews its inventory for obsolete or slow-moving items.

Property, plant and equipment

Property, plant and equipment are stated at cost. Depreciation is based on the estimated useful lives of the assets, ranging from ten to forty years for buildings and two to seven years for machinery and equipment, and is provided using the straight-line method.

Income taxes

Income taxes are accounted for using an asset and liability approach, which requires the recognition of taxes payable or refundable for the current fiscal year and deferred tax assets and liabilities for the future tax consequences of events that have been recognized in our consolidated financial statements or tax returns. Deferred income taxes, reflecting the impact of temporary differences between assets and liabilities recognized for financial reporting and tax purposes, are based on tax laws currently enacted. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion of the deferred tax assets will not be realized.

Tektronix is subject to ongoing tax examinations of our tax returns by the Internal Revenue Service (“IRS”) and other tax authorities in various jurisdictions. The liabilities associated with years subject to income tax audits will ultimately be resolved when events such as the completion of audits by the taxing jurisdictions occur. We believe that an appropriate liability has been established for estimated exposures; however, actual results may differ materially from these estimates. The liabilities are regularly reviewed for their adequacy and appropriateness.

Goodwill and Intangible Assets

Goodwill and intangible assets are accounted for in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations,” and SFAS No. 142, “Goodwill and Other Intangible Assets.” Tektronix performed its annual goodwill impairment analysis during the second quarter of fiscal year 2006 and identified no impairment. SFAS No. 142 requires purchased intangible assets, other than goodwill, to be amortized over their estimated useful lives, unless an asset has an indefinite life. Purchased intangible assets with finite useful lives are carried at cost less accumulated amortization. Amortization expense is recognized over the estimated useful lives of the intangible assets, mostly over three to five years.

For software-related intangible assets with finite useful lives, Tektronix amortizes the cost over the estimated economic life of the software product and assesses impairment in accordance with SFAS No. 86, “Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed.” At each balance sheet date, the unamortized cost of the software-related intangible asset is compared to its net realizable value. The net realizable value is the estimated future gross revenues from the software product reduced by the estimated future costs of completing and disposing of that product, including the costs of performing maintenance and customer support. The

53

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

excess of the unamortized cost over the net realizable value would then be recognized as an impairment loss. Amortization expense for intangible assets that are software-related developed technology is recorded as Cost of sales on the Consolidated Statements of Operations.

Tektronix does not amortize intangible assets with indefinite useful lives. However, Tektronix reevaluates these intangible assets each reporting period. If Tektronix subsequently determines that a nonamortizable intangible asset has a finite useful life, the intangible asset will be written down to the lower of its fair value or carrying amount and then amortized over its remaining useful life on a prospective basis. Tektronix reviews nonamortizable intangible assets annually for impairment and more frequently if events or circumstances indicate that the intangible asset may be impaired. The impairment test includes a comparison of the fair value of the nonamortizable intangible asset with its carrying value. An impairment loss would be recognized as a charge to continuing operations if the carrying value exceeds the fair value of the nonamortizable intangible asset. The balance of nonamortizable intangible assets of $11.2 million as of May 27, 2006 resulted primarily from the Inet acquisition during the second quarter of fiscal year 2005. Accordingly, the nonamortizable intangible assets were recorded at their fair values and no events or circumstances have arisen that would indicate that the nonamortizable intangible assets may be impaired. Tektronix performs its annual nonamortizable intangible asset impairment test in conjunction with its annual goodwill impairment test in the second quarter of each fiscal year.

Impairment of long-lived assets

Long-lived assets and intangibles with finite useful lives are reviewed for impairment when events or circumstances indicate costs may not be recoverable. Impairment exists when the carrying value of the asset is greater than the pre-tax undiscounted future cash flows expected to be provided by the asset. If impairment exists, the asset is written down to its fair value. Fair value is determined through quoted market values or through the calculation of the pre-tax present value of future cash flows expected to be provided by the asset.

Revenue recognition

Tektronix recognizes product revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collection is probable. Delivery is considered to have been met when title and risk of loss have transferred to the customer. These criteria are met for the majority of our product sales at the time the product is shipped. Upon shipment, Tektronix also provides for estimated costs that may be incurred for product warranties and for sales returns. When other significant obligations or acceptance terms remain after products are delivered, revenue is recognized only after such obligations are fulfilled or acceptance by the customer has occurred.

Contracts for network management solution products often involve multiple deliverables. Tektronix determines the fair value of each of the contract deliverables using vendor-specific objective evidence (“VSOE”). VSOE for each element of the contract is based on the price for which Tektronix sells the element on a stand-alone basis. In addition to hardware and software products, elements of the contracts include product support services such as the correction of software problems, hardware replacement, telephone access to Tektronix’ technical personnel and the right to receive unspecified product updates, upgrades and enhancements, when and if they become available. Revenues from these services, including post-contract support included in initial licensing fees, are recognized ratably over the service periods. Post-contract support included in the initial licensing fee is allocated from the total contract amount based on the fair value of these services determined using VSOE. If Tektronix determines that it does not have VSOE on an undelivered element of an arrangement, Tektronix will not recognize revenue until all elements of the arrangement that do not have VSOE are delivered. This occurrence could materially impact Tektronix’ financial results because of the significant dollar amount of many of its contracts and the significant portion of total revenues that a single contract may represent in any particular period.

Revenue earned from service is recognized ratably over the contractual service periods or as the services are performed. Shipping and handling costs are recorded as Cost of sales on the Consolidated Statements of Operations.

54

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Amounts billed or collected in advance of the period in which the related product or service qualifies for revenue recognition are recorded as Deferred revenue on the Consolidated Balance Sheets.

Advertising

Advertising production and placement costs are expensed when incurred. Advertising expenses were $12.8 million, $11.7 million and $12.2 million in fiscal years 2006, 2005, and 2004, respectively.

Environmental costs

Environmental costs are accrued and expensed when environmental assessments are made or remedial efforts are probable and when the related costs can be reasonably estimated. Environmental liability accruals are calculated as the best estimate of costs expected to be incurred. If this estimate can only be identified within a range and no specific amount within that range is determined more likely than any other amount within the range, the minimum of the range is accrued. Actual costs incurred may vary from these estimates due to the inherent uncertainties involved. Accrued environmental costs are recorded in Accounts payable and accrued liabilities on the Consolidated Balance Sheets.

Foreign currency translation

Assets and liabilities of foreign subsidiaries that operate in a local currency environment are translated into U.S. dollars at period-end exchange rates. Income and expense accounts are translated at the average exchange rate during the period. Adjustments arising from the translation of assets and liabilities are accumulated as a separate component of Accumulated other comprehensive income (loss) in Shareholders’ equity on the Consolidated Balance Sheets.

Derivatives

Tektronix utilizes derivative financial instruments, primarily forward foreign currency exchange contracts, to reduce the impact of foreign currency exchange rate risks where natural hedging strategies cannot be effectively employed. The notional or contract amounts of the hedging instruments do not represent amounts exchanged by the parties and, thus, are not a measure of Tektronix’ exposure due to the use of derivatives. Tektronix’ forward exchange contracts have generally ranged from one to three months in original maturity, and no forward exchange contract has had an original maturity greater than one year.

Tektronix does not hold or issue derivative financial instruments for trading purposes. The purpose of Tektronix’ hedging activities is to reduce the risk that the eventual cash flows of the underlying assets, liabilities and firm commitments will be adversely affected by changes in exchange rates. In general, Tektronix’ derivative activities do not create foreign currency exchange rate risk because fluctuations in the value of the instruments used for hedging purposes are offset by fluctuations in the value of the underlying exposures being hedged. Counterparties to derivative financial instruments expose Tektronix to credit-related losses in the event of nonperformance. However, Tektronix has entered into these instruments with creditworthy financial institutions and considers the risk of nonperformance to be remote.

All derivatives, including foreign currency exchange contracts are recognized on the balance sheet at fair value. Derivatives that are not hedges are recorded at fair value through earnings. If a derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivative are either offset against the change in fair value of underlying assets or liabilities through earnings or recognized in Accumulated other comprehensive income (loss) until the underlying hedged item is recognized in earnings. The ineffective portion of a derivative’s change in fair value is immediately recognized in earnings. At May 27, 2006, Tektronix did not designate any derivative financial instruments as a hedge.

55

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

3.   Recent Accounting Pronouncements

In November 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 151, “Inventory Costs, an amendment of ARB No. 43, Chapter 4.” SFAS No. 151 amends the guidance in Accounting Research Bulletins (“ARB”) No. 43, Chapter 4, “Inventory Pricing,” to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Paragraph 5 of ARB No. 43, Chapter 4, previously stated that “... under some circumstances, items such as idle facility expense, excessive spoilage, double freight, and rehandling costs may be so abnormal as to require treatment as current period charges....” SFAS No. 151 requires that those items be recognized as current period charges regardless of whether they meet the criterion of “so abnormal.” In addition, SFAS No. 151 requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. The provisions of SFAS No. 151 will apply to inventory costs beginning in fiscal year 2007. The adoption of SFAS No. 151 is not expected to have a material effect on the consolidated financial statements of Tektronix.

In December 2004, the FASB issued SFAS No. 123 (Revised 2004), “Share-Based Payment” (“SFAS No. 123R”). This pronouncement, as interpreted, requires compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. SFAS No. 123R covers a wide range of share-based compensation arrangements including stock options, restricted stock plans, performance-based awards, stock appreciation rights, and employee stock purchase plans. SFAS No. 123R replaces SFAS No. 123, “Accounting for Stock-Based Compensation,” and supersedes Accounting Principles Board Opinion (“APB”) No. 25, “Accounting for Stock Issued to Employees.” SFAS No. 123, as originally issued in 1995, established as preferable a fair-value-based method of accounting for share-based payment transactions with employees. However, SFAS No. 123 permitted entities the option of continuing to apply the guidance in APB No. 25, as long as the footnotes to financial statements disclosed what net income would have been had the preferable fair-value-based method been used.

Beginning in the first quarter of fiscal year 2007, Tektronix will adopt the provisions of SFAS No. 123R under the modified prospective transition method using the Black-Scholes option pricing model. This new standard requires a number of subjective and complex assumptions including stock price volatility, employee exercise behavior and patterns and related tax effects. We continue to evaluate the requirements and impact of SFAS No. 123R on our consolidated financial statements. The adoption of SFAS No. 123R is expected to have a material effect on the consolidated financial statements of Tektronix. See Note 4 of the Notes to Consolidated Financial Statements for the pro forma impact on net earnings and earnings per share from calculating stock-related compensation cost under the fair value alternative of SFAS No. 123. However, the calculation of compensation cost for share-based payment transactions after the effective date of SFAS No. 123R may be different from the calculation of compensation cost under SFAS No. 123, but such differences have not yet been quantified.

In April 2005, the FASB issued FASB Interpretation (“FIN”) 47, “Accounting for Conditional Asset Retirement Obligations.” This interpretation clarifies that the entity is required to record a liability in financial statements for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. The “conditional asset retirement obligation” terminology used in SFAS No. 143, “Accounting for Asset Retirement Obligations,” refers to a legal obligation to perform an asset retirement activity in which the timing and (or) method of settlement are conditional on a future event that may or may not be within the control of the entity. Tektronix adopted this FIN 47 beginning with the first quarter of fiscal year 2006 without a material effect on the consolidated financial statements of Tektronix.

In June 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections — a replacement of APB No. 20 and FASB Statement No. 3.” This SFAS No. 154 supersedes APB No. 20, “Accounting Changes,” and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements.” This statement applies to all voluntary changes in accounting principle and changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. SFAS No. 154 requires

56

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

retrospective application to prior periods’ financial statements of changes in accounting principle, unless this would be impracticable. When it is impracticable to determine the period-specific effects of an accounting change on one or more individual prior periods presented, this statement requires that the new accounting principle be applied to the balances of assets and liabilities as of the beginning of the earliest period for which retrospective application is practicable. This statement also requires that if an entity changes its method of depreciation, amortization, or depletion for long-lived, nonfinancial assets, the change must be accounted for as a change in accounting estimate. This statement will be effective in fiscal year 2007. Management does not expect this statement to have a material effect on the consolidated financial statements.

In June 2005, the FASB issued FASB Staff Position (“FSP”) 143-1, “Accounting for Electronic Equipment Waste Obligations.” This FSP 143-1 addresses the accounting related to obligations associated with Directive 2002/96/EC on Waste Electrical and Electronic Equipment adopted by the European Union (EU). This FSP 143-1 was effective the later of the end of the first quarter of fiscal year 2006 or the date of adoption of the law by the applicable EU-member country. Tektronix adopted this FSP FAS 143-1 beginning with the first quarter of fiscal year 2006 without a material effect on the consolidated financial statements of Tektronix.

In November 2005, the FASB issued FASB Staff Position (“FSP”) FAS 115-1 and FAS 124-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments.” FSP FAS 115-1 and FAS 124-1 addresses the determination as to when an investment is considered impaired, whether that impairment is other than temporary, and the measurement of an impairment loss. It also includes accounting considerations subsequent to the recognition of an other-than-temporary impairment and requires certain disclosures about unrealized losses that have not been recognized as other-than-temporary impairments. Tektronix has adopted this FSP FAS 115-1 and FAS 124-1 without a material effect on the consolidated financial statements of Tektronix.

In July 2006, the FASB issued FASB Interpretation (“FIN”) 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109.” This interpretation clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes.” It prescribes a recognition threshold and measurement attribute for financial statement disclosure of tax positions taken or expected to be taken on a tax return. This interpretation is effective for fiscal years beginning after December 15, 2006. Tektronix will be required to adopt this interpretation in the first quarter of fiscal year 2008. Management is currently evaluating the requirements of FIN 48 and has not yet determined the impact on the consolidated financial statements.

4.  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 stock options based on the treasury stock method. Potential shares issuable upon the exercise of stock options are excluded from the calculation of diluted earnings per share to the extent their effect would be antidilutive.

57

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Earnings per share for fiscal years ended May 27, 2006, May 28, 2005, and May 29, 2004 were as follows:

	2006		2005		2004
	(In thousands, except per share amounts)
Net earnings	$	92,355	$	81,596	$	116,095
Weighted average shares used for basic earnings per share		83,323		86,803		84,720
Incremental dilutive stock options		1,058		1,348		1,318
Weighted average shares used for diluted earnings per share		84,381		88,151		86,038
Earnings per share:
Net earnings — basic	$	1.11	$	0.94	$	1.37
Net earnings — diluted	$	1.09	$	0.93	$	1.35

Options to purchase an additional 7.2 million, 4.9 million, and 4.0 million shares of common stock were outstanding at May 27, 2006, May 28, 2005, and May 29, 2004, respectively, but were not included in the calculation of diluted net earnings per share because the exercise price of the options exceeded the average market price and their effect would have been antidilutive.

Tektronix accounts for stock options according to APB No. 25, “Accounting for Stock Issued to Employees.” Under APB No. 25, no compensation expense is recognized on Tektronix’ 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 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 fiscal years 2006, 2005, and 2004 were $9.30, $9.48, and $9.72 per share, respectively.

The pro forma impact to both net earnings and earnings per share from calculating stock based compensation cost consistent with the fair value alternative of SFAS No. 123 is indicated below:

	2006			2005			2004
	(In thousands, except per share amounts)
Net earnings as reported	$	92,355		$	81,596		$	116,095
Stock compensation cost included in net earnings as reported, net of income taxes		3,550			2,061			595
Stock compensation cost using the fair value alternative, net of income taxes		(19,161	)		(17,427	)		(17,944	)
Pro forma net earnings	$	76,744		$	66,230		$	98,746
Earnings per share:
Basic — as reported	$	1.11		$	0.94		$	1.37
Basic — pro forma	$	0.92		$	0.76		$	1.17
Diluted — as reported	$	1.09		$	0.93		$	1.35
Diluted — pro forma	$	0.91		$	0.75		$	1.15

58

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

SFAS No. 123 Assumptions

The fair values 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 years ended May 27, 2006, May 28, 2005, and May 29, 2004:

	2006			2005			2004
Expected life in years		5.1			5.1			5.0
Risk-free interest rate		4.18	%		3.68	%		2.96	%
Volatility		31.55	%		32.76	%		31.45	%
Dividend yield		0.85	%		0.82	%		0.48	%

5.   Acquisitions

Inet Acquisition

During the second quarter of fiscal year 2005, Tektronix acquired Inet Technologies, Inc. (“Inet”), a leading global provider of communications software solutions that enable network operators to more strategically and profitably operate their businesses. Inet’s products address next-generation mobile and fixed networks, including mobile data and voice over packet (also referred to as voice over Internet protocol or VoIP) technologies, and traditional networks. Inet’s Unified Assurance Solutions enable network operators to simultaneously manage their voice and data services at the network, service, and customer layers by capturing, correlating, and analyzing network wide traffic in real time. Inet’s diagnostic products assist equipment manufacturers and network operators to quickly and cost effectively design, deploy, and maintain current and next-generation networks and network elements. Through this acquisition Tektronix significantly enhanced its position in the overall network management and diagnostic market and will accelerate the delivery of products and solutions for network operators and equipment manufacturers seeking to implement next-generation technologies such as General Packet Radio Service (GPRS), Universal Mobile Telecommunications Systems (UMTS), and VoIP.

Tektronix acquired all of Inet’s outstanding common stock for $12.50 per share consisting of $6.25 per share in cash and $6.25 per share in Tektronix common stock. The cash consideration of $247.6 million, the value of Tektronix common stock of $247.5 million, and the fair values of stock options and restricted share rights assumed are included in the purchase price that was allocated to the underlying assets acquired and liabilities assumed based on their estimated fair values. The purchase price allocation is subject to further changes primarily related to resolution of tax contingencies associated with ongoing tax audits for pre-acquisition periods. The purchase price and resulting allocation to the underlying assets acquired, net of deferred income taxes, are presented below as of May 27, 2006.

The following table presents the total purchase price (in thousands):

Cash paid	$	247,561
Stock issued		247,543
Stock options assumed		9,658
Restricted share rights assumed		321
Transaction costs		5,224
Unearned stock-based compensation		(3,403	)
Liabilities assumed		36,735
Total purchase price	$	543,639

59

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table presents the allocation of the purchase price to the assets acquired, net of deferred income taxes, based on their fair values (in thousands):

Cash and cash equivalents	$	158,821
Accounts receivable		18,504
Inventories		18,025
Tax benefit from transaction costs		1,209
Other current assets		6,708
Property, plant, and equipment		10,662
Intangible assets		121,953
Goodwill		219,653
Other long term assets		811
In-process research and development		32,237
Deferred income taxes		(44,944	)
Total assets acquired, net of deferred income taxes	$	543,639

The following table presents the details of the intangible assets purchased in the Inet acquisition as of May 27, 2006:

	(In years)
	Weighted Average			Accumulated
	Useful Life	Cost		Amortization			Net
		(In thousands)
Developed technology	4.8	$	87,004	$	(30,824	)	$	56,180
Customer relationships	4.8		22,597		(8,031	)		14,566
Covenants not to compete	4.0		1,200		(500	)		700
Tradename	Not amortized		11,152		—			11,152
Total intangible assets purchased		$	121,953	$	(39,355	)	$	82,598

Amortization expense in fiscal years 2006 and 2005 for intangible assets purchased in the Inet acquisition has been recorded on the Consolidated Statements of Operations as follows:

	2006		2005
	(In thousands)
Cost of sales	$	18,495	$	12,329
Acquisition related costs (credits) and amortization		5,117		3,414
Total	$	23,612	$	15,743

The amortization expense for fiscal years 2006 and 2005 was for twelve months and eight months, respectively.

60

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The estimated amortization expense of intangible assets purchased in the Inet acquisition in future years will be recorded on the Consolidated Statements of Operations as follows:

			Acquisition Related
	Cost of		Costs (Credits)
	Sales		and Amortization		Total
	(In thousands)
Fiscal Year
2007	$	18,495	$	5,117	$	23,612
2008		16,670		4,621		21,291
2009		15,759		4,174		19,933
2010		5,256		1,354		6,610
Total	$	56,180	$	15,266	$	71,446

In fiscal year 2005, the $32.2 million allocated to the in-process research and development (“IPR&D”) asset was written off at the date of the acquisition in accordance with Financial Accounting Standards Board (“FASB”) Interpretation No. 4, “Applicability of FASB Statement No. 2 to Business Combinations Accounted for by the Purchase Method.” This write-off was included in acquisition related costs (credits) and amortization on the Consolidated Statements of Operations. The fair value of IPR&D was based on the net present value of estimated future cash flows. Significant assumptions used in the valuation of IPR&D included a risk adjusted discount rate of 10.2%, revenue and expense projections, development life cycle and future entry of products to the market. As of the acquisition date, there were eight research and development projects in process that were approximately 87% complete. The total estimated cost to complete these projects was approximately $0.8 million at the acquisition date. In the first quarter of fiscal year 2006, Tektronix had completed these eight research and development projects.

The Consolidated Statements of Operations included the results of operations of Inet since September 30, 2004. The following (unaudited) pro forma consolidated results of operations have been prepared as if the acquisition of Inet had occurred at June 1, 2003, the beginning of Tektronix’ fiscal year 2004.

	2005		2004
	(In thousands, except per share amounts)
Pro forma
Net sales	$	1,071,333	$	1,033,346
Net earnings		112,338		115,890
Earnings per share:
Basic	$	1.26	$	1.26
Diluted	$	1.24	$	1.24

The $32.2 million write-off of IPR&D in fiscal year 2005 was excluded from the calculation of net earnings and net earnings per share in the table shown above.

The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisition been consummated as of that time, and it is not intended to be a projection of future results.

61

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Acquisition Related Costs (Credits) and Amortization

A tabular summary of the activity in Acquisition related costs (credits) and amortization for fiscal years 2006, 2005 and 2004 was as follows:

	2006		2005		2004
	(In thousands)
Inet Acquisition:
Write-off of IPR&D	$	—	$	32,237	$	—
Amortization of acquired intangible assets		5,117		3,414		—
Amortization of unearned stock-based compensation		339		785		—
Transition costs		1,955		2,224		—
Sony/Tektronix Redemption:
Gain on Japan pension restructuring		—		—		(36,741	)
Gain on sale of Shinagawa, Japan property		—		—		(22,525	)
Other Shinagawa, Japan asset disposals		—		—		216
Impairment of Gotemba, Japan property held-for-sale		—		—		3,063
Transition costs		447		2,893		4,962
Other acquisitions:
Write-off of IPR&D		365		—		—
Amortization of acquired intangible assets		77		—		—
Transition costs		267		—		—
Acquisition related costs (credits) and amortization	$	8,567	$	41,553	$	(51,025	)

Inet Acquisition.  Activity related to the Inet acquisition is discussed above.

Sony/Tektronix Redemption.  Transition costs included expenses specifically associated with the integration of Sony/Tektronix. In the fourth quarter of fiscal year 2004, Tektronix offered voluntary retention bonuses to certain employees in Gotemba, Japan as an incentive to remain with Tektronix while Tektronix completed its plan to relocate manufacturing operations to other locations.

During fiscal year 2004, Tektronix restructured the Japan pension plans and recorded a net gain from the restructuring of $36.7 million. Also during fiscal year 2004, Tektronix sold property located in Shinagawa, Japan with a net book value of $23.5 million for 5.2 billion Yen or approximately $47.2 million.

6.   Discontinued Operations

Discontinued operations presented on the Consolidated Statements of Operations included the following:

	2006			2005			2004
	(In thousands)
Loss on sale of VideoTele.com (less applicable income tax benefit of $1, $13, and $48)	$	(3	)	$	(23	)	$	(89	)
Gain (loss) on sale of optical parametric test business (less applicable income tax benefit (expense) of ($338), $113, and $195)		629			(212	)		(363	)
Gain (loss) on sale of Gage (less applicable income tax benefit (expense) of ($408), $182, and $692)		759			(337	)		(1,284	)
Loss from operations of Gage (less applicable income tax benefit of $0, $0, and $212)		—			—			(394	)
Gain on sale of Color Printing and Imaging (less applicable income tax expense of $42, $1,786, and $0) (see Note 17)		78			3,317			—
Gain (loss) from discontinued operations, net of income taxes	$	1,463		$	2,745		$	(2,130	)

62

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Sale of Color Printing and Imaging

On January 1, 2000, Tektronix sold substantially all of the assets of the Color Printing and Imaging Division (“CPID”). Tektronix accounted for CPID as a discontinued operation in accordance with APB 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, $60.0 million of contingencies related to the sale, and $14.4 million in transaction and related costs. See Note 17 for additional discussion of the CPID sale transaction and subsequent resolution of the related contingencies.

Sale of VideoTele.com

On November 7, 2002, Tektronix completed the sale of the VideoTele.com (“VT.c”) subsidiary. VT.c was sold to Tut Systems, Inc. (“Tut”), a publicly traded company, for 3,283,597 shares of Tut common stock valued on the sale date at $4.2 million and a note receivable for $3.1 million due in November 2007. The common stock was classified as an available-for-sale security and both the common stock and the note receivable were included in Other long-term assets on the Consolidated Balance Sheets. Tektronix currently holds 1,883,597 shares, which is less than 20% of the outstanding common stock of Tut and does not have the ability to significantly influence the operations of Tut. The note receivable accrues interest at an annual rate of 8%. Tektronix’ reason for divesting the VT.c business was that the VT.c product offering was not consistent with Tektronix’ strategy of focusing on the test, measurement, and monitoring markets, which ultimately resulted in the sale of this business to Tut. The sale of VT.c has been accounted for as a discontinued operation in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” Accordingly, the results of VT.c operations prior to the transaction date, and the loss on this sale, have been excluded from continuing operations and recorded as discontinued operations, net of tax, on the Consolidated Statements of Operations.

Sale of Optical Parametric Test Business

The optical parametric test business was acquired in April 2002 for $23.2 million. The purchase included $2.0 million of intangible assets, $4.3 million of other net assets and $16.9 million of goodwill. The optical parametric test business was a technology innovator in optical test and measurement components. During the third quarter of fiscal year 2003, management approved and initiated an active plan for the sale of its optical parametric test business. This business was accounted for as a discontinued operation in accordance with SFAS No. 144. Accordingly, the results of operations of the optical parametric test business have been excluded from continuing operations and recorded as discontinued operations. The net carrying value of assets, primarily goodwill and other intangible assets, were adjusted to estimated selling price less costs to sell which resulted in a $15.3 million write-down, net of income tax benefit of $8.4 million, included in loss on sale of the optical parametric test business in the third quarter of fiscal year 2003. The market for optical parametric test equipment was dramatically affected by the economic conditions that negatively impacted many technology sectors, which began in the second half of fiscal year 2001 and continued into fiscal year 2003. The reduction in the value of the optical parametric test business during the period it was owned by Tektronix was a direct result of the impact of these economic conditions. On May 27, 2003, Tektronix sold its optical parametric test business for $1.0 million. Tektronix recognized an additional loss on the sale of $1.7 million, net of income tax benefit of $0.9 million, in the fourth quarter of fiscal year 2003. Gain (loss) from discontinued operations during fiscal years 2006, 2005, and 2004 included additional net losses and gain resulting from the resolution of a contingency from the sale of the optical parametric test business.

Sale of Gage Applied Sciences

During the fourth quarter of fiscal year 2003, management approved and initiated an active plan for the sale of Gage Applied Sciences (“Gage”), a wholly-owned subsidiary of Tektronix. Gage, located in Montreal, Canada,

63

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

produced PC-based instruments products. The divestiture of this entity was consistent with Tektronix’ 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, Tektronix sold the operations of Gage to a third party. Tektronix 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 goodwill, of Gage to net realizable value less estimated selling costs. Gain from sale of Gage during fiscal year 2006 was for settlements of matters associated with the sale of the business.

7.   Business Realignment Costs

Business realignment costs represent actions to realign our cost structure in response to significant events and primarily include restructuring actions and impairment of assets resulting from reduced business levels or related to significant acquisitions or divestitures. Business realignment actions taken in recent fiscal years were intended to reduce our worldwide cost structure across all major functions. Major operations impacted include manufacturing, engineering, sales, marketing and administrative functions. In addition to severance, we incurred other costs associated with restructuring our organization, which primarily represented facilities contracts and other exit costs associated with aligning the cost structure to appropriate levels. Restructuring actions can take significant time to execute, particularly if they are being conducted in countries outside the United States. We believe that the restructuring actions implemented in recent fiscal years have resulted in the cost savings anticipated for those actions.

Business realignment costs incurred during fiscal year 2006 primarily reflected actions taken in response to softening in orders in some of our product areas at the end of fiscal year 2005 and the beginning of the first quarter of fiscal year 2006. We also took actions to realize business synergies as a result of the acquisition of Inet.

Business realignment costs of $9.8 million during fiscal year 2006 included severance and related costs of $11.1 million for 120 employees, $0.3 million for contractual obligations and a net $1.6 million credit for currency gains primarily related to the closure of three subsidiaries in Europe. At May  27, 2006, liabilities remained for the severance and related benefits of 41 employees.

Costs incurred during fiscal year 2005 primarily related to restructuring actions Tektronix planned in prior fiscal years which were executed in fiscal year 2005. Many of the restructuring actions planned take significant time to execute, particularly if they are being conducted in countries outside the United States.

Business realignment costs of $3.1 million during fiscal year 2005 were primarily for severance and related costs for residual activity in Europe. For fiscal year 2005, business realignment costs of $3.1 million included severance and related costs of $2.2 million for 37 employees, $0.9 million for contractual obligations, and $0.2 million for accelerated depreciation of assets, offset by a $0.2 million credit from net accumulated currency translation gains. At May 28, 2005, liabilities of $1.3 million remained for the severance and related benefits of 15 employees for actions taken in fiscal years 2005, 2004, and 2003. The remaining $1.0 million liability was for continuing payments on contractual obligations, some of which span several years.

Business realignment costs of $22.8 million in fiscal year 2004 included $16.7 million of severance related costs for 274 employees mostly located in Europe and the United States and adjustments to estimates in prior fiscal years, $2.6 million for accumulated currency translation losses, net, related to the substantial closure of subsidiaries in Brazil, Australia, Denmark, and a surplus facility in China, $1.9 million for contractual obligations for leased facilities in Europe and the United States, and $1.6 million for accelerated depreciation and write-down of assets in Europe and the United States. Annual salary cost savings from actions taken in fiscal year 2004 to reduce employee headcount were $14.7 million.

64

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Activity for the above described actions during fiscal year 2006 was as follows:

			Costs
	Balance		Incurred								Balance
	May 28,		and Other			Cash			Non-cash		May 27,
	2005		Adjustments			Payments			Adjustments		2006
	(In thousands)
Fiscal Year 2006 Actions:
Employee severance and related benefits	$	—	$	11,142		$	(6,275	)	$	—	$	4,867
Contractual obligations		—		259			(259	)		—		—
Accumulated currency translation gain, net		—		(1,603	)		—			1,603		—
Total		—		9,798			(6,534	)		1,603		4,867
Fiscal Year 2005 Actions:
Employee severance and related benefits		568		(143	)		(414	)		—		11
Contractual obligations		103		49			(152	)		—		—
Total		671		(94	)		(566	)		—		11
Fiscal Year 2004 Actions:
Employee severance and related benefits		681		98			(208	)		42		613
Total		681		98			(208	)		42		613
Fiscal Year 2003 and 2002 Actions:
Employee severance and related benefits		2		—			—			1		3
Contractual obligations		926		45			(460	)		—		511
Total		928		45			(460	)		1		514
Total of all actions	$	2,280	$	9,847		$	(7,768	)	$	1,646	$	6,005

65

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Activity for the above described actions during fiscal year 2005 was as follows:

			Costs
	Balance		Incurred									Balance
	May 29,		and Other			Cash			Non-cash			May 28,
	2004		Adjustments			Payments			Adjustments			2005
	(In thousands)
Fiscal Year 2005 Actions:
Employee severance and related benefits	$	—	$	2,447		$	(1,879	)	$	—		$	568
Asset impairments		—		345			—			(345	)		—
Contractual obligations		—		525			(639	)		217			103
Accumulated currency translation gain, net		—		(236	)		—			236			—
Total		—		3,081			(2,518	)		108			671
Fiscal Year 2004 Actions:
Employee severance and related benefits		5,335		(235	)		(4,419	)		—			681
Asset impairments		—		(97	)		—			97			—
Contractual obligations		409		327			(737	)		1			—
Total		5,744		(5	)		(5,156	)		98			681
Fiscal Year 2003 Actions:
Employee severance and related benefits		294		(20	)		(272	)		—			2
Contractual obligations		1,240		35			(479	)		109			905
Total		1,534		15			(751	)		109			907
Fiscal Year 2002 Actions:
Employee severance and related benefits		152		9			(161	)		—			—
Contractual obligations		54		—			(33	)		—			21
Total		206		9			(194	)		—			21
Total of all actions	$	7,484	$	3,100		$	(8,619	)	$	315		$	2,280

66

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

			Costs
	Balance		Incurred									Balance
	May 31,		and Other			Cash			Non-cash			May 29,
	2003		Adjustments			Payments			Adjustments			2004
	(In thousands)
Fiscal Year 2004 Actions:
Employee severance and related benefits	$	—	$	17,351		$	(12,016	)	$	—		$	5,335
Asset impairments		—		1,610			—			(1,610	)		—
Contractual obligations		—		1,514			(1,105	)		—			409
Accumulated currency translation loss, net		—		2,594			—			(2,594	)		—
Total		—		23,069			(13,121	)		(4,204	)		5,744
Fiscal Year 2003 Actions:
Employee severance and related benefits		5,394		(623	)		(4,477	)		—			294
Asset impairments		—		(53	)		—			53			—
Contractual obligations		1,730		447			(1,085	)		148			1,240
Total		7,124		(229	)		(5,562	)		201			1,534
Fiscal Year 2002 Actions:
Employee severance and related benefits		494		172			(514	)		—			152
Contractual obligations		434		(57	)		(323	)		—			54
Total		928		115			(837	)		—			206
Other		—		(190	)		(9	)		199			—
Total of all actions	$	8,052	$	22,765		$	(19,529	)	$	(3,804	)	$	7,484

8.   Marketable Investments

Marketable investments are recorded at fair value with the resulting unrealized gains and temporary losses included, net of tax, in Accumulated other comprehensive income (loss) on the Consolidated Balance Sheets. Fair values of marketable investments are based on quoted market prices. Realized gains and losses on sales of marketable investments were $0.3 million and $0.5 million, $1.5 million and $2.4 million, and $2.6 million and $2.8 million, respectively, for fiscal years 2006, 2005, and 2004.

Short-term marketable investments held at May 27, 2006 consisted of:

	Amortized Cost		Unrealized Gains		Unrealized Losses			Market Value
	(In thousands)
Asset backed securities	$	40,071	$	6	$	(241	)	$	39,836
U.S. Agencies		27,340		—		(328	)		27,012
Corporate notes and bonds		23,841		9		(67	)		23,783
Commercial paper		21,568		—		—			21,568
Mortgage backed securities		6,802		—		(187	)		6,615
Certificates of deposit		2,517		—		(2	)		2,515
U.S. Treasuries		17		—		—			17
Short-term marketable investments	$	122,156	$	15	$	(825	)	$	121,346

67

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Long-term marketable investments held at May 27, 2006 consisted of:

	Amortized Cost		Unrealized Gains		Unrealized Losses			Market Value
	(In thousands)
Asset backed securities	$	37,595	$	—	$	(901	)	$	36,694
U.S. Agencies		13,561		—		(340	)		13,221
Corporate notes and bonds		20,223		—		(686	)		19,537
Mortgage backed securities		30,252		—		(1,305	)		28,947
U.S. Treasuries		5,634		—		(194	)		5,440
Long-term marketable investments	$	107,265	$	—	$	(3,426	)	$	103,839

Short-term marketable investments held at May 28, 2005 consisted of:

	Amortized Cost		Unrealized Gains		Unrealized Losses			Market Value
	(In thousands)
Asset backed securities	$	12,290	$	—	$	(103	)	$	12,187
U.S. Agencies		31,109		—		(189	)		30,920
Corporate notes and bonds		48,245		14		(274	)		47,985
Mortgage backed securities		1,840		—		(26	)		1,814
U.S. Treasuries		28,150		—		(175	)		27,975
Short-term marketable investments	$	121,634	$	14	$	(767	)	$	120,881

Long-term marketable investments held at May 28, 2005 consisted of:

	Amortized Cost		Unrealized Gains		Unrealized Losses			Market Value
	(In thousands)
Asset backed securities	$	70,667	$	238	$	(418	)	$	70,487
U.S. Agencies		42,962		—		(718	)		42,244
Corporate notes and bonds		48,535		45		(555	)		48,025
Mortgage backed securities		53,622		4		(1,006	)		52,620
U.S. Treasuries		13,491		83		(58	)		13,516
Long-term marketable investments	$	229,277	$	370	$	(2,755	)	$	226,892

Contractual maturities of long-term marketable investments at May 27, 2006 will be as follows:

	Amortized Cost
	Basis
	(In thousands)
After 1 year through 5 years	$	77,013
Mortgage backed securities		30,252
	$	107,265

Tektronix reviews investments in debt and equity securities for other than temporary impairment whenever the fair value of an investment is less than amortized cost and evidence indicates that an investment’s carrying amount is not recoverable within a reasonable period of time. In the evaluation of whether an impairment is other-than-temporary, Tektronix considers the reasons for the impairment, its ability and intent to hold the investment until the market price recovers, compliance with its investment policy, the severity and duration of the impairment, and expected future performance. As Tektronix primarily invests in high quality debt securities, unrealized losses are largely driven by increased market interest rates. These unrealized losses were not significant on an individual investment security basis. Based on this evaluation, no impairment was considered to be other-than-temporary.

68

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table presents the market value of marketable investments with continuous unrealized losses at May 27, 2006:

	12 Months or More					Less Than 12 Months					Total
	Gross					Gross					Gross
	Estimated					Estimated					Estimated
	Market		Unrealized			Market		Unrealized			Market		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	(In thousands)
Asset backed securities	$	37,340	$	(668	)	$	32,568	$	(474	)	$	69,908	$	(1,142	)
U.S. Agencies		35,287		(655	)		4,946		(13	)		40,233		(668	)
Mortgage backed securities		29,383		(1,228	)		6,179		(264	)		35,562		(1,492	)
Corporate notes and bonds		21,977		(596	)		11,779		(156	)		33,756		(752	)
U.S. Treasuries		3,522		(142	)		1,934		(52	)		5,456		(194	)
Certificates of deposit		—		—			2,515		(3	)		2,515		(3	)
Total	$	127,509	$	(3,289	)	$	59,921	$	(962	)	$	187,430	$	(4,251	)

9.   Concentrations of Risk

Credit Risk

Financial instruments that potentially subject Tektronix to concentrations of credit risk consist principally of trade accounts receivable and marketable investments. The risk is limited due to the large number of entities comprising Tektronix’ customer base and investments, and their dispersion across many different industries and geographies.

Supplier Risk

Tektronix currently buys a significant portion of its circuit boards from one supplier and a significant portion of its Application Specific Integrated Chips (“ASICs”) from two suppliers. Both circuit boards and ASICs are important components of our products and are built to Tektronix’ specifications. Management believes that other suppliers could build these circuit boards on comparable terms, however there are a limited number of suppliers that could build ASICs to Tektronix’ specifications. A change in suppliers for circuit boards or ASICs could cause a delay in manufacturing and a possible loss of sales, which would adversely affect operating results.

10.   Inventories

Inventories consisted of the following at May 27, 2006 and May 28, 2005:

	2006		2005
	(In thousands)
Materials	$	8,252	$	7,015
Work in process		72,663		63,091
Finished goods		75,436		60,990
Inventories	$	156,351	$	131,096

69

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

11.   Other Current Assets

Other current assets consisted of the following at May 27, 2006 and May 28, 2005:

	2006		2005
	(In thousands)
Current deferred tax asset	$	45,686	$	49,537
Prepaid expenses		12,776		12,877
Income taxes receivable		1,772		9,928
Other receivables		8,343		7,401
Notes receivable		12		18
Other current assets		413		416
Other current assets	$	69,002	$	80,177

12.   Property, Plant and Equipment, Net

Property, plant and equipment, net consisted of the following at May 27, 2006 and May 28, 2005:

	2006			2005
	(In thousands)
Land	$	698		$	1,086
Buildings		135,727			129,983
Machinery and equipment		258,137			246,032
Accumulated depreciation and amortization		(267,052	)		(256,555	)
Property, plant and equipment, net	$	127,510		$	120,546

Depreciation and amortization expense for property, plant and equipment for fiscal years 2006, 2005, and 2004 was $27.6 million, $28.4 million, and $29.0 million, respectively.

13.   Goodwill, Net

Goodwill and intangible assets are accounted for in accordance with SFAS No. 141, “Business Combinations”, and SFAS No. 142, “Goodwill and Other Intangible Assets.” Accordingly, Tektronix does not amortize goodwill from acquisitions, but continues to amortize other acquisition related intangibles.

Tektronix performed its annual goodwill impairment analysis during the second quarter of fiscal year 2006 and identified no impairment. The impairment review is based on a discounted cash flow approach that uses estimates of future market share and revenues and costs for the reporting units as well as appropriate discount rates. The estimates used are consistent with the plans and estimates that Tektronix uses to manage the underlying businesses. However, if Tektronix 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 Tektronix may incur charges for impairment of goodwill. Goodwill that was included in assets of discontinued operations and related impairment charges are discussed in Note 6.

70

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Changes in goodwill, net, for continuing operations during fiscal years ended May 27, 2006 and May 28, 2005 were as follows (in thousands):

Balance at May 29, 2004	$	79,774
Acquisition of Inet (Note 5)		220,883
Currency translation		1,277
Balance at May 28, 2005		301,934
Inet purchase price adjustment		(1,230	)
Other acquisitions		7,428
Currency translation		(943	)
Balance at May 27, 2006	$	307,189

Goodwill at May 27, 2006 consisted primarily of $219.7 million from the acquisition of Inet and $39.3 million from the Sony/Tektronix redemption.

14.   Other Long-Term Assets

Other long-term assets consisted of the following at May 27, 2006 and May 28, 2005:

	2006		2005
	(In thousands)
Intangibles, net	$	86,805	$	107,652
Notes, contracts and leases		18,476		12,377
Corporate equity securities		8,923		8,285
Other long-term assets		5,335		6,103
Other long-term assets	$	119,539	$	134,417

Intangibles, net included $82.6 million as of May 27, 2006 and $106.2 million as of May 28, 2005, resulting from the acquisition of Inet in the second quarter of fiscal year 2005, as described in Note 5.

Accumulated amortization for intangible assets as of May 27, 2006 and May  28, 2005 was $44.1 million and $22.4 million, respectively.

Corporate equity securities are classified as available-for-sale and reported at fair value. The related unrealized holding gains and temporary losses are excluded from earnings and included, net of tax, in Accumulated other comprehensive income (loss) on the Consolidated Balance Sheets. Corporate equity securities classified as available-for-sale and the related unrealized holding gains at May 27, 2006 and May 28, 2005 were as follows:

	2006		2005
	(In thousands)
Cost basis of corporate equity securities	$	4,282	$	4,282
Gross unrealized holding gains		4,641		4,003
Fair value of corporate equity securities	$	8,923	$	8,285

71

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

15.   Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consisted of the following at May 27, 2006 and May 28, 2005:

	2006		2005
	(In thousands)
Trade accounts payable	$	50,910	$	36,407
Other accounts payable		44,719		35,444
Accounts payable		95,629		71,851
Income taxes payable		16,181		17,348
Contingent liabilities (Note 17)		8,785		10,539
Warranty reserve (Note 24)		5,798		6,508
Accrued expenses and other liabilities		6,930		8,812
Accrued liabilities		37,694		43,207
Accounts payable and accrued liabilities	$	133,323	$	115,058

Other accounts payable includes employee benefits liabilities and other miscellaneous non-trade payables. Contingent liabilities are described in Note 17.

At May 27, 2006, Tektronix maintained unsecured bank credit facilities, primarily for bank overdraft balances, totaling $56.5 million, of which $46.0 million was unused. These facilities do not have an expiration date or a fixed interest rate. In addition, no covenants are required by the banks.

16.   Long-Term Liabilities

Long-term liabilities consisted of the following at May 27, 2006 and May 28, 2005:

	2006		2005
	(In thousands)
Pension liability	$	66,147	$	174,841
Deferred compensation		14,584		15,708
Postretirement benefits		12,106		12,828
Other long-term liabilities		16,031		19,638
Long-term liabilities	$	108,868	$	223,015

The reduction in Pension liability was the result of Tektronix’ voluntary contributions of $54.8 million in fiscal year 2006, favorable asset returns, and increase in the discount rates which favorably impacted the pension liability as discussed in Note 26.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

17.   Commitments and Contingencies

Commitments

Tektronix leases a portion of its capital equipment and certain of its facilities under operating leases that expire at various dates. Rental expense was $22.9 million in fiscal year 2006, $20.8 million in fiscal year 2005, and $17.0 million in fiscal year 2004. In addition, Tektronix is a party to long-term or minimum purchase agreements with various suppliers and vendors. The future minimum obligations under operating leases and purchase commitments as of May 27, 2006 were:

	Operating		Purchase
	Leases		Commitments
	(In thousands)
Fiscal Year
2007	$	19,720	$	130,921
2008		16,881		732
2009		12,391		166
2010		9,520		—
2011		2,320		—
Future years		3,010		—
Total	$	63,842	$	131,819

Contingencies

As of May 27, 2006, Tektronix had $8.8 million of contingencies recorded in Accounts payable and accrued liabilities on the Consolidated Balance Sheets, which included $5.0 million of contingencies relating to the sale of the Color Printing and Imaging Division (“CPID”) in fiscal year 2000, $2.0 million for environmental exposures and $1.8 million for other contingent liabilities. It is reasonably possible that management’s estimates of contingencies could change in the near term and that such changes could be material to the consolidated financial statements.

Sale of Color Printing and Imaging

On January 1, 2000, Tektronix sold substantially all of the assets of CPID. Tektronix accounted for CPID as a discontinued operation in accordance with APB 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 purchaser. 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, $60.0 million of contingencies related to the sale and $14.4 million in transaction and related costs.

In accordance with SFAS No. 5, “Accounting for Contingencies,” it is Tektronix’ policy to defer recognition of a gain where it is believed that contingencies exist that may result in that gain being recognized prior to realization. Tektronix analyzes the amount of deferred gain in relation to outstanding contingencies, and recognizes additional gain when persuasive objective evidence indicates that such contingencies are believed to be resolved. With regard to the contingencies associated with the sale of CPID, persuasive objective evidence includes: a) legal determinations resulting in the resolution of contingencies, including lapse of claim periods defined in the final sale agreement, b) the resolution of claims made by the purchaser, c) evidence that liabilities underlying current or probable future claims have been resolved and d) interactions with the purchaser on outstanding claims. The $60.0 million of contingencies represented the deferral of a portion of the gain on sale that Tektronix’ management believed was not realizable due to certain contingencies contained in the final sale agreement and

73

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

approximated the amount that management believed was the maximum exposure under the contingencies. The specific nature of these contingencies was specified in the final sale agreement.

The contingencies contained in the final sale agreement represented provisions designed to protect the purchaser in disputes over the net assets included in the closing balance sheet and breach of certain representations and warranties by Tektronix. Tektronix viewed these exposures in terms of the following categories: balance sheet arbitration, liabilities subject to indemnity, 18 month indemnity for breach of certain representations and warranties and a 36 month indemnity for breach of certain representations and warranties. Tektronix’ estimate of the maximum contingency, including anticipated costs and expenses to resolve these matters, was $60.0 million. This estimate was based on certain limitations on purchase contingencies as defined in the final sale agreement as well as Tektronix’ estimates of other exposures not subject to these limitations. As the maximum exposure under these categories is measured in the aggregate by Tektronix and as there are many overlapping provisions between these categories, Tektronix’ review of these contingencies considered both the individual categories as well as the aggregate remaining exposures.

Subsequent to the close of the transaction, Tektronix and the purchaser 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 process was provided to the purchaser under the terms of the final sale agreement. This arbitration was resolved in the first quarter of fiscal year 2002, resulting in an $18.0 million payment by Tektronix to the purchaser. This settlement directly reduced the $60.0 million deferred gain.

During fiscal year 2003, Tektronix recognized $25.0 million of the deferred gain as a result of the resolution of certain of the purchase contingencies related to the sale, in accordance with the accounting policy described above. The $25.0 million of pre-tax gain was recognized in Discontinued operations. Of the total $25.0 million recognized in fiscal year 2003, $20.0 million was recorded during the third quarter of fiscal year 2003. Persuasive objective evidence supporting the recognition of $20.0 million included: a) the expiration of the 36 month deadline for certain claims included in the final sale agreement, which passed without the receipt of claims from the purchaser, b) analysis of exposures underlying pending claims previously made by the purchaser, and c) the interactions with the purchaser regarding these pending claims, which included the fact that significant time had lapsed since the purchaser had pursued these claims. Tektronix recognized an additional $5.0 million of pre-tax gain in Discontinued operations during the fourth quarter of fiscal year 2003 based on persuasive objective evidence that certain previously identified exposures had been resolved without consequence to Tektronix.

During the third quarter of fiscal year 2005, Tektronix recognized an additional $5.4 million of pre-tax gain in Discontinued operations. Persuasive objective evidence supporting the recognition of $5.4 million included: a) a sustained reduction in expense activity associated with certain exposures underlying the contingencies, b) analysis of exposures underlying pending claims previously made by the purchaser and c) the interactions with the purchaser regarding these pending claims, which included the fact that significant time had lapsed since the purchaser had pursued these claims.

Other payments and adjustments during the period from fiscal years 2001 through 2005 reduced the balance of the contingencies by $4.6 million. As of May 27, 2006 and May 28, 2005, the balance of the contingencies related to the CPID disposition was $5.0 million. This contingency may take several years to resolve. The continued deferral of this amount is associated with existing exposures for which Tektronix believes adequate evidence of resolution has not been obtained. Tektronix continues to monitor the status of the CPID related contingencies based on information received. If unforeseen events or circumstances arise subsequent to the balance sheet date, changes in the estimate of these contingencies would occur. Tektronix, however, does not expect such changes to be material to the financial statements.

Environmental and Other

The $2.0 million for environmental exposures was specifically associated with the closure and cleanup of a licensed hazardous waste management facility at Tektronix’ Beaverton, Oregon campus. Tektronix established the initial liability in 1998 and bases ongoing estimates on currently available facts and presently enacted laws and

74

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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. Tektronix is currently awaiting approval of a work plan and risk assessment for a feasibility study from the Oregon Department of Environmental Quality. We expect approval for the work plan and risk assessment and completion of the feasibility study during fiscal year 2007, which could increase our recorded liability. If events or circumstances arise that are unforeseen to Tektronix as of the balance sheet date, actual costs could differ materially from the recorded liability.

The remaining $1.8 million included amounts primarily related to intellectual property, employment issues and regulatory matters. If events or circumstances arise that are unforeseen to Tektronix as of the balance sheet date, actual costs could differ materially from this estimate.

The U.S. Office of Export Enforcement and the Department of Justice are conducting investigations into Tektronix’ compliance with export regulations with respect to certain sales made in Asia. We are fully cooperating with the investigations. The government could pursue a variety of sanctions against Tektronix, including monetary penalties and restrictions on our exportation of certain products. Based on the status of the investigations as of the date of this report, we do not anticipate that the results of the investigations will have a material adverse effect on Tektronix’ business, results of operations, financial condition, or cash flows.

In the normal course of business, Tektronix and its subsidiaries are parties to various legal claims, actions and complaints, including matters involving patent infringement and other intellectual property claims and various other risks. It is not possible to predict with certainty whether or not Tektronix will ultimately be successful in any of these legal matters or, if not, what the impact might be. However, Tektronix’ management does not expect the results of these legal proceedings to have a material adverse effect on its results of operations, financial position or cash flows.

18.   Fair Value of Financial Instruments

For cash and cash equivalents, trade accounts receivable, accounts payable and accrued liabilities, and accrued compensation, the carrying amount approximates the fair value because of the immediate or short-term nature of those instruments. Marketable investments are recorded at their fair value based on quoted market prices.

19.   Stock Compensation Plans

Stock options

Tektronix maintains stock incentive plans for selected employees. As of May 27, 2006 there were 17.4 million shares reserved for all stock compensation, of which 11.1 million were reserved for issuance for outstanding options under stock incentive plans, 0.8 million for outstanding stock options converted in connection with the Inet acquisition, 1.3 million for the Employee Stock Purchase Plan and 4.2 million available for future grants under the 2005 and 2002 Stock Incentive Plans. Under the terms of the stock incentive plans, stock options are granted at an option price not less than the market value at the date of grant. Options granted generally vest over four years and expire ten years from grant date.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following is a summary of the stock compensation plans as of May 27, 2006:

	Equity Compensation Plan Information
	Number of Securities				Number of Securities
	to be Issued Upon		Weighted Average		Remaining Available
	Exercise of Outstanding		Exercise Price of		for Future Issuance
	Options,		Outstanding Options,		(Excluding Shares
	Warrants and Rights		Warrants and Rights		Listed in (a))
Plan Category	(a)		(b)		(c)
Equity Compensation Plans Approved by Shareholders
2005 Stock Incentive Plan		646,412	$	29.79		2,457,696
2002 Stock Incentive Plan		6,297,696	$	25.50		1,771,530
1998 Stock Option Plan		1,257,705	$	22.39		—
1989 Stock Incentive Plan		2,927,963	$	29.39		—
Employee Stock Purchase Plan (1)		—		n/a		1,258,007
Equity Compensation Plan Not Approved by Shareholders
2001 Stock Option Plan (2)		23,637	$	25.69		—
Total (3)		11,153,413	$	26.42		5,487,233

(1)	As of May 27, 2006 employees had contributed $3.1 million for the purchase period ending July 14, 2006. Contributions are held as cash until the last day of the purchase period when shares are purchased by the employees.
(2)	This plan was adopted by the Board of Directors for the sole purpose of making grants to new non-officer employees who join the Company as a result of acquisitions, and grants were limited to such non-officer employees. Options with a term of 10 years were granted at fair market value at the time of grant. The terms of the options are substantially the same as the options granted under plans approved by shareholders. The Board of Directors terminated this Plan, therefore there will be no further grants.
(3)	These totals do not include information relating to the Inet Stock Option Plan, which was approved by the shareholders of Inet Technologies, Inc. and assumed by the Company in a transaction approved by shareholders of Inet. No additional grants will be made under this plan. The applicable information for the Inet Stock Option Plan is as follows: (i) 780,157 securities are issuable upon exercise of outstanding options and 4,180 rights; (ii) the weighted average exercise price of outstanding options, warrants and rights is $61.37; and (iii) no securities are available for future issuance.

Additional information with respect to option activity is set forth below:

	Outstanding					Exercisable
	Number of					Number of
	Shares in			Weighted Average		Shares in		Weighted Average
	Thousands			Exercise Price		Thousands		Exercise Price
May 31, 2003		11,100		$	22.87		4,914	$	23.49
Granted		2,360			30.99
Exercised		(1,604	)		18.05
Cancelled		(641	)		24.69
May 29, 2004		11,215			25.16		5,135		25.17
Granted		4,377			36.89
Exercised		(819	)		19.49
Cancelled		(596	)		44.51
May 28, 2005		14,177			28.29		7,452		29.57
Granted		875			28.63
Exercised		(2,201	)		20.93
Cancelled		(917	)		32.36
May 27, 2006		11,934		$	29.06		7,473	$	29.55

76

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes information about options outstanding and exercisable at May 27, 2006:

		Outstanding						Exercisable
				Weighted
				Average		Weighted				Weighted
		Number of		Remaining		Average		Number of		Average
Range of Exercise		Shares in		Contractual		Exercise		Shares in		Exercise
Prices		Thousands		Life (years)		Price		Thousands		Price
$	10.97 -  $ 20.06		2,787		5.55	$	18.15		2,247	$	18.31
	20.08 -    28.57		2,034		6.16		24.33		1,822		24.26
	28.58 -    28.69		2,286		8.64		28.69		521		28.69
	28.70 -    31.55		2,577		8.19		30.99		881		31.45
$	31.64 -  $176.32		2,250		5.26		45.02		2,002		46.36
			11,934		6.76	$	29.06		7,473	$	29.55

Tektronix also has plans for certain executives, key employees, and outside directors that provide stock-based compensation other than options. Under APB No. 25, compensation cost for these plans is measured based on the market price of the stock at the date the terms of the award become fixed. Under the fair value approach of SFAS No. 123, compensation cost is measured based on the market price of the stock at the grant date. There were 810,118, 166,600 and 96,000 shares granted under these plans during fiscal years 2006, 2005, and 2004, respectively. The weighted average grant-date fair value of the shares granted under these plans during fiscal years 2006, 2005, and 2004 was $29.54, $29.04 and $31.37 per share, respectively. Compensation costs for these plans were $4.0 million, $1.7 million and $0.8 million in fiscal years 2006, 2005 and 2004, respectively.

Employee Stock Purchase Plan

During fiscal year 2001, Tektronix initiated the Employee Stock Purchase Plan (“ESPP”) and reserved an initial 1.5 million shares for issuance. On September 22, 2005, shareholders approved an additional 1.3 million shares to be reserved for issuance. The ESPP allows substantially all regular employees to purchase shares of Tektronix common stock through payroll deductions of up to 10% of their eligible compensation during a six-month period. Plan periods are from January 15 to July 14 and July 15 to January 14. The price an employee pays for the shares is 85% of the fair market value of Tektronix stock on the last day of the period.

During fiscal years 2006 and 2005, employees purchased 364,035 and 225,739 shares, respectively, at an average price of $20.98 and $25.22 per share, respectively. At May 27, 2006, 1,258,007 shares of common stock were available for future issuance under the ESPP. As calculated under SFAS No. 123, the total fair value for ESPP shares purchased was $1.8 million, $1.6 million and $2.7 million in fiscal years 2006, 2005, and 2004, respectively.

20.   Shareholders’ Equity

Repurchase of Common Stock

Repurchases of Tektronix common stock are made under authorizations totaling $950.0 million approved by the Board of Directors in fiscal years 2000 and 2005. This repurchase authority allows Tektronix, at management’s discretion, to selectively repurchase its common stock from time to time in the open market or in privately negotiated transactions depending on market price and other factors. The share repurchase authorization has no stated expiration date.

During fiscal years 2006, 2005, and 2004, Tektronix repurchased a total of 4.8 million, 7.8 million, and 2.7 million shares, respectively, at an average price per share of $25.02, $26.63, and $27.24, respectively, for $120.8 million, $208.4 million, and $72.4 million, respectively. As of May 27, 2006, Tektronix has repurchased a total of 29.8 million shares at an average price of $24.10 per share totaling $718.0 million under these authorizations. The reacquired shares were immediately retired, in accordance with Oregon corporate law. As of May 27, 2006 $232.0 million remained open under these authorizations.

77

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Shareholder Rights Agreement

On June 21, 2000, the Board of Directors adopted a new shareholder rights agreement to replace the 1990 agreement that expired by its terms in September 2000. To implement the new plan, the Board of Directors declared a dividend of one right for each outstanding common share payable to shareholders of record on September 7, 2000. As a result of Tektronix’ two-for-one stock split in October 2000, each outstanding share of common stock and each share issued thereafter, including under the plans, includes one-half of a right. Each right entitles the holder to purchase one one-thousandth of a share of Series B preferred shares at a purchase price of $375, subject to adjustment. The rights become exercisable ten days after a person or group acquires, or commences a tender offer that would result in, beneficial ownership of 15% or more of the outstanding common shares of Tektronix. Upon the occurrence of certain events described in the rights agreement, each right entitles its holder to purchase common shares of Tektronix, or in certain circumstances common shares of the acquiring company, or other property having a value of twice the right’s exercise price. However, rights that are beneficially owned by an acquiring person become null and void. The rights may be redeemed at a price of $0.001 per right at any time before a person becomes an acquiring person, and any time after a person becomes an acquiring person, Tektronix may exchange each right at a ratio of one common share, or one one-thousandth of a preferred share, per right. The rights expire on September 7, 2010.

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income (Loss) consisted of the following:

				Unrealized						Accumulated
				Holding Gains			Additional			Other
	Foreign			on Available-			Minimum			Comprehensive
	Currency			for-Sale			Pension			Income
	Translation			Securities			Liability			(Loss)
	(In thousands)
Balance as of May 29, 2004	$	35,192		$	3,488		$	(173,748	)	$	(135,068	)
Fiscal year 2005 activity		6,935			(2,961	)		(24,689	)		(20,715	)
Balance as of May 28, 2005		42,127			527			(198,437	)		(155,783	)
Fiscal year 2006 activity		(4,523	)		(268	)		186,960			182,169
Balance as of May 27, 2006	$	37,604		$	259		$	(11,477	)	$	26,386

21.   Derivative Financial Instruments and Hedging Activities

Tektronix’ activities expose it to a variety of market risks, including the effects of changes in foreign currency exchange rates. The financial exposures are monitored and managed by Tektronix as an integral part of its overall risk management program. Tektronix’ risk management program seeks to reduce the potentially adverse effects that the volatility of the markets may have on its operating results. Tektronix maintains a foreign currency risk management strategy that uses derivative instruments to protect its interests from unanticipated fluctuations in earnings and cash flows caused by volatility in currency exchange rates. By using derivative financial instruments to hedge exposures to changes in exchange rates, Tektronix exposes itself to counterparty credit risk. Tektronix manages exposure to counterparty credit risk by entering into derivative financial instruments with highly rated institutions that can be expected to fully perform under the terms of the agreement.

Tektronix accounts for derivative financial instruments under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” SFAS No. 133 establishes accounting and reporting standards requiring that every derivative instrument be recorded in the balance sheet as either an asset or liability measured at its fair value. SFAS No. 133 requires that changes in the derivative’s fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative’s gains and losses to offset related results on the hedged item in the consolidated statement of operations to the extent effective and

78

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

requires that Tektronix formally document, designate and assess the effectiveness of transactions that receive hedge accounting.

Tektronix utilizes foreign currency forward contracts to partially or fully offset the risk associated with the effects of certain non-functional currency assets and liabilities. As a result, increases or decreases to these balances due to foreign exchange rate changes are offset by gains and losses on the forward contracts. Tektronix does not use forward contracts for trading purposes. All foreign currency balances and all outstanding forward contracts are marked-to-market at the end of the period with unrealized gains and losses included in Tektronix’ consolidated statements of operations.

Net foreign exchange transaction gains and losses were not material for fiscal years 2006, 2005, and 2004. Tektronix held forward contracts with notional amounts totaling $37.9 million and $5.7 million at May 27, 2006 and May 28, 2005, respectively.

22.   Business Segments

Tektronix derives revenue principally by developing, manufacturing, and selling a broad range of test, measurement and monitoring products in two primary segments that have similar economic characteristics as well as similar customers, production processes, and distribution methods. Accordingly, Tektronix reports as a single segment.

	2006		2005		2004
	(In thousands)
Consolidated net sales to external customers by groups of similar products:
Instruments Business	$	788,773	$	812,692	$	710,549
Communications Business		251,097		221,962		210,071
Net sales	$	1,039,870	$	1,034,654	$	920,620
Consolidated net sales to external customers by region:
The Americas
United States	$	361,688	$	392,755	$	386,369
Other Americas		30,449		31,843		27,704
Europe		286,756		241,823		190,235
Pacific		196,759		198,911		167,651
Japan		164,218		169,322		148,661
Net sales	$	1,039,870	$	1,034,654	$	920,620
Operating income:
Continuing operations	$	137,117	$	156,077	$	113,530
Less:
Business realignment costs		9,847		3,100		22,765
Acquisition related costs (credits) and amortization		8,567		41,553		(51,025	)
Operating income	$	118,703	$	111,424	$	141,790
Long-lived assets:
United States	$	679,301	$	447,860	$	106,383
International		114,065		109,905		109,526
Long-term marketable investments		103,839		226,892		463,878
Deferred tax assets		—		56,560		105,886
Long-lived assets	$	897,205	$	841,217	$	785,673

79

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

23.   Other Non-Operating Income (Expense), Net

	2006			2005			2004
	(In thousands)
Gain (loss) on sale of corporate equity securities	$	(90	)	$	2,696		$	7,293
Gain (loss) on disposition of financial assets		35			(825	)		(120	)
Currency gains (losses)		(259	)		(1,047	)		659
Other expense, net		(3,063	)		(4,388	)		(1,667	)
Other non-operating income (expense), net	$	(3,377	)	$	(3,564	)	$	6,165

In fiscal year 2005, Tektronix sold 1.4 million shares of common stock of Tut Systems, Inc. Net proceeds from the sale were $4.4 million, which resulted in a realized gain of $2.7 million.

In fiscal year 2004, Tektronix sold 0.4 million shares of common stock of Merix Corporation (“Merix”) in connection with a public offering by Merix. Net proceeds from the sale were $9.5 million, which resulted in a net realized gain of $7.3 million.

Other expense, net, includes items such as rental income, miscellaneous fees, charitable contributions, and other expenses.

24.   Product Warranty Accrual

Tektronix’ product warranty accrual, included in Accounts payable and accrued liabilities on the Consolidated Balance Sheets, 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 29, 2004	$	8,959
Payments made		(9,523	)
Provision for warranty expense		7,072
Balance, May 28, 2005		6,508
Payments made		(9,777	)
Provision for warranty expense		9,067
Balance, May 27, 2006	$	5,798

80

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

25.   Income Taxes

Income tax expense consisted of:

	2006			2005			2004
	(In thousands)
Current:
Federal	$	17,790		$	15,910		$	39,338
State		1,086			3,360			1,434
Non - U.S.		13,026			6,740			5,887
		31,902			26,010			46,659
Deferred:
Federal		9,799			21,003			6,015
State		532			(817	)		1,509
Non - U.S.		(4,697	)		(863	)		(5,096	)
		5,634			19,323			2,428
Total income tax expense	$	37,536		$	45,333		$	49,087

Income tax expense differs from the amounts that would result by applying the U.S. statutory rate to earnings before taxes. A reconciliation of the difference is:

	2006			2005			2004
	(In thousands)
Income taxes based on U.S. statutory rate	$	44,950		$	43,464		$	58,559
State income taxes, net of U.S. tax		1,052			1,653			1,913
Extraterritorial income exclusion		(3,150	)		(2,504	)		(1,413	)
Changes in valuation allowance		(4,838	)		(16,664	)		(1,776	)
Reversal of prior fiscal years’ provisions		(2,005	)		—			(6,306	)
Nondeductible charge for in-progress R&D		128			11,283			—
Domestic manufacturer’s deduction		(1,193	)		—			—
Change in enacted state and local tax rate		2,355			—			—
Other — net		237			8,101			(1,890	)
Total income tax expense	$	37,536		$	45,333		$	49,087

The reconciliations above reflect permanent items that impact the provisions. Items that increase provisions include state income taxes and various nondeductible expenses, whereas items that decrease the provisions include extraterritorial income exclusion, various tax credits, reductions in valuation allowances and reversals of prior fiscal years’ provisions.

During fiscal year 2005, $11.3 million was not recognized as a tax benefit since this resulted from the write-off of IPR&D from the Inet acquisition. Income tax expense for fiscal year 2005 included $8.1 million of other provisions largely for taxes on unremitted earnings of foreign subsidiaries and tax contingencies related to research and development tax credits, net operating loss carryforwards and other non-deductible items, partially offset by a favorable adjustment from the prior fiscal year income tax return.

Tax benefits of $8.4 million, $3.9 million and $7.0 million associated with the exercise of employee stock options were allocated to common stock in fiscal years 2006, 2005, and 2004, respectively.

81

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Net deferred tax assets and liabilities are included in the following Consolidated Balance Sheet line items:

	2006			2005
	(In thousands)
Other current assets	$	45,686		$	49,537
Deferred tax assets		—			56,560
Deferred tax liabilities		(65,935	)		—
Net deferred tax assets (liabilities)	$	(20,249	)	$	106,097

The temporary differences and carryforwards that gave rise to deferred tax assets and liabilities were as follows:

	2006			2005
	(In thousands)
Deferred tax assets:
Reserves and other liabilities	$	41,585		$	43,670
Accrued pension obligation		—			44,036
Foreign tax credit carryforwards		—			6,519
Accumulated depreciation		11,211			11,557
Inventory		8,834			10,184
Net operating loss carryforwards		10,769			6,822
Other credit carryforwards		2,922			18,871
Accrued postretirement benefits		5,219			5,783
Lease obligation		2,393			4,409
Restructuring costs and separation programs		522			1,683
Unrealized gains on marketable equity securities		297			—
Gross deferred tax assets		83,752			153,534
Less: valuation allowance		(1,681	)		(6,519	)
Deferred tax assets	$	82,071		$	147,015
Deferred tax liabilities:
Accrued pension obligation	$	(71,775	)	$	—
Intangibles		(30,330	)		(39,945	)
Software development costs		(215	)		(637	)
Unrealized gains on marketable equity securities		—			(336	)
Deferred tax liabilities		(102,320	)		(40,918	)
Net deferred tax assets (liabilities)	$	(20,249	)	$	106,097

At May 27, 2006, there were no remaining unused foreign tax credit carryovers. In addition, at May 27, 2006, there were $2.9 million of other credit carryforwards comprising alternative minimum tax credits and international tax credits, which can be carried forward into the future. Also, there were $45.3 million of international net operating losses that existed at May 27, 2006, with a deferred tax value of $10.8 million. Tektronix has a $1.7 million valuation allowance in place against certain international tax credits and net operating losses.

Tektronix 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 Tektronix’ management to believe a revision of past estimates is appropriate. During fiscal year 2006, the estimate

82

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

of prior years’ exposures was reduced by $2.0 million to reflect the results of the Internal Revenue Service examination of Tektronix’ fiscal years 2001, 2002 and 2003.

Management believes that an appropriate liability has been established for estimated exposures; however, actual results may differ materially from these estimates.

26.   Benefit Plans

Pension and postretirement benefit plans

Tektronix sponsors one IRS-qualified defined benefit plan, the Tektronix Cash Balance pension plan, and one non-qualified defined benefit plan, the Retirement Equalization Plan, for eligible employees in the United States. Employees hired after July 31, 2004 do not participate in the U.S. Cash Balance pension plan. Tektronix also sponsors defined benefit pension plans in Germany, the United Kingdom, Netherlands, Japan and Taiwan. Tektronix also provides postretirement life insurance benefits to all current employees and provides certain retired and active employees with postretirement health care benefits. The pension plans have a fiscal year end measurement date.

83

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following tables provide information about changes in the benefit obligation and plan assets and the funded status of Tektronix pension and postretirement benefit plans:

	Pension			Pension			Postretirement			Postretirement
	Benefits			Benefits			Benefits			Benefits
	2006			2005			2006			2005
	(In thousands)
Change in Benefit Obligation
Beginning balance	$	728,739		$	661,646		$	16,261		$	15,198
Service cost		7,050			6,336			96			84
Interest cost		36,624			38,079			856			904
Actuarial (gain) loss		(22,110	)		65,394			(394	)		2,074
Curtailment/settlement		(3,118	)		(577	)		—			—
Benefit payments		(46,493	)		(44,454	)		(1,675	)		(1,999	)
Exchange rate changes		1,821			2,187			—			—
Participant contributions		108			128			—			—
Ending balance	$	702,621		$	728,739		$	15,144		$	16,261
Change in Plan Assets
Beginning balance	$	543,864		$	479,698		$	—		$	—
Actual return		71,387			56,379			—			—
Employer contributions		60,042			51,774			1,675			1,999
Benefit payments		(46,493	)		(44,454	)		(1,675	)		(1,999	)
Participant contributions		108			128			—			—
Curtailment/settlement		(335	)		(546	)		—			—
Exchange rate changes		1,757			885			—			—
Ending balance	$	630,330		$	543,864		$	—		$	—
Net underfunded status of the plan	$	(72,291	)	$	(184,875	)	$	(15,144	)	$	(16,261	)
Unrecognized initial net obligation		541			231			—			—
Unrecognized prior service cost		(7,337	)		(9,800	)		—			—
Unrecognized net loss		277,237			342,533			1,038			1,433
Net prepaid (liability) recognized	$	198,150		$	148,089		$	(14,106	)	$	(14,828	)
Amounts recognized on the consolidated balance sheets
Pension assets	$	239,128		$	868		$	—		$	—
Long-term liabilities		(66,147	)		(174,841	)		(12,106	)		(12,828	)
Accrued compensation		—			—			(2,000	)		(2,000	)
Accumulated other comprehensive loss		25,169			322,062			—			—
Net prepaid (liability) recognized	$	198,150		$	148,089		$	(14,106	)	$	(14,828	)

The accumulated benefit obligation for all defined benefit pension plans was $691.8 million and $718.1 million at May 27, 2006 and May 28, 2005, respectively.

84

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table provides information for certain pension plans with an accumulated benefit obligation in excess of plan assets:

	Pension		Pension
	Benefits		Benefits
	2006		2005
	(In thousands)
Projected benefit obligation	$	118,481	$	728,739
Accumulated benefit obligation		115,492		718,111
Fair value of plan assets		51,567		543,864

The primary reason for the changes between fiscal year 2006 and 2005 in the table above was due to the change in the U.S. Cash Balance pension plan from an underfunded status in fiscal year 2005 to an overfunded status in fiscal year 2006.

At May 27, 2006 and May 28, 2005, Tektronix’ accumulated benefit obligation exceeded the fair value of plan assets for certain pension plans. This resulted in a cumulative minimum pension liability pre-tax amount of $25.2 million at May 27, 2006 which was recorded net of deferred tax assets of $13.7 million in Accumulated other comprehensive income (loss) in accordance with SFAS No. 87, “Employers’ Accounting for Pensions.” In fiscal year 2006, the fair value of the U.S. Cash Balance pension plan assets exceeded the accumulated benefit obligation. As a result, the cumulative pre-tax amount decreased by $296.9 million comprised of an after-tax credit to equity in Accumulated other comprehensive income (loss) of $187.0 million, net of a $109.9 million reversal of deferred tax assets.

As for fiscal year 2005, the cumulative pre-tax balance increased by $40.4 million, which resulted in an after-tax reduction in equity in Accumulated other comprehensive income (loss) of $24.7 million, net of $15.7 million of deferred tax assets.

During fiscal year 2006, Tektronix made voluntary contributions of $48.4 million to the U.S. Cash Balance pension plan and $6.4 million to the United Kingdom pension plan. Depending on the market performance of the pension plans assets, Tektronix may make additional cash contributions to the plans in the future.

The following estimated future benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

	Pension		Postretirement
	Benefit		Benefit		Total
	(In thousands)
Fiscal Year
2007	$	41,868	$	1,296	$	43,164
2008		42,085		1,296		43,381
2009		42,568		1,305		43,873
2010		43,320		1,302		44,622
2011		44,545		1,304		45,849
2012 — 2016		239,049		6,457		245,506
Total	$	453,435	$	12,960	$	466,395

85

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The plan asset allocations at May 27, 2006 and May 28, 2005 for the U.S. Cash Balance pension plan, which comprises the majority of Tektronix’ pension plan assets, by asset category were as follows:

	2006			2005
Equity investments		74	%		72	%
Debt securities		17			19
Real estate		8			8
Other		1			1
		100	%		100	%

The investment policy for the U.S. Cash Balance pension plan currently provides for target asset allocations of 74.5% for equity investments, 25.5% for fixed income investments. Allocations may vary by 5% before reallocation of assets becomes necessary. Tektronix’ investment strategy is to maximize shareholder value within the context of providing benefit security for plan participants.

The components of net pension benefit expense and postretirement benefit expense (credit) recognized in income were:

	2006			2005			2004
	(In thousands)
Pension Benefit:
Service cost	$	7,050		$	6,336		$	7,169
Interest cost		36,624			38,079			37,824
Expected return on plan assets		(49,493	)		(49,698	)		(50,793	)
Amortization of transition asset		156			118			111
Amortization of prior service cost		(2,300	)		(2,298	)		(2,069	)
Curtailment/settlement loss		(2,221	)		(193	)		—
Amortization of unrecognized net loss		21,104			13,542			11,174
Net benefit expense	$	10,920		$	5,886		$	3,416
Postretirement Benefit:
Service cost	$	96		$	84		$	104
Interest cost		856			904			930
Amortization of prior service cost		—			—			(2,671	)
Net benefit expense (credit)	$	952		$	988		$	(1,637	)

Weighted Average Assumptions Used

Weighted average assumptions used to determine benefit obligations at May 27, 2006 and May 28, 2005 were as follows:

	Pension Benefits				Postretirement Benefits
	2006		2005		2006		2005
Discount rate		5.9%		5.3%		6.3%		5.5%
Rate of compensation increase		3.4%		3.5%		3.6%		3.8%

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Weighted average assumptions used to determine net pension benefit expense (credit) and net postretirement benefit credit for fiscal years 2006, 2005, and 2004 were as follows:

	Pension Benefits						Postretirement Benefits
	2006		2005		2004		2006		2005		2004
Discount rate		5.3%		6.1%		5.6%		6.3%		6.3%		6.0%
Rate of compensation increase		3.5%		3.6%		3.5%		3.6%		3.8%		3.8%
Expected long-term return on plan assets		8.3%		8.4%		8.1%		N/A		N/A		N/A

N/A — not applicable

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 expected long-term return on plan assets assumption is based on a comprehensive analysis conducted by Tektronix’ Treasury department with detailed input from external actuarial and asset management consultants. The analysis includes a review of the asset allocation strategy, projected future long-term performance of individual asset classes, risks (standard deviations) and correlations for each of the asset classes that comprise the plans’ asset mix. While the analysis gives appropriate consideration to recent asset performance and actual returns in the past, the assumption is primarily an estimated long-term, prospective rate.

Tektronix maintains an insured indemnity health plan for retirees. The assumed health care cost trend rates used to measure the expected cost of benefits under the indemnity and HMO plans were assumed to increase by 7.75% and 8.0%, respectively, for participants under the age of 65 and 8.0% and 8.50%, respectively, for participants age 65 and over in fiscal year 2006. Thereafter, the rates of both plans were assumed to gradually decrease until they reach 5.3% for participants under the age of 65 and 5.5% for those over 65 in 2010. A 1.0% change in these assumptions would not have a material effect on either the postretirement benefit obligation at May 27, 2006 or the benefit expense reported for fiscal year 2006.

Employee savings plan

Tektronix has an employee savings plan that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Participating U.S. employees may defer up to 50% of their compensation, subject to certain regulatory limitations. Employee contributions are invested, at the employees’ direction, among a variety of investment alternatives. Tektronix’ matching contribution is 4% of compensation and may be invested in any one of the 401(k) plan funds. In addition, Tektronix contributes Company stock to the plan for all eligible employees equal to 2% of compensation. Tektronix’ total contributions were approximately $11.9 million in fiscal year 2006, $10.6 million in fiscal year 2005, and $9.2 million in fiscal year 2004.

87

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

27.   Supplemental Cash Flow Information

	May, 27,			May, 28,			May 29,
	2006			2005			2004
	(In thousands)
Supplemental disclosure of cash flows
Income taxes paid (refunded), net	$	8,932		$	34,669		$	(18,731	)
Interest paid		254			335			3,367
Non-cash transactions from Inet acquisition
Common stock issued	$	—		$	247,543		$	—
Stock options assumed		—			9,658			—
Restricted share rights assumed		—			321			—
Unearned stock-based compensation		—			(3,403	)		—
Liabilities assumed		(2,298	)		39,033			—
Non-cash assets acquired, net of deferred income taxes		2,298			(387,101	)		—
Net cash paid for acquisition of Inet	$	—		$	(93,949	)	$	—
Other non-cash transactions:
Common stock issued for acquisition	$	2,075		$	—		$	—
Note receivable for sale of property		1,250			—			—

88

Quarterly Financial Data (Unaudited)

In the opinion of management, this unaudited quarterly financial summary includes all adjustments necessary to present fairly the results for the periods represented (in thousands, except per share amounts):

	Quarter Ended
	May 27,			Feb. 25,		Nov. 26,		Aug. 27,
	2006			2006		2005		2005
Net sales	$	289,309		$	262,105	$	253,396	$	235,060
Gross profit		174,158			159,102		152,225		135,957
Operating income(a)		37,851			33,535		29,451		17,866
Earnings before taxes		42,466			35,887		30,200		19,875
Net earnings from continuing operations		31,908			24,938		19,878		14,168
Gain (loss) from discontinued operations		(47	)		1,575		17		(82	)
Net earnings	$	31,861		$	26,513	$	19,895	$	14,086
Earnings per share:
Continuing operations — basic	$	0.38		$	0.30	$	0.24	$	0.17
Continuing operations — diluted	$	0.37		$	0.30	$	0.24	$	0.17
Discontinued operations — basic and diluted	$	—		$	0.02	$	—	$	—
Net earnings — basic	$	0.38		$	0.32	$	0.24	$	0.17
Net earnings — diluted	$	0.37		$	0.32	$	0.24	$	0.17
Average shares outstanding:
Basic		83,681			82,174		82,833		84,603
Diluted		85,365			83,319		83,584		85,297
Common stock prices:
High	$	36.70		$	31.41	$	26.63	$	25.29
Low		30.26			25.36		22.73		22.56

	Quarter Ended
	May 28,			Feb. 26,		Nov. 27,			Aug. 28,
	2005			2005		2004			2004
Net sales	$	261,029		$	256,332	$	266,828		$	250,465
Gross profit		156,548			153,386		160,323			148,519
Operating income(a)		28,072			27,530		6,883			48,939
Earnings before taxes		30,068			32,637		9,385			52,094
Net earnings (loss) from continuing operations		21,573			23,391		(2,579	)		36,466
Gain (loss) from discontinued operations		(372	)		3,430		(255	)		(58	)
Net earnings (loss)	$	21,201		$	26,821	$	(2,834	)	$	36,408
Earnings (loss) per share:
Continuing operations — basic	$	0.25		$	0.26	$	(0.03	)	$	0.44
Continuing operations — diluted	$	0.25		$	0.26	$	(0.03	)	$	0.43
Discontinued operations — basic and diluted	$	—		$	0.04	$	—		$	—
Net earnings (loss) — basic	$	0.24		$	0.30	$	(0.03	)	$	0.43
Net earnings (loss) — diluted	$	0.24		$	0.30	$	(0.03	)	$	0.43
Average shares outstanding:
Basic		87,103			89,307		87,020			83,782
Diluted		87,840			90,690		87,020			85,211
Common stock prices:
High	$	29.10		$	31.95	$	33.99		$	34.94
Low		21.17			28.00		28.35			26.49

Tektronix common stock is traded on the New York Stock Exchange. There were 3,634 shareholders of record at July 17, 2006. The market prices quoted above are the composite daily high and low prices reported by the New York Stock Exchange rounded to full cents per share.

89

Notes to Quarterly Financial Data (Unaudited):

Financial data for fiscal year 2006 and 2005 included twelve months and eight months of the results of operations, respectively, from the Inet acquisition.

(a) Tektronix incurred business realignment costs of $2.5 million, $1.9 million, $3.2 million and $2.3 million during the first, second, third and fourth quarters of fiscal year 2006, respectively. Tektronix incurred acquisition related costs (credits) and amortization of $3.4 million, $2.1 million, $1.4 million and $1.6 million during the first, second, third and fourth quarters of fiscal year 2006, respectively. Tektronix incurred business realignment costs of $2.0 million, $0.3 million, $0.4 million and $0.4 million during the first, second, third and fourth quarters of fiscal year 2005, respectively. Tektronix incurred acquisition related costs (credits) and amortization of $0.8 million, $34.9 million, $2.6 million and $3.2 million during the first, second, third and fourth quarters of fiscal year 2005, respectively.

Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A.   Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management has evaluated, under the supervision and with the participation of, the chief executive officer and chief financial officer, the effectiveness of our 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 (the “Exchange Act”). Based on that evaluation, the chief executive officer and chief financial officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective in ensuring that information required to be disclosed is (1) recorded, processed, summarized and reported in a timely manner, and (2) accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of May 27, 2006 based on the guidelines established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on the results of our evaluation, our management concluded that our internal control over financial reporting was effective as of May 27, 2006. We reviewed the results of management’s assessment with our Audit Committee.

Management’s assessment of the effectiveness of our internal control over financial reporting as of May 27, 2006 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report. The report of Deloitte & Touche LLP is included below.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Exchange Act Rule 13a-15 that was conducted during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Chief Executive Officer and Chief Financial Officer Certifications

The certifications of Tektronix’ chief executive officer and chief financial officer required under Section 302 of the Sarbanes-Oxley Act have been filed as Exhibits 31.1 and 31.2 to this report. Additionally, in October 2005, Tektronix’ chief executive officer filed with the New York Stock Exchange (“NYSE”) the annual certification required to be furnished to the NYSE pursuant to Section 303A.12 of the NYSE Listed Company Manual. The certification confirmed that Tektronix’ chief executive officer was not aware of any violation by Tektronix of the NYSE’s corporate governance listing standards.

90

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Tektronix, Inc.

Beaverton, Oregon

We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control over Financial Reporting, that Tektronix, Inc. and subsidiaries (the “Company”) maintained effective internal control over financial reporting as of May 27, 2006, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that the Company maintained effective internal control over financial reporting as of May 27, 2006, is fairly stated, in all material respects, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of May 27, 2006, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the fiscal year ended May 27, 2006 of the Company and our report dated August 2, 2006 expressed an unqualified opinion on those financial statements and financial statement schedule.

/s/  Deloitte & Touche llp

Portland, Oregon

August 2, 2006

91

Item 9B.  Other Information.

None.

PART III

Item 10.   Directors and Executive Officers of the Registrant.

The information required by this item regarding directors is included under the “Director Nominees,” “Report of the Audit Committee,” and “Board of Directors Meetings, Committees and Compensation” sections of Tektronix’ Proxy Statement dated August 17, 2006.

The information required by this item regarding executive officers is contained under “Executive Officers of Tektronix” in Item 1 of Part I of this report.

The information required by Item 405 of Regulation S-K is included under “Section 16(a) Beneficial Ownership Reporting Compliance” of Tektronix’ Proxy Statement dated August 17, 2006.

The information required by Item 406 of Regulation S-K is included under “Corporate Governance Guidelines and Policies” of Tektronix’ Proxy Statement dated August 17, 2006 and under “The Company” in Item 1 of Part I of this report.

Item 11.   Executive Compensation.

The information required by this item is included under “Director Compensation,” “Executive Compensation,” “Organization and Compensation Committee Report on Executive Compensation” and “Performance Graph” of Tektronix’ Proxy Statement dated August 17, 2006.

Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this item is included under “Security Ownership of Certain Beneficial Owners” and “Security Ownership of Management” of Tektronix’ Proxy Statement dated August 17, 2006.

Item 13.   Certain Relationships and Related Transactions.

None.

Item 14.   Principal Accounting Fees and Services.

The information appearing in the 2006 Proxy Statement under the caption “Fees Paid to Deloitte & Touche LLP” is incorporated herein by reference.

92

PART IV

Item 15.   Exhibits and Financial Statement Schedules.

(a) The following documents are filed as part of the Annual Report on Form 10-K:

(1) Financial Statements.

The following Consolidated Financial Statements of Tektronix, Inc. are included in Item 8 Financial Statements and Supplementary Data of this Annual Report on Form 10-K:

	Page
Report of Independent Registered Public Accounting Firm	47
Consolidated Statements of Operations	48
Consolidated Balance Sheets	49
Consolidated Statements of Cash Flows	50
Consolidated Statements of Shareholders’ Equity	51
Notes to Consolidated Financial Statements	52 through 88

(2) Financial Statement Schedules.

The following financial statement schedule is filed as part of this Report on Form 10-K and should be read in conjunction with the financial statements:

Schedule II — Valuation and Qualifying Accounts Page 96

All other schedules are omitted because they are not required or the required information is included in the financial statements or notes thereto.

Separate financial statements for the registrant have been omitted because the registrant is primarily an operating company and the subsidiaries included in the consolidated financial statements are substantially totally held. All subsidiaries of the registrant are included in the consolidated financial statements.

(3) Exhibits:

(3)	(i)	Restated Articles of Incorporation of the Company, as amended. Incorporated by reference to Exhibit 3(i) of Form 10-K filed August 12, 2004, SEC File No. 1-04837.
	(ii)	Bylaws of the Company, as amended. Incorporated by reference to Exhibit 3(ii) of Form 8-K filed May 9, 2005, SEC File No. 1-04837.
(4)	(i)	Pursuant to Item 601(b)(4)(iii) of Regulation S-K, the registrant agrees to furnish to the Commission upon request copies of agreements relating to other indebtedness.
	(ii)	Rights Agreement dated as of June 21, 2000, between Tektronix, Inc. and ChaseMellon Shareholder Services, L.L.C. Incorporated by reference to Exhibit (4) of Form 8-K filed June 28, 2000, SEC File No. 1-04837.
(10)	†(i)	Stock Incentive Plan, as amended. Incorporated by reference to Exhibit 10(ii) of Form 10-Q filed April 12, 1993, SEC File No. 1-04837.
	†(ii)	Restated Annual Performance Incentive Plan, as amended. Incorporated by reference to Exhibit 10(iii) of Form 10-Q filed October 14, 2003, SEC File No. 1-04837.
	†(ii)(A)	Annual Performance Incentive Plan — Additional Information.
	†(iii)	Change of Control Agreements. Form of agreement is incorporated by reference to Exhibit 10(viii) of Form 10-K dated August 18, 1993, SEC File No. 1-4837. Current list of covered executive officers is incorporated by reference to Exhibit 10.1 of Form 10-Q filed January 4, 2006. SEC File No. 1-04837.
	†(iv)	Retirement Equalization Plan, Restatement. Incorporated by reference to Exhibit 10(v) of Form 10-K filed August 22, 1996, SEC File No. 1-04837.
	†(v)	Indemnity Agreement entered into between the Company and certain named officers and directors. Incorporated by reference to Exhibit 10(ix) of Form 10-K filed August 20, 1993, SEC File No. 1-04837.

93

	†(vi)	Executive Severance Agreement dated May 17, 2001 entered into between the Company and its Chief Executive Officer, Richard H. Wills. Incorporated by reference to Exhibit 10(vii) of Form 10-K filed August 2, 2001, SEC File No. 1-04837.
	†(vii)	Form of Executive Severance Agreement entered into between the Company and each of its executive officers (other than the Chief Executive Officer). Incorporated by reference to Exhibit 10(vii) of Form 10-K filed August 12, 2004, SEC File No. 1-04837.
	†(viii)	Tektronix, Inc. 2001 Non-Employee Directors Compensation Plan, 2005 Restatement, as amended March 15, 2006. Incorporated by reference to Exhibit 10.1 of Form 8-K filed March 20, 2006, SEC File No. 1-04837.
	†(ix)	1998 Stock Option Plan, as amended. Incorporated by reference to Exhibit 10(i) of Form 10-Q filed October 8, 1999, SEC File No. 1-04837.
	†(x)	Tektronix, Inc. Deferred Compensation Plan, 2005 Restatement, effective January 1, 2005.
	†(xi)	Tektronix, Inc. Stock Deferral Plan, 2005 Restatement, effective January 1, 2005.
	†(xii)	Individual Cash Incentive Arrangements. Incorporated by reference to Exhibit 10(xii) of Form 10-K filed August 5, 2005, SEC File No. 1-04837.
	†(xiii)	2001 Stock Option Plan. Incorporated by reference to Exhibit 10(xiv) of Form 10-K filed August 14, 2003, SEC File No. 1-04837.
	†(xiv)	2002 Stock Incentive Plan, as amended. Incorporated by reference to Exhibit 10(xiv) of Form 10-K filed August 5, 2005, SEC File No. 1-04827.
	†(xv)	Agreement and plan of merger dated as of June 29, 2004, among Tektronix, Inc., Inet Technologies, Inc., Impala Merger Corp. and Impala Acquisition Co. LLC. Incorporated by reference to Exhibit (2) of Form 8-K filed June 30, 2004, SEC File No. 1-04837.
	†(xvi)	Form of Non-Statutory Stock Option Agreement for Executive Officers under the Tektronix 2005 Stock Incentive Plan. Incorporated by reference to Exhibit 10.2 of Form 8-K filed January 23, 2006, SEC File No. 1-04837.
	†(xvii)	Form of Restricted Stock Agreement for Executive Officers under the Tektronix 2005 Stock Incentive Plan. Incorporated by reference to Exhibit 10.1 of Form 8-K filed January 23, 2006, SEC File No. 1-04837.
	†(xviii)	2005 Stock Incentive Plan. Incorporated by reference to appendix B to the Company’s Proxy Statement dated August 18, 2005 for the 2005 Annual Meeting of Shareholders.
(14)	(i)	Code of Ethics for Financial Managers. Incorporated by reference to Exhibit 14(i) of Form 10-K filed August 12, 2004, SEC File No. 1-04837.
	(ii)	Business Practices Guidelines, 2007 Restatement, effective as of May 28, 2006.
(21)		Subsidiaries of the registrant.
(23)		Consent of Independent Registered Public Accounting Firm.
(24)		Powers of Attorney.
(31.1)		302 Certification, Chief Executive Officer.
(31.2)		302 Certification, Chief Financial Officer.
(32.1)		906 Certification, Chief Executive Officer.
(32.2)		906 Certification, Chief Financial Officer.

† Compensatory Plan or Arrangement

94

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

TEKTRONIX, INC.

By  /s/ COLIN L. SLADE

Colin L. Slade, Senior Vice President and

Chief Financial Officer

Dated: August 2, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature		Capacity	Date
/s/ RICHARD H. WILLS* Richard H. Wills		Chairman of the Board, President, and Chief Executive Officer	August 2, 2006
/s/  COLIN L. SLADE Colin L. Slade		Senior Vice President and Chief Financial Officer, Principal Financial and Accounting Officer	August 2, 2006
/s/  PAULINE LO ALKER* Pauline Lo Alker		Director	August 2, 2006
/s/  A. GARY AMES* A. Gary Ames		Director	August 2, 2006
/s/  GERRY B. CAMERON* Gerry B. Cameron		Director	August 2, 2006
/s/  DAVID N. CAMPBELL* David N. Campbell		Director	August 2, 2006
/s/  FRANK C. GILL* Frank C. Gill		Director	August 2, 2006
/s/  MERRILL A. MCPEAK* Merrill A. McPeak		Director	August 2, 2006
/s/  ROBIN L. WASHINGTON* Robin L. Washington		Director	August 2, 2006
/s/  CYRIL J. YANSOUNI* Cyril J. Yansouni		Director	August 2, 2006
*By:	/s/  JAMES F. DALTON      James F. Dalton     as attorney-in-fact		August 2, 2006

95

Tektronix, Inc. and Subsidiaries

Schedule II — Valuation and Qualifying Accounts

For the years ended May 29, 2004, May 28, 2005 and May 27, 2006

			Charged to			Charged
	Beginning		Costs and			to Other					Ending
Description	Balance		Expenses			Accounts		Deductions			Balance
	(Dollars in thousands)
2004:
Allowance for doubtful accounts	$	3,756	$	671		$	—	$	(1,414	)	$	3,013
Deferred tax assets valuation allowance		24,959		—			—		(1,776	)	$	23,183
2005:
Allowance for doubtful accounts	$	3,013	$	559		$	—	$	(166	)	$	3,406
Deferred tax assets valuation allowance		23,183		—			—		(16,664	)		6,519
2006:
Allowance for doubtful accounts	$	3,406	$	(126	)	$	—	$	(201	)	$	3,079
Deferred tax assets valuation allowance		6,519		—			—		(4,838	)		1,681

96

EXHIBIT INDEX

Exhibit No.		Exhibit Description
(3)	(i)	Restated Articles of Incorporation of the Company, as amended. Incorporated by reference to Exhibit 3(i) of Form 10-K filed August 12, 2004, SEC File No. 1-04837.
	(ii)	Bylaws of the Company, as amended. Incorporated by reference to Exhibit 3(ii) of Form 8-K filed May 9, 2005, SEC File No. 1-04837.
(4)	(i)	Pursuant to Item 601(b)(4)(iii) of Regulation S-K, the registrant agrees to furnish to the Commission upon request copies of agreements relating to other indebtedness.
	(ii)	Rights Agreement dated as of June 21, 2000, between Tektronix, Inc. and ChaseMellon Shareholder Services, L.L.C. Incorporated by reference to Exhibit (4) of Form 8-K filed June 28, 2000, SEC File No. 1-04837.
(10)	+(i)	Stock Incentive Plan, as amended. Incorporated by reference to Exhibit 10(ii) of Form 10-Q filed April 12, 1993, SEC File No. 1-04837.
	+(ii)	Restated Annual Performance Incentive Plan, as amended. Incorporated by reference to Exhibit 10(iii) of Form 10-Q filed October 14, 2003, SEC File No. 1-04837.
	+(ii)(A)	Annual Performance Incentive Plan — Additional Information.
	+(iii)	Change of Control Agreements. Form of agreement is incorporated by reference to Exhibit 10(viii) of Form 10-K dated August 18, 1993, SEC File No. 1-4837. Current list of covered executive officers is incorporated by reference to Exhibit 10.1 of Form 10-Q filed January 4, 2006. SEC File No. 1-04837.
	+(iv)	Retirement Equalization Plan, Restatement. Incorporated by reference to Exhibit 10(v) of Form 10-K filed August 22, 1996, SEC File No. 1-04837.
	+(v)	Indemnity Agreement entered into between the Company and certain named officers and directors. Incorporated by reference to Exhibit 10(ix) of Form 10-K filed August 20, 1993, SEC File No. 1-04837.
	+(vi)	Executive Severance Agreement dated May 17, 2001 entered into between the Company and its Chief Executive Officer, Richard H. Wills. Incorporated by reference to Exhibit 10(vii) of Form 10-K filed August 2, 2001, SEC File No. 1-04837.
	+(vii)	Form of Executive Severance Agreement entered into between the Company and each of its executive officers (other than the Chief Executive Officer). Incorporated by reference to Exhibit 10(vii) of Form 10-K filed August 12, 2004, SEC File No. 1-04837.
	+(viii)	Tektronix, Inc. 2001 Non-Employee Directors Compensation Plan, 2005 Restatement, as amended March 15, 2006. Incorporated by reference to Exhibit 10.1 of Form 8-K filed March 20, 2006, SEC File No. 1-04837.
	+(ix)	1998 Stock Option Plan, as amended. Incorporated by reference to Exhibit 10(i) of Form 10-Q filed October 8, 1999, SEC File No. 1-04837.
	+(x)	Tektronix, Inc. Deferred Compensation Plan, 2005 Restatement, effective January 1, 2005.
	+(xi)	Tektronix, Inc. Stock Deferral Plan, 2005 Restatement, effective January 1, 2005.
	+(xii)	Individual Cash Incentive Arrangements. Incorporated by reference to Exhibit 10(xii) of Form 10-K filed August 5, 2005, SEC File No. 1-04837.
	+(xiii)	2001 Stock Option Plan. Incorporated by reference to Exhibit 10(xiv) of Form 10-K filed August 14, 2003, SEC File No. 1-04837.
	+(xiv)	2002 Stock Incentive Plan, as amended. Incorporated by reference to Exhibit 10(xiv) of Form 10-K filed August 5, 2005, SEC File No. 1-04827.
	+(xv)	Agreement and plan of merger dated as of June 29, 2004, among Tektronix, Inc., Inet Technologies, Inc., Impala Merger Corp. and Impala Acquisition Co. LLC. Incorporated by reference to Exhibit (2) of Form 8-K filed June 30, 2004, SEC File No. 1-04837.
	+(xvi)	Form of Non-Statutory Stock Option Agreement for Executive Officers under the Tektronix 2005 Stock Incentive Plan. Incorporated by reference to Exhibit 10.2 of Form 8-K filed January 23, 2006, SEC File No. 1-04837.
	+(xvii)	Form of Restricted Stock Agreement for Executive Officers under the Tektronix 2005 Stock Incentive Plan. Incorporated by reference to Exhibit 10.1 of Form 8-K filed January 23, 2006, SEC File No. 1-04837.

Exhibit No.		Exhibit Description
	+(xviii)	2005 Stock Incentive Plan. Incorporated by reference to appendix B to the Company’s Proxy Statement dated August 18, 2005 for the 2005 Annual Meeting of Shareholders.
(14)	(i)	Code of Ethics for Financial Managers. Incorporated by reference to Exhibit 14(i) of Form 10-K filed August 12, 2004, SEC File No. 1-04837.
	(ii)	Business Practices Guidelines, 2007 Restatement, effective as of May 28, 2006.
(21)		Subsidiaries of the registrant.
(23)		Consent of Independent Registered Public Accounting Firm.
(24)		Powers of Attorney.
(31.1)		302 Certification, Chief Executive Officer.
(31.2)		302 Certification, Chief Financial Officer.
(32.1)		906 Certification, Chief Executive Officer.
(32.2)		906 Certification, Chief Financial Officer.

+ Compensatory Plan or Arrangement

EX-10.(II)(A)

                                                             Exhibit (10)(ii)(A)

Annual Performance Incentive Plan - Additional Information

The Organization and Compensation Committee of the Board of Directors of the
Company (the "Committee") establishes annual Company performance objectives
under the Company's Restated Annual Incentive Performance Plan, as amended (the
APIP), the Company's annual cash incentive compensation plan for executive
officers, and the Stock Incentive Plan. The Committee sets a threshold and a
target level for each measure of Company performance, which will determine the
cash amount payable under the APIP to an executive officer. If Company
performance on a measure is below the threshold level, no incentive payment will
be made for that measure. The Committee assigns each executive officer a
percentage of base pay (targeted amount) used to calculate benefits under the
APIP.

The Company's performance objectives under the APIP for the fiscal year ending
May 26, 2006 (FY 2007) are specified levels of net sales and operating income
before income taxes (excluding nonrecurring items at the discretion of the
Committee). Fifty percent of the participant's award is based on net sales and
fifty percent of the award is based on operating income before income taxes. The
target amounts for FY2007 are 100% of base pay for the chief executive officer
and ranged from 50% to 65% of base pay for the other executive officers. Under
the APIP for FY 2007, an executive officer can receive from 0% to 200% of the
applicable targeted amount, depending on the Company's actual net sales and
operating income before income taxes compared to the target levels.

EX-10.(X)

                                                                   EXHIBIT 10(x)

                                 TEKTRONIX, INC.

                           DEFERRED COMPENSATION PLAN

                                2005 RESTATEMENT

                                 JANUARY 1, 2005

TEKTRONIX, INC.
14200 SW KARL BRAUN DRIVE
BEAVERTON, OREGON 97077                                                  COMPANY

                             (STOEL RIVES LLP LOGO)

                                ATTORNEYS AT LAW

                            STANDARD INSURANCE CENTER
                         900 SW FIFTH AVENUE, SUITE 2600
                           PORTLAND, OREGON 97204-1268
                     Phone (503) 224-3380 Fax (503) 220-2480
                               TDD (503) 221-1045
                             Internet: www.stoel.com



                                TABLE OF CONTENTS



                                                                            PAGE
                                                                            ----
                                                                         
1.  Effective Dates and Transition Provisions............................     2

2.  Purposes; Administration; Affiliates; Plan Year......................     3

3.  Eligibility..........................................................     3

4.  Compensation Deferral................................................     4

5.  Deferred Compensation Accounts; Vesting..............................     6

6.  Irrevocable Trust....................................................    10

7.  Time and Manner of Payment...........................................    10

8.  Withdrawal Payments..................................................    13

9.  Death................................................................    15

10. Termination; Amendment...............................................    16

11. Claims Procedures....................................................    18

12. General Provisions...................................................    21

13. Effective Date.......................................................    22

APPENDIX A...............................................................    23



                                        i



                                 INDEX OF TERMS



TERM                      SECTION                                           PAGE
- ----                      -------                                           ----
                                                                      
10-Year Treasury Rate   Appendix A                                            23

Account                 5.1                                                    6
Affiliate               2.4                                                    3
APIP                    Preamble                                               1

Board Members           Preamble                                               3
Bonus                   4.1.4                                                  5

Cash Balance Plan       2.2                                                    3
Change in Control       10.3                                                  18
Committee               2.3                                                    3
Commission              4.1.4                                                  5
Company                 Preamble                                               1

DCP                     Preamble                                            1, 2
Director Fees           4.1.4                                                  5

EPS                     Preamble                                            1, 2
Earnings Credit         5.3                                                    9
Employer                2.4                                                    3

401(k) Plan             2.2                                                    3
FICA                    5.5                                                    9

GVG Plan                Preamble                                            1, 2

401(k) Make-Up          5.2.2                                                  7

Participant             3.7                                                    4
Pension Make-Up         5.2.3                                                  7
Pension Supplement      5.2.4                                                  8
Plan Year               2                                                      3
Prime Rate              Appendix A                                            23

REP                     Preamble                                               1

Salary                  4.1.4                                                  5
SERP                    Preamble                                            1, 2
Stock Deferral Plan     Preamble                                               1



                                       ii



                                                                      
Trust                   6.3                                                   10

Vesting                 5.4                                                    9




                                       iii


                                 TEKTRONIX, INC.

                           DEFERRED COMPENSATION PLAN

                                2005 RESTATEMENT

                                 JANUARY 1, 2005

TEKTRONIX, INC.
14200 SW KARL BRAUN DRIVE
BEAVERTON, OREGON 97077                                                  COMPANY

          As of December 31, 2004, the Company maintained the following unfunded
nonqualified deferred compensation plans for select groups of management or
highly compensated employees:

          Plan accounts maintained for former employees under an inactive plan,
          pending payment ("EPS")

          The Grass Valley Group, Inc. GVG Executive Incentive Compensation Plan
          ("GVG Plan")

          Tektronix, Inc. Supplemental Executive Retirement Plan ("SERP")

          Tektronix, Inc. Retirement Equalization Plan, relating to supplements
          to benefits under the Tektronix Cash Balance Plan ("REP")

          Tektronix Deferred Compensation Plan, relating to certain incentive
          compensation ("APIP")

          Tektronix, Inc. Deferred Compensation Plan, also known as the
          Executive Deferred Compensation Plan, relating to deferral of
          compensation generally and covering both management employees and
          Board Members ("DCP")

          Tektronix, Inc. Stock Deferral Plan, relating to deferral of director
          and employee compensation payable in Tektronix, Inc. common stock
          ("Stock Deferral Plan")

          The Company adopted an interim 2005 Restatement to restate the DCP, as
last amended on September 8, 2003, primarily to change the Deferral Period for
members of the Board of Directors of the Company ("Board Members") from a fiscal
year to a calendar year. This Restatement includes and supersedes the provisions
of the interim 2005 Restatement. The provisions of the interim 2005 Restatement
shall have no separate effect on operation.

          The EPS, the GVG Plan, the SERP, the REP and the APIP are frozen
effective as of various dates; no new deferred compensation credit accrues under
the plans and accounts are maintained solely for the purpose of providing for
earnings credit and distributions in accordance with applicable distribution
terms and elections. The Company also desires to consolidate the EPS, the GVG
Plan, the SERP, the REP and the APIP into the DCP, which shall be the surviving



plan, for administrative efficiency, and to amend the EPS, the GVG Plan, the
SERP, the REP, the APIP and DCP to comply with section 409A of the Internal
Revenue Code ("Code"), to coordinate payment and investment credit features and
to make other changes as provided below. After the consolidation, Tektronix will
maintain the DCP and the Stock Deferral Plan. The Stock Deferral Plan will be
amended separately and maintained under a separate plan document.

          The Company intends to preserve the terms of the DCP substantially in
effect as of December 31, 2004 with respect to the vested DCP Account balances
as of December 31, 2004 to avoid the requirements of section 409A of the Code
with respect to such balances. The preservation does not extend to the benefits
or Account balances from before 2005 under the EPS, the GVG Plan, the SERP, the
REP and APIP even though the GVG Plan, the SERP, the REP and APIP will merge
into the DCP. The Committee shall keep separate subaccounts for the former EPS,
GVG Plan, SERP, REP and APIP balances and amounts that deferred or become vested
under the DCP after December 31, 2004 to assure preservation of the pre-2005 DCP
benefits as if the pre-2005 DCP vested balances were a separate plan. Amounts
that are deferred or that become vested under the DCP after December 31, 2004
are subject to section 409A of the Code.

          The DCP (the "Plan") is amended and restated as follows:

1.   EFFECTIVE DATES AND TRANSITION PROVISIONS

     1.1 This 2005 Restatement amends the Plan as most recently amended on
September 8, 2003 and amends and supersedes an earlier 2005 Restatement and is
generally effective January 1, 2005 except as provided below. The terms of this
2005 Restatement amend and supersede all of the terms of the EPS, the GVG Plan,
the SERP, the REP and the APIP, as applicable, including the time and form of
benefit payments.

     1.2 The EPS, the GVG Plan, the SERP, the REP and the APIP are merged into
the Plan and the amendments by this Restatement of the EPS, the GVG Plan, the
SERP, the REP and the APIP are subject to the special effective dates provided
in Appendix A. The various special elections concerning time and form of payment
of the EPS, the GVG Plan, the SERP, the REP and the APIP subaccount balances
shall not apply to DCP balances described in 7.10 and 8.1.2.

     1.3 The Deferral Period (as defined in the Plan as in effect before January
1, 2005) is changed as follows:

          1.3.1 The Deferral Period for Board Members that ends August 31, 2005
     shall remain effective and shall apply to Director Fees (as defined in the
     Plan as in effect before January 1, 2005) for services through September
     22, 2005. No deferral of director fees will be allowed for services
     performed from September 23, 2005 to December 31, 2005.

          1.3.2 Effective January 1, 2006, the applicable period for deferrals
     by Board Members under 4.1 shall be the calendar year. Deferral elections
     of Board Members for director fees for services in 2006 must be submitted
     to the Committee in accordance with Committee procedures by December 31,
     2005.


                                       2



2.   PURPOSES; ADMINISTRATION; AFFILIATES; PLAN YEAR

     2.1 This Plan is maintained to provide for payment of deferred compensation
formerly provided under separate arrangements maintained under separate
documents, as modified to comply with section 409A of the Code, and to allow
more simple and efficient administration. The Plan is designed to provide
unfunded deferred compensation for a select group of highly compensated or
management employees and to qualify as such a plan under section 2520.104-23 and
related provisions of Department of Labor regulations under the Employee
Retirement Income Security Act of 1974, as amended.

     2.2 This Plan is maintained to permit eligible employees of the Company and
any of its participating Affiliates under 2.4 to defer a portion of what would
otherwise be current compensation. The Plan also provides deferred compensation
credits for amounts by which employer contributions for eligible employees under
the Tektronix 401(k) Plan ("401(k) Plan") and accruals under the Tektronix Cash
Balance Plan ("Cash Balance Plan") are reduced because taxable compensation of
the participant for a Plan Year is reduced by elective deferrals under the Plan.
The Plan also provides deferred compensation credits to certain employees to
supplement benefits under the Cash Balance Plan.

     2.3 The Plan shall be administered by an Administrative Committee
("Committee") appointed by the chief executive officer of the Company, or the
officer's delegate. The Committee shall interpret the Plan and make
determinations about participation and benefits. Any decision by the Committee
within its authority shall be final and binding on all parties. The Committee
shall have absolute discretion in carrying out its responsibilities in
accordance with the provisions of this Plan and applicable law. The Committee
may delegate all or part of its authority.

     2.4 The Plan shall apply to the Company and its Affiliates. An Affiliate is
a corporation or other entity that has been designated an Affiliate for this
purpose by the Committee. The designation of an Affiliate may include special
provisions that apply only to the Affiliate, its employees and members of its
board of directors. The term "Employer" refers to the Company and all designated
Affiliates.

     2.5 The "Plan Year" shall be the calendar year.

3.   ELIGIBILITY

     3.1 Board Members are eligible for deferral of compensation as provided in
4.1.

     3.2 Employees who are United States "Senior Managers" or hold more senior
positions are eligible for deferral of compensation as provided in 4.1 and
401(k) make-up credits and pension make-up credits as provided in 5.2.2 and
5.2.3.

     3.3 Officers who are subject to section 16(b) of the Securities Exchange
Act of 1934 are eligible for pension supplement credits as provided in 5.2.4.

     3.4 The Committee may determine that any employee of an Employer shall be
eligible to participate for a Plan Year and may determine before a Plan Year or
before


                                       3



employment starts that an employee who otherwise holds an eligible position is
not eligible for the year. If an employee holds an eligible position but changes
employment status or is no longer approved by the Committee for participation
during a year, participation in compensation deferrals under 4.1 below and
participation in credits for 401(k) make-up, pension make-up and pension
supplement under 5.2.2, 5.2.3 and 5.2.4 below shall continue for the remainder
of the Plan Year. Discontinuation of eligibility and credits shall not
constitute a termination of employment and shall not trigger a payment of
benefits, nor will it discontinue earnings credits or affect the participant's
ability to select among guideline investment funds (if any) on the same basis as
other participants.

     3.5 An eligible Board Member or employee must enroll to begin or continue
participation in this Plan. Such enrollment shall constitute acceptance of any
changes associated with merging a deferred compensation balance from a prior
plan into this Plan, if applicable, and other changes under this Restatement.
The enrollment shall include an election of time and manner of payment of
amounts not covered by an election described in 3.6. An election described in
3.6 may serve as enrollment.

     3.6 An eligible Board Member or employee may participate in elective
deferrals and an eligible employee may participate in related 401(k) make-up
credits and pension make-up credits by filing a deferral election as provided in
4.1.

     3.7 A person eligible to elect deferral or who has an Account under the
Plan shall be known as a participant.

4.   COMPENSATION DEFERRAL

     4.1 Eligible Board Members and eligible employees may elect for each Plan
Year (or part Plan Year under 4.2.3) to defer director fees payable in cash,
salary, bonus or commissions otherwise payable for the year or part year, and
eligible employees may elect to defer bonuses payable under the Tektronix Annual
Performance Incentive Plan, as follows:

          4.1.1 The amount of director fees payable in cash, salary, bonus or
     commissions deferred may be expressed as a whole percentage of director
     fees, salary, bonus or commissions for the year or as a specified dollar
     amount. The percentage designated shall apply automatically to any director
     fee or pay changes in the year. The maximum deferral shall be 100 percent
     of director fees payable in cash, 100 percent of commissions, and 90
     percent of salary, subject to automatic reduction to accommodate
     withholding of amounts required by law and amounts elected before the
     beginning of the year to provide benefits under any benefit plan of the
     Company or an Affiliate.

          4.1.2 A bonus deferral shall be governed by the election for the
     Company's fiscal year for which the bonus is payable. The amount deferred
     may be expressed as a whole percentage of bonus or as a specified dollar
     amount. An election of a specified dollar amount shall be treated as an
     election of the lower of 100 percent of the bonus or the specified dollar
     amount. The maximum deferral shall be 100 percent of the bonus, subject to
     automatic reduction to accommodate withholding of amounts required by law


                                       4



     and amounts elected before the beginning of the year to provide benefits
     under any benefit plan of the Company or an Affiliate.

          4.1.3 The minimum deferral amount for a participant for a Plan Year
     shall be $5,000, taking into account all deferrals by the participant of
     director fees, salary, commission and bonus for the Plan Year under the
     Plan and the Stock Deferral Plan. Bonus amounts are taken into account in
     the Plan Year in which the bonus is payable. Elections for all amounts
     under all Plans must be filed and irrevocable not later than as provided
     under 4.2 for any amount otherwise payable in the year. The Committee may
     determine at any time that a participant's elections will fail to provide
     for the minimum deferral amount and are void. The Committee shall disregard
     failure caused by a decline in the value of Stock during the year. If
     elections are void, the amounts shall not be deferred and the Committee may
     determine the timing of the compensation that fails to be deferred,
     provided that the amounts shall be paid and included in income before the
     end of the Plan Year. If the deferral fails to satisfy the minimum solely
     because of the termination of services of the Board Member or the
     termination of employment or change of position or compensation of the
     employee, the deferral elections shall not be void.

          4.1.4 The following compensation is subject to deferral:

               (a) "Bonus" means only performance based compensation under the
          Tektronix Annual Performance Incentive Plan.

               (b) "Director fees" means retainer, chair and director or special
          committee meeting fees otherwise payable in cash unless deferred under
          the Plan or the Stock Deferral Plan. Director fees do not include
          expenses that are paid or reimbursed or compensation payable only in a
          form other than cash.

               (c) "Salary" means base salary for the Plan Year and excludes
          commission, bonus, option, equity, severance, allowances, or other
          compensation, whether paid or reimbursed in cash or property.

               (d) "Commission" means commission compensation.

          4.1.5 The Committee may change the minimum and maximum deferrals and
     may decrease a participant's deferrals, but no change or decrease may be
     effective after an election becomes effective, except as provided in 4.1.1
     and 4.1.2.

     4.2 Deferral elections under the Plan shall be made in accordance with
procedures established by the Committee. The Committee will determine and notify
eligible employees how deferral elections will be calculated and charged to
reduce compensation. An election may not be revoked, even prospectively, with
respect to a Plan Year or bonus period after the applicable effective date.
Elections shall be effective as follows:

          4.2.1 An election to defer director fees, salary or commission must be
     filed with the Committee, and shall be effective and irrevocable, not later
     than the start of the Plan Year for which it applies, subject to 4.2.3.


                                       5



          4.2.2 Subject to 4.2.3, an election to defer bonus must be filed with
     the Committee, and shall be effective and irrevocable, not later than six
     months before the end of the Company's fiscal year, or any earlier date
     that is the end of the performance period for the bonus. The election shall
     be ineffective if the participant fails to perform services continuously
     during the following period:

               (a) Starting the later of (i) the first day of the 12-month
          performance period for the bonus, or (ii) the date on which the
          performance criteria are established.

               (b) Ending on the earlier of (i) the date the deferral election
          is submitted and effective, or (ii) the date that is described in the
          first sentence of 4.2.2.

          4.2.3 The following shall apply to a Board Member or employee who
     first becomes eligible after the start of a Plan Year or a fiscal year:

               (a) The individual may elect to defer compensation for services
          performed after the election by submitting the election within 30 days
          after becoming eligible.

               (b) All arrangements that are required to be aggregated under
          applicable law shall be considered. An individual shall not be treated
          as first becoming eligible under the Plan if the individual is already
          eligible under another arrangement that is aggregated with the Plan to
          determine the "plan" that covers the individual.

               (c) The amount of bonus that is treated as compensation for
          services performed after the election and subject to the deferral
          election is a fraction of the bonus. The numerator of the fraction is
          the number of days of the fiscal year after the date the election is
          submitted. The denominator of the fraction is the number of days in
          the fiscal year.

          4.2.4 An election shall be effective only for one Plan Year, or part
     Plan Year under 4.2.3. A new election shall be required for each year.
     Separate elections shall be filed for director fees deferral, salary
     deferral, commission deferral and bonus deferral. Deferral elections shall
     be submitted in a format established by the Committee.

     4.3 The participant's compensation for the year shall be reduced by the
amounts deferred, subject to 4.1.3.

5.   DEFERRED COMPENSATION ACCOUNTS; VESTING

     5.1 An Account shall be maintained for each participant on the books of the
Company or other Employer, as applicable in accordance with the adoption
statement of the Employer, until full payment has been made to the participant
or beneficiaries under Sections 7 and 8. The following shall apply, subject to
Section 6:


                                       6



          5.1.1 The Committee shall maintain such subaccounts under each Account
     as may be necessary to give effect to the participant's elections
     concerning time and form of payment, to proper earnings credit, to vesting,
     to preservation of pre-2005 terms for pre-2005 balances and to any other
     terms of the Plan that may affect the balance of the Account.

          5.1.2 Employer shall not be obligated to set aside or earmark any
     funds for the Account, which shall be purely a bookkeeping device.

          5.1.3 All amounts of deferred compensation under this plan shall
     remain at all times the unrestricted assets of the Employer, and the
     promise to pay the deferred amounts shall at all times remain unfunded as
     to the participants.

     5.2 The Accounts of participants shall be adjusted by the following:

          5.2.1 For each participant, credit for deferrals under 4.1. Amounts
     shall be credited as soon as practicable after the date the amount would
     have been paid if not deferred.

          5.2.2 For each participant, credit for 401(k) make-up as follows:

               (a) The credit for 401(k) make-up shall be the sum of the
          following differences:

                    (1) The difference between the recalculated match minus the
               actual match for the participant under the 401(k) Plan for the
               Plan Year. The difference may be zero.

                    (2) The difference between the recalculated basic
               contribution minus the actual basic contribution for the
               participant under the 401(k) Plan for the Plan Year. The
               difference may be zero.

               (b) The recalculated match and the recalculated basic
          contribution shall be calculated by adding to the participant's
          compensation for purposes of the 401(k) an amount equal to the
          participant's deferral credit under 5.2.1 for the Plan Year. However,
          the recalculation shall not count total compensation greater than the
          limit under section 401(a)(17) of the Code. Elective deferrals under
          the 401(k) Plan shall not be affected.

               (c) The "basic contribution" under the 401(k) Plan is any
          employer contribution other than matching contributions and
          participant-elected contributions.

               (d) Amounts shall be credited annually as soon as practicable
          after the amount is determined, which may be after the Plan Year.

          5.2.3 For each participant, credit for pension make-up as follows:


                                       7



               (a) The credit for pension make-up shall be the difference
          between the recalculated accrual minus the actual accrual for the
          participant under the Cash Balance Plan for the Plan Year. The
          difference may be zero.

               (b) The recalculated accrual shall be determined by adding to the
          participant's compensation for purposes of the Cash Balance Plan
          accruals an amount equal to the participant's deferral credit under
          5.2.1 for the Plan Year. However, the recalculation shall not count
          total compensation greater than the limit under section 401(a)(17) of
          the Code. Interest or other earnings credit under the Cash Balance
          Plan terms shall be included in the accruals.

               (c) Amounts shall be credited annually as soon as practicable
          after the amount is determined, which may be after the Plan Year.

          5.2.4 For each participant eligible under 3.3, credit for pension
     supplement as follows:

               (a) The credit for pension supplement shall be the difference
          between the recalculated accrual minus the adjusted accrual.

               (b) The adjusted accrual is the sum of the accrual actually
          credited for the participant under the Cash Balance Plan for the Plan
          Year plus the pension make-up under 5.2.3 for the Plan Year.

               (c) The recalculated accrual shall be the amount that would have
          been accrued for the participant under the Cash Balance Plan if both
          of the following applied:

                    (1) The amount of the participant's deferral credit under
               5.2.1 for the Plan Year had been included in the participant's
               compensation under the Cash Balance Plan.

                    (2) The limitations of sections 401(a)(17) and 415 of the
               Code did not apply.

               (d) The actual pension supplement credit shall be determined by
          the Company in its discretion, and the actual supplement may differ
          from the specified calculation. No participant shall be entitled to
          any credit until the credit is finally determined by the Company and
          entered into Account records. Amounts shall be credited annually as
          soon as practicable after the amount is determined, which may be after
          the Plan Year.

               (e) The pension supplement credit shall not affect the
          participant's taxable compensation for the Plan Year and shall not
          take into account the participant's elections under the 401(k) Plan or
          other contributions under the 401(k) Plan, except as provided under
          the terms of the Cash Balance Plan.

          5.2.5 Credit for earnings as provided in 5.3. The credit may be
     negative.


                                       8



          5.2.6 Amounts necessary to account for applicable withholding for
     Federal Insurance Contributions Act (FICA) taxes imposed on the credits
     under sections 3101, 3121(a) and 3121(v)(2) (as applicable) of the Code,
     and for tax withholding imposed by section 3401 of the Code and tax
     withholding imposed by state and local laws with respect to the FICA tax
     amount, including related pyramiding taxes, in accordance with procedures
     of the Committee and payroll practices and procedures of the Company.

     5.3 Employer shall add earnings credits to each participant's Account,
based on guideline investment earnings, until the entire Account has been paid
out, as follows:

          5.3.1 The Committee shall establish guideline investment funds with
     investment objectives fixed by the Committee, and may change the funds at
     its discretion. The guideline funds may parallel funds or other investments
     available under any insurance policy or policies purchased by the Company
     or Employer in connection with the Plan, funds available under any
     irrevocable trust established under Section 6, below, or other investment
     indexes identified from time to time by the Committee, but no Employer or
     trustee shall have any obligation to invest any amounts in any guideline
     fund.

          5.3.2 Each participant shall, under procedures established by the
     Committee, elect among available guideline funds for the participant's
     Account under this Plan. In the absence of a proper election, a guideline
     fund designated by the Committee will be used. Participant elections may be
     changed at such times and subject to such limits as may be fixed by the
     Committee.

          5.3.3 The Committee shall credit Accounts in accordance with earnings
     (which may be negative) of the elected guideline funds in accordance with
     procedures established by the Committee.

     5.4 A participant's Account shall be 100 percent vested at all times with
respect to deferral credits under 5.2.1 and related earnings credit. The 401(k)
make-up credit and related earnings credit shall be vested in the same
percentages as the participant's employer contributions under the 401(k) Plan.
The pension make-up credit and pension supplement credit and related earnings
credit shall be vested in the same percentages as the participant's benefit
under the Cash Balance Plan.

     5.5 Amounts, other than director fees, credited under 5.2 shall be treated
as wages for purposes of FICA taxes as follows:

          5.5.1 Credits for elected deferrals shall be treated as wages when the
     amounts deferred would otherwise have been paid.

          5.5.2 Credits for 401(k) make-up, pension make-up and pension
     supplement shall be treated as wages when they vest instead of when they
     are credited, if vesting is later. Related unvested earnings credits shall
     be treated as wages when they vest.

          5.5.3 Except as provided in 5.5.2, earnings credit is not treated as
     wages.


                                       9



6.   IRREVOCABLE TRUST

     6.1 Employer may, but shall not be required to, establish an irrevocable
trust to cover the liabilities to participants in certain circumstances, and may
transfer cash or other property to such a trust. Employer may use the same trust
as may be established under the Stock Deferral Plan.

     6.2 If Employer creates a trust under 6.1 above, assets transferred to the
trust shall be invested as follows:

          6.2.1 Investment of such assets shall be at the absolute discretion of
     the Committee, the trustee, or both on a shared basis, as provided in the
     trust. Neither the Committee nor the trustee shall be required to invest in
     such funds in accordance with participants' elections under 5.3. The
     Committee and the trustee may, however, choose, in their discretion, to
     invest in the elected guideline funds in accordance with the elections.

          6.2.2 The guideline investment funds under 5.3 shall be purely for
     measuring the amount of earnings credits to Accounts.

     6.3 The trust under 6.1 shall be a grantor trust and all assets held in
trust shall be assets of Employer subject to the trust terms. All assets of the
trust shall at all times be subject to the claims of creditors of Employer in
circumstances described in the trust. Participants will not receive a vested
priority interest in the trust assets ahead of such creditors. Participants'
interests in the trust will be governed by the trust terms at all times.

     6.4 The trust terms may provide that the assets of the trust may be used to
pay amounts with respect the Stock Deferral Plan and with respect to certain
Accounts or subaccounts under the Plan and not others, subject to claims of
creditors.

7.   TIME AND MANNER OF PAYMENT

     7.1 Annual Election of Payment Date. Subject to 7.3, 7.10 and 7.11, for all
deferred amounts for a year (and subsequent earnings credit on the deferred
amounts for that year), including 401(k) make-up under 5.2.2, pension make-up
under 5.2.3 and pension supplement under 5.2.4, a participant shall elect a
Payment Date that is one of the following as selected under 7.6:

          7.1.1 Upon Termination. The date the participant's service as a Board
     Member or employment has terminated for any reason, including death and
     disability. Special provisions under 9 apply to termination by death. A
     participant is disabled if the Committee determines that any of the
     following apply:

               (a) The participant is unable to engage in any substantial
          gainful activity by reason of any medically determinable physical or
          mental impairment that can be expected to result in death or can be
          expected to last for a continuous period of not less than twelve
          months.


                                       10



               (b) The participant is, by reason of any medically determinable
          physical or mental impairment that can be expected to result in death
          or can be expected to last for a continuous period of not less than
          twelve months, receiving income replacement benefits for a period of
          not less than three months under an accident and health plan covering
          employees of the Employer.

               (c) The Social Security Administration has determined the
          participant to be totally disabled.

          7.1.2 January After Termination. The January next following the date
     in 7.1.1.

          7.1.3 In-Service. The January selected by the participant that is not
     less than two years after the year subject to the deferral election.

     7.2 Default Payment Date. The Payment Date shall be the date in 7.1.1 if
either of the following apply:

          7.2.1 The participant has not properly elected a Payment Date.

          7.2.2 Payment of all amounts subject to an election under 7.1.3 has
     not been completed by the date in 7.1.1.

          7.2.3 The balance of the participant's Account is not more than
     $50,000 as of the date in 7.1.1.

     7.3 Form of Payment. Payment shall be in cash, delivered in the form of a
check or electronic funds transfer, as determined by the Committee. Subject to
7.4, 7.5 and 7.11, a participant's Account shall be paid in the following ways
as selected under 7.6:

          7.3.1 In a lump sum within 30 days after the Payment Date.

          7.3.2 In not more than 15 annual installments elected by the
     participant, starting as soon as practicable after the Payment Date, with
     subsequent installments in January each year.

     7.4 Special In-Service Payment Form. Payment under 7.1.3 shall be paid in
not more than five annual installments (including a single installment) elected
by the participant, starting as soon as practicable, but not more than 90 days,
after the Payment Date, subject to 7.2.2.

     7.5 Default Form of Payment. Payment shall be in a lump sum if any of the
following apply:

          7.5.1 A participant has not properly selected a form of payment.

          7.5.2 Termination of a Board Member's service before age 55 and five
     years of service.


                                       11



          7.5.3 Termination of employment before age 55 and five years of
     service.

          7.5.4 Payment is subject to 7.2.2 or 7.2.3.

     7.6 Elections. In the deferral election under 4.1 for the year a
participant shall select a Payment Date under 7.1 and a form of payment under
7.3 or 7.4 for all deferred amounts and related earnings credits for the Plan
Year. The Committee may, in its discretion, establish rules and procedures to
allow a participant to elect more than one Payment Date and form of payment for
amounts deferred for a year and allocate the deferred amount between or among
Payment Dates. Subject to 7.10, the selection shall be irrevocable. If different
selections apply to different amounts for the year or different years, the
Account shall be appropriately divided to track earnings credits and payments
with respect to each selection.

     7.7 Installments. If installments are selected, the payout period shall be
specified in the deferral election. The installment size shall be fixed as of a
valuation date determined by the Committee preceding the first Payment Date and
each later December 31 as though equal installments were to be paid for the
remainder of the installment period, disregarding future earnings credits.

     7.8 Termination. A participant terminates service as a Board Member or
employment when no longer serving as a Board Member of, or employed by, an
Employer. A transfer from one Employer to another or to an affiliate shall not
constitute a termination of service as a Board Member or termination of
employment.

     7.9 Withholding. The Employer may withhold from any payments any income tax
or other amounts as required by law.

     7.10 Special Rules for Changing Form of Payment. Payment of amounts that
were credited to a participant's DCP account as of December 31, 2004 (and
subsequent related earnings credits) with respect to services performed before
January 1, 2005, and that were vested as of December 31, 2004, all pursuant to
the terms of the DCP in effect on October 3, 2004, shall be governed by such
terms and applicable elections in effect before January 1, 2005 and not by the
terms of this Restatement except as provided in Section 8 below and the
following restatement of pre-2005 Plan terms:

          7.10.1 A participant may change the form of a payment that is
     scheduled to start after termination by filing a new election with the
     Committee not less than 13 calendar months prior to the date of the
     participant's termination of services as a Board Member or employment. If
     termination occurs prior to the expiration of the 13-month period, the
     election shall not be effective.

          7.10.2 Subject to 7.10.1, the new election shall be effective with
     respect to all amounts described above and shall supersede all prior
     elections with respect to such amounts.

          7.10.3 The election may change only the form of payment. The Payment
     Date may not be changed.


                                       12



     7.11 Delay of Payment to Key Employees. Payment on account of termination
may not start or be made to a participant who is a "key employee" as defined in
section 416(i) of the Code, without regard to section 416(i)(5) of the Code,
before the date which is six months after the date of termination. The Committee
may determine that a participant is a key employee in the event of doubt or to
avoid impractical efforts or expense to make an exact determination of key
employees. A participant shall have no claim, rights or remedy if the
determination is not correct. If the participant terminates service because of
death or if the participant dies within the six months, benefits shall start as
soon as practicable after death unless a later Payment Date applies.

          7.11.1 If installment payments are delayed because of this 7.11, the
     number of installments shall not change and the following shall apply:

               (a) The first installment shall be paid upon expiration of six
          months after termination.

               (b) The next installment shall be paid the January 1 after the
          first installment.

               (c) The remainder of installments shall be paid annually starting
          the following January 1.

          7.11.2 The delay under this 7.11 shall not apply to amounts described
     in 7.10 above. If the participant is entitled to payment with respect to
     amounts described in 7.10 above, the Committee shall apply payment
     provisions to the subaccount that records the amount described in 7.10
     above separately from the other amounts under the Account to the extent
     necessary to comply with this 7.11.

          7.11.3 This 7.11 shall not apply with respect to payments that are not
     on account of termination. Under 7.2.2, amounts subject to an election
     under 7.1.3 that remain unpaid at termination ("Accelerated Amounts")
     become payable at termination. If the participant is a key employee, the
     Accelerated Amounts shall be paid as though the participant had terminated
     six months after actual termination. However, Accelerated Amounts payable
     during the six months pursuant to the election under 7.1.3 shall be paid in
     accordance with the election.

     7.12 Delay of Nondeductible Payments. Employer may delay any payment to the
extent that employer reasonably anticipates that employer's deduction with
respect to such payment would be limited or eliminated by application of section
162(m) of the Code. A delayed payment will be made at the earliest date the
Employer reasonably anticipates that the deduction of the payment will not be
limited or eliminated by application of section 162(m) of the Code.

8.   WITHDRAWAL PAYMENTS

     8.1 A participant may elect to be paid amounts, and the payments shall be
charged against the participant's Account (including all subaccounts under 7.6),
as follows:


                                       13



          8.1.1 Upon approval of the Committee, up to 100 percent of the amount
     reasonably necessary to meet an unforeseeable emergency under 8.2, as
     determined by the Committee (a "Hardship Withdrawal").

          8.1.2 At the participant's option, 100 percent of the available
     Account balance in a lump sum (a "Forfeiture Withdrawal"), subject to
     forfeiture of 10 percent of the available balance. The amount paid to the
     participant and the forfeiture shall be charged to the available balance. A
     Forfeiture Withdrawal is available only with respect to amounts that were
     credited to a participant's Account under the DCP as of December 31, 2004
     (and subsequent related earnings credits) with respect to services
     performed before January 1, 2005, and that were vested as of December 31,
     2004, all pursuant to the terms of the DCP in effect on October 3, 2004.

          8.1.3 Withdrawals under 8.1.1 or 8.1.2 may be made before or after a
     participant's Payment Date.

     8.2 "Unforeseeable emergency" means a participant's severe financial
hardship to the extent that the hardship that cannot be met from other
reasonably available resources and is caused by one or more of the following:

          8.2.1 Illness or accident of the participant, the participant's
     spouse, or a dependent under section 152(a) of the Code.

          8.2.2 Loss of the participant's property due to casualty, including
     the need to rebuild a home following damage not covered by insurance.

          8.2.3 Other similar extraordinary and unforeseeable circumstances
     arising as a result of events beyond the control of the participant.

     8.3 Other resources are reasonably available if assets can be liquidated
without liquidation itself creating severe financial hardship, if insurance or
other reimbursement or compensation is available, or if deferrals under 4.1 are
stopped.

     8.4 Upon payment of a Hardship Withdrawal or Forfeiture Withdrawal,
elective deferrals under 4.1 shall cease and the participant shall not be
eligible under 4.1 until the year following the calendar year after the payment.

     8.5 Subject to 8.1.2, Withdrawals under this Plan shall be charged ratably
to all of the participant's accounts and applicable guideline investment funds
under this Plan.

     8.6 An application for payment shall be written, shall be signed by the
participant and shall include the following:

          8.6.1 For Hardship Withdrawal, a statement of the facts causing the
     financial hardship, any other facts as may be required by the Committee and
     an acknowledgement of temporary future ineligibility.


                                       14



          8.6.2 For Forfeiture Withdrawal, an acknowledgment of the forfeiture
     and temporary future ineligibility.

     8.7 Subject to 8.5, the Committee shall establish guidelines and procedures
for implementing withdrawals. The payment date shall be fixed by the Committee.
The Committee may require a minimum advance notice and may limit the amount,
time and frequency of Withdrawals.

9.   DEATH

     9.1 Subject to separate provisions under 9.5 for amounts described in 7.10,
a participant's Account shall be payable under this Section on the participant's
death regardless of the provisions of Section 7, except with respect to amounts
described in 7.10.

     9.2 On death the balance of the Account shall be fully vested and shall be
paid as follows:

          9.2.1 If the participant had selected payment by installments and had
     terminated services as a Board Member or employment before death, the
     designated beneficiary shall receive payment in installments in accordance
     with the selection.

          9.2.2 By a lump sum as soon as practicable if 9.2.1 does not apply or
     if either of the following apply:

               (a) The recipient is not a designated beneficiary.

               (b) The selection was under 7.4.

     9.3 An amount payable on death of a participant shall be paid to the
surviving beneficiaries most recently designated by the participant in writing
to the Committee in accordance with Committee procedures.

          9.3.1 The participant may designate beneficiaries or change designated
     beneficiaries without consent of any person.

          9.3.2 If the participant has no valid beneficiary designation in
     effect at death, or all beneficiaries predecease the participant, the
     amount payable shall be paid in the following order of priority:

               (a) To the participant's surviving spouse.

               (b) To the participant's surviving children in equal shares.

               (c) To the participant's estate.

     9.4 If a beneficiary is receiving installments and dies when a balance
remains, the balance shall be paid in a lump sum to the beneficiary's estate.


                                       15


     9.5 Amounts described in 7.10 shall be payable after a participant's death
in accordance with provisions applicable to such amounts prior to January 1,
2005 as follows:

          9.5.1 If a participant terminates Board Member service or employment
     before age 55 and five years of service because of death, benefits shall be
     paid in a lump sum as soon as practicable.

          9.5.2 If termination because of death occurs after age 55 and five
     years of service, benefits shall be paid in accordance with the time and
     form of benefits elected by the participant.

          9.5.3 Amounts payable because of death shall be paid to the surviving
     beneficiaries most recently designated by the participant in writing to the
     Committee in accordance with Committee procedures. The participant may
     designate beneficiaries or change designated beneficiaries without consent
     of any person. If the participant has no valid beneficiary designation in
     effect at death, or all beneficiaries predecease the participant, the
     amount payable shall be paid to the participant's estate.

          9.5.4 If a beneficiary is receiving installments and dies when a
     balance remains, the balance shall be paid in a lump sum to the
     beneficiary's estate.

10.  TERMINATION; AMENDMENT

     10.1 The Board of Directors of the Company may terminate this Plan and
provide for payment of amounts under all Accounts as follows:

          10.1.1 No payments other than payments that would be payable if the
     termination had not occurred will be made within twelve months of the
     termination of the Plan.

          10.1.2 All payments shall be made within twenty-four months of the
     termination of the Plan.

          10.1.3 Any amendments to the Plan in connection with termination shall
     not reduce amounts credited to Accounts and earnings credits shall continue
     pending full payment.

     10.2 The Board of Directors may amend the Plan at any time and from time to
time, subject to the following:

          10.2.1 If the amendment ceases deferred compensation credits, the
     following shall apply:

               (a) Deferrals under 4.1 and related 401(k) make-up credits and
          pension make-up credits shall continue until the end of the Plan Year
          unless the Company terminates the Plan.

               (b) Earnings credits shall continue until the final payment.


                                       16



          10.2.2 No amendment may reduce the amount credited to any Account as
     of the date the notice of amendment is issued to participants, except as
     provided in 10.2.7 below.

          10.2.3 After a Change in Control, the following shall apply:

               (a) No amendment may change the methodology used to calculate
          earnings credit in any way that would reduce the balance or rate of
          earnings credit on amounts to be credited to a participant's Account
          for a period prior to the Change in Control or pursuant to an election
          that is effective prior to the Change in Control. The guideline funds
          may not be changed if the replacement guideline funds are not,
          considered as a whole, comparable to the guideline funds in effect
          prior to the Change in Control.

               (b) No amendment may change the time or form of payment of
          amounts credited to Accounts prior to the Change in Control or amounts
          credited to Accounts for a year pursuant to elections effective prior
          to the Change in Control.

          10.2.4 No amendment may change the Plan in a way that would cause the
     terms or operation of the Plan to fail to comply with the requirements of
     section 409A, but the Company shall have no liability if the Plan fails to
     comply with section 409A unless the violation is deliberate and with
     knowledge of the violation.

          10.2.5 If the Plan is amended to eliminate election by participants
     among guideline investments established by the Committee, earnings credit
     shall be calculated at a rate not less than the monthly equivalent of the
     average nominal annual yield on three-month Treasury Bills.

          10.2.6 Unless otherwise restricted by express terms of the Plan,
     amendments may be effective as of any date provided in the amendment
     document, including a retroactive effective date.

          10.2.7 Notwithstanding any restriction in the Plan, the Company may
     amend the Plan from time to time to comply with section 409A of the Code or
     other legal requirements that would cause material adverse consequences to
     participants if violated. If an amendment reduces amounts that have been
     deferred, Employer shall increase the compensation of the participant to
     restore the participant, as nearly as practicable, to the position as if
     the reduced amount had not been deferred, without adjustment for earnings
     or other time value of money, provided that the restoration would not cause
     penalties under section 409A of the Code or other material penalties to
     apply.

          10.2.8 The Committee may amend the Plan to make technical,
     administrative, or editorial changes to comply with applicable law or to
     clarify the Plan provided that the amendment does not materially increase
     the cost to Employer.


                                       17



     10.3 A "Change in Control" occurs when any of the following occur (terms
below that are not defined elsewhere in the Plan shall have the same meanings as
the terms have under the Securities Exchange Act of 1934, as amended and the
rules and regulations adopted thereunder):

          10.3.1 The shareholders of the Company approve any of the following
     transactions and either the transaction is consummated or the Board of
     Directors of the Company determines that consummation is likely:

               (a) Any consolidation, merger or plan of exchange involving the
          Company ("Merger") in which the Company is not the continuing or
          surviving corporation or pursuant to which Stock would be converted
          into cash, securities or other property, other than a Merger involving
          the Company in which the holders of Stock immediately prior to the
          merger had the same proportionate ownership of Stock of the surviving
          corporation after the Merger.

               (b) Any sale, lease or exchange, or other transfer in one
          transaction or a series of related transactions of all or
          substantially all of the assets of the Company or the adoption of any
          plan or proposal for the liquidation or dissolution of the Company.

          10.3.2 A tender or exchange offer, other than one made by the Company,
     is made for Stock (or securities convertible into Stock) and such offer
     results in a proportion of those securities being purchased and the offeror
     after the consummation of the offer is the beneficial owner (as determined
     pursuant to section 13(d) of the Securities Exchange Act of 1934), directly
     or indirectly, of at least 20 percent of the outstanding stock.

          10.3.3 During any period of 12 months or less, individuals who at the
     beginning of such period constituted a majority of the Board of Directors
     of the Company ceases for any reason to constitute a majority thereof
     unless the nomination or election of such new directors was approved by a
     vote of at least two thirds of the directors then still in office who were
     directors at the beginning of the period.

11.  CLAIMS PROCEDURES

     11.1 Claims shall be submitted in writing to the Committee. The Chair of
the Committee shall respond as soon as practicable but not later than 90 days
after receipt of the claim unless the Chair gives written notice to the claimant
before the end of the 90-day period that additional time is required. The notice
shall explain the special circumstances that require additional time and the
expected date of the response. The extension shall not be more than an
additional 90 days.

     11.2 If the claim involves benefits on disability, the time for response
will be not later than 45 days after receipt of the claim, subject to extension
by as many as two additional 30-day periods if necessary due to matters beyond
the control of the Chair. If an extension is necessary, the Chair shall notify
the claimant in writing before each extension of the circumstances requiring
extension and the date by which the Chair expects to render a decision. The
notice of extension shall explain the standards on which entitlement to a
benefit is based, the unresolved issues that prevent a decision on the claim and
the additional information needed to resolve the


                                       18



issues. If the claimant needs to provide additional information, the claimant
shall be given 45 days. If an extension is necessary to obtain information from
the claimant, the extension period may be further extended by the amount of time
taken to provide the specified information.

     11.3 The claimant may have a representative to assist the claimant or to
conduct the claim and review any denial. The Chair may require that the claimant
notify the Chair in writing about authorization of a representative.

     11.4 Determinations about claims shall be based on and in accordance with
Plan documents and shall be applied consistently with respect to similarly
situated participants and beneficiaries.

     11.5 The following shall apply to review of denied claims:

               (a) If a claim is denied, the Chair shall notify the claimant in
          writing. The notice shall state the following:

                    (1) The specific reasons for the denial.

                    (2) Reference to the relevant Plan provisions.

                    (3) A description of additional material or information that
               is needed and an explanation of why the material or information
               is needed.

                    (4) A description of the Plan's review procedures and the
               claimant's right to bring a civil action under section 502(a) of
               the Employee Retirement Income Security Act of 1974 (ERISA) if
               the claim is also denied after review.

               (b) If a claim involves benefits upon disability, the claimant
          shall be notified if any internal rule, guideline, protocol or other
          similar criterion was relied upon in the decision to deny the claim
          and that the claimant may have a copy of any such rule, guideline,
          protocol or other criterion free of charge upon request.

     11.6 A claimant may request review of a denied claim by written notice to
the Committee. The written request for review must be delivered within 60 days
after the notice of denial. If the claim involves benefits upon disability, the
request must be in writing and delivered within 180 days. The Committee shall
review the matter and may grant the claimant a hearing but is not required to.
The following apply in connection with the review:

                    (1) The claimant may submit written comments, documents,
               records and other information.

                    (2) Upon request, the claimant shall be provided, without
               charge, reasonable access to, and copies of, all documents,
               records and other information relevant to the claim.


                                       19



                    (3) If the claim involves a determination of disability,
               upon the claimant's request, the claimant shall be provided with
               the identity of medical or vocational experts who advised the
               President, whether or not the advice was relied upon in deciding
               to deny the claim.

                    (4) The review shall consider all aspects of the claim and
               all comments, documents, records and other information the
               claimant submits, whether or not the claimant raised the issues
               or submitted such information when the claim was originally
               considered.

               (b) If the claim involves benefits upon disability, the following
          also apply:

                    (1) The review shall not afford deference to the initial
               consideration of the claim and shall be conducted by Committee
               members who are neither individuals who made the initial
               determination nor the subordinates of any such individual.

                    (2) If the Committee members are reviewing a matter that is
               based on a medical judgment, the members shall consult with a
               health care professional who has appropriate training and
               experience in the field involved in the medical judgment. That
               health care professional will be a person who was not consulted
               in connection with the claim denial and is not a subordinate of
               the person who was consulted.

               (c) The decision on review shall be made within 60 days after
          receipt of the request for review in most cases. If there is a hearing
          or other special reason for delay, the President shall notify the
          claimant in writing within the initial 60-day period and the time
          limit shall be 120 days. If the claim involves benefits upon
          disability, the decision shall be made within 45 days, subject to
          extension of an additional 45 days pursuant to notice in writing
          within the initial 45-day period. The notice of any extension shall
          explain the special circumstances that require additional time and the
          expected date of the decision upon review. If an extension is
          necessary to obtain information from the claimant, the extension
          period may be further extended by the amount of time taken to provide
          the information.

               (d) The Committee's decision shall be provided in writing and
          will be final and bind all parties. An adverse determination shall
          state the following:

                    (1) The specific reasons for the determination.

                    (2) Reference to relevant Plan provisions.

                    (3) A reminder that the claimant is entitled to access to
               and copies of all documents, records and information relevant to
               the claim upon request and without charge.


                                       20



                    (4) A reminder that the claimant may bring a civil action
               under section 502(a) of ERISA.

               (e) If the claim involves benefits upon disability, the following
          also apply:

                    (1) If the determination is based on a medical, scientific
               or technical judgment, the determination will include either an
               explanation of the judgment that applies Plan terms to the
               medical circumstances, or a statement that an explanation will be
               provided free of charge upon request.

                    (2) Notice of an adverse determination shall include the
               following statement:

               "You and your Plan may have other voluntary alternative dispute
               resolution options, such as mediation. One way to find out what
               may be available is to contact your local U.S. Department of
               Labor Office and your State insurance regulatory agency."

12.  GENERAL PROVISIONS

     12.1 If suit or action is instituted to enforce any rights under this Plan
after or in lieu of proceeding under applicable claims procedures, the
prevailing party may recover from the other party reasonable attorneys' fees at
trial and on any appeal.

     12.2 Any notice or directions under the Plan shall be in accordance with
procedures established by the Committee.

     12.3 The rights of a participant under the Plan are personal. Except for
the limited provisions of 9.3 and 12.5, no interest of a participant or any
beneficiary or representative of a participant may be directly or indirectly
transferred, encumbered, seized by legal process or in any other way subjected
to the claims of any creditor.

     12.4 Except as otherwise provided in the terms of Employer's participation,
if an Employer merges, consolidates, or otherwise reorganizes or if its assets
or business are acquired by another company, the following shall apply.

          12.4.1 The Plan shall continue with respect to those eligible
     employees who continue in the employ of the successor company.

          12.4.2 The transition of Employers shall not be considered a
     termination of employment for purposes of this Plan.

          12.4.3 A successor corporation may terminate this Plan as to its
     employees on the effective date of the succession by notice to affected
     employees within 30 days after the succession, subject to 10.


                                       21



     12.5 The Committee may decide that because of the mental or physical
condition of a person entitled to payments, or because of other relevant
factors, it is in the person's best interest to make payments to others for the
benefit of the person entitled to payment. In that event the Committee may in
its discretion direct that payments be made to one or more of the following:

          12.5.1 To a parent or spouse or a child of legal age.

          12.5.2 To a legal guardian.

          12.5.3 To one furnishing maintenance, support, or hospitalization.

     12.6 This Plan is not a contract of employment with any participant.
Nothing in the Plan shall create any right of any participant with respect to
continued employment, terms of employment or discipline, or continued ability to
elect deferrals or have pension supplement credits.

13.  EFFECTIVE DATE

          This Restatement shall be generally effective January 1, 2005.

                                        TEKTRONIX, INC.


                                        By: /s/ RICHARD H. WILLS
                                            ------------------------------------
                                            Richard H. Wills
                                            Board Chairman, CEO & President

                                        Executed: 6-23 2006


                                       22



                                   APPENDIX A
                                       TO
                           DEFERRED COMPENSATION PLAN

                          SPECIAL TRANSITION PROVISIONS

     The following special transition provisions and effective dates apply:

     1.1 The EPS, the GVG Plan, the SERP, the REP and the APIP shall cease to
exist as separate plans, and benefits accrued under the EPS, the GVG Plan, the
SERP, the REP and the APIP shall be maintained under the Plan in accordance with
the terms of the Plan.

          1.1.1 If a participant fails to specify a beneficiary for benefits
payable under the Plan, the beneficiary designated under the affected plan shall
continue to apply, as applicable; the Committee shall determine how to apply the
beneficiary designations to benefits under the Plan.

          1.1.2 Except as provided below, the earnings credit provisions and the
distribution provisions of the affected plans shall remain in effect in 2005.

     1.2 Subject to 1.2.4, the benefits accrued under the REP for each REP
participant shall be determined and established as a separate identifiable
balance under the participant's Account, subject to the following:

          1.2.1 If a participant is an employee of the Company or an Affiliate
as of November 1, 2005, the following shall apply:

               (A) The participant shall elect before January 1, 2006, in
          accordance with the procedures of the Committee, the time and form of
          payment of the balance in accordance with (b) and (c) below. The
          participant may elect to divide the balance into two portions,
          specified in the election, and elect the time and form of payment
          separately for each portion. If the participant fails to elect
          properly, the portion shall be paid in a lump sum as soon as
          practicable after the date described in 7.1.1 of the Plan.

               (B) The participant may elect a Payment Date from among the
          following:

                    (1) Any January on or after January 2006.

                    (2) The options under 7.1.1 and 7.1.2 of the Plan.

               (C) Subject to (d), the participant may elect a form of payment
          under 7.3 of the Plan.

               (D) If the participant elects a Payment Date described in (b)(1)
          above, the participant may elect payment in not more than five annual
          installments (including a single installment) starting as soon as
          practicable after the Payment Date. The balance subject to the
          election shall be paid in a single lump sum as


                                       23



          soon as practicable after termination if the participant terminates
          employment before the balance has otherwise been paid in full.

               (E) The Account of the participant shall be subject to 5.3 of the
          Plan.

          1.2.2 If 1.2.1 does not apply, the following shall apply:

               (A) A participant shall elect before January 1, 2006, in
          accordance with procedures of the Committee, the time and number of
          annual installments of payment for the participant's balance, and the
          following shall apply:

                    (1) The participant shall specify a starting date in any
               January after January 2005, not later than the earlier of January
               2016 or the January next following the date the participant
               attains age 65. The participant shall specify the number of
               annual installments, not more than 10 (including a single
               installment).

                    (2) If the participant fails to specify before January 1,
               2006 as provided in (1) above, the balance shall be paid in a
               lump sum in January 2006.

               (B) The provisions of 5.3 of the Plan shall not apply to the
          earnings credits to the balance. Earnings credits shall be added to
          the balance at the same rate as earnings are credited under the Cash
          Balance Plan.

               (C) No transfers to a grantor trust under 6.1 of the Plan shall
          be made with respect to the balance.

          1.2.3 The Committee shall determine the wages subject to FICA tax
withholding as a result of the determination of benefits and establishment of
balances. The amount shall be charged against the participant's balance.

          1.2.4 A participant who starts payments before January 1, 2006 under
the terms of the REP in effect as of December 31, 2004 shall continue to be paid
amounts under the Plan after December 31, 2005 in accordance with the form of
payments applicable before January 1, 2006 and shall not have an account with
respect to the REP under the Plan.

     1.3 Subject to 1.3.4, the balances under the EPS, the GVG Plan, the SERP
and the APIP shall be determined and the balance under each plan shall be
established as a separate identifiable balance under the Plan and the following
shall apply:

          1.3.1 If a participant is an employee of the Company or an Affiliate
as of November 1, 2005, the following shall apply:

               (A) The participant shall elect before January 1, 2006, in
          accordance with the procedures of the Committee, the time and form of
          payment of the balance in accordance with 1.2.1.


                                       24



               (B) The Account of the participant shall be subject to 5.3 of the
          Plan.

          1.3.2 If 1.3.1 does not apply, the following shall apply:

               (A) A participant shall elect before January 1, 2006, in
          accordance with the procedures of the Committee, the time and number
          of annual installments for payment of the participant's balance and
          the following shall apply:

                    (1) The participant shall specify a starting date in any
               January after January 2005, not later than the earlier of January
               2016 or the January next following the date the participant
               attains age 65. The participant shall specify the number of
               annual installments, not more than 10 (including a single
               installment).

                    (2) If the participant fails to specify before January 1,
               2006 as provided in (1) above, the balance shall be paid in a
               lump sum in January 2006.

               (B) The provisions of 5.3 of the Plan shall not apply to the
          earnings credit to the balance and the following shall apply:

                    (1) Earnings credits shall be added to the former EPS
               balances prior to November 30, 2005 based on the rate of interest
               determined by the Committee based on prime commercial lending
               rates (the "Prime Rate") as of January 1, 2005. Earnings credits
               from December 1, 2005 until December 31, 2005 shall be based on
               the Prime Rate as of December 1, 2005. Earnings credit for a year
               after December 31, 2005 shall be based on the Prime Rate as of
               the first business day of January of the year.

                    (2) Effective January 1, 2005, earnings credits for the
               former GVG Plan balances for each year shall be based on the
               Prime Rate in effect on the first business day of January of the
               year.

                    (3) Earnings credit for former SERP and APIP balances for
               October and November 2005 shall be based on the interest rate of
               10-year U.S. Treasury Notes (the "10-year Treasury Rate") as of
               November 30, 2005 and credited in arrears. Earnings credit for
               December 30, 2005 shall be based on the 10-year Treasury Rate as
               of November 30, 2005 and credited in advance. After December 31,
               2005, earnings credits shall be added to the former SERP and APIP
               balances for a calendar quarter based on the 10-year Treasury
               Rate as of the end of the prior quarter.

               (C) No contribution to a grantor trust under 6.1 of the Plan
          shall be made with respect to the balances.


                                       25



          1.3.3 A participant who starts payment with respect to an account,
subaccount or balance before January 1, 2006, under the terms of the EPS, the
GVG Plan, SERP or APIP in effect as of December 31, 2004 shall continue payments
in accordance with the form of benefit in effect as of the time payments
started. Amounts not subject to payments that start before January 1, 2006 shall
be subject to the election in 1.3.1(a) or 1.3.2(a), as applicable.


                                       26

EX-10.(XI)

                                                                  EXHIBIT 10(xi)

                                 TEKTRONIX, INC.

                               STOCK DEFERRAL PLAN

                                2005 RESTATEMENT

                                 JANUARY 1, 2005

TEKTRONIX, INC.
14200 SW KARL BRAUN DRIVE
BEAVERTON, OREGON 97077                                                  COMPANY

                             (STOEL RIVES LLP LOGO)

                                ATTORNEYS AT LAW

                            STANDARD INSURANCE CENTER
                         900 SW FIFTH AVENUE, SUITE 2600
                           PORTLAND, OREGON 97204-1268
                     Phone (503) 224-3380 Fax (503) 220-2480
                               TDD (503) 221-1045
                             Internet: www.stoel.com



                                TABLE OF CONTENTS



                                                                            PAGE
                                                                            ----
                                                                         
1.  Effective Dates and Transition Provisions............................     1

2.  Purposes; Administration; Affiliates; Plan Year......................     2

3.  Eligibility..........................................................     2

4.  Compensation Deferral................................................     3

5.  Deferred Compensation Accounts; Vesting..............................     5

6.  Irrevocable Trust....................................................     7

7.  Time and Manner of Payment...........................................     7

8.  Withdrawal Payments..................................................    10

9.  Death................................................................    12

10. Termination; Amendment...............................................    13

11. Claims Procedures....................................................    15

12. General Provisions...................................................    18

13. Effective Date.......................................................    19



                                        i




                                 INDEX OF TERMS



TERM                   SECTION                                              PAGE
- ----                   -------                                              ----
                                                                      
Account               5.1                                                      5
Affiliate             2.3                                                      2

Board Members         Preamble                                                 2
Bonus                 4.1.4                                                    4

Change in Control     10.3                                                    14
Committee             2.2                                                      2
Commission            4.1.4                                                    4
Company               Preamble                                                 1

Director Fees         4.1.4                                                    4

Employer              2.3                                                      2

FICA                  5.5                                                      6

Participant           3.5                                                      3
Plan Year             2                                                        2

Salary                4.1.4                                                    4
SERP                  Preamble                                              1, 2
Stock                 2.1                                                      3
Stock Deferral Plan   Preamble                                                 1

Trust                 6.3                                                      7

Vesting               5.4                                                      6



                                       ii


                                 TEKTRONIX, INC.

                               STOCK DEFERRAL PLAN

                                2005 RESTATEMENT

                                 JANUARY 1, 2005

TEKTRONIX, INC.
14200 SW KARL BRAUN DRIVE
BEAVERTON, OREGON 97077                                                  COMPANY

          The Company maintains this Plan for Members of the Board of Directors
of the Company ("Board Members") and a select group of management or highly
compensated employees.

          The company also maintains under a separate document the Tektronix,
Inc. Deferred Compensation Plan, ("Deferred Compensation Plan") relating to
deferral of compensation generally and covering both Board Members and a select
group of management or highly compensated employees.

          In 2005, the Company adopted an interim 2005 Restatement to restate
the Plan, as last amended on September 8, 2003, primarily to change the Deferral
Period for Board Members from a fiscal year to a calendar year. This Restatement
includes and supersedes the provisions of the interim 2005 Restatement. The
provisions of the interim 2005 Restatement shall have no separate effect on
operation.

          The Company desires to amend the Plan to comply with section 409A of
the Internal Revenue Code ("Code") and to make other changes as provided below.
Amounts that are deferred or that become vested under the Plan after December
31, 2004 are subject to section 409A of the Code.

          The Plan is amended and restated as follows:

1.   EFFECTIVE DATES AND TRANSITION PROVISIONS

     1.1 This 2005 Restatement amends the Plan as most recently amended on
September 8, 2003 and amends and supersedes an earlier 2005 Restatement and is
generally effective January 1, 2005 except as provided below.

     1.2 The Deferral Period (as defined in the Plan as in effect before January
1, 2005) is changed as follows:

          1.2.1 The Deferral Period for Board Members that ends August 31, 2005
     shall remain effective and shall apply to Director Fees (as defined in the
     Plan as in effect before January 1, 2005) for services through September
     22, 2005. No deferral of director fees will be allowed for services
     performed from September 23, 2005 to December 31, 2005.



          1.2.2 Effective January 1, 2006, the applicable period for deferrals
     by Board Members under 4.1 shall be the calendar year. Deferral elections
     of Board Members for director fees for services in 2006 must be submitted
     to the Committee in accordance with Committee procedures by December 31,
     2005.

2.   PURPOSES; ADMINISTRATION; AFFILIATES; PLAN YEAR

     2.1 The Plan is designed to provide unfunded deferred compensation for
Board Members and a select group of highly compensated or management employees
and to qualify as such a plan under section 2520.104-23 and related provisions
of Department of Labor regulations under the Employee Retirement Income Security
Act of 1974, as amended. The Plan is intended to operate in conjunction with the
Deferred Compensation Plan to allow participants to elect to use common stock of
the Company ("Stock") as a measure for benefits and to receive payment in Stock.

     2.2 The Plan shall be administered by an Administrative Committee
("Committee") appointed by the chief executive officer of the Company, or the
officer's delegate. The Committee shall interpret the Plan and make
determinations about participation and benefits. Any decision by the Committee
within its authority shall be final and binding on all parties. The Committee
shall have absolute discretion in carrying out its responsibilities in
accordance with the provisions of this Plan and applicable law. The Committee
may delegate all or part of its authority.

     2.3 The Plan shall apply to the Company and its Affiliates. An Affiliate is
a corporation or other entity that has been designated an Affiliate for this
purpose by the Committee. The designation of an Affiliate may include special
provisions that apply only to the Affiliate, its employees and members of its
board of directors. The term "Employer" refers to the Company and all designated
Affiliates.

     2.4 The "Plan Year" shall be the calendar year.

3.   ELIGIBILITY

     3.1 Board Members, the Chief Executive Officer of the Company and Vice
Presidents are eligible for deferral of compensation as provided in 4.1.

     3.2 The Committee may determine before a Plan Year or before employment
starts that an employee who otherwise holds an eligible position is not eligible
for the year. If an employee holds an eligible position but changes employment
status or is no longer approved by the Committee for participation during a
year, participation in compensation deferrals under 4.1 below shall continue for
the remainder of the Plan Year. Discontinuation of eligibility and credits shall
not constitute a termination of employment and shall not trigger a payment of
benefits. Service credit for vesting of any pre-2005 amounts shall continue
unless the participant terminates.

     3.3 An eligible Board Member or employee must enroll to begin or continue
participation in this Plan. Such enrollment shall constitute acceptance of any
changes under this Restatement. An election described in 3.6 may serve as
enrollment.


                                       2



     3.4 An eligible Board Member or employee may participate in elective
deferrals and an eligible employee may participate in related 401(k) make-up
credits and pension make-up credits by filing a deferral election as provided in
4.1.

     3.5 A person eligible to elect deferral or who has an Account under the
Plan shall be known as a participant.

4.   COMPENSATION DEFERRAL

     4.1 Eligible Board Members and eligible employees may elect for each Plan
Year (or part Plan Year under 4.2.3) to defer director fees, salary, or
commissions otherwise payable for the year or part year, and eligible employees
may elect to defer bonuses payable under the Tektronix Annual Performance
Incentive Plan, as follows:

          4.1.1 The amount of director fees payable in cash, salary, bonus or
     commissions deferred may be expressed as a whole percentage of such
     director fees, salary, bonus or commissions for the year or as a specified
     dollar amount. Deferral of director fees payable in Stock shall be
     expressed as a whole percentage of such director fees or as a specified
     number of shares of Stock. The percentage designated shall apply
     automatically to any director fee or pay changes in the year. The maximum
     deferral shall be 100 percent of director fees, 100 percent of commissions,
     and 90 percent of salary, subject to automatic reduction to accommodate
     withholding of amounts required by law and amounts elected before the
     beginning of the year to provide benefits under any benefit plan of the
     Company or an Affiliate.

          4.1.2 A bonus deferral shall be governed by the election for the
     Company's fiscal year for which the bonus is payable. The amount deferred
     may be expressed as a whole percentage of bonus or as a specified dollar
     amount. An election of a specified dollar amount shall be treated as an
     election of the lower of 100 percent of the bonus or the specified dollar
     amount. The maximum deferral shall be 100 percent of the bonus, subject to
     automatic reduction to accommodate withholding of amounts required by law
     and amounts elected before the beginning of the year to provide benefits
     under any benefit plan of the Company or an Affiliate.

          4.1.3 The minimum deferral amount for a participant for a Plan Year
     shall be $5,000, taking into account all deferrals by the participant of
     director fees, salary, commission and bonus for the Plan Year under the
     Plan and the Deferred Compensation Plan. Bonus amounts are taken into
     account in the Plan Year in which the bonus is payable. Elections for all
     amounts under all Plans must be filed and irrevocable not later than as
     provided under 4.2 for any amount otherwise payable in the year. The
     Committee may determine at any time that a participant's elections will
     fail to provide for the minimum deferral amount and are void. The Committee
     shall disregard failure caused by a decline in the value of Stock during
     the year. If elections are void, the amounts shall not be deferred and the
     Committee may determine the timing of the compensation that fails to be
     deferred, provided that the amounts shall be paid and included in income
     before the end of the Plan Year. If the deferral fails to satisfy the
     minimum solely because of the termination of services of the Board Member
     or the termination of


                                       3



     employment or change of position or compensation of the employee, the
     deferral elections shall not be void.

          4.1.4 The following compensation is subject to deferral:

               (a) "Bonus" means only performance based compensation under the
          Tektronix Annual Performance Incentive Plan.

               (b) "Director fees" means retainer, chair and director or special
          committee meeting fees otherwise payable in Stock unless deferred
          under the Plan or the Deferred Compensation Plan. Director fees do not
          include expenses that are paid or reimbursed.

               (c) "Salary" means base salary for the Plan Year and excludes
          commission, bonus, option, equity, severance, allowances, or other
          compensation, whether paid or reimbursed in cash or property.

               (d) "Commission" means commission compensation.

          4.1.5 The Committee may change the minimum and maximum deferrals and
     may decrease a participant's deferrals, but no change or decrease may be
     effective after an election becomes effective, except as provided in 4.1.1
     and 4.1.2.

     4.2 Deferral elections under the Plan shall be made in accordance with
procedures established by the Committee. The Committee will determine and notify
eligible employees how deferral elections will be calculated and charged to
reduce compensation. An election may not be revoked, even prospectively, with
respect to a Plan Year or bonus period after the applicable effective date.
Elections shall be effective as follows:

          4.2.1 An election to defer director fees, salary or commission must be
     filed with the Committee, and shall be effective and irrevocable, not later
     than the start of the Plan Year for which it applies, subject to 4.2.3.

          4.2.2 Subject to 4.2.3, an election to defer bonus must be filed with
     the Committee, and shall be effective and irrevocable, not later than six
     months before the end of the Company's fiscal year, or any earlier date
     that is the end of the performance period for the bonus. The election shall
     be ineffective if the participant fails to perform services continuously
     during the following period:

               (a) Starting the later of (i) the first day of the 12-month
          performance period for the bonus, or (ii) the date on which the
          performance criteria are established.

               (b) Ending on the earlier of (i) the date the deferral election
          is submitted and effective, or (ii) the date that is described in the
          first sentence of 4.2.2.


                                       4



          4.2.3 The following shall apply to a Board Member or employee who
     first becomes eligible after the start of a Plan Year or a fiscal year:

               (a) The individual may elect to defer compensation for services
          performed after the election by submitting the election within 30 days
          after becoming eligible.

               (b) All arrangements that are required to be aggregated under
          applicable law shall be considered. An individual shall not be treated
          as first becoming eligible under the Plan if the individual is already
          eligible under another arrangement that is aggregated with the Plan to
          determine the "plan" that covers the individual.

               (c) The amount of bonus that is treated as compensation for
          services performed after the election and subject to the deferral
          election is a fraction of the bonus. The numerator of the fraction is
          the number of days of the fiscal year after the date the election is
          submitted. The denominator of the fraction is the number of days in
          the fiscal year.

          4.2.4 An election shall be effective only for one Plan Year, or part
     Plan Year under 4.2.3. A new election shall be required for each year.
     Separate elections shall be filed for director fees deferral, salary
     deferral, commission deferral and bonus deferral. Deferral elections shall
     be submitted in a format established by the Committee.

     4.3 The participant's compensation for the year shall be reduced by the
amounts deferred, subject to 4.1.3.

5.   DEFERRED COMPENSATION ACCOUNTS; VESTING

     5.1 An Account shall be maintained for each participant on the books of the
Company or other Employer, as applicable in accordance with the adoption
statement of the Employer, until full payment has been made to the participant
or beneficiaries under Sections 7 and 8. The following shall apply, subject to
Section 6:

          5.1.1 The Committee shall maintain such subaccounts under each Account
     as may be necessary to give effect to the participant's elections
     concerning time and form of payment, to vesting, to preservation of
     pre-2005 terms for pre-2005 balances and to any other terms of the Plan
     that may affect the balance of the Account.

          5.1.2 Employer shall not be obligated to set aside or earmark any
     Stock or funds for the Account, which shall be purely a bookkeeping device.

          5.1.3 All amounts of deferred compensation under this plan shall
     remain at all times the unrestricted assets of the Employer, and the
     promise to pay the deferred amounts shall at all times remain unfunded as
     to the participants.


                                       5



     5.2 The Accounts of participants shall be adjusted by the following:

          5.2.1 For each participant, credit for deferrals under 4.1.

          5.2.2 Adjustments to reflect any reorganization, Stock split or
     combination, dividend or distribution on the Stock, or other event
     affecting the Stock, as the Committee shall determine.

          5.2.3 Amounts necessary to account for applicable withholding for
     Federal Insurance Contributions Act (FICA) taxes imposed on the credits
     under sections 3101, 3121(a) and 3121(v)(2) (as applicable) of the Code,
     and for tax withholding imposed by section 3401 of the Code and tax
     withholding imposed by state and local laws with respect to the FICA tax
     amount, including related pyramiding taxes, in accordance with procedures
     of the Committee and payroll practices and procedures of the Company.

     5.3 Deferrals described in 5.2 shall be credited to the Account as of the
last day of the calendar quarter in which the deferred amount would have been
paid if not deferred. Adjustments shall be credited to the Account as of the
date the adjustment to Stock would have become effective for shareholders.
Phantom shares for cash dividends on Stock shall be credited to the Account as
of the payment date for the dividend.

          5.3.1 If the amount deferred or the adjustment or dividend would have
     been paid or recorded in Stock outside of the Plan, the credit to the
     Account shall be the same number of phantom shares as the number of shares
     of Stock.

          5.3.2 If the amount deferred or the adjustment or dividend would have
     been paid or recorded in cash outside of the Plan, the following shall
     apply:

               (a) For deferrals, the number of phantom shares shall have a
          value equal to the deferral based on the unweighted arithmetic average
          of the closing prices of Stock on the last trading day of each
          calendar month that ends in the calendar quarter for which the amounts
          are credited.

               (b) For adjustments and dividends, the number of phantom shares
          shall have a value equal to the adjustment amount or dividend based on
          the closing price of the Stock on the date the amount is credited to
          the Account.

     5.4 A participant's Account shall be 100 percent vested at all times,
except pre-2005 amounts shall be vested and continue to vest in accordance with
provisions of the Plan in effect as of December 31, 2004.

     5.5 Amounts, other than director fees, credited under 5.2 shall be treated
as wages for purposes of FICA taxes as follows:

          5.5.1 Credits for elected deferrals shall be treated as wages when the
     amounts deferred would otherwise have been paid.


                                        6



          5.5.2 Earnings credit shall not be treated as wages except for
     earnings credit on unvested amounts shall be treated as wages when they
     vest.

6.   IRREVOCABLE TRUST

     6.1 Employer may, but shall not be required to, establish an irrevocable
trust to cover the liabilities to participants in certain circumstances, and may
transfer cash or other property to such a trust. Employer may use the same trust
as may be established under the Deferred Compensation Plan.

     6.2 If Employer creates a trust under 6.1 above, assets transferred to the
trust shall be invested at the absolute discretion of the Committee, the
trustee, or both on a shared basis, as provided in the trust. Neither the
Committee nor the trustee shall be required to invest in such funds in Stock or
any other security or investment vehicle. The Committee and the trustee may,
however, choose, in their discretion, to invest in Stock.

     6.3 The trust under 6.1 shall be a grantor trust and all assets held in
trust shall be assets of Employer subject to the trust terms. All assets of the
trust shall at all times be subject to the claims of creditors of Employer in
circumstances described in the trust. Participants will not receive a vested
priority interest in the trust assets ahead of such creditors. Participants'
interests in the trust will be governed by the trust terms at all times.

     6.4 The trust terms may provide that the assets of the trust may be used to
pay amounts with respect to the Deferred Compensation Plan and with respect to
certain Accounts or subaccounts under the Plan and not others, subject to claims
of creditors.

7.   TIME AND MANNER OF PAYMENT

     7.1 Annual Election of Payment Date. Subject to 7.3, 7.10 and 7.11, for all
deferred amounts for a year (and subsequent adjustments and credit on the
deferred amounts for that year), a participant shall elect a Payment Date that
is one of the following as selected under 7.6:

          7.1.1 Upon Termination. The date the participant's service as a Board
     Member or employment has terminated for any reason, including death and
     disability. Special provisions under 9 apply to termination by death. A
     participant is disabled if the Committee determines that any of the
     following apply:

               (a) The participant is unable to engage in any substantial
          gainful activity by reason of any medically determinable physical or
          mental impairment that can be expected to result in death or can be
          expected to last for a continuous period of not less than twelve
          months.

               (b) The participant is, by reason of any medically determinable
          physical or mental impairment that can be expected to result in death
          or can be expected to last for a continuous period of not less than
          twelve months, receiving income replacement benefits for a period of
          not less than three months under an accident and health plan covering
          employees of the Employer.


                                       7



               (c) The Social Security Administration has determined the
          participant to be totally disabled.

          7.1.2 January After Termination. The January next following the date
     in 7.1.1.

          7.1.3 In-Service. The January selected by the participant that is not
     less than two years after the year subject to the deferral election.

     7.2 Default Payment Date. The Payment Date shall be the date in 7.1.1 if
either of the following apply:

          7.2.1 The participant has not properly elected a Payment Date.

          7.2.2 Payment of all amounts subject to an election under 7.1.3 has
     not been completed by the date in 7.1.1.

          7.2.3 The balance of the participant's Account is not more than 1000
     phantom shares of Stock as of the date in 7.1.1.

     7.3 Form of Payment. Payment shall be in shares of Stock equal to or based
on the number of whole phantom shares in the Participant's Account. Fractional
phantom shares shall be disregarded. Subject to 7.4, 7.5 and 7.11, a
participant's Account shall be paid in the following ways as selected under 7.6:

          7.3.1 In a lump sum within 30 days after the Payment Date.

          7.3.2 In not more than 15 annual installments elected by the
     participant, starting as soon as practicable after the Payment Date, with
     subsequent installments in January each year.

          7.3.3 Regardless of the form of payment selected, payment shall be in
     a lump sum if the balance of a participant's Account is not more than 1,000
     phantom shares of Stock.

     7.4 Special In-Service Payment Form. Payment under 7.1.3 shall be paid in
not more than five annual installments (including a single installment) elected
by the participant, starting as soon as practicable, but not more than 90 days,
after the Payment Date, subject to 7.2.2.

     7.5 Default Form of Payment. Payment shall be in a lump sum if any of the
following apply:

          7.5.1 A participant has not properly selected a form of payment.

          7.5.2 Termination of a Board Member's service before age 55 and five
     years of service.

          7.5.3 Termination of employment before age 55 and five years of
     service.


                                       8



          7.5.4 Payment is subject to 7.2.2 or 7.2.3.

     7.6 Elections. In the deferral election under 4.1 for the year a
participant shall select a Payment Date under 7.1 and a form of payment under
7.3 or 7.4 for all deferred amounts and related earnings credits for the Plan
Year. The Committee may, in its discretion, establish rules and procedures to
allow a participant to elect more than one Payment Date and form of payment for
amounts deferred for a year and allocate the deferred amount between or among
Payment Dates. Subject to 7.10, the selection shall be irrevocable. If different
selections apply to different amounts for the year or different years, the
Account shall be appropriately divided to track earnings credits and payments
with respect to each selection.

     7.7 Installments. If installments are selected, the payout period shall be
specified in the deferral election. The installment size shall be fixed as of a
valuation date determined by the Committee preceding the first Payment Date and
each later December 31 as though equal installments were to be paid for the
remainder of the installment period, disregarding future earnings credits.

     7.8 Termination. A participant terminates service as a Board Member or
employment when no longer serving as a Board Member of, or employed by, an
Employer. A transfer from one Employer to another or to an affiliate shall not
constitute a termination of service as a Board Member or termination of
employment.

     7.9 Withholding. The Employer may withhold from any payments any income tax
or other amounts as required by law.

     7.10 Special Rules for Changing Form of Payment. Payment of amounts that
were credited to a participant's Account as of December 31, 2004 (and subsequent
adjustments and related earnings credits) with respect to services performed
before January 1, 2005, and that were vested as of December 31, 2004, all
pursuant to the terms of the Plan in effect on October 3, 2004, shall be
governed by such terms and applicable elections in effect before January 1, 2005
and not by the terms of this Restatement except as provided in Section 8 below
and the following restatement of pre-2005 Plan terms:

          7.10.1 A participant may change the form of a payment that is
     scheduled to start after termination by filing a new election with the
     Committee not less than 13 calendar months prior to the date of the
     participant's termination of services as a Board Member or employment. If
     termination occurs prior to the expiration of the 13-month period, the
     election shall not be effective.

          7.10.2 Subject to 7.10.1, the new election shall be effective with
     respect to all amounts described above and shall supersede all prior
     elections with respect to such amounts.

          7.10.3 The election may change only the form of payment. The Payment
     Date may not be changed.

     7.11 Delay of Payment to Key Employees. Payment on account of termination
may not start or be made to a participant who is a "key employee" as defined in
section 416(i) of the


                                       9



Code, without regard to section 416(i)(5) of the Code, before the date which is
six months after the date of termination. The Committee may determine that a
participant is a key employee in the event of doubt or to avoid impractical
efforts or expense to make an exact determination of key employees. A
participant shall have no claim, rights or remedy if the determination is not
correct. If the participant terminates service because of death or if the
participant dies within the six months, benefits shall start as soon as
practicable after death unless a later Payment Date applies.

          7.11.1 If installment payments are delayed because of this 7.11, the
     number of installments shall not change and the following shall apply:

               (a) The first installment shall be paid upon expiration of six
          months after termination.

               (b) The next installment shall be paid the January 1 after the
          first installment.

               (c) The remainder of installments shall be paid annually starting
          the following January 1.

          7.11.2 The delay under this 7.11 shall not apply to amounts described
     in 7.10 above. If the participant is entitled to payment with respect to
     amounts described in 7.10 above, the Committee shall apply payment
     provisions to the subaccount that records the amount described in 7.10
     above separately from the other amounts under the Account to the extent
     necessary to comply with this 7.11.

          7.11.3 This 7.11 shall not apply with respect to payments that are not
     on account of termination. Under 7.2.2, amounts subject to an election
     under 7.1.3 that remain unpaid at termination ("Accelerated Amounts")
     become payable at termination. If the participant is a key employee, the
     Accelerated Amounts shall be paid as though the participant had terminated
     six months after actual termination. However, Accelerated Amounts payable
     during the six months pursuant to the election under 7.1.3 shall be paid in
     accordance with the election.

     7.12 Delay of Nondeductible Payments. Employer may delay any payment to the
extent that employer reasonably anticipates that employer's deduction with
respect to such payment would be limited or eliminated by application of section
162(m) of the Code. A delayed payment will be made at the earliest date the
Employer reasonably anticipates that the deduction of the payment will not be
limited or eliminated by application of section 162(m) of the Code.

8.   WITHDRAWAL PAYMENTS

     8.1 A participant may elect to be paid amounts, and the payments shall be
charged against the participant's Account (including all subaccounts under 7.6),
as follows:


                                       10



          8.1.1 Upon approval of the Committee, up to 100 percent of the amount
     reasonably necessary to meet an unforeseeable emergency under 8.2, as
     determined by the Committee (a "Hardship Withdrawal").

          8.1.2 At the participant's option, 100 percent of the available
     Account balance in a lump sum (a "Forfeiture Withdrawal"), subject to
     forfeiture of 10 percent of the available balance. The amount paid to the
     participant and the forfeiture shall be charged to the available balance. A
     Forfeiture Withdrawal is available only with respect to amounts that were
     credited to a participant's Account under the Plan as of December 31, 2004
     (and subsequent related adjustments and earnings credits) with respect to
     services performed before January 1, 2005, and that were vested as of
     December 31, 2004, all pursuant to the terms of the Plan in effect on
     October 3, 2004.

          8.1.3 Withdrawals under 8.1.1 or 8.1.2 may be made before or after a
     participant's Payment Date.

     8.2 "Unforeseeable emergency" means a participant's severe financial
hardship to the extent that the hardship that cannot be met from other
reasonably available resources and is caused by one or more of the following:

          8.2.1 Illness or accident of the participant, the participant's
     spouse, or a dependent under section 152(a) of the Code.

          8.2.2 Loss of the participant's property due to casualty, including
     the need to rebuild a home following damage not covered by insurance.

          8.2.3 Other similar extraordinary and unforeseeable circumstances
     arising as a result of events beyond the control of the participant.

     8.3 Other resources are reasonably available if assets can be liquidated
without liquidation itself creating severe financial hardship, if insurance or
other reimbursement or compensation is available, or if deferrals under 4.1 are
stopped.

     8.4 Upon payment of a Hardship Withdrawal or Forfeiture Withdrawal,
elective deferrals under 4.1 shall cease and the participant shall not be
eligible under 4.1 until the year following the calendar year after the payment.

     8.5 Subject to 8.1.2, Withdrawals under this Plan shall be charged ratably
to all of the participant's accounts under this Plan.

     8.6 An application for payment shall be written, shall be signed by the
participant and shall include the following:

          8.6.1 For Hardship Withdrawal, a statement of the facts causing the
     financial hardship, any other facts as may be required by the Committee and
     an acknowledgement of temporary future ineligibility.


                                       11



          8.6.2 For Forfeiture Withdrawal, an acknowledgment of the forfeiture
     and temporary future ineligibility.

     8.7 Subject to 8.5, the Committee shall establish guidelines and procedures
for implementing withdrawals. The payment date shall be fixed by the Committee.
The Committee may require a minimum advance notice and may limit the amount,
time and frequency of Withdrawals.

9.   DEATH

     9.1 Subject to separate provisions under 9.5 for amounts described in 7.10,
a participant's Account shall be payable under this Section on the participant's
death regardless of the provisions of Section 7, except with respect to amounts
described in 7.10.

     9.2 On death the balance of the Account shall be fully vested and shall be
paid as follows:

          9.2.1 If the participant had selected payment by installments and had
     terminated services as a Board Member or employment before death, the
     designated beneficiary shall receive payment in installments in accordance
     with the selection.

          9.2.2 By a lump sum as soon as practicable if 9.2.1 does not apply or
     if either of the following apply:

               (a) The recipient is not a designated beneficiary.

               (b) The selection was under 7.4.

     9.3 An amount payable on death of a participant shall be paid to the
surviving beneficiaries most recently designated by the participant in writing
to the Committee in accordance with Committee procedures.

          9.3.1 The participant may designate beneficiaries or change designated
     beneficiaries without consent of any person.

          9.3.2 If the participant has no valid beneficiary designation in
     effect at death, or all beneficiaries predecease the participant, the
     amount payable shall be paid in the following order of priority:

               (a) To the participant's surviving spouse.

               (b) To the participant's surviving children in equal shares.

               (c) To the participant's estate.

     9.4 If a beneficiary is receiving installments and dies when a balance
remains, the balance shall be paid in a lump sum to the beneficiary's estate.


                                       12



     9.5 Amounts described in 7.10 shall be payable after a participant's death
in accordance with provisions applicable to such amounts prior to January 1,
2005 as follows:

          9.5.1 If a participant terminates Board Member service or employment
     before age 55 and five years of service because of death, benefits shall be
     paid in a lump sum as soon as practicable.

          9.5.2 If termination because of death occurs after age 55 and five
     years of service, benefits shall be paid in accordance with the time and
     form of benefits elected by the participant.

          9.5.3 Amounts payable because of death shall be paid to the surviving
     beneficiaries most recently designated by the participant in writing to the
     Committee in accordance with Committee procedures. The participant may
     designate beneficiaries or change designated beneficiaries without consent
     of any person. If the participant has no valid beneficiary designation in
     effect at death, or all beneficiaries predecease the participant, the
     amount payable shall be paid to the participant's estate.

          9.5.4 If a beneficiary is receiving installments and dies when a
     balance remains, the balance shall be paid in a lump sum to the
     beneficiary's estate.

10.  TERMINATION; AMENDMENT

     10.1 The Board of Directors of the Company may terminate this Plan and
provide for payment of amounts under all Accounts as follows:

          10.1.1 No payments other than payments that would be payable if the
     termination had not occurred will be made within twelve months of the
     termination of the Plan.

          10.1.2 All payments shall be made within twenty-four months of the
     termination of the Plan.

          10.1.3 Any amendments to the Plan in connection with termination shall
     not reduce amounts credited to Accounts and earnings credits shall continue
     pending full payment.

     10.2 The Board of Directors may amend the Plan at any time and from time to
time, subject to the following:

          10.2.1 If the amendment ceases deferred compensation credits,
     deferrals under 4.1 shall continue until the end of the Plan Year unless
     the Company terminates the Plan.

               (a) Earnings credits shall continue until the final payment.


                                       13



          10.2.2 No amendment may reduce the amount credited to any Account as
     of the date the notice of amendment is issued to participants, except as
     provided in 10.2.7 below.

          10.2.3 After a Change in Control, the following shall apply:

               (a) No amendment may change the methodology used to calculate
          adjustments or earnings credit in any way that would reduce the
          balance or rate of earnings credit on amounts to be credited to a
          participant's Account for a period prior to the Change in Control or
          pursuant to an election that is effective prior to the Change in
          Control.

               (b) No amendment may change the time or form of payment of
          amounts credited to Accounts prior to the Change in Control or amounts
          credited to Accounts for a year pursuant to elections effective prior
          to the Change in Control.

          10.2.4 No amendment may change the Plan in a way that would cause the
     terms or operation of the Plan to fail to comply with the requirements of
     section 409A, but the Company shall have no liability if the Plan fails to
     comply with section 409A unless the violation is deliberate and with
     knowledge of the violation.

          10.2.5 Reserved.

          10.2.6 Unless otherwise restricted by express terms of the Plan,
     amendments may be effective as of any date provided in the amendment
     document, including a retroactive effective date.

          10.2.7 Notwithstanding any restriction in the Plan, the Company may
     amend the Plan from time to time to comply with section 409A of the Code or
     other legal requirements that would cause material adverse consequences to
     participants if violated. If an amendment reduces amounts that have been
     deferred, Employer shall increase the compensation of the participant to
     restore the participant, as nearly as practicable, to the position as if
     the reduced amount had not been deferred, without adjustment for earnings
     or other time value of money, provided that the restoration would not cause
     penalties under section 409A of the Code or other material penalties to
     apply.

          10.2.8 The Committee may amend the Plan to make technical,
     administrative, or editorial changes to comply with applicable law or to
     clarify the Plan provided that the amendment does not materially increase
     the cost to Employer.

     10.3 A "Change in Control" occurs when any of the following occur (terms
below that are not defined elsewhere in the Plan shall have the same meanings as
the terms have under the Securities Exchange Act of 1934, as amended and the
rules and regulations adopted thereunder):

          10.3.1 The shareholders of the Company approve any of the following
     transactions and either the transaction is consummated or the Board of
     Directors of the Company determines that consummation is likely:


                                       14



               (a) Any consolidation, merger or plan of exchange involving the
          Company ("Merger") in which the Company is not the continuing or
          surviving corporation or pursuant to which Stock would be converted
          into cash, securities or other property, other than a Merger involving
          the Company in which the holders of Stock immediately prior to the
          merger had the same proportionate ownership of Stock of the surviving
          corporation after the Merger.

               (b) Any sale, lease or exchange, or other transfer in one
          transaction or a series of related transactions of all or
          substantially all of the assets of the Company or the adoption of any
          plan or proposal for the liquidation or dissolution of the Company.

          10.3.2 A tender or exchange offer, other than one made by the Company,
     is made for Stock (or securities convertible into Stock) and such offer
     results in a proportion of those securities being purchased and the offeror
     after the consummation of the offer is the beneficial owner (as determined
     pursuant to section 13(d) of the Securities Exchange Act of 1934), directly
     or indirectly, of at least 20 percent of the outstanding stock.

          10.3.3 During any period of 12 months or less, individuals who at the
     beginning of such period constituted a majority of the Board of Directors
     of the Company ceases for any reason to constitute a majority thereof
     unless the nomination or election of such new directors was approved by a
     vote of at least two thirds of the directors then still in office who were
     directors at the beginning of the period.

11.  CLAIMS PROCEDURES

     11.1 Claims shall be submitted in writing to the Committee. The Chair of
the Committee shall respond as soon as practicable but not later than 90 days
after receipt of the claim unless the Chair gives written notice to the claimant
before the end of the 90-day period that additional time is required. The notice
shall explain the special circumstances that require additional time and the
expected date of the response. The extension shall not be more than an
additional 90 days.

     11.2 If the claim involves benefits on disability, the time for response
will be not later than 45 days after receipt of the claim, subject to extension
by as many as two additional 30-day periods if necessary due to matters beyond
the control of the Chair. If an extension is necessary, the Chair shall notify
the claimant in writing before each extension of the circumstances requiring
extension and the date by which the Chair expects to render a decision. The
notice of extension shall explain the standards on which entitlement to a
benefit is based, the unresolved issues that prevent a decision on the claim and
the additional information needed to resolve the issues. If the claimant needs
to provide additional information, the claimant shall be given 45 days. If an
extension is necessary to obtain information from the claimant, the extension
period may be further extended by the amount of time taken to provide the
specified information.

     11.3 The claimant may have a representative to assist the claimant or to
conduct the claim and review any denial. The Chair may require that the claimant
notify the Chair in writing about authorization of a representative.


                                       15



     11.4 Determinations about claims shall be based on and in accordance with
Plan documents and shall be applied consistently with respect to similarly
situated participants and beneficiaries.

     11.5 The following shall apply to review of denied claims:

               (a) If a claim is denied, the Chair shall notify the claimant in
          writing. The notice shall state the following:

                    (1) The specific reasons for the denial.

                    (2) Reference to the relevant Plan provisions.

                    (3) A description of additional material or information that
               is needed and an explanation of why the material or information
               is needed.

                    (4) A description of the Plan's review procedures and the
               claimant's right to bring a civil action under section 502(a) of
               the Employee Retirement Income Security Act of 1974 (ERISA) if
               the claim is also denied after review.

               (b) If a claim involves benefits upon disability, the claimant
          shall be notified if any internal rule, guideline, protocol or other
          similar criterion was relied upon in the decision to deny the claim
          and that the claimant may have a copy of any such rule, guideline,
          protocol or other criterion free of charge upon request.

     11.6 A claimant may request review of a denied claim by written notice to
the Committee. The written request for review must be delivered within 60 days
after the notice of denial. If the claim involves benefits upon disability, the
request must be in writing and delivered within 180 days. The Committee shall
review the matter and may grant the claimant a hearing but is not required to.
The following apply in connection with the review:

                    (1) The claimant may submit written comments, documents,
               records and other information.

                    (2) Upon request, the claimant shall be provided, without
               charge, reasonable access to, and copies of, all documents,
               records and other information relevant to the claim.

                    (3) If the claim involves a determination of disability,
               upon the claimant's request, the claimant shall be provided with
               the identity of medical or vocational experts who advised the
               President, whether or not the advice was relied upon in deciding
               to deny the claim.

                    (4) The review shall consider all aspects of the claim and
               all comments, documents, records and other information the
               claimant


                                       16



               submits, whether or not the claimant raised the issues or
               submitted such information when the claim was originally
               considered.

               (b) If the claim involves benefits upon disability, the following
          also apply:

                    (1) The review shall not afford deference to the initial
               consideration of the claim and shall be conducted by Committee
               members who are neither individuals who made the initial
               determination nor the subordinates of any such individual.

                    (2) If the Committee members are reviewing a matter that is
               based on a medical judgment, the members shall consult with a
               health care professional who has appropriate training and
               experience in the field involved in the medical judgment. That
               health care professional will be a person who was not consulted
               in connection with the claim denial and is not a subordinate of
               the person who was consulted.

               (c) The decision on review shall be made within 60 days after
          receipt of the request for review in most cases. If there is a hearing
          or other special reason for delay, the President shall notify the
          claimant in writing within the initial 60-day period and the time
          limit shall be 120 days. If the claim involves benefits upon
          disability, the decision shall be made within 45 days, subject to
          extension of an additional 45 days pursuant to notice in writing
          within the initial 45-day period. The notice of any extension shall
          explain the special circumstances that require additional time and the
          expected date of the decision upon review. If an extension is
          necessary to obtain information from the claimant, the extension
          period may be further extended by the amount of time taken to provide
          the information.

               (d) The Committee's decision shall be provided in writing and
          will be final and bind all parties. An adverse determination shall
          state the following:

                    (1) The specific reasons for the determination.

                    (2) Reference to relevant Plan provisions.

                    (3) A reminder that the claimant is entitled to access to
               and copies of all documents, records and information relevant to
               the claim upon request and without charge.

                    (4) A reminder that the claimant may bring a civil action
               under section 502(a) of ERISA.

               (e) If the claim involves benefits upon disability, the following
          also apply:


                                       17



                    (1) If the determination is based on a medical, scientific
               or technical judgment, the determination will include either an
               explanation of the judgment that applies Plan terms to the
               medical circumstances, or a statement that an explanation will be
               provided free of charge upon request.

                    (2) Notice of an adverse determination shall include the
               following statement:

               "You and your Plan may have other voluntary alternative dispute
               resolution options, such as mediation. One way to find out what
               may be available is to contact your local U.S. Department of
               Labor Office and your State insurance regulatory agency."

12.  GENERAL PROVISIONS

     12.1 If suit or action is instituted to enforce any rights under this Plan
after or in lieu of proceeding under applicable claims procedures, the
prevailing party may recover from the other party reasonable attorneys' fees at
trial and on any appeal.

     12.2 Any notice or directions under the Plan shall be in accordance with
procedures established by the Committee.

     12.3 The rights of a participant under the Plan are personal. Except for
the limited provisions of 9.3 and 12.5, no interest of a participant or any
beneficiary or representative of a participant may be directly or indirectly
transferred, encumbered, seized by legal process or in any other way subjected
to the claims of any creditor.

     12.4 Except as otherwise provided in the terms of Employer's participation,
if an Employer merges, consolidates, or otherwise reorganizes or if its assets
or business are acquired by another company, the following shall apply.

          12.4.1 The Plan shall continue with respect to those eligible
     employees who continue in the employ of the successor company.

          12.4.2 The transition of Employers shall not be considered a
     termination of employment for purposes of this Plan.

          12.4.3 A successor corporation may terminate this Plan as to its
     employees on the effective date of the succession by notice to affected
     employees within 30 days after the succession, subject to 10.

     12.5 The Committee may decide that because of the mental or physical
condition of a person entitled to payments, or because of other relevant
factors, it is in the person's best interest to make payments to others for the
benefit of the person entitled to payment. In that event the Committee may in
its discretion direct that payments be made to one or more of the following:


                                       18



          12.5.1 To a parent or spouse or a child of legal age.

          12.5.2 To a legal guardian.

          12.5.3 To one furnishing maintenance, support, or hospitalization.

     12.6 This Plan is not a contract of employment with any participant.
Nothing in the Plan shall create any right of any participant with respect to
continued employment, terms of employment or discipline, or continued ability to
elect deferrals or have pension supplement credits.

13.  EFFECTIVE DATE

          This Restatement shall be generally effective January 1, 2005.

                                        TEKTRONIX, INC.


                                        By: /s/ RICHARD H. WILLS
                                            ------------------------------------
                                            Richard H. Wills
                                            Board Chairman, CEO & President

                                        Executed: 6-23, 2006


                                       19

EX-14.(II)

                                                                  EXHIBIT 14(ii)

(TEKTRONIX(R) LOGO)
Enabling Innovation

                                    (LOGO 1)

                                    (LOGO 2)

                          BUSINESS PRACTICES GUIDELINES


                                                                    Page 1 of 31



                            A MESSAGE FROM RICK WILLS

For more than 60 years, Tektronix' success has been linked to the ability of our
employees to "do the right thing" for our employees, customers and shareholders
and their ability to make business decisions that support our company values. We
pride ourselves on the fact that while short-term priorities may shift, our
values remain constant, reinforcing a long-standing culture committed to the
highest standards of ethical and compliant business practices.

It takes the efforts of each of you to ensure we continue to uphold the
company's strong reputation as a trusted business partner. Often the business
choices in front of us are complex and figuring out the right thing to do can be
difficult and unclear. Tektronix Business Ethics and Compliance Program will
provide you with the training, resources and tools to help you make the best
business decisions possible.

Our success starts with your dedication to making ethical decisions. While this
program helps Tektronix meet its legal and ethical commitments, it also supports
our core value system and underlies all that we do as a company and all that we
do as individuals working together. Your relationships with customers,
shareholders, employees, and suppliers starts with your own integrity.

Your integrity. Our success. It's a simple concept yet one that is critical to
our success and one that will continue to ensure Tektronix' leadership position
as a preferred global supplier and employer.

I challenge you to make the most of this program and apply your efforts and
commitment to achieve the highest levels of integrity with each business
decision that you make.


                                        Rick Wills
                                        Tektronix Chairman, CEO and President


                                                                    Page 2 of 31



ROLES AND RESPONSIBILITIES

     The Tektronix Business Practices Guidelines (Business Practices Guidelines
     or Guidelines) apply worldwide, to all of our employees, directors,
     officers, contract labor, consultants, and others acting for Tektronix
     ("Representatives"). The ethical and legal principles contained in the
     guidelines represent the very core of how Tektronix expects its
     Representatives to conduct business on its behalf.

     The Guidelines continue Tektronix' long-standing expectation that all
     Tektronix Representatives conduct business on behalf of Tektronix morally,
     ethically and in conformance with all applicable laws in all places and at
     all times. No Representative may use outside agents or other indirect means
     to violate or circumvent applicable laws and regulations or the business
     practices outlined in these guidelines.

     -    ALL TEKTRONIX REPRESENTATIVES

          -    Be aware of the Business Practices Guidelines and always follow
               them.

          -    Be sensitive to situations that could lead you or others to
               engage in illegal, improper, or unethical actions, and avoid such
               situations.

          -    Never act in violation of any law and never believe that breaking
               the law in an attempt to help Tektronix is an indication of
               loyalty.

          -    Take action against illegal, improper, or unethical behavior. If
               necessary, report violations
               (http://tek.com/ir/business/reporting_violations.html) to your
               managers, the Chief Compliance Officer, or Ethicspoint at
               www.ethicspoint.com (Tektronix' employee access line and
               website).

     -    ADDITIONAL RESPONSIBILITIES OF TEKTRONIX MANAGERS

          -    Make a personal commitment to operate in accordance with the
               uncompromising values set forth in the Tektronix Business
               Practices Guidelines. Communicate this commitment to all
               Tektronix Representatives under your management control.

          -    Be familiar with the company-wide business practices and other
               standards of conduct and policies required of all
               Representatives. Know the resources and processes available to
               assist in the resolution of questions and concerns about
               Tektronix' business practices.

          -    Periodically discuss ethics and business conduct issues and
               review the business practices guidelines with Representatives
               under your management control. Ensure that all Representatives
               under your management control are aware of the guidelines,
               policies and legal requirements relevant to their work.

          -    Maintain a work environment that encourages open communication
               regarding ethics and business conduct issues and concerns.


                                                                    Page 3 of 31



GUIDELINES OVERVIEW & INDEX

     Tektronix' ability to live up to its commitments and ethical standards is
     directly dependent on the day-to-day choices and actions of each individual
     acting on behalf of Tektronix. Set forth below is our standard of ethical
     conduct expected from everyone who does business in Tektronix' name. In
     addition to the Guidelines, each Representative is expected to become
     familiar and comply with all policies relating to their specific jobs
     within the Company. We have provided links to additional information where
     appropriate in the Guidelines. Please contact your manager or the Chief
     Compliance Office at CHIEF-COMPLIANCE-OFFICE@TEK.COM if you need additional
     clarification of the Guidelines or information regarding specific policies.

     Many decisions about ethical and compliant conduct fall into a gray area.
     If you have any questions about how to apply the Guidelines or related
     policies, you should discuss the situation with your manager or contact the
     references provided in those policies or the Guidelines. But first, when
     faced with a difficult ethical issue try asking yourself the following
     questions:

          -    Is it legal?

          -    Does it follow our Business Practices and other policies?

          -    How will the decision affect (or hurt) others (consumers,
               shareholders, suppliers, partners, competitors, the community,
               other employees)?

          -    How will the decision look to others?

          -    Would the decision be considered fair by those affected?

          -    Have all implications of the decision been fully explored?

          -    Would additional advice be helpful?

          -    How would I feel if the decision were made public? If you would
               not be comfortable justifying your decision publicly, it is
               probably not the right thing to do.

     The following is a list of the business practices topics you will find in
     these Guidelines. To access a topic, click on the underscored title listed
     below.

                                                                   (PEN GRAPHIC)

          -    ACCOUNTING CONTROLS, PROCEDURES, RECORDS & AUDITS

          -    ADVERTISING

          -    BUSINESS RELATIONSHIPS

          -    COMMUNITY RELATIONS

          -    COMPETITION

          -    CONFIDENTIAL & PROPRIETARY INFORMATION

          -    CONFLICTS OF INTEREST

          -    EMPLOYEE RELATIONS

          -    ENTERTAINMENT & GIFTS

          -    ENVIRONMENTAL HEALTH & SAFETY

          -    EXTERNAL PATENTS, COPYRIGHTS & TRADEMARKS


                                                                    Page 4 of 31



(GUIDELINES OVERVIEW & INDEX CONTINUED....)

          -    ILLEGAL OR IMPROPER ACTS INCLUDING FRAUD & SIMILAR IRREGULARITIES

          -    INTERNATIONAL BUSINESS

               -    EXPORT CONTROL

               -    FOREIGN CORRUPT PRACTICES ACT

          -    MEDIA & INVESTOR INQUIRIES

          -    POLITICAL ACTIVITIES

          -    PRODUCT SAFETY

          -    QUALITY ASSURANCE

          -    SELLING TO THE GOVERNMENT

          -    TRADING IN TEKTRONIX STOCK


                                                                    Page 5 of 31



ACCOUNTING CONTROLS, PROCEDURES, RECORDS AND AUDITS

     -    INTERNAL CONTROLS

               Tektronix has established systems, controls and records for
               authorizing, executing and recording transactions involving
               assets and liabilities. No Tektronix Representative will engage
               in any activity that circumvents Tektronix' system of internal
               controls. Administrative and accounting controls will be in place
               to assure that financial and other reports are accurately and
               reliably prepared, and fully and fairly disclose pertinent
               information.

     -    ACCOUNTING ACCURACY

               Accuracy and reliability of Tektronix' business records is not
               only mandated by law, but are critical to the company's
               decision-making process and to the proper discharge of our
               financial, legal and reporting obligations. All business records,
               accounts and reports to government agencies and others must be
               prepared with care and honesty. Representatives must provide
               constituents with information that is fair, accurate, complete,
               objective, relevant, timely and understandable with the
               understanding that such information may be used in documents that
               Tektronix files with or submits to the Securities and Exchange
               Commission or other governmental agencies.

     -    AUTHORIZATION

               All Tektronix payments and other transactions must be properly
               authorized by management and accurately and completely recorded
               on Tektronix' records in accordance with U.S. Generally Accepted
               Accounting Principles (GAAP) and established corporate accounting
               policies. Tektronix Representatives may not make any false,
               incomplete, or misleading entries. No undisclosed or unrecorded
               corporate funds, assets or liabilities may be established for any
               purpose, nor should Tektronix funds be placed in any personal or
               non-corporate account. All corporate assets must be properly
               protected and asset records regularly compared with actual assets
               with proper action taken to reconcile any variances. No
               Representative will authorize payment knowing that any part of
               the payment will be used for any purpose other than what is
               described in documents supporting the payment.

               Tektronix' detailed Accounting Policies & Procedures are located
               at:

               http://fp-finance.tek.com/finance/forms/corprefer/acctgpol.html.

     -    AUDITORS

               Tektronix Representatives are expected to cooperate fully with
               our internal and external auditors. No person will fraudulently
               influence, coerce, manipulate or mislead the independent auditors
               retained by Tektronix to audit or review its books, records or
               financial statements. For example, if an auditor asks you a
               question at a time when you are very busy and you are 80% sure of
               the answer, but to be completely sure will take some additional
               research, you should not "guess" at the answer. Instead, to
               cooperate fully, you should tell them that you are only 80% sure
               of the answer and perform the additional research if required. In
               other words, you should give thorough and complete answers to all
               questions.


                                                                    Page 6 of 31



(ACCOUNTING CONTROLS, PROCEDURES, RECORDS AND AUDITS CONTINUED...)

     -    RECORD RETENTION

               Tektronix' records of its transactions are important corporate
               assets. All company records must be retained in accordance with
               Tektronix' Record Retention Guidelines. Each business function
               and entity is responsible for establishing record keeping
               processes in accordance with those guidelines. For more detailed
               information about Tektronix' Record Retention Guidelines, please
               visit: http://fp-bldgmgmt.tek.com/bldgmgmt/archivingattektronix/
               RecordRetention.htm

     -    EXPENSE REIMBURSEMENT & TRAVEL

               Tektronix' policies provide that employees will be reimbursed for
               reasonable expenses incurred when traveling on business or
               performing other company business. Each Tektronix employee is
               responsible for ensuring that selections for air carriers,
               vehicle rentals, accommodations, expenditures for meals, etc. are
               made with the goal of traveling economically and otherwise in
               accordance with established travel policies. Expenses incurred by
               employees in performing company business will be reimbursed
               through the filing of expense reports, which must be documented
               accurately and completely.

               Tektronix' Global Travel Policy can be found at:
               http://fp-travel.tek.com/travel/doc/GTP.pdf.

               Additional travel guidelines and other recommendations for
               prudent spending can be found at:
               http://fp-travel.tek.com/travel/Global_Travel.htm.

     -    PRESERVING TEKTRONIX' ASSETS

               Each Tektronix Representative is responsible for preserving
               Tektronix' assets including physical assets such as facilities,
               data and equipment and intangible assets such as patents,
               copyrights and trade secrets. This requires that all
               company-owned equipment be properly safeguarded and accounted for
               and that all supplier or customer-owned equipment be treated with
               the same high standards. No Representative may make improper use
               of Tektronix or customer resources or permit others to do so. Use
               of Tektronix property, facilities, equipment or information for
               non-Tektronix purposes is permitted only with the approval of
               managers having authority to permit such usage, after ensuring
               that the use is in compliance with other company policies.


                                                                    Page 7 of 31



ADVERTISING

     Tektronix advertising must always be truthful. If specific claims are made
     about Tektronix products or their performance, there must be evidence to
     substantiate those claims. Tektronix products should not be labeled or
     marketed in any way that might cause confusion between our products and
     those of our competitors.

     Tektronix' Representatives should never disparage any of the products or
     services or the representatives of any of our competitors. If comparisons
     of Tektronix products against those of any of our competitors are used,
     such comparisons should be fair and accurate. Similarly, Representatives
     should be alert to any situation where a competitor may be trying to
     mislead potential customers about Tektronix or as to the origin of
     products, and inform appropriate management or the Law Department in any
     such case. Comparative advertising is subject to regulation particularly
     outside the U.S. You should review any comparative advertising with the Law
     Department and the appropriate Marketing Communications personnel, and must
     be substantiated.

     All use of Tektronix' trademarks and trade names should be in accordance
     with the company's policies governing such use.

     Advertising and like co-op promotional allowances are subject to very
     detailed and technical regulation under the Robinson-Patman Act, and should
     only be offered to Tektronix business partners after consultation with the
     Law Department.

     All estimates supplied to any customer or supplier (such as cost estimates)
     must be fair and reasonable. To the extent reasonably possible, objective
     facts and experience should back them up. If it is necessary to forecast
     future delivery dates, such forecasts should be made in the same way as an
     estimate (backed up by objective evidence to the extent reasonably possible
     and based upon good faith judgment when required). When an estimate is
     given, the company or individual receiving the information should always be
     advised that the information is provided as an estimate and not a
     commitment on the part of Tektronix and that Tektronix will not assume any
     liability for inaccuracy or change in the estimated information.

     Tektronix' Representatives may not use gifts, excessive entertainment, or
     any other ways to improperly influence current or potential customers.
     Tektronix products are to be marketed on the basis of our price, quality
     and service. It is our expectation that Tektronix' business partners and
     their representatives also live up to these obligations. When dealing with
     representatives of non-US governments, Tektronix' Representatives should
     also be familiar with the provisions of the (Foreign Corrupt Practices Act
     (FCPA).

     For more detailed information on Tektronix' advertising policies and
     related laws, please visit: http://fp-law.tek.com/law/advertising.html


                                                                    Page 8 of 31



BUSINESS RELATIONSHIPS

     -    CUSTOMERS

               Every product or service Tektronix offers must be offered as our
               best solution to meet our customers' needs and conform to
               Tektronix' published specifications or with the specifications
               agreed upon with the customer without exception.

               Customers of Tektronix should be provided factual information
               regarding prices, capabilities, and delivery schedules.
               Underestimating design cycles or exaggerating benefits to obtain
               business is unacceptable. If unforeseen problems arise that will
               adversely affect a customer, the customer should be informed and
               an attempt made to minimize the impact or provide such relief as
               is appropriate. In short, Tektronix is committed to ensuring that
               its customers obtain full value and are dealt with fairly and
               honestly.

     -    SUPPLIERS

               Suppliers to Tektronix should always be treated fairly and
               honestly, and they should be provided clear instructions and
               timely feedback. All proprietary data of the suppliers provided
               to Tektronix will be protected as reflected in our agreements
               with them, In turn, Tektronix expects and demands both integrity
               and competence from its suppliers.

               Tektronix' Representatives should select goods and services for
               Tektronix on the basis of price, quality, suitability, delivery
               and service. Representatives must always exercise the highest
               ethical business practices in source selection, negotiation, and
               administration of all purchasing activities. Purchase agreements
               should be in writing and clearly identify the services or
               products to be provided, the basis for earning payment, and the
               applicable rate or fee. The amount of payment must be appropriate
               to the services or products provided. The same specifications or
               information and instructions will be provided to each competing
               supplier for a proposed purchase.

               Reasonable efforts should be made to carefully consider and
               evaluate competing offers from other companies. Tektronix'
               Representatives or any person having a close personal
               relationship with a Tektronix Representative (including
               affiliated entities) should not directly participate as a
               business partner or vendor without prior written approval from
               the Chief Compliance Officer or the VP of Human Resources (as
               described under the Conflicts of Interest Guideline.

               A person "having a close personal relationship" with a Tektronix
               Representative means a spouse, parents, children, siblings,
               mothers- and fathers-in-law, sons- and daughters-in-law,
               brothers- and sisters-in-law, any person living in the same house
               with the Representative, former spouses, or anyone in a close
               personal relationship with that Representative, or any business
               associate of the Representative, or any entity in which any of
               the any of the foregoing have a substantial interest.


                                                                    Page 9 of 31



COMMUNITY RELATIONS

     Every year Tektronix receives hundreds of requests for contributions from
     various community organizations. All such requests are forwarded to the
     Tektronix Foundation for processing in accordance with the guidelines
     established by the trustees of the Foundation.

     Company guidelines require donations to be made only to IRS-designated
     non-profit organizations, and prohibit donations to political or religious
     organizations, fund-raisers or individuals. Requests from health
     organizations will be referred to the local United Way office.

     For more detailed information on Tektronix' community relations, please
     visit: http://www.tek.com/ir/about_us/foundation.html.


                                                                   Page 10 of 31


COMPETITION

     -    ANTITRUST LAWS

               In marketing and selling Tektronix products, all Representatives
               must comply with the antitrust laws. Tektronix supports the
               antitrust laws and subscribes to the philosophy of competition
               and free enterprise that underlies them. In addition to U.S.
               laws, some of which apply to Tektronix' activities abroad, there
               are foreign antitrust laws which apply to our international
               activities.

               Violation of applicable antitrust laws is a serious offense and
               can result in severe penalties, including criminal and civil
               penalties for business entities, and discharge, fines or
               imprisonment for individual Representatives.

               The antitrust laws generally prohibit agreements or actions in
               restraint of trade. Among the activities found to be clear
               violations of the law are agreements or understandings among
               competitors to fix or control prices; to boycott specified
               suppliers or customers; to allocate product, territories, or
               markets; or to limit or reduce production. All such actions are
               anti-competitive or otherwise contrary to laws that govern
               competitive practices in the marketplace and must be avoided.

     -    ANTI-BOYCOTT

               By law, Tektronix Representatives and agents may not support or
               cooperate with an unsanctioned boycott of another country that is
               "friendly" to the United States. The Company must report to the
               U.S. government any information (about which it has knowledge) or
               any request to support a boycott. Requests are often found in
               letters of credit, shipping instructions, certificates of origin
               and other contract-related documents. For example, a customer may
               ask for our certification that the products supplied are not made
               in a particular country, directly or indirectly, in whole or in
               part, or words to that effect. Complying with this request is
               prohibited by law and Tektronix must report this to the U.S.
               Government. If you learn of a boycott of another country that is
               "friendly" to the United States, contact the Legal department.

               More information about antitrust laws and Tektronix' polices can
               be found at:

               http://fp-law.tek.com/law/antitrust.html

     -    GATHERING COMPETITIVE INFORMATION

               Tektronix Representatives may not use improper means to gather
               information about competitors. Theft, illegal entry and
               electronic eavesdropping are obviously unacceptable means of
               searching for competitive intelligence. In addition,
               Representatives may not misrepresent themselves or their
               situation in order to convince another person to release
               information (by posing as a customer, for example), or engage a
               third party to do so. Representatives may not offer a bribe or a
               gift in exchange for competitors' information, nor solicit
               confidential information from a competitor's ex-employee now
               working for Tektronix. This is not a comprehensive list of
               unacceptable means. Under the Economic Espionage Act, it is a
               federal crime to steal or otherwise take, without authorization,
               a product related trade secret of another for economic benefit
               and while knowing or intending that the action will injure the
               owner. The penalties for violating the law are substantial, for
               both the individual and the company. The Act applies to
               activities of US citizens and US companies both within and
               outside the US and activities of foreign companies within the US.
               You should talk with your manager before using any non-public
               competitive information where there is a question about how it
               was obtained. If the competitive information may involve a trade
               secret, also contact the Law Department.


                                                                   Page 11 of 31



CONFIDENTIAL AND PROPRIETARY INFORMATION

                                                                 (PAPER GRAPHIC)

     Tektronix safeguards its proprietary and other confidential information and
     trade secrets, and also similarly protects comparable information obtained
     from customers and suppliers. Tektronix Representatives are responsible for
     protecting this information.

     Proprietary information, trade secrets and other confidential information
     includes information about technologies under development, future products,
     marketing strategies, production or sales data, names or lists of Tektronix
     employees, and information about or supplied by customers or vendors.

     Tektronix Representatives should only discuss proprietary, confidential or
     trade secret information internally with Tektronix Representatives who have
     a need to know such information. Representatives must avoid inadvertent
     disclosure in the course of social conversations and business relations
     with customers, suppliers and others.

     If there is a business reason to disclose or receive confidential, trade
     secret or proprietary information, you should use a Tektronix Confidential
     Information Agreement (CIA; also known as a "Non-Disclosure Agreement" or
     "NDA") and comply with the directions for its use, including having it
     signed by someone with proper authority. Confidential Information
     Agreements (CIAs or NDAs) offered by a third party must always be reviewed
     by a Tektronix attorney. Contact the attorney responsible for CIAs/NDAs in
     the Law Department with questions or if you need an outside agreement
     reviewed.

     Trade secrets and Confidential Information obtained from customers and
     suppliers should be carefully protected. Theft of trade secrets is now a
     federal crime under the Economic Espionage Act of 1996. The penalties for
     violating the law are substantial, for both the individual and the company
     involved.

     Each Tektronix employee is required to sign a written agreement which sets
     forth more detailed limitations on disclosure of proprietary and
     confidential information and trade secrets. Representatives who are unsure
     of how to handle requests for confidential information, should seek
     guidance from their manager, their Tektronix employee contact, or the
     Controller in the organization they serve.

     Tektronix' Privacy Statement is located at:
     http://www.tek.com/Measurement/cgi-bin/framed.pl?Document=/Measurement
     /privacy/privacy_truste.html&FrameSet=mbd


                                                                   Page 12 of 31



CONFLICTS OF INTEREST

                                                              (CONFLICT GRAPHIC)

     At Tektronix there is no room for a conflict of interest between a
     Representative's personal affairs and company business. Tektronix
     Representatives may not engage in any business activity or investment that
     could prevent the Representative from impartially performing his or her
     duties at Tektronix. This requires that each Representative avoid any
     actual or apparent conflict of interest between personal affairs and
     company business. Any time a conflict appears, or the possibility exists
     that such conflict might develop, Representatives should discuss and
     resolve the matter with his or her manager, the Human Resources Business
     Partner assigned to support the Representative's Business unit or Corporate
     Functions, the Chief Compliance Officer or the Vice President of Human
     Resources.

     Examples of some clear conflict of interest situations which must be
     avoided are:

          -    Any financial interest (other than small amounts of stocks or
               bonds in publicly traded companies) in any supplier, customer, or
               competitor;

          -    Any consulting, contract, or employment relationship with any
               customer, supplier, or competitor;

          -    Any outside business activity which is competitive with any of
               Tektronix' businesses;

          -    The receipt of gifts, gratuities (see the policies set out in
               these guidelines dealing with gifts and gratuities), or excessive
               entertainment from a company with which we have business
               dealings;

          -    Any outside activity of any type which is so substantial as to
               call into question your ability to devote appropriate time and
               attention to your job responsibilities with Tektronix;

          -    The service on any board of directors of any customer, supplier,
               or competitor unless such board service has been disclosed to
               Tektronix and approved by the General Counsel;

          -    Being in the position of supervising, reviewing, or having any
               influence on the job evaluation, pay, or benefits of any relative
               or person with whom you have a close personal relationship within
               Tektronix; or approving, authorizing, or processing a transaction
               that was prepared, approved, or initiated by such a person.

          -    Taking advantage of an opportunity which you learned of in the
               course of your employment with Tektronix, such as acquiring
               property that Tektronix may be interested in; and

          -    Selling anything to Tektronix or buying anything from Tektronix
               (except through any normal program of disposal of surplus
               Tektronix property which is offered to all employees in general).

     Anything that presents a conflict for you would probably also present a
     conflict if it relates to a member of your family or someone with whom you
     have a close personal relationship. For example, ownership of stock in
     competitors or suppliers, or receipt of gifts or entertainment by members
     of your family or spouse, would likely create the same conflict of interest
     as if you owned the stock or received the gift.

     As a Tektronix Representative, you may not conduct business on behalf of
     Tektronix with a member of your family, or a business organization in which
     you or a family member has a significant financial interest, or is a
     stockholder, director, officer, creditor, or proprietor.

     Representatives are expected to disclose to their manager, in writing, any
     potential conflict. No Representative may engage in any activity involving
     a potential conflict unless they have a written, signed statement from
     their manager advising the Representative that the activity does not
     violate Tektronix policies. No manager may give such a statement unless
     approved by the Chief Compliance Officer or the Vice President of Human
     Resources.


                                                                   Page 13 of 31



EMPLOYEE RELATIONS

     -    NON-USA EMPLOYEES

               Please note that the references and web links listed in the
               Employee Relations section of these Guidelines relate to USA
               policy, and are provided as a guide for other countries. Please
               see your local Human Resources Representative for detailed local
               policies and procedures applicable to your region. In addition,
               guidance has been established for several countries, which can be
               found at the Regional Manager Playbooks website at:

               http://fp-hr.tek.com/hr/global/playbooks/default.htm

     -    ALCOHOL AND DRUG USE

               Tektronix intends to have a workplace where employees, contingent
               workers, contractors, customers, and visitors are free from the
               presence and effects of alcohol and drug abuse. For more
               information please see the HR website or use the following link:

               http://fp-hr.tek.com/hr/usa/ER_Policies/Substance_Abuse.htm#
               alcohol

     -    ELECTRONIC COMMUNICATION POLICY

               Tektronix has a firm policy regarding the use of the internet by
               employees. Employees are expected to be familiar with the
               policies established by Tektronix as it relates to Electronic
               Communication and Internet Access. Detailed policies are located
               under the Information Services website or at the following link:

               http://fp-hr.tek.com/hr/usa/policies/online_project/
               Electronic_Communication.htm

     -    EMPLOYEE/CUSTOMER DATA PRIVACY

               Tektronix is committed to respecting the privacy rights of our
               employees and customers. We have implemented a variety of
               security measures to maintain the safety of this information. It
               is the responsibility of every employee to respect the privacy of
               fellow employees and our customers. Access to and use of employee
               and customer information is limited to only that which is
               required to do your job. Employee and customer information should
               not be used for personal benefit or the benefit of others. Names
               or list of Tektronix employees, as well as organizational charts,
               shall not be distributed to anyone who does not have a legitimate
               Tektronix business need for that information. For additional
               guidelines about this topic, see the Tektronix privacy policy at:
               http://www.tek.com/Measurement/privacy/privacy_truste.html


                                                                   Page 14 of 31



(EMPLOYEE RELATIONS CONTINUED...)

     -    EQUAL EMPLOYMENT OPPORTUNITY & AFFIRMATIVE ACTION

               Tektronix recruits, hires, trains, promotes, and makes other
               employment decisions without discrimination based on race, color,
               religion, sex, sexual orientation, national origin, age, physical
               or mental disability (if the individual can perform the essential
               functions of the position with reasonable accommodation),
               pregnancy, childbirth or related medical condition, veteran's
               status or any other status protected by applicable federal,
               state, or local law. In the United States, Tektronix also has
               affirmative action plans for minorities, females, Vietnam-era,
               disabled veterans, and individuals with disabilities. For more
               information please see the HR website or use the following link:

               http://fp-hr.tek.com/hr/usa/ER_Policies/
               Valuing_Diversity.htm#Equal%20Employment%20Opportunity

     -    HARASSMENT

               Harassment of any person visiting or working at Tektronix, or any
               Tektronix job applicant, will not be tolerated. Tektronix is
               committed to providing and maintaining an environment that is
               free from all forms of harassment and discrimination and treating
               all individuals with dignity and respect. As a result, Tektronix
               strives to maintain a workplace in which each employee can
               achieve his or her full potential without being impeded by
               discrimination or harassment based upon race, gender, national
               origin, age, religion, sexual orientation, disability or any
               other status or characteristic that is protected by applicable
               law. Any employee, who engages in harassing, discriminatory or
               other objectionable behavior in violation of this policy is
               subject to disciplinary action up to and including include
               immediate termination of employment.

     -    SEXUAL HARASSMENT

          Like other forms of discrimination, sexual harassment is a violation
          of state and federal law and is strictly prohibited. No employee or
          manager of Tektronix will engage in sexually harassing conduct or
          condition any term or condition of employment on submission to any
          sexual conduct. Sexual harassment by or toward an employee of any
          vendor, contractor, affiliate or joint venture, visitor, or customer
          of Tektronix also is prohibited. Sexually harassing conduct may be
          verbal, visual, or physical in nature. While sexual harassment
          sometimes is difficult to define, in general all employees should be
          aware that the following actions are inappropriate in the workplace:

               -    Sexual conduct or conversation

               -    Sexual advances

               -    Requests for sexual favors

               -    Other verbal or physical conduct of a sexual nature that may
                    be offensive or intimidating to others

               -    Use of sexually-oriented comments, posters, e-mails and
                    jokes, when they contribute to a hostile or offensive
                    working environment


                                                                   Page 15 of 31



(EMPLOYEE RELATIONS; SEXUAL HARASSMENT CONTINUED...)

          Conduct is considered sexual harassment where:

               -    Submission to sexual conduct is made either explicitly or
                    implicitly a term or condition of an individual's
                    employment, engagement or advancement within the
                    organization;

               -    Submission to or rejection of sexual conduct influences
                    employment or engagement decisions affecting the individual;
                    or

               -    Sexual conduct or language interferes with an individual's
                    work performance or creates an intimidating, hostile or
                    offensive working environment.

     Please find additional details on Tektronix's harassment policy at the
     following link:

     http://fp-hr.tek.com/hr/usa/ER_Policies/
     Valuing_Diversity.htm#Harassment%20and%20Discrimination

     -    REPORTING HARASSMENT

               Tektronix cannot help resolve a discrimination, harassment or
               retaliation problem unless we know about it. Therefore, it is
               every Representative's responsibility to bring these types of
               situations to management's or Human Resources' attention so that
               the appropriate steps can be taken to resolve the issue. If you
               believe that you or any other employee has been subjected to
               discrimination, including sexual or other forms of unlawful
               harassment, you should immediately notify your supervisor, Human
               Resources Representative, the Chief Compliance Officer or any
               other member of Tektronix management. Remember that Tektronix
               takes such complaints seriously and investigates promptly so that
               appropriate action can be taken to eliminate any unacceptable
               conduct.

               Complaints and investigative information are considered
               company-confidential. While the company will conduct
               investigations discreetly and strive to protect the privacy of
               the individual involved, you should be aware that the company
               cannot promise complete confidentiality. It is important that all
               employees feel free to come forward with complaints or concerns
               regarding inappropriate conduct. Retaliation against any employee
               for making a complaint or for providing information concerning a
               complaint is not tolerated.

               If you are not comfortable speaking with your supervisor or Human
               Resource Representative, please report concerns of harassment to
               the Chief Compliance Office or Ethicspoint, our confidential, 3rd
               party employee access website or toll-free access line. (See
               instructions at Reporting Violations,
               http://tek.com/ir/business/reporting_violations.html).

               If you believe that your complaint or concern has not been
               handled, or that you have been subjected to retaliation for
               making a complaint you should follow the steps in the Dispute
               Resolution Policy or contact the Chief Compliance Office
               (CHIEF-COMPLIANCE-OFFICE@TEK.COM).


                                                                   Page 16 of 31



(EMPLOYEE RELATIONS CONTINUED....)

     -    RELATIONSHIPS

               While Tektronix recognizes and respects the rights of employees
               to associate freely and to pursue personal relationships with
               those they encounter in the work place, employees must use good
               judgment to ensure that those relationships do not negatively
               impact their job performance and their ability to supervise
               others.

               Family members (e.g. spouse, in-law, dependents, domestic
               partner) or those in a close personal relationship may be
               employed in the same department or work groups. However, one
               family member or person in a close personal relationship may not
               have supervisory responsibility, or be a part of any employment
               action, over another family member or those in a close personal
               relationship or be in a position that creates an actual or
               perceived conflict of interest.

               Employees in such relationships must inform their management or
               Human Resources. Tektronix will try to work with both individuals
               to resolve the conflict of interest in a mutually satisfactory
               way.

     For additional detailed information about employment guidelines and
     procedures see "Policies, Procedures & Guidelines" section of the Human
     Resources website, located at:

     http://fp-hr.tek.com/hr/usa/ER_Policies/Default.htm


                                                                   Page 17 of 31



ENTERTAINMENT & GIFTS

                                                                  (GIFT GRAPHIC)

     Tektronix Representatives may not give or accept any gift if the value of
     the gift might indicate intent to improperly influence the normal business
     relationship between Tektronix and any of its suppliers, customers, or
     competitors. If any Tektronix Representative is given any substantial gift
     or favor, the Representative must notify his or her manager and return the
     gift. This does not apply to minor items commonly exchanged in business
     relationships, such as mugs, t-shirts, pens and pencils, but even here,
     discretion and common sense must be used in deciding whether the gift needs
     to be returned.

     In commercial business, the exchange of social amenities between suppliers,
     customers, and Tektronix Representatives is acceptable when reasonably
     based on a clear business purpose and within the bounds of good taste.
     Excessive entertainment of any sort is not acceptable. Conferences
     accompanied by a meal with suppliers or customers are often necessary and
     desirable. Whenever appropriate, these meals should be on a reciprocal
     basis. You must observe all applicable federal laws and regulations
     relating to gifts and entertainment for public employees in the countries
     involved. Tektronix policy is to avoid even the appearance of an improper
     action.

     More specifically, Tektronix's policies include the following:

          -    Individual gifts of nominal value (less than USD $50) are
               permitted, provided they are given as a gesture of professional
               friendship, do not involve a company commitment having to do with
               the transaction of business, or could not be construed as
               influencing business conduct.

          -    Cumulative annual gifts valued at over USD $100 should not be
               accepted and should be reported to your manager.

          -    Hosted business-related entertainment (group events, conferences,
               meals, etc.) may be accepted only if:

                    -    Tektronix representatives are accompanied by the host

                    -    Activity serves a valid business purpose (training,
                         relationship building, etc.)

                    -    Activity represents ordinary and customary practice for
                         transaction, business relationship and local /
                         corporate environment

                    -    Expenditure is reasonable and not excessive (for
                         example, event fee may be hosted, but travel
                         expenditures should be paid by Tektronix)

                    -    Activity may not be construed as having undue influence
                         on business decisions

          -    Hosted events such as meals should be reciprocal, when
               appropriate.

          -    In no event should a gift be accepted from a supplier or
               potential supplier during, or in connection with, contract
               negotiations.

          -    Under no circumstances may any Tektronix Representative give or
               accept kickbacks in any form to or from a supplier,
               subcontractor, customer, or any other party.


                                                                   Page 18 of 31



(ENTERTAINMENT & GIFTS CONTINUED...)

          -    Presentations of a ceremonial nature in keeping with national or
               cultural custom (such as Christmas/Holiday gifts, the Chinese
               "Lai See" custom or the Japanese "Ochugun or Oseibo" customs) are
               not encouraged. However, these gifts may be permitted as long as
               what is accepted is not excessive, is not in violation of any
               law, and cannot be construed as a bribe or a payoff.

          -    Neither the Representative nor his or her family members may
               accept any discount on personal purchases that may be perceived
               to be offered because of a supplier's or customer's relationship
               with Tektronix, unless the same discount is available to all
               Tektronix Representatives.

          -    Gifts to government officials outside the United States to obtain
               business may violate the U.S. Foreign Corrupt Practices Act
               (FCPA) which is referenced under the International Business
               section of these Guidelines.

     If you have any additional questions regarding the propriety of specific
     situations, please contact your manager or the Chief Compliance Officer at
     CHIEF-COMPLIANCE-OFFICE@TEK.COM.


                                                                   Page 19 of 31



ENVIRONMENTAL HEALTH & SAFETY

                                         (ENVIRONMENTAL HEALTH & SAFETY GRAPHIC)

     Proper management of health, safety and the environment is a Tektronix
     expectation and a sound business practice. It reduces Tektronix'
     liabilities, saves resources, and protects the well being of our
     Representatives, customers, shareholders, and the world in which we live.

     Tektronix establishes and maintains sound management practices to promote
     workplace health & safety and responsible interaction with the environment.
     Those practices include:

          -    Identification, reduction, and management of the environmental
               impacts of our operations.

          -    Identification, reduction, and management of Health and Safety
               risks at our facilities.

          -    Development of programs to identify and ensure compliance with
               applicable laws, regulations, and orders.

          -    Auditing and self-assessment for continual improvement.

          -    Employee training in proper Environmental Health & Safety
               practices.

     Responsibility for compliance with Tektronix' Environmental Health & Safety
     policies and guidelines extends to all levels of Representatives at
     Tektronix and its subsidiaries. Each Tektronix and subsidiary
     Representative has the responsibility to be aware of and follow
     Environmental Health & Safety policies and guidelines and the
     responsibility to use sound judgment. Tektronix recognizes the importance
     of providing a safe workplace and a work environment that minimizes health
     risks to Representatives. Every Representative has the responsibility to
     communicate with area management about possible unsafe or hazardous
     conditions in the workplace, as well as incidents that result in injuries,
     illness, or damage.

     Failure to meet our responsibilities under the Environmental and Health &
     Safety laws, regulations, and orders can have serious consequences,
     including civil and criminal sanctions against Tektronix and its
     Representatives and may require substantial expenditures for cleanup and
     compensation. Sanctions could affect Tektronix' ability to maintain market
     competitiveness and our reputation as a responsible corporate citizen.

     Business partners and Tektronix Representatives are also expected to live
     up to these obligations.

     Additional information on Environmental, Health & Safety responsibilities
     and programs is available at: http://fp-ehs.tek.com/ehs/index.htm.


                                                                   Page 20 of 31


EXTERNAL PATENTS, COPYRIGHTS & TRADEMARKS

     Just as Tektronix regards its patents, trade secrets, trademarks and
     copyrights as valuable corporate assets, we must respect the valid
     intellectual property rights of other companies and persons. Tektronix will
     not knowingly infringe on others' patents, trademarks or copyrights, or
     misappropriate others' trade secrets. For procedures for the proper
     licensing or other permitted use of these assets please contact the IP
     attorney for your business. Of particular importance to day-to-day
     operations, and something that must be avoided by each Representative, is
     the unauthorized copying of books, computer software or any other
     copyrighted material including music, movies, and other artistic works.
     Refer to the Law Department website for further guidance. Tektronix has
     entered into licensing agreements that permit photocopying and electronic
     copying of many magazines and articles. If you have questions about whether
     a particular magazine is covered, please contact the Law Department.

     All users of computer equipment at Tektronix are responsible for making
     certain that the computer equipment being used does not have unauthorized
     or undocumented software on a hard disk or otherwise accessible for use.

     Representatives must not make, store, transmit or make available
     unauthorized copies of copyrighted material using Tektronix, computers,
     networks or storage media. Representatives must not use peer-to-peer file
     transfer services or take other actions likely to promote or lead to
     copyright infringement.

     Computer software licensed by Tektronix must not be illegally copied for
     personal, company, or customer use. Using illegally copied software is a
     violation of federal law and carries with it the possibility of criminal
     penalties. Violating a license agreement (such as making more copies than
     the license permits) is wrong, and if done willfully, could expose the
     Company and the violator to substantial damages, including punitive
     damages.

     Most commercial software marketed today is covered by copyright and by a
     license agreement that must be accepted by the purchaser before the
     software is put into use. (In many cases, the license may be accepted by
     the act of opening the package or using the software. Such agreements are
     often referred to as shrink-wrap or break-the-seal licenses.) License
     agreements typically limit the use of the software to a specific computer
     or a specified number of individual personal computers.

     Tektronix Representatives who use a personal computer or workstation at
     Tektronix may be required from time to time to sign a statement
     acknowledging that knowledge of the company policy and certifying that all
     computer equipment in use complies with the policy requirement. The Law
     Department is available to provide specific advice regarding the company's
     rights and responsibilities under the copyright law and under specific
     license agreements.


                                                                   Page 21 of 31



ILLEGAL OR IMPROPER ACTS INCLUDING FRAUD & SIMILAR IRREGULARITIES

     Tektronix Representatives are prohibited from engaging in illegal or
     improper acts. Engaging in such acts will serve as justification for
     termination of employment for cause. Such acts include but are not limited
     to:

          -    Conviction or plea of "guilty" or "no contest" to any crime
               constituting a felony in the jurisdiction in which committed, any
               crime involving moral turpitude (whether or not a felony), or any
               violation of criminal law involving dishonesty or willful
               misconduct (whether or not a felony)

          -    Repeated failure or refusal to perform your duties in an
               acceptable manner, or to follow the lawful and proper directives
               of the Board of Directors or your supervisor(s) or manager(s)

          -    Breach of your obligations or any action you take which results
               in Tektronix' breach of its obligation under any confidentiality
               agreements or provisions, or proprietary information agreements

          -    Failure to disclose side agreements or "understandings" with a
               customer, supplier or partner that are outside the terms of the
               contract

          -    Knowingly providing, or failing to report, false or materially
               misleading information with respect to Tektronix' financial
               statements or other public disclosures

          -    Other misconduct that has or could discredit or damage Tektronix.

     Tektronix prohibits fraudulent activities. You should be cognizant of the
     existence of fraud and should follow procedures concerning the recognition,
     reporting and investigation of suspected fraud. Fraud includes, but is not
     limited to:

          -    Dishonest or fraudulent acts

          -    Embezzlement

          -    Forgery or alteration of negotiable instruments such as company
               checks and drafts

          -    Misappropriation of company, employee, customer, partner or
               supplier assets

          -    Conversion to personal use of cash, securities, supplies or any
               other company asset

          -    Unauthorized handling or reporting of company transactions

          -    Falsification of company records or financial statements for
               personal or other reasons

          -    Consistent violations of any company policy such as travel and
               entertainment

          -    Fraudulent submission of timesheets or expense reports

          -    Acceptance of offers of kickbacks from contractors, customers,
               partners or suppliers.

     Managers are responsible for knowing fraud exposures for their areas and
     for detecting suspected wrongdoing. Each manager best knows standard
     operating procedures in their area, and therefore, is most capable of
     identifying a transaction that is out of the ordinary. Managers should not,
     under any circumstances, attempt to cover up wrongdoing. Managers should
     not conduct investigations, nor should they confront the suspected
     individual or directly question strange, odd or curious transactions. If a
     Representative reports wrongdoing by another Representative, partner,
     supplier or customer, the Manager should direct them to immediately report
     the incident as described at reporting and investigation
     (http://tek.com/ir/business/reporting_violations.html).


                                                                   Page 22 of 31



INTERNATIONAL BUSINESS

     As a global company, Tektronix sells its products to governments and
     private entities worldwide. However, United States law specifically forbids
     certain practices relating to international business, of which all company
     Representatives must be aware.

     -    CUSTOMS

               Tektronix will comply with customs laws and regulations wherever
               we do business. Generally, the laws require that the company make
               complete and accurate statements to customs authorities about the
               value, kind, and origin of goods that Tektronix imports for
               manufacturing and sale. And, in many parts of the world, imported
               goods must be marked with their country of origin. Tektronix must
               also ensure that statements made on customs invoices to our
               customers who import our products are accurate and comply with
               local customs laws. It is against Tektronix policy to accommodate
               requests to lower customs values or describe a product in
               misleading terms. Failure to make correct statements or
               mismarking imported goods can lead to fines, penalties and/or
               incarceration. Further, violations can potentially affect the
               ease and timeliness of the import process for Tektronix and our
               customers. Any questions or possible violations relative to
               customs laws should be directed to Tektronix Customs Department.

     -    EXPORT CONTROL

               The United States prohibits, regulates and licenses the export of
               many products, services and technologies to foreign countries.
               These regulations extend to the release of certain Tektronix
               proprietary information abroad, but also to foreign national
               Representatives of Tektronix in the United States. Many of these
               U.S. prohibitions and suspensions apply to Tektronix'
               subsidiaries worldwide. In addition, other countries, as well as
               the United Nations, may from time to time regulate exports to
               certain countries.

               Most foreign countries in which Tektronix does business also
               maintain controls over exports of certain Tektronix products,
               including certain measurement products which can be used in
               military and nuclear weapons development and testing programs.
               Also, the United States and many allied foreign governments have
               end user controls which prohibit the export of any Tektronix
               products with knowledge they are intended for: (1) foreign firms
               sanctioned by the U.S.; (2) agents of foreign governments the
               subject of U.S. or international trade embargoes; or (3) foreign
               entities involved in nuclear, chemical, and biological weapons,
               or missile programs in targeted countries. Tektronix may from
               time to time prohibit transactions to specific persons, entities
               or destinations as a matter of policy, regardless of other
               government controls. For more detailed information, see the
               Export Control Policy for more information at:

               http://fp-trade.tek.com/trade/.

               Tektronix Export Control maintains a list of "Red Flags", or
               suspicious signs of a potential violation of export regulations.
               Red Flags are indications that a violation may occur or that
               circumstances don't add up (Export Enforcement describes them as
               anything that causes you to think "hmmm...."). The Department of
               Commerce publishes a non-exhaustive list of red flags that might
               indicate a problem. Red Flags are listed on the export control
               website at http://fp-trade.tek.com/trade/red_flags.html. A red
               flag creates a positive obligation to ask more questions. Anyone
               who touches a transaction (export or domestic sale) has
               responsibility to identify and resolve red flags. A red flag does
               not necessarily mean that something is wrong - it can be overcome
               if further research explains the circumstance and allays
               suspicions of a violation.


                                                                   Page 23 of 31



(INTERNATIONAL BUSINESS CONTINUED...)

     (- EXPORT CONTROL CONTINUED...)

               If a Tektronix Representative sees a red flag, they must ask for
               details. We may not shield ourselves from red flags by avoiding
               certain information. If a Representative still has suspicions
               about a customer's information, stop the business and tell
               Tektronix' Export Control. Any and all questions or possible
               violations relative to export controls should be directed to
               Tektronix Export Control Department.

     -    FOREIGN CORRUPT PRACTICES ACT

               The Foreign Corrupt Practices Act (FCPA) applies to Tektronix and
               its majority-owned subsidiaries worldwide. The FCPA prohibits any
               person acting on behalf of Tektronix from making a payment to a
               foreign official to obtain or keep business. Company policy
               strictly forbids these payments. The legal penalties involved may
               be severe for both the individual and the Company. Tektronix'
               policy and guidelines for compliance with the FCPA are set forth
               in its Foreign Corrupt Practices Act Compliance Policy, located
               at:

               http://eurotekweb.tek.com/eurotekweb/legal/l_foreign_corrupt/
               foreign_ corrupt_practices_act.html.

               Any Representative acting on behalf of Tektronix in the United
               States must comply with the FCPA.

               There are certain other types of payments, sometimes called
               "facilitating" payments, which may be required to be made in
               countries outside of the United States in order to have minor
               government officials perform nondiscretionary duties that they
               might otherwise delay or fail to undertake. "Facilitating"
               payments as described under the FCPA, are generally small and in
               the nature of "tips." Such payments are permitted or expected by
               local custom and generally are not treated as illegal by local
               law enforcement agencies. Tektronix discourages such payments,
               but recognizes they may be necessary to do business in certain
               jurisdictions. If a facilitating payment falls within the limits
               described above as allowed under the FCPA, is not intended for
               improper purposes and has been approved by senior management, it
               is permitted.

               Because the status of certain types of payments may be unclear,
               Representatives must review with the Law Department the nature of
               any questionable payments before they are made. Representatives
               are prohibited from paying any bribe, kickback or other similar
               unlawful payment to any public official, or government, or other
               individual, regardless of nationality, to secure any concession,
               contract or favorable treatment for Tektronix or the
               Representative.


                                                                   Page 24 of 31



MEDIA & INVESTOR INQUIRIES

     -    PRESS, RADIO, TV

               Tektronix values its relationships with those in the media and
               will endeavor to provide full and prompt disclosure of all
               material developments or events. Media relations are the
               responsibility of the Corporate Communications Department. All
               statements to the media or responses to inquiries from the media
               shall be handled through that department.

               In the event the media inquiry relates to a pending or threatened
               legal matter, media communications should also be coordinated
               with the Law Department.

               Any Representative asked for a statement from any member of the
               media should respond by explaining this policy and advising the
               questioner to contact the Corporate Communications Department or
               visit their website at: http://fp-corpcomm.tek.com/corpcomm/

     -    SHAREHOLDERS / INVESTORS

               Tektronix is a publicly traded company, and the securities laws
               regulate communications with Tektronix shareholders.
               Communication from any shareholder or investment advisor
               requesting information relating to Tektronix should be forwarded
               to Tektronix' Investor Relations Department for proper handling.
               Please see contact information at the following link:

               http://www2.tek.com/wwwcontact/Contact.Us?pg=frameset&geo=
               413&chnl=13


                                                                   Page 25 of 31



POLITICAL ACTIVITIES

     Tektronix encourages all employees to vote and be personally active in the
     political process. The national and local laws in many countries, however,
     significantly restrict use of Tektronix funds and resources in connection
     with political activities. For example, United States federal laws severely
     limit the use of corporate funds or resources in support of federal
     elections campaigns. These U.S. laws are broadly applied and cover most
     direct uses of Tektronix funds, facilities, and equipment or Representative
     time. They also cover indirect political contributions, such as including a
     contribution on an employee's expense account causing Tektronix to
     reimburse the employee for that expense.

     Because the laws regarding corporate involvement in political activity are
     very complex and violation can have severe consequences, before using any
     Tektronix resources (including funds, facilities, equipment or employee
     work-time) in connection with any political activity (including national or
     local election campaigns or government lobbying activity), the details of
     the proposed use should be discussed in advance with and approved by your
     manager and the Law Department.

     The political process has become highly regulated. If you have any
     questions about what is or is not proper you should consult with the Legal
     Department before agreeing to do anything that could be construed as
     involving Tektronix in any political activity at either the federal, state,
     or local level, or in any foreign country. See discussion above about the
     Foreign Corrupt Practices Act.

     -    LOBBYING

               Lobbying is strictly governed by the laws of the United States
               and other countries. Lobbying is generally defined as contact
               with elected officials regarding legislative or regulatory issues
               impacting the Company. While the specific rules vary widely, the
               trend has been toward expanding significantly the definition of
               who is a lobbyist, who must register as a lobbyist, and what
               constitutes lobbying. In short, Tektronix is required by law to
               disclose lobbying-related information in great detail. Contact
               the Legal department in advance of any planned lobbying
               activities on behalf of Tektronix. Further, the Legal Department
               must be consulted prior to contracting with any external lobbyist
               or lobbying firm.


                                                                   Page 26 of 31



PRODUCT SAFETY

     Tektronix intends to research, design, develop, manufacture, market and
     sell products that are safe for their intended and reasonably foreseeable
     uses. All Tektronix products will meet or exceed all applicable safety and
     product compliance regulatory standards and requirements in every place
     where they are to be marketed and sold.

     This statement applies to all products whether manufactured or purchased
     for resale from third parties, including supplies and accessories, and
     regardless of the method of distribution by Tektronix -- direct, indirect,
     sold, leased, loaned, donated or used for demonstration.


                                                                   Page 27 of 31



QUALITY ASSURANCE

                                                                  (100% GRAPHIC)

     Tektronix is committed to developing, manufacturing, and delivering high
     quality services and products, including hardware and software that meet
     Tektronix' own quality standards. To ensure compliance with our quality
     standards and to meet our customers requirements, Tektronix has developed
     and implemented an extensive quality management system that includes
     design, manufacturing, service, and support process control procedures.

     No Representative may violate or circumvent either the letter or the spirit
     of these procedures. You should bring to management's attention any lapse
     in quality assurance or process control procedures, including testing and
     inspection. If you are not satisfied with actions taken or explanations
     provided, you must bring the matter to the attention of the next level of
     management, or Human Resources. You may also report your concern
     confidentially on the Employee Access Line.

     Submitting or knowingly permitting others to submit any fraudulent
     documents relating to Tektronix' products or replacement parts is
     prohibited. Such acts carry potential penalties, which could result in the
     criminal prosecution of Tektronix and the Representative(s) involved.
     Managers must avoid placing or seeming to place pressure on Representatives
     that could cause them to violate applicable regulations or acceptable
     standards of conduct. Even with increased production, standards of quality
     and conduct must be maintained.

     Shortcuts in operations (including production and testing) must be avoided
     if they violate contract terms in any respect. However, our customers
     expect us to be alert for methods and processes that improve quality and
     reduce the cost of operations. Any ideas related to improving quality
     and/or reducing the cost of operations should be discussed with appropriate
     management prior to implementing.

     No Representative may violate or circumvent either the letter or the spirit
     of these procedures. You should bring to management's attention any lapse
     in quality assurance or process control procedures, including testing and
     inspection. If you are not satisfied with actions taken or explanations
     provided, you must bring the matter to the attention of the next level of
     management, Human Resources or the Chief Compliance Office
     (chief-compliance-office@tek.com). You may also report your concern
     confidentially to Ethicspoint at www.ethicspoint.com or on the Employee
     Access Line at (http://tek.com/ir/business/reporting_violations.html).

     The Quality Management System (QMS) homepage, including detailed policies,
     is located at: http://www2.cse.tek.com/Quality/wwqs/policies/. Tektronix'
     Quality Manual can be found at:
     http://jp.cse.tek.com/ematrix/edpm/ViewUnrestrictedDocument.jsp?name=
     QMS-2000" target="_blank"


                                                                   Page 28 of 31



SELLING TO THE GOVERNMENT

                                             (SELLING TO THE GOVERNMENT GRAPHIC)

     Tektronix carefully follows the laws and regulations that govern
     acquisition of its goods and services by the U.S. or any foreign
     government. Representatives involved in negotiating contracts must ensure
     that all statements, communications, and representations to government
     representatives are accurate and truthful.

     On U.S. government cost-based contracts, properly reporting and charging
     all costs to the appropriate account, regardless of status of the budget or
     account, is essential. Every Representative is responsible for ensuring
     that time is reported promptly and accurately with respect to such
     contracts.

     Tektronix has specific guidelines regarding dealings with the government
     and furnishes guidelines to Representatives involved in this part of
     Tektronix' business. For more information, please visit:
     http://fp-law.tek.com/law/selling_to_usgov.html


                                                                   Page 29 of 31



TRADING IN TEKTRONIX STOCK

     It is Company policy that a Representative who has material nonpublic
     information relating to Tektronix may not buy or sell securities of the
     Company or engage in any other action to take advantage of that information
     or pass that information on to others. Even the appearance of an improper
     transaction must be avoided to preserve the Company's reputation of
     adhering to the highest standards of conduct. This policy also applies to
     material nonpublic information relating to any other company, including our
     customers or suppliers, obtained in the course of employment. Tektronix'
     Stock Trading Policy is located at:

     http://fp-law.tek.com/law/tek_stock_trading.html

     -    COMPANY ASSISTANCE

               Any person who has any questions about specific transactions may
               obtain additional guidance from the Law Department. The ultimate
               responsibility for adhering to the Policy Statement and avoiding
               improper transactions rests with each Representative. In this
               regard, it is imperative that Representatives use their best
               judgment.

     -    MATERIAL INFORMATION

               Material non-public information is any information that has not
               been disclosed to the general public and that a reasonable
               investor would consider important in a decision to buy, hold, or
               sell stock. In short, material information is any information
               which could reasonably affect the price of the stock. If a
               securities transaction becomes the subject of scrutiny, it will
               be viewed after-the-fact with the benefit of hindsight. As a
               result, before engaging in any transaction, a Representative
               should carefully consider how regulators and others might view
               the transaction in hindsight.

               Common examples of information that will frequently be regarded
               as material are: projections of future earnings or losses, order
               levels, anticipated growth rates, negotiations, discussions, and
               agreements regarding significant acquisitions, orders or
               strategic relationships, changes in management, significant new
               products, the gain or loss of a substantial customer or supplier
               and information regarding stock offerings or other financings.
               Either positive or negative information may be material.

               For example, if you learn in a meeting that Tektronix was
               expected to post a loss for the quarter, and if that information
               has not been disclosed in a press release, you cannot share this
               news with friends, nor trade in Tektronix stock as the
               information you overheard is considered "material". The buying or
               selling of Tektronix stock after you have gained knowledge of
               information that has not been publicly disclosed, would be in
               violation of U.S. law.

     -    DIRECTORS, OFFICERS & OTHER INSIDERS

               Tektronix has an Insider Trading Policy applicable to directors,
               officers and other potential insiders. For more detailed
               information review the policy at:

               http://fp-law.tek.com/law/insider_trading.html


                                                                   Page 30 of 31



(TRADING IN TEKTRONIX STOCK CONTINUED...)

     -    POTENTIAL LIABILITIES

               Representatives may be subject to substantial criminal and civil
               liability for engaging in transactions in the Company's shares at
               a time when material information regarding the Company is known
               to the insider but has not been disclosed to the public. In
               addition, Representatives may be liable for the improper
               transactions of other persons (commonly referred to as "tippees")
               to whom they have disclosed material information regarding the
               Company not previously disclosed to the public.

     -    PUT OR CALL OPTIONS

               Because we believe it is improper and inappropriate for any
               Representatives to engage in short-term or speculative
               transactions involving Company stock and the high level of risk
               of misuse of undisclosed material information about the Company,
               it is the Company's policy that Representatives not engage in any
               short sales of Company stock and not purchase or sell put or call
               options on the Company's stock. This policy does not apply to
               exercises of stock options under the Company's option plans.

     -    STOCK OPTION PURCHASE/ESPP

               Purchases of stock upon exercise of stock options or through the
               Employee Stock Purchase Plan (but not sales of the purchased
               shares, and not "cashless" exercises of options) are exempt from
               the rule against transacting in company stock while in possession
               of material, non-public information.

     -    TIPPING INFORMATION TO OTHERS

               Representatives are prohibited from sharing with anyone
               (including family members and others living in a Representative's
               household) information that could have an impact on the Company's
               stock price. The above liabilities can apply, whether or not a
               Representative derives any benefit from another's actions.



                                                                   Page 31 of 31

EX-21

                                                                               .
                                                                               .
                                                                               .

                                                                      EXHIBIT 21

                         SUBSIDIARIES OF TEKTRONIX, INC.
                              an Oregon Corporation



                                                              JURISDICTION
                    NAME OF SUBSIDIARY                         ORGANIZED
                    ------------------                      ---------------
                                                         
Tektronix Network Systems Pty. Ltd.                         Australia
Tektronix GesmbH                                            Austria
Tektronix Industria e Comercio Ltda. Brazil                 Brazil
Tektronix Canada Inc.                                       Canada
Tektronix Electronics (China) Co., Ltd.                     China
Tektronix (China) Co., Ltd.                                 China
Tektronix Oy                                                Finland
Tektronix S.A.                                              France
Tektronix Berlin GmbH & Co. KG                              Germany
Tektronix Berlin Verwaltungs GmbH                           Germany
Tektronix GmbH                                              Germany
Tektronix Network Systems GmbH                              Germany
Tektronix Hong Kong Limited                                 Hong Kong
Tektronix Engineering Development (India) Private Limited   India
Tektronix (India) Private Limited                           India
Tektronix Padova S.p.A.                                     Italy
Tektronix S.p.A.                                            Italy
Tektronix Japan Ltd.                                        Japan
Tektronix Korea, Ltd.                                       Korea
Tektronix, S.A. de C.V.                                     Mexico
Inet Technologies Netherlands BV                            The Netherlands
Tektronix Holland B.V.                                      The Netherlands
Tektronix Southeast Asia Pte. Ltd.                          Singapore
Tektronix Espanola, S.A.                                    Spain
Tektronix AB                                                Sweden
Tektronix International GmbH                                Switzerland
Tektronix International Sales GmbH                          Switzerland
Tektronix Taiwan, Ltd.                                      Taiwan
Tayvin 160 Limited                                          United Kingdom
Tektronix Cambridge Limited                                 United Kingdom
Tektronix Network Systems Ltd.                              United Kingdom
Tektronix U.K. Limited                                      United Kingdom
Tektronix U.K. Holdings Limited                             United Kingdom
Tektronix U K Development Centre Limited                    United Kingdom
Maxtek Components Corporation                               Delaware
Inet Technologies International, Inc.                       Delaware
Tektronix Texas, LLC                                        Delaware
Tektronix Analysis Software, Inc.                           Oregon
Tektronix Asia, Ltd.                                        Oregon
Tektronix Development Company                               Oregon
Tektronix Export, Inc.                                      Oregon
Tektronix Federal Systems, Inc.                             Oregon
Tektronix International, Inc.                               Oregon

EX-23

                                                                      EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statements No.
33-59171, 333-42413, 333-68607, 333-94347, 333-60668, 333-69840, 333-102456,
333-119460, and 333-131158 of Tektronix, Inc. on Form S-8 and Registration
Statements No. 33-58513, 333-117455, and 333-126595 of Tektronix, Inc. on Form
S-3 of our reports dated August 2, 2006, relating to the financial statements
and financial statement schedule of Tektronix, Inc., and management's report on
the effectiveness of internal control over financial reporting appearing in the
Annual Report on Form 10-K of Tektronix, Inc. for the year ended May 27, 2006.

/s/ DELOITTE & TOUCHE LLP

Portland, Oregon
August 2, 2006

EX-24

                                                                      EXHIBIT 24

                                POWER OF ATTORNEY

          The undersigned constitutes and appoints RICHARD H. WILLS, COLIN L.
SLADE and JAMES F. DALTON and each of them, as the undersigned's true and lawful
attorneys and agents, with full power of substitution and resubstitution for the
undersigned and in the undersigned's name, place and stead, in any and all
capacities, to sign the Tektronix, Inc. Annual Report on Form 10-K for the year
ended May 27, 2006 and any and all amendments thereto, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys and agents, and
each of them, full power and authority to do any and all acts and things
necessary or advisable to be done, as fully and to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and confirming all
that said attorneys and agents or either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

DATED: August 2, 2006


                                        /s/ PAULINE LO ALKER
                                        ----------------------------------------
                                        (Signature)
                                        Pauline Lo Alker



                                                                      EXHIBIT 24

                                POWER OF ATTORNEY

          The undersigned constitutes and appoints RICHARD H. WILLS, COLIN L.
SLADE and JAMES F. DALTON and each of them, as the undersigned's true and lawful
attorneys and agents, with full power of substitution and resubstitution for the
undersigned and in the undersigned's name, place and stead, in any and all
capacities, to sign the Tektronix, Inc. Annual Report on Form 10-K for the year
ended May 27, 2006 and any and all amendments thereto, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys and agents, and
each of them, full power and authority to do any and all acts and things
necessary or advisable to be done, as fully and to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and confirming all
that said attorneys and agents or either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

DATED: August 2, 2006


                                        /s/ A. GARY AMES
                                        ----------------------------------------
                                        (Signature)
                                        A. Gary Ames



                                                                      EXHIBIT 24

                                POWER OF ATTORNEY

          The undersigned constitutes and appoints RICHARD H. WILLS, COLIN L.
SLADE and JAMES F. DALTON and each of them, as the undersigned's true and lawful
attorneys and agents, with full power of substitution and resubstitution for the
undersigned and in the undersigned's name, place and stead, in any and all
capacities, to sign the Tektronix, Inc. Annual Report on Form 10-K for the year
ended May 27, 2006 and any and all amendments thereto, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys and agents, and
each of them, full power and authority to do any and all acts and things
necessary or advisable to be done, as fully and to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and confirming all
that said attorneys and agents or either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

DATED: August 2, 2006


                                        /s/ GERRY B. CAMERON
                                        ----------------------------------------
                                        (Signature)
                                        Gerry B. Cameron



                                                                      EXHIBIT 24

                                POWER OF ATTORNEY

          The undersigned constitutes and appoints RICHARD H. WILLS, COLIN L.
SLADE and JAMES F. DALTON and each of them, as the undersigned's true and lawful
attorneys and agents, with full power of substitution and resubstitution for the
undersigned and in the undersigned's name, place and stead, in any and all
capacities, to sign the Tektronix, Inc. Annual Report on Form 10-K for the year
ended May 27, 2006 and any and all amendments thereto, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys and agents, and
each of them, full power and authority to do any and all acts and things
necessary or advisable to be done, as fully and to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and confirming all
that said attorneys and agents or either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

DATED: August 2, 2006


                                        /s/ DAVID N. CAMPBELL
                                        ----------------------------------------
                                        (Signature)
                                        David N. Campbell



                                                                      EXHIBIT 24

                                POWER OF ATTORNEY

          The undersigned constitutes and appoints RICHARD H. WILLS, COLIN L.
SLADE and JAMES F. DALTON and each of them, as the undersigned's true and lawful
attorneys and agents, with full power of substitution and resubstitution for the
undersigned and in the undersigned's name, place and stead, in any and all
capacities, to sign the Tektronix, Inc. Annual Report on Form 10-K for the year
ended May 27, 2006 and any and all amendments thereto, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys and agents, and
each of them, full power and authority to do any and all acts and things
necessary or advisable to be done, as fully and to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and confirming all
that said attorneys and agents or either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

DATED: August 2, 2006


                                        /s/ FRANK C. GILL
                                        ----------------------------------------
                                        (Signature)
                                        Frank C. Gill



                                                                      EXHIBIT 24

                                POWER OF ATTORNEY

          The undersigned constitutes and appoints RICHARD H. WILLS, COLIN L.
SLADE and JAMES F. DALTON and each of them, as the undersigned's true and lawful
attorneys and agents, with full power of substitution and resubstitution for the
undersigned and in the undersigned's name, place and stead, in any and all
capacities, to sign the Tektronix, Inc. Annual Report on Form 10-K for the year
ended May 27, 2006 and any and all amendments thereto, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys and agents, and
each of them, full power and authority to do any and all acts and things
necessary or advisable to be done, as fully and to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and confirming all
that said attorneys and agents or either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

DATED: August 2, 2006


                                        /s/ MERRILL A. McPEAK
                                        ----------------------------------------
                                        (Signature)
                                        Merrill A. McPeak



                                                                      EXHIBIT 24

                                POWER OF ATTORNEY

          The undersigned constitutes and appoints RICHARD H. WILLS, COLIN L.
SLADE and JAMES F. DALTON and each of them, as the undersigned's true and lawful
attorneys and agents, with full power of substitution and resubstitution for the
undersigned and in the undersigned's name, place and stead, in any and all
capacities, to sign the Tektronix, Inc. Annual Report on Form 10-K for the year
ended May 27, 2006 and any and all amendments thereto, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys and agents, and
each of them, full power and authority to do any and all acts and things
necessary or advisable to be done, as fully and to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and confirming all
that said attorneys and agents or either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

DATED: August 2, 2006


                                        /s/ ROBIN L. WASHINGTON
                                        ----------------------------------------
                                        (Signature)
                                        Robin L. Washington



                                                                      EXHIBIT 24

                                POWER OF ATTORNEY

          The undersigned constitutes and appoints RICHARD H. WILLS, COLIN L.
SLADE and JAMES F. DALTON and each of them, as the undersigned's true and lawful
attorneys and agents, with full power of substitution and resubstitution for the
undersigned and in the undersigned's name, place and stead, in any and all
capacities, to sign the Tektronix, Inc. Annual Report on Form 10-K for the year
ended May 27, 2006 and any and all amendments thereto, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys and agents, and
each of them, full power and authority to do any and all acts and things
necessary or advisable to be done, as fully and to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and confirming all
that said attorneys and agents or either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

DATED: August 2, 2006


                                        /s/ CYRIL J. YANSOUNI
                                        ----------------------------------------
                                        (Signature)
                                        Cyril J. Yansouni



                                                                      EXHIBIT 24

                                POWER OF ATTORNEY

          The undersigned constitutes and appoints RICHARD H. WILLS, COLIN L.
SLADE and JAMES F. DALTON and each of them, as the undersigned's true and lawful
attorneys and agents, with full power of substitution and resubstitution for the
undersigned and in the undersigned's name, place and stead, in any and all
capacities, to sign the Tektronix, Inc. Annual Report on Form 10-K for the year
ended May 27, 2006 and any and all amendments thereto, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys and agents, and
each of them, full power and authority to do any and all acts and things
necessary or advisable to be done, as fully and to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and confirming all
that said attorneys and agents or either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

DATED: August 2, 2006


                                        /s/ RICHARD H. WILLS
                                        ----------------------------------------
                                        (Signature)
                                        Richard H. Wills



                                                                      EXHIBIT 24

                                POWER OF ATTORNEY

          The undersigned constitutes and appoints RICHARD H. WILLS and JAMES F.
DALTON and each of them, as the undersigned's true and lawful attorneys and
agents, with full power of substitution and resubstitution for the undersigned
and in the undersigned's name, place and stead, in any and all capacities, to
sign the Tektronix, Inc. Annual Report on Form 10-K for the year ended May 27,
2006 and any and all amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys and agents, and each of them,
full power and authority to do any and all acts and things necessary or
advisable to be done, as fully and to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorneys and agents or either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

DATED: August 2, 2006


                                        /s/ COLIN L. SLADE
                                        ----------------------------------------
                                        (Signature)
                                        Colin L. Slade

EX-31.1

                                                                    EXHIBIT 31.1

                            CERTIFICATION PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Richard H. Wills, certify that:

1.   I have reviewed this annual report on Form 10-K of Tektronix, Inc., for the
     fiscal year ending May 27, 2006;

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

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

4.   The registrant's other certifying officer(s) and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
     financial reporting (as defined in Exchange Act Rules 13a-15(f) and
     15d-15(f)) for the registrant and have:

     (a)  Designed such disclosure controls and procedures, or caused such
          disclosure controls and procedures to be designed under our
          supervision, to ensure that material information relating to the
          registrant, including its consolidated subsidiaries, is made known to
          us by others within those entities, particularly during the period in
          which this report is being prepared;

     (b)  Designed such internal control over financial reporting, or caused
          such internal control over financial reporting to be designed under
          our supervision, to provide reasonable assurance regarding the
          reliability of financial reporting and the preparation of financial
          statements for external purposes in accordance with generally accepted
          accounting principles;

     (c)  Evaluated the effectiveness of the registrant's disclosure controls
          and procedures and presented in this report our conclusions about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     (d)  Disclosed in this report any change in the registrant's internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal quarter (the registrant's fourth fiscal quarter in
          the case of an annual report) that has materially affected, or is
          reasonably likely to materially affect, the registrant's internal
          control over financial reporting; and

5.   The registrant's other certifying officer(s) and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     (a)  All significant deficiencies and material weaknesses in the design or
          operation of internal control over financial reporting which are
          reasonably likely to adversely affect the registrant's ability to
          record, process, summarize and report financial information; and

     (b)  Any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          control over financial reporting.

Date: August 2, 2006


/s/ RICHARD H. WILLS
- ----------------------------------------
Richard H. Wills
President and Chief Executive Officer

EX-31.2

                                                                    EXHIBIT 31.2

                            CERTIFICATION PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Colin L. Slade, certify that:

1.   I have reviewed this annual report on Form 10-K of Tektronix, Inc., for the
     fiscal year ending May 27, 2006;

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

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

4.   The registrant's other certifying officer(s) and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
     financial reporting (as defined in Exchange Act Rules 13a-15(f) and
     15d-15(f)) for the registrant and have:

     (a)  Designed such disclosure controls and procedures, or caused such
          disclosure controls and procedures to be designed under our
          supervision, to ensure that material information relating to the
          registrant, including its consolidated subsidiaries, is made known to
          us by others within those entities, particularly during the period in
          which this report is being prepared;

     (b)  Designed such internal control over financial reporting, or caused
          such internal control over financial reporting to be designed under
          our supervision, to provide reasonable assurance regarding the
          reliability of financial reporting and the preparation of financial
          statements for external purposes in accordance with generally accepted
          accounting principles;

     (c)  Evaluated the effectiveness of the registrant's disclosure controls
          and procedures and presented in this report our conclusions about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     (d)  Disclosed in this report any change in the registrant's internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal quarter (the registrant's fourth fiscal quarter in
          the case of an annual report) that has materially affected, or is
          reasonably likely to materially affect, the registrant's internal
          control over financial reporting; and

5.   The registrant's other certifying officer(s) and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     (a)  All significant deficiencies and material weaknesses in the design or
          operation of internal control over financial reporting which are
          reasonably likely to adversely affect the registrant's ability to
          record, process, summarize and report financial information; and

     (b)  Any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          control over financial reporting.

Date: August 2, 2006


/s/ COLIN L. SLADE
- -------------------------------------
Colin L. Slade
Senior Vice President and Chief
Financial Officer

EX-32.1

                                                                    EXHIBIT 32.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Annual Report of Tektronix, Inc. (the "Company") on
Form 10-K for the fiscal year ended May 27, 2006 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, Richard H. Wills,
President and Chief Executive Officer of the Company, certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that to the best of my knowledge:

     (1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

     (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.

Dated: August 2, 2006


/s/ RICHARD H. WILLS
- -------------------------------------
Richard H. Wills
President and Chief Executive Officer

EX-32.2

                                                                    EXHIBIT 32.2

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Annual Report of Tektronix, Inc. (the "Company") on
Form 10-K for the fiscal year ended May 27, 2006 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, Colin L. Slade,
Senior Vice President and Chief Financial Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

     (1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

     (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.

Dated: August 2, 2006


/s/ COLIN L. SLADE
- -------------------------------------
Colin L. Slade
Senior Vice President and Chief
Financial Officer