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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

For the fiscal year ended March 29, 2002

OR

For the transition period from ___________ to ___________

Commission file number 0-9321

PRINTRONIX, INC.

Registrant’s telephone number, including area code (714) 368-2300

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

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.01,
Including Common Share Purchase Rights

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the 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.  [X]

On April 26, 2002, there were 5,855,064 shares of the Registrant’s Common Stock outstanding. The aggregate market value of the Common Stock (based upon the closing price of $12.00 per share as quoted in the Nasdaq Stock Market® on April 26, 2002) held by non-affiliates of the Registrant was $50,640,504.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s Proxy Statement for the Annual Meeting of Stockholders to be held on August 20, 2002 are incorporated by reference into Part III of this report.

Table of Contents

Printronix, Inc.
Index to Form 10-K

				PAGE
PART I:
Item 1.		Business		2
Item 2.		Properties		9
Item 3.		Legal Proceedings		9
Item 4.		Submission of Matters to a Vote of Security Holders		9
PART II:
Item 5.		Market for Registrant’s Common Equity and Related Stockholder Matters		11
Item 6.		Selected Financial Data		11
Item 7.		Management’s Discussion and Analysis of Results of Operations and Financial Condition		11
Item 7A.		Qualitative and Quantitative Disclosures About Market Risk		20
Item 8.		Financial Statements and Supplementary Data		21
Item 9.		Changes in and Disagreements with Independent Accountants on Accounting and Financial Disclosure		39
PART III:
Item 10.		Directors and Executive Officers of the Registrant		39
Item 11.		Executive Compensation		39
Item 12.		Security Ownership of Certain Beneficial Owners and Management		39
Item 13.		Certain Relationships and Related Transactions		39
PART IV:
Item 14.		Exhibits, Financial Statement Schedules and Reports on Form 8-K		40
SIGNATURES				41

PART I

Item 1.   Business

Certain geographic information for Item 1 is found in Note 7 of the Notes to Consolidated Financial Statements on page 37 of this Annual Report on Form 10-K.

General

Printronix, Inc. is the leader in multi-technology “Supply Chain Printing Solutions,” which provide remotely managed printers that produce documents of all types in network printing systems of businesses around the world. Printronix markets three types of applications-compatible printers — line matrix, thermal and fanfold laser, as well as software that manages these printers in an enterprise network. Printronix common stock is traded on NASDAQ under the symbol PTNX. For more information, visit us at www.Printronix.com.

We develop, design, manufacture and market medium and high speed printing solutions and the related supplies and services. Products are designed for use in mission critical applications where unsurpassed reliability and performance are crucial. Products are used in industrial settings such as manufacturing plants and distribution centers, in addition to the front office and the information technology department. We have a global presence with manufacturing and configuration sites located in the United States, Singapore and Holland. In addition, we have 17 sales and support locations around the world.

The printers function on a wide range of computer systems and enterprise software and are compatible with various label generation and label management software. All of the printers have extensive industrial graphics capabilities allowing them to support most popular industrial graphics languages while producing every type of printed computer output, including labels, bar codes, multi-part forms and reports.

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We distinguish ourselves from our competitors in several key areas. We offer three printing technologies; line matrix, thermal and fanfold laser. We also provide professional services for systems integration and post-sales support with supplies, spares, repairs and maintenance capability. Our unique printer management solution, PrintNet® Enterprise, offers remote management of networked printers around the world. This unique architecture allows common printing solutions to be applied to all three printing technologies. Printing solutions offer direct connectivity to the enterprise software SAP/R3 thus eliminating costly middleware. In addition, our unique On-Line Data Validation (ODV™) feature provides a differentiated solution in thermal printing for compliance labeling by monitoring bar code labels as they print to ensure scanability. The printers offer worldwide languages. We also design, manufacture and market bar code verifiers. The verifiers are both hand-held and on-line units, incorporating traditional and American National Standards Institute (ANSI) verification. We develop and own most of the technology employed in our products.

To support our installed base of printers and verifiers, we sell consumables, such as ribbons and toner. We also sell spare parts and provide other customer services such as the Advanced Exchange spare parts logistics program, repairs and maintenance. The consumable supplies, spare parts and customer services provide recurring revenue on the installed base of Printronix printers.

We market and sell our products worldwide through major computer systems companies (OEMs), and a network of system integrators, full-service distributors and value added resellers. All three technologies are marketed to the same installed base and through the same channels.

The business is affected by global changes in the level of capital spending to expand or enhance manufacturing plants, distribution centers and investments in information technology spending. We believe that greater emphasis on supply chain management, warehouse automation and the increasing use of bar coded labels offers opportunities for long-term growth.

Printronix, Inc. was incorporated in California in 1974 and was reincorporated in Delaware in December 1986. Our headquarters are located in Irvine, California. Unless the context otherwise requires, the terms “we,” “our,” “us,” “Company” and “Printronix” refer to Printronix, Inc. and its consolidated subsidiaries.

Market Overview

Various industry analysts track market share data and such data for fiscal 2002 is not yet available. In 2001, we enjoyed a 61 percent market share in the worldwide line matrix market, excluding Japan. We introduced our own thermal printer in late fiscal year 2000 and since then have increased our market share to four percent of the performance segment of the 2001 worldwide thermal market. Industry analysts do not track the size of the fanfold laser market. However, we believe we have a dominant market share in the high-end fanfold laser label-printing segment.

Geographic Regions

We classify revenue in three geographic regions; The Americas, Asia-Pacific and Europe, the Middle East and Africa (“EMEA”). Our products are sold in over seventy-three countries. We believe that a large percentage of our revenue will continue to come from outside of the Americas in the future. We price our products in United States dollars and the Euro. A summary of the effects of the Euro can be found in Note 1 of the Notes to Consolidated Financial Statements on page 29 of this Annual Report on Form 10-K. A summary of revenue and assets by region can be found in Note 7 on page 37 of this Annual Report on Form 10-K.

Growth Strategy

Printronix intends to continue to invest in line matrix solutions and leverage those solutions to the thermal and laser products. We also intend to continue to invest in high-speed line matrix printer development and believe these higher speed models offer an opportunity to replace aging high-speed band printers. We also intend to enhance line matrix print quality by developing better ribbon technology and manufacturing processes. We intend to grow our thermal market share by expanding the range of applications where our unique features add value. We intend to expand our capability to allow migration of industrial printing applications to new enterprise software platforms and networks.

Printronix intends to grow revenue from our installed base of printers by increasing our market share of recurring revenue by expanding our channel for supplies, increasing our services, such as maintenance, repairs, spare parts

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logistics programs and professional services, such as systems integration and migration. We are also expanding our market share of remanufactured Printronix printers, a market that we did not previously participate in.

Printronix has entered into strategic alliances with labeling and warehouse management systems software providers in order to expand our range of solutions and systems integration. We expect to continue to enter into additional alliances.

We expect to create demand for our products through our Major Accounts Marketing and Vertical Marketing programs. We intend to work with retail and automotive industry leaders to provide printing solutions using all three of our printing technologies. We believe we can achieve efficiencies for our end user customers through our global channel partners due to the common architecture, worldwide support and post sales supplies and services.

Technology

Our core technologies include line matrix and thermal print engines, subsystem controllers and software, bar code verification and network printer management. Line matrix, thermal and laser printers developed from these technologies are unified by a common control architecture called Printronix System Architecture (PSA®), the latest version of which is PSA®2 (PSA2). This architecture permits all three printing technologies to be application compatible by supporting common industrial graphics languages, host communication protocols, and global network management.

We also offer advanced network printer management solutions with our recently launched PrintNet Enterprise, which is a combination of hardware and software components. PrintNet Enterprise is a global printing, troubleshooting and management system that allows remote management control of our printers from a networked desktop. PrintNet Enterprise includes an interface card to provide connection to an Ethernet network and a Java-based software application providing advanced configuration management tools, event notification and remote status and diagnostic capabilities.

In addition, we also offer the unique ODV capability that ensures all bar codes produced on the T5000 thermal printer are readable by bar code scanners. ODV analyzes each bar code immediately after the label is printed and validates that the bar code is within specifications. ODV also provides a quality control record of each bar code printed.

All of our printers support Printronix IGP®/PGL® and IGP/VGL bar code label printing languages. During fiscal 2002, we further advanced our industry leadership in network printer management, bar code verification, line matrix and thermal printing through new product introductions.

We have designed and developed software and hardware that leads the industry in connectivity to allow the printers to operate in a wide variety of computer systems, software and networks. In addition, we designed and developed emulation software which allows our printers to be placed in environments with competitive products and allows the printers to function using the host data streams without the need for modifications to the applications. In addition, Printronix printers can print in worldwide languages.

Printers

Computer printers are output devices that use electromechanical techniques to convert digitized information sent from a host computer to a printed form. Printing by means of impact or non-impact technologies, output can take the form of a variety of media, including paper, card stock, plastic, and cloth. Whether people and/or machines read the output is dependent upon whether the printed output is a bar code or text, and bar coded labels contain both formats. Printronix’s line matrix printers are impact printers and can process single-part or multi-part forms. Printronix’s non-impact printers print only single-part forms by means of thermal and laser techniques.

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     LINE MATRIX PRINTERS

Printing is accomplished as the hammer bank shuttles a small distance back and forth, enabling the hammers to place dots anywhere along a row across the paper. Successive rows of dots are produced by the paper advancing while the hammer bank reverses for printing the next row of dots. Dots overlap horizontally and vertically to produce graphics as well as alphanumeric characters.

Line matrix models include the Printronix P5000 series line printer family with speeds ranging from 500 to 2000 lines per minute (“LPM”). The P5000 series models were introduced in fiscal 1996, and replaced our previous generation models. In fiscal 2002, we introduced the P5220, which at 2000 LPM, is the world’s fastest line matrix printer. Applications for line matrix printers include reports, multi-part forms, bar codes, labels and program listings. The P5000 series line matrix printers operate at 500, 1000, 1500 and 2000 LPM.

The dot placement of our line matrix printers is very precise, permitting accurate character alignment. The combination of precise dot placement anywhere on the page and the use of overlapping dots rather than fully formed characters enables Printronix printers, under computer control, to produce graphic output. Another key feature of the line matrix technology is that hammer energy is optimized to print only dots, resulting in improved print quality on multi-part forms. These printers are available in pedestal or floor cabinet models with worldwide languages, a wide range of computer capabilities and a power paper stacker for floor model units.

Our P5000 series of line matrix printers offers the PrintNet Enterprise option, which includes high-speed Ethernet connectivity and full remote printer management capabilities.

The value provided by line matrix printing is the high level of reliability, the ability to function in harsh environments, the lowest cost per printed page and the ability to process multi-part forms.

     THERMAL PRINTERS

Thermal printers have become the primary instruments in the creation of bar codes and on-demand label printing. Thus, they occupy a unique niche in the printer world, because of the growing importance of bar coding in supply chain logistics.

Thermal printers create images on paper by heating thermal sensitive media. The image is created either by heating an ink-based ribbon which transfers ink to the paper label material (transfer) or by heating paper label material in which the thermally sensitive ink is already impregnated (direct). This technology results in a readable bar code image.

Our T5000 thermal printers range in print width from 4.1 to 8.5 inches and in speed from 6 to 10 inches per second. They print from 200 to 300 dots per inch (“DPI”). They support both direct and thermal transfer methods and were designed to fulfill the demands of the high volume, high intensity user.

The T5000 thermal printer models were designed, engineered and manufactured by Printronix, and they incorporate PSA2 and PrintNet Enterprise. The T5000 also offers the unique ODV capability that ensures all the bar codes it produces meet industry specifications and will scan accurately. With PrintNet Enterprise, ODV and PSA2, the T5000 sets a new standard of durability, versatility, flexibility, and manageability to meet today’s enterprise users’ needs. These printers address a wide range of label printing applications in the manufacturing, distribution, retail and healthcare sectors.

The value provided by thermal printing is on demand label printing and a small footprint that allows stationing along the manufacturing production line or throughout the distribution center.

     LASER PRINTERS

Fanfold laser printers create images on paper electrographically like a copier machine. The image is fixed to the paper with toner in the same manner as copiers. The controllers, which we designed, are integrated with print engines purchased from outside suppliers. All models are available with optional power stackers.

The LaserLine® printers combine print quality and speed with the distinct advantages of fanfold forms. A straight-through paper path combined with optional power stacking allows for long, unattended print runs. The L1524 laser printer operates at up to 24 pages per minute and 300 DPI. The L1524 utilizes the more conventional heat/pressure

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fusing process, supports form widths up to 10 inches and offers a 50,000 pages per month duty cycle. The L1524 is primarily used for medium volume billing and labeling applications.

The LaserLine L5520 and L5535 fanfold laser printers operate at up to 35 pages per minute, 240 to 400 DPI, and have a unique flash fusing process, which produces output of exceptional durability and quality. Unlike other laser printers, the L5520 and L5535 can print on a wide variety of media including synthetics and plastic cards. The wide carriage, which can print widths up to 14.6 inches, high duty cycle and durability of the output make these printers particularly well suited for high volume utility type billing and labeling applications.

Fanfold laser printing provides value with its high resolution and high-speed batch printing, and the L5520 and L5535 have unique label printing capabilities.

Bar Code Verification Products

A Bar Code Verifier reads and decodes a bar code in the same manner as a normal scanner, but additionally, it analyzes the adherence of the bar code to published industry specifications. Hand-held portable models and on-line models are available that meet practically any industry requirement. On-line verifiers are fixed to either printers or conveyance systems. When attached to a printer, the verifier analyzes the bar codes being produced by the printer. When attached to a conveyance system, the verifier analyzes the bar codes as they traverse in front of it. On-line models have an additional feature that communicates with the printers or conveyance systems and allows them to be controlled. These control features can stop the printers or conveyance systems, sound alarms or alert operators that manual intervention is required if the bar codes are not meeting industry specifications.

Supplies, Consumables and Services

We also sell associated printer supplies and consumables such as ribbons and toner. Some of these products are designed and manufactured by us; others are purchased from outside suppliers. We offer maintenance services and the Advanced Exchange program, which provides logistical support for spares and repairs, and minimizes the amount of inventory needed by our resellers and customers to service the printers. The printers are sold with warranties, but customers can purchase maintenance service agreements from us or from our channel which cover the post warranty period. We also repair and sell spare parts to our channel, which are used to support their maintenance service agreements. Supplies, consumables and services, such as maintenance, are an area of expected growth opportunity.

Worldwide Market For Printronix Products

We market our products to manufacturers, distribution centers and retailers for use in producing bar codes, labels, tags, transaction documents and information reports. In addition, we market our products to information systems departments for use in producing multi-part forms and reports. The market for bar code verifiers consists mainly of companies that use bar codes as a critical source for data, print bar codes, supply bar codes to other companies either as labels or on products and/or have internal quality procedures relating to bar codes, such as ISO 9000 requirements.

Warranties

We offer either a 90 day on-site or a 12 month return to factory standard parts and labor warranty on all products. Defective printers and verifiers can be returned to us for repairs or replacement in the applicable warranty period. Supplies are warranted for the shelf life of the products.

Channel

The printers and products are sold worldwide through major computer systems companies (OEMs), and a network of full-service distributors, systems integrators and value added resellers (VARs).

OEM sales and distribution channel sales were 43.0% and 57.0% of net sales for fiscal year 2002, respectively. Channel sales were 44.0% OEM and 56.0% distribution for fiscal year 2001, and 46.4% OEM and 53.6% distribution for fiscal year 2000.

Information on sales to our largest customers can be found in Note 7 of the Notes to Consolidated Financial Statements on page 37 of this Annual Report on Form 10-K.

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Competition

Our products compete in the overall market for medium and high-speed computer printers. The overall market includes line matrix, thermal transfer, laser, inkjet, serial, and band printers. We compete on a direct basis with several companies of varying sizes, including some of the largest businesses in the United States and Japan.

On-line verifier products offer a unique feature mix of fixed position scanning, verification communication and controls. There is little direct competition at this time. For portable verifiers, there are two major competitors in the United States. Both major competitors purchase on-line systems from us.

Competitive factors in the markets include reliability, durability, price, print quality, and versatility of special performance features, information systems connectivity, channel to market, post-sales support, including professional services and financial resources to invest in new product designs and features. We believe our printers are highly competitive with regard to features, reliability, durability, price/performance and cost of ownership. Our professional services includes a wide range of services to assure that our printing solutions deliver their full potential in our customer’s enterprise system. We invest more heavily in research and development than the industry average. We can offer no assurance that products with superior technology or superior price/performance will not be introduced by the competition. If introduced, those products could have a material impact on our operations. Knowledge of a pending new product in the marketplace by us or by our competitors may have an adverse impact on revenue as customers may delay purchasing decisions until the new product is available.

Industry analysts have estimated the size of the 2001 worldwide line matrix market to be $300 million based on end user pricing, excluding Japan. Industry analysts have estimated this market experienced a 24 percent drop from the prior year due to the general slowness in the economy. We have long enjoyed the dominant position in this market. We grew our market share to 61 percent in fiscal year 2001, in spite of a declining market. Our primary competitors in the line matrix market are Genicom, Inc. and Tally, whom together account for 22 percent of the market. Based upon industry analysts’ data, we expect this market to remain flat in the near future in the United States and Western Europe, but grow in the emerging economies of Eastern Europe and Asia Pacific.

Industry analysts have estimated the 2001 worldwide market for high-end thermal printers to be $320 million based on end user pricing. The high-end market is defined as printers with a list price of $2,700 or greater. The market experienced a 9 percent drop from the prior year due to the general slowness in the economy. We grew our fiscal year 2001 market share to 4 percent, despite a declining market, after introducing our own thermal printer in late fiscal year 2000. Our primary competitors in the thermal market are Zebra Technologies Corporation, Sato, Tokyo Electric Company (TEC) and Intermec, a subsidiary of Unova, who together account for 82 percent of the market. We expect this market to grow approximately 7 percent annually in the future, based upon industry analysts’ data, driven by enhancements in networking technologies and expansion of enterprise systems. All brand names used throughout this Annual Report on Form 10-K are trademarks or registered trademarks of their respective companies.

Industry data on the fanfold laser market is not available. We believe we have a significant market share in the segment devoted to fanfold laser label printing.

Industry data on market size is not yet available for 2002.

We invest more of our revenue in research and development, about 10% of revenue versus 6% for our key competitors, and expect to continue to do so. We believe that our global presence, three technologies, advanced network printer management capabilities and unique ODV capability provide a competitive advantage.

Order Backlog

Our customers place the majority of their orders on a just in time basis. We ship directly to most of our end user customers in the United States. As a result, we believe order backlog is not a meaningful indicator of future sales.

Raw Materials

We purchase custom mechanical and standard electronic components from numerous outside suppliers. Most of those components used in our impact and thermal printers are available from alternate sources should an issue arise with the existing source. Tooling is typically transferable to a new source with minimal ramp up time to full production capabilities. We also purchase certain components from sole sources and have no reason to believe that

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supply from these sources would be placed in jeopardy. However, if we were to lose any sole source for a component, there could be a delay in shipment of printers requiring those components until an alternate source could be ramped to fulfill production requirements. Our laser printer products are designed to use specific proprietary print engines and printer assemblies manufactured by outside suppliers. We have entered into written purchase agreements for these printer components and have no reason to believe that we will be unable to obtain the materials required.

Engineering and Development

Printronix operates in an industry that is subject to rapid technological change, and our ability to compete successfully depends upon, among other things, our ability to anticipate market needs and quickly respond with new solutions. Accordingly, we are committed to a product development process that is coupled to market requirements and facilitates high quality, rapid, product development and introduction. Engineering and development expenditures were approximately $15.7 million in fiscal 2002, compared with $16.7 million in fiscal 2001 and $19.3 million in fiscal 2000. In fiscal 2000, we were developing the new T5000 thermal printer product line. Engineering personnel are located in all three key regions: the Americas, Europe, and Asia Pacific. Research and development expenditures were made in fiscal 2002 and 2001 to enhance our suite of enterprise system printing solutions. These enhancements include: Introduction of PrintNet Enterprise, a significant innovation in enterprise network printer management; the P5220, the world’s fastest (2000 LPM) line matrix printer; new network printing protocols; feature and language enhancements to the T5000 thermal printers; ODV enhancements and introduction of professional services to support definition, customization and integration of our printing solutions.

Patents and Licenses

Printronix has been issued 40 United States patents, and related foreign patents (primarily in Canada, the United Kingdom, France and Germany) associated with various aspects of its printers. We believe that our patents, in various technologies (line matrix, thermal, system architecture, printer control), have competitive value and intend to continue our practice of enforcing our patent rights against potential infringements where we deem appropriate. Although there can be no assurance that we will be successful in defending our rights to any of our patents, we believe our patents are valid.

We have no material licenses from others pertaining to the manufacture of our products, including those under development, and believe none are currently required. Certain software is obtained under licensing agreements. We believe, based on industry practice, any such licenses as might be required in the future could be obtained on terms that would not have a material effect on us.

Employees

Printronix had 922 employees as of March 29, 2002, including 519 in the United States, 318 in Asia Pacific and 85 in Europe.

None of our employees in the United States or Asia Pacific is subject to a collective bargaining agreement. Our wholly owned subsidiary, Printronix Nederland BV, is a member of the Employers Union F.M.E., and some of our employees have elected to become members of an employee union. This employee union is not government sponsored and is supported by contributions from its members. We believe our relationship with our employees is good.

Foreign Operations

We have manufacturing facilities in Singapore, wherein line matrix and thermal printer products and some key components are produced. As part of the fiscal 2001 restructuring, the production of line matrix and thermal printers was centralized in the Singapore facilities. See Note 4 of the Notes to Consolidated Financial Statements on page 32 of this Annual Report on Form 10-K for more details on the restructuring. Also provided out of the Singapore facilities are product support and customer service for the Asia Pacific region. We have a facility in the Netherlands that provides product support, customer service, line matrix, thermal and laser product configuration and distribution. We have sales offices within Germany, France, the United Kingdom, Austria, India, China and Singapore.

International sales information is found in Note 7 of the Notes to Consolidated Financial Statements on page 37 of this Annual Report on Form 10-K.

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We are not aware of any significant risks with respect to our foreign business other than those inherent in the competitive nature of the business and fluctuations in foreign currency exchange rates. Selected financial information regarding foreign and export sales by geographic area is set forth in Note 7 of the Notes to Consolidated Financial Statements on page 37 of this Annual Report on Form 10-K.

In late fiscal 2002, we completed leasehold improvements on a new ribbon manufacturing facility in Mexico. We began shipping from that location in the first quarter of fiscal 2003.

Item 2.   Properties

During the third quarter of fiscal 2000, our new 186,000 square foot facility in Irvine, California, was completed and occupied. The leased facility in Memphis, Tennessee, is approximately 44,000 square feet, and provides logistics support for spares and supplies for the United States market, with the capability of next-morning delivery of orders throughout the United States.

Our foreign operations are located in the Netherlands and Singapore. The Netherlands operations are in leased facilities of approximately 34,000 square feet. Our Singapore operations are in a 74,000 square foot facility we constructed in fiscal 1997. We also lease several small offices, generally on short-term leases, throughout the United States, Asia Pacific and Europe for sales support or service.

See Note 8 of the Notes to Consolidated Financial Statements on page 38 of this Annual Report on Form 10-K for a summary of the expiration dates and lease or rental commitments.

Item 3.   Legal Proceedings

Environmental Assessment

Information on environmental assessment matters is found in Note 8 of the Notes to Consolidated Financial Statements on page 38 of this Annual Report on Form 10-K.

Legal Matters

Information on legal matters is found in Note 8 of the Notes to Consolidated Financial Statements on page 38 of this Annual Report on Form 10-K.

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

We did not submit any matter during the fourth quarter of the fiscal year covered by this report to a vote of security holders through the solicitation of proxies or otherwise.

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Executive Officers of the Registrant

The executive officers of Printronix and their ages as of March 29, 2002, are as follows:

Officers are appointed by and hold office at the pleasure of the Board of Directors.

Mr. Kleist is one of the founders of Printronix and has served as a director and its President and Chief Executive Officer since its formation in 1974. In addition, Mr. Kleist served as Chief Financial Officer from February 1987 to October 1988, a position he also held from August 1985 until January 1986.

Mr. Chapman joined Printronix in November 1995 as Vice President, Product Development. In April 1999, Mr. Chapman was appointed Senior Vice President, Engineering and Chief Technical Officer. From July 1970 to October 1995, Mr. Chapman held various engineering and senior management positions with IBM Corporation.

Mr. Fitzsimmons joined Printronix in September 1985 as Director of Information Systems. In December 1988, he was appointed Vice President, Information Systems. In May 1990, Mr. Fitzsimmons assumed responsibility for Printronix B.V., the Company’s Netherlands subsidiary. Mr. Fitzsimmons was appointed to the additional office of Vice President, Irvine Manufacturing in October 1990. In July 1991, he assumed responsibility for Printronix Schweiz GmbH (formerly known as Printronix A.G.), the Company’s Singapore subsidiary. From May 1992 to October 1994, Mr. Fitzsimmons was Senior Vice President, Manufacturing and Information Systems. In October 1994, he was appointed Senior Vice President, Worldwide Manufacturing. From September 1979 to September 1985, Mr. Fitzsimmons held various senior IS positions at Magnavox.

Mr. Hall joined Printronix in January 2002 as Senior Vice President, Sales and Marketing. For the previous 28 years, Mr. Hall held various senior positions in marketing, sales and general management at Xerox Corporation. In addition to his most recent role at Xerox Corporation as Vice President, eMarketing, Mr. Hall had previously served as Vice President/General Manager of the certified Pre-owned Business Unit and Vice President/General Manager of the Departmental Copier Business Team.

Mr. Harwood joined the Company in October 1988 as Senior Vice President, Finance and Chief Financial Officer. Mr. Harwood was appointed to the additional office of Corporate Secretary in January 1989. In October 1994, Mr. Harwood assumed responsibility for the Company’s Information Systems. From December 1984 to October 1988, Mr. Harwood was Chief Financial Officer and Vice President, Finance at Qume Corporation. From December 1982 to December 1984, Mr. Harwood was Group Controller of ITT Automotive Products, Worldwide. In prior years, Mr. Harwood has held various senior financial positions at ITT in Brussels, London, and Zambia. Mr. Harwood is a Fellow of the Institute of Chartered Accountants in England and has had seven years of public accounting experience, including positions at Price Waterhouse LLP.

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PART II

Item 5.   Market for Registrant’s Common Equity and Related Stockholder Matters

Item 6.   Selected Financial Data

The following income statement and balance sheet data have been derived from our consolidated financial statements. The information set forth below is not necessarily indicative of the results of future operations and should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this Annual Report on Form 10-K.

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

The matters discussed in this Management’s Discussion and Analysis of Results of Operations and Financial Condition on Form 10-K should be read in conjunction with the Consolidated Financial Statements and the Notes to the Consolidated Financial Statements provided under Part II, Item 8 of this Annual Report on Form 10-K.

Forward-Looking Statements

Except for historical information, the Annual Report and Form 10-K contain “forward-looking statements” about Printronix, within the meaning of the Private Securities Reform Act of 1995. Terms such as “objectives,” “believes,” “expects,” “plans,” “intends,” “estimates,” “anticipates,” “forecasts,” “projections,” and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including: adverse business conditions and a failure to achieve growth in the computer industry and in the economy in general; our ability to achieve growth in the Asia Pacific market; adverse political and economic events in our markets; a worsening of the global economy due to general conditions; a worsening of the global economy resulting from terrorist attacks; our ability to hold or increase market share with respect to line matrix printers; our ability to successfully compete against entrenched competition in the thermal printer market; our ability to attract and retain key personnel; the ability of our customers to achieve their sales projections, upon which we have in part based our sales and marketing plans; our ability to retain our customer base and channel; and our ability to continue to develop and market new and innovative products superior to those of the competition and to keep pace with technological

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change. We do not undertake to publicly update or revise any of our forward-looking statements even if experience or future changes show that the indicated results or events will not be realized.

Critical Accounting Policies and Estimates

We prepare the consolidated financial statements of Printronix in conformity with accounting principles generally accepted in the United States of America. As such, we are required to make certain estimates, judgments and assumptions that we believe are reasonable based on the information available to us at the time. These estimates and assumptions affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to product returns, customer programs and incentives, bad debts, inventories, warranty obligations, intangible assets and other long-lived assets, income taxes, and contingencies and litigation. Actual results may differ from these estimates under different assumptions or conditions.

We believe the most critical accounting policies used to prepare the accompanying consolidated financial statements are the following:

     REVENUE RECOGNITION

We recognize revenue from product sales at the time of shipment and passage of title. Our sales are based on written contractual agreements with our resellers that include established pricing and terms. Customers may return products that do not function properly upon delivery or are incompatible with the application.

We continuously monitor and track such product returns and record a provision for the estimated amount of such future returns, based on historical experience and any notification we receive of significant pending returns. While such returns have historically been within our expectations and the provisions we have established, we cannot guarantee that we will continue to experience the same return rates that we have in the past. Any significant increase in product failure rates and the resulting returns could have a material adverse impact on our operating results for the period or periods in which such information is known. We record estimated revenue reductions for customer programs and incentive offerings, including special pricing, rebates, or other programs.

We offer printer maintenance services through service agreements that customers may purchase separately from the printer. These agreements are covered by written contracts and are mostly one year in duration. We provide the point of customer contact and initial diagnostic services, and supply the parts used for printer repairs. We have contracted with third parties to perform the on-site repair services. Revenue from these agreements is recognized on a straight-line basis over the period of the contract, which approximately matches costs incurred.

We offer professional services, such as installation, training and customized applications to customers. These services are billed separately upon completion and acceptance of the service. While the revenue received from professional services is not currently material, professional services are considered an area of potential growth.

     ACCOUNTS RECEIVABLE

We perform credit evaluations of our customers and adjust credit limits based upon payment history and the customer’s current credit worthiness. We continuously monitor collections and payments from our customers and maintain an allowance for estimated bad debt losses based upon our historical experience and any specific customer collection issues we have identified. While such bad debt losses have historically been within our expectations and the allowance we have established, we cannot guarantee that we will continue to experience the same bad debt loss rates that we have in the past. Since our accounts receivable include substantial receivables from a few large resellers, a significant change in the liquidity or financial position of any one of these resellers could result in additional allowances that could affect our future operating results.

     INVENTORIES

We record a provision to value our inventory at the lower of the actual cost to purchase and/or manufacture the inventory, or the current estimated market value of the inventory, based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required.

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     WARRANTIES

We offer warranties of various lengths to our customers depending upon the specific product and terms of the customer purchase agreement. Our standard warranties require us to repair or replace defective product returned to us during such warranty period at no cost to the customer. We record an estimate for warranty related costs based on our actual historical return rates and repair costs at the time of sale.

We engage in product quality programs and processes, including evaluating our suppliers. While our warranty costs have historically been within our expectations and the provisions we have established, we cannot guarantee that we will continue to experience the same warranty return rates or repair costs that we have in the past. A significant increase in product return rates, or a significant increase in the costs to repair our products, could have a material adverse impact on our operating results.

     LONG-LIVED ASSETS

We assess the carrying value of long-lived assets, including intangibles assets, whenever events or changes in circumstances indicate that the carrying amount of the underlying asset may not be recoverable. In the event the carrying value of assets is determined to be unrecoverable, we would record an adjustment to the carrying value of the assets affected. While we make every effort to ensure our long-lived assets are recoverable, any major unanticipated change in circumstances could have a significant impact on the recoverability of long-lived assets and on our operating results.

     INCOME TAXES

We estimate our income tax liability based upon current tax laws in the tax jurisdictions in which we operate. These estimates include judgments about deferred tax assets and liabilities resulting from temporary differences between assets and liabilities recognized for financial reporting purposes and those recognized for tax purposes.

We periodically review our deferred tax assets for recoverability based on historical taxable income, projected future taxable income, and the expected timing of the reversals of existing temporary differences. If the provision for income tax is inadequate, or if we are unable to realize deferred tax assets, or if the tax laws change unfavorably, we could experience income tax charges in excess of the reserves established. Likewise, if the provisions for current and deferred taxes are in excess of those eventually needed, or if we are able to realize additional deferred tax assets, or if tax laws change favorably, we could experience reduced income tax charges.

We have operations in multiple international taxing jurisdictions and are subject to audit in those jurisdictions. These audits can involve complex issues. While we believe we have made adequate provision for any such issues, there is the possibility that the ultimate resolution of such issues could have an adverse effect on our operating results.

Results of Operations

     COMPARISON OF FISCAL YEAR 2002 AND 2001 — OVERVIEW

Revenue for fiscal year 2002 was negatively impacted by the slow worldwide economy and reduced capital spending within our target markets. Despite lower revenue, we returned to profitability due to several factors, including the improved gross margins resulting from the completion of the restructuring efforts initiated and completed in fiscal year 2001, certain price increases and a continual product cost reduction program. Cash balances increased by $12.8 million and inventory decreased by $5.6 million.

Our focus during the year has been to develop future revenue opportunities by expanding the Major Accounts Marketing program, and by expanding customer services. We have initiated programs to pursue total printing solutions in the retail logistics and automotive vertical markets.

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     COMPARISON OF FISCAL YEAR 2001 AND 2000 — OVERVIEW

Revenue for fiscal year 2001 was lower than fiscal year 2000, partly due to one additional week in the prior fiscal year, and partly due to lower sales across all regions and all product lines, except the thermal product line. We attribute the decrease to the general downturn in the worldwide economy. We believe the slowdown in plant expansions and the announcement of plant closures were contributing factors to our lower sales. During fiscal year 2001, we announced and completed various restructuring efforts, which were designed to improve manufacturing efficiencies worldwide at a lower level of sales. The majority of the loss from operations for the fiscal year was due to the restructuring costs. During the later part of the fourth quarter of fiscal 2001, we began to see improved margins as a result of the restructuring efforts. The fiscal year resulted in a loss of $1.3 million, compared with income of $10.5 million in the prior year.

     NET SALES — FISCAL YEARS 2002 AND 2001

Revenue for the fiscal year 2002 was $146.7 million, a decrease of $11.4 million, or 7.2%, compared with the prior fiscal year. We attribute the decrease to the soft worldwide economy and the resultant slowdown in capital spending for plant expansion or refurbishment. Printronix printers are used in manufacturing, supply chain logistics, business critical applications and have a long life, which allows users to delay programs to upgrade these printers in times of economic uncertainty. Thermal printer sales are primarily driven by new plant infrastructure projects and have been affected by the lower capital spending. The decrease in sales was principally due to lower sales in the Americas. The decrease in sales was across all product lines. We were also impacted by lower sales to our major customer.

Americas sales were $81.2 million, down $11.9 million, or 12.8%, from a year ago. Americas distribution sales decreased 11.0% to $44.8 million. Americas OEM sales decreased 14.9% to $36.4 million. Lower sales to some of Printronix’s larger OEM customers were only partially offset by higher sales to some of the smaller OEMs. EMEA sales decreased $0.9 million, or 1.7%, to $48.9 million. EMEA OEM sales were unchanged from the prior year at $24.8 million. EMEA distribution sales were $24.1 million, down from $25.0 million a year ago. Asia Pacific sales increased $1.3 million, or 8.7%, from a year ago to $16.6 million, mostly as a result of increased line matrix sales into India and China.

Line matrix sales for fiscal year 2002 were $114.9 million, a decrease of 5.7% from the prior fiscal year. Line matrix revenue was 78.3% of revenue versus 77.0% in the prior fiscal year. Laser sales totaled $18.3 million, down 8.7% from the prior fiscal year. Laser revenue was 12.5% of revenue compared with 12.7% in the prior fiscal year. Thermal sales were $11.3 million, down 17.5% from the prior fiscal year. Thermal sales were 7.7% of revenue compared with 8.7% in the prior fiscal year. Verification products were $2.1 million, a decrease of $0.4 million from the prior fiscal year. Verification product sales were 1.5% of revenue, compared with 1.6% in the prior fiscal year. Sales of recurring items such as spares, consumables and customer services, included in the product line sales discussed above, were $50.6 million, down 2.0% from the prior fiscal year.

Sales to our largest customer, IBM, represented 27.4% of net sales for the fiscal year, compared with 26.1% a year ago. Sales to the second largest customer represented 8.6% of net sales for the fiscal year, compared with 8.5% a year ago. Sales to the top 10 customers represented 53.9% and 54.7% of net sales for the current and prior fiscal year, respectively.

Sales by channel were 43.0% OEM and 57.0% distribution compared with 44.0% OEM and 56.0% distribution for the prior fiscal year. Revenue from United States customers was 53.3% and 54.9% of total revenue, while revenue from international customers was 46.7% and 45.1% of total revenue for fiscal years 2002 and 2001, respectively.

     NET SALES — FISCAL YEARS 2001 AND 2000

Fiscal year 2001 revenue was $158.1 million, a decrease of $32.1 million, or 16.9%, compared with fiscal year 2000. The decrease was mainly due to lower sales across all regions and all product lines, except the thermal product line, which was up 122.1%, and partly due to one additional week in fiscal year 2000. Americas distribution sales decreased 10.7% to $50.3 million. Americas OEM sales decreased 19.6% to $42.7 million, mostly due to a decrease in sales to our largest customer. EMEA sales decreased $13.2 million, or 20.9%, to $49.8 million, primarily due to a drop in the line matrix business to our largest customer. Asia Pacific sales decreased $2.5 million, or 14.1%, from the prior fiscal year to $15.3 million, mostly as a result of lower sales into India and China.

Line matrix sales for fiscal year 2001 were $121.8 million, a decrease of 21.9% from the prior fiscal year, primarily due to the drop in OEM sales. Line matrix revenue was 77.0% of total fiscal year 2001 revenue versus 81.9% in

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fiscal year 2000. Laser sales totaled $20.1 million, down 14.1% from the prior fiscal year. Thermal sales were $13.7 million, up 130.4% over fiscal year 2000, due to the new T5000 product line, which was launched late in the third quarter of fiscal 2000. Verification products were $2.5 million, compared with $5.1 million in fiscal 2000 due to a large one-time order from the United States Postal Service in fiscal 2000. Sales of recurring items such as spares, consumables and customer services were $51.6 million in fiscal 2001, down 8.8% from fiscal 2000.

Sales to our largest customer, IBM, represented 26.1% of total sales for the fiscal year, compared with 30.0% a year ago, and were lower largely due to a reorganization by that company. Sales to the second largest customer represented 8.5% of total sales for the fiscal year, compared with 7.6% a year ago. Sales to the top 10 customers were 54.7% and 57.0% of revenue for fiscal years 2001 and 2000, respectively.

Sales by channel were 44.0% OEM and 56.0% distribution compared with 46.4% OEM and 53.6% distribution for fiscal year 2000. Revenue from United States customers was 54.9% and 52.4% of total revenue, while revenue from international customers was 45.1% and 47.6% of total revenue for fiscal years 2001 and 2000, respectively.

     GROSS PROFIT

Gross profit as a percentage of sales was 32.4% in fiscal 2002 compared with 27.2% and 33.0% in fiscal 2001 and 2000, respectively. The increase in gross profit percentage during fiscal year 2002 is due to a full year of benefits of the manufacturing restructuring activities which were completed in late fiscal year 2001, together with continuing cost reductions, certain price increases, and a more favorable product mix.

The decrease in gross profit percentage in fiscal year 2001 was due to lower sales volume, unfavorable product mix, the introduction of the 4 inch thermal product, and the ramp up of thermal printer production that was based on high cost soft tooling. During the fourth quarter of fiscal year 2001, gross margin improved as we realized lower product costs resulting from the manufacturing restructuring activities.

     OPERATING EXPENSES

Operating expenses, excluding restructuring charges, consist of engineering and development, sales and marketing, and general and administrative costs. Operating expenses, excluding restructuring charges, were $44.1 million, $43.2 million and $47.5 million for fiscal years 2002, 2001 and 2000, respectively.

We believe it is critical to continue to invest in R&D to ensure technology leadership in line matrix and thermal printing solutions. Engineering expenses consist mostly of labor and test materials. In fiscal years 2002 and 2001, expenditures were made to enhance the line matrix product family with a faster printer, resulting in the introduction of the P5220 during fiscal year 2002. The P5220 is the world’s fastest line matrix printer, printing 2000 lines per minute. We also enhanced our market leading printer management networking solutions with PrintNet Enterprise and ODV verification solutions. In fiscal year 2001, engineering expenditures were made to complete the T5000 thermal product line by bringing to market the T5000 4 inch thermal printer.

In fiscal 2002, we spent $15.7 million on engineering and development, compared with $16.7 million in fiscal 2001 and $19.3 million for fiscal 2000. The decrease in fiscal 2002 was due to lower development costs as both the T5000 product line and P5220 line matrix printer moved into production. As a percentage of sales, engineering and development expenses increased slightly, due to lower revenue, to 10.7% from 10.6% in fiscal 2001 and 10.1% in fiscal 2000.

Engineering and development expenses decreased in fiscal 2001 from the prior fiscal year due to lower development costs for the T5000 product line. In fiscal 2000, engineering expenditures were made to develop and bring new products to market, including the new Printronix designed and manufactured T5000 thermal printer, ODV capability that ensures all bar codes are scannable, and expanded network management capabilities to all three printing technologies.

Sales and marketing expenses increased to $19.2 million, compared with $18.0 million for fiscal 2001 and $18.7 million for fiscal 2000. As a percentage of revenue, sales and marketing expenses increased to 13.1% from 11.4% in fiscal 2001 and 9.8% in fiscal 2000. The increase in fiscal 2002 is largely due to higher labor and marketing costs due to increased resources being applied to the Major Accounts Marketing program. Fiscal 2001 expenses decreased from fiscal 2000 due mostly to lower commissions, lower labor costs, and lower travel expenses.

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General and administrative spending increased to $9.2 million in fiscal 2002 compared with $8.4 million for fiscal 2001 and $9.4 million for fiscal 2000. General and administrative expenses increased due to higher property taxes, higher labor costs, increased bad debt provision, higher legal fees, and higher utility costs associated with the California energy shortage. General and administrative expenses decreased in fiscal 2001 from fiscal 2000 due to lower labor costs. As a percentage of sales, general and administrative expenses were 6.3% in fiscal 2002, 5.3% in fiscal 2001 and 5.0% in fiscal 2000.

     RESTRUCTURING CHARGES

Information on restructuring charges can be found in Note 4 of the Notes to Consolidated Financial Statements on page 32 of this Annual Report on Form 10-K.

     FOREIGN CURRENCY, NET

Foreign currency transactions and remeasurements were a loss of $0.2 million in fiscal 2002 compared with gains of $0.5 million in fiscal 2001 and $0.4 million in fiscal 2000. Fiscal year 2002 foreign currency transaction and remeasurement losses were due primarily to a weakened Euro.

A summary of the effects of the Euro can be found in Note 1 of the Notes to Consolidated Financial Statements on page 29 of this Annual Report on Form 10-K.

     INTEREST AND OTHER EXPENSES, NET

Interest and other expenses, net, decreased $0.5 million in fiscal 2002 compared with fiscal 2001 due to lower interest expense as a result of reduced interest rates, partially offset by lower interest income. Interest and other expenses, net, increased $1.1 million in fiscal 2001 compared with fiscal 2000 due to higher interest expense on our line of credit and long-term borrowings.

     INCOME TAXES

The effective tax rate for fiscal 2002 was 11.0% primarily as a result of domestic operating losses due to the revenue declines in the Americas and a shift in the geographic composition of pre-tax earnings to entities that operate with lower tax rates. We expect the effective tax rate for fiscal 2003 to be between 15.0% and 20.0%.

The effective tax rate for fiscal year 2001 was a benefit of 48.0%, primarily as a result of domestic operating losses and a shift in the geographic composition of pre-tax earnings to entities that operate with lower tax rates. The effective tax rate for fiscal 2000 was 33.0%.

The provision for taxes included certain state and foreign taxes for all fiscal years presented.

Liquidity and Capital Resources

     FISCAL YEARS 2002 AND 2001

The primary source of liquidity has historically been cash generated from operations. For the fiscal year 2002, cash and cash equivalents increased to $22.6 million from $9.8 million in fiscal 2001 primarily due to a return to profitability, reductions in inventory, lower accounts receivable, and reduced capital expenditures.

We generated $20.7 million in cash provided by operations during the fiscal year, compared with a use of cash of $1.7 million in the prior fiscal year. Accounts receivable decreased due to lower sales. Inventory levels decreased as a result of completing the manufacturing restructuring wherein certain manufacturing processes were consolidated in the Singapore facilities, which had resulted in carrying more inventory during the transition, and also due to other manufacturing programs. Investment in property, plant and equipment was less than depreciation expense as we completed our major product development efforts. The remaining major uses of cash were payments on the line of credit totaling $3.5 million and payments made on the long-term note of $0.7 million.

     FISCAL YEARS 2001 AND 2000

Cash and cash equivalents decreased to $9.8 million in fiscal 2001 from $15.0 million in fiscal 2000 due to the loss from operations in fiscal 2001 and changes in inventory levels and accounts payable. Several reasons caused the

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inventory to increase over fiscal 2000 amounts. Our restructuring plans centralized more manufacturing in the Singapore plant, which resulted in higher levels of in-transit inventory than the prior fiscal year. We also manufactured line matrix ribbons in China in fiscal 2001, which were previously purchased from a United States supplier, which owned the inventory and shipped product direct to our customers. By manufacturing the ribbons, we enjoy higher gross margins, but are required to carry inventory. We also carried more inventory than the prior year to meet the demand for the T5000 thermal printer, which was launched in late fiscal 2000. Lastly, we temporarily carried higher inventory levels as we worked through the various manufacturing restructuring activities.

Accounts payable decreased in fiscal 2001 from the prior year based in part on the lower sales levels, but also due to not purchasing as much inventory after the restructuring activities. The remaining major uses of funds in fiscal 2001 were net repayments on the line of credit totaling $10.0 million, the repurchase of Printronix common stock totaling $3.9 million, and capital expenditures of $6.9 million. The major source of funds in fiscal 2001 was borrowing $17.5 million secured by our Irvine facility, the proceeds of which were used to pay the $13.5 million line of credit borrowings (See Note 2 on page 31 of this Annual Report on Form 10-K).

On May 1, 2000, we increased our credit facility with a United States bank to $27.5 million from $22.5 million. The $27.5 million consisted of a $17.5 million, seven-year note secured by our Irvine facility and a $10.0 million three-year unsecured line of credit. We repaid the line of credit borrowings as scheduled in the first quarter of fiscal 2002, and, on June 15, 2001, cancelled our $10.0 million unsecured line of credit (See Note 2 on page 31 of this Annual Report on Form 10-K). We ended fiscal year 2002 with long-term debt of $15.6 million and short-term debt of $0.7 million related to the note.

Contractual Obligations and Commercial Commitments

We are obligated under certain borrowing and lease commitments. The minimum payments due as of March 29, 2002, for the subsequent fiscal years, are as follows:

We are also obligated under certain unsecured lines of credit and a credit agreement for our foreign subsidiaries. No amounts have been borrowed against these lines of credit or credit agreement as of March 29, 2002. The commitment amounts and expiration periods, as of March 29, 2002, are summarized below. (See Note 2).