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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

For the Fiscal Year Ended: December 31, 2000

OR

Commission File Number: 000-18908

INFOCUS CORPORATION
(Exact name of registrant as specified in its charter)

Registrant's telephone number, including area code: 503-685-8888

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

Securities registered pursuant to Section 12(g) of the Act: Common Stock, without par value

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

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

    The aggregate market value of the voting stock held by non-affiliates of the Registrant is $773,242,661 as of February 28, 2001 based upon the last sales price as reported by the Nasdaq National Market System.

    The number of shares outstanding of the Registrant's Common Stock as of February 28, 2001 was 38,807,799 shares.

Documents Incorporated by Reference

     The Registrant has incorporated into Part III of Form 10-K by reference portions of its Proxy Statement for its 2001 Annual Meeting of Shareholders.

INFOCUS CORPORATION
2000 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS

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PART I

Item 1. Business

Forward Looking Statements

    Statements in this Form 10-K which InFocus Corporation ("InFocus") considers to be forward-looking are denoted with an *, and the following cautionary language applies to all such statements, as well as any other statements in this Form 10-K which the reader may consider to be forward-looking in nature. Investors are cautioned that all forward-looking statements involve risks and uncertainties and several factors could cause actual results to differ materially from those in the forward-looking statements. InFocus, from time to time, may make forward-looking statements relating to the following:

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anticipated revenues, earnings and gross margins;



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anticipated growth in revenues and earnings;



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availability of products manufactured on behalf of the Company;



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backlog;



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new product introductions;



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future capital expenditures; and



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average selling prices.

    The following factors, among others, could cause actual results to differ from those indicated in the forward-looking statements:

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in regard to revenues, gross margins and earnings, uncertainties associated with market acceptance of and demand for InFocus' products, the impact competitive and economic factors have on business buying decisions and dependence on third party suppliers;



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in regard to product availability and backlog, uncertainties associated with manufacturing capabilities, availability of critical components and dependence on third party suppliers;



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in regard to new product introductions, the ability of InFocus to make timely delivery of new platforms, uncertainties associated with the development of technology and the establishment of full manufacturing capabilities, dependence on third party suppliers and intellectual property rights;



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in regard to future capital expenditures, uncertainties associated with new product introductions; and



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in regard to average selling prices, fluctuations in component availability and pricing and the introduction of new technologies and products.

Introduction

    InFocus Corporation (formerly In Focus Systems, Inc.) (an Oregon corporation) was founded in October 1986 to develop, manufacture and market innovative projection products. The Company's products utilize LCD and Digital Light Processing™ ("DLP") technologies to present output from personal computers and other electronic devices. References within this document to the "Company" or to "InFocus" are to InFocus Corporation and its consolidated subsidiaries. All share and per share amounts in this Form 10-K have been adjusted for a two for one stock split effective February 10, 1998.

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Products

    The Company develops, manufactures and markets data/video projection products and services to present video, audio, graphics and data from personal computers, workstations, VCRs and laser disc players. The Company's products are used in business, education and government markets for training sessions, meetings, sales presentations, technical seminars, group collaboration and other applications involving the sharing of computer-generated and/or video information with an audience. The Company's products are compatible with all major personal computers and most video sources used in business and education. A key characteristic of the Company's products is resolution. Resolution is defined by using standard industry terms SVGA, XGA and SXGA, which are terms that define the number of pixels in a display. An SVGA display has 480,000 pixels (800X600), an XGA has 786,432 pixels (1,024X768), an SXGA has 1,310,720 pixels (1,280X1,024) and a UXGA has 1,920,000 pixels (1,600X1,200).

Projection Systems

    The Company has established product platforms intended to meet the diverse projection requirements of its audience. These are Microportable Projectors, Conference Room Projectors and Fixed/Auditorium Projectors. Microportable Projectors are intended for the mobile presenter who places a premium on reduced size and weight in projection solutions. Conference Room Projectors are intended for conference room environments that require both mobility and a superior image. Fixed/Auditorium Projectors are intended for large venues and auditorium environments that require fixed high and bright solutions where optimal connectivity alternatives are available.

Microportable Projectors:

    LP130 The InFocus LP130 is the ultimate digital mobile projector at 31bs. with 1100 lumens, fully loaded, XGA resolution, a zoom lens and data/video connectivity standard.

    LP335 The InFocus LP335 is a micro-portable projector, which weighs 4.81bs., has XGA resolution, 1,000 lumens, digital connectivity, InFocus Home Theater Quality Video and HDTV compatibility.

    DX3 and ASK M5 The Proxima DX3 and the ASK M5 are both very quiet, 51b. micro-portable projectors with XGA resolution, 1,100 lumens, zoom lenses and remote controls.

    DX2 and DS2 The Proxima DX2 (our first 0.7" DLP XGA product) and the DS2 (SVGA) are 51b. DLP, micro-portable projectors, which offer a combination of portability and affordability.

    LP340 and LP350 The InFocus LP340 and LP350 are DLP, micro-portable projectors that provide excellent image quality, 1,300 lumens, digital connectivity, InFocus Home Theater Quality video and HDTV compatibility.

    M3 and UltraLight 350 ASK's M3 and Proxima's UltraLight 350 have 1100 lumens, weigh 3.51bs, or 1.5kg and are fully digital with XGA resolution. The M3 and UltraLight 350 are also very quiet, at 32 db., and have video module ports, which replicate DVI/I and USB, in addition to supporting RCA, S-video, and a one-watt stereo speaker.

    UltraLight S520 Proxima's UltraLight S520 has 800 lumens, SVGA resolution and weighs 5.01bs., or 2.3kg. It has an extra short throw lens to display big images in small rooms and an integrated video component for connectivity to a DVD player or VCR.

    LP260 InFocus' LP260 has 700 lumens, true SVGA resolution, weighs 5.511bs., or 2.5kg, with polysilicon LCDs.

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Conference Room Projectors:

    DP6850+ Proxima's DP6850+ offers XGA resolution with 1,800 lumens. It weighs 5.9kg, or 13.21bs, with full conference room connectivity including 2 computer inputs, 2 audio inputs, 1 video input and motorized zoom and focus. This projector also offers multiple lens options.

    Impression A8+ ASK's A8+ has 1500 lumens, 350:1 contrast ratio, SVGA resolution and weighs 10.81bs., or 4.9 kg. The A8+ has USB, a MS Serial mouse and IBM PS/2 and MAC ADB compatibility.

    Impression A9+ ASK's A9+ has 1600 lumens, 350:1 contrast ratio, XGA resolution and weighs 10.81bs., or 4.9 kg. The A9+ has USB, a MS Serial mouse and IBM PS/2 and MAC ADB compatibility.

    Impression A10+ ASK's A10+ has 1800 lumens, 350:1 contrast ratio, XGA resolution and weighs 10.81bs., or 4.9 kg. The A10+ has USB, a MS Serial mouse and IBM PS/2 and MAC ADB compatibility.

    DP9240 Proxima's DP9240 has 1600 lumens, XGA resolution with a Fit-to-View display of VGA through SXGA. The DP9240 also has a motorized zoom lens with optional long and short throw zoom lens, digital keystone correction and is HDTV-ready for compatibility with the latest standards and weighs 15.21bs., or 6.9kg.

    DP9260 Proxima's DP9260 has 2200 lumens, XGA resolution with a Fit-to-View display of VGA through SXGA. The DP9260 also has a motorized zoom lens with optional long and short throw zoom lens, digital keystone correction and is HDTV-ready for compatibility with the latest standards and weighs 15.21bs., or 6.9kg.

    DP9260+—Proxima's DP9260+ has 2500 lumens, XGA resolution with a Fit-to-View display of VGA through SXGA. The DP9260+ has a motorized zoom lens with optional long and short throw zoom lens, digital keystone correction and is HDTV-ready for compatibility with the latest standards and weighs 15.21bs., or 6.9kg.

    C90 ASK's C90 has XGA resolution, 1,100 lumens, zoom and digital keystone correction, multiple computer connections and digital and analog video input. The C90 weighs 7.51bs, or 3.4kg.

    C1 Compact ASK's C1 has 700 lumens, manual zoom and focus, S-video and composite video. The C1 weighs 8.11bs, or 3.7kg, provides superior color saturation and uniform brightness.

    C2 Compact ASK's C2 has 800 lumens, SVGA resolution and distortion free scaling from 1152 × 870 × 640 × 480 and video resolutions. The C2 has USB, MS Serial mouse and IBM PS/2 and MAC ADB compatibility for automatic mouse set-up.

    C6 Compact ASK's C6 has 900 lumens and XGA resolution in true color. The C6 weighs 8.11bs, or 3.7 kg, with the capability to connect a computer source and two video sources simultaneously.

    UltraLight LX Proxima's UltraLight LX is 800 lumens, has true XGA resolution and plug-and-play compatibility with all popular laptop and PC systems. It also has a motorized l.3:1 zoom and focus and weighs 8.41bs., or 3.8kg.

    UltraLight LS2 Proxima's UltraLight LS2 has 1200 lumens, SVGA resolution with XGA to VGA compatibility that supports full-screen images from any computer. The UltraLilght LS2 has digital keystone correction a motorized 1.3:1 zoom and focus and a RS-232 control for easy integration with AMX/Panja TM and Creston TM control systems.

    DP6150 and C100 Proxima's DP6150 and ASK's C100 have 1,400 lumens and XGA resolution. They weigh 7.51bs., or 3.4kg, with zoom lenses, 3 computer inputs and S-video.

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Fixed/Auditorium Projectors:

    LP920 InFocus' LP920 is a fixed installation projector with 2,200 lumens, XGA resolution, full connectivity, which includes 4 computer inputs, 2 video inputs and one audio input, four lens options and is HDTV compatible with exceptional video quality.

    DP9280 Proxima's DP9280 has 3000 lumens, XGA resolution and optional lenses, which offer flexibility for installation in small and large venues. The DP9280 has power lens shift systems with Digital Keystone Correction for hassle-free vertical image adjustment and weighs 20.31bs., or 9.2 kg.

    Pro AV 9320 Proxima's Pro AV 9320 has 3000 lumens, native XGA resolution with Fit to View display of VGA through UXGA, RS-232 control for easy integration with AMX/Panja and Crestron controls systems, including compatibility with Crestron e-control and weighs 39.21bs., or 17.8kg.

    Pro AV 9400+ Proxima's Pro AV 9400+ has 3300 lumens, native SXGA resolution with Fit to View, integrated digital scaling and line doubling for superb video quality with a wide selection of lenses for installation flexibility with Crestron e-control and weighs 39.21bs., or 17.8kg.

    Pro AV 9350 Proxima's Pro AV 9350 has 5000 lumens, XGA resolution, horizontal and vertical lens shift for flexible installation and positioning, six optional lenses, 700:1 contrast ratio, V-Scan video processing for superior video performance, component video input for DVD, HDTV compatibility and weighs 78.41bs., or 35.5kg.

    LP925 InFocus' LP925 has 2400 lumens, true XGA resolution, capability to resize VGA and SVGA, SXGA compression, PC and Macintosh compatibility, a 1.32 inch polysilicon TFT LCD and weighs 25.51bs., or 11.5kg. The LP925 has built-in digital/analog connectivity, an onboard key panel, LaserPro Remote and RS-232.

    LP930 InFocus' LP930 has 3200 lumens, true XGA resolution, capability to resize VGA and SVGA, SXGA compression, PC and Macintosh compatibility, a 1.32 inch polysilicon TFT LCD and weighs 25.51bs., or 11.5kg. The LP930 has built-in digital/analog connectivity, an onboard key panel, LaserPro Remote and RS-232.

Projector Networking Software:

    LightPort This revolutionary new software makes it easy to share and make presentations, using the power of the web. LightPort links an InFocus projector to the enterprise network, allowing the presenter to get more out of his projector investment. Network administrators are able to control the projector settings, automatically turn the projector on or off, saving valuable lamp life, and monitor vital status and usage information, all from a remote PC.

Product and Technology Development

    InFocus maintained its investment level in research and development in 2000 in order to enhance existing products as well as create new, differentiated products in the market place. InFocus plans to continue to invest in research and development at a consistent rate as a percent of revenue, based on its targeted business model.

    The Company expended approximately $34,841,000, $27,077,000 and $24,782,000 on research and development activities for the years ended December 31, 2000, 1999 and 1998, respectively. See Note 1 of Notes to Consolidated Financial Statements contained in Item 14.

Marketing and Distribution

    InFocus has devoted significant resources to develop and support a well-trained reseller network with the ability to demonstrate and sell the Company's products to a wide range of end-users

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worldwide. In the U.S., InFocus offers its products to approximately 30 authorized professional audiovisual dealers and direct resellers. In addition, InFocus sells its InFocus and Proxima brand products through wholesale distributors including Ingram Micro, Tech Data, D&H, Electrograph, ICG, Stampede, Merisel and Wynit, which in turn sell to approximately 3,000 PC resellers, online providers, catalogs and government resellers.

    Outside the U.S., InFocus sells its products to approximately 130 international business partners in more than 87 countries. These distributors sell the Company's products to audiovisual dealers, PC resellers and, in some cases, directly to end-users. For the year ended December 31, 2000, sales outside of the U.S. represented approximately 39 percent of the Company's revenue. Sales subsidiaries, located in Singapore, Germany, Sweden and The Netherlands, work with international distributors and local direct dealers to sell and support the Company's products.

    The Company has private label OEM arrangements with IBM, Toshiba, Boxlight Corporation, Geha, Siemens, Yokogawa, Triumph Adler and PictureTel, which resell the Company's projectors under their own labels.

    Additionally, InFocus sells its products and services directly to large multinational organizations including Accenture (formerly Andersen Consulting), Hewlett Packard, IBM, Intel, J.D. Edwards, Microsoft, Motorola, Oracle, People Soft, Pfizer and PricewaterhouseCoopers via its WorldView Global Accounts Program. WorldView companies work with InFocus teams to identify their presentation technology needs company-wide, then consolidate their purchase and support requirements across geographic boundaries. Sales of projectors and services are fulfilled either directly by InFocus or through a local authorized business partner.

Service

    InFocus Corporation customer service includes: call center and internet customer support, factory repair, authorized service center repair, accessories, service parts, remanufactured projectors, service contracts, training, service engineering and technical publications. The Service organization has facilities in Wilsonville, Oregon, San Diego, California, Singapore, The Netherlands and Norway. Factory repair is performed at all corporate service locations. In addition, personnel in approximately 250 Authorized Service Centers worldwide are trained by the Company to provide product repair, technical support, and training to their resellers and end-user customers. Customers have access via telephone and email in the United States, Europe and Asia or the worldwide web to technical specialists who answer application and hardware questions. All current products are covered by at least a two-year warranty for parts and labor from the date of purchase with extended service agreements also available for purchase.

Manufacturing and Supply

    The principal components of the Company's products are display devices, including various types of LCDs and DMDs, integrated circuits, light sources, optics, lenses, plastic housing parts and electronic sub-assemblies. The Company procures and tests parts manufactured to the Company's specifications and also designs and delivers certain electronic components to local sub-contractors for sub-assembly. Specifically, the DMD imaging engines are produced in house, requiring the design, specification and handling of precision optics. Most of these DMD Engines are produced in the Company's class 10,000 clean room. The Company then manufactures the final product, which includes precise alignment of optical elements and 100 percent image quality testing.

    The Company offers products utilizing several types of display devices and generally attempts to procure components from multiple sources. Certain components, however, including certain LCDs, DMDs and light sources are purchased from single or limited sources. The key components in projection systems are the display devices, imaging engines and light sources manufactured to the

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Company's specifications by major Japanese, European, and American manufacturers of products for the electronics industry. The Company believes that it could obtain most LCDs manufactured to its specifications from alternate sources within three-to-six months at a comparable price to existing suppliers. The Company does not have an alternate source for the DMDs, which are currently used in some of the Company's products.

Customers

    The Company sells its products to a large number of customers worldwide. One customer accounted for 21.9 percent of revenue in the year ended December 31, 2000 and accounted for 18.5 percent of the accounts receivable balance at December 31, 2000. One customer accounted for 13.4 percent of revenue in the year ended December 31, 1999 and 10.4 percent of revenue in the year ended December 31, 1998.

Backlog

    InFocus had backlog of approximately $36.3 million at December 31, 2000, compared to approximately $80.4 million at December 31, 1999. InFocus' backlog at December 31, 2000 was at more historical levels due to the availability of certain components that were constrained during most of 1999. Certain illumination components were constrained during the fourth quarter of 2000, which increased backlog at December 31, 2000 over what it would have otherwise been. Given current supply and demand estimates, it is anticipated that a majority of the current backlog will turn over by the end of the first quarter of 2001.* However, should InFocus not receive components as forecasted, some of the backlog orders at December 31, 2000 may be canceled and therefore not result in revenue for InFocus. There is minimal seasonal influence relating to InFocus' order backlog. The stated backlog is not necessarily indicative of sales for any future period nor is a backlog any assurance that InFocus will realize a profit from filling the orders.

Competition

    The Company believes its ability to compete in the projection display market depends on certain key product characteristics including ease-of-use, resolution, brightness, image quality, portability and price. In addition, the Company believes that its leadership in developing technologies and its focused effort on development activities give it a competitive advantage.

    The Company faces competition primarily from 30 to 40 manufacturers, 6 of which, including the Company, make up over 65 percent of the products sold in the industry. The Company expects continued competition as new technologies, applications and products are introduced. Principal current competitors include Epson, NEC, Sanyo, Sharp and Sony.

Patents, Trademarks and Licenses

    The Company has been issued more than 90 United States patents and numerous corresponding foreign patents covering various novel aspects of its display systems. In addition, numerous applications for United States patents are pending on inventions that enable the Company's display systems to be lighter, brighter, and more compact, and to operate with better contrast, more efficient optical paths, and increased ease of use features. Corresponding applications for selected inventions are pending internationally through the Patent Cooperation Treaty and at foreign Patent Offices.

    The Company attempts to protect its proprietary information through agreements with customers and suppliers. The Company requires its employees, consultants and advisors to execute confidentiality agreements on the commencement of employment with or service to the Company. While the Company has enhanced its ability to compete by aggressively protecting its intellectual property, it believes the rapid pace of technological change in the industry will mean that the Company's ability to develop new

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technologies and distribute new products on a timely basis will be of equal importance in maintaining its competitive position.

    The Company licenses certain of its patents through Motif, Inc., the Company's ⁵⁰/50 joint venture with Motorola, Inc. Motif has executed numerous licenses for its technology, with additional licenses under negotiation.

    The Company has also licensed Texas Instruments Incorporated under certain patents involving the Company's "auto-sync" electronics.

    InFocus holds United States registered trademarks for "InFocus," "Proxima,""LitePro," "Cyclops," "Fit-To-View," "Instant Access Rental Program," "Data Display," "Epresenter," and "Presentation Plus". In addition, InFocus has additional trademark registrations registered or pending in the United States and either holds or has registrations pending for its most important trademarks in over 40 foreign countries.

Employees

    As of December 31, 2000, InFocus had 1,235 employees, including 134 temporary personnel engaged through the services of an employment agency. InFocus believes its relations with its employees are good.

Item 2. Properties

    InFocus leases its Wilsonville, Oregon facility and certain improvements under a non-cancelable operating lease, which expires in December 2003 as to approximately 150,000 square feet and December 2001 as to approximately 30,000 square feet. In August 2000, the Company entered into an operating lease for additional space in Oregon that will be utilized beginning November 1, 2001. This lease expires October 31, 2011. The Company also leases space in Norway and California under leases expiring on June 30, 2002, March 31, 2004 and April 30, 2009.

    In February 2000, InFocus purchased 26.8 acres of land adjacent to its leased Wilsonville facility. An additional facility is currently being constructed on one third of the property, which will be leased beginning November 2001 as discussed above. The remaining property will be held for possible future development.

Item 3. Legal Proceedings

    As of February 28, 2001, there were no material, pending legal proceedings to which the Company or its subsidiaries are a party. From time to time, the Company becomes involved in ordinary, routine or regulatory legal proceedings incidental to the business of the Company.

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

    No matters were submitted to a vote of InFocus' shareholders during the quarter ended December 31, 2000.

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PART II

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

    InFocus' Common Stock trades on The Nasdaq National Market System under the symbol INFS. In addition, the Company has a secondary listing on the Oslo, Norway exchange under the symbol IFC. The high and low sales prices on the Nasdaq National Market System for the two years in the period ended December 31, 2000 were as follows:

    The approximate number of beneficial shareholders and shareholders of record at February 28, 2001 was 11,200 and 220, respectively.

    There were no cash dividends declared or paid in 2000 or 1999. The Company does not anticipate declaring cash dividends in the foreseeable future.

    In connection with the Business Combination Agreement between InFocus Corporation and Proxima ASA, on June 23, 2000 the Company issued 14,649 shares of its common stock in exchange for shares of Proxima ASA. These shares were issued in reliance on the exemption from registration provided by Rule 802 as adopted by the U.S. Securities and Exchange Commission ("SEC") under the Securities Act of 1933, as amended (the "Act"). This exemption was available because the business combination involved an exchange offer for the securities of a foreign private issuer (Proxima ASA) and not more than 10% of the outstanding securities of Proxima ASA were held by U.S. holders, as such term is defined in Rule 800, as adopted by the SEC under the Act.

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Item 6.  Selected Financial Data

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

Results of Operations

2000 Compared to 1999

    Total revenue increased to $886.7 million in 2000 from $688.5 million in 1999. The increase in revenue is primarily attributable to record unit sales, with a 47.5 percent increase in units sold in the 2000 compared to 1999. The increase in units sold primarily resulted from strong growth in the microportable segment and new product introductions. The microportable and ultraportable product segment, which includes all products under 111bs., represented 79.2 percent and 78.9 percent, respectively, of total product revenue in the three month and year to date periods ended December 31, 2000. Revenues in the fourth quarter of 2000 were negatively affected in the U.S. as weakening economic conditions impacted corporate capital spending. In addition, certain illumination components for some of the Company's newer products were supply constrained during the fourth quarter of 2000. InFocus expects the illumination components to continue to be constrained during the first quarter of 2001, but expects to see improvement in the second quarter of 2001 and beyond.*

    Also included in revenue in the first quarter of 2000 is $4.4 million related to a license agreement with Pixelworks, Inc. ("Pixelworks"). In February 2000, the Company entered into a non-exclusive,

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perpetual license agreement with Pixelworks, which allows Pixelworks to utilize certain of the Company's technology in exchange for $2.4 million in cash and 156,863 shares of Pixelworks' Series D Preferred Stock with a value of $2.0 million at the time of issuance to the Company. The $2.4 million in cash was received in four quarterly payments of $600,000 each, which were received on or about March 31, June 30, September 30, and December 31, 2000, respectively.

    During the second quarter of 2000, Pixelworks completed its initial public offering, in which the Series D Preferred Stock was converted into common stock of Pixelworks. The investment is currently recorded in the accompanying financial statements as available for sale securities in accordance with SFAS 115. The securities are recorded at market value with the unrealized gain on securities included as a separate component of shareholders' equity. In the third quarter of 2000, InFocus sold 50,000 shares of Pixelworks common stock and, at December 31, 2000, held 106,863 shares of Pixelworks common stock.

    During 2000, sales in the United States represented 61 percent of total revenue, compared to 63 percent in 1999.

    InFocus had backlog of approximately $36.3 million at December 31, 2000, compared to approximately $80.4 million at December 31, 1999. InFocus' backlog at December 31, 2000 was at more historical levels due to the availability of certain components that were constrained during most of 1999. Certain illumination components were constrained during the fourth quarter of 2000, which increased backlog at December 31, 2000 over what it would have otherwise been. Given current supply and demand estimates, it is anticipated that a majority of the current backlog will turn over by the end of the first quarter of 2001.* However, should InFocus not receive components as forecasted, some of the backlog orders at December 31, 2000 may be canceled and therefore not result in revenue for InFocus. There is minimal seasonal influence relating to InFocus' order backlog. The stated backlog is not necessarily indicative of sales for any future period nor is a backlog any assurance that InFocus will realize a profit from filling the orders.

    Gross profit, as a percentage of revenue, was relatively flat at 27.6 percent in 2000 compared to 27.7 percent in 1999. The Company achieved gross margins of 25.1 percent in the fourth quarter of 2000. The lower gross margin achieved in the fourth quarter of 2000 compared to the year to date 2000 average is due to volume shortfalls negatively affecting the absorption of manufacturing costs. The volume shortfalls resulted from the change in economic conditions and component supply constraints discussed above. Gross margin was also negatively affected in the second half of 2000 due to start-up costs related to our Digital Light Processing™ ("DLP") manufacturing capability in Norway. Gross margins in 1999 were positively affected by supply constraints on DLP components that resulted in higher average selling prices than anticipated.

    Marketing and sales expense increased to $87.4 million (9.9 percent of revenue) in 2000 from $74.7 million (10.9 percent of revenue) in 1999. The increase in dollars spent is primarily a result of revenue growth and related channel programs. The decrease as a percent of revenue is primarily a result of efficiencies gained with a higher revenue base.

    Research and development expense increased to $34.8 million (3.9 percent of revenue) in 2000 from $27.1 million (3.9 percent of revenue) in 1999. The Company continues to invest in research and development at a consistent rate as a percent of revenue, based on its targeted business model. During 2000, the Company focused its research and development efforts on the high growth microportable segment.

    General and administrative expense increased to $34.8 million (3.9 percent of revenue) in 2000 from $26.4 million (3.8 percent of revenue) in 1999. The increase is primarily a result of growth of the Company and increases in accounts receivable reserves.

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    Merger related costs of $15.0 million in 2000 include primarily investment banking fees, merger advisory fees and integration costs directly related to the Company's business combination with Proxima ASA, which was completed in June 2000.

    The Company has identified some redundancies and consolidation opportunities in distribution, logistics and service operations, as well as opportunities to better balance manufacturing capacity loading in the U.S. and Norway. The Company plans to take a one-time merger related pre-tax charge in the first half of fiscal 2001 of approximately $8.0 million to $12.0 million related to implementing strategies to address these opportunities.*

    Goodwill amortization decreased to $1.5 million (0.2 percent of revenue) in 2000, compared to $2.1 million (0.3 percent of revenue) in 1999 due to a decrease in goodwill balances as a result of a reclassification of $10.2 million from goodwill to deferred tax assets in 1999, offset in part by increases in goodwill related to acquisitions made in 2000.

    Income from operations increased to $71.0 million (8.0 percent of revenue) in 2000 compared to $60.5 million (8.8 percent of revenue) in 1999. The increase was primarily a result of increased revenues and decreased operating expenses as a percent of revenue, offset by merger related costs in 2000 as indicated above.

    Without merger related costs, income from operations would have been $86.0 million (9.7 percent of revenue) for the year ended December 31, 2000.

    Other income of $4.1 million in 2000 includes a $1.6 million gain on the sale of equity securities.

    Income taxes for the year ended December 31, 2000 were recorded at an effective rate of 34.9 percent, which increased from 32.7 percent in 1999. The increase is primarily a result of the non-deductibility of certain merger related expenses for U.S. tax purposes. The tax rate, excluding merger related expenses, was 32.4 percent in 2000.

    The Company believes that the impact of inflation was minimal in 2000 and 1999.

1999 Compared to 1998

    Total revenue increased to $688.5 million in 1999 from $515.4 million in 1998. The increase in total revenue was primarily attributable to record unit sales, with a 42 percent increase in units sold in 1999 compared to 1998. Demand was particularly strong for ultraportable personal projectors, the first of which was introduced by the Company during the first quarter of 1999. The ultraportable segment represented approximately 56 percent of units sold in 1999. Due to strong demand and a limited supply of Digital Micromirror Devices ("DMDs") (a component of Texas Instruments' DLP technology, which is used in the ultraportable products), pricing on the ultraportable products remained relatively stable during 1999 while pricing on the conference room and fixed installation projectors experienced historical industry pricing declines of approximately 3 to 5 percent per quarter. Supply constraints of SVGA DMDs eased during the fourth quarter of 1999.

    During 1999, sales in the United States represented 63 percent of total revenue, compared to 57 percent in 1998.

    During the third quarter of 1999, InFocus began shipping its latest XGA ultraportable projector, the LP330, which utilizes DLP technology, weighs 4.8 pounds and has 650 lumens. Market response to the product was favorable during the third and fourth quarters, especially as a companion product to laptop computers.

    Gross profit, as a percentage of revenue, increased to 27.7 percent in 1999 from 22.7 percent in 1998. The increase in the gross margin percentage was primarily a result of the volume shipment of new ultraportable projectors that have higher gross margins than mature products, cost savings

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associated with the in-house manufacturing of the imaging engines for the ultraportable projectors and material cost reduction programs. In addition, prices for ultraportable products were relatively stable during 1999 due to strong demand and constrained supply for certain components.

    Marketing and sales expense increased to $74.7 million (10.9 percent of revenue) in 1999 from $60.6 million (11.8 percent of revenue) in 1998. The increase in dollars spent was primarily a result of increased spending to drive demand for new products, tradeshows and increased channel program expenses related to increased revenue.

    Research and development expense increased to $27.1 million (3.9 percent of revenue) in 1999 from $24.8 million (4.8 percent of revenue) in 1998. The increase in dollars spent was primarily a result of the level of new product introductions during 1999.

    General and administrative expense increased to $26.4 million (3.8 percent of revenue) in 1999 from $15.7 million (3.1 percent of revenue) in 1998. The increase was primarily a result of increased sales, headcount, bonus and profit sharing accruals and increases in accounts receivable reserves related to increased revenues. In addition, Proxima Corp. was included in the results for a full year in 1999 compared to approximately nine months in 1998.

    Goodwill amortization increased to $2.1 million (0.3 percent of revenue) in 1999 from $1.5 million (0.3 percent of revenue) in 1998 as a result of having a full year of amortization related to the Proxima Corp. acquisition in 1999 and only approximately nine months in 1998.

    Income from operations was $60.5 million (8.8 percent of revenue) in 1999 compared to $14.2 million (2.8 percent of revenue) in 1998. The increase was primarily a result of increased sales, increased margins and lower operating expenses as a percentage of revenue, as discussed above.

    Other loss of $3.1 million in 1998 represents the write down of an equity investment to fair market value. The equity investment was sold in 1999.

    The Company's effective tax rate was approximately 32.7 percent in 1999, compared to approximately 45.3 percent in 1998. The decrease in the rate was primarily a result of a large increase in the Company's valuation allowance in 1998 principally caused by capital losses on the Company's available for sale securities that are only recognizable to the extent of future capital gains, offset in part by a larger portion of the income being derived from U.S. operations in 1999 and smaller research and development tax credit and tax exempt interest deductions compared to income during 1999.

Liquidity and Capital Resources

    At December 31, 2000, the Company had working capital of $270.8 million, which included $67.1 million of cash and cash equivalents and $19.9 million of marketable securities, current. The current ratio at both December 31, 2000 and 1999 was 2.9:1.

    Cash and cash equivalents decreased $24.7 million in 2000 primarily due to $17.2 million used for the purchase of Proxima shares that were not tendered in the Proxima share exchange, $23.0 million used for the purchase of property and equipment and $2.2 million used for the acquisition of two European distributors, offset by cash provided by operations of $2.9 million and $12.6 million provided by the exercise of stock options.

    Accounts receivable increased $48.2 million to $197.5 million at December 31, 2000 compared to $149.3 million at December 31, 1999. Days sales outstanding increased to 79 days at December 31, 2000 compared to 70 days at December 31, 1999. The increase in accounts receivable is primarily due to increased sales and the increase in days sales outstanding is primarily a result of significant shipments late in the fourth quarter. At December 31, 2000, approximately 85.4 percent of InFocus' accounts receivable were current or 30 days or less past due.

13

    Inventories increased $28.5 million to $95.2 million at December 31, 2000 compared to $66.7 million at December 31, 1999. The increase in inventories was primarily a result of the establishment of a European logistics and distribution center, the start-up of DLP manufacturing in Norway and an economic slow down in the U.S. in the fourth quarter of 2000. Annualized inventory turns were approximately 7.4 times for the quarter ended December 31, 2000 compared to approximately 8.8 times for the fourth quarter of 1999 on an annualized basis.

    Accounts payable increased $10.6 million to $94.6 million at December 31, 2000 from $84.0 million at December 31, 1999 primarily as a result of increases in inventories.

    Marketing incentives payable increased $5.6 million to $17.5 million at December 31, 2000 from $11.9 million at December 31, 1999 primarily as a result of increased revenues and marketing activities.

    Other current liabilities increased $7.2 million to $10.8 million at December 31, 2000 from $3.7 million at December 31, 1999 primarily as a result of direct costs associated with the Company's business combination with Proxima ASA, which was completed in June 2000.

    In February 2000, InFocus purchased 26.8 acres of land adjacent to its leased Wilsonville facility for $5.2 million in cash. The remaining $19.6 million of purchases of property, plant and equipment were primarily for new product tooling, engineering design and test equipment and information systems infrastructure. Total expenditures for property and equipment are expected to total approximately $25.0 million in 2001, primarily for leasehold improvements, product tooling, engineering equipment, manufacturing equipment and information systems infrastructure*.

New Accounting Pronouncements

    In June 2000, the FASB issued Statement of Financial Accounting Standards No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities-an amendment of FASB Statement No. 133" ("SFAS 138"). In June 1999, the FASB issued Statement of Financial Accounting Standards No. 137, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 137"). SFAS 137 is an amendment to Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities". SFAS 137 and 138 establish accounting and reporting standards for all derivative instruments. SFAS 137 and 138 are effective for fiscal years beginning after June 15, 2000. InFocus does not expect the adoption of these pronouncements to have a material impact on its financial position or results of operations.

    In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101 ("SAB 101"). SAB 101 summarized certain areas of the Staff's views in applying generally accepted accounting principles to revenue recognition in financial statements. In June 2000, SAB 101B was issued which defers the implementation date of SAB 101 until October 1, 2000. InFocus implemented SAB 101 in the fourth quarter of 2000. The implementation of SAB 101 had no impact on InFocus' financial condition or results of operations.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

    The Company's financial market risk arises from fluctuations in foreign currencies and interest rates.

    The Company has significant operations in Norway, and therefore, is exposed to currency rate risk. For the Company, a weakening of the Norwegian Kroner relative to the U.S. Dollar has a positive effect on the cost of operating in Norway but has a negative foreign currency translation effect.

    The Company's net investment in foreign subsidiaries with a functional currency other than the U.S. Dollar is not hedged. The net assets in foreign subsidiaries translated into U.S. Dollars using the period-end exchange rates were approximately $60 million. The potential loss in fair value resulting

14

from a hypothetical 10 percent adverse change in foreign exchange rates would be approximately $6 million at December 31, 2000. Any loss in fair value would be reflected as a cumulative translation adjustment and would not reduce reported net income of the Company.

    Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio. We mitigate our risk by diversifying investments among high credit quality securities in accordance with our investment policy. As of December 31, 2000, our investment portfolio included marketable debt securities of $29.1 million and equity securities of $2.4 million. These debt securities are subject to interest rate risk, and will decline in value if the interest rates increase. Due to the short duration of our investment portfolio, an immediate 10 percent increase in interest rates would not have a material effect on our financial condition or the results of operations.

    The Company is exposed to changes in exchange rates through the purchase of production materials and the sale of products denominated in foreign currencies. The Company limits its exposure by engaging in forward exchange contracts. At December 31, 2000, the Company had contracts totaling $2.4 million at a rate of Euro 1.11, which became due in January 2001. Unrealized profit/loss, which were insignificant at December 31, 2000, on forward contracts in foreign currencies were valued on the basis of the market exchange rate at the end of the year.

Item 8.  Financial Statements and Supplementary Financial Data

    The financial statements and notes thereto required by this item begin on page F-1 of this document, as listed in Item 14 of Part IV. Unaudited quarterly financial data for each of the eight quarters in the two-year period ended December 31, 2000 is as follows:

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

    None.

15

PART III

Item 10.  Directors and Executive Officers of the Registrant

    Information required by this item is included under the captions Election of Directors, Executive Officers and Section 16(a) Beneficial Ownership Reporting Compliance, respectively, in the Company's Proxy Statement for its 2001 Annual Meeting of Shareholders and is incorporated herein by reference.

Item 11.  Executive Compensation

    The information required by this item is included under the caption Executive Compensation in the Company's Proxy Statement for its 2001 Annual Meeting of Shareholders and is incorporated herein by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

    The information required by this item is included under the caption Security Ownership of Certain Beneficial Owners and Management in the Company's Proxy Statement for its 2001 Annual Meeting of Shareholders and is incorporated herein by reference.

Item 13.  Certain Relationships and Related Transactions

    None.

16

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

Financial Statements and Schedules

    The Consolidated Financial Statements, together with the report thereon of Arthur Andersen LLP, are included on the pages indicated below:

    The following schedule and report thereon is filed herewith:

Reports on Form 8-K

    No reports on Form 8-K were filed during the quarter ended December 31, 2000.

Exhibits

    The following exhibits are filed herewith and this list is intended to constitute the exhibit index:

17

18

19

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.

    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 indicated on February 28, 2001:

20

Report of Independent Public Accountants

To the Board of Directors and Shareholders of
InFocus Corporation:

    We have audited the accompanying consolidated balance sheets of InFocus Corporation (formerly In Focus Systems, Inc.) (an Oregon corporation) and subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of operations, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of Proxima ASA, a company acquired during 2000 in a transaction accounted for as a pooling of interests, as of December 31, 1999 or for the periods ended December 31, 1999 and 1998, as discussed in Note 2. Such statements are included in the consolidated financial statements of InFocus Corporation and reflect total assets of 42 percent as of December 31, 1999 and total revenues of 43 percent and 41 percent for the periods ended December 31, 1999 and 1998, respectively, of the related consolidated totals. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to amounts included for Proxima ASA, is based solely upon the report of the other auditors.

    We conducted our audits in accordance with auditing standards generally accepted in the 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 and the report of the other auditors provide a reasonable basis for our opinion.

    In our opinion, based on our audits and the report of other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of InFocus Corporation and subsidiaries as of December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States.

ARTHUR ANDERSEN LLP

Portland, Oregon,
January 26, 2001

F-1

Report of Independent Accountants

    In our opinion, the consolidated balance sheet and the related consolidated statements of income and cash flows of Proxima ASA and its subsidiaries (not presented separately herein) present fairly, in all material respects, the results of their operations and their cash flows for the two years ended December 31, 1999, in conformity with accounting principles generally accepted in Norway. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with auditing standards generally accepted ("GAAS") in Norway, which are substantially the same as GAAS in the 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for the opinion expressed above. We have not audited the consolidated financial statements of Proxima ASA for any period subsequent to December 31, 1999.

/s/ PricewaterhouseCoopers DA

Oslo, Norway
February 15, 2000

F-2

InFocus Corporation
Consolidated Balance Sheets
(In thousands, except share amounts)

The accompanying notes are an integral part of these consolidated balance sheets.

F-3

InFocus Corporation
Consolidated Statements of Operations
(In thousands, except per share amounts)

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

F-4

InFocus Corporation
Consolidated Statements of Shareholders' Equity
For The Years Ended December 31, 2000, 1999 and 1998
(In thousands, except share amounts)

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

F-5

InFocus Corporation
Consolidated Statements of Cash Flows
(In thousands)

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

F-6

INFOCUS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Numbers in thousands, except per share amounts or as otherwise indicated)

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation

    The consolidated financial statements include the accounts of InFocus Corporation (formerly In Focus Systems, Inc.) (the "Company") and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

    As discussed in Note 2 ("Business Combination with Proxima ASA"), the Company consummated a business combination, effected through a share exchange, with Proxima ASA, a Norwegian headquartered company, in June 2000. This business combination has been accounted for as a pooling of interests and, accordingly, all prior period consolidated financial statements have been restated to include the combined results of operations, financial position and cash flows of Proxima ASA. Proxima ASA's wholly owned U.S. subsidiary, Proxima Corporation, was acquired by Proxima ASA pursuant to a purchase business combination in April 1998. See further details in Note 3. Proxima ASA's financial information is reflected in accordance with U.S. Generally Accepted Accounting Principles.

Nature of Operations

    The Company develops, manufactures and markets multimedia projection products and services to present video, audio, graphics and data from personal computers, workstations, VCRs and laser disc players. The Company's products are used in businesses, schools and government agencies for training sessions, meetings, sales presentations, technical seminars and other applications involving the sharing of computer-generated and/or video information with an audience. The Company's products are compatible with all major personal computers and most video sources used in business and education.

Estimates

    The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management believes that the estimates used are reasonable.

Cash Equivalents and Marketable Securities

    Cash equivalents consist of highly liquid investments with maturities at the date of purchase of 90 days or less; marketable securities consist primarily of government and corporate debt instruments. The Company's marketable securities are classified as "held to maturity" and "available for sale." See Note 4 below.

Foreign Currency Translation

    The assets and liabilities of the Company's foreign operations are translated into U.S. dollars at current exchange rates, and revenues and expenses are translated at average exchange rates for the year. Resulting translation adjustments are reflected as other comprehensive income or loss within shareholders' equity.

F-7

    Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency, except those transactions which operate as a hedge of an identifiable foreign currency commitment or as a hedge of a foreign currency investment position, are included in the results of operations as incurred.

Market Risks

    In June 2000, the FASB issued Statement of Financial Accounting Standards No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities-an amendment of FASB Statement No. 133" ("SFAS 138"). In June 1999, the FASB issued Statement of Financial Accounting Standards No. 137, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 137"). SFAS 137 is an amendment to Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities". SFAS 137 and 138 establish accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded on the balance sheet as either an asset or liability measured at its fair value. SFAS 137 and 138 require 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 income statement, and requires that a company must formally document, designate and assess the effectiveness of transactions that receive hedge accounting. SFAS 137 and 138 are effective for fiscal years beginning after June 15, 2000. InFocus does not expect the adoption of these pronouncements to have a material impact on its financial position or results of operations.

    The Company is exposed to changes in exchange rates through the purchase of production materials and the sale of products denominated in foreign currencies. The Company limits its exposure by engaging in forward exchange contracts. At December 31, 2000, the Company had contracts totaling $2,358 at a rate of Euro 1.11, which became due in January 2001. Unrealized profit/loss, which were insignificant at December 31, 2000, on forward contracts in foreign currencies were valued on the basis of the market exchange rate at the end of the year.

Revenue Recognition

    Revenue from the sale of products is recognized when title transfers and risk of loss has passed to the customer, which is generally at time of delivery. The Company maintains a reserve for sales returns and price adjustments generally based on historical experience and other qualitative factors. The Company has incentive programs for dealers and distributors whereby rebates are offered based upon exceeding a percentage of quarterly and annual volume goals. Estimated sales returns, price adjustments and rebates are netted against revenue in the month in which revenue is recognized. These estimates have not differed materially from actual results.

Product Warranty

    Estimated warranty costs are provided at the time of sale of the warranted products.

F-8

Concentrations of Risk

    The Company generally attempts to procure components from multiple sources. Certain components, however, including LCDs, Digital Micromirror Devices™ ("DMDs"), illumination devices and plastic housing parts, are purchased from single or limited sources. The Company believes that it could obtain most LCDs manufactured to its specifications from other foreign sources within three-to-six months at a price that would not be materially higher than the price paid to existing suppliers. The Company does not have alternate sources for the DMDs or certain illumination products.

    The Company sells its products to a large number of customers worldwide. One customer accounted for 21.9 percent, 13.4 percent and 10.4 percent, respectively, of total revenues for the years ended December 31, 2000, 1999 and 1998.

    The Company invests its excess cash with high credit quality financial institutions, which bear minimal risk and, by policy, limits the amount of credit exposure to any one financial institution.

Inventories

    Inventories are valued at the lower of cost, using average costs, which approximates the first-in, first-out (FIFO) method, or market, and include materials, labor and manufacturing overhead.

Property and Equipment

    Property and equipment are stated at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the assets (approximately two to five years). Leasehold improvements are amortized over the lease term or the estimated useful life of the asset, whichever is shorter.

Patents and Trademarks

    Costs associated with obtaining patents and trademarks are capitalized in other assets and amortized over the estimated life of the associated patent or trademark.

Goodwill

    Goodwill, which represents the excess purchase price over fair value of net assets acquired, is amortized on the straight-line basis over the expected period to be benefited of 15 years. The Company assesses the recoverability of this intangible asset by determining whether the amortization of the goodwill balance over its remaining life can be recovered through undiscounted future operating cash flows of the acquired operation. The assessment of the recoverability of goodwill will be impacted if estimated future operating cash flows are not achieved. During 1999, in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109), $10,234 was reclassified from goodwill to deferred tax assets as a result of a change in judgment regarding the realizability of the deferred tax assets in future years.

F-9

Employee Benefit Plans

    The Company provides a defined benefit pension plan, a defined contribution pension plan and a 401(k) plan for certain employees. The net pension liability related to the defined benefit pension plan was $73 and $31 at December 31, 2000 and 1999, respectively. The total expense related to all of the plans was $1,735, $1,403 and $1,027, respectively, for the years ended December 31, 2000, 1999 and 1998. Detail information pursuant to Statement of Financial Accounting Standards No. 87 is not provided due to the immateriality of the defined benefit pension amounts.

Research and Development

    Amounts spent on research and development activities are expensed as incurred.

Advertising Costs

    Advertising costs, which are included in sales and marketing expenses, are expensed as incurred. Advertising expense was approximately $7,230, $6,864 and $6,969 in 2000, 1999 and 1998, respectively.

Stock-Based Compensation Plans

    The Company accounts for its stock-based compensation plans under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25). Effective January 1, 1996, the Company adopted the disclosure option of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS 123). SFAS 123 requires that companies which do not choose to account for stock-based compensation as prescribed by this Statement shall disclose the pro forma effects on earnings and earnings per share as if SFAS 123 had been adopted. Additionally, certain other disclosures are required with respect to stock compensation and the assumptions used to determine the pro forma effects of SFAS 123.

Net Income Per Share

    Basic earnings per share (EPS) and diluted EPS are computed using the methods prescribed by Statement of Financial Accounting Standards No. 128, Earnings per Share (SFAS 128). Following is a reconciliation of basic EPS and diluted EPS: