-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AybOHnLfNhCLh4yTAqfsczJE6/9qZkiAKki2Mu5o7b3f10aLX0hHEC/LJZDwl8Z2 reBYnEPDOxSxCWVwcYJ39A== 0000931763-98-000206.txt : 19980209 0000931763-98-000206.hdr.sgml : 19980209 ACCESSION NUMBER: 0000931763-98-000206 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19971226 FILED AS OF DATE: 19980206 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SCIENTIFIC ATLANTA INC CENTRAL INDEX KEY: 0000087777 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 580612397 STATE OF INCORPORATION: GA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-05517 FILM NUMBER: 98523224 BUSINESS ADDRESS: STREET 1: ONE TECHNOLOGY PKWY S CITY: NORCROSS STATE: GA ZIP: 30092-2967 BUSINESS PHONE: 7709035000 MAIL ADDRESS: STREET 1: ONE TECHNOLOGY PKWY S CITY: NORCROSS STATE: GA ZIP: 30092-2967 FORMER COMPANY: FORMER CONFORMED NAME: SCIENTIFIC ASSOCIATES INC DATE OF NAME CHANGE: 19671024 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 26, 1997 ----------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO -------------------------- -------------------- COMMISSION FILE NUMBER 1-5517 SCIENTIFIC-ATLANTA, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) GEORGIA 58-0612397 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) ONE TECHNOLOGY PARKWAY, SOUTH NORCROSS, GEORGIA 30092-2967 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) 770-903-5000 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) 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 --- --- AS OF JANUARY 23, 1998, SCIENTIFIC-ATLANTA, INC. HAD OUTSTANDING 79,047,945 SHARES OF COMMON STOCK. 1 PART I - FINANCIAL INFORMATION SCIENTIFIC-ATLANTA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF EARNINGS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
Three Months Ended Six Months Ended ------------------------------- ---------------------------- December 26, December 27, December 26, December 27, 1997 1996 1997 1996 ------------- --------- ------------ --------- SALES $294,524 $282,184 $589,025 $543,848 COSTS AND EXPENSES Cost of sales 208,507 196,847 412,780 379,741 Sales and administrative 39,187 37,624 80,286 73,057 Research and development 26,651 29,108 53,401 57,141 Interest expense 154 120 269 254 Interest income (1,234) (1,112) (2,335) (1,651) Other (income) expense, net 71 (626) (114) (815) -------- -------- -------- -------- Total costs and expenses 273,336 261,961 544,287 507,727 EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 21,188 20,223 44,738 36,121 PROVISION (BENEFIT) FOR INCOME TAXES Current 6,045 9,480 13,016 (734) Deferred 311 (3,009) 405 12,293 -------- -------- -------- -------- NET EARNINGS FROM CONTINUING OPERATIONS 14,832 13,752 31,317 24,562 GAIN ON SALE OF DISCONTINUED OPERATIONS, NET OF TAX -- -- -- 3,400 -------- -------- -------- -------- NET EARNINGS $ 14,832 $ 13,752 $ 31,317 $ 27,962 ======== ======== ======== ======== EARNINGS PER COMMON SHARE BASIC CONTINUING OPERATIONS $ 0.19 $ 0.18 $ 0.40 $ 0.32 DISCONTINUED OPERATIONS -- -- -- 0.04 -------- -------- -------- -------- NET EARNINGS $ 0.19 $ 0.18 $ 0.40 $ 0.36 ======== ======== ======== ======== DILUTED $ 0.19 $ 0.18 $ 0.40 $ 0.36 ======== ======== ======== ======== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING BASIC 78,885 77,205 78,567 77,166 ======== ======== ======== ======== DILUTED 80,149 78,387 80,038 78,249 ======== ======== ======== ======== DIVIDENDS PER SHARE PAID $ 0.015 $ 0.015 $ 0.03 $ 0.03 ======== ======== ======== ========
SEE ACCOMPANYING NOTES 2 SCIENTIFIC-ATLANTA, INC., AND SUBSIDIARIES CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
In Thousands ---------------------- December 26, June 27, 1997 1997 --------- --------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 89,154 $107,143 Receivables, less allowance for doubtful accounts of $4,106,000 at December 26 and $4,202,000 at June 27 254,665 238,179 Inventories 202,284 209,570 Deferred income taxes 29,360 31,323 Other current assets 12,074 10,886 -------- -------- TOTAL CURRENT ASSETS 587,537 597,101 -------- -------- PROPERTY, PLANT AND EQUIPMENT, at cost Land and improvements 19,854 19,854 Buildings and improvements 30,670 32,229 Machinery and equipment 215,775 206,760 -------- -------- 266,299 258,843 Less-Accumulated depreciation and amortization 101,660 92,423 -------- -------- 164,639 166,420 -------- -------- COST IN EXCESS OF NET ASSETS ACQUIRED 10,724 11,263 -------- -------- OTHER ASSETS 53,403 48,831 -------- -------- TOTAL ASSETS $816,303 $823,615 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current maturities of long-term debt $ 821 $ 842 Accounts payable 92,068 123,675 Accrued liabilities 90,489 111,737 Income taxes currently payable 7,171 13,507 -------- -------- TOTAL CURRENT LIABILITIES 190,549 249,761 -------- -------- LONG-TERM DEBT, less current maturities 1,493 1,810 -------- -------- OTHER LIABILITIES 44,812 39,394 -------- -------- STOCKHOLDERS' EQUITY Preferred stock, authorized 50,000,000 shares; no shares issued -- -- Common stock, $0.50 par value, authorized 350,000,000 shares; issued 79,086,325 shares at December 26 and 77,995,475 shares at June 27 39,543 38,998 Additional paid-in capital 190,496 171,857 Retained earnings 352,565 323,608 Accumulated translation adjustments (456) (186) -------- -------- 582,148 534,277 -------- -------- Less - Treasury stock, at cost (164,521 shares at December 26 and 113,000 shares at June 27) 2,699 1,627 -------- -------- 579,449 532,650 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $816,303 $823,615 ======== ========
SEE ACCOMPANYING NOTES 3 SCIENTIFIC-ATLANTA, INC., AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
Six Months Ended -------------------------- December 26, December 27, 1997 1996 -------- -------- NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: $(14,508) $91,073 -------- ------- INVESTING ACTIVITIES: Purchases of property, plant, and equipment (19,270) (29,626) Proceeds from sale of discontinued operations -- 18,369 Proceeds from the sale of a business unit 8,059 -- Other 25 1,197 -------- -------- Net cash used by investing activities (11,186) (10,060) -------- -------- FINANCING ACTIVITIES: Net repayments of short-term borrowings -- (1,350) Principal payments on long-term debt (338) -- Dividends paid (2,360) (2,316) Issuance of common stock 10,403 717 Treasury shares acquired -- (2,973) -------- -------- Net cash provided (used) by financing activities 7,705 (5,922) -------- -------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (17,989) 75,091 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 107,143 20,930 -------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 89,154 $96,021 ======== ======= SUPPLEMENTAL CASH FLOW DISCLOSURES Interest paid $ 242 $ 229 ======== ======= Income taxes paid, net $ 15,662 $ 5,810 ======== =======
SEE ACCOMPANYING NOTES 4 NOTES: (Amounts in thousands except share data). A. The accompanying consolidated financial statements include the accounts of the company and all subsidiaries after elimination of all material intercompany accounts and transactions. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. These condensed financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the 1997 Form 10-K. The financial information presented in the accompanying statements reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the periods indicated. All such adjustments are of a normal recurring nature. B. Basic earnings per common share were computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share were computed by dividing net earnings by the sum of the weighted average shares of common stock outstanding during the period and incremental shares from the assumed exercise of dilutive options. See Exhibit 11. C. Inventories consist of the following: December 26, June 27, 1997 1997 -------- -------- Raw materials and work-in-process $127,471 $136,699 Finished goods 74,813 72,871 -------- -------- Total inventory $202,284 $209,570 ======== ======== D. During the quarter ended September 29, 1995, the company decided to discontinue its defense-related businesses in San Diego, California, because these businesses were not aligned with the company's core business strategies and recorded a one-time charge of $12,172, net of a tax benefit of $5,728, for the estimated loss on sale of discontinued operations. During the quarter ended September 27, 1996, the company completed negotiations with a prime contractor, for whom the defense- related businesses had performed work as a subcontractor, to settle issues related to the pricing of unexercised options for additional products. The company also completed the sale of its defense-related businesses to Global Associates, Ltd. (Global) for cash of $13,142 and secured and unsecured notes aggregating approximately $4,700. The net realizable value of the assets of the defense-related businesses and the settlement with the prime contractor were more favorable than the company had anticipated when it decided to exit these businesses; accordingly, the company recognized a pre-tax gain of $5,000 from these transactions in the first quarter of fiscal 1997. Sales and losses, net of tax, from discontinued operations were $1,920 and $817, respectively, for the quarter ended September 27, 1996. At December 26, 1997, the company had a reserve of approximately $7,200 for potential sales price adjustments, indemnifications provided to Global, legal, severance and other miscellaneous expenses related to the sale and the settlement with the prime contractor. Global is currently in default under its promissory notes to the company and under promissory notes to Global's senior lenders and, in January 1998, filed a voluntary petition for a Chapter 11 reorganization in the United States Bankruptcy Court. Whether Global will successfully reorganize in this bankruptcy proceeding is not known at this time. If a satisfactory resolution of the situation is not reached, the company believes it has adequate reserves to cover any potential losses related to Global's default on the promissory note and related to any contracts of the defense-related businesses from which contracts the company has not been released. E. During the quarter ended March 28, 1997, the company decided to dispose of two business units, microwave and mobile, because these businesses were not aligned with the company's core business strategies and recorded a pre-tax charge of $5,526. During the quarter ended December 26, 1997, the company sold the majority of the net assets of the microwave business unit for $8,059 of cash. No gain or loss was recognized on the transaction. At December 26, 1997, the company had a reserve of approximately $5,200 to adjust the carrying amount of the net assets of the mobile business unit and to provide for estimated indemnifications to the purchaser of the microwave business unit, potential losses on contracts of the microwave business which were retained by the company, severance, closing costs and other miscellaneous expenses related to the sale of the microwave business unit. 5 NOTES: (continued) (Amounts in thousands except share data). F. During the six months ended December 27, 1996, the company purchased 225,000 shares of its common stock pursuant to a stock buyback program at an aggregate cost of $2,973. During the six months ended December 26, 1997, the company obtained an additional 70,496 shares of its common stock, primarily from the cancellation of unvested, restricted stock grants. The company re-issues these shares under the company's stock option plans, 401(k) plan, employee stock purchase plan and other stock- based employee compensation arrangements. G. Income taxes paid of $15,662 in the six months ended December 26, 1997 included approximately $5,800 of payments in connection with the filing of amended federal income tax returns. Payments to foreign tax authorities were approximately $2,900 higher in the six months ended December 26, 1997 as compared to the prior year due to the timing of tax payments by foreign subsidiaries. H. During the quarter ended December 26, 1997, the company adopted Statement of Financial Accounting Standards No. 128 "Earnings Per Share" which superseded Opinion 15. Earnings per share computed under the provisions of Statement 128 were the same as those computed under Opinion 15 for the three months ended December 26, 1997 and December 27, 1996, respectively, and were the same for the six months ended December 27, 1996. 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION - ------------------- Scientific-Atlanta had stockholders' equity of $579.4 million and cash on hand of $89.2 million at December 26, 1997. Cash decreased $18.0 million during the six months ended December 26, 1997 as expenditures for equipment, reductions in payables, and increases in accounts receivable exceeded cash generated from earnings, the issuance of common stock and the sale of the net assets of the microwave business. The current ratio was 3.1:1 at December 26, 1997, compared to 2.4:1 at June 27, 1997. At December 26, 1997, total debt was $2.3 million or less than one percent of total capital invested. The company entered into a $38 million off-balance sheet operating lease commitment with an option to purchase in July 1997 related to the construction of facilities to replace those currently under lease by the company. The company believes that funds generated from operations, existing cash balances and its available senior credit facility will be sufficient to support the company's growth. RESULTS OF OPERATIONS - --------------------- Sales for the quarter ended December 26,1997 were $294.5 million, up 4 percent over the prior year. Sales of Subscriber Network Systems products increased 13 percent over the prior year primarily on higher sales volume of analog settops. Sales of Terrestrial Network Systems products increased 9 percent over the prior year primarily due to sales generated by Arcodan A/S which was acquired in February 1997. Sales for the six months ended December 26, 1997 were $589.0 million, up 8 percent over the prior year. Sales of Subscriber Network Systems and Terrestrial Network Systems products increased 14 percent and 9 percent, respectively. These increases were also the result of higher sales volume of analog settops and sales generated by Arcodan in fiscal 1998. Delivery of ground terminals for a satellite-based global system for the Iridium(TM) project during fiscal 1998 contributed to a 5 percent increase in sales of Satellite Network Systems. Sales in each sector were negatively impacted by the deterioration in the economic condition of the Asia/Pacific region during fiscal 1998 and the company believes that future sales in this region will be negatively impacted until the economic conditions improve. The company previously announced that it planned to have production quantities of the new Prisma(TM) Digital Transport product available in the third quarter of fiscal 1998, but the availability of such production quantities is expected to be delayed until the fourth quarter of fiscal 1998. Orders booked during the three and six months ended December 26, 1997 were $312.6 million and $575.2 million, respectively, a decline of 9 percent from the comparable periods of the prior year. Lower orders in fiscal 1998 reflected a decline in business in the Pacific Rim resulting from currency issues in the region, which made the company's products more expensive, and a slowdown of a cable system roll-out in Australia and a softening of the market in the United Kingdom. These declines were offset partially by strong growth in orders booked in North America and Latin America. Gross margins of 29.2 percent and 29.9 percent, for the three and six months ended December 26, 1997, declined 1.0 and 0.3 percentage points, respectively, from the prior year. Lower volume of sales in the Asia/Pacific region, which generally have higher margins than some other geographic regions, and margin decreases in Terrestrial Network Systems, resulting from market pressures, more than offset the impact of favorable exchange rates on the Japanese yen compared to the prior year and favorable product mix. Certain material purchases are denominated in Japanese yen and, accordingly, the purchase price in U.S. dollars is subject to change based on exchange rate fluctuations. The company has forward exchange contracts to purchase yen to hedge a portion of its exposure on purchase commitments for a period of approximately twelve months. Research and development costs were $26.7 million and $53.4 million for the three and six months ended December 26, 1997, respectively, or 9 percent of sales, reflecting the company's continued investment in research and development programs to support new product initiatives. Research and development costs during fiscal 1998 were lower than the prior year due primarily to decreased research and development efforts related to cable telephony products which was offset partially by increased investments in analog and digital settop programs. In addition, the company capitalized software development costs of $0.4 million and $1.0 million and non-recurring engineering costs of $3.2 million and $6.2 million during the three and six months ended December 26, 1997, respectively. 7 Selling and administrative expense increased $1.6 million, or 4 percent, and $7.2 million, or 10 percent, for the three and six months ended December 26, 1997, respectively, over the comparable periods of the prior year. Increased selling expenses reflect costs associated with higher sales volumes, ongoing investments to support expansion into international markets and to support the introduction of new products and selling expenses of Arcodan A/S which was acquired in February 1997. Administrative expenses declined in fiscal 1998 due primarily to lower professional and consulting fees and cost reduction programs the company has implemented. Other (income) expense for the three and six months ended December 26, 1997 and December 27, 1996, included the results of foreign currency transactions and partnership activities and net gains from rental income and other miscellaneous items. There were no significant items in other (income) expense. The company's effective income tax rate in fiscal 1998 was 30 percent, two percentage points lower than the rate in the prior year. The lower effective income tax rate in fiscal 1998, as compared to fiscal 1997, is due to benefits from the company's foreign sales corporation (FSC) and a decrease in foreign earnings taxed at higher rates. Net earnings from continuing operations were $14.8 million for the quarter ended December 26, 1997, up $1.1 million or 8 percent, over the prior year. Net earnings from continuing operations were $31.3 million for the six months ended December 26, 1997, up $6.8 million, or 28 percent, over the prior year. Higher sales volume and lower research and development expenses in fiscal 1998 were offset partially by increased selling and administrative expenses and lower gross margins. The company periodically evaluates the contribution of its business units and products to the company's overall strategic direction. During the quarter ended September 29, 1995, the company decided to discontinue its defense-related businesses in San Diego, California because these businesses were not aligned with the company's core business strategy of being a provider of satellite and terrestrial based networks and applications. In October 1995, the company announced its intent to sell its defense-related businesses and recorded a one- time, after-tax charge of $13.2 million in the quarter ended September 29, 1995. During the quarter ended September 27, 1996, the company completed negotiations with a prime contractor, for whom the defense-related businesses had performed work as a subcontractor, to settle issues related to the pricing of unexercised options for additional products. The company also completed the sale of its defense-related businesses to Global Associates, Ltd. for cash of $13.1 million and secured and unsecured notes aggregating approximately $4.7 million. The net realizable value of the assets of the defense-related businesses and the settlement with the prime contractor were more favorable than the company had anticipated when it decided to exit these businesses; accordingly the company recognized a pre-tax gain of $5.0 million from these transactions in the quarter ended September 27, 1996. Global is currently in default under its promissory notes to the company and under promissory notes to Global's senior lenders and, in January 1998, filed a voluntary petition for a Chapter 11 reorganization in the United States Bankruptcy Court. Whether Global will successfully reorganize in this bankruptcy proceeding is not known at this time. If a satisfactory resolution of the situation is not reached, the company believes it has adequate reserves to cover any potential losses related to Global's default on the promissory note and related to any contracts of the defense-related businesses from which contracts the company has not been released. During the quarter end March 28, 1997, the company decided to dispose of two business units, microwave and mobile, because these business were not aligned with the company's core business strategies and recorded a pretax charge of $5.5 million. During the quarter ended December 26, 1997, the company sold the majority of the net assets of the microwave business unit for $8.1 million of cash. No gain or loss was recognized on the transaction. Net earnings for the three months ended December 26, 1997 were $14.8 million, up $1.1 million over the prior year. Net earnings for the six months ended December 26, 1997 were $31.3 million, up $3.4 million over the prior year which included an after-tax gain of $3.4 million related to the sale of discontinued operations. 8 Any of the above statements that are not statements about historical facts are forward-looking statements. Such forward-looking statements are based upon current expectations but involve risks and uncertainties. Investors are referred to the Cautionary Statements contained in Exhibit 99 to this Form 10-Q for a description of the various risks and uncertainties that could cause the company's actual results and experience to differ materially from the anticipated results or other expectations expressed in the company's forward- looking statements. Such Exhibit 99 is hereby incorporated by reference into Management's Discussion and Analysis of Financial Condition and Results of Operations. ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS - ------ ----------------------------------------------------------- This information is not yet required, per the Instructions to Item 305 of Regulation S-K. PRISMA is a registered trademark of Scientific-Atlanta, Inc. IRIDIUM is a registered trademark and service mark of Iridium LLC. 9 PART II - OTHER INFORMATION Item 4 Submission of Matters to a Vote of Security Holders - ------ --------------------------------------------------- The following information is furnished with respect to matters submitted to a vote of security holders through the solicitation of proxies: (a) The matters described below were submitted to a vote of security holders at the Annual Meeting of Shareholders held on November 12, 1997. (b) Election of directors: Votes For Withhold Authority ------------- ------------------- David J. McLaughlin 58,860,026 8,441,689 James V. Napier 58,873,802 8,427,913 Sam Nunn 58,200,636 9,101,079 Marion H. Antonini, William E. Kassling, Wilbur B. King, Mylle Bell Mangum, Alonzo L. McDonald, and James F. McDonald continue as directors. Sidney Topol retired from the Board of Directors effective November 12, 1997. (c)(i) Approval of the Amended Stock Plan for Non-Employee Directors Votes For Votes Against Abstain ------------- ---------------- ----------- 63,923,175 1,808,106 1,570,434 (ii) Approval of a grant of an option for shares of the Corporation's Common Stock to an executive officer Votes For Votes Against Abstain ------------- ---------------- ----------- 56,256,407 10,457,890 587,418 (iii) Ratification of the selection of Arthur Andersen LLP as independent auditors Votes For Votes Against Abstain ------------- ---------------- ----------- 66,883,545 197,078 221,092 Item 6 Exhibits and Reports on Form 8-K - ------ -------------------------------- (a) Exhibits. Exhibit No. Description ----------- ----------- 3(b) By-laws of the company, as amended. 10.1 Stock Plan for Non-Employee Directors of Scientific- Atlanta, Inc., as amended and restated 10.2 Deferred Compensation Plan for Non-Employee Directors of Scientific-Atlanta, Inc., as amended and restated 10.3 Retirement Plan for Non-Employee Directors, as amended and restated 11 Computation of Earnings Per Share 27 Financial Data Schedule 99 Cautionary Statements (b) No reports on Form 8-K were filed during the quarter ended December 26, 1997. Date: February 6, 1998 /s/ Harvey A. Wagner ---------------- ------------------------------------------------ Harvey A. Wagner Senior Vice President, Finance Chief Financial Officer and Treasurer (Principal Financial Officer and duly authorized signatory of the Registrant) 10 EX-3.(B) 2 BY-LAWS OF THE COMPANY EXHIBIT 3(b) BY-LAWS OF SCIENTIFIC-ATLANTA, INC. (AS AMENDED NOVEMBER 12, 1997) ARTICLE I OFFICES ------- Section 1. Registered Office. The registered office shall be in the state ----------------- of Georgia, County of Gwinnett. Section 2. Other Offices. The corporation may also have offices at such ------------- other places both within and without the state of Georgia as the board of directors may from time to time determine and the business of the corporation may require or make desirable. ARTICLE II SHAREHOLDERS' MEETINGS ---------------------- Section 1. Annual Meetings. The annual meeting of the shareholders of the --------------- corporation shall be held at such place and time in the United States as may be determined by the board of directors, for the purpose of electing directors and transacting such other business as may properly be brought before the meeting. To be properly brought before the meeting, business must be either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the board of directors, (b) otherwise properly brought before the meeting by or at the direction of the board of directors, or (c) otherwise properly brought before the meeting by a shareholder. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a shareholder, the shareholder must have given timely notice thereof in writing to the Secretary of the corporation. To be timely, a shareholder's notice must be delivered to or mailed and received at the principal executive offices of the corporation, no earlier than 90 days and no later than 60 days prior to the date of such meeting, regardless of any postponements, deferrals or adjournments of such meeting to a later date; provided, however, that if less than 70 days' notice or prior public disclosure of the date of the meeting is given or made, notice by a holder of record must, to be timely, be so delivered or received not later than the close of business on the tenth day following the day on which such notice of the date of the meeting is mailed or the day on which such public disclosure was made; provided that, in the case of an annual meeting, notice by a holder of record, to be timely, must be so delivered or received not later than the close of business 60 days prior to the anniversary of the date of the previous year's annual meeting. A shareholder's notice to the Secretary shall set forth as to each matter the shareholder proposes to bring before the annual meeting (i) a brief 1 description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of the shareholder proposing such business, (iii) the class and number of securities of the corporation which are beneficially owned by the shareholder, and (iv) any material interest of the shareholder in such business. Notwithstanding anything in the By-Laws to the contrary, no business shall be conducted at the annual meeting except in accordance with the procedures set forth in this Section 1, provided, however, that nothing in this Section 1 shall -------- ------- be deemed to preclude discussion by any shareholder of any business properly brought before the annual meeting. The presiding officer at an annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 1, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. Section 2. Special Meetings. (a) Special meetings of the shareholders ---------------- shall be held at the principal office of the corporation or at such other place in the United States as may be designated in the notice of such meetings, and shall be called by the chief executive officer or the secretary only when so directed by the board of directors or when so requested in writing by the holders of at least 75 percent of the issued and outstanding capital stock of the corporation entitled to vote in an election of directors. (b) Anything in these by-laws to the contrary notwithstanding, the following procedures shall apply to the call of any special meeting of shareholders, or a special meeting in lieu of the annual meeting of shareholders, at the request of holders of the outstanding capital stock of the corporation: (i) Every written request for the call of a special meeting shall bear the signature and date of signature of each shareholder who signs the request and shall state the purpose or purposes for which the meeting is to be called. (ii) The record date for the determination of shareholders entitled to request the corporation to call a special meeting shall be the date which is 45 calendar days prior to the date (the "Filing Date") that written requests complying with the requirements of law and these by-laws signed by a sufficient number of record holders to request a special meeting in accordance with this Section 2 have been received by the corporation (the "Minimum Request Condition"). (iii) Promptly after receipt of a written request or requests for the call of a special meeting, the corporation shall engage nationally recognized independent inspectors of election for the purpose of determining the validity of the request or requests and any revocations thereof. Within 15 2 calendar days of the Filing Date, such independent inspectors shall deliver to the corporation a written report stating whether the Minimum Request Condition has been satisfied. If such written report states that the Minimum Request Condition has been satisfied, or if no report is delivered by independent inspectors within 15 calendar days of the Filing Date, the chief executive officer or the secretary of the corporation shall call the special meeting by mailing notice thereof not later than 45 calendar days after the Filing Date. (iv) The date, time and place of the special meeting shall be determined by the board of directors and shall be set forth in the notice of meeting, which notice shall comply with the provisions of Section 3 of this Article II. (v) The record date for the determination of shareholders entitled to notice of and to vote at the special meeting shall be set by the board of directors in accordance with the provisions of Section 4 of Article V of these by-laws. Section 3. Notice of Meetings. Written notice of every meeting of ------------------ shareholders, stating the place, date and hour of the meeting, shall be given personally or by mail to each shareholder of record entitled to vote at such meeting not less than 10 nor more than 60 days before the date of the meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail with first class postage thereon prepaid (except as hereinafter provided) addressed to the shareholder at his address as it appears on the corporation's record of stockholders. The corporation may utilize a class of mail other than first class if the notice of the meeting is mailed, with adequate postage prepaid, not less than 30 days before the date of the meeting. Attendance of a shareholder at a meeting of shareholders (1) waives objection to lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting, and (2) waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented. Notice need not be given to any shareholder who signs a waiver of notice either before or after the meeting. Section 4. Quorum. The holders of a majority of the stock issued and ------ outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the shareholders except as otherwise provided by statute, by the articles of incorporation, or by these by-laws. If a quorum is not present or represented at any meeting of the shareholders, the holders of a majority of the voting shares, present in person or represented by proxy, may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than 120 days, or if a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting. 3 Section 5. Voting. When a quorum is present at any meeting, action on a ------ matter (other than the election of directors) is approved if the votes cast favoring the action exceed the votes cast opposing the action, unless the question is one upon which by express provision of law, of the articles of incorporation or of these by-laws, a different vote is required, in which case such express provision shall govern and control the decision of the question. Except as otherwise required by the Articles of Incorporation, each shareholder shall at every meeting of the shareholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power registered in his name on the books of the corporation, but no proxy shall be voted or acted upon after eleven months from its date, unless otherwise provided in the proxy. Section 6. Consent of Shareholders. Any action required or permitted to ----------------------- be taken at any meeting of the shareholders may be taken without a meeting if all of the shareholders consent thereto in writing, setting forth the action so taken, and such writing is delivered to the corporation for inclusion in the minutes or filing with the corporate records. Such consent shall have the same force and effect as a unanimous vote of shareholders. Section 7. List of Shareholders. The corporation shall keep at its -------------------- registered office or principal place of business, or at the office of its transfer agent or registrar, a record of its shareholders, giving their names and addresses and the number, class and series, if any, of the shares held by each. The officer who has charge of the stock transfer books of the corporation shall prepare and make, before every meeting of shareholders or any adjournment thereof, a complete list of the shareholders entitled to vote at the meeting or any adjournment thereof, arranged in alphabetical order, with the address of and the number and class and series, if any, of shares held by each. The list shall be produced and kept open at the time and place of the meeting and shall be subject to inspection by any shareholder during the whole time of the meeting for the purposes thereof. The said list may be the corporation's regular record of shareholders if it is arranged in alphabetical order or contains an alphabetical index. ARTICLE III DIRECTORS --------- Section 1. Powers. Except as otherwise provided or authorized by law, the ------ property, affairs and business of the corporation shall be managed and directed by its board of directors, which may exercise all powers of the corporation and do all lawful acts and things which are not by law, by any legal agreement among shareholders or by the articles of incorporation, directed or required to be exercised or done by the shareholders. Section 2. Meetings and Notice. The board of directors of the corporation ------------------- may hold meetings, both regular and special, either within or without the state of Georgia. Regular meetings of the board of directors may be held without notice at such time and place as shall from time to time be determined by resolution of the board. Special meetings of the board may be called by the chairman of the board or the chief executive officer or by any three directors on 4 one day's oral, telegraphic or written notice duly given or served on each director personally, or three days' notice deposited, first class postage prepaid, in the United States mail. Such notice shall state a reasonable time, date and place of meeting, but the purpose need not be stated therein. Notice need not be given to any director who signs a waiver of notice either before or after the meeting. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting and waiver of all objections to the place and time of the meeting, or the manner in which it has been called or convened, except when the director states, at the beginning of the meeting, any such objection or objections to the transaction of business. Section 3. Quorum. At all meetings of the board a majority of directors ------ shall constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board, except as may be otherwise specifically provided by law, by the articles of incorporation, or by these by-laws. If a quorum shall not be present at any meeting of the board, a majority of the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 4. Consent of Directors. Unless otherwise restricted by the -------------------- articles of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, setting forth the action so taken, and the writing or writings are delivered to the corporation for inclusion in the minutes of the proceedings of the board or committee or filing with the corporate records. Such consent shall have the same force and effect as a unanimous vote of the board. Section 5. Committees. The board of directors may by resolution designate ---------- from among its members one or more committees, each committee to consist of one or more directors. The board may designate one or more directors as alternate members of any committee, who may replace any absent member at any meeting of such committee. Any such committee, to the extent provided in the resolution, shall have and may exercise all of the authority of the board of directors in the management of the business and affairs of the corporation, except that it shall have no authority to (1) approve or propose to shareholders action which the Georgia Business Corporation Code requires to be approved by shareholders; (2) fill vacancies on the board of directors or any of its committees; (3) amend the articles of incorporation; (4) adopt, amend or repeal by-laws; or (5) approve a plan of merger not requiring shareholder approval. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. The provisions of Sections 2 and 3 of this Article III shall apply to committees and their members as well as to the board of directors. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. Section 6. Compensation of Directors. Directors shall be entitled to such ------------------------- reasonable compensation for their services as directors or members of any committee of the board as shall be fixed from time to time by resolution adopted by the board, and shall also be entitled to 5 reimbursement for any reasonable expenses incurred in attending any meeting of the board or any such committee. Section 7. Nominations of Directors. Nominations of candidates for ------------------------ election at any meeting of the shareholders of the corporation as directors of the corporation may be made (i) by, or at the direction of, the board of directors or (ii) by any holder of record entitled to vote at such meeting in an election of directors who complies with the notice procedures set forth in this Section 7. Nominations, other than those made by, or at the direction of, the board of directors, shall be made pursuant to timely notice in writing to the secretary of the corporation as set forth in this Section 7. To be timely, any such notice must be delivered to, or mailed and received at, the principal executive offices of the corporation not less than 60 days nor more than 90 days prior to the date of such meeting, regardless of any postponements, deferrals or adjournments of such meeting to a later date; provided, however, that if less than 70 days' notice or prior public disclosure of the date of the meeting is given or made, notice by a holder of record must, to be timely, be so delivered or received not later than the close of business on the tenth day following the day on which such notice of the date of the meeting is mailed or the day on which such public disclosure was made; provided that, in the case of an annual meeting, notice by a holder of record, to be timely, must be so delivered or received not later than the close of business 60 days prior to the anniversary of the date of the previous year's annual meeting. Such notice by a holder of record must set forth (i) as to each person whom such holder proposes to nominate for election as a director, all information relating to such person that would be required to be disclosed, or otherwise required, pursuant to Sections 13 or 14 of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the "Exchange Act"), in connection with any acquisition of shares and the solicitations of proxies with respect to nominees for election of directors pursuant to the Exchange Act, regardless of whether such person is subject to such provisions of such Exchange Act, and (ii) as to the holder of record giving such notice, (a) the name and address, as they appear on the records of the corporation, of such holder, together with the name and address of any other shareholder of the corporation who is a record or beneficial owner of securities of the corporation and who is known by such holder to be supporting such nominee(s) and (b) the class and number of securities which are beneficially owned and owned of record by such holder on the date of such holder's notice and the class and number of securities of the corporation beneficially owned and owned of record by any person known by such holder to be supporting such nominee(s). At the request of the board of directors, any person nominated by, or at the direction of, the board of directors for election as a director shall furnish to the secretary of the corporation that information that would be required to be set forth in any holder's notice of nomination pertaining to such nominee. Ballots bearing the names of all the persons who have been nominated for election as directors at any meeting of shareholders in accordance with the procedures set forth in this Section 7 shall be provided for use at such meeting. The board of directors of the corporation may reject any nomination by a holder of record not timely made in accordance with the procedures set forth in this Section 7. If the board of directors determines that the information provided in a holder's notice of nomination does not 6 satisfy the informational requirements of this Section 7 in any material respect, the secretary of the corporation shall promptly notify such holder of the deficiency in such notice. The holder shall have an opportunity to cure the deficiency by providing additional information to the secretary within such period of time, not to exceed five days, from the date such notice of deficiency is given to such holder, as the board of directors shall determine. If the deficiency is not cured within such period, or if the board of directors reasonably determines that the additional information provided by such holder, together with previously provided information, does not satisfy the requirements of this Section 7 in any material respect, then the board of directors may reject such holder's nomination. The secretary of the corporation shall notify in writing any holder making a nomination whether such nomination has been made in accordance with the time and informational requirements of this Section 7. Notwithstanding the procedures set forth herein, if the board of directors does not make a determination as to the validity of any nomination by a holder of record, the presiding officer at the meeting of shareholders shall determine and declare at such meeting whether a nomination was or was not made in accordance with the procedures set forth in this Section 7. If the presiding officer determines that a nomination was not made in accordance with the procedures set forth in this Section 7, he shall so declare at such meeting of shareholders and the defective nomination shall be disregarded. ARTICLE IV OFFICERS -------- Section 1. Number. The officers of the corporation, shall be chosen by ------ the board of directors and shall be a chairman of the board, a chief executive officer, a vice president, a secretary, and a treasurer. The board of directors may also choose a vice chairman, additional vice presidents, one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board of directors. Section 2. Compensation. The salaries of all officers and agents of the ------------ corporation shall be fixed by the board of directors or a committee or officer appointed by the board. As used herein the term "salaries" shall include any bonus, incentive payments, or other plans or programs involving remuneration to officers. Section 3. Term of Office. Unless otherwise provided by resolution of the -------------- board of directors, the principal officers shall be chosen annually by the board at the first meeting of the board following the annual meeting of shareholders of the corporation, or as soon thereafter as is conveniently possible. Subordinate officers may be elected from time to time. Each officer shall serve until his successor shall have been chosen and qualified, or until his death, resignation or removal. Section 4. Removal. Any officer may be removed from office at any time, ------- with or without cause, by the board of directors whenever in its judgment the best interest of the corporation will be served thereby. 7 Section 5. Vacancies. Any vacancy in an office resulting from any cause --------- may be filled by the board of directors. Section 6. Powers and Duties. Except as hereinafter provided, the ----------------- officers of the corporation shall each have such powers and duties as generally pertain to their respective offices, as well as such powers and duties as from time to time may be conferred by the board of directors. At the annual meeting at which officers are elected, the board shall by resolution designate a chief executive officer, who will be responsible to the board for the general management of the company. (a) Chairman of the Board. The chairman of the board shall preside at --------------------- all meetings of the stockholders and directors, and shall see that all orders and resolutions of the board are carried into effect. He shall have such powers and perform all such other duties as the board may direct. The chairman of the board of directors may delegate to any other officer of the corporation the power to preside at any meeting of the shareholders. (b) Vice Chairman of the Board. The vice chairman shall have such -------------------------- duties, responsibilities and authority as the board of directors may prescribe, subject to the limitations expressed or implied by these by- laws. In the absence of the chairman or in the event of his inability or incapacity to act, the vice chairman shall perform the duties and exercise the powers of the chairman. (c) President and Chief Executive Officer. The president and chief ------------------------------------- executive officer shall be responsible for the operation and management of the company and shall be responsible for the proper utilization and security of the company's assets and resources. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, within such limitations as the board by resolution may establish. The president and chief executive officer may delegate his powers to other officers and agents of the company; provided, however, that such delegation shall be reported to the board of directors no less frequently than once a year at the annual meeting, or at such other time as a significant change is made to a previously reported delegation. (d) Vice Presidents. The vice presidents shall have such duties, --------------- responsibilities and authority as the chief executive officer shall delegate, subject to any limitations imposed by the board and subject to the limitations expressed or implied by these by-laws. The Board may designate one or more vice presidents as senior vice president. In the absence of the chief executive officer or in the event of his inability or incapacity to act, the person designated as the Chairman of the Operating Committee shall perform the duties of the chief executive officer and, when so acting, shall have all the powers of and be subject to all the restrictions upon the chief executive officer. 8 (e) Secretary. The secretary shall attend all meetings of the board --------- of directors and all meetings of the shareholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the shareholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or chief executive officer, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. (f) Assistant Secretary. The assistant secretary, or if there be more ------------------- than one, the assistant secretaries in the order determined by the board of directors (or, if there be no such determination, then in the order of their election), shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. (g) Treasurer. The treasurer shall, subject to the direction of a --------- vice president designated by the chief executive officer, have general custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all monies and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. The treasurer shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements. If required by the board of directors, the treasurer shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of the treasurer's office and for the restoration to the corporation, in case of death, resignation, retirement, or removal from office, of all books, papers, vouchers, money, and other property of whatever kind in the possession or under control of the treasurer and belonging to the corporation. (h) Assistant Treasurer. The assistant treasurer, or if there shall ------------------- be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election), shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. (i) Controller. The controller shall be the chief accounting officer ---------- of the corporation. Subject to the direction of a vice president designated by the chief executive 9 officer, the controller shall maintain adequate records of all assets, liabilities, and transactions of the corporation in the conduct of its business. The controller shall require reports from the other officers and agents of the corporation who receive or disburse funds for its account, at such time and in such form as the controller may deem advisable. The controller shall compile and maintain such accounting and statistical records and data as may be required, and shall prepare and submit to the executive officers, including the treasurer, and to the board of directors such periodical and special financial statements as may be called for by them. In conjunction with other officers and heads of divisions, the controller shall initiate and enforce rules and regulations, budgets, and other measures and procedures for the purpose of enhancing the efficiency, economy, and profit with which the business of the corporation is conducted. The controller shall see that adequate internal audits of the financial records of the corporation are currently and accurately made. Section 7. Staff and Operating Unit Officers. The chief executive --------------------------------- officer may from time to time designate one or more "officers" for any function or operating unit, but such persons shall not be officers of the corporation. Any such appointee shall serve at the pleasure of the chief executive officer. Section 8. Voting Securities of the Corporation. Unless otherwise ordered ------------------------------------ by the board of directors, the chief executive officer shall have full power and authority on behalf of the corporation to attend and to act and vote at any meetings of security holders of corporations in which the corporation may hold securities, and at such meetings shall possess and may exercise any and all rights and powers incident to the ownership of such securities which the corporation might have possessed and exercised if it had been present. The chief executive officer from time to time may delegate like powers upon any other officer or agent of the corporation. ARTICLE V CERTIFICATES OF STOCK --------------------- Section 1. Form of Certificate. Every holder of fully-paid stock in the ------------------- corporation shall be entitled to have a certificate in such form as the board of directors may from time to time prescribe. Section 2. Lost Certificates. A new certificate may be issued in place of ----------------- any certificate theretofore issued by the corporation and alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When issuing such new certificate, the officer of the corporation responsible for such issuance may, in his discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or his legal representative, to advertise the same in such manner as he shall require and/or to give the corporation a bond in such sum as he may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. 10 Section 3. Transfers. --------- (a) Transfers of shares of the capital stock of the corporation shall be made only on the books of the corporation by the registered holder thereof, or by his duly authorized attorney, or with a transfer clerk or transfer agent appointed as in Section 5 of this Article provided, and on surrender of the certificate or certificates for such shares properly endorsed and the payment of all taxes thereon. (b) The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and for all other purposes, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law. (c) Shares of capital stock may be transferred by delivery of the certificates therefor, accompanied either by an assignment in writing on the back of the certificates or by separate written power of attorney to sell, assign and transfer the same, signed by the record holder thereof, or by his duly authorized attorney in fact, but no transfer shall affect the right of the corporation to pay any dividend upon the stock to the holder of record as the holder in fact thereof for all purposes, and no transfer shall be valid, except between the parties thereto, until such transfer shall have been made upon the books of the corporation as herein provided. (d) The board may, from time to time, make such additional rules and regulations as it may deem expedient, not inconsistent with these by-laws or the articles of incorporation, concerning the issue, transfer, and registration of certificates for shares of the capital stock of the corporation. Section 4. Record Date. In order that the corporation may determine the ----------- shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than 70 days prior to the date on which the particular action requiring such determination of shareholders is to be taken. If no record date is fixed for the determination of shareholders entitled to notice of and to vote at any meeting of shareholders, the record date shall be at the close of business on the day next preceding the day on which the notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. If no record date is fixed for determining shareholders entitled to take action without a meeting, the record date shall be the date the first shareholder signs the consent. If no record date is fixed for other purposes, the record date shall be at the close of business on the day on which the board of directors adopts 11 the resolution relating thereto. A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting unless the board of directors shall fix a new record date for the adjourned meeting. Section 5. Transfer Agent and Registrar. The board of directors may ---------------------------- appoint one or more transfer agents or one or more transfer clerks and one or more registrars, and may require all certificates of stock to bear the signature or signatures of any of them. ARTICLE VI GENERAL PROVISIONS ------------------ Section 1. Dividends. Dividends upon the capital stock of the --------- corporation, subject to the provisions of the articles of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the corporation's capital stock, subject to the provisions of the articles of incorporation. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. Section 2. Fiscal Year. The fiscal year of the corporation shall be fixed ----------- by resolution of the board of directors. Section 3. Seal. The corporate seal shall have inscribed thereon the name ---- of the corporation, the year of its organization and the words "Corporate Seal" and "Georgia." The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. In the event it is inconvenient to use such a seal at any time, the signature of the corporation followed by the word "Seal" enclosed in parentheses shall be deemed the seal of the corporation. Section 4. Annual Statements. Not later than four months after the close ----------------- of each fiscal year, and in any case prior to the next annual meeting of stockholders, the corporation shall prepare: (1) A balance sheet showing in reasonable detail the financial condition of the corporation as of the close of its fiscal year, and (2) A profit and loss statement showing the results of its operations during its fiscal year. Upon written request the corporation promptly shall mail to any shareholder of record a copy of the most recent such balance sheet and profit and loss statement. 12 Section 5. Fair Price to Shareholders; Business Combinations. All of the ------------------------------------------------- requirements of Part 2 of Article 11 and all of the requirements of Part 3 of Article 11 of the Georgia Business Corporation Code shall be applicable to the corporation. ARTICLE VII INDEMNIFICATION --------------- Section 1. Definitions. As used in this Article, the term ----------- (a) "change of control", for purposes of this Article VII, means (1) an acquisition by a person of beneficial ownership of 20% or more of the combined voting power of the corporation's then outstanding voting securities, provided that any such securities acquired directly from the corporation shall be excluded from the determination of such person's beneficial ownership (but shall be included in calculating total outstanding securities); or (2) the individuals who are members of the incumbent board (as defined below) cease for any reason to constitute two- thirds of the Board of Directors; or (3) approval by the shareholders of the corporation of (i) a merger or consolidation involving the corporation if the shareholders of the corporation, immediately before such merger or consolidation, do not own, immediately following such merger or consolidation, more than 80% of the combined voting power of the outstanding voting securities of the corporation in substantially the same proportion as their ownership of voting securities immediately before such merger or consolidation or (ii) a complete liquidation or dissolution of the corporation or an agreement for the sale or other disposition of all or substantially all of the assets of the corporation. Notwithstanding the foregoing, a change of control shall not be deemed to occur solely because twenty percent (20%) or more of the then outstanding voting securities is acquired by (i) a trustee or other fiduciary holding securities under one or more employee benefit plans maintained by the corporation or any of its subsidiaries or (ii) any corporation which, immediately prior to such acquisition, is owned directly or indirectly by the shareholders of this corporation in the same proportion as their ownership of shares in this corporation immediately prior to such acquisition. Moreover, notwithstanding the foregoing, a change of control shall not be deemed to occur solely because any person (the "Subject Person") acquired beneficial ownership of more than the permitted amount of the outstanding voting securities as a result of the acquisition of voting securities by the corporation which, by reducing the number of voting securities outstanding increases the proportional number of shares beneficially owned by the Subject Person, provided, that if a change of -------- control would occur (but for the operation of this sentence) as a result of the acquisition of voting securities by the corporation, and after such share acquisition by the corporation, the Subject Person 13 becomes the beneficial owner of any additional voting securities which increases the percentage of the then outstanding voting securities beneficially owned by the Subject Person, then a change of control shall occur. (b) "corporation" includes any domestic or foreign predecessor entity of the corporation or a corporation in a merger or other transaction in which the predecessor's existence ceased upon consummation of the transaction. (c) "director" means an individual who is or was a director of the corporation or an individual who, while a director of the corporation, is or was serving at the corporation's request as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise. A director is considered to be serving an employee benefit plan at the corporation's request if his duties to the corporation also impose duties on, or otherwise involve services by, him to the plan or to participants in or beneficiaries of the plan. Director includes, unless the context requires otherwise, the estate or personal representative of a director. (d) "expenses" include attorneys' fees. (e) "incumbent board" includes the individuals who as of May 11, 1994 are members of the Board of Directors and any individual becoming a director subsequent to May 11, 1994 whose election, or nomination for election by the corporation's shareholders was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board; provided, however, that any individual who is not a member of the incumbent -------- ------- board at the time he or she becomes a member of the Board of Directors shall become a member of the incumbent board upon the completion of two full years as a member of the Board of Directors; provided further, -------- ------- however, that notwithstanding the foregoing, no individual shall be ------- considered a member of the incumbent board if such individual initially assumed office (1) as a result of either an actual threatened "election contest" (within the meaning of Rule 14a-11 promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board of Directors (a "Proxy Contest") or (2) with the approval of the other members of the Board of Directors, but by reason of any agreement intended to avoid or settle a Proxy Contest. (f) "liability" means the obligation to pay a judgment, settlement, penalty, fine (including an excise tax assessed with respect to an employee benefit plan), or reasonable expenses incurred with respect to a proceeding. (g) "party" includes an individual who was, is, or is threatened to be made a named defendant or respondent in a proceeding. 14 (h) "proceeding" means any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative and whether formal or informal. Section 2. Indemnification of Directors, Officers and Employees - ------------------------------------------------------ General. - ------- (a) Subject to the terms and conditions of this Article VII, the corporation shall indemnify an individual made a party to a proceeding because he is or was a director or officer of the corporation against liability incurred in connection with a proceeding to the fullest extent permitted by the Georgia Business Corporation Code (the "GBCC"), as the same now exists or may hereafter be amended (but only to the extent any such amendment permits the corporation to provide broader indemnification rights than the GBCC permitted the corporation to provide prior to such amendment). (b) The termination of a proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent is not, of itself, determinative that the director or officer did not meet the standard of conduct set forth in the GBCC. (c) To the extent that a director or officer has been successful, on the merits or otherwise, in the defense of any proceeding to which he was a party, or in defense of any claim, issue, or matter therein, because he is or was a director or officer of the corporation, the corporation shall indemnify the director or officer against reasonable expenses incurred by him in connection therewith regardless of whether the director or officer has met the standards set forth in the GBCC and without any action or determination under Section 4 of this Article VII. (d) Subject to the approval of the chief executive officer and the general counsel for the corporation, the officers of the corporation may indemnify an individual who is an employee of the corporation and who is made a party to a proceeding because he is or was an employee of the corporation against liability incurred in connection with a preceding to the fullest extent permitted under the GBCC, as the same now exists or may hereafter be amended (but only to the extent any such amendment permits the corporation to provide broader indemnification rights than the GBCC permitted the corporation to provide prior to such amendment). Section 3. Advance for Expenses. -------------------- (a) The corporation shall pay for or reimburse the reasonable expenses incurred by a director or officer who is a party to a proceeding in advance of final disposition of the proceeding if: (1) The director or officer furnishes the corporation a written affirmation of his good faith belief that he has met the standard of conduct set forth in the GBCC; and 15 (2) The director or officer furnishes the corporation a written undertaking, executed personally or on his behalf, to repay any advances if it is ultimately determined that he is not entitled to indemnification under this Article (b) The undertaking required by paragraph (2) of subsection (a) of this Section 3 must be an unlimited general obligation of the director or officer but need not be secured and may be accepted without reference to financial ability to make repayment. Section 4. Limitations on Indemnification. ------------------------------ (a) The corporation shall not indemnify a director under Section 2 of this Article VII unless a determination has been made in the specific case that indemnification of the director is permissible in the circumstances because he has met the standard of conduct set forth in the GBCC. (b) The corporation shall indemnify an officer under Section 2 of this Article VII unless a determination has been made in the specific case that indemnification of the officer is precluded in the circumstances because he has failed to meet the standard of conduct set forth in the GBCC. (c) In either paragraph (a) or (b) above, such determination shall be made within 60 days of the request for indemnification: (I) By the Board of Directors by majority vote of a quorum consisting of directors not at the time parties to the proceeding; (ii) If a quorum cannot be obtained under paragraph (i) of this subsection, by majority vote of a committee duly designated by the Board of Directors (in which designation directors who are parties may participate), consisting solely of two or more directors not at the time parties to the proceeding; (iii) By special legal counsel: (A) Selected by the Board of Directors or its committee in the manner prescribed in paragraph (i) or (ii) of this subsection; or (B) If a quorum of the Board of Directors cannot be obtained under paragraph (i) of this subsection and a committee cannot be designated under paragraph (ii) of this subsection, selected by majority vote of the full Board of Directors (in which selection directors who are parties may participate); or (iv) By the shareholders, but the shares owned by or voted under the control of the officers and directors who are at the time parties to the proceeding may not be voted on the determination; 16 provided, however, that following a change of control of the corporation, with respect to all matters thereafter arising out of acts, omissions or events prior to the change of control of the corporation concerning the rights of any person seeking indemnification under this Article VII, such determination shall be made by special legal counsel selected by such person and approved by the Board of Directors or its committee in the manner described in Section 4(c)(iii) above (which approval shall not be unreasonably withheld), which counsel has not otherwise performed services (other than in connection with similar matters) within the five years preceding its engagement to render such opinion for such person or for the corporation or any affiliates (as such term is defined in Rule 405 under the Securities Act of 1933, as amended) of the corporation (whether or not they were affiliates when services were so performed) ("Independent Counsel"). Unless such person has theretofore selected Independent Counsel pursuant to this Section 4 and such Independent Counsel has been approved by the corporation, legal counsel approved by a resolution or resolutions of the Board of Directors of the corporation prior to a change of control of the corporation shall be deemed to have been approved by the corporation as required. Such Independent Counsel shall determine as promptly as practicable whether and to what extent such person would be permitted to be indemnified under applicable law and shall render its written opinion to the corporation and such person to such effect. In making a determination under this Section 4, the special legal counsel and Independent Counsel referred to above shall determine that indemnification is permissible unless clearly precluded by this Article VII or the applicable provisions of the GBCC. The corporation agrees to pay the reasonable fees of the Independent Counsel referred to above and to fully indemnify such Independent Counsel against any and all expenses, claims, liabilities and damages arising out of or relating to this Article or its engagement pursuant hereto. (d) Authorization of indemnification or an obligation to indemnify and evaluation as to reasonableness of expenses shall be made as set forth in paragraph (c) above. (e) Indemnification under this Article VII in connection with a proceeding by or in the right of the corporation shall be limited to reasonable expenses incurred in connection with the proceeding. Section 5. Enforceability. The provisions of this Article shall be -------------- applicable to all proceedings commenced after its adoption, whether such arise out of events, acts, omissions or circumstances which occurred or existed prior or subsequent to such adoption, and shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such person. This Article shall be deemed to grant each person who is entitled to indemnification hereunder rights against the corporation to enforce the provisions of this Article, and any repeal or other modification of this Article or any repeal or modification of the GBCC or any other applicable law shall not limit any rights of 17 indemnification then existing or arising out of events, acts, omissions, circumstances occurring or existing prior to such repeal or modification, including, without limitation, the right to indemnification for proceedings commenced after such repeal or modification to enforce this Article with regard to acts, omissions, events or circumstances occurring or existing prior to such repeal or modification. Section 6. Severability. If this Article or any portion hereof shall be ------------ invalidated on any ground by any court of competent jurisdiction, then the corporation shall nevertheless indemnify each director or officer of the corporation as to liabilities incurred in connection with any proceeding, including an action by or in the right of the corporation, to the full extent permitted by any applicable portion of this Article that shall not have been invalidated and to the full extent permitted by applicable law. Section 7. Statements to Shareholders. If the corporation indemnifies or -------------------------- advances expenses to an officer or director under this Article VII in connection with a proceeding by or in the right of the corporation, the corporation shall report the indemnification or advance in writing to the shareholders with or before the notice of the next shareholders' meeting. 18 EX-10.1 3 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS EXHIBIT 10.1 SCIENTIFIC-ATLANTA, INC. STOCK PLAN FOR NON-EMPLOYEE DIRECTORS As Amended, Effective November 12, 1997 1. PURPOSES The purposes of this Plan are to aid the Company in attracting and retaining highly qualified Non-employee Directors, to provide additional compensation as an incentive for Non-employee Directors to contribute their best efforts to the Company's success, and to emphasize and enhance the Company's policy of seeking to have Non-employee Directors maintain a significant investment in the stock of the Company and thus a strong commonality of interests with the shareholders. 2. DEFINITIONS As used in this Plan: (a) The term "Annual Meeting" means the annual meeting of shareholders of the Company. (b) The term "Award" means an Elective Grant, a Stock Award, a Retirement Award, or a Lump Sum Distribution awarded under this Plan. (c) The term "Board" means the Board of Directors of the Company. (d) The term "Board Approval" means approval by a majority of the directors present at a Board meeting at which a quorum is present. (e) The term "Company" means Scientific-Atlanta, Inc., a Georgia corporation. (f) The term "Committee" shall mean the Governance and Nominations Committee of the Board or any another committee comprised of directors of the Board which is vested by the Board with responsibility to administer this Plan. (g) The term "Elective Grant" shall mean the election by a Non-Employee Director pursuant to Section 3(a) hereof to receive a portion of his or her Quarterly Compensation in the form of Shares. (h) For the purposes of a Stock Award, the term "Eligible Directors" shall mean those Non-employee Directors who served on the Board for the six months immediately preceding the Annual Meeting at which a Stock Award is granted. For the purposes of an Elective Grant, the term "Eligible Directors" shall mean all Non-employee Directors of the Board. For the purposes of a Retirement Award and for purposes of the Lump Sum Distribution, the term "Eligible Directors" shall mean all Non-employee Directors who were not members of the Board prior to January 1, 1997, and all Non-employee Directors who were members of the Board and Participants in the Retirement Plan for Non-employee Directors prior to January 1, 1997, and who elected on or before September 21, 1997, pursuant to the terms of paragraph 3 of the Retirement Plan for Non- employee Directors, as amended on June 17, 1997, to receive a Lump Sum Distribution. (i) The term "Fair Market Value Per Share" means the closing sale price of a Share on the New York Stock Exchange on the date such value is determined or, if there is no trade on such Exchange on that date, then the closing sale price on the next preceding date on which there is trade of the Company's Common Stock on such Exchange. In the event that the Company's Common Stock is not listed on the New York Stock Exchange on the determination date, the Fair Market Value shall be determined as stated above but with reference to trades on the largest stock exchange or other public market on which the Company's Common Stock is then traded. (j) The term "Lump Sum Distribution" means an award to an Eligible Director consisting of a number of Shares having an aggregate fair market value, as of January 1, 1997, determined as provided in Section 2(i) above, equal to the greater of either (i) the present value, actuarially determined, as ------ of January 1, 1997, of the retirement benefits of such Eligible Director under the Retirement Plan for Non-employee Directors, as amended on June 17, 1997 (the "Retirement Plan"), reduced by the present value, actuarially determined by the ---------- Company, as of January 1, 1997, of the stream of annual Retirement Awards (granted under Section 5(a) hereof) through the electing participant's sixty- fifth birthday, or (ii) an amount equal to the value of 750 shares of the -- Company's Common Stock (at the closing price on January 1, 1997) multiplied by ------------- the Eligible Director's total years of service as a director, as of January 1, 1997, all as determined in accordance with paragraph 3 of the Retirement Plan. (k) The term "Non-employee Director" means any person who is elected to the Board and who has not been an employee of the Company or any of its subsidiaries at any time during the twelve (12) months preceding (i) any election by such person under Section 3 hereof, (ii) the receipt of a Stock Award by such person under Section 4 hereof, or (iii) the receipt of a Retirement Award by such person under Section 5 hereof. (l) The term "Plan" means this Scientific-Atlanta, Inc. Stock Plan for Non-employee Directors, as amended from time to time. (m) The term "Quarterly Compensation" means the sum of all meeting fees, annual retainer fees, and Committee and Board Chairmanship fees for service as a director earned by a Non-employee Director during a fiscal quarter. Compensation paid to Non-employee Directors for their service to the Company in any other capacity, shall be excluded from the calculation of Quarterly Compensation. 2 (n) The term "Retirement Award" means an award consisting of 1,500 Shares (subject to adjustment as herein provided) granted to an Eligible Director pursuant to Section 5 hereof, which Shares shall be either deferred or restricted for a period of at least two (2) years from the date of the grant, in accordance with the terms of Section 5 hereof. Depending on the election made by each Eligible Director under Section 5(a) hereof, each Retirement Award will be either a Deferred Retirement Award or a Restricted Retirement Award (as such terms are defined in Section 5(a) hereof). (o) The term "Share" means a share of the Company's Common Stock, $.50 par value. Shares delivered to the Eligible Directors under this Plan may be either authorized but previously unissued shares or previously issued shares reacquired by the Company. (p) The term "Shareholder Approval" means the affirmative vote of a majority of the shares of Common Stock present or represented and entitled to vote at a meeting of the shareholders of the Company at which a quorum is present. (q) The term "Stock Award" means an award consisting of 500 Shares (subject to adjustment as herein provided) granted to an Eligible Director pursuant to Section 4(a) hereof. 3. ELECTIVE GRANTS (a) Each Non-employee Director may make an election to receive up to 100 percent (100%) of his or her Quarterly Compensation (in increments of 5%) in the form of Shares pursuant to an Elective Grant made in accordance with this Section 3(a). The election by the Non-employee Director to receive an Elective Grant of Shares must be in writing and must be delivered to the Secretary of the Company before the start of the fiscal quarter during which services are to be rendered by the Non-employee Director giving rise to the Quarterly Compensation. The election made by a Non-employee Director pursuant to this Section 3(a) shall be in effect as to Quarterly Compensation payable for services rendered during the fiscal quarter of the Company covered by the election. The Committee shall, prior to the receipt by a Non-employee Director of shares under an Elective Grant, approve the issuance of such shares by resolution; however, if the Committee fails to adopt such an approving resolution, such shares may be issued to the electing Non-employee Director, but such shares cannot be sold or otherwise transferred by such Non-employee Director prior to the date which is six (6) months after the date of such issuance of shares. (b) The number of Shares to be granted to a Non-employee Director who makes an Elective Grant shall equal (i) the amount of the Quarterly Compensation earned during the Company's fiscal quarter subject to the Elective Grant, divided by (ii) the Fair Market Value Per Share on the last day of such fiscal quarter. In no event shall the Company be required to issue fractional Shares. Any fractional Share will be rounded to the nearest whole Share. 3 (c) As soon as practicable after each Non-employee Director's Elective Grant of Shares is determined, the Company shall cause to be issued and delivered to such Non-employee Director a stock certificate registered in the name of the Non-employee Director evidencing his or her Elective Grant, less any Shares withheld by the Company pursuant to Section 8 below. (d) No right to an Elective Grant and no interest therein may be assigned, pledged, hypothecated, or otherwise transferred by a Non-employee Director except that, in the event of the death of a Non-employee Director prior to the issuance of a stock certificate evidencing an Elective Grant, such right to such Elective Grant may be transferred to the Non-employee Director's designated beneficiary or, in the absence of such designation, by will or the laws of descent and distribution. 4. STOCK AWARDS (a) Beginning with the 1995 Annual Meeting and at the Annual Meeting every year thereafter through and including the Annual Meeting held in 2009, every Eligible Director shall be granted a Stock Award. (b) Subject to the provisions of Section 8 hereof, as soon as practicable after the applicable Annual Meeting, the Company shall cause to be issued and delivered to each Eligible Director receiving a Stock Award a stock certificate registered in the name of such Eligible Director evidencing the Stock Award, less any Shares withheld by the Company pursuant to Section 8 below. (c) Eligible Directors shall not be deemed for any purpose to be, or have any rights as, shareholders of the Company with respect to any Stock Award until the stock certificates are issued and then only from the date of the issuance of such stock certificates. Appropriate adjustments shall be made for dividends or distributions or other rights for which the record date is after an Annual Meeting and prior to the issuance of such stock certificates. (d) No right to a Stock Award and no interests therein may be assigned, pledged, hypothecated, or otherwise transferred by an Eligible Director except that, in the event of the death of a Non-employee Director prior to the issuance of a stock certificate evidencing a Stock Award, such right to such Stock Award may be transferred to the Non-employee Director's designated beneficiary or, in the absence of such designation, by will or the laws of descent and distribution. 5. RETIREMENT AWARDS (a) Beginning with the 1997 Annual Meeting and at the Annual Meeting every year thereafter through and including the Annual Meeting held 2009, every Eligible Director shall be granted a Retirement Award. Each Eligible Director shall elect annually either (i) to defer his or her right to receive such Retirement Award, under the Deferred Compensation Plan for Non-employee Directors, for a minimum period of two (2) years after the date of the grant thereof (a "Deferred Retirement Award"), or (ii) to receive such Retirement Award as restricted stock that 4 cannot be sold, assigned or otherwise disposed of by the Eligible Director for a period of two (2) years after the date of the grant thereof (a "Restricted Retirement Award"). (b) Subject to the provisions of Section 8, as soon as practicable after the expiration of (i) the deferral period under the Deferred Compensation Plan for Non-employee Directors applicable to a Deferred Retirement Award, or (ii) the restriction period under this Plan applicable to a Restricted Retirement Award, as applicable, the Company shall cause to be issued to the pertinent Eligible Director a stock certificate registered in the name of such Eligible Director evidencing the Deferred Retirement Award or the Restricted Retirement Award, as applicable. (c) Eligible Directors shall not be deemed for any purpose to be, or have any rights as, shareholders of the Company with respect to any Retirement Award until the stock certificates are issued and then only from the date of the issuance of such stock certificates. Appropriate adjustments shall be made for dividends or distributions or other rights for which the record date is after an Annual Meeting and prior to the issuance of such stock certificates. (d) No right to a Retirement Award and no interests therein may be assigned, pledged, hypothecated, or otherwise transferred by an Eligible Director except that, in the event of the death of a Non-employee Director prior to the issuance of a stock certificate evidencing a Retirement Award, such right to such Retirement Award may be transferred to the Non-employee Director's designated beneficiary or, in the absence of such designation, by will or the laws of descent and distribution.. (e) During the two (2) year restriction period applicable to a Restricted Retirement Award, Eligible Directors shall have all rights of a shareholder with respect to the Shares granted under the Retirement Award, including the right to vote such Shares and to receive dividends and other distributions paid with respect to such Shares, but they shall not have the right to sell, exchange, transfer, pledge, hypothecate or otherwise dispose of such Restricted Retirement Award, except that such Shares may be transferred upon the death of the Eligible Director to such of his legal representatives, heirs and legatees as may be entitled thereto by will or the laws of intestacy. 6. LUMP SUM DISTRIBUTIONS (a) As soon as practicable after the 1997 Annual Meeting, every Eligible Director who has elected to receive a Lump Sum Distribution, in accordance with paragraph 3 of the Retirement Plan for Non-employee Directors, shall be granted a Lump Sum Distribution under this Plan. Each Eligible Director shall elect to defer his or her right to receive such Lump Sum Distribution, under the Deferred Compensation Plan for Non-employee Directors, until not earlier than such Eligible Director's Retirement, Death or Total Disability (as such terms are defined in that plan). 5 (b) Subject to the provisions of Section 8, as soon as practicable after the expiration of the deferral period under the Deferred Compensation Plan for Non-employee Directors applicable to such Lump Sum Distribution for an Eligible Director, the Company shall cause to be issued to such Eligible Director receiving a Lump Sum Distribution a stock certificate registered in the name of such Eligible Director evidencing the Lump Sum Distribution. (c) Eligible Directors shall not be deemed for any purpose to be, or have any rights as, shareholders of the Company with respect to any Lump Sum Distribution until the stock certificates are issued and then only from the date of the issuance of such stock certificates. Appropriate adjustments shall be made for dividends or distributions or other rights for which the record date is after an Annual Meeting and prior to the issuance of such stock certificates. (d) No right to a Lump Sum Distribution and no interests therein may be assigned, pledged, hypothecated, or otherwise transferred by an Eligible Director except that, in the event of the death of a Non-employee Director prior to the issuance of a stock certificate evidencing a Lump Sum Distribution, such right to such Lump Sum Distribution may be transferred to the Non-employee Director's designated beneficiary or, in the absence of such designation, by will or the laws of descent and distribution.. 7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION If a reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation, rights offering, or any other change in the corporate structure of the Company or the Shares occurs, then the number and/or kind of shares to be awarded under the Plan shall be automatically adjusted as required in order to prevent an unfavorable effect upon the value of the Awards to be made under this Plan. 8. ELECTION FOR TAX PURPOSES/TAX WITHHOLDING/DEFERRAL (a) All Awards made pursuant to this Plan shall be subject to the withholding of state and federal income taxes, FICA tax or other taxes to the extent required by applicable law. The Company shall, before delivery of a stock certificate evidencing an Award, require the recipient to make arrangements satisfactory to the Company to satisfy such withholding requirement, if any. An Eligible Director receiving an Award may satisfy such withholding requirement by having the Company withhold Shares otherwise issuable to the Eligible Director if such Director makes a written election to do so, which election must be delivered to the Secretary of the Company. Each Eligible Director receiving a Restricted Retirement Award shall have the right to make an election, under the terms of Section 83(b) of the U.S. tax code and related regulations, whereby such Eligible Director would treat such Restricted Retirement Award as creating income on the date of the grant thereof, rather than on the date upon which the restriction period expires. (b) The right to receive any Shares under this Plan, at the election of the Non-employee Director receiving an Award (without need for Committee approval), may be deferred under the provisions of the Company's Deferred Compensation Plan for Non-employee 6 Directors. In the event of such a deferral, the Eligible Director will not have any rights of ownership, such as voting, selling or receipt of dividends, until the deferral period for such Award expires. 9. ADMINISTRATION The Plan shall be administered by the Committee. The Committee shall have full authority, consistent with the Plan, to interpret the Plan and to promulgate such rules and regulations with respect to the Plan as it deems desirable for the administration of the Plan. The Committee shall have authority to determine all matters relating to the administration and granting of Awards. All decisions, determinations and interpretations of the Committee shall be binding upon all persons. 10. COMPLIANCE WITH APPLICABLE LEGAL REQUIREMENTS The Plan, the Awards, and the obligation of the Company to deliver Shares under the Plan shall be subject to all applicable laws, regulations, and the requirements of the exchanges on which Shares may, at the time, be listed. In the event that the Shares to be issued under this Plan are not registered under the Securities Act of 1933 and/or any applicable state securities laws prior to the delivery of such Shares, the Company may require, as a condition to the issuance thereof, that each Eligible Director to whom such Shares are to be issued represent and warrant in writing to the Company that the Shares are being acquired by him or her for investment for his or her account and not for resale or with any intent of participating directly or indirectly in any distribution of such Shares and a legend to that effect may be placed on the stock certificates representing such Shares. 11. AMENDMENTS The Committee with Board Approval may amend this Plan or any provision thereof from time to time for the purpose of satisfying the requirements of any changes in applicable laws or regulations or for any other purpose which at the time may be permitted by law, provided that no amendment, except with shareholder Approval, shall: (i) change the calculation of the Awards so as to increase the value of the award to the Non-employee Directors; (ii) increase the frequency of the Awards, (iii) materially increase in any other way the benefits to the Non- employee Directors, (iv) materially modify the definitions of Non-employee Director or Eligible Directors as defined herein, or (v) disqualify a Non- employee Director from being a "Non-Employee Director" administrator (within the meaning of Rule 16b-3 or any successor rule of the Securities and Exchange Commission) of any stock-based plan of the Company. Notwithstanding the foregoing, in no case may the Plan provisions pertaining to the amount or determination of a Stock Award, Elective Grant, Retirement Award, or the determination of Eligible Directors be amended more than once every six months, other than to comport with changes in the Internal Revenue Code, the Employee Retirement Income Security Act, or the rules thereunder. 7 12. DISCONTINUANCE The Board may suspend or discontinue this Plan in whole or in part, but any such suspension or discontinuance shall not affect Awards granted under this Plan prior thereto. 13. Governing Law This Plan is made in accordance with and shall be governed in all respects by the laws of the State of Georgia. 14. EFFECTIVE DATE This Plan was effective on August 24, 1995. 15. TERM The term of this Plan shall be for the period commencing as of the date of Board Approval and ending with the Annual Meeting held in 2009. To record the adoption of the Plan by the Board on August 24, 1995, and by the shareholders on November 8, 1995, and to record the amendment of the Plan by the Board on November 13, 1996, and on June 17, 1997, with an effective date of November 12, 1997, the date of Shareholder Approval thereof, the Company has caused its authorized officers to execute this Plan and affix the corporate name and seal hereto. SCIENTIFIC-ATLANTA, INC. By: /s/ Brian C. Koenig ------------------------------------------- Name: Brian C. Koenig Title: Senior Vice President - Human Resources By: /s/ William E. Eason, Jr. ------------------------------------------ Name: William E. Eason, Jr. Title: Corporate Secretary [Corporate Seal] 8 EX-10.2 4 DEFERRED COMPENSATION PLAN FOR NON-EMPL. EXHIBIT 10.2 [Logo of Scientific Atlanta DEFERRED COMPENSATION PLAN FOR Appears NON-EMPLOYEE DIRECTORS OF SCIENTIFIC-ATLANTA, INC. here] --------------------------------------------------- As Amended, Effective November 12, 1997 ARTICLE I - INTRODUCTION - ------------------------ 1.1 Name of the Plan ----------------- This Plan shall be known as the Deferred Compensation Plan for Non-Employee Directors of Scientific-Atlanta, Inc. 1.2 Purpose of Plan --------------- The purpose of the Plan is to provide non-employee directors of Scientific- Atlanta, Inc. the opportunity to defer receipt of cash compensation and compensation in the form of stock payable to them for services to Scientific- Atlanta, Inc. as directors. 1.3 Restatement of Plan ------------------- This document amends and restates the Plan effective as of November 12, 1997. All deferral elections made on or after November 12, 1997, shall be governed by the terms of the Plan as amended and restated herein. In addition, deferral elections made before November 12, 1997, by an individual who is a non- employee member of the Board on November 12, 1997, shall be governed prospectively by the terms of the Plan as amended and restated herein. ARTICLE II - DEFINITIONS - ------------------------ For purposes of this Plan the following words and phrases shall have the meanings and applications set forth below: 2.1 Plan ---- This Deferred Compensation Plan for Non-Employee Directors of Scientific- Atlanta, Inc., as amended from time to time. 2.2 Participant ----------- A non-employee member of the Board of Directors of Scientific-Atlanta, Inc. who elects to participate in this Plan. 1 2.3 Plan Year --------- The period beginning on the first day of July of each calendar year and ending on and including the last day of June of the next calendar year. The first Plan Year began on July 1, 1993, and ended on June 30, 1994. 2.4 Compensation ------------ The total of a Participant's Annual Retainer, Meeting Fees, and Committee Chair Retainer payments paid to the Participant, by Scientific-Atlanta, Inc. during a Plan Year. 2.5 Annual Retainer --------------- The amount paid each year, in quarterly payments, to non-employee members of the Board of Directors of Scientific-Atlanta, Inc. 2.6 Meeting Fees ------------ The amounts paid to a non-employee member of the Board of Directors of Scientific-Atlanta, Inc. for each meeting of the Board and each meeting of a standing or special committee he or she attends. 2.7 Committee Chair Retainer ------------------------ The amount paid each year, in quarterly payments to a non-employee director who chairs a standing or special committee of the Board of Directors. 2.8 Awards ------ The right to receive shares of Scientific-Atlanta Common Stock, granted under a Stock Award, an Elective Grant, a Retirement Award, or a Lump Sum Distribution made pursuant to the Stock Plan for Non-Employee Directors, as such terms are defined in that plan. 2.9 Election Form ------------- The form completed by a Participant in order to make one or more Compensation Deferral Elections for the next Plan Year. 2.10 Compensation Deferral Election ------------------------------ Each election made by a Participant to defer a portion of his or her Compensation and/or Awards by executing and submitting an Election Form. 2 2.11 Deferred Benefit Account ------------------------ An account maintained pursuant to and in accordance with the terms and conditions set forth in Article V hereof by or on behalf of Scientific-Atlanta, Inc. for each Compensation Deferral Election made by a Participant under this Plan. 2.12 Deferred Benefit Commencement Date ---------------------------------- The date designated by a Participant with respect to each Compensation Deferral Election entered on an Election Form as the date on which the payment of the Deferred Benefits that accumulate as a result of each respective election is to begin. A Participant may change the date designated for a Compensation Deferral Election by sending a request to the Plan Committee for such changed date and obtaining the Plan Committee's approval of such change prior to the effective date of such change. 2.13 Beneficiary ----------- A person or entity designated in accordance with the terms and conditions of this Plan to receive benefits upon the death of a Participant. 2.14 Election Amount --------------- The amount of Compensation (and right to a certain number of shares of Scientific-Atlanta Common Stock under an Award, if applicable) to be deferred pursuant to a single Compensation Deferral Election. 2.15 Service Termination Date ------------------------ The last day of the month immediately preceding the date of a Participant's Retirement, termination of service, determination of Total Disability, or death, whichever is applicable. 2.16 Retirement ---------- The discontinuation of service on the Board of Directors by a Participant who is fifty-five years of age or older with at least three years of Board service. 2.17 Total Disability ---------------- A physical or mental condition which is expected to be totally and permanently disabling as determined in accordance with the terms and conditions of the long-term disability insurance plan currently or most recently maintained by Scientific-Atlanta, Inc. for the benefit of its employees claiming to be totally disabled. 3 2.18 Plan Committee -------------- The Human Resources and Compensation Committee of the Board of Directors of Scientific-Atlanta, Inc. 2.19 Determination Date ------------------ The last day of each Plan Year. 2.20 Plan Interest Rate ------------------ An annual rate of interest that shall be determined by the Plan Committee prior to the start of each Plan Year and credited to a Participant's Deferred Benefit Account during the Plan Year. 2.21 Deferred Benefits ----------------- The amounts (and right to a certain number of shares of Scientific-Atlanta Common Stock, if applicable) payable to a Participant or to his or her Beneficiary or estate following the Participant's Retirement, termination of service as a non-employee member of the Board, determination of Total Disability, or death. 2.22 Scientific-Atlanta Common Stock ------------------------------- The $.50 par value common stock of Scientific-Atlanta, Inc. 2.23 Deferral Period --------------- The period commencing on the date that an Election Form becomes effective for a Compensation Deferral Election and continuing until the Deferred Benefit Commencement Date. ARTICLE III - ELIGIBILITY AND PARTICIPATION - ------------------------------------------- 3.1 Eligibility ----------- Directors who are not employees of Scientific-Atlanta, Inc. and who are actively serving on the Board of Directors of Scientific-Atlanta, Inc. shall be eligible to participate in this Plan. 3.2 Participation ------------- The Plan Committee shall notify in writing each director who becomes eligible to participate in this Plan of his or her eligibility. Eligible directors may participate in this Plan by completing an Election Form on or before the end of the quarter immediately preceding the 4 quarter in which he or she wants to begin deferring Compensation. If timely received, such election to participate shall be effective on the first day of the succeeding quarter. ARTICLE IV - COMPENSATION DEFERRAL - ---------------------------------- 4.1 Compensation Deferral Election ------------------------------ A Participant shall effect a Compensation Deferral Election by executing and submitting to the Plan Committee an Election Form. Subsequently, Scientific-Atlanta, Inc. shall defer Election Amounts deferred from the Participant's Awards and Compensation at the time Compensation would have been paid (or at the time the right to receive shares of Scientific-Atlanta Common Stock was granted, as applicable). Awards may only be deferred into an Award Sub-Account and Compensation may not be deferred into an Award Sub-Account. Each Election Amount shall be deferred for the Deferral Period specified with respect to the particular Compensation Deferral Election in the Election Form, provided, however, that the Participants shall not be entitled to defer Retirement Awards or Lump Sum Distributions (as such terms are defined in the Stock Plan for Non-Employee Directors) for Deferral Periods that are shorter than the minimum Deferral Periods for such Awards that are set forth in the Stock Plan for Non-Employee Directors. All Compensation Deferral Elections shall apply solely to Compensation and/or Awards which will be paid (or granted) to a Participant beginning with the first day of the calendar quarter commencing subsequent to the calendar quarter in which the Compensation Deferral Election is received. Any Compensation Deferral Election will apply only to Compensation and/or Awards paid (or granted) during the Plan Year in which the election becomes effective. 4.2 Election Amounts ---------------- Each Election Amount specified by a Participant on an Election Form with respect to any Plan Year shall state in percentages the amount (and, to the extent applicable, the right to receive a specific number of shares of Scientific-Atlanta Common Stock), if any, which the Participant wishes to defer. An election to defer Compensation must equal a minimum of five percent up to a maximum of one hundred percent, in increments of five percentage points, of the Compensation which the Participant may be paid during the Plan Year. As to Awards, the election must be in whole shares, with no right to receive fractional shares being deferred. 4.3 Investment Election ------------------- A Participant shall specify in his or her Compensation Deferral Election the percentage of the Election Amount to be credited to an Interest Sub-Account, a Phantom Stock Sub-Account or a Split-Dollar Insurance Sub-Account, and the number of shares to be credited to an Award Sub-Account. Awards may only be credited into an Award Sub-Account, and Compensation may not be credited into an Award Sub-Account. 5 4.4 Deferral Period --------------- With the exception of any amounts deposited into a Split-Dollar Insurance Sub-Account, a Participant shall irrevocably specify in his or her Compensation Deferral Election a Deferred Benefit Commencement Date for all of the Election Amount to be deferred pursuant to such Compensation Deferral Election, which date shall be (i) a set date which is no earlier than July 1 of the calendar year following the end of the Plan Year in which the Election Amount is deferred; (ii) the Participant's Retirement; or (iii) a date which is either the fifth or the tenth anniversary following the date of the Participant's Retirement. In the case of Awards which have minimum Deferral Periods that are required under the terms of the Stock Plan for Non-Employee Directors, the above limitations shall apply, and the Participant shall also be required to elect a Deferral Period that complies with the minimum Deferral Periods required under the Stock Plan for Non-Employee Directors. 4.5 Deferred Benefit Commencement Date; Method of Payment and Issuance ------------------------------------------------------------------ Except as otherwise provided in Article VI hereof, the Election Amounts that accumulate in a Deferred Benefit Account as a result of a Participant's making a Compensation Deferral Election will be paid (or issued, in the case of deferred Awards) by Scientific-Atlanta, Inc. to the Participant in the manner and commencing on the Deferred Benefit Commencement Date designated with respect to the Compensation Deferral Election in an Election Form. (a) Method of Cash Payments: Except as otherwise provided in Article VI ----------------------- hereof, the Participant may elect to receive payment of the Deferred Benefits held in the form of cash, which Deferred Benefits are attributable to a Compensation Deferral Election and which are held in an Interest Sub- Account or a Phantom Stock Sub-Account, pursuant to one of the following methods: (1) Annual, semi-annual or quarterly installments payable over a five, ten or fifteen year period, and commencing on the respective Deferred Benefit Commencement Date; or (2) A single lump sum payment of the entire balance of the respective Deferred Benefit Account, determined as of and payable on the Deferred Benefit Commencement Date. (b) Method of Issuance of Shares: Except as otherwise provided in Article ---------------------------- VI hereof, the Participant may elect to receive issuance of the Deferred Benefits held in the form of shares of Scientific-Atlanta Common Stock, which Deferred Benefits are attributable to a Compensation Deferral Election and which are held in an Award Sub-Account, pursuant to one of the following methods: (1) Annual, semi-annual or quarterly issuance of shares of Scientific- Atlanta Common Stock from an Award Sub-Account over a five, ten or fifteen year 6 period, and commencing on the respective Deferred Benefit Commencement Date; provided, however, that no fractional shares of Scientific- -------- ------- Atlanta Common Stock will be issued; or (2) A single issuance of all shares subject to the specific Award Sub- Account, determined as of and payable on the Deferred Benefit Commencement Date. (c) Change in Payment or Issuance Method. A Participant may change the ------------------------------------ method of payment (or method of issuance of shares) selected, which method was selected pursuant to the terms of subsection (a) or subsection (b) above, as applicable, with respect to a Compensation Deferral Election by submitting a request in writing to the Plan Committee. Prior to a change in the method of payment or a change in the method of issuance of shares becoming effective, the Plan Committee must approve such change. Participants may not move Deferred Benefits from one Sub-Account to another Sub-Account, except that Participants may move Deferred Benefits from an Interest Sub-Account to a Split-Dollar Insurance Sub-Account by notifying the Plan Committee in writing and designating in such notification the date upon which such Deferred Benefits are to be moved. 4.6 Designation of Beneficiaries ---------------------------- A Participant shall designate a Beneficiary with respect to each Compensation Deferral Election and may change the Beneficiary designation with respect to any Compensation Deferral Election at any time by submitting to the Plan Committee a revised Beneficiary designation in writing reflecting the change. ARTICLE V - DEFERRED BENEFIT ACCOUNTS - ------------------------------------- 5.1 Deferred Benefit Accounts ------------------------- Scientific-Atlanta, Inc. shall cause to be established and maintained a separate Deferred Benefit Account, and within each such Deferred Benefit Account an Interest Sub-Account, a Phantom Stock Sub-Account, a Split-Dollar Insurance Sub-Account and an Award Sub-Account with respect to each Compensation Deferral Election. Scientific-Atlanta, Inc. shall credit the Election Amount deferred pursuant to each such election to the Participant's appropriate Deferred Benefit Account, and to the Interest Sub-Account, Phantom Stock Sub-Account, a Split- Dollar Insurance Sub-Account and Award Sub-Account as specified in the Election, as of the date deferred from Participant's Compensation as provided in Section 4.1 hereof. 5.2 Interest Sub-Account -------------------- Except as otherwise provided by Section 6.2(a) hereof, interest shall accrue at the Plan Interest Rate on any amounts credited to an Interest Sub- Account from the date on which the amount is credited. 7 5.3 Phantom Stock Sub-Account ------------------------- If a Participant elects all or a portion of the Election Amount to be credited to the Phantom Stock Sub-Account, the amount so credited shall, solely for purposes of determining the value of the Phantom Stock Sub-Account, be deemed to be a number of shares of Scientific-Atlanta Common Stock determined as follows: (a) Conversion into Scientific-Atlanta Common Stock: The amount credited ----------------------------------------------- to the Phantom Stock Sub-Account shall be converted on the date of such credit into an equivalent number of hypothetical shares of Scientific- Atlanta Common Stock (including hypothetical fractional shares) by dividing the amount credited by the average closing price of Scientific-Atlanta Common Stock, as reported on the composite tape of New York Stock Exchange issues, for the 20 business days immediately preceding the last day of the month in which such amount is credited. (b) Deemed Reinvestment of Dividends: The number of hypothetical shares -------------------------------- of Scientific-Atlanta Common Stock credited to a Participant's Phantom Stock Sub-Account shall be increased on each date that a dividend is paid on Scientific-Atlanta Common Stock. The number of additional hypothetical shares of Scientific-Atlanta Common Stock credited to a Participant's Phantom Stock Sub-Account as a result of such increase shall be determined, first, by multiplying the total number of hypothetical shares of Scientific-Atlanta Common Stock credited to such Sub-Account immediately before such increase by the amount of the dividend paid per share of Scientific-Atlanta Common Stock on the dividend payment date, and, then, by dividing the product so determined by the closing sale price of Scientific- Atlanta Common Stock on the composite tape of New York Stock Exchange issues on the dividend payment date (or if there was no reported sale of Scientific-Atlanta Common Stock on such date, on the next preceding day on which there was such a reported sale). (c) No Rights as Shareholder: At no time shall the hypothetical shares ------------------------ credited to a Phantom Stock Sub-Account be considered as actual shares of Scientific-Atlanta Common Stock, and a Participant shall have no rights as a shareholder of Scientific-Atlanta, Inc. by virtue of such hypothetical shares. 5.4 Award Sub-Account ----------------- If a Participant elects that an Award be deferred and credited to an Award Sub-Account, such Award will remain in such Award Sub-Account until the Deferred Benefit Commencement Date related to such Award Sub-Account occurs. No interest will accrue on the Award in such Award Sub-Account, but amounts equivalent to the dividends that would have been paid if the shares had been issued will accrue on such Awards ("Accrued Dividends"). Upon accrual, such Accrued Dividends will be placed in an Interest Sub-Account. A Participant shall not have any 8 rights as a shareholder of Scientific-Atlanta, Inc. while an Award is held in an Award Sub-Account. 5.5 Split-Dollar Insurance Sub-Account ---------------------------------- Amounts credited to a Split-Dollar Insurance Sub-Account shall be used to pay premiums on life insurance insuring the life of the Participant, or, at the Participant's election, the lives of the Participant and his or her spouse on a joint and survivor basis, pursuant to such policies of insurance, and with such insurers, as the Plan Committee may determine from time to time. Scientific- Atlanta, Inc. shall be the owner of such insurance policy or policies, and the proceeds thereof shall be payable as provided in an Endorsement Split-Dollar Agreement to be entered into between the Participant and Scientific-Atlanta, Inc. 5.6 Determination of Account Balance -------------------------------- (a) As of each Determination Date, the current balance of a Participant's Deferred Benefit Account shall be the sum of (i) the balance credited to the Interest Sub-Account as of the immediately preceding Determination Date, plus any Compensation deferred by such Participant and credited to such Interest Sub-Account since the previous Determination Date, plus the amount of interest credited to such Interest Sub-Account since the preceding Determination Date, plus (ii) the value of the hypothetical ---- shares of Scientific-Atlanta Common Stock, determined as set forth in Section 5.5(a) above, in the Phantom Stock Sub-Account at that time, including deferred amounts credited to that Sub-Account since the last Determination Date and deemed reinvestment, if any, of dividends since the last Determination Date, plus (iii) the number of shares the Participant ---- has the right to receive under Awards credited to the Award Sub-Account and the total Accrued Dividends credited to the Award Sub-Account, as of the immediately preceding Determination Date, plus the number of shares the Participant has the right to receive under additional Awards and additional Accrued Dividends credited to such Award Sub-Account since the previous Determination Date, minus any payments to or withdrawals by the Participant ----- from the Deferred Benefit Account since the previous Determination Date. (b) The dollar value of the hypothetical shares of Scientific-Atlanta Common Stock credited to a Participant's Phantom Stock Sub-Account on any date shall be determined by multiplying the number of hypothetical shares of Scientific-Atlanta Common Stock credited to such Sub-Account on that date by the average closing price of Scientific-Atlanta Common Stock, as reported on the composite tape of New York Stock Exchange issues for the 12 months immediately preceding that date, or for that number of whole months for which the hypothetical shares have been credited to such sub-account, if less than 12 months. (c) Effect of Recapitalization: In the event of a transaction or event -------------------------- described in this paragraph (c), the number of hypothetical shares of Scientific-Atlanta Common Stock 9 credited to a Participant's Phantom Stock Sub-Account and the number of shares of Scientific-Atlanta Common Stock subject to Awards credited to a Participant's Award Sub-Account shall be adjusted in such a manner as the Plan Committee deems equitable. A transaction or event is described in this paragraph (c) if and only if (i) it is a dividend or other distribution (whether in the form of cash, shares, other securities, or other property), extraordinary cash dividend, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, re-purchase, or exchange of shares or other securities, the issuance of warrants or other rights to purchase shares or other securities, or other similar corporate transaction or event, and (ii) the Plan Committee determines that such transaction or event affects the shares of Scientific-Atlanta Common Stock, such that an adjustment pursuant to this paragraph (c) is appropriate to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Plan. 5.7 Statement of Accounts --------------------- Within ninety (90) days after each Determination Date, the Plan Committee shall submit to each Participant a statement in such form as the Plan Committee shall deem desirable, setting forth a summary of the Compensation Deferral Elections made and the current balances of the Deferred Benefit Accounts and related Sub-Accounts maintained for the Participant as of the Determination Date. ARTICLE VI - PAYMENT (AND ISSUANCE) OF DEFERRED BENEFITS - -------------------------------------------------------- 6.1 General ------- Except as otherwise provided herein, Deferred Benefits credited to the Interest Sub-Account, the Phantom Stock Sub-Account or the Award Sub-Account shall be payable (and issued, if applicable) to a Participant upon the Deferred Benefit Commencement Date and pursuant to the manner of payment (or issuance, if applicable) selected by the Participant on the applicable Compensation Deferral Election or any permitted modification thereof, pursuant to Section 4.5(c) hereof. If the Participant has elected to receive such Deferred Benefits in installments, the amount payable in the first year of such installments shall be an amount that will fully amortize the balance in the Participant's Deferred Benefit Account determined as of the Deferred Benefit Commencement Date over the five, ten or fifteen year period, based on assumed interest earnings at the Plan Interest Rate (to the extent applicable) in effect for such first year. Thereafter, the amount payable (or to be issued) in each succeeding year shall be adjusted to an amount that will fully amortize the remaining balance in such Deferred Benefit Account over the remaining years in the aforesaid five, ten, or fifteen year installment period based on the Plan Interest Rate (to the extent applicable) for such succeeding year. Proceeds of life insurance purchased with amounts credited to the Split-Dollar Insurance Sub-Account shall be payable as provided in the respective policy or policies and the applicable Endorsement Split-Dollar Agreement. 10 6.2 Service Termination ------------------- Deferred Benefits shall be paid (or issued, as appropriate) to a Participant after his or her termination, as follows: (a) Upon termination of service as a director by a Participant prior to the Participant's attaining fifty-five years of age: (1) the amounts in each of the Participant's Deferred Benefit Accounts shall cease to earn interest (to the extent applicable) and the balance of each Deferred Benefit Account shall be determined in accordance with Article V hereof, and (2) Scientific-Atlanta, Inc. shall pay (or issue, as appropriate) to the Participant the balance of each of the Participant's Deferred Benefit Accounts not according to the Participant's elections as specified in his or her Election Forms but in a lump sum, to be paid within sixty days of the termination. (b) For purposes of this Plan, termination of service as a director by a Participant who is fifty-five years or older with at least three years of Board Service will in all instances be construed to be and will be treated as Retirement by such a Participant, and Scientific-Atlanta, Inc. will pay (or issue) to such a Participant all amounts in his or her Deferred Benefit Accounts in accordance with Section 6.1 hereof. 6.3 Total Disability ---------------- Deferred Benefits shall be paid (or issued, as appropriate) to a Participant after his or her becoming Totally Disabled, as follows: (a) Upon the determination that a Participant is Totally Disabled, no further deferrals will be made from his or her Compensation, and Scientific Atlanta, Inc. shall pay (or issue, as appropriate) to the Participant the balance in each of the Participant's Deferred Benefit Accounts as follows: (1) the date of Total Disability shall be deemed to be (i) the Deferred Benefit Commencement Date, if the Deferred Benefit Commencement Date for one or more Deferred Benefit Accounts is a set date prior to the Participant's fifty-fifth birthday and the Total Disability occurs before such date, or (ii) the Participant's Retirement, for those Deferred Benefit Accounts, if any, for which the Deferred Benefit Commencement Date is the Participant's Retirement or later; (2) following Total Disability, the amounts in his or her Interest Sub-Account shall continue to earn interest, and the hypothetical shares in the Phantom Stock Sub-Account shall continue to earn dividends, as provided in the Plan, until paid out to the Participant as provided herein; and 11 (3) the amount (including shares of Scientific-Atlanta Common Stock) in any Deferred Benefit Account shall be payable (or issued) to the Participant on the Deferred Benefit Commencement Date which applies to such Deferred Benefit Account, taking into consideration the aforesaid deemed dates (Section 6.3(a)(1)(i) and (ii)) pursuant to the method(s) requested by the Participant in his or her Election Form. (b) For purposes of this Plan, once a Participant is determined to be Totally Disabled, he or she will continue to be deemed Totally Disabled irrespective of the Participant's ceasing to be considered Totally Disabled for purposes of any other plan maintained by Scientific-Atlanta, Inc. (c) In the event that a Totally Disabled Participant resumes service with the Board following his or her Service Termination Date, such Totally Disabled Participant may resume participation in this Plan at the discretion of the Plan Committee; provided, however, that in any event the -------- ------- Totally Disabled Participant shall continue to receive payments of Deferred Benefits pursuant to the terms of this Plan. 6.4 Death ----- Deferred Benefits shall be paid (or issued, as appropriate) after the death of a Participant, as follows: (a) After the death of a Participant, Scientific-Atlanta, Inc. shall pay the amounts (or issue shares of Scientific-Atlanta Common Stock, if applicable) in each of the Participant's Deferred Benefit Accounts to the Beneficiary designated by the Participant with respect to each Compensation Deferral Election in each of his or her respective Election Forms, or, if the Participant fails to so designate a Beneficiary, to his or her estate. (b) If the Participant dies prior to Retirement, Scientific-Atlanta, Inc. shall pay to each respective Beneficiary or to the Participant's estate, as the case may be, the amounts in each of the Participant's respective Deferred Benefit Accounts (or issue the shares held in the Award Sub- Account), in the same manner as set forth in Section 6.3(a). (c) If the Participant dies following Retirement or being determined to be Totally Disabled but prior to his or her receiving the full payment of all Deferred Benefits payable to him or her, Scientific-Atlanta, Inc. shall pay (or issue, if appropriate) to the respective Beneficiaries or to the Participant's estate, as the case may be, the same Deferred Benefits in the same manner as it otherwise would have paid (or issued) to the Participant as if the Participant had not died, unless the Participant has specified in his or her Election Form a different manner of payment to a Beneficiary. 12 (d) Notwithstanding the other provisions of Section 6.4, a Beneficiary may request a different payment schedule than what has been elected by the Participant, if such change does not further defer the scheduled payout, by submitting a request in writing to the Plan Committee. The granting of any such request shall be within the discretion of the Plan Committee. (e) If a Beneficiary who is receiving Deferred Benefits pursuant to this Plan dies, the remainder of the Deferred Benefits to which such Beneficiary was entitled at the time of his or her death shall continue to be payable to the Beneficiary or to beneficiaries designated by such Beneficiary in writing to the Plan Committee (or to the Beneficiary's estate or heirs if he or she fails to designate a beneficiary or beneficiaries). ARTICLE VII - PLAN ADMINISTRATION - --------------------------------- 7.1 Plan Committee -------------- This Plan and all matters related to it shall be administered by the Plan Committee. The Plan Committee shall have the authority to interpret the provisions of this Plan and to determine all questions arising in the administration, interpretation and application of this Plan. The Plan Committee may, in its sole discretion, delegate any or all of its responsibilities relative to administration of this Plan to such officers of Scientific-Atlanta, Inc. as it designates. ARTICLE VIII - PARTICIPANT'S RIGHTS - ----------------------------------- 8.1 Ineligibility to Participate in Plan ------------------------------------ In the event that the Plan Committee determines that a Participant has become ineligible to continue to participate in this Plan, the Plan Committee may terminate Participant's participation in this Plan upon ten (10) days' prior written notice to the Participant. In such event, the Participant will not be entitled to make further Compensation Deferral Elections, but all current Compensation Deferral Elections shall continue in effect. All Deferred Benefit Accounts shall be payable as otherwise provided in Article VI hereof. 8.2 Termination of Plan ------------------- The Board of Directors of Scientific-Atlanta, Inc. may terminate this Plan at any time, and termination of this Plan shall be effective upon ten (10) days' written notice to all Participants in the Plan. Upon such termination of this Plan, Scientific-Atlanta, Inc. shall pay all active Participants their Deferred Benefits as provided in Section 6.1 as if each such Participant had actually reached the Deferred Benefit Commencement Date for all of his or her Deferred Benefit Accounts. 13 8.3 Participant's Rights -------------------- The right of a Participant or his or her Beneficiary or estate to receive any benefits under this Plan shall be solely that of an unsecured creditor of Scientific-Atlanta, Inc. Any asset acquired or held by Scientific-Atlanta, Inc. or funds allocated by Scientific-Atlanta, Inc. in connection with the liabilities assumed by Scientific-Atlanta, Inc. pursuant to this Plan shall not be deemed to be held under any trust for the benefit of any Participant or of any of Participant's Beneficiaries or to be security for the performance of Scientific Atlanta, Inc.'s obligations hereunder but shall be and remain a general asset of Scientific-Atlanta, Inc. 8.4 Spendthrift Provision --------------------- Neither a Participant nor any person claiming through a Participant shall have the right to commute, sell, assign, transfer, pledge, mortgage or otherwise encumber, transfer, hypothecate or convey any Deferred Benefit payable hereunder or any part thereof in advance of its actually having been received by a Participant or other appropriate recipient under this Plan, and the right to receive all such Deferred Benefits is expressly declared to be non-assignable and non-transferable. Prior to the actual payment (or issuance, if appropriate) thereof, no part of the Deferred Benefits payable hereunder shall be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any person claiming through a Participant or be transferable by operation of law in the event of a Participant's or any such other person's bankruptcy or insolvency. 8.5 Cooperation ----------- Each Participant will cooperate with Scientific-Atlanta, Inc. by furnishing any and all information reasonably requested by Scientific-Atlanta, Inc. in order to facilitate the payment of Deferred Benefits hereunder and by taking any such other actions as Scientific-Atlanta, Inc. or the Plan Committee may reasonably request. ARTICLE IX - MISCELLANEOUS - -------------------------- 9.1 Amendments and Modifications ---------------------------- The Board of Directors of Scientific-Atlanta, Inc. may amend this Plan in any respect at any time. In addition, the Plan Committee may authorize the following types of amendments to the Plan without Board approval: (a) amendments required by law; (b) amendments that relate to the administration of the Plan and that do not materially increase the cost of the Plan; and (c) amendments that are designed to resolve possible ambiguities, inconsistencies or omissions in the Plan and that do not materially increase the cost of the Plan. All authorized amendments shall be effective upon ten (10) days' written notice to the Participants. If any such amendment affects a Participant's Deferred Benefits, such affected Participant may, within ninety (90) days after the effective date of such amendment, elect to terminate his or her participation in the Plan pursuant to this Section 9.1, in which event the date of such election shall be deemed to be such 14 Participant's Deferred Benefit Commencement Date. 9.2 Inurement --------- This Plan shall be binding upon and shall inure to the benefit of Scientific-Atlanta, Inc. and each Participant hereto, and their respective beneficiaries, heirs, executors, administrators, successors and assigns. 9.3 Governing Law ------------- This Plan is made in accordance with and shall be governed in all respects by the laws of the state of Georgia. 9.4 Tax Withholding --------------- All payments (and issuances of shares) made pursuant to this Plan shall be subject to the withholding of state and federal income taxes, FICA tax or other taxes to the extent required by applicable law. The Plan Committee shall, before delivery of a cash payment or a stock certificate, require the Participant to make arrangements satisfactory to the Plan Committee to satisfy such withholding requirements. A Participant receiving shares of Scientific- Atlanta, Inc. Common Stock may elect to satisfy such withholding requirements by having the Plan Committee withhold shares otherwise issuable to the Participant, with the Participant's election being made by delivering to the Plan Committee a written election stating his or her desire to so satisfy such withholding requirements. To record the adoption of the Plan (as amended and restated) by the Board on June 17, 1997, with an effective date of November 12, 1997, the Company has caused its authorized officers to execute this Plan and affix the corporate name and seal hereto. SCIENTIFIC-ATLANTA, INC. By: /s/ Brian C. Koenig ------------------- Name: Brian C. Koenig Title: Senior Vice President - Human Resources By: /s/ William E. Eason, Jr. ------------------------- Name: William E. Eason, Jr. Title: Corporate Secretary [Corporate Seal] 15 EX-10.3 5 RETIREMENT PLAN FOR NON-EMPLOYEES EXHIBIT 10.3 SCIENTIFIC-ATLANTA, INC. RETIREMENT PLAN FOR NON-EMPLOYEE DIRECTORS ------------------------------------------ As Amended, Effective November 12, 1997 1. PURPOSE The purpose of this plan ("Plan") is to enhance the ability of Scientific- Atlanta, Inc. ("Company") to attract and retain the service of experienced, able and knowledgeable persons to serve as members of the Company's board of directors ("Board") over a substantial period of years during which the full benefit of their capabilities can be realized to further the growth and profitability of the Company and return to the shareholders. 2. ADMINISTRATION The Plan shall be administered by a Plan Administrator, who shall be appointed by the Board. In addition to the duties stated elsewhere in the Plan, the Plan Administrator shall have full authority, consistent with the Plan, to interpret the Plan and to make all determinations necessary or desirable for the administration of the Plan. 3. ELIGIBLE PARTICIPANTS Each person who is or becomes a member of the Board on or after the effective date of this Plan but before January 1, 1997, and who has never been a participant in an employee retirement plan of the Company shall be deemed a participant in this Plan after having been a member of the Board for thirty-six consecutive months (a "Participant"). Each person who was a Participant in the Plan as of January 1, 1997 (the "Conversion Date"), and who was not already receiving retirement benefits under the Plan as of the Conversion Date, shall, on or before September 1, 1997, make an election as to whether he or she desires (a) to continue as a Participant under this Plan, or (b) to discontinue participation in this Plan and to receive in lieu thereof (1) annual grants of retirement awards (currently 1,500 shares of the Company's common stock), under the terms of the Stock Plan for Non-Employee Directors, and (2) a lump sum --- distribution equal to the greater of either (i) the present value, actuarially ------ determined by the Company as of the Conversion Date, of the retirement benefits of such Participant under this Plan through the Conversion Date, reduced by the ---------- present value, actuarially determined by the Company, as of the Conversion Date, of the stream of annual grants of retirement awards described under clause (1) above through such Participant's Normal Retirement Date, or (ii) an amount equal -- to the value of 750 shares of the Company's common stock. $.50 par value (at the closing price on the Conversion Date) multiplied by such Participant's total ------------- years of service as a director, as of the Conversion Date, which lump sum distribution shall be converted, under the terms of the Stock Plan for Non- Employee Directors, into shares of the Company's common 1 stock, $.50 par value, at the fair market value on the Conversion Date. Participants electing to receive a lump sum distribution shall be also entitled to receive a further distribution in the form of shares to be issued under the Stock Plan for Non-Employee Directors, upon the death of such Participant, such further distribution to be equal to the difference, if any, between (a) the value of the spousal benefits otherwise payable to the spouse of a Participant under the provisions of paragraph 7 below, and (b) the assumed value (as defined --- in the assumptions approved by the Board) of the lump sum distribution to such Participant described above plus the annual retirement awards granted to such ---- Participant under the Stock Plan for Non-Employee Directors prior to his or her death. Except to the extent otherwise provided in the preceding sentence, individuals who are Participants under this Plan as of the Conversion Date, and who elect on or before September 1, 1997, to receive the lump sum distribution described above, shall cease to be Participants under this Plan, effective as of the Conversion Date. 4. RETIREMENT DATES (a) A Participant's "Normal Retirement Date" is the first day of the calendar month in which a Participant attains the age of sixty-five (65) years and is no longer a member of the Board or any subsequent month designated by a Participant in accordance with paragraph 6 below. (b) A Participant's "Early Retirement Date" is the first day of the calendar month designated by a Participant in accordance with paragraph 6 below, prior to the Normal Retirement Date, on or after the month in which a Participant attains the age of fifty-five (55) years. 5. RETIREMENT BENEFIT (a) The annual retirement benefit payable to any Participant who retires on the Normal Retirement Date, or any date thereafter, will be an amount equal to (i) the regular annual retainer paid by the Company to each director for the last fiscal year of the Company that the Participant served as a director, plus (ii) the value, as of the date of grant, of the shares of the Company's Common Stock granted to the Participant as a "Stock Award" under the Company's Stock Plan for Non-Employee Directors during the last fiscal year of the Company that the Participant served as a director. The "regular annual retainer" as used in the preceding sentence means the annual retainer received by each director of the Company, excluding any committee chair annual retainer, meeting fees and other fees received by a director; and, if the Participant elects to receive all or a portion of his or her annual retainer in the form of shares of the Company's common stock under the Company's Stock Plan for Non-Employee Directors, any portion of such annual retainer received in shares shall be included in the definition of "regular annual retainer." 2 (b) The annual early retirement benefit payable to any Participant who retires on the Early Retirement Date will be the amount specified in 5(a) above, reduced by the following early retirement factors: Age at Commencement Factor ------------------- ------ 64 .933 63 .867 62 .800 61 .733 60 .667 59 .633 58 .600 57 .567 56 .533 55 .500 If a Participant's age at the Early Retirement Date falls between any two of these ages, these factors shall be adjusted by straight-line interpolation. (c) No retirement benefit will be payable to any person who is a member of the Board for less than thirty-six (36) consecutive months. 6. BENEFIT PAYMENTS A Participant may retire by written notice to the Plan Administrator or the Secretary of the Company, designating a retirement date in accordance with paragraph 4 above. Retirement benefit payments will be payable on the first day of each calendar quarter following retirement or in accordance with such other schedule of payments as may be requested by the Participant and approved by the Board. Benefit payments will continue to be paid to the Participant for the remainder of the Participant's life. Notwithstanding the foregoing, in lieu of the normal form of payment otherwise provided under this Plan, the Plan Administrator may direct, in its sole and absolute discretion, that benefits shall be paid in a single sum that is the actuarial equivalent of the annual benefit payable to the Participant or, in the event of the Participant's death, to his or her surviving spouse. 7. SPOUSAL BENEFITS Should a Participant die before retirement benefits have begun to be paid to the Participant under this Plan, the Participant shall be deemed to retire on the later of (i) the day before his/her death, or (ii) the first day of the first calendar month thereafter in which the Participant would have attained the age of fifty-five (55), and the Participant's surviving spouse, if any, shall be entitled to a benefit equal to the benefit that would have been paid to the 3 Participant. If the Participant dies after retirement benefits have commenced, the Participant's surviving spouse shall be entitled to annual benefit payments equal to the annual benefit previously payable to the Participant. In each case, the benefit shall continue for the lesser of (i) ten years or (ii) a number of years equal to the number of years that the Participant was a member of the Board; provided, however, that payments shall not continue after the death of the spouse. 8. DISABILITY Should a Participant become totally and permanently disabled prior to retirement for a period of six (6) consecutive months while a member of the Board and the Board determines that such disability will continue, the Participant will be deemed to have retired on the first day of the calendar month following the month in which the Board makes such determination and the age of the Participant on such retirement date shall be deemed the older of (i) fifty-five (55), or (ii) the Participant's actual age on that date. Payments will be made on the same basis as described in Sections 5, 6, and 7 above. 9. CHANGE OF CONTROL Notwithstanding anything contained in this Plan to the contrary, the provisions of this paragraph 9 shall apply to any Participant whose membership on the Board ends before a Change of Control occurs or who is a member of the Board on the date that a Change of Control occurs and who ceases within twenty- four (24) months after a Change of Control to be a member of the Board for any reason. (a) Each such Participant shall be immediately vested in his or her retirement benefit payable under this Plan. (b) The Company shall contribute to the trust maintained pursuant to the Scientific-Atlanta, Inc. Benefits Protection Trust Agreement a lump sum amount equal to the then-present value of the Participant's retirement benefit. This lump sum payment to the trust shall be due on the later of (i) the date when the Change of Control occurs or (ii) the date the Participant ceases to be a member of the Board. The retirement benefit of a Participant who ceases to be a member of the Board within twenty-four (24) months after a Change of Control shall be computed as if the Participant would retire on the first day that he or she is eligible to retire (whether an Early Retirement Date or a Normal Retirement Date) following the Change of Control and the end of his or her membership on the Board. Any retirement benefits to which the Participant is entitled under the terms of this Plan shall be payable from the trust, except to the extent that the benefits are paid from the general assets of the Company. (c) Notwithstanding the foregoing, in lieu of the form of payment otherwise provided for in this paragraph 9, the Plan Administrator may direct, in its sole and absolute discretion, that upon a Change of Control benefits under this Plan shall be paid in a single lump sum that is the 4 actuarial equivalent of the annual benefits payable to the Participant or, in the event of the Participant's death, to his or her surviving spouse. (d) "Change of Control" means a change of twenty-five percent (25%) or more of the membership of the Board (excluding membership changes resulting from normal retirement of directors) within a twenty-four (24) month period following the acquisition of beneficial ownership by any person or entity, or group of persons or entities and their affiliates acting in concert, of twenty percent (20%) or more of the voting securities of the Company. "Affiliates" and "beneficial ownership" shall be defined in accordance with Rules 12b-2 and 13d-3 of the Securities and Exchange Commission, as the same may from time to time be amended. 10. TERMINATION AND AMENDMENT OF THE PLAN The Board may terminate the Plan at any time and may amend the Plan from time to time but no such termination and amendment shall adversely affect the rights of Participants under the Plan, which shall be deemed fully vested and irrevocable on the date that a director becomes a Participant in accordance with paragraph 3 above. 11. EFFECTIVE DATE The effective date of this Plan was February 15, 1989. To record the adoption of the Plan (as amended and restated) by the Board, effective as of November 12, 1997, the Company has caused its authorized officers to execute this Plan and affix the corporate name and seal hereto. SCIENTIFIC-ATLANTA, INC. By: /s/ Brian C. Koenig ------------------------------------ Name: Brian C. Koenig Title: Senior Vice President - Human Resources By: /s/ William E. Eason, Jr. ----------------------------------- Name: William E. Eason, Jr. Title: Corporate Secretary [Corporate Seal] 5 EX-11 6 COMPUTATION OF EARNINGS PER SHARE Exhibit 11 SCIENTIFIC-ATLANTA, INC., AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (IN THOUSANDS, EXCEPT SHARE DATA) (UNAUDITED)
THREE MONTHS ENDED THREE MONTHS ENDED DECEMBER 26, 1997 DECEMBER 27, 1996 ------------------------------ ------------------------------- PER SHARE PER SHARE EARNINGS SHARES AMOUNT EARNINGS SHARES AMOUNT ------- ------ --------- ------- ------ --------- BASIC EARNINGS PER COMMON SHARE Earnings from continuing operations available to common stockholders $14,832 78,885 $0.19 $13,752 77,205 $0.18 EFFECT OF DILUTIVE SECURITIES Options -- 1,264 -- -- 1,182 -- ------- ------ ----- ------- ------ ----- DILUTED EARNINGS PER COMMON SHARE Earnings from continuing operations available to common stockholders and assumed conversions $14,832 80,149 $0.19 $13,752 78,387 $0.18 ======= ====== ===== ======= ====== ===== SIX MONTHS ENDED SIX MONTHS ENDED DECEMBER 26, 1997 DECEMBER 27, 1996 ------------------------------ ------------------------------- PER SHARE PER SHARE EARNINGS SHARES AMOUNT EARNINGS SHARES AMOUNT ------- ------ --------- ------- ------ --------- BASIC EARNINGS PER COMMON SHARE Earnings from continuing operations available to common stockholders $31,317 78,567 $0.40 $24,562 77,166 $0.32 EFFECT OF DILUTIVE SECURITIES Options -- 1,471 -- -- 1,083 -- ------- ------ ----- ------- ------ ----- DILUTED EARNINGS PER COMMON SHARE Earnings from continuing operations available to common stockholders and assumed conversions $31,317 80,038 $0.40 $24,562 78,249 $0.32 ======= ====== ===== ======= ====== =====
The following information pertains to options to purchase shares of common stock which were not included in the computation of Diluted Earnings per Common Share because the options' exercise price was greater than the average market price of the common shares: December 26, 1997 December 27, 1996 ----------------- ----------------- Number of options outstanding 3,341 2,926 Weighted average exercise price $22.371 $20.545 EX-27 7 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR THE QUARTER ENDED DECEMBER 26, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS JUN-26-1998 JUN-28-1997 DEC-26-1997 89,154 0 258,771 4,106 202,284 587,537 266,299 101,660 816,303 190,549 1,493 0 0 39,543 539,906 816,303 589,025 589,025 412,780 412,780 53,401 221 269 44,738 13,421 31,317 0 0 0 31,317 0.40 0.40
EX-99 8 CAUTIONARY STATEMENTS Exhibit 99 CAUTIONARY STATEMENTS From time to time, the company may publish, verbally or in written form, forward-looking statements relating to such matters as anticipated financial performance, business prospects, technological developments, new products, research and development activities and similar matters. In fact, this Form 10- Q (or any other periodic reporting documents required by the 1934 Act) may contain forward-looking statements reflecting the current views of the company concerning potential future events or developments. The Private Securities Litigation Reform Act of 1995 (the "Act") provides a "safe harbor" for forward- looking statements. These Cautionary Statements are being made pursuant to the provisions of the Act and with the intention of obtaining the benefits of the "safe harbor" provisions of the Act. In order to comply with the terms of the "safe harbor," the company cautions investors that any forward-looking statements made by the company are not guarantees of future performance and that a variety of factors could cause the company's actual results and experience to differ materially from the anticipated results or other expectations expressed in the company's forward-looking statements. The risks and uncertainties which may affect the operations, performance, development and results of the company's business include, but are not limited to, the following: uncertainties relating to the development and ownership of intellectual property; uncertainties relating to the ability of the company and other companies to enforce their intellectual property rights; uncertainties relating to economic conditions (including, but not limited to, the economic conditions in the Asia / Pacific region); uncertainties relating to government and regulatory policies; uncertainties relating to customer plans and commitments; the company's dependence on the cable television industry and cable television spending; signal security; the pricing and availability of equipment, materials and inventories; technological developments; performance issues with key suppliers and subcontractors; governmental export and import policies; global trade policies; worldwide political stability and economic growth; regulatory uncertainties; delays in testing of new products; rapid technology changes; the highly competitive environment in which the company operates; the entry of new, well-capitalized competitors into the company's markets; changes in the financial markets relating to the company's capital structure and cost of capital; and uncertainties inherent in international operations and foreign currency fluctuations. The words "believe," "expect," "anticipate," "project," "plan" and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. -----END PRIVACY-ENHANCED MESSAGE-----