-----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, QTnpEppTEDuvuXKpXPv6/WYurcBBtoOQq7ytqCTqlP3ta1J0Tu9dk0QTXLiktIzG vdGSHWdWCK6WEea0m2GMgQ== 0000931763-99-003048.txt : 19991109 0000931763-99-003048.hdr.sgml : 19991109 ACCESSION NUMBER: 0000931763-99-003048 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19991001 FILED AS OF DATE: 19991108 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: 99743115 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 QUARTERLY REPORT 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 October 1, 1999 ------------------------------------------------- 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 October 29, 1999, Scientific-Atlanta, Inc. had outstanding 78,561,295 shares of common stock. 1 of 12 PART I - FINANCIAL INFORMATION SCIENTIFIC-ATLANTA, INC. AND SUBSIDIARIES Consolidated Statement of Earnings (In Thousands, Except Per Share Data) (Unaudited)
Three Months Ended -------------------------- October 1, September 25, 1999 1998 ---------- ------------- SALES $ 349,319 $ 257,478 ------- -------- COSTS AND EXPENSES Cost of sales 249,371 187,109 Sales and administrative 39,106 38,789 Research and development 28,332 29,291 Interest expense 358 167 Interest (income) (3,633) (2,102) Other (income) expense, net (292) (17,196) ------- -------- Total costs and expenses 313,242 236,058 ------- -------- EARNINGS BEFORE INCOME TAXES 36,077 21,420 PROVISION (BENEFIT) FOR INCOME TAXES Current 4,596 (6,487) Deferred 6,227 12,913 ------- -------- NET EARNINGS $ 25,254 $ 14,994 ======= ======== EARNINGS PER COMMON SHARE BASIC $ 0.32 $ 0.19 ======= ======== DILUTED $ 0.31 $ 0.19 ======= ======== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING BASIC 77,865 79,216 ======= ======= DILUTED 80,676 80,649 ======= ======= DIVIDENDS PER SHARE PAID $ 0.015 $ 0.015 ======= ======= COMPREHENSIVE INCOME: NET EARNINGS $ 25,254 $ 14,994 OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX(1) Unrealized gains (losses) on marketable securities, net 9,724 - Retirement plan minimum liability adjustment (828) - Foreign currency translation adjustments (237) 547 ------- ------- COMPREHENSIVE INCOME $ 33,913 $ 15,541 ======= =======
(1) Assumed 38% and 40% tax rate in fiscal 2000 and fiscal 1999, respectively. SEE ACCOMPANYING NOTES 2 of 12 SCIENTIFIC-ATLANTA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
In Thousands ----------------------------- October 1, July 2, 1999 1999 ------------ ---------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 315,088 $ 300,454 Marketable securities 3,159 2,438 Receivables, less allowance for doubtful accounts of $8,256,000 at October 1 and $8,160,000 at July 2 284,125 290,274 Inventories 208,240 189,354 Deferred income taxes 32,583 37,130 Other current assets 18,016 11,811 ----------- ----------- TOTAL CURRENT ASSETS 861,211 831,461 ----------- ----------- PROPERTY, PLANT AND EQUIPMENT, at cost Land and improvements 21,161 21,161 Buildings and improvements 31,691 31,802 Machinery and equipment 205,564 197,326 ----------- ----------- 258,416 250,289 Less - Accumulated depreciation and amortization 98,482 92,751 ----------- ----------- 159,934 157,538 ----------- ----------- COST IN EXCESS OF NET ASSETS ACQUIRED 8,175 7,900 ----------- ----------- NON-CURRENT MARKETABLE SECURITIES 34,088 18,783 ----------- ----------- OTHER ASSETS 57,413 46,592 ----------- ----------- TOTAL ASSETS $ 1,120,821 $ 1,062,274 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Short-term debt and current maturities of long-term debt $ 444 $ 416 Accounts payable 132,397 137,146 Accrued liabilities 121,625 125,038 Income taxes currently payable - 5,211 ----------- ----------- TOTAL CURRENT LIABILITIES 254,466 267,811 ----------- ----------- LONG-TERM DEBT, less current maturities 379 370 ----------- ----------- OTHER LIABILITIES 63,520 55,927 ----------- ----------- STOCKHOLDERS' EQUITY Preferred stock, authorized 50,000,000 shares; no shares issued - - Common stock, $0.50 par value, authorized 350,000,000 shares; issued 79,616,712 shares at October 1 and at July 2 39,808 39,808 Additional paid-in capital 243,605 226,390 Retained earnings 521,484 497,403 Accumulated other comprehensive income, net of taxes of $9,831,000 at October 1 and $4,921,000 at July 2 16,038 7,379 ----------- ----------- 820,935 770,980 Less - Treasury stock, at cost (1,146,032 shares at October 1 and 2,269,646 shares at July 2) 18,479 32,814 ----------- ----------- 802,456 738,166 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,120,821 $ 1,062,274 =========== ===========
SEE ACCOMPANYING NOTES 3 of 12 SCIENTIFIC-ATLANTA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
Three Months Ended ------------------ October 1, September 25, 1999 1998 ---------- ------------- NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ 24,268 $ (5,821) ------- ------- INVESTING ACTIVITIES: Purchases of property, plant, and equipment (12,156) (13,219) Acquisition of businesses (7,697) - Proceeds from the sale of certain assets of a business unit 3,259 - Investments (13,100) - Other 162 149 ------- ------- Net cash provided (used) by investing activities (29,532) (13,070) ------- ------- FINANCING ACTIVITIES: Net short-term borrowings - 537 Principal payments on long-term debt - (133) Dividends paid (1,173) (1,191) Issuance of common stock 21,071 3,314 Treasury shares acquired - (11,423) ------- ------- Net cash provided (used) by financing activities 19,898 (8,896) ------- ------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 14,634 (27,787) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 300,454 175,392 ------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 315,088 $ 147,605 ======= ======= SUPPLEMENTAL CASH FLOW DISCLOSURES Interest paid $ 16 $ 154 ======= ======= Income taxes paid, net $ 5,523 $ 4,629 ======= =======
SEE ACCOMPANYING NOTES 4 of 12 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 company's 1999 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 share were computed based on the weighted average number of shares outstanding. Diluted earnings per share were computed based on the weighted average number of dilutive shares of common stock outstanding. See Exhibit 11. C. Inventories consist of the following: October 1, July 2, 1999 1999 ---------- --------- Raw materials and work-in-process $ 151,462 $ 129,911 Finished goods 56,778 59,443 -------- -------- Total inventory $ 208,240 $ 189,354 ======== ======== D. During the quarter ended October 1, 1999, the company acquired 17,302 shares of its common stock from the payment in stock rather than cash by employees of tax withholdings on restricted stock which vested. During the quarter ended September 25, 1998, the company acquired 601,000 shares of its common stock for $11,423 and acquired an additional 38,111 shares primarily from the payment in stock rather than cash by employees of tax withholdings on restricted stock which vested. 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. E. The company completed the sale of certain assets of its Control Systems business unit for $3,259 of cash and recorded a gain of $1,500 in other (income) and expense in the quarter ended October 1, 1999. This gain was partially offset by other miscellaneous expenses. Other (income) expense for the quarter ended September 25, 1998 included an $18,000 gain from the adjustment of the company's investment in Broadcom Corporation (Broadcom) to market value as required by generally accepted accounting principles. There were no other significant items in other (income) expense during the quarter ended September 25, 1998. F. During the quarter ended October 1, 1999, the company invested $13,100 in Bookham Technology Limited (Bookham), a UK-based developer and supplier of optical components. In addition, the company acquired certain assets of an optics business for a cash payment of $7,697. G. Information on the segments of the company and reconciliations to consolidated amounts are as follows:
Corporate and 1999 Broadband Satellite Other Total ----- --------- --------- --------- ----- Sales $ 303,863 $ 44,596 $ 860 $ 349,319 Earnings (loss) before taxes 33,040 (1,181) 4,218 36,077 1998 ---- Sales $ 210,238 $ 44,323 $ 2,917 $ 257,478 Earnings (loss) before taxes 7,993 (7,611) 21,038/(1)/ 21,420
(1) Includes $18,000 gain from the adjustment of the company's investment in Broadcom to market value. 5 of 12 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION - ------------------- Scientific-Atlanta had stockholders' equity of $802.5 million and cash on hand was $315.1 million at October 1, 1999. Cash increased $14.6 million during the quarter as cash provided by operations and the issuance of common stock exceeded the company's investment in Bookham, a developer and supplier of optical components, expenditures for equipment and the acquisition of an optics business. The current ratio was 3.4:1 at October 1, 1999, up from 3.1:1 at July 2, 1999. At October 1, 1999, total debt was $0.8 million or less than one percent of total capital invested. The company believes that funds generated from operations, existing cash balances and its available senior credit facility will be sufficient to support growth and planned expansion of manufacturing capacity. RESULTS OF OPERATIONS - --------------------- Sales for the quarter ended October 1, 1999 were $349.3 million, up 36 percent over the prior year. Broadband segment sales were $303.9 million, up 45 percent over the prior year, driven by the rapid acceleration in the deployment of digital interactive systems. The company shipped approximately 245,000 Explorer(R) 2000 digital interactive set-tops during the quarter as compared to approximately 57,000 in the prior year. Sales of transmission products also increased significantly with strong growth across all product areas. As anticipated and previously announced, sales of analog set-tops continued to decline as cable operators shift from analog to digital products. The company expects that the downward trend in sales of analog set-tops will continue throughout the fiscal year. Satellite segment sales were $44.6 million for the quarter ended October 1, 1999, flat as compared to the prior year. The company expects to continue to experience softness in the Satellite segment because of its significant reliance on international markets. In the quarter ended October 1, 1999, international sales were 22 percent of total sales, approximately the same as the prior year. Gross margins were 28.6 percent, 1.3 percentage points higher than the prior year, reflecting the continuing benefit from manufacturing in Juarez, Mexico, negotiated procurement savings, and the economies of scale associated with increased manufacturing volumes. Gross margins in the quarter ended October 1, 1999 were 1.2 percentage points lower than the quarter ended July 2, 1999 due primarily to rapid increases in capacity, start-up costs associated with new transmission products and, in part, to the acquisition of an optics business. 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 through the second quarter of fiscal 2000. During the first quarter of fiscal 2000, the company selected a new supplier for certain materials. Certain material purchases which had been denominated in Japanese yen are now denominated in U.S. dollars thereby reducing the company's exposure to exchange rate fluctuations in the Japanese yen. Research and development costs were $28.3 million, or 8 percent of sales, reflecting the company's continued investment in research and development programs which are focused on the development of applications and enhancements to the company's interactive broadband networks. The company continues to invest in research and development programs to support existing products. The company capitalized $0.4 million and $0.6 million of software development costs in the quarters ended October 1, 1999 and September 25, 1998, respectively. During the quarter ended October 1, 1999, the company recognized revenue on certain of the products on which software development costs had been capitalized and amortized $0.4 million of these costs to cost of sales. No such revenue was recognized in the quarter ended September 25, 1998. Selling and administrative expenses were flat in the quarter ended October 1, 1999 as compared to the prior year. Cost reductions from the restructuring of the Satellite segment were offset by increases in professional fees and expenses related to the higher volume of sales. The restructuring plan announced during fiscal 1998 was substantially completed during fiscal 1999. During the quarter ended October 1, 1999, $0.1 million was charged against the liability for contractual liabilities for cancelled leases and $1.5 million remains in the liability which is expected to be utilized by 2002 for expenses related to contractual liabilities for cancelled leases. 6 of 12 Other income (expense) in the quarter ended October 1, 1999 included a gain of $1.5 million from the sale of certain assets of the Control Systems business unit which was partially offset by other miscellaneous expenses. Other (income) expense for the quarter ended September 25, 1998 included an $18.0 million gain from the adjustment of the company's investment in Broadcom to market value as required by generally accepted accounting principles. There were no other significant items in other (income) expense during the quarter ended September 25, 1998. Earnings before taxes were $36.1 million in the quarter ended October 1, 1999, up $14.7 million over the prior year. Earnings before income taxes in the Broadband segment were $33.0 million, up $25.0 million over the prior year. Significantly higher sales volumes and improved gross margins were the primary factors in the year-over-year increase. Losses before taxes for the Satellite segment were reduced to $1.2 million in the quarter ended October 1, 1999 from losses of $7.6 million in the prior year reflecting the benefit from the previously announced restructuring and resizing efforts in this segment. The company's effective income tax rate was 30 percent for the quarter, unchanged from the prior year. Net earnings for the quarter ended October 1, 1999 were $25.3 million compared to $15.0 million in the prior year. Higher sales volume, and higher gross margins as a percent of sales and reduced operating expenses contributed to the year-over-year improvement in net earnings. YEAR 2000 - --------- The company, like most other major companies, is currently addressing a universal problem commonly referred to as "Year 2000 Compliance," which relates to the ability of computer programs and systems to properly recognize and process date sensitive information before and after January 1, 2000. The following discussion is based on information currently available to the company. The company has analyzed and continues to analyze its internal information technology ("IT") systems ("IT systems") to identify any computer programs that are not Year 2000 compliant and implement any changes required to make such systems Year 2000 compliant. The company believes that its critical IT systems currently are capable of functioning without substantial Year 2000 Compliance problems. Of the non-critical, but important, IT systems that are not currently Year 2000 Compliant, the company believes such IT systems will be Year 2000 compliant in a time frame that will avoid any material adverse effect on the company. Also, the company does not believe that the expenditures related to replacing or upgrading any of its IT systems to make them Year 2000 compliant will have a material adverse effect on the financial condition of the company. The company has identified only two IT systems (E-mail and electronic calendar) that must be replaced due to Year 2000 concerns, and the company already had plans to replace these IT systems with one system providing increased functionality. Installation of these new systems has been completed. The Company has evaluated its critical equipment and critical systems that contain embedded software, such as microcontrollers ("Non-IT systems"), and the company believes that all of its critical Non-IT systems are capable of functioning without substantial Year 2000 Compliance problems. The company commenced testing of IT systems and Non-IT systems in the first calendar quarter of 1999. To date, such testing has not revealed any significant Year 2000 issues. Certain products currently sold by the company contain computer programs that perform date functions or date calculations. The company has evaluated its products and is continuing to evaluate its products, and, based on its investigation to date, the company believes that the products it currently sells are Year 2000 compliant, provided that they are upgraded to include all recommended and available engineering changes. However, the company's products are often used by its customers in systems that contain third party products or products supplied by the company in prior years. Therefore, even though the company's current products may be Year 2000 compliant, the failure of such third party products or historical company-supplied products to be Year 2000 compliant, or to properly interface with the company's current products, may result in a system failure. Certain products that the company no longer offers for sale are not Year 2000 compliant, and the company has no plans to upgrade them. However, the company does have a plan for helping its customers upgrade their System Manager products and related components to System Release 4.6 (and higher versions) software which is currently available for purchase. Such System Release 4.6 (and higher versions) software is expected to remedy the Year 2000 problems of System Manager products historically sold by the company to its customers. Because some customers may be using obsolete versions of the System Manager products, they may also need to purchase equipment to solve their Year 2000 problems. Additionally, the company is in the process of installing Year 2000 compliant upgrades to certain third party software included in the company's digital network control system. A customer's failure to upgrade its System Manager products and related equipment to System Release 4.6 (or higher versions) software and related equipment or to upgrade the third party software in the customer's digital network control system may result in such 7 of 12 customer having critical Year 2000 problems. Under certain limited circumstances, the company may incur expenses to help remedy such customer's critical Year 2000 failure. The company continues to investigate each of its significant vendors, suppliers, financial service organizations, service providers and customers to confirm that the company's operations will not be materially adversely affected by the failure of any such third party to have Year 2000 compliant computer programs. Regardless of the responses that the company receives from such third parties, the company is establishing contingency plans to reduce the company's exposure resulting from the non-compliance of third parties. First, the company plans to build inventories of critical and/or important components prior to January 1, 2000, and thereby decrease the company's dependence on suppliers that are not Year 2000 compliant. Second, the company plans to send hard copies of "Schedules of Ordered Products and Delivery Dates" to its major customers, commencing in the fourth calendar quarter of 1999. Such Schedules should enable customers to accept ordered products after January 1, 2000, even if their internal computer systems are not operating properly. The company expects the costs related to remediating Year 2000 issues not to be material. All of such expenditures are included in the budgets of the various departments of the company tasked with various aspects of the Year 2000 project. No IT projects have been deferred due to IT's Year 2000 efforts; however, the company is establishing freezes on new software and hardware upgrades at various dates to avoid the possibility of the upgrades affecting previously tested systems. The company has approached the Year 2000 project in phases. Phase I of the project involved identification of all software used or sold by the company, identification of all significant vendors, and establishment of a senior management committee (composed of the General Counsel, the Chief Financial Officer and the Chief Operating Officer) to oversee the project. Phase I was completed in the second calendar quarter of 1998. Phase II of the project involves (a) evaluation of each significant vendor and evaluation of major customers through letters and questionnaires (b) communication with customers concerning any products currently or recently sold by the company that have Year 2000 issues, and (c) evaluating the company's most reasonably likely worst case Year 2000 scenarios and contingency planning related thereto. Phase II was completed in the second calendar quarter of 1999. Phase III involves testing of the company's IT systems and Non-IT systems to confirm Year 2000 compliance and/or discover any overlooked Year 2000 problems. Phase III was completed in the second calendar quarter of 1999. Last, Phase IV involves implementation of the company's contingency plans. Several contingency plans are currently being implemented and will continue to be implemented through the remainder of calendar year 1999, and early 2000. The company does not currently believe that any of the foregoing will have a material adverse effect on its financial condition or its results of operations. However, the process of evaluating the company's products and third party products and systems is ongoing. Although not expected, failures of critical suppliers, critical customers, critical IT systems, critical Non-IT systems, or products sold by the company (including any delay in the deployment of software releases related to either the System Manager upgrades or the upgrade of the third party software included in the digital network control system) could have a material adverse effect on the company's financial condition or results of operations. As widely publicized, Year 2000 Compliance has many issues and aspects, not all of which the company is able to accurately forecast or predict. There is no way to assure that Year 2000 Compliance will not have adverse effects on the company, some of which could be material. Many of the company's statements related to Year 2000 are forward-looking statements and actual results could differ materially from those anticipated above. The company is relying on the investigations and statements of many employees, consultants and third parties in making the above forward-looking statements and such investigations or statements may not be accurate. 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. 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. Explorer is a registered trademark for Scientific-Atlanta. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS - ------ ----------------------------------------------------------- The company enters into foreign exchange forward contracts to hedge certain firm commitments and assets denominated in currencies other than the U.S. dollar, primarily Japanese yen. These contracts are for periods consistent with the exposure being hedged and generally have maturities of one year or less. To qualify as a hedge, the item to be hedged must expose the company to inventory pricing or asset devaluation risk and the related 8 of 12 contract must reduce that exposure and be designated by the company as a hedge. Gains and losses on foreign exchange forward contracts, including cost of the contracts, are deferred and recognized in income in the same period as the hedged transactions. The company's foreign exchange forward contracts do not subject the company's results of operations to risk due to exchange rate fluctuations because gains and losses on these contracts generally offset losses and gains on the exposure being hedged. The company does not enter into any foreign exchange forward contracts for speculative trading purposes. If a foreign exchange forward contract did not meet the criteria for a hedge, the company would recognize unrealized gains and losses as they occur. Firmly committed purchase and sales exposure and related derivative contracts through March 31, 2000 are as follows:
Japanese Canadian Spanish Yen Dollar Pesetas -------- -------- ------- (In thousands, except per dollar amounts) Firmly committed purchase (sales) contracts 458,000 5,000 (159,900) Notional amount of forward exchange contracts 471,000 3,060 (160,000) Average contract amount (Foreign currency/ United States dollar) 115.95 1.49 188.9
The company has no derivative exposure beyond March 31, 2000. 9 of 12 PART II - OTHER INFORMATION Item 6 Exhibits and Reports on Form 8-K. - ------ (a) Exhibits. Exhibit No. Description ----------- ----------- 11 Computation of Earnings per Share 27 Financial Data Schedule (for SEC filing purposes only) 99 Cautionary Statements (b) No reports on Form 8-K were filed during the quarter ended October 1, 1999. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SCIENTIFIC-ATLANTA, INC. ------------------------ (Registrant) Date: November 8, 1999 By: /s/ Wallace G. Haislip ------------------------ --------------------------------------- Wallace G. Haislip Senior Vice President Chief Financial Officer and Treasurer (Principal Financial Officer and duly authorized signatory of the Registrant) 10 of 12 EX-11 2 COMPUTATIONS OF EARNINGS PER SHARE SCIENTIFIC-ATLANTA, INC. AND SUBSIDIARIES EXHIBIT 11 COMPUTATION OF EARNINGS PER SHARE (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) Quarter Ended October 1, 1999 ----------------------------- Net Per Share Earnings Shares Amount -------- ------ ------ Basic earnings per common share: Net earnings $ 25,254 77,865 $ 0.32 Diluted earnings per common share: Net earnings $ 25,254 80,676 0.31 -------- ------ ------- Effect of dilutive stock options $ -- 2,811 $ (0.01) ======== ====== ======= Quarter Ended September 25, 1998 -------------------------------- Net Per Share Earnings Shares Amount -------- ------ ------ Basic earnings per common share: Net earnings $ 14,994 79,216 $ 0.19 Diluted earnings per common share: Net earnings $ 14,994 80,649 0.19 -------- ------ ------- Effect of dilutive stock options $ -- 1,433 $ -- ======== ====== ======= 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 option's exercise price was greater than the average market price of the common shares: October 1, 1999 September 25, 1998 --------------- ------------------ Number of options outstanding 1,808 2,396 Weighted average exercise price $ 46.648 $ 23.573 11 of 12 EX-27 3 FINANCIAL DATA SCHEDULE
5 This schedue contains summary financial information extracted from Form 10-Q for the quarter ended October 1, 1999, and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS JUN-30-2000 JUL-03-1999 OCT-01-1999 315,088 3,159 292,381 8,256 208,240 861,211 258,416 98,482 1,120,821 254,466 823 0 0 39,808 762,648 1,120,821 349,319 349,319 249,371 249,371 28,332 106 358 36,077 10,823 25,254 0 0 0 25,254 0.32 0.31
EX-99 4 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-K (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 continued weak economic conditions in the Asia Pacific region and the Latin America region); uncertainties relating to government and regulatory policies; uncertainties relating to customer plans and commitments; changes in customer order patterns, including changes due to Year 2000 issues; 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 development and / or deployment of new products, including digital set-top products and the applications to be used on such digital set-top products; delays in testing of new products; uncertainties from the regulation of the Internet; rapid technology changes; the highly competitive environment in which the company operates; the entry of new, well- capitalized competitors into the company's markets as both competitors and customers; reliance on software programs used by the company or its suppliers containing problems related to computations that must be made in 1999, 2000 and beyond ("Year 2000 Problems"); Year 2000 Problems that may exist in products currently or historically sold to customers of the company; and delays in providing upgrades to customers to prevent Year 2000 Problems in products sold by the company; in the financial markets relating to the company's capital structure and cost of capital; the impact of a major earthquake on the company's operations; and uncertainties inherent in international operations and foreign currency fluctuations. The words "believe," "expect," "anticipate," "project," "plan," "intend," "seek," "estimate" 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. 12 of 12 -----END PRIVACY-ENHANCED MESSAGE-----