-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, sOxUaYaaFEuBtFzTyndctyjk6Jqebz499kjE6f9BK1bQ8uAk9qijvtWhMjUPFd64 zRFgzhg49Y9/eN/pfx1PHw== 0000950144-94-000386.txt : 19940214 0000950144-94-000386.hdr.sgml : 19940214 ACCESSION NUMBER: 0000950144-94-000386 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940211 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SCIENTIFIC ATLANTA INC CENTRAL INDEX KEY: 0000087777 STANDARD INDUSTRIAL CLASSIFICATION: 3663 IRS NUMBER: 580612397 STATE OF INCORPORATION: GA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 34 SEC FILE NUMBER: 001-05517 FILM NUMBER: 94506525 BUSINESS ADDRESS: STREET 1: ONE TECHNOLOGY PKWY SOUTH STREET 2: BOX 105600 CITY: NORCROSS STATE: GA ZIP: 30092 BUSINESS PHONE: 4049035000 FORMER COMPANY: FORMER CONFORMED NAME: SCIENTIFIC ASSOCIATES INC DATE OF NAME CHANGE: 19671024 10-Q 1 SCIENTIFIC ATLANTA, INC. 1 UNITED STATES 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 31, 1993 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)
404-903-5000 (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 28, 1994, Scientific-Atlanta, Inc. had outstanding 37,529,020 shares of common stock. 1 OF 10 2 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 31, January 1, December 31, January 1, 1993 1993 1993 1993 ------------ ----------- ------------- ----------- SALES $ 178,033 $ 186,647 $ 348,325 $ 357,847 ---------- ---------- ---------- ----------- COSTS AND EXPENSES Cost of sales 124,795 142,570 245,495 265,759 Sales and administrative 28,770 28,128 56,279 53,858 Research and development 14,488 15,225 26,778 29,234 Interest expense 416 227 668 411 Interest (income) (756) (884) (1,597) (1,621) Other (income) expense, net 17,057 (519) 16,924 (747) ---------- ----------- --------- ----------- Total costs and expenses 184,770 184,747 344,547 346,894 ---------- ----------- ---------- ----------- EARNINGS (LOSS) BEFORE INCOME TAXES AND ACCOUNTING CHANGES (6,737) 1,900 3,778 10,953 PROVISION FOR INCOME TAXES Current (1,232) 492 2,920 3,370 Deferred (924) (17) (1,711) (632) ---------- --------- --------- ---------- EARNINGS (LOSS) BEFORE ACCOUNTING CHANGES (4,581) 1,425 2,569 8,215 Cumulative effect of changes for postretirement benefits, postemployment benefits and income taxes -- -- -- (4,700) NET EARNINGS (LOSS) $ (4,581) $ 1,425 $ 2,569 $ 3,515 ========== ========== ========== =========== EARNINGS (LOSS) PER COMMON SHARE AND COMMON EQUIVALENT SHARE PRIMARY Before accounting changes $ (0.12) $ 0.04 $ 0.07 $ 0.23 Accounting changes -- -- -- (0.13) ---------- ---------- ---------- ----------- Net earnings (loss) $ (0.12) $ 0.04 $ 0.07 $ 0.10 ========== ========== ========== =========== FULLY DILUTED $ (0.12) $ 0.04 $ 0.07 $ 0.10 ========== ========== ========== =========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES AND COMMON EQUIVALENT SHARES OUTSTANDING PRIMARY 38,598 37,182 38,583 36,898 ---------- ========== ========== ============ FULLY DILUTED 38,598 37,350 38,613 37,028 ========== ========== ========== ============ DIVIDENDS PER SHARE PAID $ 0.03 $ 0.03 $ 0.06 $ 0.05 2/3 ========== ========== ========== ===========
SEE ACCOMPANYING NOTES 2 0F 10 3 SCIENTIFIC-ATLANTA, INC., AND SUBSIDIARIES CONSOLIDATED STATEMENT OF FINANCIAL POSITION
In Thousands -------------------------- December 31, July 2, 1993 1993 ------------ ------- (UNAUDITED) ASSETS CURRENT ASSETS Cash and cash equivalents $ 106,518 $ 103,536 Receivables, less allowance for doubtful accounts of $4,297,000 at December 31 and $4,224,000 at July 2 150,469 150,851 Inventories 123,317 127,408 Deferred income taxes and taxes recoverable 26,557 23,919 --------- ---------- TOTAL CURRENT ASSETS 406,861 405,714 --------- ---------- PROPERTY, PLANT AND EQUIPMENT, at cost Land and improvements 3,730 3,658 Buildings and improvements 26,431 26,721 Machinery and equipment 102,350 92,066 --------- ---------- 132,511 122,445 Less-Accumulated depreciation and amortization 56,737 50,813 --------- ---------- 75,774 71,632 --------- ---------- COST IN EXCESS OF NET ASSETS ACQUIRED 8,063 8,438 --------- ---------- OTHER ASSETS 62,909 38,426 --------- ---------- TOTAL ASSETS $ 553,607 $ 524,210 ========= ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Short-term debt and current maturities of long-term debt $ 6,691 $ 5,962 Accounts payable 39,800 47,224 Accrued liabilities 104,073 76,850 --------- ---------- TOTAL CURRENT LIABILITIES 150,564 130,036 --------- ---------- LONG-TERM DEBT, less current maturities 1,369 1,398 --------- ---------- OTHER LIABILITIES 42,745 39,886 STOCKHOLDERS' EQUITY --------- ---------- Preferred stock, authorized 50,000,000 shares; no shares issued -- -- Common stock, $.50 par value, authorized 350,000,000 shares; issued 37,445,387 at December 31 and 37,196,194 shares at July 2 18,723 18,598 Additional paid-in capital 134,683 129,072 Retained earnings 204,604 204,274 Accumulated translation adjustments 919 946 --------- ---------- 358,929 352,890 --------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 553,607 $ 524,210 ========= ==========
SEE ACCOMPANYING NOTES 3 of 10 4 SCIENTIFIC-ATLANTA, INC., AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
Six Months Ended ---------------------------------- December 31, January 1, 1993 1993 ------------ --------- NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: $ 16,268 $ (3,416) --------- ----------- INVESTING ACTIVITIES: Purchases of property, plant and equipment (13,597) (10,733) Other (909) 214 --------- ---------- Net cash used by investing activities (14,506) (10,519) --------- ---------- FINANCING ACTIVITIES: Net short-term borrowings 727 2,414 Principal payments on long-term debt (27) (25) Dividends paid (2,239) (2,024) Issuance of common stock 2,759 22,113 --------- ---------- Net cash provided by financing activities 1,220 22,478 --------- ---------- INCREASE IN CASH AND CASH EQUIVALENTS 2,982 8,543 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 103,536 90,888 --------- ---------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 106,518 $ 99,431 ========= ========== SUPPLEMENTAL CASH FLOW DISCLOSURES Interest paid $ 605 $ 404 ========= ========== Income taxes paid, net $ 5,087 $ 5,732 ========= ==========
SEE ACCOMPANYING NOTES 4 of 10 5 NOTES: 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 1993 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. Earnings per share for the three and six months ended December 31, 1993 and January 1, 1993 has been computed based on the weighted average number of shares outstanding and equivalent shares derived from dilutive stock options. See Exhibit 11. C. Inventories consist of the following:
December 31, July 2, 1993 1993 ------------ --------- Raw materials and work-in-process $ 73,414 $ 71,780 Finished goods 49,903 55,628 --------- --------- Total inventory $ 123,317 $ 127,408 ========= =========
D. Other expense for the three and six months ended December 31, 1993 included a pre-tax charge of $17.5 million ($0.31 per share after taxes), from the settlement of securities class action litigation. Under the terms of the settlement, $14.0 million is payable to the members of the plaintiff class and the remainder is costs incurred by the company in connection with the suit. E. During the fourth quarter of fiscal 1993, the company adopted Financial Accounting Standards Board Statement (SFAS) No. 106 "Postretirement Benefits", No. 112 "Postemployment Benefits" and No. 109 "Accounting for Income Taxes" effective as of the first quarter of fiscal 1993. Charges of $6.7 million and $1.9 million for SFAS No. 106 and SFAS No. 112 respectively, were partially offset by a credit of $3.9 million for SFAS No. 109 resulting in one-time, after-tax charges of $4.7 million, $0.13 per share, to previously reported earnings for the six months ended January 1, 1993. 5 of 10 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION Scientific-Atlanta had shareholders' equity of $358.9 million and cash on hand was $106.5 million at December 31, 1993. Cash generated from operating activities was used for capital expenditures. Expenditures focused on equipment for new product development and increased manufacturing capacity. The current ratio of 2.7:1 at December 31, 1993, was down slightly from 3.1:1 at July 2, 1993 due to increases in accrued liabilities. Accrued liabilities increased due to provisions for the settlement of securities class action litigation and higher customer down payments. Payment of the litigation settlement was made after the end of the second quarter. At December 31, 1993, total debt was $8.1 million or 2 percent of total capital invested. Short-term debt consists of working capital borrowings to support the operations of foreign subsidiaries. RESULTS OF OPERATIONS Sales for the quarter ended December 31, 1993 were $178.0 million, as compared to $186.6 million for the same quarter a year ago. Within the Communications sector, higher sales of cable television distribution equipment and addressable home communications terminals (converters) were offset by reduced sales due to the completion of the PrimeStar television contract, lower digital audio sales, and weakness in sales of network systems. Additionally, sales for the quarter were negatively impacted by component shortages and limited converter inventories. Sales of instrumentation equipment were flat compared to the prior year.
Quarter Year-to-Date --------------------------- --------------------------- % Decrease % Decrease % of from % of from Amount Total Prior Year Amount Total Prior Year ------ ----- ---------- ------ ----- ---------- Communications $140.7 79% (6)% $275.7 79% (3)% Instrumentation 37.3 21% -- 72.6 21% -- ------ ---- ---- ------ ---- ---- Consolidated $178.0 100% (5)% $348.3 100% (3)% ====== ==== ==== ====== ==== ====
Gross margins improved 6.3 and 3.8 percentage points over the comparable three and six month periods in the previous year. Manufacturing efficiencies and increased volumes in distribution and addressable converter products contributed to the year-to-year improvement in gross margins. Margins in the prior year were adversely impacted by higher than anticipated launch costs associated with the company's digital video compression products. Research and development costs were down from the prior year due primarily to lower spending within the Instrumentation sector and the reallocation of engineering resources from research and development efforts to specific customer orders. The revenue from these orders will be recognized in future periods and, accordingly, the related costs have been inventoried. During the quarter, selling and administrative expense increased 2 percent over the prior year. Lower professional fees were partially offset by other increases in administrative expenses. During the three and six months ended December 31, 1993, sales and marketing expenses increased, reflecting costs associated with ongoing investments to support expansion into international markets and the introduction of new products. The company's effective income tax rate was 32 percent for fiscal 1994 compared to 25 percent for the prior year. The lower provision in fiscal 1993 reflected benefits from interest income on tax-exempt investments and benefits from international tax planning. 6 of 10 7 Other expense of $16.9 million for the six months ended December 31, 1993 included a one time charge related to the settlement of securities class action litigation of $17.5 million and rental income, gains from the sale of certain assets, and other miscellaneous items of $0.6 million. The litigation settlement was the only significant item in other expense during the second quarter of fiscal 1994. Other income of $0.7 million for the six months ended January 31, 1993 included net gains from investments of $0.2 million and other miscellaneous items of $1.0 million and losses from foreign currency transactions of $0.5 million. There were no significant items in other income during the second quarter of fiscal 1993. Net earnings, before including the effect of the one time charge for the legal settlement, were $7.3 million and $14.5 million for the three and six months ended December 31, 1993. Net earnings, before the $4.7 million charge for the cumulative effect of accounting changes, were $1.4 million and $8.2 million for the comparable periods of the prior year. Improved margins were the primary factor in the year-to-year increases. 7 of 10 8 PART II - OTHER INFORMATION Item 1 Legal Proceedings Pursuant to an Order dated January 31, 1994, the United States District Court for the Northern District of Georgia approved the settlement of Henderson, et al vs. Scientific-Atlanta, Inc. (Civil Action No. 1:88 - CV - 2208 - RLV), a previously reported class action lawsuit against the Registrant alleging violations of Rule 10b-5. See the Registrant's Annual Report on Form 10-K for the fiscal year ended July 2, 1993. Under the terms of the settlement, the Registrant, without admitting any liability, deposited with the Court the sum of $14 million to be distributed to the members of the class in return for a full and complete release of all claims against the Registrant. The case was commenced in September, 1988. 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, November 11, 1993. (b) Election of directors:
Votes For Withhold Authority --------- ------------------ Marion H. Antonini 33,822,735 187,631 William E. Kassling 33,831,589 178,777 Wilbur B. King, Mylle Bell Mangum, Alonzo L. McDonald, James F. McDonald, David J. McLaughlin, James V. Napier, and Sidney Topol continue as directors. (c) (i) Selection of Arthur Andersen & Co. as independent auditors: Votes For Votes Against Abstain ---------- ------------- ------- 38,899,242 45,179 65,945 Item 6 Exhibits and Reports on Form 8-K. (a) Exhibits. Exhibit No. Description ----------- ----------- 11 Computation of Earnings Per Share (b) No reports on Form 8-K were filed during the quarter ended December 31, 1993.
8 of 10 9 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: February 9, 1994 /s/ Kenneth V. Jaeggi ---------------- ------------------------- Kenneth V. Jaeggi Senior Vice President and Chief Financial Officer (Principal Financial Officer and duly authorized officer of the Registrant)
9 of 10 EX-11 2 SCIENTIFIC ATLANTA, INC. EARNINGS PER SHARE 1 SCIENTIFIC-ATLANTA, INC., AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (IN THOUSANDS, EXCEPT PER SHARE DATA) EXHIBIT 11 (UNAUDITED)
Three Months Ended Six Months Ended --------------------------- --------------------------- December 31, January 1, December 31, January 1, 1993 1993 1993 1993 ---- ---- ---- ---- WEIGHTED AVERAGE NUMBER OF 37,424 35,609 37,349 35,263 COMMON SHARES OUTSTANDING Add - Shares of common stock assumed issued upon exercise of options using the "treasury stock" method as it applies to the computation of primary earnings per share 1,174 1,573 1,234 1,635 --------- -------- -------- -------- NUMBER OF COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING 38,598 37,182 38,583 36,898 Add - Additional shares of common stock assumed issued upon exercise of options using the "treasury stock" method as it applies to the computation of fully diluted earnings per share - 168 30 130 --------- -------- -------- -------- NUMBER OF SHARES OUTSTANDING ASSUMING FULL DILUTION 38,598 37,350 38,613 37,028 ========= ======= ======== ======== NET EARNINGS (LOSS) FOR PRIMARY AND FULLY DILUTED COMPUTATION $(4,581) $1,425 $2,569 $3,515 ========= ======= ======== ======== EARNINGS (LOSS) PER COMMON SHARE AND COMMON EQUIVALENT SHARE PRIMARY $(0.12) $0.04 $ 0.07 $0.09 ========= ======= ======== ======== FULLY DILUTED $(0.12) $0.04 $ 0.07 $0.09 ========= ======= ======== ======== EARNINGS (LOSS) PER COMMON SHARE AND COMMON EQUIVALENT SHARE AS REPORTED PRIMARY $(0.12) $0.04 $ 0.07 $0.10 ========= ======= ======== ======== FULLY DILUTED $(0.12) $0.04 $ 0.07 $0.10 ========= ======= ======== ========
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