-----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, Lxlq9/iqTfwyhJn/ityWWIMR0hnCao6xOiGyYQYlXmFoW/trkp0is6J+XsKqS/pE VSGGClHq86dsloqk4JomtA== 0000950144-95-003037.txt : 19951109 0000950144-95-003037.hdr.sgml : 19951109 ACCESSION NUMBER: 0000950144-95-003037 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950929 FILED AS OF DATE: 19951108 SROS: BSE SROS: CSE SROS: CSX SROS: NYSE SROS: PHLX 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: 1934 Act SEC FILE NUMBER: 001-05517 FILM NUMBER: 95588398 BUSINESS ADDRESS: STREET 1: ONE TECHNOLOGY PKWY S STREET 2: BOX 105600 CITY: NORCROSS STATE: GA ZIP: 30092 BUSINESS PHONE: 4049035000 MAIL ADDRESS: STREET 1: ONE TECHNOLOGY PKWY S STREET 2: B0X 105600 CITY: NORCROSS STATE: GA ZIP: 30092 FORMER COMPANY: FORMER CONFORMED NAME: SCIENTIFIC ASSOCIATES INC DATE OF NAME CHANGE: 19671024 10-Q 1 SCIENTIFIC ATLANTA FORM 10-Q 1 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 SEPTEMBER 29, 1995 ------------------------------------------------- OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXHANGE 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 27, 1995, SCIENTIFIC-ATLANTA, INC. HAD OUTSTANDING 76,241,403 SHARES OF COMMON STOCK. 1 of 8 2 PART I - FINANCIAL INFORMATION SCIENTIFIC-ATLANTA, INC., AND SUBSIDIARIES CONSOLIDATED STATEMENT OF EARNINGS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
Three Months Ended ----------------------------------------- September 29, September 30, 1995 1994 -------------- --------------- SALES $ 242,193 $ 224,976 ---------- ---------- COSTS AND EXPENSES Cost of sales 181,116 157,553 Sales and administrative 32,726 31,336 Research and development 22,767 19,045 Interest expense 147 228 Interest (income) (751) (886) Other expense, net 179 34 ---------- ---------- Total costs and expenses 236,184 207,310 ---------- ---------- EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 6,009 17,666 PROVISION (BENEFIT) FOR INCOME TAXES Current 550 6,418 Deferred 1,373 (765) ---------- ---------- NET EARNINGS FROM CONTINUING OPERATIONS 4,086 12,013 EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX (1,038) 96 ESTIMATED LOSS ON SALE OF DISCONTINUED OPERATIONS, NET OF TAX (12,172) -- ---------- ---------- NET EARNINGS (LOSS) $ (9,124) $ 12,109 ========= ========== EARNINGS (LOSS) PER COMMON SHARE AND COMMON EQUIVALENT SHARE PRIMARY CONTINUING OPERATIONS $ 0.05 $ 0.16 DISCONTINUED OPERATIONS (0.17) -- --------- ---------- NET EARNINGS (LOSS) $ (0.12) 0.16 ========= ========== FULLY DILUTED $ (0.12) $ 0.16 ========= ========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES AND COMMON EQUIVALENT SHARES OUTSTANDING PRIMARY 77,019 77,910 ========= ========== FULLY DILUTED 77,019 77,978 ========= ========== DIVIDENDS PER SHARE PAID $ .015 $ -- ========= ==========
SEE ACCOMPANYING NOTES 2 of 8 3 SCIENTIFIC-ATLANTA, INC., AND SUBSIDIARIES CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
In Thousands ------------------------------------ September 29, June 30, 1995 1995 ------------- --------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 50,491 $ 80,311 Receivables, less allowance for doubtful accounts of $ $3,705,000 at September 29 and $3,823,000 at June 30 207,932 243,420 Inventories 269,473 257,427 Deferred income taxes 41,219 28,271 Other current assets 15,464 5,950 ---------- --------- TOTAL CURRENT ASSETS 584,579 615,379 ---------- --------- PROPERTY, PLANT AND EQUIPMENT, at cost Land and improvements 7,027 7,005 Buildings and improvements 39,583 36,847 Machinery and equipment 136,516 145,301 ---------- --------- 183,126 189,153 Less-Accumulated depreciation and amortization 57,090 64,539 ---------- --------- 126,036 124,614 ---------- --------- COST IN EXCESS OF NET ASSETS ACQUIRED 6,752 6,940 ---------- --------- OTHER ASSETS 36,132 38,331 ---------- --------- TOTAL ASSETS $ 753,499 $ 785,264 ========== ========= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Short-term debt and current maturities of long-term debt $ 1,040 $ 1,386 Accounts payable 124,422 148,260 Accrued liabilities 104,526 113,947 Income taxes currently payable 17,195 12,121 ---------- --------- TOTAL CURRENT LIABILITIES 247,183 275,714 --------- --------- LONG-TERM DEBT, less current maturities 756 773 ---------- --------- OTHER LIABILITIES 38,116 34,588 ---------- --------- STOCKHOLDERS' EQUITY Preferred stock, authorized 50,000,000 shares; no shares issued -- -- Common stock, $0.50 par value, authorized 350,000,000 shares; issued 77,248,253 shares at September 29 and 76,950,029 shares at June 30 38,624 38,475 Additional paid-in capital 163,451 160,206 Retained earnings 264,561 274,840 Accumulated translation adjustments 808 668 ---------- --------- 467,444 474,189 ---------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 753,499 $ 785,264 ---------- =========
SEE ACCOMPANYING NOTES 3 of 8 4 SCIENTIFIC-ATLANTA, INC., AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
Three Months Ended ------------------ September 29, September 30, 1995 1994 ------------- ------------- NET CASH USED BY OPERATING ACTIVITIES: $ (15,616) $ (17,462) ---------- --------- INVESTING ACTIVITIES: Purchases of property, plant, and equipment (14,020) (8,015) Other 190 (2,210) ---------- --------- Net cash used by investing activities (13,830) (10,225) ---------- --------- FINANCING ACTIVITIES: Net short-term borrowings (347) 1,663 Principal payments on long-term debt (16) (19) Dividends paid (1,155) -- Issuance of common stock 1,144 2,226 ---------- --------- Net cash provided (used) by financing activities (374) 3,870 ---------- --------- DECREASE IN CASH AND CASH EQUIVALENTS (29,820) (23,817) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 80,311 123,387 ---------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 50,491 $ 99,570 ========== ========= SUPPLEMENTAL CASH FLOW DISCLOSURES Interest paid $ 218 $ 262 ========== ========= Income taxes paid, net $ 1,630 $ 12,446 ========== =========
SEE ACCOMPANYING NOTES 4 of 8 5 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 1995 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 months ended September 29, 1995 was computed based on the weighted average number of shares of common stock outstanding. Earnings per share for the three months ended September 30, 1994, was 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:
September 29, June 30, 1995 1995 ---- ---- Raw materials and work-in-process $ 136,420 $ 142,418 Finished goods 133,053 115,009 ------- ------- Total inventory $ 269,473 $ 257,427 ======= =======
D. During the quarter ended September 29, 1995, the company decided to discontinue its defense-related businesses in San Diego, California because these businesses are not aligned with the company's core business strategies. The company anticipates that the sale of the net assets of the defense-related businesses will be completed within one year. A one-time charge of $12,172, net of a tax benefit of $5,728, for the estimated loss on sale of discontinued operations was recorded in the quarter ended September 29, 1995. During the quarter ended September 29, 1995 the loss from discontinued operations was $1,038, net of a tax benefit of $488. Earnings from discontinued operations were $96, net of tax expense of $46 for the quarter ended September 30, 1994. Sales of discontinued operations were $5,020 and $7,325 in the first quarter of fiscal 1996 and 1995, respectively. The net assets of the discontinued operations include inventory, accounts receivable, machinery and equipment, accounts payable, and accrued expenses and are included in other current assets in the Consolidated Statement of Financial Position. E. In October 1995, the company announced that it had adopted a stock buyback program for the purchase of up to five million shares of its common stock. As of October 27, 1995, the company had purchased 1,010,000 shares at an aggregate cost of $12,411. The company will re-issue these shares under the company's stock option plan, 401 (k) plan and employee stock purchase plan. 5 of 8 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION Scientific-Atlanta had stockholders' equity of $467.4 million and cash on hand was $50.5 million at September 29, 1995. Cash decreased $29.8 million during the quarter as expenditures for inventories, equipment and expansion of manufacturing capacity exceeded cash generated from earnings and accounts receivable collections. The current ratio of 2.4:1 at September 29, 1995, compared to 2.2:1 at June 30, 1995. At September 29, 1995, total debt was $1.8 million or less than 1 percent of total capital invested. Short-term debt consists primarily of borrowings by the company's international operations to support their working capital requirements. The company believes it will use a portion of its senior credit facility to supplement funds generated internally to support growth and planned expansion of manufacturing capacity prior to the end of the fiscal year. RESULTS OF OPERATIONS Sales for the quarter ended September 29, 1995, were $242.2 million, up 8 percent from the prior year's sales of $225.0 million. Higher sales volume of transmission and addressable converter products and Sega game adapters contributed to the year-to-year sales increase. Sales of satellite systems were lower in the quarter ended September 29, 1995 as compared to the prior year due to substantial completion of deliveries of equipment to Orbit Communications Company for its direct to home satellite services in fiscal 1995. Sales growth decreased from 48 percent in fiscal 1995 to 8 percent in the first quarter of fiscal 1996 due to the slowdown in the US market for cable equipment. The company earlier had indicated that delays in the passage of telecommunications legislation by Congress and the continuing uncertainty regarding the timing and form of legislation, along with uncertainties regarding technology to be deployed in telecommunications network construction projects, were factors contributing to the delay in spending by customers. Gross margins were 25.2 percent, down 4.8 percentage points from a year ago. Unfavorable exchange rate changes in Japanese yen, product mix and cost issues offset gains from increased volumes in transmission products. Continued strength of the yen would also adversely affect gross margins. 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 its exposure on purchase commitments for a period of approximately ten months. Research and development costs were up $3.7 million, or 20 percent, over the prior year due to increased research and development activity, particularly development of digital products. The company anticipates that spending will continue at this level. Selling and administrative expense increased $1.4 million, or 4 percent, from the prior year. Increased expenses reflect costs associated with ongoing investments to support expansion into international markets, the introduction of new products and a build-up in the infrastructure to handle the growth the company is experiencing. Other expense for the quarter ended September 29, 1995, included net losses from foreign currency transactions and partnership activities and net gains from rental income and other miscellaneous items. There were no significant items in other income and expense in 1995. Other expense for the quarter ended September 30, 1994, included net losses of $0.5 million from partnership activities and net gains of $0.5 million from royalty income, rental income and other miscellaneous items. The company's effective income tax rate was 32 percent for the quarter, unchanged from the prior year. Net earnings from continuing operations were $4.1 million, down $7.9 million from the prior year. Lower gross margins more than offset earnings from higher sales volumes in the quarter ended September 29, 1995. In October 1995, the company announced its intent to sell its defense related businesses in San Diego, California and recorded a one-time, after tax charge of $13.2 million in the quarter ended September 29, 1995. This charge for discontinued operations resulted in a net loss of $9.1 million in the quarter ended September 29, 1995 as compared to net earnings of $12.1 million in the prior year. 6 of 8 7 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 use only)
(b) No reports on Form 8-K were filed during the quarter ended September 29, 1995. 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: Novmeber 8, 1995 /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) 7 of 8 EX-11 2 COMPUTATION OF EARNINGS PER SHARE 1 Exhibit 11 SCIENTIFIC-ATLANTA, INC., AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
Three Months Ended ------------------------------------ September 29, September 30, 1995 1994 ------------- ------------- WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 77,019 75,580 Add - Additional 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 1,625 2,330 ----------- --------- NUMBER OF COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING 78,644 77,910 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 -- 68 ----------- --------- NUMBER OF SHARES OUTSTANDING ASSUMING FULL DILUTION 78,644 77,978 =========== ========= NET EARNINGS (LOSS) FOR PRIMARY AND FULLY DILUTED COMPUTATION Continuing Operations $ 4,086 $ 12,013 Discontinued Operations (13,210) 96 ----------- --------- Net Earnings (Loss) $ (9,124) $ 12,109 =========== ========= EARNINGS (LOSS) PER COMMON SHARE AND COMMON EQUIVALENT SHARE PRIMARY Continuing Operations $ 0.05 $ 0.16 Discontinued Operations (0.17) -- ----------- --------- Net Earnings (Loss) $ (0.12) $ 0.16 =========== ========= FULLY DILUTED Continuing Operations $ 0.05 $ 0.16 Discontinued Operations (0.17) -- ----------- --------- Net Earnings (Loss) $ (0.12) $ 0.16 =========== =========
Note: In the three months ended September 29, 1995 the dilutive effect of equivalent shares derived from stock options was less than 3 percent and therefore, the equivalent shares were not included in the computation of earnings per share. 8 of 8 EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 29, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS JUN-28-1996 JUL-01-1995 SEP-29-1995 50,491 0 211,637 3,705 269,473 584,579 183,126 57,090 753,499 247,183 756 38,624 0 0 428,820 753,499 242,193 242,193 181,116 181,116 22,767 331 147 6,009 1,923 4,086 (13,210) 0 0 (9,124) (0.12) (0.12)
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