Deferred Compensation Plan of the
SCI Systems, Inc.,
Employee Financial Security Program
Financial Statements
Years ended December 31, 1993 and 1992
with Report of Independent Auditors
<PAGE>
Deferred Compensation Plan of the SCI Systems, Inc.,
Employee Financial Security Program
Financial Statements
Years ended December 31, 1993 and 1992
Contents
Report of Independent Auditors .......................................... 1
Audited Financial Statements
Statements of Financial Condition ....................................... 2
Statements of Income and Changes in Plan Equity ......................... 4
Notes to Financial Statements ........................................... 7
<PAGE>
Report of Independent Auditors
The Administrative Committee
Deferred Compensation Plan of the SCI Systems, Inc.,
Employee Financial Security Program
We have audited the accompanying statements of financial condition of the
Deferred Compensation Plan of the SCI Systems, Inc., Employee Financial
Security Program as of December 31, 1993 and 1992, and the related
statements of income and changes in plan equity for each of the three years
in the period ended December 31, 1993. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial condition of the Deferred
Compensation Plan of the SCI Systems, Inc., Employee Financial Security
Program at December 31, 1993 and 1992, and its results of operations for
each of the three years in the period ended December 31, 1993, in conformity
with generally accepted accounting principles.
Ernst & Young LLP /sig/
August 31, 1994
<PAGE>
<TABLE>
<CAPTION>
Deferred Compensation Plan of the
SCI Systems, Inc.,
Employee Financial Security Program
Statement of Financial Condition
December 31, 1993
<C> <C> <C> <C> <C> <C>
Money SCI
Market Stock GIC Balanced Equity
Fund Fund Fund Fund Fund Total
<S>
Assets
Investments at fair value $ 128,717 $ 955,977 $ 502,884 $ 1,239,388 $ 849,236 $ 3,676,202
Accrued interest receivable 618 - - - - 618
Total assets 129,335 955,977 502,884 1,239,388 849,236 3,676,820
Liabilities
Distribution payable to participants - 51,526 82,774 5,826 12,162 152,288
Total liabilities - 51,526 82,774 5,826 12,162 152,288
Plan equity $ 129,335 $ 904,451 $ 420,110 $ 1,233,562 $ 837,074 $ 3,524,532
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
Deferred Compensation Plan of the SCI Systems, Inc.,
Employee Financial Security Program
Statement of Financial Condition
December 31, 1992
<C> <C> <C> <C> <C> <C>
Money SCI
Market Stock GIC Balanced Equity
Fund Fund Fund Fund Fund Total
<S>
Assets
Investments at fair value $ 101,903 $ 983,585 $ 393,039 $ 775,762 $ 597,033 $ 2,851,322
Contribution receivable 2,966 13,421 7,308 12,463 8,623 44,781
Total assets 104,869 997,006 400,347 788,225 605,656 2,896,103
Liabilities
Distribution payable to participants - - - - - -
Total liabilities - - - - - -
Plan Equity $ 104,869 $ 997,006 $ 400,347 $ 788,225 $ 605,656 $ 2,896,103
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
Deferred Compensation Plan of the SCI Systems, Inc.,
Employee Financial Security Program
Statement of Income and Changes in Plan Equity
Year ended December 31, 1993
<C> <C> <C> <C> <C> <C>
Money SCI
Market Stock GIC Balanced Equity
Fund Fund Fund Fund Fund Total
<S>
Additions
Contributions:
Employees $ 18,285 $ 80,621 $ 136,579 $ 222,078 $ 143,170 $ 600,733
Employer 3,299 11,430 11,492 25,561 16,844 68,626
21,584 92,051 148,071 247,639 160,014 669,359
Interest income 3,687 382 19,737 178 (660) 23,324
Dividends received 1,534 - - 44,114 11,483 57,131
Realized gain (loss) on investments - 139,529 141 102,926 89,387 331,983
Unrealized appreciation
(depreciation) in the fair value of
investments - (181,297) 285 (45,308) 36,418 (189,902)
26,805 50,665 168,234 349,549 296,642 891,895
Deductions
Distribution to participants 6,984 65,533 92,277 45,302 53,370 263,466
Inter-fund transfers 4,645 (77,687) (56,194) 141,090 (11,854) -
Net increase (decrease) 24,466 (92,555) 19,763 445,337 231,418 628,429
Plan equity at beginning of year 104,869 997,006 400,347 788,225 605,656 2,896,103
Plan equity at end of year $ 129,335 $ 904,451 $ 420,110 $ 1,233,562 $ 837,074 $ 3,524,532
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
Deferred Compensation Plan of the SCI Systems, Inc.,
Employee Financial Security Program
Statement of Income and Changes in Plan Equity
Year ended December 31, 1992
<C> <C> <C> <C> <C> <C>
Money SCI
Market Stock GIC Balanced Equity
Fund Fund Fund Fund Fund Total
<S>
Additions
Contributions:
Employees $ 14,747 $ 46,850 $ 76,940 $ 58,586 $ 18,022 $ 215,145
Employer 11,198 31,663 32,055 33,620 17,444 125,980
25,945 78,513 108,995 92,206 35,466 341,125
Interest income 3,148 148 16,666 14,400 (1,790) 32,572
Dividends received - - - 58,522 62,953 121,475
Realized gain (loss) on investments - - - 4,370 5,653 10,023
Unrealized appreciation
(depreciation) in the fair value of
investments 1 620,700 (252) (10,401) (17,920) 592,128
29,094 699,361 125,409 159,097 84,362 1,097,323
Deductions
Distributions to participants 1,773 65,861 67,787 63,709 86,554 285,684
Inter-fund transfers 16,599 23,552 38,162 (113,182) 34,869 -
Net increase (decrease) 43,920 657,052 95,784 (17,794) 32,677 811,639
Plan equity at beginning of year 60,949 339,954 304,563 806,019 572,979 2,084,464
Plan equity at end of year $ 104,869 $ 997,006 $ 400,347 $ 788,225 $ 605,656 $ 2,896,103
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
Deferred Compensation Plan of the SCI Systems, Inc.,
Employee Financial Security Program
Statement of Income and Changes in Plan Equity
Year ended December 31, 1991
<C> <C> <C> <C> <C> <C>
Money SCI
Market Stock GIC Balanced Equity
Fund Fund Fund Fund Fund Total
<S>
Additions
Contributions:
Employees $ - $ - $ 16,710 $ 14,467 $ 11,533 $ 42,710
Employer 8,019 121,920 140,582 180,497 133,400 584,418
8,019 121,920 157,292 194,964 144,933 627,128
Interest income 24 352 1,118 271 167 1,932
Dividends received 4,322 - 18,205 19,327 9,219 51,073
Realized gain (loss) on investments - (3,656) 336 11,211 18,661 26,552
Unrealized appreciation
(depreciation) in the fair value of
investments - (82,327) 1,965 72,441 43,462 35,541
12,365 36,289 178,916 298,214 216,442 742,226
Deductions
Distribution to participants 9,885 16,873 98,458 48,702 13,901 187,819
Inter-fund transfers 1,384 10,413 26,021 (21,084) (16,734) -
Net increase (decrease) 3,864 29,829 106,479 228,428 185,807 554,407
Plan equity at beginning of year 57,085 310,125 198,084 577,591 387,172 1,530,057
Plan equity at end of year $ 60,949 $ 339,954 $ 304,563 $ 806,019 $ 572,979 $ 2,084,464
</TABLE>
See accompanying notes.
<PAGE>
Deferred Compensation Plan of the SCI Systems, Inc.,
Employee Financial Security Program
Notes to Financial Statements
December 31, 1993
1. Accounting Policies
Basis of Accounting
The accounting records of the Deferred Compensation Plan of the SCI Systems,
Inc., Employee Financial Security Program (the Plan) are maintained on the
accrual basis.
Valuation of Investments
Marketable securities are stated at fair value, determined by the average
of the last reported bid and ask prices at December 31. The fair value of
mutual funds and separate accounts are based on quoted redemption values at
December 31. Separate accounts that do not have an established fair value
are stated at aggregate fair value at December 31, as determined by the
Plan's trustee.
The change in the difference between fair value and the cost of investments
is reflected in the statements of income and changes in plan equity as
unrealized appreciation (depreciation) in the fair value of investments.
The realized gain or loss on investments is the difference between the
proceeds received and the average cost of the investments sold.
2. Description of the Plan
General
The following description of the Plan provides only general information.
Participants should refer to the Plan agreement for a more complete
description of the Plan's provisions.
Eligibility
The Plan was established to provide additional incentive and retirement
security for a select group of management and certain highly compensated
employees.
2. Description of the Plan (continued)
Participation
To participate in the Plan, the employee must have been designated for
participation in the Plan by the Plan Administrator. Employees designated
for participation may enter the Plan on the first day of either January,
April, July or October.
Vesting
Substantially all of the Plan's assets are vested in its members. Member
contributions are fully vested when made and the Company's matching portion
is fully vested after 5 years. Upon death or retirement at age 65, a member
<PAGE>
Vesting (continued)
will be paid his share of the Plan assets. A member may withdraw from the
Plan and receive his share representing his own contributions together with
his pro rata share of net income.
Contributions
The Company maintains payroll deduction accounts for all participating
employees. Employees may authorize withholdings up to 15% of their earnings
in 1/2% increments as a before-tax contribution or in 1% increments as an
after-tax contribution. The maximum payroll deduction of 15% can consist of
matched and unmatched before-tax and after-tax savings in any combination.
The Company may contribute amounts to match up to 40% of any employee's
before-tax matched savings and 60% of their after-tax matched savings. The
actual matched contribution amount is dependent on years of service and
compensation levels.
Investment Program
Each member is entitled to direct the investment in their account to each of
the separate funds as follows: "Money Market Fund" - to invest in government
securities, commercial paper, time deposits or certificates of deposit
maturing within one year (17 participants at December 31, 1993); "SCI Stock
Fund" - to invest in qualifying securities of the Company (50 participants at
December 31, 1993); "Guaranteed Interest Contract (GIC) Fund" - to invest in
contracts which provide a fixed rate of return (51 participants at
2. Description of the Plan (continued)
December 31, 1993); "Balanced Fund" - to invest in a combination of stocks
and fixed income securities in order to provide a balance of high yield and
safety (80 participants at December 31, 1993); and, "Equity Fund" - to invest
in a diversified portfolio of common stocks expected to have earnings and
dividend growth potential greater than the economy in general (58
participants at December 31, 1993).
Administration
The Plan is administered by a three member Administrative Committee appointed
by the Board of Directors of the Company.
Trustee
First Alabama Bank of Huntsville, N.A., operated as Trustee of the Plan
until September 30, 1993. Effective October 1, 1993 Mellon Bank replaced
First Alabama Bank as trustee of the Plan and holds the Plan's assets.
Termination of the Plan
The Company has the right under the Plan to discontinue contributions at any
time and terminate the Plan. In the event of a termination of the Plan, the
net assets of the Plan are to be distributed to the members on the basis of
the number of units credited to each.
3. Transactions with Parties -in -Interest
All trustee expenses, legal, accounting and other services in connection with
the administration and operation of the Plan are paid by the Company.
<PAGE>
4. Income Tax Status
The Plan is a grantor type trust and is not qualified under Section 401 of
the Internal Revenue Code. Under Section 671 of the Internal Revenue Code,
items of income, deduction or credit in a grantor trust are treated as
belonging to the grantor. These items are reported on the income tax return
of the grantor, SCI Systems, Inc. Participants must include distributions in
taxable income at the time of withdrawal.
5. Investments
The cost of investments at December 31, 1993 and 1992 is summarized as
follows:
1993 1992
Mellon Bank Time Deposit Fund $ 272,594 $ -
First Alabama Bank of Huntsville, N.A.
Time Open Short-Term Notes - 9,346
Vanguard Money Market Fund 125,934 101,898
SCI Systems, Inc. common stock 442,347 439,417
First Alabama Bank Investment Contract Fund 487,884 384,193
MAS Pooled Trust Fund Equity Portfolio
(Balanced Fund) 680,828 345,027
MAS Fixed Income Portfolio 506,477 354,741
MAS Pooled Trust Fund Equity Portfolio
(Equity Fund) 606,579 572,942
$ 3,122,643 $ 2,207,564
The fair value of individual investments of the Plan at December 31, 1993
and 1992 are as follows:
1993 1992
Mellon Bank Time Deposit Fund $ 272,594 $ -
First Alabama Bank of Huntsville, N.A.
Time Open Short-Term Notes - 9,346
Vanguard Money Market Fund 125,934 101,898
SCI Systems, Inc. common stock 810,221 981,412
First Alabama Bank Investment Contract Fund 489,886 385,897
MAS Pooled Trust Fund Equity Portfolio
(Balanced Fund) 708,822 397,713
MAS Fixed Income Portfolio 504,476 378,031
MAS Pooled Trust Fund Equity Portfolio
(Equity Fund) 764,269 597,025
$ 3,676,202 $ 2,851,322
<PAGE>
5. Investments (continued)
During 1993, 1992 and 1991, the Plan's investments that were bought, sold as
well as held during the year, appreciated in fair value as follows:
1993 1992 1991
Vanguard Money Market Fund $ - $ - $ -
SCI Systems, Inc. common stock (41,768) 620,700 (85,983)
First Alabama Bank Investment Contract
Fund 426 (251) -
Trustees GIC Fund - - 2,301
MAS Equity Fund Deferred (12,303) 64,684
MAS Trust Fund Equity Portfolio 259,896 (12,267) 62,123
MAS Fixed Income Portfolio (76,473) 6,272 18,968
$ 142,081 $ 602,151 $ 62,093
