[FRONT COVER OF PROXY]
SCI SYSTEMS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 23, 1998
To the Shareholders of SCI Systems, Inc.:
Notice is hereby given that the 1998 Annual Meeting of Shareholders of SCI
Systems, Inc., a Delaware corporation, will be held at 10:00 A.M., Eastern
Daylight Savings Time, on Friday, October 23, 1998, at The Ritz-Carlton Hotel
(Buckhead), 3434 Peachtree Street, N.E., Atlanta, Georgia 30326 (the "Meeting"),
for the following purposes:
(1) to elect three Class II Directors to serve for a term of three years;
(2) approval of amendment of the Company's 1994 Stock Option Incentive Plan
(the "Plan") to increase the number of shares of Common Stock (par value
$0.10) that may be issued pursuant to the Plan by 2,000,000 shares to an
aggregate of 4,600,000 shares.
(3) to act upon a proposal to ratify the selection of Ernst & Young LLP as
the Company's independent auditor for the fiscal year ending June 30,
1999; and
(4) to transact such other business as may properly come before the Meeting
and any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on September 15,
1998, as the Record Date for the determination of shareholders entitled to
notice of and to vote at such Meeting and any adjournment or postponement
thereof.
It is important that your shares be represented and voted at the Meeting.
Accordingly, you are requested to please date, sign, and mail the enclosed proxy
as promptly as possible. Thank you for your cooperation.
By order of the Board of Directors,
/s/ Michael M. Sullivan
Michael M. Sullivan
Secretary
Huntsville, Alabama
September 23, 1998
PLEASE SIGN, DATE, AND PROMPTLY MAIL THE ENCLOSED WHITE PROXY CARD IN THE
POSTAGE PAID ENVELOPE PROVIDED.
<PAGE>
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SCI SYSTEMS, INC.
C/O SCI SYSTEMS (ALABAMA), INC.
P.O. BOX 1000
HUNTSVILLE, ALABAMA 35807
PROXY STATEMENT
This Statement is furnished in connection with the solicitation by the
Board of Directors of SCI Systems, Inc. (the "Board" and the "Company") of
proxies to be voted at the Annual Meeting of Shareholders of the Company to be
held at 10:00 A.M., Eastern Daylight Savings Time, on Friday, October 23, 1998,
at The Ritz-Carlton Hotel (Buckhead), 3434 Peachtree Street, N.E., Atlanta,
Georgia 30326 and at any and all adjournments or postponements of such meeting
(the "Meeting"). If the enclosed form of proxy is executed, returned in time,
and not revoked, it will be voted in accordance with the specifications, if any,
made by the shareholder, and if specifications are not made, it will be voted
(i) for election of the director nominees named herein, (ii) in favor of
amendment of the Company's 1994 Stock Option Incentive Plan to increase the
number of shares of Common Stock (par value $0.10) that may be issued pursuant
to the 1994 Plan by 2,000,000 shares, and (iii) for ratification of the
selection of Ernst & Young LLP as the Company's independent auditor as described
in this Proxy Statement. If other matters are properly presented at the Meeting,
it is the intention of the persons designated as proxies to vote on them in
accordance with their best judgment.
Shareholders who execute proxies may revoke them at any time before they
are voted by filing with the Secretary of the Company either an instrument
revoking the proxy, or a duly executed proxy bearing a later date. Proxies also
may be revoked by any shareholder present at the Meeting who expresses a desire
to vote his or her shares in person. A majority of the shareholders entitled to
vote must be present in person, or represented by proxy, to constitute a quorum
and act upon the proposed business. Failure of a quorum to be represented at the
Meeting will necessitate adjournment and will subject the Company to additional
expense. When a quorum is present an affirmative vote of a majority of the
number of shares of stock present, or represented by proxy, at the Meeting and
entitled to vote shall decide any question brought before the Meeting unless a
different vote is otherwise required. However, directors shall be elected by an
affirmative vote of a plurality of the shares present in person, or represented
by proxy at the Meeting, and entitled to vote on the election of directors.
Abstentions will have the effect of negative votes with respect to any matter
presented at the Meeting, other than election of directors. Broker non-votes
will have no effect on any other matter presented. If authority to vote for one
or more of the director nominees is withheld on a proxy card, no vote will be
cast with respect to the shares indicated on that proxy card and the outcome of
the election will not be affected.
The Notice of the Meeting, this Proxy Statement, and the form of proxy were
first mailed to shareholders on or about September 23, 1998.
VOTING SECURITIES
At the close of business on September 15, 1998, the record date for
determining shareholders entitled to notice and to vote at the Meeting, there
were outstanding 60,115,010 shares of Common Stock. Each share is entitled to
one vote.
The following table sets forth certain information concerning each person
known to the Board to be a beneficial owner of more than five percent of the
outstanding shares of Common Stock as of December 31, 1997 (the ownership of the
directors and executive officers of the Company being included elsewhere
herein).
Name and Address Amount Beneficially Percent of
of Beneficial Owner Owned Class
- --------------------------------------------------------------------------------
FMR Corporation 8,735,200(1) 14.60%(1)
82 Devonshire Street
Boston, MA 02109-3614
AMVESCAP PLC 6,295,089(2) 10.50%(2)
1315 Peachtree Street, N.E.
Atlanta, GA 30309
(1) According to a Schedule 13G dated February 14, 1998, filed pursuant to the
Securities Exchange Act of 1934.
(2) According to a Schedule 13G dated April 9, 1998, filed pursuant to the
Securities Exchange Act of 1934.
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OWNERSHIP OF EQUITY SECURITIES IN THE COMPANY
The following table sets forth information regarding beneficial ownership of
Common Stock by each director, the Company's five most highly compensated
officers, and the directors and executive officers of the Company as a group as
of September 15, 1998.
Aggregate Number of Shares Percentage of
Name Beneficially Owned Outstanding Shares
- --------------------------------------------------------------------------------
Olin B. King 2,838,840 (1) 4.7%
A. Eugene Sapp, Jr 397,575 (1) *
David F. Jenkins 134,728 (2) *
Howard H. Callaway 64,394 (3) *
Jerry F. Thomas 55,948 (4) *
Peter M. Scheffler 53,315 (4) *
G. Robert Tod 11,906 (5) *
William E. Fruhan 11,599 (6) *
Jackie M. Ward 9,820 (7) *
Wayne Shortridge 6,794 (8) *
All Directors and Executive Officers
as a group (18 persons) 3,850,506 (9) 6.4%
* Indicates less than 1% of issued and outstanding shares of Common Stock.
(1) Includes 739,500 and 270,000 shares not presently owned by Messrs. King
and Sapp, respectively, but which are subject to stock options exercisable
within 60 days after September 15, 1998.
(2) Includes 132,400 shares not presently owned but which are subject to stock
options exercisable within 60 days after September 15, 1998.
(3) Includes 2,000 shares owned by Mr. Callaway's spouse, 6,800 shares owned
of record by the Howard H. Callaway Foundation, Inc., 1,940 shares not presently
owned by Mr. Callaway but which are subject to stock options exercisable within
60 days after September 15, 1998, and 3,654 shares owned through the Company's
Directors' Deferred Compensation Plan. Mr. Callaway is an officer and Trustee of
the Foundation and, as such, shares voting and investment powers with respect to
the shares owned by the Foundation. Nothing in this paragraph should be
construed as an admission by Mr. Callaway of beneficial ownership of the shares
owned by his spouse.
(4) Includes 52,800 and 51,600 shares not presently owned by Messrs. Thomas
and Scheffler, respectively, but which are subject to stock options exercisable
within 60 days after September 15, 1998.
(5) Includes 484 shares not presently owned by Mr. Tod but which are subject
to stock options exercisable within 60 days of September 15, 1998, and 4,382
shares owned through the Company's Directors' Deferred Compensation Plan.
(6) Includes 4,599 shares owned through the Company's Directors' Deferred
Compensation Plan.
(7) Includes 4,650 shares owned through the Company's Directors' Deferred
Compensation Plan.
(8) Includes 4,794 shares owned through the Company's Directors' Deferred
Compensation Plan.
(9) Includes 1,505,000 shares not presently owned by directors or executive
officers but which are subject to stock options exercisable within 60 days of
September 15, 1998, and 25,811 shares owned by directors through the Directors'
Deferred Compensation Plan.
PROPOSAL 1 - ELECTION OF DIRECTORS
NOMINEES FOR BOARD OF DIRECTORS
In accordance with the Company's Second Restated Certificate of
Incorporation, the Board is divided into three classes with each class
consisting of, as nearly as possible, one third of the total number of directors
fixed by the Board. The Company's Bylaws provide that the number of directors
shall be not less than three (3) and not more than eleven (11), and that the
exact size of the Board may be fixed from time to time by the Board. The Board
has currently fixed the number of directors at seven, with two directors in
Class I, three in Class II, and two in Class III. Board members serve three-year
terms which are staggered to provide for election of one director class each
year. Class II directors are to be elected at the Meeting.
The Board has nominated and proposes Jackie M. Ward, Wayne Shortridge and
William E. Fruhan for re-election as Class II directors, and requests
Shareholder approval of the nominees. It is intended that the proxies will be
voted for the re-election of the three nominees to serve as directors of the
Company for a term of three years and until their respective successors are
elected and qualified. The proxies cannot be voted for a greater number of
persons than the number of nominees named herein. In the event any of the
nominees refuses
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or is unable to serve as a director (which is not now anticipated), the persons
acting as proxies reserve full discretion to vote for such other persons as may
be nominated.
INFORMATION ABOUT DIRECTOR NOMINEES AND CONTINUING DIRECTORS
Based upon information supplied by them, the table below sets forth for
each director nominee and continuing director their name, age, positions with
the Company, principal occupation, and business experience for the last five
years, and prior service as a director of the Company.
<TABLE>
<S> <C> <C>
POSITIONS WITH THE COMPANY DIRECTOR
NAME AND AGE AND PRINCIPAL OCCUPATION SINCE
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS II DIRECTORS
(TERM EXPIRING IN 2001)
- -----------------------
Jackie M. Ward (1)(2) Chief Executive Officer, Computer Generation Incorporated, Atlanta, GA, 1992
(60) a provider of turn-key telecommunication systems products and data process-
ing services to U.S. and international markets, 1968 to present.
Wayne Shortridge (1)(4) Partner, Paul, Hastings, Janofsky & Walker LLP, Altlanta, GA, 1992
(60) 1994 to present; Partner, Powell, Goldstein, Frazer & Murphy,
Atlanta, GA, 1968 to 1994.
William E. Fruhan (1)(3) The George E. Bates Professorship, Harvard University Graduate School 1992
(55) of Business, Boston, MA, 1979 to present.
CLASS I DIRECTOR NOMINEES
(TERM EXPIRING IN 2000)
- -------------------------
Olin B. King (4) Chairman of the Board and Chief Executive Officer, SCI Systems, Inc. 1961
(64)
Howard H. Callaway (2)(3) Chief Executive Officer, Crested Butte Mountain Resort, Inc., Crested Butte, 1976
(71) CO, a resort complex, since 1979 to present; Chairman, Callaway Gardens
Resort, Inc., Pine Mountain, GA, a resort complex, since January 1994 to
present.
CLASS III DIRECTORS
(TERM EXPIRING IN 1999)
- -----------------------
G. Robert Tod (2)(3) Formerly, Vice Chairman, CML Group, Inc., Acton, MA, 1981
(59) a specialty marketing company, 1969 to 1998; retired.
A. Eugene Sapp, Jr. (1)(4)
(62) President and Chief Operating Officer, SCI Systems, Inc. 1981
<FN>
(1) Member of the Investment Committee
(2) Member of the Compensation Committee
(3) Member of the Audit Committee
(4) Member of the Executive Committee
Certain of the continuing directors and director nominees also serve as
directors of other publicly held companies as follows: Mr. Callaway, CML Group,
Inc.; Mr. King, Regions Financial Corporation; Mr. Sapp, VBand Corporation and
Artesyn Technologies; Mr. Tod, EG&G, Inc., and UST Corp.; and Ms. Ward, TRIGON
Blue Cross Blue Shield, Nations Bank Corporation, and Matria Healthcare, Inc.
</FN>
</TABLE>
MEETINGS AND COMMITTEES
The Board has standing Executive, Investment, Compensation, and Audit
Committees. The Board does not have a standing Nominating Committee as the
Executive Committee acts as such.
During fiscal year 1998 the Board met four times; the Executive Committee
eight times; the Investment Committee four times; the Compensation Committee two
times; and the Audit Committee one time. All Board members attended 75% or more
of Board and Committee meetings during the year.
Consisting entirely of outside directors, the Audit Committee is
responsible for reviewing the Company's financial statements, evaluating the
Company's internal financial controls and procedures, and coordinating and
approving the activities of the Company's auditors.
Consisting entirely of outside directors, the Compensation Committee is
responsible for setting compensation guidelines for executives of the Company,
establishing their salaries, reviewing and approving incentive compensation
plans and bonus awards, and reporting all of the foregoing to the outside
members of the Board for approval.
The Executive Committee functions with substantially all of the powers and
duties of the Board; however, the Committee does not have
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authority to approve mergers, amend the Certificate of Incorporation or Bylaws,
or dispose of all or substantially all of the Company's assets. The Executive
Committee also functions as the nominating committee of the Company and will
consider proposed directorship nominations if recommended by shareholders in
writing to the Secretary of the Company.
The Investment Committee is responsible for reviewing the investment funds
of the Company and of each employee benefit trust established by the Company and
for directing the investment funds of the Company's Supplemental Retirement
Plan.
During fiscal 1998 the six outside directors were paid an annual fee of
$40,000 plus $1,000 per Board meeting attended and $500 per committee meeting
attended, except that Mr. Shortridge was paid the greater of $1,000 or $300 per
hour for each Executive Committee Meeting attended.
In 1995 the Company adopted a Directors' Deferred Compensation Plan
pursuant to which outside Directors may elect in advance to defer all or part of
their Director's fees in return for stock equivalent rights equal to the number
of shares of Common Stock which he or she could have purchased at the full
market price with the deferred fees. If a Director elects to defer 100% of his
or her fees earned during an entire year, the Director will also be entitled to
additional stock equivalent rights at the full market price equal to 40% of the
deferred fees. The deferred fees and any additional earned stock equivalent
rights are contributed by the Company to a "rabbi trust" which purchases Common
Stock in the open market as the Directors' fees are deferred and holds the
Common Stock in the name of the Director participant. On termination of a
Director's service from the Board for any reason, all stock equivalent rights
earned by the Director pursuant to the Plan will be paid out to him or her by
the trust in Common Stock held in his or her name. The Directors' Deferred
Compensation Plan effectively replaced the directors' stock option feature of
the Company's 1994 Stock Option Incentive Plan (the "1994 Plan").
All outside Directors elected to defer receipt of 100% of their Board fees
for fiscal year 1998 pursuant to the Directors' Deferred Compensation Plan. No
director exercised stock options during the year.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RE-ELECTION OF THE DIRECTOR
NOMINEES NAMED ABOVE.
PROPOSAL 2-AMENDMENT OF SCI SYSTEMS, INC.
1994 STOCK OPTION INCENTIVE PLAN
The Company's 1994 Stock Option Incentive Plan (the "1994 Plan") was approved
by the shareholders of the Company on October 28, 1994. The purpose of the 1994
Plan is to allow the Company to provide incentive compensation linked to
long-term shareholder value to its key employees, officers and nonemployee, or
outside, directors. The Company's Board of Directors has approved an amendment
(the "Amendment") to the 1994 Plan which increases the aggregate number of
shares of Company Common Stock, ($0.10 par value) (the "Common Stock") that may
be issued pursuant to the 1994 Plan by 2,000,000 shares, from an aggregate of
2,600,000 shares to an aggregate of 4,600,000 shares. The Amendment is subject
to approval of the Company's Shareholders.
If the Amendment is not approved by the Company's shareholders, the 1994 Plan
will have a limited number of shares available for issuance. The Board of
Directors believes that it is in the best interest of the Company to continue
the 1994 Plan. Accordingly, the Board of Directors has approved the Amendment
increasing the number of shares available under the 1994 Plan by 2,000,000
shares of Common Stock and recommends that Shareholders vote in favor of it.
DESCRIPTION OF THE 1994 PLAN
The following is a summary of the significant clauses in the 1994 Plan:
AWARDS TO KEY EMPLOYEES AND OFFICERS. The 1994 Plan permits awards of
nonqualified stock options and incentive stock options within the meaning of
Internal Revenue Code Section 422 (collectively, "Options") to key employees and
officers. All officers and key employees of the Company and its subsidiaries and
affiliates are eligible to participate in the 1994 Plan. It is currently
estimated that approximately 39 individuals are eligible to participate in the
1994 Plan. Awards to key employees and officers under the 1994 Plan are
determined by the Compensation Committee of the Board of Directors (the
"Committee"). The Committee's members are selected by the Board of Directors. In
order to maintain its independence, only "disinterested directors" may be
members of the Committee, as that term is defined in rule 16b-3(c) of the
Securities and Exchange Act of 1934. Directors who are also officers or
employees of the Company may not serve on the Committee.
Only the Committee may determine the persons to whom options will be granted
and when the options will be granted. The Committee also determines the types of
options which will be granted (nonqualified or incentive), the number of shares
granted, the exercise price, the terms and conditions of exercise, and all other
related terms and conditions of the option, subject to the limitations described
below and as set forth in the 1994 Plan. The terms and conditions of each option
are contained in a written agreement with the recipient. The Committee may not
grant an individual more than 100,000 stock options in any one-year period. The
exercise price of any incentive stock option may not be less than the fair
market value of the Common Stock at the time of grant, and as to incentive stock
options granted to a person owning greater than 10% of the Company's Common
Stock, the exercise price may not be less than 110% of fair market value
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of the Common Stock at the time of grant. For nonqualified stock options, the
per share exercise price may be less than the fair market value at the time of
grant. However, to date the Committee has always granted nonqualified stock
options at full fair market value. Finally, no option may be granted on or after
the tenth anniversary of the date the 1994 Plan was approved by the Board of
Directors.
A stock option recipient may pay the option exercise price in any form or
manner authorized by the Committee, including, but not limited to, (i) cash,
(ii) shares of Common Stock previously owned by the recipient, (iii) a "cashless
exercise" through a broker, or (iv) by having a number of shares of Common Stock
withheld, the fair market value of which is sufficient to satisfy the exercise
price. The Committee may also authorize Company financing to assist a key
employee or officer in paying for the shares of Common Stock upon exercise of an
option but has not done so to date. The interest rate on any such financing must
not be less than the "applicable federal rate" as defined in the Internal
Revenue Code of 1986, as amended.
AWARDS TO OUTSIDE DIRECTORS. All outside directors of the Company and its
affiliates are also eligible to participate in the 1994 Plan. Six directors are
currently eligible to participate. As of June 30, 1998 two directors were
participating in the 1994 Plan.
The 1994 Plan permits each outside director to forego all or a portion of
his/her annual director fees (but not meeting or committee fees or expense
reimbursements) in exchange for nonqualified stock options. An election to
forego fees in favor of stock options is effective with respect to all annual
director fees to be paid for the remainder of the director's term. A director
may elect to forego fees for stock options only during the 30 days following his
or her election, re-election, or appointment to the Board of Directors.
Nonqualified stock options granted to an outside director are issued for a
number of shares of stock with an aggregate fair market value (determined as of
the date of grant) equal to four times the amount of the foregone director fees.
Each option may be exercised to the extent it has become vested. Options vest
generally in quarterly periods over the director's remaining term. A director
who ceases to be an outside director forfeits that portion of the option
attributable to such vesting dates on and after the date he/she ceases to be an
outside director.
Each outside director's options are exercisable at a price equal to the Common
Stock's full fair market value on the date the option is granted, that is, the
stock options are not granted at a discount. Options remain exercisable through
the tenth anniversary of the date on which they were granted. An outside
director may pay the exercise price in cash, in shares of Common Stock
previously owned, or by a cashless exercise through a broker.
GENERAL PROVISIONS APPLICABLE TO ALL AWARDS UNDER THE 1994 PLAN. Awards of
nonqualified stock options and incentive stock options under the 1994 Plan are
nontransferable except by will or the laws of descent and distribution. In the
event of, or in anticipation of a merger, consolidation or other reorganization
of the Company or tender offer for shares of Common Stock, the Committee may
make such adjustments with respect to such awards and take such other action as
it deems necessary or appropriate to reflect such merger, consolidation,
reorganization or tender offer, including, without limitation, the substitution
of new awards, the termination or adjustment of outstanding awards, the
acceleration of awards, or the removal of restrictions on outstanding awards.
The number of shares of Common Stock reserved for issuance under the 1994 Plan
is subject to adjustment in the event of stock split, stock dividend,
recapitalization, or similar events.
The Board may amend or terminate the 1994 Plan without the approval of the
shareholders of the Company, but may make any amendment conditioned on
shareholder approval if the Board believes it is necessary or advisable to
comply with any applicable tax or regulatory requirement. However, no
termination or amendment of the 1994 Plan without the consent or the holder of
an award shall adversely affect the rights of that participant. In the present
instance, the Board believes it is fair and in the interest of the Company and
its Shareholders to obtain Shareholder approval of the Amendment.
FEDERAL INCOME TAX CONSEQUENCES. The following discussion outlines generally
the federal income tax consequences of participation in the 1994 Plan.
Individual circumstances may vary these results.
A participant in the 1994 Plan will not recognize income upon the grant of a
nonqualified stock option. At the time the participant exercises a nonqualified
option, he/she will recognize as compensation taxable as ordinary income an
amount equal to (1) the excess of the fair market value of the Common Stock on
the date the option is exercised, (2) over the price paid for the Common Stock,
and the Company will then be entitled to a corresponding tax deduction.
A participant will not recognize income upon the grant of an incentive stock
option. A participant who exercises an incentive stock option will not be taxed
at the time he/she exercises his/her option. Instead, he/she will be taxed at
the time he/she sells the Common Stock purchased pursuant to the option. If
shares of Common Stock obtained by exercise of an incentive stock option are
disposed of within two years from the date the option is granted, or within one
year from the date the option is exercised, the individual generally will have
to recognize ordinary income equal to the lesser of (1) the gain recognized
(i.e., the excess of the amount realized on the disposition of the
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Common Stock over the exercise price) or (2) the excess of the fair market value
of the shares transferred upon exercise over the exercise price for such shares.
If the individual is subject to Section 16(b) of the Securities Exchange Act of
1934, special rules may apply to determine the amount treated as ordinary income
on disposition of the Common Stock, which generally will be treated as long or
short-term capital gain depending upon whether the holding period applicable to
long-term capital assets is satisfied. The Company normally will be entitled to
a federal income tax deduction equal to any ordinary income tax withholding
requirements. Exercise of an incentive stock option may subject a participant
to, or increase a participant's liability for, the alternative minimum tax. All
payments pursuant to the Plan are subject to federal income tax withholding.
SHAREHOLDER APPROVAL. The Board of Directors requests Shareholder approval of
the Amendment to the 1994 Plan which increases the number of shares of Common
Stock available for issuance pursuant to the 1994 Plan by 2,000,000 shares, from
an aggregate of 2,600,000 shares to an aggregate of 4,600,000 shares. This will
allow the Company to continue to provide incentive awards to its key employees,
officers, and outside directors which are equity-based and linked to long-term
shareholder value.
YOUR BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
AMENDMENT TO THE SCI SYSTEMS, INC. 1994 STOCK OPTION INCENTIVE PLAN.
PROPOSAL 3-RATIFICATION OF SELECTION OF INDEPENDENT AUDITOR
Ernst & Young LLP has served as independent auditor for the Company since 1961
and has been selected by the Board of Directors to audit the books and records
of the Company for the fiscal year ending June 30, 1999. The Board of Directors
proposes that its selection of Ernst & Young LLP as the Company's independent
auditor be ratified by shareholders at the Meeting. If the shareholders do not
ratify this selection, the selection of another firm will be considered by the
Board. The Audit Committee of the Board is of the opinion that the retention of
the services of Ernst & Young LLP is in the best interests of the Company. A
representative of Ernst & Young LLP is expected to be present at the Meeting to
respond to appropriate questions and to make a statement if he or she so
desires.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF ERNST & YOUNG LLP
AS AUDITOR FOR FISCAL YEAR 1999.
EXECUTIVE OFFICERS
Officers of the Company are elected by the Board annually and serve at the
pleasure of the Board. Information concerning certain of the executive officers
of the Company is required by Securities and Exchange Commission Regulations to
be disclosed in this Proxy Statement and is contained in the following Summary
Compensation Table and other tables set forth in this Proxy Statement.
Messrs. Olin B. King and A. Eugene Sapp, Jr. are officers of SCI Systems,
Inc. and of one or more of its subsidiaries; all other executive officers are
officers of one or more Company subsidiaries.
Messrs. O. King and Sapp have held various positions with the Company since
1961 and 1962, respectively, and have been Chairman and CEO, and President and
COO, respectively, since prior to 1990.
Mr. David F. Jenkins, age 61, joined the Company in 1990 as Vice President.
He was promoted to Senior Vice President, Western Division, in 1991 and
continues in that position.
Mr. Jerry F. Thomas, age 57, has held various positions with the Company
since 1963. In September 1993 he was promoted to Senior Vice President, Central
Region. In 1997 he was appointed Senior Vice President of the newly formed
Computer Systems Division, and in April 1998 to Senior Vice President of the
newly formed Technology Division, the position he currently holds.
Mr. Peter M. Scheffler, age 47, joined the Company as Senior Vice
President, Asian Division, in January 1994. From June 1993 to January 1994 Mr.
Scheffler was Senior Director of Worldwide Manufacturing for Apple Computer,
Inc. In July 1998 Mr. Scheffler was appointed Senior Vice President and
Assistant to the President.
Mr. George J. King, age 42, has held various positions with the Company
since 1978. In 1992 he was elected Vice President and in 1997 was promoted to
Senior Vice President of the Southeastern Division and continues in that
position. Mr. King is the son of Olin B. King, Chairman and Chief Executive
Officer of the Company.
Mr. Charles N. Parks, age 42, joined the Company in 1988 as Vice President.
In 1997 he was promoted to Senior Vice President of the Mexican Division and
continues in that position.
Mr. LeRoy H. Mackedanz, age 55, joined the Company in 1987. In 1989 he was
elected Vice President and in 1997 was promoted to Senior Vice President of the
Northeastern Division, and currently holds that position.
Mr. W. David Rees, age 52, joined the Company in 1991 as a Program Manager
and was promoted to European Marketing Manager in 1994. He was elected Vice
President, Business Development, European Division, in 1996 and to Senior Vice
President, European Division, in January 1998, the position he currently holds.
Jerry W. Lee, age 56, joined the Company in July 1998 as Senior Vice
President, Asian Division. Prior to joining the Company Mr. Lee was President of
Alpha-TI Semiconductor Co. Ltd, in Bangkok, Thailand since 1996. From 1994 to
1996 he owned a Malaysian-based consulting firm, and from 1993 to 1994 was Vice
President of Operations at Read-Rite Inc., in Bangkok, Thailand.
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Michael H. Missios, age 56, joined the Company in 1990 as Vice President,
Peripherals and in April 1997 was promoted to First Vice President. In January
1998 he was promoted to Senior Vice President of the newly formed PC Division A,
the position he currently holds.
EXECUTIVE COMPENSATION
SEC regulations require that the Company provide Shareholders the following
general information regarding its executive compensation and detailed
information regarding compensation given to the Company's five most highly paid
officers.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
The following table summarizes compensation given to the Company's five
most highly compensated officers during the last three fiscal years:
<S> <C> <C> <C> <C> <C> <C>
Long Term
Annual Compensation Compensation
----------------------------------------------- -------------
Name and Total Securities All Other
Principal Annual Underlying Compensation
Position Year Salary ($) Bonus ($)(a) Compensation ($) Options (#) ($)
- --------- ---- ---------- ------------ ---------------- ------------- ------------
Olin B. King, 1998 707,108 1,450,854 2,157,962 100,000 25,456(b)
Chairman & CEO 1997 599,442 1,127,130 1,726,572 100,000 21,580(b)
1996 504,051 809,547 1,313,598 90,000 18,146(b)
A. Eugene Sapp, Jr., 1998 476,369 943,055 1,419,424 70,000 17,044(b)
President & COO 1997 436,919 732,635 1,169,554 75,000 15,729(b)
1996 382,326 526,205 908,531 60,000 13,764(b)
David F. Jenkins, 1998 234,070 192,048 426,118 25,000 6,476(b)
Senior Vice President, 1997 216,604 191,201 407,805 30,000 5,198(b)
Western Division 1996 196,953 128,478 325,431 28,000 4,727(b)
Jerry F. Thomas, 1998 206,977 208,300 415,277 25,000 6,617(b)
Senior Vice President, 1997 189,092 191,100 380,192 30,000 6,807(b)
Technology Division 1996 172,181 173,700 345,881 28,000 6,183(b)
Peter M. Scheffler, 1998 226,617 83,246 309,863 25,000 266,095(c)
Senior Vice President, and 1997 208,908 57,298 266,278 24,000 308,891(c)
Assistant to the President 1996 195,459 67,291 262,750 24,000 236,277(c)
</TABLE>
(a) The 1998 bonus is an estimate of the amount payable when final accounting is
completed and approved by the Board of Directors.
(b) Amounts represent the Company's contributions to the Company's 401(k) and
Deferred Compensation Plans, which Plans are available to all eligible
employees.
(c) Amounts represent contributions of $2,874 in 1998, $3,760 in 1997 and $3,518
in 1996 to the Company's 401(k) and Deferred Compensation Plans, with the
remainder representing foreign living and car allowances.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
Prior to October 28, 1994, the Company granted stock options to executive
officers and other key employees pursuant to its Incentive Stock Option and
NonQualified Stock Option Plans, and after October 28, 1994, pursuant to the
1994 Plan. The Company does not grant Stock Appreciation Rights (SARs). The
following table sets forth information regarding stock options granted to the
Company's five most highly compensated officers during fiscal year 1998 under
the 1994 Plan.
[PAGE 8 OF PROXY]
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Potential Realizable
Number of Value at Assumed
Securities % of Total Annual Rates of Stock
Underlying Options Granted to Price Appreciation for
Options Employees in Exercise or Base Expiration Option Term
Name Granted (#) Fiscal Year Price ($/SH) Date 5% ($) 10% ($)
- ---- ----------- ----------------- ---------------- ---------- --------- ---------
Olin B. King 100,000 14.27 45.938 10/24/07 2,888,984 7,321,254
A. Eugene Sapp, Jr. 70,000 9.99 45.938 10/24/07 2,022,289 5,124,878
David F. Jenkins 25,000 3.57 45.938 10/24/07 722,246 1,830,313
Jerry F. Thomas 25,000 3.57 45.938 10/24/07 722,246 1,830,313
Peter M. Scheffler 25,000 3.57 45.938 10/24/07 722,246 1,830,313
</TABLE>
The assumed annual rates of appreciation of five and ten percent would result in
the price of the Company's common stock increasing by $28.89 and $43.21,
respectively, by the end of the option term.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1998
AND FISCAL YEAR-END OPTION VALUES
The following table summarizes options exercised by the Company's five most
highly compensated officers during fiscal year 1998 and presents the value of
unexercised options held by them at fiscal year end under all stock option
Plans:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Number of
Securities Underlying Value of Unexercised
Shares Unexercised Options In-the-Money Options
Acquired Value at Fiscal Year End (#) At Fiscal Year End ($)
Name on Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---- --------------- ----------- ----------- ------------- ----------- -------------
Olin B. King -0- -0- 665,500 192,000 19,518,625 1,954,500
A. Eugene Sapp, Jr. -0- -0- 218,800 133,200 5,218,400 1,343,850
David F. Jenkins -0- -0- 111,000 54,000 2,841,425 594,450
Jerry F. Thomas -0- -0- 31,400 54,000 518,300 594,450
Peter M. Scheffler -0- -0- 33,800 47,200 715,600 470,400
</TABLE>
SUPPLEMENTAL RETIREMENT PLAN
The Company's Supplemental Retirement Plan ("SRP") is a noncontributory,
defined benefit pension plan which provides fixed benefits to members upon their
retirement, death, or termination of employment after at least 5 years of
service with the Company or its subsidiaries. The SRP is sponsored by SCI
Systems (Alabama), Inc. ("Plan Sponsor"), a wholly owned subsidiary of the
Company.
All employees of the Plan Sponsor and its participating affiliates are
eligible to participate in the SRP. The SRP provides for a benefit accrual each
year for up to 35 years equal to 1% of employee compensation in excess of
$10,000 and, as of January 1, 1989, 1/2% of the first $10,000. Employee
compensation covered by the SRP is the total compensation that would be subject
to Social Security taxes as actually paid to the employee during a calendar
year, but excluding supplemental compensation awards, subject to a limitation
beginning January 1, 1989. Compensation deferred by participants under the
Deferred Compensation Plan is not included as part of the employee covered
compensation in the year of deferral.
Based on past years' compensation covered by the SRP, and assuming normal
retirement age and a 5.5% annual increase in covered compensation from calendar
year 1998 until retirement, estimated annual benefits payable upon retirement to
the Company's five most highly compensated officers are as follows: Mr. O. King,
$40,451; Mr. Sapp, $35,614; Mr. Jenkins, $19,082; Mr. Thomas, $25,069 and for
Mr. Scheffler, $42,913. These estimated benefits are subject to the Internal
Revenue Code of 1986 (the "Code") section415 maximum benefit limitations. These
benefits do not reflect the maximum limitation on includable employee
compensation under Code section401(a)(17) effective for plan years beginning in
1989. The maximum limitation in 1998 is $150,000, subject to cost of living
increases as prescribed by the Secretary of the Treasury.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company's Board of Directors (the
"Committee") consists of three Directors who are neither employees nor officers
of the Company. The Committee reviews the Company's executive compensation
program and policies each year and determines the compensation of the officers.
The Committee's recommendations of compensation for the Chief Executive Officer
and the other officers are reviewed with and approved by all the nonemployee
directors, who constitute a majority of the Board.
The Committee's overall policy regarding compensation of the Company's
officers is to provide competitive salary levels and compensation incentives
that attract and retain individuals of outstanding ability; that recognize
individual performance and the performance of the Company relative to the
performance of other companies of comparable size and quality; and that support
both the
[PAGE 9 OF PROXY]
short-term and long-term goals of the Company.
The executive compensation program includes three elements which, taken
together, constitute a flexible and balanced method of establishing total
compensation for management. These elements are base salary, annual incentive
awards in the form of annual cash bonuses, and long-term incentive awards in the
form of stock option grants.
BASE SALARIES: The Committee annually reviews and establishes officer base
salaries. Individual salaries are determined by the Committee's assessment of
the individual's experience level, the scope and complexity of the position
held, and the salaries being paid for similar positions in the industry based
upon the Company's knowledge of competitive salaries in the marketplace.
ANNUAL INCENTIVE PROGRAM: The goal of the annual incentive, or bonus,
program is to place a significant portion of the officers' and senior managers'
cash compensation at risk to encourage and reward a continued high level of
performance each year. Individual incentive amounts are determined by the
Committee generally based upon profitability of the individual's business unit
and his or her organizational responsibility.
The CEO and COO do not participate in the same annual incentive program as
other Company officers. Annual incentive compensation for Messrs. O. King,
Chairman and CEO, and Sapp, President and COO, is granted pursuant to the
Company's Senior Executive Officer Annual Incentive Plan and is based upon the
Company's annual profits. This incentive compensation has been set for several
years at 1% of the Company's annual net income for Mr. O. King and .65% of
annual net income for Mr. Sapp.
LONG-TERM INCENTIVE PROGRAM: Stock options are the basis for the Company's
long-term incentive program. The Company's stock option grants generally are
made at market value at the date of grant and vest over a five year period. This
program links officer compensation to long-term shareholder value and focuses
management attention on Company performance over a period longer than one year.
Stock options are also granted to encourage and facilitate personal stock
ownership by the officers and thus strengthen their personal commitment to the
Company and lengthen their perspective. The Committee's policy is to grant stock
option awards annually, based both upon individual performance and the potential
for the officer to contribute to the future success of the Company.
The Committee believes that the three programs described above provide
compensation that is competitive with the levels paid by major competitors in
the industry; effectively links officer and shareholder interests through
equity-based plans; and is structured to provide incentives that are consistent
with the long-term investment horizons which characterize the business in which
the Company is engaged. In this regard, the Committee draws shareholder
attention to the Total Annual Compensation for Messrs. O. King and Sapp, CEO and
COO, respectively, for the last several years during which their Total Annual
Compensation generally followed overall Company performance.
CHIEF EXECUTIVE OFFICER COMPENSATION: In determining Mr. King's base
salary, annual bonus, and stock option grant in fiscal year 1998, the Committee
considered the Company's overall performance and Mr. King's individual
performance by the same methods described above for Company officer
compensation. The Committee also considered compensation granted to chief
executive officers of other companies in similar industries, as well as
incentives for future performance.
The Committee believes that Mr. King's total compensation as Chief
Executive Officer appropriately reflects his performance and, in turn, that of
the Company in fiscal year 1998. Company results and Mr. King's individual
performance during the year continued to be excellent. For example, in 1998 the
Company again had record revenues and record net income.
The Committee does not believe that the compensation of any Company officer
is likely to exceed the nonperformance based $1 million threshold limit of
Section 162 (m) of the Internal Revenue Code.
Submitted by the Compensation Committee of the Company's Board of
Directors:
Howard H. Callaway, Chairman
G. Robert Tod Jackie M. Ward
PERFORMANCE GRAPH
The following graph sets forth a comparison of the cumulative total Company
shareholder return with those of the Dow Jones Industrial Average ("DJIA") and
the Computer Hardware Subsector of the Hambrecht & Quist Technology Index ("H&Q
Comp Hdw"). Total shareholder return was determined by converting the closing
price of a share of SCI Common Stock ("SCI") at the beginning of the measurement
period (June 30, 1993) to a base amount ($100.00). Cumulative return for each
subsequent quarter-end (assuming reinvestment of all dividends into additional
shares) was measured as a change from the closing price at the beginning of the
measurement period and plotted. The graph assumes $100.00 was invested on June
30, 1993 in the Company's Common Stock, in the DJIA, and in the H&Q Comp Hdw
companies.
[PAGE 10 OF PROXY]
<TABLE>
<CAPTION>
COMPARATIVE FIVE-YEAR TOTAL RETURNS
SCI SYSTEMS, INC., DOW JONES INDUSTRIAL AVERAGE, AND HAMBRECHT & QUIST
COMPUTERHARDWARE SUBSECTOR
(NORMALIZED) STOCK PERFORMANCE GRAPH
<S> <C> <C> <C>
DATES SCI Systems DJIA H&Q Comp Hdw
Jun-93 100.00 100.00 100.00
Jul-93 109.42 100.12 89.90
Aug-93 114.49 105.29 93.85
Sep-93 97.83 108.43 88.49
Oct-93 105.80 110.87 96.48
Nov-93 105.07 107.56 103.84
Dec-93 102.17 110.56 107.66
Jan-94 103.62 113.92 114.51
Feb-94 110.14 112.85 120.99
Mar-94 92.75 105.91 113.66
Apr-94 86.96 104.54 109.54
May-94 91.30 104.79 108.57
Jun-94 87.68 100.96 98.17
Jul-94 92.03 103.03 105.27
Aug-94 110.14 109.60 118.99
Sep-94 122.46 109.32 116.99
Oct-94 105.80 111.47 134.03
Nov-94 107.25 107.77 132.15
Dec-94 104.35 108.07 133.74
Jan-95 105.80 108.68 129.72
Feb-95 105.07 114.42 133.58
Mar-95 108.33 117.82 137.73
Apr-95 118.12 121.53 152.50
May-95 120.29 124.66 156.64
Jun-95 144.93 134.77 172.44
Jul-95 155.07 144.67 183.81
Aug-95 179.71 147.60 186.58
Sep-95 200.00 151.00 186.29
Oct-95 203.62 150.13 202.86
Nov-95 194.20 153.66 199.07
Dec-95 179.71 152.84 192.52
Jan-96 212.32 153.59 196.44
Feb-96 214.85 159.44 214.39
Mar-96 212.32 159.97 188.88
Apr-96 248.55 173.24 221.66
May-96 260.87 181.19 232.74
Jun-96 235.51 173.03 202.91
Jul-96 202.17 157.62 192.54
Aug-96 258.70 166.45 202.96
Sep-96 326.09 179.18 225.36
Oct-96 288.41 177.20 228.37
Nov-96 305.80 188.16 260.09
Dec-96 258.70 187.99 255.23
Jan-97 337.68 201.35 295.28
Feb-97 310.14 190.21 280.51
Mar-97 293.48 177.79 263.97
Apr-97 357.97 183.35 277.56
May-97 376.81 204.13 307.65
Jun-97 369.57 210.38 310.90
Jul-97 460.50 232.59 398.46
Aug-97 455.79 232.23 410.49
Sep-97 574.63 245.97 435.70
Oct-97 510.14 233.23 371.97
Nov-97 531.15 234.40 371.27
Dec-97 505.07 230.65 347.46
Jan-98 504.35 237.89 391.93
Feb-98 521.74 260.22 437.69
Mar-98 413.04 269.82 411.82
Apr-98 477.54 274.39 460.44
May-98 395.65 259.39 421.44
Jun-98 437.68 277.69 440.97
</TABLE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers, directors, and persons who own more than ten percent of a registered
class of the Company's equity securities to file reports of ownership and
changes in ownership with the Securities and Exchange Commission ("SEC") and the
New York Stock Exchange and to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on transactions reported to the Company and review of the
copies of such forms and any amendments thereto furnished to the Company, or
written representations that no forms were required, the Company believes that
during the year ended June 30, 1998, all Section 16(a) filing requirements
applicable to its officers, directors, and greater than ten percent beneficial
owners were met.
GENERAL
Any Shareholder of the Company wishing to submit a proposal at the
Company's 1999 annual meeting of Shareholders, and desiring the proposal to be
considered for inclusion in the Company's proxy materials, should provide a
written copy of the proposal to the management of the Company at its principal
executive office, attention Corporate Secretary, not later than May 27, 1999,
and should otherwise comply with the rules of the Securities and Exchange
Commission relating to Shareholder proposals. Proxies solicited by the Company
for its 1999 annual meeting will grant discretionary authority to the Proxies to
vote or not vote on any Shareholder proposal if the Company has not received
notice of the proposal by August 9, 1999.
The cost of preparing and mailing the proxies, accompanying notices and
Proxy Statements, and all costs in connection with solicitation of proxies will
be paid by the Company. In addition to solicitation by use of the mail, certain
directors, officers and regular employees of the Company may solicit the return
of proxies by telephone, telegram or other electronic methods, or personal
interview without additional compensation. The Company has also retained D.F.
King & Co., Inc. to provide routine advice and services for proxy solicitation
for an annual fee of $3,000.00. The Company may request brokerage houses and
custodians, nominees, and fiduciaries to forward soliciting material to their
principals, the beneficial owners of Common Stock of the Company, and will
reimburse them for their reasonable out-of-pocket expenses.
Management does not know of any other matters to be presented at the
Meeting for action by shareholders. However, if any other matters requiring a
vote of the shareholders arise at the Meeting, it is intended that votes will be
cast pursuant to the proxies with respect to such matters in accordance with the
best judgment of the persons acting under the proxies.
If you cannot be present in person, you are requested to please date, sign
and mail the enclosed proxy card promptly. An envelope has been provided for
that purpose. No postage is required if mailed in the U.S.
By Order of the Board of Directors.
/s/ Michael M. Sullivan
Huntsville, Alabama Michael M. Sullivan
September 23, 1998 Secretary
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
PLEASE DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE
This Proxy, when properly executed, will be voted in accordance with the directions given by the undersigned shareholder.
If no direction is made, it will be voted in favor of Proposals 1, 2 and 3 and will be voted on any discretionary matters
in accordance with the best judgement and discretion of the Proxies.
Dated: , 1998
Signature
Additional Signature, if held jointly
Please sign exactly as your name(s) appears hereon.
If your shares are held jointly, each shareholder
named should sign. When signing as attorney,
executor, administrator, trustee or guardian,
please give your full title as such. If the
signatory is a corporation, please sign the full
corporate name by a duly authorized officer.
SCI SYSTEMS, INC.
This Proxy is solicited on behalf of the Board of Directors of the Company
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders and Proxy Statement, each dated
September 23, 1998, and does hereby appoint Olin B. King and A. Eugene Sapp, Jr., and either of them, with full power of
substitution, as proxy or proxies of the undersigned to represent the undersigned and to vote all shares of SCI Systems, Inc. Common
Stock (par value $0.10) which the undersigned would be entitled to vote if personally present at the Annual Meeting of Shareholders
of SCI Systems, Inc. to be held at The Ritz-Carlton Hotel (Buckhead), 3434 Peachtree Street, N.E., Atlanta, Georgia 30326 at
10:00 a.m., Eastern Daylight Savings Time, on October 23, 1998, and at any adjournment or postponement thereof, upon the following
matters as specified:
1. Election of Class II Directors
__ FOR all nominees listed below (except as marked to the __ WITHHOLD AUTHORITY to vote for all nominees
contrary below) listed below
Jackie M. Ward Wayne Shortridge William E. Fruhan
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, write that
nominee's name in the space provided immediately below.)
- ------------------------------------------------------------------------------------------------------------------------------------
2. Approval of Amendment of the Company's 1994 Stock Option Incentive Plan (the "Plan") to increase the number of shares of Common
Stock (par value $0.10) that may be issued pursuant to the Plan by 2,000,000 shares to an aggregate of 4,600,000 shares.
FOR AGAINST ABSTAIN
3. Ratification of selection of Ernst & Young LLP as the Company's auditors for the fiscal year ending June 30, 1999.
FOR AGAINST ABSTAIN
4. In their discretion, the Proxies are authorized to vote on such other business as may properly come before the meeting or any
adjournment or postponement thereof.
This Proxy may be revoked at any time prior to the voting thereof.
(PLEASE SPECIFY YOUR CHOICE ON EACH PROPOSAL, AND SIGN AND DATE THIS CARD ON THE REVERSE SIDE AND RETURN THIS CARD IN THE
ENCLOSED ENVELOPE)
<PAGE>
Dated: , 1998
Signature
1. Election of Class II Directors
__ FOR all nominees listed below (except as marked to the __ WITHHOLD AUTHORITY to vote for all nominees
contrary below) listed below
Jackie M. Ward Wayne Shortridge William E. Fruhan
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, write that
nominee's name in the space provided immediately below.)
Name of nominee:
2. Approval of Amendment of the Company's 1994 Stock Option Incentive Plan (the "Plan") to increase the number of shares of common
stock (par value $0.10) that may be issued pursuant to the Plan by 2,000,000 shares to an aggregate of 4,600,000 shares.
FOR AGAINST ABSTAIN
3. Ratification of selection of Ernst & Young LLP as the Company's auditors for the fiscal year ending June 30, 1999.
FOR AGAINST ABSTAIN
4. In their discretion, the Proxies are authorized to vote on such other business as may properly come before the meeting or any
adjournment or postponement thereof.
This Proxy may be revoked at any time prior to the voting thereof.
PLEASE DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENVELOPE ENCLOSED
ALLOCATED SHARES VOTING INSTRUCTIONS TO ADMINISTRATOR
FOR THE OCTOBER 23, 1998 ANNUAL MEETING OF SHAREHOLDERS OF SCI SYSTEMS, INC.
THE ADMINISTRATOR SOLICITS THESE VOTING INSTRUCTIONS FROM PLAN PARTICIPANTS IN THE SCI STOCK PURCHASE PLAN
The undersigned Participant in the SCI Systems, Inc. Stock Purchase Plan (the "Plan") hereby instructs Merrill Lynch, Inc., as
Administrator under the Plan ("Administrator"), to vote all shares of Common Stock (par value $0.10) of the Company allocated
to the account of the undersigned under the Plan ("Allocated Shares") in accordance with the instructions on the reverse
hereof, and to represent the undersigned at the Annual Meeting of Shareholders of the Company to be held at The Ritz-Carlton Hotel
(Buckhead), 3434 Peachtree Street, N.E., Atlanta, Georgia 30326 at 10:00 a.m., Eastern Daylight Savings Time, on October 23, 1998,
and at any adjournments or postponements thereof, and to act in its discretion upon such other matters as may properly come before
the Meeting or any adjournments or postponements thereof. The submission of this voting instruction form, if properly executed,
revokes all prior voting instruction forms.
TO ASSURE THAT YOUR VOTING INSTRUCTIONS ARE FOLLOWED, THIS FORM MUST BE PROPERLY COMPLETED, SIGNED AND RECEIVED BACK BY THE TRUSTEE
BY THE CLOSE OF BUSINESS ON OCTOBER 21, 1998. IF YOUR VOTING INSTRUCTIONS ARE NOT RECEIVED IN TIME, OR IF THIS FORM IS SIGNED AND
RECEIVED BY THE TRUSTEE ON TIME BUT YOU DO NOT INDICATE YOUR VOTING PREFERENCES, THE TRUSTEE WILL NOT VOTE THE SHARES ALLOCATED TO
YOUR ACCOUNT. IN ADDITION, YOUR VOTING INSTRUCTIONS WILL NOT BE COUNTED, UNLESS YOU SIGN THIS FORM EXACTLY AS YOUR NAME APPEARS ON
IT.
For your information, the Board of Directors recommends a vote "FOR" Proposals 1, 2, and 3. The Trustee makes no recommendations
with respect to your voting decision.
YOUR ALLOCATED SHARES:
(PLEASE SPECIFY YOUR CHOICE ON EACH PROPOSAL AND SIGN AND DATE THIS CARD ON THE REVERSE SIDE AND RETURN THIS CARD IN THE
ENCLOSED ENVELOPE.)
<PAGE>
Dated: , 1998
Signature
1. Election of Class II Directors
__ FOR all nominees listed below (except as marked to the __ WITHHOLD AUTHORITY to vote for all nominees
contrary below) listed below
Jackie M. Ward Wayne Shortridge William E. Fruhan
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, write that
nominee's name in the space provided immediately below.)
Name of nominee:
2. Approval of Amendment of the Company's 1994 Stock Option Incentive Plan (the "Plan") to increase the number of shares of common
stock (par value $0.10) that may be issued pursuant to the Plan by 2,000,000 shares to an aggregate of 4,600,000 shares.
FOR AGAINST ABSTAIN
3. Ratification of selection of Ernst & Young LLP as the Company's auditors for the fiscal year ending June 30, 1999.
FOR AGAINST ABSTAIN
4. In their discretion, the Trustee is authorized to vote on such other business as may properly come before the meeting or any
adjournment or postponement thereof.
This Proxy may be revoked at any time prior to the voting thereof.
PLEASE DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENVELOPE ENCLOSED
ALLOCATED SHARES VOTING INSTRUCTIONS TO TRUSTEE
FOR THE OCTOBER 23, 1998 ANNUAL MEETING OF SHAREHOLDERS OF SCI SYSTEMS, INC.
THE TRUSTEE SOLICITS THESE VOTING INSTRUCTIONS FROM PLAN PARTICIPANTS IN THE SCI SYSTEMS, INC. 401(k)/ SAVINGS PLAN
The undersigned Participant in the SCI Systems, Inc. 401(k)/ Savings Plan (the "Plan") hereby instructs Fidelity Management Trust
Company, as Trustee under the Plan ("Trustee"), to vote all shares of Common Stock (par value $0.10) of the Company allocated to
the account of the undersigned under the Plan ("Allocated Shares") in accordance with the instructions on the reverse hereof, and to
represent the undersigned at the Annual Meeting of Shareholders of the Company to be held at The Ritz-Carlton Hotel (Buckhead), 3434
Peachtree Street, N.E., Atlanta, Georgia 30326 at 10:00 a.m., Eastern Daylight Savings Time, on October 23, 1998, and at any
adjournments or postponements thereof, and to act in its discretion upon such other matters as may properly come before the Meeting
or any adjournments or postponements thereof. The submission of this voting instruction form, if properly executed, revokes
all prior voting instruction forms.
TO ASSURE THAT YOUR VOTING INSTRUCTIONS ARE FOLLOWED, THIS FORM MUST BE PROPERLY COMPLETED, SIGNED AND RECEIVED BACK BY THE TRUSTEE
BY THE CLOSE OF BUSINESS ON OCTOBER 21, 1998. IF YOUR VOTING INSTRUCTIONS ARE NOT RECEIVED IN TIME, OR IF THIS FORM IS SIGNED AND
RECEIVED BY THE TRUSTEE ON TIME BUT YOU DO NOT INDICATE YOUR VOTING PREFERENCES, THE TRUSTEE WILL NOT VOTE THE SHARES ALLOCATED TO
YOUR ACCOUNT. IN ADDITION, YOUR VOTING INSTRUCTIONS WILL NOT BE COUNTED UNLESS YOU SIGN THIS FORM EXACTLY AS YOUR NAME APPEARS ON
IT.
For your information, the Board of Directors recommends a vote "FOR" Proposals 1, 2, and 3. The Trustee makes no recommendations
with respect to your voting decision.
YOUR ALLOCATED SHARES:
(PLEASE SPECIFY YOUR CHOICE ON EACH PROPOSAL AND SIGN AND DATE THIS CARD ON THE REVERSE SIDE AND RETURN THIS CARD IN THE
ENCLOSED ENVELOPE.)
<PAGE>
Dated: , 1998
Signature
1. Election of Class II Directors
__ FOR all nominees listed below (except as marked to the __ WITHHOLD AUTHORITY to vote for all nominees
contrary below) listed below
Jackie M. Ward Wayne Shortridge William E. Fruhan
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, write that
nominee's name in the space immediately provided below.)
Name of nominee:
2. Approval of Amendment of the Company's 1994 Stock Option Incentive Plan (the "Plan") to increase the number of shares of common
stock (par value $0.10) that may be issued pursuant to the Plan by 2,000,000 shares to an aggregate of 4,600,000 shares.
FOR AGAINST ABSTAIN
3. Ratification of selection of Ernst & Young LLP as the Company's auditors for the fiscal year ending June 30, 1999.
FOR AGAINST ABSTAIN
4. In their discretion, the Proxies are authorized to vote on such other business as may properly come before the meeting or any
adjournment or postponement thereof.
This Proxy may be revoked at any time prior to the voting thereof.
PLEASE DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENVELOPE ENCLOSED
ALLOCATED SHARES VOTING INSTRUCTIONS TO TRUSTEE
FOR THE OCTOBER 23, 1998 ANNUAL MEETING OF SHAREHOLDERS OF SCI SYSTEMS, INC.
THE TRUSTEE SOLICITS THESE VOTING INSTRUCTIONS FROM PLAN PARTICIPANTS IN THE SCI SYSTEMS, INC. DIRECTORS' DEFERRED COMPENSATION PLAN
The undersigned Participant in the SCI Systems, Inc. Directors' Deferred Compensation Plan (the "Plan") hereby instructs
Merrill Lynch Trust Company (Florida) as Trustee under the Plan ("Trustee"), to vote all shares of Common Stock (par value $0.10)
of the Company allocated to the account of the undersigned under the Plan ("Allocated Shares") in accordance with the
instructions on the reverse hereof, and to represent the undersigned at the Annual Meeting of Shareholders of the Company to
be held at The Ritz-Carlton Hotel (Buckhead), 3434 Peachtree Street, N.E., Atlanta, Georgia 30326 at 10:00 a.m., Eastern Daylight
Savings Time, on October 23, 1998, and at any adjournments or postponements thereof, and to act in its discretion upon such
other matters as may properly come before the Meeting or any adjournments or postponements thereof. The submission of this voting
instruction form, if properly executed, revokes all prior voting instruction forms.
TO ASSURE THAT YOUR VOTING INSTRUCTIONS ARE FOLLOWED, THIS FORM MUST BE PROPERLY COMPLETED, SIGNED AND RECEIVED BACK BY THE TRUSTEE
BY THE CLOSE OF BUSINESS ON OCTOBER 21, 1998. IF YOUR VOTING INSTRUCTIONS ARE NOT RECEIVED IN TIME, OR IF THIS FORM IS SIGNED AND
RECEIVED BY THE TRUSTEE ON TIME BUT YOU DO NOT INDICATE YOUR VOTING PREFERENCES, THE TRUSTEE WILL NOT VOTE THE SHARES ALLOCATED TO
YOUR ACCOUNT. IN ADDITION, YOUR VOTING INSTRUCTIONS WILL NOT BE COUNTED UNLESS YOU SIGN THIS FORM EXACTLY AS YOUR NAME APPEARS ON
IT.
For your information, the Board of Directors recommends a vote "FOR" Proposals 1, 2, and 3. The Trustee makes no recommendations
with respect to your voting decision.
YOUR ALLOCATED SHARES:
(PLEASE SPECIFY YOUR CHOICE ON EACH PROPOSAL AND SIGN AND DATE THIS CARD ON THE REVERSE SIDE AND RETURN THIS CARD IN THE
ENCLOSED ENVELOPE.)
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