SCI SYSTEMS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 27, 2000
To the Shareholders of SCI Systems, Inc.:
Please take notice that the fiscal year 2000 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 27, 2000, at The
Ritz-Carlton Hotel (Buckhead), 3434 Peachtree Street, N.E., Atlanta, Georgia
30326 (the "Meeting"), for the following purposes:
(1) To elect two Class I Directors to serve for a term of three
years;
(2) To increase the authorized shares of the Company to 500,000,000;
(3) To approve the Company's 2000 Stock Purchase Plan;
(4) To approve the Company's 2000 Stock Incentive Plan;
(5) To approve the Company's Senior Officer 2000 Incentive
Compensation Plan;
(6) To ratify the selection of Ernst & Young LLP as the Company's
independent auditor for fiscal year 2001; and
(7) To transact such other business as may properly come before
the Meeting and any adjournment or postponement of the
Meeting.
The Board of Directors has fixed the close of business on September 15,
2000 as the Record Date to determine shareholders entitled to vote at the
Meeting and any adjournment or postponement of the Meeting.
You are cordially invited to attend the Meeting. If you cannot attend
in person, it is important that your shares be represented and voted at the
Meeting. Accordingly, you are requested to please vote your shares (i) by
dating, signing, and mailing the enclosed proxy, (ii) by voting over the
Internet using the instructions on the enclosed proxy card, or (iii) by voting
by calling the 800 number listed on the proxy card.
Thank you.
By order of the Board of Directors,
[GRAPHIC OMITTED][GRAPHIC OMITTED]
Michael M. Sullivan
Secretary
Huntsville, Alabama
September 25, 2000
<PAGE>
SCI SYSTEMS, INC.
c/o SCI Systems (Alabama), Inc.
P.O. Box 1000
Huntsville, Alabama 35807
PROXY STATEMENT
SECTION 1 - INTRODUCTION
In this Proxy Statement the terms "we", "us", "our" and the "Company"
refer to SCI Systems, Inc., a Delaware corporation.
This Proxy Statement is furnished to holders of our Common Stock (par
value $0.10) (the "Common Stock") in connection with the solicitation of proxies
from them by our Board of Directors (the "Board") to vote their shares at the
Company's fiscal year 2000 Annual Meeting of Shareholders (the "Meeting") and at
any adjournments or postponements of the Meeting. This Proxy Statement contains
important information which U.S. Securities and Exchange Commission ("SEC")
regulations require the Company provide its Shareholders regarding the Company
and the Meeting.
The Notice of the Meeting, this Proxy Statement, and the proxy card
were first mailed to shareholders on or about September 25, 2000.
THE MEETING
The Meeting will be held at 10:00 A.M., Eastern Daylight Savings Time,
on Friday, October 27, 2000, at The Ritz-Carlton Hotel (Buckhead), 3434
Peachtree Street, N.E., Atlanta, Georgia 30326.
RECORD DATE, SHARES OUTSTANDING, AND SHAREHOLDERS ENTITLED TO VOTE
Only holders of record of our Common Stock at the close of business on
September 15, 2000 (called the Record Date) are entitled to notice of and vote
at the Meeting. As of the Record Date, there were 146,990,574 shares of Common
Stock outstanding.
VOTING AT THE MEETING
Each share of Common Stock entitles its holder to one vote at the
Meeting. As a Shareholder you may attend the Meeting and vote in person. If you
cannot attend the Meeting, or can attend but prefer to vote in advance of the
Meeting, you may do so by sending a properly executed form of proxy to the
Company. In that regard, enclosed is a proxy card, which can be used by
Shareholders to vote their shares at the Meeting. The proxy to vote your shares
at the Meeting (as specified on the enclosed proxy card) is solicited on behalf
of our Board.
Shareholders should please read this Proxy Statement very carefully and
then complete, sign, and mail the proxy card in the enclosed return postage
pre-paid envelope. If the card or form of proxy is properly signed, returned in
time, and not revoked by the Shareholder, the Shareholder's shares will be voted
in accordance with the Shareholder's requests. If the Shareholder returns the
card but does not make any requests, his or her shares will be voted (i) FOR
election of the Class I director nominees named in this Proxy Statement, (ii)
FOR increase in the authorized shares of the Company, (iii) FOR approval of the
Company's 2000 Share Incentive Plan, (iv) FOR approval of the Company's 2000
Stock Purchase Plan, (v) FOR approval of the Company's Senior Officer 2000
Incentive Compensation Plan, and (vi) FOR ratification of selection of Ernst &
Young LLP as the Company's independent auditor for the fiscal year July 1, 2000
to June 30, 2001, as described in this Proxy Statement. Our Board does not
presently intend to bring any business before the Meeting other than the
specific proposals referred to in the Proxy Statement and specified in the
Notice of Annual Meeting. Moreover, so far as is known to our Board, no other
matters are to be brought before the Shareholders at the Meeting. If any other
business does come before the Shareholders at the Meeting, however, it is the
intention of the persons designated as Shareholder proxies to vote on them in
accordance with their best judgment.
Please understand that Shareholders who execute proxies may revoke them
at any time before their shares are voted at the Meeting. Filing with the
Secretary of the Company either a document revoking the proxy, or a properly
executed proxy bearing a later date may revoke proxies. Proxies also may be
revoked by any Shareholder present at the Meeting who expresses a desire to vote
his or her shares in person.
QUORUM; BROKER NON-VOTES
A majority of Shareholders entitled to vote must be present at the
Meeting in person, or represented by proxy, in order to have a quorum and to act
upon the proposed business. If there is not a quorum of Shareholders at the
Meeting, the Company will have to adjourn the Meeting until a quorum can be
obtained. This will result in additional expenses to the Company, so please vote
your shares.
Abstentions and "broker non-votes", although counted for purposes of
determining whether there is a quorum at the Meeting, will not be voted. A
broker non-vote occurs when a nominee, such as a broker or bank, holding shares
for a beneficial owner votes on one proposal, but does not vote on another
proposal because the nominee does not have discretionary voting power and has
not received instructions from the beneficial owner of those shares. Broker
non-votes will have no effect on any other matter presented.
VOTE REQUIRED
When a quorum is present at the Meeting, a FOR vote of a majority of
the number of shares of stock present or represented by proxy and entitled to
vote will decide any question or proposal brought before the Meeting, unless a
different vote is required. In that regard, directors will be elected by a FOR
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
be considered AGAINST votes with respect to any matter presented at the Meeting,
other than election of directors. If authority to vote for one or more of the
director nominees is withheld, 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.
Section 2 - INFORMATION REGARDING THE COMPANY'S VOTING SECURITIES
At the close of business on September 15, 2000, the Record Date, there
were 146,990,574 shares of Common Stock of the Company outstanding.
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, 1999. Please note that
the ownership of the directors and executive officers of the Company are
included elsewhere in this Proxy Statement.
<TABLE>
<S> <C> <C>
Name and Address Amount Beneficially Percent of
of Beneficial Owner Owned Class(1)
---------------------------------------------------------------------------------------------------------------------
FMR Corporation 10,853,570 (2) 14.99% (2)
82 Devonshire Street, Boston, MA 02109-3614
T. Rowe Price Associates, including 6,821,190 (3) 4.70% (3)
T. Rowe Price Science and Technology Fund, Inc.
100 East Pratt Street, Baltimore, MD 21202
Capital Research and Management Company 5,074,430 (4) 7.0% (4)
333 South Hope Street
Los Angeles, CA 90071
</TABLE>
[FN]
Notes:
(1) Stated as a percentage of shares outstanding on December 31, 1999,
except T. Rowe Price which is as of March 31, 2000.
(2) According to SEC Schedule 13G dated February 14, 2000.
(3) According to Schedule 13G dated April 10, 2000.
(4) According to Schedule 13G dated February 10, 2000.
</FN>
OWNERSHIP OF EQUITY SECURITIES IN THE COMPANY
BY DIRECTORS AND EXECUTIVE OFFICERS
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, 2000.
<TABLE>
<S> <C> <C>
Aggregate Number of Percentage of
Shares Beneficially Shares
Name Owned
Outstanding
Olin B. King 3,396,746 2.3%
A. Eugene Sapp, Jr. 1,070,464 (1) *
Robert C. Bradshaw 80,000 (2) *
Peter M. Scheffler 176,000 (3) *
James E. Moylan 46,000 (4) *
Michael H. Missios 130,400 (3) *
Howard H. Callaway 78,287 (5) *
G. Robert Tod 22,656 (6) *
William E. Fruhan 23,015 (7) *
Jackie M. Ward 21,088 (8) *
Wayne Shortridge 21,957 (9) *
All Directors and Executive
Officers as a group (20 persons) 6,280,485 (10) 4.3%
* Indicates less than 1% of issued and outstanding shares of Common Stock.
</TABLE>
[FN]
(1) Includes 828,000 shares not presently owned by Mr. Sapp but which are
subject to stock options exercisable within 60 days after September 15,
2000, and 166,464 owned of record by the Eugene and Patricia Sapp
Charitable Remainder Unitrust.
(2) Represents shares not presently owned by Mr. Bradshaw but which are
subject to stock options exercisable within 60 days after September 15,
2000.
(3) Includes 164,000 and 130,400 shares not presently owned by Messrs.
Scheffler and Missios, respectively, but which are subject to stock
options exercisable within 60 days after September 15, 2000.
(4) Includes 40,000 shares not presently owned by Mr. Moylan but which are
subject to stock options exercisable within 60 days after September 15,
2000.
(5) Includes 4,000 shares owned by Mr. Callaway's spouse, 13,600 shares
owned of record by the Howard H. Callaway Foundation, Inc., 3,880
shares not presently owned by Mr. Callaway but which are subject to
stock options exercisable within 60 days after September 15, 2000, and
12,639 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.
(6) Includes 14,616 shares owned by Mr. Tod through the Company's
Directors' Deferred Compensation Plan.
(7) Includes 15,015 shares owned by Mr. Fruhan through the Company's
Directors' Deferred Compensation Plan.
(8) Includes 14,918 shares owned by Ms. Ward through the Company's
Directors' Deferred Compensation Plan.
(9) Includes 15,957 shares owned by Mr. Shortridge through the Company's
Directors' Deferred Compensation Plan.
(10) Includes 1,246,280 shares not presently owned by directors or executive
officers but which are subject to stock options exercisable within 60
days of September 15, 2000, and 73,145 shares owned by directors
through the Directors' Deferred Compensation Plan.
</FN>
SECTION 3 - SHAREHOLDER PROPOSALS
PROPOSAL 1: ELECTION OF DIRECTORS
INFORMATION CONCERNING NOMINEES FOR BOARD OF DIRECTORS
The Company's Second Restated Certificate of Incorporation
("Certificate of Incorporation") states that the Board will be divided into
three classes, with each class consisting as nearly as possible of one third of
the total number of directors fixed by the Board. Board members serve three-year
terms and their terms are staggered to provide for election of one director
class each year. Class I directors are to be elected at the Meeting.
The Company's Bylaws state that the number of directors will be no 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. For the Board year ending at
the Meeting, the Board had set the number of members at eight, with seven
regular members elected by Shareholders and one non-voting director emeritus
elected by the Board. During the year the classes consisted of two directors in
Class I, three in Class II, and two in Class III. As a result of Mr. Callaway's
retirement from the Board as a Class II director, it is necessary to rebalance
the classes in order to satisfy the Certificate of Incorporation's requirement
for balanced classes. Accordingly, the Board has reduced the number of members
elected by the Shareholders to six and rebalanced the classes with two directors
in each class. To accomplish this, Mr. Shortridge has moved from Class II (which
had three directors) to Class I and will stand for re-election at the Meeting as
a Class I member. Mr. Olin B. King, Company founder and former Chairman and CEO,
will also stand for re-election.
Details regarding both director nominees are set forth immediately
below.
INFORMATION REGARDING DIRECTOR NOMINEES AND CONTINUING DIRECTORS
The following information was supplied the Company by director nominees
and continuing directors. The table below sets forth for each director nominee
and continuing director their name, age, positions with the Company (if any),
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 I Director Nominees
(Term expiring in 2003)
-------------------------
Olin B. King (1) Formerly, Chairman of the Board and Chief Executive 1961
(66) Officer, SCI Systems, Inc., July 1999 to prior to 1995;
Chairman of the Board, July 1999 to June
2000; Director and Chairman Emeritus, since
July 2000.
Wayne Shortridge (1) (4) (5) Partner, Paul, Hastings, Janofsky & Walker LLP, Atlanta, GA, 1992
(62) 1994 to present; Lead Director.
Class III Directors
(Term expiring in 2002)
-------------------------
G. Robert Tod (2) (3) Formerly, Vice Chairman, CML Group, Inc., Acton, MA, 1981
(61) a specialty marketing company, 1969 to 1998; retired.
A. Eugene Sapp, Jr. (1) (4) Chairman of the Board, President and Chief Executive Officer,
(64) SCI Systems, Inc., since July 2000; President and Chief Executive
Officer, from prior to 1995 to June 2000. 1981
Class II Directors
(Term expiring in 2001)
-------------------------
Jackie M. Ward (1) (2) Chief Executive Officer, Computer Generation Incorporated,
(62) Atlanta, GA, a provider of turn-key telecommunication systems,
products and data processing services to U.S. and international
markets, 1968 to present. 1992
William E. Fruhan (3) (4) The George E. Bates Professorship, Harvard University Graduate
(57) School of Business, Boston, MA, 1979 to present. 1992
</TABLE>
[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
(5) Mr. Shortridge was elected Lead Director at the Board's January 24,
2000 meeting.
Certain of the continuing directors and director nominees also serve as
directors of other publicly held companies as follows: Mr. King, Regions
Financial Corporation; Mr. Sapp, Artesyn Technologies; Mr. Tod, PerkinElmer; and
Ms. Ward, TRIGON Blue Cross Blue Shield, Bank of America, Equifax, Inc., and
Matria Healthcare, Inc.
</FN>
INFORMATION REGARDING BOARD 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 2000 the Board met nine times; the Executive
Committee eleven times; the Investment Committee five times; and the Audit and
Compensation Committees four times each. All Board members attended 75% or more
of Board and Committee meetings during the year.
The Audit Committee consists entirely of outside directors. The
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.
The Compensation Committee also consists entirely of outside directors.
The 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 full Board. However, the Committee does not have 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. The Committee is also responsible for directing the investment funds of
the Company's Supplemental Retirement Plan.
During fiscal 2000 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, as Chairman of the Executive Committee,
was paid the greater of $1,000 or $300 per hour for each Executive Committee
Meeting attended. Effective October 22, 1999, non-employee outside directors
were granted 2,500 Stock Appreciation Rights at fair market value of $44.375
redeemable on October 27, 2000. In addition, to compensate him for carrying out
his duties as Lead Director, on February 8, 2000 Mr. Shortridge was granted
2,500 additional Stock Appreciation Rights at fair market value of $35.562
redeemable on October 27, 2000. Mr. King retired as Chairman of the Board
effective June 30, 2000. As part of his retirement compensation, Mr. King's
unexercised and unvested 268,000 stock options were vested by the Board as of
his retirement date. Mr. King also earned a bonus of $603,040 for the period
July 1-December 31, 1999 and was granted a $400,000 retirement bonus for his
many years of loyal service to Shareholders and the Company. During fiscal 2000,
Mr. King also received compensation of $613,077 and the Company contributed
$22,071 matching funds to Mr. King's Company 401(k) and Deferred Compensation
Plan accounts.
In 1995 the Company adopted a Directors' Deferred Compensation Plan
(the "Directors' Deferred Compensation Plan") for its outside Directors. This
Plan allows the outside Directors to elect, in advance of the year, to defer
receipt of 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 to be earned during an entire year, the
Director is also 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". The trust 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 under 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"). For the Company's fiscal 2000, all outside Directors
elected to defer receipt of 100% of their Board fees under the Directors'
Deferred Compensation Plan. No director exercised stock options during the year.
The Board respectfully requests Shareholders approve its Class I Board
nominees and vote FOR this Proposal 1. Unless otherwise specified by the
Shareholder, the Company intends to vote all proxies FOR re-election of Mr. King
and Mr. Shortridge to serve as Class I directors of the Company for a term of
three years and until their respective successors are elected and qualified. For
your information, the proxies cannot be voted for a greater number of persons
than the number of director nominees named in this Proxy Statement. In the event
any of the Board's nominees refuses or is unable to serve as a director (which
is not now anticipated), the persons acting as proxies for Shareholders at the
Meeting reserve full discretion to vote for such other persons as may be
nominated.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RE-ELECTION
OF THE DIRECTOR NOMINEES NAMED ABOVE.
PROPOSAL 2: AMENDMENT OF THE COMPANY'S SECOND RESTATED CERTIFICATE OF
INCORPORATION
Background
The Company's Second Restated Certificate of Incorporation
("Certificate of Incorporation") presently provides that the Company is
authorized to issue 200,000,000 shares of Common Stock. The Board of Directors
recommends and proposes that the authorized Common Stock of the Company be
increased from 200,000,000 to 500,000,000 shares and that the Certificate of
Incorporation be amended to reflect this. The additional shares of Common Stock
for which authorization is sought would be a part of the Company's existing
class of Common Stock and, if and when issued, would have the same rights and
privileges as the shares of Common Stock now outstanding.
As of September 15, 2000, of the 200,000,000 authorized shares of
Common Stock there were 146,990,574 shares of Common Stock issued and
outstanding. Of these shares, 884,045 were held by the Company as treasury
stock. In addition, an aggregate of 1,646,200 additional shares are subject to
issuance under the Company's Stock option plans, and a further 10,225,858 shares
are reserved for issuance to holders of the Company's 3% Convertible
Subordinated Notes due 2007. As of September 15, 2000, only 41,137,368 shares of
Common Stock are available for issue.
Purpose of the Increase
The Board recommends the increase in authorized Common Stock in order
to have additional shares available for possible issuance in connection with
such general corporate purposes as stock splits and stock dividends, issuance of
shares for cash to raise equity capital, conversions of additional convertible
securities, or in connection with business acquisitions, stock option plans, or
other employee benefit plans which may be adopted in the future. The Board
believes that additional authorized Common Stock will give the Company greater
flexibility and may allow shares of Common Stock to be issued without the
expense and delay of a Shareholders' meeting to authorize additional shares if
and when the need arises. If the proposed amendment is adopted, the Company
would be permitted to issue the authorized shares without further shareholder
approval, except to the extent otherwise required (i) by law, (ii) by a
securities exchange or association on which the Common Stock is listed or
adopted at the time, or (iii) by the Second Restated Certificate of
Incorporation. For your information, Shareholders do not have pre-emptive rights
to subscribe for or purchase additional shares of the Company's Common Stock.
The Board has no current plans, agreements or arrangement for the
issuance of additional Common Stock, other than the purchase of shares pursuant
to its employee and director stock option plans and conversion of Notes into
Common Stock in accordance with the Company's 3% Convertible Subordinated Notes
due 2007. For the sake of clarity, you should be aware, however, that the
additional authorized shares would be available for issuance (subject to further
shareholder approval only as noted above) at such times and for such proper
corporate purposes as the Board may approve, including possible future financing
and acquisition transactions. While the Board has no present plans in this
regard, depending upon their nature and terms, such transactions could also
enable the Board to make more difficult, or discourage, an attempt to obtain
control of the Company. For example, the issuance of shares of Common Stock in a
public or private sale, merger, or similar transaction would increase the number
of the Company's outstanding shares, thereby diluting the interest of a party
seeking to take over the Company. Furthermore, many companies issue warrants or
other right to acquire additional shares to holders of common stock to
discourage or defeat unsolicited stock accumulation programs and acquisition
proposals. If Proposal 2 were adopted, more Common Stock of the Company would be
available for such purposes than is currently available. Please understand that
Management currently knows of no intent or plan on the part of any persons or
entity to gain control of the Company, and Proposal 2 is not being recommended
in response to any such intent or plan.
Amendment to the Second Restated Certificate of Incorporation
If Proposal 2 is adopted, the Second Restated Certificate of
Incorporation of SCI Systems, Inc., as in force and effect on the date of this
Proxy Statement, will be amended by deleting Section (a) of Article FOURTH in
its entirety and by substituting the following in its place:
"FOURTH. (a) The aggregate number of shares which the
corporation shall have the authority to issue is Five Hundred Million
(500,000,000) shares of common stock with par value of ten cents ($0.10) per
share (hereinafter called the "Common Stock") and five hundred thousand
(500,000) shares of Preferred stock without par value (hereinafter called the
"Preferred Stock"). At every meeting of the stockholders, every holder of stock
of the corporation, be it Common Stock or Preferred Stock, shall be entitled to
one vote, in person or by proxy, for each share of Common Stock and the
Preferred Stock shall vote together as one class unless otherwise expressly
required by law."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
AMEND ARTICLE FOURTH, SECTION (A) OF THE SECOND RESTATED CERTIFICATE OF
INCORPORATION.
PROPOSAL 3: APPROVAL OF THE SCI SYSTEMS 2000 EMPLOYEE STOCK PURCHASE PLAN
Overview and Purpose
The Company favors employee ownership of Company stock. It presently
has an Employee Stock Purchase Plan for its U.S. employees according to which
employees may purchase Company Common Stock at fair market value through a
payroll deduction scheme. The existing plan is limited to U.S. employees and
relatively few participate in the plan because it does not have features which
encourage participation. Management believes that a new plan which is available
to all employees worldwide and containing more attractive features will
significantly broaden employee participation, and has obtained Board approval
for such a plan.
The Board has authorized the Company to adopt a new SCI Systems 2000
Employee Stock Purchase Plan ("Stock Purchase Plan" or the "Plan") and to issue
up to 500,000 shares of Company Common Stock under the Plan. The purpose of the
Plan is to encourage employees to purchase the Company's Common Stock. The
Company believes this will incentivize employees to focus on long term
Shareholder value. Under the Stock Purchase Plan, all employees of the Company
worldwide would be able to purchase Company Common Stock through a payroll
deduction scheme at 85% of current market value. The Company intends to qualify
the Stock Purchase Plan as an "employee stock purchase plan" under Section 423
of the U.S. Internal Revenue Code.
The following is a summary of the significant terms of the Stock
Purchase Plan. For a more detailed understanding of the Plan, please read the
Plan documents, copies of which are available from the Company upon request by
either emailing the Company at its website "[email protected]", or
calling 1-800-283-3290.
Eligibility
All full time employees of the Company and its worldwide subsidiaries are
eligible to participate in the Stock Purchase Plan. Part time employees (those
employed by the Company for 20 hours per week or less, or for five months of the
year or less) or who own more than 5% of the Company's Common Stock are not
eligible. As of July 2000, the Company had approximately 32,270 employees
eligible to participate in the Stock Purchase Plan.
Available Shares
The Company has reserved 500,000 shares of Common Stock for issuance to
its worldwide employees under the Stock Purchase Plan.
Terms of the Stock Purchase Plan
Eligible employees who elect to participate in the Stock Purchase Plan
will authorize payroll deductions to be made during three-month offering
periods. The amount of payroll deductions may not exceed 10% of the employee's
base pay and cannot be less than 1% of the employee's base pay for any payroll
period. At the end of each three-month offering period, the accumulated payroll
deductions for all employees will be used to purchase stock at a price equal to
85% of the lesser of (i) the fair market value of the Common Stock on the first
business day of the offering period or (ii) the fair market value on the last
business day of the offering period. This is a further incentive for employees
to participate in the Stock Purchase Plan and is a feature of many similar stock
purchase plans.
No employee is permitted to purchase stock under the Stock Purchase
Plan (or any other Company benefit plan which qualifies under Section 423 of the
U.S. Internal Revenue Code) in excess of $25,000 of the fair market value of
stock during each calendar year.
Certain Reorganizations
The Stock Purchase Plan provides for an adjustment by the Compensation
Committee of the Board (the "Committee") of the number and kind of shares
available for purchase, the number and kind of shares which may be purchased
under the Stock Purchase Plan and for adjustment of the purchase price to
reflect a change in the Company's capital structure due to recapitalization,
reclassification, stock split, combination of shares or distribution of stock
dividends. The Committee may, in its discretion, substitute, terminate, adjust
or accelerate the purchase rights under the Stock Purchase Plan in the case of a
reorganization of the Company or a tender offer for shares of the Company's
common stock.
Amendment or Termination
The Board of Directors may terminate or amend the Stock Purchase Plan
without Shareholder approval. However, the Board may condition any termination
or amendment on Shareholder approval if it determines that Shareholder approval
is preferred or necessary under tax, securities or other laws. The Board's
action may not adversely affect the rights of an employee with respect to Common
Stock previously acquired under the Stock Purchase Plan.
Federal Tax Consequences
If a participant does not sell or otherwise dispose of shares of common
stock purchased under the Plan until the end of the period that lasts two years
after the date on which the options were granted (for tax purposes, the right to
buy stock under the Stock Purchase Plan is considered an option) and one year
from the date the shares are purchased, the participant will not realize taxable
income upon the granting of the option to purchase shares or upon the actual
purchase of the shares. Upon a disposition after this period, or upon the
participant's death at any time (even if within the period described above)
while owning the shares, the gain or loss on the shares will be treated as
capital gain or loss, provided that the participant will realize ordinary income
equal to the lesser of (i) 15% of the fair market value of the shares on the
date the shares were purchased, or (ii) the excess of the fair market value of
the shares at the time the shares were sold (or at the time of the participant's
death) over the purchase price of the shares. If the participant holds the
shares for the required period, the Company will not be entitled to a deduction
for federal income tax purposes with respect to the purchase of the shares or
the subsequent disposition of the shares.
If a participant sells or otherwise disposes of shares prior to the
expiration of the period described above, the participant will realize ordinary
income in the year of the sale in an amount equal to the excess of the fair
market value at the time the shares were purchased over the purchase price. This
amount generally will be deductible by the Company in the year in which the
disposition occurs. The excess, if any, of the amount realized by the
participant upon the sale of the shares over the fair market value of the shares
on the date of purchase will be treated as a capital gain. If the amount
realized is less than the fair market value of the shares on the date of
purchase, the difference will be treated as a capital loss.
Benefits to Named Executive Officers and Others
It is not possible to determine the number of shares or the value of
shares that may be purchased by any person under the Stock Purchase Plan because
the decision to participate in the plan is solely the employee's, and the prices
at which common stock will be purchased will be determined in the future.
Shareholder Approval
The Board of Directors seeks Shareholder approval of the Stock Purchase
Plan because approval is required under the Internal Revenue Code as a condition
to favorable tax treatment for options granted under the Stock Purchase Plan.
Approval of the Plan requires the affirmative vote of the holders of at least a
majority of the outstanding shares of Common Stock present, or represented and
entitled to vote at the Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE PROPOSAL TO APPROVE THE SCI SYSTEMS 2000 EMPLOYEE STOCK PURCHASE PLAN.
PROPOSAL 4: ADOPTION OF THE SCI SYSTEMS 2000 STOCK INCENTIVE PLAN
Overview and Purpose
The Company presently has its 1994 Employee Stock Option Incentive
Plan. However, only 1,646,200 shares of Common Stock were available for grant
under that Plan as of September 18, 2000. Moreover, under the Plan option awards
may only be granted to Company officers and directors. The Company believes that
to enhance its overall competitiveness in the market place its stock option plan
needs to be broader based and available to middle managers and key employees,
and provide for additional forms of employee incentives.
On July 19, 2000, the Board approved Management's request to adopt the
SCI Systems 2000 Stock Incentive Plan (the "Plan"). The Plan provides the
Company with much needed flexibility to grant several forms of equity-based
compensation to additional levels of employees and to directors, officers, and
consultants of the Company. The Plan reserves 7,500,000 additional shares of
Common Stock for issuance to Plan participants. These 7,500,000 new shares would
be added to the shares previously authorized for issuance under the 1994 Stock
Option Incentive Plan but unissued on the date the new 2000 Stock Option Plan
comes into effect. There were 1,646,200 authorized but unissued shares under the
1994 Plan on September 18, 2000.
The Plan (i) prohibits repricing of stock incentives, (ii) limits
incentive awards granted to an individual in any 12 month period to 500,000
shares of Common Stock, (iii) limits stock awards granted during the life of the
Plan to 750,000 shares of Common Stock, and (iv) prohibits awards of stock
incentives below fair market value.
The purpose of the Plan is to: (i) incentivize individual efforts
toward the Company's long-term growth and profitability; (ii) encourage stock
ownership by employees, officers, directors and consultants by allowing them to
obtain shares of Common Stock, or to receive compensation based on appreciation
in the value of the Common Stock; and (iii) provide a means of obtaining,
rewarding, and retaining key personnel. The Company has reserved 7,500,000
shares of Common Stock for issuance under the Plan, increased by the number of
shares of Common Stock which are subject to the Company's 1994 Stock Option
Incentive Plan for which grants are not outstanding as of the adoption of the
Plan. Of the total number of shares reserved, however, only 750,000 may be
issued for stock awards (including restricted stock grants) under the Plan. The
Company has not yet made any awards under the Plan pending Shareholder approval.
The Company intends to discontinue grants under the 1994 Plan upon approval of
the 2000 Stock Incentive Plan. We will reserve for issuance under the 2000 Stock
Incentive Plan any shares that were authorized under the 1994 Plan but are
unissued on the date the 2000 Stock Incentive Plan is approved and goes into
effect.
Summary of the Plan
The following is a summary description of the key features of the Plan.
For a more detailed understanding of the Plan, please read the Plan documents,
copies of which are available from the Company upon request by emailing the
Company's website "[email protected]", or calling 1-800-283-3290.
Terms of the Plan. Benefits bestowed under the Plan are referred to as
"awards". Awards are typically "granted" under the Plan to Plan participants
(employees, officers, directors, and consultants). The nature, terms, and
conditions of all awards under the Plan will be determined by the Compensation
Committee of the Board of Directors (the "Committee"). All members of the
Committee are non-employee outside directors selected by the Board at large. No
member of the Committee is also an officer or employee of the Company. The
current members of the Committee are Messrs. Callaway and Tod and Ms. Ward.
The Plan allows the Committee to make awards of Common Stock, incentive
or nonqualified stock options, stock appreciation rights ("SARs"), dividend
equivalent rights, performance unit awards, and phantom shares (these are
collectively referred to as "Stock Incentives") under the following terms and
conditions:
Terms and Conditions of Stock Incentives. The Committee will determine
the number of shares of Common Stock granted as Stock Incentives. Each Stock
Incentive will be evidenced by a either a Stock Incentive Agreement (for a grant
to an individual) or a Stock Incentive Program (for grants to several
individuals). In each case the Agreement or Program will contain the terms,
conditions, and restrictions for the Stock Incentives as the Committee believes
is appropriate. Although the Committee has the authority to do otherwise, Stock
Incentives are generally not transferable or assignable to anyone except through
an individual's will or by the laws governing the passing of assets to
descendants. Stock Incentives may only be "exercised" by the individual
recipient during his or her lifetime, or by the recipient's legal representative
in the event of the recipient's death or disability.
The maximum number of shares of Common Stock granted to an individual
as Stock Incentives during any one-year period may not exceed 500,000. An annual
limit is necessary to satisfy the requirements of Section 162(m) of the Internal
Revenue Code of 1986, as it has been amended (the "Code"), and the Code's
regulations governing performance-based compensation. In addition, at the
discretion of the Committee, the Committee may make payment or vesting of Stock
Incentives conditional upon the achievement by the individual of what is
referred to as Performance Goals. Performance Goals include, but are not
necessarily limited to the following: increases in the fair market value of the
Company's Common Stock, increases in earnings per share, increased return to
stockholders (including dividends), increased return on equity and earnings,
increases in revenues, and on such other items as earnings before interest,
taxes and depreciation, operating income, net income, return on assets, economic
value added, cash flows, market share, cost reduction goals, or any combination
thereof. The Committee may establish Performance Goals on a Company-wide basis
or tie them to performance of a division, an affiliate of the Company, a
department or a Company function. In its discretion, the Committee can modify a
Performance Goal if it determines that the Performance Goal is no longer
suitable, unless the modification would affect the status of the Stock Incentive
as performance based compensation under Section 162(m) of the Code. All
Performance Goals applicable to a specific Stock Incentive will be set forth in
a Stock Incentive Agreement.
Prohibition on Repricing. The Plan prohibits the repricing of stock
options or stock appreciation rights. That is, the Plan does not allow the
Committee to grant new stock options or stock appreciation rights in exchange
for stock options or stock appreciation rights which were previously granted at
a higher exercise price or a higher base amount on which the stock appreciation
right is calculated. The Plan also prohibits the Committee from modifying an
outstanding option or stock appreciation right to lower the exercise price or
base amount, except in connection with certain changes in the Company's
capitalization, as explained below in "Changes in Capitalization".
Stock Awards. Only 750,000 shares of Common Stock under the Plan may be
granted as Stock Awards. The Committee will determine the number of shares of
Common Stock granted under a Stock Award and the restrictions or conditions on
such shares, including Performance Goals (if any). The Committee may also
require a cash payment from the recipient in an amount no greater than the
aggregate Fair Market Value (as that term is defined in the Plan) of the shares
of Common Stock awarded, as determined at the date of the grant.
Stock Options. Stock Options may be either incentive stock options as
described in Section 422 of the Code, or nonqualified stock options. The
exercise price of each option will be determined by the Committee and set forth
in a Stock Incentive Agreement. However, the exercise price of an option may not
be less than the Fair Market Value of the Common Stock on the date the option is
granted (that is, no discounted options), or it can be the Fair Market Value on
the date of the individual's hire except if the individual is the Chief
Executive Officer and the four other highest paid officers in the Company,
referred to as Named Executive Officers. For Named Executive Officers, the
options must be granted at the Fair Market Value on the date the options are
granted to them.
Regarding incentive stock options granted to beneficial owners of over
10% of the Company's outstanding Common Stock ("10% Owners"), the exercise price
may not be less than 110% of the Fair Market Value of the Common Stock on the
date the option is granted. In addition, incentive stock options granted to 10%
Owners will expire five years after the date they are granted. All other
incentive stock options will expire ten years after the date of grant.
The exercise price of each stock option granted may be paid in cash or,
if the Participant's agreement allows it, in shares previously owned by the
Participant, by any combination of shares and cash, or by means of a "cashless
exercise" through a broker. The term or exercise period of a nonqualified stock
option will be set forth in its stock option agreement. The term or exercise
period of incentive stock options, or any portion thereof, will expire no later
than three months after the date the employee terminates his / her employment
with the Company, except that in the case of the stock option recipient's death
or disability, this period will be extended to one year. An incentive or
nonqualified stock option agreement may, however, provide that vesting and the
exercise period will continue after the expiration of the three month period in
the case of termination of employment, or the one year period in the case of
death or disability. If the option is exercised in these extended periods, it
will be considered a nonqualified stock option. The Committee may also condition
the terms of a Stock Option to attainment of Performance Goals.
Stock Appreciation Rights. Stock Appreciation Rights (SARs) entitle the
recipient to receive the excess of: (i) the Fair Market Value of a specified or
determinable number of shares of Common Stock at the time of payment or exercise
over (ii) a specified or determinable price that, in the case of a SAR granted
in connection with an option, may not be less than the exercise price for the
number of shares subject to that option. When a SAR becomes due, the Company
must pay the recipient the increase in value (if any) in cash or shares of
Common Stock (valued at Fair Market Value on the date of payment or exercise) in
accordance with the terms of the individual's Stock Incentive Agreement. If the
Agreement does not specify the form of payment, the Committee will determine the
form. Each SAR will be exercisable, or payable, at time(s), or upon the
occurrence of event(s), in amount(s), and subject to Performance Goals
determined by the Committee and set forth in the applicable Stock Incentive
Agreement. However, the Committee may accelerate the time(s) at which the SAR
may be exercised or paid (in whole or part) at any time prior to the SAR's
termination.
Dividend Equivalent Rights. A dividend equivalent right entitles the
recipient to receive payments from the Company in an amount determined by
reference to cash dividends paid on a specified number of shares of Common
Stock. The Committee may impose such restrictions and conditions, including
Performance Goals, on any dividend equivalent right as it determines. The
Company may pay dividend equivalent rights in cash or shares of Common Stock
(valued at Fair Market Value on the date of payment), with the specific payment
provisions determined by the Committee.
Performance Unit Awards. A performance unit award entitles the
recipient to receive an amount equal to all or a portion of the value of a
specified or determinable number of units (stated in terms of a designated or
determinable dollar amount per unit) granted by the Committee at a specified
future date. When the Committee grants the performance units it will determine
the face value of each unit, the number of units subject to the award, the
performance factors applicable to the payment value of the award (including
Performance Goals), and the period over which the Company's performance will be
measured. The Company may pay the holders of performance unit awards in cash or
shares of Common Stock (valued at Fair Market Value on the date of payment),
with specific payment provisions determined by the Committee.
Phantom Shares. Phantom shares entitle the recipient to receive an
amount equal to all or a portion of the Fair Market Value of a specified number
of shares of Common Stock at the end of a specified period. When the Committee
grants phantom shares it will determine the factors that will govern the amounts
to be paid and any performance criteria that must be satisfied as a condition to
payment, including Performance Goals. The Company may pay the holders of phantom
shares in cash or shares of Common Stock (valued at Fair Market Value on the
date of payment), with specific payment provisions determined by the Committee.
Termination and Amendment of the Plan. The Board of Directors may amend
or terminate the Plan without stockholder approval at any time. However, the
Board may condition any amendment on stockholder approval if stockholder
approval is necessary or advisable with respect to tax, securities or other
applicable laws. No termination or amendment of the Plan may adversely affect
the rights of a holder under the terms of that Stock Incentive Plan without the
consent of the holder.
Changes in Capitalization. The Plan provides for adjustment of (i) the
number of shares of Common Stock reserved and subject to awards issued pursuant
to the Plan, (ii) the maximum number of shares subject to Stock Awards under the
Plan, (iii) the maximum number of shares that can be subject to Stock Incentives
granted to any individual during any year, and (iv) the exercise price of
options granted under the Plan, in the event of (x) any increase or decrease in
the number of issued shares of Common Stock resulting from a subdivision or
combination of shares or (y) the payment of a stock dividend in shares of Common
Stock, or (z) any other increase or decrease in the number of shares of Common
Stock outstanding effected without receipt of consideration by the Company. In
the event of a merger, consolidation or other reorganization of the Company or a
tender offer for its shares of Common Stock, under the Plan the Committee may
take such action as it deems necessary or appropriate to reflect the effect of
the applicable transaction on the Stock Incentives, including but not limited
to: (i) the substitution, adjustment or acceleration of awards; (ii) the removal
of restrictions on awards; or (iii) the termination of outstanding awards in
exchange for the cash value of the vested portion of the award.
Federal Income Tax Consequences. The following discussion outlines
generally the federal income tax consequences of the receipt of options under
the Plan. Individual circumstances may vary these results. If the recipient is
subject to Section 16(b) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), special rules may apply to determine the federal income tax
consequences of certain option exercises.
(a) Incentive Stock Options: The recipient of an incentive stock option
is not subject to any federal income tax upon grant of an incentive option under
the Plan, nor does the grant of an incentive stock option result in an income
tax deduction for the Company. Further, a recipient will not recognize income
for federal income tax purposes and the Company normally will not be entitled to
any federal income tax deduction as a result of the exercise of an incentive
stock option and the related transfer of shares of Common Stock to the
recipient. However, the excess of the Fair Market Value of the shares
transferred upon the exercise of the incentive stock option over the exercise
price for such shares generally will constitute an item of alternative minimum
tax adjustment to the recipient for the year in which the option is exercised.
Thus, certain recipients may increase their federal income tax liability as a
result of the exercise of an incentive stock option under the alternative
minimum tax rules under the Code.
If the shares of Common Stock received by exercising an incentive stock
option are disposed of within two years from the date the option was granted, or
within one year from the date the option is exercised, the recipient generally
will recognize ordinary income equal to the lesser of (1) the gain recognized
(i.e., the excess of the amount realized on the disposition 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. The balance, if any, of the
recipient's gain over the amount treated as ordinary income on disposition
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 would be entitled to a federal income tax deduction equal
to any ordinary income recognized by the recipient, if the Company satisfies the
applicable federal income tax withholding requirements.
If the shares of Common Stock received by exercising an incentive stock
option are disposed of after the holding periods have been satisfied, the
disposition will result in a long-term capital gain or loss treatment with
respect to the difference between the amount realized on the disposition and the
exercise price. The Company will not be entitled to a federal income tax
deduction as a result of disposition of such shares after these holding periods
have been satisfied.
(b) Nonqualified Options: A recipient will not recognize income upon
the grant of a nonqualified option or at any time prior to the exercise of the
option or a portion thereof. At the time the recipient exercises a nonqualified
option or portion thereof, he or she will recognize compensation taxable as
ordinary income in an amount equal to the excess of the Fair Market Value of the
Common Stock on the date the option is exercised over the price paid for the
Common Stock, and the Company will be entitled to a corresponding deduction.
Depending upon the period for which shares of Common Stock are held
after exercise, the sale or other taxable disposition of shares acquired through
the exercise of a nonqualified option generally will result in a short- or
long-term capital gain or loss equal to the difference between the amount
realized on such disposition and the Fair Market Value of such shares when the
nonqualified option was exercised. Special rules apply to a participant who
exercises a nonqualified option by paying the exercise price in whole or in part
by a transfer of shares of Common Stock to the Company.
Shareholder Approval
In addition to the reasons stated at the beginning of this Proposal,
the Board of Directors seeks Shareholder approval because such approval is
required under the Internal Revenue Code as a condition to favorable tax
treatment by the Company for incentive stock options granted pursuant to the
Plan. The Board also seeks approval to qualify certain of the grants under the
Plan as performance based compensation under Section 162(m) of the Internal
Revenue Code to preserve the Company's federal tax deduction for these grants.
The Board believes that preserving the Company's federal tax deduction for these
grants is in the best interest of Company Shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS SHAREHOLDERS VOTE "FOR"
THE PROPOSAL TO APPROVE THE SCI SYSTEMS 2000 STOCK INCENTIVE PLAN.
PROPOSAL 5: APPROVAL OF SCI SYSTEMS SENIOR OFFICER 2000 INCENTIVE COMPENSATION
PLAN
Overview and Purpose
The Board of Directors recommends adoption of the SCI Systems 2000
Senior Officer Incentive Compensation Plan (the "Senior Officer Incentive
Compensation Plan" or "Plan"). The Plan is intended to recruit and retain highly
qualified executives and other employees by providing them with incentive-based
compensation based on the achievement of performance goals which are directly
tied to Shareholder value. In this regard, the Plan is designed to align senior
officers' compensation with Shareholder value.
The Plan has been designed to meet the performance-based exception to
the $1 million limitation of deductible executive compensation under Section
162(m) of the U.S. Internal Revenue Code ("Code"). The Board of Directors has
determined that it is in the best interest of the Company and its Shareholders
to seek Shareholder approval of the Plan in view of the tax provisions contained
in Section 162(m) of the Code. To qualify for the performance-based exception to
Section 162(m), the specific terms of the performance-based compensation awarded
to the officer or key employee must be disclosed to and approved by Company
Shareholders. Your approval of the Plan is sought in order that awards granted
under the Plan would not count towards the $1 million deductible compensation
limit under Section 162(m).
How the Plan Works
The Compensation Committee of the Board of Directors (the "Committee")
administers the Plan. The Committee is made up entirely of non-employee, outside
Directors and determines the recipients and amount of awards under the Plan. The
Compensation Committee also has the authority to interpret the Plan and make all
determinations under the Plan.
Each employee of the Company holding the position of Chief Executive
Officer, President, Chief Financial Officer, Chief Operating Officer, or
Executive Vice President is eligible to participate under the Plan. As of
September 15, 2000, six officers are eligible for participation under the Plan.
All payments under the Plan are based on attainment of certain
performance measures established by the Committee. If the compensation is
intended to be exempt from the $1 million limitation under Code Section 162, the
performance measures will be established within the first 90 days of the period
to which they relate. The performance measures are one or more of the following
objective criteria: earnings per share, revenue growth rate, return on net
assets (EBIT divided by net assets), cash return on assets, operating return on
assets, return on invested capital, return on capital employed, return on
equity, total shareholder return (including dividends), earnings of the Company,
revenues, EBITDA, EBIT, operating income, net income, return on assets, economic
value added (EVA), cash flows, market share, cash flow or cost reduction goals,
or any combination of the foregoing, which relate to the Company as a whole. The
amount of any bonus award under the Plan is subject to reduction, not to exceed
25% of the award, based on qualitative factors established by the Committee from
time to time.
Payments under the Plan are made for a fiscal year period. The maximum
payment that can be made to any one participant for a fiscal year is $4,500,000.
After expiration of a fiscal year, the Committee will certify if the
performance measures have been attained and if so, each participant who is
employed with the Company on the last day of the applicable period will be
entitled to a payment under the Plan in a predetermined amount, as established
by the Committee. Participants who during the applicable period died or became
disabled are entitled to a pro rated bonus for the applicable period. In the
event of a change of control of the Company (as defined in the Plan), awards
will be based on the achievement of the Company during the the twelve month
period ending on the last day of the fiscal quarter immediately prior to the
change of control against the performance measures and all incentive payments
will be immediately due and payable.
Federal Income Tax Consequences of the Plan
Cash payments to participants under the Plan will generally be taxable
to the employee as ordinary income in the year payment is made to the employee.
If the Company complies with the performance based exception to the $1 million
limitation on deductible executive compensation, all cash payments under the
Plan will be deductible by the Company for federal income tax purposes, when
paid.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS SHAREHOLDERS VOTE "FOR"
ADOPTION AND APPROVAL OF THE SCI SYSTEMS SENIOR OFFICER 2000 ANNUAL INCENTIVE
COMPENSATION PLAN.
PROPOSAL 6 - RATIFICATION OF SELECTION OF INDEPENDENT AUDITOR
Ernst & Young LLP has served as independent auditor for the Company
since 1961. The Audit Committee of the Board believes that retention of the
services of Ernst & Young LLP as independent auditor for the Company's fiscal
year 2001 is in the best interests of the Company. The Committee has recommended
that the Board select Ernst & Young LLP as company auditor for fiscal year 2001.
Upon this recommendation, the Board of Directors has again selected Ernst &
Young to audit the books and records of the Company for the fiscal year 2001.
The Board of Directors proposes that Company Shareholders ratify its
selection of Ernst & Young LLP as the Company's independent auditor at the
Meeting. If Shareholders do not ratify this selection, the Board will consider
selection of another firm as auditor. A representative of Ernst & Young LLP is
expected to be present at the Meeting to respond to questions and to make a
statement if he or she so desires.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" RATIFICATION OF
ERNST & YOUNG LLP AS AUDITOR FOR FISCAL YEAR 2000.
SECTION 4 - Information Regarding Company Officer Compensation
EXECUTIVE OFFICERS
Officers of the Company are elected by the Board annually and serve at
the pleasure of the Board. Securities and Exchange Commission Regulations
require that the Company provide Shareholders information regarding certain of
its executive officers of the Company. This information is contained in the
following Summary Compensation Table and other tables set forth in this Proxy
Statement.
Messrs. A. Eugene Sapp, Jr., Robert C. Bradshaw, and James E.Moylan are
officers of SCI Systems, Inc. and/or of one or more of its subsidiaries; all
other executive officers are officers of one or more Company subsidiaries.
Mr. Sapp, age 64, has held various positions with the Company since
1962 and has been Chairman, CEO, and President since July 1, 2000; Mr. Sapp was
CEO and President from July 1, 1999 to June 30, 2000; before that he was COO
since prior to 1995.
Mr. Robert C. Bradshaw, age 44, has been Chief Operating Officer of the
Company since December 1999 when he joined the Company. Prior to joining the
Company, Mr. Bradshaw was with Solectron Technology Inc., Eastern Region, from
June 1998 to December 1999, first as Vice President and then as President. For
several years prior to June 1998, Mr. Bradshaw held a series of executive
positions with International Business Machines, the last being General Manager
of its Charlotte, North Carolina Plant from 1997 to 1998.
Mr. Peter M. Scheffler, age 48, 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, and in June 1999 was elected Executive Vice
President-Atlantic Group, the position he currently holds.
Mr. James E. Moylan, age 49, joined the Company in November 1999 as
Senior Vice President-Chief Financial Officer. Prior to joining the Company,
Mr. Moylan held several positions with Sonat, Inc. and related companies in
Birmingham, Alabama. From July 1997 to October 1999 Mr. Moylan was Senior Vice
President and Chief Financial Officer of Sonat, and from April 1994 to
July 1997 he was President of Southern Natural Gas Company.
Mr. Bhawnesh C. Mathur, age 42, joined the Company in April 2000 as
Senior Vice President-Supply Chain Management. Prior to joining the Company, Mr.
Mathur held a series of increasingly responsible positions with International
Business Machines, the most recent as Director of e-Business at IBM's Somers,
Massachusetts Facility.
Mr. David F. Jenkins, age 63, 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 59, has held various positions with the
Company since 1963. In September 1993 he was elected Senior Vice President,
Central Region. In 1997 he was appointed Senior Vice President of the newly
formed Computer Systems Division, and in April 1998 appointed Senior Vice
President of the newly formed Technology Division, the position he currently
holds.
Mr. George J. King, age 44, 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 Emeritus of the
Company.
Mr. Charles N. Parks, age 44, 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 57, 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 54, 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 elected
Senior Vice President, European Division, in January 1998. As a result of an
April 1999 reorganization, Mr. Rees was appointed Senior Vice President-Northern
European Division, the position he currently holds.
Mr. Michael H. Missios, age 58, 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, his current position.
Mr. C. T. Chua, age 53, joined the Company in 1993 as Vice President.
He was promoted to First Vice President in 1998 and to Senior Vice President,
Asian Division in July 1999, his current position.
Mr. James M. Ferguson, age 41, joined the Company in November 1995 as
Plant Manager in Irvine, Scotland. In November 1996 Mr. Ferguson was elected
Vice President, and in April 2000 was elected Senior Vice President-Southern
European Division, his current position.
<PAGE>
EXECUTIVE COMPENSATION
U.S. Securities Exchange Commission regulations require that the
Company provide Shareholders certain general information regarding its
executives' compensation, and detailed information regarding compensation given
the Company's five most highly paid officers. The following is the required
information:
<TABLE>
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 ($) Compensation ($) Options (#) ($)
-------- ---- ---------- --------- ---------------- ----------- -----
A. Eugene Sapp, Jr., 2000 777,308 1,967,350 2,744,658 200,000 27,983(b)
Chairman, President 1999 502,012 896,012 1,398,024 120,000(e) 18,072(b)
& CEO 1998 476,369 943,055 1,419,424 140,000(e) 17,044(b)
Robert C. Bradshaw, 2000 233,545 417,121 650,666 400,000 1,500,000(a)
Chief Operating Officer (d)1999 -0- -0- -0- -0- -0-
1998 -0- -0- -0- -0- -0-
Peter M. Scheffler, 2000 343,106 205,396 548,501 60,000 7,898(b)
Executive Vice President 1999 246,820 188,375 435,195 60,000(e) 4,469(b)
Atlantic Group 1998 226,617 83,246 309,863 50,000(e) 266,095(c)
James E. Moylan, 2000 219,648 110,701 330,349 100,000 1,198(b)
Senior Vice President 1999 -0- -0- -0- -0- -0-
Chief Financial Officer (d)1998 -0- -0- -0- -0- -0-
Michael H. Missios, 2000 214,721 214,721 429,442 36,000 5,109(b)
Senior Vice President, 1999 201,365 173,706 346,456 40,000(e) 4,832(b)
PC Division A 1998 174,639 185,000 359,639 35,000(e) 4,177(b)
<FN>
Notes:
(a) Amount represents an employment bonus.
(b) Amounts represent the Company's matching contributions to the Company's 401(k) and Deferred Compensation
Plans. These Plans are available to all eligible employees.
(c) Amounts represent matching contributions of $2,874 to the Company's
401(k) and Deferred Compensation Plans, with the remainder representing
foreign living and car allowances.
(d) Mr. Bradshaw began his employment with the Company in December 1999. Mr. Moylan joined the Company in
November 1999. The compensation amounts presented represent wages earned and prorated annual performance
bonus from initial date of employment through June 30, 2000.
(e) Adjusted for February 2000 two for one stock dividend.
</FN>
</TABLE>
<PAGE>
Stock Option Grants in Fiscal Year 2000
The following table sets forth information regarding stock options
granted to the Company's five most highly compensated officers during fiscal
year 2000 under the Company's 1994 Stock Option Incentive Plan (the "1994
Plan"):
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Potential Realizable
Number of Value at Assumed
Securities % of Total Annual Rates of
Underlying Options Granted to Stock Price Appreciation
Options Employees in Exercise or Base Expiration for Option Term
Name Granted (#) Fiscal Year Price ($/SHE) Date 5% ($) 10% ($)
------- ----------- ----------- ------------- ---- ------ -------
A. Eugene Sapp, Jr. 200,000 8.7451 22.1875 10/22/09 2,790,720 7,072,232
Robert C. Bradshaw(1) 200,000 8.7451 40.0625 12/20/09 5,039,018 12,769,861
Robert C. Bradshaw(2) 200,000 8.7451 40.25 01/03/10 5,039,018 12,829,627
James E. Moylan 100,000 4.3725 26.25 11/02/09 1,650,848 4,183,574
Peter M. Scheffler 60,000 2.6235 22.1875 10/22/09 837,216 2,121,670
Michael H. Missios 36,000 1.5741 22.1875 10/22/09 502,330 1,273,002
</TABLE>
The assumed annual rates of appreciation of five and ten percent would result in
the price of the Company's common stock increasing as follows by the end of the
option term:
<TABLE>
<S> <C> <C> <C>
Name Option Price($) 5%($) 10%($)
---- --------------- ----- ------
A. Eugene Sapp, Jr. 22.1875 13.95 35.36
Peter M. Scheffler 22.1875 13.95 35.36
Michael H. Missios 22.1875 13.95 35.36
Robert C. Bradshaw(1) 40.0625 25.20 63.85
Robert C. Bradshaw(2) 40.25 25.20 64.15
James E. Moylan 26.25 16.50 41.84
</TABLE>
Aggregated Option Exercises in Fiscal Year 2000 and Fiscal Year-End
Option Values
Prior to October 28,1994, the Company granted stock options to
executive officers and other key employees under its Incentive Stock Option and
NonQualified Stock Option Plans (the "Pre-1994 Plans"). Some of these stock
options are still held by executive officers. After October 28, 1994 stock
options were granted to executive officers under the 1994 Plan. The following
table summarizes options exercised by the Company's five most highly compensated
officers during fiscal year 2000 and presents the value of unexercised options
held by them at the end of fiscal year 2000 under the Pre-1994 Plan and 1994
Plan:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Number of
Securities Underlying Value of Unexercised
Shares Unexercised Options In-the-Money Options
Acquired Value at Fiscal Year End (#) At Fiscal Year End ($)
Name on Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ----------- -------------------------- -------------------------
A. Eugene Sapp, Jr. -0- -0- 708,000 316,000 20,324,035 5,965,391
Robert C. Bradshaw -0- -0- 80,000 320,000 -0- -0-
James E. Moylan -0- -0- 20,000 80,000 256,876 1,027,504
Peter M. Scheffler -0- -0- 120,400 113,600 3,377,131 2,195,406
Michael H. Missios 14,000 497,438 102,000 72,000 2,508,680 1,409,329
</TABLE>
<PAGE>
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. (the "Plan Sponsor"), a wholly owned
subsidiary of the Company.
All employees of the Plan Sponsor and its participating affiliate
companies, which are mostly the Company's U.S. subsidiaries, 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. The employee compensation covered by
the SRP is the employee's 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 Company's
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 2000 until retirement, the estimated annual benefits payable upon
retirement to the Company's five most highly compensated officers are as
follows: Mr. Sapp, $35,514; Mr. Bradshaw, $50,533; Mr. Scheffler, $42,113; Mr.
Moylan, $34,663; and Mr. Missios, $23,819. These estimated benefits are subject
to the maximum benefit limitations of section 415 of the U.S. Internal Revenue
Code of 1986 (the "Code"). These benefits do not reflect the maximum limitation
on includable employee compensation under Code section 401(a)(17) effective for
plan years beginning in 1989. The maximum limitation in calendar year 2000 is
$170,000, which is subject to the cost of living increases published by the
Secretary of the Treasury.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
consists of three Directors who are neither employees nor officers of the
Company. Each year the Committee reviews the Company's executive compensation
program and policies and sets the compensation of the Company's officers. The
Committee's recommendations of compensation for the Chief Executive Officer and
the other officers are reviewed with and approved by all the non-employee
directors, who make up 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 (i)
that attract and retain individuals of outstanding ability; (ii) that recognize
individual performance and the performance of the Company relative to the
performance of other companies of comparable size and quality; and (iii) that
support both the short-term and long-term goals of the Company.
The executive compensation program includes three elements which, taken
together, in the opinion of the Committee are a flexible and balanced method of
establishing total compensation for Company management. These three 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. These three
elements are discussed briefly below:
Base Salaries: The Committee annually reviews and establishes base
salaries for all Company officers. 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 Mr. Sapp, Chairman,
President and CEO, and Mr. Bradshaw, 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 the CEO and .65% of annual net income for
the COO. In addition, the Board is recommending Shareholders approve at the
Meeting a new Senior Officer 2000 Incentive Compensation Plan (Proposal 5) which
will tie the Company's Senior Officers bonus' directly to specific performance
goals listed in the Proposal, as determined by the Board. The Board believes
these performance goals promote shareholder value.
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 to 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. The Total Annual Compensation for the Chairman-CEO and
President-COO for the last several years generally followed overall Company
performance.
Chief Executive Officer Compensation: In determining Mr. Sapp's base
salary, annual bonus, and stock option grant in fiscal year 2000, the Committee
considered the Company's overall performance and Mr. Sapp'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. Sapp's total
compensation as Chief Executive Officer appropriately reflects his performance
and, in turn, that of the Company in fiscal year 2000, which were excellent.
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.
This Report is respectfully submitted by the Compensation Committee of
the Company's Board of Directors:
Howard H. Callaway, Chairman
G. Robert Tod
Jackie M. Ward
AUDIT COMMITTEE REPORT, CHARTER, AND INDEPENDENCE
Audit Committee Report. The Audit Committee reports as follows with
respect to the audit of the Company's 2000 audited financial statements:
The Committee has reviewed and discussed the Company's 2000 audited
financial statements with the Company's management;
The Committee has discussed with the independent auditors (Ernst &
Young LLP) the matters required to be discussed by SAS 61, which include, among
other items, matters related to the conduct of the audit of the Company's
financial statements;
The Committee has received written disclosures and the letter from the
independent auditors required by ISB Standard No. 1 (which relates to the
auditor's independence from the corporation and its related entities) and has
discussed with the auditors the auditors' independence from the Company; and
Based on review and discussions of the Company's 2000 audited financial
statements with management and discussions with the independent auditors, the
Audit Committee recommended to the Board of Directors that the Company's 2000
audited financial statements be included in the Company's Annual Report on Form
10-K.
This Report is respectfully submitted by the Audit Committee of the
Company's Board of Directors:
Howard H. Callaway
William E. Fruhan
G. Robert Tod
Audit Committee Charter. The Board of Directors has adopted a written
charter for the Audit Committee. The Board of Directors reviews and approves
changes to the Audit Committee charter annually.
Independence of Audit Committee Members. The Company's Audit Committee
is comprised of Messrs. Callaway, Fruhan and Tod. Each of these members meets
the requirements for independence promulgated by the New York Stock Exchange.
SECTION 5 - COMPANY STOCK PERFORMANCE
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 Chase 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, 1995) 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, 1995 in the Company's Common Stock, in the
DJIA, and in the Chase H&Q Comp Hdw companies.
<TABLE>
[GRAPHIC OMITTED][GRAPHIC OMITTED]
<S> <C> <C> <C>
Chase H&Q Computer Dow Jones Industrial
DATES SCI Systems, Inc. Hardware Average
----- ----------------- ------------------ -------------------
Jun-95 100.00 100.00 100.00
Jun-96 162.50 117.67 127.05
Jun-97 255.00 180.30 175.78
Jun-98 302.00 255.73 208.65
Jun-99 379.00 434.60 260.13
Jun-00 627.00 748.25 251.42
</TABLE>
Comparative Five-Year Total Returns
SCI Systems, Inc., Dow Jones Industrial Average, and Chase Hambrecht &
Quist ComputerHardware Subsector
(Normalized) Stock Performance Graph
SECTION 6 - COMPLIANCE WITH SECTION 16(a) OF THE U.S. SECURITIES
EXCHANGE ACT OF 1934
Section 16(a) of the U.S. 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 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, 2000, all Section 16(a) filing requirements
applicable to its officers, directors, and greater than ten percent beneficial
owners were met.
SECTION 7 - GENERAL
Any Shareholder of the Company who wishes to submit a proposal at the
Company's year 2001 annual meeting of Shareholders, and desires that the
proposal 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
29, 2001. In doing so, the Shareholder must comply with the rules of the U.S.
Securities and Exchange Commission relating to Shareholder proposals. Proxies
solicited by the Company for its year 2001 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 11,
2001.
The cost of preparing and mailing the proxies, the 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 $7,500. The Company may also 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.
As of the date of this Proxy Statement, 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, the Company intends that votes held by proxy will be voted with respect
to such matters according to the best judgment of the persons acting under the
proxies.
If you cannot be present at the Meeting in person, you are respectfully
requested to date, sign, and mail the enclosed proxy card promptly, or vote by
telephone or over the Internet. The Company has enclosed a return envelope for
your convenience. No postage is required if the envelope is mailed in the U.S.
By Order of the Board of Directors.
----------------------------------------
Michael M. Sullivan
Secretary
Huntsville, Alabama
September 25, 2000
<PAGE>
SCI SYSTEMS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF SCI SYSTEMS, INC.
FOR AN ANNUAL MEETING OF SHAREHOLDERS TO BE HELD OCTOBER 27, 2000
Please take notice that the fiscal year 2000 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 27, 2000, at The Ritz Carlton
Hotel (Buckhead), 3434 Peachtree Street, N.E., Atlanta, Georgia 30326 (the
"Meeting"), for the purposes listed on the reverse side. The Board of Directors
has fixed the close of business on September 15, 2000 as the Record Date to
determine shareholders entitled to vote at the Meeting and any adjournment or
postponement of the Meeting.
You are cordially invited to attend the Meeting. If you cannot attend in
person, it is important that your shares be represented and voted at the
Meeting. Accordingly, you are requested to please vote your shares (i) by
dating, signing, and mailing this proxy card, (ii) by voting over the Internet
using the instructions on the reverse of this card, or (iii) by voting by
calling the 800 number listed on the reserve side of this proxy card.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Shareholders and Proxy Statement dated September 25, 2000 and hereby
appoints, James E. Moylan and John M. Noll 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 Meeting and at any adjournment or postponement thereof, upon the matters
specified on the reverse hereof:
When properly executed, this proxy will be voted in the manner directed
herein by the undersigned shareholder(s). IF THIS CARD IS RETURNED BUT NO
DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE PROPOSALS LISTED ON THE
REVERSE AND WILL BE VOTED ON ANY DISCRETIONARY MATTERS IN ACCORDANCE WITH THE
BEST JUDGEMENT AND DISCRETION OF THE PROXIES.
Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as an attorney, executor, administrator, trustee or guardian, give
full title as such. If a corporation or partnership, sign in full corporate or
partnership name by an authorized officer or person.
(CONTINUED AND TO BE SIGNED ON REVERSE)
<PAGE>
SCI Systems, Inc.
PROXY SERVICES
P.O.BOX 9112
FARMINGDALE,NY 11735
VOTE BY PHONE -1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions. Have your
proxy card in hand when you call. You will be prompted to enter your 12-digit
Control Number which is located below and then follow the simple instructions
the Vote Voice provides you.
VOTE BY INTERNET -www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic
delivery of information. Have your proxy card in hand when you access the web
site.You will be prompted to enter your 12-digit Control Number which is located
below to obtain your records and create an electronic voting instruction form.
VOTE BY MAIL -
Mark, sign and date your proxy card and return it in the postage- paid envelope
we've provided or return to SCI Systems Inc., c/o ADP, 51 Mercedes Way,
Edgewood, NY 11717.
KEEP THIS PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
DETACH AND RETURN THIS PORTION ONLY
SCI SYSTEMS INC.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Vote On Directors
1.To elect two Class I Directors to serve For Withhold For All To withhold authority to vote, mark "For All Except"
for a term of three years: All All Except and write the nominee's number on the line below.
01)Olin B. King
02)Wayne Shortridge ___________________________________________________
Vote On Proposals For Against Abstain
2.To increase the authorized shares of the Company to 500,000,000;
3.To approve the Company's 2000 Stock Incentive Plan;
4.To approve the Company's 2000 Stock Purchase Plan;
5.To approve the Company's Senior Officer 2000 Incentive Compensation Plan; and
6.To ratify the selection of Ernst & Young LLP as the Company 's independent
auditor for fiscal year 2001.
</TABLE>
<TABLE>
<S> <C> <C> <C>
Signature[PLEASE SIGN WITHIN BOX] Date Signature(Joint Owners) Date
</TABLE>
<PAGE>
Notice to Participants in the SCI Systems, Inc. 401(k) Savings Plan
Dear Plan Participant:
We are sending this letter and the enclosed materials to you as Trustee of
the SCI Systems 401 (k) Savings Plan (the "Plan").
The Annual Meeting of Shareholders of SCI Systems, Inc. ("SCI") is
scheduled to be held on October 27, 2000. Enclosed are the 2000 Annual Report
and proxy materials which are being distributed in connection with SCI's Annual
Meeting. As an owner of SCI Common Stock through the Plan, you are entitled to
direct the Trustee to vote your shares on all proposals presented in
Management's Proxy Statement.
Enclosed is a voting instruction form which will enable you to vote your
shares. If you wish to direct the vote of your shares, please mark the
appropriate boxes on the voting instruction form, then sign, date and mail the
instruction card in the return envelope provided. Please mail the card in time
to be received no later than Wednesday, October 25, 2000.
For your convenience, you may also vote by telephone or over the Internet.
Please refer to the instructions on the reverse side of this letter.
Your are encouraged to read the enclosed materials carefully and to
exercise your right to vote. We make no recommendation on how you should vote
your shares. All instruction cards received by us will remain confidential and
will not be disclosed to the Company or any officer of the Company.
Please be aware that your shares will not be voted in the following
instances: (1) If you do not return the voting instruction form, to be received
no later than Wednesday, October 25, 2000; (2) if your instruction form is not
signed exactly as your name appears on it; or (3) if you return a properly
signed instruction card but no direction is given as to the vote of your shares.
Fidelity Management Trust Company
ALLOCATED SHARES VOTING INSTRUCTIONS TO TRUSTEE
FOR THE OCTOBER 27, 2000 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 10:00 A.M., Eastern Daylight Savings Time, on Friday,
October 27, 2000, at The Ritz Carlton Hotel (Buckhead), 3434 Peachtree Street,
N.E., Atlanta, Georgia 30326 and at any adjournments or postponements thereof
(the "Meeting") and to act in its discretion upon such other matters as may
properly come before the Meeting or 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 WEDNESDAY 25, 2000. 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 1,2,3,4,5,and 6. 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.)
(CONTINUED AND TO BE SIGNED ON REVERSE)
<PAGE>
SCI SYSTEMS INC.
C/O PROXY SERVICES
P.O.BOX 9112
FARMINGDALE,NY 11735
VOTE BY PHONE -1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions.Have your
proxy card in hand when you call. You will be prompted to enter your 12-digit
Control Number which is located below and then follow the simple instructions
the Vote Voice provides you.
VOTE BY INTERNET -www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic
delivery of information. Have your proxy card in hand when you access the web
site.You will be prompted to enter your 12-digit Control Number which is located
below to obtain your records and create an electronic voting instruction form.
VOTE BY MAIL -
Mark, sign and date your proxy card and return it in the postage- paid envelope
we've provided or return to SCI Systems Inc., c/o ADP, 51 Mercedes Way,
Edgewood, NY 11717.
KEEP THIS PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
DETACH AND RETURN THIS PORTION ONLY
SCI SYSTEMS INC.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Vote On Directors
1.To elect two Class I Directors to serve For Withhold For All To withhold authority to vote, mark "For All Except"
for a term of three years: All All Except and write the nominee's number on the line below.
01)Olin B. King
02)Wayne Shortridge ___________________________________________________
Vote On Proposals For Against Abstain
2.To increase the authorized shares of the Company to 500,000,000;
3.To approve the Company's 2000 Stock Incentive Plan;
4.To approve the Company's 2000 Stock Purchase Plan;
5.To approve the Company's Senior Officer 2000 Incentive Compensation Plan; and
6.To ratify the selection of Ernst & Young LLP as the Company 's independent
auditor for fiscal year 2001.
</TABLE>
<TABLE>
<S> <C> <C> <C>
Signature[PLEASE SIGN WITHIN BOX] Date Signature(Joint Owners) Date
</TABLE>
<PAGE>
Notice to Participants in the SCI Systems, Inc. Stock Purchase Plan
Dear Plan Participant:
We are sending this letter and the enclosed materials to you as
Administrator of the SCI Systems Stock Purchase Plan (the "Plan").
The Annual Meeting of Shareholders of SCI Systems, Inc. ("SCI") is
scheduled to be held on October 27, 2000. Enclosed are the 2000 Annual Report
and proxy materials which are being distributed in connection with SCI's Annual
Meeting. As an owner of SCI Common Stock through the Plan, you are entitled to
direct the Administrator to vote your shares on all proposals presented in
Management's Proxy Statement.
Enclosed is a voting instruction form which will enable you to vote your
shares. If you wish to direct the vote of your shares, please mark the
appropriate boxes on the voting instruction form, then sign, date and mail the
instruction card in the return envelope provided. Please mail the card in time
to be received no later than Wednesday, October 25, 2000.
For your convenience, you may also vote by telephone or over the Internet.
Please refer to the instructions on the reverse side of this letter.
You are encouraged to read the enclosed materials carefully and to exercise
your right to vote. We make no recommendation on how you should vote your
shares. All instruction cards received by us will remain confidential and will
not be disclosed to the Company or any officer of the Company.
Please be aware that your shares will not be voted in the following
instances: (1) If you do not return the voting instruction form, to be received
no later than Wednesday, October 25, 2000; (2) if your instruction form is not
signed exactly as your name appears on it; or (3) if you return a properly
signed instruction card but no direction is given as to the vote of your shares.
Merrill Lynch
ALLOCATED SHARES VOTING INSTRUCTIONS TO
ADMINISTRATOR FOR THE OCTOBER 27, 2000 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 10:00 A.M., Eastern Daylight Savings Time, on Friday,
October 27, 2000, at The Ritz Carlton Hotel (Buckhead), 3434 Peachtree Street,
N.E., Atlanta, Georgia 30326, (the "Meeting") 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 forms.
TO ASSURE THAT YOUR VOTING INSTRUCTIONS ARE FOLLOWED, THIS FORM MUST BE
PROPERLY COMPLETED, SIGNED AND RECEIVED BACK BY THE ADMINISTRATOR BY THE CLOSE
OF BUSINESS ON WEDNESDAY, OCTOBER 25, 2000. IF YOUR VOTING INSTRUCTIONS ARE NOT
RECEIVED IN TIME, OR IF THIS FORM IS SIGNED AND RECEIVED BY THE ADMINISTRATOR ON
TIME BUT YOU DO NOT INDICATE YOUR VOTING PREFERENCES, THE ADMINISTRATOR 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 1,2,3,4,5,and 6. The Administrator 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.)
(CONTINUED AND TO BE SIGNED ON REVERSE)
<PAGE>
SCI SYSTEMS INC.
C/O PROXY SERVICES
P.O.BOX 9112
FARMINGDALE,NY 11735
VOTE BY PHONE -1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions.Have your
proxy card in hand when you call. You will be prompted to enter your 12-digit
Control Number which is located below and then follow the simple instructions
the Vote Voice provides you.
VOTE BY INTERNET -www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic
delivery of information.Have your proxy card in hand when you access the web
site.You will be prompted to enter your 12-digit Control Number which is located
below to obtain your records and create an electronic voting instruction form.
VOTE BY MAIL -
Mark, sign and date your proxy card and return it in the postage- paid envelope
we've provided or return to SCI Systems Inc., c/o ADP, 51 Mercedes Way,
Edgewood, NY 11717.
KEEP THIS PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
DETACH AND RETURN THIS PORTION ONLY
SCI SYSTEMS INC.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Vote On Directors
1.To elect two Class I Directors to serve For Withhold For All To withhold authority to vote, mark "For All Except"
for a term of three years: All All Except and write the nominee's number on the line below.
01)Olin B. King
02)Wayne Shortridge ___________________________________________________
Vote On Proposals For Against Abstain
2.To increase the authorized shares of the Company to 500,000,000;
3.To approve the Company's 2000 Stock Incentive Plan;
4.To approve the Company's 2000 Stock Purchase Plan;
5.To approve the Company's Senior Officer 2000 Incentive Compensation Plan; and
6.To ratify the selection of Ernst & Young LLP as the Company 's independent
auditor for fiscal year 2001.
</TABLE>
<TABLE>
<S> <C> <C> <C>
Signature[PLEASE SIGN WITHIN BOX] Date Signature(Joint Owners) Date
</TABLE>
<PAGE>
Notice to Participants in the SCI Systems, Inc.
Directors' Deferred Compensation Plan
Dear Plan Participant:
We are sending this letter and the enclosed materials to you as Trustee of
the SCI Directors' Deferred Compensation Plan (the "Plan").
The Annual Meeting of Shareholders of SCI Systems, Inc. ("SCI") is
scheduled to be held on October 27, 2000. Enclosed are the 2000 Annual Report
and proxy materials which are being distributed in connection with SCI's Annual
Meeting. As an owner of SCI Common Stock through the Plan, you are entitled to
direct the Trustee to vote your shares on all proposals presented in
Management's Proxy Statement.
Enclosed is a voting instruction form which will enable you to vote your
shares. If you wish to direct the vote of your shares, please mark the
appropriate boxes on the voting instruction form, then sign, date and mail the
instruction card in the return envelope provided. Please mail the card in time
to be received no later than Wednesday, October 25, 2000.
For your convenience, you may also vote by telephone or over the Internet.
Please refer to the instructions on the rreverse side of this letter.
You are encouraged to read the enclosed materials carefully and to exercise
your right to vote. We make no recommendation on how you should vote your
shares. All instruction cards received by us will remain confidential and will
not be disclosed to the Company or any officer of the Company.
Please be aware that your shares will not be voted in the following
instances: (1) If you do not return the voting instruction form, to be received
no later than Wednesday, October 25, 2000; (2) if your instruction form is not
signed exactly as your name appears on it; or (3) if you return a properly
signed instruction card but no direction is given as to the vote of your shares.
Merrill Lynch
ALLOCATED SHARES VOTING INSTRUCTIONS TO
TRUSTEE FOR THE OCTOBER 27, 2000 ANNUAL MEETING OF
SHAREHOLDERS OF SCI SYSTEMS, INC.
THE TRUSTEE SOLICITS THESE VOTING INSTRUCTIONS FROM PLAN PARTICIPANTS IN T
HE 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 10:00 A.M., Eastern
Daylight Savings Time, on Friday, October 27, 2000, at The Ritz Carlton Hotel
(Buckhead), 3434 Peachtree Street, N.E., Atlanta, Georgia 30326, (the "Meeting")
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 WEDNESDAY, OCTOBER 25, 2000. 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 1,2,3,4,5,and 6. 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.)
(CONTINUED AND TO BE SIGNED ON REVERSE)
<PAGE>
SCI SYSTEMS INC.
C/O PROXY SERVICES
P.O.BOX 9112
FARMINGDALE,NY 11735
VOTE BY PHONE -1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions.Have your
proxy card in hand when you call. You will be prompted to enter your 12-digit
Control Number which is located below and then follow the simple instructions
the Vote Voice provides you.
VOTE BY INTERNET -www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic
delivery of information.Have your proxy card in hand when you access the web
site.You will be prompted to enter your 12-digit Control Number which is located
below to obtain your records and create an electronic voting instruction form.
VOTE BY MAIL -
Mark,sign and date your proxy card and return it in the postage- paid envelope
we've provided or return to SCI Systems Inc., c/o ADP, 51 Mercedes Way,
Edgewood, NY 11717.
KEEP THIS PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
DETACH AND RETURN THIS PORTION ONLY
SCI SYSTEMS INC.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Vote On Directors
1.To elect two Class I Directors to serve For Withhold For All To withhold authority to vote, mark "For All Except"
for a term of three years: All All Except and write the nominee's number on the line below.
01)Olin B. King
02)Wayne Shortridge ___________________________________________________
Vote On Proposals For Against Abstain
2.To increase the authorized shares of the Company to 500,000,000;
3.To approve the Company's 2000 Stock Incentive Plan;
4.To approve the Company's 2000 Stock Purchase Plan;
5.To approve the Company's Senior Officer 2000 Incentive Compensation Plan; and
6.To ratify the selection of Ernst & Young LLP as the Company 's independent
auditor for fiscal year 2001.
</TABLE>
<TABLE>
<S> <C> <C> <C>
Signature[PLEASE SIGN WITHIN BOX] Date Signature(Joint Owners) Date
</TABLE>
Notice to Participants in the SCI Systems, Inc.
Deferred Compensation Plan
<PAGE>
Dear Plan Participant:
We are sending this letter and the enclosed materials to you as Trustee
of the SCI Systems Deferred Compensation Plan (the "Plan").
The Annual Meeting of Shareholders of SCI Systems, Inc. ("SCI") is
scheduled to be held on October 27, 2000. Enclosed for your information only, as
an owner of SCI Common Stock through the Plan, are the 2000 Annual Report and
Proxy Statement which are being distributed in connection with the Annual
Meeting. For your information, under the Plant, the Plan Administrator directs
the Trustee as to the manner in which the shares of stock are to be voted.
Sincerely,
Fidelity Management Trust Company
September 30, 20000
