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Previous: SCHULMAN A INC, DEF 14A, 1994-11-10 |
Next: SEALED AIR CORP, 10-Q, 1994-11-10 |
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1994
----------------------------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________________ TO ___________________
COMMISSION FILE NUMBER 1-5517
SCIENTIFIC-ATLANTA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
GEORGIA 58-0612397
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
ONE TECHNOLOGY PARKWAY, SOUTH
NORCROSS, GEORGIA 30092-2967
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
404-903-5000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO
--- ---
AS OF OCTOBER 28, 1994, SCIENTIFIC-ATLANTA, INC. HAD OUTSTANDING 75,842,057
SHARES OF COMMON STOCK.
1 of 8
<PAGE> 2
PART I - FINANCIAL INFORMATION
SCIENTIFIC-ATLANTA, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------------
September 30, October 1,
1994 1993
------------- -----------
<S> <C> <C>
SALES $ 232,301 $ 170,292
-------- ---------
COSTS AND EXPENSES
Cost of sales 162,436 120,700
Sales and administrative 33,148 27,509
Research and development 19,527 12,290
Interest expense 228 252
Interest (income) (886) (841)
Other (income) expense, net 40 (133)
-------- ---------
Total costs and expenses 214,493 159,777
-------- ---------
EARNINGS BEFORE INCOME TAXES 17,808 10,515
PROVISION FOR INCOME TAXES
Current 6,464 4,152
Deferred (765) (787)
------- --------
NET EARNINGS $ 12,109 $ 7,150
======== =========
EARNINGS PER COMMON SHARE
AND COMMON EQUIVALENT SHARE
PRIMARY $ 0.16 $ 0.09
======== =========
FULLY DILUTED $ 0.16 $ 0.09
======== =========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES AND COMMON
EQUIVALENT SHARES OUTSTANDING
PRIMARY 77,910 77,093
======== =========
FULLY DILUTED 77,978 77,135
======== =========
DIVIDENDS PER SHARE PAID $ -- $ 0.01 1/2
======== =========
</TABLE>
SEE ACCOMPANYING NOTES
2 of 8
<PAGE> 3
SCIENTIFIC-ATLANTA, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
<TABLE>
<CAPTION>
In Thousands
-------------------------------------
September 30, July 1,
1994 1994
-------------- --------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 99,570 $ 123,387
Receivables, less allowance for doubtful
accounts of $3,581,000 at September 30
and $3,839,000 at July 1 195,680 206,145
Inventories 171,434 136,813
Deferred income taxes 29,069 27,918
Other current assets 9,850 10,774
----------- ---------
TOTAL CURRENT ASSETS 505,603 505,037
----------- ---------
PROPERTY, PLANT AND EQUIPMENT, at cost
Land and improvements 3,850 3,823
Buildings and improvements 29,419 28,890
Machinery and equipment 114,794 108,585
----------- ---------
148,063 141,298
Less-Accumulated depreciation and amortization 59,618 55,510
----------- ---------
88,445 85,788
----------- ---------
COST IN EXCESS OF NET ASSETS ACQUIRED 7,501 7,689
----------- ---------
OTHER ASSETS 45,511 41,705
----------- ---------
TOTAL ASSETS $ 647,060 $ 640,219
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt and current maturities of
long-term debt $ 8,150 $ 6,487
Accounts payable 90,199 82,285
Accrued liabilities 85,671 95,505
Income taxes currently payable 10,994 17,989
----------- ---------
TOTAL CURRENT LIABILITIES 195,014 202,266
----------- ---------
LONG-TERM DEBT, less current maturities 1,069 1,088
----------- ---------
OTHER LIABILITIES 38,980 41,219
----------- ---------
STOCKHOLDERS' EQUITY
Preferred stock, authorized 50,000,000 shares;
no shares issued -- --
Common stock, $0.50 par value, authorized
350,000,000 shares; issued 75,783,481 at
September 30 and 75,494,670 shares at July 1 37,892 37,747
Additional paid-in capital 145,374 141,179
Retained earnings 227,987 215,926
Accumulated translation adjustments 744 794
----------- ---------
411,997 395,646
----------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 647,060 $ 640,219
=========== =========
</TABLE>
SEE ACCOMPANYING NOTES
3 of 8
<PAGE> 4
SCIENTIFIC-ATLANTA, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------
September 30, October 1,
1994 1993
------------ ---------
<S> <C> <C>
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: $ (17,340) $ 21,295
--------- --------
INVESTING ACTIVITIES:
Purchases of property, plant, and equipment (8,203) (5,957)
Other (2,144) (1,163)
--------- --------
Net cash used by investing activities (10,347) (7,120)
--------- --------
FINANCING ACTIVITIES:
Net short-term borrowings 1,663 935
Principal payments on long-term debt (19) (13)
Dividends paid -- (1,117)
Issuance of common stock 2,226 1,400
--------- --------
Net cash provided by financing activities 3,870 1,205
--------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (23,817) 15,380
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 123,387 103,536
--------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 99,570 $ 118,916
========= ========
SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest paid $ 262 $ 155
========= =======
Income taxes paid, net $ 12,446 $ 2,516
========= =======
</TABLE>
SEE ACCOMPANYING NOTES
4 of 8
<PAGE> 5
NOTES:
A. The accompanying consolidated financial statements include the
accounts of the company and all subsidiaries after elimination of
all material intercompany accounts and transactions. Certain
information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to the rules and regulations of the Securities and
Exchange Commission. These condensed financial statements should
be read in conjunction with the consolidated financial statements
and related notes contained in the 1994 Form 10-K. The financial
information presented in the accompanying statements reflects all
adjustments which are, in the opinion of management, necessary
for a fair presentation of the periods indicated. All such
adjustments are of a normal recurring nature.
B. Earnings per share for the three months ended September 30, 1994,
and October 1, 1993 has been computed based on the weighted
average number of shares outstanding and equivalent shares
derived from dilutive stock options. See Exhibit 11.
C. Inventories consist of the following:
<TABLE>
<CAPTION>
September 30, July 1,
1994 1994
-------------- -------------
<S> <C> <C>
Raw materials and work-in-process $ 117,421 $ 94,890
Finished goods 54,013 41,923
-------------- ----------
Total inventory $ 171,434 $ 136,813
============== ==========
</TABLE>
D. All per share amounts have been restated to reflect the 2-for-1
stock split effected as a dividend issued on October 6, 1994.
5 of 8
<PAGE> 6
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Scientific-Atlanta had stockholders' equity of $412.0 million and cash
on hand was $99.6 million at September 30, 1994. Cash decreased $23.8 million
during the quarter as expenditures for inventories, equipment and expansion of
manufacturing capacity, exceeded cash generated from earnings and accounts
receivable collections. The current ratio of 2.6:1 at September 30, 1994,
compared to 2.5:1 at July 1, 1994. At September 30, 1994, total debt was $9.2
million or 2 percent of total capital invested. Short-term debt consists of
borrowings by the company s international operations to support their working
capital requirements.
RESULTS OF OPERATIONS
Sales for the quarter ended September 30, 1994, were $232.3 million,
up 36% from the prior years sales of $170.3 million. Strong growth in sales of
transmission and addressable converter products coupled with substantial
deliveries of satellite equipment to Orbit Communications Company for its
direct to home satellite services contributed to the year-to-year increase in
sales, which was partially offset by a decline in sales of instrumentation
products.
Gross margins were 30.1 percent, up 1.0 percentage point from a year
ago. Gains from overall cost improvements and increased volumes in
transmission products were offset partially by unfavorable exchange rate
changes in Japanese yen and costs associated with capacity expansion. The
company believes that gross margins will be negatively impacted in future
periods by planned expansion of manufacturing capacity and the continued
increase in sales of addressable converter products which have lower margins
than some of the company s other products. Continued strength of the yen would
also adversely affect gross margins.
Certain material purchases are denominated in Japanese yen and,
accordingly, the purchase price in U.S. dollars is subject to change based on
exchange rate fluctuations. The company has forward exchange contracts to
purchase yen to hedge its purchase commitments for a period of approximately
two months.
Research and development costs were up $7.2 million, or 59 percent,
over the prior year due to increased research and development activity,
particularly development of digital products. The company anticipates that
spending will continue at this level.
Selling and administrative expense increased $5.6 million, or 20
percent, from the prior year. Increased expenses reflect costs associated with
ongoing investments to support expansion into international markets, the
introduction of new products and a build-up in the infrastructure to handle the
growth the company is experiencing.
Other expense for the quarter ended September 30, 1994, included net
losses of $0.5 million from partnership activities and net gains of $0.5
million from royalty income, rental income and other miscellaneous items.
Other income of $0.1 million for the quarter ended October 1, 1993, included
net losses from partnership activities of $0.2 million and royalty income,
rental income and other miscellaneous items of $0.3 million.
The company s effective income tax rate was 32 percent for the quarter
unchanged from the prior year.
Net earnings were $12.1 million, up from $7.2 million in the same
quarter a year ago. Higher sales volume and improved margins were the major
factors in the year-to-year increase.
6 of 8
<PAGE> 7
PART II - OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K.
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
11 Computation of Earnings Per Share
27 Financial Data Schedule
</TABLE>
(b) No reports on Form 8-K were filed during the quarter ended
September 30, 1994
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SCIENTIFIC-ATLANTA, INC.
------------------------
(Registrant)
Date: November 10, 1994 /s/ Harvey A. Wagner
----------------- --------------------
Harvey A. Wagner
Senior Vice President, Chief Financial
Officer and Treasurer (Principal
Financial Officer and duly authorized
signatory of the Registrant)
7 of 8
<PAGE> 1
Exhibit 11
SCIENTIFIC-ATLANTA, INC., AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
EXHIBIT 11
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
------------------------------------
September 30, October 1,
1994 1993
------------ ---------
<S> <C> <C>
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 75,580 74,494
Add - Additional shares of common stock assumed
issued upon exercise of options using the "treasury stock"
method as it applies to the computation of primary
earnings per share 2,330 2,599
------------ ---------
NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 77,910 77,093
Add - Additional shares of common stock assumed
issued upon exercise of options using the "treasury
stock" method as it applies to the computation of
fully diluted earnings per share 68 42
------------ ---------
NUMBER OF SHARES OUTSTANDING
ASSUMING FULL DILUTION 77,978 77,135
============ =========
NET EARNINGS FOR PRIMARY
AND FULLY DILUTED COMPUTATION $ 12,109 $ 7,150
============ =========
EARNINGS PER COMMON SHARE
AND COMMON EQUIVALENT SHARE
PRIMARY $ 0.16 $ 0.09
============ =========
FULLY DILUTED $ 0.16 $ 0.09
============ =========
</TABLE>
8 of 8
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1994, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-02-1994
<PERIOD-END> SEP-30-1994
<CASH> 99,570
<SECURITIES> 0
<RECEIVABLES> 199,261
<ALLOWANCES> 3,581
<INVENTORY> 171,434
<CURRENT-ASSETS> 505,603
<PP&E> 148,063
<DEPRECIATION> 59,618
<TOTAL-ASSETS> 647,060
<CURRENT-LIABILITIES> 195,014
<BONDS> 1,069
<COMMON> 37,892
0
0
<OTHER-SE> 374,105
<TOTAL-LIABILITY-AND-EQUITY> 647,060
<SALES> 232,301
<TOTAL-REVENUES> 232,301
<CGS> 162,436
<TOTAL-COSTS> 162,436
<OTHER-EXPENSES> 19,527
<LOSS-PROVISION> (73)
<INTEREST-EXPENSE> 228
<INCOME-PRETAX> 17,808
<INCOME-TAX> 5,699
<INCOME-CONTINUING> 12,109
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,109
<EPS-PRIMARY> 0.16
<EPS-DILUTED> 0.16
</TABLE>
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