<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 29, 1995
-------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
-------------------- -----------------------
COMMISSION FILE NUMBER 1-5517
SCIENTIFIC-ATLANTA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
GEORGIA 58-0612397
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
ONE TECHNOLOGY PARKWAY, SOUTH
NORCROSS, GEORGIA 30092-2967
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
770-903-5000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL
REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES [X] NO [ ]
AS OF JANUARY 26, 1996, SCIENTIFIC-ATLANTA, INC. HAD OUTSTANDING
76,410,954 SHARES OF COMMON STOCK.
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<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 Six Months Ended
------------------------------ -----------------------------
December 29, December 30, December 29, December 30,
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
SALES $261,100 $269,690 $503,293 $494,666
COSTS AND EXPENSES
Cost of sales 193,383 195,880 374,499 353,433
Sales and administrative 33,663 32,601 66,389 63,937
Research and development 23,871 20,057 46,638 39,102
Interest expense 220 190 367 418
Interest (income) (223) (617) (974) (1,503)
Other (income) expense, net 479 (1,222) 658 (1,188)
-------- -------- -------- --------
Total costs and expenses 251,393 246,889 487,577 454,199
EARNINGS FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES 9,707 22,801 15,716 40,467
PROVISION (BENEFIT) FOR INCOME TAXES
Current 4,331 9,015 4,881 15,433
Deferred (1,225) (1,719) 148 (2,484)
-------- -------- -------- --------
NET EARNINGS FROM CONTINUING
OPERATIONS 6,601 15,505 10,687 27,518
LOSS FROM DISCONTINUED
OPERATIONS NET OF TAX -- (492) (1,038) (396)
ESTIMATED LOSS ON SALE OF
DISCONTINUED OPERATIONS
NET OF TAX -- -- (12,172) --
-------- -------- -------- --------
NET EARNINGS (LOSS) $ 6,601 $ 15,013 $ (2,523) $ 27,122
======== ======== ======== ========
EARNINGS (LOSS) PER COMMON SHARE
AND COMMON EQUIVALENT SHARE
PRIMARY
CONTINUING OPERATIONS $ 0.09 $ 0.20 $0.14 $ 0.36
DISCONTINUED OPERATIONS -- (0.01) (0.17) (0.01)
-------- -------- -------- --------
NET EARNINGS (LOSS) $ 0.09 $ 0.19 $ (0.03) $ 0.35
======== ======== ======== ========
FULLY DILUTED $ 0.09 $ 0.19 $ (0.03) $ 0.35
======== ======== ======== ========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES AND COMMON
EQUIVALENT SHARES OUTSTANDING
PRIMARY 76,379 78,231 76,699 77,923
======== ======== ======== ========
FULLY DILUTED 76,379 78,251 76,699 78,032
======== ======== ======== ========
DIVIDENDS PER SHARE PAID $ 0.015 $ 0.03 $ 0.03 $ 0.03
======== ======== ======== ========
</TABLE>
SEE ACCOMPANYING NOTES
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<PAGE> 3
SCIENTIFIC-ATLANTA, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(UNAUDITED)
<TABLE>
<CAPTION>
In Thousands
------------------------------------
December 29, June 30,
1995 1995
------------ ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 22,802 $ 80,311
Receivables, less allowance for doubtful
accounts of $3,514,000 at December 29
and $3,823,000 at June 30 215,500 243,420
Inventories 246,348 257,427
Deferred income taxes 38,719 28,271
Other current assets 19,472 5,950
-------- --------
TOTAL CURRENT ASSETS 542,841 615,379
-------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost
Land and improvements 7,027 7,005
Buildings and improvements 40,616 36,847
Machinery and equipment 147,442 145,301
-------- --------
195,085 189,153
Less-Accumulated depreciation and amortization 61,629 64,539
-------- --------
133,456 124,614
-------- --------
COST IN EXCESS OF NET ASSETS ACQUIRED 6,565 6,940
-------- --------
OTHER ASSETS 38,560 38,331
-------- --------
TOTAL ASSETS $721,422 $785,264
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt $ 11,154 $ 1,071
Current maturities of long-term debt 318 315
Accounts payable 89,253 148,260
Accrued liabilities 101,123 113,947
Income taxes currently payable 17,007 12,121
-------- --------
TOTAL CURRENT LIABILITIES 218,855 275,714
-------- --------
LONG-TERM DEBT, less current maturities 739 773
-------- --------
OTHER LIABILITIES 39,685 34,588
-------- --------
STOCKHOLDERS' EQUITY
Preferred stock, authorized 50,000,000 shares;
no shares issued -- --
Common stock, $0.50 par value, authorized
350,000,000 shares; issued 77,255,528 shares at
December 29 and 76,950,029 shares at June 30 38,628 38,475
Additional paid-in capital 163,442 160,206
Retained earnings 270,018 274,840
Accumulated translation adjustments 677 668
-------- --------
472,765 474,189
-------- --------
Less - Treasury stock, at cost (879,524 shares) 10,622 --
-------- --------
462,143 474,189
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $721,422 $785,264
======== ========
</TABLE>
SEE ACCOMPANYING NOTES
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<PAGE> 4
SCIENTIFIC-ATLANTA, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
----------------
December 29, December 30,
1995 1994
------------ ------------
<S> <C> <C>
NET CASH USED BY OPERATING ACTIVITIES: $(22,661) $(28,884)
-------- --------
INVESTING ACTIVITIES:
Purchases of property, plant, and equipment (29,704) (27,241)
Proceeds from sale of investment in joint venture -- 4,214
Other (1,973) (3,909)
-------- --------
Net cash used by investing activities (31,677) (26,936)
-------- --------
FINANCING ACTIVITIES:
Net short-term borrowings 10,083 86
Principal payments on long-term debt (31) (32)
Dividends paid (2,299) (2,278)
Issuance of common stock 1,487 3,757
Treasury shares acquired (12,411) --
-------- --------
Net cash provided (used) by financing activities (3,171) 1,533
-------- --------
DECREASE IN CASH AND CASH EQUIVALENTS (57,509) (54,287)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 80,311 123,387
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 22,802 $ 69,100
======== ========
SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest paid $ 306 $ 438
======== ========
Income taxes paid, net $ 3,580 $ 17,082
======== ========
</TABLE>
SEE ACCOMPANYING NOTES
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<PAGE> 5
NOTES:
(Amounts in thousands except share data).
A. The accompanying consolidated financial statements include the
accounts of the company and all subsidiaries after elimination
of all material intercompany accounts and transactions.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to the rules and regulations of the Securities and
Exchange Commission. These condensed financial statements
should be read in conjunction with the consolidated financial
statements and related notes contained in the 1995 Form 10-K.
The financial information presented in the accompanying
statements reflects all adjustments which are, in the opinion
of management, necessary for a fair presentation of the
periods indicated. All such adjustments are of a normal
recurring nature.
B. Earnings per share for the three and six months ended December
29,1995 were computed based on the weighted average number of
shares of common stock outstanding. Earnings per share for
the three and six months ended December 30, 1994, were
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>
December 29, June 30,
1995 1995
------------ ----------
<S> <C> <C>
Raw materials and work-in-process $128,632 $142,418
Finished goods 117,716 115,009
-------- --------
Total inventory $246,348 $257,427
======== ========
</TABLE>
D. During the quarter ended September 29, 1995, the company
decided to discontinue its defense-related businesses in San
Diego, California because these businesses are not aligned
with the company's core business strategies. The company
anticipates that the sale of the net assets of the
defense-related businesses will be completed within one year.
A one-time charge of $12,172, net of a tax benefit of $5,728,
for the estimated loss on sale of discontinued operations was
recorded in the quarter ended September 29, 1995. Sales and
losses from discontinued operations were as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------------- -----------------------------
December 29, December 30, December 29, December 30,
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales $7,495 $7,703 $12,515 $15,028
Loss from discontinued
operations, net of tax $ -- $ (492) $(1,038) $ (396)
Tax benefit $ -- $ 231 $ 488 $ 185
</TABLE>
The net assets of the discontinued operations include
inventory, accounts receivable, machinery and equipment,
accounts payable, and accrued expenses and are included in
other current assets in the Consolidated Statement of
Financial Position.
E. In October 1995, the company announced that it had adopted a
stock buyback program for the purchase of up to 5,000,000
shares of its common stock. During the quarter ended December
29, 1995, the company repurchased 1,010,000 shares at an
aggregate cost of $12,411 and re-issued 130,476 shares under
the company's stock option plan, voluntary employee retirement
and investment plan, and employee stock purchase plan.
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<PAGE> 6
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Scientific-Atlanta had stockholders' equity of $462.1 million and cash
on hand was $22.8 million at December 29, 1995. Cash decreased $57.5 million
during the six months ended December 29, 1995 as expenditures for equipment,
expansion of manufacturing capacity and the repurchase of 1,010,000 shares of
the company's common stock exceeded cash generated from earnings, accounts
receivable collections and short-term borrowings under a senior credit
facility. The current ratio was 2.5:1 at December 29, 1995, compared to 2.2:1
at June 30, 1995. At December 29, 1995, total debt was $12.2 million or less
than 3 percent of total capital invested. Short-term debt consists of a $10.0
million borrowing under a senior credit facility and borrowings by the
company's international operations to support their working capital
requirements. The company believes that funds generated from operations,
existing cash balances and its available senior credit facility will be
sufficient to support growth and planned expansion of manufacturing capacity.
RESULTS OF OPERATIONS
Sales for the quarter ended December 29, 1995 were $261.1 million,
down 3 percent from the prior year's sales of $269.7 million. Sales for the
six months ended December 29, 1995 were $503.3 million, up 2 percent from the
prior year's sales of $494.7 million. Higher sales volume of transmission
products, digital set-tops and Sega game adapters were offset by declines in
most Broadband product lines. Sales of satellite systems were lower in the
quarter and six months ended December 29, 1995 as compared to the prior year
due to substantial completion of deliveries of equipment to Orbit
Communications Company for its direct to home satellite services in fiscal
1995.
Sales in the three and six months ended December 29, 1995 were
negatively impacted by reduced levels of spending by domestic cable operators
and telephone companies. The company believes that customer uncertainty over
the types of communications technology to be deployed in advanced networks, the
fact that many of the products to be utilized in these networks are still under
development by the industry and not yet ready for commercial production, and
delays in the passage of telecommunications reform legislation recently
enacted, were significant factors in the reduced spending.
Gross margins of 25.9 percent and 25.6 percent for the three and six
months ended December 29, 1995 declined 1.5 and 3.0 percentage points,
respectively, from the prior year primarily as the result of unfavorable
exchange rate changes in Japanese yen. 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 a portion of its exposure on purchase commitments for a
period of approximately one year.
Research and development costs were up $3.8 million, or 19 percent,
and $7.5 million, or 19 percent, for the three and six months ended December
29, 1995, respectively, over the comparable periods of the prior year due to
increased research and development activity, particularly development of
digital products and cable telephony. The company anticipates that spending
during the second half of fiscal 1996 will increase over the prior year at a
slightly lower rate than the first half of fiscal 1996.
Selling and administrative expense increased approximately 4 percent
from the prior year. Increased expenses reflect costs associated with ongoing
investments to support expansion into international markets and the
introduction of new products.
Other expense for the three and six months ended December 29, 1995,
included net losses from foreign currency transactions and partnership
activities and net gains from rental income and other miscellaneous items.
There were no significant items in other income and expense in the first six
months of fiscal 1996. Other income of $1.2 million for the quarter ended
December 30, 1994, included net gains of $0.6 million from partnership
activities and net gains of $0.6 million from foreign currency transactions,
rental income and other miscellaneous items. Other income of $1.2 million for
the six months ended December 30, 1994, included net gains of $0.3 million from
foreign currency transactions, $0.3 million of rental income and net gains of
$0.6 million from royalty income, partnership activities and other
miscellaneous items.
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<PAGE> 7
The company's effective income tax rate was 32 percent, unchanged from
the prior year.
Net earnings from continuing operations were $6.6 million for the
quarter ended December 29, 1995, down $8.9 million from the prior year. Net
earnings for the six months ended December 29, 1995 was $10.7 million, down
$16.8 million from the prior year. Net earnings in the quarter and for the
first half were negatively impacted by the exchange rate for the yen, higher
spending for research and development and investment in sales and marketing to
support the company's international growth. The net loss of $2.5 million
for the first half of fiscal 1996 included a charge of $13.2 million, net of
tax, for losses related to discontinued operations and the estimated loss on
the sale of discontinued operations.
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<PAGE> 8
PART II - OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders
The following information is furnished with respect to matters
submitted to a vote of security holders through the solicitation of
proxies:
(a) The matters described below were submitted to a vote of
security holders at the Annual Meeting of Shareholders held on
November 8, 1995.
(b) Election of directors:
<TABLE>
<CAPTION>
Votes For Withhold Authority
---------- ------------------
<S> <C> <C>
Wilbur B. King 65,245,261 1,268,350
Alonzo L. McDonald 66,025,724 487,887
James F. McDonald 65,970,940 542,671
</TABLE>
Marion H. Antonini, William E. Kassling, Mylle Bell Mangum,
David J. McLaughlin, James V. Napier and Sidney Topol
continue as directors.
(c) (i) Approval of Stock Plan for Non-Employee Directors
<TABLE>
<CAPTION>
Votes For Votes Against Abstain
---------- ------------- -------
<S> <C> <C>
54,422,754 11,712,740 378,117
</TABLE>
(ii) Selection of Arthur Andersen LLP as independent
auditors
<TABLE>
<CAPTION>
Votes For Votes Against Abstain
---------- ------------- -------
<S> <C> <C>
66,199,344 201,434 112,833
</TABLE>
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
10.1 Stock Plan for Non-Employee Directors (incorporated
by reference to Exhibit number 4 to the Form S-8
Registration Statement filed on November 8, 1995)
10.2 Amendment Number One to the Non-Employee
Directors Stock Option Plan
10.3 Amended and Restated Scientific-Atlanta, Inc.
Retirement Plan for Non-Employee Directors
10.4 Amended and Restated Deferred Compensation Plan
for Non-Employee Directors of Scientific-Atlanta, Inc.
11 Computation of Earnings Per Share
27 Financial Data Schedule (for SEC use only)
</TABLE>
(b) No reports on Form 8-K were filed during the quarter ended
December 29, 1995.
Date: February 15, 1996 /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)
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<PAGE> 1
EXHIBIT 10.2
AMENDMENT NUMBER ONE TO THE
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
WHEREAS, Section 4(b) of Scientific-Atlanta, Inc.'s (the "Corporation's")
Non-Employee Directors Stock Option Plan (the "Option Plan") provides for the
grant of an option for 10,000 shares of the Corporation's common stock to a
non-employee director upon commencing service on the Corporation's Board of
Directors;
WHEREAS, Section 4(c) of the Option Plan provides for the grant of options for
2,500 shares of the Corporation's common stock to each non-employee director at
each Board meeting held on the date of the annual meeting of shareholders each
year; and
WHEREAS, pursuant to Section 6 of the Option Plan, as a result of stock splits
declared by the Corporation since the adoption of the Option Plan, the initial
option grant has increased to 30,000 shares and the annual option grant has
increased to 7,500 shares;
NOW, THEREFORE, Sections 4(b) and 4(c) of the Stock Option Plan are hereby
amended to read in their entirety as follows:
(b) INITIAL GRANT. Each Non-Employee Director will receive an
initial grant of 20,000 shares upon approval by the Board of
this plan or upon the initial appointment or election to the
Board.
(c) AUTOMATIC GRANTS. An Option to Purchase 5,000 shares of
Common Stock shall be granted at the annual meeting of the
Board held on the date of the Annual Meeting of Shareholders
beginning in 1995 and at each succeeding Board meeting held on
that date provided the Non-Employee Director continues in
office after the Board meeting date on which the Option is
granted.
All other sections and provisions of the Option Plan shall remain in full force
and effect as written, without amendment.
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<PAGE> 2
To record the adoption of this Amendment by the Board on November 8, 1995, the
Company has caused its authorized officers to execute this Amendment and affix
the corporate name and seal hereto.
SCIENTIFIC-ATLANTA, INC.
By: /s/ Brian C. Koenig
-------------------------------------
Name: Brian C. Koenig
-----------------------------------
Title: Vice President Human Resources
----------------------------------
By: /s/ William E. Eason, Jr.
-------------------------------------
Name: William E. Eason, Jr.
-----------------------------------
Title: Secretary
----------------------------------
[Seal]
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<PAGE> 1
[LOGO
SCIENTIFIC-
ATLANTA]
EXHIBIT 10.3
SCIENTIFIC-ATLANTA, INC.
RETIREMENT PLAN FOR NON-EMPLOYEE DIRECTORS
As Amended November 8, 1995
1. PURPOSE
The purpose of this plan ("Plan") is to enhance the ability of
Scientific-Atlanta, Inc. ("Company") to attract and retain the service of
experienced, able and knowledgeable persons to serve as members of the
Company's board of directors ("Board") over a substantial period of years
during which the full benefit of their capabilities can be realized to further
the growth and profitability of the Company and return to the shareholders.
2. ADMINISTRATION
The Plan shall be administered by a Plan Administrator, who shall be
appointed by the Board. In addition to the duties stated elsewhere in the
Plan, the Plan Administrator shall have full authority, consistent with the
Plan, to interpret the Plan and to make all determinations necessary or
desirable for the administration of the Plan.
3. ELIGIBLE PARTICIPANTS
Each person who is or becomes a member of the Board on or after the
effective date of this Plan and who has never been a participant in an employee
retirement plan of the Company shall be deemed a Participant in this Plan after
having been a member of the Board for thirty-six consecutive months.
4. RETIREMENT DATES
(a) A Participant's "Normal Retirement Date" is the first day of
the calendar month in which a Participant attains the age of sixty-five (65)
years and is no longer a member of the Board or any subsequent month
designated by a Participant in accordance with paragraph 6 below.
(b) A Participant's "Early Retirement Date" is the first day of
the calendar month designated by a Participant in accordance with paragraph 6
below, prior to the Normal Retirement Date, on or after the month in which a
Participant attains the age of fifty-five (55) years.
5. RETIREMENT BENEFIT
(a) The annual retirement benefit payable to any Participant who
retires on the Normal Retirement Date, or any date thereafter, will be an
amount equal to (i) the regular annual retainer
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<PAGE> 2
paid by the Company to each director for the last fiscal year of the Company
that the Participant served as a director, plus (ii) the value, as of the date
of grant, of the shares of the Company's Common Stock granted to the
Participant as a "Stock Award" under the Company's Stock Plan for Non-Employee
Directors during the last fiscal year of the Company that the Participant
served as a director. The "regular annual retainer" as used in the preceding
sentence means the annual retainer received by each director of the Company,
excluding any committee chair annual retainer, meeting fees and other fees
received by a director; and, if the Participant elects to receive all or a
portion of his or her annual retainer in the form of shares of the Company's
common stock under the Company's Stock Plan for Non-Employee Directors, any
portion of such annual retainer received in shares shall be included in the
definition of "regular annual retainer."
(b) The annual early retirement benefit payable to any Participant
who retires on the Early Retirement Date will be the amount specified in 5(a)
above, reduced by the following early retirement factors:
<TABLE>
<CAPTION>
Age at
Commencement Factor
------------ ------
<S> <C>
64 .933
63 .867
62 .800
61 .733
60 .667
59 .633
58 .600
57 .567
56 .533
55 .500
</TABLE>
If a Participant's age at the Early Retirement Date falls between any
two of these ages, these factors shall be adjusted by straight-line
interpolation.
(c) No retirement benefit will be payable to any person who is a
member of the Board for less than thirty-six (36) consecutive months.
6. BENEFIT PAYMENTS
A Participant may retire by written notice to the Plan Administrator
or the Secretary of the Company, designating a retirement date in accordance
with paragraph 4 above. Retirement benefit payments will be payable on the
first day of each calendar quarter following retirement or in accordance with
such other schedule of payments as may be requested by the Participant and
approved by the Board. Benefit payments will continue to be paid to the
Participant for the remainder of the Participant's life. Notwithstanding the
foregoing, in lieu of the normal form of
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<PAGE> 3
payment otherwise provided under this Plan, the Plan Administrator may direct,
in its sole and absolute discretion, that benefits shall be paid in a single
sum that is the actuarial equivalent of the annual benefit payable to the
Participant or, in the event of the Participant's death, to his or her
surviving spouse.
7. SPOUSAL BENEFITS
Should a Participant die before retirement benefits have begun to be
paid to the Participant under this Plan, the Participant shall be deemed to
retire on the later of (i) the day before his/her death, or (ii) the first day
of the first calendar month thereafter in which the Participant would have
attained the age of fifty-five (55), and the Participant's surviving spouse, if
any, shall be entitled to a benefit equal to the benefit that would have been
paid to the Participant. If the Participant dies after retirement benefits
have commenced, the Participant's surviving spouse shall be entitled to annual
benefit payments equal to the annual benefit previously payable to the
Participant. In each case, the benefit shall continue for the lesser of (i)
ten years or (ii) a number of years equal to the number of years that the
Participant was a member of the Board; provided, however, that payments shall
not continue after the death of the spouse.
8. DISABILITY
Should a Participant become totally and permanently disabled prior to
retirement for a period of six (6) consecutive months while a member of the
Board and the Board determines that such disability will continue, the
Participant will be deemed to have retired on the first day of the calendar
month following the month in which the Board makes such determination and the
age of the Participant on such retirement date shall be deemed the older of (i)
fifty-five (55), or (ii) the Participant's actual age on that date. Payments
will be made on the same basis as described in Sections 5, 6, and 7 above.
9. CHANGE OF CONTROL
Notwithstanding anything contained in this Plan to the contrary, the
provisions of this paragraph 9 shall apply to any Participant whose membership
on the Board ends before a Change of Control occurs or who is a member of the
Board on the date that a Change of Control occurs and who ceases within
twenty-four (24) months after a Change of Control to be a member of the Board
for any reason.
(a) Each such Participant shall be immediately vested in his or
her retirement benefit payable under this Plan.
(b) The Company shall contribute to the trust maintained pursuant
to the Scientific-Atlanta, Inc. Benefits Protection Trust Agreement a lump sum
amount equal to the then-present value of the Participant's retirement benefit.
This lump sum payment to the trust shall be due on the later of (i) the date
when the Change of Control occurs or (ii) the date the Participant ceases to be
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<PAGE> 4
a member of the Board. The retirement benefit of a Participant who ceases to
be a member of the Board within twenty-four (24) months after a Change of
Control shall be computed as if the Participant would retire on the first day
that he or she is eligible to retire (whether an Early Retirement Date or a
Normal Retirement Date) following the Change of Control and the end of his or
her membership on the Board. Any retirement benefits to which the Participant
is entitled under the terms of this Plan shall be payable from the trust,
except to the extent that the benefits are paid from the general assets of the
Company.
(c) Notwithstanding the foregoing, in lieu of the form of payment
otherwise provided for in this paragraph 9, the Plan Administrator may direct,
in its sole and absolute discretion, that upon a Change of Control benefits
under this Plan shall be paid in a single lump sum that is the actuarial
equivalent of the annual benefits payable to the Participant or, in the event
of the Participant's death, to his or her surviving spouse.
(d) "Change of Control" means a change of twenty-five percent
(25%) or more of the membership of the Board (excluding membership changes
resulting from normal retirement of directors) within a twenty-four (24) month
period following the acquisition of beneficial ownership by any person or
entity, or group of persons or entities and their affiliates acting in concert,
of twenty percent (20%) or more of the voting securities of the Company.
"Affiliates" and "beneficial ownership" shall be defined in accordance with
Rules 12b-2 and 13d-3 of the Securities and Exchange Commission, as the same
may from time to time be amended.
10. TERMINATION AND AMENDMENT OF THE PLAN
The Board may terminate the Plan at any time and may amend the Plan
from time to time but no such termination and amendment shall adversely affect
the rights of Participants under the Plan, which shall be deemed fully vested
and irrevocable on the date that a director becomes a Participant in accordance
with paragraph 3 above.
11. EFFECTIVE DATE
The effective date of this Plan is February 15, 1989.
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To record the adoption of the Plan (as amended and restated) by the Board on
November 8, 1995, the Company has caused its authorized officers to execute
this Plan and affix the corporate name and seal hereto.
SCIENTIFIC-ATLANTA, INC.
By: /s/ Brian C. Koenig
-------------------------------------
Name: Brian C. Koenig
-----------------------------------
Title: Vice President Human Resources
----------------------------------
By: /s/ William E. Eason, Jr.
-------------------------------------
Name: William E. Eason, Jr.
-----------------------------------
Title: Secretary
----------------------------------
[Seal]
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<PAGE> 1
[LOGO
SCIENTIFIC
ATLANTA]
EXHIBIT 10.4
DEFERRED COMPENSATION PLAN FOR
NON-EMPLOYEE DIRECTORS OF SCIENTIFIC-ATLANTA, INC.
As Amended November 8, 1995
ARTICLE I - INTRODUCTION
1.1 Name of the Plan
This Plan shall be known as the Deferred Compensation Plan for
Non-Employee Directors of Scientific-Atlanta, Inc.
1.2 Purpose of Plan
The purpose of the Plan is to provide non-employee directors of
Scientific-Atlanta, Inc. the opportunity to defer receipt of cash compensation
and compensation in the form of stock payable to them for services to
Scientific-Atlanta, Inc. as directors.
1.3 Restatement of Plan
This document amends and restates the Plan effective as of November 8,
1995.
(a) Deferrals Affected by Restatement: All deferral elections made
on or after November 8, 1995, shall be governed by the terms of the
Plan as amended and restated herein. In addition, deferral elections
made before November 8, 1995, by an individual who is a non-employee
member of the Board on November 8, 1995, shall be governed
prospectively by the terms of the Plan as amended and restated herein.
ARTICLE II - DEFINITIONS
For purposes of this Plan the following words and phrases shall have the
meanings and applications set forth below:
2.1 Plan
This Deferred Compensation Plan for Non-Employee Directors of
Scientific-Atlanta, Inc., as amended from time to time.
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2.2 Participant
A non-employee member of the Board of Directors of Scientific-Atlanta,
Inc. who elects to participate in this Plan.
2.3 Plan Year
The period beginning on the first day of July of each calendar year
and ending on and including the last day of June of the next calendar year. The
first Plan Year began on July 1, 1993, and ended on June 30, 1994.
2.4 Compensation
The total of a Participant's Awards granted, and a Participant's
Annual Retainer, Meeting Fees, and Committee Chair Retainer payments paid to
the Participant, by Scientific-Atlanta, Inc. during a Plan Year.
2.5 Annual Retainer
The amount paid each year, in quarterly payments, to non-employee
members of the Board of Directors of Scientific-Atlanta, Inc.
2.6 Meeting Fees
The amounts paid to a non-employee member of the Board of Directors of
Scientific-Atlanta, Inc. for each meeting of the Board and each meeting of a
standing or special committee he or she attends.
2.7 Committee Chair Retainer
The amount paid each year, in quarterly payments to a non-employee
director who chairs a standing or special committee of the Board of Directors.
2.8 Awards
The right to receive shares of Scientific-Atlanta Common Stock,
granted under a stock award or elective grant made pursuant to the
Scientific-Atlanta, Inc. Stock Plan for Non-Employee Directors.
2.9 Election Form
The form completed by a Participant in order to make one or more
Compensation Deferral Elections for the next Plan Year.
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2.10 Compensation Deferral Election
Each election made by a Participant to defer a portion of his or her
Compensation by executing and submitting an Election Form.
2.11 Deferred Benefit Account
An account maintained pursuant to and in accordance with the terms and
conditions set forth in Article V hereof by or on behalf of Scientific-Atlanta,
Inc. for each Compensation Deferral Election made by a Participant under this
Plan.
2.12 Deferred Benefit Commencement Date
The date irrevocably designated by a Participant with respect to each
Compensation Deferral Election entered on an Election Form as the date on which
the payment of the Deferred Benefits that accumulate as a result of each
respective election is to begin.
2.13 Beneficiary
A person or entity designated in accordance with the terms and
conditions of this Plan to receive benefits upon the death of a Participant.
2.14 Election Amount
The compensation amount (and right to a certain number of shares of
Scientific-Atlanta Common Stock, if applicable) to be deferred pursuant to a
single Compensation Deferral Election.
2.15 Service Termination Date
The last day of the month immediately preceding the date of a
Participant's Retirement, termination of service, determination of Total
Disability, or death, whichever is applicable.
2.16 Retirement
The discontinuation of service on the Board of Directors by a
Participant who is fifty-five years of age or older with at least three years
of Board service.
2.17 Total Disability
A physical or mental condition which is expected to be totally and
permanently disabling as determined in accordance with the terms and conditions
of the long-term disability insurance plan currently or most recently
maintained by Scientific-Atlanta, Inc. for the benefit of its employees
claiming to be totally disabled.
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2.18 Plan Committee
The Human Resources and Compensation Committee of the Board of
Directors of Scientific-Atlanta, Inc.
2.19 Determination Date
The last day of each Plan Year.
2.20 Plan Interest Rate
An annual rate of interest that shall be determined by the Plan
Committee prior to the start of each Plan Year and credited to a Participant's
Deferred Benefit Account during the Plan Year.
2.21 Deferred Benefits
The amounts (and right to a certain number of shares of
Scientific-Atlanta Common Stock, if applicable) payable to a Participant or to
his or her Beneficiary or estate following the Participant's Retirement,
termination of service as a non-employee member of the Board, determination of
Total Disability, or death.
2.22 Scientific-Atlanta Common Stock
The common stock of Scientific-Atlanta, Inc.
ARTICLE III - ELIGIBILITY AND PARTICIPATION
3.1 Eligibility
Directors who are not employees of Scientific-Atlanta, Inc. and who
are actively serving on the Board of Directors of Scientific-Atlanta, Inc.
shall be eligible to participate in this Plan.
3.2 Participation
The Plan Committee shall notify in writing each director who becomes
eligible to participate in this Plan of his or her eligibility. Eligible
directors may participate in this Plan by completing an Election Form on or
before the end of the month immediately preceding the month in which he or she
wants to begin deferring Compensation. If timely received, such election to
participate shall be effective on the first day of the succeeding month.
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ARTICLE IV - COMPENSATION DEFERRAL
4.1 Compensation Deferral Election
A Participant shall effect a Compensation Deferral Election by
executing and submitting to the Plan Committee an Election Form. Subsequently,
Scientific-Atlanta, Inc. shall defer Election Amounts deferred from the
Participant's Awards, Annual Retainer, Committee Chair Retainer or Meeting Fees
at the time cash compensation would have been paid (or at the time the right to
receive shares of Scientific-Atlanta Common Stock was granted, as applicable).
Each Election Amount shall be deferred for the Deferral Period specified with
respect to the particular Compensation Deferral Election in the Election Form.
All Compensation Deferral Elections shall apply solely to Compensation which
will be paid (or granted) to a Participant beginning with the first day of the
month commencing subsequent to the month in which the Compensation Deferral
Election is received. Any Compensation Deferral Election will apply only to
Compensation paid (or granted) during the Plan Year in which the election
becomes effective.
4.2 Election Amounts
Each Election Amount specified by a Participant on an Election Form
with respect to any Plan Year shall state in percentages the amount (and, to
the extent applicable, the right to receive a specific number of shares of
Scientific-Atlanta Common Stock), if any, which the Participant wishes to
defer. An election to defer Compensation must equal a minimum of five percent
up to a maximum of one hundred percent, in increments of five percentage
points, of the Annual Retainer and/or Committee Chair Retainer and/or Meeting
Fees and/or Awards which the Participant may be paid during the Plan Year. As
to Awards, the election must be in whole shares, with no right to receive
fractional shares being deferred.
4.3 Investment Election
A Participant shall specify in his or her Compensation Deferral
Election the percentage of the Election Amount to be credited to an Interest
Sub-Account, the percentage to be credited to a Phantom Stock Sub-Account, and
the number of shares to be credited to an Award Sub-Account; provided, however,
that no percentage of the Election Amount may be credited to a Phantom Stock
Sub-Account and no number of shares may be credited to an Award Sub-Account if
the Deferred Benefit Commencement Date for such Sub-Account is not at least six
months after the date of such credit.
4.4 Deferral Period
A Participant shall irrevocably specify in his or her Compensation
Deferral Election a Deferred Benefit Commencement Date for all of the Election
Amount to be deferred pursuant to such Compensation Deferral Election, which
date shall be (i) to a set date which is no earlier than July 1 of the calendar
year following the end of the Plan Year in which the Election Amount is
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deferred; (ii) the Participant's Retirement; or (iii) to a date which is either
the fifth or the tenth anniversary following the date of the Participant's
Retirement.
4.5 Deferred Benefit Commencement Date; Method of Payment and Issuance
Except as otherwise provided in Article VI hereof, the Election
Amounts that accumulate in a Deferred Benefit Account as a result of a
Participant's making a Compensation Deferral Election will be paid (or issued,
in the case of deferred Awards) by Scientific-Atlanta, Inc. to the Participant
in the manner and commencing on the Deferred Benefit Commencement Date
designated with respect to the Compensation Deferral Election in an Election
Form.
(a) Method of Cash Payments: Except as otherwise provided in
Article VI hereof, the Participant may elect to receive payment of the
Deferred Benefits held in the form of cash, which Deferred Benefits
are attributable to a Compensation Deferral Election and which are
held in an Interest Sub-Account, a Phantom Stock Sub-Account or an
Award Sub-Account pursuant to one of the following methods:
(1) Annual, semi-annual or quarterly installments payable
over a five, ten or fifteen year period, and commencing on the
respective Deferred Benefit Commencement Date; or
(2) A single lump sum payment of the entire balance of
the respective Deferred Benefit Account, determined as of and
payable on the Deferred Benefit Commencement Date.
(b) Method of Issuance of Shares: Except as otherwise provided in
Article VI hereof, the Participant may elect to receive issuance of
the Deferred Benefits held in the form of shares of Common Stock,
which Deferred Benefits are attributable to a Compensation Deferral
Election and which are held in an Award Sub-Account pursuant to one of
the following methods:
(1) Annual, semi-annual or quarterly issuance of shares
of Scientific-Atlanta Common Stock from an Award Sub-Account
over a five, ten or fifteen year period, and commencing on the
respective Deferred Benefit Commencement Date; provided,
however, that no fractional shares of Scientific-Atlanta
Common Stock will be issued; or
(2) A single issuance of all shares subject to the
specific Award Sub-Account, determined as of and payable on
the Deferred Benefit Commencement Date.
(c) Change in Payment or Issuance Method. A Participant may
change the method of payment (or issuance of shares) selected with
respect to a Compensation Deferral Election by submitting a request in
writing to the Plan Committee on or before the earlier of (i) the
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date which is six months prior to the Deferred Benefit Commencement
Date, or (ii) the December 31 immediately preceding the Deferred
Benefit Commencement Date.
4.6 Designation of Beneficiaries
A Participant shall designate a Beneficiary with respect to each
Compensation Deferral Election and may change the Beneficiary designation with
respect to any Compensation Deferral Election at any time by submitting to the
Plan Committee a revised Beneficiary designation in writing reflecting the
change.
ARTICLE V - DEFERRED BENEFIT ACCOUNTS
5.1 Deferred Benefit Accounts
Scientific-Atlanta, Inc. shall cause to be established and maintained
a separate Deferred Benefit Account, and within each such Deferred Benefit
Account an Interest Sub-Account, a Phantom Stock Sub-Account and an Award
Sub-Account with respect to each Compensation Deferral Election.
Scientific-Atlanta, Inc. shall credit the Election Amount deferred pursuant to
each such election to the Participant's appropriate Deferred Benefit Account,
and to the Interest Sub-Account, Phantom Stock Sub-Account and Award
Sub-Account as specified in the Election, as of the date deferred from
Participant's Compensation as provided in Section 4.1 hereof.
5.2 Accrual of Interest
Except as otherwise provided by Section 6.2(a) hereof, interest shall
accrue at the Plan Interest Rate on any amounts credited to an Interest
Sub-Account from the date on which the amount is credited.
5.3 Phantom Stock Sub-Account
If a Participant elects all or a portion of the Election Amount to be
credited to the Phantom Stock Sub-Account, the amount so credited shall, solely
for purposes of determining the value of the Phantom Stock Sub-Account, be
deemed to be a number of shares of Scientific-Atlanta, Inc. Common Stock
determined as follows:
(a) Conversion into Scientific-Atlanta Common Stock: The amount
credited to the Phantom Stock Sub-Account shall be converted into an equivalent
number of hypothetical shares of Scientific-Atlanta Common Stock (including
hypothetical fractional shares) by dividing the amount credited by the average
closing price of Scientific-Atlanta Common Stock, as reported on the composite
tape of New York Stock Exchange issues, for the 20 business days immediately
preceding the last day of the month in which such amount is credited.
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(b) Deemed Reinvestment of Dividends: The number of hypothetical
shares of Scientific-Atlanta Common Stock credited to a Participant's
Phantom Stock Sub-Account shall be increased on each date that a
dividend is paid on Scientific-Atlanta Common Stock. The number of
additional hypothetical shares of Scientific-Atlanta Common Stock
credited to a Participant's Phantom Stock Sub-Account as a result of
such increase shall be determined, first, by multiplying the total
number of hypothetical shares of Scientific-Atlanta Common Stock
credited to such Sub-Account immediately before such increase by the
amount of the dividend paid per share of Scientific-Atlanta Common
Stock on the dividend payment date, and, then, by dividing the product
so determined by the closing sale price of Scientific-Atlanta Common
Stock on the composite tape of New York Stock Exchange issues on the
dividend payment date (or if there was no reported sale of
Scientific-Atlanta Common Stock on such date, on the next preceding
day on which there was such a reported sale).
(c) No Rights as Shareholder: At no time shall the hypothetical
shares credited to a Phantom Stock Sub-Account be considered as actual
shares of Scientific-Atlanta Common Stock, and a Participant shall
have no rights as a shareholder of Scientific-Atlanta, Inc. by virtue
of such hypothetical shares.
5.4 Award Sub-Account
If a Participant elects that an Award be deferred and credited to an
Award Sub-Account, such Award will remain in such Award Sub-Account until the
Deferred Benefit Commencement Date related to such Award Sub-Account occurs.
No interest will accrue on the Award in such Award Sub-Account, but amounts
equivalent to the dividends that would have been paid if the shares had been
issued will accrue on such Awards ("Accrued Dividends"). A Participant shall
not have any rights as a shareholder of Scientific-Atlanta, Inc. while an Award
is held in an Award Sub-Account.
5.5 Determination of Account Balance
(a) As of each Determination Date, the current balance of a
Participant's Deferred Benefit Account shall be the sum of (i) the
balance credited to the Interest Sub-Account as of the immediately
preceding Determination Date, plus any Compensation deferred by such
Participant and credited to such Interest Sub-Account since the
previous Determination Date, plus the amount of interest credited to
such Interest Sub-Account since the preceding Determination Date, plus
(ii) the value of the hypothetical shares of Scientific-Atlanta Common
Stock, determined as set forth in Section 5.5(a) above, in the Phantom
Stock Sub-Account at that time, including deferred amounts credited to
that Sub-Account since the last Determination Date and deemed
reinvestment, if any, of dividends since the last Determination Date,
plus (iii) the number of shares the Participant has the right to
receive under Awards credited to the Award Sub-Account and the total
Accrued Dividends credited to the Award Sub-Account, as of the
immediately preceding Determination Date, plus the number of shares
the participant has the right to receive under additional Awards and
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additional Accrued Dividends credited to such Award Sub-Account since
the previous Determination Date, minus any payments to or withdrawals
by the Participant from the Deferred Benefit Account since the
previous Determination Date.
(b) The dollar value of the hypothetical shares of
Scientific-Atlanta Common Stock credited to a Participant's Phantom
Stock Sub-Account on any date shall be determined by multiplying the
number of hypothetical shares of Scientific-Atlanta Common Stock
credited to such Sub-Account on that date by the average closing price
of Scientific-Atlanta Common Stock, as reported on the composite tape
of New York Stock Exchange issues for the 12 months immediately
preceding that date, or for that number of whole months for which the
hypothetical shares have been credited to such sub-account, if less
than 12 months.
(c) Effect of Recapitalization: In the event of a transaction or
event described in this paragraph (c), the number of hypothetical
shares of Scientific-Atlanta Common Stock credited to a Participant's
Phantom Stock Sub-Account and the number of shares of
Scientific-Atlanta Common Stock subject to Awards credited to a
Participant's Award Sub-Account shall be adjusted in such a manner as
the Plan Committee deems equitable. A transaction or event is
described in this paragraph (c) if and only if (i) it is a dividend or
other distribution (whether in the form of cash, shares, other
securities, or other property), extraordinary cash dividend,
recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, re-purchase,
or exchange of shares or other securities, the issuance of warrants or
other rights to purchase shares or other securities, or other similar
corporate transaction or event, and (ii) the Plan Committee determines
that such transaction or event affects the shares of
Scientific-Atlanta Common Stock, such that an adjustment pursuant to
this paragraph (c) is appropriate to prevent dilution or enlargement
of the benefits or potential benefits intended to be made available
under this Plan.
5.6 Statement of Accounts
Within ninety (90) days after each Determination Date, the Plan
Committee shall submit to each Participant a statement in such form as the Plan
Committee shall deem desirable, setting forth a summary of the Compensation
Deferral Elections made and the current balances of the Deferred Benefit
Accounts and related Sub-Accounts maintained for the Participant as of the
Determination Date.
ARTICLE VI - PAYMENT (AND ISSUANCE) OF DEFERRED BENEFITS
6.1 General
Except as otherwise provided herein, Deferred Benefits shall be
payable (and issued, if applicable) to a Participant upon the Deferred Benefit
Commencement Date and pursuant to the manner of payment (or issuance, if
applicable) selected by the Participant on the applicable Compensation Deferral
Election or any permitted modification thereof. If the Participant has elected
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to receive such Deferred Benefits in installments, the amount payable
in the first year of such installments shall be an amount that will
fully amortize the balance in the Participant's Deferred Benefit
Account determined as of the Deferred Benefit Commencement Date over
the five, ten or fifteen year period, based on assumed interest
earnings at the Plan Interest Rate (to the extent applicable) in
effect for such first year. Thereafter, the amount payable (or to be
issued) in each succeeding year shall be adjusted to an amount that
will fully amortize the remaining balance in such Deferred Benefit
Account over the remaining years in the aforesaid five, ten, or
fifteen year installment period based on the Plan Interest Rate (to
the extent applicable) for such succeeding year.
6.2 Service Termination
Deferred Benefits shall be paid (or issued, as appropriate) to a
Participant after his or her termination, as follows:
(a) Upon termination of service as a director by a Participant
prior to the Participant's attaining fifty-five years of age:
(1) the amounts in each of the Participant's Deferred
Benefit Accounts shall cease to earn interest (to the extent
applicable) and the balance of each Deferred Benefit Account
shall be determined in accordance with Article V hereof, and
(2) Scientific-Atlanta, Inc. shall pay (or issue, as
appropriate) to the Participant the balance of each of the
Participant's Deferred Benefit Accounts not according to the
Participant's elections as specified in his or her Election
Forms but in a lump sum, to be paid within sixty days of the
termination.
(b) For purposes of this Plan, termination of service as a
director by a Participant who is fifty-five years or older with at
least three years of Board Service will in all instances be construed
to be and will be treated as Retirement by such a Participant, and
Scientific-Atlanta, Inc. will pay (or issue) to such a Participant all
amounts in his or her Deferred Benefit Accounts in accordance with
Section 6.1 hereof.
6.3 Total Disability
Deferred Benefits shall be paid (or issued, as appropriate) to a
Participant after his or her becoming Totally Disabled, as follows:
(a) Upon the determination that a Participant is Totally Disabled,
no further deferrals will be made from his or her Compensation, and
Scientific Atlanta, Inc. shall pay (or issue, as appropriate) to the
Participant the balance in each of the Participant's Deferred Benefit
Accounts as follows:
(1) the date of Total Disability shall be deemed to be
(i) the Deferred Benefit
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Commencement Date, if the Deferred Benefit Commencement
Date for one or more Deferred Benefit Accounts is a set date
prior to the Participant's fifty-fifth birthday and the Total
Disability occurs before such date, or (ii) the Participant's
Retirement, for those Deferred Benefit Accounts, if any, for
which the Deferred Benefit Commencement Date is the
Participant's Retirement or later;
(2) following Total Disability, the amounts in his or her
Interest Sub-Account shall continue to earn interest, and the
hypothetical shares in the Phantom Stock Sub-Account shall
continue to earn dividends, as provided in the Plan, until
paid out to the Participant as provided herein; and
(3) the amount (including shares of Scientific-Atlanta
Common Stock) in any Deferred Benefit Account shall be payable
(or issued) to the Participant on the Deferred Benefit
Commencement Date which applies to such Deferred Benefit
Account, taking into consideration the aforesaid deemed dates
(Section 6.3(a)(1)(i) and (ii)) pursuant to the method(s)
requested by the Participant in his or her Election Form.
(b) For purposes of this Plan, once a Participant is determined to
be Totally Disabled, he or she will continue to be deemed Totally
Disabled irrespective of the Participant's ceasing to be considered
Totally Disabled for purposes of any other plan maintained by
Scientific-Atlanta, Inc.
(c) In the event that a Totally Disabled Participant resumes
service with the Board following his or her Service Termination Date,
such Totally Disabled Participant may resume participation in this
Plan at the discretion of the Plan Committee; provided, however, that
in any event the Totally Disabled Participant shall continue to
receive payments of Deferred Benefits pursuant to the terms of this
Plan.
6.4 Death
Deferred Benefits shall be paid (or issued, as appropriate) after the
death of a Participant, as follows:
(a) After the death of a Participant, Scientific-Atlanta, Inc.
shall pay the amounts (or issue shares of Scientific-Atlanta Common
Stock, if applicable) in each of the Participant's Deferred Benefit
Accounts to the Beneficiary designated by the Participant with respect
to each Compensation Deferral Election in each of his or her
respective Election Forms, or, if the Participant fails to so
designate a Beneficiary, to his or her estate.
(b) If the Participant dies prior to Retirement,
Scientific-Atlanta, Inc. shall pay to each respective Beneficiary or
to the Participant's estate, as the case may be, the amounts in each
of the Participant's respective Deferred Benefit Accounts (or issue
the shares held in the
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Award Sub-Account), in the same manner as set forth in Section 6.3(a).
(c) If the Participant dies following Retirement or being
determined to be Totally Disabled but prior to his or her receiving
the full payment of all Deferred Benefits payable to him or her,
Scientific-Atlanta, Inc. shall pay (or issue, if appropriate) to the
respective Beneficiaries or to the Participant's estate, as the case
may be, the same Deferred Benefits in the same manner as it otherwise
would have paid (or issued) to the Participant as if the Participant
had not died, unless the Participant has specified in his or her
Election Form a different manner of payment to a Beneficiary.
(d) Notwithstanding the other provisions of Section 6.4, a
Beneficiary may request a different payment schedule than what has
been elected by the Participant, if such change does not further defer
the scheduled payout, by submitting a request in writing to the Plan
Committee. The granting of any such request shall be within the
discretion of the Plan Committee.
(e) If a Beneficiary who is receiving Deferred Benefits pursuant
to this Plan dies, the remainder of the Deferred Benefits to which
such Beneficiary was entitled at the time of his or her death shall
continue to be payable to the Beneficiary or to beneficiaries
designated by such Beneficiary in writing to the Plan Committee (or to
the Beneficiary's estate or heirs if he or she fails to designate a
beneficiary or beneficiaries).
ARTICLE VII - PLAN ADMINISTRATION
7.1 Plan Committee
This Plan and all matters related to it shall be administered by the
Plan Committee. The Plan Committee shall have the authority to interpret the
provisions of this Plan and to determine all questions arising in the
administration, interpretation and application of this Plan. The Plan Committee
may, in its sole discretion, delegate any or all of its responsibilities
relative to administration of this Plan to such officers of Scientific-Atlanta,
Inc. as it designates.
ARTICLE VIII - PARTICIPANT'S RIGHTS
8.1 Ineligibility to Participate in Plan
In the event that the Plan Committee determines that a Participant has
become ineligible to continue to participate in this Plan, the Plan Committee
may terminate Participant's participation in this Plan upon ten (10) days'
prior written notice to the Participant. In such event, the Participant will
not be entitled to make further Compensation Deferral Elections, but all
current Compensation Deferral Elections shall continue in effect. All Deferred
Benefit Accounts shall be payable as
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otherwise provided in Article VI hereof.
8.2 Termination of Plan
The Board of Directors of Scientific-Atlanta, Inc. may terminate this
Plan at any time, and termination of this Plan shall be effective upon ten (10)
days' written notice to all Participants in the Plan. Upon such termination of
this Plan, Scientific-Atlanta, Inc. shall pay all active Participants their
Deferred Benefits as provided in Section 6.1 as if each such Participant had
actually reached the Deferred Benefit Commencement Date for all of his or her
Deferred Benefit Accounts.
8.3 Participant's Rights
The right of a Participant or his or her Beneficiary or estate to
receive any benefits under this Plan shall be solely that of an unsecured
creditor of Scientific-Atlanta, Inc. Any asset acquired or held by
Scientific-Atlanta, Inc. or funds allocated by Scientific-Atlanta, Inc. in
connection with the liabilities assumed by Scientific-Atlanta, Inc. pursuant
to this Plan shall not be deemed to be held under any trust for the benefit of
any Participant or of any of Participant's Beneficiaries or to be security for
the performance of Scientific Atlanta, Inc.'s obligations hereunder but shall
be and remain a general asset of Scientific-Atlanta, Inc.
8.4 Spendthrift Provision
Neither a Participant nor any person claiming through a Participant
shall have the right to commute, sell, assign, transfer, pledge, mortgage or
otherwise encumber, transfer, hypothecate or convey any Deferred Benefit
payable hereunder or any part thereof in advance of its actually having been
received by a Participant or other appropriate recipient under this Plan, and
the right to receive all such Deferred Benefits is expressly declared to be
non-assignable and non-transferable. Prior to the actual payment (or issuance,
if appropriate) thereof, no part of the Deferred Benefits payable hereunder
shall be subject to seizure or sequestration for the payment of any debts,
judgments, alimony or separate maintenance owed by a Participant or any person
claiming through a Participant or be transferable by operation of law in the
event of a Participant's or any such other person's bankruptcy or insolvency.
8.5 Cooperation
Each Participant will cooperate with Scientific-Atlanta, Inc. by
furnishing any and all information reasonably requested by Scientific-Atlanta,
Inc. in order to facilitate the payment of Deferred Benefits hereunder and by
taking any such other actions as Scientific-Atlanta, Inc. or the Plan Committee
may reasonably request.
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ARTICLE IX - MISCELLANEOUS
9.1 Amendments and Modifications
The Board of Directors of Scientific-Atlanta, Inc. may amend this Plan
in any respect at any time. In addition, the Plan Committee may authorize the
following types of amendments to the Plan without Board approval: (a)
amendments required by law; (b) amendments that relate to the administration of
the Plan and that do not materially increase the cost of the Plan; and (c)
amendments that are designed to resolve possible ambiguities, inconsistencies
or omissions in the Plan and that do not materially increase the cost of the
Plan. All authorized amendments shall be effective upon ten (10) days' written
notice to the Participants. If any such amendment affects a Participant's
Deferred Benefits, such affected Participant may, within ninety (90) days after
the effective date of such amendment, elect to terminate his or her
participation in the Plan pursuant to this Section 9.1, in which event the date
of such election shall be deemed to be such Participant's Deferred Benefit
Commencement Date.
9.2 Inurement
This Plan shall be binding upon and shall inure to the benefit of
Scientific-Atlanta, Inc. and each Participant hereto, and their respective
beneficiaries, heirs, executors, administrators, successors and assigns.
9.3 Governing Law
This Plan is made in accordance with and shall be governed in all
respects by the laws of the state of Georgia.
9.4 Securities Law Restrictions
Notwithstanding any other provision of this Plan, no provision hereof
shall be applied in a manner that would cause a Participant or a former
Participant to be deemed to have made a purchase or sale of a derivative
security of Scientific-Atlanta, Inc. that would be subject to Section 16 of the
Securities Exchange Act of 1934, as amended (the "Act"), or the rules,
regulations, or interpretations thereunder. The Plan Committee shall have
complete power from time to time to adopt, amend, and rescind such rules as the
Plan Committee shall deem necessary, appropriate, or prudent in order to avoid
having the Plan or any interest in it deemed to constitute a derivative
security subject to Section 16 of the Act, as amended, or the rules promulgated
thereunder from time to time.
9.5 Tax Withholding
All payments (and issuances of shares) made pursuant to this Plan
shall be subject to the withholding of state and federal income taxes, FICA tax
or other taxes to the extent required by
29 of 31
<PAGE> 15
applicable law. The Plan Committee shall have the right, before delivery of a
cash payment or a stock certificate, to require the recipient to make
arrangements satisfactory to the Plan Committee to satisfy such withholding
requirements. A Participant receiving shares of Scientific-Atlanta, Inc.
Common Stock may satisfy such withholding requirements by having the Plan
Committee withhold shares otherwise issuable to the Participant if such
Participant makes an irrevocable election, by way of a written statement in a
form acceptable to the Plan Committee, at least six (6) months before the date
the Participant recognizes federal taxable income with respect to the receipt
of such shares or during any period set forth in Rule 16b-3(e)(3) under the
Securities Exchange Act of 1934.
To record the adoption of the Plan (as amended and restated) by the Board on
November 8, 1995, the Company has caused its authorized officers to execute
this Plan and affix the corporate name and seal hereto.
SCIENTIFIC-ATLANTA, INC.
By: /s/ Brian C. Koenig
-------------------------------------
Name: Brian C. Koenig
-----------------------------------
Title: Vice President Human Resources
----------------------------------
By: /s/ William E. Eason, Jr.
-------------------------------------
Name: William E. Eason, Jr.
-----------------------------------
Title: Secretary
-----------------------------------
[Seal]
30 of 31
<PAGE> 1
EXHIBIT 11
SCIENTIFIC-ATLANTA, INC., AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------------- ----------------------------
December 29, December 30, December 29, December 30,
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 76,379 76,019 76,699 75,800
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 969 2,212 1,297 2,123
------- ------- ------- -------
NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 77,348 78,231 77,996 77,923
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 50 20 20 109
------- ------- ------- -------
NUMBER OF SHARES OUTSTANDING
ASSUMING FULL DILUTION 77,398 78,251 78,016 78,032
======= ======= ======= =======
NET EARNINGS (LOSS) FOR PRIMARY
AND FULLY DILUTED COMPUTATION
Continuing Operations $ 6,601 $15,505 $10,687 $27,518
Discontinued Operations -- (492) (13,210) (396)
------- ------- ------- -------
Net Earnings (Loss) $ 6,601 $15,013 $(2,523) $27,122
======= ======= ======= =======
EARNINGS (LOSS) PER COMMON SHARE
AND COMMON EQUIVALENT SHARE
PRIMARY
Continuing Operations $ 0.09 $ 0.20 $ 0.14 $ 0.36
Discontinued Operations -- $ (0.01) $ (0.17) $ (0.01)
------- ------- ------- -------
Net Earnings (Loss) $ 0.09 $ 0.19 $ (0.03) $ 0.35
======= ======= ======= =======
FULLY DILUTED
Continuing Operations $ 0.09 $ 0.20 $ 0.14 $ 0.36
Discontinued Operations -- (0.01) (0.17) (0.01)
------- ------- ------- -------
Net Earnings (Loss) $ 0.09 $ 0.19 $ (0.03) $ 0.35
======= ======= ======= =======
</TABLE>
Note: In the three and six months ended December 29, 1995 the dilutive
effect of equivalent shares derived from stock options was less than 3
percent and therefore, the equivalent shares were not included in the
computation of earnings per share.
31 of 31
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q/A
FOR THE QUARTER ENDED DECEMBER 29, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-28-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> DEC-29-1995
<CASH> 22,802
<SECURITIES> 0
<RECEIVABLES> 215,500
<ALLOWANCES> 3,514
<INVENTORY> 246,348
<CURRENT-ASSETS> 542,841
<PP&E> 195,085
<DEPRECIATION> 61,629
<TOTAL-ASSETS> 721,422
<CURRENT-LIABILITIES> 207,383
<BONDS> 11,472
0
0
<COMMON> 38,628
<OTHER-SE> 423,515
<TOTAL-LIABILITY-AND-EQUITY> 721,422
<SALES> 503,293
<TOTAL-REVENUES> 503,293
<CGS> 374,499
<TOTAL-COSTS> 374,499
<OTHER-EXPENSES> 46,638
<LOSS-PROVISION> 405
<INTEREST-EXPENSE> 367
<INCOME-PRETAX> 15,716
<INCOME-TAX> 5,029
<INCOME-CONTINUING> 10,687
<DISCONTINUED> (13,210)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,523)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
