Scientific-Atlanta Reports Record Earnings of $0.67 per Share, Including Record $0.38 per Share from
Operations
-- Broadband Transmission and Subscriber Demand Remains Strong --
ATLANTA, Oct. 19 /PRNewswire/ -- Scientific-Atlanta, Inc. (NYSE: SFA - news) today reported
record financial results for its first fiscal quarter, with bookings, revenues, operating profit, backlog
and cash each setting all-time records.
Consistently Strong Financial Performance
For the quarter ending September 29, 2000, bookings were $674.7 million, an increase of $304.9
million, or 82%, over the prior year's first quarter. Revenues of $597.2 million rose by $247.9 million,
or 71%, from the same period a year ago. Net earnings for the quarter were $113.3 million, or $0.67 per
share. This represents an $88.0 million, or 349%, improvement in net earnings over the comparable
period of the prior year, which were $0.16 per share. Excluding an after-tax gain of $49.5 million from
the sale of a portion of the company's investment in Bookham Technology plc and Wink
Communications Inc., net earnings for the quarter were $63.8 million, or $0.38 per share. This
represents an increase of $38.6 million, or 153% over the first quarter of the previous year.
Strong first quarter results were driven by the company's Broadband businesses. Subscriber sales
increased 145% year-over-year to $385.7 million, and Transmission sales increased 27% to $186.7
million. Subscriber bookings of $454.6 million were up 185% from the prior year. Transmission
bookings of $194.1 million increased 15% year-over-year. First quarter bookings and sales in the
Media Networks business increased 11% and 7%, respectively, as compared to the prior year.
Backlog at quarter end was a record $888.8 million, an increase of $339.0 million from last year and up
$77.1 million from last quarter.
The company's balance sheet remains strong, with cash and short-term investments of $676.4 million
at the end of the first quarter. This represents an increase of $361.3 million, or 115%, over the prior
year and an increase of $153.2 million, or 29%, from last quarter's record balance. The company
continues to have no significant debt.
Commenting on the first quarter, James F. McDonald, Scientific-Atlanta's CEO said, ``This was
another outstanding quarter for Scientific-Atlanta. The diversity of our Broadband strategies in
Transmission, Subscriber, Media Networks, and services allowed us to capitalize on the many
opportunities that exist in this marketplace.''
Broadband Subscriber Volume Grows as Product Offering is Broadened
For the first time, quarterly shipments of digital set-tops exceeded one million units. In the first
quarter, more than 1.2 million Explorer® set- tops were ordered, and 1.03 million units were shipped,
versus 835,000 last quarter and 245,000 in the comparable period of the prior year. Backlog at the end
of the quarter was 1.7 million units.
In the first quarter, the company began production of the new Explorer 2100 and 3100 digital
interactive set-tops. Designed for improved performance with more consumer-friendly features, both
models include more memory and 130 MHz processors, compared with the 54MHz and 108MHz
processors in the Explorer 2000 and the Explorer 3000 set-tops, respectively. The new models are
25% smaller than their predecessors and feature a USB port on the front panel for convenient access
for USB-enabled devices such as digital cameras and camcorders.
The production mix in the first quarter continued to shift in favor of the Explorer 3000 and 3100
set-tops, which command higher average selling prices due to their greater memory and graphics
capabilities. In the preceding quarter, the Explorer 3000 set-top represented approximately 13% of
shipments; however, the Explorer 3000 and 3100 set-tops together accounted for 35% of shipments
in the most recent quarter.
Broadband Transmission Growth Attributed to Diverse Strategy
Scientific-Atlanta's Transmission business continued to benefit from increasing demand for its
opto-electronics products. Driven by the need for more bandwidth to support the commercial
launches of interactive applications, cable operators are continuing their network upgrades and
beginning to split nodes. The 91% increase in the company's opto-electronics bookings as
compared to the prior year reflects this trend.
International demand for the company's Transmission products was strong in the first quarter, with
bookings up 91% over the first quarter of last year. Each international region posted strong
increases in bookings. Asia was up 108% year-over-year, driven by large orders from Japan.
Bookings in Europe and the Middle East were up 40% year-over-year. European orders included an
order for a wide range of fiberoptic equipment from UPC's Intercom Sudcable Services in France.
Bookings in Latin America have grown by more than 600% over the prior year on the strong demand
from Argentina and Brazil.
The Transmission business has expanded its served market by working with a select number of
broadband service providers. These new operators value Scientific-Atlanta's end-to-end product
line as they design completely new networks with advanced capabilities for video, data, and voice.
In the first quarter these operators, as a group, represented approximately 10% of Transmission
bookings.
In support of these strategies, Scientific-Atlanta continued to make investments in promising new
technologies this quarter. Early in the quarter, the company announced an investment in Alloptic
Inc. designed to speed development of fiber optic solutions for the crucial ``last mile'' to the home.
This high-speed passive optical network (PON) technology has the potential to provide significant
cost advantages over alternative technologies by reducing fiber count as well as construction and
maintenance costs.
The company also announced an investment in BridgeWave Communications Inc., an innovative
wireless broadband technology developer. This strategic investment in BridgeWave is intended to
provide customers with the technology to reach new small and medium size business customers,
enabling new revenue opportunities from their existing HFC cable plant. Scientific-Atlanta plans to
integrate BridgeWave's technology into its Prisma® fiber nodes.
PowerTV Reaches 4 Million Shipments
The company's PowerTV subsidiary reached cumulative operating system shipments of 4 million
units in the quarter, and cumulative middleware licenses exceeded 3.5 million. Responding to
customer demand for advanced interactive products, PowerTV has more than doubled its headcount
to approximately 200 in the last year.
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