Thursday August 12, 4:15 pm Eastern Time
Company Press Release
SOURCE: Scientific-Atlanta, Inc.
Scientific-Atlanta Reports Record
Fourth Quarter and Record Fiscal
Year Results
ATLANTA, Aug. 12 /PRNewswire/ -- Scientific-Atlanta (NYSE: SFA - news) today reported
all-time record bookings and revenues for its fiscal fourth quarter ended July 2, 1999. Increased
revenues were driven by shipments of the company's transmission networks products and
Explorer® 2000 interactive digital set-tops.
Bookings of $388.7 million in the fiscal fourth quarter represented an increase of 22% over the
previous year's fourth quarter.
Revenues of $355.2 million increased 17% over the prior year's fourth quarter.
Net earnings for the quarter were $47.3 million, or $0.59 per share, including $20.9 million of
previously announced one-time, after-tax gains on marketable securities. Excluding the gains, net
earnings for the quarter were $26.4 million, or $0.33 per share, a 32% profit increase over the
previous year's comparable quarter. In the prior year, the company reported net earnings of $32.3
million, or $0.40 per share, which included one-time charges and one-time gains. Excluding these
one-time special items, net earnings in the fourth quarter of the previous year were $20.1 million, or
$0.25 cents per share. Backlog at fiscal year end was $529.4 million, a record for any fourth quarter
and the second highest in the company's history.
Record fiscal year
Fiscal year bookings were a record $1.28 billion. Sales for the year were a record $1.24 billion.
Net earnings for the fiscal year were a record $102.3 million, or $1.30 per share, including realized
and unrealized gains on marketable securities. Excluding the gains, net income was $60.7 million, or
$0.77 per share.
Strong balance sheet
The company's balance sheet remains strong with record cash and marketable securities of $302.9
million at the end of the fiscal year, an increase of $31.6 million from the end of the prior fiscal year.
The company continues to have no significant debt.
James F. McDonald, Scientific-Atlanta's CEO said, ''Record sales in our Broadband Segment, in
both the transmission and subscriber businesses, are being driven by the cable industry's accelerating
moves into Internet-Protocol based digital interactive services. Our transmission business grew to
$145.0 million in sales in the fourth quarter, a 28% increase compared to last year's fourth quarter,
and our subscriber business increased 26% over last year's fourth quarter to $164.2 million. It is
increasingly clear that the cable industry is entering a new phase of growth, and Scientific-Atlanta is
well positioned to benefit. Early on, we bet on Hybrid Fiber Coax, or HFC, architecture and on the
cable industry, and now it is becoming evident that HFC is the architecture of choice.
''We were particularly pleased with our North American sales in the fourth quarter. Our
transmission sales increased 34% versus last year's fourth quarter, while our subscriber business
increased 31% over the same period.''
Digital deployments increase 5-fold in six months
Seventy-nine Scientific-Atlanta digital interactive cable systems have been installed at customer sites
to date. Of those installed, 58 cable systems have launched commercial services to paying
customers. This compares to 24 systems launched at the end of the previous quarter and 8 systems
at the end of the second quarter. ''It is evident that the rate of deployment is accelerating as our
customers respond to growing consumer demand,'' McDonald said.
More than a half million Explorer 2000 digital set-tops shipped in fiscal
year
During the fourth quarter the company shipped 178,000 Explorer 2000
digital interactive set-tops, making a total of 511,000 shipped during the
fiscal year. Approximately 230,000 units have been installed in homes with
the remainder, less than 6,000 per system, held in cable operators'
inventories. Customers are installing the set-tops in subscriber homes at a
rate of approximately 20,000 per week compared to 4,000 per week at the
beginning of the fourth quarter.
Digital set-top production to double again
The company announced during the quarter that it would double production capacity for digital
interactive set-tops from 1 million units annually to 2 million units. A year ago, annual capacity was
doubled from 500,000 units to 1 million. ''This second increase is the result of customer
assessments of their future needs based on extremely favorable initial consumer reaction,''
McDonald said.
Analog shipments remain strong
The company shipped 472,000 analog set-tops in the fourth quarter compared to 503,000 in the
previous quarter as customers continued to implement the transition to digital technology. Analog
subscriber sales continue to be a significant profit contributor and complement to the company's
digital strategy. As indicated previously, the company anticipates some decline in domestic analog
shipments in the future as customers move to digital technology, and the company is managing the
business accordingly.
Transmission has banner quarter
The company's transmission business had an outstanding quarter with bookings up 67% in the fourth
quarter compared to the previous year's fourth quarter. Sales increased 28% over the same period.
The company began shipments of its Prisma(TM) DWDM, Dense Wavelength Division
Multiplexing, system to AT&T Broadband Internet Services and to Charter Communications. The
DWDM product has gained acceptance for its ability to expand the capacity of fiber-optic cable by
delivering up to 16 unique data streams on a single fiber. The company also received an order from
AT&T Broadband Internet Services for its baseband digital reverse products.
''These orders for our digital transport system, as well as strong demand for our 1310 optics
products and the GainMaker(TM) broadband amplifier platform by a number of MSOs continue to
strengthen our position as a provider of increased bandwidth solutions for our customers. Our
experience in building interactive digital video and Internet Protocol networks has been of invaluable
assistance in providing insight into the future requirements of the cable industry for opto-electronic
and other transmission products,'' McDonald said.
Services business on growth path
The company's Worldwide Services Organization continued its growth with a record $39.4 million in
service bookings for the fourth quarter, including some longer-term programs. As two-way
broadband networks are prepared for the launch of new digital video, voice and data services,
network operators turn to Scientific-Atlanta to assist in planning, building and activating their
systems. The company expanded its work in outside plant services by providing design, construction
and sweep/certification engineering services to customers in many parts of the country.
Satellite business on course
Bookings in the company's Satellite Segment increased $8.2 million sequentially and declined by 4%
compared to the previous year's fourth quarter. Satellite Segment sales declined $3.1 million
sequentially and were down 24% year over year. During the quarter, the company's satellite
television networks business began shipments of its fourth generation digital satellite transmission
system, PowerVu Plus(TM). The company announced in May 1999 that ESPN had selected
PowerVu Plus to provide its domestic digital platform, joining Time Warner Cable/AthenaTV as the
second major customer to select the company's new digital video compression system for its U.S.
transmissions.
The company announced in the fourth quarter that the PowerVu IP(TM) system has been installed at
MEDIASAT in Australia and at Hong Kong Telecom. Contracts were also signed with Bloomberg
Television for the analog-to-digital conversion of their domestic broadcast feeds, PanAmSat's launch
of its new GALAXY 3D(TM) domestic digital distribution service, and ARABSAT's extensive
implementation of additional PowerVu® equipment and a PowerVu IP system.
McDonald concluded, ''The broadband industry is on a growth path, and Scientific-Atlanta is
positioned as a major force in that industry. We have converted our vision of a digital interactive
network into a commercial success because we have remained consistent and committed to our
strategy for seven years. We have devoted sufficient research and development and other resources
to our vision, and we are now beginning to see some very tangible results.''
''Forward-looking statements,'' as defined in the Private Securities Litigation Reform Act of 1995,
may be included in this news release. A variety of factors could cause Scientific-Atlanta's actual
results to differ from the anticipated results expressed in such forward-looking statements. Investors
are referred to Scientific-Atlanta's Cautionary Statements (Exhibit 99 to the company's most recent
Form 10-Q), which statements are incorporated into this news release by reference.
Scientific-Atlanta, Inc (http://www.sciatl.com ) is a leading supplier of broadband communications
systems, satellite-based video, voice and data communications networks, and worldwide customer
service and support.
Explorer and PowerVu are registered trademarks and Prisma, GainMaker, PowerVu Plus, and
PowerVu IP are trademarks of Scientific-Atlanta, Inc. GALAXY 3D is a trademark of PanAmSat
Corp. All other trademarks are the property of their respective companies.
SCIENTIFIC-ATLANTA, INC.
consolidated statement of earnings
(in millions, except per share data)
Three Months Ended Twelve Months Ended
July 2, June 26, July 2, June 26,
1999 1998 1999 1998
SALES $355.2 $303.7 $1,243.5 $1,181.4
COSTS AND EXPENSES
Cost of sales 249.5 240.5 888.2 850.7
Sales and administrative 42.8 45.6 162.0 165.7
Research and development 30.3 30.8 117.3 111.5
Restructuring --- 23.4 --- 23.4
Interest expense --- 0.1 0.6 0.5
Interest (income) (3.0) (2.3) (8.5) (6.0)
Other (income) expense,
net (32.0) (80.6) (62.3) (79.8)
Total costs and expenses287.6 257.5 1,097.3 1,066.0
EARNINGS FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES 67.6 46.2 146.2 115.4
PROVISION FOR INCOME TAXES20.3 13.9 43.9 34.6
NET EARNINGS $47.3 $32.3 $102.3 $80.8
EARNINGS PER COMMON SHARE
BASIC $0.62 $0.41 $1.33 $1.03
DILUTED $0.59 $0.40 $1.30 $1.02
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
BASIC 76.9 78.9 76.8 78.7
DILUTED 79.3 80.3 78.6 80.0
BOOKINGS $388.7 $319.7 $1,284.9 $1,204.7
SOURCE: Scientific-Atlanta, Inc.
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