Thursday July 27, 4:55 pm Eastern Time
Company Press Release
SOURCE: Scientific-Atlanta, Inc.
Scientific-Atlanta Reports Record Fourth Quarter and
Fiscal Year Results
Subscriber Sales Increase 95% and Transmission Sales Increase 40% In the Quarter Compared to
the Prior Fiscal Year
ATLANTA, July 27 /PRNewswire/ -- Scientific-Atlanta, Inc. (NYSE: SFA - news) today reported record financial results for
its fiscal fourth quarter, with bookings, sales, operating profit, backlog and cash each setting all-time records.
Record Fourth Quarter
Bookings of $639.3 million in the fourth quarter represented an increase of $250.6 million, or 64% over the previous year's
fourth quarter. Sales of $552.6 million increased by $197.4 million, or 56% over the same period a year ago.
Net earnings for the quarter were $59.1 million, or $0.35 per share, up $11.7 million, or 25% over the prior year. Excluding
the one-time events in the prior year, net earnings for the fourth quarter of fiscal year 2000 increased $32.6 million, or 123%
over the prior year. The prior year's fourth quarter earnings included one-time events of $20.9 million, or $0.13 per share.
Backlog at fiscal year end was $811.7 million, an increase of $282.3 million, or 53%, over the fourth quarter of the previous
year. The backlog was $25.9 million higher than the previous record level achieved last quarter, despite a reduction of $56.4
million due to the sale of the company's Satellite Networks business to ViaSat, Inc. in April.
Strong Balance Sheet
The company's balance sheet remains strong with record cash and short-term investments of $523.1 million at the end of the
fiscal year, an increase of $220.2 million or 73% from the end of the prior fiscal year. The reduction in days sales outstanding to
53 days and the improvement in inventory turns to 6.9 contributed significantly to the positive cash flow in the fourth quarter.
The company continues to have no significant debt.
Record Fiscal Year
Fiscal year bookings were a record $2,067.8 million, up $782.9 million, or 61%, over last year. Sales for the year were a
record $1,715.4 million, an increase over last year of $471.9 million, or 38%. Net earnings for the year grew by $53.5 million,
or 52%, to $155.8 million, or $0.94 per share. Excluding one-time events, net earnings for the year increased 150% to $151.7
million, or $0.92 per share.
Strong fourth quarter results were driven by the company's Broadband segment. Subscriber sales increased 95% to $320.5
million, and Transmission sales increased 40% over the prior year's fourth quarter to $202.3 million. Subscriber bookings of
$403.7 million were up 10% sequentially and 188% from the prior year. Transmission bookings of $204.4 increased 11% over
last quarter and 5% over last year's record levels, led by a 119% increase in opto- electronics. Fourth quarter bookings and
sales in the Satellite segment were down as compared to the prior year due to the sale of the company's Satellite Networks
business.
Commenting on the fourth quarter and fiscal year 2000, James F. McDonald, Scientific-Atlanta's CEO said, ``I'm pleased that
every part of our business is performing well. Our Transmission business has enjoyed rapid growth for six consecutive quarters.
Subscriber sales are accelerating as cable operators expand their deployments. PowerTV continues to expand its leading
presence in digital interactive set-tops, and our service business is expanding as our customers demonstrate their confidence in
our capabilities.''
Subscriber Demand and Capacity Continue to Grow
Demand for the company's Explorer® digital interactive set-top continued to strengthen in the quarter. In the fourth quarter,
more than 1 million Explorer set-tops were ordered, and 835,000 units were shipped, versus 512,000 last quarter and
178,000 in the comparable period of the prior year. Backlog at the end of the quarter was 1.5 million units.
The company exited the year with production capacity of one million units per quarter, as compared to quarterly capacity of
250,000 units at the beginning of the fiscal year. Capacity again will be increased to 1.3 million set-tops per quarter by January,
2001. New digital interactive systems were shipped to an additional 17 cities in the quarter.
Demand for the Explorer platform broadened in the quarter, as two large customers made multi-year commitments. In May,
Charter Communications ordered 1.3 million Explorer 3000 set-tops for delivery over the next 30 months. In June, Adelphia
Communications ordered 1.6 million Explorer 3000 set-tops for delivery over the next 18 months. Both customers have shifted
all of their demand for Scientific-Atlanta product to the Explorer 3000 set-top, which provides enhanced graphics, memory,
and processor speed. Demand from other large customers, including Time Warner Cable, Cox Communications, Comcast
Cable Communications, Rogers Communications, and Le Groupe Videotron, continued to be strong in the quarter.
Transmission Architectural Leadership Continues
Scientific-Atlanta strengthened its lead in baseband digital reverse technology this quarter through introduction of its second
generation bdr(TM) products. Successfully deployed by seven customers in over 2000 reverse paths in more than 30 markets,
Scientific-Atlanta's architecture, including bdr products, now serves more than three million subscribers. The company also
introduced the Prisma® II platform, the cable industry's first ``carrier class'' optical network for interactive services, including
voice. In conjunction with this product introduction, the company announced a 50% increase in channel capacity for its Dense
Wave Division Multiplexing, or DWDM, optic transmission technology.
SciCare Offerings Expand
The company's SciCare(TM) Broadband Services business booked new orders for three new service products during the
quarter: Network Support Agreements, Network Availability Consulting Services and Operational Assessment Consulting
Services. These new services are being offered in response to the growing awareness and need of customers to focus on
process and service level improvements.
In the fourth quarter, the company received commitments from Charter Communications for headend consolidation and
integration work for eighteen sites.
PowerTV Expands its Lead
PowerTV strengthened its leading position in software solutions for digital interactive systems. Its operating system reached the
milestone of 2.5 million cumulative deployments in the quarter. To date, nearly 3 million licenses have been sold.
The previously announced merger of PRASARA Technologies into PowerTV was completed in July. PRASARA brings
complementary interactive application and back-office technology to PowerTV. The combined entity will be better positioned
to meet customers' needs with broader and deeper offerings.
International Markets Continue to Improve
The growth in international markets continued in the fourth quarter, as bookings increased 27% over the fourth quarter of the
prior year. Transmission bookings showed particular strength, increasing 104% over the comparable period of the prior year.
Significant orders from the Kabel Plus and Kabel Net subsidiaries of UPC in Europe and from several large operators in Latin
America signal increasing infrastructure spending.
In two significant markets, Canada and Asia, Transmission bookings increased in the quarter by $8.5 million and $5.9 million,
respectively, over the prior year. As in previous quarters, the absolute growth of bookings and sales in international markets
was overshadowed by the robustness of the domestic market.
Summarizing the quarter and the year, McDonald concluded, ``Fiscal year 2000 was the year in which our substantial
investments in broadband interactive technologies began to pay a handsome return. Acceptance of our products and services
by both consumers and cable operators is very strong. As we expand the presence of digital interactive set-tops well beyond
the current 10% of homes in North America, we believe that we will continue to create opportunities not only for our
Subscriber business, but also for our Transmission, software and services businesses.''
``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.scientificatlanta.com ) is a leading supplier of broadband transmission networks, digital
interactive subscriber systems, and worldwide customer service and support.
Scientific-Atlanta, the Scientific-Atlanta logo, SciCare, Prisma, bdr, and Explorer are trademarks of Scientific-Atlanta, Inc.
PowerTV is a trademark of PowerTV, Inc.
SCIENTIFIC-ATLANTA, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(IN MILLIONS, EXCEPT PER SHARE DATA)
Three Months Ended Twelve Months Ended
June 30, July 2, June 30, July 2,
2000 1999 2000 1999
SALES $552.6 $355.2 $1,715.4 $1,243.5
COSTS AND EXPENSES
Cost of sales 389.1 249.5 1,212.6 888.2
Sales and
administrative 51.1 42.8 177.6 162.0
Research and
development 32.3 30.3 122.4 117.3
Interest expense 0.1 --- 0.5 0.6
Interest (income) (6.5) (3.0) (19.6) (8.5)
Other (income)
expense, net 2.1 (32.0) (0.7) (62.3)
Total costs and
expenses 468.2 287.6 1,492.8 1,097.3
EARNINGS BEFORE
INCOME TAXES 84.4 67.6 222.6 146.2
PROVISION FOR INCOME
TAXES 25.3 20.3 66.8 43.9
NET EARNINGS $59.1 $47.3 $155.8 $102.3
EARNINGS PER COMMON SHARE
BASIC $0.37 $0.31 $0.99 $0.67
DILUTED $0.35 $0.30 $0.94 $0.65
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING
BASIC 159.4 153.8 157.8 153.6
DILUTED 168.0 158.7 164.9 157.1
BOOKINGS $639.3 $388.7 $2,067.8 $1,284.9
SOURCE: Scientific-Atlanta, Inc.
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