Scientific-Atlanta Reports Profits; Vows to Fight Adelphia Suit

Jul 27, 2004  •  Post A Comment

Set-top box maker Scientific-Atlanta on Tuesday reported a 117 percent surge in fiscal-year profit, as the company announced it was being sued in a class-action lawsuit by disgruntled investors in beleaguered cable operator Adelphia Communications.

The Atlanta-based Scientific-Atlanta reported a profit of $218 million, or $1.41 a share, for the 12 months ended July 2 vs. $100.3 million, or 65 cents a share a year ago, for the 12-month period ended June 27, 2003. The company attributed the lift in profit to an income tax settlement and the mark-to-market adjustment of several equity investments as well as strong sales of its digital-video recorder-enabled set-top boxes.

Revenue advanced 18 percent to $1.7 billion.

The company said it sold 277,000 standard-definition DVR-enabled set-top boxes during the fiscal year and 106,000 DVR-enabled high-definition set-top boxes for a total of 383,000 units-a 143 percent increase over the previous fiscal year.

Meanwhile, Scientific-Atlanta said it would “vigorously defend” itself against allegations by Adelphia investors claiming that several transactions between the cable operator and Scientific-Atlanta violated antifraud regulations in federal securities law. Rival set-top box maker Motorola was also named in the suit.

At the heart of the lawsuit is the testimony of a former Adelphia VP of finance who testified in the fraud trial of Adelphia founder and former Chairman John Rigas that Adelphia inflated its cash flow numbers by overpaying the set-top suppliers and treating the money the suppliers would return to Adelphia as cash flow.