-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HVmfgaugUp8ClG3EXyr4Tji4X6C88Ti1wMMpgCyeRZaMU23UOl9Ulu12S2T5u+vL b9+i/g+IXLnmwIHOUCu79A== 0000317093-95-000009.txt : 19951226 0000317093-95-000009.hdr.sgml : 19951226 ACCESSION NUMBER: 0000317093-95-000009 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951222 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANDREW CORP CENTRAL INDEX KEY: 0000317093 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 362092797 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 000-09514 FILM NUMBER: 95603982 BUSINESS ADDRESS: STREET 1: 10500 W 153RD ST CITY: ORLAND PARK STATE: IL ZIP: 60462 BUSINESS PHONE: 7083493300 MAIL ADDRESS: STREET 1: 10500 WEST 153RD ST CITY: ORLANDO PARK STATE: IL ZIP: 60462 10-K405 1 FORM 10K-405 (09-30-95) SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K405 (Mark One) (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT of 1934 For the fiscal year ended September 30, 1995. OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-9514 ANDREW CORPORATION (Exact name of Registrant as specified in its charter) DELAWARE 36-2092797 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) identification No.) 10500 W. 153rd Street, Orland Park, Illinois 60462 (Address of principal executive offices and zip code) (708) 349-3300 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: Title of Each Class Common Stock, $.01 par value Common Stock Purchase Rights 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 as 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 ---- ---- Indicate by check mark if disclosure of delinquent filers pursuant to item 405 of Regulation S-K is not contained herein and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K, or any amendment of this Form 10-K. (X) The aggregate market value of voting stock held by non-affiliates of the Registrant as of December 20, 1995 was $1,505,192,446. The number of outstanding shares of the Registrant's common stock as of that date was 39,111,781. Documents incorporated by Reference: Portions of the Registrant's Annual Report to Stockholders for the year ended September 30, 1995 are incorporated by reference into Parts I and II. Portions of the Proxy Statement for the annual stockholders' meeting to be held February 7, 1996 are incorporated by reference into Part III. PART I Item 1-Business General Andrew Corporation ("Andrew" or the "Company") was reincorporated in Delaware in 1987. The Company previously was incorporated in Illinois in 1947 as the successor to a partnership founded in 1937. Its executive offices are located at 10500 West 153rd Street, Orland Park, Illinois, 60462, which is approximately 25 miles southwest of Chicago's loop. Unless otherwise indicated by the context, all references herein to Andrew include Andrew Corporation and its subsidiaries. Andrew is a multinational supplier of communications products and systems to worldwide commercial, industrial, governmental and military customers. Its principal products include coaxial cables, microwave antennas for point-to- point communication systems, special purpose antennas for commercial, government and military end use, antennas and complete earth stations for satellite communication systems, electronic radar systems, communication reconnaissance systems, connectivity devices for use in communication systems, and related ancillary items and services. These products are frequently sold as integrated systems rather than as separate components. Andrew conducts manufacturing operations, primarily from ten locations in the United States and from four locations in other countries. Sales by non-U.S. operations and export sales from U.S. operations accounted for approximately 45% of Andrew's net sales in 1995, 44% in 1994, and 41% in 1993. During the year the Company operated in three strategic business areas, Commercial, Government and Network. The Commercial business supplies coaxial cable and antenna system equipment to telecommunications companies and agencies. The Government business supplies specialized antenna systems, electronic radar systems, communication reconnaissance systems, coaxial cable, standard antennas, and fully integrated systems to various United States government agencies and friendly foreign governments. The Network business supplies products and services through value added and other resellers to data processing organizations that support the interconnectivity needs of computer networks. Information concerning Andrew's net sales (intersegment sales are insignificant), operating profit and assets employed attributable to each business area for fiscal 1995, 1994, and 1993, is included in the "Industry Segment Information" note to Consolidated Financial Statements included on page 33 of the 1995 Annual Report to Stockholders and incorporated herein by reference. Products and Services The following table sets forth net sales and percentages of total net sales represented by Andrew's principal products during the last three years:
Year Ended September 30 1995 1994 1993 --------------------------------------------------- (Dollars in thousands) Coaxial Cable Systems and Bulk Cables $324,790 52% $248,613 45% $175,811 41% Microwave Antenna Systems 122,576 20 107,455 19 94,152 22 Special Antennas and Other 92,217 15 107,074 19 55,143 13 Earth Station Antennas 28,840 5 19,246 4 20,929 5 Defense Electronics 15,519 2 19,026 3 23,407 5 Network Products 39,217 6 52,208 9 57,681 13 Other 3,304 -- 4,835 1 3,697 1 -------- ---- -------- ---- -------- ---- $626,463 100% $558,457 100% $430,820 100% ======== ==== ======== ==== ======== ====
Sales for the Company's business areas during the last three years were as follows:
Year Ended September 30 1995 1994 1993 -------- -------- -------- (Dollars in thousands) Commercial $542,487 $457,803 $315,484 Government 41,455 43,611 53,958 Network 39,217 52,208 57,681 Other 3,304 4,835 3 ,697 -------- -------- -------- $626,463 $558,457 $430,820 ======== ======== ========
PRINCIPAL PRODUCTS Commercial Business Coaxial Cable Systems and Bulk Cables: Coaxial cable is a two-conductor, radio frequency transmission line with the smaller of the two conductors centrally located inside the larger, tubular conductor. It is principally used to carry radio frequency signals at frequencies up to 2 GHz. Waveguides are tubular conductors, the dimensions and manufacturing tolerances of which are related to operating frequency. Waveguides find greatest application at frequencies above 2 GHz, although they are also used in UHF-TV broadcasting at frequencies in hundreds of megahertz. Andrew manufactures waveguides with rectangular, circular and elliptical cross-sections. Most of Andrew's waveguides are sold as part of its antenna systems. Andrew sells its semi-flexible cables and waveguides under the trademark HELIAX(R). Microwave Antenna Systems: A "microwave antenna system," as this term is used by Andrew, consists of one or more microwave antennas, waveguides or coaxial cables connecting antennas to transmitters or receivers, a tower to support the antennas, an equipment shelter to house transmitters and receivers, various ancillary items, and field installation services. If sold without a supporting tower, equipment shelter or field installation, microwave antennas with their connecting cables or waveguides are still considered by Andrew to be "microwave antenna systems." Land-based microwave radio networks are commonly used by telecommunications companies for intercity telephone, telex, video and data transmission. They are also used for more specialized purposes by pipeline companies, electric utilities and railroads. Special Antennas and Other: Andrew also manufactures and sells several types and configurations of special application antennas. Applications include cellular systems, navigation, FM and television broadcasting, multipoint distribution services and instructional television. As with microwave antennas, Andrew considers sales of special antennas and other various components used in the cellular market (shelters and towers) and the installation of these components to be part of a "cellular system." The company also designs and installs its proprietary distributed communication systems. These systems permit in-building and enclosed area access for all types of wireless communications. These systems utilize the company's semi-flexible coaxial cable sold under the tradename RADIAX(R). Earth Station Antennas: Earth station antenna systems manufactured by Andrew are used at earth terminals to receive signals from, and transmit signals to, communication satellites in equatorial orbit. System elements include an antenna, from 6 to 40 feet in diameter, and may also include electronic controllers, waveguides, polarizers, combiners, special mounting features, motor drives, position indicators, transmitters and receivers. Andrew earth station antenna systems in all sizes are used in various countries to broadcast and transmit programs, both to CATV operators and to VHF or UHF broadcast stations, as well as long distance transmission of conventional telecommunications traffic. Government Business Defense Electronics: Andrew manufactures electronic scanning and communication receiver systems, which are designed to search and monitor the electromagnetic spectrum from 20 MHz to 40 GHz. These systems are purchased primarily for intelligence gathering in strategic surveillance operations which emphasize highly sensitive reception of weak signals as well as accuracy of signal analysis data. The Company's highly automated receiver systems are subsystems that are incorporated into fully-integrated systems which, in addition to the Company's receiving and analyzing equipment, include antennas and other equipment necessary to carry out the overall electronic reconnaissance operation. The Company is also engaged in the supply of fully integrated electronic surveillance systems, both for military radar reconnaissance and for non-military communications monitoring. These surveillance systems are custom designed by the Company's engineering staff to meet customer requirements. Other Products: The Company also supplies specialized microwave antenna systems to governmental agencies and the military. In addition, coaxial cables are used in military countermeasure devices, radar and specialized instrumentation applications. Earth station antenna systems and special application antennas are used for broadcasting programs and operational traffic to military bases and telemetry traffic associated with widely dispersed environmental monitoring stations. Andrew also manufactures pedestals and electronic controls for radio frequency and optical systems used in military and defense markets. Network Business Andrew designs, manufactures and markets advanced connectivity solutions for IBM mainframe, and token ring systems. Products include protocol convertors, local area network (LAN) gateways, terminal emulators, file transfer software, multistation access units, adapter cards, repeaters, bridges and routers. In addition, Andrew supplies channel interface products which provide direct channel links between IBM or plug-compatible host computers and non-IBM devices and networks, terminal to mainframe computer adapters and emulators for PCs and printers, emulation for Macintosh devices and wiring products such as baluns and star panels that provide cost-effective wiring connections for network communications equipment. INTERNATIONAL ACTIVITIES Andrew's international operations represent a substantial portion of its overall operating results and asset base. Manufacturing facilities are located in Canada, Australia, and the United Kingdom. Andrew's plants in the United States also ship significant amounts of manufactured goods to export markets. In Russia, Andrew participates in joint ventures that operate fiber optic telecommunication networks and manufacture sophisticated microwave antennas. During fiscal 1995 sales of products exported from the United States or manufactured abroad were $282,169,000 or 45% of total sales compared with $244,785,000 (44%) in fiscal 1994 and $175,811,000 (41%) in fiscal 1993. Exports from the United States amounted to $103,090,000 in fiscal 1995, $101,829,000 in fiscal 1994, and $54,253,000 in fiscal 1993. Sales and income before income taxes on a country-by-country basis can vary considerably year to year. Further information on Andrew's international operations is contained in the note "Geographic Area Information" to Consolidated Financial Statements included on page 32 of the 1995 Annual Report to Stockholders, incorporated herein by reference. Andrew's international operations are subject to a number of risks including currency fluctuations, changes in foreign governments and their policies, and expropriation or requirements of local or shared ownership. Andrew believes that the geographic dispersion of its sales and assets tends to mitigate these risks. MARKETING AND DISTRIBUTION Commercial Business Sales engineering functions, including product application assistance, are performed by a staff of highly trained applications engineers located at each manufacturing facility. In addition, field sales engineers are located at or near Atlanta, Dallas, Los Angeles, New York, San Francisco, Washington, D.C., Essen and Munich (Germany), Hong Kong (China), London (England), Madrid (Spain), Mexico City (Mexico), Milan (Italy), Paris (France), Tokyo (Japan), and Zurich (Switzerland). Unlike most of its competitors, Andrew uses its own sales and sales engineering staffs to service its principal markets, but follows the traditional practice of using commissioned sales agents in countries with modest sales potential. Approximately one-half of Andrew's products are sold directly to end users. Most of the remainder is sold to radio equipment companies which install Andrew's products as part of a total system, with the balance being sold through dealers and jobbers. Small or medium-size orders are normally shipped from inventory; delivery schedules on larger orders are negotiated, but seldom exceed five months. Andrew's sales are principally standard, proprietary items although unique specifications or features are incorporated for special order situations. Because most of Andrew's business is derived from large telecommunications system operators and the radio equipment manufacturers who supply this industry, Andrew has tailored its business strategy to serve the needs of technically sophisticated buyers. In particular, Andrew has emphasized the compatibility of antennas, transmission lines and related components in order to optimize their performance as an integrated subsystem. Government Business The specialized needs of the Company's customers and the technology required to meet those needs change constantly. Accordingly, the Company stresses its engineering, installation, service and other support capabilities to its government and military customers. To provide close communication with these customers and to discern developments and trends in procurement requirements, the Company has established a team of sales engineers located in five offices in the United States and one office in the United Kingdom. The Company also utilizes sales representatives in the United Kingdom, Germany and the Middle East. In addition, technical program support and direct sales engineering are performed at each location. The Company places great emphasis in its marketing on extensive personal contact and continuous consultation with its customers in an attempt to meet current technical requirements and anticipated future requirements and to learn of upcoming procurement programs in which its products may have application. Network Business The Company's Network business emphasizes support of three major computer connectivity market segments: mainframe interface, microcomputer to IBM midrange access, and token ring local area networking (LAN). Due to the specialized customer needs within these markets, each area has distinct marketing and distribution channels. Mainframe products are sold to Original Equipment Manufacturers (OEMs) and a select group of specialized system integrators whose focus is on the mainframe computer user. In the midrange area, the Company concentrates on a large group of highly specialized midrange computer dealers, and Value-Added Resellers (VARs). LAN products are sold through a distribution network of VARs, resellers and telesales. In addition, Andrew maintains business partner relationships with a select group of systems integrators in order to provide strong high-end product support channels for customers. Service and technical support is an integral part of the Company's sales program for all product groups and is provided either by the VAR or directly by the factory. MAJOR CUSTOMERS Andrew serves more than 6,000 customers in more than 100 countries. In the last three years, aggregate sales to the ten largest customers averaged approximately 24% of aggregate consolidated sales. No single customer has accounted for over 10% of consolidated annual sales in any of the last three years. In fiscal 1995, 1994 and 1993 direct and indirect sales to U.S. governmental agencies amounted to $22,337,000, $27,840,000, and $31,257,000, respectively. MANUFACTURING AND RAW MATERIALS Andrew generally develops, designs, fabricates, manufactures and assembles the products which it sells. In the Commercial business, cable and waveguide products are produced at its plants in Illinois and the United Kingdom. Parabolic antenna reflectors are manufactured primarily in Texas. Self-supporting and guyed towers are also manufactured in Texas. Equipment shelters are manufactured in Georgia and California. Andrew's defense electronic products are manufactured in plants located in Texas. The Company's products are manufactured from both standard components and parts that are built to the Company's specifications by other manufacturers. A large number of the Company's products contain multiple microprocessors for which proprietary machine readable software is designed by the Company's engineers and technicians. Network products are produced at plants in California. The production process principally entails assembly of electronic components. Andrew considers its sources of supply for all raw materials to be adequate and is not dependent upon any single supplier for any significant portion of materials used in its products. RESEARCH AND DEVELOPMENT Andrew believes that the successful marketing of its products depends upon its research, engineering and production skills. Research and development activities are undertaken for new product development and for product and manufacturing process improvement. In fiscal 1995, 1994 and 1993 Andrew spent $23,771,000, $25,707,000, and $22,011,000, respectively on research and development activities. Andrew holds approximately 255 active patents expiring at various times between 1996 and 2012, relating to its products and attempts to obtain patent protection for significant developments whenever possible. The Company does not consider patents to be material to its operations nor would the loss of any patents have a materially adverse effect on operations. COMPETITION Commercial Many large manufacturers of electrical or radio equipment, some of which have substantially greater financial resources than Andrew, compete with a portion of Andrew's antenna systems equipment and coaxial cable product lines. In addition, there are a number of small independent companies that compete with portions of these product lines. Andrew has traditionally focused on specific specialized fields within the marketplace which require sophisticated technology and support services. Andrew competes principally on the basis of product quality, service, and continual technological enhancement of its products. Government There are numerous manufacturers of electronic radar systems, communication reconnaissance systems and specialized antenna systems that supply their equipment to United States government agencies and friendly foreign governments. There is substantial competition within the market and the Company is not a major competitor. Due to fixed-price contracts and pre-defined contract specifications prevalent within this market, the Company competes primarily on the basis of its ability to provide state-of-the-art solutions in this technologically demanding marketplace while maintaining its competitive pricing. Network Within the corporate network communications market, Andrew's principal competitor is IBM which provides similar products across Andrew's product line. There are also numerous other manufacturers that compete with portions of Andrew's product line. Andrew's principal bases of competition within this market are product quality and reliability and product support. BACKLOG AND SEASONALITY The following table sets forth the backlog of orders believed to be firm in each of Andrew's businesses (government orders included herein are funded orders):
$000 Orders to be Shipped as of September 30 1995 1994 -------------------- ------------------- After After 12 Months 12 Months 12 Months 12 Months --------- --------- --------- --------- Commercial $113,700 $18,500 $65,200 $600 Government 9,800 -- 16,900 -- Network 800 -- 900 -- Other 600 -- 900 -- -------- ------- ------- ---- $124,900 $18,500 $83,900 $600 ======== ======= ======= ====
In the Commercial and Government businesses, Andrew can experience quarterly fluctuations in the level of sales. The variability in recent years has been demonstrated by typically higher sales and net income in the second six months of the fiscal year, particularly in the fiscal fourth quarter. The primary reason for this pattern is the need of northern hemisphere customers to complete installations during warm weather months. The fiscal fourth quarter can also be affected by the timing of sales to U.S. governmental agencies. Other factors which can cause quarterly fluctuations in net sales and net income include variability of shipments under large contracts and variations in product mix and in profitability of individual orders. These variations can be expected to continue in the future. Consequently, it is more meaningful to focus on annual rather than interim results. ENVIRONMENT The Company engages in a variety of activities to comply with various federal, state and local laws and regulations involving the protection of the environment. Compliance with such laws and regulations does not currently have a significant effect on the Company's capital expenditures, earnings, or competitive position. In addition, the Company has no knowledge of any environmental condition(s) which might individually or in the aggregate have a material adverse effect on the Company's financial condition. EMPLOYEES At September 30, l995, Andrew had 3,345 employees, of whom 2,593 were located in the United States. None of Andrew's employees are subject to collective bargaining agreements. As a matter of policy, Andrew seeks to maintain good relations with employees at all locations and believes that such relations are good. REGULATION Andrew is not directly regulated by any governmental agency in the United States. Most of its customers and the telecommunications industry generally, are subject to regulation by the Federal Communications Commission (the "FCC"). The FCC controls the allocation of transmission frequencies and the performance characteristics of earth station antennas. As a result of these controls, Andrew's antenna design specifications must be conformed on an ongoing basis to meet FCC requirements. This regulation has not adversely affected Andrew's operations. Outside of the United States, where many of Andrew's customers are government owned and operated entities, changes in government economic policy and communications regulation have affected in the past, and may be expected to affect in the future, the volume of Andrew's non-U.S. business. However, the effect of regulation in countries other than the U.S. in which Andrew does business has generally not been detrimental to Andrew's non-U.S. operations taken as a whole. GOVERNMENT CONTRACTS Andrew performs work for the United States Government primarily under fixed-price prime contracts and subcontracts. Under fixed-price contracts, Andrew realizes any benefit or detriment occasioned by lower or higher costs of performance. Total direct and indirect sales to agencies of the United States Government, which are generally fixed-price contracts, were $22,337,000 in 1995, $27,840,000 in 1994, and $31,257,000 in 1993. These contracts are typically less than 12 months in duration. Andrew, in common with other companies which derive a portion of their revenues from the United States Government, is subject to certain basic risks, including rapidly changing technologies, changes in levels of defense spending, and possible cost overruns. Recognition of profits is based upon estimates of final performance which may change as contracts progress. Contract prices and costs incurred are subject to Government Procurement Regulations, and costs may be questioned by the Government and are subject to disallowance. All United States Government contracts contain a provision that they may be terminated at any time for the convenience of the Government. In such event, the contractor is entitled to recover allowable costs plus any profits earned to the date of termination. Item 2-Properties Andrew has fourteen manufacturing facilities, thirty-four engineering and sales administration locations and two distribution facilities. All are equipped with appropriate office space. Andrew's executive offices are located at the facility in Orland Park, Illinois. The following table sets forth certain information regarding significant facilities:
Approximate floor area in Location square feet Principal Use Owned/Leased - -------- ------------- ------------- ------------ Orland Park, Illinois 554,000 Commercial and Government Owned Denton, Texas 230,000 Commercial and Government Owned Newnan, Georgia 103,000 Commercial Owned Garland, Texas 86,000 Government Owned Torrance, California 43,000 Network Leased Addison, Illinois 54,000 Commercial Leased Tinley Park, Illinois 54,000 Commercial Leased Sacramento, California 54,000 Commercial Leased --------- U.S. sub-total 1,178,000 Whitby, Ontario, Canada 92,000 Commercial and Government Owned Campbellfield, Victoria, Australia 115,000 Commercial and Government Owned Lochgelly, Fife, United Kingdom 132,000 Commercial and Government Owned Bachenbulach, Switzerland 6,000 Commercial and Government Leased Hong Kong, China 32,000 Commercial Leased --------- Non U.S. sub-total 377,000 --------- TOTAL 1,555,000 ========= The Company's properties are in good condition and are suitable for the purpose for which they are used.
Andrew owns a total of 664 acres of land. Of this total, 565 acres are unimproved, including 181 acres in Orland Park, Illinois, 137 acres in Floyd, Texas, l43 acres in Denton, Texas, and 98 acres in Ashburn, Ontario, Canada. Andrew also leases sales offices and facilities in the United States and in eleven countries outside the United States. Item 3-Legal Proceedings Andrew is not involved in any pending legal proceedings which are expected to have a materially adverse effect on its financial position, nor is it aware of any proceedings of this nature or relating to the protection of the environment contemplated by governmental authorities. Item 4-Submission of Matters to a Vote of Security Holders There were no matters which required a vote of security holders during the three months ended September 30, l995. PART II Item 5-Market for the Registrant's Common Stock and Related Stockholder Matters The Company's Common Stock is traded over-the-counter on the Nasdaq National Market. The Company had 3,523 holders of common stock of record at December 22, 1995. Information concerning the Company's stock price during the years ended September 30, l995 and 1994 is incorporated herein by reference from the l995 Annual Report to Stockholders, page 34. All prices represent high and low sales prices as reported by the Nasdaq National Market. It is the present policy of Andrew's Board of Directors to retain earnings in the business to finance the Company's operations and investments; and the Company does not anticipate payment of cash dividends in the foreseeable future. Long-term debt agreements include restrictive covenants which, among other things, provide restrictions on dividend payments. At September 30, l995, $201,097,000 was not restricted for purposes of such payments. Item 6-Selected Financial Data Selected financial data for the last five fiscal years is incorporated herein by reference from the l995 Annual Report to Stockholders, pages 36 and 37. Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations Information concerning this item is incorporated herein by reference from the l995 Annual Report to Stockholders, pages 16 through 20. Item 8-Financial Statements and Supplementary Data The Consolidated Financial Statements of the Company, Notes to Consolidated Financial Statements, Selected Quarterly Financial Information, and the report thereon of the independent auditors are incorporated herein by reference from the 1995 Annual Report to Stockholders, pages 21 through 35. Item 9-Changes in and Disagreements with Accountants on Accounting and Financial Disclosures None PART III Item l0-Directors and Executive Officers of the Registrant Information concerning directors and executive officers of the Registrant is incorporated herein by reference from the Company's l995 Proxy Statement under the captions "Election of Directors" and "Executive Officers." Item ll-Executive Compensation Information concerning management compensation is incorporated herein by reference from the Company's l995 Proxy Statement under the caption "Executive Compensation." Item l2-Security Ownership of Certain Beneficial Owners and Management Information concerning security ownership of certain beneficial owners and management is incorporated herein by reference from the Company's l995 Proxy Statement under the caption "Security Ownership." Item 13-Certain Relationships and Related Transactions Information concerning certain relationships and related transactions is incorporated herein by reference from the Company's 1995 Proxy Statement under the caption "Security Ownership." PART IV Item l4-Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) (1)The following consolidated financial statements of Andrew Corporation and subsidiaries, included in the l995 Annual Report to Stockholders, are incorporated by reference in Item 8: Consolidated Statements of Income years ended September 30, l995, 1994 and l993.................page 21 Consolidated Balance Sheets September 30, l995 and 1994...........................pages 22 and 23 Consolidated Statements of Cash Flows years ended September 30, l995, l994 and l993.................page 24 Consolidated Statements of Stockholders' Equity years ended September 30, l995, 1994 and l993.................page 25 Notes to Consolidated Financial Statements..........pages 26 through 33 Selected Quarterly Financial Information........................page 34 Report of Independent Auditors..................................page 35 (2)The following consolidated financial statement schedule of Andrew Corporation and subsidiaries is included in Item l4(d): Schedule II--Valuation and Qualifying Accounts and Reserves All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted. Item 14 cont. (3)Exhibit Index:
Exhibit No. Description Reference ----------- ----------- --------- 3.1(i) Certificate of Incorporation Filed as Exhibit 3.1(i) to Form 10-K for fiscal year ended September 30, 1994 and incorporated herein by reference. 3.1(ii) By-Laws of Registrant Filed as Exhibit 3.1(ii) to Form 10-K for fiscal year ended September 30, 1994 and incorporated herein by reference. 4.(a) Note Agreement dated Filed as Exhibit 4.(a) to Form 10-K for fiscal year ended September 1, 1990 September 30, 1990 and incorporated herein by reference. 4.(a)a First Amendment to Note Filed as Exhibit 4(a)a to Form 10-K for fiscal year ended Agreement dated September 30, 1992 and incorporated herein by reference. September 1, 1990 4.(b) Stockholder Rights Agreement Filed as Exhibit 4(b) to Form 10-K for fiscal year ended dated September 22, 1988 September 30, 1993 and incorporated herein by reference. 10.(a) Executive Severance Benefit Plan Filed as Exhibit 10(b)a to Form 10-K for fiscal year ended (i) Agreement with Floyd L. English September 30, 1991 and incorporated herein by reference. (ii) Agreement with Charles R. Nicholas (iii) Agreement with Ernest T. Weber 10.(a)a Executive Severance Benefit Plan Filed as Exhibit 10(a)a to Form 10-K for fiscal year ended (i) Agreement with Thomas E. Charlton September 30, 1993 and incorporated herein by reference. (ii) Agreement with John B. Scott (iii) Agreement with William L. Shockley 10.(a)b Executive Severance Benefit Plan (i) Agreement with Alan J. Rossi 10.(b) Management Incentive Plan Filed as Exhibit 10(c) to Form 10-K for fiscal year ended dated February 4, 1988. September 30, 1993 and incorporated herein by reference. 10.(c) Non-employee Directors' Filed as Exhibit 10(d) to Form 10-K for fiscal year ended Stock Option Plan dated September 30, 1993 and incorporated herein by reference. February 4, 1988. 10.(d) Credit Agreement dated as of Filed as Exhibit 10(e) to Form 10-K for fiscal year ended June 16, 1993. September 30, 1993 and incorporated herein by reference. 10.(d)a First Amendment to Credit Agreement dated June 16, 1993. 10.(d)b Second Amendment to Credit Agreement dated June 16, 1993. 10.(e) 1994 Employee Stock Purchase Filed with Proxy statement in connection with Plan Annual Meeting held February 2, 1994. 11 Computation of Earnings per Share l3 l995 Annual Report to Those portions of the 1995 Annual Report to Shareholders Stockholders expressly incorporated herein by reference. 21 List of Significant Subsidiaries 22 Proxy Statement in connection Filed on December 15, 1995 and incorporated herein by with Annual Meeting to be held reference. on February 7, 1996 23 Independent Auditors' Consent 27 Financial Data Schedules
(b) There were no reports on Form 8-K filed during the three months ended September 30, 1995. REPORT OF INDEPENDENT AUDITORS To the Stockholders and Board of Directors Andrew Corporation We have audited the consolidated financial statements and related schedule of Andrew Corporation and subsidiaries listed in Item 14(a)(1) and (2) of the annual report on Form 10-K of Andrew Corporation for the year ended September 30, 1995. These financial statements and related schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and related schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and related schedule are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and related schedule. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Andrew Corporation and subsidiaries at September 30, 1995 and 1994, and the consolidated results of their operations and their cash flows for each of the three years in the period ended September 30, 1995 in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. /s/ Ernst & Young LLP Chicago, Illinois November 3, 1995 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES ANDREW CORPORATION AND SUBSIDIARIES (Dollars in thousands)
COL. A COL. B COL. C COL. D COL. E Additions --------- Charged Balance Charged to to Other Balance Beginning Costs and Accounts-- Deductions-- at End of Period Expenses Describe Describe of Period --------- -------- -------- ------------ --------- Year ended September 30, l995: Allowance for doubtful accounts $ 2,769 $ 1,295 $ -- $ 998 $3,066 ======= ======= ===== ======= ====== Year ended September 30, l994: Allowance for doubtful accounts $ 3,167 $ 1,571 $ -- $ 1,969 $2,769 ======= ======= ===== ======= ====== Year ended September 30, 1993: Allowance for doubtful accounts $ 3,190 $ 1,636 $ -- $ 1,659 $3,167 ======= ======= ===== ======= ====== Note A: Represents write-offs, net of recoveries.
SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on December 20, 1995. Andrew Corporation By \s\ Floyd L. English ------------------------ Floyd L. English Chairman, President, and Chief Executive Officer By \s\ Charles R. Nicholas --------------------------- Charles R. Nicholas Executive Vice President and Chief Financial Officer By \s\ Gregory F. Maruszak --------------------------- Gregory F. Maruszak Vice President and Controller Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on December 20, 1995, by the following persons on behalf of the Registrant in the capacities indicated. \s\ John G. Bollinger \s\ Donald N. Frey ------------------------ --------------------- John G. Bollinger Donald N. Frey Director Director \s\ Jon L. Boyes \s\ Carole M. Howard ------------------- ----------------------- Jon L. Boyes Carole M. Howard Director Director \s\ George N. Butzow \s\ Ormand J. Wade ----------------------- --------------------- George N. Butzow Ormand J. Wade Director Director \s\ Kenneth J. Douglas ------------------------- Kenneth J. Douglas Director ANDREW CORPORATION EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION - ----------- ----------- 10.(a)b(i) Executive Severence Plan Agreement with Alan J. Rossi 10.(d)a First Amendment to Credit Agreement dated June 16, 1993 10.(d)b Second Amendment to Credit Agreement dated June 16, 1993 11. Computation of Earnings Per Share 13. Portions of 1995 Annual Report to Stockholders Incorporated by Reference 21. List of Significant Subsidiaries 23. Independent Auditors' Consent 27. Financial Data Schedule
EX-10.(A)B(I) 2 EXECUTIVE SEVERENCE PLAN AGREEMENT ANDREW CORPORATION EXECUTIVE SEVERANCE BENEFIT PLAN AGREEMENT THIS AGREEMENT made as of 1 December, 1994, between Andrew Corporation, a Delaware corporation (the "Company"), and Alan J. Rossi (the "Executive"). W I T N E S S E T H: 1. Participation. The Executive has been designated as a participant in the Andrew Corporation Executive Severance Benefit Plan (the "Plan") by the Compensation Committee of the Board of Directors of the Company. 2. Plan Benefits. The Executive agrees to be bound by the provisions of the Plan, including those provisions which relate to his eligibility to receive benefits and to the conditions affecting the form, manner, time and terms of benefit payments under the Plan, as applicable. The Executive understands and acknowledges that his benefit may be reduced pursuant to Section 10 of the Plan in order to eliminate any "excess parachute payments" as defined under Section 4999 of the Internal Revenue Code of 1954, as amended. The Executive may elect to receive his Plan benefits in installment payments, as provided under Section 9 of the Plan, by signing the statement included on page three of this Agreement. The Executive may make an election to receive installment payments, or may revoke any such election, at any time prior to the date which is ten days prior to the date on which a Change in Control is deemed to have occurred; provided that any election subsequent to the execution of this Agreement or any revocation shall be in writing and shall be subject to the approval of the Compensation Committee. 3. Federal and State Laws. The Executive shall comply with all federal and state laws which may be applicable to his participation in this Plan, including without limitation, his entitlement to, or receipt of, any benefits under the Plan. If the Executive is subject to the provisions of Section 16(b) of the Securities Exchange Act of 1934 as amended and in effect at the time of any Plan benefit payment, he shall comply with the provisions of Section 16(b), including any applicable exemptions thereto, whether or not such provisions and exemptions apply to all or any portion of his Plan benefit payments. 4. Amendment and Termination. The Board of Directors may amend, modify, suspend or terminate the Plan or this Agreement at any time, subject to the following: (a) without the consent of the Executive, no such amendment, modification, suspension or termination shall reduce or diminish his right to receive any payment or benefit then due and payable under the Plan immediately prior to such amendment, modification, suspension or termination; and (b) in the event of a Change in Control pursuant to Section 5 of the Plan, no such amendment, modification, suspension or termination of benefits, and eligibility therefor, will be effective prior to the expiration of the 48-consecutive-month period following the date of the Change in Control. 5. Beneficiary. The Executive hereby designates his primary beneficiary(ies) as Indrani Rossi, who will receive any unpaid benefit payments in the event of the Executive's death prior to full receipt thereof. In the event that the primary beneficiary(ies) predeceases the Executive, his unpaid benefits shall be paid to Adrian and Nicolas Rossi as secondary beneficiary(ies). If more than one primary or secondary beneficiary has been indicated, each primary beneficiary or, if none survives, each secondary beneficiary will receive an equal share of the unpaid benefits unless the Executive indicates specific percentages next to the beneficiaries' names. Except as required by applicable law, the Executive's beneficiary or beneficiaries shall not be entitled to any medical, life or other insurance-type welfare benefits. 6. Arbitration. The Executive agrees to be bound by any determination rendered by arbitrators pursuant to Section 11 of the Plan. 7. Employment Rights. The Plan and this Agreement shall not be construed to give the Executive the right to be continued in the employment of the Company or to give the Executive any benefits not specifically provided by the Plan. IN WITNESS WHEREOF, Andrew Corporation has caused this Agreement to be executed and the Executive has executed this Agreement, both as of the day and year first above written. ANDREW CORPORATION By /s/ Alan J. Rossi By /s/ F. L. English ----------------- ----------------- Alan J. Rossi F. L. English Group Vice President President, Chief Executive Officer ELECTION OF INSTALLMENTS I hereby elect to receive my Plan benefits in installment payments pursuant to the terms of Section 9 of the Plan. By /s/ Alan J. Rossi ----------------- Alan J. Rossi EX-10.(D)A 3 FIRST AMENDMENT TO CREDIT AGREEMENT FIRST AMENDMENT DATED AS OF AUGUST 15, 1994 TO CREDIT AGREEMENT DATED AS OF JUNE 16, 1993 THIS AMENDMENT, dated as of August 15, 1994, is entered into among ANDREW CORPORATION, a Delaware corporation (the "Company"), the various financial institutions parties hereto (collectively, the Lenders"), and CONTINENTAL BANK (F/K/A Continental Bank N.A., a national banking association), an Illinois banking corporation having its principal office at 231 South LaSalle Street, Chicago, Illinois 60697 ("Continental"), as agent ("Agent"), for the Lenders. R E C I T A L S: A. The Company, the Agent and the Lenders have entered into a Credit Agreement, dated as of June 16, 1993 (said Credit Agreement, as heretofore and hereby amended, shall hereinafter be referred to as the "Agreement"; the terms defined in the Agreement and not otherwise defined herein shall be used herein as defined in the Agreement). B. The Company, the Agent and the Lenders wish to amend the Agreement to extend the Stated Maturity Date, reduce pricing, delete certain covenants and to otherwise amend certain provisions of the Agreement. C. Therefore, the parties hereto agree as follows: 1. AMENDMENTS TO THE AGREEMENT. 1.1 Section 1.1 of the Agreement - Commitment Termination Date. The definition of "Commitment Termination Date" in Section 1.1 of the Agreement is hereby amended as of the date hereof by deleting clause (a) thereof and substituting "(a) Stated Maturity Date"; therefor. 1.2 Section 1.1 of the Agreement - Interest Period. The definition of "Interest Period" in Section 1.1 of the Agreement is hereby amended as of the date hereof by deleting the numeral "eight (8)" appearing in clause (a) thereof and substituting the numeral "twenty (20)" therefor. 1.3 Section 1.1 of the Agreement - Quoted Rate. The definition of "Quoted Rate" in Section 1.1 of the Agreement is hereby amended as of the date hereof by deleting the percentage "0.50%" appearing therein and substituting the percentage "0.25%" therefor. 1.4 Section 1.1 of the Agreement - Stated Maturity Date. The definition of "Stated Maturity Date" in Section 1.1 of the Agreement is hereby amended as of the date hereof by deleting the date "March 31, 1996" appearing therein and substituting the date "March 31, 1997" therefor. 1.5 Section 3.2.1(b) of the Agreement. Section 3.2.1(b) of the Agreement is hereby amended as of the date hereof by deleting the percentage "0.65%" appearing therein and substituting the percentage "0.25%" therefor. 1.6 Section 3.3.1 of the Agreement. Section 3.3.1 of the Agreement is hereby deleted in its entirety and the following substituted therefor: "SECTION 3.3.1 Facility Fee. The Company agrees to pay to the Agent for the account of each Lender, for the period (including any portion thereof when its Commitment is suspended by reason of any Borrower's inability to satisfy any condition of Article V) commencing on the Effective Date and continuing through the final Commitment Termination Date, a facility fee at the rate of fifteen hundredths of one-percent (.15%) per annum on such Lender's Percentage of the Commitment Amount. Such facility fees shall be payable by the Company in arrears on each Quarterly Payment Date, commencing with the first such day following August 15, 1994, and on the Commitment Termination Date for the period then ending." 1.7 Section 5.3.1(a) of the Agreement. Section 5.3.1(a) of the Agreement is hereby amended and restated in its entirety as follows: "(a) the representations and warranties set forth in Article VI (excluding, however, those contained in Sections 6.6, 6.7, 6.8 and 6.9) shall be true and correct with the same effect as if then made (unless stated to relate solely to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date) except for such changes as are specifically permitted hereunder;" 1.8 Section 7.1.3 of the Agreement. Section 7.1.3 of the Agreement is hereby deleted in its entirety and the following substituted therefor: "Intentionally Omitted." 1.9 Section 7.1.5 of the Agreement. Section 7.1.5 of the Agreement is hereby deleted in its entirety and the following substituted therefor: "Intentionally Omitted." 1.10 Section 7.2.1 of the Agreement. Section 7.2.1 of the Agreement is hereby deleted in its entirety and the following substituted therefor: "Intentionally omitted." 1.11 Section 7.2.3(b) and (d) of the Agreement. Section 7.2.3(b) and (d) of the Agreement are hereby deleted in their entirety and the following substituted therefor: "(b) Intentionally omitted." "(d) Intentionally Omitted." 1.12 Section 7.2.6 of the Agreement. Section 7.2.6 of the Agreement is hereby deleted in its entirety and the following substituted therefor: "Intentionally omitted." 2. WARRANTIES. To induce the Agent and the Lenders to enter into this Amendment, the Company warrants that: 2.1 Authorization. The Company is duly authorized to execute and deliver this Amendment and is and will continue to be duly authorized to borrow monies under the Agreement, as amended hereby, and to perform its obligations under the Agreement, as amended hereby. 2.2 No Conflicts. The execution and delivery of this Amendment, and the performance by the Company of its obligations under the Agreement, as amended hereby, do not and will not conflict with any provision of law or of the articles of incorporation or by-laws of the Company or of any agreement binding upon the Company. 2.3 Validity and Binding Effect. The Agreement, as amended hereby, is a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency or other similar laws of general application affecting the enforcement of creditors' rights or by general principles of equity limiting the availability of equitable remedies. 3. CONDITIONS FREQUENT TO AMENDMENTS. The amendments contemplated by Section 1 hereof are subject to the satisfaction of each of the following conditions precedent: 3.1 Documentation. The Company shall have delivered to the Agent (with sufficient copies for each Lender) all of the following, each duly executed and dated the closing date hereof, in form and substance satisfactory to the Agent: (a) Amendment. Counterparts of this Amendment. (b) Certificate. A certificate of the Treasurer of the Company as to the matters set out in Sections 3.2 and 3.3 hereof. (c) Other. Such other documents as the Agent may reasonably request. 3.2 No Default. As of the closing date hereof, no Default shall have occurred and be continuing. 3.3 Warranties. As of the closing date hereof, the warranties in Article VI of the Agreement and in Section 2 of this Amendment shall be true and correct as though made on such date, except for such changes as are specifically permitted under the Agreement. 4. GENERAL. 4.1 Expenses. The Company agrees to pay the Agent upon demand for all reasonable expenses, including reasonable attorneys' and legal assistants' fees, incurred by the Agent in connection with the preparation, negotiation and execution of this Amendment and any document required to be furnished herewith. 4.2 Law. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS. 4.3 Successors. This Amendment shall be binding upon the Company, the Agent and the Lenders and their respective successors and assigns, and shall inure to the benefit of the Company, the Agent and the Lenders and the successors and assigns of the Agent and Lenders. 4.4 Confirmation of the Agreement. Except as amended hereby, the Agreement shall remain in full force and effect and is hereby ratified and confirmed in all respects. 4.5 References to the Agreement. Each reference in the Agreement to "this Agreement," "hereunder," "hereof," or words of like import, and each reference to the Agreement in any and all instruments or documents provided for in the Agreement or delivered or to be delivered thereunder or in connection therewith, shall, except where the context otherwise requires, be deemed a reference to the Agreement as amended hereby. 4.6 Counterparts. This Amendment may be executed by the parties hereto on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed at Chicago, Illinois by their respective officers thereunto duly authorized as of the date first written ANDREW CORPORATION By: /s/ M J Gittelman Title: Treasurer CONTINENTAL BANK, as a Lender and as Agent By: /s/ Barbara A. Hamel Title: Vice President ABN AMRO BANK N.V. By: /s/ Brian B. Devane Title: Group Vice President By: /s/ Lawrence O'Reilly Title: Vice President THE FIRST NATIONAL BANK OF CHICAGO By: /s/ Karen F. Kizer Title: Senior Vice President CERTIFICATE I, the undersigned, Treasurer of Andrew Corporation ("Company"), DO HEREBY CERTIFY that: 1. The representations and warranties on the part of the Company contained in the First Amendment dated as of August 15, 1994 ("Amendment") to Credit Agreement dated June 16, 1993 ("Amendment") between the Company, the Lenders and Continental Bank, as agent (terms not otherwise defined herein have the same meaning herein as in the Amendment) and the Agreement are as true and correct at and as of the date hereof as though made on and as of the date hereof. 2. No Default has occurred and is continuing, or would result from the consummation of the Amendment on this date. WITNESS my hand as of the 15th day of August, 1994 /s/ M J Gittelman Treasurer EX-10.(D)B 4 SECOND AMENDMENT TO CREDIT AGREEMENT SECOND AMENDMENT DATED AS OF SEPTEMBER 29, 1995 TO CREDIT AGREEMENT DATED AS OF JUNE 16, 1993 THIS AMENDMENT, dated as of September 29, 1995, is entered into among ANDREW CORPORATION, a Delaware corporation (the "Company"), the various financial institutions parties hereto (collectively, the "Lenders"), and BANK OF AMERICA ILLINOIS (f/k/a CONTINENTAL BANK), an Illinois banking corporation having its principal office at 231 South LaSalle Street, Chicago, Illinois 60697 ("BAI"), as agent ("Agent"), for the Lenders. R E C I T A L S: A. The Company, the Agent and the Lenders have entered into a Credit Agreement, dated as of June 16, 1993, as amended by a First Amendment thereto dated as of August 14, 1994 (said Credit Agreement, as heretofore and hereby amended, shall hereinafter be referred to as the "Agreement"; the terms defined in the Agreement and not otherwise defined herein shall be used herein as defined in the Agreement). B. The Company, the Agent and the Lenders wish to amend the Agreement to revise the definition of Cash Equivalent Investment and to otherwise amend certain provisions of the Agreement. C. Therefore, the parties hereto agree as follows: 1. AMENDMENTS TO THE AGREEMENT. 1.1 Global Amendment. All references in the Agreement to "Continental Bank N.A." or "Continental" are hereby deleted as of the date hereof and "Bank of America Illinois" and "BAI", respectively, substituted therefor. 1.2 Section 1.1 of the Agreement - Cash Equivalent Investment. The definition of "Cash Equivalent Investment" in Section 1.1 of the Agreement is hereby amended as of the date hereof by deleting it in its entirety and substituting the following therefor: "'Cash Equivalent Investment' means, at any time, any Investment that is classified under GAAP as a short term investment and consistent with such Person's internal guidelines regarding liquidity and short term investments". 2. WARRANTIES. To induce the Agent and the Lenders to enter into this Amendment, the Company warrants that: 2.1 Authorization. The Company is duly authorized to execute and deliver this Amendment and is and will continue to be duly authorized to borrow monies under the Agreement, as amended hereby, and to perform its obligations under the Agreement, as amended hereby. 2.2 No Conflicts. The execution and delivery of this Amendment, and the performance by the Company of its obligations under the Agreement, as amended hereby, do not and will not conflict with any provision of law or of the articles of incorporation or by-laws of the Company or of any agreement binding upon the Company. 2.3 Validity and Binding Effect. The Agreement, as amended hereby, is a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency or other similar laws of general application affecting the enforcement of creditors' rights or by general principles of equity limiting the availability of equitable remedies. 3. CONDITIONS PRECEDENT TO AMENDMENTS. The amendments contemplated by Section 1 thereof are subject to the satisfaction of each of the following conditions precedent: 3.1 Documentation. The Company shall have delivered to the Agent (with sufficient copies for each Lender) all of the following, each duly executed and dated the closing date hereof, in form and substance satisfactory to the Agent: (a) Amendment. Counterparts of this Amendment. (b) Certificate. A certificate of the Treasurer of the Company as to the matters set out in Sections 3.2 and 3.3 hereof. (c) Other. Such other documents as the Agent may reasonably request. 3.2 No Default. As of the closing date hereof, no Default shall have occurred and be continuing. 3.3 Warranties. As of the closing date hereof, the warranties in Article VI of the Agreement and in Section 2 of this Amendment shall be true and correct as though made on such date, except for such changes as are specifically permitted under the Agreement. 4. GENERAL. 4.1 Expenses. The Company agrees to pay the Agent upon demand for all reasonable expenses, including reasonable attorneys' and legal assistants' fees (which attorneys and paralegals may be employees of the Agent), incurred by the Agent in connection with the preparation, negotiation and execution of this Amendment and any document required to be furnished herewith. 4.2 Law. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS. 4.3 Successors. This Amendment shall be binding upon the Company, the Agent and the Lenders and their respective successors and assigns, and shall inure to the benefit of the Company, the Agent and the Lenders and the successors and assigns of the Agent and Lenders. 4.4 Confirmation of the Agreement. Except as amended hereby, the Agreement shall remain in full force and effect and is hereby ratified and confirmed in all respects. 4.5 References to the Agreement. Each reference in the Agreement to "this Agreement," "hereunder," "hereof," or words of like import, and each reference to the Agreement in any and all instruments or documents provided for in the Agreement or delivered or to be delivered thereunder or in connection therewith, shall, except where the context otherwise requires, be deemed a reference to the Agreement as amended hereby. 4.6 Counterparts. This Amendment may be executed by the parties hereto on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed at Chicago, Illinois by their respective officers thereunto duly authorized as of the date first written above. ANDREW CORPORATION By: /s/ M J Gittelman Title: Treasurer BANK OF AMERICA ILLINOIS, as a Lender and as Agent By: Barbara A. Hamel Title: Barbara A. Hamel, Vice President ABN AMRO BANK N.V. By: Mary L. Janovsky Title: Mary L. Janovsky, Vice President By: /s/ James R. Morgan Title: James R. Morgan, Vice President THE FIRST NATIONAL BANK OF CHICAGO By: /s/ Karen F. Kizer Title: Senior Vice President CERTIFICATE I, the undersigned, Treasurer of Andrew Corporation ("Company"), DO HEREBY CERTIFY that: 1. The representations and warranties on the part of the Company contained in the Second Amendment dated as of September 29, 1995 ("Amendment") to Credit Agreement dated June 16, 1993 ("Agreement") between the Company, the Lenders and Bank of America Illinois, as agent (terms not otherwise defined herein have the same meaning herein as in the Amendment) and the Agreement are as true and correct at and as of the date hereof as through made on and as of the date hereof. 2. No Default has occurred and is continuing, or would result from the consummation of the Amendment on this date. WITNESS my hand as of the 29th day of September, 1995. /s/ M J Gittelman Treasurer EX-11 5 EX-11 COMPUTATION OF EARNINGS PER SHARE EXHIBIT 11 ANDREW CORPORATION AND SUBSIDIARIES Computation of Earnings Per Share (Amounts in thousands, except per share data)
Year Ended September 30 1995 1994 1993 ------- ------ ------ PRIMARY EARNINGS PER SHARE Average shares outstanding 38,607 38,013 37,281 Net effect of dilutive stock options-- based on the treasury stock method using average market price 559 1,102 1,141 ------- ------- ------- TOTAL 39,166 39,115 38,422 ======= ======= ======= Net income $67,809 $44,395 $27,862 ======= ======= ------- Per share amount $ 1.73 $ 1.13 $ .72 ======= ======= ======= FULLY DILUTED EARNINGS PER SHARE Average shares outstanding 38,607 38,013 37,281 Net effect of dilutive stock options-- based on the treasury stock method using the year-end market price 688 1,164 1,152 ------- ------- ------- TOTAL 39,295 39,177 38,433 ======= ======= ======= Net income $67,809 $44,395 $27,862 ======= ======= ======= Per share amount $ 1.73 $ 1.13 $ .72 ======= ======= ======= Note: The fully diluted earnings per share calculation is submitted in accordance with the Securities Exchange Act of l934 Release No. 9038 although not required by footnote 2 to paragraph l4 of APB Opinion No. l5 because it results in dilution of less than 3%.
EX-13 6 EX-13 ANNUAL REPORT TO SHAREHOLDERS Operations Review Continued growth in global wireless communications markets resulted in another record year for Andrew Corporation. Sales, net income and earnings per share rose to record levels for the fiscal year ended September 30, 1995. Strong demand for wireless communications products and systems within the cellular and land mobile markets of the commercial business segment were major contributors to a successful year. The strength in the commercial business segment was partially offset by decreased sales in the government and network business segments. Favorable product mix, volume efficiencies, continued cost control efforts and a decrease in other expenses resulted in net income increasing at a faster pace than sales. SALES rose 12% in 1995 to $626.5 million. International sales remained solid in 1995 representing 45% of the company's sales compared to 44% in 1994. Sales in the commercial business segment increased 18% to $542.5 million in 1995 from $457.8 million in 1994. The increase was primarily attributable to coaxial cable sales. In addition, terrestrial microwave and broadcast products contributed to the strong sales growth in this segment. In 1994, commercial business segment sales included $42.8 million in coaxial cable, towers and services provided to a consortium that developed a major cellular system in Argentina. As a result of consolidation of its operations, the network business segment experienced a 25% decrease in sales in 1995 to $39.2 million versus $52.2 million in 1994. Government business segment sales declined 5% to $41.5 million. COST OF PRODUCTS SOLD as a percentage of sales decreased in 1995 to 57.1% from 58.4% in 1994 and 58.5% in 1993. The decreases resulted from favorable product mix, primarily increased coaxial cable sales, and volume efficiencies within the commercial business segment. In addition, the government business segment contributed to the improvement in margins through continued cost containment efforts. These improvements were slightly offset by lower gross margins in the network business segment. OPERATING EXPENSES improved as a percentage of sales. Selling and administrative expenses, as a percentage of sales, were 21.5% in 1995, compared to 23.3% in 1994 and 25.5% in 1993. The reductions in 1995 and 1994 were accomplished largely due to a significantly greater rate of sales growth than expense growth. Total dollar spending increased to $134.9 million, up 3.8% in 1995, from $130 million in 1994, and $109.9 million, up 18.2% in 1993 on sales increases of 12.2% and 29.6% respectively. The expense increase in 1994 was attributable to increased profit sharing and marketing expenses and costs related to the continued support of the Russian and Ukrainian joint ventures. RESEARCH AND DEVELOPMENT expenses decreased to $23.8 million in 1995, compared to $25.7 million in 1994 and $22.0 million in 1993. The decline in 1995 stemmed primarily from cost reduction efforts within the government business segment and the consolidation of the network business operations. OTHER INCOME AND EXPENSE improved in 1995. Net interest expense was $2.7 million in 1995, versus $3.9 million in 1994 and $4.6 million in 1993. The declines are primarily attributable to increases in interest income due to larger investment balances. Net other expense declined to $1.4 million in 1995 from $3.3 million in 1994. The decline was due to a $2.7 million gain realized on the sales of Allen group debentures which was partially offset by the company's equity loss of $1.5 million related to its Russian and Ukrainian joint ventures. In 1994 the equity loss recorded from the joint ventures totaled $.9 million. NET INCOME increased 52.7% to $67.8 million in 1995. Increased sales and the resultant volume efficiencies and favorable product mix, along with cost containment efforts in sales, administrative, and research and development expenses and a reduction in other expenses, contributed to net income growing faster than sales. In 1994, net income increased 59% to $44.4 million from $27.9 million in 1993, also exceeding the revenue growth rate. The significant growth in 1994 was attributable to changes in product mix, improved productivity and cost controls. The company's effective tax rate was 36% in 1995 and 1994 and 36.1% in 1993. LIQUIDITY also improved with $53.8 million in cash generated from operating activities in 1995, compared to $51.8 million in 1994 and $55.0 million in 1993. This has enabled the company to continue to finance investments and working capital internally. Increases in inventory and accounts receivable in 1995 partially offset cash generated from net income. The inventory increase was primarily for the coaxial cable, wireless telephone accessories and equipment building businesses. The increase in accounts receivable was the result of higher sales levels. Capital expenditures increased $19.8 million to $46.9 million in 1995. Plant expansion and productivity-related enhancements to increase capacity within the commercial business segment contributed to the majority of the increase. In 1994 and 1993 capital expenditures totaled $27.1 million and $17.9 million, respectively. The increase in expenditures in 1994 was primarily due to the purchase of an equipment building manufacturing facility built in Newnan, Georgia, and the addition of several distribution warehouses. The company has a $50 million available line of credit under which there were no borrowings during 1995. During the first quarter of 1995, the company received $3.8 million from an Industrial Development Revenue Bond with Coweta County, Georgia in connection with the construction of the company's facility in Newnan, Georgia. At September 30, 1995 the company had $45.5 million of senior notes outstanding, of which $4.5 million is due within one year. Andrew has never paid cash dividends. It is the present policy of the Board of Directors to retain earnings in the business to finance investments and operations. CHANGES IN ACCOUNTING PRINCIPLES included the adoption of Statement of Financial Accounting Standard (SFAS) No. 115 "Accounting for Certain Investments in Debt and Equity Securities" during the first quarter of fiscal 1995. The adoption of SFAS No. 115 did not have a material effect on the company's financial statements. Andrew Corporation Consolidated Statements of Income (In thousands, except per share amounts)
Year Ended September 30 1995 1994 1993 --------- --------- --------- Sales $ 626,463 $ 558,457 $ 430,820 Cost of products sold 357,745 326,261 252,186 --------- --------- --------- Gross Profit 268,718 232,196 178,634 Operating Expenses Sales and administrative 134,852 129,971 109,947 Research and development 23,771 25,707 22,011 --------- --------- --------- 158,623 155,678 131,958 --------- --------- --------- Operating Income 110,095 76,518 46,676 Other Interest expense 5,280 5,200 5,445 Interest income (2,533) (1,343) (830) Other expense (income) 1,396 3,295 (1,530) --------- --------- --------- 4,143 7,152 3,085 --------- --------- --------- Income Before Income Taxes 105,952 69,366 43,591 Income taxes 38,143 24,971 15,729 --------- --------- --------- Net Income $ 67,809 $ 44,395 $ 27,862 ========= ========= ========= Net Income per Average Share of Common Stock Outstanding $ 1.73 $ 1.13 $ .72 ========= ========= ========= Average Shares Outstanding 39,295 39,177 38,433 ========= ========= ========= See Notes to Consolidated Financial Statements.
Andrew Corporation Consolidated Balance Sheets (Dollars in thousands)
September 30 1995 1994 --------- --------- ASSETS Current Assets Cash and cash equivalents $ 45,085 $ 40,267 Accounts receivables, less allowances (1995-$3,066; 1994-$2,769) 141,732 126,821 Inventories Finished products 43,646 31,413 Materials and work in process 75,788 56,174 --------- --------- 119,434 87,587 Miscellaneous current assets 4,430 5,974 --------- --------- Total Current Assets 310,681 260,649 Other Assets Costs in excess of net assets of businesses acquired, less accumulated amortization (1995-$16,524; 1994-$13,919) 35,667 38,272 Investments in and advances to affiliates 33,480 27,119 Investments and other assets 10,661 14,157 Property, Plant, and Equipment Land and land improvements 9,402 8,496 Buildings 55,069 52,422 Equipment 209,039 169,716 Allowances for depreciation and amortization (172,970) (155,668) --------- --------- 100,540 74,966 --------- --------- Total Assets $ 491,029 $ 415,163 ========= ========= See Notes to Consolidated Financial Statements.
September 30 1995 1994 --------- --------- (Dollars in thousands) LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 26,726 $ 24,902 Accrued expenses and other liabilities 17,607 24,354 Compensation and related expenses 25,310 22,928 Income taxes 13,666 14,899 Current portion of long-term debt 4,545 4,545 --------- --------- Total Current Liabilities 87,854 91,628 Deferred Liabilities 7,087 5,226 Long-Term Debt, less current portion 44,710 45,455 Stockholders' Equity Common stock (par value, $.01 a share: 100,000,000 shares authorized; 45,653,823 shares issued, including treasury) 457 304 Additional paid-in capital 44,437 31,205 Foreign currency translation 1,076 (1,283) Retained earnings 362,738 294,929 Treasury stock, at cost (6,648,675 shares in 1995; 7,336,740 shares in 1994) (57,330) (52,301) --------- --------- 351,378 272,854 --------- --------- Total Liabilities and Equity $ 491,029 $ 415,163 ========= ========= See Notes to Consolidated Financial Statements
Andrew Corporation Consolidated Statements of Cash Flows (Dollars in thousands)
Year Ended September 30 1995 1994 1993 -------- -------- -------- Cash Flows from Operations Net Income $ 67,809 $ 44,395 $ 27,862 Adjustments to Net Income Depreciation and amortization 24,960 22,387 21,186 Equity in losses of affiliates 1,462 913 150 Increase in accounts receivable (13,086) (17,329) (17) Increase in inventories (31,517) (15,950) (4,045) Decrease (increase) in miscellaneous current and other assets 5,700 (1,859) (1,290) Increase in receivables from affiliates (1,171) (6,467) -- Increase (decrease) in accounts payable and other liabilities (416) 26,572 9,754 Other 53 (841) 1,418 -------- -------- -------- Net Cash from Operations 53,794 51,821 55,018 Investing Activities Capital expenditures (46,864) (27,095) (17,876) Investments in and advances to affiliates (7,823) (10,626) (15,513) Proceeds from sale of property, plant and equipment 532 405 697 -------- -------- -------- Net Cash Used in Investing Activities (54,155) (37,316) (32,692) Financing Activities Proceeds from issuance of long-term debt 3,800 -- -- Payments on long-term debt (4,545) -- (4,025) Short-term borrowings -net payments -- -- (8,000) Stock purchase and option plans 5,561 3,255 5,464 -------- -------- -------- Net Cash From (Used for) Financing Activities 4,816 3,255 (6,561) Effect of exchange rate changes on cash 363 778 (1,469) -------- -------- -------- Increase for the year 4,818 18,538 14,296 Cash and equivalents at beginning of year 40,267 21,729 7,433 -------- -------- -------- Cash and Equivalents at End of Year $ 45,085 $ 40,267 $ 21,729 ======== ======== ======== See Notes to Consolidated Financial Statements.
Andrew Corporation Consolidated Statements of Stockholders' Equity (Dollars in thousands)
Year Ended September 30 1995 1994 1993 --------- --------- --------- Common Stock Issued Balance at beginning of year $ 304 $ 203 $ 101 Three-for-two stock split 153 101 -- Two-for-one stock split -- -- 102 --------- --------- --------- Balance at End of Year $ 457 $ 304 $ 203 ========= ========= ========= Additional Paid-In Capital Balance at beginning of year $ 31,205 $ 28,448 $ 28,343 Three-for-two stock split (153) (101) -- Two-for-one stock split -- -- (102) Stock purchase and option plans 13,385 2,858 207 --------- --------- --------- Balance at End of Year $ 44,437 $ 31,205 $ 28,448 ========= ========= ========= Retained Earnings Balance at beginning of year $ 294,929 $ 250,534 $ 222,672 Net Income 67,809 44,395 27,862 --------- --------- --------- Balance at End of Year $ 362,738 $ 294,929 $ 250,534 ========= ========= ========= Treasury Stock Balance at beginning of year $ (52,301) $ (54,205) $ (61,144) Stock purchase and option plans (5,029) 1,904 6,939 --------- --------- --------- Balance at End of Year $ (57,330) $ (52,301) $ (54,205) ========= ========= ========= See Notes to Consolidated Financial Statements.
Summary of Significant Accounting Policies Principles of consolidation. The consolidated financial statements include the accounts of the company and its majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Cash equivalents. The company considers all highly liquid investments purchased with maturities of three months or less to be cash equivalents. The carrying amount of cash equivalents approximates fair value due to the relative short-term maturity of these investments. Inventories. Inventories are stated at the lower of cost or market. Inventories stated under the last-in, first-out (LIFO) method represent 41% of total inventories in 1995 and 44% of total inventories in 1994. The remaining inventories are valued on the first-in, first-out (FIFO) method. If the FIFO method, which approximates current replacement cost, had been used for all inventories, the total amount of inventories would have been increased by $11,189,000 and $11,610,000 at September 30, 1995 and 1994, respectively. Depreciation and amortization. The company provides for depreciation and amortization of property, plant and equipment, all of which are recorded at cost, principally using accelerated methods based on estimated useful lives of the assets for both financial reporting and tax purposes. Costs in excess of net assets of businesses acquired are amortized on the straight-line basis over periods ranging from 10 to 40 years. Investments in affiliates. Investments in affiliates are accounted for using the equity method, under which the company's share of earnings or losses of these affiliates is reflected in income as earned and dividends are credited against the investment in affiliates when received. Revenue recognition. Revenue is recognized from sales, other than long-term contracts, when a product is shipped or a service is performed. Sales under long-term contracts generally are recognized under the percentage of completion method and include a portion of the earnings expected to be realized on the contract in the ratio that costs incurred bear to estimated total costs. Contracts in progress are reviewed monthly, and sales and earnings are adjusted in current accounting periods based on revisions in contract value and estimated costs at completion. Estimated losses on contracts are provided when identified. ANDREW CORPORATION Notes to Consolidated Financial Statements (Cont'd.) Summary of Significant Accounting Policies (Cont'd.) Foreign currency translation. The functional currency for the company's foreign operations is predominantly the applicable local currency. Accounts of foreign operations are translated into U.S. dollars using year-end exchange rates for assets and liabilities and average monthly exchange rates for revenue and expense accounts. Adjustments resulting from translation are included as a separate component of stockholders' equity. Gains or losses resulting from foreign currency transactions are included in determining net income. Income taxes. Deferred income taxes reflect the impact of temporary differences between the amounts of assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes. In accordance with Statement of Financial Accounting Standards ("SFAS") No. 109 "Accounting for Income Taxes," these deferred taxes are measured by applying currently enacted tax laws. In years prior to fiscal year 1994, deferred taxes were accounted for in accordance with Accounting Principles Board ("APB") Opinion No. 11. Net income per share. Net income per share is based on the weighted average number of common shares outstanding during each year after giving effect to stock options considered to be dilutive common stock equivalents. Fully diluted net income per share is not materially different from primary earnings per share. Accounting changes. The company adopted SFAS No. 115 "Accounting for Certain Investments in Debt and Equity Securities" during the first quarter of fiscal year 1995. During the first quarter of 1994, the company adopted SFAS No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions," SFAS No. 109 "Accounting for Income Taxes," and SFAS No. 112 "Employers' Accounting for Postemployment Benefits". The adoption of these statements did not have a material effect on the company's financial statements. ANDREW CORPORATION Notes to Consolidated Financial Statements (Cont'd.) Investments In Affiliates The company's investments in affiliates represents 40 to 50 percent interests in several start-up network telecommunications joint ventures in Russia and Ukraine. The combined operating results of the ventures and the company's share thereof were not material to the company's 1995, 1994 and 1993 operating results. Unbilled Receivables At September 30, 1995, unbilled receivables of $11,750,000 are included in accounts receivable, compared to $14,207,000 at September 30, 1994. These amounts will be billed to customers in accordance with contract terms and delivery schedules and are generally expected to be collected within one year. Profit Sharing Plans Most employees of Andrew Corporation and its subsidiaries participate in various retirement plans, principally defined contribution profit sharing plans. The amounts charged to earnings for these plans in 1995, 1994 and 1993 were $11,561,000, $10,915,000 and $7,020,000, respectively. ANDREW CORPORATION Notes to Consolidated Financial Statements (Cont'd.) Borrowings The company has a $50 million revolving credit agreement under which there were no amounts outstanding at September 30, 1995. Long-term debt at September 30 consisted of the following:
Dollars in thousands 1995 1994 ------- ------- 9.52% senior notes payable to insurance companies in annual installments from 1995 to 2005 $45,455 $50,000 Variable rate Industrial Development Revenue Bond with Coweta County, Georgia 3,800 - Less Current Portion 4,545 4,545 ------- ------- Total Long-Term Debt $44,710 $45,455 ======= =======
Under the terms of the loan agreements, the company is required to maintain certain levels of working capital and net worth. The loan agreements further provide restriction on dividend payments. At September 30, 1995 all these requirements have been met. The principal amounts of long-term debt maturing after September 30, 1995 are $4,545,000 annually in each fiscal year from 1996 through 2000 and $26,530,000 thereafter. Cash payments for interest on all borrowings were $4,930,000, $5,024,000 and $5,166,000 in 1995, 1994 and 1993, respectively. The carrying amount of long-term debt as of September 30, 1995 approximates fair value. The fair value was determined by discounting the future cash outflows based upon the current market rates for instruments with a similar risk and term to maturity. ANDREW CORPORATION Notes to Consolidated Financial Statements (Cont'd.) Income Taxes The composition of the provision for income taxes follows:
Year Ended September 30 1995 1994 1993 --------- -------- -------- (Dollars in thousands) Currently Payable: Federal $ 18,897 $ 13,504 $ 3,986 Non-United States 13,533 12,779 10,817 State 3,408 2,867 1,223 --------- -------- -------- 35,838 29,150 16,026 Deferred (Credit): Federal and State 2,207 (3,659) (260) Non-United States 98 (520) (37) --------- -------- -------- 2,305 (4,179) (297) --------- -------- -------- $ 38,143 $ 24,971 $ 15,729 ========= ======== ======== Income Taxes Paid $ 26,024 $ 18,474 $ 7,230 ========= ======== ======== Components of Income Before Income Taxes: United States 63,768 $ 30,923 $ 11,969 Non-United States 42,184 38,443 31,622 --------- -------- -------- $ 105,952 $ 69,366 $ 43,591 ========= ======== ========
The company's effective income tax rate varied from the statutory United States federal income tax rate because of the following:
1995 1994 1993 ---- ---- ---- Statutory United States federal tax rate 35.0% 35.0% 35.0% Foreign Sales Corporation (FSC) (2.3) (2.7) (2.5) State income taxes, net of federal tax effect 2.2 2.4 1.8 Goodwill amortization 0.9 1.3 2.1 Other items 0.2 -- (.3) ---- ---- ---- Effective Tax Rate 36.0% 36.0% 36.1% ==== ==== ====
ANDREW CORPORATION Notes to Consolidated Financial Statements (Cont'd.) Income Taxes (Cont'd.) The tax effects of temporary differences have given rise to gross deferred tax assets of $7,402,000, primarily accrued expenses and inventory, and gross deferred tax liabilities of $5,781,000, primarily depreciation, as of September 30, 1995. The company has not recorded a valuation allowance for deferred tax assets, because the existing net deductible temporary differences will reverse during periods in which the company expects to generate taxable income. No provision has been made for income taxes of approximately $4,563,000 at September 30, 1995, which would be payable should undistributed net income of $74,919,000 of subsidiaries located outside the United States be distributed as dividends, since any tax resulting from such a distribution could be substantially offset by resulting tax credits. ANDREW CORPORATION Notes to Consolidated Financial Statements (Cont'd.) Stockholders' Equity Each outstanding common share has attached to it a one Share Purchase Right which, until exercisable, cannot be transferred apart from the company's Common Stock. The Rights will only become exercisable if a person or group acquires 27% or more of the company's Common Stock or announces an offer to acquire 30% or more of the company's Common Stock. In the event the Rights become exercisable, each Right may entitle the holder to purchase Common Stock of either the surviving or acquired company at one-half its market price. The company currently maintains a long-term Management Incentive Program which provides for the issuance of up to 4,050,000 common shares in the form of stock options and awards and the awarding of performance units payable in cash or stock to key officers and other employees. Substantially all options granted under this plan become fully exercisable at the end of a four-year period and expire five years after grant. The company also maintains a Stock Option Plan for non-employee Directors that provides for the issuance of up to 450,000 common shares. Options issued under this plan vest over a five year period and expire ten years after grant. Information on options for the last three years ended September 30 is as follows:
1995 1994 1993 ---------- ---------- ---------- Outstanding at beginning of year 1,564,800 1,687,428 2,619,873 Granted 372,450 462,150 225,000 Expired or cancelled (32,067) (63,810) (186,723) Exercised (852,900) (520,968) (970,722) ---------- ---------- ---------- Outstanding at End of Year 1,052,283 1,564,800 1,687,428 ---------- ---------- ---------- Exercisable at End of Year 136,350 510,495 466,650 ========== ========== ========== Price range of options: Outstanding at end of year $ 2.95-38.50 $ 2.95-21.55 $ 2.95-12.11 Granted during the year $34.33-38.50 $15.67-21.55 $ 9.39-12.11 Exercised during the year $ 4.33- 9.39 $ 3.11-12.11 $ 2.95- 8.81
The company also has an Employee Stock Purchase Plan which expires February 1, 1999. All employees with six months of service as of the annual offering date are eligible to participate in this Plan. The Plan authorizes up to 787,500 shares of Common Stock to be sold to employees at 85% of market value. Through September 30, 1995, 185,178 shares have been issued under the Plan. ANDREW CORPORATION Notes to Consolidated Financial Statements (Cont'd.) Stockholders' Equity (Cont'd.) At September 30, 1995, 2,627,790 shares of Common Stock were reserved for the various stock plans described above. On February 8, 1995, the company's Board of Directors approved a three-for-two stock split to stockholders of record on February 22, 1995, payable March 8, 1995. A three-for-two stock split was also effected in March, 1994 and a two-for-one stock split was effected in March, 1993. Common Stock issued and outstanding and held in treasury is summarized in the tables below:
1995 1994 1993 ----------- ----------- ----------- Shares of Common Stock- Issued Balance at beginning of year 30,435,882 20,290,588 10,145,294 Three-for-two stock split 15,217,941 10,145,294 -- Two-for-one stock split -- -- 10,145,294 ----------- ----------- ----------- Balance at End of Year 45,653,823 30,435,882 20,290,588 =========== =========== =========== Shares of Common Stock-Held in Treasury Balance at beginning of year 4,891,160 3,495,678 1,982,452 Three-for-two stock split 2,445,580 1,747,839 -- Two-for-one stock split -- -- 1,825,057 Stock option and purchase plans (688,065) (352,357) (311,831) ----------- ----------- ----------- Balance at End of Year 6,648,675 4,891,160 3,495,678 =========== =========== ===========
Foreign currency translation adjustments increased equity by $2.4 million during the year ended September 30, 1995. Foreign currency translation adjustments increased equity $4.1 million and decreased equity $7.6 million during the years ended September 30, 1994 and 1993, respectively. ANDREW CORPORATION Notes to Consolidated Financial Statements (Cont'd.) Geographic Area Information Principal financial data by major geographic area:
1995 1994 1993 -------- -------- -------- (Dollars in thousands) Sales United States: Customers $447,384 $415,501 $309,262 Intercompany 62,302 42,754 34,539 -------- -------- -------- 509,686 458,255 343,801 Europe: Customers 125,010 94,620 79,614 Intercompany 13,890 5,462 2,510 -------- -------- -------- 138,900 100,082 82,124 Australasia: Customers 32,531 29,254 17,201 Intercompany 1,208 390 228 -------- -------- -------- 33,739 29,644 17,429 Other Americas: Customers 21,538 19,082 24,743 Intercompany 5,285 3,449 3,008 -------- -------- -------- 26,823 22,531 27,751 Eliminations 82,685 52,055 40,285 -------- -------- -------- Consolidated Sales $626,463 $558,457 $430,820 ======== ======== ======== United States - Export Sales $103,090 $101,829 $ 54,253 ======== ======== ======== Operating Income: United States $ 69,664 $ 42,436 $ 17,260 Europe 19,862 17,440 17,910 Australasia 16,979 12,447 6,472 Other Americas 3,590 4,195 5,034 -------- -------- -------- Consolidated Operating Income $110,095 $ 76,518 $ 46,676 ======== ======== ======== Assets Identifiable to: United States $359,045 $313,121 $253,059 Europe 100,208 75,257 59,922 Australasia 13,019 11,406 7,273 Other Americas 18,757 15,379 16,849 -------- -------- -------- Consolidated Assets $491,029 $415,163 $337,103 ======== ======== ========
Sales and transfers between geographic areas are made at amounts which approximate manufacturing cost and generally consist of products which require additional processing and with respect to which related selling, marketing and engineering expenses are incurred prior to shipment to customers. ANDREW CORPORATION Notes to Consolidated Financial Statements (Cont'd.) Industry Segment Information The company operates in three strategic business segments: commercial, government and network. The commercial segment serves commercial markets, including communications companies, radio equipment companies, television stations, utilities and distributors. Products include antennas and antenna systems, and coaxial cable. The government segment serves government markets--federal, foreign and local. Products include specialized antennas and communication reconnaissance systems sold to various United States government agencies and friendly foreign governments. Products also include coaxial cable and standard antennas sold to government customers. The network segment provides products and services supporting the integration of voice, data and video in corporate communication networks. The corporate and other category includes certain expenses for corporate administration; long-range research and development; costs related to unconsolidated affiliates; and results of operations which do not relate to business segments, as well as the assets associated therewith. Corporate identifiable assets also include cash and equivalents. In 1995, direct and indirect sales to agencies of the United States federal government totaled $22,337,000 compared to $27,840,000 in 1994 and $31,257,000 in 1993. Financial information by industry segment is as follows:
Corporate (Dollars in thousands) Commercial Government Network And Other Total ---------- ---------- ------- --------- ----- 1995: Sales $542,487 $41,455 $39,217 $ 3,304 $626,463 Operating income (loss) 138,774 3,879 (3,048) (29,510) 110,095 Identifiable assets 315,933 75,308 36,834 62,954 491,029 Capital expenditures 41,323 1,436 1,305 2,800 46,864 Depreciation and amortization 18,289 2,131 3,202 1,338 24,960 1994: Sales $457,803 $43,611 $52,208 $ 4,835 $558,457 Operating income (loss) 112,020 1,067 (5,409) (31,160) 76,518 Identifiable assets 228,560 66,800 42,502 77,301 415,163 Capital expenditures 22,986 1,527 655 1,927 27,095 Depreciation and amortization 13,574 3,256 3,494 2,063 22,387 1993: Sales $315,484 $53,958 $57,681 $ 3,697 $430,820 Operating income (loss) 71,258 2,547 (1,586) (25,543) 46,676 Identifiable assets 170,560 65,109 52,131 49,303 337,103 Capital expenditures 10,850 2,614 1,975 2,437 17,876 Depreciation and amortization 12,451 3,531 3,440 1,764 21,186
ANDREW CORPORATION Notes to Consolidated Financial Statements (Cont'd.) Selected Quarterly Financial Information (Unaudited) Due to variability of shipments under large contracts, customers' seasonal installation considerations, variations in product mix and in profitability of individual orders, the company can experience wide quarterly fluctuations in net sales and income. Consequently, it is more meaningful to focus on annual rather than quarterly results.
December March June September Annual -------- ----- ---- --------- ------ (In thousands, except per share amounts) 1995: Sales $142,605 $156,343 $161,272 $166,243 $626,463 Gross profit 58,758 63,448 70,341 76,171 268,718 Income before income taxes 17,553 22,046 28,821 37,532 105,952 Net income 11,234 14,109 18,446 24,020 67,809 Net income per share 0.28 0.36 0.47 0.61 1.73 Common Stock Price Range: High 35-3/4 44-3/4 57-7/8 64 Low 29-1/2 34 41 55 1994: Sales $121,746 $142,159 $135,970 $158,582 $558,457 Gross profit 48,820 52,683 58,738 71,955 232,196 Income before income taxes 10,042 14,206 17,294 27,824 69,366 Net income 6,427 9,092 11,068 17,808 44,395 Net income per share .17 .23 .28 .45 1.13 Common Stock Price Range: High 19-1/3 23-1/8 26-1/3 33-1/2 Low 13-1/8 16-1/8 20 1/2 24 The sum of net income per share for the four quarters in 1995 does not equal earnings per share for the year due to differences in average shares outstanding.
Report of Independent Auditors To the Stockholders and Board of Directors Andrew Corporation We have audited the accompanying consolidated balance sheets of Andrew Corporation and subsidiaries as of September 30, 1995 and 1994, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended September 30, 1995. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Andrew Corporation and subsidiaries at September 30, 1995 and 1994, and the consolidated results of their operations and their cash flows for each of the three years in the period ended September 30, 1995 in conformity with generally accepted accounting principles. /s/ Ernst & Young, LLP Chicago, Illinois November 3, 1995 FIVE YEAR FINANCIAL SUMMARY ANDREW CORPORATION
Dollars in thousands, except per share amounts 1995 1994 1993 1992 1991 - -------------------------------------------------------------------------------------------------------------- Operations - ------------- Sales $626,463 $558,457 $430,820 $442,008 $416,229 Employee compensation 182,501 166,850 147,323 145,632 145,079 Materials, supplies and services 343,544 311,768 222,801 222,912 224,120 Depreciation 21,840 19,271 18,065 17,911 17,255 Increase (decrease) in inventory 31,517 15,950 4,045 (11,713) 10,707 Interest expense 5,280 5,200 5,445 6,133 6,552 Interest income 2,533 1,343 830 1,328 961 Other income (expense) (1,396) (3,295) 1,530 944 985 Non-recurring items - - - - Income tax 38,143 24,971 15,729 14,992 13,698 Net income 67,809 44,395 27,862 24,987 22,178 Net income per share 1.73 1.13 .72 .58 .51 Financial Position - ------------------ Working capital 222,827 169,021 138,689 124,864 150,330 Property, plant and equipment, net 100,540 74,966 68,113 70,829 72,436 Total assets 491,029 415,163 337,103 313,932 343,018 Long-term debt 44,710 45,455 50,000 52,556 58,261 Stockholders' equity 351,378 272,854 219,570 192,224 217,471 Ratios and Other Data - --------------------- Current ratio 3.5 2.8 3.2 2.9 3.5 Return on sales 10.8% 7.9% 6.5% 5.7% 5.3% Return on average assets 15.0% 11.8% 8.6% 7.6% 6.7% Return on average stockholders' equity 21.7% 18.0% 13.5% 12.2% 10.7% Stockholders' equity per share outstanding $ 9.01 $ 7.12 $ 5.81 $ 5.23 $ 5.06 Foreign exchange gain (loss) (1,794) ( 2,021) 1,340 17 593 Research and development 23,771 25,707 22,011 20,156 20,341 Additions to property, plant and equipment 46,864 27,095 17,876 17,844 25,002 Net assets located outside U.S. at year end 159,400 129,300 89,300 64,500 70,000 Orders entered 685,600 555,000 436,300 418,300 419,900 Order backlog to be shipped in 12 months 124,900 83,900 85,500 83,900 107,600 Order backlog over 12 months 18,500 600 1,600 5,500 8,300 Number of employees at year end: Outside United States 752 651 577 591 713 Total employees 3,345 3,096 2,924 3,040 3,370 Average shares of stock outstanding (thousands) 39,295 39,177 38,433 43,146 43,799 Stockholders' of record at year end 2,340 1,482 1,133 1,057 1,137 All acquired businesses have been accounted for as purchases. Pro forma information is provided on individual acquisitions in the financial statements of the year of acquisition. In 1987, pre-tax charge of $19,000 for restructuring less pre-tax gain of $5,941 on sale of land. Total foreign exchange gain or loss, realized and unrealized, before provision for applicable taxes.
APPENDIX A
PAGES WHERE GRAPHIC DESCRIPTION OF GRAPHIC AND IMAGE MATERIAL IMAGE APPEARS (In thousands, except per share data) 16 Bar graph of Sales (Dollars in Millions) Data points: 1991-$416, 1992-$442, 1993-$431, 1994-$558, 1995-$626 16 Bar graph of Sales-International (Dollars in Millions) Data points: 1991-$168, 1992-$168, 1993-$176, 1994-$245, 1995-$282 16 Bar graph of Sales-U.S. Export (Dollars in Millions) Data points: 1991-$50, 1992-$49, 1993-$54, 1994-$102, 1995-$103 17 Bar graph of Gross Profit (Dollars in Millions) Data points: 1991-$159, 1992-$169, 1993-$179, 1994-$232, 1995-$269 17 Bar graph of Sales and Administrative Expenses (Dollars in Millions) Data points: 1991-$98, 1992-$105, 1993-$110, 1994-$130, 1995-$135 17 Bar graph of Research and Development Expenses (Dollars in Millions) Data points: 1991-$20, 1992-$20, 1993-$22, 1994-$26, 1995-$24 18 Bar graph of Operating Income (Percent to Sales) Data points: 1991-9.7%, 1992-9.9%, 1993-10.8%, 1994-13.7%, 1995-17.8% 18 Bar graph of Net Income (Dollars in Millions) Data points: 1991-$22.2, 1992-$25.0, 1993-$27.9, 1994-$44.4, 1995-$67.8 18 Bar graph of 12-Month Backlog (Dollars in Millions) Data points: 1991-$108, 1992-$84, 1993-$85, 1994-$84, 1995-$125 19 Bar graph of Return on Equity (Percent) Data points: 1991-10.7%, 1992-12.2%, 1993-13.5%, 1994-18.0%, 1995-21.7% 19 Bar graph of Return on Assets (Percent) Data points: 1991-6.7%, 1992-7.6%, 1993-8.6%, 1994-11.8%, 1995-15.0% 19 Bar graph of Sales per Employee (Dollars in Thousands) Data points: 1991-$127, 1992-$138, 1993-$144, 1994-$186, 1995-$195 20 Bar graph of Net Cash from Operations (Dollars in Millions) Data points: 1991-$32.3, 1992-$50.9, 1993-$55.0, 1994-$51.8, 1995-$53.8 20 Bar graph of Capital Expenditures (Dollars in Millions) Data points: 1991-$25, 1992-$18, 1993-$18, 1994-$27, 1995-$47 20 Bar graph of Total Debt (Dollars in Millions) Data points: 1991-$62, 1992-$54, 1993-$50, 1994-$50, 1995-$49
EX-21 7 EX-21 LIST OF SIGNIFICANT SUBSIDIARIES EXHIBIT 21 ANDREW CORPORATION AND SUBSIDIARIES List of Significant Subsidiaries Significant subsidiaries of the registrant, all of which are wholly-owned unless otherwise indicated, are as follows: Jurisdiction Name of Subsidiary of Incorporation Andrew AG.........................................................Switzerland Andrew Canada Inc......................................................Canada Andrew Communications B.V.........................................Netherlands Andrew Corporation (Australia) Pty. Ltd.............................Australia Andrew Data Corporation.....................................State of Delaware Andrew Espana, S.A......................................................Spain Andrew GmbH...........................................................Germany Andrew International Corporation............................State of Illinois Andrew KMW Systems Inc......................................State of Delaware Andrew Kommunikationssysteme AG...................................Switzerland Andrew Corporation (Mexico), S.A. de C.V...............................Mexico Andrew NPG Ltd.................................................United Kingdom Andrew SciComm Inc.............................................State of Texas Andrew S.A.R.L.........................................................France Andrew S.R.L............................................................Italy Andrew Systems Inc..........................................State of Delaware Andrew VSAT Systems Inc...................................State of California (owned 90%) UCI/Unified Communications, Inc............................State of Minnesota (owned 80%) EX-23 8 EX-23 CONSENT OF INDEPENDENT AUDITORS EXHIBIT 23 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in Registration Statement No. 2-86070 on Form S-8 dated August 23, 1983; Registration Statement No. 33-30364 on Form S-8 dated August 7, 1989; Registration Statement No. 33-58750 on Form S-8 dated February 24, 1993; Registration Statement No. 33-58752 on Form S-8 dated February 24, 1993; Registration Statement No. 33-52487 on Form S-8 dated March 2, 1994 and Post-Effective Amendment No. 1 to Registration Statement No. 33-52487 on Form S-8 dated March 3, 1994 of our report dated November 3, 1995, with respect to the consolidated financial statements incorporated by reference in the Annual Report (Form 10-K) and related schedule of Andrew Corporation for the year ended September 30, 1995. /s/ Ernst & Young LLP Chicago, Illinois December 20, 1995 EX-27 9 EX-27 ARTICLE 5 FINANCIAL DATA SCHEDULE
5 1,000 YEAR SEP-30-1995 SEP-30-1995 45,085 0 144,798 3,066 119,434 310,681 273,510 172,970 491,029 87,854 44,710 0 0 457 350,921 491,029 626,463 626,463 357,745 357,745 158,623 1,295 5,280 105,952 38,143 67,809 0 0 0 67,809 1.73 1.73 All per share amounts in this exhibit have been restated to reflect a three-for-two stock split to stockholders of record on February 22, 1995.
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