-----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, GCCNvzVT1wa79PVfN8qQEk3TB99ezZkART3ku5T9ZT0EodKIT6saXhH366iJRJbC joZIjhSRGjnVsg2ZnaJ+0g== 0000317093-96-000025.txt : 19961223 0000317093-96-000025.hdr.sgml : 19961223 ACCESSION NUMBER: 0000317093-96-000025 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961220 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANDREW CORP CENTRAL INDEX KEY: 0000317093 STANDARD INDUSTRIAL CLASSIFICATION: DRAWING AND INSULATING NONFERROUS WIRE [3357] IRS NUMBER: 362092797 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-09514 FILM NUMBER: 96683717 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-K 1 FORM-10K (09/30/96) SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (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, 1996. 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. ( ) The aggregate market value of voting stock held by non-affiliates of the Registrant as of November 30, 1996 was $3,501,110,729. The number of outstanding shares of the Registrant's common stock as of that date was 60,489,128. DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Registrant's Annual Report to Stockholders for the year ended September 30, 1996 are incorporated by reference into Parts I and II. Portions of the Proxy Statement for the annual stockholders' meeting to be held February 11, 1997 are incorporated by reference into Part III. PART I ITEM 1-BUSINESS GENERAL All figures presented in this Form 10-K as well as any documents incorporated by reference have been restated to reflect the recent acquisition by Andrew Corporation ("Andrew" or the "Company") of The Antenna Company, which was accounted for as a pooling of interests. Andrew 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. In addition, the Company sells cellular antenna products and cellular telephone accessories. Andrew conducts manufacturing operations, primarily from thirteen 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 47% of Andrew's net sales in fiscal 1996, 44% in 1995, and 43% in 1994. During fiscal 1996, Andrew completed three acquisitions which provided new products and improved accessibility to expanding markets. In December 1995, the Company purchased a 51% interest in Mapra Industria e Comerico Ltda. and Gerbo Telecommunicacoes e Servicos Ltda., located in Brazil. Mapra and Gerbo manufacture, distribute, and sell antennas, waveguides and towers and provide installation services. Andrew also formed a cable manufacturing company with Mapra and Gerbo in which Andrew holds a 70% interest. In March 1996, the Company completed its acquisition of The Antenna Company, a manufacturer and distributor of wireless telephone antennas and accessories for mobile applications. In June 1996, the company purchased an 80% interest in the Satcom Group of Companies, a distributor of commercial products, located in South Africa. 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 and cellular antenna products and cellular phone accessories through retail distribution channels of cellular service providers. 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 1996, 1995, and 1994 is included in the "Industry Segment Information" note to Consolidated Financial Statements on page 31 of the 1996 Annual Report to Stockholders and is 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 1996 1995 1994 -------------------------------------------------------- (Dollars in thousands) Coaxial Cable Systems and Bulk Cables $415,633 52% $324,790 49% $248,613 42% Microwave Antenna Systems 153,231 19 122,576 19 107,455 18 Special Antennas and Other 88,922 11 84,663 13 107,620 19 Wireless Accessories 63,498 8 48,355 7 34,065 6 Earth Station Antennas 32,830 4 28,840 4 19,246 3 Network Products 27,569 4 39,217 6 52,208 9 Defense Electronics 11,892 2 15,519 2 19,026 3 -------- ---- --------- ---- --------- ----- $793,575 100% $663,960 100% $588,233 100% ======== ==== ======== ==== ======== ====
Sales for the Company's business areas during the last three years were as follows:
Year Ended September 30 1996 1995 1994 ------------------------------------- (Dollars in thousands) Commercial $731,347 $579,984 $487,579 Government 34,063 41,455 43,611 Network 27,568 39,217 52,208 Other 597 3,304 4,835 -------- -------- -------- $793,575 $663,960 $588,233 ======== ======== ========
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). Wireless Accessories: Andrew manufactures and distributes accessories for personal communication systems, cellular handsets and paging devices. Portable antennas, batteries, battery chargers, paging accessories, hands free kits, and various other wireless accessories are all included in this group. The recent acquisition of The Antenna Company increased Andrew's product offering and opened domestic distribution channels. 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 for the 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, the United Kingdom, and Brazil. 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. During fiscal 1996, sales of products exported from the United States or manufactured abroad were $376,743,000 (47% of total sales) compared with $287,662,000 (44% of total sales) in fiscal 1995 and $250,067,000 (43% of total sales) in fiscal 1994. Exports from the United States amounted to $112,648,000 in fiscal 1996, $103,090,000 in fiscal 1995, and $101,829,000 in fiscal 1994. Sales and income before income taxes on a country-by-country basis may 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 30 of the 1996 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 generally mitigates 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 in or near Atlanta, Dallas, Los Angeles, New York, San Francisco, Washington, D.C., Essen and Munich (Germany), Hong Kong, Johannesburg (South Africa), London (England), Madrid (Spain), Mexico City (Mexico), Milan (Italy), Moscow (Russia), Paris (France), Sorocaba (Brazil), 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. The commercial business also includes mobile cellular products such as antennas and cellular telephone accessories. These products are sold primarily through the retail distribution channels of cellular service providers. In addition, mobile cellular products are sold to distributors who then resell these products to dealers and cellular carriers. 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 technical 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 to 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 130 countries. In the last three years, aggregate sales to the ten largest customers averaged approximately 26% 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 1996, 1995 and 1994, direct and indirect sales to U.S. governmental agencies amounted to $18,250,000, $22,337,000, and $27,840,000, respectively. MANUFACTURING AND RAW MATERIALS Andrew generally develops, designs, fabricates, manufactures and assembles its products. In the Commercial business, cable and waveguide products are produced at its plants in Illinois, Brazil, and the United Kingdom. Microwave and earth station antennas are manufactured in Texas and Australia. Self-supporting and guyed towers are also manufactured in Texas. Equipment shelters are manufactured in Georgia and California. Wireless antennas and accessories for mobile applications are manufactured in Illinois. 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 the 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 1996, 1995 and 1994 Andrew spent $33,003,000, $25,124,000, and $26,611,000, respectively, on research and development activities. Andrew holds approximately 273 active patents relating to its products expiring at various times between 1998 and 2004, 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 material 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 some of Andrew's antenna systems equipment, wireless products, 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):
Orders to be Shipped as of September 30 1996 1995 --------------------- ---------------------- (Dollars in thousands) Within After Within After 12 Months 12 Months 12 Months 12 Months -------- --------- --------- --------- Commercial $144,700 $14,700 $115,600 $18,500 Government 7,500 --- 9,800 -- Network 1,200 --- 800 -- -------- -------- --------- -------- $153,400 $14,700 $126,200 $18,500 ======== ======== ========= ========
Due to variability of shipments under large contracts, customers' seasonal installation considerations, variations in product mix and in profitability of individual orders, the Company may experience wide quarterly fluctuations in net sales and income. 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, l996, Andrew had 4,622 employees, 3,460 of whom 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 $18,250,000 in fiscal 1996, $22,337,000 in 1995, and $27,840,000 in 1994. 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. In addition, 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 seventeen manufacturing facilities, thirty-nine engineering and sales administration locations and seven 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 551,000 Commercial and Government Owned Denton, Texas 244,000 Commercial and Government Owned Newnan, Georgia 109,000 Commercial Owned Garland, Texas 89,000 Government Owned Itasca, Illinois 78,000 Commercial Leased Richardson, Texas 68,000 Commercial Leased Dolton, Illinois 55,000 Commercial Leased Addison, Illinois 54,000 Commercial Leased Tinley Park, Illinois 54,000 Commercial Leased Sacramento, California 54,000 Commercial Leased ---------- U.S. sub-total 1,356,000 Sorocaba, Sao Paulo, Brazil 143,000 Commercial Owned Lochgelly, Fife, United Kingdom 132,000 Commercial and Government Owned Campbellfield, Victoria, Australia 115,000 Commercial and Government Owned Whitby, Ontario, Canada 92,000 Commercial and Government Owned ---------- Non U.S. sub-total 482,000 ---------- TOTAL 1,838,000 ========== The Company's properties are in good condition and are suitable for the purposes 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 thirteen 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, l996. 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 3,734 holders of Common Stock of record at December 18, 1996. Information concerning the Company's stock price during the years ended September 30, l996 and 1995 is incorporated herein by reference from Andrew's l996 Annual Report to Stockholders, page 32. All prices represent high and low sales prices as reported by the Nasdaq National Market. It is the present practice 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, l996, $307,812,000 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 to the l996 Annual Report to Stockholders, pages 34 and 35. 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 l996 Annual Report to Stockholders, pages 14 through 18. 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 to the 1996 Annual Report to Stockholders, pages 19 through 33. ITEM 9-CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES None PART III ITEM 10-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 l996 Proxy Statement under the captions "Election of Directors" and "Executive Officers" and "Section 16(a) Beneficial Ownership Reporting Compliance." ITEM 11-EXECUTIVE COMPENSATION Information concerning management compensation is incorporated herein by reference from the Company's l996 Proxy Statement under the captions "Executive Compensation", "Director Compensation," "Report of the Compensation Committee of the Board of Directors" and "Company Performance." ITEM 12-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 l996 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 1996 Proxy Statement under the caption "Security Ownership." PART IV ITEM 14-EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) The following consolidated financial statements of Andrew Corporation and subsidiaries, included in the l996 Annual Report to Stockholders, are incorporated by reference in Item 8: Consolidated Statements of Income years ended September 30, l996, 1995 and l994.........................page 19 Consolidated Balance Sheets September 30, l996 and 1995...................................pages 20 and 21 Consolidated Statements of Cash Flows years ended September 30, l996, l995 and l994.........................page 22 Consolidated Statements of Stockholders' Equity years ended September 30, l996, 1995 and l994.........................page 23 Notes to Consolidated Financial Statements................pages 24 through 31 Selected Quarterly Financial Information..............................page 32 Report of Independent Auditors........................................page 33 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 herin 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 to Form 8-A dated November 18, 1996 dated November 14, 1996 and incorporated herein by reference. 10.(a) Executive Severance Benefit Plan Filed as Exhibit 10(a) to Form 10-Q for fiscal quarter ended (i) Agreement with Floyd L. English June 30, 1996 and incorporated herein by reference. (ii) Agreement with Charles R. Nicholas 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 10.(a)b Executive Severance Benefit Plan Filed as Exhibit 10(a)b to Form 10-Q for fiscal quarter ended (i) Agreement with William B. Currer June 30, 1996 and incorporated herein by reference. 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 Filed as Exhibit 10(d)a to Form 10-K for fiscal year ended Agreement dated June 16, 1993. September 30, 1995 and incorporated herein by reference. 10.(d)b Second Amendment to Credit Filed as Exhibit 10(d)b to Form 10-K for fiscal year ended Agreement dated June 16, 1993. September 30, 1995 and incorporated herein by reference. 10.(d)c Third Amendment to Credit Filed as Exhibit 10(d)c to Form 10-Q for fiscal quarter ended Agreement dated June 16, 1993. June 30, 1996 and incorporated herein by reference. 10.(d)d Guaranty dated as of Filed as Exhibit 10(d)d to Form 10-Q for fiscal quarter ended April 11, 1996. June 30, 1996 and incorporated herein by reference. 10.(d)e Replacement Note dated as of Filed as Exhibit 10(d)e to Form 10-Q for fiscal quarter ended April 8, 1996. June 30, 1996 and incorporated herein by reference. 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 l996 Annual Report to Those portions of the 1996 Annual Report to Shareholders Stockholders expressly incorporated herein by reference. 21 List of Significant Subsidiaries 22 Proxy Statement in connection with Annual Meeting to be held on February 11, 1997 (To be filed within 120 days of the Registrant's fiscal year end.) 23 Consent of Independent Auditors 27 Financial Data Schedules
(b) Reports on Form 8-K On September 20, 1996, the Company filed a restated 1995 Annual Report under Item 5 of Form 8-K. Andrew restated the 1995 Annual Report due to the acquisition of The Antenna Company which was accounted for as a pooling of interests. In compliance with the accounting for a pooling of interests all prior financial data has been restated to include the results of operations of The Antenna Company. REPORT OF INDEPENDENT AUDITORS To the Stockholders and Board of Directors Andrew Corporation We have audited the consolidated financial statements of Andrew Corporation and subsidiaries listed in Item 14 (a) of the annual report on Form 10-K of Andrew Corporation for the year ended September 30, 1996. 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 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Andrew Corporation and subsidiaries at September 30, 1996 and 1995, and the consolidated results of their operations and their cash flows for each of the three years in the period ended September 30, 1996 in conformity with generally accepted accounting principles. /s/ Ernst & Young LLP Chicago, Illinois October 25, 1996 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, 1996. 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 20,1996, by the following persons on behalf of the Registrant in the capacities indicated. \s\ John G. Bollinger \s\ Jere D. Fluno ---------------------- ------------------------ John G. Bollinger Jere D. Fluno 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 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION - ----------- ----------- 11 Computation of Earnings per Share 13 Portions of 1996 Annual Report to Shareholders Incorporated by Reference 21 List of Significant Subsidiaries 23 Consent of Independent Auditors 27 Financial Data Schedule
EX-11 2 EXHIBIT 11 COMPUTATION OF EPS EXHIBIT 11 ANDREW CORPORATION AND SUBSIDIARIES Computation of Earnings Per Share
Year Ended September 30 1996 1995 1994 ------- ------- ------- (Amounts in thousands, except per share data) PRIMARY EARNINGS PER SHARE Average shares outstanding 60,175 59,453 58,562 Net effect of dilutive stock options-- based on the treasury stock method using average market price 821 838 1,653 ------- ------- ------- TOTAL 60,996 60,291 60,215 ======= ======= ======= Net income $90,397 $69,955 $45,767 ======= ======= ======= Per share amount $ 1.48 $ 1.16 $ .76 ======= ======= ======= FULLY DILUTED EARNINGS PER SHARE Average shares outstanding 60,175 59,453 58,562 Net effect of dilutive stock options-- based on the treasury stock method using the year-end market price 1,013 1,032 1,746 ------- ------- ------- TOTAL 61,188 60,485 60,308 ======= ======= ======= Net income $90,397 $69,955 $45,767 ======= ======= ======= Per share amount $ 1.48 $ 1.16 $ .76 ======= ======= ======= 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 3 EXHIBIT 13 ANNUAL REPORT TO SHAREHOLDERS OPERATIONS REVIEW Andrew Corporation once again set record highs in orders, sales, net income and net income per share for the fiscal year ended September 30, 1996. In the United States, accelerating construction for PCS more than offset slower cellular construction. International cellular, common carrier and broadcast markets were consistently strong throughout the year. Expanded manufacturing capacity, new distribution locations and new products strengthened the company's ability to compete in the growing, global wireless market. During fiscal 1996, Andrew completed three acquisitions that added new products and improved accessibility to our markets. In December 1995, the company purchased a 51% interest in MAPRA Industria e Comercio Ltda. and GERBO Telecommunicacoes e Servicos Ltda., located in Brazil. The companies manufacture, distribute and sell antennas, waveguide and towers and provide installation services. In March 1996, the company completed its acquisition of The Antenna Company, a manufacturer and distributor of wireless telephone accessories and mobile antennas. In June 1996, Andrew purchased an 80% interest in the SATCOM Group of Companies, a distributor of commercial products, located in South Africa. Sales for the year increased $129.6 million or 20% over 1995 to $793.6 million. Sales in the commercial business segment increased $151.4 million or 26% to $731.3 million. In 1996, a 28% increase in sales of coaxial cable, a 25% increase in terrestrial microwave antenna systems and a 31% increase in cellular telephone accessories fueled the increase in the commercial business segment. In 1996, the government business segment and the network business segment declined 18% and 30%, respectively. In 1995, the commercial business segment increased $92.4 million or 19% over 1994 to $580.0 million. Increased sales of coaxial cable and strong growth in terrestrial microwave, wireless accessories and broadcast products contributed to growth in the commercial segment in 1995. Cost of Products Sold, as a percentage of sales revenue, remained relatively unchanged over the three-year period. Cost of goods sold as a percentage of sales revenue was 58.1%, 57.5% and 58.8% in 1996, 1995 and 1994, respectively. During 1996, increased raw material prices and price competition were partially offset by changes in product mix, the effect of efficiencies of volume and manufacturing improvements. Research and Development expenses rose as the company continued to invest in the future. In 1996, research and development spending increased $7.9 million or 31.4% to $33.0 million, compared with $25.1 million in 1995 and $26.6 million in 1994. The increase in 1996 reflects the company's new product development efforts in the commercial business segment. The decline in 1995 stems from the company's cost reduction efforts in the government business segment and the network business. Operating Expenses over the last three years increased at a much lower rate than the increase in sales revenue. Improved systems, centralization of selling and administrative functions and productivity gains are all important factors in this trend. Selling and administrative expenses as a percentage of sales revenue decreased to 19.3% in 1996 compared with 21.5% in 1995 and 23.3% in 1994. Total spending increased $10.3 million or 7.2% to $153.3 million in 1996 compared to $143.0 million in 1995 and $136.8 million in 1994. Other Expense increased 5.2% over 1995 to $4.7 million, while 1995 decreased 39.5% compared with 1994. In 1996, net interest expense increased 6.5% to $3.3 million. In 1995, it decreased 25.7% from the $4.1 million reported in 1994. Net other expense in 1996 increased to $1.5 million from $1.4 million and in 1995, it decreased from $3.3 million in 1994. In 1996, foreign exchange gains of $1.0 million were offset by the one-time charge of $1.5 million related to acquisition of The Antenna Company and recording of the minority interest's share in the net income of the company's operations in Brazil and South Africa. In 1995, net other expense included foreign exchange losses ($1.7 million), the company's share of the losses in its joint ventures in Russia ($1.5 million) and other miscellaneous expenses ($0.9 million). In 1995, these expenses were offset by the $2.7 million gain on the sale of the Allen group debentures. Net Income increased 29.2% to $90.4 million in 1996, making this the sixth consecutive year in which the percentage increase in net income exceeded the percentage increase in sales revenue. Volume efficiencies, increased productivity, cost containment and favorable product mix all contributed with this trend. Liquidity: Net cash from operations increased 19.7% to $66.8 million in 1996 compared with $55.8 million in 1995 and $52.3 million in 1994. In 1996, increases in net income, depreciation, accounts payable and accrued liabilities were partially offset by increases in accounts receivable and inventory. Higher sales volume in the fourth quarter of 1996 contributed to the increase in accounts receivable. Net cash used in investing activities increased 42.1% to $78.7 million in 1996. The company's acquisitions in Brazil and South Africa required the use of $17.8 million. In 1996, capital expenditures increased 9.2% to $52.5 million, and 1995 was up 68.9% over 1994. During 1996, the company spent $2.9 million of a projected $10 million investment in equipment and expanded manufacturing capacity at its recently acquired facilities in Brazil. In the United States, investments in additional cable manufacturing facilities also contributed to this increase. In 1995, plant expansion and productivity-related enhancements to increase capacity within the commercial business segment contributed to the majority of the increase in capital expenditures over 1994. In 1996, the company loaned $7.8 million to its joint ventures in Russia. Net cash used in financing activities was $2.0 million in 1996 compared with net cash from financing activities of $4.6 million and $4.3 million in 1995 and 1994, respectively. During 1996, the company liquidated The Antenna Company's short-term debt of $5.0 million. As of September 30, 1996 the company had $40.9 million of senior notes outstanding of which $5.0 million was due within one year. The company maintains a $75 million revolving line of credit agreement with Bank of America, Illinois under which there were no amounts outstanding as of September 30, 1996. Although Andrew has never paid cash dividends, the Board of Directors periodically reviews this practice and to date has elected to retain earnings in the business to finance investments and operations. Risk Factors: This annual report may contain forward looking statements that involve risks and uncertainties. Factors that could cause actual results to differ materially from forecasts or expectations include but are not limited to impact of competitive products and pricing; regional economic and political conditions that may impact customers' ability to purchase our products and services; availability of qualified technical management, principally in emerging markets and end user demand for wireless communication products. In addition, the company may, from time to time, list risk factors in the company's reports filed with the SEC. CONSOLIDATED STATEMENTS OF INCOME
Year Ended September 30 - -------------------------------------------------------------------------------- Amounts in thousands, except per share amounts 1996 1995 1994 - -------------------------------------------------------------------------------- SALES $793,575 $663,960 $588,233 Cost of products sold 461,310 381,842 345,768 - -------------------------------------------------------------------------------- GROSS PROFIT 332,265 282,118 242,465 OPERATING EXPENSES Research and development 33,003 25,124 26,611 Sales and administrative 153,277 143,015 136,766 - -------------------------------------------------------------------------------- 186,280 168,139 163,377 - -------------------------------------------------------------------------------- OPERATING INCOME 145,985 113,979 79,088 OTHER Interest expense 5,183 5,643 5,492 Interest income (1,903) (2,562) (1,343) Other expense 1,460 1,425 3,295 - -------------------------------------------------------------------------------- 4,740 4,506 7,444 - -------------------------------------------------------------------------------- INCOME BEFORE INCOME TAXES 141,245 109,473 71,644 Income taxes 50,848 39,518 25,877 - -------------------------------------------------------------------------------- NET INCOME $ 90,397 $ 69,955 $ 45,767 ================================================================================ NET INCOME PER AVERAGE SHARE OF COMMON STOCK OUTSTANDING $ 1.48 $ 1.16 $ 0.76 ================================================================================ AVERAGE SHARES OUTSTANDING 61,188 60,485 60,308 ================================================================================ See Notes to Consolidated Financial Statements.
CONSOLIDATED BALANCE SHEETS
September 30 - ------------------------------------------------------------------- Dollars in thousands 1996 1995 - ------------------------------------------------------------------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 31,295 $ 46,064 Accounts receivable, less allowances (1996 - $3,648; 1995 - $3,071) 197,589 147,598 Inventories Finished products 56,947 45,333 Materials and work in process 109,662 78,992 - ------------------------------------------------------------------- 166,609 124,325 Miscellaneous current assets 6,491 4,758 - ------------------------------------------------------------------- TOTAL CURRENT ASSETS 401,984 322,745 OTHER ASSETS Costs in excess of net assets of businesses acquired, less accumulated amortization (1996 - $19,732; 1995 - $16,524) 42,667 35,667 Investments in and advances to affiliates 42,510 33,480 Investments and other assets 11,368 10,661 PROPERTY, PLANT AND EQUIPMENT Land and land improvements 11,103 9,402 Buildings 68,248 55,069 Equipment 254,737 212,952 Allowances for depreciation and amortization (201,388) (174,862) - -------------------------------------------------------------------- 132,700 102,561 - -------------------------------------------------------------------- TOTAL ASSETS $631,229 $505,114 ==================================================================== See Notes to Consolidated Financial Statements.
CONSOLIDATED BALANCE SHEETS
September 30 - ----------------------------------------------------------------------- Dollars in thousands 1996 1995 - ----------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 38,887 $ 30,628 Accrued expenses and other liabilites 26,170 20,343 Compensation and related expenses 27,006 25,815 Income taxes 20,367 13,994 Current portion of long-term debt 4,952 4,801 - ----------------------------------------------------------------------- TOTAL CURRENT LIABILITIES 117,382 95,581 DEFERRED LIABILITIES 7,919 7,087 LONG-TERM DEBT, less current portion 40,423 45,255 MINORITY INTEREST 9,291 - STOCKHOLDERS' EQUITY Common stock (par value, $.01 a share: 100,000,000 shares authorized; 68,479,398 shares issued, including treasury) 685 457 Additional paid-in capital 43,257 35,588 Foreign currency translation 349 1,077 Retained earnings 458,914 368,517 Treasury stock, at cost (8,047,229 shares in 1996; 8,431,449 shares in 1995) (46,991) (48,448) - ----------------------------------------------------------------------- 456,214 357,191 - ----------------------------------------------------------------------- TOTAL LIABILTIES AND EQUITY $631,229 $505,114 ======================================================================= See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended September 30 - ---------------------------------------------------------------------------------- Dollars in thousands 1996 1995 1994 - ---------------------------------------------------------------------------------- CASH FLOWS FROM OPERATIONS Net Income $90,397 $69,955 $45,767 ADJUSTMENTS TO NET INCOME Depreciation and amortization 34,334 25,803 22,889 Increase in accounts receivable (45,681) (15,334) (18,087) Increase in inventories (34,705) (32,078) (17,725) (Increase) decrease in miscellaneous current and other assets (1,663) 5,488 (1,667) (Increase) decrease in receivables from affiliates 130 (1,171) (6,467) Increase in accounts payable and other liabilities 23,321 1,638 27,561 Other 663 1,515 72 - ---------------------------------------------------------------------------------- NET CASH FROM OPERATIONS 66,796 55,816 52,343 INVESTING ACTIVITIES Capital expenditures (52,475) (48,076) (28,471) Acquisition of businesses, net of cash acquired (17,802) - - Investments in and advances to affiliates (9,030) (7,823) (10,626) Proceeds from sale of property, plant and equipment 624 532 405 - ---------------------------------------------------------------------------------- NET CASH USED IN INVESTING ACTIVITIES (78,683) (55,367) (38,692) FINANCING ACTIVITIES Proceeds from issuance of long-term debt - 3,842 - Payments on long-term debt (5,229) (5,583) (696) Short-term borrowings (payments)-net (2,455) 750 1,700 Stock purchase and option plans 5,712 5,561 3,255 - ---------------------------------------------------------------------------------- NET CASH FROM (USED IN) FINANCING ACTIVITIES (1,972) 4,570 4,259 Effect of exchange rate changes on cash (910) 331 803 - ---------------------------------------------------------------------------------- (DECREASE) INCREASE FOR THE YEAR (14,769) 5,350 18,713 Cash and equivalents at beginning of year 46,064 40,714 22,001 - ---------------------------------------------------------------------------------- CASH AND EQUIVALENTS AT END OF YEAR $31,295 $46,064 $40,714 ================================================================================== See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Year Ended September 30 - ---------------------------------------------------------------------------------- Dollars in thousands 1996 1995 1994 - ---------------------------------------------------------------------------------- COMMON STOCK ISSUED Balance at beginning of year $ 457 $ 304 $ 203 Three-for-two stock split 228 153 101 - ---------------------------------------------------------------------------------- BALANCE AT END OF YEAR $ 685 $ 457 $ 304 ================================================================================== ADDITIONAL PAID-IN CAPITAL Balance at beginning of year $ 35,588 $ 22,356 $ 19,599 Three-for-two stock split (228) (153) (101) Stock purchase and option plans 7,897 13,385 2,858 - ---------------------------------------------------------------------------------- BALANCE AT END OF YEAR $ 43,257 $ 35,588 $ 22,356 ================================================================================== RETAINED EARNINGS Balance at beginning of year $368,517 $298,562 $252,795 Net Income 90,397 69,955 45,767 - ---------------------------------------------------------------------------------- BALANCE AT END OF YEAR $458,914 $368,517 $298,562 ================================================================================== TREASURY STOCK Balance at beginning of year $(48,448) $(43,419) $(45,323) Stock purchase and option plans 1,457 (5,029) 1,904 - ---------------------------------------------------------------------------------- BALANCE AT END OF YEAR $(46,991) $(48,448) $(43,419) ================================================================================== See Notes to Consolidated Financial Statements.
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 1996 and 39% of total inventories in 1995. The remaining inventories are valued on the first-in, first-out (FIFO) method and the weighted average 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 $8,435,000 and $11,189,000 at September 30, 1996 and 1995, 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. 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 and 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. 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. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Accounting changes In March 1995, The Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of," which requires long-lived assets to be reviewed for impairment when events or circumstances indicate that an impairment exists. The company is required to adopt SFAS No. 121 during the first quarter of fiscal year 1997. Adoption of this Statement is not expected to have a material effect on the company's financial statements. During the first quarter of fiscal year 1995, the company adopted SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities." The adoption of this statement did not have a material effect on the company's financial statements. BUSINESS ACQUISITIONS ================================================================================ In December 1995, the company purchased a 51% interest in Mapra Industria e Comercio, Ltda. and Gerbo Telecommunicacoes e Servicos, Ltda. located in Brazil, for $14.6 million, net of cash received. The acquisition was accounted for as a purchase and, accordingly, the operating results of Mapra and Gerbo have been included in the consolidated operating results since the date of acquisition. Mapra and Gerbo manufacture, distribute and sell antennas, waveguide and towers and also provide installation services. In June 1996, the company purchased an 80% interest in SATCOM Group of Companies, located in South Africa, for $3.2 million net of cash received. The acquisition of SATCOM was accounted for as a purchase and, accordingly, the operating results of SATCOM have been included in the consolidated operating results since the date of acquisition. If the acquisitions of Mapra Industria e Comercio, Ltda., Gerbo Telecommunicacoes e Servicos, Ltda. and SATCOM Group of Companies had taken place at the beginning of fiscal year 1996, Andrew Corporation's consolidated sales and net income would not have been materially affected. In March 1996, Andrew Corporation completed its acquisition of The Antenna Company, a manufacturer and distributor of wireless telephone antennas and accessories for mobile applications. The transaction has been accounted for as a pooling of interests and, accordingly, the accompanying financial statements have been restated to include the accounts and operations of The Antenna Company for all periods prior to the merger. Andrew exchanged 1,541,564 shares of its common stock for all the outstanding stock of the privately held The Antenna Company. In addition, $1.5 million in acquisition costs were incurred to complete the merger. INVESTMENTS IN AFFILIATES - -------------------------------------------------------------------------------- The company's investments in affiliates represent 40 to 50 percent interests in several start-up network telecommunications joint ventures located in Russia and Ukraine. The combined operating results of the ventures and the company's share thereof were not material to the company's 1996, 1995 and 1994 operating results. UNBILLED RECEIVABLES - -------------------------------------------------------------------------------- As of September 30, 1996, unbilled receivables of $7,634,000 are included in accounts receivable, compared with $11,750,000 as of September 30, 1995. These amounts will be billed 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 1996, 1995 and 1994 were $13,678,000, $11,696,000 and $11,027,000, respectively. BORROWINGS ================================================================================ Lines of Credit The company maintains a $75 million revolving line of credit agreement with Bank of America, Illinois. The maximum outstanding during 1996 under the line of credit was $3.5 million with a weighted average interest rate of 5.58%. There were no amounts outstanding under the line of credit agreement as of September 30, 1996. Long-Term Debt Long-term debt as of September 30 consisted of the following:
- ---------------------------------------------------------------------- Dollars in thousands 1996 1995 - ---------------------------------------------------------------------- 9.52% senior notes payable to insurance companies in annual installments from 1995 to 2005 $40,910 $45,455 Variable rate Industrial Development Revenue Bond with Coweta County, Georgia 3,800 3,800 Other 665 801 Less: Current Portion 4,952 4,801 - ---------------------------------------------------------------------- Total Long-Term Debt $40,423 $45,255 - ----------------------------------------------------------------------
Under the terms of the loan agreements, the company has agreed to maintain certain levels of working capital and net worth. As of September 30, 1996, all these requirements have been met. The principal amounts of long-term debt maturing after September 30, 1996 are: - ------------------------------------------------------------------------------------ Dollars in thousands 1997 1998 1999 2000 2001 Thereafter - ------------------------------------------------------------------------------------ $4,952 $4,766 $4,582 $4,545 $4,545 $21,985 ====================================================================================
Cash payments for interest on all borrowings were $4,752,000, $5,339,000 and $5,307,000 in 1996, 1995 and 1994, respectively. The carrying amount of long-term debt as of September 30, 1996 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. INCOME TAXES - ---------------------------------------------------------------------- The composition of the provision for income taxes follows:
Year Ended September 30 - ------------------------------------------------------------------------------ Dollars in thousands 1996 1995 1994 - ------------------------------------------------------------------------------ Currently Payable: Federal $ 32,644 $ 19,957 $ 14,191 Non-United States 16,155 13,640 12,860 State 4,779 3,624 3,008 - ------------------------------------------------------------------------------ 53,578 37,221 30,059 Deferred (Credit): Federal and State (2,608) 2,199 (3,662) Non-United States (122) 98 (520) - ------------------------------------------------------------------------------ (2,730) 2,297 (4,182) - ------------------------------------------------------------------------------ $ 50,848 $ 39,518 $ 25,877 ============================================================================== Income Taxes Paid $ 37,041 $ 27,387 $ 19,461 ============================================================================== Components of Income Before Income Taxes: United States $ 75,025 $ 67,079 $ 32,918 Non-United States 66,220 42,394 38,726 - ------------------------------------------------------------------------------ $141,245 $109,473 $ 71,644 ==============================================================================
The company's effective income tax rate varied from the statutory United States federal income tax rate because of the following:
- ---------------------------------------------------------------------- 1996 1995 1994 - ---------------------------------------------------------------------- Statutory United States federal tax rate 35.0 % 35.0 % 35.0 % Foreign Sales Corporation (2.7) (2.3) (2.7) State income taxes, net of federal tax effect 2.1 2.2 2.4 Other items 1.6 1.2 1.4 - ---------------------------------------------------------------------- Effective Tax Rate 36.0 % 36.1 % 36.1 % ======================================================================
The tax effects of temporary differences have given rise to gross deferred tax assets of $10,197,000, primarily accrued expenses and inventory pricing methods, and gross deferred tax liabilities of $6,784,000, primarily depreciation, as of September 30, 1996. 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 $10,750,000 as of September 30, 1996, which would be payable should undistributed net income of $84,300,000 of subsidiaries located outside the United States be distributed as dividends. The company plans to continue its non-United States operations and anticipates the ability to use tax planning opportunities if any dividends are declared or paid from these operations. STOCKHOLDERS' EQUITY - -------------------------------------------------------------------------------- Each outstanding common share has attached to it a one Share Purchase Right that, 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 6,075,000 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. Options granted prior to fiscal year 1996 expire five years after grant, while options granted during fiscal year 1996 expire ten years after grant. The company also maintains a Stock Option Plan for non-employee Directors that provides for the issuance of up to 675,000 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:
Year Ended September 30 - ------------------------------------------------------------------------------ 1996 1995 1994 - ------------------------------------------------------------------------------ Outstanding at beginning of year 1,578,425 2,347,200 2,531,142 Granted 674,550 558,675 693,225 Expired or cancelled (182,847) (48,101) (95,715) Exercised (324,374) (1,279,350) (781,452) - ------------------------------------------------------------------------------ Outstanding at End of Year 1,745,754 1,578,424 2,347,200 ============================================================================== Exercisable at End of Year 314,850 204,525 765,742 ==============================================================================
Price range of options: Outstanding at end of year $ 1.97 - 43.56 $ 1.97 - 25.67 $ 1.97 - 14.37 Granted during the year $29.00 - 43.56 $22.89 - 25.67 $10.45 - 14.37 Exercised during the year $ 2.70 - 25.67 $ 2.89 - 6.26 $ 2.07 - 8.07 ==============================================================================
The company also has an Employee Stock Purchase Plan that 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 1,181,250 shares of Common Stock to be sold to employees at 85% of market value. Through September 30, 1996, 353,466 shares have been issued under the Plan. As of September 30, 1996, 3,560,850 shares of Common Stock were reserved for the various stock plans described above. On February 7, 1996, the company's Board of Directors approved a three-for-two stock split to stockholders of record on February 21, 1996, payable March 6, 1996. A three-for-two stock split was also effected in March 1995 and in March 1994. Common Stock issued and outstanding and held in treasury is summarized in the tables below:
Year Ended September 30 - ------------------------------------------------------------------------------ 1996 1995 1994 - ------------------------------------------------------------------------------ SHARES OF COMMON STOCK - ISSUED Balance at beginning of year 45,653,823 30,435,882 20,290,588 Three-for-two stock split 22,825,575 15,217,941 10,145,294 - ------------------------------------------------------------------------------ Balance at End of Year 68,479,398 45,653,823 30,435,882 ==============================================================================
SHARES OF COMMON STOCK - HELD IN TREASURY Balance at beginning of year 5,620,970 4,206,023 3,038,920 Three-for-two stock split 2,809,352 2,103,012 1,519,460 Stock purchase and option plans (383,093) (688,065) (352,357) - ------------------------------------------------------------------------------ Balance at End of Year 8,047,229 5,620,970 4,206,023 ==============================================================================
Foreign currency translation adjustments decreased equity by $0.7 million during the year ended September 30, 1996. Foreign currency translation adjustments increased equity $2.3 million and $4.2 million during the years ended September 30, 1995 and 1994, respectively. GEOGRAPHIC AREA INFORMATION - ------------------------------------------------------------------------------ Principal financial data by major geographic area:
Year Ended September 30 - ------------------------------------------------------------------------------ Dollars in thousands 1996 1995 1994 - ------------------------------------------------------------------------------ SALES: United States: Customers $529,480 $474,388 $439,995 Intercompany 93,872 61,865 42,728 - ------------------------------------------------------------------------------ 623,352 536,253 482,723 Europe: Customers 154,363 129,029 99,039 Intercompany 81,090 13,890 5,462 - ------------------------------------------------------------------------------ 235,453 142,919 104,501 Asia-Pacific: Customers 50,344 38,026 29,698 Intercompany 2,314 1,645 416 - ------------------------------------------------------------------------------ 52,658 39,671 30,114 Other Americas: Customers 59,388 22,517 19,501 Intercompany 5,557 5,285 3,449 - ------------------------------------------------------------------------------ 64,945 27,802 22,950 Eliminations 182,833 82,685 52,055 - ------------------------------------------------------------------------------ CONSOLIDATED SALES $793,575 $663,960 $588,233 ============================================================================== UNITED STATES - EXPORT SALES $112,648 $103,090 $101,829 ============================================================================== OPERATING INCOME: United States $ 80,756 $ 72,010 $ 44,803 Europe 36,792 20,092 17,629 Asia-Pacific 23,951 18,199 12,377 Other Americas 4,486 3,678 4,279 - ------------------------------------------------------------------------------ CONSOLIDATED OPERATING INCOME $145,985 $113,979 $ 79,088 ============================================================================== ASSETS IDENTIFIABLE TO: United States $453,217 $367,025 $320,193 Europe 104,208 101,550 76,758 Asia-Pacific 18,559 17,449 12,710 Other Americas 55,245 19,090 15,665 - ------------------------------------------------------------------------------ CONSOLIDATED ASSETS $631,229 $505,114 $425,326 ============================================================================== Sales and transfers between geographic areas are made at amounts that approximate manufacturing cost and generally consist of products that require additional processing and with respect to which related selling, marketing and engineering expenses are incurred prior to shipment to customers.
INDUSTRY SEGMENT INFORMATION - -------------------------------------------------------------------------------- The company operates in three strategic business segments: commercial, government and network. The commercial segment serves commercial markets, including telecommunications 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 international governments. Products also include coaxial cable and standard antennas sold to government customers. The network segment provides products and services that support the integration of voice, data and video in corporate telecommunication 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 that do not relate to business segments as well as the assets associated therewith. Corporate identifiable assets also include cash and equivalents. In 1996, direct and indirect sales to agencies of the United States federal government totaled $18,250,000 compared with $22,337,000 in 1995 and $27,840,000 in 1994. Financial information by industry segment is as follows:
- -------------------------------------------------------------------------------------------------- Corporate Dollars in thousands Commercial Government Network and Other Total - -------------------------------------------------------------------------------------------------- 1996: Sales $731,347 $34,063 $27,568 $ 597 $793,575 Operating income (loss) 170,401 1,154 (3,143) (22,427) 145,985 Identifiable assets 476,787 43,938 33,417 77,087 631,229 Capital expenditures 47,328 1,700 2,394 1,053 52,475 Depreciation and amortization 27,474 1,911 3,183 1,767 34,335 - -------------------------------------------------------------------------------------------------- 1995: Sales $579,984 $41,455 $39,217 $ 3,304 $663,960 Operating income (loss) 142,658 3,879 (3,048) (29,510) 113,979 Identifiable assets 329,039 75,308 36,834 63,933 505,114 Capital expenditures 42,535 1,436 1,305 2,800 48,076 Depreciation and amortization 19,132 2,131 3,202 1,338 25,803 - -------------------------------------------------------------------------------------------------- 1994: Sales $487,579 $43,611 $52,208 $ 4,835 $588,233 Operating income (loss) 114,590 1,067 (5,409) (31,160) 79,088 Identifiable assets 238,276 66,800 42,502 77,748 425,326 Capital expenditures 24,362 1,527 655 1,927 28,471 Depreciation and amortization 14,076 3,256 3,494 2,063 22,889 - --------------------------------------------------------------------------------------------------
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. All quarters have been updated to reflect the pooling of interests acquisition of The Antenna Company in 1996.
- ------------------------------------------------------------------------------------------------------- Dollars in thousands, except per share amounts December March June September Annual - ------------------------------------------------------------------------------------------------------- 1996: Sales $177,924 $183,159 $197,209 $235,283 $793,575 Gross profit 71,853 72,818 85,036 102,558 332,265 Income before income taxes 26,424 28,537 37,558 48,726 141,245 Net income 16,911 18,292 24,007 31,187 90,397 Net income per share 0.28 0.30 0.39 0.51 1.48 Common Stock Closing Price Range: High 39 1/3 39 55 1/2 53 7/8 Low 24 2/3 20 3/4 38 3/4 40 1/2 - ------------------------------------------------------------------------------------------------------- 1995: Sales $151,731 $163,736 $170,478 $178,015 $663,960 Gross profit 62,251 65,983 73,688 80,196 282,118 Income before income taxes 18,543 22,065 29,735 39,130 109,473 Net income 11,954 14,129 18,960 24,912 69,955 Net income per share 0.20 0.23 0.31 0.41 1.16 Common Stock Closing Price Range: High 23 7/8 29 7/8 38 5/8 42 2/3 Low 19 2/3 22 2/3 27 1/3 36 2/3 - ------------------------------------------------------------------------------------------------------- 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, 1996 and 1995, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended September 30, 1996. 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, 1996 and 1995, and the consolidated results of their operations and their cash flows for each of the three years in the period ended September 30, 1996 in conformity with generally accepted accounting principles. /s/ Ernst & Young LLP Chicago, Illinois October 25, 1996
FIVE YEAR FINANCIAL SUMMARY - ----------------------------------------------------------------------------------------------------------- Dollars in thousands, except per share amounts 1996 1995 1994 1993 1992 - ----------------------------------------------------------------------------------------------------------- OPERATIONS - ----------------------------------------------------------------------------------------------------------- Sales $793,575 $663,960 $588,233 $451,957 $453,408 Employee compensation 200,945 192,469 174,701 152,570 148,660 Materials, supplies and services 450,834 366,907 332,396 236,652 229,723 Depreciation 30,516 22,683 19,773 18,357 18,026 Increase (decrease) in inventory 34,705 32,078 17,725 5,185 (11,309) Interest expense 5,183 5,643 5,492 5,772 6,161 Interest income 1,903 2,562 1,343 830 1,328 Other income (expense) (1,460) (1,425) (3,295) 1,530 944 Non-recurring items - - - - - Income tax 50,848 39,518 25,877 16,748 15,650 Net income 90,397 69,955 45,767 29,403 26,151 Net income per share 1.48 1.16 0.76 0.50 0.39 =========================================================================================================== FINANCIAL POSITION Working capital 284,602 227,164 171,705 142,675 126,764 Property, plant and equipment-net 132,700 102,561 76,618 68,891 71,296 Total assets 631,229 505,114 425,326 343,876 318,062 Long-term debt 40,423 45,255 46,092 52,467 54,223 Stockholders' equity 456,214 357,191 276,553 221,872 192,956 =========================================================================================================== RATIOS AND OTHER DATA Current ratio 3.4 3.4 2.8 3.2 2.9 Return on net sales 11.4% 10.5% 7.8% 6.5% 5.8% Return on average assets 15.9% 15.0% 11.9% 8.9% 7.9% Return on average stockholders' equity 22.2% 22.1% 18.4% 14.2% 12.8% Stockholders' equity per share outstanding $7.55 $5.95 $4.69 $3.81 $3.41 Foreign exchange gain (loss) 964 (1,709) (2,021) 1,340 17 Research & development 33,003 25,124 26,611 22,479 20,481 Additions to property, plant and equipment 52,475 48,076 28,471 18,479 18,188 Net assets located outside U.S. at year end 220,600 160,700 130,900 90,300 65,100 Orders entered 818,600 723,600 584,800 457,400 429,700 Order backlog at year end (under 12 months) 153,400 126,200 84,800 86,400 84,800 Order backlog at year end (over 12 months) 14,800 18,500 600 1,600 5,500 Number of full time equivalent employees at year end: Outside United States 1,162 763 661 584 596 Total employees 4,622 3,677 3,405 3,110 3,144 Average shares of stock outstanding (thousands) 61,188 60,485 60,308 59,192 66,261 Stockholders of record at year end 3,242 2,340 1,482 1,133 1,057 =========================================================================================================== The results of operations for fiscal years 1991 through 1995 have been updated for the pooling of interests with The Antenna Company in 1996. All other acquisitions have been included in operations since the date of acquisition. In 1987, pretax charge of $19,000 for restructuring less pretax 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) 14 Bar graph of Sales (Dollars in Millions) Data points: 1992-$453, 1993-$452, 1994-$588, 1995-$664, 1996-$794 14 Bar graph of Sales-International (Dollars in Millions) Data points: 1992-$169, 1993-$177, 1994-$250, 1995-$293, 1996-$377 14 Bar graph of Sales- U.S. Export (Dollars in Millions) Data points: 1992-$49, 1993-$54, 1994-$102, 1995-$103, 1996-$113 15 Bar graph of Gross Profit (Dollars in Millions) Data points: 1992-$174, 1993-$187, 1994-$242, 1995-$282, 1996-$332 15 Bar graph of Sales and Administrative (Dollars in Millions) Data points: 1992-$108, 1993-$115, 1994-$137, 1995-$143, 1996-$153 15 Bar graph of Research and Development (Dollars in Millions) Data points: 1992-$20, 1993-$22, 1994-$27, 1995-$25, 1996-$33 16 Bar graph of Operating Income (Dollars in Millions) Data points: 1992-$46, 1993-$50, 1994-$79, 1995-$114, 1996-$146 16 Bar graph of Net Income (Dollars in Millions) Data points: 1992-$26, 1993-$29, 1994-$46, 1995-$70, 1996-$90 16 Bar graph of 12-Month Backlog (Dollars in Millions) Data points: 1992-$85, 1993-$86, 1994-$85, 1995-$126, 1996-$153 17 Bar graph of Return on Equity (Percent) Data points: 1992-12.8, 1993-14.2, 1994-18.4, 1995-22.1, 1996-22.2 17 Bar graph of Return on Assets (Percent) Data points: 1992-7.9, 1993-8.9, 1994-11.9, 1995-15.0, 1996-15.9 17 Bar graph of Sales per Employee (Dollars in Thousands) Data points: 1992-$137.5, 1993-$144.5, 1994-$180.6, 1995-$187.5, 1996-$191.2 18 Bar graph of Net Cash from Operations (Dollars in Millions) Data points: 1992-$51.7, 1993-$54.9, 1994-$52.3, 1995-$55.8, 1996-$66.8 18 Bar graph of Capital Expenditures (Dollars in Millions) Data points: 1992-$18, 1993-$18, 1994-$28, 1995-$48, 1996-$52 18 Bar graph of Total Debt (Dollars in Millions) Data points: 1992-$65, 1993-$56, 1994-$52, 1995-$50, 1996-$45
EX-21 4 EXHIBIT 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: Name of Jurisdiction Subsidiary of Incorporation Andrew AG....................................................Switzerland Andrew Canada Inc............................................Canada Andrew Corporation (Australia) Pty. Ltd......................Australia Andrew Data Corporation......................................State of Delaware Andrew do Brazil, Limitada...................................Brazil (70% owned) 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 Satcom Systems........................................South Africa (80% owned) Andrew SciComm Inc...........................................State of Texas Andrew S.A.R.L...............................................France Andrew S.R.L.................................................Italy Andrew Soracaba, Brazil......................................Brazil (51% owned) Andrew Systems Inc...........................................State of Delaware Andrew VSAT Systems Inc......................................State of California (90% owned) EX-23 5 EXHIBIT 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; Registration Statement No. 333-00887 on Form S-4 dated February 13, 1996 and Post-Effective Amendment No. 1 to Registration Statement No. 333-00887 on Form S-4 dated February 14, 1996; Registration Statement No. 333-12743 on Form S-4 dated September 26, 1996 of our report dated October 25, 1996, with respect to the consolidated financial statements incorporated by reference in the Annual Report (Form 10-K) of Andrew Corporation for the year ended September 30, 1996. /s/ Ernst & Young LLP Chicago, Illinois December 19, 1996 EX-27 6 EXHIBIT 27 ARTICLE 5 FDS FOR 09-30-96 10K
5 1000 YEAR SEP-30-1996 SEP-30-1996 31,295 0 201,237 3,648 166,609 401,984 334,088 201,388 631,229 117,382 40,423 0 0 685 455,529 631,229 793,575 793,575 461,310 461,310 186,280 1,227 5,183 141,245 50,848 90,397 0 0 0 90,397 1.48 1.48
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