-----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, FdAzYKHOlW7YUhsrTwkeDirs/iEPTKXizXR9S+PwJZH+PXtxU+/rE91JPPX1RuW7 T44tLutroWeRCdXHlrnBLw== 0000317093-98-000009.txt : 19980514 0000317093-98-000009.hdr.sgml : 19980514 ACCESSION NUMBER: 0000317093-98-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980513 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-Q SEC ACT: SEC FILE NUMBER: 000-09514 FILM NUMBER: 98618989 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-Q 1 FORM 10Q (03/31/98) SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 10-Q (Mark-One) (x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1998. OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to _________ Commission file number 0-9514 ANDREW CORPORATION (Exact name of Registrant as specified in its charter) DELAWARE 36-2092797 (State or other jurisdiction of (IRS 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) No Change (Former name, former address and former fiscal year, if changed since last report) 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. Common Stock, $.01 Par Value-- 88,497,720 shares as of April 30, 1998 INDEX ANDREW CORPORATION PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated balance sheets--March 31, 1998 and September 30, 1997. Consolidated statements of income--Three and six months ended March 31, 1998 and 1997. Consolidated statements of cash flows--Six months ended March 31, 1998 and 1997. Notes to consolidated financial statements--March 31, 1998. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders Item 6. Exhibits and Reports on Form 8-K. SIGNATURES ANDREW CORPORATION CONSOLIDATED BALANCE SHEETS (Dollars in thousands)

ANDREW CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts) (Continued)

ANDREW CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per share amounts)

ANDREW CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)

ANDREW CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A--BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 1998 are not necessarily indicative of the results that may be expected for the year ending September 30, 1998. For further information, refer to the consolidated financial statements and footnotes thereto included in the company's annual report on Form 10-K for the year ended September 30, 1997. NOTE B--EARNINGS PER SHARE In 1997, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 128, Earnings Per Share. Statement 128 replaces the computation of primary and fully diluted earnings per share with basic and diluted earnings per share. Unlike primary earnings per share, basic earnings per share excludes any dilutive effects of options, warrants and convertible securities. Diluted earnings per share is very similar to the previously reported fully diluted earnings per share. The company adopted Statement 128 in the first quarter of fiscal year 1998. All share and per share amounts have been presented, and where necessary, restated to conform with the requirements of Statement 128. The following table sets forth the computation of basic and diluted earnings per share:

Options to purchase 772,000 shares of common stock, at prices ranging from $24.00 - $38.17 per share, were not included in the March 1998 computation of diluted earnings per share, because the option's exercise price was greater than the average market price of the common shares. Options to purchase 634,000 shares of common stock at prices ranging from $37.25 - $38.17 per share were not included in the March 1997 diluted earnings per share calculation since the option's exercise price was higher than the average market price of the common shares. NOTE C - ACCOUNTING CHANGES In February 1998, the Financial Accounting Standards Board (FASB) issued Statement No. 132 Employers' Disclosures about Pensions and Other Postretirement Benefits. Statement No. 132 changes the existing disclosure requirements for pensions and other postretirement benefits. The company will adopt this statement in the first quarter of fiscal year 1999. Adoption of this statement is not expected to have a material effect on the company's financial statements. In March 1998, the American Institute of Certified Public Accountants (AICPA) issued Statement of Position (SOP) 98-1 Accounting for the Costs of Computer Software Developed or Obtained for Internal Use. SOP 98-1 provides guidance on the accounting treatment of costs related to software obtained or developed for internal use. The company will adopt this statement in the first quarter of fiscal year 1999. Adoption of this statement is not expected to have a material effect on the company's financial statements. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Sales for the quarter ended March 31, 1998 decreased 3% to $196.9 million compared to $202.2 million for the second quarter of fiscal year 1997. Sales for the first half of fiscal year 1998 remained relatively unchanged at $428.0 million compared to the same period last fiscal year. The second quarter of fiscal year 1997 included $13 million in revenues from the Hong Kong Metro distributed communications project, which made comparisons to last year difficult. For the quarter, excluding the Hong Kong Metro project, slower U.S. cellular and personal communications services sales offset international wireless infrastructure growth. Land mobile radio sales were up slightly for the quarter ended March 31, 1998 compared to the second quarter of fiscal year 1997. Common carrier and private microwave sales for the second quarter of fiscal year 1998 were lower than the same period last fiscal year due to weakness in the domestic and European markets. Broadcast and government sales increased due to strength across all geographic areas in the broadcast market. Cost of products sold as a percentage of sales for the quarter ended March 31, 1998 increased to 60.8% compared to 59.1% for the same period last fiscal year, due mainly to lower sales volume in the quarter. For the first half of fiscal year 1998, cost of products sold as a percentage of sales increased to 61.1% compared to 60.2% for the same period last fiscal year due to increased price pressure and changes in product mix, which were partially offset by productivity improvements. As a percentage of sales, operating expenses decreased to 20.9% compared to 21.7% for the same period last fiscal year. For the first half of fiscal year 1998, operating expenses as a percentage of sales decreased 1.2% to 20.2% compared to the first half of fiscal year 1997. The largest factor contributing to the decline in the overall operating expenses for both the quarter and the first half of fiscal year 1998 was lower research and development expenses. Research and development expenses decreased $3.7 million for the second quarter and $5.6 million for the six months ended March 31, 1998, compared to the same periods last fiscal year due to the elimination of the company's fiber optic sensors and global messaging development activities in July 1997. Sales and administrative expenses for the second quarter of fiscal year 1998 were $34.8 million, 17.7% of sales, compared to $33.9 million, 16.7% of sales, for the second quarter of fiscal year 1997. Gains achieved from restructuring the European wireless products business and eliminating the global messaging and fiber optic sensor development activities in fiscal year 1997 partially offset the increase in general and administrative costs, which were mainly a result of the company's continued upgrading of its business and information systems. For the first six months of fiscal year 1998, sales and administrative expenses were $73.3 million compared to $72.6 million for the same period last fiscal year and remained relatively unchanged as a percentage of sales. Interest expense for the quarter ended March 31, 1998 remained stable while interest income increased compared to the same period last fiscal year due to interest earned on the company's advances to its Russian joint ventures. For the first six months of fiscal year 1998, net interest expense decreased primarily due to higher average investment balances and interest earned on advances to the company's Russian joint ventures. Other income decreased for the second quarter and first six months of fiscal year 1998 due to foreign exchange losses when compared to the same periods last fiscal year. LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents grew 26.3% during the fiscal year and totaled $118.5 million for the period ended March 31, 1998. Working capital improved to $352.3 million compared to $332.7 million at September 30, 1997. The company generated $77.9 million in cash from operations, principally from earnings of $52.5 million, which included $17.5 million in non-cash charges. While accounts receivable decreased $19.4 million during the first half of fiscal year 1998, the company's days sales in billed receivables increased to 73 days compared to 67 days at September 30, 1997. Cash generated from earnings and accounts receivable collections was partially offset by growth in inventories and prepaid and other assets. The company's inventory turnover ratio decreased to 2.7 times compared to 3.3 times at September 30, 1997. Net cash used in investing activities was $22.2 million for the six-month period ended March 31, 1998. Of the $27.5 million spent by the company on property, plant and equipment expenditures, during the first half of fiscal year 1998, $7.9 million related to the construction of the company's Chinese facilities and $5.0 million related to the construction of new facilities in Texas. In addition, during the first quarter of fiscal year 1998 the company used $3.0 million in funds to purchase an additional 19% interest in its Brazilian operations. These outflows were partially offset by cash repayments from the company's Russian joint ventures totaling $8.0 million, as a result of their obtaining external financing in the first quarter of fiscal year 1998 under Andrew Corporation's line of credit with Bank of America. Net cash used in financing activities totaled $28.5 million for the first half of fiscal year 1998. During the first three months of fiscal year 1998, the company repurchased 1,305,000 shares of its common stock for $32.5 million. There were no repurchases of the company's common stock during the second quarter of fiscal year 1998. Since the inception of the program in May 1997 to repurchase 5,000,000 shares of its common stock, the company has acquired 2,850,000 shares at a total cost of $74.1 million. During the first quarter of fiscal year 1998, the company's operations in Brazil borrowed $6.1 million in long-term debt, at a weighted average interest rate of 12%. A portion of the proceeds was used to repay Brazilian borrowings made under a line of credit agreement with ABN-AMRO that carried a weighted average interest rate of 22%. YEAR 2000 In 1994, the company instituted a program to routinely review and upgrade its computer hardware and software to both improve operations and comply with the year 2000 issue. The company is currently in the process of upgrading several of its business systems, which will be completed by December 1998. In the event that these systems are not in place by the year 2000, the company does not expect any significant disruption in operations. The company does not expect the costs directly associated with year 2000 compliance will be material to its financial condition or results of operations. The company, also, does not expect any significant disruption in operations in the event that any of its suppliers or customers do not successfully achieve year 2000 compliance. RISK FACTORS Statements included in this Form 10-Q which are not historical in nature are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Certain factors that could cause the company's results to differ materially from forecasts or expectations include, but are not limited to: the impact of competitive products and pricing; regional economic or 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. PART II--OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders (a) Andrew's Annual Meeting of Stockholders was held on February 10, 1998 (b) & (c) Items submitted to a vote Number of Shares Voted ---------------------------------------------- Broker/ 1. Election of Directors For Against Non-Votes Abstentions ---------------------------------------------- John G. Bollinger 79,469,864 0 0 634,960 Jon L. Boyes 79,597,168 0 0 507,656 Kenneth J. Douglas 79,449,309 0 0 655,515 Floyd L. English 79,613,865 0 0 490,959 Jere D. Fluno 79,617,660 0 0 487,164 Ormand J. Wade 79,615,655 0 0 489,169 2. Approval of a proposal to amend the Company's Stock Option Plan for Non-Employee Directors. The proposal was ratified by votes of 75,353,043 shares for; 4,152,298 against and 599,483 abstentions. 3. The selection of Ernst & Young to serve as independent public auditors for fiscal year 1998. The selection of Ernst & Young as independent auditors was ratified by votes of 79,620,350 for; 232,049 against and 252,425 abstentions. Item 6. Exhibits and reports on Form 8-K (a) EXHIBIT INDEX

(b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended March 31, 1998. SIGNATURES Pursuant to the requirements 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. Date May 13, 1998 /s/ F. L. English ------------------ ----------------- F. L. English Chairman, President and Chief Executive Officer Date May 13, 1998 /s/ C. R. Nicholas ------------------ ------------------ C. R. Nicholas Executive Vice President and Chief Financial Officer EXHIBIT INDEX

EX-27.1 2 ART. 5 FDS FOR 03-31-98 10Q
5 1,000 3-MOS SEP-30-1998 MAR-31-1998 118,532 0 168,077 4,214 176,244 472,037 375,455 230,608 703,064 119,703 41,751 0 0 1,027 524,391 703,064 428,008 428,008 261,301 261,301 86,591 789 3,161 79,517 27,036 52,481 0 0 0 52,481 0.59 0.59

EX-27.2 3 ART. 5 FDS FOR 09-30-97 10K
5 1,000 YEAR SEP-30-1997 SEP-30-1997 93,823 0 188,506 2,754 166,890 459,814 359,545 221,955 691,154 127,093 35,693 0 0 1,027 508,096 691,154 869,475 869,475 513,809 513,809 191,873 646 5,003 165,782 58,024 107,758 19,416 0 0 88,342 0.98 0.97 This financial data schedule has been restated in accordance with SFAS No. 128 (Earnings Per Share).

EX-27.3 4 ART. 5 FDS FOR 06-30-97 10Q
5 1,000 3-MOS SEP-30-1997 JUN-30-1997 91,598 0 178,396 4,165 179,178 461,186 354,940 218,721 690,871 141,337 40,254 0 0 1,027 493,881 690,871 636,853 636,853 374,692 374,692 144,998 407 4,440 118,470 41,464 77,006 19,416 0 0 57,590 0.63 0.63 This financial data schedule has been restated in accordance with SFAS No. 128 (Earnings Per Share).

EX-27.4 5 ART. 5 FDS FOR 03-31-97 10Q
5 1,000 3-MOS SEP-30-1997 MAR-31-1997 90,903 0 178,571 4,402 176,874 450,846 354,425 216,066 688,051 122,503 40,273 0 0 1,027 510,107 688,051 427,942 427,942 257,727 257,727 91,484 284 2,783 80,072 28,025 52,047 2,195 0 0 49,852 0.55 0.55 This financial data schedule has been restated in accordance with SFAS No. 128 (Earnings Per Share), and also to reflect the disposal of the company's network products business.

EX-27.5 6 ART. 5 FDS FOR 09-30-96 10K
5 1,000 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 0 685 455,529 631,229 766,007 766,007 445,521 445,521 169,182 806 5,183 146,566 52,764 93,802 3,405 0 0 90,397 1.00 0.99 This financial data schedule has been restated in accordance with SFAS No. 128 (Earnings Per Share).

EX-27.6 7 ART. 5 FDS FOR 06-30-96 10Q
5 1,000 3-MOS SEP-30-1996 JUN-30-1996 22,903 0 165,387 3,411 165,025 356,049 319,972 193,062 580,207 102,630 45,013 0 0 685 417,513 580,207 535,818 535,818 315,300 315,300 120,310 633 4,211 96,143 34,614 61,529 2,319 0 0 59,210 0.66 0.65 This financial data schedule has been restated in accordance with SFAS No. 128 (Earnings Per Share).

EX-27.7 8 ART. 5 FDS FOR 03-31-96 10Q
5 1,000 3-MOS SEP-30-1996 MAR-31-1996 21,411 0 157,035 3,226 150,071 331,193 309,363 185,684 547,241 94,174 45,080 0 0 685 393,507 547,241 345,911 345,911 207,604 207,604 77,245 284 2,741 57,650 20,727 36,923 1,720 0 0 35,203 0.39 0.39 This financial data schedule has been restated in accordance with SFAS No. 128 (Earnings Per Share), and also to reflect the disposal of the company's network products business.

EX-27.8 9 ART. 5 FDS FOR 12-31-95 10Q
5 1,000 3-MOS SEP-30-1996 DEC-31-1995 22,893 0 159,247 3,472 138,482 322,351 298,828 180,128 533,855 101,916 45,879 0 0 457 373,167 533,855 170,474 170,474 102,037 102,037 39,969 146 1,277 27,438 9,868 17,570 659 0 0 16,911 0.19 0.19 This financial data schedule has been restated in accordance with SFAS No. 128 (Earnings Per Share), and also to reflect the disposal of the company's network products business.

EX-27.9 10 ART. 5 FDS FOR 09-30-95 10K
5 1,000 YEAR SEP-30-1995 SEP-30-1995 46,064 0 150,669 3,071 124,325 322,745 277,423 174,862 505,114 95,581 45,255 0 0 457 356,734 505,114 624,743 624,743 360,730 360,730 147,210 922 5,643 112,441 40,587 71,854 1,899 0 0 69,955 0.78 0.78 This financial data schedule has been restated in accordance with SFAS No. 128 (Earnings Per Share).

EX-27.10 11 ART. 5 FDS FOR 06-30-95 10Q
5 1,000 3-MOS SEP-30-1995 JUN-30-1995 36,598 0 147,385 3,044 117,402 303,494 262,466 168,675 474,699 88,249 50,335 0 0 457 327,120 474,699 454,997 454,997 267,107 267,107 110,842 339 4,064 73,404 26,320 47,084 2,041 0 0 45,043 0.51 0.50 This financial data schedule has been restated in accordance with SFAS No. 128 (Earnings Per Share), and also to reflect the disposal of the company's network products business.

EX-27.11 12 ART. 5 FDS FOR 03-31-95 10Q
5 1,000 3-MOS SEP-30-1995 MAR-31-1995 24,592 0 141,999 3,200 111,711 280,862 252,970 163,833 451,308 89,915 50,923 0 0 457 304,216 451,308 293,485 293,485 175,249 175,249 71,359 284 3,013 43,075 15,338 27,737 1,654 0 0 26,083 0.29 0.29 This financial data schedule has been restated in accordance with SFAS No. 128 (Earnings Per Share), and also to reflect the disposal of the company's network products business.

EX-27.12 13 ART. 5 FDS FOR 12-31-94 10Q
5 1,000 3-MOS SEP-30-1995 DEC-31-1994 34,380 0 131,692 3,041 102,368 271,942 241,297 160,038 435,324 91,068 50,949 0 0 304 287,520 435,324 140,955 140,955 83,780 83,780 35,855 180 1,451 19,910 7,036 12,874 920 0 0 11,954 0.13 0.13 This financial data schedule has been restated in accordance with SFAS No. 128 (Earnings Per Share), and also to reflect the disposal of the company's network products business.

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