10-K405

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, 1999.
OR
	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-14617

ANDREW CORPORATION
(Exact name of Registrant as specified in its charter)

Delaware	36-2092797
(State of Incorporation)	(I.R.S. Employer Identification No.)
10500 W. 153rd Street, Orland Park, Illinois	60462
(Address of principal executive offices)	(Zip code)

Registrant's telephone number, including area code: (708) 349-3300

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act:

Title of Each Class

Common Stock, $.01 par value
Common Stock Purchase Rights

    Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period as the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  X  No   

    Indicate by check mark if disclosure of delinquent filers pursuant to item 405 of Regulation S-K is not contained herein and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K, or any amendment of this Form 10-K.  X 

    The aggregate market value of voting stock held by non-affiliates of the Registrant as of December 10, 1999 was $1,076,827,282. The number of outstanding shares of the Registrant's common stock as of that date was 80,510,451.

DOCUMENTS INCORPORATED BY REFERENCE

    Portions of the Registrant's Annual Report to Stockholders for the year ended September 30, 1999 are incorporated by reference into Parts I and II.

    Portions of the Proxy Statement for the annual stockholders' meeting to be held, February 8, 2000 are incorporated by reference into Part III.

PART I

Item 1—Business

General

    Andrew Corporation ("Andrew" or the "Company") was reincorporated in Delaware in 1987. The Company previously was incorporated in Illinois in 1947 as the successor to a partnership founded in 1937. Its executive offices are located at 10500 West 153rd Street, Orland Park, Illinois, 60462, which is approximately 25 miles southwest of Chicago's loop. Unless otherwise indicated by the context, all references herein to Andrew include Andrew Corporation and its subsidiaries.

    Andrew is a multinational supplier of communications products and systems to worldwide commercial, industrial, and governmental customers. Its principal products include coaxial cables, microwave antennas for point-to-point communication systems, special purpose antennas for commercial and government end use, antennas and complete earth stations for satellite communication systems, cellular antenna products, cellular telephone accessories, electronic radar systems, communication reconnaissance systems, and related ancillary items and services. These products are frequently sold as integrated systems rather than as separate components. Andrew conducts manufacturing operations, primarily from nine locations in the United States and from six locations in other countries. Sales by non-U.S. operations and export sales from U.S. operations accounted for approximately 52% of Andrew's net sales in 1999, 49% in 1998 and 48% in 1997.

    During fiscal 1996, Andrew completed three acquisitions that provided new products and improved accessibility to expanding 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. Mapra and Gerbo manufacture, distribute, and sell antennas, waveguides and towers and provide installation services. Andrew 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 Satcom Systems, Pty. Ltd., a distributor of commercial products, located in South Africa.

    During June 1997, the Company discontinued the network products business, significantly restructured its European wireless products business and phased out of the fiber optic sensors and global messaging development activities. These actions resulted in total after-tax charges to net income of $22.8 million or $.25 per share.

    In October 1997, the Company purchased an additional 19% ownership interest in Mapra Industria e Comercio Ltda. and Gerbo Telecommunicacoes e Servicos Ltda for $3.0 million. This purchase increased the Company's ownership percentage in Mapra and Gerbo to 70%.

    In March 1999, the Company initiated a plan to restructure the manufacturing operations of its towers and wireless accessories businesses, phase out of its AVS small aperture earth station product line and divest itself of its SciComm government electronics business. In connection with the restructuring plans, approximately 600 employees and 280 temporary/contract workers will be terminated. Estimated employee termination costs of $5.2 million were accrued in the second quarter of 1999. In addition to termination costs, the restructuring reserve includes a goodwill write-off of $14.1 million, long-term lease commitments of $3.5 million and inventory, equipment and other asset write-downs of $13.9 million. Of the total $36.7 million employee termination and exit costs recognized in the second quarter, $6.9 million is classified as Cost of Products Sold and $29.8 million as Restructuring in the Operating Expense section of the income statement. On an after-tax basis, restructuring charges were $28.1 million, or $0.34 per share.

    Actual costs charged against the restructuring reserve in 1999 were $24.6 million, including termination costs of $2.8 million paid to 424 terminated employees, a $14.1 million goodwill write-off and inventory and other asset write-downs of $7.4 million. The company expects to complete the restructuring prior to September 30, 2000.

    During fiscal year 1999 the Company completed three acquisitions. In February 1999, the Company purchased the remaining 20% interest in Satcom Systems, Pty. Ltd., a distributor of commercial products, in South Africa. In March 1999 the Company acquired Passive Power Products, Inc., a Maine based supplier of RF products to the broadcast market. In September of 1999 Andrew acquired Chesapeake Microwave Technologies Inc., a company that designs and develops RF and microwave amplifiers and assemblies.

    During fiscal year 1999 the Company operated in a dominant industry segment. Andrew supplies coaxial cable and antenna system equipment to telecommunications companies and agencies as well as cellular antenna products and cellular phone accessories through retail distribution channels of cellular service providers. The Company also supplies specialized antenna systems, electronic radar systems, communication reconnaissance systems, standard antennas and fully integrated systems to various United States government agencies and friendly foreign governments.

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:

	Dollars in thousands Year Ended September 30
	1999				1998				1997
Coaxial Cable	$	418,496	53	%	$	486,788	57	%	$	467,774	54	%
Other Products and Services		169,804	21			157,912	19			183,557	21
Terrestrial Microwave Systems		150,795	19			148,614	17			153,905	18
Wireless Accessories		52,665	7			59,601	7			64,239	7
	$	791,760	100	%	$	852,915	100	%	$	869,475	100	%

PRINCIPAL PRODUCTS

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.

    In addition to bulk cable, coaxial cable systems include: cable connectors, accessories and assemblies. Coaxial cable connectors attach to cable and facilitate transmission line attachment to the antennas and radio equipment. Accessories protect and facilitate installation of coaxial cable on the tower and into the equipment building. Accessories include lightning surge protectors, hangers, adaptors and grounding kits. Together, connectors and cable assemblies combine to form coaxial cable assemblies.

    Andrew sells its semi-flexible cables and waveguides under the trademark HELIAX®.

Other Products and Services:

    This group includes special application antennas, support products and various electronics.

    Andrew 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 (equipment buildings and towers) and the installation of these components to be part of a "cellular system."

    Support products include equipment buildings, which provide a controlled environment for radio and other equipment, while towers provide support and elevation for 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 cable TV operators and to VHF or UHF broadcast stations, as well as for the long distance transmission of conventional telecommunications traffic.

    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.

    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 that emphasize highly sensitive reception of weak signals as well as accuracy of signal analysis data. 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. The electronic scanning, communication receiver and electronic surveillance systems described above are manufactured and distributed by the Company's government electronics division. As part of the restructuring efforts initiated in March of 1999, the Company has decided to divest itself of the government electronic business and plans to complete this divestiture by September 30, 2000.

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, internet, video and data transmission. They are also used for more specialized purposes by cellular operators to link cellsites with switching centers, pipeline companies, electric utilities and railroads.

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, GPS automotive equipment and various other wireless accessories are included in this group. The acquisition of The Antenna Company increased Andrew's product offering and opened domestic distribution channels.

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, Scotland, Brazil, China and India. Andrew's plants in the United States also ship significant amounts of manufactured goods to export markets. In Russia, the Ukraine and Mexico, Andrew participates in joint ventures that operate fiber optic telecommunication networks.

    During fiscal 1999, sales of products exported from the United States or manufactured abroad were $409,203,000 or 52% of total sales compared with $420,376,000 or 49% of total sales in fiscal 1998 and $414,749,000 or 48% of total sales in fiscal 1997. Exports from the United States amounted to $61,843,000 in fiscal 1999, $97,738,000 in fiscal 1998 and $105,147,000 in fiscal 1997.

    Sales and net income from continuing operations on a country-by-country basis can vary considerably year to year. Further information on Andrew's international operations is contained in the note "Geographic Area Information" to Consolidated Financial Statements included on page 32 of the 1999 Annual Report to Stockholders, incorporated herein by reference.

    Andrew's international operations are subject to a number of risks including currency fluctuations, changes in foreign governments and their policies, and expropriation or requirements of local or shared ownership. Andrew believes that the geographic dispersion of its sales and assets tends to mitigate these risks.

MARKETING AND DISTRIBUTION

    Sales engineering functions, including product application assistance, are performed by a staff of highly trained applications engineers located at each manufacturing facility. In addition, field sales engineers are located at or near Atlanta, Dallas, Los Angeles, Miami, New York, San Francisco, Washington, D.C., Kansas City, Seattle, Pittsburgh, Columbus, Essen and Munich (Germany), Hong Kong, Johannesburg (South Africa), London (England), Madrid (Spain), Mexico City (Mexico), Milan (Italy), Moscow (Russia), Paris (France), Sorocaba (Brazil), Suzhou (China), Tokyo (Japan), Zurich (Switzerland), Singapore, Melbourne (Australia), Riyadh (Saudi Arabia), Bangkok, and New Delhi (India). 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 emerging sales markets.

    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 Company also sells mobile cellular products such as antennas and cellular telephone accessories. These products are sold primarily through the retail distribution channels of cellular service providers or carriers. Mobile cellular products are also sold to distributors who then resell these products to dealers and cellular carriers.

MAJOR CUSTOMERS

    Andrew serves more than 6,000 customers in more than 170 countries. In fiscal 1999, aggregate sales to the ten largest customers accounted for 31% of total consolidated sales compared to 31% in 1998 and 31% in 1997. No single customer has accounted for over 10% of consolidated annual sales in any of the last three years.

MANUFACTURING AND RAW MATERIALS

    Andrew generally develops, designs, fabricates, manufactures and assembles the products it sells. Cable and waveguide products are produced at plants in Illinois, Brazil, Scotland, China and India. Microwave and earth station antennas are manufactured in Texas, Scotland and Australia. Equipment shelters are manufactured in Georgia, California and Kansas. Wireless antennas and accessories for mobile applications are manufactured in Illinois. The Company's products are manufactured from both standard components and parts that are built to the Company's specifications by other manufacturers. Certain of the Company's products contain multiple microprocessors for which proprietary machine-readable software is designed by the Company's engineers and technicians.

    Andrew considers its sources of supply for all raw materials to be adequate and is not dependent upon any single supplier for a 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 1999, 1998 and 1997, Andrew spent $29,622,000, $25,810,000, and $41,076,000, respectively, on research and development activities.

    Andrew holds approximately 272 active patents, relating to its products, expiring at various times between 1999 and 2018, relating to its products. Andrew attempts to obtain patent protection for significant developments whenever possible. The Company believes that, while patents in the aggregate are important to its business, the loss of any individual patent would not have a material adverse effect on its operations.

COMPETITION

    Many large manufacturers of electrical or radio equipment, some of which have substantially greater financial resources than Andrew, compete with a portion of Andrew's antenna systems equipment, 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 that require sophisticated technology and support services. Andrew competes principally on the basis of product quality, service and continual technological enhancement of its products.

    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.

BACKLOG AND SEASONALITY

    The following table sets forth the Company's backlog of orders believed to be firm and due to ship both within the next year and beyond: (government orders included herein are funded orders):

	Orders to be shipped as of September 30
	1999		1998
	Dollars in thousands
Within 12 months	$	170,706	$	141,847
After 12 months		3,276		12,317
	$	173,982	$	154,164

    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. 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 that might individually or in the aggregate have a material adverse effect on the Company's financial condition.

EMPLOYEES

    At September 30, 1999, Andrew had 4,572 employees, 3,311 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 $9,676,000 in 1999, $9,520,000 in 1998 and $17,254,000 in 1997. These contracts are typically less than 12 months in duration.

    Andrew, like other companies that derive a portion of their revenues from the United States Government, is subject to certain basic risks, including changes in levels of defense spending and possible cost overruns. Recognition of profits is based upon estimates of final performance that may change as contracts progress. Contract prices and costs incurred are subject to Government Procurement Regulations. 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 eighteen manufacturing facilities, thirty-seven engineering and sales administration locations and twelve 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:

Location	Approximate floor area in square feet	Owned/Leased
Orland Park, Illinois	613,000	Owned
Addison, Illinois	201,000	Leased
Denton, Texas	222,000	Owned
Newnan, Georgia	185,000	Owned
Garland, Texas	64,000	Owned
Richardson, Texas	100,000	Owned
Tinley Park, Illinois	55,000	Leased
Sacramento, California	83,000	Leased
Burlington, Kansas	150,000	Leased
U.S. sub-total	1,673,000
Sorocaba, Sao Paulo, Brazil	229,000	Owned
Lochgelly, Fife, United Kingdom	167,000	Owned/Leased
Campbellfield, Victoria, Australia	110,000	Owned
Suzhou, China	85,000	Owned/Leased
Whitby, Ontario, Canada	92,000	Owned
Non-U.S. sub-total	683,000
TOTAL	2,356,000

The Company's properties are in good condition and are suitable for the purposes for which they are used.

    Andrew owns a total of 701 acres of land. Of this total, 565 acres are unimproved, including 181 acres in Orland Park, Illinois, 137 acres in Floyd, Texas, 143 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 that 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 that required a vote of security holders during the three months ended September 30, 1999.

PART II

Item 5—Market for the Registrant's Common Stock and Related Stockholder Matters

    The Company's common stock is traded on the National Nasdaq Market and the Chicago Stock Exchange.

    The Company had 4,455 holders of common stock of record at December 10, 1999.

    Information concerning the Company's stock price during the years ended September 30, 1999 and 1998 is incorporated herein by reference from Andrew's 1999 Annual Report to Stockholders, page 33. All prices represent high and low daily closing prices as reported by Nasdaq.

    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 that, among other things, restrict dividend payments. At September 30, 1999, $314,625,000 was not restricted for purposes of such payments.

Item 6—Selected Financial Data

    Selected financial data for the last eleven fiscal years is incorporated herein by reference to the 1999 Annual Report to Stockholders, pages 36 and 37.

Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations

    Information concerning this item is incorporated herein by reference from the 1999 Annual Report to Stockholders, pages 14 through 18.

Item 7a.—Quantitative and Qualitative Disclosures about Market Risks

    The Company is exposed to market risk from changes in interest rates and foreign exchange rates, and commodities:

    Interest Rate Risk—the Company had $60.0 million in debt outstanding at September 30, 1999 in the form of lines of credit and debt agreements at both fixed and variable rates. The Company is exposed to interest rate risk primarily through its variable rate debt, which totaled $21.2 million or 35.3% of total debt. To assess its exposure to interest rates, the Company performed a sensitivity analysis on its variable rate debt. As a result, the Company determined that a 100 basis point increase in interest rates would not have a material effect on the Company's financial position, results of operations or cash flows. The Company currently does not use derivative instruments to manage its interest rate risk.

    Foreign Currency Risk—Andrew's international operations represent a substantial portion of its overall operating results and asset base. In most cases, the Company's products are produced at manufacturing facilities located near the customer. As a result, significant volumes of finished goods are manufactured in foreign countries for sale into those markets. During fiscal year 1999, sales of products exported from the United States or manufactured abroad were 52% of total sales.

    The Company's identifiable foreign exchange exposures result primarily from the anticipated purchase of product from affiliates and third-party suppliers along with the repayment of intercompany loans with foreign subsidiaries denominated in foreign currencies. The Company has $64.0 million of investments in and advances to its ventures located in Russia, Ukraine and Mexico. The ultimate collectability of these advances and the Company's ability to recoup its investments in these ventures is tied in part to the economic stability of these countries, particularly Russia and the stability of the Russian Ruble. The Company manages its foreign currency risk by making use of naturally offsetting positions, such as borrowing in functional currencies, and structuring intercompany transactions to reduce known material exposures, where possible. The Company currently does not use derivative financial instruments to manage its foreign currency risk.

    Commodity Risk—the Company uses various metals in the production of its products, principally copper. As a result, the Company is exposed to fluctuations in the price of copper. In order to reduce its exposure, the Company has negotiated copper purchasing contracts with various suppliers into fiscal year 2000. In general, the Company has contracts that lock copper pricing through March of 2000.

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 1999 Annual Report to Stockholders, pages 19 through 34.

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 1999 Proxy Statement under the captions "Election of Directors" and "Executive Officers."

Item 11—Executive Compensation

    Information concerning management compensation is incorporated herein by reference from the Company's 1999 Proxy Statement under the caption "Director Compensation" and "Executive Compensation."

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 1999 Proxy Statement under the caption "Ownership of Andrew Common Stock."

Item 13—Certain Relationships and Related Transactions

    Information concerning certain relationships and related transactions is incorporated herein by reference from the Company's 1999 Proxy Statement under the caption "Ownership of Andrew Common Stock."

PART IV

Item 14—Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)

(1) The following consolidated financial statements of Andrew Corporation and subsidiaries included in the 1999 Annual Report to Stockholders are incorporated by reference in Item 8 above:

Consolidated Statements of Income years ended September 30, 1999, 1998 and 1997	page 19
Consolidated Balance Sheets September 30, 1999 and 1998	page 20
Consolidated Statements of Cash Flows years ended September 30, 1999, 1998 and 1997.	page 21
Consolidated Statements of Stockholders' Equity years ended September 30, 1999, 1998 and 1997.	page 22
Notes to Consolidated Financial Statements	pages 23 through 32
Selected Quarterly Financial Information.	page 33
Report of Independent Auditors	page 34

(a)(2) Financial Statement Schedules

    None

(a)(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. (SEC File No. 000-09514)
3.1(ii	)	By-Laws of Registrant	Filed as Exhibit 3.1(ii) to Form 10-K for fiscal year ended September 30, 1994 and incorporated herein by reference. (SEC File No. 000-09514)
4.(a	)	Note Agreement dated September 1, 1990	Filed as Exhibit 4(a) to Form 10-K for fiscal year ended September 30, 1992 and incorporated herein by reference. (SEC File No. 000-09514)
4.(a	)a	First Amendment to Note Agreement dated September 1, 1990	Filed as Exhibit 4(a)a to Form 10-K for fiscal year ended September 30, 1992 and incorporated herein by reference. (SEC File No. 000-09514)
4.(b	)	Stockholder Rights Agreement Dated November 14, 1996	Filed under Item 5 of Form 8-K dated November 14, 1996 and incorporated herein by reference.
10.(a (i (ii	)* ) )	Executive Severance Benefit Plan Agreement with Floyd L. English Agreement with Charles R. Nicholas	Filed as Exhibit 10(a) to Form 10-Q for fiscal quarter ended June 30, 1996 and incorporated herein by reference.
10.(a (i (ii	)a* ) )	Executive Severance Benefit Plan Agreement with Thomas E. Charlton Agreement with John B. Scott	Filed as Exhibit 10(a)a to Form 10-K for fiscal year ended September 30, 1993 and incorporated herein by reference. (SEC File No. 000-09514)
10.(a (i	)b* )	Executive Severance Benefit Plan Agreement with William B. Currer	Filed as Exhibit 10(a)b to Form 10-Q for fiscal quarter ended June 30, 1993 and incorporated herein by reference. (SEC File No. 000-09514)
10.(a (i (ii	)c* ) )	Executive Severance Benefit Plan Agreement with Robert J. Hudzik Agreement with Debra B. Huttenburg	Filed as Exhibit 10(a)c to Form 10-Q for fiscal quarter ended December 31, 1997 and incorporated herein by reference.
10.(a (i	)d* )	Executive Severance Benefit Plan Agreement with John E. DeSana	Filed as Exhibit 10(a)c(iii) to Form 10-Q for quarter ended December 31, 2000 and incorporated herein by reference.
10.(a (i	)e* )	Executive Severance Benefit Plan Agreement with Guy M. Campbell
10.(b	)*	Management Incentive Plan Dated February 4, 1988	Filed as Exhibit 10(c) to Form 10-K for fiscal year ended September 30, 1993 and incorporated herein by reference. (SEC File No. 000-09514)
10.(c	)*	Non-employee Directors' Stock Option Plan dated February 10, 1998, as amended November 18, 1999
10.(d	)	Credit Agreement dated as of June 16, 1993	Filed as Exhibit 10(e) to Form 10-K for fiscal year ended September 30, 1993 and incorporated herein by reference. (SEC File No. 000-09514)
10.(d	)a	First Amendment to Credit Agreement dated June 16, 1993	Filed as Exhibit 10(d)a to Form 10-K for fiscal year ended September 30, 1995 and Incorporated herein by reference.
10.(d	)b	Second Amendment to Credit Agreement dated June 16, 1993	Filed as Exhibit 10(d)b to Form 10-K for fiscal year ended September 30, 1995 and incorporated herein by reference.
10.(d	)c	Third Amendment to Credit Agreement dated June 16, 1993	Filed as Exhibit 10(d)c to Form 10-Q for fiscal quarter ended June 30, 1996 and incorporated herein by reference.
10.(d	)d	Guaranty dated as of April 11, 1996.	Filed as Exhibit 10(d)d to Form 10-Q for fiscal quarter ended June 30, 1996 and incorporated herein by reference.
10.(d	)e	Replacement Note dated as of April 8, 1996.	Filed as Exhibit 10(d)e to Form 10-Q for fiscal quarter ended June 30, 1996 and incorporated herein by reference.
10.(e	)	Amended and Restated Employee Stock Purchase Plan adopted November 12, 1998	Filed with Proxy Statement in connection with Annual Meeting held February 9, 1999 (filed on December 22, 1998) and incorporated herein by reference.
10.(f	)	Credit Agreement dated as of November 1, 1997	Filed as Exhibit10(f) to Form 10-K for fiscal year ended September 30, 1997 and incorporated herein by reference.
10.(g	)	Amended and Restated Employee Retirement Benefit Restoration Plan dated October 1, 1998.	Filed with Proxy Statement in connection with Annual Meeting held February 9, 1999(filed on December 22, 1998) and incorporated herein by reference.
10(h	)	May 4, 1998 Assignment Agreement between ABN-Amro Bank N.V. and Bank Austria Aktiengesellschaft	Filed as Exhibit 10 to Form 10-Q for fiscal quarter ended June 30,1998 and incorporated herein by reference.
13		1999 Annual Report to Stockholders	Pages 14 through 34 and 36-37 of the 1999 Annual Report to Shareholders, which are expressly incorporated herein by reference.
21		List of Significant Subsidiaries
23		Consent of Independent Auditors
27		Financial Data Schedules
99.(a	)	Description of Common stock	Filed as Exhibit 99(a) to Form 10-K for fiscal year ended September 30, 1997 and incorporated herein by reference.
(b	)	Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended September 30, 1999

*

Indicates compensatory plan

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, 1999. 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, 1999 and 1998, and the consolidated results of their operations and their cash flows for each of the three years in the period ended September 30, 1999 in conformity with generally accepted accounting principles.

/s/ Ernst & Young LLP
Chicago, Illinois
October 22, 1999

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 21, 1999.

Andrew Corporation

 
By /s/ Floyd L. English
Floyd L. English
Chairman, President and
Chief Executive Officer

    Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on December 21, 1999 by the following persons on behalf of the Registrant in the capacities indicated.

/s/	Floyd L. English Floyd L. English Chairman, President, Chief Executive Officer and Director (Principal Executive Officer)	/s/	Charles R. Nicholas Charles R. Nicholas Executive Vice President and Chief Financial Officer (Principal Financial Officer)
/s/	Gregory F. Maruszak Gregory F. Maruszak Vice President Finance (Principal Accounting Officer)	/s/	Jere D. Fluno Jere D. Fluno Director
/s/	Jon L. Boyes Jon L. Boyes Director	/s/	Ormand J. Wade Ormand J. Wade Director
/s/	Kenneth J. Douglas Kenneth J. Douglas Director	/s/	Glen O. Toney Glen O. Toney Director
/s/	Thomas A. Donahoe Thomas A. Donahoe Director	/s/	Elizabeth A. Fetter Elizabeth A. Fetter Director
/s/	William O. Hunt William O. Hunt Director	/s/	John G. Bollinger John G. Bollinger Director

EXHIBIT INDEX

Item Number	Description
10(a)e	Executive Severance Benefit Plan Agreement with Guy M. Campbell
10(c)	Non-employee directors' Stock Option Plan dated February 10, 1998, as amended November 18, 1999
13	1999 Annual Report to Stock Holders, pages 14 through 34 and pages 36 through 37
21	List of Significant Subsidiaries
23	Consent of Independent Auditors
27	Financial Data Schedule

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PART I
Item 1—Business

Item 2—Properties
Item 3—Legal Proceedings
Item 4—Submission of Matters to a Vote of Security Holders
PART II
Item 5—Market for the Registrant's Common Stock and Related Stockholder Matters
Item 6—Selected Financial Data
Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7a.—Quantitative and Qualitative Disclosures about Market Risks
Item 8—Financial Statements and Supplementary Data
Item 9—Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
PART III
Item 10—Directors and Executive Officers of the Registrant
Item 11—Executive Compensation
Item 12—Security Ownership of Certain Beneficial Owners and Management
Item 13—Certain Relationships and Related Transactions
PART IV
Item 14—Exhibits, Financial Statement Schedules and Reports on Form 8-K

SIGNATURES
EXHIBIT INDEX

EX-10.(A)(E)

EXHIBIT 10(a)(e)

ANDREW CORPORATION
EXECUTIVE SEVERANCE BENEFIT PLAN AGREEMENT

    THIS AGREEMENT made as of 14 July 1999, between Andrew Corporation, a Delaware corporation (the "Company"), and Guy M. Campbell (the "Executive").

W I T N E S S E T H:

    1.  Participation.  The Executive has been designated as a participant in the Andrew Corporation Executive Severance Benefit Plan (the "Plan") by the Compensation Committee of the Board of Directors of the Company.

    2.  Plan Benefits.  The Executive agrees to be bound by the provisions of the Plan, including those provisions which relate to his eligibility to receive benefits and to the conditions affecting the form, manner, time and terms of benefit payments under the Plan, as applicable. The Executive understands and acknowledges that his benefit may be reduced pursuant to Section 10 of the Plan in order to eliminate any "excess parachute payments" as defined under Section 4999 of the Internal Revenue Code of 1954, as amended. The Executive may elect to receive his Plan benefits in installment payments, as provided under Section 9 of the Plan, by signing the statement included on page three of this Agreement. The Executive may make an election to receive installment payments, or may revoke any such election, at any time prior to the date which is ten days prior to the date on which a Change in Control is deemed to have occurred; provided that any election subsequent to the execution of this Agreement or any revocation shall be in writing and shall be subject to the approval of the Compensation Committee.

    3.  Federal and State Laws.  The Executive shall comply with all federal and state laws which may be applicable to his participation in this Plan, including without limitation, his entitlement to, or receipt of, any benefits under the Plan. If the Executive is subject to the provisions of Section 16(b) of the Securities Exchange Act of 1934 as amended and in effect at the time of any Plan benefit payment, he shall comply with the provisions of Section 16(b), including any applicable exemptions thereto, whether or not such provisions and exemptions apply to all or any portion of his Plan benefit payments.

    4.  Amendment and Termination.  The Board of Directors may amend, modify, suspend or terminate the Plan or this Agreement at any time, subject to the following:

(a)

without the consent of the Executive, no such amendment, modification, suspension or termination shall reduce or diminish his right to receive any payment or benefit then due and payable under the Plan immediately prior to such amendment, modification, suspension or termination; and



(b)

in the event of a Change in Control pursuant to Section 5 of the Plan, no such amendment, modification, suspension or termination of benefits, and eligibility therefor, will be effective prior to the expiration of the 48-consecutive-month period following the date of the Change in Control.

    5.  Beneficiary.  The Executive hereby designates his primary beneficiary as Kay Campbell, who will receive any unpaid benefit payments in the event of the Executive's death prior to full receipt thereof. In the event that the primary beneficiaries predeceases the Executive, his unpaid benefits shall be paid to Amy Campbell, Carrie Campbell, and Grant Campbell as secondary beneficiaries. If more than one primary or secondary beneficiary has been indicated, each primary beneficiary or, if none survives, each secondary beneficiary will receive an equal share of the unpaid benefits unless the Executive indicates specific percentages next to the beneficiaries' names. Except as required by applicable law, the Executive's beneficiary or beneficiaries shall not be entitled to any medical, life or other insurance-type welfare benefits.

    6.  Arbitration.  The Executive agrees to be bound by any determination rendered by arbitrators pursuant to Section 11 of the Plan.

    7.  Employment Rights.  The Plan and this Agreement shall not be construed to give the Executive the right to be continued in the employment of the Company or to give the Executive any benefits not specifically provided by the Plan.

    IN WITNESS WHEREOF, Andrew Corporation has caused this Agreement to be executed and the Executive has executed this Agreement, both as of the day and year first above written.

	ANDREW CORPORATION
/s/ GUY M. CAMPBELL Guy M. Campbell Group President Wireless Products and Distributed Communications Systems	By:	/s/ F.L. ENGLISH F. L. English Chairman, President and Chief Executive Officer

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EXHIBIT 10(a)(e)
ANDREW CORPORATION EXECUTIVE SEVERANCE BENEFIT PLAN AGREEMENT

EX-10.(C)

EXHIBIT 10(c)

THE ANDREW CORPORATION
STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS

As approved by the Board of Directors of
Andrew Corporation on November 13, 1997 and by the
Stockholders of Andrew Corporation on February 10, 1998
As amended by the Board of Directors on November 18, 1999

ANDREW CORPORATION
STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS

    1.  Name and Identity of the Plan.  This instrument and the plan set forth herein shall be known as the Andrew Corporation Stock Option Plan for Non-Employee Directors (hereinafter called the "Plan").

    2.  Definitions.  As used herein, the following terms shall have the meanings indicated below, unless the context shall give a clear meaning to the contrary:

(a) "Company" shall mean Andrew Corporation, a Delaware corporation.

(b) "Board" shall mean the Board of Directors of the Company.

(c) "Stockholders" shall mean the stockholders of the Company.

(d) "Eligible Director" shall mean a member of the Board who is not, and has not at any time within the preceding three years, been an officer or employee of the Company or any of its subsidiaries or affiliates.

(e) "Administrator" shall mean the Chief Financial Officer of the Company, or such other officer as may be designated by the Board.

(f) "Beneficiary" shall mean a person or entity (including a trust or the estate of the Optionee) designated by the Optionee to succeed to any rights that he or she may have in Optionsat the time of death. No such designation, or any revocation or change thereof, shall be effective unless made in writing by the Optionee on a form provided by the Administrator and delivered to the Administrator prior to the Optionee's death. If, on the death of the Optionee, there is no living person or entity in existence so designated, the term "Beneficiary" shall mean the legal representative of the Optionee's estate.

(g) "Change-in-Control" shall mean any of the following: (i) the merger or consolidation of the Company with any other corporation following which the holders of Common Stock immediately prior thereto hold less than 60% of the outstanding common stock of the surviving or resulting entity; (ii) the sale of all or substantially all of the assets of the Company to any person or entity other than a wholly owned subsidiary; (iii) any person or group of persons acting in concert, or any entity, becomes the beneficial owner, directly or indirectly, of more than 20% of the outstanding Common Stock; or (iv) those individuals who, as of the close of the most recent annual meeting of the Company's stockholders, are members of the Board (the "Existing Directors") cease for any reason to constitute more than 50% of the Board. For purposes of the foregoing, a new director will be considered an Existing Director if the election, or nomination for election by the Company's stockholders, of such new director was approved by a vote of a majority of the Existing Directors. No individual shall be considered an Existing Director if such individual initially assumed office as a result of either an actual or threatened election contest subject to Rule 14a-11 under the Securities Exchange Act of 1934 or other actual or threatened solicitation of proxies by or on behalf of anyone other than the Board, including by reason of any agreement intended to avoid or settle any election proxy contest.

(h) "Common Stock" shall mean the common stock, $.01 par value, of the Company.

(i) "Disability" shall mean eligibility for Social Security disability benefits based upon a determination by the Administrator that the condition arose prior to termination of the Optionee as a director of the Company.

(j) "Market Value" shall mean, as of any date, the average of the high and low sale prices of the Common Stock on such date as reported on the Nasdaq National Market system or, if no such sales were reported for such date, on the next preceding date for which such sales were reported.

(k) "Option" shall mean an option granted under the Plan to an Eligible Director for the purchase of shares of Common Stock.

(l) "Optionee" shall mean the recipient and holder of an Option.

(m) "Retirement" shall mean the cessation of an Optionee's service as a director of the Company after the third anniversary of the Stockholders' meeting at which he or she was first elected to the Board.

    As used herein, the singular shall include the plural and vice versa, and words used in any gender shall include all genders, unless the context shall give a clear meaning to the contrary.

    3.  Purpose of the Plan.  The purpose of the Plan is to encourage the highest level of director performance by providing to Eligible Directors the opportunity to acquire a proprietary interest in the Company's success and progress through the purchase of Common Stock.

    4.  Administration of the Plan.  The Plan shall be administered by the Administrator. Subject only to the express restrictions, limitations and directions of other provisions of the Plan, the Administrator shall have sole, absolute and full authority and power: (a) to interpret the Plan; (b) to establish, amend and rescind rules and regulations relating to the Plan; and (c) to do such other things and make such other determinations, decisions and interpretations as he or she deems necessary or advisable to carry out the purposes of the Plan and its orderly administration. All actions, determinations, decisions and interpretations taken and made by the Administrator shall be final and conclusively binding on all persons whomsoever.

    5.  Stock Subject to the Plan.  The aggregate number of shares of Common Stock which may be purchased by exercise of Options shall not exceed 400,000, subject to adjustment as provided in Section 7. Accordingly, at any one time the total of the number of shares of Common Stock subject to outstanding Options and the number of shares of Common Stock purchased by exercise of Options shall not exceed 400,000, subject to such adjustment. If any Option expires or terminates without having been exercised in full, the unpurchased shares which were subject thereto, unless the term of the Plan has expired or it has been terminated, shall become available for grant of other Options. Shares purchased by exercise of Options may be authorized but unissued shares or issued shares held in treasury.

    6.  Grant of Options.  Each Eligible Director shall receive an automatic Option grant on the date of the first meeting of the Board following each annual meeting of Stockholders of the Company. The annual Option granted to each Eligible Director shall be for 12,000 shares of Common Stock. No Option shall be granted as provided for herein if the number of shares of Common Stock then remaining available for grant is insufficient for full grant of all Options to be granted on that date pursuant to the provisions of Section 5 and this Section 6.

    7.  Adjustment Provisions.  In the event of any stock dividend, stock split, combination of shares or other change in respect of the Common Stock, (i) the aggregate number of shares of Common Stock then remaining available for grant of Options under the Plan and the number of shares of Common Stock then subject to each outstanding Option shall be adjusted in proportion to such change in issued shares, and (ii) the option price under each then outstanding Option shall be adjusted so that the total consideration payable to the Company upon exercise of such Option shall not be changed by reason of such change in the Common Stock. Notwithstanding the preceding sentence, the number of Option shares to be granted in any year to each Eligible Director shall be 12,000, and shall not be adjusted in accordance with this Section 7.

    8.  Term of Plan.  The Plan shall remain in effect until terminated in accordance with the provisions of Section 15.

    9.  Option Price Under an Option.  The option price for each share of Common Stock subject to an Option shall be 100% of its Market Value determined as of the date of its grant.

    10.  Exercise of Options.  No Option shall be exercisable during the first 12 months from and including its date of grant or later than 10 years from its date of grant. On the date of each annual meeting of Stockholders following the grant of an Option, such Option shall become exercisable for 20% of the shares of Common Stock covered thereby, until the fifth annual meeting of Stockholders following the grant of the Option, at which time such Option shall become fully exercisable. The privilege shall be cumulative and, to the extent exercisable at any time, shall be exercisable in whole or in part. In the event of a Change-in-Control, all Options shall be fully vested and exercisable during the 90 days immediately thereafter.

    An Option shall be exercised by written notice thereof given by the person entitled to exercise such Option to the Administrator. Said notice shall state the date of grant of the Option, the number of shares of Common Stock subject thereto and the number of shares of Common Stock with respect to which the Option is exercised. No such notice which is inconsistent with any provision of the option agreement or the Plan shall be effective. No such notice shall be effective unless and until the Company, in the person of the Administrator, is in receipt of full payment of the option price for the shares of Common Stock in respect of which the Option is exercised. No right (including, without limitation, the right to any dividend or to vote) with respect to such shares of Common Stock shall accrue until after the date of the stock certificate representing such shares.

    Payment of the option price may be made in cash, by delivery of whole shares of Common Stock equivalent in Market Value to the option price on the date that the written notice of exercise is delivered by the Optionee or partly in cash and partly in whole shares of Common Stock; provided that, Common Stock previously acquired from the Company may not be surrendered unless it has been held for at least six months.

    11.  Non-transferability; Exceptions.  Except as provided in this Section 11, no Option may be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or under the laws of descent and distribution, and an Option may be exercised, during the lifetime of the Optionee, only by such Optionee. Under such rules and procedures as the Administrator may establish, an Optionee may transfer his or her Option to members of the Optionee's immediate family (i.e., children, grandchildren and spouse) or to one or more trusts for the benefit of such family members or to partnerships in which such family members are the only partners, provided that (i) the agreement, if any, with respect to such Option, expressly so permits or is amended to so permit, (ii) the Optionee does not receive any consideration for such transfer, and (iii) the Optionee provides such documentation or information concerning any such transfer or transferee as the Administrator may reasonably request. Any Option held by any transferees shall be subject to the same terms and conditions that applied immediately prior to its transfer. The Administrator may also amend the agreements applicable to any outstanding Options to permit such transfers. Any Option not granted pursuant to any agreement expressly permitting its transfer or amended expressly to permit its transfer shall not be transferable.

    12.  Termination of Directorship.  If an Optionee ceases to be a director by reason of Retirement or Disability, his or her Options shall be fully vested and exercisable until the earlier of five years after the date on which the Optionee ceases to be a director or the expiration of the Options' respective terms. Upon the death of an Optionee, while serving as a director or after terminating by reason of Retirement or Disability, his or her Options shall be fully vested and exercisable by the Optionee's Beneficiary until the earliest of one year after the date of death, five years after the date of termination due to Retirement or Disability, or the expiration of their terms. If an Optionee ceases to be a director of the Company for any other reason, his or her unvested Options shall continue to vest within the five-year period following his or her termination as if the Optionee had continued as a director and shall be exercisable during that period, but not later than the expiration of their terms. If the Optionee dies during such period, his or her Beneficiary may exercise the Options (to the extent they were vested and exercisable on the date of death) until the earliest of one year after the date of death, five years after the date on which the Optionee ceases to be a director, or the expiration of their terms.

    13.  Option Agreements.  Each Option shall be evidenced by a written option agreement signed by the Optionee and, on behalf of the Company, by the Administrator. The form of the option agreement shall be as provided by the Administrator. Each option agreement by its own express terms shall set forth: (i) the name of the Optionee, (ii) the date of the grant of the Option, (iii) the number of shares of Common Stock subject thereto, and (iv) the option price per share of Common Stock. Each option agreement shall otherwise set forth the provisions of the Plan or incorporate the same therein by reference.

    14.  Conditions Upon Issuance of Shares.  The Company shall have no obligation to sell, issue or deliver any shares of Common Stock pursuant to any Option or the exercise thereof if, in the opinion of counsel for the Company, the sale, issuance or delivery of such shares of Common Stock would be in violation of any provision of the Securities Act of 1933, as amended, or the Securities and Exchange Act of 1934, as amended; any regulation or rule promulgated under either of said acts; any regulation, rule or requirement of any stock exchange upon which shares of Common Stock may then be listed; or any other law, regulation, rule or requirement whatever which, in the opinion of said counsel, may be applicable. In such circumstances, the Company shall be without liability for the non-sale, non-issuance and non-delivery of such shares, except for the return of any payment of the option price for such shares made by the Optionee, or any person standing in the Optionee's stead, to the Company. Without assumption of or exposure to liability for failure of accomplishment of the purpose, the Company nonetheless commits itself to a standard of reasonable care and effort for the avoidance or cure of any obstacle to the sale, issuance and delivery of shares hereunder. As a condition to the exercise of an Option, the Company may require the person exercising such Option to represent and warrant in writing at the time of such exercise that the shares of Common Stock are being purchased only for investment and without any present intention to sell or distribute such shares, and may require that shares delivered upon exercise of an Option bear an appropriate restrictive legend.

    15.  Suspension, Termination, Modification, and Amendment.  The Board shall have the power to suspend, terminate, revise or amend the Plan; provided that suspension, termination, revision or amendment shall be without effect on any Option previously granted and then outstanding; and further provided that, except with the approval of Stockholders, the Board may not increase the maximum number of shares of Common Stock subject to the Plan (except with respect to adjustments under Section 7).

EX-13

EXHIBIT 13

Results of Operations

    Fiscal year 1999 financial results were disappointing due to pricing pressure, volatile economies and customer spending patterns. Sales in 1999 were $791.8 million, 7.2% below 1998 results. Net income per share, excluding restructuring costs, declined 39.8% to $0.71, falling faster than sales due mainly to pricing and product mix. As 1999 progressed, customer spending rebounded and troubled economic regions such as Southeast Asia and Brazil began to stabilize. However, price erosion continued. In response, the company initiated a restructuring plan and accelerated research and development and acquisition activity designed to fuel future revenue and earnings growth.

    In March 1999, the company initiated a plan to restructure the manufacturing operations of its towers and wireless accessories business, phase out of its AVS small aperture earth station product line and divest itself of its SciComm government electronics business. In connection with these restructuring activities, the company recognized pre-tax charges of $36.7 million in the second quarter. On an after-tax basis, restructuring charges were $28.1 million, or $0.34 per share. While these steps negatively impacted 1999 results, they allow the company to increase its focus on the growing wireless markets and further enhance long-term growth opportunities.

    Sales declined $61.1 million or 7.2% in 1999 to $791.8 million from $852.9 million in 1998. International sales decreased 2.7% to $409.2 million in 1999 compared with $420.4 million in 1998 and $414.7 million in 1997. International sales represented 51.7% of revenue in 1999, 49.3% in 1998 and 47.7% in 1997.

    The company's sales trends are most influenced by the wireless infrastructure market, which accounts for 67% of total sales. In 1999, wireless infrastructure sales decreased 8.5%. Sales were up in Europe and up strongly in China, but were more than offset by slower customer spending for new cell sites in the United States and continued price erosion. Fixed telecommunication network sales decreased 1.6%. A significant increase in equipment building sales to U.S. fiber optic network providers was not enough to offset lower pricing and lower spending on traditional microwave networks in international markets. Sales to the broadcast and government markets decreased 3.2% due mainly to a weak government market. Wireless accessories unit volume grew strongly driven by wireless subscriber growth and market share gains. However, unit volume growth was more than offset by significant price declines and the company's exit from the European market, bringing overall wireless accessories sales down 11.6%.

    From a product standpoint in 1999, coaxial cable sales decreased 14.0%, terrestrial microwave systems increased 1.5%, other products and services increased 7.5% and wireless accessories decreased 11.6%. In 1998, coaxial cable sales increased 4.1%, while terrestrial microwave systems, other products and services and wireless accessories declined 3.4%, 14.0% and 7.2%, respectively.

    Cost of products sold was 68.2% of revenue in 1999 compared to 61.2% in 1998 and 59.1% in 1997.  The increase in 1999 was due mainly to pricing concessions required by competitive wireless market conditions. The decrease in gross margin was also caused by unfavorable product mix. Sales of higher margin cable products decreased, and sales of certain lower margin products such as equipment buildings increased significantly. This was partially offset by the benefits of higher unit volumes and productivity improvements. Also contributing to the increase in product cost in 1999 was the classification of $6.9 million of the $36.7 million pre-tax restructuring charges as cost of products sold. In 1998, increased price pressures, particularly for coaxial cable, and lower volumes in the towers business contributed to the growth in cost of products sold as a percentage of revenue. This was partially offset by positive contributions from product mix and efficiency improvements over 1997.

    Research and development expenditures increased $3.8 million or 14.8% to $29.6 million in 1999. As a percentage of sales revenue, research and development expenses were 3.7%, 3.0% and 4.7% in 1999, 1998 and 1997, respectively. The increase in 1999 was the result of accelerated efforts to develop additional products and move into new markets. The decline in 1998 was primarily due to the phase-out of the company's fiber optic sensors and global messaging development activities.

    Sales and administrative expenses in 1999 were $144.3 million, basically unchanged from 1998. As a percentage of sales revenue, selling and administrative expenses increased to 18.2%, compared with 17.0% in 1998 and 16.8% in 1997. Decreases in payroll and related costs were offset by increases in expense related to the company's management information systems.

    Other income and expense in 1999 resulted in income of $1.3 million, compared to an expense of $2.5 million in 1998 and income of $2.0 million in 1997. Other income and expense is primarily comprised of net interest income or expense and foreign exchange gains or losses. Net interest income was $4.9 million in 1999 and $1.5 million in 1998, compared to net interest expense of $0.9 million in 1997. The increase of $3.4 million in 1999 was due to interest earned on advances to the company's joint ventures in Russia. Net other income was $3.6 million in 1999, compared to $4.0 million in 1998 and net other income of $2.9 million in 1997. The year over year fluctuations in net other income and expense were primarily driven by changes in foreign exchange gains and losses.

    Income from continuing operations declined 70.7% to $30.4 million in 1999, compared, with $103.8 million in 1998 and $107.8 million in 1997. The largest portion of this decrease can be attributed to the after-tax impact of restructuring charges of $28.1 million. During 1999, the company's effective income tax rate for continuing operations increased to 38.1% from 34.0% in 1998 and 35.0% in 1997. The increase in the effective tax rate for 1999 was due to the inclusion of non-deductible goodwill in the restructuring charges recognized during the year. Excluding the impact of the non-deductible goodwill restructuring charges, the effective tax rate for 1999 was 32.0%. The decrease in the effective tax rate over the last three years is due to the company generating a larger percentage of its income outside of the U.S.

Liquidity

    Cash and cash equivalents were $38.3 million in 1999, $78.4 million in 1998 and $93.8 million in 1997. Working capital was $303.9 million in 1999, $320.1 million in 1998 and $332.7 million in 1997. Management believes the current level of working capital will be adequate to meet the company's liquidity needs related to normal operations. The decrease in working capital in 1999 was due mainly to the company's continued common stock repurchase activities and a decrease in cash generated from operations. The decrease in working capital in 1998 was due mainly to the company's common stock repurchases through the company's stock buyback program.

    During 1999, the company generated $72.8 million in cash from operations, principally from net income of $30.4 million, which included non-cash charges of $33.6 million for restructuring charges and $39.1 million for depreciation and amortization. This was offset by an increase in accounts receivable. Days sales in billed receivables increased from 70 days in 1998 to 81 days in 1999. The increase in the time required to collect receivables was partially due to the increase in international sales in countries with less favorable payment terms, such as China. In 1998, the company generated $149.9 million in cash from operations, principally from net income of $103.8 million, which included non-cash charges of $37.5 million from depreciation and amortization. Changes in accounts receivable and receivables from affiliates accounted for the remainder of the growth in cash from operations. Days sales in billed receivables increased from 67 days in 1997 to 70 days in 1998. During 1997, the company generated $151.7 million in cash from operations.

    Net cash used in investing activities was $70.1 million in 1999, $64.1 million in 1998 and $61.4 million in 1997. In 1999, the company spent $51.4 million on property, plant and equipment, which included a $7.0 million increase in capital expenditures related to the company's information management systems. During 1998, the company spent $58.5 million on property, plant and equipment, which included expenditures of $8.3 million related to the construction of a cable manufacturing facility in Suzhou, China and $10.7 million related to the construction of new facilities in Texas. Capital expenditures totaled $49.1 million in 1997.

    During 1999, the company spent $15.1 million on acquisitions. The company purchased the remaining 20% interest in the South African Satcom Group of companies for $1.2 million; Passive Power Products, Inc. for $4.3; manufacturing assets from Miller Building Systems, Inc. for $1.0 million and Chesapeake Microwave Technologies, Inc. for $8.6 million. In 1998, the company purchased an additional 19% interest in its Brazilian operations for $3.0 million, which brought the company's ownership percentage to 70%. No acquisitions were made in 1997.

    Net cash used in financing activities was $44.7 million in 1999, $100.4 million in 1998 and $25.5 million in 1997. In November 1998, the company's Board of Directors authorized the company to repurchase an additional 5.0 million shares of its common stock. This brought the total number of shares that the company is authorized to repurchase to 15.0 million. The company repurchased 3.0 million shares for $50.5 million in 1999, 5.5 million shares for $105.4 million in 1998 and 1.5 million shares for $41.6 million in 1997, totalling 10.0 million shares for $197.5 million. Shares repurchased under this program will be held for potential future acquisitions and to meet employee compensation needs. Although the company 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 future investments and operations.

    The company currently maintains two revolving line of credit agreements. The first is a $50 million revolving line of credit agreement with Bank of America. During 1999, the company's Japanese operations borrowed $2.3 million on this line that remained outstanding as of September 30, 1999. The $3.8 million borrowed under this line by the company's French operations in 1998 was paid off in 1999. In 1997, the company arranged an $11.4 million line of credit agreement with ABN-AMRO for its Brazilian operations. In 1997, the company's Brazilian operations borrowed $10.7 million under this agreement to facilitate its facility expansion. During 1998 and 1999, the company refinanced and paid down this line of credit. No outstanding balance existed under this line of credit at September 30, 1999.

    The company currently has $27.3 million in senior notes payable outstanding, of which $4.5 million is due within one year. In addition, the company also has a $3.8 million industrial development revenue bond outstanding, which was used to facilitate the construction of a manufacturing facility in Newnan, Georgia in 1995. This debt is due to be repaid in 2005. During 1999, the company's Chinese operations borrowed $9.6 million in local currency, of which $1.9 million is due within one year. Also during 1999, the company's Brazilian operations restructured its debt to obtain lower interest rates. Total debt from the company's Brazilian operations decreased from $17.1 million at September 30, 1998 to $13.3 million at September 30, 1999. During 1998, the company's Brazilian operations initiated a $12.0 million line of credit agreement with Bank Austria Creditanstalt, which had $5.5 million outstanding as of September 30, 1998. In 1999, this line of credit was converted into $8.8 million in long-term variable rate debt due in December of 2000. During 1998, the company entered into a loan agreement with Banco Nacional De Desenvolvimento Economico E Social for $7.0 million, the proceeds of which were used to pay down a portion of the company's outstanding line of credit with ABN-AMRO. In 1999, a portion of this loan was paid down leaving $4.5 million outstanding at September 30, 1999. Portions of this loan will be paid off annually through 2003.

Year 2000

    The company continues to address its readiness for Year 2000 issues. In 1994, the company instituted a program to routinely review its computer hardware and software to increase operational efficiency. As an output from this process, the company purchased a new business system in 1994 that would not only meet the company's future business needs but was also Year 2000 compliant. The company completed implementation of this system in all major locations in April 1999. Amounts expended or to be expended on information technology systems exclusively to ensure Year 2000 compliance are not expected to be material to the company's consolidated results of operations or financial position.

    Management initiated a comprehensive program to prepare the company's manufacturing and facility systems for the year 2000. The company has tested and fixed major applications such as security, environmental, desktop computers and production equipment. The company currently does not expect that any additional remediation costs will be material nor does it expect any significant interruption to its operations because of Year 2000 problems. Most of the company's products do not have Year 2000 readiness issues because they do not contain date-sensitive functions.

    The company has contacted substantially all third parties with which it has significant relationships to determine the extent to which the company could be vulnerable to failure by any of them to obtain Year 2000 compliance. Some of the company's major suppliers, customers and financial institutions have confirmed that they anticipate being Year 2000 compliant on or before December 31, 1999, although many have only indicated that they have Year 2000 readiness programs. To date, the company is not aware of any significant third parties with a Year 2000 issue that could materially impact the company's operations, liquidity or capital resources. However, the company has no means of ensuring that third parties will be Year 2000 ready and the potential effect of third-party non-compliance is currently not determinable.

    The company has devoted and will continue to devote the resources necessary to ensure that all Year 2000 issues are properly addressed. However, there can be no assurance that all Year 2000 problems are detected. Further, there can be no assurance that the company's assessment of its third-party vendors and suppliers will be accurate. Some of the potential worst-case scenarios that could occur include: (1) corruption of data in the company's internal systems; (2) failure of infrastructure services provided by government agencies; and (3) health, environmental and safety issues relating to the company's facilities. If any of these situations were to occur, the company's operations in certain areas could be temporarily interrupted.

    These interruptions could be more severe in countries outside the U.S. where the company does a considerable amount of its business. The company has developed Year 2000 contingency plans for continuing operations in the event such problems arise. The company has operations around the world and is prepared to shift operations to different facilities if there are interruptions to operations in particular countries or regions.

RISK FACTORS

    Safe Harbor for Forward-Looking Statements.  We have made forward-looking statements in this annual report under "Management's Discussion and Analysis of Financial Condition and Results of Operations". In addition, other written or oral statements that constitute forward-looking statements may be made by or on behalf of the company. Although we have based these statements on the beliefs and assumptions of our management and on information currently available to them, they are subject to risks and uncertainties. We wish to ensure that such statements are accompanied by meaningful cautionary statements, so as to obtain the protections of the safe harbor established in the Private Securities Litigation Reform Act of 1995. Accordingly, such statements are qualified by reference to the discussion below of certain important factors that could cause actual results to differ materially from those projected in such forward-looking statements.

    We caution the reader that the list of factors may not be exhaustive. We operate in a continually changing business environment, and new risk factors emerge from time to time. We cannot predict such risk factors, nor can we assess the impact, if any, of such risk factors on our business or the extent to which any factors may cause actual results to differ materially from those projected in any forward-looking statements. Accordingly, undue reliance should not be put on any forward-looking statements. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. While Andrew Corporation's management is optimistic about the company's long-term prospects, the following risks and uncertainties, among others, should be considered in evaluating its growth outlook.

    Share Price Volatility.  The market price of our common stock is very volatile. We believe the price fluctuates in response to changes in the company's sales, net income and cash flow; volatility in the U.S. stock market in general and in wireless equipment stocks in particular; changes in analysts' estimates; and changes in general economic conditions. We expect that the price of our common stock will fluctuate in the future, perhaps substantially.

    Fluctuations in Operating Results.  Historically, our quarterly and annual revenues and operating results have fluctuated. We expect similar fluctuations in the future. In addition to general economic and political conditions, the following factors affect our revenues: timing of significant customer orders; inability to forecast future revenue due to our just-in-time supply approach; changes in competitive pricing; and wide variations in profitability by product line. Since our quarterly and annual revenues and operating results vary, we believe that period-to-period comparisons are not necessarily meaningful and such comparisons should not be relied on as indicators of our future performance.

    Impact of restructuring.  We believe that our current restructuring efforts will generate significant cost savings. The cost savings are dependent upon the company's ability to divest the SciComm government electronic business, to outsource tower production, and to relocate the wireless accessory production to a lower cost manufacturing facility.

    Intense Competition and Pricing Pressure.  We consider our principal competitive factors to include product quality and performance, service and support, pricing and proprietary technology. We believe we must respond effectively to increased competitive pressure. Over the past three years, in response to aggressive pricing practices by our competitors, we have significantly lowered prices for most of our products. If we are unable to compete successfully, we may lose market share. We expect that a significant loss in market share would have a material negative effect on our business, financial condition and operating results.

    Rapid Technological Change and Pressure to Develop New Products.  We believe that our future success depends on our ability to effectively anticipate and respond to changes in technology, customer needs and industry standards. Failure to anticipate changes, to adapt current products, to develop and introduce new products on a timely basis, or to gain market acceptance for new products would impair our competitiveness and could have a material negative impact on our business and operating results.

    International Risk.  Over half of our sales are outside the United States, and in recent years we have significantly increased our international manufacturing capabilities. We anticipate that international sales will continue to represent a substantial portion of our revenues and that continued growth and profitability will require further international expansion. International business risks include currency fluctuations, tariffs and other trade barriers, longer customer payment cycles, adverse taxes, restrictions on the repatriation of earnings, compliance with local laws and regulations, political and economic instability, and difficulties in managing and staffing operations. We believe that international risk factors could materially impact our future sales, financial condition and operating results.

    Ability to Attract and Retain Qualified People.  We believe that our future success significantly depends on our ability to attract and retain highly qualified personnel. We cannot be sure that we will be able to attract and retain key personnel in the future. We believe our inability to do so could negatively impact our business, financial condition and operating results.

    Year 2000 Compliance.  We believe that our business, manufacturing and facilities systems are Year 2000 compliant. We have contacted third parties with whom we have significant relationships to determine our vulnerability to their failure to achieve Year 2000 compliance. Our failure to detect and address our own third-party Year 2000 problems could have a significant negative impact on our business, financial condition and results of operations.

    Dependence on Intellectual Property Rights.  Others could obtain or use our intellectual property without our permission, develop equivalent or superior technology, or claim that we have infringed on their intellectual property rights. We rely on a combination of patent, copyright, trademark and trade secret laws, and non-disclosure and non-competition agreements to protect our rights. We are dependent on our intellectual property rights as a whole; however, we do not believe that the loss of exclusivity with respect to any one right would have a significant negative impact on our business, financial condition or operating results.

    Impact of Governmental Regulation.  We are not directly regulated in the U.S., but most of our customers and the telecommunications industry generally are subject to Federal Communications Commission regulation. We believe that regulatory changes could have a significant negative effect on our business and operating results by restricting our customers' development efforts, making current products obsolete or increasing competition. Internationally, where many of our customers are at least partially government owned and operated entities, we also are at risk of changes in economic policy and communications regulation. In addition, our joint ventures in Russia and Mexico require telecommunications licenses, which may limit or otherwise affect the operations of the ventures.

Consolidated Statements of Income

	Year Ended September 30
Amounts in thousands, except for per share amounts
	1999			1998			1997
Sales	$	791,760		$	852,915		$	869,475
Cost of products sold		540,075			521,996			513,809
Gross Profit		251,685			330,919			355,666
Operating Expenses
Research and development		29,622			25,810			41,076
Sales and administrative		144,335			145,313			145,647
Restructuring		29,817			0			5,150
		203,774			171,123			191,873
Operating Income		47,911			159,796			163,793
Other
Interest expense		5,329			6,060			5,003
Interest income		(10,198	)		(7,615	)		(4,124	)
Other (income) expense		3,602			4,007			(2,868	)
		(1,267	)		2,452			(1,989	)
Income from Continuing Operations
Before Income Taxes		49,178			157,344			165,782
Income taxes		18,751			53,497			58,024
Income from Continuing Operations		30,427			103,847			107,758
Discontinued Operations
Loss from operations of Network Products Business, net of applicable tax benefit		0			0			3,330
Loss on disposal of Network Products Business, including provision of $1,040 for operating losses during phase-out period, net of applicable tax benefits		0			0			16,086
		0			0			19,416
Net Income	$	30,427		$	103,847		$	88,342
Basic and Diluted Income from Continuing Operations per Average Share of Common Stock Outstanding	$	0.37		$	1.18		$	1.18
Basic and Diluted Net Income per Average Share of Common Stock Outstanding	$	0.37		$	1.18		$	0.97
Average Basic Shares Outstanding		82,675			87,941			90,947
Average Diluted Shares outstanding		82,813			88,306			91,539

See Notes to Consolidated Financial Statements

Consolidated Balance Sheets

	September 30
Dollars in thousands
	1999			1998
ASSETS
Current Assets
Cash and cash equivalents	$	38,287		$	78,395
Accounts receivable, less allowances (1999—$3,403; 1998—$3,026)		200,068			181,389
Inventories
Finished products		58,225			56,736
Materials and work in process		106,261			111,057
		164,486			167,793
Miscellaneous current assets		10,662			9,229
Total Current Assets		413,503			436,806
Other Assets
Costs in excess of net assets of businesses acquired, less accumulated amortization (1999—$4,654; 1998—$10,291)		21,498			23,177
Investments in and advances to affiliates		63,992			59,691
Other assets		6,297			9,267
Property, Plant and Equipment
Land and land improvements		17,016			15,507
Buildings		83,850			83,789
Equipment		335,125			301,757
Allowances for depreciation and amortization		(275,191	)		(247,091	)
		160,800			153,962
Total Assets	$	666,090		$	682,903
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes Payable	$	3,053		$	13,897
Accounts payable		43,105			32,867
Restructuring Reserve		12,128			242
Accrued expenses and other liabilities		21,212			16,856
Compensation and related expenses		21,947			32,424
Income taxes		—			15,835
Current portion of long-term debt		8,205			4,568
Total Current Liabilities		109,650			116,689
Deferred Liabilities		18,602			14,044
Long-Term Debt, less current portion		48,760			38,031
Minority Interest		5,068			5,361
Stockholders' Equity
Common stock (par value, $.01 a share: 400,000,000 shares authorized; 102,718,210 shares issued, including treasury)		1,027			1,027
Additional paid-in capital		55,802			53,309
Accumulated other comprehensive income		(21,755	)		(7,617	)
Retained earnings		681,530			651,103
Treasury stock, at cost (20,527,072 shares in 1999; 18,210,250 shares in 1998)		(232,594	)		(189,044	)
		484,010			508,778
Total Liabilities and Equity	$	666,090		$	682,903

See Notes to Consolidated Financial Statements.

Consolidated Statements of Cash Flows

	Year Ended September 30
Dollars in thousands
	1999			1998			1997
Cash Flows from Operations
Net Income	$	30,427		$	103,847		$	88,342
Adjustments to Net Income
Restructuring costs		33,580			(864	)		4,439
Discontinued operations		—			—			22,771
Depreciation and amortization		39,155			37,494			39,274
(Increase) decrease in accounts receivables		(25,107	)		3,637			4,074
Increase in inventories		(4,238	)		(107	)		(577	)
(Increase) decrease in miscellaneous current and other assets		(3,756	)		1,117			(3,331	)
Decrease (increase) in receivables from affiliates		4,201			3,150			(161	)
(Decrease) increase in accounts payable and other liabilities		(1,303	)		1,754			(2,471	)
Other		(124	)		(176	)		(680	)
Net Cash From Operations		72,835			149,852			151,680
Investing Activities
Capital expenditures		(51,418	)		(58,529	)		(49,144	)
Acquisition of businesses, net of cash acquired		(15,107	)		(3,000	)		—
Investments in and advances to affiliates		(4,308	)		(3,195	)		(13,097	)
Proceeds from sale of property, plant and equipment		759			607			814
Net Cash Used for Investing Activities		(70,074	)		(64,117	)		(61,427	)
Financing Activities
Long-term borrowings (payments)—net		6,385			2,223			(4,524	)
Short-term (payments) borrowings—net		(3,587	)		(38	)		14,356
Stock purchase and option plans		3,059			2,859			6,297
Purchase of treasury stock		(50,512	)		(105,405	)		(41,628	)
Net Cash Used for Financing Activities		(44,655	)		(100,361	)		(25,499	)
Effect of exchange rate changes on cash		1,786			(802	)		(2,226	)
(Decrease) Increase for the Year		(40,108	)		(15,428	)		62,528
Cash and equivalents at beginning of year		78,395			93,823			31,295
Cash and Equivalents at End of Year	$	38,287		$	78,395		$	93,823

See Notes to Consolidated Financial Statements.

Consolidated Statements of Stockholders' Equity

Dollars in thousands	Common Stock		Additional Paid-In Capital			Accumulated Other Comprehensive Income			Retained Earnings		Treasury Stock			Total
Balance at September 30, 1996	$	685	$	43,257		$	349		$	458,914	$	(46,991	)	$	456,214
Three-for-two stock split		342		(342	)										0
Repurchase of shares												(41,628	)		(41,628	)
Stock purchase and option plans				8,895								2,181			11,076
Foreign Currency Translation Adjustment							(4,881	)							(4,881	)
Net Income										88,342					88,342
Comprehensive Income															83,461
Balance at September 30, 1997	$	1,027	$	51,810		$	(4,532	)	$	547,256	$	(86,438	)	$	509,123
Repurchase of shares												(105,405	)		(105,405	)
Stock purchase and option plans				1,499								2,799			4,298
Foreign Currency Translation Adjustment							(3,085	)							(3,085	)
Net Income										103,847					103,847
Comprehensive Income															100,762
Balance at September 30, 1998	$	1,027	$	53,309		$	(7,617	)	$	651,103	$	(189,044	)	$	508,778
Repurchase of shares												(50,512	)		(50,512	)
Stock purchase and option plans				2,493								6,962			9,455
Foreign Currency Translation Adjustment							(14,138	)							(14,138	)
Net Income										30,427					30,427
Comprehensive Income															16,289
Balance at September 30, 1999	$	1,027	$	55,802		$	(21,755	)	$	681,530	$	(232,594	)	$	484,010

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 in which the company exercises control. 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 57% of total inventories in 1999 and 50% of total inventories in 1998. The remaining inventories are valued on the first-in, first-out (FIFO) method.

    If the FIFO method, which approximates current replacement cost, had been used for all inventories, the total amount of inventories would have remained unchanged at September 30, 1999 and September 30, 1998.

Property, plant and equipment

    Property, plant and equipment is recorded at cost. Depreciation is computed using accelerated methods based on estimated useful lives of the assets for both financial reporting and tax purposes. Buildings are depreciated over 10 to 30 years and equipment is depreciated over 3 to 7 years. Depreciation expense was $37.1 million, $35.4 million and $36.0 million for 1999, 1998 and 1997, respectively.

Cost in excess of net assets of businesses acquired

    The company amortizes the excess of net assets of businesses acquired on the straight-line basis over periods ranging from 10 to 40 years. Amortization expense was $2.0 million, $2.1 million and $3.3 million for 1999, 1998 and 1997, respectively.

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 in accumulated other comprehensive income, 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.

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.

Recently issued accounting policies

    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 2000. Adoption of this statement is not expected to have a material effect on the company's financial statements.

    In June 1998, the FASB issued statement No. 133, "Accounting for Derivative Instruments and Hedging Activities." FASB No. 133 requires all derivatives to be recorded on the balance sheet at fair value. FASB statement No. 133 was amended by FASB statement No.137 in June 1999, which delayed the effective date for the company until the first quarter of fiscal year 2001. Adoption of this statement is not expected to have a material effect on the company's financial statements.

Business Acquisitions

    In October 1997, the company purchased an additional 19% interest in Mapra Industria e Comerico, Ltda. and Gerbo Telecommunicacoes e Servicos, Ltda. for $3.0 million. This acquisition was accounted for as a purchase.

    In February 1999, the company purchased the remaining 20% interest in Satcom Group of Companies, located in South Africa, for $1.2 million. In March of 1999, the company acquired the stock of Passive Power Products, Inc., a Maine-based supplier of RF products to the broadcast market for $4.3 million, net of cash acquired. In September of 1999, the company acquired the stock of Chesapeake Microwave Technologies Inc.(CMTI), a Glen Rock, Pennsylvania company that designs and develops RF and microwave amplifiers and assemblies. In addition to the $8.6 million, net of cash acquired paid at closing, the CMTI purchase agreement contains a provision for deferred payments of up to $4.0 million payable to certain CMTI shareholders, which will be accounted for as additional purchase consideration when paid.

    The 1999 acquisitions were accounted for as purchases, resulting in $13.9 million of goodwill that will be amortized over 10 years. Pro forma results of operations, assuming these transactions occurred at the beginning of the fiscal year, are not materially different from the reported results of operations.

Discontinued Operations

    On July 14, 1997, the company adopted a plan to discontinue the operations of its network products business. The business was acquired by Nlynx Systems Inc. during 1998. As such, there are no remaining assets or liabilities related to the business. The losses associated with the disposition did not materially differ from the estimated loss on disposal of the discontinued operations of $16.1 million (net of applicable taxes of $6.7 million), recorded during the third quarter 1997.

Earnings per Share

    The following table sets forth the computation of basic and diluted earnings per share:

	Year Ended September 30
(Dollars in thousands, except per share amounts)
	1999		1998		1997
BASIC EARNINGS PER SHARE
Numerator:
Numerator for income from continuing operations per share	$	30,427	$	103,847	$	107,758
Numerator for net income per share	$	30,427	$	103,847	$	88,342
Denominator:
Weighted average shares outstanding		82,675		87,941		90,947
Income from continuing operations per share—basic	$	0.37	$	1.18	$	1.18
Net income per share—basic	$	0.37	$	1.18	$	0.97
DILUTED EARNINGS PER SHARE
Numerator:
Numerator for income from continuing operations per share	$	30,427	$	103,847	$	107,758
Numerator for net income per share	$	30,427	$	103,847	$	88,342
Denominator:
Weighted average shares outstanding		82,675		87,941		90,947
Effect of dilutive securities:
Stock options		138		365		592
		82,813		88,306		91,539
Income from continuing operations per share—diluted	$	0.37	$	1.18	$	1.18
Net income per share—diluted	$	0.37	$	1.18	$	0.97

    Options to purchase 2,681,000, 1,285,000 and 643,000 shares of common stock in 1999, 1998 and 1997, respectively, were not included in the computation of diluted earnings per share, because the option's exercise price was greater than the average market price of the common shares.

Investments in and Advances to Affiliates

    The company has various investments in ventures that are accounted for by the equity method. Nine of the ventures are engaged in communication and data transmission in Russia, Ukraine, and Mexico. The company has minority interest holdings in six of the ventures and a majority interest holding in three of the ventures. The company does not consolidate the majority owned ventures because of governmentally imposed uncertainties that significantly affect the company's ability to exercise control. The method of accounting is evaluated on a periodic basis for appropriateness based on the existing conditions and the company's ability to exercise control. The company has no investments in ventures that are accounted for by the cost method. The combined operating results of the ventures and the company's share thereof were not material to the company's 1999, 1998 and 1997 operating results. The company guarantees a $46.0 million line of credit with ABN-AMRO, which is used by its ventures. As of September 30, 1999, there was $35.9 million outstanding under the agreement.

Unbilled Receivables

    At September 30, 1999, unbilled receivables of $4,551,000 are included in accounts receivable, compared to $4,205,000 at September 30, 1998. 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 1999, 1998 and 1997 were $9,203,000, $14,967,000 and $12,933,000 respectively.

Borrowings

Lines of Credit

    The company maintains a $50 million revolving line of credit agreement with Bank of America, NT & SA. The maximum outstanding during 1999 under the line of credit was $8.8 million with a weighted average interest rate of 4.192%. The outstanding balance at September 30, 1999 was $2.3 million.

    The company also maintains an $11.4 million line of credit agreement with ABN-AMRO for its Brazilian operations. The maximum outstanding during 1999 under the line of credit was $3.5 million with a weighted average interest rate of 15.8%. The outstanding balance at September 30, 1999 was zero.

    As a result of the acquisition of Chesapeake Microwave Technologies in September 1999, the company assumed a line of credit with First Capitol Bank. The maximum outstanding under the line of credit during 1999 was $795,000, with a weighted average interest of 8.75%. The balance at September 30, 1999 was $795,000. In October 1999, the company repaid outstandings under this line of credit and cancelled the credit facility.

Long-Term Debt

    Long-term debt at September 30 consisted of the following:

Dollars in thousands	1999		1998
9.52% senior notes payable to insurance companies in annual installments from 2000 to 2005	$	27,272	$	31,818
Variable rate Industrial Development Revenue Bond with Coweta County, Georgia		3,800		3,800
6.66% RMB loan from the Agricultural Bank of China, supported by a Bank of America letter of credit		9,678		0
Variable rate loan BBA Creditanstalt Bank Limited		8,800		0
12.00% loan agreement with Banco Nacional De Desenvolvimento Economico E Social		4,477		6,960
Other		2,938		21
Less: Current Portion		8,205		4,568
Total Long-Term Debt	$	48,760	$	38,031

    Under the terms of the loan agreements, the company has agreed to maintain certain levels of working capital and net worth. At September 30, 1999, all these requirements have been met.

    The principal amounts of long-term debt maturing after September 30, 1999 are:

Dollars in thousands	2000		2001		2002		2003		2004		Thereafter
	$	8,205	$	15,188	$	14,131	$	5,215	$	4,853	$	9,373

    Cash payments for interest on all borrowings were $5,091,000, $7,146,000 and $4,246,000 in 1999, 1998 and 1997, respectively.

    The carrying amount of long-term debt as of September 30, 1999 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.

Restructuring

    In March 1999, the company initiated a plan to restructure the manufacturing operations of its towers and wireless accessories businesses, phase out of its AVS small aperture earth station product line and divest itself of its SciComm government electronics business.

    In connection with these restructuring activities, the company plans to terminate approximately 600 employees and 280 temporary/contract workers. Estimated employee termination costs of $5.2 million were accrued in the second quarter of 1999. In addition to termination costs, these restructuring charges include a goodwill write-off of $14.1 million, long-term lease commitments of $3.5 million and inventory, equipment and other asset write-downs of $13.9 million. Of the total $36.7 million employee termination and exit costs recognized in the second quarter, $6.9 million was classified as Cost of Sales and $29.8 million as Restructuring in the Operating Expense section of the income statement. On an after-tax basis, restructuring charges were $28.1 million, or $0.34 per share.

    Actual costs charged against the restructuring reserve in 1999 were $24.6 million, including termination costs of $2.8 million paid to 424 terminated employees, a $14.1 million goodwill write-off and inventory and other asset write-downs of $7.4 million. The company expects to complete the restructuring prior to September 30, 2000.

    During June 1997, the company initiated a plan to restructure its European wireless products business and phase out its fiber optic sensors and global messaging development activities. Actual costs were not materially different than the total after-tax charges of $3.3 million or $.04 per diluted share recorded in June 1997.

INCOME TAXES

    The composition of the provision for income taxes follows:

	Year Ended September 30
Dollars in thousands
	1999			1998		1997
Currently Payable:
Federal	$	2,554		$	24,539	$	29,636
Non-United States		15,553			17,043		19,852
State		933			4,708		5,281
		19,040			46,290		54,769
Deferred (Credit):
Federal and State		384			7,091		3,280
Non-United States		(673	)		116		(25	)
		(289	)		7,207		3,255
	$	18,751		$	53,497	$	58,024
Income Taxes Paid	$	29,411		$	56,162	$	44,641
Components of Income from Continuing Operations Before Income Taxes:
United States	$	(8,078	)	$	97,909	$	99,782
Non-United States		57,256			59,435		66,000
	$	49,178		$	157,344	$	165,782

    The company's effective income tax rate varied from the statutory United States federal income tax rate because of the following:

	Year ended September 30
	1999		1998		1997
Statutory United States federal tax rate	35.0	%	35.0	%	35.0	%
Foreign Sales Corporation (FSC)	(4.2	)	(2.0	)	(2.8	)
State income taxes, net of federal tax effect	1.3		2.2		2.2
Net tax effect of restructuring	6.1		0.0		0.0
Other items	(0.1	)	(1.2	)	0.6
Effective Tax Rate	38.1	%	34.0	%	35.0	%

    The tax effects of temporary differences have given rise to gross deferred tax assets of $16,980,000 in 1999 and $11,300,000 in 1998, primarily accrued expenses and inventory. The tax effect of temporary differences have created gross deferred tax liabilities of $22,779,000 in 1999 and $17,386,000 in 1998, primarily due to depreciation. The company has not recorded valuation allowances for deferred tax assets in 1999 or 1998, because the existing net deductible temporary differences will reverse during periods in which the company expects to generate taxable income.

    The increase in the effective tax rate for the year ended September 30, 1999 was attributable to the inclusion of non-deductible goodwill in the restructuring charges recognized during the year. Excluding the impact of the restructuring charges, the effective tax rate for the year ended September 30, 1999 was 32.0%, as compared to an effective tax rate of 34.0% for the prior fiscal year.

    No provision has been made for income taxes of approximately $20,647,000 at September 30, 1999, which would be payable should all undistributed net income 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 to reduce the tax liability if any dividends are declared or paid from these operations.

Stockholders' Equity

Common Stock

    The company has authorized 400,000,000 shares of common stock with a par value of $.01 per share. As of September 30, 1999, 82,191,138 shares of common stock were outstanding. 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 15% or more of the company's Common Stock or announces an offer to acquire 15% 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.

    During the third quarter of fiscal year 1997, the company implemented a stock buy-back program, which authorized the company to repurchase up to five million shares of its common stock. In June 1998, the company's Board of Directors authorized an additional five million common shares to be repurchased under the company's stock buyback plan. As of September 30, 1998, the company had repurchased 7,017,732 shares of common stock at a total cost of $147,033,000. In November 1998, the company's Board of Directors authorized an additional five million common shares to be repurchased under the company's stock buyback plan, bringing the total authorized for repurchase to 15 million shares. During fiscal year 1999, the company repurchased 2,967,700 shares, at a total cost of $50,512,000, bringing the total shares repurchased under the stock buyback program to 9,985,432 shares at a total cost of $197,545,000. The common shares repurchased under this program may be used to meet employee compensation needs or used in future acquisitions.

    A three-for-two stock split was effected in March 1997.

    Common Stock issued and outstanding and held in treasury is summarized in the tables below:

	Year Ended September 30
	1999		1998		1997
Shares of Common Stock—Issued
Balance at beginning of year	102,718,210		102,718,210		68,479,398
Three-for-two stock split	—		—		34,238,812
Balance at End of Year	102,718,210		102,718,210		102,718,210
Shares of Common Stock—Held in Treasury
Balance at beginning of year	18,210,250		13,060,876		8,047,229
Three-for-two stock split	—		—		4,023,615
Stock repurchase	2,967,700		5,472,732		1,545,000
Stock purchase, option and other plans	(650,878	)	(323,358	)	(554,968	)
Balance at End of Year	20,527,072		18,210,250		13,060,876

    As of September 30, 1999, 4,861,256 shares of Common Stock were reserved for the various stock plans described on the following pages.

Stock Based Compensation

    Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," encourages, but does not require, companies to record compensation expense for stock-based employee compensation plans at fair value. The company has chosen to continue to account for stock-based compensation using the intrinsic value method described in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. Under APB No. 25, compensation expense is measured as the excess of market price over the price the employee must pay to acquire the stock on the grant date. All options are granted by the company at market price and, as a result, no compensation expense is recorded.

    The company currently maintains a long-term Management Incentive Program (MIP), which provides for the issuance of up to 9,112,500 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. Options under this plan vest over a four-year period. Options granted prior to fiscal year 1996 expire five years after grant, while options granted during and after fiscal years 1996 expire ten years after grant date. In fiscal year 1999, there were 930,480 options granted under the plan.

    The company also maintains a Stock Option Plan for Non-Employee Directors that provides for the issuance of up to 1,012,500 common shares. Options under this plan vest over a five-year period and expire ten years after grant. In fiscal year 1998, this plan was terminated due to an insufficient number of shares available for new grants. On February 10, 1998, the company's shareholders ratified a new Stock Option Plan for Non-Employee Directors (DSP) that provides for the issuance of up to 400,000 common shares. Options under this plan vest over a five-year period and expire ten years after grant. In fiscal year 1999, there were 84,000 options granted under this plan.

    The company also has an Employee Stock Purchase Plan (ESPP) that was amended and restated on November 12, 1998 and expires on February 1, 2009. 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 1,096,970 shares of Common Stock to be sold to employees at 85% of market value. All shares issued under this plan are restricted and cannot be sold for one year following the date of purchase. In fiscal year 1999, there were 108,775 shares purchased by employees under the plan.

    Pro forma information regarding net income and earnings per share is required by Statement 123, and has been determined as if the company had accounted for its stock option plans under the fair value method of that Statement. The fair value of these options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions for 1999, 1998 and 1997, respectively: risk-free interest rate of 5.98%, 4.39% and 6.11%; dividend yield of 0%; a volatility factor of .490, .477 and .415, and a weighted average expected life of the options of six years.

    For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the option's vesting period. The company's pro forma information follows:

	Year Ended September 30
Dollars in thousands, except per share amounts
	1999		1998		1997
Pro forma income from continuing operations	$	26,161	$	99,891	$	104,485
Pro forma net income		26,161		99,891		85,069
Pro forma income from continuing operations per share
Basic		0.32		1.14		1.15
Diluted		0.32		1.13		1.14
Pro forma net income per share
Basic		0.32		1.14		0.94
Diluted	$	0.32	$	1.13	$	0.93

    The effects on pro forma disclosures of applying Statement No. 123 are not likely to be representative of the effects of such disclosures in future years. Because Statement No. 123 is applicable only to options granted subsequent to September 30, 1995, the pro forma effect is not fully reflected in fiscal years 1999, 1998 and 1997.

    A summary of the company's stock option activity and related information follows:

	Year Ended September 30
	1999			1998			1997
Outstanding at beginning of year		2,911,831			2,648,033			2,618,631
Granted		1,014,480			659,150			662,250
Expired or canceled		(229,748	)		(136,098	)		(143,925	)
Exercised		(207,423	)		(259,254	)		(488,923	)
Outstanding at End of Year		3,489,140			2,911,831			2,648,033
Exercisable at End of Year		1,604,529			1,232,536			673,147
Weighted Average Exercise Price
Outstanding at beginning of year	$	21.81		$	20.26		$	13.92
Granted		17.13			23.69			37.60
Expired or canceled		24.89			27.01			20.91
Exercised		9.15			8.12			9.55
Outstanding at End of Year		20.99			21.81			20.26
Exercisable at End of Year	$	20.14		$	17.26		$	11.64

    The weighted average fair value of options granted during fiscal years 1999, 1998 and 1997 was $8.63, $12.93 and $13.84 per share, respectively. The weighted average life of options outstanding as of September 30, 1999 was 6.17 years. The range of exercise prices for options outstanding at September 30, 1999, was $2.35 to $38.17.

Range of Exercise Prices	$	2.35—$9.58	$	12.50—$15.56	$	16.00—$18.19	$	19.33—$24.50	$	27.19—$38.17	Total
Outstanding Options		299,057		384,718		995,808		1,143,657		665,900	3,489,140
Exercisable Options		299,057		260,093		129,700		566,917		348,762	1,604,529
Weighted Average
Exercise Price		$6.61		$14.69		$17.48		$21.35		$35.73	$20.99
Average Life		3.75		3.46		8.52		5.14		7.15	6.17

Segment and Geographic Information

    The Company manages its business as one operating segment. This segment serves commercial markets, including coaxial cable, terrestrial microwave systems, wireless accessories and other products and services. The Company sells to a wide range of customers in these markets; no single customer makes up 10% or more of the of the company's total revenue. Principal financial data by major product group and geographic selling location is as follows:

	Year Ended September 30
Dollars in thousands
	1999		1998		1997
Product Sales:
Coaxial Cable	$	418,496	$	486,788	$	467,774
Terrestrial Microwave Systems		150,795		148,614		153,905
Other Products and Services		169,804		157,912		183,557
Wireless Accessories		52,665		59,601		64,239
Total Product Sales	$	791,760	$	852,915	$	869,475
Sales:
United States—Domestic	$	382,557	$	432,539	$	454,726
United States—Export		61,843		97,738		105,147
Europe, Africa, Middle East		184,575		175,021		178,773
Asia-Pacific		77,643		59,782		51,419
Other Americas		85,142		87,835		79,410
Total Sales	$	791,760	$	852,915	$	869,475
Assets Identifiable to:
United States	$	410,783	$	411,545	$	456,566
Europe, Africa, Middle East		129,519		144,137		112,726
Asia-Pacific		63,845		52,000		48,362
Other Americas		61,943		75,221		73,500
Consolidated Assets	$	666,090	$	682,903	$	691,154

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.

Dollars in thousands, except per share amounts	December		March			June		September		Total
1999:
Sales	$	218,573	$	172,006		$	186,079	$	215,102	$	791,760
Gross profit		79,532		45,166	*		59,131		67,856		251,685	*
Income from continuing operations before income taxes		35,122		(25,725	)*		20,043		19,738		49,178	*
Net income		23,181		(20,849	)*		14,735		13,360		30,427	*
Basic and diluted income from continuing operations per share		0.28		(0.25	)*		0.18		0.16		0.37	*
Basic and diluted net income per share		0.28		(0.25	)*		0.18		0.16		0.37	*
Common Stock Closing Price:
High		18.50		20.56			19.06		22.06
Low		11.31		11.13			11.56		16.31
1998:
Sales	$	231,136	$	196,872		$	204,220	$	220,687	$	852,915
Gross profit		89,597		77,110			81,315		82,897		330,919
Income from continuing operations before income taxes		42,932		36,585			37,257		40,570		157,344
Net income		28,334		24,147			24,590		26,776		103,847
Basic and diluted income from continuing operations per share		0.32		0.27			0.28		0.31		1.18
Basic and diluted net income per share		0.32		0.27			0.28		0.31		1.18
Common Stock Closing Price:
High		29.31		29.63			23.90		18.75
Low		22.38		19.31			18.00		12.25

*

Includes restructuring charges of $6,888 in gross profit, $36,706 pre-tax, $28,120 after-tax, $0.34 per share.

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, 1999 and 1998, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended September 30, 1999. 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 requires 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, 1999 and 1998, and the consolidated results of their operations and their cash flows for each of the three years in the period ended September 30, 1999, in conformity with generally accepted accounting principles.

/s/ Ernst & Young LLP
Chicago, Illinois
October 22, 1999

Eleven Year Financial Summary

Dollars in thousands, except per share amounts	1999			1998			1997			1996			1995
Operations (1, 2)
Sales	$	791,760		$	852,915		$	869,475		$	766,007		$	624,743
Gross profit		251,685			330,919			355,666			320,486			264,013
Operating income		47,911			159,796			163,793			151,304			116,803
Other (income) expense		(1,267	)		2,452			(1,989	)		4,738			4,362
Income from continuing operations before taxes		49,178			157,344			165,782			146,566			112,441
Income from continuing operations		30,427			103,847			107,758			93,802			71,854
Discontinued Operations
Loss (income) from operations of network business, net of taxes		0			0			3,330			3,405			1,899
Loss on disposal of network business, net of taxes		0			0			16,086			0			0
Net income		30,427			103,847			88,342			90,397			69,955
Basic Income from continuing operations per share		0.37			1.18			1.18			1.04			0.81
Diluted income from continuing operations per share		0.37			1.18			1.18			1.03			0.80
Basic net income per share		0.37			1.18			0.97			1.00			0.78
Diluted net income per share		0.37			1.18			0.97			0.99			0.78
Financial Position
Working capital		303,853			320,117			332,721			284,602			227,164
Total assets		666,090			682,903			691,154			631,229			505,114
Long-term debt		48,760			38,031			35,693			40,423			45,255
Stockholders' equity		484,010			508,778			509,123			456,214			357,191
Cash Flow
From operations		72,835			149,852			151,680			66,796			55,816
Used in investing activities		(70,074	)		(64,117	)		(61,427	)		(78,683	)		(55,367	)
From (used for) financing activities		(44,655	)		(100,361	)		(25,499	)		(1,972	)		4,570
Cash and equivalents	$	38,287		$	78,395		$	93,823		$	31,295		$	46,064
Ratios and Other Data
Current ratio		3.8			3.7			3.6			3.4			3.4
Return on Sales:
Income from continuing operations		3.8	%		12.2	%		12.4	%		12.2	%		11.5	%
Net income		3.8	%		12.2	%		10.2	%		11.8	%		11.2	%
Return on average assets		4.5	%		15.1	%		13.4	%		15.9	%		15.0	%
Return on average stockholders' equity		6.1	%		20.4	%		18.3	%		22.2	%		22.1	%
Stockholder's equity per share outstanding	$	5.89		$	6.02		$	5.68		$	5.03		$	3.97
Foreign exchange gain (loss)		(2,372	)		(2,988	)		3,433			972			(1,612	)
Research and development		29,622			25,810			41,076			29,624			21,041
Additions to property, plant and equipment		51,418			58,529			49,144			52,475			48,076
Net assets located outside U.S. at year end		258,117			272,661			228,488			220,600			160,700
Orders entered		824,252			874,717			864,918			790,621			684,504
Order backlog at year end (under 12 months)		170,706			141,847			132,610			152,205			125,446
Order backlog at year end (over 12 months)	$	3,276		$	12,317		$	5,950		$	14,756		$	18,529
Number of full-time equivalent employees at year end:
Outside United States		1,261			1,219			1,185			1,162			763
Total employees		4,572			4,221			4,227			4,622			3,677
Average basic shares of stock outstanding (thousands)		82,675			87,941			90,947			90,263			89,177
Average diluted shares of stock outstanding (thousands)		82,813			88,306			91,539			91,033			89,964
Registered stockholders at year end		4,365			4,727			4,599			3,242			2,340

1)

The results of operations for fiscal years 1988 through 1996 have been updated for the disposal of the network products segment in 1997.

2)

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.

Eleven Year Financial Summary (Cont)

Dollars in thousands, except per share amounts	1994			1993			1992			1991			1990			1989
Operations 1, 2
Sales	$	536,025		$	394,276		$	397,721		$	371,590		$	325,455		$	285,037
Gross profit		217,796			156,130			144,281			135,550			118,199			97,719
Operating income		84,497			51,149			45,591			42,994			35,175			26,720
Other (income) expense		7,226			3,145			3,904			4,999			4,470			1,314
Income from continuing operations before taxes		77,271			48,004			41,687			37,995			30,705			25,406
Income from continuing operations		49,360			30,587			26,080			23,390			18,832			15,751
Discontinued Operations
Loss (income) from operations of network business, net of taxes		3,593			1,184			(71	)		1,456			671			(484	)
Loss on disposal of network business, net of taxes		—			—			—			—			—			—
Net income		45,767			29,403			26,151			21,934			18,161			16,235
Basic Income from continuing operations per share		0.56			0.35			0.27			0.24			0.19			0.16
Diluted Income from continuing operations per share		0.55			0.35			0.26			0.23			0.19			0.16
Basic Net Income per share		0.52			0.34			0.27			0.22			0.18			0.16
Diluted Net income per share		0.51			0.33			0.27			0.22			0.18			0.16
Financial Position
Working capital		171,705			142,675			126,764			151,280			136,068			99,711
Total assets		425,326			343,876			318,062			345,261			319,542			265,660
Long-term debt		46,092			52,467			54,223			59,928			63,447			15,568
Stockholders' equity		276,553			221,872			192,956			217,036			198,524			182,187
Cash Flow
From operations		52,343			54,911			51,725			32,285			34,602			14,089
Used in investing activities		(38,692	)		(33,295	)		(12,113	)		(22,903	)		(47,900	)		(27,365	)
From (used in) financing activities		4,259			(5,938	)		(50,764	)		(5,508	)		18,622			11,532
Cash and equivalents	$	40,714		$	22,001		$	7,763		$	17,168		$	13,823		$	7,395
Ratios and Other Data
Current ratio		2.8			3.2			2.9			3.5			3.6			2.5
Return on Sales:
Income from continuing operations		9.2	%		7.8	%		6.6	%		6.3	%		5.8	%		5.5	%
Net Income		8.5	%		7.5	%		6.6	%		5.9	%		5.6	%		5.7	%
Return on average assets		11.9	%		8.9	%		7.9	%		6.6	%		6.2	%		6.5	%
Return on average stockholders' equity		18.4	%		14.2	%		12.8	%		10.6	%		9.5	%		9.3	%
Stockholder's equity per share outstanding	$	3.12		$	2.54		$	2.27		$	2.19		$	2.04		$	1.80
Foreign exchange gain (loss)		(1,922	)		1,380			41			583			(560	)		132
Research and development		20,377			17,118			14,248			14,786			16,621			14,493
Additions to property, plant and equipment		28,471			18,479			18,188			25,124			25,151			16,278
Net assets located outside U.S. at year end		130,900			90,300			65,100			70,400			59,800			54,700
Orders entered		532,881			401,284			373,700			374,900			323,000			305,100
Order backlog at year end (under 12 months)		83,884			85,170			82,500			106,700			109,200			107,400
Order backlog at year end (over 12 months)	$	595		$	1,573		$	5,500		$	8,300		$	9,300		$	6,400
Number of full time equivalent employees at year end:
Outside United States		661			584			596			717			738			714
Total employees		3,405			3,110			3,144			3,450			3,200			2,870
Average basic shares of stock outstanding (thousands)		87,845			86,193			96,981			98,408			100,916			100,703
Average diluted shares of stock outstanding (thousands)		89,204			87,831			98,521			99,971			101,647			101,416
Registered Stockholders at year end		1,482			1,133			1,057			1,137			1,300			1,285

1)

The results of operations for fiscal years 1988 through 1996 have been updated for the disposal of the network products segment in 1997.

2)

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.

APPENDIX A

PAGE WHERE GRAPHIC IMAGE APPEARS	DESCRIPTION OF GRAPHIC AND IMAGE MATERIAL
Page 15	Bar Graph of Sales (Dollars in Millions) Data Points: 1995-$625, 1996-$766, 1997-$869, 1998-$853, 1999-$792
	Gross Profit (Dollars in Millions) Data Points: 1995-$264, 1996-$320, 1997-$356, 1998-$331, 1999-$252
	Operating Expenses (Dollars in Millions) Data Points: 1995-$147, 1996-$169, 1997-$192, 1998-$171, 1999-$204
Page 17	Net Income (Dollars in Millions) Data Points: 1995-$70, 1996-$90, 1997-$88, 1998-$104, 1999-$30 Net Income Including Discontinued Operations and Restructuring Charges Data Points: 1995-$72, 1996-$94, 1997-$111, 1998-$104, 1999-$59
	Net Cash From Operations (Dollars in Millions) Data Points: 1995-$56, 1996-$67, 1997-$152, 1998-$150, 1999-$73
	Capital Expenditures (Dollars in Millions) Data Points: 1995-$48, 1996-$52, 1997-$49, 1998-$59, 1999-$51

QuickLinks

EX-21

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 Subsidiary	Jurisdiction of Incorporation
Andrew A.B.	Sweden
Andrew AG	Switzerland
Andrew AO	Russia
Andrew Canada, Inc	Canada
Andrew Communications Oy	Finland
Andrew Corporation (Mexico), S.A. de C.V	Mexico
Andrew Espana, S.A	Spain
Andrew Financial Services Corporation	State of Delaware
Andrew GmbH	Germany
Andrew Industria e Comercio, Ltda. (owned 70%)	Brazil
Andrew International Corporation	State of Illinois
Andrew Kommunikationssysteme AG	Switzerland
Andrew Satcom Africa (Pty.) Ltd.	South Africa
Andrew SciComm Inc.	State of Texas
Andrew S.A.R.L.	France
Andrew S.R.L.	Italy
Andrew Systems Inc.	State of Delaware
Andrew Telecom, Inc.	State of Delaware
Andrew Telecommunications India Pvt. Ltd.	India
Andrew Telecommunications (Suzhou) Co. Ltd.	China

EX-23

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. 333-12743 on Form S-4 dated September 26, 1996; Registration Statement No. 333-52575 on Form S-8 dated May 13, 1998; Registration Statement No. 333-57273 on Form S-8 dated June 19, 1998 of our report dated October 22, 1998, 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, 1999.

/s/ Ernst & Young LLP
Chicago, Illinois
December 20, 1999

EX-27

 


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