-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VKyg2EpYSrpt1ZZ3kgF740WRtKDHnTk6DAkSQcGwR70KTAPbGK10EyhzeXm/kXjA F4mGnKVSJIUMrUN2niZSgQ== 0001047469-03-018368.txt : 20030514 0001047469-03-018368.hdr.sgml : 20030514 20030514131656 ACCESSION NUMBER: 0001047469-03-018368 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20030331 FILED AS OF DATE: 20030514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANDREW CORP CENTRAL INDEX KEY: 0000317093 STANDARD INDUSTRIAL CLASSIFICATION: DRAWING AND INSULATING NONFERROUS WIRE [3357] IRS NUMBER: 362092797 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-14617 FILM NUMBER: 03697977 BUSINESS ADDRESS: STREET 1: 10500 W 153RD ST CITY: ORLAND PARK STATE: IL ZIP: 60462 BUSINESS PHONE: 7083493300 MAIL ADDRESS: STREET 1: 10500 WEST 153RD ST CITY: ORLANDO PARK STATE: IL ZIP: 60462 10-Q 1 a2111180z10-q.htm 10-Q
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549


Form 10-Q

(Mark One)  

ý

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2003.

OR

o

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

For the transition period from                               to                              

Commission file number:    001-14617


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


DELAWARE

 

36-2092797
(State or other jurisdiction
of incorporation or organization)
  (IRS Employer identification No.)

10500 W. 153rd Street, Orland Park, Illinois 60462
(Address of principal executive offices and zip code)

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

No Change
(Former name, former address and former fiscal year, if changed since last report)


        Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period as the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  ý        No  o

        Indicate by check mark whether the registrant is an accelerated filer (as defined in rule 12b-2 of the Act)

Yes  ý        No  o

        Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date.

Common Stock, $.01 Par Value—98,329,555 shares as of May 12, 2003





INDEX
ANDREW CORPORATION

PART I.   FINANCIAL INFORMATION   3

Item 1.

 

Financial Statements (Unaudited)

 

3

 

 

Consolidated balance sheets—March 31, 2003 and September 30, 2002.

 

3

 

 

Consolidated statements of income—Three and six months ended March 31, 2003 and 2002.

 

4

 

 

Consolidated statements of cash flows—Six months ended March 31, 2003 and 2002.

 

5

 

 

Notes to consolidated financial statements—March 31, 2003.

 

6

Item 2.

 

Management's Discussion and Analysis of Financial Condition and Results of Operations.

 

10

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risks

 

14

Item 4.

 

Controls and Procedures.

 

14

PART II.

 

OTHER INFORMATION

 

15

Item 4.

 

Submission of Matters to a Vote of Security Holders.

 

15

Item 6.

 

Exhibits and Reports on Form 8-K.

 

16

SIGNATURES

 

17

CERTIFICATIONS

 

18

2



ITEM 1.    FINANCIAL STATEMENTS (UNAUDITED)

ANDREW CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

 
  March 31
2003

  September 30
2002

 
 
  (Unaudited)

   
 
ASSETS              
Current Assets              
Cash and cash equivalents   $ 79,074   $ 84,871  
Accounts receivable, less allowances (Mar. 2003—$8,339;
Sept. 2002—$6,516)
    174,797     215,406  
Inventories              
  Finished products     75,711     61,963  
  Materials and work in process     74,374     72,030  
   
 
 
      150,085     133,993  
Other current assets     21,504     28,121  
Current assets—discontinued operations     651     14,792  
   
 
 
Total Current Assets     426,111     477,183  
Other Assets              
Costs in excess of net assets of businesses acquired     397,277     396,295  
Intangible assets, less amortization     39,855     47,344  
Other assets     3,092     1,809  
Non-current assets—discontinued operations         2,000  
Property, Plant, and Equipment              
Land and land improvements     17,962     17,890  
Buildings     99,666     98,714  
Equipment     455,127     448,036  
Allowance for depreciation     (384,099 )   (365,605 )
   
 
 
      188,656     199,035  
   
 
 
TOTAL ASSETS   $ 1,054,991   $ 1,123,666  
   
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY              
Current Liabilities              
Notes payable   $ 32,500   $ 66,184  
Accounts payable     61,534     69,835  
Accrued expenses and other liabilities     35,102     44,548  
Compensation and related expenses     22,605     28,434  
Restructuring     6,741     15,329  
Current portion of long-term debt     6,935     7,250  
Current liabilities—discontinued operations         4,990  
   
 
 
Total Current Liabilities     165,417     236,570  
Deferred liabilities     19,283     28,461  
Long-term debt, less current portion     9,277     13,391  
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     145,480     145,764  
Accumulated other comprehensive loss     (33,959 )   (46,089 )
Retained earnings     799,010     796,374  
Treasury stock, at cost (4,388,655 shares in Mar. 2003; 4,500,493 shares
in Sept. 2002)
    (50,544 )   (51,832 )
   
 
 
      861,014     845,244  
   
 
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 1,054,991   $ 1,123,666  
   
 
 

See Notes to Consolidated Financial Statements.

3



ANDREW CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share amounts)

 
  Three Months Ended
March 31

  Six Months Ended
March 31

 
 
  2003
  2002
  2003
  2002
 
Sales   $ 201,318   $ 189,326   $ 455,844   $ 389,222  
Cost of products sold     149,601     134,473     332,914     270,994  
   
 
 
 
 
Gross Profit     51,717     54,853     122,930     118,228  
Operating Expenses                          
Research and development     19,665     11,530     39,564     23,134  
Sales and administrative     31,314     33,019     68,128     70,089  
Intangible amortization     3,683     150     7,365     300  
Restructuring     126         205      
   
 
 
 
 
      54,788     44,699     115,262     93,523  
   
 
 
 
 
Operating Income (Loss)     (3,071 )   10,154     7,668     24,705  
Other                          
Interest expense     906     1,195     1,966     2,659  
Interest income     (179 )   (903 )   (502 )   (1,756 )
Other income     (1,410 )   (39 )   (890 )   (877 )
Gain on the sale of equity investments                 (8,651 )
   
 
 
 
 
      (683 )   253     574     (8,625 )
   
 
 
 
 
Income (Loss) from Continuing Operations                          
Before Income Taxes     (2,388 )   9,901     7,094     33,330  
Income tax (benefit) expense     (717 )   2,971     2,128     8,726  
   
 
 
 
 
Income (Loss) from Continuing Operations     (1,671 )   6,930     4,966     24,604  
Loss from Discontinued Operations, Net of Tax Benefit     1,760     3,624     2,330     5,971  
   
 
 
 
 
Net Income (Loss)   $ (3,431 ) $ 3,306   $ 2,636   $ 18,633  
   
 
 
 
 
Basic and Diluted Income (Loss) per Share from Continuing Operations   $ (0.02 ) $ 0.08   $ 0.05   $ 0.30  
   
 
 
 
 
Basic and Diluted Net Income (Loss) per Share   $ (0.03 ) $ 0.04   $ 0.03   $ 0.23  
   
 
 
 
 
Average Shares Outstanding                          
  Basic     98,330     81,777     98,307     81,696  
  Diluted     98,330     81,889     98,309     81,864  

See Notes to Consolidated Financial Statements.

4




ANDREW CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)

 
  Six Months Ended
March 31

 
 
  2003
  2002
 
Cash Flows from Operations              
Net Income   $ 2,636   $ 18,633  
Adjustments to Net Income              
  Depreciation and amortization     33,066     23,596  
  Gain on the sale of equity investments         (8,651 )
  Other     (41 )   (359 )
Restructuring and Discontinued Operations              
  Restructuring costs     (5,935 )    
  Discontinued operations costs, net of taxes     (1,483 )    
  Operating cash flow from discontinued operations     5,346     15,517  
Change in Operating Assets / Liabilities              
  Decrease in accounts receivable     50,498     63,830  
  (Increase) / Decrease in inventories     (14,607 )   7,847  
  Decrease / (Increase) in other assets     5,411     (5,563 )
  Decrease in accounts payable and other liabilities     (39,911 )   (22,079 )
   
 
 
Net Cash from Operations     34,980     92,771  

Investing Activities

 

 

 

 

 

 

 
  Capital expenditures     (14,619 )   (25,390 )
  Proceeds from the sale of businesses and investments     7,286     50,301  
  Acquisition of businesses, net of cash acquired     (114 )   (121 )
  Investments in and advances to affiliates         58  
  Proceeds from sale of property, plant and equipment     586     232  
   
 
 
Net Cash (Used for) / from Investing Activities     (6,861 )   25,080  

Financing Activities

 

 

 

 

 

 

 
  Long-term debt payments, net     (4,472 )   (20,308 )
  Notes payable payments, net     (33,690 )   (38,815 )
  Stock purchase and option plans     111     2,083  
   
 
 
Net Cash Used for Financing Activities     (38,051 )   (57,040 )
Effect of exchange rate changes on cash     4,135     (1,400 )
   
 
 
(Decrease) / Increase for the Period     (5,797 )   59,411  
Cash and Equivalents at Beginning of Period     84,871     112,377  
   
 
 
Cash and Equivalents at End of Period   $ 79,074   $ 171,788  
   
 
 

See Notes to Consolidated Financial Statements.

5




ANDREW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.    BASIS OF PRESENTATION

        The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended March 31, 2003 are not necessarily indicative of the results that may be expected for the year ending September 30, 2003. For further information, refer to the consolidated financial statements and footnotes thereto included in the company's annual report on Form 10-K for the year ended September 30, 2002.

NOTE 2.    EARNINGS PER SHARE

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

 
  Three Months Ended
March 31

  Six Months Ended
March 31

 
  2003
  2002
  2003
  2002
BASIC EARNINGS PER SHARE                        

Income (loss) from continuing operations

 

$

(1,671

)

$

6,930

 

$

4,966

 

$

24,604
Average basic shares outstanding     98,330     81,777     98,307     81,696
   
 
 
 
Basic income (loss) from continuing operations per share   $ (0.02 ) $ 0.08   $ 0.05   $ 0.30
   
 
 
 

Net income (loss)

 

$

(3,431

)

$

3,306

 

$

2,636

 

$

18,633
Average basic shares outstanding     98,330     81,777     98,307     81,696
   
 
 
 
Net income (loss) per share   $ (0.03 ) $ 0.04   $ 0.03   $ 0.23
   
 
 
 

DILUTED EARNINGS PER SHARE

 

 

 

 

 

 

 

 

 

 

 

 
Income (loss) from continuing operations   $ (1,671 ) $ 6,930   $ 4,966   $ 24,604
Average basic shares outstanding     98,330     81,777     98,307     81,696
  Effect of dilutive securities: stock options         112     2     168
   
 
 
 
Average diluted shares outstanding     98,330     81,889     98,309     81,864
   
 
 
 
Diluted income (loss) from continuing operations per share   $ (0.02 ) $ 0.08   $ 0.05   $ 0.30
   
 
 
 

Net income (loss)

 

$

(3,431

)

$

3,306

 

$

2,636

 

$

18,633
Average basic shares outstanding     98,330     81,777     98,307     81,696
  Effect of dilutive securities: stock options         112     2     168
   
 
 
 
Average diluted shares outstanding     98,330     81,889     98,309     81,864
   
 
 
 
Diluted net income (loss) per share   $ (0.03 ) $ 0.04   $ 0.03   $ 0.23
   
 
 
 

        Options to purchase 6,445,727 shares of common stock, at exercise prices ranging from $9.36—$38.17 per share, were not included in the March 2003 diluted earnings per share calculations because the options' exercise prices were greater than the average market price of the common shares. Options to purchase 4,193,915 shares of common stock, at exercise prices ranging from $19.33—$38.17 per

6



share, were not included in the March 2002 diluted earnings per share calculations because the options' exercise prices were higher than the average market price of the common shares.

NOTE 3.    COMPREHENSIVE INCOME

        Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income, requires the company to report foreign currency translation adjustments as a component of other comprehensive income. Comprehensive income for the six months ended March 31, 2003 and 2002 amounted to $14,766,000 and $17,162,000, respectively. Comprehensive income (loss) for the three months ended March 31, 2003 and 2002 amounted to ($1,537,000) and $2,722,000, respectively.

NOTE 4.    RECENTLY ISSUED ACCOUNTING POLICIES

        In June 2002, the FASB issued Statements of Financial Accounting Standards No. 146, Accounting for Costs Associated with Exit or Disposal Activities. The provisions of this statement will be effective for exit or disposal activities initiated after December 31, 2002. The company's current restructuring plan, initiated in September 2002, is being accounted for under the previously existing accounting principles for restructuring, primarily Emerging Issues Task Force Issue 94-3. The company accrued pre-tax charges of $36.0 million when the company's management approved the current restructuring plan. If the company had accounted for this restructuring plan under FASB No. 146, certain costs such as employee termination benefits of $11.8 million and lease and contract cancellation costs of $2.5 million accrued in this $36.0 million would have been recognized over the restructuring period as incurred and not accrued in fiscal year 2002.

NOTE 5.    ADOPTION OF NEW ACCOUNTING POLICIES

        At the beginning of fiscal year 2003, the company adopted FASB Statement No. 143, Accounting and Reporting for Obligations Associated with the Retirement of Tangible Long-Lived Assets and the Associated Asset Retirement Costs and FASB Statement No.145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of Statement 13, and Technical Corrections. FASB Statement No. 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and associated asset retirement costs. FASB Statement No. 145 modifies reporting of extinguishment of debt and amends accounting for leases. The adoption of these statements did not impact the company's results of operations.

        Starting in the second quarter of 2003 the company has adopted Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation. See note 8 for the disclosures required by FASB No. 148.

NOTE 6.    RESTRUCTURING

        In September 2002, the company initiated a plan to restructure its operations. The company plans to close several manufacturing and engineering facilities and consolidate into fewer, more efficient facilities. The company has closed two U.S. manufacturing locations and is in the processes of closing three additional U.S. manufacturing locations. The company has closed one international facility and will close three additional international facilities. The company is in the processes of moving the operations of these facilities to existing facilities and to two new facilities the company plans to open in Mexico and the Czech Republic. The company has entered into agreements to lease facilities in both Mexico and Czech Republic. These lease agreements will allow the company to significantly reduce the original estimate of $8.0 million dollars of capital expenditures that was required to build these facilities. The company plans to start operations at these facilities in the third quarter. The company has paid $4.2 million of severance to 375 employees in the second quarter of 2003 and during the first six months of 2003 the company paid $6.1 million to 545 employees who were terminated as part of

7



these restructuring plans. Including discontinued operations (note 7) the company has reduced its workforce by 715 employees, plans to terminate approximately 485 additional employees as part of its restructuring plans and anticipates that approximately 400 employees will be hired at the new facilities.

        In the fourth quarter of fiscal year 2002, the company recorded a $36.0 million pre-tax charge for these activities comprised of the following:

(Dollars in thousands)

 
  Actual Charges to Reserve
 
  Restructuring
Charge

  Three months
Ended Sept. 30, 2002

  Six months
Ended
March 31, 2003

  March 31, 2003
Reserve Balance

Inventory write downs   $ 11,138   $ (11,138 ) $   $
Employee termination costs     11,877         (6,148 )   5,729
Equipment and other asset write downs     9,579     (9,579 )      
Lease and contract cancellation costs     3,452         (2,440 )   1,012
   
 
 
 
Pre-tax charge   $ 36,046   $ (20,717 ) $ (8,588 ) $ 6,741

        Restructuring costs for the relocation of fixed assets are being expensed as incurred and are included in operating expenses. The statements of operations for the three months and six months ending March 31, 2003 contain $126 thousand and $205 thousand, respectively, of restructuring expense for the relocation of fixed assets.

NOTE 7.    DISCONTINUED OPERATIONS

        The company has discontinued three non-strategic businesses: equipment shelters, wireless accessories and satellite modems. In September 2002, the company recognized an after-tax charge of $26.4 million to reduce the carrying value of these assets to their fair value. The company estimated the fair value of these assets based on the projected proceeds from sale of these assets, net of any related costs. These businesses employed approximately 170 employees. The company closed its satellite modem business in September 2002 and sold its equipment shelter business in October 2002 and its wireless accessory business in January 2003.

        The company has restated all periods presented to reflect its equipment shelter, wireless accessory, and satellite modem businesses as discontinued operations. The results of operations for the discontinued businesses are as follows:

 
  Three Months Ended
March 31

  Six Months Ended
March 31

 
(Dollars in thousands)

  2003
  2002
  2003
  2002
 
Sales   $ 1,544   $ 10,405   $ 8,007   $ 34,008  
Cost of products sold     2,276     12,648     9,258     36,306  
   
 
 
 
 
Gross Profit     (732 )   (2,243 )   (1,251 )   (2,298 )

Operating expenses

 

 

1,782

 

 

2,934

 

 

2,078

 

 

6,232

 
   
 
 
 
 
Loss before income taxes     (2,514 )   (5,177 )   (3,329 )   (8,530 )

Income tax benefit

 

 

(754

)

 

(1,553

)

 

(999

)

 

(2,559

)
   
 
 
 
 
Loss from discontinued operations   $ (1,760 ) $ (3,624 ) $ (2,330 ) $ (5,971 )
   
 
 
 
 

8


NOTE 8.    STOCK-BASED COMPENSATION

        In the second quarter of fiscal year 2003, the company adopted Statements of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation. The company will continue to account for stock-based compensation plans using the intrinsic value method described in Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. All stock options granted by the company are granted at market price and thus no compensation expense is recorded in the company's results of operations. Under FASB No. 148 the company is required to report quarterly pro forma net income and earnings per share as if the company had accounted for its stock option plans under the fair value method. The following table shows the company's pro forma net income and earnings per share as if the company had recorded the fair value of stock options as compensation expense.

 
  Three Months Ended
March 31

  Six Months Ended
March 31

 
(Dollars in thousands, except per share amounts)

  2003
  2002
  2003
  2002
 
Reported net income (loss)   $ (3,431 ) $ 3,306   $ 2,636   $ 18,633  

Charges for stock-based compensation, net of tax

 

 

(1,267

)

 

(1,774

)

 

(2,612

)

 

(3,431

)
   
 
 
 
 
Pro forma net income (loss)   $ (4,698 ) $ 1,532   $ 24   $ 15,202  

Reported basic and diluted net income (loss) per share

 

$

(0.03

)

$

0.04

 

$

0.03

 

$

0.23

 

Pro forma basic and diluted net income (loss) per share

 

$

(0.05

)

$

0.02

 

$

0.00

 

$

0.19

 

NOTE 9.    WARRANTY RESERVE

        In November 2002, the FASB issued Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees. The company offers warranties on most of its products that qualify as guarantees under FASB Interpretation No. 45 and thus is required to disclose the components of its warranty reserve. The specific terms and conditions of the warranties offered by the company vary depending upon the product sold. The company estimates the costs that may be incurred under its warranty plans and records a liability in the amount of such costs at the time product revenue is recognized. Factors that affect the company's warranty liability include the number of units sold, type of products sold, historical and anticipated rates of warranty claims and cost per claim. The company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. Changes in the company's warranty reserve during the six months ended March 31, 2003 are as follows:

(dollars in thousands)

   
 
Warranty Reserve Sept. 30, 2002   $ 9,932  
Accrual for warranties issued     1,032  
Warranty settlements made     (1,079 )
Warranty expirations and adjustments     (34 )
   
 
Warranty Reserve March 31, 2003   $ 9,851  
   
 

NOTE 10.    PENDING ACQUISITION

        On February 18, 2003, the company announced a definitive agreement to acquire Allen Telecom Inc. of Beachwood, Ohio in a stock-for-stock transaction valued at approximately $496 million. Under the terms of the agreement, which has been unanimously approved by the Board of Directors of both companies, Allen shareholders will receive 1.775 shares of newly issued Andrew stock for each

9



Allen share that they currently own. The company anticipates completing this transaction in late June of 2003, pending shareholder and regulatory approval.

NOTE 11.    DEBT COVENANTS

        Under the terms of the company's revolving credit and loan agreements, the company has agreed to meet various requirements. The company is in compliance with all of these requirements as of March 31, 2003. Under the company's amended and restated credit agreement dated December 19, 2002 the company must meet various requirements, including maintaining net worth, maintaining a ratio of earnings before interest, taxes, depreciation and amortization (EBITDA) to total debt, maintaining a fixed charges coverage ratio and limits on the amount of assets that the company can dispose of in a fiscal year. The company is required to report on these requirements quarterly.

NOTE 12.    SEGMENT

        The company manages its business as one operating segment. This segment serves commercial markets, including coaxial cable, terrestrial microwave systems, power amplifiers, and other products and services.

NOTE 13.    COSTS IN EXCESS OF NET ASSETS OF BUSINESSES ACQUIRED

        The company adopted FASB No. 142, Goodwill and Other Intangible Assets, during fiscal year 2002. Under the provisions of FASB No. 142, the company tests goodwill or Costs in Excess of Net Assets of Businesses Acquired on an annual basis. The company has elected to perform its annual impairment test on the first day of its fiscal fourth quarter. The impairment test performed for fiscal year 2002 indicated no impairment of goodwill, but due to uncertain market conditions, it is possible that future tests may indicate impairment of the fair value of goodwill, which could result in non-cash charges, adversely affecting the company's results of operations.


ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

        Sales for the second quarter of fiscal year 2003 were $201.3 million, an increase of 6% compared to the second quarter of 2002. This increase was driven by higher sales of power amplifiers due to the company's June 2002 acquisition of Celiant Corporation. Excluding the increase in the company's power amplifier business, sales decreased compared to the second quarter of 2002 driven by continued weakness in the wireless infrastructure market. Compared to the second quarter of 2002, total sales decreased in all major geographic regions, with the exception of Europe. Sales to the European wireless infrastructure market grew even excluding the impact of power amplifiers. U.S. wireless infrastructure sales were up modestly due to increased power amplifier sales, which were mostly offset by a decrease in cable sales. Sales to the Asia-Pacific region were driven down by weak sales in China.

        For the second quarter of 2003 compared to the second quarter of 2002, from a market standpoint, wireless infrastructure sales were up, driven by power amplifier sales and offset by a decline in cable sales. Sales to the fixed telecommunications market were down due to weak U.S. sales and partially offset by strong sales in Europe. The broadcast and government market was up slightly due to increases in the U.S. and Europe and offset by a decrease in Latin America. From a product standpoint, sales of cable products were down in all markets except Europe. Terrestrial microwave antenna sales were up, driven by strength in Europe. Other antenna and support products were down due to weak sales of base station antennas and broadcast antennas.

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        Sequentially, sales decreased 21% from the first quarter to the second quarter of 2003 driven by a weak wireless infrastructure market and normal seasonal trends. On a sequential basis, sales decreased in most major geographic regions and product categories. Wireless infrastructure sales showed the largest decrease, declining in all major geographic regions, except Latin America.

        For the first six months of 2003 compared to the first six months of 2002, sales increased 17% driven by the company's power amplifier business. Excluding the impact of the Celiant acquisition, sales decreased due to a weak wireless infrastructure market. Excluding the impact of increased power amplifier sales, the European wireless infrastructure market was the only major geographic region to show an increase in sales. The broadcast and government market, and the fixed telecommunication market showed slight decreases. Sales to the fixed telecommunications market showed good growth in Europe and decreased in other regions. From a product standpoint, sales of cable products decreased in every region except Europe. Terrestrial microwave systems sales grew, driven by strong sales in the U.S. and Europe. Other antenna and support products sales decreased due to a decrease in earth station and broadcast antennas.

        Gross margin as a percentage of sales was 25.7% in the second quarter of 2003, compared to 29.0% in the second quarter of 2002. This decrease in gross margin was driven by price erosion and product mix and partially offset by cost reductions. The gross margin on the company's products varies. Cable products are the company's highest margin products, while power amplifiers and terrestrial microwave systems typically have lower margins. Therefore, as the company expands its power amplifier operations, its consolidated gross margin percentage has decreased due to the shift in product mix. In addition, the decrease in cable sales had a significant impact on gross margin for the second quarter, with cable volumes down approximately 26%. Continued pricing pressure on cable products has also had a significant impact on the company's overall margin. For the second quarter of 2003 compared to the second quarter of 2002, the margin percentage on terrestrial microwave products remained relatively stable and the margin on other antenna and support products decreased slightly. Due to the wide range in products in the other antenna and support product category, margins on individual products can vary significantly. Gross margin decreased from 28.0% in the first quarter of 2003 due mostly to lower sales and production volumes. Cable production volumes were down 23% sequentially. For the first six months of 2003 the gross margin percentage was 27.0% as compared to 30.4% for the first six months of 2002. This decrease was due to product mix, price declines and lower cable volumes. The most significant impact on product mix was the increase in power amplifier sales.

        In April 2003, the company signed a new power amplifier supply agreement with Lucent Technologies. This agreement replaces the original agreement that the company acquired as part of the June 2002 acquisition of Celiant Corporation. The new agreement maintains the value of the original minimum target purchase levels by extending these purchase targets another year. The new agreement adds a percentage requirement of Lucent's worldwide power amplifier business, compared to the original agreement that covered only North America. The company believes that it has reached an agreement that will benefit both companies. This supply agreement was filed with the Securities and Exchange Commission under Form 8-K on April 9, 2003.

        Total operating expenses for the second quarter of 2003 increased $10.1 million or 23% from the second quarter of 2002 due to an increase of $8.1 million in research and development and $3.5 million of intangible amortization and offset by a $1.7 million decrease in sales and administrative expense. The $8.1 million or 71% increase in research and development was driven by the company's expanded power amplifier business. The $3.5 million increase in intangible amortization is also due to the company's power amplifier business and intangible assets acquired in the Celiant acquisition. Sales and administrative costs decreased $1.7 million or 5% due to lower bonus and profit sharing expenses and the impact of the company's restructuring and cost cutting efforts. Compared to the first quarter of 2003, total operating expenses decreased $5.7 million or 9%, due to a $5.5 million or 15% decrease in

11



sales and administrative expenses. Lower incentive bonus and profit sharing expenses were the largest drivers of this decrease.

        For the first six months of 2003, total operating expenses increased 23% due to increased research and development expense and intangible amortization, both a result of the company's expanded power amplifier business. These increases were partially offset by the 3% decrease in sales and administrative expenses due to cost cutting efforts and lower profit-related compensation expenses.

        Total other income and expense resulted in income of $0.7 million in the second quarter of 2003 compared to expense of $0.3 million in the second quarter of 2002, primarily due to foreign exchange gains. Foreign exchange gains, mostly a result of the strengthening of the Euro, were the largest factor in the $1.4 million gain in other income for the second quarter of 2003. Interest expense decreased $0.2 million on lower debt levels, and interest income dropped $0.7 million due to lower cash balances and lower interest rates. For the first six months of 2003, interest expense decreased due to lower debt levels and interest income decreased due to lower cash balances. Foreign exchange gains in total were approximately the same for both the first six months of 2002 and 2003. Other income for 2002 includes an $8.7 million gain on the sale of the company's Russian telecommunication ventures that was recorded in the first quarter of 2002.

        Income taxes were 30% of income from continuing operations before taxes for the first six months of 2003. If the $8.7 million gain on the sale of the company's Russian telecommunication ventures was excluded from 2002, the effective income tax rate would have been 30% for the first six months of 2002.

        In the fourth quarter of 2002, the company decided to discontinue three non-strategic businesses: equipment shelters, wireless accessories and satellite modems. The company closed the satellite modem business in September 2002, sold the equipment shelter business in October 2002 and sold the wireless accessory business in January 2003. The company recorded a loss from these discontinued operations of $1.8 million for the second quarter and $2.3 million for the first six months of 2003 compared to losses of $3.6 million and $6.0 million for the same periods in 2002. The company anticipates that it will not incur any significant expenses relating to these businesses after the third quarter of 2003.

LIQUIDITY

        Despite having a difficult second quarter, the company has maintained its strong balance sheet and reduced its outstanding debt. Working capital totaled $260.7 million at March 31, 2003 compared to $240.6 million at September 30, 2002. In the first six months of fiscal year 2003 the company decreased its total outstanding debt by $38.2 million. Cash, net of all outstanding debt, on March 31, 2003 was $30.4 million compared to ($2.0) million at September 30,2002. Management believes that the company's strong working capital position, low debt levels and ability to generate cash flow from operations will allow the company to meet its normal operating cash flow needs.

        The company anticipates completing its acquisition of Allen Telecom in late June 2003, pending shareholder and regulatory approval. Andrew will issue approximately 55 million shares of Andrew common stock to acquire Allen. The company has made a preliminary estimate that it will incur approximately $42.6 million of additional cash costs to complete the merger. The company currently plans to fund these costs with cash on hand and its available line of credit. The company maintains a $160 million revolving line of credit, which had $32.5 million of borrowings outstanding as of March 31, 2003. At March 31, 2003, Allen had a working capital balance of $183.6 million and its cash balance of $78.8 million exceeded total debt by $1.6 million (excluding Allen's $50.0 million of convertible preferred stock). Management believes that after the acquisition of Allen, the combined company's strong working capital position, low debt levels and ability to generate cash flow from operations will allow the company to meet its normal operating cash flow needs.

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        In the first six months of 2003, the company generated $35.0 million in cash flow from operations, a decrease of 62% from the $92.8 million generated in the first six months of 2002. This decrease was driven by the 80% decrease in net income and changes in operating assets and liabilities. Accounts receivable decreased $50.5 million in the first six months of 2003 compared to the $63.8 million decrease in 2002. The relative slower decline in receivables in 2003 was due to higher sales and an increase in days sales in billed receivables to 80 days at March 31, 2003 up from 77 days at December 31, 2002 and up from 74 days at March 31, 2002. This increase was primarily driven by an increase in receivables in Asia and a one-year financing agreement in Australia with Ericsson. Inventory increased $14.6 million in the first six months of 2003. This was mostly due to a planned increase in finished goods to meet customer requirements as the company begins to move various manufacturing operations as part of its restructuring plans. Accounts payable and other liabilities decreased $39.9 million dollars as the company paid down or reduced its outstanding liabilities.

        The company used $6.9 million of cash for investing activities in the first six months of 2003. This was principally due to $14.6 million for capital expenditures and $7.3 million received for the sales of discontinued businesses. The company has significantly reduced its investment in manufacturing facilities over the last six months. Capital expenditures were $14.6 million in the first six months of 2003, a 42% decrease from the $25.4 million spent in the first six months of 2002. The company received $7.3 million for the sale of two discontinued business. The company sold its equipment shelter business in October 2002 and its wireless accessory business in January 2003. Investing activities for 2002 include $50.3 million that the company received in the first quarter of 2002 for the sale of its Russian telecommunication ventures.

        Net cash used for financing activities totaled $38.1 million. The company reduced its net short-term notes payable borrowing by $33.7 million. The company decreased borrowing under its revolving credit agreement in the U.S. and Canada by $28.4 million and repaid $9.7 million of short-term borrowing in China. The company decreased its long-term borrowing by $4.5 million primarily due to the repayment of an industrial development bond associated with the company's equipment shelter business.

CRITICAL ACCOUNTING POLICIES

        There were no changes in critical accounting policies during the quarter.

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS

        We have made forward-looking statements in this Form 10-Q under "Management's Discussion and Analysis of Financial Condition and Results of Operations" and in the "Notes to Consolidated Financial Statements." In addition, our representatives or management may make other written or oral statements that constitute forward-looking statements. Forward-looking statements are based on management's beliefs and assumptions and on information currently available to them. These statements often contain words like believe, expect, anticipate, intend, contemplate, seek, plan, estimate or similar expressions. We make these statements under the protection afforded them by Section 21E of the Securities Exchange Act of 1934.

        Forward-looking statements involve risks, uncertainties and assumptions, including those discussed in this report. We operate in a continually changing business environment, and new risk factors emerge from time to time. We cannot predict those risk factors, nor can we assess the impact, if any, of those 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. Forward-looking statements do not guarantee future performance, and you should not put undue reliance on them.

        While Andrew Corporation's management is optimistic about the company's long-term prospects, you should consider the risks and uncertainties in evaluating its growth outlook. Factors that may cause

13



actual results to differ from expected results include the company's ability to consummate and integrate its acquisition of Allen Telecom and to realize the synergies and cost savings anticipated from this transaction, the effects of competitive products and pricing, economic and political conditions that may impact customers' ability to fund purchases of our products and services, the company's ability to achieve the costs savings anticipated from cost reduction programs, fluctuations in international exchange rates, the timing of cash payments and receipts, end use demands for wireless communication services, and other business factors. For a more complete discussion of these and other risks, uncertainties and assumptions that may affect us, see the company's Annual Report on Form 10-K for the fiscal year ended September 30, 2002 and Registration Statement on Form S-4 filed with the Securities and Exchange Commission on March 31, 2003.


ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

        See Item 7 of the company's Annual Report on Form 10-K for the year ended September 30, 2002. There has been no material change from the end of the previous fiscal year through March 31, 2003.


ITEM 4.    CONTROLS AND PROCEDURES

    (a)
    Evaluation of Disclosure Controls and Procedures

        The company's Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of the company's disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and 15d-14(c)) as of a date within 90 days of the filing date of this quarterly report on Form 10-Q (the "Evaluation Date"). Based on their review and evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, the company's disclosure controls and procedures were adequate and effective to ensure that material information relating to the company and its consolidated subsidiaries would be made known to them by others within those entities in a timely manner, particularly during the period in which this quarterly report on Form 10-Q was being prepared, and that no changes are required at this time.

    (b)
    Changes in Internal Controls

        There were no significant changes in the company's internal controls or in other factors that could significantly affect the company's internal controls subsequent to the Evaluation Date, or any significant deficiencies or material weaknesses in such internal controls requiring corrective actions. As a result, no corrective actions were taken.

14



PART II—OTHER INFORMATION

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    (a)
    The company's Annual Meeting of Stockholders was held on February 11, 2003.

    (b)
    Items submitted to a vote

1.
Election of Directors

Nominee

  For
  Against
  Broker/
Non-Votes

  Abstentions
J.G. Bollinger   88,269,278   0   0   3,224,486
T.A. Donahoe   85,029,286   0   0   6,464,478
F.L. English   88,112,867   0   0   3,380,897
R.E. Faison   89,410,830   0   0   2,082,934
J. D. Fluno   85,266,920   0   0   6,226,844
W. O. Hunt   87,121,859   0   0   4,371,905
C.R. Nicholas   89,156,113   0   0   2,337,651
G.A. Poch   85,261,524   0   0   6,232,240
G. O. Toney   88,378,499   0   0   3,115,265
D.L. Whipple   85,201,934   0   0   6,291,830
2.
The proposal to increase the number of shares of common stock available for issuance under the Andrew Corporation Management Incentive Program from 4,000,000 to 8,000,000 was approved by a vote of 81,636,508 shares for, 8,671,722 shares against, and 1,185,534 shares withheld.

3.
The proposal to increase the number of shares of common stock available for issuance under the Andrew Corporation Stock Option Plan for Non-Employee Directors from 400,000 to 800,000 was approved by a vote of 81,259,803 shares for, 8,967,495 shares against, and 1,266,466 shares withheld.

4.
The selection of Ernst & Young to serve as independent public auditors for fiscal year 2003 was approved by a vote of 85,393,296 shares for, 5,249,901 shares against, and 850,567 shares withheld.

15



ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibit Index

Exhibit No.
  Description
3.1   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)

3.2

 

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)

4.1

 

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)

4.2

 

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)

4.3

 

Stockholder Rights Agreement dated November 14, 1996. Filed under Item 5 of Form 8-K dated November 14, 1996 and incorporated herein by reference. (SEC File No. 000-09514)

4.4

 

Registration Rights Agreement dated as of June 4, 2002 between Andrew Corporation and each of the stockholders named therein. Filed as Exhibit 4.1 to Form S-3 dated August 19, 2002 and incorporated herein by reference.

10.1

 

The Andrew Corporation Stock Option Plan for Non-Employee Directors

10.2

 

The Andrew Corporation Management Incentive Plan

10.3*

 

Supply Agreement dated April 3, 2003, between Andrew Corporation and Lucent Technologies Inc. filed as Exhibit 99.1 to the current report on Form 8-K filed on April 9, 2003 and incorporated herein by reference.

99.1

 

Certificate of Chief Executive and Chief Financial Officers

*
Portions of this exhibit have been omitted pending the Commission's review of a request for confidential treatment

(b)   Reports on Form 8-K

        On February 13, 2003, the company filed under Item 5 of Form 8-K. The Form 8-K contained the February 11, 2003 press release regarding the appointment of Ralph E. Faison as chief executive officer and president of the company.

        On February 18, 2003, the company filed under Item 5 of Form 8-K. The Form 8-K contained the February 18, 2003 press release announcing that the company had entered into a definitive agreement to acquire Allen Telecom Inc.

        On February 27, 2003, the Registrant filed under Item 5 of Form 8-K. The Form 8-K contained the February 17, 2003 Agreement and Plan of Merger (the "Merger Agreement") by and among Andrew, Adirondacks, Inc., a Delaware corporation and a wholly-owned subsidiary of Andrew Corporation, and Allen Telecom Inc., a Delaware corporation.

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SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date May 14, 2003   By:   /s/  CHARLES R. NICHOLAS      
Charles R. Nicholas
Chief Financial Officer and Vice Chairman
(Duly Authorized Officer and Principal Financial Officer)

17


CERTIFICATIONS

I, Ralph E. Faison, certify that:

        1.     I have reviewed this quarterly report on Form 10-Q of Andrew Corporation;

        2.     Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

        3.     Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

        4.     The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

      a)
      designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

      b)
      evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

      c)
      presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

        5.     The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

      a)
      all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

      b)
      any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

        6.     The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: 5/14/2003   /s/  RALPH E. FAISON      
Ralph E. Faison
President and Chief Executive Officer

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I, Charles R. Nicholas, certify that:

        1.     I have reviewed this quarterly report on Form 10-Q of Andrew Corporation;

        2.     Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

        3.     Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

        4.     The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

      a)
      designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

      b)
      evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

      c)
      presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

        5.     The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

      a)
      all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

      b)
      any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

        6.     The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: 5/14/2003   /s/  CHARLES R. NICHOLAS      
Charles R. Nicholas
Chief Financial Officer

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EX-10.1 3 a2111180zex-10_1.htm EXHIBIT 10.1
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Exhibit 10.1


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
As further amended by the Board of Directors on November 14, 2002
and ratified by the Stockholders on February 11, 2003

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

1


      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 800,000, 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 800,000, 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.

2


    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

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    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. If an Optionee ceases to be a director by reason of death, his or her Beneficiary may exercise the Options (to the extent they were vested and exercisable at the time of death) until the earlier of five years after the date of the Optionee's death or the expiration of the Options' respective 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 at the time of death) until the later of five years after the date on which the Optionee ceased to be a director or 12 months after the Optionee's death, but in no event later than 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).

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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 As further amended by the Board of Directors on November 14, 2002 and ratified by the Stockholders on February 11, 2003 ANDREW CORPORATION STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
EX-10.2 4 a2111180zex-10_2.htm EXHIBIT 10.2
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Exhibit 10.2


ANDREW CORPORATION
MANAGEMENT INCENTIVE PROGRAM

As approved by the Board of Directors on November 18, 1999
and by the Stockholders on February 8, 2000
As further amended by the Board of Directors on November 14, 2002
and by the Stockholders on February 11, 2003

1   Purposes of the Program   2
2.   Definitions   2
3.   Administration   3
    3.1.   Committee   3
    3.2.   Committee Authority   3
4.   Common Stock Subject to the Program; Adjustments   3
    4.1.   Shares Authorized   3
    4.2.   Adjustments   4
5.   Long-Term Incentives   4
    5.1.   Grants of Long-Term Incentives.   4
    5.2.   Stock Awards   4
    5.3.   Options   4
    5.4.   Performance Units   5
    5.5.   Termination of Employment   5
6.   Change-in-Control   6
7.   General Provisions   6
    7.1.   No Employment Rights Conferred   6
    7.2.   Acceptance of Program   6
    7.3.   Withholding   6
    7.4.   Non-Transferability; Exceptions   6
    7.5.   No Segregation; No Property Interest   7
    7.6.   Certain Forfeitures   7
    7.7.   Governing Law   7
8.   Amendment or Termination of Program   7

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ANDREW CORPORATION
MANAGEMENT INCENTIVE PROGRAM

1.     Purposes of the Program

        The purposes of the Management Incentive Program are to assist the Company in attracting and retaining individuals of outstanding competence, and to provide performance incentives for officers, executives and other key personnel.

2.     Definitions

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

        "Board": The Board of Directors of the Company.

        "Change-in-Control": 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.

        "Committee": The Compensation Committee of the Board or such other committee designated by the Board to administer the Program pursuant to the provisions of Section 3.1.

        "Code": The Internal Revenue Code of 1986, as amended.

        "Common Stock": The common stock, $.01 par value, of the Company or such other class of shares or other securities as may be applicable pursuant to the provisions of Section 4.

        "Company": Andrew Corporation, a Delaware corporation, and its successors and assigns.

        "Disability": Eligible for Social Security disability benefits or disability benefits under the Company's long-term disability plan, based upon a determination by the Committee that the condition arose prior to termination of employment.

        "Incentive Stock Option": A form of stock option that is defined in Code Section 422.

        "Key Employee": An employee of the Company or of a subsidiary thereof regularly employed on a full-time basis, including an officer or director if he or she is such an employee, who, in the opinion of the Committee, is in a position to make significant contributions to the earnings of the Company.

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        "Long-Term Incentive": An award in one of the forms provided for in Section 5.

        "Market Value": 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.

        "Option": An option to purchase shares of Common Stock granted under Section 5.3.

        "Performance Unit": A contingent right granted pursuant to Section 5.4 to receive a cash award or shares of Common Stock.

        "Program": This Management Incentive Program, as from time to time amended.

        "Restricted Stock": Shares of Common Stock subject to restrictions.

        "Retirement": The termination of a Key Employee's employment with the Company and its subsidiaries for retirement purposes if such termination (i) occurs on or after his or her sixty-fifth birthday; or (ii) occurs on or after his or her fifty-fifth birthday with the written consent of the Chief Executive Officer of the Company or, in the case of the Chief Executive Officer's retirement, with the consent of the Committee.

        "Stock Award": An award granted pursuant to Section 5.2.

3.     Administration

        3.1.    Committee.    The Program shall be administered by a committee of three or more persons selected by the Board from its own membership, which shall be the Compensation Committee of the Board unless the Board designates another committee. No person shall be appointed to or shall serve as a member of the Committee unless at the time of such appointment and service he or she shall be a "non-employee director," as defined in Rule 16b-3 under the Securities Exchange Act of 1934. To the extent required to comply with Code Section 162(m) and the related regulations, each member of the Committee shall qualify as an "outside director" as defined therein.

        3.2.    Committee Authority.    The Committee shall have full power and authority to (i) interpret and administer the Program, (ii) adopt rules and regulations for its administration, (iii) designate the Key Employees to receive grants under the Program, (iv) determine the amount to be granted to each Key Employee and (v) determine the conditions, form, manner, time and terms of payment or grants of Long-Term Incentives. All action taken by the Committee shall be final, binding and conclusive on the Company, all Key Employees and other employees, their Beneficiaries, successors and assigns, and on all other persons claiming under or through any of them.

4.     Common Stock Subject to the Program; Adjustments

        4.1.    Shares Authorized.    Subject to Section 4.2, the shares of Common Stock that may be issued or transferred under the Program shall not exceed 8,000,000. Such shares may be authorized but unissued shares of Common Stock, shares of treasury stock or shares purchased for the Program. Any shares of Common Stock withheld or surrendered to pay withholding taxes pursuant to Section 7.3 or surrendered in full or partial payment of the exercise price of an Option pursuant to Section 5.3 shall be added to the shares of Common Stock available for issuance or transfer. If any shares of Common Stock subject to Long-Term Incentives are not issued or transferred for any reason, or if any such shares are issued or transferred and are subsequently reacquired by the Company because of a Key Employee's failure to comply with the terms of such Long-Term Incentive, the shares not so issued or transferred or reacquired shall not be charged against the maximum limitation set forth above and may again be made subject to Long-Term Incentives.

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        4.2.    Adjustments.    The Committee shall make or provide for appropriate adjustments in the number and type of shares to be made available, the number of shares allotted to an individual and the option price per share, to give effect to any changes in capitalization or classification, including stock splits, stock dividends, offering of rights to subscribe or convert to shares of Common Stock, or any merger, consolidation or other reorganization.

5.     Long-Term Incentives

        5.1.    Grants of Long-Term Incentives.    

      (a)
      Long-Term Incentives may be granted, in whole or in part, in one or more of the following forms:

      (i)
      A Stock Award in accordance with Section 5.2;

      (ii)
      An Option in accordance with Section 5.3; or

      (iii)
      A Performance Unit in accordance with Section 5.4.

      (b)
      The terms of any grant of Long-Term Incentives and the number of shares of Common Stock or Performance Units subject to such grant shall be determined by the Committee; provided that, the maximum annual amount payable in cash to any Key Employee for his or her Performance Units shall not exceed 200% of the Key Employee's average base salary over the applicable performance period, and the maximum annual number of shares of Common Stock that may be issued or transferred to any Key Employee pursuant to Long-Term Incentives shall not exceed 20% of the total shares authorized to be issued or transferred pursuant to Section 4.1.

      (c)
      The aggregate Market Value (determined on the date the Option is granted) of the Common Stock for which any Key Employee may be granted Incentive Stock Options in the calendar year in which such Options are first exercisable shall not exceed $100,000.

      (d)
      No more than 10% of the shares of Common Stock authorized to be issued or transferred pursuant to Section 4.1 may be used for grants of Stock Awards.

        5.2.    Stock Awards.    Long-Term Incentives granted as Stock Awards may be in the form of Restricted Stock or a commitment to issue or transfer Common Stock and shall contain such terms and conditions as the Committee determines, including forfeiture provisions and restrictions on transfer. Upon the issuance or transfer of Common Stock pursuant to a Stock Award, the Key Employee shall be entitled to receive dividends, to vote and to exercise all other rights of a stockholder as to such Common Stock except to the extent otherwise specifically provided in the Stock Award. If the Committee intends the Restricted Stock granted to any Key Employee to satisfy the performance-based compensation exemption under Code Section 162(m) ("Qualifying Restricted Stock"), the extent to which the Qualifying Restricted Stock will vest shall be based on the attainment of performance goals established in writing prior to commencement of the performance period by the Committee from the list in Section 5.4(b). The level of attainment of such performance goals and the corresponding number of shares of vested Qualifying Restricted Stock shall be certified by the Committee in writing pursuant to Code Section 162(m) and the related regulations.

        5.3.    Options.    Long-Term Incentives granted as Options shall be subject to the following provisions:

      (a)
      The Option price per share of Common Stock shall be determined by the Committee, but shall not be less than the Market Value of a share of Common Stock on the date the Option is granted. The Option price may not be changed after the grant date.

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      (b)
      The expiration date of each Option shall be established by the Committee at the time the Option is granted. Incentive Stock Options may not be granted after November 17, 2009 and must expire not later than ten years from their grant date.

      (c)
      An Option shall be considered exercised on the date written notice is mailed (postage prepaid) or delivered to the Secretary of the Company advising of the exercise of a particular Option and transmitting payment of the Option price for the shares involved. Payment may be made in cash or by the surrender of Common Stock that has a Market Value equal to the exercise price, or by a combination thereof; provided that, Common Stock previously acquired from the Company may not be surrendered unless it has been held for at least six months. No Common Stock shall be issued or transferred upon exercise of an Option until full payment therefor has been made.

      (d)
      Performance Units. Long-Term Incentives granted as Performance Units shall be subject to the following provisions:

      (e)
      The performance period for the attainment of performance goals shall be determined by the Committee.

      (f)
      Prior to the commencement of the performance period, the Committee shall establish in writing an initial target value or number of shares of Common Stock for the Performance Units to be granted to a Key Employee, the duration of the performance period, and the specific performance goals to be attained, including performance levels at which various percentages of Performance Units will be earned and the minimum level of attainment to be met to earn any portion of the Performance Units. If the Committee intends the Performance Units granted to any Key Employee to satisfy the performance-based compensation exemption under Code Section 162(m) ("Qualifying Performance Units"), the performance goals shall be based on one or more of the following objective criteria: generation of free cash, earnings per share, revenue, market share, stock price, cash flow, earnings, operating expense ratios, return on sales, return on capital, return on assets, return on investment, productivity, delivery performance, quality, or level of improvement in any of the foregoing. After the end of a performance period, the Committee shall certify in writing the extent to which performance goals have been met and shall compute the payout to be received by each Key Employee. The Committee may not adjust upward the amount payable under Qualifying Performance Units to any Key Employee who is a covered employee under Code Section 162(m).

        Termination of Employment

      (g)
      Unless determined otherwise by the Committee, and subject to Section 6 below, all unvested Options and Stock Awards and all unpaid Performance Units shall be forfeited upon termination of employment for reasons other than Retirement, Disability or death.

      (h)
      Subject to Section 7.6, upon termination of employment by reason of Retirement, Disability or death, all unvested Options and Stock Awards shall become fully vested and any Performance Units shall become payable to the extent determined by the Committee.

      (i)
      Upon termination by reason of Retirement or Disability, Options shall be exercisable until not later than the earlier of three years after the termination date or the expiration of their term. Upon the death of a Key Employee, while employed by the Company or after terminating by reason of Retirement or Disability, Options shall be exercisable by the Key Employee's Beneficiary not later than the earliest of one year after the date of death, three years after the date of termination due to Retirement or Disability, or the expiration of their term.

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      (j)
      Upon termination for any reason other than Retirement, Disability or death, any Options vested prior to such termination may be exercised during the three-month period commencing on the termination date, but not later than the expiration of their term. If a Key Employee dies during such post-employment period, such Key Employee's Beneficiary may exercise the Options (to the extent they were vested and exercisable on the date of employment termination), but not later than the earlier of one year after the date of death or the expiration of their term.

6.     Change-in-Control

        In the event of a Change-in-Control, all Long-Term Incentives shall vest and the maximum value of each Key Employee's Performance Units, prorated for the number of full months of service completed by the Key Employee during the applicable performance period, shall immediately be paid in cash to the Key Employee. Options that become vested upon a Change-in-Control may be exercised only during the 90 days immediately thereafter.

7.     General Provisions

        7.1.    No Employment Rights Conferred.    Neither the adoption of this Program nor its operation, nor any booklet or other document describing or referring to this Program, or any part thereof, shall confer upon any employee any right to continue in the employ of the Company or any subsidiary thereof or shall in any way affect the right and power of the Company or any subsidiary to dismiss or otherwise terminate the employment of any employee at any time for any reason with or without cause.

        7.2.    Acceptance of Program.    By accepting any benefits under the Program, each Key Employee and each person claiming under or through a Key Employee shall be conclusively deemed to have indicated his or her acceptance of all provisions of the Program and his or her consent to any action or decision under the Program by the Company, the Board or the Committee.

        7.3.    Withholding.    The Company may withhold, or allow a Key Employee to remit to the Company, any Federal, state or local taxes applicable to any grant, exercise, vesting, distribution or other event giving rise to income tax liability with respect to a Long-Term Incentive. In order to satisfy all or a portion of the income tax liability that arises with respect to a Long-Term Incentive, a Key Employee may elect to surrender Common Stock held by the Key Employee or to have the Company withhold Common Stock that would otherwise be issued pursuant to the exercise of an Option or in connection with any other Long-Term Incentive, but any withheld Common Stock and any surrendered Common Stock held by the Key Employee for less than six months, may be used only to satisfy the minimum tax withholding required by law.

        7.4.    Non-Transferability; Exceptions.    Except as hereinafter provided, no Long-Term Incentive may be assigned, transferred or subjected to any encumbrance, pledge or charge of any nature; provided that a Key Employee may designate a Beneficiary to receive a Long-Term Incentive in the event of the Key Employee's death. Under such procedures as the Committee may establish, Long-Term Incentives may be transferred by gift to members of a Key Employee's immediate family (i.e., children, grandchildren and spouse) or to one or more trusts for their benefit or to partnerships in which such family members and the Key Employee are the only partners, provided that (i) any agreement governing such Long-Term Incentives expressly so permits or is amended to so permit, (ii) the Key Employee does not receive any consideration for such transfer, and (iii) the Key Employee provides such documentation or information concerning any such transfer or transferee as the Committee may reasonably request. Any transferred Long-Term Incentives shall be subject to the same terms and conditions that applied immediately prior to their transfer. In no event shall such transfer rights apply to any Incentive Stock Option.

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        7.5.    No Segregation; No Property Interest.    Nothing in this Program shall require the Company to segregate or set aside any funds or other property for the purpose of paying a Long-Term Incentive. No Key Employee, Beneficiary or other person shall have any right, title or interest in any amount awarded under the Program prior to payment thereof, or in any property of the Company or any affiliated corporation.

        7.6.    Certain Forfeitures.    Except for a Long-Term Incentive that has vested pursuant to Section 6, the Committee may declare a Long-Term Incentive, whether vested or unvested, to be forfeited if the Key Employee or former Key Employee competes with the Company or engages in conduct that, in the opinion of the Committee, adversely affects the Company.

        7.7.    Governing Law.    The Program, and all agreements hereunder, shall be construed in accordance with and governed by the laws of the State of Illinois.

8.     Amendment or Termination of Program

        This Program may be amended or terminated by the Board at any time, provided that, without the approval of the stockholders of the Company, no amendment that increases the maximum number of shares of Common Stock that may be subject to Long-Term Incentives shall be effective. No amendment or termination of the Program or any portion thereof shall, without the consent of a Key Employee, adversely affect any award previously made or any other rights previously granted to such Key Employee.

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ANDREW CORPORATION MANAGEMENT INCENTIVE PROGRAM As approved by the Board of Directors on November 18, 1999 and by the Stockholders on February 8, 2000 As further amended by the Board of Directors on November 14, 2002 and by the Stockholders on February 11, 2003
ANDREW CORPORATION MANAGEMENT INCENTIVE PROGRAM
EX-99.1 5 a2111180zex-99_1.htm EXHIBIT 99.1

Exhibit 99.1

Certificate of Chief Executive and Chief Financial Officers

        The following statement is being furnished to the Securities and Exchange Commission solely for purposes of Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1349), which carries with it certain criminal penalties in the event of a knowing or willful misrepresentation.

Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
Re: Andrew Corporation

Ladies and Gentlemen:

        In accordance with the requirements of Section 906 of the Sarbanes-Oxley Act of 2002 (18 USC 1349), each of the undersigned hereby certifies that:

      (i)
      this Current Report on Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

      (ii)
      the information contained in this report fairly presents, in all material respects, the financial condition and results of operations of Andrew Corporation.

Dated as of this 14 day of May 2003.

/s/  RALPH E. FAISON      
Ralph E. Faison
President and Chief Executive Officer
  /s/  CHARLES R. NICHOLAS      
Charles R. Nicholas
Vice Chairman and Chief Financial Officer

        A signed original of this written statement required by section 906 has been provided to Andrew Corporation and will be retained by Andrew Corporation and furnished to the Securities and Exchange commission or its staff upon request.




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