EX-99.1 3 a2115628zex-99_1.htm EX-99.1
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Exhibit 99.1 Press release dated July 29, 2003

    Contact:   Charles Nicholas
708-873-2740

ANDREW CORPORATION AND ALLEN TELECOM INC. JUNE QUARTER RESULTS

Post Merger Integration Plans Outlined

        ORLAND PARK, IL, July 29, 2003—Andrew Corporation (NASDAQ: ANDW), a global communications systems equipment supplier, today reported financial results for the quarter ended June 30, 2003. Andrew Corporation's June quarter net sales were $213.7 million, up 5% from the 2002 June quarter. Net income per share was $.08 in the June 2003 quarter, compared to $.02 in the year ago quarter. Income per share from continuing operations was $.09 for the June 2003 quarter, compared to $.05 in the year ago quarter.

        A summary of financial results for Allen Telecom Inc. are included later in this release and reflect a full quarter's activity prior to the company's merger with Andrew Corporation on July 15, 2003. Andrew Corporation results for the September 2003 quarter will include Allen results from July 15, 2003.

ANDREW CORPORATION JUNE QUARTER SUMMARY

        Income from continuing operations of $8.4 million ($.09 per share) includes a gain of $9.3 million ($.09 per share) from the sale of surplus land and expenses of $3.1 million ($.03 per share) related to the company's restructuring program and the acquisition of Allen Telecom Inc.

        The 5% sales growth in the June 2003 quarter, compared to the prior year, was driven by the company's wireless infrastructure market category. Sales in the broadcast and government market category declined and sales in the fixed telecom networks market category were flat. Geographically, sales increased in Europe, Latin America, and the Asia Pacific regions, but declined in the United States. Orders were $220.2 million, down 6% from the June 2002 quarter.

        Andrew's cash balance on June 30, 2003 was $78.3 million, down $6.6 million from September 30, 2002. This cash decrease follows $62.6 million of net debt payments during the first nine months of the year. Cash, less outstanding debt, on June 30, 2003 was $54.1 million compared to a negative $2.0 million at September 30, 2002, reflecting the company's successful efforts to further strengthen its balance sheet during this challenging period.

        Ralph Faison, Andrew's President and CEO, stated, "We are very pleased that both Andrew Corporation and Allen Telecom Inc. posted sequential revenue and earnings growth in the June 2003 quarter. Sequentially, Andrew posted 6% sales growth and Allen posted 14% sales growth. In addition, sales grew year over year for both companies. Comparing the June 2003 quarter to last year, Andrew sales grew 5% and Allen sales grew 38%. Our sales teams continue to find opportunities in this difficult market, and our cost reduction efforts are continuing to pay off. Over the past few months we balanced rigorous merger integration planning with daily attention to operational excellence. This integration effort will unfortunately impact many talented individuals who have served each of the businesses in the past. The planning process is providing us the opportunity to refine our strategy and spend more time with customers to better understand their needs. The integration of Andrew and Allen over the next 12 to18 months positions Andrew to achieve substantial sales, product and cost synergies."

        All comparisons reflect the restatement of prior periods for the effect of discontinuing certain businesses as announced in September 2002. Results since June 2002 include the operations of power amplifier maker Celiant Corporation acquired June 4, 2002.



ALLEN INTEGRATION

        Andrew Corporation's acquisition of Allen Telecom closed on July 15, 2003. Andrew expects to realize significant synergies from the combination with Allen—at least $52 million on an annualized basis by the end of the December 2004 quarter. The $52 million estimate is a $12 million increase from our original $40 million estimate. The integration plan includes consolidation of redundant capabilities for sales and administration functions and the closing of at least nine manufacturing and distribution facilities. The company also expects to achieve cost efficiencies across shared functional areas such as procurement, information systems, human resources, and finance. Worldwide, facility square footage will be reduced by at least 20% or 500,000 square feet, and workforce costs will be reduced by at least $30 million. Workforce reductions will total approximately 400 people, net, reflecting a gross reduction of 700 current employees with 300 people to be added at lower cost, relocated manufacturing facilities by the end of the December 2004 quarter. Current combined headcount is approximately 7,300.

        We anticipate the integration plan will cost approximately $46 million before tax, with approximately $40 million included as a component of the Allen purchase consideration in the September 2003 quarter. The remainder of the costs, about $6 million, will be included in operating expense as incurred through approximately December 2004.

        It is anticipated that the merger integration will be substantially completed by December 31, 2004. Because the integration actions will take place through December 2004 and certain costs of relocation and consolidation will be expensed as incurred during that period, the net savings from the integration are estimated to be about $17 million in fiscal 2004.

        The expected integration actions will require about $51 million in cash, including $18 million for contractual change in control severance costs, approximately $15 million for capital expenditures, and about $13 million in additional severance.

        As of July 15, 2003, approximately 153 million common shares are outstanding for the newly combined company. In addition, the company has outstanding one million shares of redeemable convertible preferred stock which is convertible into approximately 11.5 million common shares. On July 16, 2003 Andrew Corporation declared a cash dividend payable on August 15, 2003 of $0.96875 per share to convertible preferred stockholders of record as of July 31, 2003.

ALLEN TELECOM JUNE QUARTER SUMMARY

        Allen Telecom Inc.'s results reflect a full quarter's activity prior to the company's merger with Andrew Corporation on July 15, 2003. Allen sales for the June 2003 quarter were $126.5 million, an increase of 38% compared to $91.9 million in the June 2002 quarter.

        Diluted earnings per common share in the June 2003 quarter were $0.33, an all time record high, and up significantly as compared to a reported loss of $0.04 per common share in the June 2002 quarter.

        The 38% sales growth in the June 2003 quarter was driven primarily by Allen's geolocation business. Sales of base station subsystems and components and base station and mobile antennas also grew compared to the June 2002 quarter, while the sales of repeater and in-building coverage products declined. Geographically, sales increased in all regions, with particular strength in the United States.



FINANCIAL HIGHLIGHTS (000)

 
  Quarter Ended June 30
 
 
  Allen Telecom
  Andrew Corporation
 
 
  2003
  2002
  2003
  2002
 
Sales   $ 126,507   $ 91,850   $ 213,721   $ 203,753  
Gross margin     44,447     22,047     54,630     57,155  
Gross margin %     35.1 %   24.0 %   25.6 %   28.1 %
Diluted income (loss) per common share from continuing operations   $ 0.33   $ (0.04 ) $ 0.09   $ 0.05  
Diluted average common shares     37,752     30,390     98,330     87,220  

 


 


Nine Months Ended June 30


 
 
  Allen Telecom
  Andrew Corporation
 
 
  2003
  2002
  2003
  2002
 
Sales   $ 365,743   $ 271,364   $ 669,565   $ 592,975  
Gross margin     115,445     63,016     177,560     175,383  
Gross margin %     31.6 %   23.2 %   26.5 %   29.6 %
Diluted income (loss) per common share from continuing operations   $ 0.74*   $ (0.16 )* $ 0.14   $ 0.35  
Diluted average common shares     37,437     29,715     98,316     83,649  
Cash and equivalents   $ 64,881   $ 22,351   $ 78,301   $ 100,715  
Cash, less debt   $ (17,367 ) $ (64,633 ) $ 54,079   $ (15,076 )

*
Before cumulative effect of change in accounting principle—Adoption of FAS142.

        Attached to this news release are preliminary financials for the quarter ended June 30, 2003 for both Andrew Corporation and Allen Telecom Inc.

Teleconference and Webcast

        Andrew will discuss June quarter 2003 results for both Andrew Corporation and Allen Telecom Inc. in a teleconference on Tuesday, July 29, 2003 at 7:00 a.m. C.D.T. The conference call will be webcast live on the Internet at www.andrew.com. A toll-free replay of the call will be available until midnight, C.D.T., August 4, 2003. The dial-in for the Domestic 800-475-6701 and the International 320-365-3844. The access code for the replay is 689375.

About Andrew Corporation

        Andrew Corporation (<http://www.andrew.com>) designs, manufactures, and delivers innovative and essential communications equipment and solutions for the global telecommunications infrastructure market. A global company, Andrew serves operators and OEMs from facilities in 36 countries. Andrew (founded in 1937) is an S&P 500 company listed on the Nasdaq National Market System under the symbol: ANDW.

Forward Looking Statements

        Some of the statements in this news release are forward looking statements and we caution our stockholders and others that these statements involve certain risks and uncertainties. Factors that may cause actual results to differ from expected results include the company's ability to integrate acquisitions and to realize the anticipated synergies and cost savings, 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 cost 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, the loss of one or more significant customers, and other business factors. Investors should also review other risks and uncertainties discussed in company documents filed with the Securities and Exchange Commission.



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

 
  Three Months Ended
June 30

  Nine Months Ended
June 30

 
 
  2003
  2002
  2003
  2002
 
Sales   $ 213,721   $ 203,753   $ 669,565   $ 592,975  
Cost of products sold     159,091     146,598     492,005     417,592  
   
 
 
 
 
Gross Profit     54,630     57,155     177,560     175,383  
Operating Expenses                          
Research and development     18,921     13,851     58,485     36,985  
Sales and administrative     32,815     34,307     100,943     104,396  
Intangible amortization     3,662     1,333     11,027     1,633  
Restructuring     472         677      
   
 
 
 
 
      55,870     49,491     171,132     143,014  
   
 
 
 
 
Operating Income (Loss)     (1,240 )   7,664     6,428     32,369  
Other                          
Interest expense     682     1,183     2,648     3,842  
Interest income     (249 )   (1,228 )   (751 )   (2,984 )
Other income     (362 )   1,457     (1,211 )   646  
Gain on the sale of PP&E     (9,357 )   7     (9,398 )   (59 )
Gain on the sale of equity investments                 (8,651 )
   
 
 
 
 
      (9,286 )   1,419     (8,712 )   (7,206 )
   
 
 
 
 
Income from Continuing Operations Before Income Taxes     8,046     6,245     15,140     39,575  
Income tax (benefit) expense     (371 )   1,874     1,757     10,600  
   
 
 
 
 
Income from Continuing Operations     8,417     4,371     13,383     28,975  

Loss from Discontinued Operations, Net of Tax Benefit

 

 

788

 

 

2,378

 

 

3,118

 

 

8,349

 
   
 
 
 
 

Net Income

 

$

7,629

 

$

1,993

 

$

10,265

 

$

20,626

 
   
 
 
 
 

Basic and Diluted Income per Share from Continuing Operations

 

$

0.09

 

$

0.05

 

$

0.14

 

$

0.35

 
   
 
 
 
 
Basic and Diluted Income per Share   $ 0.08   $ 0.02   $ 0.10   $ 0.25  
   
 
 
 
 
Average Shares Outstanding                          
  Basic     98,330     87,170     98,315     83,521  
  Diluted     98,330     87,220     98,316     83,649  

Orders Entered

 

 

220,196

 

 

234,422

 

 

656,020

 

 

614,650

 
Total Backlog     170,571     184,473     170,571     184,473  


ANDREW CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

 
  June 30
2003

  September 30
2002

 
 
  (Unaudited)

   
 
ASSETS              
Current Assets              
Cash and cash equivalents   $ 78,301   $ 84,871  
Accounts receivable, less allowances (Jun. 2003—$9,483; Sept. 2002—$6,516)     189,299     215,406  
Inventories              
  Finished products     73,627     61,963  
  Materials and work in process     76,325     72,030  
   
 
 
      149,952     133,993  
Other current assets     13,547     28,121  
Current assets—discontinued operations         14,792  
   
 
 
Total Current Assets     431,099     477,183  
Other Assets              
Costs in excess of net assets of businesses acquired     398,199     396,295  
Intangible assets, less amortization     36,453     47,344  
Other assets     3,661     1,809  
Non-current assets—discontinued operations         2,000  
Property, Plant, and Equipment              
Land and land improvements     18,546     17,890  
Buildings     97,485     98,714  
Equipment     456,593     448,036  
Allowance for depreciation     (388,479 )   (365,605 )
   
 
 
      184,145     199,035  
   
 
 
TOTAL ASSETS   $ 1,053,557   $ 1,123,666  
   
 
 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 
Current Liabilities              
Notes payable   $ 10,000   $ 66,184  
Accounts payable     67,584     69,835  
Accrued expenses and other liabilities     38,205     44,548  
Compensation and related expenses     23,354     28,434  
Restructuring     3,174     15,329  
Current portion of long-term debt     4,912     7,250  
Current liabilities—discontinued operations         4,990  
   
 
 
Total Current Liabilities     147,229     236,570  
Deferred Liabilities     19,389     28,461  
Long-Term Debt, less current portion     9,310     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     (24,973 )   (46,089 )
Retained earnings     806,639     796,374  
Treasury stock, at cost (4,388,655 shares in Jun. 2003;
4,500,493 shares in Sept. 2002)
    (50,544 )   (51,832 )
   
 
 
      877,629     845,244  
   
 
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 1,053,557   $ 1,123,666  
   
 
 


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

 
  Three Months Ended
June 30

  Nine Months Ended
June 30

 
 
  2003
  2002
  2003
  2002
 
Cash Flows from Operations                          
Net Income     7,629     1,993   $ 10,265   $ 20,626  

Adjustments to Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 
  Depreciation and amortization     17,280     14,645     50,346     38,241  
  (Gain) / loss on the sale of PP&E     (9,357 )   7     (9,398 )   (59 )
  Gain on the sale of equity investments                 (8,651 )
  Other                 (293 )
Restructuring and Discontinued Operations                          
  Restructuring costs     (3,714 )       (9,649 )    
  Discontinued operations costs, net of taxes             (1,483 )    
  Operating cash flow from discontinued operations     491     3,954     5,837     19,471  
Change in Operating Assets / Liabilities                          
  (Increase) / Decrease in accounts receivable     (9,975 )   7,782     40,523     71,612  
  Decrease / (Increase) in inventories     4,437     (2,750 )   (10,170 )   5,097  
  Decrease / (Increase) in other assets     8,039     360     13,450     (5,203 )
  Increase / (Decrease) in accounts payable and other liabilities     3,924     9,026     (35,987 )   (13,053 )
   
 
 
 
 
Net Cash from Operations     18,754     35,017     53,734     127,788  

Investing Activities

 

 

 

 

 

 

 

 

 

 

 

 

 
  Capital expenditures     (7,385 )   (7,344 )   (22,004 )   (32,734 )
  Proceeds from the sale of businesses and investments             7,286     50,301  
  Acquisition of businesses, net of cash acquired         (173,590 )   (114 )   (173,711 )
  Investments in and advances to affiliates                 58  
  Proceeds from sale of property, plant and equipment     9,660     463     10,246     695  
   
 
 
 
 
Net Cash from / (used for) Investing Activities     2,275     (180,471 )   (4,586 )   (155,391 )

Financing Activities

 

 

 

 

 

 

 

 

 

 

 

 

 
  Long-term debt payments, net     (1,990 )   (300 )   (6,462 )   (20,608 )
  Notes payable (payments) borrowings, net     (22,500 )   67,065     (56,190 )   28,250  
  Stock purchase and option plans             111     2,083  
   
 
 
 
 
Net Cash (used for) / from Financing Activities     (24,490 )   66,765     (62,541 )   9,725  

Effect of exchange rate changes on cash

 

 

2,688

 

 

7,616

 

 

6,823

 

 

6,216

 
   
 
 
 
 

Decrease for the Period

 

 

(773

)

 

(71,073

)

 

(6,570

)

 

(11,662

)
Cash and Equivalents at Beginning of Period     79,074     171,788     84,871     112,377  
   
 
 
 
 
Cash and Equivalents at End of Period   $ 78,301   $ 100,715   $ 78,301   $ 100,715  
   
 
 
 
 


ALLEN TELECOM INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Amounts in Thousands, Except Per Share Data)
(Unaudited)

 
  Three Months Ended
June 30,

  Six Months Ended
June 30,

 
 
  2003
  2002
  2003
  2002
 
Sales   $ 126,507   $ 91,850   $ 237,441   $ 181,719  
Cost of sales     (82,060 )   (69,803 )   (155,057 )   (138,505 )
   
 
 
 
 
Gross profit     44,447     22,047     82,384     43,214  
Operating expenses:                          
  Selling, general and administrative expense     (17,885 )   (14,819 )   (34,964 )   (27,973 )
  Research and development costs     (6,122 )   (6,483 )   (14,122 )   (13,092 )
   
 
 
 
 

Operating income

 

 

20,440

 

 

745

 

 

33,298

 

 

2,149

 
Interest expense     (1,470 )   (1,972 )   (2,861 )   (4,472 )
Interest Income     348     199     570     333  
   
 
 
 
 

Income (loss) before taxes and minority interest

 

 

19,318

 

 

(1,028

)

 

31,007

 

 

(1,990

)
Provision (benefit) for income taxes     (6,761 )   357     (8,803 )   697  
   
 
 
 
 

Income (loss) before minority interest

 

 

12,557

 

 

(671

)

 

22,204

 

 

(1,293

)
Minority interest     (12 )   9     (39 )   (11 )
   
 
 
 
 

Income (loss) before cumulative effect of accounting change

 

 

12,545

 

 

(662

)

 

22,165

 

 

(1,304

)
Cumulative effect of change in accounting principle                 (3,397 )
   
 
 
 
 
NET INCOME (LOSS)     12,545     (662 )   22,165     (4,701 )
Preferred stock dividends     (970 )   (603 )   (1,938 )   (603 )
   
 
 
 
 
Income (loss) applicable to common shareholders   $ 11,575   $ (1,265 ) $ 20,227   $ (5,304 )
   
 
 
 
 

EARNINGS (LOSS) PER COMMON SHARE:

 

 

 

 

 

 

 

 

 

 

 

 

 
Basic:                          
  Income (loss) before cumulative effect of accounting change   $ .38   $ (.04 ) $ .66   $ (.06 )
  Cumulative effect of change in accounting principle                 (.11 )
   
 
 
 
 
  Net Income (loss)   $ .38   $ (.04 ) $ .66   $ (.17 )
   
 
 
 
 
Diluted:                          
  Income (loss) before cumulative effect of accounting change   $ .33   $ (.04 ) $ .59   $ (.06 )
  Cumulative effect of change in accounting principle                 (.11 )
   
 
 
 
 
  Net income (loss)   $ .33   $ (.04 ) $ .59   $ (.17 )
   
 
 
 
 

Weighted average common shares:

 

 

 

 

 

 

 

 

 

 

 

 

 
  Basic     30,735     30,390     30,653     30,370  
  Effect of dilution:                          
    Stock options     523         463      
    Convertible preferred stock     6,494         6,494      
   
 
 
 
 
  Diluted     37,752     30,390     37,610     30,370  
   
 
 
 
 


ALLEN TELECOM INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)

 
  June 30,
2003

  December 31,
2002

 
 
  (Unaudited)

   
 
ASSETS              
  Current Assets:              
    Cash and equivalents   $ 64,881   $ 48,420  
    Accounts receivable (less allowance for doubtful
accounts of $2,728 and $3,141, respectively)
    131,306     105,463  
   
Inventories:        Raw materials

 

 

57,235

 

 

59,092

 
                               Work in process     37,654     30,117  
                               Finished goods     16,512     11,265  
   
 
 
      Total inventories (net of reserves)     111,401     100,474  
   
 
 
    Deferred income taxes     6,251     5,480  
    Recoverable income taxes     2,550     20,379  
    Other current assets     3,724     2,710  
   
 
 
        Total current assets     320,113     282,926  
  Property, plant and equipment, net     38,897     38,214  
  Goodwill     139,478     139,126  
  Deferred income taxes     26,906     36,365  
  Other assets     42,469     33,407  
   
 
 
      TOTAL ASSETS   $ 567,863   $ 530,038  
   
 
 
LIABILITIES              
  Current Liabilities:              
    Notes payable and current maturities of long-term obligations   $ 12,840   $ 13,277  
    Accounts payable     45,062     54,003  
    Accrued expenses     45,257     36,192  
    Income taxes payable     1,031     4,443  
    Deferred income taxes     7,145     10,157  
   
 
 
        Total current liabilities     111,335     118,072  
  Long-term debt     69,408     64,084  
  Other liabilities     25,260     23,628  
   
 
 
      TOTAL LIABILITIES     206,003     205,784  
   
 
 
REDEEMABLE CONVERTIBLE PREFERRED STOCK              
  1,000 shares at redemption value (liquidation preference
of $50.00 per share)
    50,000     50,000  
   
 
 
STOCKHOLDERS' EQUITY              
  Common stock     32,725     32,502  
  Paid-in capital     206,790     203,292  
  Retained earnings     87,549     67,322  
  Accumulated other comprehensive loss     (580 )   (13,243 )
  Less: Treasury stock (common shares, at cost)     (13,739 )   (14,612 )
      Unearned compensation     (885 )   (1,007 )
   
 
 
      TOTAL STOCKHOLDERS' EQUITY     311,860     274,254  
   
 
 
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 567,863   $ 530,038  
   
 
 



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ANDREW CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (Dollars in thousands, except per share amounts)
ANDREW CORPORATION CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
ANDREW CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Dollars in thousands)
ALLEN TELECOM INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Amounts in Thousands, Except Per Share Data) (Unaudited)
ALLEN TELECOM INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in Thousands)