EX-99.1 3 a2115931zex-99_1.htm EX-99.1
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Exhibit 99.1

UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

        The following unaudited pro forma condensed consolidated financial statements ("pro forma financial statements") are based on the historical financial statements of Andrew and Allen after giving effect to the purchase of Allen by Andrew using the purchase method of accounting and the assumptions and adjustments described in the accompanying notes. The pro forma condensed consolidated balance sheet ("pro forma balance sheet") as of June 30, 2003 has been prepared as if the merger of Andrew and Allen occurred on June 30, 2003. The pro forma condensed consolidated statements of operations ("pro forma statements of operations") for the year ended September 30, 2002 and nine months ended June 30, 2003 have been prepared as if the merger of Andrew and Allen occurred on October 1, 2001. Because Allen's fiscal year ends December 31, Allen's statement of operations for the year ending September 30, 2002 is based on Allen's statement of operations for its fiscal year ending December 31, 2002, adjusted by subtracting the quarter ended December 31, 2002 and adding the quarter ended December 31, 2001 and Allen's statement of operations for the nine months ended June 30, 2003 is based on Allen's quarters ended December 31, 2002, March 31, 2003 and June 30, 2003.

        Andrew acquired Celiant Corporation ("Celiant") on June 4, 2002 and accounted for this acquisition using the purchase method of accounting. The pro forma statement of operations for the year ended September 30, 2002 includes adjustments for the results of operations of Celiant from October 1, 2001 to June 3, 2002 to present pro forma results of operations of Andrew and Celiant combined for the full year. Pro forma adjustments have been made to reflect this acquisition as if it had occurred on October 1, 2001. The historical Andrew consolidated financial information in the pro forma statement of operations for the nine months ended June 30, 2003 and the pro forma balance sheet as of June 30, 2003 include Celiant.

        The total estimated purchase consideration of $510 million, as shown in note 1 to these pro forma financial statements, has been allocated to the tangible and intangible assets of Allen based on a preliminary estimate of fair value. Independent valuation specialists are currently conducting a valuation in order to assist Andrew in determining the fair value of these assets. The preliminary work performed by these specialists has been considered in this estimate of the fair value of the assets acquired from Allen.

        The pro forma balance sheet includes an adjustment for liabilities and for the write-off of Allen inventories resulting from integration planning. Andrew believes that this merger will provide significant synergies and cost savings after the integration of Andrew and Allen is complete. The impact of these cost savings and synergies has not been included in these pro forma statements of operations.

        These pro forma financial statements should be read in conjunction with the historical consolidated financial statements and accompanying notes of Andrew, Celiant and Allen incorporated by reference into the S-4 Registration Statement filed with the Securities and Exchange Commission on June 10, 2003. The pro forma financial statements are not intended to represent or be indicative of the consolidated results of operations or financial condition of Andrew that would have been reported had the merger been completed as of the dates presented, and should not be taken as representative of the future consolidated results of operations or financial condition of Andrew.

4


UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET OF ANDREW AND ALLEN
AS OF JUNE 30, 2003

 
   Andrew
   Allen
   Pro-Forma Adj
    
   Pro-Forma
  
Dollars in thousands

    
    
    
    
    
  
Assets                              
Current Assets                              
Cash and cash equivalents   $ 78,301   $ 64,881             $ 143,182  
Accounts receivable, less allowances     189,299     131,306               320,605  
Inventories     149,952     111,401     (8,815 ) 2     252,538  
Other current assets     13,547     12,525               26,072  
   
 
 
     
 
Total Current Assets     431,099     320,113     (8,815 )       742,397  

Other Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill     398,199     139,478     389,068
(139,478
)		 2       
787,267		  
Deferred income taxes, net     —     26,906     (26,906
26,906
7,178		 )

 6
6
6		       
 
34,084		  

Intangible assets, less amortization
 
 
36,453
 
 
—
 
 
70,600
 
2, 3
 
 
107,053
 
Other assets     3,661     42,469               46,130  

Property, Plant and Equipment
 
 
572,624
 
 
129,208
 
 
(90,311
)
11
 
 
611,521
 
Allowance for depreciation     (388,479 )   (90,311 )   90,311   11     (388,479 )
   
 
 
     
 
      184,145     38,897     —         223,042  

Total Assets
 
$
1,053,557
 
$
567,863
 
$
318,553
 
 
 
$
1,939,973
 
   
 
 
     
 

Liabilities and Stockholders' Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Liabilities                              
Notes payable and current portion of long term debt   $ 14,912   $ 12,840   $ 57,196   1, 4   $ 84,948  
Accounts payable     67,584     45,062               112,646  
Other Current Liabilities     64,733     53,433     13,939   2     132,105  
Total Current Liabilities     147,229     111,335     71,135         329,699  

Deferred Liabilities
 
 
19,389
 
 
25,260
 
 
25,000
 
2
 
 
69,649
 
Long-Term Debt, less current portion     9,310     69,408               78,718  
Redeemable Convertible Preferred Stock     —     50,000               50,000  
Stockholders' Equity                              
Common stock     1,027     32,725     550
(32,725
)		 1      
1,577		  
Additional paid-in capital     145,480     206,790     450,830
1,678
81,220
(206,790


)		 1
1
2		       
  
  
679,208		  
Accumulated other comprehensive loss     (24,973 )   (1,465 )   1,465         (24,973 )
Retained earnings     806,639     87,549     (87,549 )       806,639  
Treasury stock, at cost     (50,544 )   (13,739 )   13,739         (50,544 )
   
 
 
     
 
Total Stockholders' Equity     877,629     311,860     222,418         1,411,907  
   
 
 
     
 

Total Liabilities and Stockholders' Equity
 
$
1,053,557
 
$
567,863
 
$
318,553
 
 
 
$
1,939,973
 
   
 
 
     
 

5

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS OF ANDREW AND ALLEN
FOR THE YEAR ENDING SEPTEMBER 30, 2002

 
   Andrew
   Celiant Oct. 1, 2001
to Jun. 3, 2002
   Celiant Pro Forma
Adjustments
    
   Andrew
Pro-Forma
   Allen
   Pro Forma
Adjustments
    
   Pro-Forma
  
In thousands, except per share amounts

    
    
    
    
    
    
    
    
    
  
Sales   $ 864,801   $ 228,519           $ 1,093,320   $ 378,318           $ 1,471,638  
Cost of products sold     627,093     179,530             806,623     289,493             1,096,116  
   
 
 
     
 
 
     
 
Gross Profit     237,708     48,989             286,697     88,825   —         375,522  

Operating Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Research and development     57,977     13,190             71,167     25,613             96,780  
Sales and administrative     140,307     14,911             155,218     56,412             211,630  
Intangible amortization     5,121     66   8,134   9     13,321     1,966   23,150   3     38,437  
Restructuring     24,908                   24,908     —             24,908  
   
 
 
     
 
 
     
 
      228,313     28,167   8,134         264,614     83,991   23,150         371,755  
   
 
 
     
 
 
     
 

Operating Income (Loss)
 
 
9,395
 
 
20,822
 
(8,134
)
 
 
 
22,083
 
 
4,834
 
(23,150
)
 
 
 
3,767
 

Other (Income) Expense
 
 
(3,675
)
 
(1,163
)
1,265
 
9
 
 
(3,573
)
 
8,501
 
1,155
 
4, 5
 
 
6,083
 
   
 
 
     
 
 
     
 

Income (Loss) from Continuing Operations Before Income Taxes
 
 
13,070
 
 
21,985
 
(9,399
)
 
 
 
25,656
 
 
(3,667
)
(24,305
)
 
 
 
(2,316
)

Income tax expense (benefit)
 
 
2,578
 
 
9,674
 
(507
)
 
 
 
11,745
 
 
(1,507
)
(9,479
)
10
 
 
759
 

Minority Interest
 
 
—
 
 
 
 
 
 
 
 
 
 
 
 
88
 
 
 
 
 
 
88
 

Income (Loss) from Continuing Operations
 
 
10,492
 
 
12,311
 
(8,892
)
 
 
 
13,911
 
 
(2,248
)
(14,826
)
 
 
 
(3,163
)
   
 
 
     
 
 
     
 

Calculation of Per Share Earnings:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Numerator                                                
    Income (loss) from continuing operations     10,492     12,311   (8,892 )       13,911     (2,248 ) (14,826 )       (3,163 )
    Adjustment for preferred stock dividend     —     —   —         —     (1,572 ) (2,303 ) 5     (3,875 )
   
 
 
     
 
 
     
 
    Income (loss) from continuing operations available to common shareholders     10,492     12,311   (8,892 )       13,911     (3,820 ) (17,129 )       (7,038 )
 
Denominator:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Average basic shares outstanding     87,197     —   10,837   9     98,034     29,908   55,046   7     153,080  
      Adjustment for stock options and preferred stock     98         —         98     —   —   8     98  
   
 
 
     
 
 
     
 
    Average diluted shares outstanding     87,295         10,837         98,132     29,908   55,046         153,178  

Basic and Diluted Income (Loss) from continuing operations available to common shareholders per basic share:
 
$
0.12
 
 
 
 
 
 
 
 
$
0.14
 
$
(0.13
)
 
 
 
 
$
(0.05
)
   
 
 
     
 
 
     
 

6

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS OF ANDREW AND ALLEN
FOR THE NINE MONTHS ENDING JUNE 30, 2003

 
   Andrew
   Allen
   Pro-Forma Adj
    
   Pro-Forma
  
In thousands, except per share amounts

    
    
    
    
    
  
Sales   $ 669,565   $ 365,743           $ 1,035,308  
Cost of products sold     492,005     250,298             742,303  
   
 
 
     
 
Gross Profit     177,560     115,445   —         293,005  

Operating Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Research and development     58,485     20,648             79,133  
Sales and administrative     100,943     51,497             152,440  
Intangible amortization     11,027     —   14,030   3     25,057  
Restructuring     677     —             677  
   
 
 
     
 
      171,132     72,145   14,030         257,307  
   
 
 
     
 

Operating Income (Loss)
 
 
6,428
 
 
43,300
 
(14,030
)
 
 
 
35,698
 

Other Expense
 
 
(8,712
)
 
3,558
 
1,287
 
4
 
 
(3,867
)
   
 
 
     
 

Income (Loss) from Continuing Operations Before Income Taxes
 
 
15,140
 
 
39,742
 
(15,317
)
 
 
 
39,565
 

Income tax expense (benefit)
 
 
1,757
 
 
11,900
 
(5,974
)
10
 
 
7,683
 

Minority Interest
 
 
—
 
 
81
 
 
 
 
 
 
81
 

Income from Continuing Operations
 
 
13,383
 
 
27,761
 
(9,343
)
 
 
 
31,801
 
   
 
 
     
 

Calculation of Per Share Earnings:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic:                            
  Numerator: Income (loss) from continuing operations     13,383     27,761   (9,343 )       31,801  
  Adjustment for preferred stock dividend     —     (2,906 ) —         (2,906 )
   
 
 
     
 
  Income (loss) from continuing operations available to common shareholders     13,383     24,855   (9,343 )       28,895  
  Denominator: Average basic shares outstanding     98,315     30,594   55,046   7     153,361  

Income from continuing operations available to common shareholders per basic share:
 
$
0.14
 
$
0.81
 
 
 
 
 
$
0.19
 
   
 
 
     
 

Diluted:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Numerator: Income (loss) from continuing operations     13,383     27,761   (9,343 )       31,801  
  Adjustment for preferred stock dividend     —     (2,906 )     8     (2,906 )
   
 
 
     
 
  Income (loss) from continuing operations available to common shareholders     13,383     24,855   (9,343 )       28,895  
  Denominator: Average basic shares outstanding     98,315     30,594   55,046   7     153,361  
            Adjustment for stock options and preferred stock     1     6,843       8     1  
   
 
 
     
 
            Average diluted shares outstanding     98,316     37,437   55,046         153,362  

Income from continuing operations available to common shareholders per diluted share:
 
$
0.14
 
$
0.74
 
 
 
 
 
$
0.19
 
   
 
 
     
 

7

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

1.     Estimated Purchase Consideration.

        The estimated total purchase consideration used in the pro forma balance sheet is $510.3 million, comprised of the following estimated items (dollars in thousands):

55,046,000 shares of Andrew Stock (at $8.20 a share)   $ 451,380
Buyout of Allen Stock Options     22,025
Fair Value of Andrew Stock Options Exchanged     1,678
Merger Costs     35,171
   
    $ 510,254
   

        Andrew issued an estimated 55,046,000 shares of its $.01 par value common stock. This estimate is based on the 31,011,686 Allen common shares outstanding at June 30, 2003 and the agreed upon exchange ratio of 1.775. The 55,046,000 shares of Andrew stock were valued at $8.20 a share. The $8.20 a share is the average closing price for three days—the day the merger was announced, February 18, 2003, and the day before and day after the announcement.

        Allen issued stock options to employees and non-employee directors. Pursuant to Allen's stock option plans, all non-vested stock options held by employees or by directors who, upon the merger, ceased to serve as directors automatically vested upon completion of the merger. All of Allen's options that have exercise prices below the fair market value were paid in cash. Such cash payment was determined by (a) in the case of directors, the price of Allen common stock at the close of trading on the day before the effective time of the merger and (b) in the case of employees, the price of Allen common stock at the close of trading on the day before the date that Allen's common stockholders approved the merger or, if higher, at the close of trading on the New York Stock Exchange on any day during the 60-day period preceding such date. The total buyout of these stock options is estimated to be $22.0 million.

        All of Allen's outstanding stock options with exercise prices above the market price at the date of closing (determined as described above) were exchanged for options to purchase shares of Andrew stock with the same terms and conditions as under the Allen stock option plans. The Black-Scholes option-pricing model was used to estimate the fair value of these options at $1.7 million.

        The $35.1 million of merger costs is comprised of $17.5 million of severance and benefit costs and $17.6 million of other merger costs. The severance and benefit costs are for Allen employees who are covered by severance agreements in their employment and other contracts with Allen. The $17.5 million of severance and benefit costs consists of approximately $13.6 million to Allen directors and executive officers, with the balance to be paid to non-executive officer employees.

        Total estimated other merger-related costs are $17.6 million consisting of investment banker, legal, accounting and other costs. It is estimated that the total cash costs will be $57.2 million consisting of the $35.1 million of merger costs and $22.0 million for the stock option buyout.

2.     Allocation of Purchase Consideration.

        The estimated purchase consideration was allocated to tangible and intangible assets based upon a preliminary estimate of fair value determined by Andrew and independent valuation specialists. With the exception of the redeemable convertible preferred stock, the pension liability, the adjustments for the Allen integration costs and the impact of these items on deferred taxes, there have been no adjustments to the historical carrying value of Allen's tangible assets and liabilities for these pro forma financial statements. The final purchase accounting

8


adjustments could include additional adjustments to the fair value of the assets and liabilities acquired from Allen. Based on these preliminary estimates the purchase consideration was allocated as follows (dollars in thousands):

Net tangible assets of Allen   $ 172,382  

Allen integration costs
 
 
(13,939
)
Redeemable convertible preferred stock (recorded to additional paid-in capital)     (81,220 )
Intangible assets     70,600  
Allen inventory adjustment     (8,815 )
Pension liability     (25,000 )
Net deferred tax asset     7,178  
Goodwill     389,067  
   
 
    $ 510,254  
   
 

        Allen had one million redeemable convertible preferred shares outstanding which allowed the holders to convert the preferred stock into common stock at a conversion rate of $7.70 per share. The preliminary estimate of the fair value of these instruments used in these pro forma financial statements was $131.2 million, which is calculated using a price per share of Allen common stock based on closing prices of Andrew and Allen on July 15, 2003 and the exchange ratio of 1.775x as set forth in the merger agreement, the terms of the Allen Series D 7.75% Convertible Preferred Stock, and the then-prevailing market rates for the debt of Allen and the then-prevailing volatility for the common stock of Allen. Each share of Allen redeemable convertible preferred stock was converted in the merger into the right to receive one share of newly-created Andrew redeemable convertible preferred stock, with substantially identical rights as the Allen preferred stock. Each share of Andrew preferred stock is convertible into Andrew common stock at a conversion rate of $4.338 per share, which gives effect to the common stock exchange ratio of 1.775.

        Allen has a defined benefit plan for the benefit of its employees. At July 15, 2003, it is estimated that the projected benefit obligation exceeds the plan's assets by approximately $25 million.

        As allowed by EITF Issue 95-3, a liability has been recorded for the estimated severance of former Allen employees, costs to close redundant Allen manufacturing and other facilities, eliminate duplicate corporate overhead functions and reserve for Allen inventory which will be scrapped. The estimated cost of these activities is approximately $22.8 million dollars.

3.     Intangible Assets and Amortization.

        A preliminary analysis by independent valuation experts identified the following intangible assets and their associated useful lives.

 
   Value
   Useful Life in years
   Annual Amortization
 
   (Dollars in thousands)
Patents and related technology   $ 35,000   4   $ 8,750
AT&T Wireless Supply Agreement     20,000   1.5     13,333
Trademarks and trade names     7,500   Indefinite     NA
Non-compete agreements     1,100   3     367
Customer relationships     7,000   10     700
   
     
    $ 70,600       $ 23,150
   
     

        Andrew expects to complete its analysis by September 30, 2003, which could result in the identification of other intangible assets such as additional trademarks and trade names, customer lists and backlog lists. Due to the variety of potential intangible assets being evaluated, the allocation of purchase consideration and amortization periods assigned to these assets could vary considerably. Therefore, any change to Andrew's preliminary analysis could result in a material change in the annual amortization expense shown in the above table.

4.     Interest Expense.

        The estimated $57.2 million of cash required to pay merger costs and severance costs and to buy out stock options is assumed to require additional borrowing. These additional borrowings are assumed to be under Andrew's revolving line of credit agreement at an estimated annual interest rate of 3%.

9


5.     Redeemable Convertible Preferred Stock Dividend.

        Allen issued the redeemable convertible preferred stock on March 20, 2002. The pro forma statement of operations for the year ended September 30, 2002 was prepared as if the redeemable convertible preferred stock was outstanding since October 1, 2001 and reflects the dividend of $3.9 million that would have been paid if these instruments were outstanding for the entire fiscal year. If these instruments were outstanding for the entire fiscal year, Allen's interest expense would have decreased by $561,000 over such period, assuming the $46.8 million of net proceeds from the sale of these instruments was used to reduce outstanding borrowings on October 1, 2001 at an average interest rate of 3.6%.

6.     Net Deferred Income Taxes.

        The net deferred tax asset adjustments reflect the elimination of the previously recorded Allen deferred tax assets and the establishment of Allen deferred taxes, as well as the entry to record the difference between the tax basis and book basis of certain pro forma adjustments. The pro forma adjustments to record the estimated fair value of the intangible assets resulted in a deferred tax liability of $27.5 million, calculated by using a marginal tax rate of 39%. Certain other adjustments resulted in a basis difference between book and tax and resulted in a deferred tax asset of $34.7 million.

        The net impact of these adjustments resulted in a net deferred tax asset of $7.2 million, calculated by using a marginal tax rate of 39%. Note that the final allocation of purchase price has not been completed. A change in the value of any of these adjustments will also impact the value of the deferred income tax asset recorded as part of the purchase price allocation.

7.     Average Shares Outstanding.

        The pro forma basic and diluted average shares outstanding includes the 55,046,000 shares of Andrew stock issued in connection with the merger. The pro forma diluted average shares outstanding do not include 11,526,000 shares of Andrew stock that would be issued assuming the holders of the redeemable convertible preferred stock exercised their conversion rights because these shares were anti-dilutive.

8.     Earnings Per Share.

        The pro forma basic and diluted earnings per share calculations for the year ended September 30, 2002 and the nine months ended June 30, 2003 include an adjustment to income from continuing operations for the dividend on preferred stock. The pro forma earnings per share calculations do not include 11,526,000 shares of Andrew stock that would be issued assuming the holders of the redeemable convertible preferred stock exercised their conversion rights because these shares were anti-dilutive.

9.     Celiant Pro Forma Adjustments.

        Andrew acquired Celiant on June 4, 2002 for total consideration of $481.0 million, consisting of cash and 16,279,000 shares of Andrew stock. The pro forma adjustments consist of amortization of intangible assets of $8.1 million and $1.3 million of interest expense. Andrew estimates that it would have borrowed an additional $63.0 million under its revolving credit agreement to finance this acquisition as of October 1, 2001. An adjustment of 10,837,000 shares was required to adjust Andrew's average shares outstanding to reflect the 16,279,000 shares as outstanding for the entire year.

10.   Income Taxes.

        The tax benefit on the pro forma adjustments is calculated using a marginal tax rate of 39%.

11.   Depreciation.

        The accumulated depreciation on Allen property, plant and equipment has been eliminated against the cost of these assets, which Andrew management believes to be a reasonable estimate of fair value. Andrew has engaged independent valuation experts to assist in determining the fair value of the Allen assets being acquired, including property, plant and equipment. This valuation is expected to be completed by September 30, 2003. The final valuation may result in adjustments to the historical carrying value of Allen's property, plant and equipment to reflect current market values. Andrew management does not anticipate that any changes to the carrying value of property, plant and equipment will have a material impact on pro forma depreciation expense.

10




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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS