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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from --------------------- to ----------------
Commission file number 0-9514
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Andrew Corporation
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(Exact name of registrant as specified in its charter)
Delaware 36-2092797
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10500 W. 153rd Street, Orland Park, IL 60462
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(Address of principal executive offices) (Zip Code)
(708) 349-3300
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(Registrant's telephone number, including area code)
No Change
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(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 that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Common Stock, $.01 Par Value--25,419,713 shares as of April 30, 1994
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INDEX
ANDREW CORPORATION
PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements (Unaudited)
Consolidated condensed balance sheets--March 31, 1994 and
September 30, 1993.
Consolidated condensed statements of income--Three months ended
March 31, 1994 and 1993; Six months ended March 31, 1994 and 1993.
Consolidated condensed statements of cash flows--Six months ended
March 31, 1994 and 1993.
Notes to consolidated condensed financial statements--March 31,
1994.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
PART II OTHER INFORMATION
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Item 4. Submission of Matters to a Vote of Security Holders.
Item 6. Exhibits and Reports on Form 8-K.
EXHIBIT 11 - Computation of Earnings per Share.
SIGNATURES
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ANDREW CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
March 31 September 30
1994 1993
ASSETS ------------- --------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 9,745 $ 21,729
Accounts receivable, less allowance of (Mar. $2,915; 126,410 107,276
Sep. $3,167)
Inventories:
Finished products 24,454 18,611
Materials and work in process 60,298 51,695
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84,752 70,306
Miscellaneous current assets 4,142 3,309
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TOTAL CURRENT ASSETS 225,049 202,620
OTHER ASSETS
Cost in excess of net assets of businesses
acquired, less amortization (Mar. $12,635
Sep. $11,310) 39,555 40,881
Investment in and advances to affiliates 25,437 16,493
Investments and other assets 13,259 8,996
PROPERTY, PLANT AND EQUIPMENT 216,517 207,511
Less allowances for depreciation (146,717) (139,398)
--------- ---------
69,800 68,113
--------- ---------
$ 373,100 $ 337,103
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 10,501 $
Accounts payable 19,709 18,561
Accrued expenses and other liabilities 27,111 19,170
Compensation and related expenses 13,961 15,950
Income taxes 11,399 10,250
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TOTAL CURRENT LIABILITIES 82,681 63,931
DEFERRED LIABILITIES 4,253 3,602
LONG-TERM DEBT 50,000 50,000
STOCKHOLDERS' EQUITY
Common Stock - (par value $.01 a share)
Authorized - 100,000,000
Issued - 30,435,882 304 203
Additional paid-in capital 29,017 28,448
Retained earnings 266,053 250,534
Foreign currency translation (6,302) (5,410)
Treasury stock, at cost (5,089,407 shares Mar.;
5,243,517 shares Sep.) (52,906) (54,205)
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236,166 219,570
--------- ---------
$ 373,100 $ 337,103
========= =========
</TABLE>
The balance sheet at September 30, 1993 has been derived from the audited
financial statements at that date. See notes to consolidated condensed
financial statements.
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ANDREW CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31 March 31
-------------------- --------------------
1994 1993 1994 1993
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Sales $142,159 $99,886 $263,905 $200,918
Cost of products sold 89,476 60,384 162,402 121,669
-------- ------- -------- --------
Gross profit 52,683 39,502 101,503 79,249
Operating expenses:
Sales and administrative 30,665 25,877 61,989 52,443
Research and development 6,346 5,486 12,948 10,842
-------- ------- -------- --------
37,011 31,363 74,937 63,285
-------- ------- -------- --------
Operating income 15,672 8,139 26,566 15,964
Other:
Interest expense 1,323 1,294 2,558 2,868
Interest income (222) (157) (507) (375)
Other (income) expense 365 (201) 267 (1,304)
-------- ------- -------- --------
1,466 936 2,318 1,189
-------- ------- -------- --------
Income before income taxes 14,206 7,203 24,248 14,775
Income taxes 5,114 2,669 8,729 5,471
-------- ------- -------- --------
Net income $ 9,092 $ 4,534 $ 15,519 $ 9,304
======== ======= ======== ========
Net income per average share
of common stock outstanding $ .35 $ .18 $ .60 $ .37
======== ======= ======== ========
Average shares outstanding 26,045 25,571 26,015 25,355
======== ======= ======== ========
</TABLE>
See notes to consolidated condensed financial statements.
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ANDREW CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
March 31
-------------------
1994 1993
-------- --------
<S> <C> <C>
Cash Flows from Operations
Net income $ 15,519 $ 9,304
Adjustments to net income
Depreciation and amortization 10,769 10,106
Decrease (increase) in accounts receivable (19,404) 1,677
Decrease (increase) in inventories (14,460) 25
Increase in prepaid expenses
and other assets (644) (1,756)
Increase in receivables from affiliates (4,703)
Increase (decrease) in accounts payable
and other liabilities 10,062 (9,463)
Other (4) 100
-------- --------
Net Cash provided by (used in) Operations (2,865) 9,993
Investing Activities
Increased investment in affiliates (8,944) (2,746)
Capital expenditures (11,439) (9,336)
Proceeds from sale of property, plant,
and equipment 80 322
-------- --------
Net Cash used in Investing Activities (20,303) (11,760)
Financing Activities
Proceeds from (payment of) short-term borrowings 10,501 (2,550)
Payments on long-term debt (2,556)
Stock purchase and option plans 888 2,921
-------- --------
Net Cash provided by (used in) Financing Activities 11,389 (2,185)
Foreign currency translation adjustments (205) (1,311)
-------- --------
Decrease for the period (11,984) (5,263)
Cash and cash equivalents at beginning of period 21,729 7,433
-------- --------
Cash and cash equivalents at end of period $ 9,745 $ 2,170
======== ========
</TABLE>
See notes to consolidated condensed financial statements.
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ANDREW CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended March 31,
1994 are not necessarily indicative of the results that may be expected for the
year ending September 30, 1994. 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, 1993.
NOTE B--INCOME TAXES
Effective October 1, 1993 Andrew Corporation changed its method of accounting
for income taxes from the deferred method to the liability method required by
SFAS No. 109, "Accounting for Income Taxes". Adoption of this statement did not
have a material effect on the Company's financial statements.
NOTE C--POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company adopted SFAS No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions", effective October 1, 1993. Adoption of this
statement did not have a material effect on the Company's financial statements.
NOTE D--STOCK SPLIT
On February 2, 1994 the Company's Board of Directors declared a three-for-two
stock split to stockholders of record on February 16, 1994, payable on March 2,
1994. On February 2, 1994 the stockholders approved an increase in the common
stock authorized from 30,000,000 to 100,000,000. All share and per share
amounts have been restated for all periods presented to reflect the stock split.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
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RESULTS OF OPERATIONS
---------------------
RESULTS OF OPERATIONS
Net sales for the quarter ended March 31, 1994 increased 42% over the same
period last year to $142.2 million, bringing the total for the first six months
to $263.9 million, a 31% increase over the same period last year. The increase
reflects strong demand for Andrew's wireless communication products and
services, including revenue from the Company's participation in the construction
of a major cellular system in Argentina. Revenues from the Argentina project
were $24.5 million for the quarter and $31.9 million for the first six months.
Although we expect additional revenue from Argentina in the second half of the
year, it will not be at the same level as during the first six months. These
increases were partially offset by weaker performances in the network products
and government electronic businesses.
Cost of products sold as a percentage of sales for the quarter increased to
62.9%, up from 60.5% for the prior year quarter. For the first six months, cost
of products sold was 61.5% of sales compared to 60.6% in the prior year. The
increase for the quarter and the first six months reflects lower than average
margins on the Argentina project.
Sales and administrative expenses increased 19% to $30.7 million for the
quarter, and increased 18% to $62.0 million for the first six months. The
increase for both periods represents Russian joint venture development expenses,
increased staffing for European outreach programs, and increased profit sharing
expense. Research and development expenses increased $860,000 for the quarter
and $2.1 million during the first six months. This increase was primarily due
to increased product development costs for the Company's wireless telephone and
network product businesses.
Other expense for the quarter was $365,000, a $566,000 increase in expense
compared to the prior year quarter. This expense increase primarily reflects
prior year quarter foreign exchange gains of $155,000 compared to losses of
$123,000 in the current quarter. Other expense for the first six months was
$267,000, a $1.6 million increase in expense compared with the prior year. This
increase in expense also reflects that the results for the first six months of
the prior year included foreign exchange gains of $1.3 million.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operations during the first six months totaled $2.9 million
compared to net cash from operations of $10.0 million for same period last year.
The cash used in operations primarily reflects that the Company's record orders
and sales drove a $19.4 million increase in accounts receivable, and a $14.5
increase in inventories. The $8.9 million increase in investment in affiliates
during the first six months reflects the Company's continuing investment in its
Russian joint ventures. Short-term borrowings increased $10.5 million primarily
to finance temporary investments in accounts receivable and inventory related to
the Argentina project.
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PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) Andrew's Annual Meeting of Stockholders was held on February 2,
1994.
<TABLE>
<CAPTION>
(b) & (c) Items held for vote Number of Shares Voted
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For Against Abstentions
----------- -------------- ------------
<S> <C> <C> <C>
1. Election of Directors
John G. Bollinger 16,916,358 4,781,781
Jon L. Boyes 21,652,986 45,153
George N. Butzow 21,656,220 41,919
Kenneth J. Douglas 16,915,503 4,782,636
Floyd L. English 16,923,303 4,774,836
Donald N. Frey 21,654,915 43,224
Carole M. Howard 21,648,116 50,023
Armand J. Wade 21,654,417 43,722
2. Increase authorized
shares of common stock from
30,000,000 to 100,000,000 17,763,572 3,847,864 86,703
3. Replacement of Andrew
Employee Stock Purchase
Plan 20,851,229 278,308 568,602
4. Ratify appointment of
Ernst & Young as independent
public auditors for Fiscal
1994. 21,651,530 19,123 27,486
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 11 - Computation of earnings per share.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended March 31,
1994.
Note: Share amounts in this exhibit have been restated to reflect a
three-for-two stock split to stockholders of record on February 16,
1994.
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EXHIBIT 11
ANDREW CORPORATION
Computation of Earnings Per Share
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31 March 31
------------------ -----------------
1994 1993 1994 1993
------- -------- ------ --------
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE
Average shares outstanding 25,277 24,869 25,247 24,708
Net effect of dilutive stock
options--based on the treasury
stock method using average
market price 749 702 693 647
------- ------- ------- -------
TOTAL 26,026 25,571 25,940 25,355
======= ======= ======= =======
Net income $ 9,092 $ 4,534 $15,519 $ 9,304
======= ======= ======= =======
Per share amount $ .35 $ .18 $ .60 $ .37
======= ======= ======= =======
FULLY DILUTED EARNINGS PER
SHARE
Average shares outstanding 25,277 24,869 25,247 24,708
Net effect of dilutive stock
options--based on the treasury
stock method using average
market price in 1993, and
quarter-end market price
in 1994 768 702 768 647
------- ------- ------- -------
TOTAL 26,045 25,571 26,015 25,355
======= ======= ======= =======
Net income $ 9,092 $ 4,534 $15,519 $ 9,304
======= ======= ======= =======
Per share amount $ .35 $ .18 $ .60 $ .37
======= ======= ======= =======
</TABLE>
NOTE: This calculation is submitted in accordance with the Securities Exchange
Act of 1934 Release No. 9038 although not required by footnote 2 to
paragraph 14 of APB Opinion No. 15 because it results in dilution of less
than 3%.
NOTE: All amounts and per share amounts in this exhibit have been restated to
reflect a three-for-two stock split to stockholders of record on February
16, 1994.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ANDREW CORPORATION
Date 13 May 1994 F. L. English
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F. L. English
President and Chief Executive Officer
Date 13 May 1994 C. R. Nicholas
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C. R. Nicholas
Vice President, Finance and
Chief Financial Officer
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