SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K405
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
of 1934 For the fiscal year ended September 30, 1995.
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-9514
ANDREW CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 36-2092797
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class
Common Stock, $.01 par value
Common Stock Purchase Rights
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period as the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---- ----
Indicate by check mark if disclosure of delinquent filers pursuant to item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K, or any amendment of
this Form 10-K. (X)
The aggregate market value of voting stock held by non-affiliates of the
Registrant as of December 20, 1995 was $1,505,192,446. The number of outstanding
shares of the Registrant's common stock as of that date was 39,111,781.
Documents incorporated by Reference:
Portions of the Registrant's Annual Report to Stockholders for the year ended
September 30, 1995 are incorporated by reference into Parts I and II.
Portions of the Proxy Statement for the annual stockholders' meeting to be held
February 7, 1996 are incorporated by reference into Part III.
<PAGE>
PART I
Item 1-Business
General
Andrew Corporation ("Andrew" or the "Company") was reincorporated in
Delaware in 1987. The Company previously was incorporated in Illinois in 1947 as
the successor to a partnership founded in 1937. Its executive offices are
located at 10500 West 153rd Street, Orland Park, Illinois, 60462, which is
approximately 25 miles southwest of Chicago's loop. Unless otherwise indicated
by the context, all references herein to Andrew include Andrew Corporation and
its subsidiaries.
Andrew is a multinational supplier of communications products and systems
to worldwide commercial, industrial, governmental and military customers. Its
principal products include coaxial cables, microwave antennas for point-to-
point communication systems, special purpose antennas for commercial, government
and military end use, antennas and complete earth stations for satellite
communication systems, electronic radar systems, communication reconnaissance
systems, connectivity devices for use in communication systems, and related
ancillary items and services. These products are frequently sold as integrated
systems rather than as separate components. Andrew conducts manufacturing
operations, primarily from ten locations in the United States and from four
locations in other countries. Sales by non-U.S. operations and export sales from
U.S. operations accounted for approximately 45% of Andrew's net sales in 1995,
44% in 1994, and 41% in 1993.
During the year the Company operated in three strategic business areas,
Commercial, Government and Network. The Commercial business supplies coaxial
cable and antenna system equipment to telecommunications companies and agencies.
The Government business supplies specialized antenna systems, electronic radar
systems, communication reconnaissance systems, coaxial cable, standard antennas,
and fully integrated systems to various United States government agencies and
friendly foreign governments. The Network business supplies products and
services through value added and other resellers to data processing
organizations that support the interconnectivity needs of computer networks.
Information concerning Andrew's net sales (intersegment sales are
insignificant), operating profit and assets employed attributable to each
business area for fiscal 1995, 1994, and 1993, is included in the "Industry
Segment Information" note to Consolidated Financial Statements included on page
33 of the 1995 Annual Report to Stockholders and incorporated herein by
reference.
<PAGE>
Products and Services
The following table sets forth net sales and percentages of total net sales
represented by Andrew's principal products during the last three years:
<TABLE>
<CAPTION>
Year Ended September 30
1995 1994 1993
---------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(Dollars in thousands)
Coaxial Cable Systems and Bulk
Cables $324,790 52% $248,613 45% $175,811 41%
Microwave Antenna Systems 122,576 20 107,455 19 94,152 22
Special Antennas and Other 92,217 15 107,074 19 55,143 13
Earth Station Antennas 28,840 5 19,246 4 20,929 5
Defense Electronics 15,519 2 19,026 3 23,407 5
Network Products 39,217 6 52,208 9 57,681 13
Other 3,304 -- 4,835 1 3,697 1
-------- ---- -------- ---- -------- ----
$626,463 100% $558,457 100% $430,820 100%
======== ==== ======== ==== ======== ====
</TABLE>
Sales for the Company's business areas during the last three years were as
follows:
<TABLE>
<CAPTION>
Year Ended September 30
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
(Dollars in thousands)
Commercial $542,487 $457,803 $315,484
Government 41,455 43,611 53,958
Network 39,217 52,208 57,681
Other 3,304 4,835 3 ,697
-------- -------- --------
$626,463 $558,457 $430,820
======== ======== ========
</TABLE>
<PAGE>
PRINCIPAL PRODUCTS
Commercial Business
Coaxial Cable Systems and Bulk Cables:
Coaxial cable is a two-conductor, radio frequency transmission line with
the smaller of the two conductors centrally located inside the larger, tubular
conductor. It is principally used to carry radio frequency signals at
frequencies up to 2 GHz.
Waveguides are tubular conductors, the dimensions and manufacturing
tolerances of which are related to operating frequency. Waveguides find greatest
application at frequencies above 2 GHz, although they are also used in UHF-TV
broadcasting at frequencies in hundreds of megahertz. Andrew manufactures
waveguides with rectangular, circular and elliptical cross-sections. Most of
Andrew's waveguides are sold as part of its antenna systems.
Andrew sells its semi-flexible cables and waveguides under the trademark
HELIAX(R).
Microwave Antenna Systems:
A "microwave antenna system," as this term is used by Andrew, consists of
one or more microwave antennas, waveguides or coaxial cables connecting antennas
to transmitters or receivers, a tower to support the antennas, an equipment
shelter to house transmitters and receivers, various ancillary items, and field
installation services. If sold without a supporting tower, equipment shelter or
field installation, microwave antennas with their connecting cables or
waveguides are still considered by Andrew to be "microwave antenna systems."
Land-based microwave radio networks are commonly used by telecommunications
companies for intercity telephone, telex, video and data transmission. They are
also used for more specialized purposes by pipeline companies, electric
utilities and railroads.
Special Antennas and Other:
Andrew also manufactures and sells several types and configurations of
special application antennas. Applications include cellular systems, navigation,
FM and television broadcasting, multipoint distribution services and
instructional television. As with microwave antennas, Andrew considers sales of
special antennas and other various components used in the cellular market
(shelters and towers) and the installation of these components to be part of a
"cellular system."
The company also designs and installs its proprietary distributed
communication systems. These systems permit in-building and enclosed area access
for all types of wireless communications. These systems utilize the company's
semi-flexible coaxial cable sold under the tradename RADIAX(R).
Earth Station Antennas:
Earth station antenna systems manufactured by Andrew are used at earth
terminals to receive signals from, and transmit signals to, communication
satellites in equatorial orbit. System elements include an antenna, from 6 to 40
feet in diameter, and may also include electronic controllers, waveguides,
polarizers, combiners, special mounting features, motor drives, position
indicators, transmitters and receivers. Andrew earth station antenna systems in
all sizes are used in various countries to broadcast and transmit programs, both
to CATV operators and to VHF or UHF broadcast stations, as well as long distance
transmission of conventional telecommunications traffic.
<PAGE>
Government Business
Defense Electronics:
Andrew manufactures electronic scanning and communication receiver systems,
which are designed to search and monitor the electromagnetic spectrum from 20
MHz to 40 GHz. These systems are purchased primarily for intelligence gathering
in strategic surveillance operations which emphasize highly sensitive reception
of weak signals as well as accuracy of signal analysis data. The Company's
highly automated receiver systems are subsystems that are incorporated into
fully-integrated systems which, in addition to the Company's receiving and
analyzing equipment, include antennas and other equipment necessary to carry out
the overall electronic reconnaissance operation.
The Company is also engaged in the supply of fully integrated electronic
surveillance systems, both for military radar reconnaissance and for
non-military communications monitoring. These surveillance systems are custom
designed by the Company's engineering staff to meet customer requirements.
Other Products:
The Company also supplies specialized microwave antenna systems to
governmental agencies and the military. In addition, coaxial cables are used in
military countermeasure devices, radar and specialized instrumentation
applications.
Earth station antenna systems and special application antennas are used for
broadcasting programs and operational traffic to military bases and telemetry
traffic associated with widely dispersed environmental monitoring stations.
Andrew also manufactures pedestals and electronic controls for radio frequency
and optical systems used in military and defense markets.
Network Business
Andrew designs, manufactures and markets advanced connectivity solutions
for IBM mainframe, and token ring systems. Products include protocol convertors,
local area network (LAN) gateways, terminal emulators, file transfer software,
multistation access units, adapter cards, repeaters, bridges and routers. In
addition, Andrew supplies channel interface products which provide direct
channel links between IBM or plug-compatible host computers and non-IBM devices
and networks, terminal to mainframe computer adapters and emulators for PCs and
printers, emulation for Macintosh devices and wiring products such as baluns and
star panels that provide cost-effective wiring connections for network
communications equipment.
INTERNATIONAL ACTIVITIES
Andrew's international operations represent a substantial portion of its
overall operating results and asset base. Manufacturing facilities are located
in Canada, Australia, and the United Kingdom. Andrew's plants in the United
States also ship significant amounts of manufactured goods to export markets. In
Russia, Andrew participates in joint ventures that operate fiber optic
telecommunication networks and manufacture sophisticated microwave antennas.
During fiscal 1995 sales of products exported from the United States or
manufactured abroad were $282,169,000 or 45% of total sales compared with
$244,785,000 (44%) in fiscal 1994 and $175,811,000 (41%) in fiscal 1993. Exports
from the United States amounted to $103,090,000 in fiscal 1995, $101,829,000 in
fiscal 1994, and $54,253,000 in fiscal 1993.
<PAGE>
Sales and income before income taxes on a country-by-country basis can vary
considerably year to year. Further information on Andrew's international
operations is contained in the note "Geographic Area Information" to
Consolidated Financial Statements included on page 32 of the 1995 Annual Report
to Stockholders, incorporated herein by reference.
Andrew's international operations are subject to a number of risks
including currency fluctuations, changes in foreign governments and their
policies, and expropriation or requirements of local or shared ownership. Andrew
believes that the geographic dispersion of its sales and assets tends to
mitigate these risks.
MARKETING AND DISTRIBUTION
Commercial Business
Sales engineering functions, including product application assistance, are
performed by a staff of highly trained applications engineers located at each
manufacturing facility. In addition, field sales engineers are located at or
near Atlanta, Dallas, Los Angeles, New York, San Francisco, Washington, D.C.,
Essen and Munich (Germany), Hong Kong (China), London (England), Madrid
(Spain), Mexico City (Mexico), Milan (Italy), Paris (France), Tokyo (Japan), and
Zurich (Switzerland). Unlike most of its competitors, Andrew uses its own sales
and sales engineering staffs to service its principal markets, but follows the
traditional practice of using commissioned sales agents in countries with modest
sales potential.
Approximately one-half of Andrew's products are sold directly to end users.
Most of the remainder is sold to radio equipment companies which install
Andrew's products as part of a total system, with the balance being sold through
dealers and jobbers. Small or medium-size orders are normally shipped from
inventory; delivery schedules on larger orders are negotiated, but seldom exceed
five months. Andrew's sales are principally standard, proprietary items although
unique specifications or features are incorporated for special order situations.
Because most of Andrew's business is derived from large telecommunications
system operators and the radio equipment manufacturers who supply this industry,
Andrew has tailored its business strategy to serve the needs of technically
sophisticated buyers. In particular, Andrew has emphasized the compatibility of
antennas, transmission lines and related components in order to optimize their
performance as an integrated subsystem.
Government Business
The specialized needs of the Company's customers and the technology
required to meet those needs change constantly. Accordingly, the Company
stresses its engineering, installation, service and other support capabilities
to its government and military customers. To provide close communication with
these customers and to discern developments and trends in procurement
requirements, the Company has established a team of sales engineers located in
five offices in the United States and one office in the United Kingdom. The
Company also utilizes sales representatives in the United Kingdom, Germany and
the Middle East. In addition, technical program support and direct sales
engineering are performed at each location. The Company places great emphasis in
its marketing on extensive personal contact and continuous consultation with its
customers in an attempt to meet current technical requirements and anticipated
future requirements and to learn of upcoming procurement programs in which its
products may have application.
<PAGE>
Network Business
The Company's Network business emphasizes support of three major computer
connectivity market segments: mainframe interface, microcomputer to IBM midrange
access, and token ring local area networking (LAN). Due to the specialized
customer needs within these markets, each area has distinct marketing and
distribution channels. Mainframe products are sold to Original Equipment
Manufacturers (OEMs) and a select group of specialized system integrators whose
focus is on the mainframe computer user. In the midrange area, the Company
concentrates on a large group of highly specialized midrange computer dealers,
and Value-Added Resellers (VARs). LAN products are sold through a distribution
network of VARs, resellers and telesales. In addition, Andrew maintains business
partner relationships with a select group of systems integrators in order to
provide strong high-end product support channels for customers. Service and
technical support is an integral part of the Company's sales program for all
product groups and is provided either by the VAR or directly by the factory.
MAJOR CUSTOMERS
Andrew serves more than 6,000 customers in more than 100 countries. In the
last three years, aggregate sales to the ten largest customers averaged
approximately 24% of aggregate consolidated sales. No single customer has
accounted for over 10% of consolidated annual sales in any of the last three
years.
In fiscal 1995, 1994 and 1993 direct and indirect sales to U.S.
governmental agencies amounted to $22,337,000, $27,840,000, and $31,257,000,
respectively.
MANUFACTURING AND RAW MATERIALS
Andrew generally develops, designs, fabricates, manufactures and assembles
the products which it sells. In the Commercial business, cable and waveguide
products are produced at its plants in Illinois and the United Kingdom.
Parabolic antenna reflectors are manufactured primarily in Texas.
Self-supporting and guyed towers are also manufactured in Texas. Equipment
shelters are manufactured in Georgia and California.
Andrew's defense electronic products are manufactured in plants located in
Texas. The Company's products are manufactured from both standard components and
parts that are built to the Company's specifications by other manufacturers. A
large number of the Company's products contain multiple microprocessors for
which proprietary machine readable software is designed by the Company's
engineers and technicians.
Network products are produced at plants in California. The production
process principally entails assembly of electronic components.
Andrew considers its sources of supply for all raw materials to be adequate
and is not dependent upon any single supplier for any significant portion of
materials used in its products.
<PAGE>
RESEARCH AND DEVELOPMENT
Andrew believes that the successful marketing of its products depends upon
its research, engineering and production skills. Research and development
activities are undertaken for new product development and for product and
manufacturing process improvement. In fiscal 1995, 1994 and 1993 Andrew spent
$23,771,000, $25,707,000, and $22,011,000, respectively on research and
development activities.
Andrew holds approximately 255 active patents expiring at various times
between 1996 and 2012, relating to its products and attempts to obtain patent
protection for significant developments whenever possible. The Company does not
consider patents to be material to its operations nor would the loss of any
patents have a materially adverse effect on operations.
COMPETITION
Commercial
Many large manufacturers of electrical or radio equipment, some of which
have substantially greater financial resources than Andrew, compete with a
portion of Andrew's antenna systems equipment and coaxial cable product lines.
In addition, there are a number of small independent companies that compete with
portions of these product lines. Andrew has traditionally focused on specific
specialized fields within the marketplace which require sophisticated technology
and support services. Andrew competes principally on the basis of product
quality, service, and continual technological enhancement of its products.
Government
There are numerous manufacturers of electronic radar systems, communication
reconnaissance systems and specialized antenna systems that supply their
equipment to United States government agencies and friendly foreign governments.
There is substantial competition within the market and the Company is not a
major competitor. Due to fixed-price contracts and pre-defined contract
specifications prevalent within this market, the Company competes primarily on
the basis of its ability to provide state-of-the-art solutions in this
technologically demanding marketplace while maintaining its competitive pricing.
Network
Within the corporate network communications market, Andrew's principal
competitor is IBM which provides similar products across Andrew's product line.
There are also numerous other manufacturers that compete with portions of
Andrew's product line. Andrew's principal bases of competition within this
market are product quality and reliability and product support.
<PAGE>
BACKLOG AND SEASONALITY
The following table sets forth the backlog of orders believed to be firm in
each of Andrew's businesses (government orders included herein are funded
orders):
<TABLE>
<CAPTION>
$000
Orders to be Shipped as of September 30
1995 1994
-------------------- -------------------
After After
12 Months 12 Months 12 Months 12 Months
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Commercial $113,700 $18,500 $65,200 $600
Government 9,800 -- 16,900 --
Network 800 -- 900 --
Other 600 -- 900 --
-------- ------- ------- ----
$124,900 $18,500 $83,900 $600
======== ======= ======= ====
</TABLE>
In the Commercial and Government businesses, Andrew can experience
quarterly fluctuations in the level of sales. The variability in recent years
has been demonstrated by typically higher sales and net income in the second six
months of the fiscal year, particularly in the fiscal fourth quarter. The
primary reason for this pattern is the need of northern hemisphere customers to
complete installations during warm weather months. The fiscal fourth quarter can
also be affected by the timing of sales to U.S. governmental agencies. Other
factors which can cause quarterly fluctuations in net sales and net income
include variability of shipments under large contracts and variations in product
mix and in profitability of individual orders. These variations can be expected
to continue in the future. Consequently, it is more meaningful to focus on
annual rather than interim results.
ENVIRONMENT
The Company engages in a variety of activities to comply with various
federal, state and local laws and regulations involving the protection of the
environment. Compliance with such laws and regulations does not currently have a
significant effect on the Company's capital expenditures, earnings, or
competitive position. In addition, the Company has no knowledge of any
environmental condition(s) which might individually or in the aggregate have a
material adverse effect on the Company's financial condition.
EMPLOYEES
At September 30, l995, Andrew had 3,345 employees, of whom 2,593 were
located in the United States. None of Andrew's employees are subject to
collective bargaining agreements. As a matter of policy, Andrew seeks to
maintain good relations with employees at all locations and believes that such
relations are good.
<PAGE>
REGULATION
Andrew is not directly regulated by any governmental agency in the United
States. Most of its customers and the telecommunications industry generally, are
subject to regulation by the Federal Communications Commission (the "FCC"). The
FCC controls the allocation of transmission frequencies and the performance
characteristics of earth station antennas. As a result of these controls,
Andrew's antenna design specifications must be conformed on an ongoing basis to
meet FCC requirements. This regulation has not adversely affected Andrew's
operations.
Outside of the United States, where many of Andrew's customers are
government owned and operated entities, changes in government economic policy
and communications regulation have affected in the past, and may be expected to
affect in the future, the volume of Andrew's non-U.S. business. However, the
effect of regulation in countries other than the U.S. in which Andrew does
business has generally not been detrimental to Andrew's non-U.S. operations
taken as a whole.
GOVERNMENT CONTRACTS
Andrew performs work for the United States Government primarily under
fixed-price prime contracts and subcontracts. Under fixed-price contracts,
Andrew realizes any benefit or detriment occasioned by lower or higher costs of
performance. Total direct and indirect sales to agencies of the United States
Government, which are generally fixed-price contracts, were $22,337,000 in 1995,
$27,840,000 in 1994, and $31,257,000 in 1993. These contracts are typically less
than 12 months in duration.
Andrew, in common with other companies which derive a portion of their
revenues from the United States Government, is subject to certain basic risks,
including rapidly changing technologies, changes in levels of defense spending,
and possible cost overruns. Recognition of profits is based upon estimates of
final performance which may change as contracts progress. Contract prices and
costs incurred are subject to Government Procurement Regulations, and costs may
be questioned by the Government and are subject to disallowance.
All United States Government contracts contain a provision that they may be
terminated at any time for the convenience of the Government. In such event, the
contractor is entitled to recover allowable costs plus any profits earned to the
date of termination.
<PAGE>
Item 2-Properties
Andrew has fourteen manufacturing facilities, thirty-four engineering and
sales administration locations and two distribution facilities. All are equipped
with appropriate office space. Andrew's executive offices are located at the
facility in Orland Park, Illinois. The following table sets forth certain
information regarding significant facilities:
<TABLE>
<CAPTION>
Approximate
floor area in
Location square feet Principal Use Owned/Leased
- -------- ------------- ------------- ------------
<S> <C> <C> <C>
Orland Park, Illinois 554,000 Commercial and Government Owned
Denton, Texas 230,000 Commercial and Government Owned
Newnan, Georgia 103,000 Commercial Owned
Garland, Texas 86,000 Government Owned
Torrance, California 43,000 Network Leased
Addison, Illinois 54,000 Commercial Leased
Tinley Park, Illinois 54,000 Commercial Leased
Sacramento, California 54,000 Commercial Leased
---------
U.S. sub-total 1,178,000
Whitby, Ontario, Canada 92,000 Commercial and Government Owned
Campbellfield, Victoria, Australia 115,000 Commercial and Government Owned
Lochgelly, Fife, United Kingdom 132,000 Commercial and Government Owned
Bachenbulach, Switzerland 6,000 Commercial and Government Leased
Hong Kong, China 32,000 Commercial Leased
---------
Non U.S. sub-total 377,000
---------
TOTAL 1,555,000
=========
<FN>
The Company's properties are in good condition and are suitable for the purpose
for which they are used.
</FN>
</TABLE>
Andrew owns a total of 664 acres of land. Of this total, 565 acres are
unimproved, including 181 acres in Orland Park, Illinois, 137 acres in Floyd,
Texas, l43 acres in Denton, Texas, and 98 acres in Ashburn, Ontario, Canada.
Andrew also leases sales offices and facilities in the United States and in
eleven countries outside the United States.
Item 3-Legal Proceedings
Andrew is not involved in any pending legal proceedings which are
expected to have a materially adverse effect on its financial position, nor
is it aware of any proceedings of this nature or relating to the protection
of the environment contemplated by governmental authorities.
Item 4-Submission of Matters to a Vote of Security Holders
There were no matters which required a vote of security holders during
the three months ended September 30, l995.
<PAGE>
PART II
Item 5-Market for the Registrant's Common Stock and Related Stockholder Matters
The Company's Common Stock is traded over-the-counter on the Nasdaq National
Market.
The Company had 3,523 holders of common stock of record at December 22, 1995.
Information concerning the Company's stock price during the years ended
September 30, l995 and 1994 is incorporated herein by reference from the
l995 Annual Report to Stockholders, page 34. All prices represent high and
low sales prices as reported by the Nasdaq National Market.
It is the present policy of Andrew's Board of Directors to retain earnings
in the business to finance the Company's operations and investments; and the
Company does not anticipate payment of cash dividends in the foreseeable
future.
Long-term debt agreements include restrictive covenants which, among other
things, provide restrictions on dividend payments. At September 30, l995,
$201,097,000 was not restricted for purposes of such payments.
Item 6-Selected Financial Data
Selected financial data for the last five fiscal years is incorporated
herein by reference from the l995 Annual Report to Stockholders, pages 36
and 37.
Item 7-Management's Discussion and Analysis of Financial Condition and Results
of Operations
Information concerning this item is incorporated herein by reference from
the l995 Annual Report to Stockholders, pages 16 through 20.
Item 8-Financial Statements and Supplementary Data
The Consolidated Financial Statements of the Company, Notes to Consolidated
Financial Statements, Selected Quarterly Financial Information, and the
report thereon of the independent auditors are incorporated herein by
reference from the 1995 Annual Report to Stockholders, pages 21 through 35.
Item 9-Changes in and Disagreements with Accountants on Accounting and Financial
Disclosures
None
<PAGE>
PART III
Item l0-Directors and Executive Officers of the Registrant
Information concerning directors and executive officers of the Registrant
is incorporated herein by reference from the Company's l995 Proxy Statement
under the captions "Election of Directors" and "Executive Officers."
Item ll-Executive Compensation
Information concerning management compensation is incorporated herein by
reference from the Company's l995 Proxy Statement under the caption
"Executive Compensation."
Item l2-Security Ownership of Certain Beneficial Owners and Management
Information concerning security ownership of certain beneficial owners and
management is incorporated herein by reference from the Company's l995 Proxy
Statement under the caption "Security Ownership."
Item 13-Certain Relationships and Related Transactions
Information concerning certain relationships and related transactions is
incorporated herein by reference from the Company's 1995 Proxy Statement
under the caption "Security Ownership."
<PAGE>
PART IV
Item l4-Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) (1)The following consolidated financial statements of Andrew Corporation
and subsidiaries, included in the l995 Annual Report to Stockholders,
are incorporated by reference in Item 8:
Consolidated Statements of Income
years ended September 30, l995, 1994 and l993.................page 21
Consolidated Balance Sheets
September 30, l995 and 1994...........................pages 22 and 23
Consolidated Statements of Cash Flows
years ended September 30, l995, l994 and l993.................page 24
Consolidated Statements of Stockholders' Equity
years ended September 30, l995, 1994 and l993.................page 25
Notes to Consolidated Financial Statements..........pages 26 through 33
Selected Quarterly Financial Information........................page 34
Report of Independent Auditors..................................page 35
(2)The following consolidated financial statement schedule of Andrew
Corporation and subsidiaries is included in Item l4(d):
Schedule II--Valuation and Qualifying Accounts and Reserves
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and,
therefore, have been omitted.
<PAGE>
Item 14 cont.
(3)Exhibit Index:
<TABLE>
<CAPTION>
Exhibit No. Description Reference
----------- ----------- ---------
<S> <C> <C>
3.1(i) Certificate of Incorporation Filed as Exhibit 3.1(i) to Form 10-K for fiscal year ended
September 30, 1994 and incorporated herein by reference.
3.1(ii) By-Laws of Registrant Filed as Exhibit 3.1(ii) to Form 10-K for fiscal year ended
September 30, 1994 and incorporated herein by reference.
4.(a) Note Agreement dated Filed as Exhibit 4.(a) to Form 10-K for fiscal year ended
September 1, 1990 September 30, 1990 and incorporated herein by reference.
4.(a)a First Amendment to Note Filed as Exhibit 4(a)a to Form 10-K for fiscal year ended
Agreement dated September 30, 1992 and incorporated herein by reference.
September 1, 1990
4.(b) Stockholder Rights Agreement Filed as Exhibit 4(b) to Form 10-K for fiscal year ended
dated September 22, 1988 September 30, 1993 and incorporated herein by reference.
10.(a) Executive Severance Benefit Plan Filed as Exhibit 10(b)a to Form 10-K for fiscal year ended
(i) Agreement with Floyd L. English September 30, 1991 and incorporated herein by reference.
(ii) Agreement with Charles R. Nicholas
(iii) Agreement with Ernest T. Weber
10.(a)a Executive Severance Benefit Plan Filed as Exhibit 10(a)a to Form 10-K for fiscal year ended
(i) Agreement with Thomas E. Charlton September 30, 1993 and incorporated herein by reference.
(ii) Agreement with John B. Scott
(iii) Agreement with William L. Shockley
10.(a)b Executive Severance Benefit Plan
(i) Agreement with Alan J. Rossi
10.(b) Management Incentive Plan Filed as Exhibit 10(c) to Form 10-K for fiscal year ended
dated February 4, 1988. September 30, 1993 and incorporated herein by reference.
10.(c) Non-employee Directors' Filed as Exhibit 10(d) to Form 10-K for fiscal year ended
Stock Option Plan dated September 30, 1993 and incorporated herein by reference.
February 4, 1988.
10.(d) Credit Agreement dated as of Filed as Exhibit 10(e) to Form 10-K for fiscal year ended
June 16, 1993. September 30, 1993 and incorporated herein by reference.
10.(d)a First Amendment to Credit
Agreement dated June 16, 1993.
10.(d)b Second Amendment to Credit
Agreement dated June 16, 1993.
10.(e) 1994 Employee Stock Purchase Filed with Proxy statement in connection with
Plan Annual Meeting held February 2, 1994.
11 Computation of Earnings
per Share
l3 l995 Annual Report to Those portions of the 1995 Annual Report to Shareholders
Stockholders expressly incorporated herein by reference.
21 List of Significant Subsidiaries
22 Proxy Statement in connection Filed on December 15, 1995 and incorporated herein by
with Annual Meeting to be held reference.
on February 7, 1996
23 Independent Auditors' Consent
27 Financial Data Schedules
</TABLE>
(b) There were no reports on Form 8-K filed during the three months ended
September 30, 1995.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Stockholders and Board of Directors
Andrew Corporation
We have audited the consolidated financial statements and related schedule
of Andrew Corporation and subsidiaries listed in Item 14(a)(1) and (2) of the
annual report on Form 10-K of Andrew Corporation for the year ended September
30, 1995. These financial statements and related schedule are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and related schedule based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
related schedule are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements and related schedule. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Andrew Corporation and subsidiaries at September 30, 1995 and 1994, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended September 30, 1995 in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
/s/ Ernst & Young LLP
Chicago, Illinois
November 3, 1995
<PAGE>
<TABLE>
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
ANDREW CORPORATION AND SUBSIDIARIES
(Dollars in thousands)
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
Additions
---------
Charged
Balance Charged to to Other Balance
Beginning Costs and Accounts-- Deductions-- at End
of Period Expenses Describe Describe<F1> of Period
--------- -------- -------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Year ended September 30, l995:
Allowance for
doubtful accounts $ 2,769 $ 1,295 $ -- $ 998 $3,066
======= ======= ===== ======= ======
Year ended September 30, l994:
Allowance for
doubtful accounts $ 3,167 $ 1,571 $ -- $ 1,969 $2,769
======= ======= ===== ======= ======
Year ended September 30, 1993:
Allowance for
doubtful accounts $ 3,190 $ 1,636 $ -- $ 1,659 $3,167
======= ======= ===== ======= ======
<FN>
<F1>
Note A: Represents write-offs, net of recoveries.
</FN>
</TABLE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on December 20,
1995.
Andrew Corporation
By \s\ Floyd L. English
------------------------
Floyd L. English
Chairman, President, and
Chief Executive Officer
By \s\ Charles R. Nicholas
---------------------------
Charles R. Nicholas
Executive Vice President and
Chief Financial Officer
By \s\ Gregory F. Maruszak
---------------------------
Gregory F. Maruszak
Vice President and Controller
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on December 20, 1995, by the following persons
on behalf of the Registrant in the capacities indicated.
\s\ John G. Bollinger \s\ Donald N. Frey
------------------------ ---------------------
John G. Bollinger Donald N. Frey
Director Director
\s\ Jon L. Boyes \s\ Carole M. Howard
------------------- -----------------------
Jon L. Boyes Carole M. Howard
Director Director
\s\ George N. Butzow \s\ Ormand J. Wade
----------------------- ---------------------
George N. Butzow Ormand J. Wade
Director Director
\s\ Kenneth J. Douglas
-------------------------
Kenneth J. Douglas
Director
<PAGE>
ANDREW CORPORATION
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
10.(a)b(i) Executive Severence Plan Agreement with Alan J. Rossi
10.(d)a First Amendment to Credit Agreement dated June 16, 1993
10.(d)b Second Amendment to Credit Agreement dated June 16, 1993
11. Computation of Earnings Per Share
13. Portions of 1995 Annual Report to Stockholders
Incorporated by Reference
21. List of Significant Subsidiaries
23. Independent Auditors' Consent
27. Financial Data Schedule
</TABLE>
ANDREW CORPORATION
EXECUTIVE SEVERANCE BENEFIT PLAN AGREEMENT
THIS AGREEMENT made as of 1 December, 1994, between Andrew Corporation,
a Delaware corporation (the "Company"), and Alan J. Rossi (the "Executive").
W I T N E S S E T H:
1. Participation. The Executive has been designated as a
participant in the Andrew Corporation Executive Severance Benefit Plan (the
"Plan") by the Compensation Committee of the Board of Directors of the Company.
2. Plan Benefits. The Executive agrees to be bound by the provisions of
the Plan, including those provisions which relate to his eligibility to receive
benefits and to the conditions affecting the form, manner, time and terms of
benefit payments under the Plan, as applicable. The Executive understands and
acknowledges that his benefit may be reduced pursuant to Section 10 of the Plan
in order to eliminate any "excess parachute payments" as defined under Section
4999 of the Internal Revenue Code of 1954, as amended. The Executive may elect
to receive his Plan benefits in installment payments, as provided under Section
9 of the Plan, by signing the statement included on page three of this
Agreement. The Executive may make an election to receive installment payments,
or may revoke any such election, at any time prior to the date which is ten days
prior to the date on which a Change in Control is deemed to have occurred;
provided that any election subsequent to the execution of this Agreement or any
revocation shall be in writing and shall be subject to the approval of the
Compensation Committee.
3. Federal and State Laws. The Executive shall comply with all federal
and state laws which may be applicable to his participation in this Plan,
including without limitation, his entitlement to, or receipt of, any benefits
under the Plan. If the Executive is subject to the provisions of Section 16(b)
of the Securities Exchange Act of 1934 as amended and in effect at the time of
any Plan benefit payment, he shall comply with the provisions of Section 16(b),
including any applicable exemptions thereto, whether or not such provisions and
exemptions apply to all or any portion of his Plan benefit payments.
4. Amendment and Termination. The Board of Directors may amend,
modify, suspend or terminate the Plan or this Agreement at any time, subject to
the following:
(a) without the consent of the Executive, no such amendment,
modification, suspension or termination shall reduce or
diminish his right to receive any payment or benefit then due
and payable under the Plan immediately prior to such
amendment, modification, suspension or termination; and
(b) in the event of a Change in Control pursuant to Section 5 of
the Plan, no such amendment, modification, suspension or
termination of benefits, and eligibility therefor, will be
effective prior to the expiration of the 48-consecutive-month
period following the date of the Change in Control.
<PAGE>
5. Beneficiary. The Executive hereby designates his primary
beneficiary(ies) as Indrani Rossi, who will receive any unpaid benefit payments
in the event of the Executive's death prior to full receipt thereof. In the
event that the primary beneficiary(ies) predeceases the Executive, his unpaid
benefits shall be paid to Adrian and Nicolas Rossi as secondary
beneficiary(ies). If more than one primary or secondary beneficiary has been
indicated, each primary beneficiary or, if none survives, each secondary
beneficiary will receive an equal share of the unpaid benefits unless the
Executive indicates specific percentages next to the beneficiaries' names.
Except as required by applicable law, the Executive's beneficiary or
beneficiaries shall not be entitled to any medical, life or other insurance-type
welfare benefits.
6. Arbitration. The Executive agrees to be bound by any
determination rendered by arbitrators pursuant to Section 11 of the Plan.
7. Employment Rights. The Plan and this Agreement shall not be
construed to give the Executive the right to be continued in the employment of
the Company or to give the Executive any benefits not specifically provided by
the Plan.
IN WITNESS WHEREOF, Andrew Corporation has caused this
Agreement to be executed and the Executive has executed this Agreement, both as
of the day and year first above written.
ANDREW CORPORATION
By /s/ Alan J. Rossi By /s/ F. L. English
----------------- -----------------
Alan J. Rossi F. L. English
Group Vice President President,
Chief Executive Officer
<PAGE>
ELECTION OF INSTALLMENTS
I hereby elect to receive my Plan benefits in installment payments
pursuant to the terms of Section 9 of the Plan.
By /s/ Alan J. Rossi
-----------------
Alan J. Rossi
FIRST AMENDMENT DATED
AS OF AUGUST 15, 1994
TO CREDIT AGREEMENT
DATED AS OF JUNE 16, 1993
THIS AMENDMENT, dated as of August 15, 1994, is entered into among
ANDREW CORPORATION, a Delaware corporation (the "Company"), the various
financial institutions parties hereto (collectively, the Lenders"), and
CONTINENTAL BANK (F/K/A Continental Bank N.A., a national banking association),
an Illinois banking corporation having its principal office at 231 South LaSalle
Street, Chicago, Illinois 60697 ("Continental"), as agent ("Agent"), for the
Lenders.
R E C I T A L S:
A. The Company, the Agent and the Lenders have entered into a Credit
Agreement, dated as of June 16, 1993 (said Credit Agreement, as heretofore and
hereby amended, shall hereinafter be referred to as the "Agreement"; the terms
defined in the Agreement and not otherwise defined herein shall be used herein
as defined in the Agreement).
B. The Company, the Agent and the Lenders wish to amend the Agreement
to extend the Stated Maturity Date, reduce pricing, delete certain covenants and
to otherwise amend certain provisions of the Agreement.
C. Therefore, the parties hereto agree as follows:
1. AMENDMENTS TO THE AGREEMENT.
1.1 Section 1.1 of the Agreement - Commitment Termination
Date. The definition of "Commitment Termination Date" in Section 1.1 of the
Agreement is hereby amended as of the date hereof by deleting clause (a) thereof
and substituting "(a) Stated Maturity Date"; therefor.
1.2 Section 1.1 of the Agreement - Interest Period. The
definition of "Interest Period" in Section 1.1 of the Agreement is hereby
amended as of the date hereof by deleting the numeral "eight (8)" appearing in
clause (a) thereof and substituting the numeral "twenty (20)" therefor.
1.3 Section 1.1 of the Agreement - Quoted Rate. The
definition of "Quoted Rate" in Section 1.1 of the Agreement is
hereby amended as of the date hereof by deleting the percentage
<PAGE>
"0.50%" appearing therein and substituting the percentage "0.25%"
therefor.
1.4 Section 1.1 of the Agreement - Stated Maturity Date. The
definition of "Stated Maturity Date" in Section 1.1 of the Agreement is hereby
amended as of the date hereof by deleting the date "March 31, 1996" appearing
therein and substituting the date "March 31, 1997" therefor.
1.5 Section 3.2.1(b) of the Agreement. Section 3.2.1(b) of the
Agreement is hereby amended as of the date hereof by deleting the percentage
"0.65%" appearing therein and substituting the percentage "0.25%" therefor.
1.6 Section 3.3.1 of the Agreement. Section 3.3.1 of
the Agreement is hereby deleted in its entirety and the following
substituted therefor:
"SECTION 3.3.1 Facility Fee. The Company agrees to pay to the
Agent for the account of each Lender, for the period (including any portion
thereof when its Commitment is suspended by reason of any Borrower's inability
to satisfy any condition of Article V) commencing on the Effective Date and
continuing through the final Commitment Termination Date, a facility fee at the
rate of fifteen hundredths of one-percent (.15%) per annum on such Lender's
Percentage of the Commitment Amount. Such facility fees shall be payable by the
Company in arrears on each Quarterly Payment Date, commencing with the first
such day following August 15, 1994, and on the Commitment Termination Date for
the period then ending."
1.7 Section 5.3.1(a) of the Agreement. Section 5.3.1(a)
of the Agreement is hereby amended and restated in its entirety as
follows:
"(a) the representations and warranties set forth in Article
VI (excluding, however, those contained in Sections 6.6, 6.7, 6.8 and 6.9) shall
be true and correct with the same effect as if then made (unless stated to
relate solely to an earlier date, in which case such representations and
warranties shall be true and correct as of such earlier date) except for such
changes as are specifically permitted hereunder;"
1.8 Section 7.1.3 of the Agreement. Section 7.1.3 of
the Agreement is hereby deleted in its entirety and the following
substituted therefor:
"Intentionally Omitted."
<PAGE>
1.9 Section 7.1.5 of the Agreement. Section 7.1.5 of
the Agreement is hereby deleted in its entirety and the following
substituted therefor:
"Intentionally Omitted."
1.10 Section 7.2.1 of the Agreement. Section 7.2.1 of
the Agreement is hereby deleted in its entirety and the following
substituted therefor:
"Intentionally omitted."
1.11 Section 7.2.3(b) and (d) of the Agreement. Section
7.2.3(b) and (d) of the Agreement are hereby deleted in their
entirety and the following substituted therefor:
"(b) Intentionally omitted."
"(d) Intentionally Omitted."
1.12 Section 7.2.6 of the Agreement. Section 7.2.6 of
the Agreement is hereby deleted in its entirety and the following
substituted therefor:
"Intentionally omitted."
2. WARRANTIES. To induce the Agent and the Lenders to enter
into this Amendment, the Company warrants that:
2.1 Authorization. The Company is duly authorized to execute
and deliver this Amendment and is and will continue to be duly authorized to
borrow monies under the Agreement, as amended hereby, and to perform its
obligations under the Agreement, as amended hereby.
2.2 No Conflicts. The execution and delivery of this
Amendment, and the performance by the Company of its obligations under the
Agreement, as amended hereby, do not and will not conflict with any provision of
law or of the articles of incorporation or by-laws of the Company or of any
agreement binding upon the Company.
2.3 Validity and Binding Effect. The Agreement, as amended
hereby, is a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency or other similar laws of general
application affecting the enforcement of creditors' rights or by general
principles of equity limiting the availability of equitable remedies.
<PAGE>
3. CONDITIONS FREQUENT TO AMENDMENTS. The amendments
contemplated by Section 1 hereof are subject to the satisfaction of
each of the following conditions precedent:
3.1 Documentation. The Company shall have delivered to the
Agent (with sufficient copies for each Lender) all of the following, each duly
executed and dated the closing date hereof, in form and substance satisfactory
to the Agent:
(a) Amendment. Counterparts of this Amendment.
(b) Certificate. A certificate of the Treasurer
of the Company as to the matters set out in Sections 3.2 and 3.3 hereof.
(c) Other. Such other documents as the Agent may
reasonably request.
3.2 No Default. As of the closing date hereof, no
Default shall have occurred and be continuing.
3.3 Warranties. As of the closing date hereof, the warranties
in Article VI of the Agreement and in Section 2 of this Amendment shall be true
and correct as though made on such date, except for such changes as are
specifically permitted under the Agreement.
4. GENERAL.
4.1 Expenses. The Company agrees to pay the Agent upon demand
for all reasonable expenses, including reasonable attorneys' and legal
assistants' fees, incurred by the Agent in connection with the preparation,
negotiation and execution of this Amendment and any document required to be
furnished herewith.
4.2 Law. THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS.
4.3 Successors. This Amendment shall be binding upon the
Company, the Agent and the Lenders and their respective successors and assigns,
and shall inure to the benefit of the Company, the Agent and the Lenders and the
successors and assigns of the Agent and Lenders.
4.4 Confirmation of the Agreement. Except as amended
hereby, the Agreement shall remain in full force and effect and is
hereby ratified and confirmed in all respects.
4.5 References to the Agreement. Each reference in the
Agreement to "this Agreement," "hereunder," "hereof," or words of
like import, and each reference to the Agreement in any and all
instruments or documents provided for in the Agreement or delivered
<PAGE>
or to be delivered thereunder or in connection therewith, shall, except where
the context otherwise requires, be deemed a reference to the Agreement as
amended hereby.
4.6 Counterparts. This Amendment may be executed by the
parties hereto on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed at Chicago, Illinois by their respective officers
thereunto duly authorized as of the date first written
ANDREW CORPORATION
By: /s/ M J Gittelman
Title: Treasurer
CONTINENTAL BANK, as a Lender
and as Agent
By: /s/ Barbara A. Hamel
Title: Vice President
ABN AMRO BANK N.V.
By: /s/ Brian B. Devane
Title: Group Vice President
By: /s/ Lawrence O'Reilly
Title: Vice President
THE FIRST NATIONAL BANK OF
CHICAGO
By: /s/ Karen F. Kizer
Title: Senior Vice President
<PAGE>
CERTIFICATE
I, the undersigned, Treasurer of Andrew Corporation ("Company"), DO
HEREBY CERTIFY that:
1. The representations and warranties on the part of the Company
contained in the First Amendment dated as of August 15, 1994 ("Amendment") to
Credit Agreement dated June 16, 1993 ("Amendment") between the Company, the
Lenders and Continental Bank, as agent (terms not otherwise defined herein have
the same meaning herein as in the Amendment) and the Agreement are as true and
correct at and as of the date hereof as though made on and as of the date
hereof.
2. No Default has occurred and is continuing, or would
result from the consummation of the Amendment on this date.
WITNESS my hand as of the 15th day of August, 1994
/s/ M J Gittelman
Treasurer
SECOND AMENDMENT DATED
AS OF SEPTEMBER 29, 1995
TO CREDIT AGREEMENT
DATED AS OF JUNE 16, 1993
THIS AMENDMENT, dated as of September 29, 1995, is entered into among
ANDREW CORPORATION, a Delaware corporation (the "Company"), the various
financial institutions parties hereto (collectively, the "Lenders"), and BANK OF
AMERICA ILLINOIS (f/k/a CONTINENTAL BANK), an Illinois banking corporation
having its principal office at 231 South LaSalle Street, Chicago, Illinois 60697
("BAI"), as agent ("Agent"), for the Lenders.
R E C I T A L S:
A. The Company, the Agent and the Lenders have entered into a Credit
Agreement, dated as of June 16, 1993, as amended by a First Amendment thereto
dated as of August 14, 1994 (said Credit Agreement, as heretofore and hereby
amended, shall hereinafter be referred to as the "Agreement"; the terms defined
in the Agreement and not otherwise defined herein shall be used herein as
defined in the Agreement).
B. The Company, the Agent and the Lenders wish to amend
the Agreement to revise the definition of Cash Equivalent
Investment and to otherwise amend certain provisions of the
Agreement.
C. Therefore, the parties hereto agree as follows:
1. AMENDMENTS TO THE AGREEMENT.
1.1 Global Amendment. All references in the Agreement
to "Continental Bank N.A." or "Continental" are hereby deleted as
of the date hereof and "Bank of America Illinois" and "BAI",
respectively, substituted therefor.
1.2 Section 1.1 of the Agreement - Cash Equivalent Investment.
The definition of "Cash Equivalent Investment" in Section 1.1 of the Agreement
is hereby amended as of the date hereof by deleting it in its entirety and
substituting the following therefor:
"'Cash Equivalent Investment' means, at any time, any
Investment that is classified under GAAP as a short
term investment and consistent with such Person's
internal guidelines regarding liquidity and short
term investments".
2. WARRANTIES. To induce the Agent and the Lenders to
enter into this Amendment, the Company warrants that:
<PAGE>
2.1 Authorization. The Company is duly authorized to execute
and deliver this Amendment and is and will continue to be duly authorized to
borrow monies under the Agreement, as amended hereby, and to perform its
obligations under the Agreement, as amended hereby.
2.2 No Conflicts. The execution and delivery of this
Amendment, and the performance by the Company of its obligations under the
Agreement, as amended hereby, do not and will not conflict with any provision of
law or of the articles of incorporation or by-laws of the Company or of any
agreement binding upon the Company.
2.3 Validity and Binding Effect. The Agreement, as amended
hereby, is a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency or other similar laws of general
application affecting the enforcement of creditors' rights or by general
principles of equity limiting the availability of equitable remedies.
3. CONDITIONS PRECEDENT TO AMENDMENTS. The amendments
contemplated by Section 1 thereof are subject to the satisfaction
of each of the following conditions precedent:
3.1 Documentation. The Company shall have delivered to the
Agent (with sufficient copies for each Lender) all of the following, each duly
executed and dated the closing date hereof, in form and substance satisfactory
to the Agent:
(a) Amendment. Counterparts of this Amendment.
(b) Certificate. A certificate of the Treasurer of
the Company as to the matters set out in Sections 3.2 and 3.3
hereof.
(c) Other. Such other documents as the Agent may
reasonably request.
3.2 No Default. As of the closing date hereof, no
Default shall have occurred and be continuing.
3.3 Warranties. As of the closing date hereof, the warranties
in Article VI of the Agreement and in Section 2 of this Amendment shall be true
and correct as though made on such date, except for such changes as are
specifically permitted under the Agreement.
4. GENERAL.
4.1 Expenses. The Company agrees to pay the Agent
upon demand for all reasonable expenses, including reasonable
attorneys' and legal assistants' fees (which attorneys and
paralegals may be employees of the Agent), incurred by the Agent
<PAGE>
in connection with the preparation, negotiation and execution of this Amendment
and any document required to be furnished herewith.
4.2 Law. THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
ILLINOIS.
4.3 Successors. This Amendment shall be binding upon the
Company, the Agent and the Lenders and their respective successors and assigns,
and shall inure to the benefit of the Company, the Agent and the Lenders and the
successors and assigns of the Agent and Lenders.
4.4 Confirmation of the Agreement. Except as amended
hereby, the Agreement shall remain in full force and effect and
is hereby ratified and confirmed in all respects.
4.5 References to the Agreement. Each reference in the
Agreement to "this Agreement," "hereunder," "hereof," or words of like import,
and each reference to the Agreement in any and all instruments or documents
provided for in the Agreement or delivered or to be delivered thereunder or in
connection therewith, shall, except where the context otherwise requires, be
deemed a reference to the Agreement as amended hereby.
4.6 Counterparts. This Amendment may be executed by the
parties hereto on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed at Chicago, Illinois by their respective officers thereunto duly
authorized as of the date first written above.
ANDREW CORPORATION
By: /s/ M J Gittelman
Title: Treasurer
BANK OF AMERICA ILLINOIS,
as a Lender and as Agent
By: Barbara A. Hamel
Title: Barbara A. Hamel, Vice President
ABN AMRO BANK N.V.
By: Mary L. Janovsky
Title: Mary L. Janovsky, Vice President
<PAGE>
By: /s/ James R. Morgan
Title: James R. Morgan, Vice
President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Karen F. Kizer
Title: Senior Vice President
<PAGE>
CERTIFICATE
I, the undersigned, Treasurer of Andrew Corporation ("Company"), DO
HEREBY CERTIFY that:
1. The representations and warranties on the part of the Company
contained in the Second Amendment dated as of September 29, 1995 ("Amendment")
to Credit Agreement dated June 16, 1993 ("Agreement") between the Company, the
Lenders and Bank of America Illinois, as agent (terms not otherwise defined
herein have the same meaning herein as in the Amendment) and the Agreement are
as true and correct at and as of the date hereof as through made on and as of
the date hereof.
2. No Default has occurred and is continuing, or would
result from the consummation of the Amendment on this date.
WITNESS my hand as of the 29th day of September, 1995.
/s/ M J Gittelman
Treasurer
EXHIBIT 11
<TABLE>
ANDREW CORPORATION AND SUBSIDIARIES
Computation of Earnings Per Share
(Amounts in thousands, except per share data)
<CAPTION>
Year Ended September 30
1995 1994 1993
------- ------ ------
<S> <C> <C> <C>
PRIMARY EARNINGS PER SHARE
Average shares outstanding 38,607 38,013 37,281
Net effect of dilutive stock options--
based on the treasury stock method
using average market price 559 1,102 1,141
------- ------- -------
TOTAL 39,166 39,115 38,422
======= ======= =======
Net income $67,809 $44,395 $27,862
======= ======= -------
Per share amount $ 1.73 $ 1.13 $ .72
======= ======= =======
FULLY DILUTED EARNINGS PER SHARE
Average shares outstanding 38,607 38,013 37,281
Net effect of dilutive stock options--
based on the treasury stock method
using the year-end market price 688 1,164 1,152
------- ------- -------
TOTAL 39,295 39,177 38,433
======= ======= =======
Net income $67,809 $44,395 $27,862
======= ======= =======
Per share amount $ 1.73 $ 1.13 $ .72
======= ======= =======
<FN>
Note: The fully diluted earnings per share calculation is submitted in
accordance with the Securities Exchange Act of l934 Release No. 9038
although not required by footnote 2 to paragraph l4 of APB Opinion No.
l5 because it results in dilution of less than 3%.
</FN>
</TABLE>
Operations Review
Continued growth in global wireless communications markets resulted in
another record year for Andrew Corporation. Sales, net income and earnings per
share rose to record levels for the fiscal year ended September 30, 1995. Strong
demand for wireless communications products and systems within the cellular and
land mobile markets of the commercial business segment were major contributors
to a successful year. The strength in the commercial business segment was
partially offset by decreased sales in the government and network business
segments. Favorable product mix, volume efficiencies, continued cost control
efforts and a decrease in other expenses resulted in net income increasing at a
faster pace than sales.
SALES rose 12% in 1995 to $626.5 million. International sales remained
solid in 1995 representing 45% of the company's sales compared to 44% in 1994.
Sales in the commercial business segment increased 18% to $542.5 million in 1995
from $457.8 million in 1994. The increase was primarily attributable to coaxial
cable sales. In addition, terrestrial microwave and broadcast products
contributed to the strong sales growth in this segment. In 1994, commercial
business segment sales included $42.8 million in coaxial cable, towers and
services provided to a consortium that developed a major cellular system in
Argentina. As a result of consolidation of its operations, the network business
segment experienced a 25% decrease in sales in 1995 to $39.2 million versus
$52.2 million in 1994. Government business segment sales declined 5% to
$41.5 million.
COST OF PRODUCTS SOLD as a percentage of sales decreased in 1995 to 57.1% from
58.4% in 1994 and 58.5% in 1993. The decreases resulted from favorable product
mix, primarily increased coaxial cable sales, and volume efficiencies within the
commercial business segment. In addition, the government business segment
contributed to the improvement in margins through continued cost containment
efforts. These improvements were slightly offset by lower gross margins in the
network business segment.
OPERATING EXPENSES improved as a percentage of sales. Selling and
administrative expenses, as a percentage of sales, were 21.5% in 1995, compared
to 23.3% in 1994 and 25.5% in 1993. The reductions in 1995 and 1994
were accomplished largely due to a significantly greater rate of sales growth
than expense growth. Total dollar spending increased to $134.9 million, up 3.8%
in 1995, from $130 million in 1994, and $109.9 million, up 18.2% in 1993 on
sales increases of 12.2% and 29.6% respectively. The expense increase in 1994
was attributable to increased profit sharing and marketing expenses and costs
related to the continued support of the Russian and Ukrainian joint ventures.
RESEARCH AND DEVELOPMENT expenses decreased to $23.8 million in 1995, compared
to $25.7 million in 1994 and $22.0 million in 1993. The decline in 1995 stemmed
primarily from cost reduction efforts within the government business segment and
the consolidation of the network business operations.
OTHER INCOME AND EXPENSE improved in 1995. Net interest expense was $2.7
million in 1995, versus $3.9 million in 1994 and $4.6 million in 1993. The
declines are primarily attributable to increases in interest income due to
larger investment balances. Net other expense declined to $1.4 million in 1995
from $3.3 million in 1994. The decline was due to a $2.7 million gain realized
on the sales of Allen group debentures which was partially offset by the
company's equity loss of $1.5 million related to its Russian and Ukrainian joint
ventures. In 1994 the equity loss recorded from the joint ventures totaled
$.9 million.
NET INCOME increased 52.7% to $67.8 million in 1995. Increased sales and the
resultant volume efficiencies and favorable product mix, along with cost
containment efforts in sales, administrative, and research and development
expenses and a reduction in other expenses, contributed to net income growing
faster than sales. In 1994, net income increased 59% to $44.4 million from $27.9
million in 1993, also exceeding the revenue growth rate. The significant growth
in 1994 was attributable to changes in product mix, improved productivity and
cost controls.
The company's effective tax rate was 36% in 1995 and 1994 and 36.1% in 1993.
LIQUIDITY also improved with $53.8 million in cash generated from operating
activities in 1995, compared to $51.8 million in 1994 and $55.0 million in 1993.
This has enabled the company to continue to finance investments and working
capital internally. Increases in inventory and accounts receivable in 1995
partially offset cash generated from net income. The inventory increase was
primarily for the coaxial cable, wireless telephone accessories and equipment
building businesses. The increase in accounts receivable was the result of
higher sales levels.
Capital expenditures increased $19.8 million to $46.9 million in 1995. Plant
expansion and productivity-related enhancements to increase capacity within the
commercial business segment contributed to the majority of the increase. In 1994
and 1993 capital expenditures totaled $27.1 million and $17.9 million,
respectively. The increase in expenditures in 1994 was primarily due to the
purchase of an equipment building manufacturing facility built in Newnan,
Georgia, and the addition of several distribution warehouses.
The company has a $50 million available line of credit under which there were
no borrowings during 1995. During the first quarter of 1995, the company
received $3.8 million from an Industrial Development Revenue Bond with Coweta
County, Georgia in connection with the construction of the company's facility in
Newnan, Georgia. At September 30, 1995 the company had $45.5 million of senior
notes outstanding, of which $4.5 million is due within one year.
Andrew has never paid cash dividends. It is the present policy of the Board of
Directors to retain earnings in the business to finance investments and
operations.
CHANGES IN ACCOUNTING PRINCIPLES included the adoption of Statement of
Financial Accounting Standard (SFAS) No. 115 "Accounting for Certain Investments
in Debt and Equity Securities" during the first quarter of fiscal 1995. The
adoption of SFAS No. 115 did not have a material effect on the company's
financial statements.
<PAGE>
<TABLE>
Andrew Corporation
Consolidated Statements of Income
(In thousands, except per share amounts)
<CAPTION>
Year Ended September 30
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Sales $ 626,463 $ 558,457 $ 430,820
Cost of products sold 357,745 326,261 252,186
--------- --------- ---------
Gross Profit 268,718 232,196 178,634
Operating Expenses
Sales and administrative 134,852 129,971 109,947
Research and development 23,771 25,707 22,011
--------- --------- ---------
158,623 155,678 131,958
--------- --------- ---------
Operating Income 110,095 76,518 46,676
Other
Interest expense 5,280 5,200 5,445
Interest income (2,533) (1,343) (830)
Other expense (income) 1,396 3,295 (1,530)
--------- --------- ---------
4,143 7,152 3,085
--------- --------- ---------
Income Before Income Taxes 105,952 69,366 43,591
Income taxes 38,143 24,971 15,729
--------- --------- ---------
Net Income $ 67,809 $ 44,395 $ 27,862
========= ========= =========
Net Income per Average Share of
Common Stock Outstanding $ 1.73 $ 1.13 $ .72
========= ========= =========
Average Shares Outstanding 39,295 39,177 38,433
========= ========= =========
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
Andrew Corporation
Consolidated Balance Sheets
(Dollars in thousands)
<CAPTION>
September 30
1995 1994
--------- ---------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 45,085 $ 40,267
Accounts receivables, less allowances
(1995-$3,066; 1994-$2,769) 141,732 126,821
Inventories
Finished products 43,646 31,413
Materials and work in process 75,788 56,174
--------- ---------
119,434 87,587
Miscellaneous current assets 4,430 5,974
--------- ---------
Total Current Assets 310,681 260,649
Other Assets
Costs in excess of net assets of
businesses acquired, less accumulated
amortization (1995-$16,524; 1994-$13,919) 35,667 38,272
Investments in and advances to affiliates 33,480 27,119
Investments and other assets 10,661 14,157
Property, Plant, and Equipment
Land and land improvements 9,402 8,496
Buildings 55,069 52,422
Equipment 209,039 169,716
Allowances for depreciation and amortization (172,970) (155,668)
--------- ---------
100,540 74,966
--------- ---------
Total Assets $ 491,029 $ 415,163
========= =========
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
September 30
1995 1994
--------- ---------
(Dollars in thousands)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 26,726 $ 24,902
Accrued expenses and other liabilities 17,607 24,354
Compensation and related expenses 25,310 22,928
Income taxes 13,666 14,899
Current portion of long-term debt 4,545 4,545
--------- ---------
Total Current Liabilities 87,854 91,628
Deferred Liabilities 7,087 5,226
Long-Term Debt, less current portion 44,710 45,455
Stockholders' Equity Common stock
(par value, $.01 a share: 100,000,000
shares authorized; 45,653,823
shares issued, including treasury) 457 304
Additional paid-in capital 44,437 31,205
Foreign currency translation 1,076 (1,283)
Retained earnings 362,738 294,929
Treasury stock, at cost (6,648,675 shares
in 1995; 7,336,740 shares in 1994) (57,330) (52,301)
--------- ---------
351,378 272,854
--------- ---------
Total Liabilities and Equity $ 491,029 $ 415,163
========= =========
<FN>
See Notes to Consolidated Financial Statements
</FN>
</TABLE>
<PAGE>
<TABLE>
Andrew Corporation
Consolidated Statements of Cash Flows
(Dollars in thousands)
<CAPTION>
Year Ended September 30
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Cash Flows from Operations
Net Income $ 67,809 $ 44,395 $ 27,862
Adjustments to Net Income
Depreciation and amortization 24,960 22,387 21,186
Equity in losses of affiliates 1,462 913 150
Increase in accounts receivable (13,086) (17,329) (17)
Increase in inventories (31,517) (15,950) (4,045)
Decrease (increase) in miscellaneous
current and other assets 5,700 (1,859) (1,290)
Increase in receivables from affiliates (1,171) (6,467) --
Increase (decrease) in accounts
payable and other liabilities (416) 26,572 9,754
Other 53 (841) 1,418
-------- -------- --------
Net Cash from Operations 53,794 51,821 55,018
Investing Activities
Capital expenditures (46,864) (27,095) (17,876)
Investments in and advances to affiliates (7,823) (10,626) (15,513)
Proceeds from sale of property,
plant and equipment 532 405 697
-------- -------- --------
Net Cash Used in Investing Activities (54,155) (37,316) (32,692)
Financing Activities
Proceeds from issuance of long-term debt 3,800 -- --
Payments on long-term debt (4,545) -- (4,025)
Short-term borrowings -net payments -- -- (8,000)
Stock purchase and option plans 5,561 3,255 5,464
-------- -------- --------
Net Cash From (Used for) Financing Activities 4,816 3,255 (6,561)
Effect of exchange rate changes on cash 363 778 (1,469)
-------- -------- --------
Increase for the year 4,818 18,538 14,296
Cash and equivalents at beginning of year 40,267 21,729 7,433
-------- -------- --------
Cash and Equivalents at End of Year $ 45,085 $ 40,267 $ 21,729
======== ======== ========
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
Andrew Corporation
Consolidated Statements of Stockholders' Equity
(Dollars in thousands)
<CAPTION>
Year Ended September 30
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Common Stock Issued
Balance at beginning of year $ 304 $ 203 $ 101
Three-for-two stock split 153 101 --
Two-for-one stock split -- -- 102
--------- --------- ---------
Balance at End of Year $ 457 $ 304 $ 203
========= ========= =========
Additional Paid-In Capital
Balance at beginning of year $ 31,205 $ 28,448 $ 28,343
Three-for-two stock split (153) (101) --
Two-for-one stock split -- -- (102)
Stock purchase and option plans 13,385 2,858 207
--------- --------- ---------
Balance at End of Year $ 44,437 $ 31,205 $ 28,448
========= ========= =========
Retained Earnings
Balance at beginning of year $ 294,929 $ 250,534 $ 222,672
Net Income 67,809 44,395 27,862
--------- --------- ---------
Balance at End of Year $ 362,738 $ 294,929 $ 250,534
========= ========= =========
Treasury Stock
Balance at beginning of year $ (52,301) $ (54,205) $ (61,144)
Stock purchase and option plans (5,029) 1,904 6,939
--------- --------- ---------
Balance at End of Year $ (57,330) $ (52,301) $ (54,205)
========= ========= =========
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
Summary of Significant Accounting Policies
Principles of consolidation. The consolidated financial statements include the
accounts of the company and its majority-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated.
Cash equivalents. The company considers all highly liquid investments purchased
with maturities of three months or less to be cash equivalents. The carrying
amount of cash equivalents approximates fair value due to the relative
short-term maturity of these investments.
Inventories. Inventories are stated at the lower of cost or market. Inventories
stated under the last-in, first-out (LIFO) method represent 41% of total
inventories in 1995 and 44% of total inventories in 1994. The remaining
inventories are valued on the first-in, first-out (FIFO) method.
If the FIFO method, which approximates current replacement cost, had been used
for all inventories, the total amount of inventories would have been increased
by $11,189,000 and $11,610,000 at September 30, 1995 and 1994, respectively.
Depreciation and amortization. The company provides for depreciation and
amortization of property, plant and equipment, all of which are recorded at
cost, principally using accelerated methods based on estimated useful lives of
the assets for both financial reporting and tax purposes. Costs in excess of net
assets of businesses acquired are amortized on the straight-line basis over
periods ranging from 10 to 40 years.
Investments in affiliates. Investments in affiliates are accounted for using the
equity method, under which the company's share of earnings or losses of these
affiliates is reflected in income as earned and dividends are credited against
the investment in affiliates when received.
Revenue recognition. Revenue is recognized from sales, other than long-term
contracts, when a product is shipped or a service is performed. Sales under
long-term contracts generally are recognized under the percentage of completion
method and include a portion of the earnings expected to be realized on the
contract in the ratio that costs incurred bear to estimated total costs.
Contracts in progress are reviewed monthly, and sales and earnings are adjusted
in current accounting periods based on revisions in contract value and estimated
costs at completion. Estimated losses on contracts are provided when identified.
<PAGE>
ANDREW CORPORATION
Notes to Consolidated Financial Statements (Cont'd.)
Summary of Significant Accounting Policies (Cont'd.)
Foreign currency translation. The functional currency for the company's foreign
operations is predominantly the applicable local currency. Accounts of foreign
operations are translated into U.S. dollars using year-end exchange rates for
assets and liabilities and average monthly exchange rates for revenue and
expense accounts. Adjustments resulting from translation are included as a
separate component of stockholders' equity. Gains or losses resulting from
foreign currency transactions are included in determining net income.
Income taxes. Deferred income taxes reflect the impact of temporary differences
between the amounts of assets and liabilities recognized for financial reporting
purposes and such amounts recognized for tax purposes. In accordance with
Statement of Financial Accounting Standards ("SFAS") No. 109 "Accounting for
Income Taxes," these deferred taxes are measured by applying currently enacted
tax laws. In years prior to fiscal year 1994, deferred taxes were accounted for
in accordance with Accounting Principles Board ("APB") Opinion No. 11.
Net income per share. Net income per share is based on the weighted average
number of common shares outstanding during each year after giving effect to
stock options considered to be dilutive common stock equivalents. Fully diluted
net income per share is not materially different from primary earnings per
share.
Accounting changes. The company adopted SFAS No. 115 "Accounting for Certain
Investments in Debt and Equity Securities" during the first quarter of fiscal
year 1995. During the first quarter of 1994, the company adopted SFAS No. 106
"Employers' Accounting for Postretirement Benefits Other Than Pensions,"
SFAS No. 109 "Accounting for Income Taxes," and SFAS No. 112 "Employers'
Accounting for Postemployment Benefits". The adoption of these statements
did not have a material effect on the company's financial statements.
<PAGE>
ANDREW CORPORATION
Notes to Consolidated Financial Statements (Cont'd.)
Investments In Affiliates
The company's investments in affiliates represents 40 to 50 percent interests in
several start-up network telecommunications joint ventures in Russia and
Ukraine. The combined operating results of the ventures and the company's share
thereof were not material to the company's 1995, 1994 and 1993 operating
results.
Unbilled Receivables
At September 30, 1995, unbilled receivables of $11,750,000 are included in
accounts receivable, compared to $14,207,000 at September 30, 1994. These
amounts will be billed to customers in accordance with contract terms and
delivery schedules and are generally expected to be collected within one year.
Profit Sharing Plans
Most employees of Andrew Corporation and its subsidiaries participate in various
retirement plans, principally defined contribution profit sharing plans. The
amounts charged to earnings for these plans in 1995, 1994 and 1993 were
$11,561,000, $10,915,000 and $7,020,000, respectively.
<PAGE>
ANDREW CORPORATION
Notes to Consolidated Financial Statements (Cont'd.)
Borrowings
The company has a $50 million revolving credit agreement under which there were
no amounts outstanding at September 30, 1995.
<TABLE>
Long-term debt at September 30 consisted of the following:
<CAPTION>
Dollars in thousands 1995 1994
------- -------
<S> <C> <C>
9.52% senior notes payable to insurance companies
in annual installments from 1995 to 2005 $45,455 $50,000
Variable rate Industrial Development Revenue Bond
with Coweta County, Georgia 3,800 -
Less Current Portion 4,545 4,545
------- -------
Total Long-Term Debt $44,710 $45,455
======= =======
</TABLE>
Under the terms of the loan agreements, the company is required to maintain
certain levels of working capital and net worth. The loan agreements further
provide restriction on dividend payments. At September 30, 1995 all these
requirements have been met.
The principal amounts of long-term debt maturing after September 30, 1995 are
$4,545,000 annually in each fiscal year from 1996 through 2000 and $26,530,000
thereafter.
Cash payments for interest on all borrowings were $4,930,000, $5,024,000 and
$5,166,000 in 1995, 1994 and 1993, respectively.
The carrying amount of long-term debt as of September 30, 1995 approximates fair
value. The fair value was determined by discounting the future cash outflows
based upon the current market rates for instruments with a similar risk and term
to maturity.
<PAGE>
ANDREW CORPORATION
Notes to Consolidated Financial Statements (Cont'd.)
Income Taxes
The composition of the provision for income taxes follows:
<TABLE>
<CAPTION>
Year Ended September 30
1995 1994 1993
--------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C>
Currently Payable:
Federal $ 18,897 $ 13,504 $ 3,986
Non-United States 13,533 12,779 10,817
State 3,408 2,867 1,223
--------- -------- --------
35,838 29,150 16,026
Deferred (Credit):
Federal and State 2,207 (3,659) (260)
Non-United States 98 (520) (37)
--------- -------- --------
2,305 (4,179) (297)
--------- -------- --------
$ 38,143 $ 24,971 $ 15,729
========= ======== ========
Income Taxes Paid $ 26,024 $ 18,474 $ 7,230
========= ======== ========
Components of Income
Before Income Taxes:
United States 63,768 $ 30,923 $ 11,969
Non-United States 42,184 38,443 31,622
--------- -------- --------
$ 105,952 $ 69,366 $ 43,591
========= ======== ========
</TABLE>
<TABLE>
The company's effective income tax rate varied from the statutory United States
federal income tax rate because of the following:
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Statutory United States
federal tax rate 35.0% 35.0% 35.0%
Foreign Sales Corporation (FSC) (2.3) (2.7) (2.5)
State income taxes, net of
federal tax effect 2.2 2.4 1.8
Goodwill amortization 0.9 1.3 2.1
Other items 0.2 -- (.3)
---- ---- ----
Effective Tax Rate 36.0% 36.0% 36.1%
==== ==== ====
</TABLE>
<PAGE>
ANDREW CORPORATION
Notes to Consolidated Financial Statements (Cont'd.)
Income Taxes (Cont'd.)
The tax effects of temporary differences have given rise to gross deferred tax
assets of $7,402,000, primarily accrued expenses and inventory, and gross
deferred tax liabilities of $5,781,000, primarily depreciation, as of September
30, 1995. The company has not recorded a valuation allowance for deferred tax
assets, because the existing net deductible temporary differences will reverse
during periods in which the company expects to generate taxable income.
No provision has been made for income taxes of approximately $4,563,000 at
September 30, 1995, which would be payable should undistributed net income of
$74,919,000 of subsidiaries located outside the United States be distributed as
dividends, since any tax resulting from such a distribution could be
substantially offset by resulting tax credits.
<PAGE>
ANDREW CORPORATION
Notes to Consolidated Financial Statements (Cont'd.)
Stockholders' Equity
Each outstanding common share has attached to it a one Share Purchase Right
which, until exercisable, cannot be transferred apart from the company's Common
Stock. The Rights will only become exercisable if a person or group acquires 27%
or more of the company's Common Stock or announces an offer to acquire 30% or
more of the company's Common Stock. In the event the Rights become exercisable,
each Right may entitle the holder to purchase Common Stock of either the
surviving or acquired company at one-half its market price.
The company currently maintains a long-term Management Incentive Program which
provides for the issuance of up to 4,050,000 common shares in the form of stock
options and awards and the awarding of performance units payable in cash or
stock to key officers and other employees. Substantially all options granted
under this plan become fully exercisable at the end of a four-year period and
expire five years after grant.
The company also maintains a Stock Option Plan for non-employee Directors that
provides for the issuance of up to 450,000 common shares. Options issued under
this plan vest over a five year period and expire ten years after grant.
Information on options for the last three years ended September 30 is as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Outstanding at beginning of year 1,564,800 1,687,428 2,619,873
Granted 372,450 462,150 225,000
Expired or cancelled (32,067) (63,810) (186,723)
Exercised (852,900) (520,968) (970,722)
---------- ---------- ----------
Outstanding at End of Year 1,052,283 1,564,800 1,687,428
---------- ---------- ----------
Exercisable at End of Year 136,350 510,495 466,650
========== ========== ==========
Price range of options:
Outstanding at end of year $ 2.95-38.50 $ 2.95-21.55 $ 2.95-12.11
Granted during the year $34.33-38.50 $15.67-21.55 $ 9.39-12.11
Exercised during the year $ 4.33- 9.39 $ 3.11-12.11 $ 2.95- 8.81
</TABLE>
The company also has an Employee Stock Purchase Plan which expires February 1,
1999. All employees with six months of service as of the annual offering date
are eligible to participate in this Plan. The Plan authorizes up to 787,500
shares of Common Stock to be sold to employees at 85% of market value.
Through September 30, 1995, 185,178 shares have been issued under the Plan.
<PAGE>
ANDREW CORPORATION
Notes to Consolidated Financial Statements (Cont'd.)
Stockholders' Equity (Cont'd.)
At September 30, 1995, 2,627,790 shares of Common Stock were reserved for the
various stock plans described above.
On February 8, 1995, the company's Board of Directors approved a three-for-two
stock split to stockholders of record on February 22, 1995, payable March 8,
1995. A three-for-two stock split was also effected in March, 1994 and a
two-for-one stock split was effected in March, 1993.
Common Stock issued and outstanding and held in treasury is summarized in the
tables below:
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Shares of Common Stock- Issued
Balance at beginning of year 30,435,882 20,290,588 10,145,294
Three-for-two stock split 15,217,941 10,145,294 --
Two-for-one stock split -- -- 10,145,294
----------- ----------- -----------
Balance at End of Year 45,653,823 30,435,882 20,290,588
=========== =========== ===========
Shares of Common Stock-Held in Treasury
Balance at beginning of year 4,891,160 3,495,678 1,982,452
Three-for-two stock split 2,445,580 1,747,839 --
Two-for-one stock split -- -- 1,825,057
Stock option and purchase plans (688,065) (352,357) (311,831)
----------- ----------- -----------
Balance at End of Year 6,648,675 4,891,160 3,495,678
=========== =========== ===========
</TABLE>
Foreign currency translation adjustments increased equity by $2.4 million during
the year ended September 30, 1995. Foreign currency translation adjustments
increased equity $4.1 million and decreased equity $7.6 million during the years
ended September 30, 1994 and 1993, respectively.
<PAGE>
ANDREW CORPORATION
Notes to Consolidated Financial Statements (Cont'd.)
<TABLE>
Geographic Area Information
Principal financial data by major geographic area:
<CAPTION>
1995 1994 1993
-------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C>
Sales
United States:
Customers $447,384 $415,501 $309,262
Intercompany 62,302 42,754 34,539
-------- -------- --------
509,686 458,255 343,801
Europe:
Customers 125,010 94,620 79,614
Intercompany 13,890 5,462 2,510
-------- -------- --------
138,900 100,082 82,124
Australasia:
Customers 32,531 29,254 17,201
Intercompany 1,208 390 228
-------- -------- --------
33,739 29,644 17,429
Other Americas:
Customers 21,538 19,082 24,743
Intercompany 5,285 3,449 3,008
-------- -------- --------
26,823 22,531 27,751
Eliminations 82,685 52,055 40,285
-------- -------- --------
Consolidated Sales $626,463 $558,457 $430,820
======== ======== ========
United States - Export Sales $103,090 $101,829 $ 54,253
======== ======== ========
Operating Income:
United States $ 69,664 $ 42,436 $ 17,260
Europe 19,862 17,440 17,910
Australasia 16,979 12,447 6,472
Other Americas 3,590 4,195 5,034
-------- -------- --------
Consolidated Operating Income $110,095 $ 76,518 $ 46,676
======== ======== ========
Assets Identifiable to:
United States $359,045 $313,121 $253,059
Europe 100,208 75,257 59,922
Australasia 13,019 11,406 7,273
Other Americas 18,757 15,379 16,849
-------- -------- --------
Consolidated Assets $491,029 $415,163 $337,103
======== ======== ========
</TABLE>
Sales and transfers between geographic areas are made at amounts which
approximate manufacturing cost and generally consist of products which require
additional processing and with respect to which related selling, marketing and
engineering expenses are incurred prior to shipment to customers.
<PAGE>
ANDREW CORPORATION
Notes to Consolidated Financial Statements (Cont'd.)
Industry Segment Information
The company operates in three strategic business segments: commercial,
government and network. The commercial segment serves commercial markets,
including communications companies, radio equipment companies, television
stations, utilities and distributors. Products include antennas and antenna
systems, and coaxial cable. The government segment serves government
markets--federal, foreign and local. Products include specialized antennas and
communication reconnaissance systems sold to various United States government
agencies and friendly foreign governments. Products also include coaxial cable
and standard antennas sold to government customers. The network segment provides
products and services supporting the integration of voice, data and video in
corporate communication networks. The corporate and other category includes
certain expenses for corporate administration; long-range research and
development; costs related to unconsolidated affiliates; and results of
operations which do not relate to business segments, as well as the assets
associated therewith. Corporate identifiable assets also include cash and
equivalents. In 1995, direct and indirect sales to agencies of the United States
federal government totaled $22,337,000 compared to $27,840,000 in 1994 and
$31,257,000 in 1993.
Financial information by industry segment is as follows:
<TABLE>
<CAPTION>
Corporate
(Dollars in thousands) Commercial Government Network And Other Total
---------- ---------- ------- --------- -----
<S> <C> <C> <C> <C> <C>
1995:
Sales $542,487 $41,455 $39,217 $ 3,304 $626,463
Operating income (loss) 138,774 3,879 (3,048) (29,510) 110,095
Identifiable assets 315,933 75,308 36,834 62,954 491,029
Capital expenditures 41,323 1,436 1,305 2,800 46,864
Depreciation and
amortization 18,289 2,131 3,202 1,338 24,960
1994:
Sales $457,803 $43,611 $52,208 $ 4,835 $558,457
Operating income (loss) 112,020 1,067 (5,409) (31,160) 76,518
Identifiable assets 228,560 66,800 42,502 77,301 415,163
Capital expenditures 22,986 1,527 655 1,927 27,095
Depreciation and
amortization 13,574 3,256 3,494 2,063 22,387
1993:
Sales $315,484 $53,958 $57,681 $ 3,697 $430,820
Operating income (loss) 71,258 2,547 (1,586) (25,543) 46,676
Identifiable assets 170,560 65,109 52,131 49,303 337,103
Capital expenditures 10,850 2,614 1,975 2,437 17,876
Depreciation and
amortization 12,451 3,531 3,440 1,764 21,186
</TABLE>
<PAGE>
ANDREW CORPORATION
Notes to Consolidated Financial Statements (Cont'd.)
Selected Quarterly Financial Information (Unaudited)
Due to variability of shipments under large contracts, customers' seasonal
installation considerations, variations in product mix and in profitability of
individual orders, the company can experience wide quarterly fluctuations in net
sales and income. Consequently, it is more meaningful to focus on annual rather
than quarterly results.
<TABLE>
<CAPTION>
December March June September Annual
-------- ----- ---- --------- ------
(In thousands,
except per share amounts)
<S> <C> <C> <C> <C> <C>
1995:
Sales $142,605 $156,343 $161,272 $166,243 $626,463
Gross profit 58,758 63,448 70,341 76,171 268,718
Income before income taxes 17,553 22,046 28,821 37,532 105,952
Net income 11,234 14,109 18,446 24,020 67,809
Net income per share<F1> 0.28 0.36 0.47 0.61 1.73
Common Stock Price Range:
High 35-3/4 44-3/4 57-7/8 64
Low 29-1/2 34 41 55
1994:
Sales $121,746 $142,159 $135,970 $158,582 $558,457
Gross profit 48,820 52,683 58,738 71,955 232,196
Income before income taxes 10,042 14,206 17,294 27,824 69,366
Net income 6,427 9,092 11,068 17,808 44,395
Net income per share .17 .23 .28 .45 1.13
Common Stock Price Range:
High 19-1/3 23-1/8 26-1/3 33-1/2
Low 13-1/8 16-1/8 20 1/2 24
<FN>
<F1>
The sum of net income per share for the four quarters in 1995 does not equal
earnings per share for the year due to differences in average shares
outstanding.
</FN>
</TABLE>
<PAGE>
Report of Independent Auditors
To the Stockholders and Board of Directors
Andrew Corporation
We have audited the accompanying consolidated balance sheets of Andrew
Corporation and subsidiaries as of September 30, 1995 and 1994, and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the three years in the period ended September 30, 1995. These financial
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Andrew Corporation
and subsidiaries at September 30, 1995 and 1994, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended September 30, 1995 in conformity with generally accepted accounting
principles.
/s/ Ernst & Young, LLP
Chicago, Illinois
November 3, 1995
<PAGE>
<TABLE>
FIVE YEAR FINANCIAL SUMMARY
ANDREW CORPORATION
<CAPTION>
Dollars in thousands, except per share amounts 1995 1994 1993 1992 1991
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operations<F1>
- -------------
Sales $626,463 $558,457 $430,820 $442,008 $416,229
Employee compensation 182,501 166,850 147,323 145,632 145,079
Materials, supplies and services 343,544 311,768 222,801 222,912 224,120
Depreciation 21,840 19,271 18,065 17,911 17,255
Increase (decrease) in inventory 31,517 15,950 4,045 (11,713) 10,707
Interest expense 5,280 5,200 5,445 6,133 6,552
Interest income 2,533 1,343 830 1,328 961
Other income (expense) (1,396) (3,295) 1,530 944 985
Non-recurring items<F2> - - - -
Income tax 38,143 24,971 15,729 14,992 13,698
Net income 67,809 44,395 27,862 24,987 22,178
Net income per share 1.73 1.13 .72 .58 .51
Financial Position
- ------------------
Working capital 222,827 169,021 138,689 124,864 150,330
Property, plant and equipment, net 100,540 74,966 68,113 70,829 72,436
Total assets 491,029 415,163 337,103 313,932 343,018
Long-term debt 44,710 45,455 50,000 52,556 58,261
Stockholders' equity 351,378 272,854 219,570 192,224 217,471
Ratios and Other Data
- ---------------------
Current ratio 3.5 2.8 3.2 2.9 3.5
Return on sales 10.8% 7.9% 6.5% 5.7% 5.3%
Return on average assets 15.0% 11.8% 8.6% 7.6% 6.7%
Return on average stockholders' equity 21.7% 18.0% 13.5% 12.2% 10.7%
Stockholders' equity per share outstanding $ 9.01 $ 7.12 $ 5.81 $ 5.23 $ 5.06
Foreign exchange gain (loss)<F3> (1,794) ( 2,021) 1,340 17 593
Research and development 23,771 25,707 22,011 20,156 20,341
Additions to property, plant and equipment 46,864 27,095 17,876 17,844 25,002
Net assets located outside U.S. at year end 159,400 129,300 89,300 64,500 70,000
Orders entered 685,600 555,000 436,300 418,300 419,900
Order backlog to be shipped in 12 months 124,900 83,900 85,500 83,900 107,600
Order backlog over 12 months 18,500 600 1,600 5,500 8,300
Number of employees at year end:
Outside United States 752 651 577 591 713
Total employees 3,345 3,096 2,924 3,040 3,370
Average shares of stock outstanding (thousands) 39,295 39,177 38,433 43,146 43,799
Stockholders' of record at year end 2,340 1,482 1,133 1,057 1,137
<FN>
<F1>
All acquired businesses have been accounted for as purchases. Pro forma information is provided on individual acquisitions
in the financial statements of the year of acquisition.
<F2>
In 1987, pre-tax charge of $19,000 for restructuring less pre-tax gain of $5,941 on sale of land.
<F3>
Total foreign exchange gain or loss, realized and unrealized, before provision for applicable taxes.
</FN>
</TABLE>
<PAGE>
APPENDIX A
<TABLE>
<CAPTION>
PAGES WHERE GRAPHIC DESCRIPTION OF GRAPHIC AND IMAGE MATERIAL
IMAGE APPEARS (In thousands, except per share data)
<S> <C>
16 Bar graph of Sales (Dollars in Millions)
Data points: 1991-$416, 1992-$442, 1993-$431, 1994-$558, 1995-$626
16 Bar graph of Sales-International (Dollars in Millions)
Data points: 1991-$168, 1992-$168, 1993-$176, 1994-$245, 1995-$282
16 Bar graph of Sales-U.S. Export (Dollars in Millions)
Data points: 1991-$50, 1992-$49, 1993-$54, 1994-$102, 1995-$103
17 Bar graph of Gross Profit (Dollars in Millions)
Data points: 1991-$159, 1992-$169, 1993-$179, 1994-$232, 1995-$269
17 Bar graph of Sales and Administrative Expenses (Dollars in Millions)
Data points: 1991-$98, 1992-$105, 1993-$110, 1994-$130, 1995-$135
17 Bar graph of Research and Development Expenses (Dollars in Millions)
Data points: 1991-$20, 1992-$20, 1993-$22, 1994-$26, 1995-$24
18 Bar graph of Operating Income (Percent to Sales)
Data points: 1991-9.7%, 1992-9.9%, 1993-10.8%, 1994-13.7%, 1995-17.8%
18 Bar graph of Net Income (Dollars in Millions)
Data points: 1991-$22.2, 1992-$25.0, 1993-$27.9, 1994-$44.4, 1995-$67.8
18 Bar graph of 12-Month Backlog (Dollars in Millions)
Data points: 1991-$108, 1992-$84, 1993-$85, 1994-$84, 1995-$125
19 Bar graph of Return on Equity (Percent)
Data points: 1991-10.7%, 1992-12.2%, 1993-13.5%, 1994-18.0%, 1995-21.7%
19 Bar graph of Return on Assets (Percent)
Data points: 1991-6.7%, 1992-7.6%, 1993-8.6%, 1994-11.8%, 1995-15.0%
19 Bar graph of Sales per Employee (Dollars in Thousands)
Data points: 1991-$127, 1992-$138, 1993-$144, 1994-$186, 1995-$195
20 Bar graph of Net Cash from Operations (Dollars in Millions)
Data points: 1991-$32.3, 1992-$50.9, 1993-$55.0, 1994-$51.8, 1995-$53.8
20 Bar graph of Capital Expenditures (Dollars in Millions)
Data points: 1991-$25, 1992-$18, 1993-$18, 1994-$27, 1995-$47
20 Bar graph of Total Debt (Dollars in Millions)
Data points: 1991-$62, 1992-$54, 1993-$50, 1994-$50, 1995-$49
</TABLE>
EXHIBIT 21
ANDREW CORPORATION AND SUBSIDIARIES
List of Significant Subsidiaries
Significant subsidiaries of the registrant, all of which are wholly-owned
unless otherwise indicated, are as follows:
Jurisdiction
Name of Subsidiary of Incorporation
Andrew AG.........................................................Switzerland
Andrew Canada Inc......................................................Canada
Andrew Communications B.V.........................................Netherlands
Andrew Corporation (Australia) Pty. Ltd.............................Australia
Andrew Data Corporation.....................................State of Delaware
Andrew Espana, S.A......................................................Spain
Andrew GmbH...........................................................Germany
Andrew International Corporation............................State of Illinois
Andrew KMW Systems Inc......................................State of Delaware
Andrew Kommunikationssysteme AG...................................Switzerland
Andrew Corporation (Mexico), S.A. de C.V...............................Mexico
Andrew NPG Ltd.................................................United Kingdom
Andrew SciComm Inc.............................................State of Texas
Andrew S.A.R.L.........................................................France
Andrew S.R.L............................................................Italy
Andrew Systems Inc..........................................State of Delaware
Andrew VSAT Systems Inc...................................State of California
(owned 90%)
UCI/Unified Communications, Inc............................State of Minnesota
(owned 80%)
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statement No.
2-86070 on Form S-8 dated August 23, 1983; Registration Statement No.
33-30364 on Form S-8 dated August 7, 1989; Registration Statement No.
33-58750 on Form S-8 dated February 24, 1993; Registration Statement No.
33-58752 on Form S-8 dated February 24, 1993; Registration Statement No.
33-52487 on Form S-8 dated March 2, 1994 and Post-Effective Amendment No. 1
to Registration Statement No. 33-52487 on Form S-8 dated March 3, 1994 of our
report dated November 3, 1995, with respect to the consolidated financial
statements incorporated by reference in the Annual Report (Form 10-K) and
related schedule of Andrew Corporation for the year ended September 30, 1995.
/s/ Ernst & Young LLP
Chicago, Illinois
December 20, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 45,085
<SECURITIES> 0
<RECEIVABLES> 144,798
<ALLOWANCES> 3,066
<INVENTORY> 119,434
<CURRENT-ASSETS> 310,681
<PP&E> 273,510
<DEPRECIATION> 172,970
<TOTAL-ASSETS> 491,029
<CURRENT-LIABILITIES> 87,854
<BONDS> 44,710
0
0
<COMMON> 457
<OTHER-SE> 350,921
<TOTAL-LIABILITY-AND-EQUITY> 491,029
<SALES> 626,463
<TOTAL-REVENUES> 626,463
<CGS> 357,745
<TOTAL-COSTS> 357,745
<OTHER-EXPENSES> 158,623
<LOSS-PROVISION> 1,295
<INTEREST-EXPENSE> 5,280
<INCOME-PRETAX> 105,952
<INCOME-TAX> 38,143
<INCOME-CONTINUING> 67,809
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 67,809
<EPS-PRIMARY> 1.73
<EPS-DILUTED> 1.73
<FN>
All per share amounts in this exhibit have been restated to reflect a
three-for-two stock split to stockholders of record on February 22, 1995.
</FN>
</TABLE>
