SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT of 1934
For the quarterly period ended June 30, 1995.
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT of 1934
For the transition period from to
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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)
No Change
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period as the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---- ----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Common Stock, $.01 Par Value--38,869,109 shares as of July 31, 1995
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<PAGE>
INDEX
ANDREW CORPORATION
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated balance sheets--June 30, 1995 and September 30, 1994.
Consolidated statements of income--Three months ended June 30, 1995
and 1994; Nine months ended June 30, 1995 and 1994.
Consolidated statements of cash flows--Nine months ended June 30, 1995
and 1994.
Notes to consolidated financial statements--June 30, 1995.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
EXHIBIT 11 - Computation of Earnings per Share.
SIGNATURES
<PAGE>
ANDREW CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
June 30 Sept. 30
1995 1994
--------- ---------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 36,200 $ 40,267
Accounts receivable, less allowances
(Jun. $3,041; Sept. $2,769) 140,065 126,821
Inventories
Finished products 41,217 31,413
Materials and work in process 71,589 56,174
--------- ---------
112,806 87,587
Miscellaneous current assets 4,888 5,974
--------- ---------
Total Current Assets 293,959 260,649
--------- ---------
Other Assets
Costs in excess of net assets of businesses
acquired, less accumulated amortization
(Jun. $15,886; Sept. $13,919) 36,315 38,272
Investments in and advances to affiliates 31,128 27,119
Investments and other assets 9,971 14,157
Property, Plant, and Equipment
Land and land improvements 9,222 8,496
Building 53,300 52,422
Equipment 196,177 169,716
Allowances for depreciation and amortization (167,000) (155,668)
--------- ---------
91,699 74,966
--------- ---------
Total Assets $ 463,072 $ 415,163
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 28,539 $ 24,902
Accrued expenses and other liabilities 22,925 24,354
Compensation and related expenses 22,569 22,928
Income taxes 4,017 14,899
Current portion of long-term debt 4,545 4,545
--------- ---------
Total Current Liabilities 82,595 91,628
Deferred Liabilities 8,538 5,226
Long-Term Debt, less current portion 49,255 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 39,817 31,205
Foreign currency translation 855 (1,283)
Retained earnings 338,718 294,929
Treasury stock, at cost (6,802,789 shares Jun.;
7,336,740 shares Sept.) (57,163) (52,301)
--------- ---------
322,684 272,854
--------- ---------
Total Liabilities and Equity $ 463,072 $ 415,163
========= =========
<FN>
The balance sheet at September 30, 1994 has been derived from the audited
financial statements at that date.
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
ANDREW CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30 June 30
---------------------- ----------------------
1995 1994 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Sales $ 161,272 $ 135,970 $ 460,220 $ 399,875
Cost of products sold 90,931 77,232 267,673 239,634
--------- --------- --------- ---------
Gross Profit 70,341 58,738 192,547 160,241
Operating Expenses
Sales and administrative 35,642 32,333 102,902 94,322
Research and development 6,100 6,045 17,576 18,993
--------- --------- --------- ---------
41,742 38,378 120,478 113,315
Operating Income 28,599 20,360 72,069 46,926
Other
Interest expense 940 1,257 3,783 3,815
Interest income (208) (259) (1,579) (766)
Other (income) expense (954) 2,068 1,445 2,335
--------- --------- --------- ---------
(222) 3,066 3,649 5,384
Income Before Income Taxes 28,821 17,294 68,420 41,542
Income taxes 10,375 6,226 24,631 14,955
--------- --------- --------- ---------
Net Income $ 18,446 $ 11,068 $ 43,789 $ 26,587
========= ========= ========= =========
Net Income per Average Share
of Common Stock Outstanding $ 0.47 $ 0.28 $ 1.11 $ 0.68
========= ========= ========= =========
Average Shares Outstanding 39,454 39,213 39,290 39,038
========= ========= ========= =========
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
ANDREW CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
June 30
----------------------
1995 1994
--------- ---------
<S> <C> <C>
Cash Flows from Operations
Net Income $ 43,789 $ 26,587
Adjustments to Net Income
Equity in losses of affiliates 1,462
Depreciation and amortization 17,522 16,153
Change in Assets and Liabilities
Accounts receivable (11,375) (11,889)
Inventories (25,440) (15,759)
Prepaid expenses and other assets 5,506 (727)
Receivables from affiliates (709) (5,928)
Accounts payable and other liabilities (4,192) 14,229
Other (59) 101
--------- ---------
Net Cash From Operations 26,504 22,767
Investing Activities
Capital expenditures (32,040) (16,371)
Investments in and advances to affiliates (5,471) (9,887)
Proceeds from sale of property, plant,
and equipment 260 251
--------- ---------
Net Cash Used In Investing Activities (37,251) (26,007)
Financing Activities
Proceeds from long-term debt 3,800
Stock purchase and option plans 2,669 1,258
--------- ---------
Net Cash From Financing Activities 6,469 1,258
Effect of exchange rate changes on cash 211 486
--------- ---------
Decrease for the period (4,067) (1,496)
Cash and equivalents at beginning of period 40,267 21,729
--------- ---------
Cash and Equivalents at End of Period $ 36,200 $ 20,233
========= =========
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
ANDREW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended June 30, 1995
are not necessarily indicative of the results that may be expected for the year
ending September 30, 1995. For further information, refer to the consolidated
financial statements and footnotes hereto included in the company's annual
report on Form 10-K for the year ended September 30, 1994.
NOTE B--CHANGES IN ACCOUNTING PRINCIPLES
Effective October 1, 1994 Andrew Corporation adopted Statement of Financial
Accounting Standards (SFAS) No. 115 "Accounting for Certain Investments in Debt
and Equity Securities." Adoption of this statement did not have a material
effect on the company's financial statements.
NOTE C--STOCK SPLIT
On February 3, 1995, the company's Board of Directors declared a three-for-two
stock split to stockholders of record on February 22, 1995, payable March 8,
1995. All share and per share amounts have been restated for all periods
presented to reflect the stock split.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - Period Ended June 30, 1995
Net sales for the third quarter of fiscal year 1995 increased $25.3 million, or
19% compared to the same period last year. On a year-to-date basis, net sales
totaled $460.2 million, an increase of 15% compared to last year. Increased
demand for the company's products in the worldwide wireless communications
markets accounted for the majority of the sales growth for both the quarter and
the year. The company also benefited from increased sales to terrestrial
microwave and broadcast markets. Weakness in the network products segment has
partially offset the overall sales growth. Fiscal year 1994 results included
sales from the company's major cellular project in Argentina, which totaled
$38.3 million for the first nine months of the year and $6.4 million for the
quarter.
Total backlog has grown substantially since the 1994 fiscal year end. Total
backlog has increased $67 million to $152 million, while backlog over 12 months
has increased $20 million to $21 million during the first nine months of fiscal
year 1995. These increases are primarily attributable to the company's major
distributed communications projects with MFS Technologies and the Hong Kong
Metro, which total $60 million in year-to-date orders.
Cost of products sold as a percentage of sales for the quarter remained
relatively stable. On a year-to-date basis, cost of products sold decreased to
58.2% of sales, a decrease of 1.7% compared with the first nine months of fiscal
year 1994. The year-to-date decrease is the result of a favorable product mix
during the first six months of fiscal year 1995, and lower than average margins
on the company's fiscal year 1994 Argentina project.
As a percentage of revenue, sales and administrative expenses have decreased for
both the quarter and the first nine months of fiscal year 1995 compared to
fiscal year 1994. Cost reduction programs implemented in the network products
segment partially offset the overall dollar growth in sales and administrative
expenses for both the quarter and year. For the year, research and development
costs have decreased $1.4 million, or 7% compared with the same period last
year. This decrease resulted from cost control efforts in Network Products and
from the narrowing of its focus to local area network (LAN) products.
Other income for the quarter totaled $1.0 million compared to other expense of
$2.1 million for the third quarter of fiscal year 1994. This increase was due
primarily to the conversion and sale of the Allen Group debentures held
by the company, which resulted in other income of $1.7 million. Decreased
foreign exchange losses contributed to the remainder of the improvement. On a
year-to-date basis, other expense decreased $.9 million compared to the same
period last year. The company's estimated share of its joint venture losses,
which totaled $1.5 million, partially offset the gain on the conversion and sale
of the Allen Group debentures for the year.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Increased inventory and growth in accounts receivables partially offset the
increased cash flows from net income and noncash expenses, resulting in net cash
from operations of $26.5 million. The increase in inventory is due primarily to
the company's increased investment in its wireless telephone products, equipment
buildings, and distributed communications businesses.
The growth in capital expenditures is the result of manufacturing expansion and
upgrades and the implementation of new business information systems. The
company's investment in its affiliates has decreased compared to fiscal year
1994, due to the fact that basic system construction has been completed at three
of its fiber optic ventures.
In the first quarter of fiscal year 1995, the company issued an Industrial
Development Revenue Bond of $3.8 million. The proceeds from this issue are being
used to finance the company's new equipment building production facility in
Newnan, Georgia.
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 11 - Computation of earnings per share.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter
ended June 30, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
ANDREW CORPORATION
Date 14 August 1995 F. L. English
----------------------- --------------------------------
F. L. English
Chairman of the Board, President
and Chief Executive Officer
Date 14 August 1995 C. R. Nicholas
----------------------- ------------------------------------------
C. R. Nicholas
Vice President, Finance and Administration
and Chief Financial Officer
<PAGE>
EXHIBIT 11
ANDREW CORPORATION
Computation of Earnings Per Share
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
June 30 June 30
--------------- ---------------
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE
Average shares outstanding 38,693 38,133 38,529 37,958
Net effect of dilutive stock options--
based on the treasury stock method
using average market price 700 1,067 588 957
------ ------ ------ ------
TOTAL 39,393 39,200 39,117 38,915
====== ====== ====== ======
Net income 18,446 11,068 43,789 26,587
====== ====== ====== ======
Per share amount 0.47 0.28 1.12 0.68
====== ====== ====== ======
FULLY DILUTED EARNINGS PER SHARE
Average shares outstanding 38,693 38,133 38,529 37,958
Net effect of dilutive stock options--
based on the treasury stock method
using quarter end market price 761 1,080 761 1,080
------ ------ ------ ------
TOTAL 39,454 39,213 39,290 39,038
====== ====== ====== ======
Net income 18,446 11,068 43,789 26,587
====== ====== ====== ======
Per share amount 0.47 0.28 1.11 0.68
====== ====== ====== ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 36,200
<SECURITIES> 0
<RECEIVABLES> 143,106
<ALLOWANCES> 3,041
<INVENTORY> 112,806
<CURRENT-ASSETS> 293,959
<PP&E> 258,699
<DEPRECIATION> 167,000
<TOTAL-ASSETS> 463,072
<CURRENT-LIABILITIES> 82,595
<BONDS> 49,255
<COMMON> 457
0
0
<OTHER-SE> 322,227
<TOTAL-LIABILITY-AND-EQUITY> 463,072
<SALES> 460,220
<TOTAL-REVENUES> 460,220
<CGS> 267,673
<TOTAL-COSTS> 267,673
<OTHER-EXPENSES> 120,478
<LOSS-PROVISION> 699
<INTEREST-EXPENSE> 3,783
<INCOME-PRETAX> 68,420
<INCOME-TAX> 24,631
<INCOME-CONTINUING> 43,789
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43,789
<EPS-PRIMARY> 1.12
<EPS-DILUTED> 1.11
<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>
