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 MARCH 31, 1995.
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
------------------ -------------------
COMMISSION FILE NUMBER 0-9514
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--38,528,728 shares as of April 30, 1995
--------------------------------------------------------------------
<PAGE>
INDEX
ANDREW CORPORATION
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated balance sheets--March 31, 1995 and September 30, 1994.
Consolidated statements of income--Three months ended March 31, 1995
and 1994; Six months ended March 31, 1995 and 1994.
Consolidated statements of cash flows--Six months ended March 31,
1995 and 1994.
Notes to consolidated financial statements--March 31, 1995.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
Item 6. Exhibits and Reports on Form 8-K.
EXHIBIT 11 - Computation of Earnings per Share.
SIGNATURES
<PAGE>
ANDREW CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
MARCH 31 September 30
1995 1994
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 24,308 $ 40,267
Accounts receivable, less allowances
(Mar. $3,198; Sept. $2,769) 135,175 126,821
Inventories
Finished products 37,369 31,413
Materials and work in process 68,953 56,174
----------- ------------
106,322 87,587
Miscellaneous current assets 5,582 5,974
----------- ------------
TOTAL CURRENT ASSETS 271,387 260,649
----------- ------------
OTHER ASSETS
Costs in excess of net assets of businesses
acquired, less accumulated amortization
(Mar. $15,239; Sept. $13,919) 36,965 38,272
Investments in and advances to affiliates 30,338 27,119
Investments and other assets 14,006 14,157
PROPERTY, PLANT, AND EQUIPMENT
Land and land improvements 8,579 8,496
Building 53,438 52,422
Equipment 187,430 169,716
Allowances for depreciation and amortization (162,357) (155,668)
----------- ------------
87,090 74,966
----------- ------------
TOTAL ASSETS $ 439,786 $ 415,163
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 27,549 $ 24,902
Accrued expenses and other liabilities 21,599 24,354
Compensation and related expenses 18,824 22,928
Income taxes 11,931 14,899
Current portion of long-term debt 4,545 4,545
----------- ------------
TOTAL CURRENT LIABILITIES 84,448 91,628
DEFERRED LIABILITIES 5,797 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 30,506 31,205
Foreign currency translation 1,327 (1,283)
Retained earnings 320,272 294,929
Treasury stock, at cost (7,127,103 shares Mar.;
7,336,740 shares Sept.) (52,276) (52,301)
----------- ------------
300,286 272,854
----------- ------------
TOTAL LIABILITIES AND EQUITY $ 439,786 $ 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 Six Months Ended
March 31 March 31
---------------------- ----------------------
1995 1994 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
SALES $ 156,343 $ 142,159 $ 298,948 $ 263,905
Cost of products sold 92,895 89,476 176,742 162,402
--------- --------- --------- ---------
GROSS PROFIT 63,448 52,683 122,206 101,503
OPERATING EXPENSES
Sales and administrative 33,145 30,665 67,260 61,989
Research and development 5,836 6,346 11,476 12,948
--------- --------- --------- ---------
38,981 37,011 78,736 74,937
OPERATING INCOME 24,467 15,672 43,470 26,566
OTHER
Interest expense 1,460 1,323 2,843 2,558
Interest income (735) (222) (1,371) (507)
Other (income) expense 1,696 365 2,399 267
--------- --------- --------- ---------
2,421 1,466 3,871 2,318
INCOME BEFORE INCOME TAXES 22,046 14,206 39,599 24,248
Income taxes 7,937 5,114 14,256 8,729
--------- --------- --------- ---------
NET INCOME $ 14,109 $ 9,092 $ 25,343 $ 15,519
========= ========= ========= =========
NET INCOME PER AVERAGE SHARE
OF COMMON STOCK OUTSTANDING $ 0.36 $ 0.23 $ 0.64 $ 0.40
========= ========= ========= =========
AVERAGE SHARES OUTSTANDING 39,521 39,068 39,449 39,023
========= ========= ========= =========
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
ANDREW CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
March 31
1995 1994
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATIONS
Net Income $ 25,343 $ 15,519
ADJUSTMENTS TO NET INCOME
Equity in losses of affiliates 962
Depreciation and amortization 11,201 10,769
CHANGE IN ASSETS AND LIABILITIES
Accounts receivable (6,064) (19,404)
Inventories (21,521) (14,460)
Prepaid expenses and other assets 1,100 (644)
Receivables from affiliates (974) (4,703)
Accounts payable and other liabilities (8,061) 10,062
Other (23) (4)
--------- ---------
NET CASH FROM (USED IN) OPERATIONS 1,963 (2,865)
INVESTING ACTIVITIES
Capital expenditures (19,165) (11,439)
Investments in and advances to affiliates (4,180) (8,944)
Proceeds from sale of property, plant,
and equipment 149 80
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (23,196) (20,303)
FINANCING ACTIVITIES
Proceeds from long-term debt 3,800
Proceeds from short-term borrowings 10,501
Stock purchase and option plans 1,198 888
--------- ---------
NET CASH FROM FINANCING ACTIVITIES 4,998 11,389
Effect of exchange rate changes on cash 276 (205)
--------- ---------
Decrease for the period (15,959) (11,984)
Cash and equivalents at beginning of period 40,267 21,729
--------- ---------
CASH AND EQUIVALENTS AT END OF PERIOD $ 24,308 $ 9,745
========= =========
<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 March 31, 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 March 31, 1995
Net sales for the quarter ended March 31, 1995 increased $14.2 million, or 10%
compared to the same period last year. On a year-to-date basis, net sales
increased $35.0 million, a 13% increase over the first six months of fiscal year
1994. Fiscal year 1994 results included sales from the company's major cellular
project in Argentina, which totaled $31.9 million for the first six months of
the year and $24.5 million for the quarter. While the worldwide wireless
communications market fueled most of the current year sales growth, the company
also saw strengthening in both the U.S. and international terrestrial microwave
and television broadcast markets. The commercial segment remained the strongest
performer due to worldwide deregulation of communications markets, equipment
upgrading by television stations, and international wireless television growth.
The growth in the commercial segment was partially offset by weaknesses in the
network products segment. The government electronics business sales remained
consistent with last year's results.
Total backlog has grown substantially since the 1994 fiscal year end. Total
backlog has increased $72 million to $157 million, while backlog over 12 months
has increased $19 million to $20 million during the first six months of fiscal
year 1995. These increases are 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 decreased to 59.4%, down from
62.9% for the prior year quarter. For the first six months, cost of products
sold was 59.1% of sales compared to 61.5% in the same period last year. The
margin improvement for the quarter and for the first six months reflects the
increased demand for the company's higher margin products, particularly those of
the commercial segment, increased manufacturing productivity, and lower than
average margins on the Argentina project in the prior year.
As a percentage of revenue, sales and administrative expenses for both the
quarter and for the first six months remained relatively unchanged compared with
the same period in fiscal year 1994. The dollar increase in selling and
administrative expenses was driven by business volume related costs in the
commercial segment, such as selling expenses, administrative staffing, and
operating performance based compensation costs. Research and development
expenses for the quarter decreased $.5 million compared to the prior year's
quarter. For the first six months of fiscal year 1995, research and development
expenses decreased $1.5 million or 11% compared to the same period last year.
Both decreases resulted from cost control efforts and from Network Products
narrowing its focus to local area network (LAN) products.
Other expense for the quarter ended March 31, 1995 increased $1.3 million
compared with the second quarter of fiscal year 1994. Foreign exchange losses of
$.6 million, and the company's share of its Russian joint venture losses drove
this increase. For the year, other expense totaled $2.4 million, an increase of
$2.1 million over the first six months of fiscal year 1994. This increase was
primarily the result of foreign exchange losses increasing $1.1 million compared
to last year, and the company's share of its Russian joint venture losses, which
increased $1.0 million.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Operating cash flow derived from increased fiscal year 1995 earnings was
partially offset by higher inventory investments, particularly in the
distributed communications, concrete shelter, and wireless telephone products
businesses.
Capital expenditure growth resulted from manufacturing expansion and equipment
upgrades. The company has also made significant investments in state-of-the-art
business information systems hardware and software. Compared to the prior year,
the company's rate of investment in affiliates has decreased, due principally to
the completion of basic system construction for three Russian fiber optic joint
ventures in fiscal year 1994.
During the first quarter of fiscal year 1995, the company financed its new
concrete shelter facility in Newnan, Georgia by issuing an Industrial
Development Revenue Bond for $3.8 million.
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) Andrew's Annual Meeting of Stockholders was held on February 8, 1995.
(b) & (c) Items submitted to a vote
<TABLE>
<CAPTION>
Number of Shares Voted
Broker/
For Against Non-Votes Abstentions
---------- ------- --------- -----------
<S> <C> <C> <C> <C>
1. Election of Directors
John G. Bollinger 20,847,453 0 0 1,878,271
Jon L. Boyes 22,378,113 0 0 347,611
George N. Butzow 22,378,593 0 0 347,131
Kenneth J. Douglas 22,377,813 0 0 347,911
Floyd L. English 22,377,393 0 0 348,331
Donald N. Frey 22,378,029 0 0 347,695
Carole M. Howard 22,377,833 0 0 347,891
Armand J. Wade 22,378,143 0 0 347,581
</TABLE>
2. Approval of a proposal to amend the Management Incentive Program
to preserve the company's tax deduction under Section 162(m) of the
Internal Revenue Code. The proposal was ratified by votes of
21,138,052 for; 583,265 against; 415,547 broker/non-votes and 588,860
abstentions.
3. Approval of Annual Bonus Program and Long-Term Incentive Program.
Both programs were ratified by a vote of 20,862,497 for; 862,541
against; 415,547 broker/non-votes and 585,139 abstentions.
4. The selection of Ernst & Young to serve as independent public
auditors for fiscal year 1995. The selection of Ernst & Young as
independent public auditors was ratified by votes of 22,614,839 for;
9,870 against; 0 broker/non-votes and 101,015 abstentions.
Note: Share amounts in this exhibit have been restated to reflect a
three-for-two stock split to stockholders of record on February 22, 1995.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 11 - Computation of earnings per share.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
March 31, 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 12 May 1995 F. L. English
-------------------------- ------------------------------------------
F. L. English
Chairman of the Board, President
and Chief Executive Officer
Date 12 May 1995 C. R. Nicholas
-------------------------- ------------------------------------------
C. R. Nicholas
Vice President, Finance and Administration
and Chief Financial Officer
EXHIBIT 11
ANDREW CORPORATION
COMPUTATION OF EARNINGS PER SHARE
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31 March 31
1995 1994 1995 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE
Average shares outstanding 38,490 37,916 38,418 37,871
Net effect of dilutive stock options--
based on the treasury stock method
using average market price 994 1,124 948 1,040
------- ------- ------- -------
TOTAL 39,484 39,040 39,366 38,911
======= ======= ======= =======
Net income $14,109 $ 9,092 $25,343 $15,519
======= ======= ======= =======
Per share amount $ .36 $ .23 $ .64 $ .40
======= ======= ======= =======
FULLY DILUTED EARNINGS PER SHARE
Average shares outstanding 38,490 37,916 38,418 37,871
Net effect of dilutive stock options--
based on the treasury stock method
using quarter end market price 1,031 1,152 1,031 1,152
------- ------- ------- -------
TOTAL 39,521 39,068 39,449 39,023
======= ======= ======= =======
Net income $14,109 $ 9,092 $25,343 $15,519
======= ======= ======= =======
Per share amount $ .36 $ .23 $ .64 $ .40
======= ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> MAR-31-1995
<CASH> 24,308
<SECURITIES> 0
<RECEIVABLES> 138,373
<ALLOWANCES> 3,198
<INVENTORY> 106,322
<CURRENT-ASSETS> 271,387
<PP&E> 249,447
<DEPRECIATION> 162,357
<TOTAL-ASSETS> 439,786
<CURRENT-LIABILITIES> 84,448
<BONDS> 49,255
<COMMON> 457
0
0
<OTHER-SE> 299,829
<TOTAL-LIABILITY-AND-EQUITY> 439,786
<SALES> 298,948
<TOTAL-REVENUES> 298,948
<CGS> 176,742
<TOTAL-COSTS> 176,742
<OTHER-EXPENSES> 78,736
<LOSS-PROVISION> 524
<INTEREST-EXPENSE> 2,843
<INCOME-PRETAX> 39,599
<INCOME-TAX> 14,256
<INCOME-CONTINUING> 25,343
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,343
<EPS-PRIMARY> 0.64
<EPS-DILUTED> 0.64
<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>
