================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
September 18, 1996
Date of Report
(Date of earliest event reported)
Andrew Corporation
(Exact name of registrant as specified in its charter)
Delaware 0-9514 36-2092797
(State or other jurisdiction of (Commission file number) (I.R.S. Employer
incorporation or organization) Identification No.)
10500 W. 153rd Street, Orland Park, Illinois 60462
(Address of principal executive offices)
(708) 349-3300
(Registrant's telephone number, including area code)
No Change
(Former name or former address, if changed since last report.)
================================================================================
<PAGE>
Item 5. Other Events
Supplemental Financial Statements.
In March 1996, Andrew Corporation completed its acquisition of The Antenna
Company, a manufacturer and distributor of wireless telephone antennas and
accessories for mobile applications. The transaction has been accounted for as a
pooling of interests. In compliance with the accounting rules for a pooling of
interests, Andrew has restated its consolidated financial statements and related
notes included in Form 10-K for the fiscal year ended September 30, 1995 to
reflect the results of operations of The Antenna Company for all periods prior
to the merger. Management's Discussion and Analysis and all other items in the
September 30, 1995 Form 10-K were not materially impacted by the merger.
<PAGE>
Signatures
Pursuant to the requirements 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.
Date: September 18, 1996 By: /s/Floyd L. English
----------------
Floyd L. English
Chairman, President and Chief
Executive Officer
Date: September 18, 1996 By: /s/Charles R. Nicholas
-------------------
Charles R. Nicholas
Executive Vice-President and
Chief Financial Officer
<PAGE>
ANDREW CORPORATION
EXHIBIT INDEX
-------------
Exhibit Number Description
- -------------- -----------
23 Consent of Independent Auditors.
27.1 Financial Data Schedule 12/31/95.
27.2 Financial Data Schedule 9/30/95.
27.3 Financial Data Schedule 6/30/95.
27.4 Financial Data Schedule 3/31/95.
27.5 Financial Data Schedule 12/31/94.
27.6 Financial Data Schedule 9/30/95.
99 Restated 1995 Annual Report to Shareholders.
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 (except for Subsequent Events footnote, as to which the date is August 28,
1996) with respect to the consolidated financial statements of Andrew
Corporation included in its Current Report on Form 8-K dated September 18, 1996,
filed with the Securities and Exchange Commission.
/s/Ernst & Young, LLP
Chicago, Illinois
September 18, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 22,893
<SECURITIES> 0
<RECEIVABLES> 159,247
<ALLOWANCES> 3,472
<INVENTORY> 138,482
<CURRENT-ASSETS> 322,351
<PP&E> 298,828
<DEPRECIATION> 180,128
<TOTAL-ASSETS> 533,855
<CURRENT-LIABILITIES> 101,916
<BONDS> 45,879
0
0
<COMMON> 457
<OTHER-SE> 373,167
<TOTAL-LIABILITY-AND-EQUITY> 533,855
<SALES> 177,924
<TOTAL-REVENUES> 177,924
<CGS> 106,071
<TOTAL-COSTS> 106,071
<OTHER-EXPENSES> 44,383
<LOSS-PROVISION> 266
<INTEREST-EXPENSE> 1,277
<INCOME-PRETAX> 26,424
<INCOME-TAX> 9,513
<INCOME-CONTINUING> 16,911
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,911
<EPS-PRIMARY> 0.28
<EPS-DILUTED> 0.28
<FN>
All amounts in this exhibit have been restated to reflect the merger of Andrew
Corporation and The Antenna Company, as well as a three-for-two stock split to
stockholders of record on February 21, 1996.
</FN>
</TABLE>
<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> 46,064
<SECURITIES> 0
<RECEIVABLES> 150,669
<ALLOWANCES> 3,071
<INVENTORY> 124,325
<CURRENT-ASSETS> 322,745
<PP&E> 277,423
<DEPRECIATION> 174,862
<TOTAL-ASSETS> 505,114
<CURRENT-LIABILITIES> 95,581
<BONDS> 45,255
0
0
<COMMON> 457
<OTHER-SE> 356,734
<TOTAL-LIABILITY-AND-EQUITY> 505,114
<SALES> 663,960
<TOTAL-REVENUES> 663,960
<CGS> 381,842
<TOTAL-COSTS> 381,842
<OTHER-EXPENSES> 168,139
<LOSS-PROVISION> 1,148
<INTEREST-EXPENSE> 5,643
<INCOME-PRETAX> 109,473
<INCOME-TAX> 39,518
<INCOME-CONTINUING> 69,955
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 69,955
<EPS-PRIMARY> 1.16
<EPS-DILUTED> 1.16
<FN>
All amounts in this exhibit have been restated to reflect the merger of Andrew
Corporation and The Antenna Company, as well as a three-for-two stock split to
stockholders of record on February 22, 1995 and the three-for-two stock split to
stockholders of record on February 21, 1996.
</FN>
</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> 36,598
<SECURITIES> 0
<RECEIVABLES> 147,385
<ALLOWANCES> 3,044
<INVENTORY> 117,402
<CURRENT-ASSETS> 303,494
<PP&E> 262,466
<DEPRECIATION> 168,675
<TOTAL-ASSETS> 474,699
<CURRENT-LIABILITIES> 88,249
<BONDS> 50,335
0
0
<COMMON> 457
<OTHER-SE> 327,120
<TOTAL-LIABILITY-AND-EQUITY> 474,699
<SALES> 485,945
<TOTAL-REVENUES> 485,945
<CGS> 284,023
<TOTAL-COSTS> 284,023
<OTHER-EXPENSES> 127,632
<LOSS-PROVISION> 699
<INTEREST-EXPENSE> 4,064
<INCOME-PRETAX> 70,343
<INCOME-TAX> 25,300
<INCOME-CONTINUING> 45,043
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 45,043
<EPS-PRIMARY> 0.74
<EPS-DILUTED> 0.74
<FN>
All amounts in this exhibit have been restated to reflect the merger of Andrew
Corporation and The Antenna Company, as well as a three-for-two stock split to
stockholders of record on February 22, 1995 and the three-for-two stock split to
stockholders of record on February 21, 1996.
</FN>
</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> 24,592
<SECURITIES> 0
<RECEIVABLES> 141,999
<ALLOWANCES> 3,200
<INVENTORY> 111,711
<CURRENT-ASSETS> 280,862
<PP&E> 252,970
<DEPRECIATION> 163,833
<TOTAL-ASSETS> 451,308
<CURRENT-LIABILITIES> 89,915
<BONDS> 50,923
0
0
<COMMON> 457
<OTHER-SE> 304,216
<TOTAL-LIABILITY-AND-EQUITY> 451,308
<SALES> 315,467
<TOTAL-REVENUES> 315,467
<CGS> 187,233
<TOTAL-COSTS> 187,233
<OTHER-EXPENSES> 83,661
<LOSS-PROVISION> 524
<INTEREST-EXPENSE> 3,013
<INCOME-PRETAX> 40,608
<INCOME-TAX> 14,525
<INCOME-CONTINUING> 26,083
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26,083
<EPS-PRIMARY> 0.43
<EPS-DILUTED> 0.43
<FN>
All amounts in this exhibit have been restated to reflect the merger of Andrew
Corporation and The Antenna Company, as well as a three-for-two stock split to
stockholders of record on February 22, 1995 and the three-for-two stock split to
stockholders of record on February 21, 1996.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> DEC-31-1994
<CASH> 34,380
<SECURITIES> 0
<RECEIVABLES> 131,692
<ALLOWANCES> 3,041
<INVENTORY> 102,368
<CURRENT-ASSETS> 271,942
<PP&E> 241,297
<DEPRECIATION> 160,038
<TOTAL-ASSETS> 435,324
<CURRENT-LIABILITIES> 91,068
<BONDS> 50,949
0
0
<COMMON> 304
<OTHER-SE> 287,520
<TOTAL-LIABILITY-AND-EQUITY> 435,324
<SALES> 151,731
<TOTAL-REVENUES> 151,731
<CGS> 89,480
<TOTAL-COSTS> 89,480
<OTHER-EXPENSES> 42,153
<LOSS-PROVISION> 300
<INTEREST-EXPENSE> 1,451
<INCOME-PRETAX> 18,543
<INCOME-TAX> 6,589
<INCOME-CONTINUING> 11,954
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,954
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0.20
<FN>
All amounts in this exhibit have been restated to reflect the merger of Andrew
Corporation and The Antenna Company, as well as a three-for-two stock split to
stockholders of record on February 22, 1995 and the three-for-two stock split to
stockholders of record on February 21, 1996.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<CASH> 40,714
<SECURITIES> 0
<RECEIVABLES> 133,265
<ALLOWANCES> 2,826
<INVENTORY> 91,917
<CURRENT-ASSETS> 269,160
<PP&E> 233,334
<DEPRECIATION> 156,716
<TOTAL-ASSETS> 425,326
<CURRENT-LIABILITIES> 97,455
<BONDS> 46,092
0
0
<COMMON> 304
<OTHER-SE> 276,249
<TOTAL-LIABILITY-AND-EQUITY> 425,326
<SALES> 588,233
<TOTAL-REVENUES> 588,233
<CGS> 345,768
<TOTAL-COSTS> 345,768
<OTHER-EXPENSES> 163,377
<LOSS-PROVISION> 1,164
<INTEREST-EXPENSE> 5,492
<INCOME-PRETAX> 71,644
<INCOME-TAX> 25,877
<INCOME-CONTINUING> 45,767
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 45,767
<EPS-PRIMARY> 0.76
<EPS-DILUTED> 0.76
<FN>
All amounts in this exhibit have been restated to reflect the merger of Andrew
Corporation and The Antenna Company, as well as a three-for-two stock split to
stockholders of record on February 16, 1994, a three-for-two stock split to
stockholders of record on February 22, 1995 and the three-for-two stock split to
stockholders of record on February 21, 1996.
</FN>
</TABLE>
REPORT OF INDEPENDENT AUDITORS
We have audited the supplemental consolidated balance sheets of Andrew
Corporation (formed as a result of the consolidation of Andrew Corporation and
The Antenna Company) as of September 30, 1995 and 1994 and the related
supplemental consolidated statements of income, stockholders' equity, and cash
flows for each of the three years in the period ended September 30, 1995. The
supplemental consolidated financial statements give retroactive effect to the
merger of Andrew Corporation and The Antenna Company, on March 15, 1996, which
has been accounted for using the pooling of interests method as described in
the notes to the supplemental consolidated financial statements. These
supplemental financial statements are the responsibility of the management of
Andrew Corporation. Our responsibility is to express an opinion on these
supplemental financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those stanadards require that we plan and perform the audit to
obtain reaonable 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 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 supplemental financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Andrew
Corporation at September 30, 1995 and 1994, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
September 30, 1995 after giving retroactive effect to the merger of The Antenna
Company, as described in the notes to the supplemental consolidated financial
statements, in conformity with generally accepted accounting principles.
/s/ Ernst & Young, LLP
November 3, 1995
except for Subsequent Events footnote,
as to which the date is August 28, 1996
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
ANDREW CORPORATION Year Ended September 30
- ---------------------------------------------------------------------------------
Amounts in Thousands, Except per Share Amounts 1995 1994 1993
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
SALES $663,960 $588,233 $451,957
Cost of products sold 381,842 345,768 265,357
- ---------------------------------------------------------------------------------
GROSS PROFIT 282,118 242,465 186,600
OPERATING EXPENSES
Sales and administrative 143,015 136,766 114,558
Research and development 25,124 26,611 22,479
- ---------------------------------------------------------------------------------
168,139 163,377 137,037
- ---------------------------------------------------------------------------------
OPERATING INCOME 113,979 79,088 49,563
OTHER
Interest expense 5,643 5,492 5,772
Interest income (2,562) (1,343) (830)
Other expense (income) 1,425 3,295 (1,530)
- ---------------------------------------------------------------------------------
4,506 7,444 3,412
- ---------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 109,473 71,644 46,151
Income taxes 39,518 25,877 16,748
- ---------------------------------------------------------------------------------
NET INCOME $69,955 $45,767 $29,403
=================================================================================
NET INCOME PER AVERAGE SHARE
OF COMMON STOCK OUTSTANDING $1.16 $0.76 $0.50
=================================================================================
AVERAGE SHARES OUTSTANDING 60,485 60,308 59,192
=================================================================================
<FN>
See Notes to Consolidated Financial Statements
</FN>
</TABLE>
<PAGE>
<TABLE>
ANDREW CORPORATION
CONSOLIDATED BALANCE SHEETS
<CAPTION>
September 30
- ---------------------------------------------------------------------
Dollars in Thousands 1995 1994
- ---------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 46,064 $ 40,714
Accounts receivables, less allowances
(1995 - $3,071; 1994 - $2,826) 147,598 130,439
Inventories
Finished products 45,333 34,005
Materials and work in process 78,992 57,912
- ---------------------------------------------------------------------
124,325 91,917
Miscellaneous current assets 4,758 6,090
- ---------------------------------------------------------------------
Total Current Assets 322,745 269,160
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 212,952 172,416
Allowances for depreciation and amortization (174,862) (156,716)
- ---------------------------------------------------------------------
102,561 76,618
- ---------------------------------------------------------------------
$ 505,114 $ 425,326
- ---------------------------------------------------------------------
<FN>
See Notes to Consolidated Financial Statements
</FN>
</TABLE>
<PAGE>
<TABLE>
ANDREW CORPORATION
CONSOLIDATED BALANCE SHEET
<CAPTION>
September 30
- -------------------------------------------------------------------------
Dollars in Thousands 1995 1994
- -------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes Payable $ 2,450 $ 1,700
Accounts payable 30,628 26,894
Accrued expenses and other liabilites 17,893 24,740
Compensation and related expenses 25,815 23,228
Income taxes 13,994 15,188
Current portion of long-term debt 4,801 5,705
- -------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 95,581 97,455
DEFERRED LIABILITIES 7,087 5,226
LONG-TERM DEBT, less current portion 45,255 46,092
STOCKHOLDERS' EQUITY
Common stock (par value, $.01 a share:
100,000,000 shares authorized;
68,480,735 shares issued, including treasury) 457 304
Additional paid-in capital 35,588 22,356
Foreign currency translation 1,077 (1,250)
Retained earnings 368,517 298,562
Treasury stock, at cost (8,431,449 shares in 1995;
9,463,546 shares in 1994) (48,448) (43,419)
- -------------------------------------------------------------------------
357,191 276,553
- -------------------------------------------------------------------------
$ 505,114 $ 425,326
- -------------------------------------------------------------------------
<FN>
See Notes to Consolidated Financial Statements
</FN>
</TABLE>
<PAGE>
<TABLE>
ANDREW CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Year Ended September 30
- ------------------------------------------------------------------------------------
Dollars in Thousands 1995 1994 1993
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATIONS
Net Income $ 69,955 $ 45,767 $ 29,403
ADUSTMENTS TO NET INCOME
Depreciation and amortization 25,803 22,889 21,478
Equity in losses of affiliates 1,462 913 150
Increase in accounts receivable (15,334) (18,087) (1,078)
Increase in inventories (32,078) (17,725) (5,185)
Decrease (increase) in miscellaneous
current and other assets 5,488 (1,667) (1,479)
Increase in receivable from affiliates (1,171) (6,467) -
Increase in accounts payable and
other liabilities 1,638 27,561 10,204
Other 53 (841) 1,418
- ------------------------------------------------------------------------------------
NET CASH FROM OPERATIONS 55,816 52,343 54,911
INVESTING ACTIVITIES
Capital expenditures (48,076) (28,471) (18,479)
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 (55,367) (38,692) (33,295)
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 3,842 - 800
Payments on long-term debt (5,583) (696) (4,202)
Short-term borrowings (payments)-net 750 1,700 (8,000)
Stock purchase and option plans 5,561 3,255 5,464
- ------------------------------------------------------------------------------------
NET CASH FROM (USED IN) FINANCING ACTIVITIES 4,570 4,259 (5,938)
Effect of exchange rate changes on cash 331 803 (1,440)
- ------------------------------------------------------------------------------------
Increase for the year 5,350 18,713 14,238
Cash and equivalents at beginning of year 40,714 22,001 7,763
- ------------------------------------------------------------------------------------
CASH AND EQUIVALENTS AT END OF YEAR $ 46,064 $ 40,714 $ 22,001
- ------------------------------------------------------------------------------------
<FN>
See Notes to Consolidated Financial Statements
</FN>
</TABLE>
<PAGE>
ANDREW CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Year Ended September 30
- ---------------------------------------------------------------------------------------------
In Thousands 1995 1994 1993
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK ISSUED
Balance at beginning of year (1993 as previously stated) $ 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 (1993 as previously stated) $ 22,356 $ 19,599 $ 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
Pooling of Interests with The Antenna Company - - (8,849)
- ---------------------------------------------------------------------------------------------
BALANCE AT END OF YEAR $ 35,588 $ 22,356 $ 19,599
=============================================================================================
RETAINED EARNINGS
Balance at beginning of year (1993 as previously stated) $ 298,562 $ 252,795 $ 222,672
Net Income 69,955 45,767 29,403
Pooling of Interests with The Antenna Company - - 720
- ---------------------------------------------------------------------------------------------
BALANCE AT END OF YEAR $ 368,517 $ 298,562 $ 252,795
=============================================================================================
TREASURY STOCK
Balance at beginning of year (1993 as previously stated) $ (43,419) $ (45,323) $ (61,144)
Stock purchase and option plans (5,029) 1,904 6,939
Pooling of Interests with The Antenna Company - - 8,882
- ---------------------------------------------------------------------------------------------
BALANCE AT END OF YEAR $ (48,448) $ (43,419) $ (45,323)
=============================================================================================
<FN>
See Notes to Consolidated Financial Statements
</FN>
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 39% of total inventories in 1995
and 42% of total inventories in 1994. The remaining inventories are valued on
the first-in, first-out (FIFO) method and the weighted average 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.
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 US 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 seperate component of stockholders'
equity. Gains and losses resulting from foreign currency transactions are
included in determining net income.
<PAGE>
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 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>
Investments in Affiliates
The company's investments in affiliates represent 40 to 50 percent interests in
several start-up network telecommunications joint ventures located 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 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
$11,696,000, $11,027,000, and $7,025,000 respectively.
<PAGE>
Borrowings
- --------------------------------------------------------------------------------
Lines of Credit
The Company maintains a $50 million revolving line of credit agreement with
Bank of America, Illinois and a $5 million line of credit agreement with
LaSalle National Bank. The maximum outstanding during 1995 under the LaSalle
line of credit was $3.3 million with a weighted average interest rate of 8.75%.
There were no amounts outstanding under the Bank of America, Illinois line of
credit at September 30, 1995.
<TABLE>
Long-term Debt
Long-term debt at September 30 consisted of the following:
<CAPTION>
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 -
Other 801 1,797
Less Current Portion 4,801 5,705
------- -------
Total Long-Term Debt $45,255 $46,092
======= =======
</TABLE>
Under the terms of the loan agreements, the company has agreed to maintain
certain levels of working capital and net worth. The loan agreements further
provide restrictions 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:
In Thousands 1996 1997 1998 1999 2000 Thereafter
------ ------ ------ ------ ------ ----------
$4,801 $5,080 $4,555 $4,545 $4,545 $26,530
Cash payments for interest on all borrowings were $5,339,000, $5,307,000 and
$5,398,000 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>
INCOME TAXES
- --------------------------------------------------------------------------------
<TABLE>
The composition of the provision for income taxes follows:
<CAPTION>
YEAR ENDED SEPTEMBER 30
DOLLARS IN THOUSANDS 1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Currently Payable:
Federal $ 19,957 $ 14,191 $ 4,809
Non-United States 13,640 12,860 10,817
State 3,624 3,008 1,391
-------- -------- --------
37,221 30,059 17,017
Deferred (Credit):
Federal and State 2,199 (3,662) (232)
Non-United States 98 (520) (37)
-------- -------- --------
2,297 (4,182) (269)
-------- -------- --------
$ 39,518 $ 25,877 $ 16,748
======== ======== ========
Income Taxes Paid $ 27,387 $ 19,461 $ 8,155
======== ======== ========
Components of Income
Before Income Taxes:
United States 67,079 32,918 14,577
Non-United States 42,394 38,726 31,574
-------- -------- --------
$109,473 $ 71,644 $ 46,151
======== ======== ========
</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 0.3 0.1 (0.1)
------ ------ ------
Effective Tax Rate 36.1 % 36.1 % 36.3 %
====== ====== ======
</TABLE>
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 $4,584,000 at
September 30, 1995, which would be payable should undistributed net income of
$75,329,000 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>
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 6,075,000 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 675,000 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>
Year Ended September 30
--------------------------------------
1995 1994 1993
---------- --------- ----------
<S> <C> <C> <C>
Outstanding at beginning of year 2,347,200 2,531,142 3,929,810
Granted 558,675 693,225 337,500
Expired or cancelled (48,101) (95,715) (280,085)
Exercised (1,279,350) (781,452) (1,456,083)
---------- --------- ----------
Outstanding at End of Year 1,578,424 2,347,200 2,531,142
========== ========= ==========
Exercisable at End of Year 204,525 765,742 699,975
========== ========= ==========
</TABLE>
<TABLE>
<CAPTION>
Year Ended September 30
-------------------------------------------------
1995 1994 1993
---------------- --------------- --------------
<S> <C> <C> <C>
Price range of options:
Outstanding at end of year $ 1.97 - 25.67 $ 1.97 - 14.37 $ 1.97 - 8.07
Granted during the year $ 22.89 - 25.67 $ 10.45 - 14.37 $ 6.26 - 8.07
Exercised during the year $ 2.89 - 6.26 $ 2.07 - 8.07 $ 1.97 - 5.87
</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 1,181,250
shares of Common Stock to be sold to employees at 85% of market value. Through
September 30, 1995, 277,767 shares have been issued under the Plan.
At September 30, 1995, 3,491,685 shares of Common Stock were reserved for the
various stock plans described above.
<PAGE>
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>
Year Ended September 30
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
(1993 as previously stated) 4,206,023 3,038,920 1,982,452
Three-for-two stock split 2,103,012 1,519,460 --
Two-for-one stock split -- -- 1,825,057
Stock purchase and option plans (688,065) (352,357) (311,831)
Pooling of Interests with The Antenna Company -- -- (456,758)
---------- ---------- ----------
Balance at End of Year 5,620,970 4,206,023 3,038,920
========== ========== ==========
</TABLE>
Foreign currency translation adjustments increased equity by $2.3 million during
the year ended September 30, 1995. Foreign currency translation adjustments
increased equity $4.2 million and decreased equity $7.6 million during the years
ended September 30, 1994 and 1993, respectively.
<PAGE>
<TABLE>
Geographic Area Information
<CAPTION>
______________________________________________________________
In thousands 1995 1994 1993
- --------------------------------------------------------------
<S> <C> <C> <C>
Sales:
United States:
Customers $479,883 $440,439 $328,879
Intercompany 62,302 42,754 34,539
- --------------------------------------------------------------
542,185 483,193 363,418
Europe:
Customers 129,029 99,039 81,134
Intercompany 13,890 5,462 2,510
- --------------------------------------------------------------
142,919 104,501 83,644
Australasia:
Customers 32,531 29,254 17,201
Intercompany 1,208 390 228
- --------------------------------------------------------------
33,739 29,644 17,429
Other Americas:
Customers 22,517 19,501 24,743
Intercompany 5,285 3,449 3,008
- --------------------------------------------------------------
27,802 22,950 27,751
Eliminations 82,685 52,055 40,285
- --------------------------------------------------------------
Consolidated Sales $663,960 $588,233 $451,957
- --------------------------------------------------------------
United States - Export Sales $103,090 $101,829 $54,253
- --------------------------------------------------------------
Operating Income:
United States 73,230 44,733 20,074
Europe 20,092 17,629 17,983
Australasia 16,979 12,447 6,472
Other Americas 3,678 4,279 5,034
- --------------------------------------------------------------
Consolidated Operating Income $113,979 $79,088 $49,563
- --------------------------------------------------------------
Assets Identifiable to:
United States 371,455 321,497 258,642
Europe 101,550 76,758 61,112
Australasia 13,019 11,406 7,273
Other Americas 19,090 15,665 16,849
- --------------------------------------------------------------
Consolidated Assets $505,114 $425,326 $343,876
- --------------------------------------------------------------
</TABLE>
<PAGE>
Industry Segment Information
- --------------------------------------------------------------------------------
The company operates in three strategic business segments: commercial,
government and network. The commercial segment serves commercial markets,
including telecommunications 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 telecommunication 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
In Thousands Commercial Government Network And Other Total
---------- ---------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
1995:
Sales $579,984 $ 41,455 $ 39,217 $ 3,304 $663,960
Operating income (loss) 142,658 3,879 (3,048) (29,510) 113,979
Identifiable assets 329,039 75,308 36,834 63,933 505,114
Capital Expenditures 42,535 1,436 1,305 2,800 48,076
Depreciation and amortization 19,132 2,131 3,202 1,338 25,803
1994:
Sales $487,579 $ 43,611 $ 52,208 $ 4,835 $588,233
Operating income (loss) 114,590 1,067 (5,409) (31,160) 79,088
Identifiable assets 238,276 66,800 42,502 77,748 425,326
Capital Expenditures 24,362 1,527 655 1,927 28,471
Depreciation and amortization 14,076 3,256 3,494 2,063 22,889
1993:
Sales $336,621 $ 53,958 $ 57,681 $ 3,697 $451,957
Operating income (loss) 74,145 2,547 (1,586) (25,543) 49,563
Identifiable assets 177,061 65,109 52,131 49,575 343,876
Capital Expenditures 11,453 2,614 1,975 2,437 18,479
Depreciation and amortization 12,743 3,531 3,440 1,764 21,478
</TABLE>
<PAGE>
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>
- -----------------------------------------------------------------------------------------
In Thousands, Except Per Share Amounts December March June September Total
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995:
Sales 151,731 163,736 170,478 178,015 663,960
Gross profit 62,251 65,983 73,688 80,196 282,118
Income before income taxes 18,543 22,065 29,735 39,130 109,473
Net Income 11,954 14,129 18,960 24,912 69,955
Net income per share 0.20 0.23 0.31 0.41 1.16<F1>
Common Stock Price Range:
High 23.83 29.83 38.59 42.67
Low 19.67 22.67 27.33 36.67
- -----------------------------------------------------------------------------------------
1994:
Sales 128,976 149,205 143,464 166,588 588,233
Gross profit 51,029 55,236 61,297 74,903 242,465
Income before income taxes 10,218 14,865 17,967 28,594 71,644
Net Income 6,584 9,511 11,505 18,167 45,767
Net income per share 0.11 0.16 0.19 0.30 0.76
Common Stock Price Range:
High 12.92 15.42 17.58 22.33
Low 8.75 10.75 13.67 16.00
- ----------------------------------------------------------------------------------------
<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>
SUBSEQUENT EVENTS
- --------------------------------------------------------------------------------
Stock Split
On February 7, 1996, the Company's Board of Directors declared a three-for-two
stock split to stockholders of record on February 21, 1996, payable March 6,
1996. All share and per share amounts have been restated for all periods
presented to reflect the stock split.
Business Acquisitions
In March 1996 Andrew Corporation completed its acquisition of The Antenna
Company, a manufacturer and distributor of wireless telephone antennas and
accessories for mobile applications. The transaction has been accounted for as a
pooling of interests, and accordingly, the accompanying financial statements
have been restated to include the accounts and operations of The Antenna Company
for all perions prior to the merger. Andrew exchanged 1,541,564 shares of its
common stock for all the outstanding stock of the privately held The Antenna
Company.
Separate results of the combining entities for the three years ended September
30, 1995 are as follows:
<TABLE>
<CAPTION>
Year Ended September 30
-----------------------------------------
In Thousands 1995 1994 1993
-----------------------------------------
<S> <C> <C> <C>
Sales:
Andrew Corporation $626,463 $558,457 $430,820
The Antenna Company 37,497 29,776 21,137
-----------------------------------------
$663,960 $558,233 $451,957
=========================================
Net Income:
Andrew Corporation $ 67,809 $ 44,395 $ 27,862
The Antenna Company 2,146 1,372 1,541
-----------------------------------------
$ 69,955 $ 45,767 $ 29,403
=========================================
</TABLE>
