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, 1996.
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-- 60,110,490 shares as of April 30, 1996
<PAGE>
INDEX
ANDREW CORPORATION
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated balance sheets--March 31, 1996 and September 30, 1995.
Consolidated statements of income--Three months ended March 31, 1996
and 1995; Six months ended March 31, 1996 and 1995.
Consolidated statements of cash flows--Six months ended
March 31, 1996 and 1995.
Notes to consolidated financial statements--March 31, 1996.
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 10 - Material Contacts
Exhibit 11 - Computation of Earnings per Share.
SIGNATURES
<PAGE>
<TABLE>
ANDREW CORPORATION
CONSOLIDATED BALANCE SHEET
(In thousands)
<CAPTION>
March 31 September 30
1996 1995
--------- ---------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 21,411 $ 46,064
Accounts receivable, less allowances
(Mar. $3,226; Sep. $3,071) 153,809 147,598
Inventories
Finished products 52,521 45,333
Materials and work in process 97,550 78,992
--------- ---------
150,071 124,325
Miscellaneous current assets 5,903 4,758
--------- ---------
TOTAL CURRENT ASSETS 331,194 322,745
OTHER ASSETS
Costs in excess of net assets of businesses
acquired, less accumulated amortization
(Mar. $18,320; Sep. $16,524) 40,982 35,667
Investments in and advances to affiliates 39,815 33,480
Investments and other assets 11,572 10,661
PROPERTY, PLANT, AND EQUIPMENT
Land and land improvements 10,329 9,402
Building 65,986 55,069
Equipment 233,047 212,952
Allowances for depreciation and amortization (185,684) (174,862)
--------- ---------
123,678 102,561
--------- ---------
TOTAL ASSETS $ 547,241 $ 505,114
========= =========
<FN>
The balance sheet at September 30, 1995 has been derived from the audited
financial statements at that date.
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
ANDREW CORPORATION
CONSOLIDATED BALANCE SHEET
(In thousands, except share amounts)
(continued)
<CAPTION>
March 31 September 30
1996 1995
--------- ---------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ -- $ 2,450
Accounts payable 35,605 30,628
Accrued expenses and other liabilities 17,564 17,893
Compensation and related expenses 19,343 25,815
Income taxes 16,937 13,994
Current portion of long-term debt 4,725 4,801
--------- ---------
TOTAL CURRENT LIABILITIES 94,174 95,581
DEFERRED LIABILITIES 5,646 7,087
LONG-TERM DEBT, LESS CURRENT PORTION 45,080 45,255
MINORITY INTEREST 8,149 --
STOCKHOLDERS' EQUITY
Common Stock (par value, $.01 a share:
100,000,000 shares authorized;
68,480,735 shares issued, including treasury) 685 457
Additional paid-in capital 36,030 35,588
Foreign currency translation 2,079 1,077
Retained earnings 403,720 368,517
Treasury stock, at cost
(8,376,164 shares Mar.; 8,431,449 shares Sep.) (48,322) (48,448)
--------- ---------
394,192 357,191
--------- ---------
TOTAL LIABILITIES AND EQUITY $ 547,241 $ 505,114
========= =========
<FN>
The balance sheet at September 30, 1995 has been derived from the audited
financial statements at that date.
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
ANDREW CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share amounts)
<CAPTION>
Three Months Ended Six Months Ended
March 31 March 31
--------------------- ---------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
SALES $ 183,159 $ 163,736 $ 361,083 $ 315,467
Cost of products sold 110,341 97,753 216,412 187,233
--------- --------- --------- ---------
GROSS PROFIT 72,818 65,983 144,671 128,234
OPERATING EXPENSES
Sales and administrative 33,898 35,229 70,870 71,415
Research and development 8,025 6,279 15,436 12,246
--------- --------- --------- ---------
41,923 41,508 86,306 83,661
OPERATING INCOME 30,895 24,475 58,365 44,573
OTHER
Interest expense 1,464 1,562 2,741 3,013
Interest income (529) (741) (1,187) (1,380)
Other expense 1,423 1,589 1,850 2,332
--------- --------- --------- ---------
2,358 2,410 3,404 3,965
INCOME BEFORE INCOME TAXES 28,537 22,065 54,961 40,608
Income taxes 10,245 7,936 19,758 14,525
--------- --------- --------- ---------
NET INCOME $ 18,292 $ 14,129 $ 35,203 $ 26,083
========= ========= ========= =========
NET INCOME PER AVERAGE SHARE OF
COMMON STOCK OUTSTANDING $ 0.30 $ 0.23 $ 0.58 $ 0.43
========= ========= ========= =========
AVERAGE SHARES OUTSTANDING 61,123 60,824 61,108 60,716
========= ========= ========= =========
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
ANDREW CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
<CAPTION>
Six Months Ended
March 31
-------------------
1996 1995
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATIONS
Net Income $ 35,203 $ 26,083
ADJUSTMENTS TO NET INCOME
Equity in losses of affiliates -- 962
Depreciation and amortization 14,998 11,629
Increase in accounts receivable (2,441) (6,070)
Increase in inventories (19,214) (22,580)
Decrease (increase) in miscellaneous
current and other assetS (431) 1,038
Increase in receivables from affiliates (28) (974)
Decrease in accounts payable
and other liabilities (1,644) (8,814)
Other (189) (23)
-------- --------
NET CASH FROM OPERATIONS 26,254 1,251
INVESTING ACTIVITIES
Capital expenditures (26,799) (19,987)
Acquisition of business, net of cash acquired (14,595) --
Investments in and advances to affiliates (6,335) (4,180)
Proceeds from sale of property, plant, and equipment 276 149
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (47,453) (24,018)
FINANCING ACTIVITIES
Proceeds from (payments on) long-term borrowings (744) 3,824
Proceeds from (payments on) short-term borrowings (2,450) 1,400
Stock option plans 474 1,198
-------- --------
NET CASH FROM (USED IN) FINANCING ACTIVITIES (2,720) 6,422
Foreign currency translation adjustments (734) 223
-------- --------
Decrease for the period (24,653) (16,122)
Cash and equivalents at beginning of period 46,064 40,714
-------- --------
CASH AND EQUIVALENTS AT END OF PERIOD $ 21,411 $ 24,592
======== ========
<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,
1996 are not necessarily indicative of the results that may be expected for the
year ending September 30, 1996. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
company's annual report on Form 10-K for the year ended September 30, 1995.
NOTE B--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.
NOTE C--ACQUISITION
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. Andrew exchanged 1,541,564 shares of its common stock
for all of the outstanding stock of the privately held The Antenna Company.
In compliance with the accounting for a pooling of interests Andrew has restated
all current and prior period financial information to reflect the results from
operations of The Antenna Company.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales for the quarter ended March 31, 1996 increased $19.4 million, or 12%
compared to the same period last year. On a year-to-date basis, net sales were
$361.1 million, an increase of $45.6 million or 14% compared to last year. The
international wireless and broadcast markets, along with the recent acquisition
of The Antenna Company, contributed to the sales growth in the quarter, which
offset the continued softness in network products and domestic cellular markets.
The Antenna Company added $11.2 million in sales revenue for the quarter and
$25.1 million for the year.
Cost of products sold as a percentage of sales remained relatively stable for
both the three months ended and the six months ended March 31, 1996 compared to
the same period last year.
Sales and administrative expenses decreased $1.3 million or 4% for the quarter
and remained relatively unchanged on a year-to-date basis when compared to last
year. Research and development expenses increased $1.7 million or 28% for the
quarter and $3.2 million or 26% for the year. This increase is the result of
new projects aimed at the development of new products within the commercial and
government segments.
Other expense decreased $.2 million or 10% for the quarter and $.5 million or
21% for the six months ended March 31, 1996 when compared to the same period
last year. Decreased foreign exchange losses and a reduction in the company's
share of the Russian joint venture losses partially offset the one time charge
of $1.5 million related to the acquisition of The Antenna Company.
LIQUIDITY AND CAPITAL RESOURCES
Increased inventory and growth in accounts receivable partially offset the
increased cash flows from net income and non-cash expenses, resulting in net
cash from operations of $26.3 million. The increase in inventory is primarily
due to the company's increased investment in personal communication systems and
other businesses.
Net cash used in investing activities increased $23.4 million for the six months
ended March 31, 1996. During the first quarter of fiscal 1996 the company
purchased a 51% interest in two Brazilian manufacturing companies: Mapra
Industria e Comercio Ltda. and Gerbo Telecomunicaoes e Servicos Ltda. for $14.6
million net of cash received. Capital expenditures increased $6.8 million or
34% for the six months ended March 31, 1996 compared to the same period last
year. The company's increased investment in manufacturing equipment and
expansion of domestic manufacturing facilities contributed to the increase.
Net cash used in financing activities increased $9.1 million for the six months
ended March 31, 1996 compared to the same period last year. The company
liquidated The Antenna Company's short-term debt of $5.0 million upon
completion of the acquisition.
<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, 1996.
(b) & (c) Items held for 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 32,234,978 0 0 3,712,230
Jon L. Boyes 35,804,306 0 0 142,902
George N. Butzow 35,808,549 0 0 138,659
Kenneth J. Douglas 35,806,568 0 0 140,640
Floyd L. English 35,805,532 0 0 141,676
Jere D. Fluno 35,789,448 0 0 157,760
Carole M. Howard 35,807,864 0 0 139,344
Ormand J. Wade 35,808,292 0 0 138,916
</TABLE>
2. The selection of Ernst & Young to serve as independent public
auditors for fiscal year 1996. The selection of Ernst & Young as
independent public auditors was ratified by votes of 35,887,855 for,
20,775 against, 0 broker/non-votes and 38,578 abstentions.
Note: Share amounts in this exhibit have been restated to reflect a
three-for-two stock split to stockholders of record on February 21, 1996.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 11 - Computation of Earnings per Share
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
March 31, 1996.
<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.
ANDREW CORPORATION
Date May 6, 1996 /s/F. L. English
------------------------- -----------------------
F. L. English
Chairman, President and
Chief Executive Officer
Date May 6, 1996 /s/C. R. Nicholas
------------------------- ----------------------------
C. R. Nicholas
Executive Vice President and
Chief Financial Officer
<PAGE>
ANDREW CORPORATION
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
11. Computation of Earnings Per Share
27. Financial Data Schedule
EXHIBIT 11
<TABLE>
ANDREW CORPORATION
COMPUTATION OF EARNINGS PER SHARE
(In thousands, except per share amounts)
<CAPTION>
Three Months Ended Six Months Ended
March 31 March 31
----------------- -----------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE
Average shares outstanding 60,100 59,277 60,085 59,169
Net effect of dilutive stock options--
based on the treasury stock method
using average market price 824 1,491 775 1,422
------- ------- ------- -------
TOTAL 60,924 60,768 60,860 60,591
======= ======= ======= =======
Net income $18,292 $14,129 $35,203 $26,083
======= ======= ======= =======
Per share amount $ 0.30 $ 0.23 $ 0.58 $ 0.43
======= ======= ======= =======
FULLY DILUTED EARNINGS PER SHARE (NOTE)
Average shares outstanding 60,100 59,277 60,085 59,169
Net effect of dilutive stock options--
based on the treasury method
using ending market price 1,023 1,547 1,023 1,547
------- ------- ------- -------
TOTAL 61,123 60,824 61,108 60,716
======= ======= ======= =======
Net income $18,292 $14,129 $35,203 $26,083
======= ======= ======= =======
Per share amount $ 0.30 $ 0.23 $ 0.58 $ 0.43
======= ======= ======= =======
<FN>
NOTE: This calculation is submitted in accordance with the Securities Exchange
Act of 1934 Release No. 9038 although not required by footnote 2 to
paragraph 14 of APB Opinion No. 15 because it results in dilution of less
than 3%.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 21,411
<SECURITIES> 0
<RECEIVABLES> 157,035
<ALLOWANCES> 3,226
<INVENTORY> 150,071
<CURRENT-ASSETS> 331,194
<PP&E> 309,362
<DEPRECIATION> 185,684
<TOTAL-ASSETS> 547,241
<CURRENT-LIABILITIES> 94,174
<BONDS> 45,080
0
0
<COMMON> 685
<OTHER-SE> 393,507
<TOTAL-LIABILITY-AND-EQUITY> 547,241
<SALES> 361,083
<TOTAL-REVENUES> 361,083
<CGS> 216,412
<TOTAL-COSTS> 216,412
<OTHER-EXPENSES> 86,306
<LOSS-PROVISION> 484
<INTEREST-EXPENSE> 2,741
<INCOME-PRETAX> 54,961
<INCOME-TAX> 19,758
<INCOME-CONTINUING> 35,203
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,203
<EPS-PRIMARY> 0.58
<EPS-DILUTED> 0.58
<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 21, 1996.
</FN>
</TABLE>
