SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM 10-Q

(Mark One)

OR

For the transition period from Not Applicable to __________________

ALLEN TELECOM INC.

(Registrant’s Telephone Number, Including Area Code)      (216) 765-5855

NOT APPLICABLE

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, 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:

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ALLEN TELECOM INC.

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ALLEN TELECOM INC.
PART I – FINANCIAL INFORMATION
ITEM 1 – FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)

See accompanying notes to the Condensed Consolidated Financial Statements.

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ALLEN TELECOM INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, Except Per Share Data)
(Unaudited)

See accompanying notes to the Condensed Consolidated Financial Statements.

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ALLEN TELECOM INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)

See accompanying notes to the Condensed Consolidated Financial Statements.

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ALLEN TELECOM INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Amounts in Thousands)
(Unaudited)

See accompanying notes to the Condensed Consolidated Financial Statements.

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ALLEN TELECOM INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

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ALLEN TELECOM INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Continued)

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ALLEN TELECOM INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Continued)

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ALLEN TELECOM INC.
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Results of Operations

Summary:

Allen Telecom Inc. reported a net profit of $2.2 million ($.08 per share) for the three months ended June 30, 2000, as compared with a breakeven ($.00 per share) for the three months ended June 30, 1999. For the six months ended June 30, 2000 the Company reported a net profit of $4.1 million ($.15 per share), as compared with a net profit of $0.9 million ($.03 per share) in 1999. Total sales for the three months ended June 30, 2000 increased 14% from $77.5 million in the second quarter 1999 to $88.4 million in the second quarter 2000. Sales for the six months ended June 30, 2000 increased 15% over the same period last year from $153.4 million to $176.4 million.

Included in the results of operations for the six months ended June 30, 2000, are incremental pretax restructuring charges of approximately $1.7 million, or $.04 per basic and diluted share after related income tax effect. The Company has estimated cost savings resulting from restructuring actions taken in the fourth quarter 1999 and first quarter 2000 to be in the pretax range of $6.0 to $8.0 million on an annual basis. Of the projected cost savings, approximately $4.4 million relate to cost of sales, $1.9 million to selling, general and administrative costs, and $.7 million to R&D costs. See Note 2 of Notes to Condensed Consolidated Financial Statements for additional information concerning such special charges.

Telecommunications Equipment Manufacturing:

Telecommunications Equipment Manufacturing sales increased $10.1 million, or 14%, from $71.4 million in the second quarter 1999 to $81.5 million in the second quarter 2000. Sales increased approximately 16% from $141.5 million for the six months ended June 30, 1999 to $163.5 million for the six months ended June 30, 2000. Increasing demand for antenna and site management products drove the sales increase in both periods. Geographically, the largest increases were in North and South America. Sales by product line were as follows:

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ALLEN TELECOM INC.
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)

The strong U.S. dollar relative to the Euro negatively impacted sales and pretax income of European operations in the second quarter 2000 as compared to the second quarter 1999. As a result of exchange differences, reported sales and pretax income in the three months ended June 30, 2000 were $6.4 million and $0.9 million lower, respectively, as compared with the corresponding period in 1999, assuming the exchange rates had stayed the same. For the six months ended June 30, 2000, the reported sales and pretax income were $11.2 million and $2.2 million lower, respectively.

Backlog for the Telecommunications Equipment Manufacturing Segment at June 30, 2000 increased 16.5% from $98.4 million at March 31, 2000 to $114.6 million.

Gross profit margins for this segment were 30.0% in the second quarter of 2000 (29.6% for the six months ended June 30, 2000), as compared with 29.8% in the second quarter of 1999 (29.7% for the six months ended June 30, 1999), excluding the aforementioned special charges. The higher gross profit margins in the second quarter of 2000 were due primarily to higher sales of site management products and cost savings from restructuring. Gross profit margins for the six-month period ended June 30, 2000 were essentially the same as the prior year six-month period.

Selling, general and administrative expenses were $10.3 million, or 12.6% of sales, and $9.3 million, or 13.0% of sales (excluding special charges), for the second quarters of 2000 and 1999, respectively. The higher costs were related primarily to higher incentive compensation and commission expenses; however, the ratio of expenses to sales decreased from the second quarter of 1999 due to the spreading of costs on higher sales. For the six-month periods ended June 30, 2000 and 1999, the ratios of selling, general and administrative expenses to sales were 12.7% and 13.5%, respectively.

Wireless Engineering Services:

Wireless Engineering Services sales were up $0.8 million, or 13%, from $6.1 million in second quarter 1999 to $6.9 million in second quarter 2000. This increase was due primarily to higher software and engineering consulting sales. Sales were up approximately $1.0 million or 8% from $11.9 million for the six-month period ended June 30, 1999 to $12.9 in 2000.

Gross profit margins for this segment were 45.7% in the second quarter of 2000 (42.0% for the six months ended June 30, 2000), as compared with 33.7% in the second quarter of 1999 (29.8% for the six months ended June 30, 1999). This margin increase is primarily attributable to an increase in higher margin software sales and full deployment of engineers, as well as the restructuring actions taken during the fourth quarter of 1999, which improved margins in engineering products. Gross profit margins increased sequentially from the first to second quarter of 2000 from 37.7% to 45.7%, respectively, due to higher software sales.

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ALLEN TELECOM INC.
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)

Selling, general and administrative expenses for the Wireless Engineering Services were 16.5% of sales in the second quarter of 2000 (19.5% for the six months ended June 30, 2000), as compared with 13.5% in the second quarter of 1999 (17.6% for the six months ended June 30, 1999). This increase is attributable to higher incentive compensation and facility expenses.

Research and Development:

Research and development and new product engineering costs were 7.2% and 9.9% of sales in the second quarter of 2000 and 1999, respectively. The lower level of expense as a percent of sales is attributable to the fourth quarter 1999 sale of the Company’s research and development business for U.S. government agencies, which had primarily R&D expenditures, as well as much higher sales in 2000 compared to prior year. The Company expects R&D spending to increase in the third and fourth quarters of 2000 due to additional spending for testing and field trials of the new E-911 Geolocation product, as well as increased development efforts on other new products.

Interest and Financing Expenses:

Net interest and financing costs increased from $4.0 million for the six months ended June 30, 1999 to $4.2 million for the six months ended June 30, 2000, and from $1.9 million in the second quarter 1999 to $2.2 million in the second quarter of 2000. The principal reasons for the increase are a higher level of outstanding borrowings, as well as higher average interest rates.

Provision for Income Taxes:

The Company’s effective tax rate was approximately 41.5% for the quarter and six months ended June 30, 2000 as compared with 35% for the comparable 1999 periods. The principal reason for the increase is higher income relating to the Company’s foreign operations, which are taxed at higher rates than the United States. The 2000 percentage is in line with the Company’s current expectation for the full year.

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ALLEN TELECOM INC.
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)

Minority Interests:

Minority interest expense decreased from $707,000 to $52,000 in the six months ended June 30, 1999 and 2000, respectively. This decrease is due to the acquisition in late 1999 of the remaining minority interest in one of the Company’s foreign subsidiaries.

Liquidity and Capital Resources:

As set forth in the Condensed Consolidated Statements of Cash Flows, the Company generated $4.9 million of cash from operations for the six months ended June 30, 2000 as compared to using $13.0 million for the comparable 1999 period. The increase in cash flow from operations is principally due to the collection of certain trade receivables and increased income from continuing operations. The Company used $12.9 million in investing activities in the first half of 2000, due primarily to the payment of purchase price for the minority interest of a European subsidiary and capital expenditures, as compared to generating $12.9 million in 1999. The cash flow from investing activities in 1999 related to the sale of the Company’s discontinued emissions testing business and cash collected from the sale of a common stock investment. Cash provided by financing activities for the period ended June 30, 2000 was $10.0 million as compared with cash usage of $6.1 million for the comparable 1999 period. At June 30, 2000, the Company had available unused worldwide lines of credit in the amount of $76.4 million.

As indicated above, the strong U.S. dollar relative to the Euro has also negatively impacted the translated value of the Company’s European operations whose assets and liabilities are denominated principally in Euro currencies. As can be seen in the Condensed Consolidated Statements of Stockholders Equity, the “Accumulated Other Comprehensive Loss” (representing the net impact on the translated net asset investment of foreign subsidiaries) has increased from $10.7 million at December 31, 1999 to $23.9 million at June 30, 2000. This decline in the translated value of the Company’s net foreign asset position is the principal reason for the decline in Stockholders’ Equity at June 30, 2000 as compared with December 31, 1999.

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ALLEN TELECOM INC.
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)

Legal Disclaimer:

      Statements included in this Form 10-Q, which are not historical in nature, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements regarding the Company’s future performance and financial results are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements. Factors that could cause the Company’s actual results to materially differ from forward-looking statements made by the Company, including, among others, the cost, success and timetable for new product development, the health and economic stability of the world and national markets, the uncertain timing and level of purchases by current and prospective customers of the Company’s products and services, the impact of competitive products and pricing, the future utilization of the Company’s tax loss carry forwards, the impact of U.S. and foreign government legislative/regulatory actions, including, for example, the scope and timing of E911 geolocation requirements and spectrum availability for new wireless applications, and the cost and availability of financing for geolocation projects. Allen Telecom Inc.’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q contain additional details concerning these factors.

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ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under Item 7 of its Annual Report on Form 10-K for the year ended December 31, 1999.

PART II — OTHER INFORMATION

ITEM 4 – SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At the Annual Meeting of Stockholders of the Company held on April 28, 2000 two proposals were voted upon by the Company’s stockholders. A brief description of each proposal voted upon at the Annual Meeting and the number of votes cast for, against and withheld are set forth below.

A vote by ballot was taken at the Annual Meeting for the election of 8 Directors of the Company to hold office until the next Annual Meeting of Stockholders of the Company and until their respective successors shall have been duly elected and qualified. The aggregate numbers of shares of common stock (a) voted in person or by proxy for each nominee, or (b) with respect to which proxies were withheld for each nominee, were as follows:

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PART II — OTHER INFORMATION
(Continued)

A vote by ballot was taken at the Annual Meeting on the proposal to ratify the appointment of Deloitte & Touche LLP as auditors for the Company for the fiscal year ending December 31, 2000. The aggregate numbers of shares of Common Stock in person or by proxy which: (a) voted for, (b) voted against or (c) abstained from the vote on such proposal were as follows:

The foregoing proposals are described more fully in the Company’s definitive proxy statement dated March 17, 2000, filed with the Securities and Exchange Commission pursuant to Section 14(a) of the Securities Act of 1934, as amended, and the rules and regulations promulgated thereunder.

ITEM 6 – EXHIBITS AND REPORTS ON FORM 8-K.

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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.

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EXHIBIT INDEX
ALLEN TELECOM INC.

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