Andrew Corporation Reports $487 Million in Sales and $491 Million in Orders.ORLAND PARK Or·land Park A village of northeast Illinois, a residential and manufacturing suburb of Chicago. Population: 53,300. , Ill. -- Andrew Corporation Andrew Corporation is an American multinational producer of communications devices. Andrew is a global designer, manufacturer, and supplier of communications equipment, services, and systems. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :ANDW): --Wireless Infrastructure sales increased 8% year-over-year to $465 million --Satellite Communications sales decreased 65% year-over-year to $22 million --Total orders were $491 million, resulting in a book-to-bill ratio Book-to-Bill Ratio The technology industry's demand-to-supply ratio for orders on a "firm's book" to number of orders filled. Notes: This ratio tells whether the company has more orders than it can deliver (if greater than 1), has the same amount of orders that it can of 1.01 --Cash flow from operations increased to $27 million compared to cash used in operations of $19 million in the prior year quarter --Extended licensing and availability of patented Remote Electrical Tilt (RET ret v. ret·ted, ret·ting, rets v.tr. To moisten or soak (flax, for example) in order to soften and separate the fibers by partial rotting. v.intr. To become so moistened or soaked. ) antenna technology --Announced an 8% average price increase for Heliax(R) cable products -- Solicited property bids for Orland Park, Illinois Orland Park is a village in Cook County, Illinois, United States; it also extends slightly into Will County. The population was 51,077 at the 2000 census, and estimated to be 55,461 as of 2005. facilities Andrew Corporation reported third quarter sales of $487.2 million, down 1% from record sales of $493.0 million in the year ago quarter. Sales for Wireless Infrastructure increased 8%, offset primarily by a greater than anticipated 65% decline for Satellite Communications. Orders for the third quarter were $491.2 million, down 1% from $497.5 million in the prior year quarter, resulting in a book-to-bill ratio of 1.01. Third quarter net income was $13.0 million or $0.08 per share, compared to net income of $17.7 million or $0.11 per share in the year ago quarter. Net income included intangible amortization of $4.7 million or $0.02 per share, a loss of $1.5 million or $0.01 per share related to the sale of assets and restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $0.5 million. The company also recorded a $3.0 million or $0.01 per share charge within cost of sales for potential value added tax value added tax n (BRIT) → impuesto sobre el valor añadido or agregado (LAM) value added tax n (Brit (VAT VAT See: Value-added tax VAT See value-added tax (VAT). ) payments pending resolution of certain Asian import-export matters with appropriate governmental authorities. The year ago quarter included intangible amortization of $9.6 million or $0.03 per share and restructuring charges of $0.7 million. "Our core wireless infrastructure business continues to demonstrate solid growth while expanding our ability to deliver new products and active components direct to operators and to OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and customers worldwide," said Faison. "While we delivered positive performance in managing operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. and generating positive cash flow in the quarter, we were clearly disappointed with our ability to make additional progress towards our gross margin targets." An effective tax rate of 38.2% and 162.8 million shares were used to calculate the per share impact of items for the third quarter of fiscal 2005. The following table is a summary of significant items impacting the comparability of earnings per share amounts for the three months ended June June: see month. 30, 2005, and June 30, 2004:
Three Months Ended
Summary of Significant June 30,
Items Impacting Results 2005 2004
----------------------- ------------- -------------
Intangible amortization $(0.02) $(0.03)
Loss on sale of assets (0.01) -
------------- -------------
Sub-total $(0.03) $(0.03)
------------- -------------
VAT provision (0.01) -
------------- -------------
Total $(0.04) $(0.03)
============= =============
The top 25 customers represented 72% of sales compared to 70% in the prior quarter and 71% in the year ago quarter. Major original equipment manufacturers (OEMs) accounted for 39% of sales compared to 41% in the prior quarter and 43% in the year ago quarter. Lucent Technologies was the largest OEM customer for the quarter at 10% of sales, down from 15% of sales in the prior year quarter. Cingular Wireless was the largest customer for the quarter at 13% of sales. In addition, Siemens, Nextel (Nextel Communications, Inc., Reston, VA, www.nextel.com) A wireless communications carrier founded in New Jersey in 1987 as Fleet Call, a two-way radio service. Throughout the late 1980s and 1990s, the company acquired a large number of SMR (Specialized Mobile Radio) operators and turned , and Nortel Networks (Nortel Networks Limited, Brampton, Ontario, www.nortelnetworks.com) A world leader in telecommunications products, which includes switching, wireless and broadband systems for service providers and carriers, telephones and systems for residential and business users, computer telephony were all customers greater than 5% of total sales for the quarter.
SALES BY MARKET SEGMENT AND MAJOR REGION
Three Months Ended
June 30,
------------------- % %
Sales by Market Segment 2005 2004 Change Total
------------------------ --------- --------- --------- ---------
Wireless Infrastructure $465 $430 8 95
Satellite Communications 22 63 (65) 5
--------- --------- --------- ---------
Total $487 $493 (1)% 100%
========= ========= ========= =========
Wireless Infrastructure sales increased 8% versus the prior year quarter driven by increasing unit volumes and foreign currency translation in EMEA (Europe, Middle East, Africa) Refers to that region of the world. For example, one might see products packaged differently for the UK, EMEA and Asia Pacific markets. and increased construction services business in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , partially offset by lower OEM sales for Base Station Subsystems The Base Station Subsystem (BSS) is the section of a traditional cellular telephone network which is responsible for handling traffic and signaling between a mobile phone and the Network Switching Subsystem. in North America and China. Satellite Communications sales decreased 65% versus the prior year quarter driven by a larger than anticipated decline in sales to the consumer broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). satellite market.
Three Months Ended
June 30,
------------------- % %
Sales by Major Region 2005 2004 Change Total
--------------------- --------- --------- --------- ---------
Americas $270 $287 (6) 55
Europe, Middle East, Africa 159 133 20 33
Asia Pacific 58 73 (21) 12
--------- --------- --------- ---------
Total $487 $493 (1)% 100%
========= ========= ========= =========
Americas A·mer·i·cas , the See America. Antenna and Cable Products increased versus the prior year quarter driven by network expansion and coverage requirements in North America and the inclusion of sales from the acquisitions of ATC ATC Air Traffic Control ATC Average Total Cost ATC Certified Athletic Trainer ATC At the Center (Hartford, Maine retreat center) ATC Applied Technology Council ATC All Things Considered Tower Services and MTS (1) See Microsoft Transaction Server. (2) (Modular TV System) The stereo channel added to the NTSC standard, which includes the SAP audio channel for special use. 1. MTS - Message Transport System. 2. Wireless Components, offset partially by weaker sales in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. . Wireless Innovations increased slightly compared to the year-ago quarter driven by an increase in operator needs for distributed coverage solutions. Base Station Subsystems declined due primarily to lower CDMA (Code Division Multiple Access) A method for transmitting simultaneous signals over a shared portion of the spectrum. The foremost application of CDMA is the digital cellular phone technology from QUALCOMM that operates in the 800 MHz band and 1.9 GHz PCS band. deployments in North America and Latin America. Network Solutions declined slightly versus the prior year quarter due to a reduction of geolocation Geolocation refers to identifying the real-world geographic location of an Internet connected computer, mobile device, or website visitor. Geolocation can be used to refer to the practice of assessing the location, or it can be used to refer to the actual assessed location or hardware installations. Satellite Communications declined due to a reduced level of involvement in certain consumer broadband satellite programs. Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , Middle East, Africa (EMEA)
Sales increased 20% compared to the prior year quarter due mainly to Antenna and Cable Products and Wireless Innovations supporting network upgrades, expansion, and distributed coverage requirements in Western Europe Western Europe The countries of western Europe, especially those that are allied with the United States and Canada in the North Atlantic Treaty Organization (established 1949 and usually known as NATO). and emerging markets. Base Station Subsystems declined slightly versus the prior year quarter. EMEA sales also benefited by approximately 3% versus the prior year quarter due mainly to the impact of a weaker dollar against the euro. Asia Pacific Sales declined 21% versus the prior year quarter. Base Station Subsystems decreased versus the prior year quarter due mainly to lower CDMA deployments and the delay in issuance of 3G licenses in China. Lower sales in Asia Pacific were partially offset by a slight increase in Antenna and Cable Products supporting network upgrades and expansion in India India, officially Republic of India, republic (2005 est pop. 1,080,264,000), 1,261,810 sq mi (3,268,090 sq km), S Asia. The second most populous country in the world, it is also sometimes called Bharat, its ancient name. India's land frontier (c. . RECENT HIGHLIGHTS --Extended non-exclusive licensing agreements for RET antenna technology to EMS Technologies, Inc., Amphenol Amphenol Corporation (NYSE: APH) is a major producer of electronic and fiber optic connectors, cable and interconnect systems. Amphenol is a portmanteau from the corporation's original name, American Phenolic Corp. Corporation, and Alan A`lan´ n. 1. A wolfhound. Dick & Company Ltd., further increasing the availability of innovative base station antenna functionality to customers worldwide. --Announced an average 8% price increase for Heliax cable products, effective August 1, 2005, to partially offset higher material costs for metals and petrochemicals used in the company's manufacturing process. --Solicited bids from real estate developers for the Orland Park, Illinois facilities as the company considers relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. to nearby state-of the-art facilities that would provide improved operational effectiveness. After bids on the property are received and evaluated, a final decision on relocation is expected by late summer. "Further licensing of our RET antenna technology continues to validate To prove something to be sound or logical. Also to certify conformance to a standard. Contrast with "verify," which means to prove something to be correct. For example, data entry validity checking determines whether the data make sense (numbers fall within a range, numeric data the technological leadership of Andrew in bringing sophisticated solutions to both our OEM and wireless operator customers worldwide," said Faison. "To continue that effort, during the quarter we incurred incremental costs Costs which are additional costs to the Service appropriations that would not have been incurred absent support of the contingency operation. See also financial management. to accelerate the introduction of several new products. Encompassing RET and Base Station Subsystem components, we believe these products represent new categories of demand from our customers. Although we anticipate that further costs will be incurred in the fourth quarter, we are encouraged by initial feedback and anticipate that these new products will drive meaningful Wireless Infrastructure growth in future periods." THIRD QUARTER FINANCIAL SUMMARY Gross margin was 23.2%, compared with 20.1% in the prior quarter and 25.9% in the year ago quarter. The prior quarter included a $19.8 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charge to cover costs above normal warranty provisions associated with abnormally high field failure rates for a specific component used in certain base station subsystem product lines. Excluding the $3.0 million VAT provision in the third quarter and $19.8 million charge for warranty provisions in the prior quarter, gross margin was 23.8%, compared to 24.2% for the prior quarter. Over the last two years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time company has incurred a significant increase in raw material costs that have created a challenging operating environment In computing, an operating environment is the environment in which users run programs, whether in a command line interface, such as in MS-DOS or the Unix shell, or in a graphical user interface, such as in the Macintosh operating system. for cable products. Usage of copper is anticipated to increase from approximately 54 million pounds in fiscal 2004, to more than 60 million pounds in fiscal 2005, while spot prices for copper have increased more than 100% and polyethylene polyethylene (pŏl'ēĕth`əlēn), widely used plastic. It is a polymer of ethylene, CH2=CH2, having the formula (-CH2-CH2-)n costs have increased more than 60% over the last two years. During the quarter, the company announced an average 8% price increase for Heliax cable products and is reviewing current copper forward hedging strategies to mitigate mit·i·gate v. To moderate in force or intensity. mit  i·ga tion n. future commodity
risk.
Gross margin for Base Station Subsystems was negatively impacted by a reduction in overall global CDMA deployments and continued filter product line transition costs. During the quarter, the company began volume shipments of recently introduced active products that are sold direct to operators and continued further development and trials with two large North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. operators and two large European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. OEMs for its new One Base(TM) Cell Extender See Media Center Extender, bus extender and DOS extender. power amplifier Power amplifier The final stage in multistage amplifiers, such as audio amplifiers and radio transmitters, designed to deliver appreciable power to the load. product line to be introduced in the fourth quarter. Although the transition for filter components has taken longer than originally anticipated, the majority of filter manufacturing is now based in China, with more than 90% of China component requirements qualified with local suppliers. The company expects that additional filter manufacturing will be transitioned to China and that significant component cost improvements will be realized over the next several quarters. Additionally, the company recorded nearly $20 million of low-margin construction services sales in the first full seasonal quarter for this business since its acquisition from American Tower Corporation Formed in 1995, American Tower Corporation is a publicly held company (NYSE: AMT) that is a leading owner and operator of wireless and broadcast communications sites in North America. Today American Tower owns and operates over 30,000 sites in the United States, Mexico and Brazil. in November 2004. Cost-control initiatives, including a reduction in total sales offices, are currently underway to improve the financial performance of this business. In addition, the services business is beginning to generate additional opportunities for product pull-through pull-through a surgical technique for abdominoperineal resection of the rectum. After removal of a segment, the rectum is sutured to the perineal skin, forming a new mucocutaneous junction. Used in the treatment of rectal neoplasms and anal furunculosis. . Furthermore, gross margin was unfavorably impacted by a $3.0 million provision for VAT in the third quarter. The company does not currently anticipate that it will be required to provide additional provisions in future quarters. Research and development expenses were $27.0 million or 5.5% of sales, compared to $29.3 million or 5.9% of sales in the year ago quarter. Research and development expenses decreased as a percentage of sales due mainly to a continued focus on project rationalization rationalization, in psychology: see defense mechanism. . Sales and administrative expenses were $55.5 million or 11.4% of sales, compared to $56.9 million or 11.5% of sales in the year ago quarter. "Research and development and sales and administrative expenses declined in both absolute dollars and as a percentage of total sales versus the prior year quarter. Our business model continues to show positive operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. despite an increase in costs for new product introductions in the third quarter, Sarbanes-Oxley compliance requirements Compliance requirements are a series of directives established by United States Federal government agencies that summarize hundreds of Federal laws and regulations applicable to Federal assistance (also known as Federal aid or Federal funds). , and on-going global IT systems implementations," said Faison. "During the quarter we completed IT systems implementations at our Shenzhen, China and Buchdorf, Germany facilities, and are on-track to complete our two remaining major facilities in Smithfield, North Carolina Smithfield is a town in Johnston County, North Carolina, United States. The population was 11,510 at the 2000 census. It is the county seat of Johnston CountyGR6. Smithfield is located in North Carolina's Inner Banks region. and Agrate, Italy, by the end of the calendar year." Intangible amortization decreased to $4.7 million in the third quarter, compared to $9.6 million in the prior year quarter due mainly to a reduction of amortized costs associated with the acquisition of Celiant in June 2002. It is anticipated that total intangible amortization will be approximately $23 million in fiscal 2005 and $17 million in fiscal 2006. The company's effective tax rate for the third quarter was 38.2%, higher than 35.0% in the prior year quarter due to a geographic mix of earnings and the establishment of valuation allowances for tax benefits associated with losses incurred in certain foreign operations. Average diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. shares outstanding decreased to 163 million from 181 million in the year ago quarter due mainly to the exclusion of our outstanding convertible debt, as conversion would have been anti-dilutive in the quarter. In the previous quarter, the company exercised its right to cause conversion of the entire outstanding Allen Al·len , Edgar 1892-1943. American anatomist who is noted for his studies of hormones and for the discovery (1923) of estrogen. Telecom Series 7.75% Convertible Preferred Stock Convertible Preferred Stock Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Also known as "convertible preferred shares". into Andrew Common Stock. As a result, the dividend payable decreased to zero in the third quarter, compared to $0.1 million in the prior year quarter. BALANCE SHEET AND CASH FLOW HIGHLIGHTS Cash and cash equivalents were $177 million at June 30, 2005, compared to $172 million at March 31, 2005, and $189 million at September 30, 2004. Cash and cash equivalents increased from the prior quarter due mainly to improved performance of working capital. Accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying were $454 million and days' sales outstanding Days' sales outstanding Average collection period. (DSOs) were 78 days at June 30, 2005, compared to $472 million and 82 days at March 31, 2005, and $417 million and 74 days at September 30, 2004. DSOs decreased versus the prior quarter due to a higher percentage of total sales in the Americas. Inventories were $364 million and inventory turns were 4.1x at June 30, 2005, compared to $358 million and 4.3x at March 31, 2005 and $351 million and 4.3x at September 30, 2004. Total debt outstanding and debt to capital was $301 million and 16.2% at June 30, 2005, compared to $302 million and 16.2% at March 31, 2005, and $299 million and 16.4% at September 30, 2004. Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses was $27.2 million in the third quarter, a significant improvement compared to cash flow used in operations of $18.7 million in the prior year quarter, primarily due to lower working capital. Capital expenditures were $16.2 million in the third quarter, compared to $18.2 million in the prior year quarter. "For each of the last two quarters, the company has generated more than $25 million of cash flow from operations," said Faison. "While we are pleased with our overall improvement in working capital, our inventory performance has not improved as much as anticipated. We are in the initial stages of executing supply chain strategies that are anticipated to drive improved working capital management and provide us the ability to accomplish our goal of generating more than $100 million of cash flow from operations on an annual basis." FOURTH QUARTER FISCAL 2005 GUIDANCE For the fourth quarter, sales are anticipated to range from $470 million to $500 million driven by modest growth in Wireless Infrastructure and relatively flat sales of Satellite Communications, partially offset by lower sales of the company's geolocation product line. Gross margin is anticipated to decrease in the fourth quarter due mainly to higher raw material costs, lower sales of geolocation, a less favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. product mix and an increase in component costs from China relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the revaluation Revaluation A calculated adjustment to a country's official exchange rate relative to a chosen baseline. The baseline can be anything from wage rates to the price of gold to a foreign currency. In a fixed exchange rate regime, only a decision by a country's government (i.e. of the Chinese yuan This article is about the Chinese currency base unit. For the modern currencies corresponding to the "Chinese yuan", see Renminbi ( , partially offset by an initial benefit from the recent price increase on Heliax cable products and cost reduction activities in the constructions services business. Total operating expenses are anticipated to be relatively flat on an absolute basis compared to the third quarter, including incremental costs for multiple new product introductions, Sarbanes-Oxley compliance requirements and on-going global implementations of IT systems at two remaining locations. The company anticipates an effective tax rate of approximately 41.5% in the fourth quarter, due to the establishment of valuation allowances in certain foreign operations. The anticipated tax rate does not include the impact of any potential repatriation Repatriation The process of converting a foreign currency into the currency of one's own country. Notes: If you are American, converting British Pounds back to U.S. dollars is an example of repatriation. of cash under the American Jobs Creation Act. Earnings per share are anticipated to range from $0.04 to $0.07, including intangible amortization costs of approximately $0.02 per share and before any potential restructuring charges. Average diluted shares are anticipated to be approximately 163 million. "Unprecedented increases in raw material costs, continued product line transition costs for filters, lower forecasted sales of geolocation and an increase in lower-margin construction services sales have limited our ability to achieve our near-term operating model Operating Model is a term that is used in many contexts. In essence an operating model describes how an organization operates across both business and technology domains. The Operating Model describes what is important for the organization. targets," said Faison. "While we are pleased with improved operating efficiencies at our new Reynosa, Mexico and Brno, Czech Republic Czech Republic, Czech Česká Republika (2005 est. pop. 10,241,000), republic, 29,677 sq mi (78,864 sq km), central Europe. It is bordered by Slovakia on the east, Austria on the south, Germany on the west, and Poland on the north. facilities, our performance in managing operating expenses, and the recent improvement in cash flow generation, it is evident that additional restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). activities focused on gross margin are required. Actions that we have undertaken in the third quarter and will take in the fourth quarter underscore The underscore character (_) is often used to make file, field and variable names more readable when blank spaces are not allowed. For example, NOVEL_1A.DOC, FIRST_NAME and Start_Routine. (character) underscore - _, ASCII 95. our commitment to financial discipline and an operating model that we believe is both appropriate and necessary for creating long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. value for our shareholders," Faison concluded. Attached to this news release are preliminary financial statements for the third fiscal quarter ended June 30, 2005. Conference Call Webcast Andrew Corporation will host a conference call to discuss its third quarter fiscal 2005 financial results on Thursday, July 28, 2005 at 8:00 a.m. CT. Investors can participate via a live webcast over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.andrew.com. An audio replay of the conference call will be made available for 60 days following the event. About Andrew Andrew Corporation (NASDAQ:ANDW) designs, manufactures and delivers innovative and essential equipment and solutions for the global communications infrastructure market. The company serves operators and original equipment manufacturers from facilities in 35 countries. Andrew (www.andrew.com), headquartered in Orland Park, IL, is an S&P 500 company founded in 1937. Forward Looking Statements Some of the statements in this news release are forward looking statements and we caution our stockholders and others that these statements involve certain risks and uncertainties. Factors that may cause actual results to differ from expected results include fluctuations in commodity costs, the company's ability to integrate acquisitions and to realize the anticipated synergies and cost savings, the effects of competitive products and pricing, economic and political conditions that may impact customers' ability to fund purchases of our products and services, the company's ability to achieve the cost savings anticipated from cost reduction programs, fluctuations in foreign currency exchange rates, the timing of cash payments and receipts, end use demands for wireless communication services, the loss of one or more significant customers, and other business factors. Investors should also review other risks and uncertainties discussed in company documents filed with the Securities and Exchange Commission. Additionally, at certain times the company will use non-GAAP financial measures, which the company believes better describes the ongoing financial results and trends of the business. The required reconciliation of these measures to GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). measures and a more detailed discussion of the reasons for using these measures are included in the company's Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. and press release filed therewith there·with adv. 1. With that, this, or it. 2. In addition to that. 3. Archaic Immediately thereafter. Adv. 1. and may be accessed from the company Web site at www.andrew.com.
UNAUDITED - PRELIMINARY
ANDREW CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
Three Months Ended Nine Months Ended
June 30 June 30
----------------------- -----------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
Sales $487,232 $492,998 $1,443,134 $1,350,915
Cost of products sold 374,311 365,309 1,122,854 1,008,503
----------- ----------- ----------- -----------
Gross Profit 112,921 127,689 320,280 342,412
Operating Expenses
Research and
development 26,990 29,295 79,438 83,377
Sales and
administrative 55,470 56,889 164,814 162,036
Intangible
amortization 4,682 9,583 17,810 28,855
Restructuring 456 719 3,242 4,181
Loss on sale of assets 1,522 - 489 3,109
----------- ----------- ----------- -----------
89,120 96,486 265,793 281,558
Operating Income 23,801 31,203 54,487 60,854
Other
Interest expense 3,552 3,533 10,776 11,375
Interest income (944) (628) (4,017) (2,359)
Other expense, net 222 885 2,062 2,192
----------- ----------- ----------- -----------
2,830 3,790 8,821 11,208
----------- ----------- ----------- -----------
Income Before Income
Taxes 20,971 27,413 45,666 49,646
Income taxes 8,002 9,595 14,716 17,377
----------- ----------- ----------- -----------
Net Income 12,969 17,818 30,950 32,269
Preferred Stock
Dividends - 126 232 560
----------- ----------- ----------- -----------
Net Income Available to
Common Shareholders $12,969 $17,692 $30,718 $31,709
=========== =========== =========== ===========
Basic Net Income per
Share $0.08 $0.11 $0.19 $0.20
=========== =========== =========== ===========
Diluted Net Income per
Share $0.08 $0.11 $0.19 $0.20
=========== =========== =========== ===========
Average Shares
Outstanding
Basic 162,443 160,655 161,544 159,272
Diluted 162,833 180,703 161,944 159,965
Orders Entered $491,206 $497,536 $1,451,188 $1,352,307
Total Backlog $319,957 $336,466 $319,957 $336,466
PRELIMINARY
ANDREW CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
June 30 September 30
2005 2004
------------ ------------
ASSETS (UNAUDITED)
Current Assets
Cash and cash equivalents $177,279 $189,048
Accounts receivable, less allowances
(June 2005 - $13,097; Sept. 2004 -
$13,798) 454,490 416,603
Inventory 363,794 351,082
Other current assets 52,659 34,190
------------ ------------
Total Current Assets 1,048,222 990,923
Other Assets
Goodwill 871,053 868,078
Intangible assets, less amortization 58,034 63,988
Other assets 93,171 92,590
Property, Plant and Equipment
Land and land improvements 22,987 22,607
Buildings 127,548 123,716
Equipment 518,399 496,739
Allowance for depreciation (438,544) (417,696)
------------ ------------
230,390 225,366
------------ ------------
TOTAL ASSETS $2,300,870 $2,240,945
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $215,207 $196,592
Accrued expenses and other liabilities 108,599 82,291
Compensation and related expenses 50,575 67,018
Restructuring 15,029 18,887
Notes payable and current portion of
long-term debt 24,813 14,051
------------ ------------
Total Current Liabilities 414,223 378,839
Deferred liabilities and minority
interest 49,530 54,388
Long-term debt, less current portion 276,124 284,844
SHAREHOLDERS' EQUITY
Redeemable convertible preferred stock
liquidation preference $50 a share
(120,414 shares outstanding at
September 30, 2004) - 6,021
Common stock (par value, $.01 a share:
400,000,000 shares authorized:
162,476,413 shares issued at
June 30, 2005 and 161,015,917 shares
issued at September 30, 2004, including
treasury) 1,625 1,610
Additional paid-in capital 675,648 666,746
Accumulated other comprehensive income 15,564 12,363
Retained earnings 868,431 837,713
Treasury stock, common stock at cost
(23,124 shares at June 30, 2005 and
148,950 shares at September 30, 2004) (275) (1,579)
------------ ------------
Total Shareholders' Equity 1,560,993 1,522,874
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $2,300,870 $2,240,945
============ ============
UNAUDITED - PRELIMINARY
ANDREW CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three Months Ended Nine Months Ended
June 30 June 30
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Cash Flows from Operations
Net Income $12,969 $17,818 $30,950 $32,269
Adjustments to Net Income
Depreciation 15,305 16,863 44,977 48,169
Amortization 4,682 9,583 17,810 28,855
Loss (Gain) on sale of
assets 1,522 (43) 1,189 2,976
Restructuring costs (343) (7,444) (5,533) (16,848)
Change in Operating Assets /
Liabilities
Accounts receivable 8,188 (39,026) (34,972) (84,330)
Inventory (12,020) (36,552) (17,810) (97,425)
Other assets (4,552) 6,033 (18,106) (10,275)
Accounts payable and other
liabilities 1,416 14,039 17,127 96,717
--------- --------- --------- ---------
Net Cash From (Used for)
Operations 27,167 (18,729) 35,632 108
Investing Activities
Capital expenditures (16,201) (18,179) (48,669) (57,675)
Acquisition of businesses 82 - (19,122) (52,227)
Investments - - - (6,500)
Proceeds from sale of
businesses and investments - - 9,494 3,000
Proceeds from sale of
property, plant and
equipment 263 797 2,615 4,578
--------- --------- --------- ---------
Net Cash Used for Investing
Activities (15,856) (17,382) (55,682) (108,824)
Financing Activities
Long-term debt payments, net 111 33 (1,522) (17,775)
Notes payable borrowings,
net - 439 9,064 254
Preferred stock dividends - (126) (232) (560)
Payments to acquire common
stock for treasury - - - (2,472)
Stock purchase and option
plans 465 1,163 1,134 2,901
--------- --------- --------- ---------
Net Cash From (Used for)
Financing Activities 576 1,509 8,444 (17,652)
Effect of exchange rate
changes on cash (6,707) (1,500) (163) 4,852
--------- --------- --------- ---------
Increase (Decrease) for the
Period 5,180 (36,102) (11,769) (121,516)
Cash and Equivalents at
Beginning of Period 172,099 200,855 189,048 286,269
--------- --------- --------- ---------
Cash and Equivalents at End of
Period $177,279 $164,753 $177,279 $164,753
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