Andrew Corporation Reports Record Third Quarter Sales.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:ANDW) --Record sales of $493 million increased 10% sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen --Net income of $0.11 per share meets high-end high-end adj. Informal 1. Appealing to sophisticated and discerning customers: a high-end department store; high-end video equipment. 2. of guidance --Gross margin improved 120 basis points sequentially to 25.9% --Sixth consecutive quarter of 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 equal to or greater than 1.0 Andrew Corporation (Nasdaq:ANDW), a global communications systems In telecommunication, a communications system is a collection of individual communications networks, transmission systems, relay stations, tributary stations, and data terminal equipment (DTE) usually capable of interconnection and interoperation to form an integrated whole. equipment supplier, today announced results for its third fiscal quarter ended June June: see month. 30, 2004. All per share information discussed is presented on a fully 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. basis. THIRD QUARTER RESULTS Third quarter sales were $493.0 million, up 131% from $213.7 million in the year ago quarter and higher than previous guidance of $450 million to $480 million in sales. The increase in sales was primarily due to continued improved wireless infrastructure market demand and the acquisition of Allen Al·len , Edgar 1892-1943. American anatomist who is noted for his studies of hormones and for the discovery (1923) of estrogen. Telecom in the fourth quarter of fiscal 2003. Net income was $17.7 million or $0.11 per share, compared to net income of $7.6 million or $0.08 per share in the year ago quarter. Third quarter results include intangible amortization of $9.6 million or $0.03 per share and pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta 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 $0.7 million. The year ago third quarter included a gain from real estate transactions of $9.4 million or $0.10 per share, intangible amortization of $3.7 million or $0.03 per share and pre-tax restructuring charges of $0.5 million. "We are very pleased to report results that exceeded our expectations, including record sales performance and operational gross margin improvement," said Ralph Faison, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Andrew Corporation. "Andrew is strategically positioned to benefit from the 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. growth opportunities we see in wireless communications wireless communications System using radio-frequency, infrared, microwave, or other types of electromagnetic or acoustic waves in place of wires, cables, or fibre optics to transmit signals or data. ." Sales for the nine months ended June 30, 2004 were $1.4 billion, up 102% from $669.6 million reported for the nine months ended June 30, 2003. Net income for the nine months ended June 30, 2004 was $31.7 million or $0.20 per share, compared to net income of $10.3 million or $0.10 per share for the nine months ended June 30, 2003. The following table is a summary of significant items impacting the comparability of results for the third quarter of fiscal 2004 and year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. earnings per share amounts:
Summary of Significant Y-T-D Y-T-D
Items Impacting Results Q3 FY04 Q3 FY03 FY04 FY03
-------- -------- -------- --------
Intangible amortization $(0.03) $(0.03) $(0.12) $(0.08)
Restructuring charges 0.00 0.00 (0.02) 0.00
Gain (loss) on sale of
assets N/A 0.10 0.01 0.10
-------- -------- -------- --------
Total $(0.03) $0.07 $(0.13) $0.02
======== ======== ======== ========
Orders for the third quarter were a record $498 million, up 12% sequentially and 126% from the year ago quarter. "This marks our sixth consecutive quarter of book-to-bill ratio equal to or greater than one. Our visibility has not improved despite continued order growth; however, with the broadest RF product group and a globally diversified diversified (di·verˑ·s customer base, we remain confident in our ability to continue to outperform Outperform An analyst recommendation meaning a stock is expected to do slightly better than the market return. Notes: Exact definitions vary by brokerage, but in general this rating is better than neutral and worse than buy or strong buy. the wireless infrastructure industry," said Mr. Faison.
% Of
% Q3
Sales by Region Q3 FY04 Q2 FY04 Change Total
------------------------------- -------- -------- -------- -------
Americas $287.1 $253.7 13% 58%
Europe / Middle East / Africa 133.4 133.2 - 27
Asia-Pacific 72.5 60.2 20% 15
-------- -------- -------- -------
Total $493.0 $447.1 10% 100%
======== ======== ======== =======
Sales increased 10% sequentially from the second quarter to $493.0 million. Sales in the Americas A·mer·i·cas , the See America. increased 13% sequentially driven by continued product demand in the 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 and wireless infrastructure 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. . Sales 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. were consistent with the prior quarter, whereas sales in Asia-Pacific The term Asia-Pacific generally applies to littoral East Asia, Southeast Asia and Australasia near the Pacific Ocean, plus the states in the ocean itself (Oceania). increased 20% sequentially driven primarily by wireless infrastructure build-outs in China and 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. . Sales increased sequentially across most major product groups. Antenna Product sales increased as a result of coverage requirements for network expansion and demand for certain new product lines within the broadband satellite market. 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. sales increased as a result of OEMs continuing to support increased operator capital expenditures for network upgrades and expansion. Base Station Subsystems is now providing products to nine major OEMs, compared to eight in the prior quarter. Cable Products sales increased as a result of network expansions and the acquisition of 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 in March 2004. Wireless Innovations' sales increased slightly versus the prior quarter due to increased need for coverage solutions. Network Solutions sales decreased modestly on a sequential One after the other in some consecutive order such as by name or number. basis due to the timing 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. In the third quarter, Lucent Technologies was the only customer accounting for more than 10% of sales. The top 25 customers represented 71% of sales in the third quarter compared to 69% in the second quarter. Major OEMs accounted for 43% of sales in the third quarter, in-line In-line Used in the context of general equities. (1) An order or market in a specific security within the inside market; 2) any announcement (earnings) that adheres closely to Wall Street analysts' expectations. with the prior quarter. THIRD QUARTER FINANCIAL SUMMARY Gross margin was 25.9%, compared with 24.7% in the prior quarter and 25.6% in the year ago quarter. Consistent with our previous guidance, gross margin showed operational improvement. During the quarter we made continued progress on relocating certain product lines within the Antenna Group to our two new manufacturing facilities. Manufacturing variances for new products in the broadband satellite market also improved during the quarter. These two positive improvements were partially offset by a lower margin product mix shift within Cable Products. Research and development expenses were $29.3 million or 5.9% of sales, compared to $28.5 million or 6.4% of sales in the prior quarter and $18.9 million or 8.9% of sales in the year ago quarter. Research and development expenses decreased as a percentage of sales due primarily to a higher level of sales. Sales and administrative expenses were $56.9 million or 11.5% of sales, compared to $52.7 million or 11.8% of sales in the prior quarter and $32.8 million or 15.4% of sales in the year ago quarter. Sales and administrative expenses increased primarily due to a higher level of sales, planned expenditures for the global deployment of IT systems and additional incentive compensation. Total 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. declined as a percentage of sales due primarily to higher sales and the effects of our cost savings and merger integration programs. Intangible amortization was $9.6 million in the third quarter, compared to $9.9 million in the prior quarter and $3.7 million in the year ago quarter. It is anticipated that total intangible amortization will be approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $39 million in fiscal 2004 and decline to approximately $22 million in fiscal 2005. Interest expense was $3.5 million compared to $0.7 million in the year ago quarter due primarily to the sale of convertible notes in August 2003. The company's effective tax rate for the third quarter was 35.0%, consistent with the second quarter. Total diluted shares increased from 159.6 million in the second quarter to 180.7 million in the third quarter, due primarily to the accounting effects on our convertible debt and the 1.7 million shares issued in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the acquisition of MTS Wireless Components in March 2004. BALANCE SHEET AND CASH FLOW HIGHLIGHTS Cash and cash equivalents were $164.8 million at June 30, 2004, compared to $200.9 million at March 31, 2004. Cash and cash equivalents declined due primarily to working capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. associated with higher sales, offsetting the cash flow from increased net income. 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 $428.3 million and days' sales outstanding Days' sales outstanding Average collection period. (DSOs) were 76 days at June 30, 2004, compared to $391.9 million and 77 days at March 31, 2004. Inventories were $366.7 million and inventory turns were 4.0x at June 30, 2004, compared to $326.6 million and 4.1x at March 31, 2004. "DSOs continue to be favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacted by a higher mix of sales in the Americas. However, inventory turns declined slightly versus the prior quarter due to duplicate DUPLICATE. The double of anything. 2. It is usually applied to agreements, letters, receipts, and the like, when two originals are made of either of them. Each copy has the same effect. manufacturing facilities and higher levels of inventory necessary to support a significant increase in sales," said Mr. Faison. "We anticipate that inventory turns will improve gradually grad·u·al adj. Advancing or progressing by regular or continuous degrees: gradual erosion; a gradual slope. n. Roman Catholic Church 1. over the next several quarters." Total debt outstanding was $302.9 million at June 30, 2004, compared to $302.5 million at March 31, 2004. Total debt to capital decreased slightly to 16.7% at June 30, 2004, compared to 16.8% at March 31, 2004. Cash used for operations was $18.7 million in the third quarter compared to 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 of $34.5 million in the prior quarter and cash flow from operations of $18.8 million in the year ago quarter. Capital expenditures of $18.2 million in the quarter consisted of investments in new facilities, IT systems and test equipment. FOURTH QUARTER GUIDANCE For the fourth quarter, sales are anticipated to range from $460 to $490 million and earnings per share to range from $0.04 to $0.07, including intangible amortization and 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). costs of approximately $0.06 per share. Gross margins are anticipated to decline in the fourth quarter due to an adverse product and geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. mix shift. Research and development and selling and administrative expenses are expected to be relatively flat to modestly down on an absolute basis compared to the third quarter. The company anticipates a normalized tax rate of approximately 35% and diluted shares of approximately 181.0 million. "We expect to complete the exit of our Dallas, Texas “Dallas” redirects here. For other uses, see Dallas (disambiguation). The City of Dallas (pronounced [ˈdæl.əs] or [ˈdæl. facility and 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. of Antenna Group product lines from our Lochgelly Lochgelly (Gaelic: Loch Gheallaidh) is a town in Fife, Scotland. It was originally a mining town, but with the industry now dead the town has slipped into economic and social deprivation as with other former mining towns. , Scotland Scotland, political division of Great Britain (1991 pop. 4,957,000), 30,414 sq mi (78,772 sq km), comprising the northern portion of the island of Great Britain and many surrounding islands. facility during the fourth quarter. In addition, global IT implementations at several of the former Allen locations are expected to be complete by the end of calendar 2004," said Mr. Faison. "Our seasonality trends continue to evolve Evolve may refer to several terms:
adj. Of, for, or involving a short period of time in the near future. impact on sales. However, the long-term underlying fundamental drivers of the wireless infrastructure industry continue to be positive and we are encouraged by global operator capital expenditure trends with a focus at the cell site level." Attached to this news release are preliminary financial statements for the third quarter ended June 30, 2004. Conference Call Webcast Andrew Corporation will host a conference call to discuss its third quarter fiscal 2004 results on Monday Monday: see week. , July July: see month. 26, 2004 at 8:00 a.m. CDT CDT abbr. Central Daylight Time CDT Central Daylight Time CDT n abbr (US) (= Central Daylight Time) → hora de verano del centro; (BRIT . Interested 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 33 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 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 international 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.
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
----------------------- -----------------------
2004 2003 2004 2003
----------- ----------- ----------- -----------
Sales $492,998 $213,721 $1,350,915 $669,565
Cost of products sold 365,309 159,091 1,008,503 492,005
----------- ----------- ----------- -----------
Gross Profit 127,689 54,630 342,412 177,560
Operating Expenses
Research and
development 29,295 18,921 83,377 58,485
Sales and
administrative 56,889 32,815 162,036 100,943
Intangible
amortization 9,583 3,662 28,855 11,027
Restructuring 719 472 4,181 677
----------- ----------- ----------- -----------
96,486 55,870 278,449 171,132
Operating Income
(Loss) 31,203 (1,240) 63,963 6,428
Other
Interest expense 3,533 682 11,375 2,648
Interest income (628) (249) (2,359) (751)
Gain on real estate
transactions - (9,357) (1,402) (9,398)
Loss on sale of
broadcast assets - - 4,511 -
Other expense
(income), net 885 (362) 2,192 (1,211)
----------- ----------- ----------- -----------
3,790 (9,286) 14,317 (8,712)
----------- ----------- ----------- -----------
Income from Continuing
Operations Before
Income Taxes 27,413 8,046 49,646 15,140
Income Taxes 9,595 (371) 17,377 1,757
----------- ----------- ----------- -----------
Income from Continuing
Operations 17,818 8,417 32,269 13,383
Discontinued
Operations, net of tax
benefit - 788 - 3,118
----------- ----------- ----------- -----------
Net Income 17,818 7,629 32,269 10,265
Preferred Stock
Dividends 126 - 560 -
----------- ----------- ----------- -----------
Net Income Available to
Common Shareholders $17,692 $7,629 $31,709 $10,265
=========== =========== =========== ===========
Basic and Diluted
Income per Share from
Continuing Operations $0.11 $0.09 $0.20 $0.14
=========== =========== =========== ===========
Basic and Diluted Net
Income per Share $0.11 $0.08 $0.20 $0.10
=========== =========== =========== ===========
Average Shares
Outstanding
Basic 160,655 98,330 159,272 98,315
Diluted 180,703 98,330 159,965 98,316
Orders Entered $497,536 $220,196 $1,352,307 $656,020
Total Backlog $336,466 $170,571 $336,466 $170,571
PRELIMINARY
ANDREW CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
June September
30, 2004 30, 2003
----------- -----------
ASSETS (UNAUDITED)
Current Assets
Cash and cash equivalents $164,753 $286,269
Accounts receivable, less allowances (Jun.
2004 -- $10,570; Sept. 2003 -- $10,662) 428,305 326,282
Inventories 366,701 247,750
Other current assets 43,664 29,131
----------- -----------
Total Current Assets 1,003,423 889,432
Other Assets
Goodwill 892,404 821,398
Intangible assets, less amortization 73,808 93,086
Other assets 42,651 50,398
Property, Plant and Equipment
Land and land improvements 22,435 20,926
Buildings 122,706 116,038
Equipment 493,713 469,296
Allowance for depreciation (411,370) (387,341)
----------- -----------
227,484 218,919
----------- -----------
TOTAL ASSETS $2,239,770 $2,073,233
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $221,792 $124,646
Accrued expenses and other liabilities 74,403 58,893
Compensation and related expenses 60,265 52,255
Restructuring 11,574 20,414
Notes payable and current portion of long-term
debt 14,180 17,750
----------- -----------
Total Current Liabilities 382,214 273,958
Deferred liabilities 59,652 73,941
Long-term debt, less current portion 288,731 301,364
STOCKHOLDERS' EQUITY
Redeemable convertible preferred stock (par
value, $50 a share: 130,414 shares
outstanding at June 30, 2004 and 183,720
shares outstanding at September 30, 2003) 6,521 9,186
Common stock (par value, $.01 a share:
400,000,000 shares authorized: 160,900,657
shares issued at June 30, 2004 and
September 30, 2003, including treasury) 1,609 1,609
Additional paid-in capital 665,033 649,667
Accumulated other comprehensive income (loss) 1,444 (14,115)
Retained earnings 837,144 805,435
Treasury stock, at cost (242,546 shares at
June 30, 2004 and 2,608,290 shares at
September 30, 2003) (2,578) (27,812)
----------- -----------
1,509,173 1,423,970
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,239,770 $2,073,233
=========== ===========
UNAUDITED -- PRELIMINARY
ANDREW CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three Months Nine Months
Ended June 30 Ended June 30
------------------ ------------------
2004 2003 2004 2003
--------- -------- --------- --------
Cash Flows from Operations
Net Income $17,818 $7,629 $32,269 $10,265
Adjustments to Net Income
Depreciation 16,863 13,618 48,169 39,319
Amortization 9,583 3,662 28,855 11,027
Other (43) (9,357) (1,535) (9,398)
Restructuring and Discontinued
Operations
Restructuring costs (7,444) (3,714) (16,848) (9,649)
Discontinued operations, net
of taxes - 491 - 4,354
Change in Operating Assets/
Liabilities
Accounts receivable (39,026) (9,975) (84,330) 40,523
Inventories (36,552) 4,437 (94,425) (10,170)
Other assets 6,034 8,039 (10,278) 13,450
Accounts payable and other
liabilities 14,038 3,924 98,228 (35,987)
--------- -------- --------- --------
Net Cash (Used for)/From
Operations (18,729) 18,754 105 53,734
Investing Activities
Capital expenditures (18,179) (7,385) (57,675) (22,004)
Acquisition of businesses, net
of cash acquired - - (23,227) (114)
Settlement of pre-acquisition
litigation - - (29,000) -
Investments - - (6,500) -
Proceeds from sale of
businesses and investments - - 3,000 7,286
Proceeds from sale of
property, plant and equipment 797 9,660 4,578 10,246
--------- -------- --------- --------
Net Cash (Used for)/From
Investing Activities (17,382) 2,275 (108,824) (4,586)
Financing Activities
Long-term debt payments, net 33 (1,990) (17,775) (6,462)
Notes payable payments, net 439 (22,500) 254 (56,190)
Preferred stock dividends (126) - (560) -
Payments to acquire treasury
stock - - (2,472) -
Stock purchase and option
plans 1,163 - 2,901 111
--------- -------- --------- --------
Net Cash From/(Used for)
Financing Activities 1,509 (24,490) (17,652) (62,541)
Effect of exchange rate changes
on cash (1,500) 2,688 4,855 6,823
--------- -------- --------- --------
Change for the Period (36,102) (773) (121,516) (6,570)
Cash and Equivalents at
Beginning of Period 200,855 79,074 286,269 84,871
--------- -------- --------- --------
Cash and Equivalents at End of
Period $164,753 $78,301 $164,753 $78,301
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