OPERATIONS REVIEW

Andrew Corporation once again set record highs in orders,  sales, net income and
net income per share for the fiscal year ended September 30, 1996. In the United
States,  accelerating  construction  for PCS more than  offset  slower  cellular
construction.  International cellular, common carrier and broadcast markets were
consistently strong throughout the year. Expanded  manufacturing  capacity,  new
distribution  locations and new products  strengthened the company's  ability to
compete in the growing, global wireless market.

During fiscal 1996, Andrew completed three  acquisitions that added new products
and  improved  accessibility  to our  markets.  In  December  1995,  the company
purchased  a 51%  interest  in  MAPRA  Industria  e  Comercio  Ltda.  and  GERBO
Telecommunicacoes   e  Servicos   Ltda.,   located  in  Brazil.   The  companies
manufacture,  distribute  and sell  antennas,  waveguide  and towers and provide
installation  services.  In March 1996, the company completed its acquisition of
The Antenna  Company,  a  manufacturer  and  distributor  of wireless  telephone
accessories and mobile antennas.  In June 1996, Andrew purchased an 80% interest
in the SATCOM Group of Companies, a distributor of commercial products,  located
in South Africa.

Sales for the year increased  $129.6 million or 20% over 1995 to $793.6 million.
Sales in the  commercial  business  segment  increased  $151.4 million or 26% to
$731.3  million.  In 1996,  a 28%  increase  in sales of  coaxial  cable,  a 25%
increase in terrestrial microwave antenna systems and a 31% increase in cellular
telephone accessories fueled the increase in the commercial business segment. In
1996, the government  business segment and the network business segment declined
18% and 30%,  respectively.  In 1995, the commercial  business segment increased
$92.4  million or 19% over 1994 to $580.0  million.  Increased  sales of coaxial
cable and strong  growth in  terrestrial  microwave,  wireless  accessories  and
broadcast products contributed to growth in the commercial segment in 1995.

Cost of Products  Sold, as a percentage of sales  revenue,  remained  relatively
unchanged  over the three-year  period.  Cost of goods sold as a  percentage  of
sales revenue was 58.1%, 57.5% and 58.8% in 1996, 1995 and 1994, respectively.
During 1996,  increased raw material prices and price competition were partially
offset by changes  in product  mix,  the  effect of  efficiencies  of volume and
manufacturing improvements.

Research and Development expenses rose as the company continued to invest in the
future.  In 1996,  research and development  spending  increased $7.9 million or
31.4% to $33.0  million,  compared with $25.1 million in 1995 and $26.6 million
in 1994.  The increase in 1996 reflects the  company's  new product  development
efforts in the commercial  business segment.  The decline in 1995 stems from the
company's  cost  reduction  efforts  in  the  government  business  segment  and
the network business.

Operating Expenses over the last three years increased at a much lower rate than
the increase in sales revenue.  Improved systems,  centralization of selling and
administrative  functions and  productivity  gains are all important  factors in
this trend. Selling and administrative expenses as a percentage of sales revenue
decreased to 19.3% in 1996 compared with 21.5% in 1995 and 23.3% in 1994.  Total
spending  increased  $10.3 million or 7.2% to $153.3 million in 1996 compared to
$143.0 million in 1995 and $136.8 million in 1994.

Other Expense  increased  5.2% over 1995 to $4.7 million,  while 1995  decreased
39.5% compared with 1994. In 1996, net interest  expense  increased 6.5% to $3.3
million. In 1995, it decreased 25.7% from the $4.1 million reported in 1994. Net
other  expense in 1996  increased to $1.5 million from $1.4 million and in 1995,
it decreased from $3.3 million in 1994. In 1996,  foreign exchange gains of $1.0
million  were  offset by the  one-time  charge of $1.5  million  related  to
acquisition  of The Antenna  Company and  recording of the  minority  interest's
share in the net income of the company's  operations in Brazil and South Africa.
In 1995, net other expense included foreign exchange losses ($1.7 million),  the
company's share of the losses in its joint ventures in Russia ($1.5 million) and
other miscellaneous expenses ($0.9 million). In 1995, these expenses were offset
by the $2.7 million gain on the sale of the Allen group debentures.

Net  Income  increased  29.2% to $90.4  million in 1996,  making  this the sixth
consecutive  year in which the  percentage  increase in net income  exceeded the
percentage   increase  in  sales   revenue.   Volume   efficiencies,   increased
productivity, cost containment and favorable product mix all contributed with
this trend.
<PAGE>

Liquidity:  Net cash from  operations  increased  19.7% to $66.8 million in 1996
compared  with  $55.8  million  in 1995 and  $52.3  million  in  1994.  In 1996,
increases in net income, depreciation,  accounts payable and accrued liabilities
were partially offset by increases in accounts receivable and inventory.  Higher
sales  volume in the  fourth  quarter of 1996  contributed  to the  increase  in
accounts receivable.

Net cash used in investing  activities increased 42.1% to $78.7 million in 1996.
The company's  acquisitions in Brazil and South Africa required the use of $17.8
million. In 1996, capital expenditures increased 9.2% to $52.5 million, and 1995
was up 68.9%  over 1994.  During  1996,  the  company  spent  $2.9  million of a
projected  $10  million  investment  in  equipment  and  expanded  manufacturing
capacity at its recently  acquired  facilities in Brazil.  In the United States,
investments  in  additional  cable  manufacturing facilities  also contributed
to this increase. In 1995, plant expansion and  productivity-related 
enhancements  to  increase  capacity  within  the  commercial  business  segment
contributed to the majority of the increase in capital  expenditures  over 1994.
In 1996, the company loaned $7.8 million to its joint ventures in Russia.

Net cash used in financing activities was $2.0 million in 1996 compared with net
cash from  financing  activities  of $4.6  million and $4.3  million in 1995 and
1994,  respectively.  During 1996, the company  liquidated The Antenna Company's
short-term debt of $5.0 million.  As of September 30, 1996 the company had $40.9
million of senior  notes  outstanding  of which $5.0  million was due within one
year. The company  maintains a $75 million  revolving  line of credit  agreement
with Bank of America,  Illinois under which there were no amounts outstanding as
of September 30, 1996.

Although  Andrew  has  never  paid  cash  dividends,   the  Board  of  Directors
periodically reviews this practice and to date has elected to retain earnings in
the business to finance investments and operations.

Risk Factors:  This annual report may contain  forward  looking  statements that
involve  risks and  uncertainties.  Factors that could cause  actual  results to
differ materially from forecasts or expectations  include but are not limited to
impact of  competitive  products and pricing;  regional  economic and  political
conditions  that may impact  customers'  ability to purchase  our  products  and
services;  availability  of  qualified  technical  management,   principally  in
emerging  markets and end user demand for wireless  communication  products.  In
addition, the company may, from time to time, list risk factors in the company's
reports filed with the SEC.



<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
                                                    Year Ended September 30
--------------------------------------------------------------------------------
Amounts in thousands, except per share amounts    1996       1995       1994
--------------------------------------------------------------------------------
<S>                                               <C>        <C>        <C>     
SALES                                             $793,575   $663,960   $588,233
Cost of products sold                              461,310    381,842    345,768
--------------------------------------------------------------------------------
GROSS PROFIT                                       332,265    282,118    242,465

OPERATING EXPENSES
Research and development                            33,003     25,124     26,611
Sales and administrative                           153,277    143,015    136,766
--------------------------------------------------------------------------------
                                                   186,280    168,139    163,377
--------------------------------------------------------------------------------
OPERATING INCOME                                   145,985    113,979     79,088

OTHER
Interest expense                                     5,183      5,643      5,492
Interest income                                     (1,903)    (2,562)    (1,343)
Other expense                                        1,460      1,425      3,295
--------------------------------------------------------------------------------
                                                     4,740      4,506      7,444
--------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES                         141,245    109,473     71,644

Income taxes                                        50,848     39,518     25,877
--------------------------------------------------------------------------------
NET INCOME                                        $ 90,397   $ 69,955   $ 45,767
================================================================================

NET INCOME PER AVERAGE SHARE
     OF COMMON STOCK OUTSTANDING                  $   1.48   $   1.16   $   0.76
================================================================================

AVERAGE SHARES OUTSTANDING                          61,188     60,485     60,308
================================================================================
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>

<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
                                                  September 30
-------------------------------------------------------------------
Dollars in thousands                            1996       1995
-------------------------------------------------------------------
<S>                                             <C>        <C>
ASSETS

CURRENT ASSETS
Cash and cash equivalents                       $ 31,295   $ 46,064
Accounts receivable, less allowances
  (1996 - $3,648; 1995 - $3,071)                 197,589    147,598
Inventories
  Finished products                               56,947     45,333
  Materials and work in process                  109,662     78,992
-------------------------------------------------------------------
                                                 166,609    124,325

Miscellaneous current assets                       6,491      4,758
-------------------------------------------------------------------
TOTAL CURRENT ASSETS                             401,984    322,745

OTHER ASSETS
Costs in excess of net assets of businesses
  acquired, less accumulated amortization
  (1996 - $19,732; 1995 - $16,524)                42,667     35,667
Investments in and advances to affiliates         42,510     33,480
Investments and other assets                      11,368     10,661

PROPERTY, PLANT AND EQUIPMENT
Land and land improvements                        11,103      9,402
Buildings                                         68,248     55,069
Equipment                                        254,737    212,952
Allowances for depreciation and amortization    (201,388)  (174,862)
--------------------------------------------------------------------
                                                 132,700    102,561
--------------------------------------------------------------------
TOTAL ASSETS                                    $631,229   $505,114
====================================================================                     
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>

<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
                                                     September 30
-----------------------------------------------------------------------
Dollars in thousands                               1996       1995
-----------------------------------------------------------------------
<S>                                                <C>        <C>

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable                                   $ 38,887   $ 30,628
Accrued expenses and other liabilites                26,170     20,343
Compensation and related expenses                    27,006     25,815
Income taxes                                         20,367     13,994
Current portion of long-term debt                     4,952      4,801
-----------------------------------------------------------------------
TOTAL CURRENT LIABILITIES                           117,382     95,581


DEFERRED LIABILITIES                                  7,919      7,087
 

LONG-TERM DEBT, less current portion                 40,423     45,255

MINORITY INTEREST                                     9,291        -

STOCKHOLDERS' EQUITY 
Common stock (par value, $.01 a share:
  100,000,000 shares authorized;
  68,479,398 shares issued, including treasury)         685        457
Additional paid-in capital                           43,257     35,588
Foreign currency translation                            349      1,077
Retained earnings                                   458,914    368,517
Treasury stock, at cost (8,047,229 shares in 1996;
  8,431,449 shares in 1995)                         (46,991)   (48,448)
-----------------------------------------------------------------------
                                                    456,214    357,191
-----------------------------------------------------------------------
TOTAL LIABILTIES AND EQUITY                        $631,229   $505,114
=======================================================================
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
                                                      Year Ended September 30
----------------------------------------------------------------------------------
Dollars in thousands                                1996       1995       1994
----------------------------------------------------------------------------------
<S>                                                 <C>        <C>        <C>
CASH FLOWS FROM OPERATIONS
Net Income                                          $90,397    $69,955    $45,767

ADJUSTMENTS TO NET INCOME
Depreciation and amortization                        34,334     25,803     22,889
Increase in accounts receivable                     (45,681)   (15,334)   (18,087)
Increase in inventories                             (34,705)   (32,078)   (17,725)
(Increase) decrease in miscellaneous
     current and other assets                        (1,663)     5,488     (1,667)
(Increase) decrease in receivables from affiliates      130     (1,171)    (6,467)
Increase in accounts payable and
     other liabilities                               23,321      1,638     27,561
Other                                                   663      1,515         72
----------------------------------------------------------------------------------
NET CASH FROM OPERATIONS                             66,796     55,816     52,343

INVESTING ACTIVITIES
Capital expenditures                                (52,475)   (48,076)   (28,471)
Acquisition of businesses, net of cash acquired     (17,802)       -          -
Investments in and advances to affiliates            (9,030)    (7,823)   (10,626)
Proceeds from sale of property, plant and equipment     624        532        405
----------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES               (78,683)   (55,367)   (38,692)

FINANCING ACTIVITIES
Proceeds from issuance of long-term debt                -        3,842       -
Payments on long-term debt                           (5,229)    (5,583)      (696)
Short-term borrowings (payments)-net                 (2,455)       750      1,700
Stock purchase and option plans                       5,712      5,561      3,255
----------------------------------------------------------------------------------
NET CASH FROM (USED IN) FINANCING ACTIVITIES         (1,972)     4,570      4,259
Effect of exchange rate changes on cash                (910)       331        803
----------------------------------------------------------------------------------
(DECREASE) INCREASE FOR THE YEAR                    (14,769)     5,350     18,713
Cash and equivalents at beginning of year            46,064     40,714     22,001
----------------------------------------------------------------------------------
CASH AND EQUIVALENTS AT END OF YEAR                 $31,295    $46,064    $40,714
==================================================================================
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>

<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
                                                  Year Ended September 30
----------------------------------------------------------------------------------
Dollars in thousands                            1996         1995         1994
----------------------------------------------------------------------------------
<S>                                             <C>          <C>          <C>    
COMMON STOCK ISSUED
Balance at beginning of year                    $    457     $    304     $    203
Three-for-two stock split                            228          153          101
----------------------------------------------------------------------------------
BALANCE AT END OF YEAR                          $    685     $    457     $    304
==================================================================================

ADDITIONAL PAID-IN CAPITAL
Balance at beginning of year                    $ 35,588     $ 22,356     $ 19,599
Three-for-two stock split                           (228)        (153)        (101)
Stock purchase and option plans                    7,897       13,385        2,858
----------------------------------------------------------------------------------
BALANCE AT END OF YEAR                          $ 43,257     $ 35,588     $ 22,356
==================================================================================

RETAINED EARNINGS
Balance at beginning of year                    $368,517     $298,562     $252,795
Net Income                                        90,397       69,955       45,767
----------------------------------------------------------------------------------
BALANCE AT END OF YEAR                          $458,914     $368,517     $298,562
==================================================================================

TREASURY STOCK
Balance at beginning of year                    $(48,448)    $(43,419)    $(45,323)
Stock purchase and option plans                    1,457       (5,029)       1,904
----------------------------------------------------------------------------------
BALANCE AT END OF YEAR                          $(46,991)    $(48,448)    $(43,419)
==================================================================================
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------------------

Principles of consolidation
The consolidated  financial  statements  include the accounts of the company and
its  majority-owned  subsidiaries.  All  significant  intercompany  accounts and
transactions have been eliminated.

Cash equivalents
The company considers all highly liquid investments purchased with maturities of
three  months  or less to be  cash  equivalents.  The  carrying  amount  of cash
equivalents  approximates fair value due to the relative  short-term maturity of
these investments.

Inventories
Inventories are stated at the lower of cost or market.  Inventories stated under
the last-in,  first-out (LIFO) method represent 41% of total inventories in 1996
and 39% of total  inventories in 1995. The remaining  inventories  are valued on
the first-in, first-out (FIFO) method and the weighted average method.

If the FIFO method,  which approximates  current replacement cost, had been used
for all inventories,  the total amount of inventories  would have been increased
by $8,435,000 and $11,189,000 at September 30, 1996 and 1995, respectively.

Depreciation and amortization
The company provides for  depreciation  and amortization of property,  plant and
equipment,  all of which are  recorded at cost,  principally  using  accelerated
methods  based on  estimated  useful  lives  of the  assets  for both  financial
reporting and tax purposes. Costs in excess of net assets of businesses acquired
are  amortized on the  straight-line  basis over  periods  ranging from 10 to 40
years.

Investments in affiliates
Investments in affiliates are accounted for using the equity method, under which
the  company's  share of earnings or losses of these  affiliates is reflected in
income  as  earned,  and  dividends  are  credited  against  the  investment  in
affiliates when received.

Revenue recognition
Revenue is recognized from sales, other than long-term contracts, when a product
is shipped or a service is performed.  Sales under long-term contracts generally
are recognized  under the percentage of completion  method and include a portion
of the earnings  expected to be realized on the contract in the ratio that costs
incurred  bear to  estimated  total  costs.  Contracts  in progress are reviewed
monthly, and sales and earnings are adjusted in current accounting periods based
on revisions in contract  value and  estimated  costs at  completion.  Estimated
losses on contracts are provided when identified.

Foreign currency translation
The functional  currency for the company's  foreign  operations is predominantly
the applicable  local  currency.  Accounts of foreign  operations are translated
into U.S. dollars using  year-end exchange rates for assets and liabilities and
average  monthly  exchange rates for revenue and expense  accounts.  Adjustments
resulting from translation are included as a separate component of stockholders'
equity.  Gains and losses  resulting  from  foreign  currency  transactions  are
included in determining net income.

Income taxes
Deferred  income taxes reflect the impact of temporary  differences  between the
amounts of assets and liabilities  recognized for financial  reporting  purposes
and such amounts recognized for tax purposes.

Net income per share
Net income per share is based on the weighted  average  number of common  shares
outstanding  during each year after giving effect to stock options considered to
be dilutive common stock equivalents.  Fully diluted net income per share is not
materially different from primary earnings per share.

Use of estimates
The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial  statements and accompanying notes.
Actual results could differ from those estimates.

Accounting changes
In March 1995, The Financial Accounting Standards Board (FASB) issued Statement
of Financial  Accounting Standard (SFAS) No. 121, "Accounting for the Impairment
of  Long-Lived  Assets  and for  Long-Lived  Assets to be  Disposed  of,"  which
requires  long-lived  assets  to be  reviewed  for  impairment  when  events  or
circumstances  indicate  that an impairment  exists.  The company is required to
adopt SFAS No. 121 during the first  quarter of fiscal  year 1997.  Adoption  of
this  Statement  is not  expected  to have a  material  effect on the  company's
financial statements.  During the first quarter of fiscal year 1995, the company
adopted  SFAS No. 115, "Accounting  for Certain  Investments  in Debt and Equity
Securities."  The adoption of this  statement did not have a material  effect on
the company's financial statements.

<PAGE>
BUSINESS ACQUISITIONS
================================================================================
In December  1995,  the company  purchased a 51%  interest in Mapra Industria e
Comercio, Ltda. and Gerbo  Telecommunicacoes  e Servicos,  Ltda. located in
Brazil, for $14.6 million,  net of cash received.  The acquisition was accounted
for as a purchase and,  accordingly,  the  operating  results of Mapra and Gerbo
have been  included  in the  consolidated  operating  results  since the date of
acquisition. Mapra and Gerbo manufacture, distribute and sell antennas, 
waveguide and towers and also provide installation services.

In June  1996,  the  company  purchased  an 80%  interest  in  SATCOM  Group  of
Companies,  located in South Africa, for $3.2 million net of cash received.  The
acquisition  of SATCOM was  accounted for as a purchase  and,  accordingly,  the
operating  results of SATCOM have been  included in the  consolidated  operating
results since the date of acquisition.

If  the   acquisitions   of   Mapra   Industria   e   Comercio,   Ltda.,  Gerbo
Telecommunicacoes  e Servicos,  Ltda.  and SATCOM Group of  Companies  had taken
place at the beginning of fiscal year 1996,  Andrew  Corporation's  consolidated
sales and net income would not have been materially affected.

In March 1996,  Andrew  Corporation  completed  its  acquisition  of The Antenna
Company,  a  manufacturer  and  distributor of wireless  telephone  antennas and
accessories for mobile applications. The transaction has been accounted for as a
pooling of interests and,  accordingly,  the accompanying  financial  statements
have been restated to include the accounts and operations of The Antenna Company
for all periods prior to the merger.  Andrew  exchanged  1,541,564 shares of its
common stock for all the  outstanding  stock of the  privately  held The Antenna
Company.  In  addition,  $1.5  million in  acquisition  costs were  incurred  to
complete the merger.


<PAGE>
INVESTMENTS IN AFFILIATES
--------------------------------------------------------------------------------

The company's  investments in affiliates represent 40 to 50 percent interests in
several start-up network telecommunications joint ventures located in Russia and
Ukraine.  The combined operating results of the ventures and the company's share
thereof  were not  material  to the  company's  1996,  1995  and 1994  operating
results.


UNBILLED RECEIVABLES
--------------------------------------------------------------------------------

As of September 30, 1996, unbilled  receivables  of $7,634,000  are included in
accounts  receivable, compared with $11,750,000 as of September 30, 1995. These
amounts will be billed in accordance with contract terms and delivery  schedules
and are generally expected to be collected within one year.


PROFIT SHARING PLANS
--------------------------------------------------------------------------------

Most employees of Andrew Corporation and its subsidiaries participate in various
retirement plans,  principally  defined  contribution  profit sharing plans. The
amounts  charged  to  earnings  for  these  plans  in 1996,  1995 and 1994  were
$13,678,000, $11,696,000 and $11,027,000, respectively.

<PAGE>
BORROWINGS
================================================================================

Lines of Credit
The company maintains a $75 million revolving line of credit agreement with Bank
of  America,  Illinois.  The maximum  outstanding  during 1996 under the line of
credit was $3.5 million with a weighted  average  interest rate of 5.58%.  There
were no amounts outstanding under the line of credit agreement as of September
30, 1996.


Long-Term Debt
Long-term debt as of September 30 consisted of the following:
<TABLE>
<CAPTION>
----------------------------------------------------------------------
Dollars in thousands                                 1996      1995
----------------------------------------------------------------------
<S>                                                  <C>       <C>
9.52% senior notes payable to insurance companies
  in annual installments from 1995 to 2005           $40,910   $45,455
Variable rate Industrial Development Revenue Bond
  with Coweta County, Georgia                          3,800     3,800
Other                                                    665       801
Less: Current Portion                                  4,952     4,801
----------------------------------------------------------------------
Total Long-Term Debt                                 $40,423   $45,255
----------------------------------------------------------------------
</TABLE>

Under the terms of the loan  agreements,  the  company  has  agreed to  maintain
certain levels of working  capital and net worth.  As of September 30, 1996, all
these requirements have been met.

The principal amounts of long-term debt maturing after September 30, 1996 are:
<TABLE>
<S>                   <C>       <C>       <C>       <C>       <C>        <C>
------------------------------------------------------------------------------------
Dollars in thousands  1997      1998      1999      2000      2001       Thereafter
------------------------------------------------------------------------------------
                      $4,952    $4,766    $4,582    $4,545    $4,545     $21,985
====================================================================================
</TABLE>

Cash payments for interest on all  borrowings  were  $4,752,000,  $5,339,000 and
$5,307,000 in 1996, 1995 and 1994, respectively.

The carrying amount of long-term debt as of September 30, 1996 approximates fair
value.  The fair value was  determined by  discounting  the future cash outflows
based upon the current market rates for instruments with a similar risk and term
to maturity.


<PAGE>
INCOME TAXES
----------------------------------------------------------------------
The composition of the provision for income taxes follows:

<TABLE>
<CAPTION>
                                                Year Ended September 30
------------------------------------------------------------------------------
Dollars in thousands                        1996         1995         1994
------------------------------------------------------------------------------
<S>                                        <C>          <C>          <C>
Currently Payable:
Federal                                    $ 32,644     $ 19,957     $ 14,191
Non-United States                            16,155       13,640       12,860
State                                         4,779        3,624        3,008
------------------------------------------------------------------------------
                                             53,578       37,221       30,059

Deferred (Credit):
Federal and State                            (2,608)       2,199       (3,662)
Non-United States                              (122)          98         (520)
------------------------------------------------------------------------------
                                             (2,730)       2,297       (4,182)
------------------------------------------------------------------------------
                                           $ 50,848     $ 39,518     $ 25,877
==============================================================================

Income Taxes Paid                          $ 37,041     $ 27,387     $ 19,461
==============================================================================

Components of Income Before Income Taxes:
United States                              $ 75,025     $ 67,079     $ 32,918
Non-United States                            66,220       42,394       38,726
------------------------------------------------------------------------------
                                           $141,245     $109,473     $ 71,644
==============================================================================
</TABLE>

The company's  effective income tax rate varied from the statutory United States
federal income tax rate because of the following:
<TABLE>
<CAPTION>
----------------------------------------------------------------------
                                              1996      1995      1994
----------------------------------------------------------------------
<S>                                           <C>       <C>       <C>   
Statutory United States federal tax rate      35.0 %    35.0 %    35.0 %
Foreign Sales Corporation                     (2.7)     (2.3)     (2.7)
State income taxes, net of federal tax effect  2.1       2.2       2.4
Other items                                    1.6       1.2       1.4
----------------------------------------------------------------------
Effective Tax Rate                            36.0 %    36.1 %    36.1 %
======================================================================
</TABLE>
<PAGE>
The tax effects of temporary  differences  have given rise to gross deferred tax
assets of $10,197,000, primarily accrued expenses and inventory pricing methods,
and gross deferred tax liabilities of $6,784,000,  primarily depreciation, as of
September  30,  1996.  The company has not  recorded a valuation  allowance  for
deferred tax assets  because the existing net deductible  temporary  differences
will reverse  during  periods in which the company  expects to generate  taxable
income.

No provision  has been made for income  taxes of  approximately  $10,750,000 as
of September 30, 1996, which would be payable should undistributed net income of
$84,300,000 of subsidiaries  located outside the United States be distributed as
dividends.  The company plans to continue its non-United  States  operations and
anticipates the ability to use tax planning opportunities if any dividends are
declared or paid from these operations.

<PAGE>
STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------

Each  outstanding  common  share has attached to it a one Share  Purchase  Right
that, until exercisable,  cannot be transferred apart from the company's Common
Stock. The Rights will only become exercisable if a person or group acquires 27%
or more of the  company's  Common  Stock or announces an offer to acquire 30% or
more of the company's Common Stock. In the event the Rights become  exercisable,
each  Right may  entitle  the  holder to  purchase  Common  Stock of either  the
surviving or acquired company at one-half its market price.

The company currently maintains a long-term Management Incentive Program,  which
provides for the issuance of up to 6,075,000  common shares in the form of stock
options and awards and the  awarding  of  performance  units  payable in cash or
stock to key officers and other  employees.  Substantially  all options  granted
under this plan  become  fully  exercisable  at the end of a  four-year  period.
Options  granted prior to fiscal year 1996 expire five years after grant,  while
options granted during fiscal year 1996 expire ten years after grant.

The company also maintains a Stock Option Plan for  non-employee  Directors that
provides for the issuance of up to 675,000 common  shares.  Options issued under
this plan vest over a five-year period and expire ten years after grant.

Information  on  options  for the last  three  years  ended  September  30 is as
follows:
<TABLE>
<CAPTION>
                                                Year Ended September 30
------------------------------------------------------------------------------
                                    1996             1995            1994
------------------------------------------------------------------------------
<S>                                 <C>              <C>             <C>      
Outstanding at beginning of year    1,578,425        2,347,200       2,531,142
Granted                               674,550          558,675         693,225
Expired or cancelled                 (182,847)         (48,101)        (95,715)
Exercised                            (324,374)      (1,279,350)       (781,452)
------------------------------------------------------------------------------
Outstanding at End of Year          1,745,754        1,578,424       2,347,200
==============================================================================

Exercisable at End of Year            314,850          204,525         765,742
==============================================================================
</TABLE>

<TABLE>
<CAPTION>
Price range of options:
<S>                            <C>              <C>             <C>       
Outstanding at end of year     $ 1.97 - 43.56   $ 1.97 - 25.67  $ 1.97 - 14.37
Granted during the year        $29.00 - 43.56   $22.89 - 25.67  $10.45 - 14.37
Exercised during the year      $ 2.70 - 25.67   $ 2.89 -  6.26  $ 2.07 -  8.07
==============================================================================
</TABLE>
The company also has an Employee  Stock  Purchase Plan that expires  February 1,
1999.  All employees  with six months of service as of the annual  offering date
are eligible to participate  in this Plan.  The Plan  authorizes up to 1,181,250
shares of Common Stock to be sold to employees at 85% of market value.
Through September 30, 1996, 353,466 shares have been issued under the Plan.
<PAGE>
As of September 30, 1996, 3,560,850 shares of Common Stock were reserved for the
various stock plans described above.

On February 7, 1996, the company's  Board of Directors  approved a three-for-two
stock split to  stockholders  of record on February 21, 1996,  payable  March 6,
1996. A  three-for-two  stock split was also effected in March 1995 and in March
1994.

Common Stock issued and  outstanding  and held in treasury is  summarized in the
tables below:

<TABLE>
<CAPTION>
                                                Year Ended September 30
------------------------------------------------------------------------------
                                    1996             1995            1994
------------------------------------------------------------------------------
<S>                                <C>              <C>              <C>  
SHARES OF COMMON STOCK - ISSUED
Balance at beginning of year       45,653,823       30,435,882      20,290,588
Three-for-two stock split          22,825,575       15,217,941      10,145,294
------------------------------------------------------------------------------
Balance at End of Year             68,479,398       45,653,823      30,435,882
==============================================================================
</TABLE>
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK - HELD IN TREASURY
<S>                                 <C>              <C>             <C>      
Balance at beginning of year        5,620,970        4,206,023       3,038,920
Three-for-two stock split           2,809,352        2,103,012       1,519,460
Stock purchase and option plans      (383,093)        (688,065)       (352,357)
------------------------------------------------------------------------------
Balance at End of Year              8,047,229        5,620,970       4,206,023
==============================================================================
</TABLE>

Foreign currency translation adjustments decreased equity by $0.7 million during
the year ended  September 30, 1996.  Foreign  currency  translation  adjustments
increased  equity $2.3 million and $4.2 million during the years ended September
30, 1995 and 1994, respectively.

<PAGE>
GEOGRAPHIC AREA INFORMATION
------------------------------------------------------------------------------
Principal financial data by major geographic area:
<TABLE>
<CAPTION>
                                                  Year Ended September 30
------------------------------------------------------------------------------
Dollars in thousands                    1996           1995           1994
------------------------------------------------------------------------------
<S>                                     <C>            <C>            <C> 
SALES:
United States:
Customers                               $529,480       $474,388       $439,995
Intercompany                              93,872         61,865         42,728
------------------------------------------------------------------------------
                                         623,352        536,253        482,723

Europe:
Customers                                154,363        129,029         99,039
Intercompany                              81,090         13,890          5,462
------------------------------------------------------------------------------
                                         235,453        142,919        104,501

Asia-Pacific:
Customers                                 50,344         38,026         29,698
Intercompany                               2,314          1,645            416
------------------------------------------------------------------------------
                                          52,658         39,671         30,114

Other Americas:                         
Customers                                 59,388         22,517         19,501
Intercompany                               5,557          5,285          3,449
------------------------------------------------------------------------------
                                          64,945         27,802         22,950
Eliminations                             182,833         82,685         52,055
------------------------------------------------------------------------------
CONSOLIDATED SALES                      $793,575       $663,960       $588,233
==============================================================================

UNITED STATES - EXPORT SALES            $112,648       $103,090       $101,829
==============================================================================

OPERATING INCOME:
United States                           $ 80,756       $ 72,010       $ 44,803
Europe                                    36,792         20,092         17,629
Asia-Pacific                              23,951         18,199         12,377
Other Americas                             4,486          3,678          4,279
------------------------------------------------------------------------------
CONSOLIDATED OPERATING INCOME           $145,985       $113,979       $ 79,088
==============================================================================

ASSETS IDENTIFIABLE TO:
United States                           $453,217       $367,025       $320,193
Europe                                   104,208        101,550         76,758
Asia-Pacific                              18,559         17,449         12,710
Other Americas                            55,245         19,090         15,665
------------------------------------------------------------------------------
CONSOLIDATED ASSETS                     $631,229       $505,114       $425,326
==============================================================================
<FN>
Sales and transfers between geographic areas are made at amounts that 
approximate manufacturing cost and generally consist of products that
require additional processing and with respect to which related selling, 
marketing and engineering expenses are incurred prior to shipment to customers.
</FN>
</TABLE>
<PAGE>
INDUSTRY SEGMENT INFORMATION
--------------------------------------------------------------------------------
The  company  operates  in  three  strategic  business   segments:   commercial,
government  and network.  The  commercial  segment  serves  commercial  markets,
including  telecommunications  companies, radio equipment companies,  television
stations,  utilities and  distributors.  Products include  antennas, and antenna
systems  and  coaxial  cable.   The  government   segment  serves   government
markets-federal,  foreign and local.  Products include specialized  antennas and
communication  reconnaissance  systems sold to various United States  government
agencies and friendly international governments.  Products also include coaxial
cable and standard antennas sold to government customers. The network segment 
provides products and services that support the integration of voice, data and
video in corporate telecommunication networks. The corporate and other category
includes certain expenses for corporate administration, long-range research and
development,   costs  related  to  unconsolidated   affiliates  and  results  of
operations that do not  relate  to  business  segments  as well as the  assets
associated  therewith.  Corporate  identifiable  assets  also  include  cash and
equivalents. In 1996, direct and indirect sales to agencies of the United States
federal  government  totaled  $18,250,000  compared with $22,337,000 in 1995 and
$27,840,000 in 1994.

Financial information by industry segment is as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
                                                                          Corporate
Dollars in thousands          Commercial     Government      Network      and Other     Total
--------------------------------------------------------------------------------------------------
<S>                           <C>            <C>             <C>          <C>           <C>    
1996:
Sales                         $731,347        $34,063        $27,568      $   597       $793,575
Operating income (loss)        170,401          1,154         (3,143)     (22,427)       145,985
Identifiable assets            476,787         43,938         33,417       77,087        631,229
Capital expenditures            47,328          1,700          2,394        1,053         52,475
Depreciation and amortization   27,474          1,911          3,183        1,767         34,335
--------------------------------------------------------------------------------------------------

1995:
Sales                         $579,984        $41,455        $39,217      $ 3,304       $663,960
Operating income (loss)        142,658          3,879         (3,048)     (29,510)       113,979
Identifiable assets            329,039         75,308         36,834       63,933        505,114
Capital expenditures            42,535          1,436          1,305        2,800         48,076
Depreciation and amortization   19,132          2,131          3,202        1,338         25,803
--------------------------------------------------------------------------------------------------

1994:
Sales                         $487,579        $43,611        $52,208      $ 4,835       $588,233
Operating income (loss)        114,590          1,067         (5,409)     (31,160)        79,088
Identifiable assets            238,276         66,800         42,502       77,748        425,326
Capital expenditures            24,362          1,527            655        1,927         28,471
Depreciation and amortization   14,076          3,256          3,494        2,063         22,889
--------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>
SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
--------------------------------------------------------------------------------
  
Due to variability of shipments under large contracts, customers' seasonal 
installation considerations, variations in product mix and in profitability of
individual orders, the company can experience wide quarterly  fluctuations in
net sales and income.  Consequently, it is more meaningful to focus on annual 
rather than quarterly  results.  All quarters have been updated to reflect the
pooling of interests acquisition of The Antenna Company in 1996.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Dollars in thousands, 
except per share amounts                       December    March       June        September   Annual
-------------------------------------------------------------------------------------------------------
<S>                                            <C>         <C>         <C>         <C>         <C>    
1996:
Sales                                          $177,924    $183,159    $197,209    $235,283    $793,575
Gross profit                                     71,853      72,818      85,036     102,558    332,265
Income before income taxes                       26,424      28,537      37,558      48,726    141,245
Net income                                       16,911      18,292      24,007      31,187     90,397
Net income per share                               0.28        0.30        0.39        0.51       1.48

Common Stock Closing Price Range:
High                                             39 1/3      39          55 1/2      53 7/8
Low                                              24 2/3      20 3/4      38 3/4      40 1/2
-------------------------------------------------------------------------------------------------------

1995:
Sales                                          $151,731    $163,736    $170,478    $178,015    $663,960
Gross profit                                     62,251      65,983      73,688      80,196    282,118
Income before income taxes                       18,543      22,065      29,735      39,130    109,473
Net income                                       11,954      14,129      18,960      24,912     69,955
Net income per share                               0.20        0.23        0.31        0.41       1.16 <F1>

Common Stock Closing Price Range:
High                                             23 7/8      29 7/8      38 5/8      42 2/3
Low                                              19 2/3      22 2/3      27 1/3      36 2/3
-------------------------------------------------------------------------------------------------------
<FN>
<F1> The sum of net income per share for the four  quarters  in 1995 does not equal
  earnings  per  share  for  the  year  due to  differences  in  average  shares
  outstanding.
</FN>
</TABLE>

<PAGE>
                        Report of Independent Auditors


TO THE STOCKHOLDERS AND BOARD OF DIRECTORS
ANDREW CORPORATION

We  have  audited  the  accompanying   consolidated  balance  sheets  of  Andrew
Corporation and  subsidiaries as of September 30, 1996 and 1995, and the related
consolidated statements of income,  stockholders' equity and cash flows for each
of the three years in the period  ended  September  30,  1996.  These  financial
statements   are  the   responsibility   of  the   company's   management.   Our
responsibility  is to express an opinion on these financial statements  based on
our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the consolidated financial position of Andrew Corporation
and subsidiaries at September 30, 1996 and 1995, and the consolidated results of
their  operations and their cash flows for each of the three years in the period
ended  September  30, 1996 in  conformity  with  generally  accepted  accounting
principles.


/s/ Ernst & Young LLP
Chicago, Illinois
October 25, 1996

<PAGE>
<TABLE>
<CAPTION>
FIVE YEAR FINANCIAL SUMMARY

-----------------------------------------------------------------------------------------------------------
Dollars in thousands, except per share amounts        1996        1995       1994       1993       1992  
-----------------------------------------------------------------------------------------------------------
<S>                                                   <C>         <C>        <C>        <C>        <C>   
OPERATIONS <F1>
-----------------------------------------------------------------------------------------------------------
Sales                                                 $793,575    $663,960   $588,233   $451,957   $453,408 
Employee compensation                                  200,945     192,469    174,701    152,570    148,660  
Materials, supplies and services                       450,834     366,907    332,396    236,652    229,723  
Depreciation                                            30,516      22,683     19,773     18,357     18,026  
Increase (decrease) in inventory                        34,705      32,078     17,725      5,185    (11,309)  

Interest expense                                         5,183       5,643      5,492      5,772      6,161   
Interest income                                          1,903       2,562      1,343        830      1,328   
Other income (expense)                                  (1,460)     (1,425)    (3,295)     1,530        944    
Non-recurring items  <F2>                                   -           -          -          -          -      
Income tax                                              50,848      39,518     25,877     16,748     15,650   
Net income                                              90,397      69,955     45,767     29,403     26,151   
Net income per share                                      1.48        1.16       0.76       0.50       0.39   
===========================================================================================================

FINANCIAL POSITION
Working capital                                        284,602     227,164    171,705    142,675    126,764  
Property, plant and equipment-net                      132,700     102,561     76,618     68,891     71,296   
Total assets                                           631,229     505,114    425,326    343,876    318,062  
Long-term debt                                          40,423      45,255     46,092     52,467     54,223   
Stockholders' equity                                   456,214     357,191    276,553    221,872    192,956  
===========================================================================================================
RATIOS AND OTHER DATA
Current ratio                                              3.4        3.4        2.8        3.2        2.9    
Return on net sales                                       11.4%      10.5%       7.8%       6.5%       5.8%     
Return on average assets                                  15.9%      15.0%      11.9%       8.9%       7.9%   
Return on average stockholders' equity                    22.2%      22.1%      18.4%      14.2%      12.8%   
Stockholders' equity per share outstanding               $7.55      $5.95      $4.69      $3.81      $3.41    

Foreign exchange gain (loss)  <F3>                         964     (1,709)    (2,021)     1,340         17     
Research & development                                  33,003     25,124     26,611     22,479     20,481   
Additions to property, plant and equipment              52,475     48,076     28,471     18,479     18,188   
Net assets located outside U.S. at year end            220,600    160,700    130,900     90,300     65,100   

Orders entered                                         818,600    723,600    584,800    457,400    429,700  
Order backlog at year end (under 12 months)            153,400    126,200     84,800     86,400     84,800  
Order backlog at year end (over 12 months)              14,800     18,500        600      1,600      5,500    

Number of full time equivalent employees at year end:
           Outside United States                         1,162        763        661        584        596  
           Total employees                               4,622      3,677      3,405      3,110      3,144 
Average shares of stock outstanding (thousands)         61,188     60,485     60,308     59,192     66,261 
Stockholders of record at year end                       3,242      2,340      1,482      1,133      1,057 
===========================================================================================================
<FN>
<F1> The results of operations for fiscal years 1991 through 1995 have been 
updated for the pooling of interests with The Antenna Company in 1996.  All 
other acquisitions have been included in operations since the date of
acquisition.

<F2> In 1987, pretax charge of $19,000 for restructuring less pretax gain
of $5,941 on sale of land.  

<F3> Total foreign exchange gain or loss, realized and unrealized, before 
provision for applicable taxes.
</FN>
</TABLE>
<PAGE>
                                   APPENDIX A
<TABLE>
<CAPTION>
PAGES WHERE GRAPHIC           DESCRIPTION OF GRAPHIC AND IMAGE MATERIAL
IMAGE APPEARS                   (In thousands, except per share data)
<S>                           <C>
14                            Bar graph of Sales (Dollars in Millions)
                              Data points:  1992-$453, 1993-$452, 1994-$588, 1995-$664, 1996-$794

14                            Bar graph of Sales-International (Dollars in Millions)
                              Data points:  1992-$169, 1993-$177, 1994-$250, 1995-$293, 1996-$377

14                            Bar graph of Sales- U.S. Export (Dollars in Millions)
                              Data points:  1992-$49, 1993-$54, 1994-$102, 1995-$103, 1996-$113

15                            Bar graph of Gross Profit (Dollars in Millions)
                              Data points:  1992-$174, 1993-$187, 1994-$242, 1995-$282, 1996-$332

15                            Bar graph of Sales and Administrative (Dollars in Millions)
                              Data points:  1992-$108, 1993-$115, 1994-$137, 1995-$143, 1996-$153
                              
15                            Bar graph of Research and Development (Dollars in Millions)
                              Data points:  1992-$20, 1993-$22, 1994-$27, 1995-$25, 1996-$33
                         
16                            Bar graph of Operating Income (Dollars in Millions)
                              Data points:  1992-$46, 1993-$50, 1994-$79, 1995-$114, 1996-$146

16                            Bar graph of Net Income (Dollars in Millions)
                              Data points:  1992-$26, 1993-$29, 1994-$46, 1995-$70, 1996-$90

16                            Bar graph of 12-Month Backlog (Dollars in Millions)
                              Data points:  1992-$85, 1993-$86, 1994-$85, 1995-$126, 1996-$153
               
17                            Bar graph of Return on Equity (Percent)
                              Data points:  1992-12.8, 1993-14.2, 1994-18.4, 1995-22.1, 1996-22.2
               
17                            Bar graph of Return on Assets (Percent)
                              Data points:  1992-7.9, 1993-8.9, 1994-11.9, 1995-15.0, 1996-15.9

17                            Bar graph of Sales per Employee (Dollars in Thousands)
                              Data points:  1992-$137.5, 1993-$144.5, 1994-$180.6, 1995-$187.5, 1996-$191.2
                         
18                            Bar graph of Net Cash from Operations (Dollars in Millions)
                              Data points:  1992-$51.7, 1993-$54.9, 1994-$52.3, 1995-$55.8, 1996-$66.8

18                            Bar graph of Capital Expenditures (Dollars in Millions)
                              Data points:  1992-$18, 1993-$18, 1994-$28, 1995-$48, 1996-$52

18                            Bar graph of Total Debt (Dollars in Millions)
                              Data points:  1992-$65, 1993-$56, 1994-$52, 1995-$50, 1996-$45
</TABLE>