TABLE OF CONTENTS




|                               |                                                                                                |  |  |  |  |  |  | 
|------------------------------ | ---------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION
|                               | ITEM 1  FINANCIAL STATEMENTS                                                                 
|                               | ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                               | ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS.                         
|PART II  OTHER INFORMATION   
|                               | ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|                               | ITEM 6  EXHIBITS AND REPORTS ON FORM 8-K.                                                    
|                               | SIGNATURES                                                                                    
|                               | EXHIBIT INDEX                                                                                 
|Exhibit 4.1                   
|Exhibit 10.1                  



---



##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

---

FORM 10-Q


|           |  |                                              |  |                                                         
|---------- |  | -------------------------------------------- |  | --------------------------------------------------------
|(Mark One)
|          
|          
|          
|          
|           |  | [X]                                          |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
|           |  |                                              |  | SECURITIES EXCHANGE ACT OF 1934                         
|          
|          
|          
|          
|           |  | For the quarterly period ended June 30, 2001
|          
|          
|          
|          
|           |  | OR                                          
|          
|          
|          
|          
|           |  | [ ]                                          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|           |  |                                              |  | SECURITIES EXCHANGE ACT OF 1934                         

For the transition period from Not Applicable to __________________

Commission file number 1-6016






|                                |  |                                     
|------------------------------- |  | ------------------------------------
|Delaware                        |  | 38-0290950                          
|                               
|(State or Other Jurisdiction of |  | (I.R.S. Employer Identification No.)
|Incorporation or Organization) 

|                                                    |  |           
|--------------------------------------------------- |  | ----------
|25101 Chagrin Boulevard, Suite 350, Beachwood, Ohio |  | 44122     
|                                                   
|(Address of Principal Executive Offices)            |  | (Zip Code)

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






Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.

Yes __X__ No _____

Indicate the number of shares outstanding of each of the issuers classes of common stock:

|                          |  |               
|------------------------- |  | --------------
|                          |  | Outstanding at
|Class of Common Stock     |  | August 1, 2001
|                          |  |               
|                         
|Par value $1.00 per share |  | 28,117,115    





---



##### Table of Contents



ALLEN TELECOM INC.

TABLE OF CONTENTS

|                               |                                                                      |                                                          |  |       |       | 
|------------------------------ | -------------------------------------------------------------------- | -------------------------------------------------------- |  | ----- | ----- | 
|                               |                                                                      |                                                          |  | Page 
|                               |                                                                      |                                                          |  | No.  
|                               |                                                                      |                                                          |  |      
|PART I. FINANCIAL INFORMATION:
|                              
|                              
|                              
|                              
|                               | ITEM 1  Financial Statements:                                      
|                              
|                              
|                              
|                              
|                               |                                                                      | Condensed Consolidated Balance Sheets -                 
|                              
|                              
|                              
|                              
|                               |                                                                      | June 30, 2001 and December 31, 2000                      |  |       | 3     | 
|                              
|                              
|                              
|                              
|                               |                                                                      | Condensed Consolidated Statements of Income -           
|                              
|                              
|                              
|                              
|                               |                                                                      | Three and Six Months Ended June 30, 2001 and 2000        |  |       | 4     | 
|                              
|                              
|                              
|                              
|                               |                                                                      | Condensed Consolidated Statements of Cash Flows -       
|                              
|                              
|                              
|                              
|                               |                                                                      | Six Months Ended June 30, 2001 and 2000                  |  |       | 5     | 
|                              
|                              
|                              
|                              
|                               |                                                                      | Condensed Consolidated Statements of Stockholders      
|                              
|                              
|                              
|                              
|                               |                                                                      | Equity  Six Months Ended June 30, 2001 and 2000         |  |       | 6     | 
|                              
|                              
|                              
|                              
|                               |                                                                      | Notes to the Condensed Consolidated Financial Statements |  |       | 7-11  | 
|                              
|                              
|                              
|                              
|                               | ITEM 2 - Managements Discussion and Analysis of
Financial Condition
|                              
|                              
|                              
|                              
|                               |                                                                      | and Results of Operations                                |  |       | 12-17 | 
|                              
|                              
|                              
|                              
|                               | ITEM 3 - Quantitative and Qualitative Disclosures About
Market Risks |                                                          |  | 18    |      
|                              
|                              
|                              
|                              
|PART II. OTHER INFORMATION:   
|                              
|                              
|                              
|                              
|                               | ITEM 4  Submission of Matters to a Vote of Security Holders         |                                                          |  | 18-19 |      
|                              
|                              
|                              
|                              
|                               | ITEM 6  Exhibits and Reports on Form 8-K                            |                                                          |  | 19    |      
|                              
|                              
|                              
|                              
|                               | Signatures                                                           |                                                          |  | 20    |      
|                              
|                              
|                              
|                              
|                               | Exhibit Index                                                        |                                                          |  | 21    |      

2



---



##### Table of Contents









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

|                     |                                      |                                                                                               |                                            |                                     |         |             |         |              |        |         |         | 
|-------------------- | ------------------------------------ | --------------------------------------------------------------------------------------------- | ------------------------------------------ | ----------------------------------- | ------- | ----------- | ------- | ------------ | ------ | ------- | ------- | 
|                     |                                      |                                                                                               |                                            |                                     |         | June 30,    |         | December 31,
|                     |                                      |                                                                                               |                                            |                                     |         | 2001        |         | 2000        
|                     |                                      |                                                                                               |                                            |                                     |         |             |         |             
|                     |                                      |                                                                                               |                                            |                                     |         | (Unaudited)
|ASSETS              
|                    
|                    
|                    
|                    
|                     | Current Assets:                     
|                    
|                    
|                    
|                    
|                     |                                      | Cash and equivalents                                                                          |                                            | $                                   | 7,599   |             |         | $            | 10,539 |        
|                    
|                    
|                    
|                    
|                     |                                      | Accounts receivable (less allowance for doubtful
accounts of $2,994 and $4,739, respectively) |                                            |                                     | 107,463 |             |         |              | 93,815 |        
|                    
|                    
|                    
|                    
|                     |                                      | Inventories: Raw materials                                                                    |                                            |                                     | 69,550  |             |         |              | 56,366 |        
|                    
|                    
|                    
|                    
|                     |                                      |                                                                                               |                                            | Work in process                     |         |             | 32,382  |              |        |         | 25,674  | 
|                    
|                    
|                    
|                    
|                     |                                      |                                                                                               |                                            | Finished goods                      |         |             | 38,106  |              |        |         | 19,600  | 
|                     |                                      |                                                                                               |                                            |                                     |         |             |         |             
|                     |                                      |                                                                                               |                                            | Total inventories (net of reserves) |         |             | 140,038 |              |        |         | 101,640 | 
|                     |                                      |                                                                                               |                                            |                                     |         |             |         |             
|                     |                                      | Deferred income taxes                                                                         |                                            |                                     | 3,264   |             |         |              | 3,820  |        
|                    
|                    
|                    
|                    
|                     |                                      | Other current assets                                                                          |                                            |                                     | 8,616   |             |         |              | 7,311  |        
|                     |                                      |                                                                                               |                                            |                                     |         |             |         |             
|                     |                                      |                                                                                               |                                            | Total current assets                |         |             | 266,980 |              |        |         | 217,125 | 
|                    
|                    
|                    
|                    
|                     | Property, plant and equipment, net   |                                                                                               |                                            | 40,783                              |         |             |         | 41,279       |       
|                    
|                    
|                    
|                    
|                     | Goodwill                             |                                                                                               |                                            | 124,793                             |         |             |         | 129,190      |       
|                    
|                    
|                    
|                    
|                     | Deferred income taxes                |                                                                                               |                                            | 47,671                              |         |             |         | 44,295       |       
|                    
|                    
|                    
|                    
|                     | Other assets                         |                                                                                               |                                            | 37,436                              |         |             |         | 41,133       |       
|                     |                                      |                                                                                               |                                            |                                     |         |             |         |             
|                     |                                      |                                                                                               | TOTAL ASSETS                               |                                     | $       | 517,663     |         |              | $      | 473,022 |        
|                     |                                      |                                                                                               |                                            |                                     |         |             |         |             
|LIABILITIES         
|                    
|                    
|                    
|                    
|                     | Current Liabilities:                
|                    
|                    
|                    
|                    
|                     |                                      | Notes payable and current maturities of long-term
obligations                                 |                                            | $                                   | 10,358  |             |         | $            | 3,796  |        
|                    
|                    
|                    
|                    
|                     |                                      | Accounts payable                                                                              |                                            |                                     | 57,144  |             |         |              | 45,181 |        
|                    
|                    
|                    
|                    
|                     |                                      | Accrued expenses                                                                              |                                            |                                     | 24,848  |             |         |              | 26,305 |        
|                    
|                    
|                    
|                    
|                     |                                      | Income taxes payable                                                                          |                                            |                                     | 6,507   |             |         |              | 3,922  |        
|                    
|                    
|                    
|                    
|                     |                                      | Deferred income taxes                                                                         |                                            |                                     | 8,314   |             |         |              | 5,290  |        
|                     |                                      |                                                                                               |                                            |                                     |         |             |         |             
|                     |                                      |                                                                                               |                                            | Total current liabilities           |         |             | 107,171 |              |        |         | 84,494  | 
|                    
|                    
|                    
|                    
|                     | Long-term debt                       |                                                                                               |                                            | 153,987                             |         |             |         | 134,639      |       
|                    
|                    
|                    
|                    
|                     | Deferred income taxes                |                                                                                               |                                            | 5,570                               |         |             |         | 9,168        |       
|                    
|                    
|                    
|                    
|                     | Other liabilities                    |                                                                                               |                                            | 10,286                              |         |             |         | 9,740        |       
|                     |                                      |                                                                                               |                                            |                                     |         |             |         |             
|                     |                                      |                                                                                               | TOTAL LIABILITIES                          |                                     |         | 277,014     |         |              |        | 238,041 |        
|                     |                                      |                                                                                               |                                            |                                     |         |             |         |             
|STOCKHOLDERS EQUITY
|                    
|                    
|                    
|                    
|                     | Common stock                         |                                                                                               |                                            | 30,210                              |         |             |         | 30,092       |       
|                    
|                    
|                    
|                    
|                     | Paid-in capital                      |                                                                                               |                                            | 184,959                             |         |             |         | 184,066      |       
|                    
|                    
|                    
|                    
|                     | Retained earnings                    |                                                                                               |                                            | 74,782                              |         |             |         | 69,067       |       
|                    
|                    
|                    
|                    
|                     | Accumulated other comprehensive loss |                                                                                               |                                            | (32,327                             | )       |             |         | (31,948      | )     
|                    
|                    
|                    
|                    
|                     | Less: Treasury stock (at cost)       |                                                                                               |                                            | (15,564                             | )       |             |         | (14,730      | )     
|                    
|                    
|                    
|                    
|                     | Unearned compensation                |                                                                                               |                                            | (1,411                              | )       |             |         | (1,566       | )     
|                     |                                      |                                                                                               |                                            |                                     |         |             |         |             
|                     |                                      |                                                                                               | TOTAL STOCKHOLDERS EQUITY                 |                                     |         | 240,649     |         |              |        | 234,981 |        
|                     |                                      |                                                                                               |                                            |                                     |         |             |         |             
|                     |                                      |                                                                                               | TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |                                     | $       | 517,663     |         |              | $      | 473,022 |        
|                     |                                      |                                                                                               |                                            |                                     |         |             |         |             

See accompanying Notes to the Condensed Consolidated Financial Statements.

3



---



##### Table of Contents



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

|                                                                  |                                                        |                                        |         |                    |     |                  |         |         |     |      |          |         |     |   |          |         |     | 
|----------------------------------------------------------------- | ------------------------------------------------------ | -------------------------------------- | ------- | ------------------ | --- | ---------------- | ------- | ------- | --- | ---- | -------- | ------- | --- | - | -------- | ------- | --- | 
|                                                                  |                                                        |                                        |         | Three Months Ended |     | Six Months Ended
|                                                                  |                                                        |                                        |         | June 30,           |     | June 30,        
|                                                                  |                                                        |                                        |         |                    |     |                 
|                                                                  |                                                        |                                        |         | 2001               |     | 2000             |         | 2001    |     | 2000
|                                                                  |                                                        |                                        |         |                    |     |                  |         |         |     |     
|SALES(Note 5)                                                     |                                                        | $                                      | 105,094 |                    |     | $                | 89,175  |         |     | $    | 213,637  |         |     | $ | 178,034  |        
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Cost of sales (Notes 2 and 5)                                     |                                                        |                                        | (77,983 | )                  |     |                  | (61,591 | )       |     |      | (156,622 | )       |     |   | (125,068 | )      
|                                                                  |                                                        |                                        |         |                    |     |                  |         |         |     |      |          |         |     |   |          |        
|Gross profit                                                      |                                                        |                                        | 27,111  |                    |     |                  | 27,584  |         |     |      | 57,015   |         |     |   | 52,966   |        
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Operating expenses:                                              
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Selling, general and administrative
expenses (Note 2)  |                                        |         | (13,988            | )   |                  |         | (13,137 | )   |      |          | (28,353 | )   |   |          | (27,480 | )  
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Research and development and product
engineering costs |                                        |         | (7,170             | )   |                  |         | (6,381  | )   |      |          | (14,070 | )   |   |          | (12,567 | )  
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Amortization of goodwill                               |                                        |         | (1,987             | )   |                  |         | (1,943  | )   |      |          | (3,967  | )   |   |          | (3,861  | )  
|                                                                  |                                                        |                                        |         |                    |     |                  |         |         |     |      |          |         |     |   |          |        
|Operating income                                                  |                                                        |                                        | 3,966   |                    |     |                  | 6,123   |         |     |      | 10,625   |         |     |   | 9,058    |        
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Interest expense                                                  |                                                        |                                        | (2,702  | )                  |     |                  | (2,625  | )       |     |      | (5,618   | )       |     |   | (5,096   | )      
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Interest income                                                   |                                                        |                                        | 192     |                    |     |                  | 417     |         |     |      | 513      |         |     |   | 927      |        
|                                                                  |                                                        |                                        |         |                    |     |                  |         |         |     |      |          |         |     |   |          |        
|Income before taxes and minority interest                         |                                                        |                                        | 1,456   |                    |     |                  | 3,915   |         |     |      | 5,520    |         |     |   | 4,889    |        
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Provision for income taxes                                        |                                                        |                                        | (565    | )                  |     |                  | (1,634  | )       |     |      | (2,150   | )       |     |   | (2,025   | )      
|                                                                  |                                                        |                                        |         |                    |     |                  |         |         |     |      |          |         |     |   |          |        
|Income before minority interest                                   |                                                        |                                        | 891     |                    |     |                  | 2,281   |         |     |      | 3,370    |         |     |   | 2,864    |        
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Minority interest                                                 |                                                        |                                        | (45     | )                  |     |                  | (39     | )       |     |      | (87      | )       |     |   | (52      | )      
|                                                                  |                                                        |                                        |         |                    |     |                  |         |         |     |      |          |         |     |   |          |        
|INCOME FROM CONTINUING OPERATIONS                                 |                                                        |                                        | 846     |                    |     |                  | 2,242   |         |     |      | 3,283    |         |     |   | 2,812    |        
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Discontinued emissions testing operations -
gain on sale (Note 3) |                                                        |                                        |        |                    |     |                  |        |         |     |      |         |         |     |   | 1,300    |        
|                                                                  |                                                        |                                        |         |                    |     |                  |         |         |     |      |          |         |     |   |          |        
|NET INCOME                                                        |                                                        | $                                      | 846     |                    |     | $                | 2,242   |         |     | $    | 3,283    |         |     | $ | 4,112    |        
|                                                                  |                                                        |                                        |         |                    |     |                  |         |         |     |      |          |         |     |   |          |        
|EARNINGS PER COMMON SHARE,                                       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|basic and diluted:                                               
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  |                                                        | Continuing operations                  |         | $                  | .03 |                  |         | $       | .08 |      |          | $       | .12 |   |          | $       | .10 | 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  |                                                        | Discontinued operations  gain on sale |         |                    |    |                  |         |         |    |      |          |         |    |   |          |         | .05 | 
|                                                                  |                                                        |                                        |         |                    |     |                  |         |         |     |      |          |         |     |   |          |        
|                                                                  |                                                        | Net income                             |         | $                  | .03 |                  |         | $       | .08 |      |          | $       | .12 |   |          | $       | .15 | 
|                                                                  |                                                        |                                        |         |                    |     |                  |         |         |     |      |          |         |     |   |          |        
|Weighted average common shares outstanding:                      
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Basic                                                  |                                        |         | 27,980             |     |                  |         | 27,800  |     |      |          | 27,950  |     |   |          | 27,790  |    
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Assumed exercise of stock options                      |                                        |         | 240                |     |                  |         | 400     |     |      |          | 330     |     |   |          | 370     |    
|                                                                  |                                                        |                                        |         |                    |     |                  |         |         |     |      |          |         |     |   |          |        
|                                                                  | Diluted                                                |                                        |         | 28,220             |     |                  |         | 28,200  |     |      |          | 28,280  |     |   |          | 28,160  |    
|                                                                  |                                                        |                                        |         |                    |     |                  |         |         |     |      |          |         |     |   |          |        

See accompanying Notes to the Condensed Consolidated Financial Statements.

4



---



##### Table of Contents



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

|                                                               |                                                         |                                                |                                             |              |         |                  |        |         |         |   |       | 
|-------------------------------------------------------------- | ------------------------------------------------------- | ---------------------------------------------- | ------------------------------------------- | ------------ | ------- | ---------------- | ------ | ------- | ------- | - | ----- | 
|                                                               |                                                         |                                                |                                             |              |         | Six Months Ended
|                                                               |                                                         |                                                |                                             |              |         | June 30,        
|                                                               |                                                         |                                                |                                             |              |         |                 
|                                                               |                                                         |                                                |                                             |              |         | 2001             |        | 2000   
|                                                               |                                                         |                                                |                                             |              |         |                  |        |        
|CASH FLOW FROM OPERATIONS:                                    
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Income from continuing operations                       |                                                | $                                           | 3,283        |         |                  | $      | 2,812   |        
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Adjustments to reconcile income to operating cash flow:
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                         | Depreciation                                   |                                             |              | 7,680   |                  |        |         | 6,947   |  
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                         | Amortization of goodwill                       |                                             |              | 3,967   |                  |        |         | 3,861   |  
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                         | Amortization of capitalized software           |                                             |              | 1,321   |                  |        |         | 1,512   |  
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                         | Other amortization                             |                                             |              | 155     |                  |        |         | 150     |  
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                         | Non-cash loss on write-down of assets          |                                             |              |        |                  |        |         | 393     |  
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Changes in operating assets and liabilities:           
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                         | Receivables                                    |                                             |              | (16,991 | )                |        |         | 3,702   |  
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                         | Inventories                                    |                                             |              | (31,162 | )                |        |         | (15,888 | )
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                         | Accounts payable and accrued expenses          |                                             |              | (1,809  | )                |        |         | 5,857   |  
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                         | Income tax payable                             |                                             |              | 6,116   |                  |        |         | (1,406  | )
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                         | Other, net                                     |                                             |              | (5,333  | )                |        |         | (3,767  | )
|                                                               |                                                         |                                                |                                             |              |         |                  |        |        
|                                                               | CASH (USED) PROVIDED BY OPERATING ACTIVITIES            |                                                |                                             | (32,773      | )       |                  |        | 4,173   |        
|                                                               |                                                         |                                                |                                             |              |         |                  |        |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                         
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                         | Investments in telecommunications subsidiaries |                                             |              |        |                  |        |         | (6,172  | )
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                         | Capital expenditures                           |                                             |              | (6,858  | )                |        |         | (5,055  | )
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                         | Capitalized software product costs             |                                             |              | (1,384  | )                |        |         | (1,658  | )
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                         | Sales and retirements of fixed assets          |                                             |              | 5,867   |                  |        |         | 706     |  
|                                                               |                                                         |                                                |                                             |              |         |                  |        |        
|                                                               | CASH USED BY INVESTING ACTIVITIES                       |                                                |                                             | (2,375       | )       |                  |        | (12,179 | )      
|                                                               |                                                         |                                                |                                             |              |         |                  |        |        
|CASH FLOWS FROM FINANCING ACTIVITIES:                         
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                         | Proceeds from borrowings                       |                                             |              | 4,556   |                  |        |         | 8,455   |  
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                         | Proceeds from sale and leaseback transaction   |                                             |              | 4,884   |                  |        |         |        |  
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                         | Acquisition of treasury shares                 |                                             |              | (1,111  | )                |        |         |        |  
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                         | Collection on installment note receivable      |                                             |              | 1,000   |                  |        |         | 1,000   |  
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                         | Treasury stock sold to employee benefit plan   |                                             |              | 481     |                  |        |         | 407     |  
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                         | Exercise of stock options                      |                                             |              | 807     |                  |        |         | 133     |  
|                                                               |                                                         |                                                |                                             |              |         |                  |        |        
|                                                               | CASH PROVIDED BY FINANCING ACTIVITIES                   |                                                |                                             | 10,617       |         |                  |        | 9,995   |        
|                                                               |                                                         |                                                |                                             |              |         |                  |        |        
|NET CASH (USED) PROVIDED                                       |                                                         |                                                | (24,531                                     | )            |         |                  | 1,989  |        
|                                                              
|                                                              
|                                                              
|                                                              
|Effect of foreign currency exchange rate changes on cash       |                                                         |                                                | 1,160                                       |              |         |                  | (1,686 | )      
|                                                              
|                                                              
|                                                              
|                                                              
|Net cash flow from change in year-end of subsidiaries (Note 1) |                                                         |                                                | 20,431                                      |              |         |                  |       |        
|                                                              
|                                                              
|                                                              
|                                                              
|Cash and equivalents at beginning of year                      |                                                         |                                                | 10,539                                      |              |         |                  | 22,085 |        
|                                                               |                                                         |                                                |                                             |              |         |                  |        |        
|CASH AND EQUIVALENTS AT END OF PERIOD                          |                                                         | $                                              | 7,599                                       |              |         | $                | 22,388 |        
|                                                               |                                                         |                                                |                                             |              |         |                  |        |        
|Supplemental cash flow data:                                  
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                         |                                                | Cash paid (received) during the period for:
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                         |                                                |                                             | Interest     |         | $                | 5,161  |         |         | $ | 4,999 | 
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                         |                                                |                                             | Income taxes |         |                  | (302   | )       |         |   | 4,098 | 

See accompanying Notes to the Condensed Consolidated Financial Statements.

5



---



##### Table of Contents



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

|                                                                   |                           |                                          |         |       |         |       |        |         |  |               |         |               |  |          |       |               |         |              |        |          |  |   |         |             |         |   |         |   |  |   |        |   |  | 
|------------------------------------------------------------------ | ------------------------- | ---------------------------------------- | ------- | ----- | ------- | ----- | ------ | ------- |  | ------------- | ------- | ------------- |  | -------- | ----- | ------------- | ------- | ------------ | ------ | -------- |  | - | ------- | ----------- | ------- | - | ------- | - |  | - | ------ | - |  | 
|                                                                   |                           |                                          |         |       |         |       |        |         |  |               |         |               |  |          |       |               |         |              |        |          |  |   |         | Accumulated
|                                                                   |                           |                                          |         |       |         |       |        |         |  |               |         |               |  |          |       |               |         |              |        |          |  |   |         | Other      
|                                                                   |                           |                                          |         |       |         |       |        | Common  |  | Paid-In       |         | Comprehensive |  | Retained |       | Comprehensive |         | Treasury     |        | Unearned
|                                                                   |                           |                                          |         | Total |         | Stock |        | Capital |  | Income (Loss) |         | Earnings      |  | Loss     |       | Stock         |         | Compensation
|                                                                   |                           |                                          |         |       |         |       |        |         |  |               |         |               |  |          |       |               |         |             
|For the six months ended June 30, 2001:                           
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Beginning Balance, January 1, 2001                                 |                           | $                                        | 234,981 |       |         | $     | 30,092 |         |  | $             | 184,066 |               |  |          |       |               |         | $            | 69,067 |          |  | $ | (31,948 | )           |         | $ | (14,730 | ) |  | $ | (1,566 | )
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Net income from change in fiscal year-end of
subsidiaries (Note 1) |                           |                                          | 2,432   |       |         |       |        |         |  |               |         |               |  |          |       |               |         |              | 2,432  |         
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Comprehensive income (loss):                                      
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Net income                                                         |                           |                                          | 3,283   |       |         |       |        |         |  |               |         |               |  | $        | 3,283 |               |         |              | 3,283  |         
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   | Other comprehensive loss:
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   |                           | Foreign currency translation adjustments |         |       | (379    | )     |        |         |  |               |         |               |  |          |       |               | (379    | )            |        |          |  |   |         |             | (379    | )
|                                                                   |                           |                                          |         |       |         |       |        |         |  |               |         |               |  |          |       |              
|                                                                   | Comprehensive income      |                                          |         |       |         |       |        |         |  |               |         |               |  |          | $     | 2,904         |        
|                                                                   |                           |                                          |         |       |         |       |        |         |  |               |         |               |  |          |       |              
|Treasury stock reissued                                            |                           |                                          | 481     |       |         |       |        |         |  |               |         |               |  |          |       |               |         |              |        |          |  |   |         |             |         |   | 277     |  
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Acquisition of treasury shares                                     |                           |                                          | (1,111  | )     |         |       |        |         |  |               | 204     |               |  |          |       |               |         |              |        |          |  |   |         |             |         |   | (1,111  | )
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Exercise of stock options                                          |                           |                                          | 807     |       |         |       | 118    |         |  |               | 689     |              
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Amortization of unearned compensation                              |                           |                                          | 155     |       |         |       |        |         |  |               |         |               |  |          |       |               |         |              |        |          |  |   |         |             |         |   |         |   |  |   | 155    |  
|                                                                   |                           |                                          |         |       |         |       |        |         |  |               |         |               |  |          |       |               |         |              |        |          |  |   |         |             |         |   |         |   |  |   |        |  
|Ending Balance, June 30, 2001                                      |                           | $                                        | 240,649 |       |         | $     | 30,210 |         |  | $             | 184,959 |               |  |          |       |               |         | $            | 74,782 |          |  | $ | (32,327 | )           |         | $ | (15,564 | ) |  | $ | (1,411 | )
|                                                                   |                           |                                          |         |       |         |       |        |         |  |               |         |               |  |          |       |               |         |              |        |          |  |   |         |             |         |   |         |   |  |   |        |  
|For the six months ended June 30, 2000:                           
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Beginning Balance, January 1, 2000                                 |                           | $                                        | 240,912 |       |         | $     | 30,010 |         |  | $             | 181,335 |               |  |          |       |               |         | $            | 57,014 |          |  | $ | (10,685 | )           |         | $ | (14,978 | ) |  | $ | (1,784 | )
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Comprehensive income (loss):                                      
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   | Net income                |                                          |         | 4,112 |         |       |        |         |  |               |         |               |  |          | $     | 4,112         |         |              |        | 4,112    | 
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   | Other comprehensive loss:
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   |                           | Foreign currency translation adjustments |         |       | (13,168 | )     |        |         |  |               |         |               |  |          |       |               | (13,168 | )            |        |          |  |   |         |             | (13,168 | )
|                                                                   |                           |                                          |         |       |         |       |        |         |  |               |         |               |  |          |       |              
|                                                                   | Comprehensive loss        |                                          |         |       |         |       |        |         |  |               |         |               |  |          | $     | (9,056        | )      
|                                                                   |                           |                                          |         |       |         |       |        |         |  |               |         |               |  |          |       |              
|Treasury stock reissued                                            |                           |                                          | 406     |       |         |       |        |         |  |               | 168     |               |  |          |       |               |         |              |        |          |  |   |         |             |         |   | 238     |  
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Exercise of stock options                                          |                           |                                          | 133     |       |         |       | 23     |         |  |               | 110     |               |  |          |       |               |         |              |        |          |  |   |         |             |         |   | (88     | )
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Restricted stock, net                                              |                           |                                          | (89     | )     |         |       | (7     | )       |  |               | (118    | )             |  |          |       |               |         |              |        |          |  |   |         |             |         |   |         |   |  |   | 124    |  
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Amortization of unearned compensation                              |                           |                                          | 150     |       |         |       |        |         |  |               |         |               |  |          |       |               |         |              |        |          |  |   |         |             |         |   |         |   |  |   | 150    |  
|                                                                   |                           |                                          |         |       |         |       |        |         |  |               |         |               |  |          |       |               |         |              |        |          |  |   |         |             |         |   |         |   |  |   |        |  
|Ending Balance, June 30, 2000                                      |                           | $                                        | 232,456 |       |         | $     | 30,026 |         |  | $             | 181,495 |               |  |          |       |               |         | $            | 61,126 |          |  | $ | (23,853 | )           |         | $ | (14,828 | ) |  | $ | (1,510 | )
|                                                                   |                           |                                          |         |       |         |       |        |         |  |               |         |               |  |          |       |               |         |              |        |          |  |   |         |             |         |   |         |   |  |   |        |  

See accompanying Notes to the Condensed Consolidated Financial Statements.

6



---



##### Table of Contents



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



|1. |  | Significant Accounting Policies:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | General                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   |  | In the opinion of the management of Allen Telecom Inc. (the Company),
the accompanying unaudited condensed consolidated interim financial
statements reflect all adjustments necessary to present fairly the
financial position of the Company as of June 30, 2001 and the consolidated
results of its operations, cash flows and changes in stockholders equity
for the periods ended June 30, 2001 and 2000. The results of operations
for such interim periods are not necessarily indicative of the results for
the full year. The year-end 2000 condensed consolidated balance sheet was
derived from audited financial statements, but does not include all
disclosures required by accounting principles generally accepted in the
United States of America. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Companys Annual Report on Form 10-K for the year ended December 31, 2000.
|  
|   |  | Consolidation Policy                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   |  | The Companys consolidated financial statements include the accounts of
all wholly owned and majority owned subsidiaries. Intercompany accounts
and transactions have been eliminated. To facilitate preparation of
financial statements, the Companys principal European operations, for
periods on or prior to December 31, 2000, were included in the
consolidated financial statements on a two-month delayed basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|   |  | Effective January 1, 2001, such European operations changed their fiscal
year-end from October 31 to December 31, consistent with the balance of
the Companys operations. The results of operations (net income of
$2,432,000) for these European subsidiaries for the period November and
December 2000, were recorded directly to retained earnings in the first
quarter of 2001 and the results of operations for the period January 1,
2001 through June 30, 2001 were included in the 2001 reported results of
operations.                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   |  | Cash flow of such European operations for the two month period November
and December 2000 is summarized as follows (amounts in millions):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

|                             |                                  |   |      |      | 
|---------------------------- | -------------------------------- | - | ---- | ---- | 
|Net income from operations   |                                  | $ | 2.4  |     
|                            
|                            
|                            
|                            
|Increase in inventories      |                                  |   | (8.7 | )   
|                            
|                            
|                            
|                            
|Decrease in receivables      |                                  |   | 3.2  |     
|                            
|                            
|                            
|                            
|Increase in accounts payable |                                  |   | 14.1 |     
|                            
|                            
|                            
|                            
|Decrease in taxes payable    |                                  |   | (6.1 | )   
|                            
|                            
|                            
|                            
|Net increase in fixed assets |                                  |   | (1.2 | )   
|                            
|                            
|                            
|                            
|Borrowings                   |                                  |   | 16.1 |     
|                            
|                            
|                            
|                            
|Other                        |                                  |   | .6   |     
|                             |                                  |   |      |     
|                             | Increase in cash and equivalents |   | $    | 20.4 | 
|                             |                                  |   |      |     

7



---



##### Table of Contents



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



|2. |  | Special Charges:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | In the fourth quarter 1999, the Company announced the restructuring of
certain operations. In the first quarter 2000, the Company incurred
incremental pretax charges of $1,678,000, or $.04 per basic and diluted
share after related income tax effect in connection with such
restructuring. These charges were not accruable at December 31, 1999.
Of this pretax charge, $960,000 was recorded in cost of sales and
$718,000 in selling, general and administrative expenses. Of the charge,
$393,000 relates to a non-cash write-off of capital assets and $1,285,000
were cash related charges.
|  
|   |  | The following is a summary of the activity for exit costs incurred
(amounts in thousands).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

|                                      |  |           |      |                  |  |       |        |   |  |   |     |  
|------------------------------------- |  | --------- | ---- | ---------------- |  | ----- | ------ | - |  | - | --- | -
|                                      |  | Severance |      | Sale of Building
|                                      |  | Accrual   |      | and Equipment    |  | Other
|                                      |  |           |      |                  |  |      
|Accrual balance at December 31, 2000  |  | $         | 219  |                  |  | $     | 1,549  |   |  | $ | 317 |  
|                                     
|                                     
|                                     
|                                     
|Charged against accrual               |  |           | (127 | )                |  |       | (1,300 | ) |  |   | (97 | )
|                                     
|                                     
|                                     
|                                     
|Accrual adjustment credited to income |  |           |     |                  |  |       | (77    | ) |  |   |    |  
|                                      |  |           |      |                  |  |       |        |   |  |   |     |  
|Balance June 30, 2001                 |  | $         | 92   |                  |  | $     | 172    |   |  | $ | 220 |  
|                                      |  |           |      |                  |  |       |        |   |  |   |     |  



|   |  | The term of severance is based on years of service or determined by
contractual obligation, and is payable over a period of time. Severance
will be paid out in its entirety by October 31, 2001.                                                                                                                                           
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|3. |  | Discontinued Operations:                                                                                                                                                                                                                                                                                                                    
|  
|   |  | The gain on sale from discontinued operations in the first quarter of
2000 represents income from previously contingent purchase price
consideration earned on the sale of the Companys former automotive
emissions testing business sold in the first quarter of 1999. This gain
is net of related income taxes in the amount of $700,000.

8



---



##### Table of Contents



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



|4. |  | Segment Disclosures:                                                                                                                                             
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The following table shows sales to external customers, results of
operations and asset positions for the Companys two operating segments
(amounts in thousands):

|                             |                                              |                                            |                                         |       |                    |         |                  |       |        |        |        |        |         |         |        |        |        |         | 
|---------------------------- | -------------------------------------------- | ------------------------------------------ | --------------------------------------- | ----- | ------------------ | ------- | ---------------- | ----- | ------ | ------ | ------ | ------ | ------- | ------- | ------ | ------ | ------ | ------- | 
|                             |                                              |                                            |                                         |       | Three Months Ended |         | Six Months Ended
|                             |                                              |                                            |                                         |       | June 30,           |         | June 30,        
|                             |                                              |                                            |                                         |       |                    |         |                 
|                             |                                              |                                            |                                         |       | 2001               |         | 2000             |       | 2001   |        | 2000  
|                             |                                              |                                            |                                         |       |                    |         |                  |       |        |        |       
|Sales to external customers:
|                            
|                            
|                            
|                            
|                             | Wireless communications equipment:          
|                            
|                            
|                            
|                            
|                             |                                              | Base station subsystems and components     |                                         | $     | 54,610             |         |                  | $     | 42,012 |        |        | $      | 114,033 |         |        | $      | 85,286 |        
|                            
|                            
|                            
|                            
|                             |                                              | Repeater and in-building coverage products |                                         |       | 20,635             |         |                  |       | 18,702 |        |        |        | 43,455  |         |        |        | 38,169 |        
|                            
|                            
|                            
|                            
|                             |                                              | Base station and mobile antennas           |                                         |       | 23,169             |         |                  |       | 21,583 |        |        |        | 43,689  |         |        |        | 41,701 |        
|                             |                                              |                                            |                                         |       |                    |         |                  |       |        |        |        |        |         |         |        |       
|                             |                                              |                                            | Total wireless communications equipment |       |                    | 98,414  |                  |       |        | 82,297 |        |        |         | 201,177 |        |        |        | 165,156 | 
|                            
|                            
|                            
|                            
|                             | Wireless engineering and consulting services |                                            |                                         | 6,680 |                    |         |                  | 6,878 |        |        |        | 12,460 |         |         |        | 12,878 |       
|                             |                                              |                                            |                                         |       |                    |         |                  |       |        |        |        |        |         |         |        |       
|                             |                                              |                                            | Total sales                             |       | $                  | 105,094 |                  |       | $      | 89,175 |        |        | $       | 213,637 |        |        | $      | 178,034 | 
|                             |                                              |                                            |                                         |       |                    |         |                  |       |        |        |        |        |         |         |        |       
|Results of operations:      
|                            
|                            
|                            
|                            
|                             | Wireless communications equipment            |                                            | $                                       | 6,533 |                    |         | $                | 7,790 |        |        | $      | 16,795 |         |         | $      | 13,470 |       
|                            
|                            
|                            
|                            
|                             | Wireless engineering and consulting services |                                            |                                         | 1,336 |                    |         |                  | 2,012 |        |        |        | 1,494  |         |         |        | 2,897  |       
|                             |                                              |                                            |                                         |       |                    |         |                  |       |        |        |        |        |         |         |        |       
|                             |                                              |                                            | 7,869                                   |       |                    |         | 9,802            |       |        |        | 18,289 |        |         |         | 16,367 |       
|                            
|                            
|                            
|                            
|Goodwill amortization        |                                              |                                            | (1,987                                  | )     |                    |         | (1,943           | )     |        |        | (3,967 | )      |         |         | (3,861 | )     
|                            
|                            
|                            
|                            
|General corporate expenses   |                                              |                                            | (1,916                                  | )     |                    |         | (1,736           | )     |        |        | (3,697 | )      |         |         | (3,448 | )     
|                             |                                              |                                            |                                         |       |                    |         |                  |       |        |        |        |        |         |         |        |       
|Operating income             |                                              | $                                          | 3,966                                   |       |                    | $       | 6,123            |       |        | $      | 10,625 |        |         | $       | 9,058  |       
|                             |                                              |                                            |                                         |       |                    |         |                  |       |        |        |        |        |         |         |        |       

|                               |                                              |              |         |               |         |                   |         |         |         | 
|------------------------------ | -------------------------------------------- | ------------ | ------- | ------------- | ------- | ----------------- | ------- | ------- | ------- | 
|                               |                                              |              |         | As of        
|                               |                                              |              |         |              
|                               |                                              |              |         | June 30, 2001 |         | December 31, 2000
|                               |                                              |              |         |               |         |                  
|Segment Assets:               
|                              
|                              
|                              
|                              
|                               | Wireless communications equipment            |              | $       | 302,878       |         |                   | $       | 261,227 |        
|                              
|                              
|                              
|                              
|                               | Wireless engineering and consulting services |              |         | 15,939        |         |                   |         | 13,676  |        
|                               |                                              |              |         |               |         |                   |         |        
|                               |                                              |              | 318,817 |               |         |                   | 274,903 |        
|                              
|                              
|                              
|                              
|Goodwill                       |                                              |              | 124,793 |               |         |                   | 129,190 |        
|                              
|                              
|                              
|                              
|Deferred income taxes          |                                              |              | 50,935  |               |         |                   | 48,115  |        
|                              
|                              
|                              
|                              
|Other general corporate assets |                                              |              | 23,118  |               |         |                   | 20,814  |        
|                               |                                              |              |         |               |         |                   |         |        
|                               |                                              | Total Assets |         | $             | 517,663 |                   |         | $       | 473,022 | 
|                               |                                              |              |         |               |         |                   |         |        

9



---



##### Table of Contents



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



|5. |  | Impact of New Accounting Pronouncements:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 133, Accounting for
Derivative Instruments and Hedging Activities, in June 1998 which is now
effective. Accordingly, the Company has adopted the provisions of the
standard on January 1, 2001. The Company utilizes hedging activities
primarily in its foreign subsidiaries to limit foreign currency exchange
rate risk on receivables and to offset the impact of currency rate
changes with regard to certain intercompany payables and foreign
denominated purchase obligations. The adoption of SFAS No. 133 as of
January 1, 2001 did not have a material impact on the Companys results
of operations or financial position for the periods ended June 30, 2001.
|  
|   |  | In the fourth quarter of 2000, the Company adopted the provisions of
Emerging Issues Task Force Issue No. 00-10, Accounting for Shipping and
Handling Fees and Costs. Accordingly, prior year amounts have been
reclassified to conform to the 2001 presentation. The previously
reported amounts for each of sales and cost of sales for the three and
six months ended June 30, 2000 have been increased $735,000 and
$1,638,000, respectively, to conform with the current presentation.
These reclassifications had no net impact on previously reported results
of operations or stockholders equity.                                                                                                                                                                                 
|  
|   |  | In June 2001, the FASB issued SFAS No. 141, Business Combinations.
SFAS No. 141 requires that the purchase method of accounting be used for
all business combinations initiated after June 30, 2001. As specified
therein, goodwill and certain intangible assets acquired will remain on
the balance sheet and not be amortized. On an annual basis, and when
there is reason to suspect that their values have been diminished or
impaired, these assets must be tested for impairment, with appropriate
write-downs, if necessary. The Company is required to implement SFAS No.
141 on July 1, 2001.                                                                                                                                                                                    
|  
|   |  | In June 2001, the FASB also issued SFAS No. 142, Goodwill and Other
Intangible Assets. SFAS No. 142 changes the accounting for goodwill
from an amortization method to an impairment-only approach. Amortization
of goodwill, including goodwill recorded in past business combinations,
will cease upon adoption of this statement. The company is required to
implement SFAS No. 142 on January 1, 2002 and it has not determined, in
all cases, the impact that this statement will have on its consolidated
financial position or results of operations. Earnings per common share
for each of the first and second quarters                                                                                                                                                            

10



---



##### Table of Contents



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



|5. |  | Impact of New Accounting Pronouncements (continued):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | of 2001 and 2000 would have increased by approximately $.07 per share,
(or approximately $.28 per share annually based on approximately
28,000,000 common shares outstanding), excluding the amortization of
goodwill, which will be eliminated in 2002 when the new Standards go into
effect.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|6. |  | Sale and Leaseback Transaction:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|   |  | In the second quarter of 2001, the company entered into a sale and
leaseback agreement for one of its European facilities. In connection
with the sale, the Company received net proceeds of $4,884,000, after a
lease deposit payment of $512,000. This transaction was accounted for as
a financing, wherein the land and building (which will continue to be
depreciated) remain on the books. A financing obligation has been
recorded in the amount of $5,125,000 representing gross proceeds received
(included in Notes payable and current maturities of long-term
obligations and Long-term debt). The terms of the lease call for
thirty-one equal quarterly payments (including the related interest
portion) of $169,000 from September 1, 2001 through June 2009 with a
purchase option of $512,000 at the termination of the lease.
|  
|7. |  | Reclassifications:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   |  | Certain prior year balances have been reclassified to conform to the
current year presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

11



---



##### Table of Contents






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

Overview

We design, manufacture, and market wireless communications infrastructure
equipment and provide wireless engineering and consulting services for the
global wireless communications markets. Our products and services improve the
capacity, coverage and performance of wireless networks, including emerging 3G
networks. As part of our commitment to our customers evolving needs, we have
also developed new products for E 911 geolocation and other emerging wireless
equipment markets such as next generation power amplifiers. Our products and
services serve all major wireless standards and frequencies.

Results of Operations

Summary:

We reported net income from continuing operations of $.8 million ($.03 per
common share) for the second quarter 2001, as compared with net income of $2.2
million ($.08 per common share) for the second quarter 2000. Net income from
continuing operations for the six-month period ended June 30, 2001 was $3.3
million ($.12 per common share) as compared to $3.8 million ($.14 per common
share) in the comparable period of 2000, excluding the restructuring charge in
the first quarter of 2000 of $.04 per common share. This charge in the first
quarter of 2000 was related to the restructuring of certain operations, the
closing of a manufacturing facility and other items.

Total sales for the Company increased 18% from $89.2 million in the second
quarter 2000 to $105.1 million in the second quarter 2001. Sales for the
six-month period ended June 30, 2001 increased 20% to $213.6 million as
compared to $178.0 million in the same six-month period of 2000.

The strong U.S. dollar relative to the Euro negatively impacted reported sales
and pretax income of our European operations in the second quarter of 2001 as
compared to the second quarter of 2000. As a result of currency exchange
differences, reported sales and pretax income for the three months ended June
30, 2001 were $3.5 million and $0.5 million lower, respectively, as compared
with the corresponding prior year period, assuming the exchange rates stayed
the same. For the six months ended June 30, 2001, the reported sales and
pretax income were $7.5 million and $1.0 million lower, respectively, than the
comparable 2000 period.

12



---



##### Table of Contents



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

Summary (continued):

Incremental pretax restructuring charges of approximately $1.7 million (or $.04
per basic and diluted share after related income tax effect) are included in
the results of operations for the six months ended June 30, 2000. See Note 2
of Notes to Condensed Consolidated Financial Statements for additional
information concerning such special items.

Wireless Communications Equipment:

Wireless Communications Equipment sales increased 20%, from $82.3 million in
second quarter 2000 to $98.4 million in the second quarter 2001. Sales of
Wireless Communications Equipment increased across all product lines with base
station subsystems and components showing the largest increase (30%) to $54.6
million from $42.0 million for the three months ended June 30, 2001, as
compared with the comparable 2000 period. Second quarter 2001 sales of
repeaters and in-building coverage products and base station and mobile
antennas increased 10% and 7%, respectively, as compared with the comparable
2000 periods. Geographically, sales improved from the second quarter 2000 to
the second quarter of 2001 in all parts of the world with the exception of
North America. Sales in this region were lower principally due to capital
spending constraints by the carriers and reduced demand from one OEM customer.
Sales in Europe, Latin America and Asia increased 54%, 65% and 51%,
respectively, primarily due to strong demand for wireless communications
equipment in these regions.

Sales increased 22% from $165.2 million for the six months ended June 30, 2000
to $201.2 million for the six months ended June 30, 2001. Sales increased
across all product lines and in all regions with the exception of North
America.

Sales by product line were as follows:

|                                           |  |         |      |         |  |              |      |              |  |   |       |  |  |   |       | 
|------------------------------------------ |  | ------- | ---- | ------- |  | ------------ | ---- | ------------ |  | - | ----- |  |  | - | ----- | 
|Sales By Product Line                      |  |         |      |         |  | Year to Date |      | Year to Date
|                                           |  |         |      |         |  |              |      |             
|($ Millions)                               |  | 2Q 2001 |      | 2Q 2000 |  | 2Q 2001      |      | 2Q 2000     
|                                           |  |         |      |         |  |              |      |             
|Base station subsystems and components     |  | $       | 54.6 |         |  | $            | 42.0 |              |  | $ | 114.0 |  |  | $ | 85.3  | 
|                                          
|                                          
|                                          
|                                          
|Repeater and in-building coverage products |  |         | 20.6 |         |  |              | 18.7 |              |  |   | 43.5  |  |  |   | 38.2  | 
|                                          
|                                          
|                                          
|                                          
|Base station and mobile antennas           |  |         | 23.2 |         |  |              | 21.6 |              |  |   | 43.7  |  |  |   | 41.7  | 
|                                           |  |         |      |         |  |              |      |              |  |   |       |  |  |   |       | 
|Total Wireless Communications Equipment    |  | $       | 98.4 |         |  | $            | 82.3 |              |  | $ | 201.2 |  |  | $ | 165.2 | 
|                                           |  |         |      |         |  |              |      |              |  |   |       |  |  |   |       | 

13



---



##### Table of Contents



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

Backlog for this Segment decreased 17% from $130.2 million at March 31, 2001 to
$107.9 million at June 30, 2001 principally due to a reduction in orders for
our base station subsystems and components product line.

Gross profit margins were 24.9% in the second quarter of 2001 (26.2% for the
six months ended June 30, 2001), as compared with 29.7% in the second quarter
of 2000 (29.4% for the six months ended June 30, 2000), excluding the
aforementioned incremental restructuring costs. The lower gross profit margins
in 2001 were due in part to product mix, with fewer sales coming from the
higher margin repeater and in-building coverage products and more sales coming
from lower margin base station subsystems and components, combined with higher
inventory costs.

Selling, general and administrative expenses were $10.8 million, or 11.0% of
sales, and $10.3 million, or 12.5% of sales, for the second quarters of 2001
and 2000, respectively. Such expenses are slightly higher in the second
quarter of 2001 due primarily to higher selling and marketing costs. Spending
as a percentage of sales is lower due to the spreading of fixed costs on higher
sales. Selling, general and administrative expenses as a percentage of sales
for the six months periods ended June 30, 2001 and 2000 (excluding
restructuring charges in 2000) were 26.2% and 29.4%, respectively, for similar
reasons.

Total assets for the wireless communications equipment segment increased 16%
from $261.2 million at December 31, 2000 to $302.9 million at June 30, 2001.
This increase is primarily due to an increase in inventory for the base station
subsystems and components product line, due to the significant planned increase
in production based on preliminary discussions with OEM customers and their
anticipated orders. The OEMs dramatically changed their outlook from early
2001. We have initiated plans to reduce inventory to amounts more in line with
revised near term sales projections. We believe this could take six to nine
months based on our current sales outlook. While we have initiated plans to
reduce the level of inventory, there are certain risks inherent in such
inventory including the potential for increased obsolescence. We believe our
inventory is properly valued; however, such factors as technological
obsolescence, dependency on customer orders and the effectiveness of our action
plans may require a reassessment in the future. We will continue to monitor
this aspect closely.

14



---



##### Table of Contents



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

Wireless Engineering and Consulting Services:

Wireless Engineering and Consulting Services sales were down slightly from $6.9
million in the second quarter 2000 to $6.7 million in second quarter 2001.
Sales also declined slightly from $12.9 million for the six months ended June
30, 2000 to $12.5 million for the six months ended June 30, 2001. Sales
declined primarily due to lower software sales, partially offset by increased
sales of engineering services. Gross profit margins for this segment were
38.9% in the second quarter 2001 (35.1% for the six months ended June 30,
2001), as compared with 45.7% in the second quarter 2000 (42.0% for the six
months ended June 30, 2000). This decrease in margins is primarily
attributable to lower sales of higher margin software products. Selling,
general and administrative increased to 19% of sales for the second quarter of
2001 compared to 16.5% for the second quarter of 2000, and increased to 23.1%
for the six months ended June 30, 2001 compared to 19.5% for the six months
ended June 30, 2000. These higher costs were primarily a result of increased
bad debt expense and one-time expenses related to the Smith Woolley
acquisition, which was terminated in the first quarter 2001.

Research and Development:

Research and development and product engineering costs were 6.8% and 7.2% of
sales in the second quarter of 2001 and 2000, respectively. While the absolute
dollar amounts of research and development costs increased year over year, the
decreased rate of spending as a percentage of sales is attributable to the
increase in sales in the current quarter. The Company believes that product
development costs as a percentage of sales will remain fairly consistent
throughout the current year.

New Accounting Standards:

As more fully described in Note 5 of the Notes to Condensed Consolidated
Financial Statements, in June 2001 the Financial Accounting Standards Board
issued two new Standards. In connection therewith, amortization of goodwill,
including goodwill reported in past business combinations, will cease upon
adoption of the new Standard on January 1, 2002. While the Company has not
fully analyzed the implications of this Standard, earnings per common share for
each of the first and second quarters of 2001 and 2000 would have increased by
approximately $.07 per share (or approximately $.28 per share on an annualized
basis, based on approximately 28,000,000 common shares outstanding), excluding
the amortization of goodwill, which will be eliminated in 2002, when the new
Standard goes into effect.

15



---



##### Table of Contents



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

Interest and Financing Expenses:

Net interest and financing costs increased to $2.5 million from $2.2 million
and to $5.1 million from $4.2 million for the three and six months ended June
30, 2001 and 2000, respectively. The higher interest expense is due
principally to higher borrowings and lower cash investments utilized to support
higher working capital requirements, offset, in part, by lower interest rates.

Provision for Income Taxes:

The Companys effective income tax rate was 39.0% and 41.5% for the quarters
and six months ended June 30, 2001 and 2000, respectively. The principal
reason for the decrease is due to lower statutory tax rates for our major
German subsidiary and the forecasted increase in income in other lower tax
jurisdictions. The 2001 tax rate is in line with our current expectation for
the full year.

Liquidity and Capital Resources:

As set forth in the Condensed Consolidated Statements of Cash Flows, $32.8
million of cash was used by operations for the six months ended June 30, 2001
as compared to $4.2 million of cash generated by operations for the comparable
2000 period. This decline in cash flow is due primarily to the aforementioned
increase in inventory as well as an increase in accounts receivable. We used
$2.4 in investing activities in 2001, due primarily to capital expenditures
offset, in part, by proceeds from the sale of an unused facility. For the six
months ended June 30, 2000, $12.2 million of cash was used for investing
activities, including $6.2 million for the purchase of minority interest in
subsidiaries. Cash generated by financing activities for the six months ended
June 30, 2001 and June 30, 2000 was $10.6 million and $10.0 million,
respectively. The funds generated in 2001 include $4.9 million from a sale and
leaseback transaction, as more fully described in Note 6 of the Notes to
Condensed Consolidated Financial Statements. At June 30, 2001, we had
available unused worldwide lines of credit of $46.2 million, as compared with
$63 million at March 31, 2001.

We have entered into a program to lease some of our test equipment and computer
workstation equipment. This program is expected to improve our economics and
cash flow when compared to purchasing this equipment directly. We expect to
lease approximately $5.0 million of equipment in 2001 under these agreements,
of which approximately $.8 million has been leased as of June 30, 2001. These
lease transactions are being recorded as operating leases in our consolidated
financial statements.

16



---



##### Table of Contents



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

In 2001, our available lines of credit and cash equivalent investments have
been reduced. Were we to consider strategic acquisitions or a significant
investment resulting from the rapid expansion of our E911 geolocation business,
we may need to consider the need for additional financing. Such financing
could take the form of equity, debt or a combination thereof. Such additional
financing needs would be tempered by our success in reducing working capital
levels, which would result in improved cash generation.

As described in Note 1, we changed the fiscal year-end of certain of our
foreign subsidiaries effective January 1, 2001. The Condensed Consolidated
Statements of Cash Flows for 2001 now includes these operations for the six
month period ended June 30, 2001. The net cash flow for the two month period
ended December 31, 2000 is shown separately in the Statements of Cash Flows.
Note 1 of the Notes to Condensed Consolidated Financial Statements includes
summarized information for the components of this $20.4 million increase in
cash.

Legal Disclaimer:

Statements included in this Quarterly Report on Form 10-Q, which are not
historical in nature, are forward-looking statements made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements regarding the Companys future performance and
financial results are subject to a number of risks and uncertainties that could
cause actual results to differ materially from those set forth in the
forward-looking statements. Factors that could cause the Companys actual
results to materially differ from forward-looking statements made by the
Company, include, among others, the cost, success and timetable for new product
development, including specifically products for 3G, E 911 and power
amplification, the health and economic stability of the world and national
markets, the availability of capital and financing to the wireless carriers,
the uncertain timing and level of purchases of both current products and those
under development for current and prospective customers of the Companys
products and services, the effective realization of inventory and other working
capital assets to cash, the collectability of receivables, the impact of
competitive products and pricing in the Companys markets, the future
utilization of the Companys tax loss carry forwards, the impact of U.S. and
foreign government legislative/regulatory actions, including, for example, the
scope and timing of E 911 geolocation requirements in the U.S. markets and
spectrum availability and licensing for new wireless applications, and the cost
and availability of financing for customers of the Companys geolocation
projects. Allen Telecom Inc.s Annual Report on Form 10-K and Quarterly
Reports on Form 10-Q contain additional details concerning these factors.

17



---



##### Table of Contents






ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS.

See Managements Discussion and Analysis of Financial Condition and Results of
Operations under Item 7 of its Annual Report on Form 10-K for the year ended
December 31, 2000.




PART II  OTHER INFORMATION




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

At the Annual Meeting of Stockholders of the Company held on April 27, 2001
three proposals were voted upon by the Companys stockholders. A brief
description of each proposal voted upon at the Annual Meeting and the number of
votes cast for, against and withheld are set forth below.

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

|                       |  |     |            |          |  |  |           | 
|---------------------- |  | --- | ---------- | -------- |  |  | --------- | 
|Nominee                |  | For |            | Withheld
|                       |  |     |            |         
|Philip Wm. Colburn     |  |     | 24,376,320 |          |  |  | 1,112,291 | 
|                      
|                      
|                      
|                      
|J. Chisholm Lyons      |  |     | 24,353,021 |          |  |  | 1,135,590 | 
|                      
|                      
|                      
|                      
|John F. McNiff         |  |     | 25,195,606 |          |  |  | 293,005   | 
|                      
|                      
|                      
|                      
|Robert G. Paul         |  |     | 25,182,618 |          |  |  | 305,993   | 
|                      
|                      
|                      
|                      
|Charles W. Robinson    |  |     | 25,177,629 |          |  |  | 310,982   | 
|                      
|                      
|                      
|                      
|Martyn F. Roetter      |  |     | 25,192,967 |          |  |  | 295,644   | 
|                      
|                      
|                      
|                      
|Gary B. Smith          |  |     | 25,180,973 |          |  |  | 307,638   | 
|                      
|                      
|                      
|                      
|Kathleen M. H. Wallman |  |     | 25,182,436 |          |  |  | 306,175   | 

18



---



##### Table of Contents



PART II  OTHER INFORMATION
(Continued)

A vote by ballot was taken at the Annual Meeting on the proposal to ratify the
appointment of Deloitte & Touche LLP as auditors for the Company for the fiscal
year ending December 31, 2001. The aggregate numbers of shares of Common Stock
in person or by proxy which: (a) voted for, (b) voted against or (c) abstained
from the vote on such proposal were as follows:

| |  |     |            |         |  |         |         |  |  |  |        | 
| |  | --- | ---------- | ------- |  | ------- | ------- |  |  |  | ------ | 
| |  | For |            | Against |  | Abstain
| |  |     |            |         |  |        
| |  |     | 25,365,626 |         |  |         | 109,930 |  |  |  | 13,055 | 

That (a) a vote by ballot was taken at the meeting on the proposal to approve
the adoption of the Amended and Restated 1994 Non-Employee Directors Stock
Option Plan, and (b) the aggregate numbers of shares of Common Stock in person
or by proxy (i) voted for, (ii) voted against or (iii) abstaining from the vote
on such proposal were as follows:

| |  |     |            |         |  |         |           |  |  |  |         | 
| |  | --- | ---------- | ------- |  | ------- | --------- |  |  |  | ------- | 
| |  | For |            | Against |  | Abstain
| |  |     |            |         |  |        
| |  |     | 15,701,081 |         |  |         | 9,485,285 |  |  |  | 302,245 | 

The foregoing proposals are described more fully in the Companys definitive
proxy statement dated March 16, 2001, filed with the Securities and Exchange
Commission pursuant to Section 14(a) of the Securities Act of 1934, as amended,
and the rules and regulations promulgated thereunder.




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



|(a) |  | Exhibits
|--- |  | --------



| | (4)  |  | Instruments Defining the Rights of Security Holders, Including
Indentures
| | ---- |  | -------------------------------------------------------------------------
|
| | (10) |  | Material Contracts                                                       



|(b) |  | Reports on Form 8-K
|--- |  | -------------------
|   
|    |  | Not Applicable.    

19



---



##### Table of Contents






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto
duly authorized.

|      |  |                 |  |  |  |  |  |     |  |                               
|----- |  | --------------- |  |  |  |  |  | --- |  | ------------------------------
|      |  |                 |  |  |  |  |  |     |  | Allen Telecom Inc.            
|      |  |                 |  |  |  |  |  |     |  |                               
|      |  |                 |  |  |  |  |  |     |  | (Registrant)                  
|     
|Date: |  | August 14, 2001 |  |  |  |  |  | By: |  | /s/ Robert A. Youdelman       
|      |  |                 |  |  |  |  |  |     |  |                               
|      |  |                 |  |  |  |  |  |     |  | Robert A. Youdelman           
|      |  |                 |  |  |  |  |  |     |  | Executive Vice President      
|      |  |                 |  |  |  |  |  |     |  | (Chief Financial Officer)     
|     
|Date: |  | August 14, 2001 |  |  |  |  |  | By: |  | /s/ James L. LePorte, III     
|      |  |                 |  |  |  |  |  |     |  |                               
|      |  |                 |  |  |  |  |  |     |  | James L. LePorte, III         
|      |  |                 |  |  |  |  |  |     |  | Vice President Finance        
|      |  |                 |  |  |  |  |  |     |  | (Principal Accounting Officer)

20



---



##### Table of Contents






EXHIBIT INDEX
ALLEN TELECOM INC.

Exhibit Number



| | 4.1  |  | Amendment No. 4 To Credit Agreement                            
| | ---- |  | ---------------------------------------------------------------
|
| | 10.1 |  | Certificate of Amendment to Allen Telecom Inc. 1992 Stock
Plan.

21