##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE
COMMISSION


Washington, D.C. 20549




---

Form 10-K

ANNUAL REPORT PURSUANT TO


SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934


|           |  |                                                                                                 
|---------- |  | ------------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                                 
|[X]        |  | ANNUAL REPORT PURSUANT TO SECTION 13 or
    15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934    
|          
|           |  | For the fiscal year ended December 31,
    2002                                                 
|          
|or        
|          
|[ ]        |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR
    15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934
|          
|           |  | For the transition period
    from           to                                                 

Commission file number 1-6016



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Allen Telecom Inc.

(Exact name of registrant as specified in its
charter)


|                                                                   |  |                                         
|------------------------------------------------------------------ |  | ----------------------------------------
|Delaware                                                           |  | 38-0290950                              
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification No.)
|                                                                  
|25101 Chagrin Boulevard, Beachwood,
    Ohio                       |  | 44122                                   
|(Address of principal executive
    offices)                       |  | (Zip Code)                              

Registrants telephone number, including
area code

216/765-5855


Securities registered pursuant to
Section 12(b) of the Act:

|                                           |  |                                             
|------------------------------------------ |  | --------------------------------------------
|Title of each class                        |  | Name of each exchange on which registered   
|                                           |  |                                             
|Common Stock, $1 par value                 |  | New York Stock Exchange
    Pacific Exchange
|Series D 7.75% Convertible Preferred Stock |  | New York Stock Exchange
    Pacific Exchange
|Preferred Stock Purchase Rights            |  | New York Stock Exchange
    Pacific Exchange

Securities registered pursuant to
Section 12(g) of the Act:

None


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 þ          No

Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be
contained, to the best of Registrants knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any
amendment to this
Form 10-K.     [X]

Indicate by check mark whether registrant is an
accelerated filer (as defined in Exchange Act
Rule 12b-2).      Yes þ          No

As of March 6, 2003, there were
30,684,976 shares of the Registrants Common Stock
outstanding. The aggregate market value of the Registrants
Common Stock outstanding on June 30, 2002, based upon the
last sale price of the Registrants Common Stock on the Dow
Jones Composite on June 30, 2002 of $4.20, of the
Registrants Common Stock held by nonaffiliates of the
Registrant was $128,059,738.80.

Exhibit Index is on pages i to viii of
this Report.

DOCUMENTS INCORPORATED BY REFERENCE

None.



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ALLEN TELECOM INC.


TABLE OF CONTENTS



|                                                 |                                                                                                           |  |  |  |  |  |  | 
|------------------------------------------------ | --------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                          
|                                                 | ITEM 1 -- BUSINESS                                                                                       
|                                                 | ITEM 2 -- PROPERTIES                                                                                     
|                                                 | ITEM 3 -- LEGAL PROCEEDINGS                                                                              
|                                                 | ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                            
|PART II                                         
|                                                 | ITEM 5 -- MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                          
|                                                 | ITEM 6 -- SELECTED CONSOLIDATED FINANCIAL DATA                                                           
|                                                 | ITEM 7 -- MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS          
|                                                 | ITEM 7A -- QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                    
|                                                 | ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                    
|                                                 | ITEM 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE           
|PART III                                        
|                                                 | ITEM 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                            
|                                                 | ITEM 11 -- EXECUTIVE COMPENSATION                                                                        
|                                                 | ITEM 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|                                                 | ITEM 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                
|                                                 | ITEM 14 -- CONTROLS AND PROCEDURES                                                                       
|PART IV                                         
|                                                 | ITEM 15 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K                              
|SIGNATURES                                      
|CERTIFICATION                                   
|INDEX TO CONSOLIDATED FINANCIAL STATEMENTS      
|EXHIBIT INDEX                                   
|EX-10.GGG Termination Agreement                 
|EX-10.HHH Death Benefit Agreement               
|EX-10.III Amendment 1 to Death Benefit Agreement
|EX-21 Company Subsidiaries                      
|EX-23 Independent Auditors Consent              
|EX-99.1 Certification - Robert Paul             
|EX-99.2 Certification - Robert Youdelman        



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##### Table of Contents



FORM 10-K

(For the fiscal year ended December 31,
2002)


|                                               |  |                                                                                                      |     |      |    | 
|---------------------------------------------- |  | ---------------------------------------------------------------------------------------------------- | --- | ---- | -- | 
|                                               |  |                                                                                                      |     | Page
|                                               |  |                                                                                                      |     |     
|PART I                                         |  |                                                                                                      |     |     
|Item 1                                         |  |  Business                                                                                           |     |      | 1  | 
|Item 2                                         |  |  Properties                                                                                         |     |      | 11 | 
|Item 3                                         |  |  Legal Proceedings                                                                                  |     |      | 11 | 
|Item 4                                         |  |  Submission of Matters to a Vote of
    Security Holders                                            |     |      | 12 | 
|                                               |  | Executive Officers of The
    Registrant                                                             |     |      | 12 | 
|PART II                                        |  |                                                                                                      |     |     
|Item 5                                         |  |  Market for Registrants Common
    Equity and Related Stockholder Matters                          |     |      | 13 | 
|Item 6                                         |  |  Selected Consolidated Financial Data                                                               |     |      | 14 | 
|Item 7                                         |  |  Managements Discussion and
    Analysis of Financial Condition and Results of Operations          |     |      | 15 | 
|Item 7A                                        |  |  Quantitative and Qualitative
    Disclosures about Market Risk                                     |     |      | 29 | 
|Item 8                                         |  |  Financial Statements and
    Supplementary Data                                                    |     |      | 29 | 
|Item 9                                         |  |  Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure           |     |      | 29 | 
|PART III                                       |  |                                                                                                      |     |     
|Item 10                                        |  |  Directors and Executive Officers of
    the Registrant                                             |     |      | 29 | 
|Item 11                                        |  |  Executive Compensation                                                                             |     |      | 32 | 
|Item 12                                        |  |  Security Ownership of Certain
    Beneficial Owners and Management and Related Stockholder Matters |     |      | 47 | 
|Item 13                                        |  |  Certain Relationships and Related
    Transactions                                                 |     |      | 49 | 
|Item 14                                        |  |  Controls and Procedures                                                                            |     |      | 50 | 
|PART IV                                        |  |                                                                                                      |     |     
|Item 15                                        |  |  Exhibits, Financial Statement
    Schedules, and Reports on Form 8-K                               |     |      | 50 | 
|SIGNATURES                                     |  |                                                                                                      | 53  |     
|CERTIFICATIONS                                 |  |                                                                                                      | 55  |     
|INDEX TO CONSOLIDATED FINANCIAL
    STATEMENTS |  |                                                                                                      | F-1 |     
|EXHIBIT INDEX                                  |  |                                                                                                      | i   |     

Allen Telecom, Antenna Specialists, Comsearch,
Decibel, Extend-a-Cell, FOREM, GEOMETRIX, Grayson Wireless,
MIKOM, On-Glass, Tekmar Sistemi and Telia are our trademarks,
registered trademarks, service marks or registered service marks
in the U.S. or other jurisdictions that are mentioned in this
document. All other trademarks, servicemarks or trade names
referred to in this document are the property of their
respective owners.



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##### Table of Contents



ALLEN TELECOM INC.

FORM 10-K






PART I







ITEM 1  BUSINESS


Overview

We are a leading global provider of wireless
infrastructure equipment and services to many of the
worlds largest wireless communications carriers, or
carriers, and original equipment manufacturers, or OEMs. Our
business is aligned around the five product lines highlighted
below:



| |   |                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Base Station Subsystems and Components,including filters, duplexers,
    combiners, amplifiers and microwave radios;                                                                                     
|
| |  | Repeaters and In-Building Coverage Products,including off-air repeaters, optical
    repeaters, low power distributed indoor antenna solutions, tower
    mounted amplifiers and bi-directional boosters;
|
| |  | Base Station and Mobile Antennas,including panel, omni-directional,
    glass-mounted and point-to-point antennas;                                                                                       
|
| |  | Geolocation Products,including our GEOMETRIX wireless 911
    caller location system; and                                                                                                                
|
| |  | Wireless Engineering and Consulting Services,including frequency planning for
    microwave and other wireless networks, system design and
    analysis and cell site field engineering.                 

Our products and services are integral to mobile
wireless communications networks and offer our customers the
ability to build networks that enhance network capacity,
coverage and performance. Our products and services are designed
for use in current wireless networks as well as next-generation
wireless networks. As a leading global provider of wireless
infrastructure equipment and services, we expect that demand for
our products and services will continue to be driven by the
continuing investment by carriers in their wireless networks in
order to expand coverage and capacity and improve performance.
We believe that the catalysts for future carrier investment
include continued growth in wireless subscribers, increased
minutes of use, or MOUs, and expanded usage of wireless devices
for data services. We believe that our broad suite of products,
as well as our experience, reputation and customer
relationships, position us to benefit from the build out of
next-generation networks such as 2.5G and 3G.

Carriers are currently in the process of
determining their migration paths to the next-generation
networks. 2.5G is an intermediary, higher data capacity solution
while 3G is the next major technological evolution of wireless
networks that is expected to provide even greater capacity to
carriers networks and allow carriers to provide new
features and services. By offering an enhanced set of products
and services to their end-user customers, carriers believe that
they will be able to generate additional average revenue per
user. 3G infrastructure equipment has begun to be deployed on a
limited basis for networks primarily in parts of Europe and
Asia. This deployment will require new infrastructure equipment
and therefore is expected to create new product opportunities
for us. We have developed and, in certain cases, have already
shipped 3G compatible products, including filters, duplexers,
combiners, base station antennas, power amplifiers, tower
mounted amplifiers, repeaters and test equipment. We also have
developed a network-based geolocation solution that enables
carriers to determine the location of callers. Our network-based
geolocation solution is being deployed or evaluated by a number
of carriers in the U.S. that must comply with Federal
Communications Commission, or FCC, regulations requiring them to
provide caller location information for wireless 911 calls. We
currently have orders from nine customers and have installed
geolocation systems in 58 markets in 25 states. We expect our
geolocation business to continue to meaningfully contribute to
our overall financial performance in the future as carriers are
required to build out their location-based capabilities.

We market our products and services to many of
the worlds largest OEMs, including Alcatel SA, Lucent
Technologies Inc., Motorola, Inc., Nokia Corporation, Nortel
Networks Corporation and

1



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Siemens AG, as well as the worlds
largest carriers, including AT&T Wireless, Nextel
Communications, Inc., Orange SA, Sprint Corporation, Verizon
Wireless and Vodafone Group plc. We conduct operations globally,
with manufacturing and assembly facilities in Australia, New
Zealand, Brazil, China, the Czech Republic, France, Germany,
Italy, Mexico and the U.S., and have sales and marketing offices
in 21 countries. Sales made to customers located outside the
U.S. accounted for 45.4% of our total sales during 2002. Our
total sales during 2002 were $417.0 million, generating
operating income of $17.7 million, as compared to total
sales during 2001 of $394.6 million, generating operating
income of $7.5 million.


Recent Developments

On February 18, 2003, we announced the
signing of a definitive agreement under which Andrew Corporation
will acquire Allen Telecom in a stock for stock transaction.
Allen Telecom shareholders will receive 1.775 shares of
newly-issued Andrew stock for each Allen share they own.
Completion of the transaction, which is expected to occur in the
first half of 2003, is subject to approval of shareholders of
both companies, expiration of the applicable waiting period
under the Hart-Scott-Rodino Act and other customary closing
conditions.

Industry Dynamics

2002 continued to be a difficult market for end
users of our equipment with global carriers facing slowing
subscriber growth rates, greater price competition, less access
to capital and the need to carefully manage their cash flow and
profitability. In response to these challenges, carriers are
reducing their capital spending and appear to be refocusing on
projects that can most directly contribute to their revenues.
The near term prospects point to continued difficulties as 3G
network deployments are not expected to have a significant
impact on the level of capital spending of carriers until 2004.
Carriers are expected to decrease capital spending again in
2003, as evidenced by an independent study by Morgan Stanley in
January 2003 which indicates that wireless spending will
decrease 2% in 2003 from 2002 levels. Over the longer term, we
anticipate capital investment growth to resume at an increased
level due to a number of factors, including a growing number of
telecommunication subscribers, increasing MOUs, and a growing
demand for new services and features, such as mobile messaging,
Internet access and other data services that require additional
network capacity and capabilities.

To further enhance capacity and performance of
wireless networks, wireless technology has evolved from first
generation analog technology, or 1G, in the early 1980s to
second-generation digital voice and data technologies, or 2G,
which was introduced in most networks in the early and
mid-1990s. These digital systems provide improved network
capacity and signal quality and remain the current standard for
most wireless networks. While the build out of 2G networks
continues, an increasing demand for additional data capacity and
transmission speeds that permit wireless transmission of
integrated voice, data, Internet and video traffic has caused
OEMs and carriers to begin to develop new equipment and networks
based on advanced technologies, such as 2.5G and 3G.

2.5G technology enabled carriers to upgrade their
existing 2G networks with certain software and hardware
enhancements. These upgrades often require significant
investments in software and equipment, but generally do not
require the comprehensive new infrastructure equipment
investment required for 3G networks. In addition, while these
upgraded networks provide improvements in capacity, coverage and
performance, they have significantly less bandwidth capacity and
transmission speeds than 3G networks are expected to provide.

Deployment
of 3G Technology

In order to address these future network
requirements, many carriers are expected to ultimately spend a
considerable amount of capital upgrading their mobile networks
to 3G, or third generation, technologies. These technologies
provide a number of advantages over current mobile network
technologies, including the ability to deliver voice, data and
multimedia services, provide incremental network capacity and
improve operating efficiencies. 3G is expected to provide high
capacity broadband wireless data services at

2



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speeds of up to two megabits per second, with the
capacity and speed to support voice, data, mobile Internet
access and full-motion video. The use of mobile wireless devices
for Internet access and other data transmissions is expected to
increase substantially over the next several years. 3G
technology is also expected to often provide incremental network
capacity and operating efficiencies.


Some major carriers in Europe and Asia began a
limited initial build out of the first 3G networks in 2001 and
2002. Regulatory agencies in most European countries, Japan and
Korea have already licensed 3G frequencies, with carriers
spending over $100 billion for these licenses to date. In the
U.S., the FCC is expected to award licenses for 3G frequencies
in the next several years, which we anticipate will be followed
by an extensive 3G infrastructure build out. As a result,
predominantly all of the current demand for 3G infrastructure
equipment is driven by the rollout of 3G networks in Europe and
Asia. Some carriers in Europe have delayed rollout of 3G
networks and OEMs are offering little guidance into the
visibility of 3G spending in 2003.

The deployment of new networks incorporating 3G
technology will require the timely development, manufacture and
installation of new or advanced infrastructure equipment,
including power amplifiers, base stations, subsystems, antennas
and repeaters that are specifically designed for the newly
licensed frequencies. In most cases, that equipment will need to
be specifically tailored to the newly licensed frequencies and
comply with the more stringent design specifications. As a
result, many wireless OEMs are currently working with qualified
vendors to design and manufacture new systems and components for
3G networks. For example, wider bandwidth channels and greater
data transmissions will require next generation, multi-channel
power amplifiers that are highly linear and compatible with the
new 3G frequencies. In addition, we believe that many OEMs are
outsourcing more of their needs for certain wireless
communications equipment, such as next generation power
amplifiers, which, prior to 3G, were primarily manufactured
in-house by OEMs. For these reasons, we believe that the build
out of new 3G networks will create substantial new product
opportunities for some qualified vendors which, in the case of
next generation power amplifiers, we estimate to be in the $1.0
to $2.0 billion range annually.

The deployment of 3G networks will also require a
greater number of base stations per coverage area because of
increased propagation losses at the higher frequencies and the
need for greater accuracy of data transmissions. As a result,
despite the increased efficiency of base station technology, we
believe the number of base stations required to support 3G will
likely increase by two to four times the 1G equivalent for the
same coverage area. We believe we are well positioned to
capitalize on the 3G spending cycle when it does materialize.

Wireless
Geolocation Markets

In 1996, we identified the wireless geolocation
market as one with significant potential and have invested more
than $20 million in developing products and services to
fulfill the needs of wireless carriers in the U.S. as they
comply with the FCC regulations. As new wireless technologies
advance in capability and the number of subscribers grows,
increased governmental focus in the U.S. is being placed on
identifying the locations of wireless 911 callers to the local
police or fire departments. Emergency calls from wireless phones
exceeded 56.8 million nationwide in 2001, an 11% increase
over 2000. The FCC has established deployment schedules for
almost all carriers.

Equipment suppliers and carriers have been
developing a variety of network-based and handset-based
solutions to provide enhanced 911, or E 911, geolocation
capabilities. Our network-based GEOMETRIX product is capable of
meeting the requirements established by the FCC and meeting the
needs of mobile carriers, putting us in a favorable position to
capitalize on the growth of E 911 network spending. This
capability is expected to lead to multiple product application
opportunities for telecommunications equipment manufacturers.
Opportunities include ancillary services such as fleet
management, concierge services, mobile commerce and wireless
information directories.

3



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##### Table of Contents



Key Acquisitions

We focus our acquisition efforts on companies
with strong engineering and technical capabilities, proven
management teams, superior products and strong customer
relationships. Our acquisitions have been an important element
in strengthening our management team, growing our business,
extending our international presence and expanding our product
and service offerings and technological expertise. Since 1990,
we have acquired a number of companies, including the following
key companies:

|     |      |                  |  |                            |  |                                       |         |  |  |                                         
|---- | ---- | ---------------- |  | -------------------------- |  | ------------------------------------- | ------- |  |  | ----------------------------------------
|Year |      | Company Acquired |  | Primary Location           |  | Primary Products or Services Acquired
|     |      |                  |  |                            |  |                                      
|     | 2001 |                  |  | Bartley R.F. Systems, Inc. |  |                                       | U.S.    |  |  | RF filters and filter-related subsystems
|     | 1997 |                  |  | Telia S.A.                 |  |                                       | France  |  |  | Power amplifiers                        
|     | 1996 |                  |  | Tekmar Sistemi S.r.l.      |  |                                       | Italy   |  |  | In-building coverage systems            
|     | 1994 |                  |  | MIKOM G.m.b.H.             |  |                                       | Germany |  |  | Repeaters                               
|     | 1994 |                  |  | FOREM S.r.l.               |  |                                       | Italy   |  |  | Base station subsystems and components  
|     | 1992 |                  |  | Comsearch                  |  |                                       | U.S.    |  |  | Wireless engineering services           
|     | 1992 |                  |  | Decibel Products           |  |                                       | U.S.    |  |  | Base station antennas                   
|     | 1990 |                  |  | Grayson Wireless           |  |                                       | U.S.    |  |  | Repeaters                               




Note: Many of our acquisitions were completed in
stages. The years of acquisition set forth in the table
represent, in each such case, the first year in which we owned a
majority of the acquired company, the balance of which we
acquired in subsequent years. Decibel Products and Comsearch
were owned by Alliance Telecommunications Corp., which we
acquired in 1992.


Products and Services

Our products and services consist of five product
lines: (i) Base Station Subsystems and Components;
(ii) Repeaters and In-Building Coverage Products;
(iii) Base Station and Mobile Antennas;
(iv) Geolocation Products; and (v) Wireless
Engineering and Consulting Services. We provide our products and
services on a global basis to many of the worlds largest
OEMs and carriers. We expect our business to benefit from the
need for expanded coverage, greater capacity and improved
performance of existing and emerging wireless networks.

Base
Station Subsystems and Components

We are one of the largest suppliers of base
station subsystems and components, supplying many different
customized subsystems and components that are incorporated in
OEM equipment for cell site installation. Our products serve all
major wireless standards and frequencies, including emerging 3G
networks. Our base station subsystems and components include:



| |   |                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Filtersthat ensure
    that incoming signals are received and outgoing signals are
    transmitted clearly and without interference;                                         
|
| |  | Duplexersthat are
    stationed at most cell site transceivers to allow a single
    antenna to be used for the simultaneous transmission and
    reception of radio signals;
|
| |  | Power Amplifiersthat enhance the reception of weak
    signals or boost outgoing signals, including low noise and tower
    mounted amplifiers;                              
|
| |  | Combinersthat
    combine multiple radio frequencies for delivery to one antenna
    system;                                                                                 
|
| |  | Auto-Tune Combinersthat adjust automatically to changes
    in frequencies;                                                                                                  
|
| |  | Microwave Radiosthat are used primarily to provide, at
    selected frequencies, communication links between a base station
    and the network; and                         
|
| |  | Related Products,such as equipment racks, connectors
    and cables.                                                                                                         

These products are marketed and sold primarily
under the FOREM, Decibel Products and Telia names and accounted
for $143.3 million, or 34.4%, and $183.0 million, or
46.3%, of our total sales in 2002 and 2001, respectively.

4



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In 2001, we introduced next generation single and
multi-carrier, highly-linear power amplifiers. Such products are
usually located within base stations and amplify the power of
the wireless transmission with minimal distortion and
interference. These products are capable of processing multiple
frequencies and are available for a number of mobile wireless
standards, including 3G. We are currently working with two major
OEMs to design their next generation power amplifier products.

Repeaters
and In-Building Coverage Products

Our repeaters and in-building coverage products
support both coverage and capacity enhancement for carriers. We
provide turnkey, customized product applications for major
projects throughout the world involving highway tunnels, subway
and railway systems, airports, convention centers and the
Australian Olympic venues. Our products include:



| |   |                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Repeatersthat
    expand coverage and fill coverage gaps caused by obstructions,
    such as mountains, tunnels and buildings, including high power
    and low power off-air repeaters and optical repeaters;
|
| |  | Distributed Antenna Systemsfor mobile wireless communications,
    broadcasting, high speed data links and broadband coverage
    systems, including low power fiber optic and cable distributed
    antennas;
|
| |  | Bi-Directional Boostersthat amplify transmitted and received
    signals at the cell site; and                                                                                                                
|
| |  | Test Equipment and Analysis Softwarethat measure and analyze radio
    transmission characteristics for optimization of wireless
    communications networks.                                                 

These products are marketed and sold under the
MIKOM, Grayson Wireless and Tekmar Sistemi names, and accounted
for $94.2 million, or 22.6%, and $94.5 million, or
24.0%, of our total sales in 2002 and 2001, respectively.

Base
Station and Mobile Antennas

We are a leading manufacturer of base station and
mobile antennas serving all major wireless standards and
frequencies. We manufacture a comprehensive line of base station
antennas, including:



| |   |                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------
| |  | Omni Antennasthat
    broadcast signals in a full 360-degree circular pattern;                                                 
|
| |  | Directional and Panel Antennasthat concentrate signals in a
    particular direction, thereby increasing capacity and coverage;
|
| |  | Sectorized Array Antennasthat generate multiple beams; and                                                                     
|
| |  | Broadband Antennasthat process multiple frequency bands
    on a single antenna.                                               

We continually enhance our base station antennas
to optimize current 2G networks. We also have recently developed
base station antennas for 3G networks, including dual band
antennas that transmit and receive RF signals simultaneously for
multiple frequencies in an integrated antenna. We complement our
base station antennas with customer service centers that deliver
base station antennas, cable and other equipment such as
mounting hardware, monitors, sensors and jumpers directly to
cell sites to aid in the deployment of our base station
antennas. The cable is delivered using our patented dispenser
with connectors and other hardware already attached, allowing
easier, faster installation.

We also provide mobile vehicular antennas that
allow two-way communications, including dual band, glass-mounted
and global positioning antennas. We design and develop new
vehicular antennas to address changing wireless technologies and
introduced a series of wireless data service antennas. In
addition, we provide mobile antennas for satellite-based digital
audio radio systems.

Our base station and mobile antenna products and
services are marketed under the Decibel Products and Antenna
Specialists names, and accounted for $75.2 million, or
18.0%, and $88.2 million, or 22.4%, of our total sales in
2002 and 2001, respectively.

5



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Geolocation
Products

We are one of two recognized suppliers of
network-based geolocation systems capable of providing carriers
with the equipment and software necessary to locate wireless 911
callers. Our GEOMETRIX wireless location system is based on
position calculations utilizing time difference of arrival, or
TDOA, and angle of arrival, or AOA, triangulation techniques. We
believe our network-based GEOMETRIX product is capable of
exceeding the accuracy and reliability requirements set by the
FCC for E 911 networks. Our system can locate calls which
transition between analog and digital sites, and calls in which
the caller is a subscriber, roamer or non-subscriber. Our
GEOMETRIX product can be used with all air interfaces including
AMPS, TDMA, CDMA, GSM and iDEN, and requires no changes in
wireless service and no modifications or replacement of existing
handsets. In addition, our system was designed to accommodate a
variety of location-based services, such as fleet management,
concierge services, mobile commerce, wireless information
directories and other location dependent services. Our
geolocation products accounted for $88.7 million, or 21.3%
and $7.8 million, or 2.0%, of our total sales in 2002 and
2001, respectively.

Wireless
Engineering and Consulting Services

We are a leading provider of frequency planning
and microwave coordination services as well as wireless network
design and field engineering services. These services are
provided to carriers to assist in determining and analyzing
network coverage requirements based on area topography and
demographics. Our engineering expertise in spectrum sharing,
microwave interconnectivity and cell system design has enabled
us to obtain orders from most major domestic carriers. Our
spectrum sharing software is currently licensed and utilized by
major operators and consultants to perform analysis in most
domestic PCS markets, and our software for microwave
interconnectivity is operational in Asia, Europe, North America
and South America.

Our wireless engineering and consulting services
are marketed and provided under the Comsearch name and accounted
for $15.7 million in sales, or 3.8%, and
$21.1 million, or 5.3%, of our total sales in 2002 and
2001, respectively.

Other
Information

See Note 9 of the Notes to Consolidated
Financial Statements on page F-26 of this Annual Report on
Form 10-K for additional financial information regarding
our products or services. See also Item 7 
Management Discussion and Analysis of Financial Conditions
and Results of Operations beginning on page 15 for
additional information regarding seasonality and backlog.

Customers

We sell our products and services to OEMs,
carriers and product distributors located throughout the world.
The OEM market for our products consists of a relatively small
number of potential customers. The carrier market for our
products, while experiencing some consolidation, is a larger and
more broadly dispersed market.

During 2002, our OEM customers accounted for
32.7% of our total sales and carriers accounted for 67.3% of our
total sales. During 2002, AT&T Wireless and Siemens AG
accounted for 19.5% and 10.2% of our sales, respectively. Our
top ten customers for 2002 were, in alphabetical order:

|                                                                                                         |  |                                                                                                     
|-------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------
|Alcatel SA
    AT&T Wireless, Inc.
    Cingular Wireless
    Lucent Technologies Inc.
    Motorola, Inc. |  | Nortel Networks Corporation
    Orange SA
    Siemens AG
    Sprint Corporation
    Verizon Wireless

During 2002, our customers located outside the
U.S. accounted for 45.4% of our total sales. We believe that,
since many of our domestic customers incorporate our products
into their products, many of

6



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which are ultimately delivered to end-users
located outside the U.S., a higher percentage of our products is
ultimately delivered to customers located outside the U.S.


Sales and Marketing

We dedicate a specific team of experienced and
knowledgeable engineering, sales and marketing professionals to
market our products directly to each OEM customer and many of
our carrier customers. Each dedicated team provides engineering
and customer service support throughout and after the sales and
development cycle of a specific product, thereby developing
collaborative working relationships between our team and our
customers management, engineering, technical, design,
purchasing and production personnel. This collaboration with
multiple levels of a customers organization, particularly
during the design, qualification and early production phases,
allows us to become an integral part of new product development
process and a logical supplier of products for our customers.

We market and sell our products and services
worldwide to carriers primarily through our direct sales forces.
We maintain sales offices in the following 20 countries:
Argentina, Australia, Austria, Brazil, Canada, China, the Czech
Republic, France, Germany, India, Italy, Mexico, New Zealand,
Norway, Peru, Singapore, Slovakia, Switzerland, the United
Kingdom and the U.S. We supplement our direct sales force with a
network of manufacturers representatives. Our sales
personnel are responsible for managing specified carrier
accounts and specified products or groups of products in their
sales territories. These sales personnel have the engineering
and technical expertise to identify carriers needs and
provide them with tailored solutions or off-the-shelf products.

Research and Development

We believe that our research and development
competencies are key reasons for our industry leadership
position and are critical to our continued success. Because the
wireless communications industry is characterized by rapidly
changing technologies and evolving customer specifications and
industry standards, providers of products and services to the
industry must continually focus on their research and
development efforts. Each of our product lines consists of
highly engineered, innovative products for our customers.

Generally, our research and development efforts
are managed and focused on a product by product basis. We have
11 research and development facilities located in the Czech
Republic, France, Germany, Italy and the U.S. and as of
December 31, 2002 we employed approximately 340 engineers
and other technical personnel who are dedicated to our research
and development and other engineering efforts. Our research and
development and other engineering efforts generally can be
characterized as follows:



| |   |                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | we collaborate closely with many of our customers
    to design and build new products or modify existing products to
    exacting specifications required by our customers for their
    network systems and solutions;                          
|
| |  | we design and manufacture enhancements and
    improvements to our existing products in response to our OEM or
    carrier customers requests or feedback; and                                                                                   
|
| |  | we independently design and build new products in
    anticipation of changing wireless communications technologies,
    evolving customer specifications and industry standards,
    developing market opportunities or changing market dynamics.

As a result of our collaborative relationships
with our customers, we believe we are able to compete more
effectively. Collaboration with our customers allows us to:



| |   |                                                                                                  
| | - | -------------------------------------------------------------------------------------------------
| |  | reduce the costs and minimize the risks of
    research and development for us and our customers;
|
| |  | reduce the costs and time associated with
    establishing new markets for our products;         
|
| |  | establish ready markets for our products that
    meet our customers specifications;            
|
| |  | solidify and enhance our working relationships
    with our customers; and                       
|
| |  | share our technical expertise and experience with
    our customers.                             

7



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For additional information concerning research
and development expenditures, see Research and Development
Costs in Note 1 of Notes to Consolidated Financial
Statements on page F-10 in this Annual Report on
Form 10-K.

Intellectual Property

We hold over 100 patents, and have a number of
patents pending, in the U.S., Canada and certain European
countries. While we consider our patents to be of significant
value, we believe that our technological position depends
primarily on the experience, the technical competence and the
creative ability of our engineering and production staff in the
areas of product design and manufacturing. We also hold a number
of registered trademarks to protect certain of our brand names.

We zealously protect our patents, copyrights,
trademarks, trade secrets and other proprietary information and
intellectual property. Our company policies require our key
employees and any third party to whom we release proprietary
information to execute confidentiality agreements.

Manufacturing

We believe that our core competencies of product
design technology, engineering expertise, proprietary
manufacturing processes and comprehensive testing permit us to
consistently meet or exceed our customers quality
specifications. All of our OEM and many of our carrier customers
have recognized our ability to consistently meet or exceed
exacting product specifications by granting us qualified vendor
status, which gives us a competitive advantage over our
competitors who have not achieved that status. We maintain 15
manufacturing facilities located in Australia, Brazil, China,
the Czech Republic, France, Germany, Italy, Mexico and the U.S.,
most of which are ISO-9001 or ISO-9002 certified.

A substantial amount of our component production
is outsourced to contract manufacturers, many of whom also hold
such ISO-9001 or ISO-9002 certification. Our practice of
outsourcing a portion of our manufacturing needs permits us to
maintain a flexible workforce and meet fluctuating customer
demands and requirements.

We generally attempt to utilize several
alternative supplier sources for the raw materials, subsystems
and components required for our products. For certain raw
materials or components, however, we utilize a small number of
suppliers and, in very few instances, a single source supplier.
In these instances, we believe the risks associated with
purchasing raw materials or components from a limited number of
suppliers are justified by the suppliers commitment to us,
which is consistent with our commitment to our customers, to
provide lower pricing, more timely delivery and higher quality.
We believe that, together with our contract manufacturers and
planned manufacturing plant expansion, we have the capacity to
meet the anticipated orders for our products.

Business Segments, Foreign Operations and
Export Sales

Information relating to the Companys
business segments, foreign and domestic operations and export
sales is included herein on pages F-26 to F-28,
Industry Segment and Geographic Data, in Note 9
of the Notes to Consolidated Financial Statements of this Annual
Report on Form 10-K.

A significant portion of our business has been
and will continue to be conducted in international markets.
Conducting business internationally subjects us to a number of
additional risks and uncertainties, including unexpected delays
or changes in regulatory requirements, difficulties and costs
related to complying with foreign laws, political and economic
instability, adverse tax consequences and restrictions on and
impediments to repatriation of our funds and our customers
ability to make payments to us.

Competition

The base station subsystems and components market
for our products is highly competitive. In the base station
subsystems and components market, we compete primarily with
Allgon AB, Filtronic PLC, Radio Frequency Systems, Inc., a
division of Alcatel SA, and REMEC, Inc.

8



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There is an increasing number of competitors
supplying products and services to carriers. Our primary
competitors for our base station and mobile antenna products are
Allgon AB, Andrew Corporation, EMS Technologies, Inc., Kathrein,
Inc. and Radio Frequency Systems, Inc., a division of Alcatel
SA. For our repeater, test and measurement equipment and
in-building coverage products, our primary competitors are
Agilent Technologies, Inc., Allgon AB, Kathrein, Inc. and LGC
Wireless Inc. Our primary competitors for our wireless
engineering and consulting services are LCC International and
Wireless Facilities, Inc. In the geolocation products market,
our primary competitor for our geolocation products is
TruePosition, Inc. In addition, competitors for our geolocation
products include a number of manufacturers who have developed or
proposed handsets for the handset-based geolocation solution.

We believe that we are currently one of the top
three competitors in the markets for our base station subsystems
and components, repeaters and in-building products and base
station antennas, and are a leading competitor in the markets
for our wireless engineering and consulting services and mobile
antennas. Some of our competitors have substantially greater
financial, marketing and other resources and better name
recognition than we do. We believe the principal factors that
allow us to compete effectively in our marketplace include:



| |   |                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------
| |  | our ability to manufacture high volume, quality
    products in a timely manner;                                           
|
| |  | the strength of existing customer relationships;                                                                           
|
| |  | proximity to existing and potential customers of
    our sales force, product development and manufacturing
    facilities;
|
| |  | low cost production and competitive pricing;                                                                               
|
| |  | our strong reputation and well-recognized brands;                                                                          
|
| |  | accountability and customer service;                                                                                       
|
| |  | financial resources;                                                                                                       
|
| |  | management expertise; and                                                                                                  
|
| |  | expertise in existing and emerging technologies.                                                                           

In addition to these factors, we believe that our
ability to develop and manufacture our E 911 geolocation
products in-house provides us with a competitive advantage over
many of our competitors.

Government Regulation

Certain of our wireless communications products
must conform to a variety of domestic, foreign and international
regulatory specifications established to, among other things,
maintain public safety, avoid interference among users of radio
frequencies and permit interconnection of equipment. Regulatory
bodies worldwide have adopted and are adopting or revising
standards for wireless communications products, which standards
may change from time to time. The emergence or evolution of
regulations and industry standards for wireless products,
through official standards committees or widespread use by
operators, could require us to modify our products.

Our business depends on the availability of radio
frequencies to carriers for use in the operation of two-way
wireless communications systems. Radio frequencies are subject
to extensive regulation under the laws of the United States,
foreign laws and international treaties. Each country has
different regulations and regulatory processes for wireless
communications equipment and uses of radio frequencies. The
regulatory environment in which our customers operate is subject
to significant change, the results and timing of which are
uncertain. The process of establishing new regulations for
wireless frequencies and allocating such frequencies to carriers
is complex and lengthy. For example, in many countries,
including the U.S., it may take years before 3G wireless
communications will be available to the public because of the
need to: (i) determine what frequencies to use for the
service; (ii) clear the necessary spectrum of its current
users, if necessary; (iii) establish regulations for this
new wireless service; (iv) auction the spectrum or
otherwise determine the frequency licensees; and (v) build
out the necessary infrastructure. Our customers and potential
customers may not be able to obtain spectrum licenses for their
planned uses

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##### Table of Contents



of our equipment. Failure by the regulatory
authorities to allocate suitable, sufficient radio frequencies
for such uses in a timely manner could deter potential customers
from ordering our products and seriously harm our business.


Unlike calls placed from landline telephones in
the U.S., calls for emergency assistance from wireless phones
are not currently traceable to specific locations. In response
to this public safety issue, the FCC issued a series of orders
requiring that carriers implement a system to locate callers as
early as October 2001. The rules specify that network-based
solutions must cover either one-half of such carriers
coverage area or one-half of such carriers subscribers
commencing the later of October 1, 2001 or six months after
the local public safety answering point has requested the
service, and the entire coverage area or all subscribers by
October 1, 2002 or within 18 months of a request by a local
public safety answering point, whichever is later. Carriers
choosing handset-based systems must begin marketing handsets
commencing October 1, 2001 and may activate only handsets
that are geolocation-capable after December 31, 2002.
Handset-electing carriers will further be required to have
reached 95% penetration of all handsets with geolocation
capability by December 31, 2005. Carriers must choose
between satisfying the FCCs requirements under a
handset-based approach or a network-based approach or petition
the FCC for a waiver allowing an extension of the implementation
deadline for a hybrid or different approach. We offer a
network-based system for locating cellular phone users making
911 calls. Most carriers, however, have indicated to the FCC
that they will adopt handset-based or other alternative
solutions. Most carriers are seeking waivers and/or delays in
the FCCs implementation of these requirements and the FCC
has granted a waiver to one carrier allowing a hybrid approach
and delaying such carriers implementation requirements.
Our sales of this product will be affected by any changes in the
FCCs E 911 rollout or other requirements, by the
decisions of carriers to use network-based, handset-based or
other E 911 systems and the timing of requests made by
local public safety answering points.

Employees

As of December 31, 2002, we had
approximately 2,300 employees. We believe our future success
will depend on our continued ability to attract, retain,
integrate and motivate qualified personnel. None of our
employees is represented by a labor union and we have not
experienced any work stoppage in any of our existing businesses.
We place a high value on maintaining a rewarding work
environment for our employees, who we believe are a key factor
in our success. We consider our relationship with our employees
to be good.

About Us

Allen Telecom was founded in 1928 as Allen
Electric & Equipment Company. We have repositioned our
business through a series of strategic acquisitions and
divestitures during the 1990s and have been known as Allen
Telecom Inc. since February 1997. Our common stock was
first listed on the New York Stock Exchange in September 1971.

Our executive offices are located at
25101 Chagrin Boulevard, Beachwood, Ohio 44122-5687, and
our telephone number is (216) 765-5800.

Allen Telecom, Antenna Specialists, Comsearch,
Decibel, Extend-A-Cell, FOREM, GEOMETRIX, Grayson Wireless,
MIKOM, On-Glass, Tekmar Sistemi and Telia are our trademarks,
registered trademarks, service marks or registered service marks
in the U.S. or other jurisdictions that are mentioned in this
prospectus. All other trademarks, servicemarks or trade names
referred to in this prospectus are the property of their
respective owners.

Available Information

We make available free of charge on or through
our internet website, www.allentele.com, our annual
report on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K, and amendments to these
reports filed and furnished pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934

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as soon as reasonably practicable after we
electronically file such documents with or furnish such
documents to the Securities and Exchange Commission.





ITEM 2  PROPERTIES

As of December 31, 2002, our continuing
operations were conducted in 57 facilities in ten states in the
United States and 20 foreign countries. Our product development,
manufacturing and distribution facilities for our Wireless
Communications Equipment segment occupy approximately
1.2 million square feet of which approximately
1.0 million square feet are rented under operating leases
and 0.1 million square feet is operated under a sale and
leaseback arrangement. Our principal manufacturing and service
facilities for the Wireless Communications Equipment segment are
located in Australia, Brazil, China, the Czech Republic, France,
Germany, Italy, Mexico, Massachusetts, Ohio, Texas and Virginia.
Our Wireless Engineering and Consulting Services segment leases
approximately 67,000 square feet in Virginia.

All machinery, plants, warehouses and office
spaces are in good condition and are reasonably suited and
adequate for the purposes for which they are presently used.




ITEM 3  LEGAL PROCEEDINGS

On December 11, 2001, a lawsuit was filed
against the Company in the United States District Court for the
District of Delaware by a competitor, True Position, Inc., and
its subsidiary, KSI, Inc. In their original complaint, the
plaintiffs alleged that the Company, through its Grayson
Wireless Division, infringed three patents in connection with
the Companys GEOMETRIX wireless geolocation business. On
July 16, 2002, the plaintiffs amended their complaint to
include four additional patents in the lawsuit. In the
Companys answer to the original complaint, filed on
January 18, 2002, and to the amended complaint, filed
July 30, 2002, it has denied all of the plaintiffs
allegations and has asserted counterclaims against the
plaintiffs for infringement of one of the Companys patents
and for tortious interference with the Companys business
relationships. The Company believes that it has meritorious
defenses against the claims asserted by the plaintiffs and
intends to vigorously defend the lawsuit. However, the Company
cannot give assurance that it will ultimately prevail in this
action. Whether the Company ultimately wins or loses, litigation
could be time-consuming and costly and injure its reputation. If
the plaintiffs prevail in this action, the Company may be
required to negotiate royalty or license agreements with respect
to the patents at issue and may not be able to enter into such
agreements on acceptable terms. Any limitation on the
Companys ability to provide a service or product could
cause it to lose revenue-generating opportunities and require it
to incur additional expenses. The Company may also be required
to indemnify customers for any expenses or liabilities resulting
from the claimed infringements. These potential costs and
expenses, as well as the need to pay any damages awarded in
favor of the plaintiffs, could adversely affect the
Companys business, financial position, results of
operations or cash flow.

We are also a party to various other legal
proceedings, lawsuits and other claims arising in the ordinary
course of our business involving such matters as contract
disputes, product liability, casualty claims, employment
practices and intellectual property infringement. We do not
believe that such other litigation, if adversely determined,
would have a material adverse effect on our business, financial
position, results of operations or cash flow.

For additional information see Note 6,
Commitments and Contingencies on pages F-18 to F-20
of this Annual Report on Form 10-K.

11



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##### Table of Contents






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

Not applicable.

EXECUTIVE OFFICERS OF THE REGISTRANT

Executive Officers

Our executive officers and their respective ages
and positions are set forth below.

|                      |  |     |    |          |  |                                                         
|--------------------- |  | --- | -- | -------- |  | --------------------------------------------------------
|Name                  |  | Age |    | Position
|                      |  |     |    |         
|Robert G. Paul        |  |     | 61 |          |  | President, Chief Executive Officer and Director         
|Robert A. Youdelman   |  |     | 60 |          |  | Executive Vice President and Chief Financial
    Officer
|Peter G. de Villiers  |  |     | 49 |          |  | Vice President                                          
|James L. LePorte, III |  |     | 48 |          |  | Vice President  Finance                                
|Laura C. Meagher      |  |     | 42 |          |  | Secretary and General Counsel                           
|Roger L. Schroeder    |  |     | 49 |          |  | Treasurer and Assistant Secretary                       




Set forth below is biographical information for
our executive officers listed above.

Robert G. Paulhas
been our President since December 1989 and our Chief Executive
Officer since February 1991 and has served as a director
since March 1990. He was our Chief Operating Officer from
December 1989 to February 1991, Senior Vice
President  Finance from April 1987 to
December 1989, Vice President  Finance from
January 1987 to April 1987 and a Vice President from
1974 to January 1987. He also was President of the Antenna
Specialists Company from 1978 to June 1990. Mr. Paul
joined us in 1970 as an Assistant to the President and also
served as Assistant Treasurer from 1970 to 1972. He was elected
our Treasurer in 1972 and Vice President and Treasurer in 1974.
Mr. Paul also is a Director of Rogers Corporation.

Robert A. Youdelmanjoined us in 1977 as Director of Taxes
and was elected Vice President  Taxation in
February 1980. In December 1989, he was elected our
Senior Vice President  Finance, Chief Financial
Officer and Assistant Secretary and was promoted to Executive
Vice President in February 1997. Mr. Youdelman is an
attorney.

Peter G. de Villiersjoined us in July 1992 upon our
acquisition of Alliance Telecommunications Corporation, where he
served as Vice President  Marketing and Sales from
March 1991 to June 1993. Mr. de Villiers served
as Vice President  Strategic Planning for a
subsidiary of Allen Telecom upon the merger of Alliance into the
subsidiary in June 1993 until February 1997. In
February 1997, he was elected Vice President.

James L. LePorte, IIIjoined us in 1981 as Senior Financial
Analyst. In 1983, he was appointed Manager of Financial Analysis
and, in 1984, was named Assistant Controller. Mr. LePorte
was elected our Controller in April 1988, elected a Vice
President in December 1990, and served as our Treasurer
from September 1995 to February 1999. Mr. LePorte
was elected Vice President  Finance in
April 1999.

Laura C. Meagherjoined us in 1999 as Corporate Counsel
and was elected Secretary and General Counsel in
September 1999. Prior to joining us, Ms. Meagher was
an attorney with the law firm of Benesch, Friedlander,
Coplan & Aronoff LLP, Cleveland, Ohio, from
September 1989 to August 1999.

Roger L. Schroederjoined us in 1981 as an Internal
Auditor. In 1984, he was appointed Manager of Financial
Analysis. He was promoted to Director of Financial Analysis in
1988 and named Director of Financial Analysis and Insurance in
1993. Mr. Schroeder was elected Assistant Secretary in
December 1992 and Assistant Treasurer in April 1997, and
was promoted to Treasurer and Assistant Secretary in
February 1999.

There is no family relationship between any of
our executive officers. All of our officers hold office until
the first meeting of directors following the annual meeting of
stockholders and until their successors have been elected and
qualified.

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##### Table of Contents






PART II






|         |                                                                          
|-------- | -------------------------------------------------------------------------
|ITEM 5  | MARKET FOR REGISTRANTS COMMON EQUITY AND
    RELATED STOCKHOLDER MATTERS

Our common stock has been traded on the New York
Stock Exchange since September 1971 under the symbol
ALN. Our common stock is also listed on the Pacific
Exchange. The following table sets forth, for the periods
indicated, the range of high and low sales prices of our common
stock as reported by the Dow Jones Composite, which includes the
New York Stock Exchange, the American Stock Exchange and all
regional markets.

|                              |  |      |       |     |  |   |       | 
|----------------------------- |  | ---- | ----- | --- |  | - | ----- | 
|                              |  | High |       | Low
|                              |  |      |       |    
|Year Ended December 31, 2000: |  |      |       |     |  |   |       | 
|First Quarter                 |  | $    | 19.94 |     |  | $ | 10.56 | 
|Second Quarter                |  |      | 20.00 |     |  |   | 12.88 | 
|Third Quarter                 |  |      | 21.94 |     |  |   | 15.69 | 
|Fourth Quarter                |  |      | 24.00 |     |  |   | 14.13 | 
|                             
|Year Ended December 31, 2001: |  |      |       |     |  |   |       | 
|First Quarter                 |  | $    | 21.75 |     |  | $ | 11.60 | 
|Second Quarter                |  |      | 15.00 |     |  |   | 10.80 | 
|Third Quarter                 |  |      | 14.80 |     |  |   | 6.63  | 
|Fourth Quarter                |  |      | 9.64  |     |  |   | 6.85  | 
|Year Ended December 31, 2002: |  |      |       |     |  |   |       | 
|First Quarter                 |  | $    | 9.91  |     |  | $ | 5.75  | 
|Second Quarter                |  |      | 6.85  |     |  |   | 3.26  | 
|Third Quarter                 |  |      | 5.80  |     |  |   | 3.50  | 
|Fourth Quarter                |  |      | 10.23 |     |  |   | 4.73  | 

On March 6, 2003, there were approximately 1,524
holders of record of our common stock. For the years ended 1996
through 2002 the Company paid no cash or stock dividends on its
common stock.

The Companys debt agreements restrict,
under limited circumstances, our ability to pay cash dividends
without the banks consent. Further, our ability to pay
cash dividends may be dependent, in part, on our
subsidiaries ability to make cash dividends and other
payments to us.

For additional information see the last paragraph
of Note 2, Financing, on Page F-13 and
Note 10 on Page F-28 of this Annual Report on Form 10-K.

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ITEM 6  SELECTED CONSOLIDATED
FINANCIAL DATA

The information required by this item is included
in the Five Year Summary of Operations set forth below.

FIVE YEAR SUMMARY OF OPERATIONS

(Amounts in thousands, except per common share
data)


|                                                                                    |                                                            |                                                                                     |          |         |      |      |          |         |      |      |          |         |     |   |          |         |      |   |          |         |      |  
|----------------------------------------------------------------------------------- | ---------------------------------------------------------- | ----------------------------------------------------------------------------------- | -------- | ------- | ---- | ---- | -------- | ------- | ---- | ---- | -------- | ------- | --- | - | -------- | ------- | ---- | - | -------- | ------- | ---- | -
|                                                                                    |                                                            | 1998                                                                                |          | 1999    |      | 2000 |          | 2001    |      | 2002
|                                                                                    |                                                            |                                                                                     |          |         |      |      |          |         |      |     
|Sales                                                                               |                                                            | $                                                                                   | 390,644  |         |      | $    | 336,213  |         |      | $    | 392,608  |         |     | $ | 394,601  |         |      | $ | 416,975  |        
|Cost of sales                                                                       |                                                            |                                                                                     | (296,044 | )       |      |      | (247,064 | )       |      |      | (277,666 | )       |     |   | (296,342 | )       |      |   | (314,891 | )      
|                                                                                    |                                                            |                                                                                     |          |         |      |      |          |         |      |      |          |         |     |   |          |         |      |   |          |        
|Gross profit                                                                        |                                                            |                                                                                     | 94,600   |         |      |      | 89,149   |         |      |      | 114,942  |         |     |   | 98,259   |         |      |   | 102,084  |        
|Operating expenses:                                                                 |                                                            |                                                                                     |          |         |      |      |          |         |      |      |          |         |     |   |          |         |      |   |          |        
|                                                                                    | Selling, general and administrative expenses               |                                                                                     |          | (65,377 | )    |      |          | (54,819 | )    |      |          | (54,271 | )   |   |          | (56,776 | )    |   |          | (58,386 | )   
|                                                                                    | Research and development and product
    engineering costs |                                                                                     |          | (30,742 | )    |      |          | (27,946 | )    |      |          | (25,442 | )   |   |          | (26,086 | )    |   |          | (26,031 | )   
|                                                                                    | Amortization of goodwill(a)                                |                                                                                     |          | (6,295  | )    |      |          | (7,020  | )    |      |          | (7,822  | )   |   |          | (7,901  | )    |   |          |        |     
|                                                                                    |                                                            |                                                                                     |          |         |      |      |          |         |      |      |          |         |     |   |          |         |      |   |          |        
|Operating (loss) income                                                             |                                                            |                                                                                     | (7,814   | )       |      |      | (636     | )       |      |      | 27,407   |         |     |   | 7,496    |         |      |   | 17,667   |        
|Other income, net                                                                   |                                                            |                                                                                     | 6,065    |         |      |      | 3,370    |         |      |      |         |         |     |   |         |         |      |   |         |        
|Net interest expense                                                                |                                                            |                                                                                     | (6,805   | )       |      |      | (8,146   | )       |      |      | (9,033   | )       |     |   | (10,247  | )       |      |   | (7,001   | )      
|                                                                                    |                                                            |                                                                                     |          |         |      |      |          |         |      |      |          |         |     |   |          |         |      |   |          |        
|(Loss) income before taxes and
    minority interests                               |                                                            |                                                                                     | (8,554   | )       |      |      | (5,412   | )       |      |      | 18,374   |         |     |   | (2,751   | )       |      |   | 10,666   |        
|Benefit from (provision for) income taxes                                           |                                                            |                                                                                     | 5,310    |         |      |      | 1,844    |         |      |      | (7,530   | )       |     |   | 1,073    |         |      |   | (3,773   | )      
|                                                                                    |                                                            |                                                                                     |          |         |      |      |          |         |      |      |          |         |     |   |          |         |      |   |          |        
|(Loss) income before minority interests                                             |                                                            |                                                                                     | (3,244   | )       |      |      | (3,568   | )       |      |      | 10,844   |         |     |   | (1,678   | )       |      |   | 6,893    |        
|Minority Interests                                                                  |                                                            |                                                                                     | (2,268   | )       |      |      | (1,650   | )       |      |      | (91      | )       |     |   | (145     | )       |      |   | (101     | )      
|                                                                                    |                                                            |                                                                                     |          |         |      |      |          |         |      |      |          |         |     |   |          |         |      |   |          |        
|(Loss) income from
    continuing operations                                        |                                                            |                                                                                     | (5,512   | )       |      |      | (5,218   | )       |      |      | 10,753   |         |     |   | (1,823   | )       |      |   | 6,792    |        
|Discontinued operations 
    (loss) gain on disposal of emissions testing business |                                                            |                                                                                     | (4,710   | )       |      |      | 2,363    |         |      |      | 1,300    |         |     |   |         |         |      |   |         |        
|Cumulative effect of change in accounting
    principle(a)                          |                                                            |                                                                                     |         |         |      |      |         |         |      |      |         |         |     |   |         |         |      |   | (3,397   | )      
|                                                                                    |                                                            |                                                                                     |          |         |      |      |          |         |      |      |          |         |     |   |          |         |      |   |          |        
|Net (loss) income                                                                   |                                                            |                                                                                     | (10,222  | )       |      |      | (2,855   | )       |      |      | 12,053   |         |     |   | (1,823   | )       |      |   | 3,395    |        
|Preferred stock dividends                                                           |                                                            |                                                                                     |         |         |      |      |         |         |      |      |         |         |     |   |         |         |      |   | (2,540   | )      
|                                                                                    |                                                            |                                                                                     |          |         |      |      |          |         |      |      |          |         |     |   |          |         |      |   |          |        
|(Loss) income applicable to
    common shareholders                                 |                                                            | $                                                                                   | (10,222  | )       |      | $    | (2,855   | )       |      | $    | 12,053   |         |     | $ | (1,823   | )       |      | $ | 855      |        
|                                                                                    |                                                            |                                                                                     |          |         |      |      |          |         |      |      |          |         |     |   |          |         |      |   |          |        
|Earnings (Loss) Per Common Share,                                                   |                                                            |                                                                                     |          |         |      |      |          |         |      |      |          |         |     |   |          |         |      |   |          |        
|                                                                                    | Basic and Diluted:                                         |                                                                                     |          |         |      |      |          |         |      |      |          |         |     |   |          |         |      |   |          |         |     
|                                                                                    |                                                            | (Loss) income from continuing operations                                            |          | $       | (.21 | )    |          | $       | (.19 | )    |          | $       | .38 |   |          | $       | (.06 | ) |          | $       | .14  |  
|                                                                                    |                                                            | Discontinued operations 
    (loss) gain on disposal of emissions testing business |          |         | (.17 | )    |          |         | .09  |      |          |         | .05 |   |          |         |     |   |          |         |     |  
|                                                                                    |                                                            | Cumulative effect of change in accounting
    principle                             |          |         |     |      |          |         |     |      |          |         |    |   |          |         |     |   |          |         | (.11 | )
|                                                                                    |                                                            |                                                                                     |          |         |      |      |          |         |      |      |          |         |     |   |          |         |      |   |          |        
|Net (loss) income                                                                   |                                                            | $                                                                                   | (.38     | )       |      | $    | (.10     | )       |      | $    | .43      |         |     | $ | (.06     | )       |      | $ | .03      |        
|                                                                                    |                                                            |                                                                                     |          |         |      |      |          |         |      |      |          |         |     |   |          |         |      |   |          |        
|Financial Condition                                                                 |                                                            |                                                                                     |          |         |      |      |          |         |      |      |          |         |     |   |          |         |      |   |          |        
|Total assets                                                                        |                                                            | $                                                                                   | 466,985  |         |      | $    | 452,500  |         |      | $    | 474,008  |         |     | $ | 513,007  |         |      | $ | 530,038  |        
|Working capital                                                                     |                                                            |                                                                                     | 133,465  |         |      |      | 128,062  |         |      |      | 132,631  |         |     |   | 162,797  |         |      |   | 164,854  |        
|Current ratio                                                                       |                                                            |                                                                                     | 2.92     |         |      |      | 2.68     |         |      |      | 2.60     |         |     |   | 2.10     |         |      |   | 2.40     |        
|Capital lease obligations                                                           |                                                            |                                                                                     |         |         |      |      |         |         |      |      |         |         |     |   | 5,357    |         |      |   | 5,400    |        
|Total debt                                                                          |                                                            |                                                                                     | 141,633  |         |      |      | 124,156  |         |      |      | 139,421  |         |     |   | 153,899  |         |      |   | 77,361   |        
|Redeemable convertible preferred stock                                              |                                                            |                                                                                     |         |         |      |      |         |         |      |      |         |         |     |   |         |         |      |   | 50,000   |        
|Stockholders equity                                                                |                                                            |                                                                                     | 250,081  |         |      |      | 240,912  |         |      |      | 234,981  |         |     |   | 258,357  |         |      |   | 274,254  |        
|Debt to equity ratio                                                                |                                                            |                                                                                     | .57      |         |      |      | .52      |         |      |      | .59      |         |     |   | .60      |         |      |   | .28      |        
|Book value per common share                                                         |                                                            |                                                                                     | 9.10     |         |      |      | 8.64     |         |      |      | 8.39     |         |     |   | 8.59     |         |      |   | 8.98     |        
|Shares outstanding at year end                                                      |                                                            |                                                                                     | 27,473   |         |      |      | 27,882   |         |      |      | 28,022   |         |     |   | 30,425   |         |      |   | 30,554   |        
|Return on stockholders equity                                                      |                                                            |                                                                                     | (4.00    | )%      |      |      | (1.20    | )%      |      |      | 5.09     | %       |     |   | (0.70    | )%      |      |   | 1.28     | %      
|Capital expenditures                                                                |                                                            |                                                                                     | 18,094   |         |      |      | 9,491    |         |      |      | 15,082   |         |     |   | 10,044   |         |      |   | 6,761    |        
|Depreciation                                                                        |                                                            |                                                                                     | 15,615   |         |      |      | 14,914   |         |      |      | 13,353   |         |     |   | 13,313   |         |      |   | 11,992   |        
|Number of employees                                                                 |                                                            |                                                                                     | 3,000    |         |      |      | 2,200    |         |      |      | 2,500    |         |     |   | 2,700    |         |      |   | 2,300    |        



---



|    |                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | For information concerning the effect of the
    change in accounting for goodwill see Goodwill and Other
    Intangible Assets in Note 1 of the Notes to
    Consolidated Financial Statements on Page F-9 of this Annual
    Report on Form 10-K.

The Company neither declared nor paid any cash
dividends on its common shares during the period 1998 through
2002. See also Critical Accounting Policies and
Contingency as set forth in Item 7 
Managements Discussion and Analysis of Financial Condition and
Results of Operations on Pages 22 and 27, respectively, of this
Annual Report on Form 10-K.

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|         |                                                                                          
|-------- | -----------------------------------------------------------------------------------------
|ITEM 7  | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial
condition and results of operations should be read in
conjunction with our consolidated financial statements and notes
thereto beginning on page F-1 of this Annual Report.

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.

We were founded in 1928 as Allen Electric &
Equipment Company and have been listed on the New York Stock
Exchange since September 1971. We repositioned our business
through a series of strategic acquisitions and divestitures
during the 1990s and have been known as Allen Telecom Inc. since
February 1997.

Sales.Our sales are
derived primarily from wireless infrastructure equipment and
engineering services provided to wireless communications
original equipment manufacturers, or OEMs, and carriers. We make
the majority of our communications equipment sales pursuant to
orders received under master purchase agreements or specific
purchase contracts, and our wireless engineering services are
typically provided on the basis of time and materials or
specific service contracts.

We derive a significant portion of our sales from
some of the worlds largest carriers and OEMs. Our top 10
customers accounted for 55.2%, 55.2% and 65.0% of total sales in
2000, 2001 and 2002, respectively. AT&T Wireless and Siemens
AG, our largest customers in 2002, accounted for 19.5% and 10.2%
of sales, respectively. Siemens AG, our largest customer in
2001, accounted for 10.2% of total sales in 2001 and in 2000,
Nortel Networks Corporation accounted for 15.2% of total sales.
These were the only customers to account for more than 10% of
sales in 2002, 2001 and 2000.

We manufacture, distribute and market our
products to the following geographic regions: Asia, Australia,
Europe, Latin America and North America. International sales
constituted approximately 58.5%, 60.8% and 45.4% of total sales
in 2000, 2001 and 2002, respectively. The decrease in the
percentage of international sales in 2002 was due to the
increase in sales of geolocation products, which are installed
only in U.S. networks. During 2003, we expect international
sales, as a percentage of total sales, to decline compared with
2002, due to higher geolocation product sales in the U.S. Export
sales from the U.S. are primarily to major carriers and are
typically payable in U.S. dollars. European-based sales are to
major OEMs and carriers, and are typically denominated in Euros.
As a result of our international position, we are subject to
foreign currency translation fluctuations that impact the amount
of sales we report in U.S. dollars for financial reporting
purposes. Other than these translation effects, we do not
believe that such currency fluctuations have significantly
impacted our competitive position or our sales to domestic or
international customers for either our U.S. or international
operations.

Our annual revenue growth in the past few years
has been largely dependent upon the overall growth rate of
wireless telecommunications infrastructure equipment spending,
which includes spending by both OEMs, principally for our base
station subsystems and components product line, and carriers for
our other product lines. An independent study by Morgan Stanley
in January 2003 indicates that wireless telecommunications
equipment spending is expected to decrease 2% in 2003 from 2002
levels. This projected decline in the level of wireless
infrastructure equipment spending may not be representative of
our results in 2003, as sales of our geolocation products are
probably more dependent on FCC regulations and requirements than
the market constraints placed on capital budgets. We cannot be
certain that our

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results in any particular period will be
consistent with wireless telecommunications spending patterns of
OEMs and carriers.


Our historical sales have reflected seasonal
fluctuations due to the effect of less infrastructure build out
and product installations in the winter months, primarily as a
result of the impact of inclement weather conditions in the
large northern hemisphere markets of Europe and North America.

We report our sales in two segments, Wireless
Communications Equipment and Wireless Engineering and Consulting
Services. Our Wireless Communications Equipment segment consists
of four product lines. The following table sets forth our sales
by segments and product lines:

|                                             |                                             |                                         |      |       |       |      |     |      |       |   |      |       |       |  |     |      |       |   |      |       |       |  |     |      |       |  
|-------------------------------------------- | ------------------------------------------- | --------------------------------------- | ---- | ----- | ----- | ---- | --- | ---- | ----- | - | ---- | ----- | ----- |  | --- | ---- | ----- | - | ---- | ----- | ----- |  | --- | ---- | ----- | -
|                                             |                                             |                                        
|                                             |                                             | Year Ended December 31,                
|                                             |                                             |                                        
|                                             |                                             |                                         |      |       |       |     
|Sales by Segments and Product Lines          |                                             | 2000                                    |      | 2001  |       | 2002
|                                             |                                             |                                         |      |       |       |     
|                                             |                                             |                                         |      |       |       |      |     |      |       |   |      |      
|                                             |                                             |                                        
|                                             |                                             | ($ millions)                           
|Wireless Communications Equipment:           |                                             |                                         |      |       |       |      |     |      |       |   |      |       |       |  |     |      |       |   |      |       |       |  |     |     
|                                             | Base Station Subsystems and Components      |                                         | $    | 190.9 |       |      |     | 48.6 | %     |   | $    | 183.0 |       |  |     | 46.3 | %     |   | $    | 143.3 |       |  |     | 34.4 | %    
|                                             | Repeaters and In-Building Coverage Products |                                         |      | 78.8  |       |      |     | 20.1 | %     |   |      | 94.5  |       |  |     | 24.0 | %     |   |      | 94.2  |       |  |     | 22.6 | %    
|                                             | Base Station and Mobile Antennas            |                                         |      | 97.8  |       |      |     | 24.9 | %     |   |      | 88.2  |       |  |     | 22.4 | %     |   |      | 75.2  |       |  |     | 18.0 | %    
|                                             | Geolocation Products                        |                                         |      |      |       |      |     |     |       |   |      | 7.8   |       |  |     | 2.0  | %     |   |      | 88.6  |       |  |     | 21.3 | %    
|                                             |                                             |                                         |      |       |       |      |     |      |       |   |      |       |       |  |     |      |       |   |      |       |       |  |     |     
|                                             |                                             | Total Wireless Communications Equipment |      |       | 367.5 |      |     |      | 93.6  | % |      |       | 373.5 |  |     |      | 94.7  | % |      |       | 401.3 |  |     |      | 96.3  | %
|Wireless Engineering and Consulting Services |                                             |                                         | 25.1 |       |       |      | 6.4 | %    |       |   | 21.1 |       |       |  | 5.3 | %    |       |   | 15.7 |       |       |  | 3.7 | %   
|                                             |                                             |                                         |      |       |       |      |     |      |       |   |      |       |       |  |     |      |       |   |      |       |       |  |     |     
|                                             |                                             | Total Sales                             |      | $     | 392.6 |      |     |      | 100.0 | % |      | $     | 394.6 |  |     |      | 100.0 | % |      | $     | 417.0 |  |     |      | 100.0 | %
|                                             |                                             |                                         |      |       |       |      |     |      |       |   |      |       |       |  |     |      |       |   |      |       |       |  |     |     

Backlog.Backlog
includes all purchase orders and contracts for products and
services with requested delivery dates within one year.
Generally, purchase orders are subject to cancellation at the
request of the customer. Cancelled orders are, in some
instances, subject to cancellation or restocking charges payable
to us.

Cost of Sales.Cost
of sales consists primarily of: (i) direct material costs
of production components; (ii) production salaries, wages
and employee benefits; (iii) fees paid to contract
manufacturers; (iv) costs of our manufacturing facilities,
including rent, depreciation, utilities, maintenance and
insurance; and (v) indirect supervisory manufacturing
salaries, wages and employee benefits.

Selling, General and Administrative
Expenses.Selling, general and
administrative expenses generally include salaries, wages,
commissions, employee benefits, travel and entertainment,
communications, third party professional fees, bad debt expense
and a portion of facility expenses related to sales and
administrative activities.

Research and Development
Costs.Research and development costs
relate to our engineering and technical operations and include
salaries, wages, employee benefits, test equipment, test labs,
third party contract research, prototype expenses and related
facility expenses. Over the last three years, we have invested a
significant portion of our research and development resources in
our new initiatives, including products for emerging 3G
networks, multi-user distributed antenna systems and next
generation power amplifiers.

Amortization of
Goodwill.As more fully described in
Note 1 to the Consolidated Financial Statements, effective
January 1, 2002, we implemented the provisions of Statement
of Financial Accounting Standards No. 142, Goodwill
and Other Intangible Assets. This statement changed the
accounting for goodwill from an amortization method to an
impairment only approach; accordingly, we have ceased amortizing
goodwill in 2002.

Income Taxes.We
operate our business in 21 countries and accrue and pay income
taxes in each of those countries in accordance with each
countrys tax rates and rules.

Earnings per Common
Share.The weighted average common
shares outstanding for the Basic Earnings Per Common Share
computation increased in 2002 to 30,410,000 shares, as compared
with

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##### Table of Contents



28,090,000 and 27,820,000 shares in the
comparable 2001 and 2000 periods, respectively, due primarily to
shares issued in connection with our fourth quarter 2001
acquisition of Bartley R.F. Systems, Inc. In computing Basic
Earnings Per Common Share for 2002, earnings were reduced by
dividends declared on the redeemable Series D 7.75%
Convertible Preferred Stock (Preferred Stock) issued
in the first quarter 2002. The dividends declared amounted to
$2.5 million (an impact of $.08 per common share). Such
dividends would amount to $3.9 million on an annual basis
when, and if, declared. For purposes of computing Diluted
Earnings Per Common Share, and only if such calculation results
in dilution, Preferred Stock dividends will not reduce earnings;
however, the weighted average shares outstanding would increase
by 6,493,500 common shares representing the amount of common
shares into which the Preferred Stock is currently convertible.


Reporting Matter.In
order to facilitate the timely preparation of our financial
statements on a consolidated basis, we historically included the
results of our principal European operations 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 our operations.
The results of operations (net income of $2.4 million) for
these European operations for November and December 2000
were recorded directly to retained earnings in the first quarter
of 2001.

Results of Operations

The following table sets forth our consolidated
results of operations as a percentage of sales for the periods
shown:

|                                                      |                                              |                         |       |      |  |      |       |      |  |  |       |      | 
|----------------------------------------------------- | -------------------------------------------- | ----------------------- | ----- | ---- |  | ---- | ----- | ---- |  |  | ----- | ---- | 
|                                                      |                                              |                        
|                                                      |                                              | Year Ended December 31,
|                                                      |                                              |                        
|                                                      |                                              | 2000                    |       | 2001 |  | 2002
|                                                      |                                              |                         |       |      |  |     
|Sales                                                 |                                              |                         | 100.0 | %    |  |      | 100.0 | %    |  |  | 100.0 | %   
|Cost of sales                                         |                                              |                         | 70.7  |      |  |      | 75.1  |      |  |  | 75.5  |     
|                                                      |                                              |                         |       |      |  |      |       |      |  |  |       |     
|                                                      | Gross profit                                 |                         |       | 29.3 |  |      |       | 24.9 |  |  |       | 24.5 | 
|Operating expenses:                                   |                                              |                         |       |      |  |      |       |      |  |  |       |     
|                                                      | Selling, general and administrative expenses |                         |       | 13.8 |  |      |       | 14.4 |  |  |       | 14.0 | 
|                                                      | Research and development costs               |                         |       | 6.5  |  |      |       | 6.6  |  |  |       | 6.2  | 
|                                                      | Amortization of goodwill                     |                         |       | 2.0  |  |      |       | 2.0  |  |  |       |     | 
|                                                      |                                              |                         |       |      |  |      |       |      |  |  |       |     
|Operating (loss) income                               |                                              |                         | 7.0   |      |  |      | 1.9   |      |  |  | 4.3   |     
|Net interest expense                                  |                                              |                         | 2.3   |      |  |      | 2.6   |      |  |  | 1.7   |     
|                                                      |                                              |                         |       |      |  |      |       |      |  |  |       |     
|Income (loss) before taxes and
    minority interests |                                              |                         | 4.7   |      |  |      | (0.7  | )    |  |  | 2.6   |     
|(Provision for) benefit from income taxes             |                                              |                         | (1.9  | )    |  |      | 0.3   |      |  |  | (0.9  | )   
|Minority interests                                    |                                              |                         |      |      |  |      | (0.1  | )    |  |  | (0.1  | )   
|                                                      |                                              |                         |       |      |  |      |       |      |  |  |       |     
|Income (loss) from continuing operations              |                                              |                         | 2.8   | %    |  |      | (0.5  | )%   |  |  | 1.6   | %   
|                                                      |                                              |                         |       |      |  |      |       |      |  |  |       |     

Year Ended December 31, 2002 Compared to
Year Ended December 31, 2001

Sales.Sales
increased to $417.0 million in 2002 from
$394.6 million in 2001.

Sales from our Wireless Communications Equipment
segment increased $27.8 million, or 7.4%, to
$401.3 million in 2002 from $373.5 million in 2001 due
to greater demand for geolocation products, partially offset by
a decline in sales of base station subsystems and components and
base station and mobile antennas. Sales of repeaters and
in-building coverage products were not significantly different
in 2002 from 2001. Geolocation sales increased from $7.8 million
in 2001 to $88.7 million in 2002. We expect first quarter
2003 geolocation sales to be consistent with strong fourth
quarter 2002 levels due primarily to continued robust demand
from customers for geolocation products in order to meet FCC
mandates. The decrease in 2002 sales of base station subsystems
and components and base station and mobile antennas products,
compared with 2001, was principally attributable to a decline in
base station

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deployments around the world as well as increased
competition which resulted in lower pricing to our customers.


Sales from our Wireless Engineering and
Consulting Services segment decreased $5.4 million, or
25.6%, to $15.7 million in 2002 from $21.1 million in
2001 primarily due to a decrease in demand in the U.S. for
consulting services by fixed wireless operators.

International sales constituted approximately
60.8% and 45.4% of total sales in 2001 and 2002, respectively.
This decrease in the percentage of international sales is
attributable to the increase in sales of geolocation products to
U.S. carriers. Geographically, all regions, with the exception
of the U.S., experienced a decrease in sales in 2002 from 2001.
However, the decrease in sales in Asia was not significant due
to continued strong sales in China and improved sales in
Australia, which were partially offset by sales decreases in
other Asian regions.

As a result of the higher-valued Euro compared to
the U.S. dollar, our reported sales, when translated into U.S.
dollars, were $8.5 million higher in 2002 than they would
have been had the average exchange rate remained constant from
2001 to 2002.

Backlog.Backlog
increased $17.0 million, or 13.7%, to $140.4 million
at December 31, 2002 from $123.4 million at
December 31, 2001 principally due to a significant increase
in the backlog for our geolocation products, which increased
from $48.7 million at December 31, 2001 to
$87.1 million at December 31, 2002. Backlog for all other
product lines declined by $21.4 million from year to year.
Backlog is not significant for our Wireless Engineering and
Consulting Services segment.

Gross Profit.Gross
profit increased $3.8 million to $102.1 million in
2002 from $98.3 million in 2001. Our gross profit margin
decreased to 24.5% in 2002 from 24.9% in 2001. The impact of
improved gross profit margins from the increase in sales of
higher margin products were more than offset by a decline in
gross profit margins among our other product lines due to price
discounting, changes in product mix and higher inventory
reserves. Restructuring charges of $1.2 million were
recorded in cost of sales in 2002 compared with restructuring
charges of $1.0 million recorded in 2001. For more
information on restructuring costs refer to Note 12 in the Notes
to Consolidated Financial Statements.

Gross profit margins for our Wireless
Communications Equipment segment decreased to 24.7% in 2002 from
24.9% in 2001. As noted above, the impact of improved gross
profit margins from the increase in sales of higher margin
products was offset by competitive pricing and higher inventory
costs relating to our other product lines.

Gross profit margins for our Wireless Engineering
and Consulting Services segment decreased to 19.5% in 2002 from
25.6% in 2001 primarily due to decreased sales of higher margin
software, and decreased utilization of our engineers for various
engineering services projects.

Selling, General and Administrative
Expenses.Selling, general and
administrative expenses increased $1.6 million, or 2.8%, to
$58.4 million in 2002 from $56.8 million in 2001
primarily due to higher compensation and commission expenses and
an increase in currency exchange losses in 2002, which went from
a gain of $0.3 million in 2001 to a loss of $(2.2) million
in 2002.

Selling, general and administrative expenses for
our Wireless Communications Equipment segment increased
$1.4 million, or 3.0%, in 2002 from 2001 due to higher
compensation and commission expense, as well as higher bad debt
expense. Special charges associated with restructuring actions
were $1.2 million in 2002 and $1.3 million in 2001.

Selling, general and administrative expenses for
our Wireless Engineering and Consulting Services segment
decreased $0.4 million, or 9.8%, in 2002 from 2001 due to
restructuring actions taken in the second quarter 2002. Special
charges associated with restructuring actions were
$0.4 million in 2002.

Research and Development
Costs.Research and development costs
remained basically unchanged at $26.0 million in 2002 and
$26.1 million in 2001. Special charges associated with
restructuring were

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$0.2 million in 2002. Our research and
development costs in 2002 and 2001 related exclusively to our
Wireless Communications Equipment segment.


Net Interest
Expenses.Net interest expense
decreased $3.2 million, or 31.7%, to $7.0 million in
2002 from $10.2 million in 2001. The decrease in net
interest expense is due primarily to lower borrowing levels, as
well as lower interest rates. The decrease in debt levels was
attributable to the issuance of Convertible Preferred Stock on
March 20, 2002, that generated cash proceeds, net of fees
and expenses, of $46.8 million which was used to pay down
debt, as well as strong cash generation from operating
activities. At our current borrowing rates, we estimate
annualized interest savings of $2.3 million as a result of
using the proceeds from the stock offering to pay down debt.

Minority Interests.Minority interest expense remained constant at $0.1 million in
both 2002 and 2001.

Special Charges.In
2002, the company incurred pretax charges of $2.9 million, or
$0.07 per basic and diluted share after related income tax
effect. These costs included charges in connection with
headcount reductions at several of its businesses,
discontinuation of certain products, particularly relating to
our base station and mobile antenna product line, and additional
facility costs related to the closing of a manufacturing
operation in Nevada. Of the costs, approximately
$1.2 million is in cost of sales, $1.5 million is in
selling, general and administrative expenses and
$0.2 million is in research and development.

In 2001, the company recognized a pretax
restructuring charge of approximately $2.3 million, or
$0.05 per basic and diluted share after related income tax
effect, with respect to the closing and consolidation of the
Companys U.S. base station subsystems and components
manufacturing facility in Nevada into the Bartley manufacturing
facility in Massachusetts. Of the cost, approximately
$1.0 million is in cost of sales and $1.3 million is
in selling, general and administrative expenses.

Income Taxes.Income
tax expense increased by $4.9 million in 2002 to
$3.8 million as compared to a tax benefit of
$1.1 million in 2001. The effective tax rate decreased to
35.4% in 2002 from 39.0% in 2001. The principal reason for the
lower tax rate is due to the change in accounting for goodwill
amortization that was almost entirely nondeductible for income
tax purposes in 2001.

Through December 31, 2002, we have recorded
a net U.S. deferred tax asset pertaining to the recognition of
net operating loss carryforwards, net deductible temporary
differences and tax credits in the amount of $40.2 million,
down from $41.8 million at December 31, 2001. The tax
effects of U.S. income of approximately $21.3 million,
partially offset by additional deferred tax assets generated in
2002, caused the decrease of $1.6 million in the deferred
tax asset in 2002. These tax losses generally may be carried
forward for up to 20 years and expire between the years
2018 and 2021. We have not provided a valuation reserve relating
to this asset, as we believe it is more likely than not that we
will realize the value of this asset. This determination is
based primarily upon our expectation that future U.S. operations
will be sufficiently profitable (notwithstanding losses prior to
2002) to utilize the operating loss carryforwards, and various
tax, business and other planning strategies available to the
company. We cannot assure you that we will be able to realize
this asset or that future valuation allowances will not be
required. The failure to utilize this asset would adversely
affect our results of operations and financial position. We
provided a valuation allowance of $5,344,000 with respect to net
operating losses of certain operations in Europe. See also
Critical Accounting Policies below and Note 8 of the
Notes to Consolidated Financial Statements.

Year Ended December 31, 2001 Compared to
Year Ended December 31, 2000

Sales.Sales
increased slightly to $394.6 million in 2001 from $392.6
million in 2000. As a result of the lower-valued Euro compared
to the U.S. dollar, our reported sales, when translated into
U.S. dollars, were $5.3 million lower in 2001 than they
would have been had the average exchange rate remained constant
from 2000 to 2001.

Sales from our Wireless Communications Equipment
segment increased $6.0 million, or 1.6%, to $373.5 million
in 2001 from $367.5 million in 2000 primarily due to
greater demand for repeater and in-

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building coverage products and sales of
geolocation products, partially offset by a decline in sales of
base station subsystems and components and base station and
mobile antennas. Sales of repeater and in-building coverage
products increased 20.0% in 2001 from 2000 due primarily to
increased repeater sales to European carriers. The decrease in
sales of base station subsystems and components and base station
and mobile antennas products was principally attributable to a
decline in base station deployments around the world as well as
increased competition which resulted in lower pricing to our
customers.


Sales from our Wireless Engineering and
Consulting Services segment decreased $4.0 million, or
16.1%, to $21.1 million in 2001 from $25.1 million in
2000 primarily due to a decrease in demand in the U.S. for
consulting services by fixed wireless operators. Sales in the
last four months of 2001 were particularly weak, partially due
to a decrease in consulting activity following the attack of
September 11, 2001.

International sales constituted approximately
58.5% and 60.8% of total sales in 2000 and 2001, respectively.
This increased percent of international sales is attributable to
the increase in sales of repeater products to European carriers
and an increase in sales of base station antennas in China.
Geographically, all regions experienced a small decrease in
sales in 2001 from 2000, with the exception of Asia, which had
an increase in customer sales to China.

Backlog.Backlog
increased $12.1 million, or 10.9%, to $123.4 million
at December 31, 2001 from $111.3 million at
December 31, 2000. Backlog for our Wireless Communications
Equipment segment increased $15.7 million to $122.6 million
at December 31, 2001 from $106.9 million at
December 31, 2000 principally due to the acquisition of
Bartley R.F. Systems, Inc. (Bartley) and a
significant increase in the backlog for geolocation products.
Backlog of all other product lines declined by
$41.1 million from year to year. Backlog for our Wireless
Engineering and Consulting Services segment decreased
$3.5 million to $0.9 million at December 31, 2001
from $4.4 million at December 31, 2000.

Gross Profit.Gross
profit decreased $16.7 million, or 14.5%, to $98.3 million
in 2001 from $114.9 million in 2000. Our gross profit
margin decreased to 24.9% in 2001 from 29.3% in 2000 principally
due to higher restructuring costs charged to cost of sales,
increased price discounting, and changes in product mix with
more sales of lower margin coverage projects, microwave radio
and booster products and less sales of higher margin measurement
and software products. Restructuring charges of
$1.0 million were recorded in 2001 compared with
restructuring charges of $0.1 million recorded in 2000. For
more information on restructuring costs please refer to Note 12
in the Notes to Consolidated Financial Statements.

Gross profit margins for our Wireless
Communications Equipment segment decreased to 24.9% in 2001 from
28.5% in 2000. This decline in gross profit margin is
attributable to more competitive pricing and increased sales of
lower margin products, including boosters, microwave radios and
coverage projects.

Gross profit margins for our Wireless Engineering
and Consulting Services segment decreased to 25.6% in 2001 from
39.0% in 2000 primarily due to decreased sales of higher margin
software, and decreased utilization of our engineers for various
engineering services projects.

Selling, General and Administrative
Expenses.Selling, general and
administrative expenses increased $2.5 million, or 4.6%, to
$56.8 million in 2001 from $54.3 million in 2000
primarily due to higher restructuring charges in 2001 as well as
an increase in pension expense (the year 2000 had a pension
curtailment gain of $0.8 million).

Selling, general and administrative expenses for
our Wireless Communications Equipment segment increased
$4.1 million, or 10.0%, in 2001 from 2000 due to higher
restructuring costs and higher pension expense, as well as
higher selling expenses in our repeaters and in building
coverage product line. Special charges associated with
restructuring actions were $1.3 million in 2001.

Selling, general and administrative expenses for
our Wireless Engineering and Consulting Services segment
decreased $1.0 million, or 18.5%, in 2001 from 2000. As a
percentage of sales, these expenses

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declined to 20.7% in 2001 from 21.3% in 2000 as a
result of continuing cost controls with the downturn in sales
during the year.


Research and Development
Costs.Research and development costs
increased $0.7 million, or 2.5%, to $26.1 million in
2001 from $25.4 million in 2000. As a percentage of sales,
these costs remained relatively constant in 2001 and 2000. Our
research and development and product engineering costs in 2000
and 2001 related exclusively to our Wireless Communications
Equipment segment.

Amortization of
Goodwill.Goodwill amortization
increased slightly to $7.9 million in 2001 from
$7.8 million in 2000.

Net Interest
Expense.Net interest expense
increased $1.2 million, or 13.4%, to $10.2 million in
2001 from $9.0 million in 2000. This increase in net
interest expense is primarily due to increased debt levels and
lower interest income offset, in part, by lower borrowing rates.
The increased debt levels were due to increased working capital
needs in 2001.

Income Taxes.Income
tax expense decreased $8.6 million to a tax benefit of
$1.1 million in 2001 as compared to a tax expense of
$7.5 million in 2000. The effective tax rate decreased to
39.0% in 2001 from 41.0% in 2000. The principal reasons for the
decrease were due to lower statutory rates at our foreign
subsidiaries and an increase in income in lower tax
jurisdictions.

Minority Interests.Minority interest expense remained constant at $0.1 million
in both 2001 and 2000.

Special Charges.With respect to restructuring actions which commenced in 1999,
we incurred additional charges and gains in 2000, which resulted
in a $35,000 net gain, including the following: (i) a
pretax charge of $1.7 million primarily related to
termination costs of employees, relocation costs, asset
write-offs, and other termination related benefits which were
not accruable at the time of the 1999 restructuring; (ii) a
non-cash pretax gain of $1.2 million with respect to a
pension curtailment gain resulting from the workforce reduction;
and (iii) a gain of $0.5 million in the form of an
adjustment to the loss accrual for the disposal of a facility
sold in January 2001. Of this $35,000 net gain, a $106,000
charge was recorded in cost of sales and a gain of $141,000 was
recorded in selling, general and administrative expenses. Please
refer to Note 13 of the Notes to Consolidated Financial
Statements for additional information regarding special charges
in 1999 and 2000.

Impact of New Accounting
Pronouncements

In June 2001, the Financial Accounting
Standards Board (FASB) issued Statements of Financial
Accounting Standards (SFAS) No. 143, Accounting
for Asset Retirement Obligations, which addresses
financial accounting and reporting for obligations associated
with the retirement of tangible long-lived assets and associated
asset retirement costs. The new rules apply to legal obligations
associated with the retirement of long-lived assets that result
from the acquisition, construction, development and/or normal
operation of a long-lived asset. SFAS No. 143 is effective
for the Company beginning January 1, 2003. The Company
believes the adoption of SFAS No. 143 will not, at this
time, have a material impact on its consolidated financial
position or results of operations.

In August 2001, the FASB issued SFAS
No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets. SFAS No. 144 supersedes SFAS No.
121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of, and the
accounting and reporting provisions of Accounting Principles
Board Opinion No. 30, Reporting the Results of
Operations  Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions, for the
disposal of a segment of a business (as previously defined in
that opinion). SFAS No. 144 requires that one accounting
model be used for long-lived assets to be disposed of by sale,
whether previously held and used or newly acquired, and broadens
the presentation of discontinued operations to include more
disposal transactions than were included under the previous
standards. The Company implemented SFAS No. 144 on
January 1, 2002, as required, and the adoption

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of this statement did not have a material impact
on the Companys financial position or results of
operations.


In June 2002, the FASB issued SFAS
No. 146, Accounting for Costs Associated with Exit or
Disposal Activities. This Statement addresses financial
accounting and reporting for costs associated with exit or
disposal activities and nullifies Emerging Issues Task Force
Issue No. 94-3, Liability Recognition for Certain
Employee Benefits and Other Costs to Exit an Activity (including
Certain Costs Incurred in a Restructuring). This Statement
requires that costs associated with exit or disposal activities
be recognized when the costs are incurred, rather than at a date
of commitment to an exit or disposal plan. The provisions of
this Statement are effective for exit and disposal activities
that are initiated after December 31, 2002. The Company
expects to implement certain cost reductions in 2003 and expects
to ultimately incur restructuring costs of approximately
$1.0 million to $3.0 in 2003 pursuant to the requirements
of this standard.

In November 2002, the FASB issued
Interpretation No. 45, Guarantors Accounting
and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others (FIN 45), which
expands previously issued accounting guidance and disclosure
requirements for certain guarantees. FIN 45 requires an entity
to recognize an initial liability for the fair value of an
obligation assumed by issuing a guarantee. The disclosure
requirements of FIN 45 are effective for the Company as of
December 31, 2002, and require the disclosure of product
warranties that are excluded from the initial recognition and
initial measurement requirements of this Interpretation. The
recognition requirements of FIN 45 are to be applied
prospectively to guarantees issued after December 31, 2002.
Information on product warranties is disclosed in Note 6 of the
Notes to Consolidated Financial Statements. The Company believes
the adoption of FIN 45 will not, at this time, have a material
impact on its consolidated financial position or results of
operations.

In December 2002, the FASB issued SFAS
No. 148, Accounting for Stock-Based Compensation
Transition and Disclosure. SFAS No. 148 amends SFAS
No. 123, Accounting for Stock-Based
Compensation, to provide alternative methods of transition
to SFAS No. 123s fair value method of accounting for
stock-based employee compensation. SFAS No. 148 does not
require companies to account for employees stock options using
the fair value method but does require additional footnote
disclosures. The Company presents the disclosure requirements of
SFAS No. 123 in Note 5 of the Notes to Consolidated
Financial Statements.

Critical Accounting Policies

We believe there are three important accounting
policies, which significantly impact our results of operations
and financial position. The first pertains to the recognition of
a deferred tax asset with respect to net operating loss
carryforwards in the United States, the second relates to our
accounting for slow moving and obsolete inventory, and the third
relates to goodwill.

At December 31, 2002, we had a net operating
loss carryforward in the U.S. of approximately
$76.3 million (see Note 8 of the Notes to Consolidated
Financial Statements) and recorded a deferred tax asset with
respect to such net operating loss carryforward, together with
net deductible temporary differences and tax credits, in the
total amount of $40.2 million. This deferred tax asset
decreased $1.6 million from $41.8 million at
December 31, 2001, primarily due to $21.3 million of
income earned in the U.S. on the strength of our Geolocation
products business, partially offset by additional deferred tax
assets and tax credits generated in 2002. We have not recorded a
valuation reserve with respect to this deferred tax asset
because we believe the eventual realization of the asset is more
likely than not. This determination is based primarily on our
expectation that future U.S. operations will be sufficiently
profitable (notwithstanding losses prior to 2002) to utilize the
operating loss carryforwards before they expire, and various
tax, business and other planning strategies available to us. We
consider this a Critical Accounting Policy since it
is possible that future operating results could generate losses
in the U.S. if sales decline, and it is possible that the
various tax planning strategies available to us may be
insufficient

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to fully utilize the net operating loss
carryforward. If these were the case, we would record a non-cash
charge to earnings to provide for a valuation reserve relating
to the deferred tax asset.


Our wireless communications equipment segment is
characterized by rapid technological changes, which in turn
results in rapid product design changes and new product
introductions. These changes result, from time to time, in
inventory obsolescence and the requirement for inventory
obsolescence reserves. We regularly and routinely examine the
need for inventory reserves and consider both quantitative and
qualitative factors such as the amount of inventory on hand as
compared to historical and projected usage of inventory and an
assessment of industry dynamics and customer needs. We believe
this accounting estimate is a Critical Accounting
Policy because changes in reserve provisions can
materially affect the amount of our reported net income and
require us to exercise a large degree of judgment in assessing
the future utilization of inventory, which, at
$100.5 million at December 31, 2002 represents 19% of
our asset base. In recent years, the telecommunications industry
has been in a severe economic downturn resulting in reduced
capital expenditures by our OEM and wireless communications
carrier customers which has, and may continue to have, the
potential to increase the risk of product obsolescence. For
example, our inventory significantly increased from
$101.6 million at December 31, 2000 to
$142.7 million at March 31, 2001. This increase in
inventory was attributable to the significant increases planned
in production based on preliminary discussions with our
customers and their anticipated orders. These customers
dramatically changed their outlook from early 2001, forcing us
to quickly initiate plans to reduce inventory levels and
mitigate the risk of obsolescence. Inventory has since declined
from $142.7 million at March 31, 2001 to
$100.5 million at December 31, 2002.

The following is an analysis of the changes in
inventory reserves over the past three years (amounts in
millions):

|     |  |              |      |            |  |            |      |            |  |  |       |   |  |   |      | 
|---- |  | ------------ | ---- | ---------- |  | ---------- | ---- | ---------- |  |  | ----- | - |  | - | ---- | 
|     |  | Balance at   |      | Charged to |  |            |      | Balance at
|     |  | Beginning of |      | Cost of    |  | Net        |      | End of    
|     |  | Year         |      | Sales      |  | Deductions |      | Year      
|     |  |              |      |            |  |            |      |           
|2002 |  | $            | 17.0 |            |  |            | 19.3 |            |  |  | (2.7  | ) |  | $ | 33.6 | 
|2001 |  | $            | 14.0 |            |  |            | 10.1 |            |  |  | (7.1  | ) |  | $ | 17.0 | 
|2000 |  | $            | 20.7 |            |  |            | 7.5  |            |  |  | (14.2 | ) |  | $ | 14.0 | 

As set forth above, the impact on earnings per
common share, after related income tax effects, of the amount
charged to cost of sales was approximately $0.32, $0.22, and
$0.16 in 2002, 2001 and 2000, respectively.

In 2002, we completed our initial evaluation of
goodwill pursuant to the impairment requirements of SFAS
No. 142  Goodwill and Other Intangible Assets.
As a result, we determined that there was impairment with
respect to a portion of the $32.7 million of goodwill
related to the Decibel Products portion of our base station and
mobile antennas product line and recorded an impairment charge
of $3.4 million as a Cumulative effect of change in
accounting principle.

We consider this impairment test for goodwill to
be a Critical Accounting Policy. In computing the
fair value of goodwill, we primarily used a discounted present
value of future cash flow technique; however, we also used a
market based approach in valuing one of our reporting units
because we had valid points for comparison. The discounted cash
flow methodology involves the use of two key assumptions:
1) estimated future income and resulting cash flows and 2)
an estimated discount rate, both of which are highly subjective
and likely to change in the future. The estimated future cash
flows rely upon our managements estimate of future
profitability over an extended period of time. The discount rate
is based upon externally sourced information. These estimates
will likely change in the future and, if such changes are
adverse, could impact the recorded value of goodwill on our
consolidated balance sheet. Accordingly, we may be required to
record a non-cash charge to operations for goodwill impairment
in the future, which would adversely affect reported earnings
and, consequently, our stockholders equity.

We have allocated goodwill among each of our
reporting units, which includes $130.4 million allocated to
our wireless communications equipment segment and
$8.7 million to our wireless engineering

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and consulting services segment. Because goodwill
is allocated among several reporting units, the sensitivity of
changes in assumptions regarding the calculation of the present
value of cash flows would be different for each unit. For
example, in computing the initial value of our reporting units,
the net book value of the aforementioned Decibel Products
reporting unit, including goodwill, exceeded the calculated fair
value by approximately $0.5 million. This is due to the
varying degree of differences between the net asset value,
including goodwill, for a reporting unit and its respective fair
value as we calculate it. In some cases, the difference between
the net asset value and fair value is large, which is not the
case for other reporting units. As a result, specific adverse
changes in assumptions would not necessarily result in goodwill
impairment charges across all reporting units equally. However,
if the estimated future cash flows used in our assumptions were
reduced by 10%, it would have resulted in an estimated
preliminary impairment charge in the range of approximately
$7.0 million to $12.0 million for several reporting
units. Further, if the assumed discount rate used were to be
increased by 1% (independent of the aforementioned change in
cash flow), it would have resulted in an estimated preliminary
impairment charge in the range of approximately $10.0 to
$15.0 million. Such amounts are only preliminary, since
upon identifying any possible impairment charge we would then be
required to perform a second step to determine the fair value of
all assets and liabilities of the applicable reporting units in
order to determine the actual impairment charge, if any. If the
cash flow and discount rate were to favorably change, there
would be no resulting impairment charge. We are primarily an
infrastructure equipment provider to the wireless
telecommunications industry, which has recently experienced a
severe economic downturn. The failure of this industry to
rebound and/or our failure to maintain or improve sales and
operating results could result in future goodwill impairment
charges.


While any negative impact of these Critical
Accounting Policies would generally result in non-cash charges
to earnings, the severity of any charge and its impact on
stockholders equity could adversely affect our borrowing
agreements, cost of capital and ability to raise external
capital. Our senior management has reviewed these Critical
Accounting Policies with the Audit Committee of our Board of
Directors, and the Audit Committee has reviewed our disclosure
in this management discussion and analysis.

Quarterly Results of Operations

The following are our unaudited quarterly
consolidated statements of operations for 2001 and 2002. We have
prepared this unaudited information on a basis consistent with
the audited consolidated financial statements and have included
all adjustments, consisting only of normal recurring
adjustments, that we considered necessary for a fair
presentation of our financial position and operating results for
the quarters presented. You should read this quarterly financial
data in conjunction with the historical Condensed Consolidated
Financial Statements and the related notes thereto included in
our Quarterly Reports on Form 10-Q filed with the
Securities and Exchange Commission. In 2002, we changed our
accounting for goodwill and, in both 2001 and 2002, incurred
restructuring charges that impacted the comparability of

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quarterly financial results. Please refer to
Notes 1 and 13 of the Notes to Consolidated Financial Statements
for additional information regarding these items.


|                                                        |  |                    |         |          |  |           |         |          |  |          |        |          |  |           |        |          |  |   |        |   |  |   |        |   |  |   |         |   |  |   |         |  
|------------------------------------------------------- |  | ------------------ | ------- | -------- |  | --------- | ------- | -------- |  | -------- | ------ | -------- |  | --------- | ------ | -------- |  | - | ------ | - |  | - | ------ | - |  | - | ------- | - |  | - | ------- | -
|                                                        |  |                   
|                                                        |  | Three Months Ended
|                                                        |  |                   
|                                                        |  | Mar. 31,           |         | June 30, |  | Sept. 30, |         | Dec. 31, |  | Mar. 31, |        | June 30, |  | Sept. 30, |        | Dec. 31,
|                                                        |  | 2001               |         | 2001     |  | 2001      |         | 2001     |  | 2002     |        | 2002     |  | 2002      |        | 2002    
|                                                        |  |                    |         |          |  |           |         |          |  |          |        |          |  |           |        |         
|                                                        |  |                   
|                                                        |  | (in thousands)    
|Sales                                                   |  | $                  | 108,543 |          |  | $         | 105,094 |          |  | $        | 91,319 |          |  | $         | 89,645 |          |  | $ | 89,869 |   |  | $ | 91,850 |   |  | $ | 106,954 |   |  | $ | 128,302 |  
|Cost of sales                                           |  |                    | 78,639  |          |  |           | 77,983  |          |  |          | 69,877 |          |  |           | 69,843 |          |  |   | 68,702 |   |  |   | 69,803 |   |  |   | 81,145  |   |  |   | 95,241  |  
|                                                        |  |                    |         |          |  |           |         |          |  |          |        |          |  |           |        |          |  |   |        |   |  |   |        |   |  |   |         |   |  |   |         |  
|Gross profit                                            |  |                    | 29,904  |          |  |           | 27,111  |          |  |          | 21,442 |          |  |           | 19,802 |          |  |   | 21,167 |   |  |   | 22,047 |   |  |   | 25,809  |   |  |   | 33,061  |  
|Operating expenses:                                     |  |                    |         |          |  |           |         |          |  |          |        |          |  |           |        |          |  |   |        |   |  |   |        |   |  |   |         |   |  |   |         |  
|Selling, general and administrative expenses            |  |                    | 14,365  |          |  |           | 13,988  |          |  |          | 13,864 |          |  |           | 14,559 |          |  |   | 13,154 |   |  |   | 14,819 |   |  |   | 13,880  |   |  |   | 16,533  |  
|Research and development costs                          |  |                    | 6,900   |          |  |           | 7,170   |          |  |          | 5,908  |          |  |           | 6,108  |          |  |   | 6,609  |   |  |   | 6,483  |   |  |   | 6,413   |   |  |   | 6,526   |  
|Amortization of goodwill                                |  |                    | 1,980   |          |  |           | 1,987   |          |  |          | 1,968  |          |  |           | 1,966  |          |  |   |       |   |  |   |       |   |  |   |        |   |  |   |        |  
|                                                        |  |                    |         |          |  |           |         |          |  |          |        |          |  |           |        |          |  |   |        |   |  |   |        |   |  |   |         |   |  |   |         |  
|Operating income (loss)                                 |  |                    | 6,659   |          |  |           | 3,966   |          |  |          | (298   | )        |  |           | (2,831 | )        |  |   | 1,404  |   |  |   | 745    |   |  |   | 5,516   |   |  |   | 10,002  |  
|Net interest expense                                    |  |                    | 2,595   |          |  |           | 2,510   |          |  |          | 2,375  |          |  |           | 2,767  |          |  |   | 2,366  |   |  |   | 1,773  |   |  |   | 1,595   |   |  |   | 1,267   |  
|                                                        |  |                    |         |          |  |           |         |          |  |          |        |          |  |           |        |          |  |   |        |   |  |   |        |   |  |   |         |   |  |   |         |  
|Income (loss) before taxes and minority
    interest    |  |                    | 4,064   |          |  |           | 1,456   |          |  |          | (2,673 | )        |  |           | (5,598 | )        |  |   | (962   | ) |  |   | (1,028 | ) |  |   | 3,921   |   |  |   | 8,735   |  
|(Provision for) benefit from income taxes               |  |                    | (1,585  | )        |  |           | (565    | )        |  |          | 1,040  |          |  |           | 2,183  |          |  |   | 340    |   |  |   | 357    |   |  |   | (1,373  | ) |  |   | (3,097  | )
|Minority interest                                       |  |                    | (42     | )        |  |           | (45     | )        |  |          | (29    | )        |  |           | (29    | )        |  |   | (20    | ) |  |   | 9      |   |  |   | (48     | ) |  |   | (42     | )
|                                                        |  |                    |         |          |  |           |         |          |  |          |        |          |  |           |        |          |  |   |        |   |  |   |        |   |  |   |         |   |  |   |         |  
|Income (loss) from continuing operations                |  |                    | 2,437   |          |  |           | 846     |          |  |          | (1,662 | )        |  |           | (3,444 | )        |  |   | (642   | ) |  |   | (662   | ) |  |   | 2,500   |   |  |   | 5,596   |  
|Cumulative effect of change in accounting
    principle |  |                    |        |          |  |           |        |          |  |          |       |          |  |           |       |          |  |   |       |   |  |   |       |   |  |   |        |   |  |   | (3,397  | )
|                                                        |  |                    |         |          |  |           |         |          |  |          |        |          |  |           |        |          |  |   |        |   |  |   |        |   |  |   |         |   |  |   |         |  
|Net income (loss)                                       |  | $                  | 2,437   |          |  | $         | 846     |          |  | $        | (1,662 | )        |  | $         | (3,444 | )        |  | $ | (642   | ) |  | $ | (662   | ) |  | $ | 2,500   |   |  | $ | 2,199   |  
|                                                        |  |                    |         |          |  |           |         |          |  |          |        |          |  |           |        |          |  |   |        |   |  |   |        |   |  |   |         |   |  |   |         |  

Liquidity and Capital Resources

As set forth in the Condensed Consolidated
Statements of Cash Flows, Operating Activities generated
$70.5 million of cash for the full year ended
December 31, 2002, as compared to $0.5 million of cash
used for the year 2001 period. This improvement of cash
generation is due primarily to a reduction of inventory and an
increase in payables. From March 31, 2001, when our
inventory was at its highest level in many years, to
December 31, 2002, our consolidated inventory decreased
$42.2 million to $100.5 million. Cash increased from
$16.4 million at December 31, 2001 to $48.4 million at
December 31, 2002 due to strong cash generation from our
Operating Activities during 2002. Net debt (defined as total
debt less cash) declined from $137.5 million at
December 31, 2001 to $28.9 million at December 31,
2002, thus resulting in an improvement of $108.6 million
for the full year 2002. Net debt increased $8.6 million
from $128.9 million at December 31, 2000 to
$137.5 million at December 31, 2001.

We used $8.6 million of cash in Investing
Activities for the full year 2002, due principally to the use of
$6.8 million for capital expenditures. For the full year of
2001, $13.1 million was used in Investing Activities,
including $10.0 million for capital expenditures.

Cash used by Financing Activities for the year
ended December 31, 2002 was $32.9 million. On
March 20, 2002, we issued $50.0 million of Convertible
Preferred Stock, which generated $46.8 million of cash
after deduction of certain fees and expenses (see Note 4 of the
Notes to Consolidated Financial Statements for additional
information). Cash proceeds from this offering, as well as cash
generated by Operating Activities, were used to repay borrowings
of $49.5 million in the first quarter 2002 and an
additional $29.3 million over the last three quarters of
2002. Cash used by Financing Activities for the

25



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##### Table of Contents



year ended December 31, 2001 was
$2.3 million and resulted primarily from the repayment of
borrowings partially offset by the proceeds from a sale and
leaseback transaction.


At December 31, 2002, we had total lines of
credit of $118.0 million (see the table below), and
available unused worldwide lines of credit of $103.5 million, as
compared with $71.4 million of available unused lines of
credit at December 31, 2001. Of the $103.5 million
unused lines at December 31, 2002, approximately
$36.4 million are with various European banks and expire in
2003. It is our intention to renew these credit lines in 2003
for an additional one-year term. In March 2002, we
permanently reduced our domestic revolving credit agreement
commitment from $105.0 million to $76.9 million. This
agreement expires on December 31, 2003. It is our intention
to replace this agreement with a similar agreement prior to
expiration. We believe the financial covenants required under
this agreement will be achieved under the current market
conditions. (See Note 2 of the Notes to Consolidated Financial
Statements).

The Companys cash balance increased
$32.1 million to $48.4 million at December 31,
2002. This cash will assist the Company with its continued goal
of accelerating growth of our product lines through strategic
acquisitions and internal development, as well as to fund
additional investment in working capital, as needed, to
accelerate future sales growth. In addition, in the first
quarter of 2003, we collected approximately $16.0 million
of the Recoverable Income Taxes set forth in the
current asset portion of our Consolidated Balance Sheets.

|                                 |  |                                                                   |         |           |  |              |         |              |  |            |   |  |  |   |   |  |  |   |   | 
|-------------------------------- |  | ----------------------------------------------------------------- | ------- | --------- |  | ------------ | ------- | ------------ |  | ---------- | - |  |  | - | - |  |  | - | - | 
|                                 |  |                                                                  
|                                 |  | Amount of Commitment Expiration per Period (amounts in thousands)
|                                 |  |                                                                  
|                                 |  | Total Amounts                                                     |         | Less Than |  | One to Three |         | Four to Five |  | After Five
|Other Commercial Commitments (A) |  | Committed                                                         |         | One Year  |  | Years        |         | Years        |  | Years     
|                                 |  |                                                                   |         |           |  |              |         |              |  |           
|Lines of Credit                  |  | $                                                                 | 118,000 |           |  | $            | 118,000 |              |  | $          |  |  |  | $ |  |  |  | $ |  | 
|Standby Letters of Credit (B)    |  |                                                                   |        |           |  |              |        |              |  |            |  |  |  |   |  |  |  |   |  | 
|                                 |  |                                                                   |         |           |  |              |         |              |  |            |   |  |  |   |   |  |  |   |   | 
|Total Commercial Commitments     |  | $                                                                 | 118,000 |           |  | $            | 118,000 |              |  | $          |  |  |  | $ |  |  |  | $ |  | 
|                                 |  |                                                                   |         |           |  |              |         |              |  |            |   |  |  |   |   |  |  |   |   | 



---



|    |                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------
|(A) | We have no guarantees, standby repurchase
    obligations or other commercial commitments at December 31, 2002.



|    |                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------
|(B) | Up to $25.0 million of standby letters of
    credit availability is included in the lines of credit
    commitment.

The following is a summary of the timing of
principal payments due for various contractual obligations at
December 31, 2002 including long-term debt and capital
lease obligations, as well as payments on operating leases.

|                                   |  |                                               |         |           |  |             |        |            |  |            |        |  |  |   |        |  |  |   |        | 
|---------------------------------- |  | --------------------------------------------- | ------- | --------- |  | ----------- | ------ | ---------- |  | ---------- | ------ |  |  | - | ------ |  |  | - | ------ | 
|                                   |  |                                              
|                                   |  | Payments Due by Period (amounts in thousands)
|                                   |  |                                              
|                                   |  |                                               |         | Less Than |  | One to      |        | Four to    |  | After     
|Contractual Obligations (A)        |  | Total                                         |         | One Year  |  | Three Years |        | Five Years |  | Five Years
|                                   |  |                                               |         |           |  |             |        |            |  |           
|Long-Term Debt                     |  | $                                             | 71,961  |           |  | $           | 12,405 |            |  | $          | 17,717 |  |  | $ | 27,017 |  |  | $ | 14,822 | 
|Capital Lease Obligations          |  |                                               | 5,400   |           |  |             | 872    |            |  |            | 1,520  |  |  |   | 1,418  |  |  |   | 1,590  | 
|Operating Leases                   |  |                                               | 34,270  |           |  |             | 7,785  |            |  |            | 11,200 |  |  |   | 7,095  |  |  |   | 8,190  | 
|                                   |  |                                               |         |           |  |             |        |            |  |            |        |  |  |   |        |  |  |   |        | 
|Total Contractual Cash Obligations |  | $                                             | 111,631 |           |  | $           | 21,062 |            |  | $          | 30,437 |  |  | $ | 35,530 |  |  | $ | 24,602 | 
|                                   |  |                                               |         |           |  |             |        |            |  |            |        |  |  |   |        |  |  |   |        | 



---



|    |                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------
|(A) | We have no unconditional purchase obligations or
    other long-term obligations at December 31, 2002.

The strong Euro currency in 2002 relative to the
U.S. dollar has positively impacted the translated value of our
European subsidiaries, whose assets and liabilities are
denominated principally in Euros. The foreign currency
translation loss adjustment, a portion of our Accumulated
Other Comprehensive Loss, declined $22.6 million to
$5.5 million at December 31, 2002 from
$28.1 million at December 31, 2001. This increase in
the translated value of our net foreign asset position is the
principal reason for the increase in Stockholders Equity
at December 31, 2002 as compared with December 31,
2001.

We have non-contributory pension plans covering
the majority of our full-time U.S. employees. At
December 31, 2001, we recorded a minimum pension liability
of $4.9 million. Principally as a result of the decline in
market value of our pension plan assets during 2002, we recorded
an additional $8.1 million of minimum pension liability at
December 31, 2002. We estimate our 2003 pension expense
will increase

26



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##### Table of Contents



approximately $1.5 million as compared with
2002. We also recorded an additional $4.9 million charge to
Stockholders Equity, as a component of Accumulated
Other Comprehensive Loss, at December 31, 2002. This
charge represents the after tax impact of the additional minimum
pension liability recorded at December 31, 2002.


Contingency

On December 11, 2001, a lawsuit was filed
against the Company in the United States District Court for the
District of Delaware by a competitor, True Position, Inc., and
its subsidiary, KSI, Inc. In their original complaint, the
plaintiffs alleged that the Company, through its Grayson
Wireless Division, infringed three patents in connection with
the Companys GEOMETRIX wireless geolocation business. On
July 16, 2002, the plaintiffs amended their complaint to
include four additional patents in the lawsuit. In the
Companys answer to the original complaint, filed on
January 18, 2002, and to the amended complaint, filed
July 30, 2002, it has denied all of the plaintiffs
allegations and has asserted counterclaims against the
plaintiffs for infringement of one of the Companys patents
and for tortious interference with the Companys business
relationships. The Company believes that it has meritorious
defenses against the claims asserted by the plaintiffs, and
intends to vigorously defend the lawsuit. However, the Company
cannot give assurance that it will ultimately prevail in this
action. Whether the Company ultimately wins or loses, litigation
could be time-consuming and costly and injure its reputation. If
the plaintiffs prevail in this action, the Company may be
required to negotiate royalty or license agreements with respect
to the patents at issue and may not be able to enter into such
agreements on acceptable terms. Any limitation on the
Companys ability to provide a service or product could
cause it to lose revenue-generating opportunities and require it
to incur additional expenses. The Company may also be required
to indemnify customers for any expenses or liabilities resulting
from the claimed infringements. These potential costs and
expenses, as well as the need to pay any damages awarded in
favor of the plaintiffs, could adversely affect the
Companys business, financial position, results of
operations or cash flow.

Quantitative and Qualitative Disclosures about
Market Risk

Our primary market risk exposure relating to
derivatives results from the use of foreign currency forward
contracts to offset the impact of currency rates against
accounts receivable. There were no open contracts related to
accounts receivable as of December 31, 2002. We entered
into several foreign currency forward contracts in 2002 to
offset the impact of currency rate changes with regard to
certain intercompany payable obligations which were still open
at December 31, 2002. We do not enter into derivative
instrument transactions for trading or speculative purposes.

Our on-balance sheet instruments that are subject
to interest rate fluctuations are various components of
long-term debt. We believe the risks are minimal. As of
December 31, 2002, 80% of our long-term debt is fixed rate
debt and not subject to interest rate fluctuation. The variable
rate debt is primarily made up of our domestic revolving credit
facility and industrial revenue bonds. The domestic revolving
credit debt interest is determined on a LIBOR or prime rate
basis, at our option. The industrial development bonds carry
interest rates that are established based on the low yield,
tax-free bond market.

27



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##### Table of Contents



The tables below provide information about our
derivative transactions and other financial instruments that are
sensitive to changes in exchange and interest rates. For
derivative instruments, the table presents December 31,
2002 and December 31, 2003 contract amounts and related
average contractual exchange rates by expected maturity date.
For debt obligations at December 31, 2002, the table
presents principal payments and related weighted average
interest rates by expected maturity dates.

|                                                 |                              |                                            |                                |                      |   |         |  |      |   |          |  |  |   |         |  |  |   |          | 
|------------------------------------------------ | ---------------------------- | ------------------------------------------ | ------------------------------ | -------------------- | - | ------- |  | ---- | - | -------- |  |  | - | ------- |  |  | - | -------- | 
|                                                 |                              |                                            |                                |                     
|                                                 |                              | Contract Value                             |                                | Fair Value          
|                                                 |                              | at Dates Maturing                          |                                | at Dates Maturing in
|                                                 |                              |                                            |                                |                     
|Anticipated Transactions and Related Derivatives |                              | 2002                                       |                                | 2003                 |   | 2002    |  | 2003
|(U.S. $ equivalent in thousands)                 |                              |                                            |                                |                      |   |         |  |     
|Canadian Dollar Functional Currency (CAD)        |                              |                                            |                                |                      |   |         |  |      |   |          |  |  |   |         |  | 
|                                                 | Foreign Exchange Agreements: |                                            |                                |                      |   |         |  |      |   |          |  |  |   |         |  |  |  
|                                                 |                              | Receive U.S. dollars/ Pay Canadian dollars |                                |                      |   |         |  |      |   |          |  |  |   |         |  |  |   |         
|                                                 |                              |                                            | Contract Amount                |                      | $ | 325.4   |  |      | $ | 290.6    |  |  | $ | 324.5   |  |  | $ | 292.0    | 
|                                                 |                              |                                            | Avg. Contractual Exchange Rate |                      |   | 1.5862  |  |      |   | 1.5798   |  |  |   | 1.5917  |  |  |   | 1.5723   | 
|Euro Functional Currency (EURO)                  |                              |                                            |                                |                      |   |         |  |      |   |          |  |  |   |         |  | 
|                                                 | Foreign Exchange Agreements: |                                            |                                |                      |   |         |  |      |   |          |  |  |   |         |  |  |  
|                                                 |                              | Receive Euros/ Pay U.S. dollars            |                                |                      |   |         |  |      |   |          |  |  |   |         |  |  |   |         
|                                                 |                              |                                            | Contract Amount                |                      | $ | 2,004.2 |  |      | $ | 13,710.8 |  |  | $ | 2,047.9 |  |  | $ | 13,860.0 | 
|                                                 |                              |                                            | Avg. Contractual Exchange Rate |                      |   | 0.8714  |  |      |   | 1.0387   |  |  |   | 0.8904  |  |  |   | 1.0487   | 

|                                 |                      |                        |   |        |     |      |   |       |     |      |   |            |     |       |   |       |     |   |   |        |     |   |   |        |     |   |   |        |     |   |   |        |     |  
|-------------------------------- | -------------------- | ---------------------- | - | ------ | --- | ---- | - | ----- | --- | ---- | - | ---------- | --- | ----- | - | ----- | --- | - | - | ------ | --- | - | - | ------ | --- | - | - | ------ | --- | - | - | ------ | --- | -
|                                 |                      |                        |   |        |     |     
|                                 |                      | Expected Maturity Date |   |        |     |     
|                                 |                      |                        |   |        |     | Fair
|Debt Obligations                 |                      | 2003                   |   | 2004   |     | 2005 |   | 2006  |     | 2007 |   | Thereafter |     | Total |   | Value
|(U.S. $ equivalent in thousands) |                      |                        |   |        |     |      |   |       |     |      |   |            |     |       |   |      
|Long Term Debt:                  |                      |                        |   |        |     |      |   |       |     |      |   |            |     |       |   |       |     |   |   |        |     |   |   |        |     |   |   |        |     |   |   |       
|                                 | Fixed Rate (US)      |                        | $ | 10,944 |     |      | $ | 8,020 |     |      | $ | 7,980      |     |       | $ | 7,975 |     |   | $ | 16,982 |     |   | $ | 158    |     |   | $ | 52,059 |     |   | $ | 52,059 |    
|                                 |                      | Avg. interest rate     |   |        | 6.7 | %    |   |       | 6.7 | %    |   |            | 6.7 | %     |   |       | 6.7 | % |   |        | 6.7 | % |   |        | 5.7 | % |   |        | 6.7 | % |   |        | 6.7 | %
|                                 | Fixed Rate (EURO)    |                        | $ | 1,885  |     |      | $ | 1,588 |     |      | $ | 1,462      |     |       | $ | 1,516 |     |   | $ | 1,405  |     |   | $ | 2,202  |     |   | $ | 10,059 |     |   | $ | 10,059 |    
|                                 |                      | Avg. interest rate     |   |        | 6.1 | %    |   |       | 5.4 | %    |   |            | 4.0 | %     |   |       | 4.0 | % |   |        | 4.3 | % |   |        | 4.6 | % |   |        | 4.8 | % |   |        | 4.8 | %
|                                 | Variable Rate (US)   |                        | $ | 418    |     |      |   |      |     |      |   |           |     |       |   |      |     |   |   |       |     |   | $ | 11,900 |     |   | $ | 12,318 |     |   | $ | 12,318 |    
|                                 |                      | Avg. interest rate     |   |        | 5.0 | %    |   |       |    |      |   |            |    |       |   |       |    |   |   |        |    |   |   |        | 1.4 | % |   |        | 1.5 | % |   |        | 1.5 | %
|                                 | Variable Rate (EURO) |                        |   | 30     |     |      |   |      |     |      |   | 188        |     |       |   | 239   |     |   |   | 317    |     |   |   | 2,152  |     |   | $ | 2,925  |     |   | $ | 2,925  |    
|                                 |                      | Avg. interest rate     |   |        | 4.5 | %    |   |       |    |      |   |            | .7  | %     |   |       | .6  | % |   |        | .8  | % |   |        | .8  | % |   |        | .8  | % |   |        | .8  | %

During fiscal year 2001, the Company had several
forward exchange contracts relating to foreign exchange. The
contracts were not material to the Company. There were no
material changes between 2001 and 2002 in market risk exposures.

Subsequent Event

On February 18, 2003, Andrew Corporation
(Andrew) and the Company announced the signing of a definitive
agreement under which Andrew will acquire the Company in a
stock-for-stock transaction. Under the terms of the agreement,
which has been unanimously approved by the Board of Directors of
both companies, the Companys shareholders will receive
1.775 shares of newly-issued Andrew stock for each share of the
Company that they own. Completion of the transaction, which is
expected to occur in the first half of 2003, is subject to
approval of shareholders of both companies, expiration of the
applicable waiting period under the Hart-Scott-Rodino Act and
other customary closing conditions.

28



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##### Table of Contents






ITEM 7A  QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required by this Item is
submitted herein on pages 27 to 28 in this Annual Report on
Form 10-K.




ITEM 8  FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA

The Companys financial statements, together
with notes and the report of Deloitte & Touche LLP,
independent accountants, are listed in Item 15(a) and
included herein beginning on page F-1 of this Annual Report on
Form 10-K.






|         |                                                                                               
|-------- | ----------------------------------------------------------------------------------------------
|ITEM 9  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
    ON ACCOUNTING AND 
     FINANCIAL DISCLOSURE

None.




PART III




ITEM 10  DIRECTORS AND EXECUTIVE
OFFICERS OF THE REGISTRANT

Information required by this Item relating to the
Companys executive officers is included on page 12 hereof
under EXECUTIVE OFFICERS OF THE REGISTRANT, and on
pages 43 to 46 hereof under EXECUTIVE COMPENSATION AND
TRANSACTIONS WITH MANAGEMENT  Employment, Termination
of Employment and Change of Control Arrangements, and is
incorporated herein by reference.

The members of the Board of Directors are elected
at the Companys annual meeting of shareholders to hold
office until the next annual meeting and until their successors
have been elected and qualified.

Information Regarding Directors

|                                             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name, Age and Date                           |  | Principal Occupation, Business Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|First Became a Director                      |  | and Other Directorships                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Sheldon I. Ausman (69)
    February 20, 2002 |  | Founding partner, Cambridge Capital Partners LLP,
    a private equity firm with offices in Los Angeles, Chicago and
    New York, since December 2000. Mr. Ausman was Managing
    Director  Western Region of Valuation Research, Inc.
    from July 2000 until December 2001. Mr. Ausman was Vice
    Chairman of Compensation Resource Group, Inc. (CRG), a national
    executive compensation and benefits consulting firm from January
    1998 until June 2000. Prior to joining CRG, Mr. Ausman
    served as Senior Vice President and Director with the
    international financial printing firm of Bowne of Los Angeles
    from November 1996 until January 1998. He also served with
    Arthur Andersen & Co. for 34 years and was Managing Partner
    of the firms practice in Southern California, Honolulu and
    Las Vegas before his retirement. Mr. Ausman is also a
    director of Superior Industries International, Inc.

29



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##### Table of Contents



|                                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name, Age and Date                          |  | Principal Occupation, Business Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|First Became a Director                     |  | and Other Directorships                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Philip Wm. Colburn (74)
    April 29, 1975  |  | Chairman of the Board, Allen Telecom Inc., since
    December 6, 1988 and a consultant to the Company since
    December 31, 1991. Mr. Colburn was also our Chief Executive
    Officer from March 1988 to February 1991 and President from
    March 1988 to December 1989. He had been our Executive Vice
    President from February 1976 to June 1981 and thereafter until
    March 1988 was a consultant to the Company. Mr. Colburn is
    also a director of Superior Industries International, Inc. and
    TransPro, Inc.                                               
|J. Chisholm Lyons (75)
    October 27, 1969 |  | Vice Chairman of the Board, Allen Telecom Inc.,
    since September 1979. He has been counsel with the law firm
    Gowling Lafleur Henderson LLP, barristers and solicitors,
    Toronto, Canada, since September 2001 when that firm merged with
    the Smith Lyons law firm, Toronto. Mr. Lyons was a partner of
    Smith Lyons for 31 years until May 1993 and counsel from that
    date to September 2001. As Vice Chairman, he was an employee of
    the Company from September 1979 to September 1989, and is
    presently a consultant to the Company.               
|Robert G. Paul (61)
    March 6, 1990       |  | President, Allen Telecom Inc., since December
    1989 and Chief Executive Officer of the Company since February
    1991. Mr. Paul was Chief Operating Officer of the Company
    from December 1989 to February 1991, Senior Vice
    President-Finance from April 1987 to December 1989, Vice
    President-Finance from January 1987 to April 1987 and a Vice
    President from 1974 to January 1987. He was also President of
    the Antenna Specialists Company division of the Company from
    1978 to June 1990. Mr. Paul also is a Director of Rogers
    Corporation.
|Dr. Martyn F. Roetter (58)
    July 1, 1998 |  | Vice President, Communications and Information
    Technology, Arthur D. Little, Inc., a consulting firm,
    Boston, Massachusetts, since February 1996, and Vice President,
    Communications and Information Technologies, Decision Resources,
    a consulting firm, Waltham, Massachusetts, from April 1992 to
    February 1996.                                                                                                                                                                                                                                           

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|                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------------------------------------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name, Age and Date                               |  | Principal Occupation, Business Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|First Became a Director                          |  | and Other Directorships                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Gary B. Smith (44)
    February 16, 1999         |  | President and founder of ColorID, LLC, a value
    added integrator of security access products, since June 1999.
    Director and founder of Work Software Systems, LLC, a network
    software designer, since October 1999. Management Consultant,
    Cornelius, North Carolina, since December 1998. Mr. Smith
    has been on the Advisory Board of Contec Innovations Inc., a
    wireless information technology company, Vancouver, B.C. Canada
    since April 2001. Mr. Smith was a Director and the
    President of Glenayre Technologies, Inc., a manufacturer of
    paging products and systems, Charlotte, North Carolina, from
    June 1996 to December 1998, Chief Executive Officer of Glenayre
    from January 1997 to December 1998, Executive Vice President and
    General Manager, of Glenayres Wireless Messaging Group
    from September 1994 to June 1996, and various management
    positions, including Chief Technology Officer, with Glenayre
    from 1983 to September 1994.
|Kathleen M. H. Wallman (45)
    December 6, 2000 |  | Visiting Research Professor, Georgetown
    University Graduate School of Arts and Sciences, Communication,
    Culture and Technology. Ms. Wallman is also a member of
    Wallman Consulting LLC, a provider of strategic advice in the
    areas of video, voice and data communications and information
    technology. Ms. Wallman is a director of Micromuse, Inc., a
    publicly traded network reliability software company.
    Ms. Wallman has also served in a number of governmental
    positions relating to telecommunications and technology matters,
    including senior staff positions at the Federal Communications
    Commission.                                                                                                                                                                                                                                                                                                                                                           

Information Regarding Board of
Directors

The business and affairs of the Company are
managed under the direction of its Board of Directors, whose
members are elected annually by the stockholders. During 2002,
the Board of Directors of the Company had Audit, Management
Compensation and Nominating Committees. Currently,
Messrs. Ausman and Roetter and Ms. Wallman are the
members of the Management Compensation Committee;
Messrs. Lyons and Colburn are the members of the Nominating
Committee; and Messrs. Ausman, Lyons and Smith are the
members of the Audit Committee.

The Audit Committee appoints the independent
auditors and reviews the degree of their independence from the
Company; approves the scope of the audit engagement, including
the cost of the audit; reviews any non-audit services rendered
by the auditors and the fees therefor; reviews with the auditors
and management the Companys policies and procedures with
respect to internal accounting and financial controls and, upon
completion of an audit, the results of the audit engagement;
reviews internal accounting and auditing procedures with the
Companys financial staff and the extent to which
recommendations made by the internal audit staff or by the
independent auditors have been implemented; and issues the Audit
Committee Report required to be included in the Companys
proxy statement by the rules of the Securities and Exchange
Commission.

The Management Compensation Committee recommends
to the Board salaries and incentive compensation awards for
officers of the Company and its subsidiaries; reviews and
approves guidelines for the administration of incentive
compensation programs for other management employees; makes

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recommendations to the Board with respect to
major compensation programs; administers the Companys
Amended and Restated 1992 Stock Plan (the 1992 Stock
Plan) and grants stock options and restricted shares of
the Companys Common Stock under the 1992 Stock Plan; and
issues the Report on Executive Compensation required to be
included in the Companys proxy statement by the rules of
the Securities and Exchange Commission.


The Nominating Committee selects and recommends
to the Board nominees for election as directors and considers
the performance of incumbent directors in determining whether to
recommend them for nomination for re-election.

During 2002, the Board of Directors of the
Company held nine meetings, the Audit Committee held eight
meetings, the Management Compensation Committee held three
meetings and the Nominating Committee held one meeting.

COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT

Section 16(a) of the Securities Exchange Act
of 1934, as amended, requires the Companys executive
officers and directors, and persons who beneficially own more
than ten percent of a registered class of the Companys
equity securities, to file initial reports of securities
ownership and changes in such ownership with the Securities and
Exchange Commission (the Commission). Such executive
officers, directors and greater than ten-percent stockholders
also are required by regulations promulgated by the Commission
to furnish the Company with copies of all Section 16(a)
forms they file with the Commission.

To the Companys knowledge, based solely
upon a review of copies of the forms, or written representations
that no such forms were required, during the fiscal year ended
December 31, 2002, its executive officers, directors and
greater than ten-percent beneficial owners complied with all
applicable Section 16(a) filing requirements.




ITEM 11  EXECUTIVE
COMPENSATION

Compensation of Directors

Each director of the Company (other than
Messrs. Colburn and Lyons, who are consultants to the
Company, and Mr. Paul, who is an employee of the Company)
is paid $15,000 per year for his or her services as a director,
$1,000 for each meeting of the Board of Directors attended in
person and $500 for each meeting attended by telephone. The
Chairman of the Audit Committee, Mr. Ausman, is paid $5,000
per year and each other member of the Audit Committee (other
than Mr. Lyons) is paid $3,000 per year. The Chairman of
the Management Compensation Committee, Mr. Roetter, is paid
$5,000 per year and each other member of the Management
Compensation Committee is paid $3,000 per year. Each member of
the Nominating Committee (other than Messrs. Colburn and
Lyons) is paid $1,000 per year, for his or her services as such
member. Each Committee member (other than Messrs. Colburn
and Lyons) is paid $500 for each meeting of a Committee attended
by telephone or in person if in conjunction with a Board
meeting, and $1,000 for each Committee meeting attended in
person which is not in conjunction with a Board meeting. Each
director and Committee member is reimbursed for travel and
related expenses incurred in attending meetings.

The stockholders approved the Amended and
Restated Allen Telecom Inc. 1994 Non-Employee Directors Stock
Option Plan (the Directors Option Plan) at the
Companys 2001 Annual Meeting of Stockholders. The
Directors Option Plan provides that each year, on the first
Friday following the Companys Annual Meeting of
Stockholders, each individual elected, re-elected or continuing
as a director (except for a director serving as Chairman or Vice
Chairman) who is not a current employee of the Company
automatically receives a nonqualified stock option to purchase
3,000 shares of Common Stock. Under the Directors Option Plan,
each new Non-Employee Director automatically receives an option
to purchase 4,000 shares of Common Stock on the date such new
director joins the Board of Directors. The Directors Option Plan
also permits discretionary grants to directors who are not
receiving such automatic awards. On May 3, 2002,
Messrs. Ausman, Roetter and Smith and Ms. Wallman each
received a formula

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non-qualified stock option to purchase 3,000
shares of Common Stock of the Company at an exercise price of
$6.50 per share. On April 25, 2002, Mr. Colburn and
Mr. Lyons received discretionary non-qualified stock
options to purchase 50,000 and 12,500 shares, respectively, of
Common Stock of the Company at an exercise price of $6.10 per
share. Each of the foregoing options expires 10 years from
date of grant and is exercisable 50 percent after two years from
date of grant, 75 percent after three years from date of
grant and 100 percent after four years from date of grant.
Also, each of the foregoing options becomes immediately
exercisable upon the death of the optionholder prior to the
expiration of such option or upon the cessation of such
optionholders service as a director of the Company six
months or more after the date of grant and prior to the
expiration of such option.


The Company maintains a Matching Gift Program for
the benefit of the directors of the Company. Pursuant to the
Matching Gift Program, in 2002 the Company matched gifts to
charitable organizations made by the directors in amounts up to
$2,500 for each director.

Mr. Colburn was employed as Chief Executive
Officer of the Company until February 26, 1991, and as
Chairman of the Board of the Company until December 31, 1991,
pursuant to an employment agreement that was entered into in
1988. On December 31, 1991, Mr. Colburn elected to
terminate his status as an employee of the Company (although he
continues as Chairman of the Board of the Company) and to
provide post-employment consulting services to the Company
pursuant to his consulting agreement described below.
Mr. Colburns employment agreement provides that the
Company will continue to provide Mr. Colburn and his spouse
medical and hospitalization benefits for their lives at least
equal to the benefits they were entitled to while he was an
employee of the Company and will provide life insurance coverage
on Mr. Colburn for his life in an amount approximately
equal to five times his 1991 salary, which is approximately the
amount of life insurance that the Company provided to
Mr. Colburn while he was an employee of the Company and
approximately the same level of life insurance that the Company
provides to all its officers and key employees. The Company is
fulfilling its obligations to provide such life insurance
benefits to Mr. Colburn primarily through a Split Dollar
Insurance Agreement between the Company and Mr. Colburn.

Mr. Colburns employment agreement
provides for mandatory arbitration of all disputes relating to
his employment agreement, his post-employment consulting
agreement described below or his supplemental pension benefit
agreement described on page 43 hereof and requires the Company
to pay all reasonable legal expenses incurred by
Mr. Colburn in connection with resolution of disputes under
the agreements.

Pursuant to an agreement entered into in 1976,
and subsequently amended, Mr. Colburn provided
post-employment consulting services to the Company for several
years prior to March 9, 1988, when he became President and
Chief Executive Officer of the Company, and has provided and
will continue to provide post-employment consulting services to
the Company for an additional period that commenced upon
termination of his employment, which was December 31, 1991,
through December 31, 1998 and continuing thereafter for
successive periods of 12 months each, unless either the
Company or Mr. Colburn gives at least three months notice
to the contrary. No such notice was given by either party in
2002. The agreement provides for the payment by the Company to
Mr. Colburn annually, during the consulting period, in an
amount which was $248,605 in 1991, increased each June 30
during the consulting period for increases in the consumer price
index. During 2002, the Company paid Mr. Colburn
$326,754.71 in consulting fees and furnished him an automobile
at the Companys expense. In addition, during the
consulting period, the Company provides Mr. Colburn with
furnished office space and support services while he is
performing consulting services. During the consulting period,
Mr. Colburn is required to provide consulting services to
the Company for up to 34 percent of his time each year,
except when he is engaged in governmental service or charitable
work, during which periods consulting services and compensation
will be suspended, and he has agreed not to engage in or be
employed by any business in competition with the Company during
the term of his agreement. If the Company breaches any material
provision of the consulting agreement and such breach continues
for at least 30 days after notice to the Company, all
benefits under the consulting agreement become nonforfeitable,
and the Company will pay Mr. Colburn an amount equal to the
present value of all remaining consulting compensation for the
remaining consulting period.

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Pursuant to an agreement entered into in
September 1989, as amended in 1990, Mr. Lyons provides
post-employment consulting services to the Company for the
period that commenced upon termination of his employment, which
was September 30, 1989, through September 30, 1992 and
continuing thereafter for successive periods of 12 months
each, unless either the Company or Mr. Lyons gives at least
three months notice to the contrary. No such notice was given by
either party in 2002. The agreement provides for the payment by
the Company to Mr. Lyons annually, during the consulting
period, of $25,000. In addition, during the consulting period,
the Company includes Mr. Lyons in the Companys life,
medical and hospitalization and disability insurance benefit
plans and furnishes him an automobile at the Companys
expense. During the consulting period, Mr. Lyons is
required to furnish consulting services to the Company for up to
10 percent of his time each year, and he has agreed not to
engage in or be employed by any business in competition with the
Company during the term of his agreement.

The Company also has entered into supplemental
pension benefits agreements and Change in Control
agreements with Messrs. Colburn and Lyons. For a
description of the terms of these agreements, see
EXECUTIVE COMPENSATION AND TRANSACTIONS WITH
MANAGEMENT  Retirement Plans  Other
Supplemental Pension Benefits Agreements and
EXECUTIVE COMPENSATION AND TRANSACTIONS WITH
MANAGEMENT  Employment, Termination of Employment and
Change in Control Arrangements on pages 43 to 46
hereof.

For additional information with respect to the
directors of the Company, see EXECUTIVE COMPENSATION AND
TRANSACTIONS WITH MANAGEMENT  Transactions with
Executive Officers and Directors and STOCK
OWNERSHIP  Directors and Officers on pages 47
to 49 hereof.

EXECUTIVE COMPENSATION AND TRANSACTIONS WITH
MANAGEMENT

Compensation Committee Report on Executive
Compensation

Pursuant to the proxy rules promulgated by the
Securities and Exchange Commission designed to enhance
disclosure of corporations policies toward executive
compensation, Messrs. Roetter (Chair) and Ausman and
Ms. Wallman, as members of the Management Compensation
Committee of the Board of Directors of the Company (the
Compensation Committee), submit the following report
outlining the Companys compensation plans and policies as
they pertain to Robert G. Paul, President and Chief Executive
Officer of the Company, and the other executive officers of the
Company:

The Compensation Committee regards stock
ownership by the Companys executive officers, encouraged
by equity-based compensation plans, as an effective way to align
the interests of the executive officers with those of the
stockholders of the Company. Accordingly, the Compensation
Committee does not plan to pay above-average base salaries to
its executive officers. The Committee does expect to utilize
performance-oriented and equity-based compensation to reward
performance.

The Compensation Committee considers that
equity-based compensation, combined with performance-based
incentive pay, will have a long-term impact on improving the
Companys financial results and increasing its stockholder
value.



| |                      
| | ---------------------
| | Measuring Performance

The evaluation of the performance of the key
executive officer group, and the Chief Executive Officer in
particular, is primarily based on measurable criteria and, to a
lesser extent, certain qualitative criteria. The measurable
criteria include both the total return to stockholders,
determined by changes in the stock price and the financial
performance of the business, determined by sales growth, the
amount of earnings per share, the return on equity and the rate
of increase in earnings per share.

Because of the nature of many of the
Companys businesses and the desire to focus on long-term
objectives, these criteria are measured over one-year,
three-year, five-year and longer periods. When evaluating
performance with regard to an increase in base salary, the
Compensation Committee assigns

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more weight to longer-term results, i.e.,
three and five-year comparisons, than to the results of a single
year. It also considers comparisons of salaries for similar
positions in companies of comparable size, as well as changes in
the cost of living. When determining an annual incentive bonus,
the Compensation Committee places full weight on the performance
of the year just completed.


The Company reported a profit of $.03 per share
in 2002 as compared to a loss of $.06 per share in 2001. The
stock price increased from $8.50 at year-end 2001 to $9.47 at
year-end 2002. This increase was during a difficult period in
the stock market, especially for technology and
telecommunications stocks.

The qualitative criteria utilized by the Board
and Compensation Committee in evaluating the performance of the
Company, the Chief Executive Officer and all other key
executives of the Company, include but are not necessarily
limited to:



| |       |                                                                                                                                                           
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i)   | the success of the Company in implementing and
    achieving its corporate strategic goals and the strategic goals
    of its individual businesses;      
|
| | (ii)  | the success in the development of management
    depth;                                                                                                   
|
| | (iii) | the development and maintenance of timely
    communication and credibility with its stockholders, financial
    analysts and other outside audiences; and
|
| | (iv)  | other items specific to each individual or to a
    particular business objective.                                                                        

The corporate executives are paid annual
incentive bonuses commensurate with the Compensation
Committees evaluation of the Companys performance as
described above. 75% of the 2002 maximum incentive bonus for the
corporate executives was based on the Companys 2002
earnings per share. The remaining 25% was based on certain
qualitative criteria, including a successful equity financing, a
successful integration of the Bartley acquisition, the stock
price and other qualitative criteria. A small portion of the
quantitative bonus, but a sizeable portion of the qualitative
bonus, was achieved. The corporate executives annual
bonuses averaged 27.5% of their maximum.

The annual performance bonuses for most of the
senior managers who are responsible for specific operating
businesses and subsidiaries within the Company are based
primarily on the annual operating profits of their individual
businesses as measured against their profit plans. Some
non-financial objectives, mutually established by those
executives and the Companys corporate officers at the
beginning of each year, are also evaluated.



| |                                                     
| | ----------------------------------------------------
| | Basis for Chief Executive Officers
    Compensation

Mr. Paul received a salary increase of
$17,000 (a 3.4% increase) on January 1, 2002, which was
based on the objective and subjective criteria discussed above,
peer comparisons and cost of living factors.

Mr. Paul was paid a performance bonus of
$114,000 for 2002 equal to 22.1% of his salary. His employment
agreement states that his performance bonus can range from 0% to
80% of base salary. 75% of his maximum bonus was to be based on
earnings per share targets which were partially met, and the
remaining 25% of maximum was based on previously described
qualitative criteria.

In April 2002, Mr. Paul was granted a
non-qualified option for 49,700 shares at $6.10 per share, the
market price on the date of grant, and an incentive stock option
for 16,300 shares at the same $6.10 per share.



| |                                                                
| | ---------------------------------------------------------------
| | Compliance with Section 162(m) of the
    Internal Revenue Code

Section 162(m) of the Internal Revenue Code,
enacted in 1993, generally disallows a tax deduction to a public
corporation for compensation over $1 million paid to the
corporations chief executive officer and four other most
highly compensated executive officers. Qualifying
performance-based compensation will not be subject to the cap if
certain requirements are met. The Compensation Committee and the
Board of Directors intend to structure the compensation of its
executive officers in a manner that should

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ensure that the Company does not lose any tax
deductions because of the $1 million compensation limit in
the foreseeable future.


The Companys salaries for its highest paid
executives will be set, based on independent studies, at levels
approximating the average for companies of comparable size in
similar industries and, when added to annual bonus targets, are
not expected to approach $1 million in the foreseeable
future. The Company has been an early proponent of using more
equity-based and performance-based compensation, which can often
be designed to ensure that tax deductibility is not compromised.

The Companys Board of Directors amended the
1992 Stock Plan incorporating maximum limitations on individual
annual stock option and restricted stock grants so as to meet
the requirements of Section 162(m). They also amended the
1992 Stock Plan to identify the performance measures to be used
if the Compensation Committee decides to use performance-based
vesting restricted stock in the future to meet the requirements
of Section 162(m). These amendments were approved by the
Companys stockholders at the Companys 1995 Annual
Meeting.

The incentive restricted stock grants made by the
Company in 1993 and thereafter contain both time-based vesting
and provisions for performance-based acceleration, and therefore
are subject to the $1 million cap. These restricted stock
grants, however, include provisions to ensure that the amount
vested in any one year will not place the individuals
earnings over the $1 million cap. Thus, no tax deduction
will be lost to the Company as a result of these restricted
stock grants.



| |                         
| | ------------------------
| | Respectfully submitted, 
|
| | Martyn F. Roetter, Chair
| | Sheldon I. Ausman       
| | Kathleen M. H. Wallman  

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Annual and Long-Term Compensation

The following table sets forth the annual and
long-term compensation paid or accrued by the Company and its
subsidiaries to those persons who were the Chief Executive
Officer and the other four most highly compensated executive
officers of the Company (collectively, the Named Executive
Officers), for services rendered by them in all capacities
in which they served the Company and its subsidiaries during
2000, 2001 and 2002.

SUMMARY COMPENSATION TABLE

|                      |                         |      |      |           |  |                     |         |                 |  |                        |         |          |  |                    |    |    |   |  |          |     |  |  |        |        |  |  |        |        | 
|--------------------- | ----------------------- | ---- | ---- | --------- |  | ------------------- | ------- | --------------- |  | ---------------------- | ------- | -------- |  | ------------------ | -- | -- | - |  | -------- | --- |  |  | ------ | ------ |  |  | ------ | ------ | 
|                      |                         |      |      |           |  |                     |         |                 |  |                        |         |         
|                      |                         |      |      |           |  |                     |         |                 |  | Long-Term Compensation |         |         
|                      |                         |      |      |           |  |                     |         |                 |  |                       
|                      |                         |      |      |           |  | Annual Compensation |         |                 |  | Securities             |         |         
|                      |                         |      |      |           |  |                     |         | Restricted      |  | Underlying             |         |         
|Name and              |                         |      |      |           |  |                     |         | Other Annual    |  | Stock                  |         | Options/ |  | All Other         
|Principal Position    |                         | Year |      | Salary($) |  | Bonus($)            |         | Compensation($) |  | Awards(#)(b)           |         | SAR(#)   |  | Compensation($)(d)
|                      |                         |      |      |           |  |                     |         |                 |  |                        |         |          |  |                   
|Robert G. Paul        |                         |      | 2002 |           |  |                     | 517,000 |                 |  |                        | 114,000 |          |  |                    | (a | )  |   |  | 0      |     |  |  | 66,000 |        |  |  | 1,778  |       
|                      | President and Chief     |      |      | 2001      |  |                     |         | 500,000         |  |                        |         | 20,000   |  |                    |    | (a | ) |  |          | 0 |  |  |        | 50,000 |  |  |        | 28,571 | 
|                      | Executive Officer       |      |      | 2000      |  |                     |         | 467,000         |  |                        |         | 234,000  |  |                    |    | (a | ) |  |          | 0 |  |  |        | 50,000 |  |  |        | 28,733 | 
|Robert A. Youdelman   |                         |      | 2002 |           |  |                     | 321,000 |                 |  |                        | 53,000  |          |  |                    | (a | )  |   |  | 0      |     |  |  | 40,000 |        |  |  | 1,694  |       
|                      | Executive Vice          |      |      | 2001      |  |                     |         | 310,000         |  |                        |         | 9,300    |  |                    |    | (a | ) |  |          | 0 |  |  |        | 30,000 |  |  |        | 22,694 | 
|                      | President and           |      |      | 2000      |  |                     |         | 291,000         |  |                        |         | 109,000  |  |                    |    | (a | ) |  |          | 0 |  |  |        | 30,000 |  |  |        | 22,789 | 
|                      | Chief Financial Officer |      |      |           |  |                     |         |                 |  |                        |         |          |  |                    |    |    |   |  |          |     |  |  |        |        |  |  |        |        | 
|Peter G. deVilliers   |                         |      | 2002 |           |  |                     | 181,000 |                 |  |                        | 20,000  |          |  |                    | (a | )  |   |  | 0      |     |  |  | 25,000 |        |  |  | 1,721  |       
|                      | Vice President          |      |      | 2001      |  |                     |         | 175,000         |  |                        |         | 3,500    |  |                    |    | (a | ) |  |          | 0 |  |  |        | 20,000 |  |  |        | 16,517 | 
|                      |                         |      | 2000 |           |  |                     | 165,000 |                 |  |                        | 41,000  |          |  |                    | (a | )  |   |  | 0      |     |  |  | 20,000 |        |  |  | 16,553 |       
|James L. LePorte, III |                         |      | 2002 |           |  |                     | 219,000 |                 |  |                        | 30,000  |          |  |                    | (a | )  |   |  | 0      |     |  |  | 25,000 |        |  |  | 2,117  |       
|                      | Vice President -        |      |      | 2001      |  |                     |         | 212,000         |  |                        |         | 5,300    |  |                    |    | (a | ) |  |          | 0 |  |  |        | 20,000 |  |  |        | 14,421 | 
|                      | Finance                 |      |      | 2000      |  |                     |         | 200,000         |  |                        |         | 63,000   |  |                    |    | (a | ) |  |          | 0 |  |  |        | 20,000 |  |  |        | 9,617  | 
|Roger L. Schroeder    |                         |      | 2002 |           |  |                     | 152,000 |                 |  |                        | 12,500  |          |  |                    | (a | )  |   |  | 0      |     |  |  | 8,000  |        |  |  | 3,320  |       
|                      | Treasurer               |      |      | 2001      |  |                     |         | 147,000         |  |                        |         | 2,200    |  |                    |    | (a | ) |  |          | 0 |  |  |        | 6,000  |  |  |        | 2,611  | 
|                      |                         |      | 2000 |           |  |                     | 140,000 |                 |  |                        | 26,000  |          |  |                    | (a | )  |   |  | 15,000(c | )   |  |  | 7,000  |        |  |  | 2,107  |       



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Aggregate amount of such compensation is less
    than the lesser of $50,000 or 10 percent of the total
    annual salary and bonus reported for such Named Executive
    Officer under Salary and Bonus for such
    fiscal year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(b) | At December 31, 2002, the Named Executive
    Officers held 30,000 restricted shares of the Companys
    Common Stock in the aggregate, which are subject to forfeiture
    under certain circumstances for periods up to 10 years with
    an aggregate value (calculated by multiplying the number of
    restricted shares held by $9.47, the closing market price of the
    Companys Common Stock on December 31, 2002) of
    $284,100 as follows: Mr. deVilliers (15,000 shares with a value
    of $142,050) and Mr. Schroeder (15,000 shares with a value
    of $142,050). Dividends are paid on restricted shares of the
    Companys Common Stock at the same rate as paid on other
    outstanding shares of the Companys Common Stock. No
    dividends were paid on the Companys Common Stock in 2000,
    2001 and 2002.
|   
|(c) | These restricted shares of the Companys
    Common Stock were awarded under the 1992 Stock Plan, and will
    vest 25 percent on February 23 in each of the years
    2007, 2008, 2009 and 2010, unless accelerated vesting is
    achieved. Accelerated vesting based on achieving certain stock
    price and earnings per share targets cannot begin until the year
    2002, and such shares will then vest only when the following
    targets have been reached:                                                                                                                                                                                                                                                                                                                                                                      

|                |        |                            |  |                 |       |                |  |  |        |   |  |   |      | 
|--------------- | ------ | -------------------------- |  | --------------- | ----- | -------------- |  |  | ------ | - |  | - | ---- | 
|                |        |                           
|90-Day Average  |        | Three-Year                
|Stock Price     |        | Average Earnings Per Share
|                |        |                           
|Vesting Percent |        | Vesting Target             |  | Vesting Percent |       | Vesting Target
|                |        |                            |  |                 |       |               
|                | 12 1/2 | %                          |  | $               | 29.00 |                |  |  | 12 1/2 | % |  | $ | 1.03 | 
|                | 12 1/2 |                            |  |                 | 32.00 |                |  |  | 12 1/2 |   |  |   | 1.15 | 
|                | 12 1/2 |                            |  |                 | 35.50 |                |  |  | 12 1/2 |   |  |   | 1.27 | 
|                | 12 1/2 |                            |  |                 | 39.00 |                |  |  | 12 1/2 |   |  |   | 1.40 | 

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(d) | All Other Compensation includes $1,661 for
    Mr. Paul, $1,577 for Mr. Youdelman, $1,604 for Mr.
    deVilliers, $2,000 for Mr. LePorte and $1,542 for
    Mr. Schroeder made as matching contributions under the
    Companys Employee Before-Tax Savings Plan for 2002, $1,700
    made as matching contributions for each of the Named Executive
    Officers under the Companys Employee Before-Tax Savings
    Plan for 2001, and $1,700 made as matching Company contributions
    for Messrs. Paul, Youdelman, deVilliers and LePorte and $1,473
    made as a matching contribution for Mr. Schroeder under the
    Companys Employee Before-Tax Savings Plan for 2000. In
    addition, All Other Compensation includes (i) insurance premiums
    in the following amounts paid by the Company with respect to
    term life insurance for the benefit of each of the Named
    Executive Officers during each of 2002, 2001 and 2000,
    respectively, as applicable: Mr. Paul ($117, $62 and $51),
    Mr. Youdelman ($117, $62 and $51), Mr. deVilliers ($117,
    $62 and $51), Mr. LePorte ($117, $62 and $51), and
    Mr. Schroeder ($1,778, $911 and $714), and (ii) the
    following amounts equal to the net dollar value of the remainder
    of the premiums paid by the Company in connection with life
    insurance policies issued pursuant to the Split Dollar Insurance
    Agreements between the Company and the following Named Executive
    Officers during 2002, 2001 and 2000, respectively: Mr. Paul ($0,
    $26,809 and $26,982), Mr. Youdelman ($0, $20,932 and
    $21,038), Mr. LePorte ($0, $12,659 and $7,866) and Mr.
    deVilliers ($0, $14,755 and $14,802). The premiums paid by the
    Company in connection with the life insurance policies issued
    pursuant to such Split Dollar Insurance Agreement of Mr.
    deVilliers generally will be recovered in full by the Company
    upon the cancellation or purchase by such Named Executive
    Officer of his life insurance policy or the payment of any death
    benefits under any such life insurance policy. The Split Dollar
    Insurance Agreements of Messrs. Paul, Youdelman and LePorte
    were terminated on December 13, 2002. The Company
    thereafter entered into Death Benefit Agreements with each of
    Messrs. Paul, Youdelman and LePorte whereby the Company
    shall provide each such executive a death benefit equivalent to
    five times his annual compensation (as defined in each of the
    agreements) during his employment with the Company, and two and
    one-half times his annual compensation (as defined in each of
    the agreements) after termination of his employment.

Options Granted in 2002

The following table sets forth information with
respect to grants of non-qualified and incentive stock options
to purchase shares of the Companys Common Stock to the
Named Executive Officers during 2002 pursuant to the
Companys 1992 Stock Plan.

OPTION/ SAR GRANTS IN LAST FISCAL
YEAR

|                      |  |              |          |                   |  |             |      |                      |  |                        |      |        |  |  |           |  |  |   |         |  |  |   |         | 
|--------------------- |  | ------------ | -------- | ----------------- |  | ----------- | ---- | -------------------- |  | ---------------------- | ---- | ------ |  |  | --------- |  |  | - | ------- |  |  | - | ------- | 
|                      |  |              |          |                   |  |             |      |                      |  |                       
|                      |  |              |          | Individual Grants |  |             |      |                     
|                      |  |              |          |                   |  |             |      | Potential Realizable
|                      |  |              |          | Percent of        |  |             |      |                      |  | Value at Assumed      
|                      |  | Number of    |          | Total             |  |             |      |                      |  | Annual Rates of Stock 
|                      |  | Securities   |          | Options/SARs      |  |             |      |                      |  | Price Appreciation For
|                      |  | Underlying   |          | Granted to        |  | Exercise or |      |                      |  | Option Term(b)        
|                      |  | Options/SARs |          | Employees in      |  | Base Price  |      | Expiration           |  |                       
|Name                  |  | Granted(#)   |          | Fiscal Year(%)    |  | ($/Sh)      |      | Date                 |  | 5%($)                  |      | 10%($)
|                      |  |              |          |                   |  |             |      |                      |  |                        |      |       
|Robert G. Paul        |  |              | 66,000(a | )                 |  |             | 11.2 | %                    |  | $                      | 6.10 |        |  |  | 4/25/2012 |  |  | $ | 253,193 |  |  | $ | 641,641 | 
|Robert A. Youdelman   |  |              | 40,000(a | )                 |  |             | 6.8  |                      |  | $                      | 6.10 |        |  |  | 4/25/2012 |  |  |   | 153,450 |  |  |   | 388,873 | 
|Peter G. deVilliers   |  |              | 25,000(a | )                 |  |             | 4.2  |                      |  | $                      | 6.10 |        |  |  | 4/25/2012 |  |  |   | 95,906  |  |  |   | 243,046 | 
|James L. LePorte, III |  |              | 25,000(a | )                 |  |             | 4.2  |                      |  | $                      | 6.10 |        |  |  | 4/25/2012 |  |  |   | 95,906  |  |  |   | 243,046 | 
|Roger L. Schroeder    |  |              | 8,000(a  | )                 |  |             | 1.4  |                      |  | $                      | 6.10 |        |  |  | 4/25/2012 |  |  |   | 30,690  |  |  |   | 77,775  | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Each of these options was granted on
    April 25, 2002. Each of these options is exercisable
    50 percent after two years from date of grant, 75 percent
    after three years from date of grant and 100 percent after
    four years from date of grant. If the optionees employment
    by the Company or any of its subsidiaries terminates for any
    reason, this option may be exercised to the extent exercisable
    at the time of such termination of employment within three
    months after such termination of employment. If the optionee
    dies within such three-month period or if the termination of his
    employment is due to

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##### Table of Contents



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | his death, this option may be exercised within
    one year after his death. Each of these options contains a
    tandem stock appreciation right providing that the Company will,
    if requested by the optionee prior to the exercise thereof and
    if approved by the Compensation Committee, purchase that portion
    of the option which is then exercisable at a price equal to the
    difference between the exercise price and the market price of
    the shares. The purchase price may be paid by the Company in
    either cash or Common Stock of the Company, or any combination
    thereof, as the Compensation Committee may determine. In
    addition, each of these options contains a tandem limited stock
    appreciation right exercisable six months after grant and
    immediately after a Change in Control of the Company
    (as defined below on pages 45 and 46 hereof). Pursuant to this
    tandem limited stock appreciation right, the Company will
    purchase the option for cash at a price equal to the difference
    between the exercise price and the market value (as
    defined in the 1992 Stock Plan) of the shares covered by the
    option. Such market value generally is defined to relate to the
    highest market value of the Companys Common Stock during
    the period in which the circumstances giving rise to the
    exercise of the limited stock appreciation right occurred.
|   
|(b) | The dollar amounts set forth in the columns are
    determined as of the date of grant of such options and are the
    result of calculations of the 5% and 10% assumed stock price
    appreciation rates set forth in the Securities and Exchange
    Commissions rules regarding the disclosure of executive
    compensation, and therefore are not intended to forecast
    possible future appreciation of the Companys Common Stock.
    Actual gains, if any, on the exercise of options are dependent
    on the future performance of the Companys Common Stock, as
    well as the applicable Named Executive Officers continued
    employment throughout the vesting period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

Option Exercises and 2002 Year-End
Values

The following table sets forth information with
respect to (i) options to purchase shares of the
Companys Common Stock granted under the Companys
1992 Stock Plan which were exercised by the Named Executive
Officers during 2002, and (ii) unexercised options to
purchase shares of the Companys Common Stock granted under
the Companys 1992 Stock Plan to the Named Executive
Officers and held by them at December 31, 2002.

AGGREGATED OPTION/ SAR EXERCISES IN LAST
FISCAL YEAR AND

FISCAL YEAR-END OPTION/ SAR VALUES


|                      |  |             |    |                |  |                        |     |                              |  |             |         |               |  |  |         |  |  |   |         |  |  |   |         | 
|--------------------- |  | ----------- | -- | -------------- |  | ---------------------- | --- | ---------------------------- |  | ----------- | ------- | ------------- |  |  | ------- |  |  | - | ------- |  |  | - | ------- | 
|                      |  |             |    |                |  |                        |     |                              |  |            
|                      |  |             |    |                |  | Number of Securities   |     |                             
|                      |  |             |    |                |  | Underlying Unexercised |     | Value of Unexercised In-the-
|                      |  |             |    |                |  | Options/SARs           |     | Money Options/SARs at       
|                      |  | Shares      |    |                |  | at Fiscal Year-End(#)  |     | Fiscal Year-End($)(b)       
|                      |  | Acquired on |    | Value          |  |                        |     |                             
|Name                  |  | Exercise(#) |    | Realized($)(b) |  | Exercisable            |     | Unexercisable                |  | Exercisable |         | Unexercisable
|                      |  |             |    |                |  |                        |     |                              |  |             |         |              
|Robert G. Paul        |  |             | (a | )              |  |                        | 0 |                              |  |             | 340,991 |               |  |  | 177,250 |  |  | $ | 159,863 |  |  | $ | 275,708 | 
|Robert A. Youdelman   |  |             | (a | )              |  |                        | 0 |                              |  |             | 200,869 |               |  |  | 106,250 |  |  |   | 93,713  |  |  |   | 166,038 | 
|Peter G. deVilliers   |  |             | (a | )              |  |                        | 0 |                              |  |             | 35,121  |               |  |  | 58,250  |  |  |   | 14,333  |  |  |   | 89,028  | 
|James L. LePorte, III |  |             | (a | )              |  |                        | 0 |                              |  |             | 71,284  |               |  |  | 62,000  |  |  |   | 30,870  |  |  |   | 94,540  | 
|Roger L. Schroeder    |  |             | (a | )              |  |                        | 0 |                              |  |             | 22,642  |               |  |  | 19,500  |  |  |   | 8,820   |  |  |   | 29,900  | 



---



|    |                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Named Executive Officer did not exercise any
    options to purchase shares of the Companys Common Stock
    during 2002.                                                                                                                                                
|   
|(b) | The dollar values are calculated by determining
    the difference between the fair market value of the shares of
    the Companys Common Stock underlying the options and the
    exercise price of such options at exercise or at
    December 31, 2002, as applicable.

39



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##### Table of Contents



Retirement Plans



| |                          
| | -------------------------
| | Corporate Retirement Plan

Participants in the Allen Telecom Inc. Corporate
Retirement Plan (the Retirement Plan) consist of a
majority of the full-time employees of the Company and its
subsidiaries in the United States, including the Named Executive
Officers, and Messrs. Colburn and Lyons as former employees
of the Company. The Retirement Plan generally provides a
retirement benefit based upon the participants years of
credited service (not in excess of 30 years) and his or her
final average earnings, with final average earnings consisting
of the sum of (i) the average of the salaries of the
participant during the five years of highest salaries of the
participant in the 10 years preceding the
participants retirement or termination date, and
(ii) the average of the performance bonuses and overtime
earnings of the participant during the five years of highest
aggregate bonuses and overtime earnings of the participant in
the 10 years preceding the participants retirement or
termination date. Retirement benefits are payable either as a
straight life annuity, a joint and survivor annuity or in other
optional forms. Normal retirement is at age 65, but certain
early retirement benefits may be payable to participants who
have attained age 55 and completed 10 years of continuous
service, and survivor benefits may be payable to the surviving
spouse of a vested participant who dies prior to early or normal
retirement. A participants benefit under the Retirement
Plan vests after five years of credited service, all benefits
funded by the Company are based upon actuarial computations, and
no contributions are made by participants.



| |                 
| | ----------------
| | Restoration Plan

The Internal Revenue Code (the IRC)
imposes a maximum limit on annual retirement benefits payable
under tax-qualified retirement plans, such as the Retirement
Plan. For 2003, that annual limit is $200,000. In addition, the
IRC limits the amount of annual compensation that may be taken
into account for benefit calculation purposes under
tax-qualified retirement plans. For 2003, that annual limit is
$200,000. Effective January 1, 1996, the Company adopted
the Allen Telecom Inc. Restoration Plan (the Restoration
Plan). Under the Restoration Plan, each employee whose
Retirement Plan benefit is limited by these IRC restrictions or
as a result of his deferral of income under the Companys
Deferred Compensation Plan will be entitled to a supplemental
restoration benefit equal to the difference between the full
amount of his pension benefits determined under the Retirement
Plan (calculated without regard to these IRC restrictions or to
deferral of income under the Companys Deferred
Compensation Plan) and the maximum amount payable from the
Retirement Plan. If (i) the Company breaches any material
provision of the Plan and such breach continues for at least
30 days after notice to the Company, or (ii) the
Company makes a general assignment for the benefit of creditors,
or (iii) any proceeding under the U.S. Bankruptcy Code
is instituted by or against the Company and, if instituted
against the Company, is consented to or acquiesced in by it or
the Company fails to use its best efforts to obtain the
dismissal thereof for 60 days, or (iv) a receiver or
trustee in bankruptcy is appointed for the Company, the Company
will pay each employee affected thereby an amount equal to the
present value of his benefits under the Restoration Plan. In
addition, at any time after an employee commences receiving
benefits from the Restoration Plan, the employee may request
that 90 percent of the present value of all remaining
benefits payable to the employee under the Restoration Plan be
paid to the employee in a single lump sum cash payment. If an
employee elects to receive such a payment, the remaining
10 percent of such present value would be forfeited. Except
as specified above, the vesting of benefits, the timing of
payments and the form of payments under the Restoration Plan are
determined in accordance with the terms of the Retirement Plan.
The Restoration Plan is unfunded. The Named Executive Officers
are participants in the Restoration Plan.



| |                       
| | ----------------------
| | Pension Benefits Table

The following table shows estimated annual
benefits payable under the Retirement Plan and the Restoration
Plan to participants in specified compensation (final average
earnings) and years-of-service classifications on a straight
life annuity basis, assuming normal retirement at age 65 on
January 1, 2003 and application of the current U.S. social
security covered compensation base. The benefits payable under

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##### Table of Contents



the Retirement Plan and the Restoration Plan are
not subject to any deduction for U.S. social security or other
offset amounts.


|                |         |                     |  |    |        |    |  |    |         |    |  |    |         |  |  |  |         |  |  |  |         |  |  |  |         | 
|--------------- | ------- | ------------------- |  | -- | ------ | -- |  | -- | ------- | -- |  | -- | ------- |  |  |  | ------- |  |  |  | ------- |  |  |  | ------- | 
|                |         |                    
|                |         | Years of Service(b)
|                |         |                    
|Remuneration(a) |         | 5                   |  | 10 |        | 15 |  | 20 |         | 25 |  | 30
|                |         |                     |  |    |        |    |  |    |         |    |  |   
|                | 125,000 |                     |  |    | 7,338  |    |  |    | 14,677  |    |  |    | 22,015  |  |  |  | 29,353  |  |  |  | 36,692  |  |  |  | 44,030  | 
|                | 150,000 |                     |  |    | 9,026  |    |  |    | 18,052  |    |  |    | 27,077  |  |  |  | 36,103  |  |  |  | 45,129  |  |  |  | 54,155  | 
|                | 175,000 |                     |  |    | 10,713 |    |  |    | 21,427  |    |  |    | 32,140  |  |  |  | 42,853  |  |  |  | 53,567  |  |  |  | 64,280  | 
|                | 200,000 |                     |  |    | 12,401 |    |  |    | 24,802  |    |  |    | 37,202  |  |  |  | 49,603  |  |  |  | 62,004  |  |  |  | 74,405  | 
|                | 225,000 |                     |  |    | 14,088 |    |  |    | 28,177  |    |  |    | 42,265  |  |  |  | 56,353  |  |  |  | 70,442  |  |  |  | 84,530  | 
|                | 250,000 |                     |  |    | 15,776 |    |  |    | 31,552  |    |  |    | 47,327  |  |  |  | 63,103  |  |  |  | 78,879  |  |  |  | 94,655  | 
|                | 300,000 |                     |  |    | 19,151 |    |  |    | 38,302  |    |  |    | 57,452  |  |  |  | 76,603  |  |  |  | 95,754  |  |  |  | 114,905 | 
|                | 350,000 |                     |  |    | 22,526 |    |  |    | 45,052  |    |  |    | 67,577  |  |  |  | 90,103  |  |  |  | 112,629 |  |  |  | 135,155 | 
|                | 400,000 |                     |  |    | 25,901 |    |  |    | 51,802  |    |  |    | 77,702  |  |  |  | 103,603 |  |  |  | 129,504 |  |  |  | 155,405 | 
|                | 450,000 |                     |  |    | 29,276 |    |  |    | 58,552  |    |  |    | 87,827  |  |  |  | 117,103 |  |  |  | 146,379 |  |  |  | 175,655 | 
|                | 500,000 |                     |  |    | 32,651 |    |  |    | 65,302  |    |  |    | 97,952  |  |  |  | 130,603 |  |  |  | 163,254 |  |  |  | 195,905 | 
|                | 600,000 |                     |  |    | 39,401 |    |  |    | 78,802  |    |  |    | 118,202 |  |  |  | 157,603 |  |  |  | 197,004 |  |  |  | 236,405 | 
|                | 700,000 |                     |  |    | 46,151 |    |  |    | 92,302  |    |  |    | 138,452 |  |  |  | 184,603 |  |  |  | 230,754 |  |  |  | 276,905 | 
|                | 800,000 |                     |  |    | 52,901 |    |  |    | 105,802 |    |  |    | 158,702 |  |  |  | 211,603 |  |  |  | 264,504 |  |  |  | 317,405 | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The current final average earnings for the Named
    Executive Officers at the end of 2002 are $732,200 for
    Mr. Paul, $418,040 for Mr. Youdelman, $194,470 for Mr.
    deVilliers, $266,600 for Mr. LePorte and $158,850 for Mr.
    Schroeder. The calculation of the foregoing amounts includes the
    amounts shown under Salary and Bonus in
    the Summary Compensation Table set forth on pages 37 and 38
    hereof.
|   
|(b) | Years of credited service as of January 1,
    2003 under the Retirement Plan for the Named Executive Officers
    are 30 for Mr. Paul, 25.9 for Mr. Youdelman, 9.5 for Mr.
    deVilliers, 21.8 for Mr. LePorte and 21.5 for Mr. Schroeder.                                                                                                                                                                                         



| |                          
| | -------------------------
| | Target Benefit Agreements

The Company has entered into separate
Supplemental Target Pension Benefit Agreements (each, a
Target Agreement) with six executives of the
Company, including Messrs. Paul, Youdelman, deVilliers and
LePorte (collectively, the Target Officers).
Pursuant to each Target Agreement, the Company will provide
annual pension benefits to a Target Officer supplemental to the
annual benefits paid to him under the Retirement Plan and the
Restoration Plan if warranted by the formula under the Target
Agreement. Generally, the target benefit is 1.733% of the Target
Officers five-year average earnings (as defined in the
Retirement Plan but without regard to IRC limitations or to
deferral of income under the Companys Deferred
Compensation Plan), multiplied by his years of credited service,
but not in excess of 30 years. The target benefit is
reduced by an amount, expressed as a single life annuity, equal
to the sum of the Target Officers Retirement Plan benefit,
Restoration Plan benefit, Employee Before-Tax Savings Plan
matching benefit and social security benefit. For this purpose,
the Employee Before-Tax Savings Plan matching benefit assumes
the Company contributed each year to the Companys Employee
Before-Tax Savings Plan for the Target Officer the maximum
permissible matching contribution, and such amounts accumulated
at the rate of 8% compounded annually. Each target benefit may
not exceed an annual amount of $250,000 reduced by four-twelfths
of one percent (4/12%) for each month (if any) by which the
applicable Target Officers target benefit commences before
such Target Officers attainment of age 65. Each Target
Agreement is unfunded.

Under each Target Agreement, if, after the Target
Officer ceases to be a senior executive officer, (i) the
Companys bank indebtedness is accelerated, or
(ii) the Company breaches any material provision of the
Target Agreement and such breach continues for at least
30 days after notice to the Company, or

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##### Table of Contents



(iii) the consolidated tangible net worth of
the Company falls below $90 million (provided that such tangible
net worth at the time the affected Target Officer ceases to be a
senior executive officer is at least $130 million, or if
such tangible net worth at the time he ceases to be a senior
executive officer is less than $130 million, the tangible
net worth of the Company declines by $40 million), or
(iv) the Company makes a general assignment for the benefit
of creditors, or (v) any proceeding under the U.S.
Bankruptcy Code is instituted by or against the Company and, if
instituted against the Company, is consented to or acquiesced in
by it or the Company fails to use its best efforts to obtain the
dismissal thereof for 60 days, or (vi) a receiver or
trustee in bankruptcy is appointed for the Company, the Company
will pay the affected Target Officer an amount equal to the
present value of his target benefits under his Target Agreement.
Similarly, under each Target Agreement, if the Target
Officers employment is terminated within the two-year
period following a Change in Control of the Company
either by the Company other than for Cause or
because the Target Officer is disabled or by the Target Officer
for Good Reason (as such terms are defined below on
pages 44 to 46 hereof), the Company will pay the affected Target
Officer an amount equal to the present value of his target
benefits under his Target Agreement. In addition, a Target
Officers benefit under the Restoration Plan is required to
be transferred to his Target Agreement in the event of a
Change in Control of the Company. At any time after
a Target Officer commences receiving benefits from his Target
Agreement, the Target Officer may request that 90 percent
of the present value of all remaining benefits payable to the
Target Officer under his Target Agreement be paid to the Target
Officer in a single lump sum cash payment. If a Target Officer
elects to receive such a payment, the remaining 10 percent
of such present value would be forfeited.


The following table shows the estimated annual
target benefits payable under the Target Agreements to the
Target Officers, assuming normal retirement at age 65 on
January 1, 2003.

|                |         |                     |  |    |   |    |  |    |       |    |  |    |        |  |  |   |        |  |  |   |        |  |  |   |        | 
|--------------- | ------- | ------------------- |  | -- | - | -- |  | -- | ----- | -- |  | -- | ------ |  |  | - | ------ |  |  | - | ------ |  |  | - | ------ | 
|                |         |                    
|                |         | Years of Service(b)
|                |         |                    
|Remuneration(a) |         | 5                   |  | 10 |   | 15 |  | 20 |       | 25 |  | 30
|                |         |                     |  |    |   |    |  |    |       |    |  |   
|$               | 125,000 |                     |  | $  |  |    |  | $  |      |    |  | $  |       |  |  | $ |       |  |  | $ |       |  |  | $ |       | 
|                | 150,000 |                     |  |    |  |    |  |    |      |    |  |    |       |  |  |   |       |  |  |   |       |  |  |   |       | 
|                | 175,000 |                     |  |    |  |    |  |    |      |    |  |    |       |  |  |   |       |  |  |   |       |  |  |   | 2,347  | 
|                | 200,000 |                     |  |    |  |    |  |    |      |    |  |    |       |  |  |   |       |  |  |   | 289    |  |  |   | 5,222  | 
|                | 225,000 |                     |  |    |  |    |  |    |      |    |  |    |       |  |  |   |       |  |  |   | 2,685  |  |  |   | 8,097  | 
|                | 250,000 |                     |  |    |  |    |  |    |      |    |  |    |       |  |  |   |       |  |  |   | 5,081  |  |  |   | 10,972 | 
|                | 300,000 |                     |  |    |  |    |  |    |      |    |  |    |       |  |  |   | 3,024  |  |  |   | 9,873  |  |  |   | 16,722 | 
|                | 350,000 |                     |  |    |  |    |  |    |      |    |  |    |        |  |  |   | 6,857  |  |  |   | 14,664 |  |  |   | 22,472 | 
|                | 400,000 |                     |  |    |  |    |  |    |      |    |  |    | 2,687  |  |  |   | 10,690 |  |  |   | 19,456 |  |  |   | 28,222 | 
|                | 450,000 |                     |  |    |  |    |  |    |      |    |  |    | 5,562  |  |  |   | 14,524 |  |  |   | 24,248 |  |  |   | 33,972 | 
|                | 500,000 |                     |  |    |  |    |  |    |      |    |  |    | 8,437  |  |  |   | 18,357 |  |  |   | 29,039 |  |  |   | 39,722 | 
|                | 600,000 |                     |  |    |  |    |  |    | 2,872 |    |  |    | 14,187 |  |  |   | 26,024 |  |  |   | 38,623 |  |  |   | 51,222 | 
|                | 700,000 |                     |  |    |  |    |  |    | 6,706 |    |  |    | 19,937 |  |  |   | 33,690 |  |  |   | 48,206 |  |  |   | 62,722 | 



---



|    |                                                                                                                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | For benefit calculation purposes under the Target
    Agreements, the current final average earnings for the Named
    Executive Officers are the same as those listed in footnote
    (a) to the Pension Benefits Table on page 41 hereof.                 
|   
|(b) | For benefit calculation purposes under the Target
    Agreements, years of credited service as of January 1, 2003
    for the Named Executive Officers are the same as those listed in
    footnote (b) to the Pension Benefits Table on page 41
    hereof.

The Company has adopted an Executive Benefit
Plan, payments under which (if made) would offset all or a
portion of the benefits payable to the Named Executive Officers
under the Restoration Plan and the Target Agreements. For a
description of the terms of the Executive Benefit Plan, see
EXECUTIVE COMPENSATION AND TRANSACTIONS WITH
MANAGEMENT  Employment, Termination of Employment and
Change in Control Arrangements on pages 43 to 46 hereof.

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| |                                                   
| | --------------------------------------------------
| | Other Supplemental Pension Benefits
    Agreements

Pursuant to an agreement entered into in 1983,
and subsequently amended, with Mr. Colburn, the Company
currently provides annual pension benefits to Mr. Colburn,
supplemental to the annual benefits paid to him under the
Retirement Plan and social security benefits, in an amount equal
to $189,528, with an equivalent annual benefit payable to
Mr. Colburns spouse for her life after his death.
Pursuant to such agreement, this amount is based upon
(i) his final average earnings, as defined in the
Retirement Plan but during the year of highest salary and
performance bonus in the four years preceding his termination
date, which was December 31, 1991 when Mr. Colburn
elected not to extend his employment agreement with the Company,
and (ii) 36 years of service as an employee and as a
director of the Company. If the consolidated tangible net worth
of the Company falls below $90 million, if the
Companys bank indebtedness is accelerated or if the
Company breaches any material provision of
Mr. Colburns supplemental pension benefit agreement
or post-employment consulting agreement described on pages 4 and
5 hereof and such breach continues for at least 30 days
after notice to the Company, the Company will pay him or his
spouse, as applicable, an amount equal to the present value of
his supplemental pension benefits under his agreement. In
addition, Mr. Colburn may at any time request that
90 percent of the present value of his supplemental pension
benefits under his agreement be paid to him in a single lump sum
cash payment. If Mr. Colburn elects to receive such a
payment, the remaining 10 percent of such present value
would be forfeited.

Pursuant to an agreement entered into in 1983, as
amended, with Mr. Lyons, the Company provides annual
pension benefits to Mr. Lyons, supplemental to the annual
benefits paid to him under the Retirement Plan, in an amount
based upon (i) his final average earnings, as defined in
the Retirement Plan but during the three years of highest
salaries and performance bonuses in the 10 years preceding
his termination date, which was September 30, 1989 (when
his employment as an officer of the Company terminated), and
(ii) his number of years of service as a director, prior to
becoming an officer, of the Company plus his number of years of
credited service under the Retirement Plan. The annual
supplemental pension benefit is reduced by the amount paid to
Mr. Lyons annually under the Retirement Plan. If the
consolidated tangible net worth of the Company falls below
$90 million, if the Companys bank indebtedness is
accelerated or if the Company breaches any material provision of
Mr. Lyons supplemental pension benefit agreement or
his post-employment consulting agreement described on page 5
hereof and such breach continues for at least 30 days after
notice to the Company, the Company will pay him an amount equal
to the present value of his supplemental pension benefits under
his agreement. The annual benefit payable to Mr. Lyons
under his supplemental pension benefit agreement, exclusive of
amounts payable under the Retirement Plan and social security
benefits, is $34,064, based upon his final average earnings and
20 years of service under his agreement, with an annual benefit
of $17,032 payable to Mr. Lyons spouse for her life
after his death. In addition, Mr. Lyons may at any time
request that 90 percent of the present value of his
supplemental pension benefits under his agreement be paid to him
in a single lump sum cash payment. If Mr. Lyons elects to
receive such a payment, the remaining 10 percent of such present
value would be forfeited.

The supplemental pension benefits payable to
Messrs. Colburn and Lyons are funded through a so-called
rabbi trust established by the Company.

Employment, Termination of Employment and
Change in Control Arrangements

Robert G. Paul is employed as President and Chief
Executive Officer of the Company pursuant to an employment
agreement entered into in June 1991, which provides for a
term of employment extending through December 31, 1993 and
thereafter continuing for successive periods of 12 months
each, unless either the Company or Mr. Paul gives at least
three months notice to the contrary. No such notice was
given by either party in 2001. The agreement provides for an
annual salary of $300,000 commencing February 26, 1991,
which amount was increased to $540,000 effective as of
January 1, 2003, and is subject to such further future
increases as the Board of Directors deems appropriate. The
Company may terminate Mr. Pauls employment for
Cause (as defined in such agreement), or in the
event of his disability, and he may terminate his employment for
Good Reason (as defined in such agreement), such as
his not

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being elected, or his being assigned duties other
than those of, President and Chief Executive Officer of the
Company, a significant adverse alteration in the nature or
status of his responsibilities or the conditions of his
employment, a reduction of his salary (except for
across-the-board salary reductions similarly affecting all
management personnel of the Company), a relocation of
Mr. Paul by more than 25 miles, the failure by the Company
to continue any material compensation or benefit plan or the
Company giving notice to Mr. Paul that his employment
agreement is not continuing for any period of 12 months
after December 31, 1993.


In the event of Mr. Pauls disability,
the Company will continue to pay him his salary and estimated
bonus until the expiration of the term of his employment
agreement and, thereafter, will pay him benefits equal to the
maximum amount currently provided by the Companys
executive long-term disability plan, which is 60 percent of
salary and estimated bonus up to a maximum payment of $420,000
per year, until the earlier of his normal retirement date or
commencement of benefits under the Retirement Plan.

If the Company terminates Mr. Pauls
employment other than for Cause or his disability,
or if Mr. Paul terminates his employment for Good
Reason, the Company will pay him an amount equal to his
salary for two years, and will provide his life, disability,
accident, medical and hospitalization insurance benefits for a
period of two years after such termination. In addition, if
termination of Mr. Pauls employment is disputed and
the dispute is ultimately resolved in his favor, the Company may
be obligated to pay his salary through the date of final
resolution of the dispute.

If the Company terminates Mr. Pauls
employment other than for Cause or his disability,
or if Mr. Paul terminates his employment for Good
Reason following a Change in Control of the
Company (as defined below), the Company will pay him an amount
equal to 2.99 times his average annual taxable compensation from
the Company during the five years preceding termination of
employment, and will pay him an amount equal to the excess of
the Fair Market Value (as defined in
Mr. Pauls employment agreement), on the date of
termination, over the option price of the shares subject to each
stock option held by him, whether or not exercisable at the
time, in exchange for surrender of the option.

Mr. Pauls employment agreement
provides for mandatory arbitration of all disputes relating to
Mr. Pauls employment agreement and requires the
Company to pay all reasonable legal expenses incurred by
Mr. Paul in connection with resolution of disputes under
his employment agreement.

The Company has severance agreements with
Messrs. Youdelman, LePorte and deVilliers, and three other
executives, which provide severance benefits if the Company
terminates the employees employment other than for
Cause (as defined in such severance agreements) or
disability before or after a Change in Control of
the Company (as defined below) or if the employee terminates his
employment for Good Reason after a Change in
Control. Good Reason includes the assignment
of duties inconsistent with the employees position with
the Company, a significant adverse alteration in the nature or
status of the employees responsibilities or the conditions
of his employment, a reduction of the employees salary
(except for across-the-board salary reductions similarly
affecting all management personnel of the Company), a relocation
of the employee by more than 25 miles or the failure by the
Company to continue any material compensation or benefit plan.
Prior to a Change in Control, severance payments
under the agreements will be six months salary plus an
additional month for each full year of service but in no event
more than 18 months salary, and will be paid in
normal pay periods. After a Change in Control, the
Company will pay the employee a lump sum severance payment equal
to the sum of (i) one year of his base salary as in effect
as of the date of termination or immediately prior to the
Change in Control, whichever is greater,
(ii) an amount equal to the highest annual incentive
compensation paid to him in the three years prior to the date of
termination, (iii) if the Board of Directors in its sole
discretion shall determine, an additional discretionary bonus
payment, and (iv) fifteen percent (15%) of the sum of the
amounts set forth in clauses (i) and (ii), multiplied by
the number of his completed years of full-time employment with
the Company as of the date of termination, and (v) an
amount equal to the excess of the fair market value (as defined
in such severance agreements), on the date of termination, over
the option price of the shares subject to each stock option held
by him, except previously issued incentive stock options,
whether or not exercisable at the time, in exchange for
surrender of the option. Life,

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disability, accident and health insurance
benefits will continue during the period of severance payments.
Severance payments in excess of the base amount of six
months salary will be reduced by any compensation received
by the employee from other employment (other than self
employment) prior to a Change in Control, and all
severance payments and all insurance benefits will be
discontinued if the employee engages in competition with the
Company or engages in conduct which is injurious to the Company,
prior to a Change in Control. In the event that any
payment received or to be received by an employee under the
aforementioned agreements, in connection with a Change of
Control or the termination of his employment, would not be
deductible by the Company by reason of Section 280G of the
Internal Revenue Code, the payments shall be reduced, in
accordance with the terms of the agreements, until no portion of
such payments is not deductible by the Company by reason of
Section 280G of the Internal Revenue Code.


The Company has Change in Control Agreements,
each dated as of September 8, 1999, with Mr. Colburn
and Mr. Lyons. The Change in Control Agreements provide,
respectively, that in the event of a Change in Control of the
Company, Mr. Colburn will receive a payment in the amount
of $1,000,000, and Mr. Lyons will receive a payment in the
amount of $250,000, plus, in each case, such additional amounts
as the Board of Directors may determine in its sole discretion.

The Company also has entered into separate
Supplemental Target Pension Benefit Agreements with each of
Messrs. Paul, Youdelman, deVilliers and LePorte, which
contain Change in Control provisions. For a
description of the terms of these Target Agreements, see
EXECUTIVE COMPENSATION AND TRANSACTIONS WITH
MANAGEMENT  Retirement
Plans  Target Benefit Agreements on pages
41 and 42 hereof.

In 1997, the Company adopted the Allen Telecom
Inc. Executive Benefit Plan (the Executive Benefit
Plan) under which designated employees of the Company,
including the Named Executive Officers are entitled to receive,
in addition to the amounts described above, an immediate cash
payment if there is a Change in Control of the
Company (as defined below) and the following conditions are
satisfied. The employee will be entitled to a cash payment only
if the employee remains employed by the Company for six months
after such Change in Control or terminates employment with the
Company during the six-month period after the Change in Control
by reason of death, disability, retirement or involuntary
termination by the Company. In addition, the employee will be
entitled to a cash payment if the employees employment
terminates during the 90-day period preceding such Change in
Control by reason of death, disability, retirement or
involuntary termination by the Company. The amount of the cash
payment to which an employee is entitled in such event is
determined by the Company from time to time and allocated to an
account under the Executive Benefit Plan in the name of the
employee. The Company has also established a trust to hold the
amounts allocated to these accounts. Any amount an employee
receives from the Executive Benefit Plan offsets the amount to
which the employee is entitled under the Restoration Plan and
such employees Target Agreement (if any). Amounts
allocated to the account of each Named Executive Officer under
the Executive Benefit Plan to date have not exceeded the present
value of benefits payable to such Named Executive Officer under
the Restoration Plan and the Named Executive Officers
Target Agreement.

For purposes of the arrangements described above,
a Change in Control of the Company is defined as
(i) the acquisition of more than 30 percent of the
outstanding Common Stock of the Company by any person or group
of related persons, (ii) the change in a majority of the
directors of the Company during a consecutive two-year period,
unless the election of each new director was approved by at
least two-thirds of the directors then still in office who were
directors at the beginning of such period, (iii) the
stockholders approve a merger or consolidation of the Company
with any other corporation, other than (a) a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than
80 percent of the combined voting power of the voting
securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation or (b) a
merger or consolidation effected to implement a recapitalization
of the Company (or similar transaction) in which no person
acquires more than 30 percent of the combined voting power

45



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of the Companys then outstanding
securities, or (iv) the stockholders approve a plan of
complete liquidation or an agreement for the sale or disposition
of all or substantially all of the Companys assets. For
purposes of the Executive Benefit Plan, Change in
Control also includes (A) the Company voluntarily filing a
petition for bankruptcy under federal bankruptcy law, or an
involuntary bankruptcy petition being filed against the Company
under federal bankruptcy law, if such involuntary petition is
not dismissed within 120 days of the filing; (B) the
Company making a general assignment for the benefit of
creditors; or (C) the Company seeking or consenting to the
appointment of a trustee, receiver, liquidator or similar person.


Performance Graph

Set forth below is a line graph comparing the
yearly percentage change in the cumulative total stockholder
return of the Companys Common Stock against the cumulative
total return of (i) the S&P SmallCap 600 Index and
(ii) the S&P Communications Equipment Index for the
period of five fiscal years ended December 31, 2002. The
comparisons in this graph are required by the proxy rules
promulgated by the Securities and Exchange Commission and are
not intended to forecast future performance of the
Companys Common Stock.

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL
RETURN*

Among Allen Telecom Inc., S&P SmallCap 600
Index and

The S&P Communications Equipment
Index


Graph

|                                   |  |      |     |      |  |      |        |      |  |      |        |      |  |  |        |  |  |  |        |  |  |  |        | 
|---------------------------------- |  | ---- | --- | ---- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  |  | ------ |  |  |  | ------ |  |  |  | ------ | 
|                                   |  | 1997 |     | 1998 |  | 1999 |        | 2000 |  | 2001 |        | 2002
|                                   |  |      |     |      |  |      |        |      |  |      |        |     
|Allen Telecom Inc.                 |  |      | 100 |      |  |      | 36.27  |      |  |      | 62.71  |      |  |  | 97.29  |  |  |  | 46.10  |  |  |  | 51.36  | 
|S&P SmallCap 600 Index             |  |      | 100 |      |  |      | 98.69  |      |  |      | 110.94 |      |  |  | 124.03 |  |  |  | 132.14 |  |  |  | 112.81 | 
|S&P Communications Equipment Index |  |      | 100 |      |  |      | 176.17 |      |  |      | 386.91 |      |  |  | 169.26 |  |  |  | 62.35  |  |  |  | 28.58  | 



---



|  |                                                                                                                                                                                                                                                   
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Assumes that the value of the investment of the
    Companys Common Stock and each index was $100 on
    December 31, 1997 and that all dividends on the
    Companys Common Stock and on each stock included in each
    index were reinvested.

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|          |                                                                                                   
|--------- | --------------------------------------------------------------------------------------------------
|ITEM 12  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
    OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Principal Stockholders

The following table sets forth information
regarding the only persons known to the Company to be the
beneficial owners (for purposes of the rules of the Securities
and Exchange Commission) of more than 5% of the outstanding
shares of the Companys Common Stock as of March 6,
2003, at which date we had 30,684,976 shares of common stock
outstanding.

|                                      |                                |              |  |         |       |   | 
|------------------------------------- | ------------------------------ | ------------ |  | ------- | ----- | - | 
|                                      |                                | Number       |  |        
|Name and Address of Beneficial Owners |                                | of Shares    |  | Percent
|                                      |                                |              |  |        
|State of Wisconsin Investment Board   |                                | 5,975,500(a) |  |         | 19.56 | %
|                                      | P.O. Box 7842                  |              |  |         |       |   | 
|                                      | Madison, Wisconsin 53707       |              |  |         |       |   | 
|Gabelli Funds, Inc. et al             |                                | 2,870,769(b) |  |         | 9.40  | %
|                                      | One Corporate Center           |              |  |         |       |   | 
|                                      | Rye, New York 10580            |              |  |         |       |   | 
|David J. Greene and Company, LLC      |                                | 1,869,604(c) |  |         | 6.12  | %
|                                      | 599 Lexington Avenue           |              |  |         |       |   | 
|                                      | New York, New York 10022       |              |  |         |       |   | 
|Dimensional Fund Advisors, Inc.       |                                | 1,819,100(d) |  |         | 5.96  | %
|                                      | 1299 Ocean Avenue, 11th Floor  |              |  |         |       |   | 
|                                      | Santa Monica, California 90401 |              |  |         |       |   | 
|Royce & Associates, LLC               |                                | 1,796,158(e) |  |         | 5.88  | %
|                                      | 1414 Avenue of the Americas    |              |  |         |       |   | 
|                                      | New York, New York 10019       |              |  |         |       |   | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Based on the Schedule 13G filed by the State
    of Wisconsin Investment Board under the Exchange Act on
    February 14, 2003, the State of Wisconsin Investment Board
    held sole dispositive power and sole voting power over all of
    such shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(b) | Based on the Schedule 13D filed on
    February 19, 2003, jointly by Mario J. Gabelli, Marc J.
    Gabelli and various entities which either one directly or
    indirectly controls or for which either one acts as chief
    investment officer under the Exchange Act on February 18,
    2003, (i) Gabelli Funds, LLC held sole dispositive power
    and sole voting power over 826,000 of such shares,
    (ii) GAMCO Investors, Inc. held sole dispositive power and
    sole voting power over 2,037,769 of such shares,
    (iii) Gabelli Advisors, Inc. held sole dispositive power
    and sole voting power over 5,000 of such shares and
    (iv) MJG Associates, Inc. sole dispositive power and sole
    voting power over 2,000 of such shares.
|   
|(c) | Based on the Form 13G filed by David J.
    Green and Company, LLC under the Exchange Act on
    February 7, 2003, David J. Greene and Company, LLC held
    shared dispositive power over all of such shares, shared voting
    power over 1,441,500 of such shares and no voting power over
    428,104 of such shares on December 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(d) | Based on the Schedule 13G filed by
    Dimensional Fund Advisors, Inc. on February 3, 2003,
    Dimensional Fund Advisors held sole voting power and sole
    dispositive power of all such shares on December 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(e) | Based on the Schedule 13G filed by Royce
    & Associates, LLC on January 31, 2003, Royce &
    Associates, LLC held sole voting power and sole dispositive
    power over all such shares on December 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

Directors and Officers

The following table sets forth information as of
March 7, 2003 with respect to shares of Common Stock of the
Company beneficially owned (for purposes of the rules of the
Securities and Exchange

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##### Table of Contents



Commission) by each director and each Named
Executive Officer and by all directors and current executive
officers of the Company as a group.


|                                                                 |  |            |           |          |  |  |     |  
|---------------------------------------------------------------- |  | ---------- | --------- | -------- |  |  | --- | -
|                                                                 |  | Amount and |           |         
|                                                                 |  | Nature of  |           |         
|                                                                 |  | Beneficial |           | Percent 
|Name and Address of Beneficial Owner                             |  | Ownership  |           | of Class
|                                                                 |  |            |           |         
|Sheldon I. Ausman                                                |  |            | 0       |          |  |  |     |  
|Philip Wm. Colburn                                               |  |            | 600,112   | (a)      |  |  | 2.0 | %
|Peter G. deVilliers                                              |  |            | 71,680    | (b)      |  |  | *   |  
|James L. LePorte, III                                            |  |            | 158,563   | (c)      |  |  | *   |  
|J. Chisholm Lyons                                                |  |            | 131,972   | (d)      |  |  | *   |  
|Robert G. Paul                                                   |  |            | 714,467   | (e)      |  |  | 2.3 | %
|Dr. Martyn F. Roetter                                            |  |            | 10,750    | (f)      |  |  | *   |  
|Roger L. Schroeder                                               |  |            | 54,240    | (g)      |  |  | *   |  
|Gary B. Smith                                                    |  |            | 11,650    | (h)      |  |  | *   |  
|Kathleen M. H. Wallman                                           |  |            | 3,500     | (i)      |  |  | *   |  
|Robert A. Youdelman                                              |  |            | 353,419   | (j)      |  |  | *   |  
|All directors and executive officers as a group
    (12 persons) |  |            | 2,119,518 | (k)      |  |  | 6.9 | %



---



| |   |              
| | - | -------------
| | * | Less than 1%.



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Includes 210,854 shares owned directly and
    389,258 shares issuable upon exercise of stock options that are
    exercisable as of March 7, 2003 or become exercisable
    within 60 days thereafter.                                                                                                                                                                                                                                                                                                                                       
|   
|(b) | Includes 662 shares owned directly; 2,647 shares
    held by the Trustee under the Companys Employee Before-Tax
    Savings Plan; 15,000 restricted shares of Common Stock awarded
    under the Companys 1992 Stock Plan; and 53,371 shares
    issuable upon exercise of stock options that are exercisable as
    of March 7, 2003 or become exercisable within 60 days
    thereafter.                                                                                                                                                  
|   
|(c) | Includes 47,935 shares owned directly; 17,344
    shares held by the trustee under the Companys Employee
    Before-Tax Savings Plan; and 93,284 shares issuable upon
    exercise of stock options that are exercisable as of March 7,
    2003 or become exercisable within 60 days thereafter.                                                                                                                                                                                                                                            
|   
|(d) | Includes 30,054 shares owned directly; 98,564
    shares issuable upon exercise of stock options that are
    exercisable as of March 7, 2003 or become exercisable
    within 60 days thereafter; and 3,354 shares owned by
    Mr. Lyons spouse, of which Mr. Lyons disclaims
    beneficial ownership.                                                                                                                                                                                                                                    
|   
|(e) | Includes 269,992 shares owned directly and 600
    shares of Series D 7.75% Preferred Stock owned directly
    (convertible into 3,896 shares of Common Stock of the Company);
    19,438 shares held by the trustee under the Companys
    Employee Before-Tax Savings Plan; 414,741 shares issuable upon
    exercise of stock options that are exercisable as of March 7,
    2003 or become exercisable within 60 days thereafter; and
    6,400 shares owned by Mr. Pauls spouse, of which
    Mr. Paul disclaims beneficial ownership.
|   
|(f) | Includes 10,750 shares issuable upon exercise of
    stock options that are exercisable as of March 7, 2003 or
    become exercisable within 60 days thereafter.                                                                                                                                                                                                                                                                                                                                                                              
|   
|(g) | Includes 2,408 shares owned directly; 7,440
    shares held by the trustee under the Companys Employee
    Before-Tax Savings Plan; 15,000 restricted shares of Common
    Stock awarded under the Companys 1992 Stock Plan; and
    29,392 shares issuable upon exercise of stock options that are
    exercisable as of March 7, 2003 or become exercisable
    within 60 days thereafter.                                                                                                                                                
|   
|(h) | Includes 900 shares which are owned directly; and
    10,750 shares issuable upon exercise of stock options that are
    exercisable as of March 7, 2003 or become exercisable
    within 60 days thereafter.                                                                                                                                                                                                                                                                                                                                 
|   
|(i) | Includes 3,500 shares issuable upon exercise of
    stock options that are exercisable as of March 7, 2003 or
    become exercisable within 60 days thereafter.                                                                                                                                                                                                                                                                                                                                                                               

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(j) | Includes 93,269 shares owned directly; 15,531
    shares held by the trustee under the Companys Employee
    Before-Tax Savings Plan; and 244,619 shares issuable upon
    exercise of stock options that are exercisable as of March 7,
    2003 or become exercisable within 60 days thereafter.                                                                                                                                                                                                                                                                                                                                             
|   
|(k) | Includes 656,074 shares owned by directors and
    executive officers; 600 shares of Series D 7.75% Preferred
    Stock convertible into 3,896 shares of Common Stock owned by
    directors and executive officers; 65,315 shares held for
    executive officers by the trustee under the Companys
    Employee Before-Tax Savings Plan; 30,000 restricted shares of
    Common Stock awarded under the Companys 1992 Stock Plan;
    and 1,354,479 shares issuable to directors and executive
    officers upon exercise of stock options that are exercisable as
    of March 7, 2003 or become exercisable within 60 days
    thereafter.

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth certain
information, as of December 31, 2002, concerning securities
authorized for issuance under all of the Companys equity
compensation plans:

|                                                               |       |                   |           |                   |  |                       |         |         |  |  |           |           | 
|-------------------------------------------------------------- | ----- | ----------------- | --------- | ----------------- |  | --------------------- | ------- | ------- |  |  | --------- | --------- | 
|                                                               |       |                   |           |                   |  | Number of securities 
|                                                               |       | Number of         |           |                   |  | remaining available  
|                                                               |       | securities        |           |                   |  | for future issuance  
|                                                               |       | to be issued      |           | Weighted-average  |  | under equity         
|                                                               |       | upon exercise of  |           | exercise price of |  | compensation plans   
|                                                               |       | outstanding       |           | outstanding       |  | (excluding securities
|                                                               |       | options, warrants |           | options, warrants |  | reflected in column  
|Plan category                                                  |       | and rights        |           | and rights        |  | (a))                 
|                                                               |       |                   |           |                   |  |                      
|                                                               |       | (a)               |           | (b)               |  | (c)                  
|                                                               |       |                   |           |                   |  |                      
|Equity compensation plans approved by security
    holders     |       |                   | 3,274,927 |                   |  | $                     | 12.7723 |         |  |  | 1,739,410 | (1)      
|Equity compensation plans not approved by
    security holders |       |                   | 283,000   | (2)               |  | $                     | 10.8648 |         |  |  | 0         |          
|                                                               | Total |                   |           | 3,557,927         |  |                       | $       | 12.6206 |  |  |           | 1,739,410 | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The maximum number of shares that may be awarded
    to an employee under the Companys 1992 Stock Plan as
    restricted stock during any fiscal year of the Company is
    limited to 100,000 shares of Common Stock, subject to certain
    adjustments as provided in the 1992 Stock Plan.                                                                                                                                                                                                                                                                                                                                                                              
|   
|(2) | This number represents options to purchase Common
    Stock of the Company granted to certain directors. All options
    have an exercise price not less than the fair market price of
    the Companys Common Stock on the date of grant. Certain of
    these options vested over a three year period after the grant
    date and the remaining options vest over a four year period
    after the grant date. Other terms and conditions of the stock
    options not approved by security holders are substantially the
    same as the terms and conditions of the stock options granted
    under the Directors Option Plan described on pages 32 and
    33 hereof.




ITEM 13  CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS

Transactions with Executive Officers and
Directors

Gowling Lafleur Henderson LLP, which merged with
the firm of Smith Lyons in September 2001, of which firm J.
Chisholm Lyons formerly was a partner and currently is counsel,
has been retained by the Company for many years, including 2002
and 2003, to perform legal services for the Company and its
Canadian subsidiaries. The Company paid $819.42 in fees and
expenses to Gowling Lafleur Henderson LLP in 2002 for the
performance of legal services for the Company and its
subsidiaries.

Benesch, Friedlander, Coplan & Aronoff, of
which firm Margaret Kennedy, the spouse of Robert G. Paul, is a
partner, has been retained by the Company for several years,
including 2002 and 2003, to perform legal services for the
Company and its subsidiaries. The Company paid $38,538.44 in
fees and

49



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##### Table of Contents



expenses to Benesch, Friedlander, Coplan &
Aronoff in 2002 for the performance of legal services for the
Company and its subsidiaries.


Additional Information

Audit Fees

The aggregate fees billed by Deloitte &
Touche (Deloitte), the Companys principal accountant, for
professional services rendered for the audit of the
Companys annual financial statements for the fiscal year
ended December 31, 2002 and the reviews of the interim
financial statements included in the Companys Quarterly
Reports on Form 10-Q for the fiscal year ended
December 31, 2002 were $501,300.

Financial Information Systems Design and
Implementation Fees

The aggregate fees billed by Deloitte for
professional services rendered by Deloitte for information
technology services relating to financial information systems
design and implementation for the fiscal year ended
December 31, 2002 were $0.

All Other Fees

The aggregate fees billed by Deloitte for
services rendered to the Company, other than the services
described under Audit Fees and Financial
Information Systems Design and Implementation Fees, for
the fiscal year ended December 31, 2002 were $732,380,
including audit related services of $351,800 and other non-audit
services of $380,580. Audit related services generally include
fees for registration statements, employee benefit plan audits,
internal control services and assessment of internal accounting
controls in connection with the implementation of an enterprise
software system. Other non-audit service fees are principally
for tax consulting services.




ITEM 14  CONTROLS AND
PROCEDURES

As of December 31, 2002 (the
Evaluation Date), under the supervision and with the
participation of our management, including our Chief Executive
Officer and our Chief Financial Officer, we evaluated the
effectiveness of the design and operation of our disclosure
controls and procedures, as required pursuant to
Rule 13a-14 under the Securities Exchange Act of 1934, as
amended (the Exchange Act). Based upon this
evaluation, our Chief Executive Officer and our Chief Financial
Officer concluded that, as of the Evaluation Date, our
disclosure controls and procedures were effective to ensure that
information required to be disclosed by us in the reports filed
or submitted by us under the Exchange Act is recorded,
processed, summarized and reported within the time periods
specified in the SECs rules and forms.

Additionally, our Chief Executive Officer and
Chief Financial Officer have determined that there have been no
significant changes in our internal controls or in other factors
that could significantly affect these controls, subsequent to
the Evaluation Date.






PART IV







|          |                                                                     
|--------- | --------------------------------------------------------------------
|ITEM 15  | EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
    REPORTS ON FORM 8-K

(a) The following documents are filed as
part of this Report:

(1) Index to Financial Statements and
Independent Accountants Report

The financial statements required by this Item
are submitted on page F-1 of this Annual Report on
Form 10-K.

50



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##### Table of Contents



|                                                                                                     |  |      |     | 
|---------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                                     |  | Page
|                                                                                                     |  |     
|Report of Independent Accountants                                                                    |  |      | F-2 | 
|Consolidated Balance Sheets as of
    December 31, 2001 and 2002                                     |  |      | F-3 | 
|Consolidated Statements of Operations for the
    years ended December 31, 2000, 2001 and 2002       |  |      | F-4 | 
|Consolidated Statements of Cash Flows for the
    years ended December 31, 2000, 2001 and 2002       |  |      | F-5 | 
|Consolidated Statements of Stockholders
    Equity for the years ended December 2000, 2001 and 2002 |  |      | F-6 | 
|Notes to Consolidated Financial Statements                                                           |  |      | F-7 | 



| |     |                              
| | --- | -----------------------------
| | (2) | Financial Statement Schedules

The following additional information should be
read in conjunction with the Consolidated Financial Statements
of the Registrant described in Item 15(a)(1) above:

Financial Statement Schedules of the
Registrant



| |                                                                                                
| | -----------------------------------------------------------------------------------------------
| | Valuation and Qualifying Accounts Schedule, on
    page F-33 of this Annual Report on Form 10-K

Schedules other than the schedule listed above
are omitted because they are not required, are not applicable or
are included elsewhere in the Notes to Consolidated Financial
Statement beginning on page F-7 of this Annual Report on
Form 10-K.

(3) Exhibits*

The information required by this Item relating to
Exhibits to this Annual Report on Form 10-K is included in
the Exhibit Index on pages (i) hereof.

(b) Reports on Form 8-K

On October 30, 2002, the Company filed a
Current Report on Form 8-K under Item 5 Other
Events, and Item 7 whereby it filed a press release,
dated October 29, 2002, reporting Allen Telecoms
third quarter 2002 sales and earnings results and, whereby it
filed a press release dated October 30, 2002, updating
Allen Telecoms orders for geolocation products.



---



|  |                                                                                                                                                                                                                     
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | A copy of any of the Exhibits to this Annual
    Report will be furnished to persons who request a copy upon the
    payment of a fee of $.25 per page to cover the Companys
    duplication and handling expenses.

Safe Harbor Cautionary Statement

Statements included in this Annual Report on
Form 10-K, 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, E911 and power amplification; the
cost and outcome of pending litigation, including, for example,
a lawsuit filed by a competitor in the E911 geolocation business
claiming infringement by the Company of intellectual property
rights; the health and economic stability of the world and
national markets; the cost and availability of capital and
financing to the Company and its customers; loss or bankruptcy
of one or more of the Companys customers, which could
adversely affect the Companys ability to collect its
accounts receivable; 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 impact of competitive
products and pricing in the Companys markets; the impact
of changes in the market value of pension fund assets held by
the Companys defined benefit pension plans; the ability of
the Company to generate future profits or to

51



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##### Table of Contents



implement other tax planning strategies needed to
utilize the Companys tax loss carry forwards in the U.S.
and Europe; the changes in business conditions and/or changes in
assumptions, which could result in goodwill impairment charges;
the impact of U.S. and foreign government legislative/regulatory
actions, including, for example, the scope and timing of E911
geolocation requirements in the U.S. markets and spectrum
availability and licensing for new wireless applications; the
impact of future business conditions on the Companys
ability to meet terms and conditions of the Companys
borrowing agreements; the cost, timing and availability of
personnel, facilities, materials and vendors required for the
Companys current and future products; whether and when
backlog will be converted to customer sales; and the impact, if
any, on current or future sales, earnings, or financial
condition of the Company resulting from the previously announced
agreement under which Andrew Corporation will acquire Allen
Telecom. Allen Telecom Inc.s Annual Report on
Form 10-K and Quarterly Reports on Form 10-Q may
contain additional details concerning these factors.


52



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SIGNATURES

Pursuant to the requirements of Section 13
or 15(d) 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)      



| |     |                        
| | --- | -----------------------
| | By: | /s/ ROBERT A. YOUDELMAN

| |                                                    
| | ---------------------------------------------------
| |                                                    
| | Robert A. Youdelman                                
| | Executive Vice President                           
| | Chief Financial Officer and Assistant
    Secretary

Date: March 20, 2003

Pursuant to the requirements of the Securities
Exchange Act of 1934, this Report has been signed below by the
following persons on behalf of the Registrant and in the
capacities and on the dates indicated.

|                         |                                                                                                         |                | 
|------------------------ | ------------------------------------------------------------------------------------------------------- | -------------- | 
|Signature                |                                                                                                         | Date          
|                         |                                                                                                         |               
|                        
|/s/ ROBERT G. PAUL       |                                                                                                         | March 20, 2003
|                        
|                         | Robert G. Paul, President, Chief Executive
    Officer and Director (Principal Executive Officer)       |                | 
|                        
|/s/ ROBERT A. YOUDELMAN  |                                                                                                         | March 20, 2003
|                        
|                         | Robert A. Youdelman, Executive Vice President
    Chief Financial Officer (Principal Financial Officer) |                | 
|                        
|/s/ JAMES L. LEPORTE III |                                                                                                         | March 20, 2003
|                        
|                         | James L. LePorte III, Vice President-Finance
    (Principal Accounting Officer)                         |                | 
|                        
|/s/ PHILIP WM. COLBURN   |                                                                                                         | March 20, 2003
|                        
|                         | Philip Wm. Colburn, Chairman of the Board
    and Director                                              |                | 
|                        
|/s/ J. CHISHOLM LYONS    |                                                                                                         | March 20, 2003
|                        
|                         | J. Chisholm Lyons, Vice Chairman of the Board and
    Director                                          |                | 
|                        
|/s/ SHELDON I. AUSMAN    |                                                                                                         | March 20, 2003
|                        
|                         | Sheldon I. Ausman, Director                                                                             |                | 
|                        
|/s/ MARTYN F. ROETTER    |                                                                                                         | March 20, 2003
|                        
|                         | Martyn F. Roetter, Director                                                                             |                | 

53



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|                           |                                  |                | 
|-------------------------- | -------------------------------- | -------------- | 
|Signature                  |                                  | Date          
|                           |                                  |               
|                          
|/s/ GARY B. SMITH          |                                  | March 20, 2003
|                          
|                           | Gary B. Smith, Director          |                | 
|                          
|/s/ KATHLEEN M. H. WALLMAN |                                  | March 20, 2003
|                          
|                           | Kathleen M. H. Wallman, Director |                | 

54



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CERTIFICATION

I, Robert G. Paul, certify that:



|   |                                                                                                                                                                                                                                                                                                                                             
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. | I have reviewed this Annual Report on
    Form 10-K of Allen Telecom Inc.;                                                                                                                                                                                                                                                                  
|  
|2. | Based on my knowledge, this annual report does
    not contain any untrue statement of a material fact or omit to
    state a material fact necessary to make the statements made, in
    light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    annual report;
|  
|3. | Based on my knowledge, the financial statements,
    and other financial information included in this annual report,
    fairly present in all material respects the financial condition,
    results of operations and cash flows of the registrant as of,
    and for, the periods presented in this annual report;                       
|  
|4. | The registrants other certifying officers
    and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                       



| |     |                                                                                                                                                                                                                                                                                                             
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | designed such disclosure controls and procedures
    to ensure that material information relating to the registrant,
    including its consolidated subsidiaries, is made known to us by
    others within those entities, particularly during the period in
    which this annual report is being prepared;
|
| | (b) | evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | (c) | presented in this annual report our conclusions
    about the effectiveness of the disclosure controls and
    procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



|   |                                                                                                                                                                                                                                                                
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5. | The registrants other certifying officers
    and I have disclosed, based on our most recent evaluation, to
    the registrants auditors and the audit committee of
    registrants board of directors (or persons performing the
    equivalent functions):



| |     |                                                                                                                                                                                                                                                                                                                   
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | all significant deficiencies in the design or
    operation of internal controls which could adversely affect the
    registrants ability to record, process, summarize and
    report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | (b) | any fraud, whether or not material, that involves
    management or other employees who have a significant role in the
    registrants internal controls; and                                                                                                                                                    



|   |                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|6. | The registrants other certifying officers
    and I have indicated in this annual report whether there were
    significant changes in internal controls or in other factors
    that could significantly affect internal controls subsequent to
    the date of our most recent evaluation, including any corrective
    actions with regard to significant deficiencies and material
    weaknesses.



|                                                               | 
|-------------------------------------------------------------- | 
|/s/ ROBERT G. PAUL                                             | 
|_________________________________________ 
     Robert G. Paul | 
|President                                                      | 
|(Chief Executive Officer)                                      | 
|                                                              
|Date: March 20, 2003                                           | 

55



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##### Table of Contents



CERTIFICATION

I, Robert A. Youdelman, certify that:



|   |                                                                                                                                                                                                                                                                                                                                             
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. | I have reviewed this Annual Report on
    Form 10-K of Allen Telecom Inc.;                                                                                                                                                                                                                                                                  
|  
|2. | Based on my knowledge, this annual report does
    not contain any untrue statement of a material fact or omit to
    state a material fact necessary to make the statements made, in
    light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    annual report;
|  
|3. | Based on my knowledge, the financial statements,
    and other financial information included in this annual report,
    fairly present in all material respects the financial condition,
    results of operations and cash flows of the registrant as of,
    and for, the periods presented in this annual report;                       
|  
|4. | The registrants other certifying officers
    and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                       



| |     |                                                                                                                                                                                                                                                                                                             
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | designed such disclosure controls and procedures
    to ensure that material information relating to the registrant,
    including its consolidated subsidiaries, is made known to us by
    others within those entities, particularly during the period in
    which this annual report is being prepared;
|
| | (b) | evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | (c) | presented in this annual report our conclusions
    about the effectiveness of the disclosure controls and
    procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



|   |                                                                                                                                                                                                                                                                
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5. | The registrants other certifying officers
    and I have disclosed, based on our most recent evaluation, to
    the registrants auditors and the audit committee of
    registrants board of directors (or persons performing the
    equivalent functions):



| |     |                                                                                                                                                                                                                                                                                                                   
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | all significant deficiencies in the design or
    operation of internal controls which could adversely affect the
    registrants ability to record, process, summarize and
    report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | (b) | any fraud, whether or not material, that involves
    management or other employees who have a significant role in the
    registrants internal controls; and                                                                                                                                                    



|   |                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|6. | The registrants other certifying officers
    and I have indicated in this annual report whether there were
    significant changes in internal controls or in other factors
    that could significantly affect internal controls subsequent to
    the date of our most recent evaluation, including any corrective
    actions with regard to significant deficiencies and material
    weaknesses.



|                                                                    | 
|------------------------------------------------------------------- | 
|/s/ ROBERT A. YOUDELMAN                                             | 
|_________________________________________ 
     Robert A. Youdelman | 
|Executive Vice President                                            | 
|(Chief Financial Officer)                                           | 
|                                                                   
|Date: March 20, 2003                                                | 

56



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##### Table of Contents



ALLEN TELECOM INC.






INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS


|                              |                                                                                                          |  |     
|----------------------------- | -------------------------------------------------------------------------------------------------------- |  | ----
|Audited Financial Statements: |                                                                                                          | 
|                             
|                              | Report of Independent Accountants                                                                        |  | F-2 
|                              | Consolidated Balance Sheets as of
    December 31, 2001 and 2002                                         |  | F-3 
|                              | Consolidated Statements of Operations for the
    years ended December 31, 2000, 2001 and 2002           |  | F-4 
|                              | Consolidated Statements of Cash Flows for the
    years ended December 31, 2000, 2001 and 2002           |  | F-5 
|                              | Consolidated Statements of Stockholders
    Equity for the years ended December 31, 2000, 2001 and 2002 |  | F-6 
|                              | Notes to Consolidated Financial Statements                                                               |  | F-7 
|                              | Schedule II Valuation and Qualifying Accounts                                                            |  | F-33

F-1



---



##### Table of Contents



REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
Allen Telecom Inc.

We have audited the accompanying consolidated
balance sheets of Allen Telecom Inc. and its subsidiaries (the
Company) as of December 31, 2001 and 2002, and
the related consolidated statements of operations,
stockholders equity, and cash flows for each of the three
years in the period ended December 31, 2002. Our audits also
included the financial statement schedule listed in the Index at
Item (15). These consolidated financial statements and
financial statement schedule are the responsibility of the
Companys management. Our responsibility is to express an
opinion on the consolidated financial statements and financial
statement schedule based on our audits.

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

In our opinion, such consolidated financial
statements present fairly, in all material respects, the
financial position of Allen Telecom Inc. and its subsidiaries at
December 31, 2001 and 2002, and the results of their
operations and their cash flows for each of the three years in
the period ended December 31, 2002, in conformity with
accounting principles generally accepted in the United States of
America. Also, in our opinion, such financial statement
schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material
respects the information set forth therein.

As discussed in Note 1 to the consolidated
financial statements, in 2002, the Company changed its method of
accounting for goodwill and other intangible assets to conform
to Statement of Financial Accounting Standards No. 142.

As discussed in Note 14 to the consolidated
financial statements, effective February 18, 2003, the
Company signed a definitive agreement under which Andrew
Corporation would acquire the Company in a stock-for-stock
transaction.

/s/ DELOITTE & TOUCHE LLP

Cleveland, Ohio

February 6, 2003


(February 18, 2003 as to Note 14)

F-2



---



##### Table of Contents



ALLEN TELECOM INC.

CONSOLIDATED BALANCE SHEETS

|                                               |                                                                                                                               |                                                                                                  |                                                                                  |         |         |         |         |         |         |         | 
|---------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- | 
|                                               |                                                                                                                               |                                                                                                 
|                                               |                                                                                                                               | As of December 31,                                                                              
|                                               |                                                                                                                               |                                                                                                 
|                                               |                                                                                                                               | 2001                                                                                             |                                                                                  | 2002   
|                                               |                                                                                                                               |                                                                                                  |                                                                                  |        
|                                               |                                                                                                                               |                                                                                                 
|                                               |                                                                                                                               | (Amounts in thousands,                                                                          
|                                               |                                                                                                                               | except for per share data)                                                                      
|Assets                                         |                                                                                                                               |                                                                                                  |                                                                                  |         |         |         |         |        
|                                               | Current Assets:                                                                                                               |                                                                                                  |                                                                                  |         |         |         |         |         |        
|                                               |                                                                                                                               | Cash and cash equivalents                                                                        |                                                                                  | $       | 16,368  |         |         | $       | 48,420  |        
|                                               |                                                                                                                               | Accounts receivable, less allowance for doubtful
    accounts  2001  $3,338; 2002 
    $3,141 |                                                                                  |         | 92,291  |         |         |         | 105,463 |        
|                                               |                                                                                                                               | Inventories                                                                                      |                                                                                  |         | 124,026 |         |         |         | 100,474 |        
|                                               |                                                                                                                               | Deferred income taxes                                                                            |                                                                                  |         | 2,660   |         |         |         | 5,480   |        
|                                               |                                                                                                                               | Recoverable income taxes                                                                         |                                                                                  |         | 20,169  |         |         |         | 20,379  |        
|                                               |                                                                                                                               | Other current assets                                                                             |                                                                                  |         | 2,416   |         |         |         | 2,710   |        
|                                               |                                                                                                                               |                                                                                                  |                                                                                  |         |         |         |         |        
|                                               |                                                                                                                               |                                                                                                  | Total Current Assets                                                             |         |         | 257,930 |         |         |         | 282,926 | 
|                                               | Property, Plant and Equipment                                                                                                 |                                                                                                  |                                                                                  | 41,290  |         |         |         | 38,214  |        
|                                               | Goodwill                                                                                                                      |                                                                                                  |                                                                                  | 140,995 |         |         |         | 139,126 |        
|                                               | Deferred Income Taxes                                                                                                         |                                                                                                  |                                                                                  | 39,401  |         |         |         | 36,365  |        
|                                               | Other Assets                                                                                                                  |                                                                                                  |                                                                                  | 33,391  |         |         |         | 33,407  |        
|                                               |                                                                                                                               |                                                                                                  |                                                                                  |         |         |         |         |        
|Total Assets                                   |                                                                                                                               | $                                                                                                | 513,007                                                                          |         |         | $       | 530,038 |        
|                                               |                                                                                                                               |                                                                                                  |                                                                                  |         |         |         |         |        
|Liabilities and Stockholders
    Equity       |                                                                                                                               |                                                                                                  |                                                                                  |         |         |         |         |        
|                                               | Current Liabilities:                                                                                                          |                                                                                                  |                                                                                  |         |         |         |         |         |        
|                                               |                                                                                                                               | Notes payable and current maturities of long-term
    debt                                       |                                                                                  | $       | 12,318  |         |         | $       | 13,277  |        
|                                               |                                                                                                                               | Accounts payable                                                                                 |                                                                                  |         | 40,355  |         |         |         | 54,003  |        
|                                               |                                                                                                                               | Accrued expenses (including accrued wages and
    commissions  2001                            |                                                                                  |         |         |         |         |         |         |        
|                                               |                                                                                                                               |                                                                                                  | $11,614; 2002  $13,441)                                                         |         |         | 27,827  |         |         |         | 36,192  | 
|                                               |                                                                                                                               | Income taxes payable                                                                             |                                                                                  |         | 4,781   |         |         |         | 4,443   |        
|                                               |                                                                                                                               | Deferred income taxes                                                                            |                                                                                  |         | 9,852   |         |         |         | 10,157  |        
|                                               |                                                                                                                               |                                                                                                  |                                                                                  |         |         |         |         |        
|                                               |                                                                                                                               |                                                                                                  | Total Current Liabilities                                                        |         |         | 95,133  |         |         |         | 118,072 | 
|                                               | Long-Term Debt                                                                                                                |                                                                                                  |                                                                                  | 141,581 |         |         |         | 64,084  |        
|                                               | Deferred Income Taxes                                                                                                         |                                                                                                  |                                                                                  | 2,164   |         |         |         |        |        
|                                               | Other Liabilities                                                                                                             |                                                                                                  |                                                                                  | 15,772  |         |         |         | 23,628  |        
|                                               |                                                                                                                               |                                                                                                  |                                                                                  |         |         |         |         |        
|                                               |                                                                                                                               |                                                                                                  | Total Liabilities                                                                |         |         | 254,650 |         |         |         | 205,784 | 
|                                               |                                                                                                                               |                                                                                                  |                                                                                  |         |         |         |         |        
|                                               | Commitments and Contingencies (Note 6)                                                                                        |                                                                                                  |                                                                                  |        |         |         |         |        |        
|                                               |                                                                                                                               |                                                                                                  |                                                                                  |         |         |         |         |        
|                                               | Redeemable Convertible Preferred Stock, 1,000
    shares at redemption value (liquidation preference of $50.00 per
    share) |                                                                                                  |                                                                                  |        |         |         |         | 50,000  |        
|                                               |                                                                                                                               |                                                                                                  |                                                                                  |         |         |         |         |        
|                                               | Stockholders Equity:                                                                                                         |                                                                                                  |                                                                                  |         |         |         |         |         |        
|                                               |                                                                                                                               | Common stock, par value $1.00;
    authorized  50,000 shares; issued                           |                                                                                  |         |         |         |         |         |         |        
|                                               |                                                                                                                               |                                                                                                  | 2001  32,500;
    2002  32,502; outstanding 
    2001  30,425; 2002  30,554 |         |         | 32,500  |         |         |         | 32,502  | 
|                                               |                                                                                                                               | Paid-in capital                                                                                  |                                                                                  |         | 203,548 |         |         |         | 203,292 |        
|                                               |                                                                                                                               | Retained earnings                                                                                |                                                                                  |         | 69,676  |         |         |         | 67,322  |        
|                                               |                                                                                                                               | Accumulated other comprehensive loss                                                             |                                                                                  |         | (30,671 | )       |         |         | (13,243 | )      
|                                               |                                                                                                                               | Less: Treasury stock  common shares,
    at cost, 2001-2,075; 2002-1,948 shares                 |                                                                                  |         | (15,440 | )       |         |         | (14,612 | )      
|Unearned compensation                          |                                                                                                                               |                                                                                                  | (1,256                                                                           | )       |         |         | (1,007  | )      
|                                               |                                                                                                                               |                                                                                                  |                                                                                  |         |         |         |         |        
|                                               |                                                                                                                               |                                                                                                  | Total Stockholders Equity                                                       |         |         | 258,357 |         |         |         | 274,254 | 
|                                               |                                                                                                                               |                                                                                                  |                                                                                  |         |         |         |         |        
|Total Liabilities and Stockholders
    Equity |                                                                                                                               | $                                                                                                | 513,007                                                                          |         |         | $       | 530,038 |        
|                                               |                                                                                                                               |                                                                                                  |                                                                                  |         |         |         |         |        

The accompanying notes are an integral part of
these financial statements.

F-3



---



##### Table of Contents



ALLEN TELECOM INC.

CONSOLIDATED STATEMENTS OF
OPERATIONS

|                                                                            |                                              |                                                         |         |         |        |      |         |         |        |   |         |        |        |  
|--------------------------------------------------------------------------- | -------------------------------------------- | ------------------------------------------------------- | ------- | ------- | ------ | ---- | ------- | ------- | ------ | - | ------- | ------ | ------ | -
|                                                                            |                                              |                                                        
|                                                                            |                                              | Year Ended December 31,                                
|                                                                            |                                              |                                                        
|                                                                            |                                              | 2000                                                    |         | 2001    |        | 2002
|                                                                            |                                              |                                                         |         |         |        |     
|                                                                            |                                              |                                                        
|                                                                            |                                              | (Amounts in thousands,                                 
|                                                                            |                                              | except per common share data)                          
|Sales                                                                       |                                              | $                                                       | 392,608 |         |        | $    | 394,601 |         |        | $ | 416,975 |       
|Cost of sales                                                               |                                              |                                                         | 277,666 |         |        |      | 296,342 |         |        |   | 314,891 |       
|                                                                            |                                              |                                                         |         |         |        |      |         |         |        |   |         |       
|Gross profit                                                                |                                              |                                                         | 114,942 |         |        |      | 98,259  |         |        |   | 102,084 |       
|Operating expenses:                                                         |                                              |                                                         |         |         |        |      |         |         |        |   |         |       
|                                                                            | Selling, general and administrative expenses |                                                         |         | 54,271  |        |      |         | 56,776  |        |   |         | 58,386 |       
|                                                                            | Research and development costs               |                                                         |         | 25,442  |        |      |         | 26,086  |        |   |         | 26,031 |       
|                                                                            | Amortization of goodwill                     |                                                         |         | 7,822   |        |      |         | 7,901   |        |   |         |       |       
|                                                                            |                                              |                                                         |         |         |        |      |         |         |        |   |         |       
|Operating income                                                            |                                              |                                                         | 27,407  |         |        |      | 7,496   |         |        |   | 17,667  |       
|Interest and financing expenses:                                            |                                              |                                                         |         |         |        |      |         |         |        |   |         |       
|                                                                            | Interest expense                             |                                                         |         | (11,022 | )      |      |         | (11,281 | )      |   |         | (7,914 | )     
|                                                                            | Interest income                              |                                                         |         | 1,989   |        |      |         | 1,034   |        |   |         | 913    |       
|                                                                            |                                              |                                                         |         |         |        |      |         |         |        |   |         |       
|Income (loss) before taxes and minority
    interests                       |                                              |                                                         | 18,374  |         |        |      | (2,751  | )       |        |   | 10,666  |       
|(Provision for) benefit from income taxes                                   |                                              |                                                         | (7,530  | )       |        |      | 1,073   |         |        |   | (3,773  | )     
|                                                                            |                                              |                                                         |         |         |        |      |         |         |        |   |         |       
|Income (loss) before minority interests                                     |                                              |                                                         | 10,844  |         |        |      | (1,678  | )       |        |   | 6,893   |       
|Minority interests                                                          |                                              |                                                         | (91     | )       |        |      | (145    | )       |        |   | (101    | )     
|                                                                            |                                              |                                                         |         |         |        |      |         |         |        |   |         |       
|Income (loss) from continuing
    operations                                |                                              |                                                         | 10,753  |         |        |      | (1,823  | )       |        |   | 6,792   |       
|Discontinued operationsgain from disposal
    of emission testing business |                                              |                                                         | 1,300   |         |        |      |        |         |        |   |        |       
|                                                                            |                                              |                                                         |         |         |        |      |         |         |        |   |         |       
|Income (loss) before cumulative effect of
    accounting change             |                                              |                                                         | 12,053  |         |        |      | (1,823  | )       |        |   | 6,792   |       
|Cumulative effect of change in accounting
    principle                     |                                              |                                                         |        |         |        |      |        |         |        |   | (3,397  | )     
|                                                                            |                                              |                                                         |         |         |        |      |         |         |        |   |         |       
|Net income (loss)                                                           |                                              |                                                         | 12,053  |         |        |      | (1,823  | )       |        |   | 3,395   |       
|Dividends on preferred stock                                                |                                              |                                                         |        |         |        |      |        |         |        |   | (2,540  | )     
|                                                                            |                                              |                                                         |         |         |        |      |         |         |        |   |         |       
|Income (loss) applicable to common
    shareholders                         |                                              | $                                                       | 12,053  |         |        | $    | (1,823  | )       |        | $ | 855     |       
|                                                                            |                                              |                                                         |         |         |        |      |         |         |        |   |         |       
|Earnings (Loss) Per Common Share:                                           |                                              |                                                         |         |         |        |      |         |         |        |   |         |       
|                                                                            | Basic and Diluted:                           |                                                         |         |         |        |      |         |         |        |   |         |        |       
|                                                                            |                                              | Income (loss) from continuing operations                |         | $       | 0.38   |      |         | $       | (0.06  | ) |         | $      | 0.14   |  
|                                                                            |                                              | Discontinued emission testing business                  |         |         | 0.05   |      |         |         |       |   |         |        |       |  
|                                                                            |                                              | Cumulative effect of change in accounting
    principle |         |         |       |      |         |         |       |   |         |        | (0.11  | )
|                                                                            |                                              |                                                         |         |         |        |      |         |         |        |   |         |       
|                                                                            |                                              | Net income (loss)                                       |         | $       | 0.43   |      |         | $       | (0.06  | ) |         | $      | 0.03   |  
|                                                                            |                                              |                                                         |         |         |        |      |         |         |        |   |         |       
|                                                                            | Weighted average common shares outstanding:  |                                                         |         |         |        |      |         |         |        |   |         |        |       
|                                                                            |                                              | Basic                                                   |         |         | 27,820 |      |         |         | 28,090 |   |         |        | 30,410 |  
|                                                                            |                                              | Diluted                                                 |         |         | 28,270 |      |         |         | 28,090 |   |         |        | 30,460 |  

The accompanying notes are an integral part of
these financial statements.

F-4



---



##### Table of Contents



ALLEN TELECOM INC.

CONSOLIDATED STATEMENTS OF CASH
FLOWS

|                                                               |                                                                                 |                                                                                                         |         |         |         |      |         |         |         |   |         |         |        |  
|-------------------------------------------------------------- | ------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------- | ------- | ------- | ------- | ---- | ------- | ------- | ------- | - | ------- | ------- | ------ | -
|                                                               |                                                                                 |                                                                                                        
|                                                               |                                                                                 | Year Ended December 31,                                                                                
|                                                               |                                                                                 |                                                                                                        
|                                                               |                                                                                 | 2000                                                                                                    |         | 2001    |         | 2002
|                                                               |                                                                                 |                                                                                                         |         |         |         |     
|                                                               |                                                                                 |                                                                                                        
|                                                               |                                                                                 | (Amounts in thousands)                                                                                 
|Cash Flows From Operating
    Activities:                      |                                                                                 |                                                                                                         |         |         |         |      |         |         |         |   |         |        
|                                                              
|                                                               | Net income (loss)                                                               |                                                                                                         | $       | 12,053  |         |      | $       | (1,823  | )       |   | $       | 3,395   |       
|                                                               | Adjustments to reconcile income (loss) to
    operating cash flow: Depreciation |                                                                                                         |         | 13,353  |         |      |         | 13,313  |         |   |         | 11,992  |       
|                                                               |                                                                                 | Amortization of goodwill                                                                                |         |         | 7,822   |      |         |         | 7,901   |   |         |         |       |  
|                                                               |                                                                                 | Goodwill impairment charge                                                                              |         |         |        |      |         |         |        |   |         |         | 3,397  |  
|                                                               |                                                                                 | Amortization of capitalized software                                                                    |         |         | 2,532   |      |         |         | 4,022   |   |         |         | 3,277  |  
|                                                               |                                                                                 | Other amortization                                                                                      |         |         | 606     |      |         |         | 704     |   |         |         | 703    |  
|                                                               |                                                                                 | Deferred income taxes                                                                                   |         |         | 5,676   |      |         |         | 2,439   |   |         |         | (4,356 | )
|                                                               |                                                                                 | Non-cash loss on write-off of capital assets                                                            |         |         | 385     |      |         |         |        |   |         |         |       |  
|                                                               |                                                                                 | Non-cash pension gain                                                                                   |         |         | (1,160  | )    |         |         |        |   |         |         |       |  
|                                                               |                                                                                 | Non-cash gain on sale of discontinued operations                                                        |         |         | (1,300  | )    |         |         |        |   |         |         |       |  
|                                                               | Changes in operating assets and liabilities:                                    |                                                                                                         |         |         |         |      |         |         |         |   |         |         |       
|                                                               |                                                                                 | Receivables                                                                                             |         |         | (16,702 | )    |         |         | 4,381   |   |         |         | (3,796 | )
|                                                               |                                                                                 | Inventories                                                                                             |         |         | (29,155 | )    |         |         | (5,659  | ) |         |         | 32,962 |  
|                                                               |                                                                                 | Accounts payable and accrued expenses                                                                   |         |         | 16,680  |      |         |         | (22,401 | ) |         |         | 14,787 |  
|                                                               |                                                                                 | Income taxes payable                                                                                    |         |         | (9,617  | )    |         |         | (5,945  | ) |         |         | 2,538  |  
|                                                               |                                                                                 | Other long-term liabilities (principally increase
    in unfunded pension obligations in 2001 and 2002) |         |         | 985     |      |         |         | 5,736   |   |         |         | 7,247  |  
|                                                               |                                                                                 | Other, net                                                                                              |         |         | (4,743  | )    |         |         | (3,137  | ) |         |         | (1,696 | )
|                                                               |                                                                                 |                                                                                                         |         |         |         |      |         |         |         |   |         |        
|Cash (used) provided by operating activities                   |                                                                                 |                                                                                                         | (2,585  | )       |         |      | (469    | )       |         |   | 70,450  |        
|                                                               |                                                                                 |                                                                                                         |         |         |         |      |         |         |         |   |         |        
|Cash Flows From Investing
    Activities:                      |                                                                                 |                                                                                                         |         |         |         |      |         |         |         |   |         |        
|                                                               | Capital expenditures                                                            |                                                                                                         |         | (15,082 | )       |      |         | (10,044 | )       |   |         | (6,761  | )     
|                                                               | Investments in wireless communications
    subsidiaries (net of cash acquired)  |                                                                                                         |         | (8,512  | )       |      |         | (5,689  | )       |   |         | (616    | )     
|                                                               | Capitalized software product costs                                              |                                                                                                         |         | (4,088  | )       |      |         | (2,191  | )       |   |         | (2,413  | )     
|                                                               | Sales and retirements of fixed assets                                           |                                                                                                         |         | 1,631   |         |      |         | 4,864   |         |   |         | 1,180   |       
|                                                               |                                                                                 |                                                                                                         |         |         |         |      |         |         |         |   |         |        
|Cash used by investing activities                              |                                                                                 |                                                                                                         | (26,051 | )       |         |      | (13,060 | )       |         |   | (8,610  | )      
|                                                               |                                                                                 |                                                                                                         |         |         |         |      |         |         |         |   |         |        
|Cash Flows From Financing
    Activities:                      |                                                                                 |                                                                                                         |         |         |         |      |         |         |         |   |         |        
|                                                               | Proceeds from (repayment of) long-term borrowings                               |                                                                                                         |         | 16,531  |         |      |         | (8,737  | )       |   |         | (78,821 | )     
|                                                               | Preferred stock dividends                                                       |                                                                                                         |         |        |         |      |         |        |         |   |         | (2,540  | )     
|                                                               | Acquisition of treasury shares                                                  |                                                                                                         |         | (179    | )       |      |         | (1,315  | )       |   |         | (215    | )     
|                                                               | Proceeds from issuance of preferred stock, net                                  |                                                                                                         |         |        |         |      |         |        |         |   |         | 46,791  |       
|                                                               | Collection on installment notes receivable                                      |                                                                                                         |         | 2,900   |         |      |         | 1,000   |         |   |         | 1,100   |       
|                                                               | Treasury stock sold to employee benefit plan                                    |                                                                                                         |         | 752     |         |      |         | 910     |         |   |         | 777     |       
|                                                               | Exercise of stock options                                                       |                                                                                                         |         | 764     |         |      |         | 939     |         |   |         | 12      |       
|                                                               | Proceeds from sale and leaseback transaction                                    |                                                                                                         |         |        |         |      |         | 4,869   |         |   |         |        |       
|                                                               |                                                                                 |                                                                                                         |         |         |         |      |         |         |         |   |         |        
|Cash provided (used) by financing activities                   |                                                                                 |                                                                                                         | 20,768  |         |         |      | (2,334  | )       |         |   | (32,896 | )      
|                                                               |                                                                                 |                                                                                                         |         |         |         |      |         |         |         |   |         |        
|Net Cash (Used) Provided                                       |                                                                                 |                                                                                                         | (7,868  | )       |         |      | (15,863 | )       |         |   | 28,944  |        
|Effect of foreign exchange rate changes on cash                |                                                                                 |                                                                                                         | (3,678  | )       |         |      | 1,261   |         |         |   | 3,108   |        
|Net cash flow from change in year-end of
    subsidiaries      |                                                                                 |                                                                                                         |        |         |         |      | 20,431  |         |         |   |        |        
|Cash and cash equivalents at beginning of year                 |                                                                                 |                                                                                                         | 22,085  |         |         |      | 10,539  |         |         |   | 16,368  |        
|                                                               |                                                                                 |                                                                                                         |         |         |         |      |         |         |         |   |         |        
|Cash and cash equivalents at end of year                       |                                                                                 | $                                                                                                       | 10,539  |         |         | $    | 16,368  |         |         | $ | 48,420  |        
|                                                               |                                                                                 |                                                                                                         |         |         |         |      |         |         |         |   |         |        
|Information with respect to cash paid during the
    year for: |                                                                                 |                                                                                                         |         |         |         |      |         |         |         |   |         |        
|                                                               | Interest paid                                                                   |                                                                                                         | $       | 10,620  |         |      | $       | 11,005  |         |   | $       | 7,409   |       
|                                                               | Income taxes paid, net                                                          |                                                                                                         | $       | 10,207  |         |      | $       | 3,664   |         |   | $       | 126     |       

The accompanying notes are an integral part of
these financial statements.

F-5



---



##### Table of Contents



ALLEN TELECOM INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY

|                                                              |                                    |                                                  |         |        |         |         |        |               |   |          |         |               |   |          |   |              |         |   |        |        |   |   |         |   |         |   |         |   |   |   |        |   |   | 
|------------------------------------------------------------- | ---------------------------------- | ------------------------------------------------ | ------- | ------ | ------- | ------- | ------ | ------------- | - | -------- | ------- | ------------- | - | -------- | - | ------------ | ------- | - | ------ | ------ | - | - | ------- | - | ------- | - | ------- | - | - | - | ------ | - | - | 
|                                                              |                                    |                                                  |         |        |         |         |        |               |   |          |         | Accumulated   |   |          |   |             
|                                                              |                                    |                                                  |         |        |         |         |        |               |   |          |         | Other         |   |          |   |             
|                                                              |                                    |                                                  |         |        |         |         |        | Comprehensive |   |          |         | Comprehensive |   |          |   |             
|                                                              |                                    |                                                  |         | Common |         | Paid-In |        | Income        |   | Retained |         | Income        |   | Treasury |   | Unearned    
|                                                              |                                    | Total                                            |         | Stock  |         | Capital |        | (Loss)        |   | Earnings |         | (Loss)        |   | Stock    |   | Compensation
|                                                              |                                    |                                                  |         |        |         |         |        |               |   |          |         |               |   |          |   |             
|                                                              |                                    |                                                 
|                                                              |                                    | (Amounts in thousands, except common share data)
|Balance, December 31, 1999                                    |                                    | $                                                | 240,912 |        |         | $       | 30,010 |               |   | $        | 181,335 |               |   |          |   |              |         | $ | 57,014 |        |   | $ | (10,685 | ) |         | $ | (14,978 | ) |   | $ | (1,784 | )
|Comprehensive loss:                                           |                                    |                                                  |         |        |         |         |        |               |   |          |         |               |   |          |   |              |         |   |        |        |   |   |         |   |         |   |         |   |   |   |        |  
|                                                              | Net income                         |                                                  |         | 12,053 |         |         |        |              |   |          |         |              |   |          | $ | 12,053       |         |   |        | 12,053 |   |   |         |  |         |   |         |  |   |   |        |  |  
|                                                              | Other comprehensive loss:          |                                                  |         |        |         |         |        |               |   |          |         |               |   |          |   |              |         |   |        |        |   |   |         |   |         |   |         |   |   |   |        |   |  
|                                                              |                                    | Foreign currency translation adjustments         |         |        | (21,263 | )       |        |               |  |          |         |               |  |          |   |              | (21,263 | ) |        |        |  |   |         |   | (21,263 | ) |         |   |  |   |        |   |  | 
|                                                              |                                    |                                                  |         |        |         |         |        |               |   |          |         |               |   |          |   |              |         |   |        |        |   |   |         |   |         |   |         |   |   |   |        |  
|                                                              |                                    | Comprehensive loss                               |         |        |        |         |        |               |  |          |         |               |  |          |   | $            | (9,210  | ) |        |        |  |   |         |   |        |   |         |   |  |   |        |   |  | 
|                                                              |                                    |                                                  |         |        |         |         |        |               |   |          |         |               |   |          |   |              |         |   |        |        |   |   |         |   |         |   |         |   |   |   |        |  
|Exercise of stock options                                     |                                    |                                                  | 764     |        |         |         | 74     |               |   |          | 656     |               |   |          |   |              |         |   |       |        |   |   |        |   |         |   | 34      |   |   |   |       |  
|Employee stock plans tax benefits                             |                                    |                                                  | 1,630   |        |         |         |       |               |   |          | 1,630   |               |   |          |   |              |         |   |       |        |   |   |        |   |         |   |        |   |   |   |       |  
|Treasury stock reissued, net 43,941 common shares             |                                    |                                                  | 573     |        |         |         |       |               |   |          | 359     |               |   |          |   |              |         |   |       |        |   |   |        |   |         |   | 214     |   |   |   |       |  
|Restricted stock, net                                         |                                    |                                                  | (1      | )      |         |         | 8      |               |   |          | 86      |               |   |          |   |              |         |   |       |        |   |   |        |   |         |   |        |   |   |   | (95    | )
|Amortization of unearned compensation                         |                                    |                                                  | 313     |        |         |         |       |               |   |          |        |               |   |          |   |              |         |   |       |        |   |   |        |   |         |   |        |   |   |   | 313    |  
|                                                              |                                    |                                                  |         |        |         |         |        |               |   |          |         |               |   |          |   |              |         |   |        |        |   |   |         |   |         |   |         |   |   |   |        |  
|Balance, December 31, 2000                                    |                                    |                                                  | 234,981 |        |         |         | 30,092 |               |   |          | 184,066 |               |   |          |   |              |         |   | 69,067 |        |   |   | (31,948 | ) |         |   | (14,730 | ) |   |   | (1,566 | )
|Net income from change in fiscal year-end of
    subsidiaries |                                    |                                                  | 2,432   |        |         |         |       |               |   |          |        |               |   |          |   |              |         |   | 2,432  |        |   |   |        |   |         |   |        |   |   |   |       |  
|Comprehensive income (loss):                                  |                                    |                                                  |         |        |         |         |        |               |   |          |         |               |   |          |   |              |         |   |        |        |   |   |         |   |         |   |         |   |   |   |        |  
|                                                              | Net loss                           |                                                  |         | (1,823 | )       |         |        |              |   |          |         |              |   |          | $ | (1,823       | )       |   |        | (1,823 | ) |   |         |  |         |   |         |  |   |   |        |  |  
|                                                              | Other comprehensive income (loss): |                                                  |         |        |         |         |        |               |   |          |         |               |   |          |   |              |         |   |        |        |   |   |         |   |         |   |         |   |   |   |        |   |  
|                                                              |                                    | Foreign currency translation adjustments         |         |        | 3,896   |         |        |               |  |          |         |               |  |          |   |              | 3,896   |   |        |        |  |   |         |   | 3,896   |   |         |   |  |   |        |   |  | 
|                                                              |                                    | Minimum pension liability adjustment             |         |        | (2,664  | )       |        |               |  |          |         |               |  |          |   |              | (2,664  | ) |        |        |  |   |         |   | (2,664  | ) |         |   |  |   |        |   |  | 
|                                                              |                                    | Derivative instruments                           |         |        | 45      |         |        |               |  |          |         |               |  |          |   |              | 45      |   |        |        |  |   |         |   | 45      |   |         |   |  |   |        |   |  | 
|                                                              |                                    |                                                  |         |        |         |         |        |               |   |          |         |               |   |          |   |              |         |   |        |        |   |   |         |   |         |   |         |   |   |   |        |  
|                                                              |                                    | Comprehensive loss                               |         |        |        |         |        |               |  |          |         |               |  |          |   | $            | (546    | ) |        |        |  |   |         |   |        |   |         |   |  |   |        |   |  | 
|                                                              |                                    |                                                  |         |        |         |         |        |               |   |          |         |               |   |          |   |              |         |   |        |        |   |   |         |   |         |   |         |   |   |   |        |  
|Acquisition of subsidiary                                     |                                    |                                                  | 20,233  |        |         |         | 2,271  |               |   |          | 17,962  |               |   |          |   |              |         |   |       |        |   |   |        |   |         |   |        |   |   |   |       |  
|Exercise of stock options                                     |                                    |                                                  | 939     |        |         |         | 137    |               |   |          | 802     |               |   |          |   |              |         |   |       |        |   |   |        |   |         |   |        |   |   |   |       |  
|Employee stock plans tax benefits                             |                                    |                                                  | 413     |        |         |         |       |               |   |          | 413     |               |   |          |   |              |         |   |       |        |   |   |        |   |         |   |        |   |   |   |       |  
|Treasury stock acquired, net 4,720 common shares              |                                    |                                                  | (405    | )      |         |         |       |               |   |          | 305     |               |   |          |   |              |         |   |       |        |   |   |        |   |         |   | (710    | ) |   |   |       |  
|Amortization of unearned compensation                         |                                    |                                                  | 310     |        |         |         |       |               |   |          |        |               |   |          |   |              |         |   |       |        |   |   |        |   |         |   |        |   |   |   | 310    |  
|                                                              |                                    |                                                  |         |        |         |         |        |               |   |          |         |               |   |          |   |              |         |   |        |        |   |   |         |   |         |   |         |   |   |   |        |  
|Balance, December 31, 2001                                    |                                    |                                                  | 258,357 |        |         |         | 32,500 |               |   |          | 203,548 |               |   |          |   |              |         |   | 69,676 |        |   |   | (30,671 | ) |         |   | (15,440 | ) |   |   | (1,256 | )
|Comprehensive income (loss):                                  |                                    |                                                  |         |        |         |         |        |               |   |          |         |               |   |          |   |              |         |   |        |        |   |   |         |   |         |   |         |   |   |   |        |  
|                                                              | Net income                         |                                                  |         | 3,395  |         |         |        |              |   |          |         |              |   |          | $ | 3,395        |         |   |        | 3,395  |   |   |         |  |         |   |         |  |   |   |        |  |  
|                                                              | Other comprehensive income (loss): |                                                  |         |        |         |         |        |               |   |          |         |               |   |          |   |              |         |   |        |        |   |   |         |   |         |   |         |   |   |   |        |   |  
|                                                              |                                    | Foreign currency translation adjustments         |         |        | 22,554  |         |        |               |  |          |         |               |  |          |   |              | 22,554  |   |        |        |  |   |         |   | 22,554  |   |         |   |  |   |        |   |  | 
|                                                              |                                    | Minimum pension liability adjustment             |         |        | (4,931  | )       |        |               |  |          |         |               |  |          |   |              | (4,931  | ) |        |        |  |   |         |   | (4,931  | ) |         |   |  |   |        |   |  | 
|                                                              |                                    | Derivative instruments                           |         |        | (195    | )       |        |               |  |          |         |               |  |          |   |              | (195    | ) |        |        |  |   |         |   | (195    | ) |         |   |  |   |        |   |  | 
|                                                              |                                    |                                                  |         |        |         |         |        |               |   |          |         |               |   |          |   |              |         |   |        |        |   |   |         |   |         |   |         |   |   |   |        |  
|                                                              |                                    | Comprehensive income                             |         |        |        |         |        |               |  |          |         |               |  |          |   | $            | 20,823  |   |        |        |  |   |         |   |        |   |         |   |  |   |        |   |  | 
|                                                              |                                    |                                                  |         |        |         |         |        |               |   |          |         |               |   |          |   |              |         |   |        |        |   |   |         |   |         |   |         |   |   |   |        |  
|Preferred stock issuance costs                                |                                    |                                                  | (3,209  | )      |         |         |       |               |   |          |        |               |   |          |   |              |         |   | (3,209 | )      |   |   |        |   |         |   |        |   |   |   |       |  
|Preferred stock dividends                                     |                                    |                                                  | (2,540  | )      |         |         |       |               |   |          |        |               |   |          |   |              |         |   | (2,540 | )      |   |   |        |   |         |   |        |   |   |   |       |  
|Exercise of stock options                                     |                                    |                                                  | 12      |        |         |         | 2      |               |   |          | 10      |               |   |          |   |              |         |   |        |        |   |   |         |   |         |   |         |   |   |   |        |  
|Treasury stock reissued, net 131,285 common shares            |                                    |                                                  | 562     |        |         |         |       |               |   |          | (266    | )             |   |          |   |              |         |   |       |        |   |   |        |   |         |   | 828     |   |   |   |       |  
|Amortization of unearned compensation                         |                                    |                                                  | 249     |        |         |         |       |               |   |          |        |               |   |          |   |              |         |   |       |        |   |   |        |   |         |   |        |   |   |   | 249    |  
|                                                              |                                    |                                                  |         |        |         |         |        |               |   |          |         |               |   |          |   |              |         |   |        |        |   |   |         |   |         |   |         |   |   |   |        |  
|Balance, December 31, 2002                                    |                                    | $                                                | 274,254 |        |         | $       | 32,502 |               |   | $        | 203,292 |               |   |          |   |              |         | $ | 67,322 |        |   | $ | (13,243 | ) |         | $ | (14,612 | ) |   | $ | (1,007 | )
|                                                              |                                    |                                                  |         |        |         |         |        |               |   |          |         |               |   |          |   |              |         |   |        |        |   |   |         |   |         |   |         |   |   |   |        |  

The accompanying notes are an integral part of
these financial statements.

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##### Table of Contents



ALLEN TELECOM INC.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years ended December 31, 2000, 2001 and
2002


Note 1: Summary of Significant Accounting
Policies

Accounting policies followed by the Company that
materially affect the determination of financial position and
results of operations are described below.

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

Basis of Consolidation: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 are included in the consolidated financial statements
on a two-month delayed basis for fiscal year 2000. 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 operations for 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 December 31, 2001 and January 1, 2002 through
December 31, 2002 were included in the 2001 and 2002
reported results of operations.

The cash flow of such European operations for the
two month period November and December 2000 is summarized as
follows (amounts in thousands):

|                                      |  |   |        |  
|------------------------------------- |  | - | ------ | -
|Net income from operations            |  | $ | 2,432  |  
|Increase in inventories               |  |   | (8,491 | )
|Decrease in receivables               |  |   | 3,129  |  
|Increase in accounts payable          |  |   | 13,892 |  
|Decrease in taxes payable             |  |   | (5,946 | )
|Net increase in fixed assets          |  |   | (1,201 | )
|Borrowings                            |  |   | 16,836 |  
|Other                                 |  |   | (220   | )
|                                      |  |   |        |  
|Increase in cash and cash equivalents |  | $ | 20,431 |  
|                                      |  |   |        |  

Revenue Recognition:With respect to the Wireless
Communications Equipment segment, sales of base station
subsystems and components, repeaters and in-building coverage
products, and base station and mobile antennas are recognized
principally when products are shipped or services are performed.
For the geolocation product line, revenue is generated pursuant
to multiple-element arrangement contracts, which
include 1) territory design, 2) delivery of hardware and
software and 3) installation, training and testing. These
represent separate earnings processes and revenue is allocated
among them based on the fair value of each element. Revenue is
recognized on the completion of each deliverable as no
undelivered element is considered essential to the functionality
of the delivered elements.

The Wireless Engineering and Consulting Services
segment provides engineering services and software to major
telecommunications vendors and system operators. These services
and products are sold and/or licensed and are separately stated
in a given sales contract, or in separate agreements, and
therefore do not constitute multiple-element arrangements. In
accordance with AICPA Statement of Position 97-2, Software
Revenue Recognition, revenue relating to the software
licenses, which do not require significant production,
modification, or customization, is recognized when all of the
following criteria are met:

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ALLEN TELECOM INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

persuasive evidence of an arrangement exists,
delivery has occurred, the fee is fixed or determinable and
collectibility is probable.

For all segments, engineering services revenue,
which excludes customer maintenance and support, is recognized
when services are performed. Other engineering services revenue,
which includes items such as ongoing customer maintenance and
support, is recognized ratably over the given contract period.

In December 1999, the Securities and Exchange
Commission issued Staff Accounting Bulletin No. 101 (SAB
101), Revenue Recognition in Financial Statements.
SAB 101 summarizes certain of the staffs views in applying
generally accepted accounting principles to revenue recognition
in financial statements. SAB 101 was implemented in 2000 and did
not require any change in the Companys revenue recognition
policies and practices.

Cash and Cash Equivalents:Cash equivalents consist of temporary
bank deposits and money market instruments with an original
maturity of three months or less at the date of purchase. The
Company invests its excess cash in bank deposits, money market,
and tax-exempt securities, which are afforded one of the two
highest ratings by nationally recognized ratings firms.

Valuation of Inventories:The Company values inventories
including materials, labor and overhead at the lower of cost
(first-in, first-out) or market. Inventories consisted of the
following at December 31, 2001 and 2002, net of reserves
(amounts in thousands):

|                |  |      |         |      |  |   |         | 
|--------------- |  | ---- | ------- | ---- |  | - | ------- | 
|                |  | 2001 |         | 2002
|                |  |      |         |     
|Raw material    |  | $    | 66,957  |      |  | $ | 59,092  | 
|Work-in-process |  |      | 23,639  |      |  |   | 30,117  | 
|Finished goods  |  |      | 33,430  |      |  |   | 11,265  | 
|                |  |      |         |      |  |   |         | 
|                |  | $    | 124,026 |      |  | $ | 100,474 | 
|                |  |      |         |      |  |   |         | 

Certain of these inventories pertain to the
production of sophisticated equipment that could be subject to
technological obsolescence. The Company maintains and
periodically revises reserves for excess inventory based on the
most current information available of anticipated usage
requirements.

Property, Plant and Equipment:Property, plant and equipment is
recorded at cost, less accumulated depreciation and
amortization. Land improvements, buildings and machinery and
equipment are depreciated over their estimated useful lives
under the straight-line method. The provision for amortization
of leasehold improvements is based on the term of the related
lease or the estimated useful life, whichever is shorter.
Maintenance, repairs and minor renewals and betterments are
charged to expense. Property, plant and equipment consisted of
the following at December 31, 2001 and 2002 (amounts in
thousands):

|                                               |  |      |         |      |  |   |         |  
|---------------------------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                                               |  | 2001 |         | 2002
|                                               |  |      |         |     
|Land and improvements                          |  | $    | 1,565   |      |  | $ | 1,703   |  
|Buildings                                      |  |      | 14,951  |      |  |   | 17,122  |  
|Machinery and equipment                        |  |      | 92,483  |      |  |   | 101,330 |  
|Leasehold improvements                         |  |      | 7,120   |      |  |   | 7,587   |  
|                                               |  |      |         |      |  |   |         |  
|                                               |  |      | 116,119 |      |  |   | 127,742 |  
|Less accumulated depreciation and amortization |  |      | (74,829 | )    |  |   | (89,528 | )
|                                               |  |      |         |      |  |   |         |  
|                                               |  | $    | 41,290  |      |  | $ | 38,214  |  
|                                               |  |      |         |      |  |   |         |  

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##### Table of Contents



ALLEN TELECOM INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The Companys estimated useful lives of
property, plant and equipment are as follows:

|                        |  |                                                   |                | 
|----------------------- |  | ------------------------------------------------- | -------------- | 
|Land improvements       |  |                                                   | 5 to 40 years  | 
|Buildings               |  |                                                   | 20 to 40 years | 
|Machinery and equipment |  |                                                   | 3 to 10 years  | 
|Leasehold improvements  |  | Term of lease (currently notlonger than 10 years)

Computer Software Costs:The Companys policy is to
capitalize costs incurred in creating computer software products
once technological feasibility is established and to amortize
such costs over periods ranging from three to ten years. The
Company also capitalizes costs incurred in the development of
computerized databases, which are amortized over periods of
three to five years. The Company reviews the amounts capitalized
for impairment whenever events or changes in circumstances
indicate that the carrying amounts of the assets may not be
recoverable. In 2000, 2001 and 2002, approximately $4,088,000,
$2,191,000 and $2,413,000, respectively, of these costs were
capitalized and approximately $2,532,000, $4,022,000 and
$3,277,000, respectively, were amortized.

Goodwill and Other Intangible Assets:Effective January 1, 2002, the
Company adopted the provisions of Statement of Financial
Accounting Standards No. 142 (SFAS 142),
Goodwill and Other Intangible Assets. This Statement
changed the accounting for goodwill from an amortization method
to an impairment only approach. Accordingly, the Company ceased
amortizing goodwill (including goodwill reported in past
business combinations) beginning in 2002. The change in the
carrying amount of goodwill by segment for the year ended
December 31, 2002 is as follows (amounts in thousands):

|                                            |  |                |         |                     |  |       |       |  |  |   |         |  
|------------------------------------------- |  | -------------- | ------- | ------------------- |  | ----- | ----- |  |  | - | ------- | -
|                                            |  | Wireless       |         | Wireless            |  |      
|                                            |  | Communications |         | Engineering and     |  |      
|                                            |  | Equipment      |         | Consulting Services |  | Total
|                                            |  |                |         |                     |  |      
|Balance, January 1, 2002                    |  | $              | 132,251 |                     |  | $     | 8,744 |  |  | $ | 140,995 |  
|Increase in acquired goodwill (see Note 10) |  |                | 1,478   |                     |  |       |      |  |  |   | 1,478   |  
|Impairment loss                             |  |                | (3,397  | )                   |  |       |      |  |  |   | (3,397  | )
|Other                                       |  |                | 50      |                     |  |       |      |  |  |   | 50      |  
|                                            |  |                |         |                     |  |       |       |  |  |   |         |  
|Balance, December 31, 2002                  |  | $              | 130,382 |                     |  | $     | 8,744 |  |  | $ | 139,126 |  
|                                            |  |                |         |                     |  |       |       |  |  |   |         |  

Goodwill is tested for impairment in the first
quarter of the year as part of the annual forecasting process.
In the fourth quarter of 2002, the Company completed its initial
evaluation of goodwill pursuant to the impairment requirements
of SFAS 142. As a result of this evaluation, the Company
determined that with respect to $32,663,000 of goodwill at
December 31, 2001 related to the Decibel Products portion
of its base station and mobile antennas product line there was
an impairment. The Company has recorded this initial charge of
$3,397,000 as a cumulative effect of a change in accounting
principle. There was no tax benefit associated with this charge.
This impairment is based on changes in customer mix and reduced
capital expenditures for telecommunications networks as well as
anticipated increased price competition. The fair value of this
reporting unit was estimated using the expected present value of
future cash flows.

The following supplemental information is
presented, on a pro forma basis, for the consolidated results of
operations for 2000, 2001 and 2002, adjusted to exclude the
impact of the cumulative effect of the

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##### Table of Contents



ALLEN TELECOM INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

change in accounting for goodwill in 2002 and
amortization of goodwill in 2000 and 2001 (amounts in thousands,
except per common share data):

|                                                                 |  |      |        |      |  |      |        |   |  |   |       | 
|---------------------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ----- | 
|                                                                 |  | 2000 |        | 2001 |  | 2002
|                                                                 |  |      |        |      |  |     
|Reported net income (loss)                                       |  | $    | 12,053 |      |  | $    | (1,823 | ) |  | $ | 3,395 | 
|Add back cumulative change in accounting for
    goodwill        |  |      |       |      |  |      |       |   |  |   | 3,397 | 
|Add back goodwill amortization (net of related
    income taxes) |  |      | 7,802  |      |  |      | 7,865  |   |  |   |      | 
|                                                                 |  |      |        |      |  |      |        |   |  |   |       | 
|Proforma net income                                              |  | $    | 19,855 |      |  | $    | 6,042  |   |  | $ | 6,792 | 
|                                                                 |  |      |        |      |  |      |        |   |  |   |       | 
|Reported income (loss) per common share
    (basic and diluted)  |  | $    | .43    |      |  | $    | (.06   | ) |  | $ | .03   | 
|Effect of cumulative change in accounting for
    goodwill       |  |      |       |      |  |      |       |   |  |   | .11   | 
|Effect of goodwill amortization                                  |  |      | .28    |      |  |      | .28    |   |  |   |      | 
|                                                                 |  |      |        |      |  |      |        |   |  |   |       | 
|Proforma income per common share                                 |  | $    | .71    |      |  | $    | .22    |   |  | $ | .14   | 
|                                                                 |  |      |        |      |  |      |        |   |  |   |       | 

Intangible assets are recorded at cost and are
amortized over their estimated useful lives unless those lives
are determined to be indefinite. An impairment loss on
intangible assets subject to amortization would be recognized if
the carrying amount is not recoverable and its carrying amount
exceeds fair value, as defined. Such assets shall be tested for
recoverability whenever events or changes in circumstances
indicate that its carrying amount may not be recoverable. The
Company has no intangible assets, other than goodwill, which are
not subject to amortization.

Foreign Currency Translation:Assets and liabilities of the
Companys foreign subsidiaries are translated into U.S.
dollars at the current rate of exchange, while sales and
expenses are translated at the average exchange rate during the
year. Adjustments from translating foreign subsidiaries
financial statements are excluded from the results of operations
and are reported as a component of Accumulated other
comprehensive loss.

The companys policy for transactions
denominated in a currency other than the functional currency is
to expense gains and losses as incurred. The net gain or
(loss) included in selling, general and administrative
expenses is ($181,000) in 2000, $286,000 in 2001 and
($2,211,000) in 2002.

Research and Development Costs:Expenditures relating to the
development of new products and processes, including significant
improvements to existing products, are expensed as incurred.

Stock Based Compensation:The Company accounts for stock based
compensation awards pursuant to Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to
Employees, and its related interpretations which prescribe
the use of the intrinsic value based method. Accordingly, no
compensation cost has been recognized for its fixed stock option
plans since the exercise price of the employee stock options
equals the market price of the underlying stock on the date of
option grant.

Income Taxes:A
deferred tax asset and/or liability is computed for both the
expected future impact of differences between the financial
statements and tax bases of assets and liabilities and for the
expected future tax benefit to be derived from tax loss and tax
credit carryforwards. Valuation allowances are provided for net
deferred tax assets in tax jurisdiction where the Company
believes the realization is not more likely than not.

Earnings Per Common Share:Basic earnings per share begins with
income (loss) applicable to common shareholders (net income
(loss) less preferred stock dividends) and is based on the
weighted average number of common shares outstanding during the
period. Diluted earnings per common share are based on the
weighted average number of common shares outstanding during the
period plus, if dilutive,

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##### Table of Contents



ALLEN TELECOM INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

the incremental number of common shares issuable,
on a pro forma basis, upon the exercise of employee stock
options, assuming the proceeds are used to repurchase
outstanding shares at the average market price during the year.
In computing Basic Earnings Per Common Share in 2002, net income
was reduced by dividends declared on the Redeemable Convertible
Preferred Stock issued in the first quarter of 2002. Such
dividends declared were $2,540,000 (an impact of $0.08 per
common share) and would amount to $3,875,000 on an annual basis
when, and if, declared. For purposes of computing Diluted
Earnings Per Common Share, and only if such calculation results
in dilution, Preferred Stock dividends will not reduce earnings;
however, the weighted average shares outstanding would increase
by 6,493,500 common shares representing the amount of common
shares into which such Preferred Stock is currently convertible.
A reconciliation of the Basic and Diluted shares is provided
below (in thousands):

|                                                        |  |      |        |      |  |      |        |  |  |  |        | 
|------------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ |  |  |  | ------ | 
|                                                        |  | 2000 |        | 2001 |  | 2002
|                                                        |  |      |        |      |  |     
|Weighted average common shares
    outstanding  Basic  |  |      | 27,820 |      |  |      | 28,090 |  |  |  | 30,410 | 
|Additional common shares issuable for stock
    options |  |      | 450    |      |  |      |       |  |  |  | 50     | 
|                                                        |  |      |        |      |  |      |        |  |  |  |        | 
|Common shares  Diluted                                 |  |      | 28,270 |      |  |      | 28,090 |  |  |  | 30,460 | 
|                                                        |  |      |        |      |  |      |        |  |  |  |        | 

For the year ended December 31, 2001,
approximately 253,000 shares attributable to outstanding stock
options were excluded from the calculation of diluted earnings
per common share because the effect was antidilutive.

Derivative Financial Instruments:The Company accounts for derivative
instruments pursuant to Financial Accounting Standards Board
(FASB) SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. 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 Company does not enter into derivative
instruments for trading or speculative purposes.

Product Warranties:The Company maintains a reserve for
product warranties based upon expected settlement charges for
pending claims and an estimate of unreported claims derived from
experience, volume, and product sales mix.

Reclassifications:Certain amounts in the 2000 and 2001
financial statements have been reclassified to conform to the
2002 presentation.

Impact of New Accounting Pronouncements:In June 2001, the FASB issued SFAS
No. 143, Accounting for Asset Retirement
Obligations, which addresses financial accounting and
reporting for obligations associated with the retirement of
tangible long-lived assets and associated asset retirement
costs. The new rules apply to legal obligations associated with
the retirement of long-lived assets that result from the
acquisition, construction, development and/or normal operation
of a long-lived asset. SFAS No. 143 is effective for the
Company beginning January 1, 2003. The Company believes the
adoption of SFAS No. 143 will not, at this time, have a
material impact on its consolidated financial position or
results of operations.

In August 2001, the FASB issued SFAS
No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets. SFAS No. 144 supersedes SFAS No.
121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of, and the
accounting and reporting provisions of Accounting Principles
Board Opinion No. 30, Reporting the Results of
Operations  Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions, for the
disposal of a segment of a business (as previously defined in
that opinion). SFAS No. 144 requires that one accounting
model be used for long-lived assets to be disposed of by sale,
whether previously held and used or newly acquired, and broadens
the presentation of discontinued operations to include more
disposal transactions than were included under the previous

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##### Table of Contents



ALLEN TELECOM INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

standards. The Company implemented SFAS
No. 144 on January 1, 2002, as required, and the
adoption of this statement did not have a material impact on the
Companys financial position or results of operations.

In June 2002, the FASB issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal
Activities. This Statement addresses financial accounting
and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force Issue
No. 94-3, Liability Recognition for Certain Employee
Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring). This Statement
requires that costs associated with exit or disposal activities
be recognized when the costs are incurred, rather than at a date
of commitment to an exit or disposal plan. The provisions of
this Statement are effective for exit and disposal activities
that are initiated after December 31, 2002. The Company
expects to implement certain cost reductions in 2003 at a cost
of approximately $1.0 million to $3.0 million in 2003
pursuant to the requirements of this standard.

In November 2002, the FASB issued Interpretation
No. 45, Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others (FIN 45), which expands previously
issued accounting guidance and disclosure requirements for
certain guarantees. FIN 45 requires an entity to recognize an
initial liability for the fair value of an obligation assumed by
issuing a guarantee. The disclosure requirements of FIN 45 are
effective for the Company as of December 31, 2002, and
require the disclosure of product warranties that are excluded
from the initial recognition and initial measurement
requirements of this Interpretation. The recognition
requirements of FIN 45 are to be applied prospectively to
guarantees issued after December 31, 2002. Product
warranties are disclosed in Note 6 of the Consolidated Financial
Statements. The Company believes the adoption of FIN 45 will
not, at this time, have a material impact on its consolidated
financial position or results of operations.

In December 2002, the FASB issued SFAS
No. 148, Accounting for Stock-Based Compensation
Transition and Disclosure. SFAS No. 148 amends SFAS
No. 123, Accounting for Stock-Based
Compensation to provide alternative methods of transition
to SFAS No. 123s fair value method of accounting for
stock-based employee compensation. SFAS No. 148 does not
require companies to account for employee stock options using
the fair value method but does require additional footnote
disclosures. The Company presents the disclosure requirements of
SFAS No. 123 in Note 5.

Note 2: Financing

Long-term obligations consisted of the following
(amounts in thousands):

|                                                         |  |      |         |      |  |   |         |  
|-------------------------------------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                                                         |  | 2001 |         | 2002
|                                                         |  |      |         |     
|Credit agreement borrowings                              |  | $    | 73,677  |      |  | $ | 8,068   |  
|Floating rate industrial revenue bonds due
    2012-2025 |  |      | 11,900  |      |  |   | 11,900  |  
|Senior notes payable due 2003-2007                       |  |      | 62,000  |      |  |   | 51,167  |  
|Capital lease obligations (See Note 6)                   |  |      | 5,357   |      |  |   | 5,400   |  
|Other                                                    |  |      | 965     |      |  |   | 826     |  
|                                                         |  |      |         |      |  |   |         |  
|                                                         |  |      | 153,899 |      |  |   | 77,361  |  
|Less current maturities                                  |  |      | (12,318 | )    |  |   | (13,277 | )
|                                                         |  |      |         |      |  |   |         |  
|                                                         |  | $    | 141,581 |      |  | $ | 64,084  |  
|                                                         |  |      |         |      |  |   |         |  

As a result of the Companys Redeemable
Convertible Preferred Stock offering in March 2002, we
permanently reduced our domestic revolving credit agreement
commitment from $105,000,000 to $76,881,000. This agreement
expires on December 31, 2003. Of this commitment,
$14,140,000 has been utilized for the issuance of letters of
credit relating principally to the Companys industrial
revenue bonds.

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##### Table of Contents



ALLEN TELECOM INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

There were no outstanding borrowings under this
domestic revolving credit agreement at December 31, 2002.
The balance of funds available may be utilized for borrowings or
other letters of credit; however, a maximum of $25,000,000 may
be allocated to letters of credit. At December 31, 2002,
$62,741,000 was available under this agreement. This agreement
is collateralized by substantially all domestic assets. The
Company has also pledged 65% of the stock of applicable foreign
subsidiaries and a guarantee is provided by certain domestic
subsidiaries in support of this obligation. Interest may be
determined on a LIBOR or prime rate basis at the Companys
option. The Company has agreed to pay a facility fee in the
range of 0.375% to 0.5% per annum on the total amount of the
commitment. During 2002, the average interest rate for all
domestic credit agreement borrowings was 3.6%.

The Company also has $41,124,000 of short-term
credit lines which may be utilized by certain of its foreign
subsidiaries. At year end, there were $362,000 of borrowings
under these agreements. Credit agreement borrowings also include
long-term arrangements at fixed and variable rates with the
Industry Ministry of Italy totaling $3,663,000 (due 2003-2017),
and fixed and variable rate borrowings with international banks
of $4,043,000 (due 2003-2008). These arrangements bear interest
based on predetermined fixed rates and LIBOR. Long-term debt
also includes capital lease obligations of $5,400,000 at
December 31, 2002, which results primarily from the sale
and leaseback of a building at one of our European subsidiaries.
During 2002, the average interest rate for all foreign credit
arrangements approximated 2.4%.

The floating rate industrial revenue bonds bear
interest at rates based upon a short-term tax exempt bond index,
as defined in the agreements, which approximated 1.2% at
December 31, 2002. During 2002, the average interest rate
for all industrial revenue borrowings approximated 1.4%.

In 1997, the Company issued $65,000,000 of notes
in a private placement transaction. The outstanding balance of
$51,167,000 at December 31, 2002 is due in years 2003
through 2007. These notes originally had a weighted average life
of 7 1/2 years and have a weighted average interest
rate of 6.65%. The notes are collateralized and rank equally
with the Companys other secured indebtedness, as discussed
above.

The aggregate maturities of long-term obligations
for the years 2003 through 2007 are as follows (amounts in
thousands):

|     |  |   |        | 
|---- |  | - | ------ | 
|2003 |  | $ | 13,277 | 
|2004 |  |   | 9,607  | 
|2005 |  |   | 9,630  | 
|2006 |  |   | 9,731  | 
|2007 |  |   | 18,703 | 

The Companys domestic borrowing agreements
include various restrictive covenants as to the amount and type
of indebtedness, investments and guarantees, maintenance of net
worth, liquidity, earnings before interest, taxes, depreciation
and amortization, the purchase or redemption of the
Companys shares, the disposition of assets of the Company
not in the ordinary course of business, a change in control and
acquisitions. The Company was in compliance with these covenants
at December 31, 2002. The Companys debt agreements
restrict, under limited circumstances, its ability to pay cash
dividends, without the banks consent. Further, the
Companys ability to pay cash dividends may be dependent,
in part, on its subsidiaries ability to make cash
dividends and other payments to the Company.

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##### Table of Contents



ALLEN TELECOM INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Note 3: Other Assets, Liabilities and
Accumulated Other Comprehensive Loss

Other assets consisted of the following (amounts
in thousands):

|                                                 |  |      |        |      |  |   |        | 
|------------------------------------------------ |  | ---- | ------ | ---- |  | - | ------ | 
|                                                 |  | 2001 |        | 2002
|                                                 |  |      |        |     
|Capitalized computer software and database files |  | $    | 7,446  |      |  | $ | 7,494  | 
|Cash surrender value of insurance policies       |  |      | 9,368  |      |  |   | 11,241 | 
|Other                                            |  |      | 16,577 |      |  |   | 14,672 | 
|                                                 |  |      |        |      |  |   |        | 
|                                                 |  | $    | 33,391 |      |  | $ | 33,407 | 
|                                                 |  |      |        |      |  |   |        | 

Other intangible assets included in other assets,
excluding goodwill, were as follows (amounts in thousands):

|                       |         |                      |  |          |    |              |        |          |        |          |         |              |         |          |       |   |       |   |        |   |        |   |         |   |         |   |       |   |       | 
|---------------------- | ------- | -------------------- |  | -------- | -- | ------------ | ------ | -------- | ------ | -------- | ------- | ------------ | ------- | -------- | ----- | - | ----- | - | ------ | - | ------ | - | ------- | - | ------- | - | ----- | - | ----- | 
|                       |         | Weighted             |  |          |    |             
|                       |         | Average              |  | 2001     |    | 2002        
|                       |         | Original Useful      |  |          |    |             
|                       |         | Lives (in            |  | Original |    | Accumulated  |        | Carrying |        | Original |         | Accumulated  |         | Carrying
|                       |         | years)               |  | Costs    |    | Amortization |        | Value    |        | Costs    |         | Amortization |         | Value   
|                       |         |                      |  |          |    |              |        |          |        |          |         |              |         |         
|Amortizable Intangible |         |                      |  |          |    |              |        |          |        |          |         |              |         |          |       |   |       |   |        |   |        |   |         |   |         |   |       |  
|                       | Assets: |                      |  |          |    |              |        |          |        |          |         |              |         |          |       |   |       |   |        |   |        |   |         |   |         |   |       |   |      
|                       |         | Capitalized software |  |          | 10 |              |        | $        | 24,536 |          |         | $            | (17,090 | )        |       | $ | 7,446 |   |        | $ | 28,333 |   |         | $ | (20,839 | ) |       | $ | 7,494 | 
|                       |         | Patents              |  |          | 5  |              |        |          | 995    |          |         |              | (557    | )        |       |   | 438   |   |        |   | 1,283  |   |         |   | (906    | ) |       |   | 377   | 
|                       |         | Other                |  |          | 3  |              |        |          | 1,551  |          |         |              | (604    | )        |       |   | 947   |   |        |   | 426    |   |         |   | (257    | ) |       |   | 169   | 
|                       |         |                      |  |          |    |              |        |          |        |          |         |              |         |          |       |   |       |   |        |   |        |   |         |   |         |   |       |  
|Total                  |         |                      |  |          |    | $            | 27,082 |          |        | $        | (18,251 | )            |         | $        | 8,831 |   |       | $ | 30,042 |   |        | $ | (22,002 | ) |         | $ | 8,040 |  
|                       |         |                      |  |          |    |              |        |          |        |          |         |              |         |          |       |   |       |   |        |   |        |   |         |   |         |   |       |  

Amortization expense for the fiscal years ended
2001 and 2002 was approximately $3,800 and $3,600, respectively.

Estimated aggregate amortization expense based on
the current carrying value of amortizable intangible assets for
the next five fiscal years is as follows (amounts in thousands):

|            |  |              |       | 
|----------- |  | ------------ | ----- | 
|            |  | Amortization
|Fiscal Year |  | Expense     
|            |  |             
|2003        |  | $            | 3,487 | 
|2004        |  |              | 1,637 | 
|2005        |  |              | 1,075 | 
|2006        |  |              | 684   | 
|2007        |  |              | 567   | 

Other liabilities consisted of the following
(amounts in thousands):

|                                                             |  |      |        |      |  |   |        | 
|------------------------------------------------------------ |  | ---- | ------ | ---- |  | - | ------ | 
|                                                             |  | 2001 |        | 2002
|                                                             |  |      |        |     
|Minority interest                                            |  | $    | 287    |      |  | $ | 455    | 
|Long-term pension and postretirement benefit
    obligations |  |      | 10,158 |      |  |   | 17,881 | 
|Other                                                        |  |      | 5,327  |      |  |   | 5,292  | 
|                                                             |  |      |        |      |  |   |        | 
|                                                             |  | $    | 15,772 |      |  | $ | 23,628 | 
|                                                             |  |      |        |      |  |   |        | 

F-14



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##### Table of Contents



ALLEN TELECOM INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Accumulated other comprehensive loss consisted of
the following (amounts in thousands):

|                                                              |  |      |        |      |  |   |        | 
|------------------------------------------------------------- |  | ---- | ------ | ---- |  | - | ------ | 
|                                                              |  | 2001 |        | 2002
|                                                              |  |      |        |     
|Foreign currency translation adjustment                       |  | $    | 28,052 |      |  | $ | 5,498  | 
|Minimum pension liability adjustments, net of tax
    benefit |  |      | 2,664  |      |  |   | 7,595  | 
|Fair value of derivative instruments                          |  |      | (45    | )    |  |   | 150    | 
|                                                              |  |      |        |      |  |   |        | 
|                                                              |  | $    | 30,671 |      |  | $ | 13,243 | 
|                                                              |  |      |        |      |  |   |        | 

Note 4: Redeemable Convertible Preferred
Stock

On March 20, 2002, the Company issued
1,000,000 shares of redeemable Series D 7.75% Convertible
Preferred Stock (Preferred Stock) which has a
liquidation preference of $50.00 per share.

Dividends on the Preferred Stock may be paid in
cash, common stock, or a combination thereof. Unpaid and/or
undeclared dividends do not accumulate, but the number of common
shares that the Preferred Stock holders are entitled to receive
upon conversion of the Preferred Stock will automatically
increase, as specified in the Companys Certificate of
Incorporation. In 2002, all dividends were paid in cash.

Each share of Preferred Stock is convertible at
the option of the holder at any time into shares of common stock
of the Company, par value $1 per share, at an initial conversion
rate of $7.70 per share (equivalent to a conversion rate of
6.4935 shares of common stock at a liquidation preference of
$50.00), subject to adjustment under certain conditions,
including the occurrence of certain change of control
transactions. On or after February 20, 2005, the Company
may, at its option as discussed below, cause all of the
outstanding shares of Preferred Stock to be automatically
converted into common stock at the then prevailing conversion
ratio. The Company may exercise that conversion right if, for at
least 20 trading days within any consecutive 30-day trading
period (including the last trading day), the closing price of
its common stock equals or exceeds 125% of the then prevailing
conversion price of the Preferred Stock.

Subject to legal availability of funds, the
shares of Preferred Stock are mandatorily redeemable by the
Company for cash at their liquidation preference on or after
February 15, 2014 (unless previously converted into common
shares of the Company) and are not redeemable by the Company
before that date.

The net proceeds from the issuance of
$46,791,000, after deducting the underwriters discount and
issuance costs, were used to repay a portion of the
Companys outstanding indebtedness under its domestic
revolving credit facility. The underwriting discount and
expenses of the offering, aggregating $3,209,000, were charged
directly to retained earnings.

Note 5: Capital Stock and Stock
Compensation Plans

The Company is authorized to issue up to
50,000,000 shares of common stock, $1.00 par value, and
3,000,000 shares of preferred stock, without par value, in one
or more series. In addition, 500,000 shares of Series C
Junior Participating Preferred Stock are authorized for issuance
under the Companys Stockholder Rights Plan. The Company
can fix the powers, designations, preferences and rights of each
of the preferred stock series.

The Company has two active stock option plans,
the 1992 Stock Plan and the 1994 Non-Employee Directors Stock
Option Plan (1994 Stock Plan).

The 1992 Stock Plan provides for the granting of
options (and restricted shares as discussed below) to key
employees as determined by the Management Compensation Committee
of the Board of Directors. In 2002, the Plan was amended to,
among other things, increase the shares available for grant by
1,500,000

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##### Table of Contents



ALLEN TELECOM INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

shares. The total number of shares for which the
Company may now grant options and award restricted shares of
common stock under the 1992 Stock Plan cannot exceed 5,028,221
shares, subject to certain adjustments. Options are awarded at a
price not less than the fair market value on the date the option
is granted, have a ten-year term whereby 50% of the option
shares vest after two years and an additional 25% in each of
years three and four, with accelerating vesting upon a change in
control. Options may contain stock appreciation rights under
which the Company, upon request of the optionee, may, at its
discretion, and subject to the approval of the aforementioned
Compensation Committee, purchase the exercisable portion of an
option for cash and/or shares at a price equal to the difference
between the option price and the market price of the shares
covered by such portion of the option in lieu of issuing shares
upon exercise. There were no exercises of stock appreciation
rights in 2000, 2001 and 2002.

Pursuant to the 1994 Stock Plan, the total number
of shares to be issued may not exceed 500,000 shares. Each
Non-Employee Director (other than the Chairman and Vice
Chairman) automatically receives an option to purchase 3,000
shares of common stock per year (Formula Awards).
Each new Non-Employee Director automatically receives an option
to purchase 4,000 shares of common stock on the date such new
director joins the Board of Directors. The Plan also permits
discretionary grants to directors who are not receiving Formula
Awards. Formula Awards and discretionary awards granted under
the 1994 Stock Plan have a ten-year term and vest in the same
manner as the 1992 Stock Plan, subject to certain accelerated
vesting upon cessation of service.

In addition to the foregoing, certain
Non-Employee Directors may receive non-qualified discretionary
awards of options to purchase shares of common stock which are
not pursuant to the 1994 Stock Plan. These options which are
awarded at a price not less than the fair market value on the
date granted, have a ten-year term and either vest 33 1/3%
on each of the first, second and third anniversaries of the
grant or vest in the same manner as the 1992 and 1994 Stock
Plans, depending upon the grant. Additionally, such
non-qualified awards are subject to certain accelerated vesting
upon cessation of service.

The following table summarizes the status of
outstanding options as of December 31, 2002:

|                          |                |                  |  |                           |           |       |  |                  |            |                |  |   |       |  |  |  |           |  |  |   |       | 
|------------------------- | -------------- | ---------------- |  | ------------------------- | --------- | ----- |  | ---------------- | ---------- | -------------- |  | - | ----- |  |  |  | --------- |  |  | - | ----- | 
|                          |                |                  |  |                          
|Stock Options Outstanding |                | Weighted Average |  | Stock Options Exercisable
|                          |                |                  |  |                          
|Range of Exercise         |                | Contractual      |  | Exercise                  |           |       |  | Weighted Average
|Prices                    |                | Shares           |  | Life                      |           | Price |  | Shares           |            | Exercise Price
|                          |                |                  |  |                           |           |       |  |                  |            |               
|$                         | 4.12 -$11.63   |                  |  |                           | 1,423,500 |       |  |                  | 7.34 years |                |  | $ | 6.93  |  |  |  | 669,150   |  |  | $ | 7.43  | 
|$                         | 12.68 - $19.97 |                  |  |                           | 1,770,103 |       |  |                  | 5.61 years |                |  | $ | 15.35 |  |  |  | 1,135,703 |  |  | $ | 16.00 | 
|$                         | 20.50 - $28.00 |                  |  |                           | 364,324   |       |  |                  | 3.21 years |                |  | $ | 21.57 |  |  |  | 364,324   |  |  | $ | 21.57 | 
|                          |                |                  |  |                           |           |       |  |                  |            |                |  |   |       |  |  |  |           |  |  |   |       | 
|$                         | 4.12 - $28.00  |                  |  |                           | 3,557,927 |       |  |                  | 6.06 years |                |  | $ | 12.62 |  |  |  | 2,169,177 |  |  | $ | 14.29 | 
|                          |                |                  |  |                           |           |       |  |                  |            |                |  |   |       |  |  |  |           |  |  |   |       | 

F-16



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##### Table of Contents



ALLEN TELECOM INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Stock option activity for the three years ended
December 31, 2002 is summarized as follows:

|                           |                                              |        |           |                  |   |   |       |       | 
|-------------------------- | -------------------------------------------- | ------ | --------- | ---------------- | - | - | ----- | ----- | 
|                           |                                              |        |           | Weighted Average
|                           |                                              | Shares |           | Exercise Price  
|                           |                                              |        |           |                 
|Balance, December 31, 1999 |                                              |        | 2,623,764 |                  |   | $ | 13.10 |      
|                           | Granted (weighted average fair value $10.52) |        |           | 613,000          |   |   | $     | 16.36 | 
|                           | Exercised                                    |        |           | (85,838          | ) |   | $     | 8.89  | 
|                           | Terminated and cancelled                     |        |           | (89,965          | ) |   | $     | 14.99 | 
|                           |                                              |        |           |                  |   |   |       |      
|Balance, December 31, 2000 |                                              |        | 3,060,961 |                  |   | $ | 13.82 |      
|                           | Granted (weighted average fair value $8.60)  |        |           | 429,450          |   |   | $     | 12.73 | 
|                           | Exercised                                    |        |           | (136,943         | ) |   | $     | 6.85  | 
|                           | Terminated and cancelled                     |        |           | (118,172         | ) |   | $     | 15.52 | 
|                           |                                              |        |           |                  |   |   |       |      
|Balance, December 31, 2001 |                                              |        | 3,235,296 |                  |   | $ | 13.91 |      
|                           | Granted (weighted average fair value $4.24)  |        |           | 589,000          |   |   | $     | 6.11  | 
|                           | Exercised                                    |        |           | (1,500           | ) |   | $     | 6.94  | 
|                           | Terminated and cancelled                     |        |           | (264,869         | ) |   | $     | 13.88 | 
|                           |                                              |        |           |                  |   |   |       |      
|Balance, December 31, 2002 |                                              |        | 3,557,927 |                  |   | $ | 12.62 |      
|                           |                                              |        |           |                  |   |   |       |      

The fair value of each option grant is estimated
on the date of grant using the Black-Scholes option pricing
model with the following weighted average assumptions used for
stock option grants: expected volatility of 60%, 65% and 69%,
risk free interest rates of 6.09%, 5.16% and 4.85%, and expected
lives of 7.1, 7.4 and 7.2 years for 2000, 2001 and 2002,
respectively. The calculations assume no future common stock
dividend payments.

Restricted stock awards made to date under the
1992 Stock Plan were issued at no cash cost to the recipients;
however, such employees generally agreed to forego salary
increases and new stock option grants for a period of two years,
other than for exceptional promotions. The restricted shares
generally vest in 25% increments in the seventh, eighth, ninth
and tenth year from the year of award. An accelerated vesting
schedule may be triggered if certain performance targets are
achieved or upon a change in control. Generally, the vesting of
50% of such shares may be accelerated (but not sooner than three
years from the award year) based upon the average sale price of
the Companys stock price during a period of 91 consecutive
calendar days exceeding specified target levels or upon a change
in control. The remaining 50% of such shares may be accelerated
based on average earnings per common share over three
consecutive years exceeding specified target levels beginning
with the award year. Restricted shares are subject to forfeiture
in certain circumstances as defined in the 1992 Stock Plan.

F-17



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##### Table of Contents



ALLEN TELECOM INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Restricted stock activity for the three years
ended December 31, 2002 is summarized as follows:

|                           |                                              |        |         |         |  
|-------------------------- | -------------------------------------------- | ------ | ------- | ------- | -
|                           |                                              | Shares
|                           |                                              |       
|Balance, December 31, 1999 |                                              |        | 234,299 |        
|                           | Granted (weighted average fair value $13.94) |        |         | 15,000  |  
|                           | Vested                                       |        |         | (28,524 | )
|                           | Terminated and cancelled                     |        |         | (6,518  | )
|                           |                                              |        |         |        
|Balance, December 31, 2000 |                                              |        | 214,257 |        
|                           | Granted                                      |        |         |        |  
|                           | Vested                                       |        |         | (36,419 | )
|                           | Terminated and cancelled                     |        |         |        |  
|                           |                                              |        |         |        
|Balance, December 31, 2001 |                                              |        | 177,838 |        
|                           | Granted                                      |        |         |        |  
|                           | Vested                                       |        |         | (50,988 | )
|                           | Terminated and cancelled                     |        |         |        |  
|                           |                                              |        |         |        
|Balance, December 31, 2002 |                                              |        | 126,850 |        
|                           |                                              |        |         |        

Unearned compensation with respect to restricted
shares, representing the fair value of the restricted shares at
the date of award, is charged to earnings over a ten-year period
or the period of actual vesting (if accelerated) whichever is
shorter. Compensation expense with respect to restricted shares,
net of forfeitures, amounted to $313,000 in 2000, $310,000 in
2001 and $249,000 in 2002.

At December 31, 2001 and 2002, 3,790,737 and
11,790,837 common shares, respectively, were reserved for
outstanding stock options, future grants of stock options and
restricted shares under all Stock Plans and conversion of the
convertible preferred stock issued in 2002.

If the Company had elected to recognize
compensation cost for its stock based compensation plans based
on the fair value determined pursuant to the Black-Scholes
option pricing model at the grant dates for awards under those
plans in accordance with SFAS No. 123, net income and
earnings per common share would have been reduced to the pro
forma amounts below (amounts in thousands, except per common
share data):

|                                                         |                                                                                      |      |   |        |   |      |   |        |   |  |   |        |  
|-------------------------------------------------------- | ------------------------------------------------------------------------------------ | ---- | - | ------ | - | ---- | - | ------ | - |  | - | ------ | -
|                                                         |                                                                                      | 2000 |   | 2001   |   | 2002
|                                                         |                                                                                      |      |   |        |   |     
|Net income (loss):                                       |                                                                                      |      |   |        |   |      |   |        |   |  |   |       
|                                                         | As reported                                                                          |      | $ | 12,053 |   |      | $ | (1,823 | ) |  | $ | 3,395  |  
|                                                         | Plus: Stock-based employee compensation (net of
    tax) included in net income      |      |   |       |   |      |   |       |   |  |   |       |  
|                                                         | Less: Stock-based employee compensation (net of
    tax) using the fair value method |      |   | (1,917 | ) |      |   | (2,586 | ) |  |   | (2,584 | )
|                                                         |                                                                                      |      |   |        |   |      |   |        |   |  |   |       
|                                                         | Pro forma                                                                            |      | $ | 10,136 |   |      | $ | (4,409 | ) |  | $ | 811    |  
|                                                         |                                                                                      |      |   |        |   |      |   |        |   |  |   |       
|Earnings (loss) per common share, basic and
    diluted: |                                                                                      |      |   |        |   |      |   |        |   |  |   |       
|                                                         | As reported                                                                          |      | $ | 0.43   |   |      | $ | (0.06  | ) |  | $ | 0.03   |  
|                                                         | Pro forma                                                                            |      | $ | 0.36   |   |      | $ | (0.16  | ) |  | $ | (0.06  | )

Note 6: Commitments and
Contingencies

The Companys leases consist primarily of
facilities and equipment and expire between 2003 and 2011. A
number of leases require that the Company pay certain executory
costs (taxes, insurance and

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##### Table of Contents



ALLEN TELECOM INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

maintenance) and may contain renewal and purchase
options. Annual rental expense for operating leases included in
results from continuing operations approximated $4,942,000 in
2000, $5,700,000 in 2001 and $7,600,000 in 2002. Future minimum
payments under noncancellable operating and capital leases as of
December 31, 2002 were as follows (amounts in thousands):

|                                  |  |           |        |         |  |   |        |  
|--------------------------------- |  | --------- | ------ | ------- |  | - | ------ | -
|                                  |  | Operating |        | Capital
|                                  |  |           |        |        
|2003                              |  | $         | 7,785  |         |  | $ | 1,224  |  
|2004                              |  |           | 6,760  |         |  |   | 1,101  |  
|2005                              |  |           | 4,440  |         |  |   | 849    |  
|2006                              |  |           | 3,705  |         |  |   | 866    |  
|2007                              |  |           | 3,390  |         |  |   | 836    |  
|Thereafter                        |  |           | 8,190  |         |  |   | 1,679  |  
|                                  |  |           |        |         |  |   |        |  
|Total minimum lease payments      |  | $         | 34,270 |         |  |   | 6,555  |  
|                                  |  |           |        |         |  |   |        |  
|Less amount representing interest |  |           |        |         |  |   | (1,155 | )
|                                  |  |           |        |         |  |   |        |  
|                                  |  |           |        |         |  | $ | 5,400  |  
|                                  |  |           |        |         |  |   |        |  

Assets recorded under capital leases at
December 31, 2002 are included in Property, Plant and
Equipment as follows (amounts in thousands):

|                              |  |      |        |  
|----------------------------- |  | ---- | ------ | -
|                              |  | 2002
|                              |  |     
|Land                          |  | $    | 515    |  
|Buildings                     |  |      | 6,080  |  
|Machinery and equipment       |  |      | 1,648  |  
|                              |  |      |        |  
|                              |  |      | 8,243  |  
|Less accumulated amortization |  |      | (3,636 | )
|                              |  |      |        |  
|                              |  | $    | 4,607  |  
|                              |  |      |        |  

The Company is self-insured for health care and
workers compensation up to predetermined amounts above
which third party insurance applies. The Company is fully
insured through third party insurance for general liability and
product liability. The Company is contingently liable to
insurance carriers under its workers compensation and
liability policies and has provided letters of credit in favor
of these carriers in the amount of $700,000.

On December 11, 2001, a lawsuit was filed
against the Company in the United States District Court for the
District of Delaware by a competitor, True Position, Inc., and
its subsidiary, KSI, Inc. In their original complaint, the
plaintiffs alleged that the Company, through its Grayson
Wireless Division, infringed three patents in connection with
the Companys GEOMETRIX wireless geolocation business. On
July 16, 2002, the plaintiffs amended their complaint to
include four additional patents in the lawsuit. In the
Companys answer to the original complaint, filed on
January 18, 2002, and to the amended complaint, filed
July 30, 2002, it has denied all of the plaintiffs
allegations and has asserted counterclaims against the
plaintiffs for infringement of one of the Companys patents
and for tortious interference with the Companys business
relationships. The Company believes that it has meritorious
defenses against the claims asserted by the plaintiffs and
intends to vigorously defend the lawsuit. However, the Company
cannot give assurance that it will ultimately prevail in this
action. Whether the Company ultimately wins or loses, litigation
could be time-consuming and costly and injure its reputation. If
the plaintiffs prevail in this action, the Company may be
required to negotiate royalty or license agreements with respect
to the patents at issue and may not be able to enter into such
agreements on acceptable terms. Any limitation on the
Companys ability to provide a service or product could
cause it to lose revenue-generating

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##### Table of Contents



ALLEN TELECOM INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

opportunities and require it to incur additional
expenses. The Company may also be required to indemnify
customers for any expenses or liabilities resulting from the
claimed infringements. These potential costs and expenses, as
well as the need to pay any damages awarded in favor of the
plaintiffs, could adversely affect the Companys business,
financial position, results of operations or cash flow.

The Company is also a party to various other
legal proceedings, lawsuits and other claims arising in the
ordinary course of its business involving such matters as
contract disputes, product liability, casualty claims,
employment practices and intellectual property infringement. The
Company does not believe that such other litigation, if
adversely determined, would have a material adverse effect on
the Companys business, financial position, results of
operations or cash flow.

The Company is subject to federal, state and
local laws designed to protect the environment and believes
that, as a general matter, its policies, practices, and
procedures are properly designed to reasonably prevent risk of
environmental damage and financial liability to the Company. The
Company has identified potential environmental damage at one
formerly occupied manufacturing facility. In this regard, the
Company has engaged a contractor to evaluate the site and
determine the cost, if any, to resolve environmental damage at
this site. While the ultimate cost cannot yet be specifically
determined, the Company currently believes the costs of
remediation will not exceed $450,000. The Company also believes
it is reasonably possible that environmental related liabilities
may exist with respect to one industrial site formerly occupied
by the Company. Based upon environmental site assessments, the
Company believes that the cost of any potential remediation, for
which the Company may ultimately be responsible, will not have a
material adverse effect on the Companys business,
financial position, results of operations or cash flow.

The Company has product warranty obligations
which continue after the sale of goods or services has taken
place. A product warranty reserve is recorded at the time of
sale based on estimated future costs to be incurred related to
the warranty. The Company maintains a reserve for product
warranties based upon expected settlement charges for pending
claims and an estimate of unreported claims derived from
experience, volume, and product sales mix.

The following is an analysis of product warranty
reserves (amounts in thousands):

|     |  |              |       |            |  |            |     |            |  |  |      |   |  |   |       | 
|---- |  | ------------ | ----- | ---------- |  | ---------- | --- | ---------- |  |  | ---- | - |  | - | ----- | 
|     |  | Balance at   |       | Charged to |  |            |     | Balance at
|     |  | Beginning of |       | Cost of    |  | Net        |     | End of    
|     |  | Year         |       | Sales      |  | Deductions |     | Year      
|     |  |              |       |            |  |            |     |           
|2002 |  | $            | 1,799 |            |  |            | 555 |            |  |  | (269 | ) |  | $ | 2,085 | 

Note 7: Pension and Post Retirement
Plans

The Company has noncontributory pension plans
covering the majority of its full-time domestic employees. Plans
covering salaried employees provide benefits that are based on
years of service and compensation during the ten-year period
prior to retirement, while for hourly employees it typically
provides benefits based on specified amounts for each year of
service. Domestic pension costs are funded in compliance with
the requirements of the Employee Retirement Income Security Act
of 1974, as amended, as employees become eligible to
participate, generally upon employment.

F-20



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##### Table of Contents



ALLEN TELECOM INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Net periodic pension cost for the Companys
plans included the following components (amounts in thousands):

|                                                  |  |      |        |      |  |      |        |   |  |   |        |  
|------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|                                                  |  | 2000 |        | 2001 |  | 2002
|                                                  |  |      |        |      |  |     
|Service cost benefits earned during the year      |  | $    | 1,006  |      |  | $    | 1,081  |   |  | $ | 965    |  
|Interest cost on the projected benefit obligation |  |      | 2,496  |      |  |      | 2,685  |   |  |   | 2,826  |  
|Actual (income) loss on plan assets               |  |      | (868   | )    |  |      | 1,619  |   |  |   | 2,504  |  
|Net curtailment/settlement gain                   |  |      | (1,160 | )    |  |      | (7     | ) |  |   | (7     | )
|Net amortization and deferral                     |  |      | (2,237 | )    |  |      | (4,488 | ) |  |   | (4,738 | )
|                                                  |  |      |        |      |  |      |        |   |  |   |        |  
|Net periodic pension (income) cost                |  | $    | (763   | )    |  | $    | 890    |   |  | $ | 1,550  |  
|                                                  |  |      |        |      |  |      |        |   |  |   |        |  

A reconciliation of the plans projected
benefit obligation, fair value of plan assets, and funded status
is as follows (amounts in thousands):

|                              |                                 |                                         |        |         |        |   |        |         |         |  
|----------------------------- | ------------------------------- | --------------------------------------- | ------ | ------- | ------ | - | ------ | ------- | ------- | -
|                              |                                 | 2001                                    |        | 2002   
|                              |                                 |                                         |        |        
|Projected benefit obligation: |                                 |                                         |        |         |        |   |        |        
|                              | Balance, beginning of year      |                                         | $      | 35,451  |        |   | $      | 38,734  |        
|                              | Service cost                    |                                         |        | 1,081   |        |   |        | 965     |        
|                              | Interest cost                   |                                         |        | 2,685   |        |   |        | 2,826   |        
|                              | Benefits paid and plan expenses |                                         |        | (2,480  | )      |   |        | (2,399  | )      
|                              | Loss recognized                 |                                         |        | 2,099   |        |   |        | 4,373   |        
|                              | Settlements and other           |                                         |        | (102    | )      |   |        | (328    | )      
|                              |                                 |                                         |        |         |        |   |        |        
|                              |                                 | $                                       | 38,734 |         |        | $ | 44,171 |        
|                              |                                 |                                         |        |         |        |   |        |        
|Fair value of plan assets:    |                                 |                                         |        |         |        |   |        |        
|                              | Balance, beginning of year      |                                         | $      | 31,763  |        |   | $      | 28,038  |        
|                              | Loss on assets                  |                                         |        | (1,619  | )      |   |        | (2,504  | )      
|                              | Employer contributions          |                                         |        | 374     |        |   |        | 2,104   |        
|                              | Benefits paid and plan expenses |                                         |        | (2,480  | )      |   |        | (2,399  | )      
|                              |                                 |                                         |        |         |        |   |        |        
|                              |                                 | $                                       | 28,038 |         |        | $ | 25,239 |        
|                              |                                 |                                         |        |         |        |   |        |        
|Funded Status:                |                                 |                                         |        |         |        |   |        |        
|                              | Projected benefit obligation    |                                         | $      | (38,734 | )      |   | $      | (44,171 | )      
|                              | Fair value of plan assets       |                                         |        | 28,038  |        |   |        | 25,239  |        
|                              |                                 |                                         |        |         |        |   |        |        
|                              | Unfunded obligation             |                                         |        | (10,696 | )      |   |        | (18,932 | )      
|                              | Unrecognized:                   |                                         |        |         |        |   |        |         |        
|                              |                                 | Net loss                                |        |         | 5,563  |   |        |         | 14,538  |  
|                              |                                 | Prior service cost                      |        |         | 1,603  |   |        |         | 1,363   |  
|                              |                                 | Additional minimum liability recognized |        |         | (4,876 | ) |        |         | (13,021 | )
|                              |                                 |                                         |        |         |        |   |        |        
|                              | Net accrued liability           |                                         | $      | (8,406  | )      |   | $      | (16,052 | )      
|                              |                                 |                                         |        |         |        |   |        |        

Plan assets consist principally of equity
securities (including 92,000 common shares of the Company).

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##### Table of Contents



ALLEN TELECOM INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

With respect to all of the Companys pension
plans, the accumulated pension obligation exceeded the fair
value of the plan assets, as follows (amounts in thousands):

|                                  |  |      |        |      |  |   |        | 
|--------------------------------- |  | ---- | ------ | ---- |  | - | ------ | 
|                                  |  | 2001 |        | 2002
|                                  |  |      |        |     
|Accumulated benefit obligation    |  | $    | 36,424 |      |  | $ | 41,236 | 
|Related fair value of plan assets |  | $    | 28,038 |      |  | $ | 25,239 | 

The rates used in determining pension cost for
the plans were:

|                                                 |  |      |      |      |  |      |      |   |  |  |      |  
|------------------------------------------------ |  | ---- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                                                 |  | 2000 |      | 2001 |  | 2002
|                                                 |  |      |      |      |  |     
|Discount rate                                    |  |      | 7.75 | %    |  |      | 7.50 | % |  |  | 7.25 | %
|Expected rate of increase in compensation        |  |      | 5.00 | %    |  |      | 5.00 | % |  |  | 5.00 | %
|Expected long-term rate of return on plan assets |  |      | 9.75 | %    |  |      | 9.75 | % |  |  | 9.75 | %

The actuarial rate assumptions used to determine
the projected benefit obligations at December 31, 2002 were
as follows: discount rate 6.5%, annual compensation increase
4.5% and expected return on plan assets 9.0%.

The Company provides health care and life
insurance benefits for certain retired employees who reach
retirement age while working for the Company. The components of
the expense for post-retirement health care and life insurance
benefits are as follows (amounts in thousands):

|                                                                    |  |      |     |      |  |      |     |  |  |   |     | 
|------------------------------------------------------------------- |  | ---- | --- | ---- |  | ---- | --- |  |  | - | --- | 
|                                                                    |  | 2000 |     | 2001 |  | 2002
|                                                                    |  |      |     |      |  |     
|Service cost benefits attributed to service
    during the year     |  | $    |    |      |  | $    |    |  |  | $ |    | 
|Interest cost on accumulated post retirement
    benefit obligation |  |      | 114 |      |  |      | 124 |  |  |   | 125 | 
|Amortization of (gain) loss                                         |  |      | (6  | )    |  |      | 4   |  |  |   | 5   | 
|                                                                    |  |      |     |      |  |      |     |  |  |   |     | 
|Net post retirement health care cost                                |  | $    | 108 |      |  | $    | 128 |  |  | $ | 130 | 
|                                                                    |  |      |     |      |  |      |     |  |  |   |     | 

The components of the accumulated post-retirement
health and life insurance benefit obligations (all of which are
unfunded) are as follows (amounts in thousands):

|                                                |  |      |       |      |  |      |       |   |  |   |       |  
|----------------------------------------------- |  | ---- | ----- | ---- |  | ---- | ----- | - |  | - | ----- | -
|                                                |  | 2000 |       | 2001 |  | 2002
|                                                |  |      |       |      |  |     
|Retirees                                        |  | $    | 1,641 |      |  | $    | 1,707 |   |  | $ | 1,850 |  
|Fully eligible active plan participants         |  |      | 80    |      |  |      | 86    |   |  |   | 71    |  
|Unrecognized net loss                           |  |      | (32   | )    |  |      | (41   | ) |  |   | (124  | )
|                                                |  |      |       |      |  |      |       |   |  |   |       |  
|Accumulated post retirement benefit obligations |  | $    | 1,689 |      |  | $    | 1,752 |   |  | $ | 1,797 |  
|                                                |  |      |       |      |  |      |       |   |  |   |       |  

A reconciliation of the accumulated obligation is
as follows (amounts in thousands):

|                                  |                        |      |       |      |  |   |       |     | 
|--------------------------------- | ---------------------- | ---- | ----- | ---- |  | - | ----- | --- | 
|                                  |                        | 2001 |       | 2002
|                                  |                        |      |       |     
|Balance as of January 1           |                        | $    | 1,689 |      |  | $ | 1,752 |    
|Net post retirement benefit cost: |                        |      |       |      |  |   |       |    
|                                  | Interest cost          |      |       | 124  |  |   |       | 125 | 
|                                  | Amortization of losses |      |       | 4    |  |   |       | 5   | 
|Actual benefits paid              |                        |      | (65   | )    |  |   | (85   | )  
|                                  |                        |      |       |      |  |   |       |    
|Balance as of December 31         |                        | $    | 1,752 |      |  | $ | 1,797 |    
|                                  |                        |      |       |      |  |   |       |    

The discount rates used in determining the
accumulated post-retirement benefit costs and obligations were
the same as for the above mentioned pension obligations.

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##### Table of Contents



ALLEN TELECOM INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The actuarial calculation assumed a health care
cost trend rate of 8.4% in 2000, 8.0% in 2001 and 7.6% in 2002.
The assumed trend rate was reduced based on the most current
data. The assumed rate decreases approximately 0.4% per year
through the year 2009 to 5.0% and remains constant beyond that
point. Assumed health care cost trend rates have an effect on
the amounts reported for the health care plans. A
one-percentage-point change (plus or minus) in the assumed
health care cost trend rules would have the following effects
(amounts in thousands):

|                                                            |  |         |    |          |  |   |     |  
|----------------------------------------------------------- |  | ------- | -- | -------- |  | - | --- | -
|                                                            |  | Plus 1% |    | Minus   
|                                                            |  | Point   |    | 1% Point
|                                                            |  |         |    |         
|Effect on total of service and interest cost
    components |  | $       | 4  |          |  | $ | (4  | )
|Effect on post-retirement benefit obligation                |  | $       | 65 |          |  | $ | (58 | )

Note 8: Income Taxes

Information with respect to income taxes in
continuing operations is as follows (amounts in thousands):

|                                                       |           |                 |        |        |        |      |        |        |        |   |        |         |        |  
|------------------------------------------------------ | --------- | --------------- | ------ | ------ | ------ | ---- | ------ | ------ | ------ | - | ------ | ------- | ------ | -
|                                                       |           | 2000            |        | 2001   |        | 2002
|                                                       |           |                 |        |        |        |     
|Income (loss) before taxes and minority
    interests: |           |                 |        |        |        |      |        |        |        |   |        |        
|                                                       | Domestic  |                 | $      | 7,850  |        |      | $      | (5,712 | )      |   | $      | 21,333  |       
|                                                       | Foreign   |                 |        | 10,524 |        |      |        | 2,961  |        |   |        | (10,667 | )     
|                                                       |           |                 |        |        |        |      |        |        |        |   |        |        
|                                                       |           | $               | 18,374 |        |        | $    | (2,751 | )      |        | $ | 10,666 |        
|                                                       |           |                 |        |        |        |      |        |        |        |   |        |        
|Provision for (benefit from) income taxes:             |           |                 |        |        |        |      |        |        |        |   |        |        
|                                                       | Current:  |                 |        |        |        |      |        |        |        |   |        |         |       
|                                                       |           | Federal         |        | $      | (6,122 | )    |        | $      | (7,707 | ) |        | $       | 6,360  |  
|                                                       |           | Foreign         |        |        | 7,636  |      |        |        | 3,895  |   |        |         | 1,399  |  
|                                                       |           | State and local |        |        | 340    |      |        |        | 300    |   |        |         | 370    |  
|                                                       |           |                 |        |        |        |      |        |        |        |   |        |        
|                                                       |           |                 | 1,854  |        |        |      | (3,512 | )      |        |   | 8,129  |        
|                                                       |           |                 |        |        |        |      |        |        |        |   |        |        
|                                                       | Deferred: |                 |        |        |        |      |        |        |        |   |        |         |       
|                                                       |           | Federal         |        |        | 5,528  |      |        |        | 678    |   |        |         | (1,909 | )
|                                                       |           | Foreign         |        |        | 720    |      |        |        | 1,765  |   |        |         | (2,275 | )
|                                                       |           | State and local |        |        | (572   | )    |        |        | (4     | ) |        |         | (172   | )
|                                                       |           |                 |        |        |        |      |        |        |        |   |        |        
|                                                       |           |                 | 5,676  |        |        |      | 2,439  |        |        |   | (4,356 | )      
|                                                       |           |                 |        |        |        |      |        |        |        |   |        |        
|                                                       |           | $               | 7,530  |        |        | $    | (1,073 | )      |        | $ | 3,773  |        
|                                                       |           |                 |        |        |        |      |        |        |        |   |        |        

F-23



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##### Table of Contents



ALLEN TELECOM INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

A reconciliation of the provision for (benefit
from) income taxes at the U.S. Federal statutory rate of 35% to
the reported tax is as follows (amounts in thousands):

|                                                                                   |  |      |        |      |  |      |        |   |  |   |        |  
|---------------------------------------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|                                                                                   |  | 2000 |        | 2001 |  | 2002
|                                                                                   |  |      |        |      |  |     
|Provision for (benefit from) taxes computed at
    the U.S. federal statutory rate |  | $    | 6,431  |      |  | $    | (963   | ) |  | $ | 3,733  |  
|State and local income taxes, net of federal
    income tax effect                 |  |      | 418    |      |  |      | 192    |   |  |   | 69     |  
|Net lower tax rates on foreign income                                              |  |      | (404   | )    |  |      | (2,833 | ) |  |   | (5,008 | )
|Impact of non-deductible goodwill amortization                                     |  |      | 2,680  |      |  |      | 2,736  |   |  |   |       |  
|Benefit of foreign sales corporation and other
    tax credits                     |  |      | (400   | )    |  |      | (450   | ) |  |   | (488   | )
|Impact of valuation allowances                                                     |  |      |       |      |  |      |       |   |  |   | 5,344  |  
|Other, net                                                                         |  |      | (1,195 | )    |  |      | 245    |   |  |   | 123    |  
|                                                                                   |  |      |        |      |  |      |        |   |  |   |        |  
|                                                                                   |  | $    | 7,530  |      |  | $    | (1,073 | ) |  | $ | 3,773  |  
|                                                                                   |  |      |        |      |  |      |        |   |  |   |        |  

The following table summarizes the total
provision for (benefit from) income taxes (amounts in thousands):

|                        |                              |      |       |        |   |      |        |        |   |   |       |        |  
|----------------------- | ---------------------------- | ---- | ----- | ------ | - | ---- | ------ | ------ | - | - | ----- | ------ | -
|                        |                              | 2000 |       | 2001   |   | 2002
|                        |                              |      |       |        |   |     
|Continuing operations   |                              | $    | 7,530 |        |   | $    | (1,073 | )      |   | $ | 3,773 |       
|Discontinued operations |                              |      | 700   |        |   |      |       |        |   |   |      |       
|Allocated to equity:    |                              |      |       |        |   |      |        |        |   |   |       |       
|                        | Employee stock plans         |      |       | (1,630 | ) |      |        | (413   | ) |   |       |       |  
|                        | Unfunded pension obligations |      |       |       |   |      |        | (1,630 | ) |   |       | (3,017 | )
|                        |                              |      |       |        |   |      |        |        |   |   |       |       
|                        |                              | $    | 6,600 |        |   | $    | (3,116 | )      |   | $ | 756   |       
|                        |                              |      |       |        |   |      |        |        |   |   |       |       

F-24



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##### Table of Contents



ALLEN TELECOM INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The components of deferred tax assets
(liabilities) are comprised of the following as of
December 31, 2001 and 2002 (amounts in thousands):

|                                                  |                                    |      |         |        |   |   |        |        |  
|------------------------------------------------- | ---------------------------------- | ---- | ------- | ------ | - | - | ------ | ------ | -
|                                                  |                                    | 2001 |         | 2002  
|                                                  |                                    |      |         |       
|Gross deferred tax assets:                        |                                    |      |         |        |   |   |        |       
|                                                  | Inventory                          |      | $       | 6,372  |   |   | $      | 8,520  |  
|                                                  | Bad debt reserves                  |      |         | 800    |   |   |        | 622    |  
|                                                  | Pensions and deferred compensation |      |         | 4,992  |   |   |        | 7,607  |  
|                                                  | Tax credit carryforwards           |      |         | 4,429  |   |   |        | 4,920  |  
|                                                  | Plant consolidation reserves       |      |         | 956    |   |   |        | 892    |  
|                                                  | Net operating loss carryforwards   |      |         | 22,541 |   |   |        | 17,366 |  
|                                                  | Depreciation                       |      |         | 2,226  |   |   |        | 1,866  |  
|                                                  | Other                              |      |         | 223    |   |   |        | 1,283  |  
|                                                  |                                    |      |         |        |   |   |        |       
|                                                  |                                    |      | 42,539  |        |   |   | 43,076 |       
|                                                  |                                    |      |         |        |   |   |        |       
|Gross deferred tax liabilities:                   |                                    |      |         |        |   |   |        |       
|                                                  | Intangible assets                  |      |         | (2,630 | ) |   |        | (2,830 | )
|                                                  | Withholding taxes                  |      |         | (4,955 | ) |   |        |       |  
|                                                  | Other                              |      |         | (4,909 | ) |   |        | (3,214 | )
|                                                  |                                    |      |         |        |   |   |        |       
|                                                  |                                    |      | (12,494 | )      |   |   | (6,044 | )     
|                                                  |                                    |      |         |        |   |   |        |       
|Net deferred tax asset before valuation allowance |                                    |      | 30,045  |        |   |   | 37,032 |       
|Valuation allowance                               |                                    |      |        |        |   |   | (5,344 | )     
|                                                  |                                    |      |         |        |   |   |        |       
|Net deferred tax assets                           |                                    | $    | 30,045  |        |   | $ | 31,688 |       
|                                                  |                                    |      |         |        |   |   |        |       

During 2000, 2001 and 2002, general business tax
credits of approximately $620,000, $540,000 and $400,000
generated in the respective years were used to reduce the
provision for U.S. Federal income taxes. At December 31,
2002, the Company also has available alternative minimum tax
credits in the amount of $476,000 available to reduce future
Federal income tax liabilities.

In general, United States income taxes or foreign
withholding taxes are not provided on undistributed earnings of
the Companys foreign subsidiaries because of the intent to
reinvest these earnings. The amount of undistributed earnings
which are considered to be indefinitely reinvested is
approximately $64,100,000 at December 31, 2002. While the
amount of federal income taxes, if such earnings are distributed
in the future, cannot now be determined, such taxes may be
reduced by tax credits and other deductions. The Company has
provided U.S. income taxes on undistributed earnings in China
that are not indefinitely reinvested in the amount of $2,400,000
for which the U.S. tax provision is $850,000.

The Company has U.S. net operating loss
carryforwards totaling approximately $76,300,000, which are
available to reduce future taxable income and expire in 2018
through 2021. At December 31, 2002, the Company has
recorded a net U.S. deferred tax asset pertaining to the
recognition of the benefit on the aforementioned operating loss
carryforwards, net deductible temporary differences and tax
credits in the amount of approximately $40,200,000. The Company
has not provided any valuation allowance with respect to this
asset, as it believes its realization is more likely than
not. This determination is primarily based upon our
expectation that future U.S. operations will be sufficiently
profitable to utilize the operating loss carryforwards, as well
as various tax, business and other planning strategies available
to the Company. We cannot assure you that we will be able to
realize this asset or that future valuation allowances will not
be required. The failure to utilize this asset would adversely
affect our results of operations and financial

F-25



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##### Table of Contents



ALLEN TELECOM INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

position. The Company has provided a valuation
allowance of $5,344,000 with respect to net operating losses and
deferred tax assets in certain of our European operations.

Note 9: Industry Segment and Geographic
Data

The Company conducts its business through two
segments based on products provided and services rendered:
Wireless Communications Equipment and Wireless Engineering and
Consulting Services. Wireless Communications Equipment consists
of four product lines: Base Station Subsystems and Components,
Repeaters and In-Building Coverage Products, Base Station and
Mobile Antennas and Geolocation Products.

The Company provides products and services on a
global basis to many of the worlds largest wireless
communications original equipment manufacturers (OEMs) and
carriers. The Company supplies many different customized Base
Station Subsystems and Components that are incorporated in cell
sites including filters, duplexers, power amplifiers, combiners,
microwave radios and related products. Repeaters and In-Building
Coverage Products support both coverage and capacity
enhancements for carriers. These products include repeaters,
distributed antenna systems, bi-directional boosters as well as
test equipment and analysis software. The Base Station and
Mobile Antenna product line manufactures a comprehensive line of
base station and mobile antennas serving all major wireless
standards and frequencies. The Geolocation Products product line
manufactures, installs and services a network based geolocation
solution that enables carriers to determine the location of
wireless callers without the need for the caller to have a
special handset.

The Wireless Engineering and Consulting Services
segment provides frequency planning and microwave coordination
services as well as network design and field engineering
services to wireless communication carriers.

The following shows the operating results and
asset positions for each of the reportable segments for the
years ended December 31, 2000, 2001 and 2002 (amounts in
thousands):

|                             |                                              |                                             |   |         |         |      |   |         |         |  |   |         |         | 
|---------------------------- | -------------------------------------------- | ------------------------------------------- | - | ------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                             |                                              | 2000                                        |   | 2001    |         | 2002
|                             |                                              |                                             |   |         |         |     
|Sales to external customers: |                                              |                                             |   |         |         |      |   |         |         |  |   |        
|                             | Wireless communications equipment:           |                                             |   |         |         |      |   |         |         |  |   |         |        
|                             |                                              | Base station subsystems and components      |   | $       | 190,934 |      |   | $       | 182,964 |  |   | $       | 143,255 | 
|                             |                                              | Repeaters and in-building coverage products |   |         | 78,751  |      |   |         | 94,523  |  |   |         | 94,200  | 
|                             |                                              | Base station and mobile antennas            |   |         | 97,820  |      |   |         | 88,218  |  |   |         | 75,209  | 
|                             |                                              | Geolocation products                        |   |         |        |      |   |         | 7,846   |  |   |         | 88,657  | 
|                             |                                              |                                             |   |         |         |      |   |         |         |  |   |        
|                             | Total Wireless communications equipment      |                                             |   | 367,505 |         |      |   | 373,551 |         |  |   | 401,321 |        
|                             | Wireless engineering and consulting services |                                             |   | 25,103  |         |      |   | 21,050  |         |  |   | 15,654  |        
|                             |                                              |                                             |   |         |         |      |   |         |         |  |   |        
|                             | Total sales                                  |                                             | $ | 392,608 |         |      | $ | 394,601 |         |  | $ | 416,975 |        
|                             |                                              |                                             |   |         |         |      |   |         |         |  |   |        

F-26



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##### Table of Contents



ALLEN TELECOM INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

|                                                |                                              |      |         |         |   |      |         |         |   |  |         |         |  
|----------------------------------------------- | -------------------------------------------- | ---- | ------- | ------- | - | ---- | ------- | ------- | - |  | ------- | ------- | -
|                                                |                                              | 2000 |         | 2001    |   | 2002
|                                                |                                              |      |         |         |   |     
|Operating income:                               |                                              |      |         |         |   |      |         |         |   |  |         |        
|                                                | Wireless communications equipment            |      | $       | 38,226  |   |      | $       | 21,159  |   |  | $       | 26,013  |  
|                                                | Wireless engineering and consulting services |      |         | 4,426   |   |      |         | 1,025   |   |  |         | (958    | )
|                                                |                                              |      |         |         |   |      |         |         |   |  |         |        
|                                                |                                              |      | 42,652  |         |   |      | 22,184  |         |   |  | 25,055  |        
|                                                | Goodwill amortization                        |      |         | (7,822  | ) |      |         | (7,901  | ) |  |         |        |  
|                                                | General corporate expenses                   |      |         | (7,423  | ) |      |         | (6,787  | ) |  |         | (7,388  | )
|                                                |                                              |      |         |         |   |      |         |         |   |  |         |        
|                                                | Operating income                             |      | $       | 27,407  |   |      | $       | 7,496   |   |  | $       | 17,667  |  
|                                                |                                              |      |         |         |   |      |         |         |   |  |         |        
|Segment Assets:                                 |                                              |      |         |         |   |      |         |         |   |  |         |        
|                                                | Wireless communications equipment            |      | $       | 261,495 |   |      | $       | 293,084 |   |  | $       | 295,953 |  
|                                                | Wireless engineering and consulting services |      |         | 13,676  |   |      |         | 12,360  |   |  |         | 9,737   |  
|                                                |                                              |      |         |         |   |      |         |         |   |  |         |        
|                                                |                                              |      | 275,171 |         |   |      | 305,444 |         |   |  | 305,690 |        
|                                                | Goodwill                                     |      |         | 129,190 |   |      |         | 140,995 |   |  |         | 139,126 |  
|                                                | Deferred income taxes                        |      |         | 48,115  |   |      |         | 42,061  |   |  |         | 41,845  |  
|                                                | General corporate assets                     |      |         | 21,532  |   |      |         | 24,507  |   |  |         | 43,377  |  
|                                                |                                              |      |         |         |   |      |         |         |   |  |         |        
|                                                | Total assets                                 |      | $       | 474,008 |   |      | $       | 513,007 |   |  | $       | 530,038 |  
|                                                |                                              |      |         |         |   |      |         |         |   |  |         |        
|Depreciation and software amortization:         |                                              |      |         |         |   |      |         |         |   |  |         |        
|                                                | Wireless communications equipment            |      | $       | 12,830  |   |      | $       | 14,440  |   |  | $       | 13,068  |  
|                                                | Wireless engineering and consulting services |      |         | 2,955   |   |      |         | 2,825   |   |  |         | 2,201   |  
|Fixed asset and capitalized software additions: |                                              |      |         |         |   |      |         |         |   |  |         |        
|                                                | Wireless communications equipment            |      | $       | 16,925  |   |      | $       | 10,510  |   |  | $       | 7,839   |  
|                                                | Wireless engineering and consulting services |      |         | 2,227   |   |      |         | 1,715   |   |  |         | 1,335   |  

The geographic distribution of the Companys
sales and long-lived assets (excluding deferred income taxes) is
as follows (amounts in thousands):

|                   |               |      |         |         |   |      |         |         |   |   |         |         |  
|------------------ | ------------- | ---- | ------- | ------- | - | ---- | ------- | ------- | - | - | ------- | ------- | -
|                   |               | 2000 |         | 2001    |   | 2002
|                   |               |      |         |         |   |     
|Sales:             |               |      |         |         |   |      |         |         |   |   |         |        
|                   | United States |      | $       | 196,783 |   |      | $       | 184,427 |   |   | $       | 247,966 |  
|                   | Italy         |      |         | 156,189 |   |      |         | 147,229 |   |   |         | 116,998 |  
|                   | Germany       |      |         | 37,581  |   |      |         | 59,292  |   |   |         | 52,700  |  
|                   | Other         |      |         | 74,708  |   |      |         | 90,451  |   |   |         | 72,084  |  
|                   | Intercompany  |      |         | (72,653 | ) |      |         | (86,798 | ) |   |         | (72,773 | )
|                   |               |      |         |         |   |      |         |         |   |   |         |        
|Total              |               | $    | 392,608 |         |   | $    | 394,601 |         |   | $ | 416,975 |        
|                   |               |      |         |         |   |      |         |         |   |   |         |        
|Long-lived assets: |               |      |         |         |   |      |         |         |   |   |         |        
|                   | United States |      | $       | 185,073 |   |      | $       | 187,122 |   |   | $       | 181,144 |  
|                   | Italy         |      |         | 13,649  |   |      |         | 14,004  |   |   |         | 13,425  |  
|                   | Germany       |      |         | 9,041   |   |      |         | 7,696   |   |   |         | 8,620   |  
|                   | Other         |      |         | 4,825   |   |      |         | 6,854   |   |   |         | 7,558   |  
|                   |               |      |         |         |   |      |         |         |   |   |         |        
|Total              |               | $    | 212,588 |         |   | $    | 215,676 |         |   | $ | 210,747 |        
|                   |               |      |         |         |   |      |         |         |   |   |         |        

The geographic distribution of sales is based on
where such products are manufactured or services rendered.

F-27



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##### Table of Contents



ALLEN TELECOM INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Sales to two major communications equipment
customers accounted for 19.5% and 10.2% of consolidated sales,
respectively, in 2002. One major customer also accounted for
10.2% of sales in 2001 and a different customer accounted for
15.2% of consolidated sales in 2000.

Note 10: Acquisitions and
Dispositions

On December 18, 2001, the Company acquired
substantially all of the assets and certain liabilities of
Bartley R.F. Systems, Inc. (Bartley). Bartley
designs and manufactures radio frequency (RF) filters,
filter related subsystems and other wireless communications
infrastructure products principally for wireless OEMs. The
combination of the Companys Forem division, a leading
manufacturer of base station subsystems and components, and
Bartley is expected to increase the Companys market share
in the United States for the Companys Base Station
Subsystems and Components product line. The results of
Bartleys operations (insignificant from the date of
acquisition through December 31, 2001) were included in the
consolidated financial statements beginning January 1, 2002.

The aggregate purchase price, as ultimately
determined, was approximately $22,004,000 including $3,770,000
in cash ($3,160,000 for the repayment of debt, $380,000 in
purchase price and $230,000 in related costs of acquisition) and
common stock valued at $20,233,000. The value of the 2,271,391
common shares was determined based on the average market price
of the Companys shares over a 5-day period before and
after the terms of the acquisition were agreed to and announced.
Under the terms of the acquisition agreement, the seller is
required to return to the Company a portion of the purchase
price in the amount of $2,000,000, based upon the realization of
acquired inventory. This amount is included in accounts
receivable at December 31, 2002 and was subsequently
received in 2003.

The following table summarizes the fair values of
the assets acquired and liabilities assumed as of the date of
acquisition.

|                              |                           |   |        |        |  
|----------------------------- | ------------------------- | - | ------ | ------ | -
|Current assets                |                           | $ | 7,145  |       
|Property, plant and equipment |                           |   | 1,279  |       
|Goodwill                      |                           |   | 21,564 |       
|                              |                           |   |        |       
|                              | Total assets acquired     |   |        | 29,988 |  
|                              |                           |   |        |       
|Current liabilities           |                           |   | (7,064 | )     
|Long-term debt                |                           |   | (920   | )     
|                              |                           |   |        |       
|                              | Total liabilities assumed |   |        | (7,984 | )
|                              |                           |   |        |       
|                              | Net assets acquired       |   | $      | 22,004 |  
|                              |                           |   |        |       

In 2002, goodwill related to this acquisition
increased by $1,478,000 pertaining to the finalization of
acquisition adjustments principally to inventory, liabilities
assumed, and adjustments for the appraised valuation of certain
acquired assets. The amount of the goodwill was assigned to the
wireless communications equipment segment, all of which is
expected to be tax deductible.

The following supplemental information is
presented, on a pro forma basis, for the consolidated results of
operations of the Company for fiscal years 2000 and 2001 as
though the business combination of Bartley had been completed at
the beginning of fiscal year 2000 (amounts in thousands, except
per common share data):

|                                                                                    |  |      |         |      |  |   |         |  
|----------------------------------------------------------------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                                                                                    |  | 2000 |         | 2001
|                                                                                    |  |      |         |     
|Sales                                                                               |  | $    | 437,857 |      |  | $ | 435,426 |  
|Income (loss) from continuing operations                                            |  | $    | 9,356   |      |  | $ | (3,590  | )
|Earnings (loss) per common share from
    continuing operations (basic and diluted) |  | $    | .31     |      |  | $ | (.12    | )

F-28



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##### Table of Contents



ALLEN TELECOM INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

In the preparation of such pro forma information,
goodwill was assumed to be amortizable over a 10-year period in
accordance with the then existing accounting rules and
requirements.

In 2000, the Company acquired the remaining
outstanding 28% minority interest of Telia S.A., bringing its
ownership interest to 100%, for a cash payment of $2,193,000.

On March 1, 1999, the Company sold its Marta
Technologies, Inc. (Marta) subsidiary, which
operated its discontinued centralized automotive emission
testing business. Previously contingent purchase price in the
amount of $2,000,000 was earned, when, in February 2000, the
purchaser was awarded an emissions testing contract. The
additional purchase price consideration was in the form of a 12%
installment note. Accordingly, in 2000, the Company reported an
additional gain of $1,300,000 from disposal of discontinued
operations, net of related income taxes of $700,000.

Note 11: Fair Values of Financial
Instruments

The following methods and assumptions were used
by the Company in estimating its fair value disclosures for
financial instruments.

Cash and Short-Term Investments:The carrying amount reported in the
balance sheet for cash and cash equivalents approximates its
fair value.

Long-Term Investments:It is not practicable to estimate the
fair value of the Companys 8% investment in the common and
preferred stock of its former specialty rubber products business
because of the lack of quoted market prices and the inability to
estimate fair value without incurring excessive costs. However,
management believes that the carrying amounts recorded at
December 31, 2001 and December 31, 2002 reflect the
corresponding fair value of such investment.

Long-Term Debt:The
fair values of the Companys long-term debt either
approximate fair value or are estimated using discounted cash
flow analysis based on the Companys current incremental
borrowing rates for similar types of borrowing arrangements.

Off-Balance Sheet Instruments:The Company utilizes letters of credit
to back certain financing instruments, insurance policies and
payment obligations. The letters of credit reflect fair value as
a condition of their underlying purpose and are subject to fees
competitively determined. The Company enters into foreign
currency contracts to offset the impact of currency rate changes
related to accounts receivable and certain payment obligations.
The fair value of such contracts are based on quoted market
prices of comparable contracts. The contract amounts and fair
values of financial instruments at December 31, 2001 and
2002 are as follows (amounts in thousands):

|                          |  |                 |         |            |  |      |        |      |  |   |         |  |  |   |        | 
|------------------------- |  | --------------- | ------- | ---------- |  | ---- | ------ | ---- |  | - | ------- |  |  | - | ------ | 
|                          |  |                 |         |           
|                          |  | Contract Amount |         | Fair Value
|                          |  |                 |         |           
|                          |  | 2001            |         | 2002       |  | 2001 |        | 2002
|                          |  |                 |         |            |  |      |        |     
|Cash and cash equivalents |  | $               | 16,368  |            |  | $    | 48,420 |      |  | $ | 16,368  |  |  | $ | 48,420 | 
|Non-current investments   |  |                 | 4,344   |            |  |      | 4,344  |      |  |   | 4,344   |  |  |   | 4,344  | 
|Long-term debt            |  |                 | 153,899 |            |  |      | 77,361 |      |  |   | 158,809 |  |  |   | 83,103 | 

|                                         |                            |                 |   |            |  |      |   |        |  |  |   |       |  |  |   |        | 
|---------------------------------------- | -------------------------- | --------------- | - | ---------- |  | ---- | - | ------ |  |  | - | ----- |  |  | - | ------ | 
|                                         |                            |                 |   |           
|                                         |                            | Contract Amount |   | Fair Value
|                                         |                            |                 |   |           
|                                         |                            | 2001            |   | 2002       |  | 2001 |   | 2002  
|                                         |                            |                 |   |            |  |      |   |       
|Off-balance sheet financial instruments: |                            |                 |   |            |  |      |   |        |  |  |   |       |  |  |   |       
|                                         | Letters of credit          |                 | $ | 2,115      |  |      | $ | 2,240  |  |  | $ | 2,115 |  |  | $ | 2,240  | 
|                                         | Foreign currency contracts |                 |   | 2,330      |  |      |   | 14,001 |  |  |   | 2,373 |  |  |   | 14,152 | 

F-29



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##### Table of Contents



ALLEN TELECOM INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Note 12: Special Charges

In 2000, 2001 and 2002, the Company incurred net
pretax special charges pertaining to the discontinuation of
certain product lines, the closing and consolidation of
manufacturing facilities and other items. Such costs are
included in the Consolidated Statements of Operations as follows
(amounts in thousands):

|                                             |                     |      |      |      |   |      |       |       |  |   |       |       | 
|-------------------------------------------- | ------------------- | ---- | ---- | ---- | - | ---- | ----- | ----- |  | - | ----- | ----- | 
|                                             |                     | 2000 |      | 2001 |   | 2002
|                                             |                     |      |      |      |   |     
|Cost of sales                                |                     | $    | 106  |      |   | $    | 997   |       |  | $ | 1,217 |      
|Selling, general and administrative expenses |                     |      | (141 | )    |   |      | 1,308 |       |  |   | 1,523 |      
|Research and development costs               |                     |      |     |      |   |      |      |       |  |   | 200   |      
|                                             |                     |      |      |      |   |      |       |       |  |   |       |      
|                                             | Total (income) loss |      | $    | (35  | ) |      | $     | 2,305 |  |   | $     | 2,940 | 
|                                             |                     |      |      |      |   |      |       |       |  |   |       |      

In 2000, the Company incurred additional pretax
charges of $1,678,000, or $0.04 per basic and diluted share
after related income tax effect, incremental to the 1999
restructuring charge. These 2000 charges, which were not
accruable at December 31, 1999, include termination costs
of employees notified subsequent to December 31, 1999,
relocation costs, asset write-offs, and other termination
related benefits. In 2000, the Company also recognized a
non-cash pretax gain of $1,160,000, or $0.03 per basic and
diluted share after related income tax effect, with respect to a
pension curtailment gain as a result of a reduction in workforce
in connection with the aforementioned restructuring. The Company
also adjusted the loss accrual for the disposal of the facility
as a result of its sale in January 2001 and recorded income in
the amount of $553,000, or $0.01 per basic and diluted share
after related income tax effect.

In 2001, the Company incurred pretax charges of
$2,305,000, or $0.05 per basic and diluted share after related
income tax effect, with respect to the planned closing and
consolidation of the Companys U.S. base station subsystem
and components parts manufacturing facility in Nevada into the
newly acquired Bartley manufacturing facility in Massachusetts.
These costs include termination costs of substantially all
employees at the Nevada manufacturing facility of $570,000,
closedown costs of the manufacturing facility of $744,000, a
loss on assets principally relating to the disposal of equipment
of $591,000 and inventory related charges of $400,000.

In 2002, the Company incurred pretax charges of
$2,940,000, or $0.07 per basic and diluted share after related
income tax effect. These costs included charges in connection
with headcount reductions at several of the Companys
businesses, discontinuation of certain products, particularly
relating to our base station and mobile antenna product line,
and additional facility related costs.

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##### Table of Contents



ALLEN TELECOM INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The following is a summary of the status of
certain exit costs incurred (amounts in thousands, except
employee data):

|                                      |  |           |        |             |  |           |      |       |  |   |        |   |  |   |        |  
|------------------------------------- |  | --------- | ------ | ----------- |  | --------- | ---- | ----- |  | - | ------ | - |  | - | ------ | -
|                                      |  |           |        |             |  |          
|                                      |  | Severance |        | Disposition |  |          
|                                      |  |           |        | of Building |  |          
|                                      |  |           |        | Number of   |  | and       |      |      
|                                      |  | Accrual   |        | Employees   |  | Equipment |      | Other
|                                      |  |           |        |             |  |           |      |      
|Accrued balance, December 31, 1999    |  | $         | 1,374  |             |  |           | 93   |       |  | $ | 2,271  |   |  | $ | 517    |  
|Additions to the accrual              |  |           | 327    |             |  |           | 5    |       |  |   | 393    |   |  |   | 958    |  
|Charged against accrual               |  |           | (1,482 | )           |  |           | (98  | )     |  |   | (562   | ) |  |   | (1,158 | )
|Accrual adjustment credited to income |  |           |       |             |  |           |     |       |  |   | (553   | ) |  |   |       |  
|                                      |  |           |        |             |  |           |      |       |  |   |        |   |  |   |        |  
|Balance, December 31, 2000            |  |           | 219    |             |  |           |     |       |  |   | 1,549  |   |  |   | 317    |  
|Additions to the accrual              |  |           | 570    |             |  |           | 76   |       |  |   | 576    |   |  |   | 168    |  
|Charged against accrual               |  |           | (219   | )           |  |           |     |       |  |   | (1,524 | ) |  |   | (147   | )
|                                      |  |           |        |             |  |           |      |       |  |   |        |   |  |   |        |  
|Balance, December 31, 2001            |  |           | 570    |             |  |           | 76   |       |  |   | 601    |   |  |   | 338    |  
|Additions to the accrual              |  |           | 2,055  |             |  |           | 125  |       |  |   | 400    |   |  |   | 485    |  
|Charged against accrual               |  |           | (1,514 | )           |  |           | (155 | )     |  |   | (323   | ) |  |   | (745   | )
|                                      |  |           |        |             |  |           |      |       |  |   |        |   |  |   |        |  
|Balance, December 31, 2002            |  | $         | 1,111  |             |  |           | 46   |       |  | $ | 678    |   |  | $ | 78     |  
|                                      |  |           |        |             |  |           |      |       |  |   |        |   |  |   |        |  

Note 13: Unaudited Quarterly Financial
Data

Quarterly financial data are summarized as
follows (amounts in thousands, except per common share data):

|                                                                |                                                          |                   |         |         |     |          |         |         |     |   |         |     |      |   |         |      |      |  
|--------------------------------------------------------------- | -------------------------------------------------------- | ----------------- | ------- | ------- | --- | -------- | ------- | ------- | --- | - | ------- | --- | ---- | - | ------- | ---- | ---- | -
|                                                                |                                                          | March 31          |         | June 30 |     | Sept. 30 |         | Dec. 31
|                                                                |                                                          |                   |         |         |     |          |         |        
|2001                                                            |                                                          |                   |         |         |     |          |         |         |     |   |         |     |      |   |         |     
|Sales                                                           |                                                          | $                 | 108,543 |         |     | $        | 105,094 |         |     | $ | 91,319  |     |      | $ | 89,645  |     
|Gross profit                                                    |                                                          |                   | 29,904  |         |     |          | 27,111  |         |     |   | 21,442  |     |      |   | 19,802  |     
|Net income (loss)                                               |                                                          |                   | 2,437   |         |     |          | 846     |         |     |   | (1,662  | )   |      |   | (3,444  | )   
|Earnings (loss) per common share:                               |                                                          |                   |         |         |     |          |         |         |     |   |         |     |      |   |         |     
|                                                                | Basic and Diluted:                                       |                   |         |         |     |          |         |         |     |   |         |     |      |   |         |      |     
|                                                                |                                                          | Net income (loss) |         | $       | .09 |          |         | $       | .03 |   |         | $   | (.06 | ) |         | $    | (.12 | )
|2002                                                            |                                                          |                   |         |         |     |          |         |         |     |   |         |     |      |   |         |     
|Sales                                                           |                                                          | $                 | 89,869  |         |     | $        | 91,850  |         |     | $ | 106,954 |     |      | $ | 128,302 |     
|Gross profit                                                    |                                                          |                   | 21,167  |         |     |          | 22,047  |         |     |   | 25,809  |     |      |   | 33,061  |     
|Income (loss) before cumulative effect of
    accounting change |                                                          |                   | (642    | )       |     |          | (662    | )       |     |   | 2,500   |     |      |   | 5,596   |     
|Cumulative effect of change in accounting
    principle         |                                                          |                   |        |         |     |          |        |         |     |   |        |     |      |   | (3,397  | )   
|Net (loss) income                                               |                                                          |                   | (642    | )       |     |          | (662    | )       |     |   | 2,500   |     |      |   | 2,199   |     
|Earnings (loss) per common share:                               |                                                          |                   |         |         |     |          |         |         |     |   |         |     |      |   |         |     
|                                                                | Basic and Diluted:                                       |                   |         |         |     |          |         |         |     |   |         |     |      |   |         |      |     
|                                                                | Income before cumulative effect of accounting
    change |                   | $       | (.02    | )   |          | $       | (.04    | )   |   | $       | .05 |      |   | $       | .15  |     
|                                                                | Cumulative effect of change in accounting
    principle  |                   |         |        |     |          |         |        |     |   |         |    |      |   |         | (.11 | )   
|                                                                | Net (loss) income                                        |                   | $       | (.02    | )   |          | $       | (.04    | )   |   | $       | .05 |      |   | $       | .04  |     

F-31



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##### Table of Contents



ALLEN TELECOM INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

In the fourth quarter of 2001, the Company
recognized a restructuring charge of approximately $2,305,000,
or $0.05 per basic and diluted share after related income tax
effect, with respect to the closing and consolidation of the
Companys U.S. base station subsystem and components parts
manufacturing facility in Nevada into the newly acquired Bartley
manufacturing facility in Massachusetts. Of this cost,
approximately $997,000 is included in cost of sales and
$1,308,000 in selling, general and administrative expense.

In 2002, the Company incurred restructuring
charges in the amount of $2,940,000, or $.07 per common share,
after related income tax effect, in connection with headcount
reductions at several of its businesses, discontinuation of
certain products, particularly relating to its base station and
mobile antenna product line, and additional facility costs
related to closing its manufacturing operation in Nevada. These
charges included $970,000, recorded in selling, general and
administrative expenses, or $.02 per common share, after related
income tax effect, in the second quarter of 2002 and $1,970,000,
which included $1,217,000 charged to cost of sales, $553,000 to
selling, general and administrative expenses and $220,000 to
research and development costs, or $.05 per common share, after
related income tax effect, in the fourth quarter of 2002.

Note 14: Subsequent Event

On February 18, 2003, Andrew Corporation
(Andrew) and the Company announced the signing of a definitive
agreement under which Andrew will acquire the Company in a
stock-for-stock transaction. Under the terms of the agreement,
which has been unanimously approved by the Board of Directors of
both companies, the Companys shareholders will receive
1.775 shares of newly-issued Andrew stock for each share of the
Company that they own. Completion of the transaction, which is
expected to occur in the first half of 2003, is subject to
approval of shareholders of both companies, expiration of the
applicable waiting period under the Hart-Scott-Rodino Act and
other customary closing conditions.

F-32



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##### Table of Contents



ALLEN TELECOM INC.

SCHEDULE II VALUATION AND QUALIFYING
ACCOUNTS

FOR THE THREE YEARS ENDED DECEMBER 31,
2002


|                                 |      |                        |   |            |  |          |  |            |  |            |  |       |     |  |  |        |     |  |   |        | 
|-------------------------------- | ---- | ---------------------- | - | ---------- |  | -------- |  | ---------- |  | ---------- |  | ----- | --- |  |  | ------ | --- |  | - | ------ | 
|                                 |      |                        |   |            |  |          |  |           
|                                 |      |                        |   | Additions  |  |          |  |           
|                                 |      | Balance                |   |            |  |          |  |           
|                                 |      | At                     |   | Charged to |  | Charged  |  | Deductions |  | Balance at
|                                 |      | Beginning              |   | Costs and  |  | to Other |  | from       |  | End Of    
|Description                      |      | of Period              |   | Expenses   |  | Accounts |  | Reserves   |  | Period    
|                                 |      |                        |   |            |  |          |  |            |  |           
|                                 |      |                       
|                                 |      | (Amounts in Thousands)
|Allowance for doubtful accounts: |      |                        |   |            |  |          |  |            |  |            |  |       |     |  |  |        |     |  |   |       
|                                 | 2002 |                        | $ | 3,338      |  |          |  | 1,329      |  |            |  | 147   | (3) |  |  | 1,673  | (1) |  | $ | 3,141  | 
|                                 |      |                        |   |            |  |          |  |            |  |            |  |       |     |  |  |        |     |  |   |       
|                                 | 2001 |                        | $ | 4,739      |  |          |  | 1,151      |  |            |  |      |     |  |  | 2,552  | (1) |  | $ | 3,338  | 
|                                 |      |                        |   |            |  |          |  |            |  |            |  |       |     |  |  |        |     |  |   |       
|                                 | 2000 |                        | $ | 2,537      |  |          |  | 2,603      |  |            |  |      |     |  |  | 401    | (1) |  | $ | 4,739  | 
|                                 |      |                        |   |            |  |          |  |            |  |            |  |       |     |  |  |        |     |  |   |       
|Inventory reserves:              |      |                        |   |            |  |          |  |            |  |            |  |       |     |  |  |        |     |  |   |       
|                                 | 2002 |                        | $ | 17,002     |  |          |  | 19,269     |  |            |  | 3,879 | (4) |  |  | 6,500  | (2) |  | $ | 33,650 | 
|                                 |      |                        |   |            |  |          |  |            |  |            |  |       |     |  |  |        |     |  |   |       
|                                 | 2001 |                        | $ | 13,964     |  |          |  | 10,139     |  |            |  | 419   | (5) |  |  | 7,520  | (2) |  | $ | 17,002 | 
|                                 |      |                        |   |            |  |          |  |            |  |            |  |       |     |  |  |        |     |  |   |       
|                                 | 2000 |                        | $ | 20,722     |  |          |  | 7,507      |  |            |  |      |     |  |  | 14,265 | (2) |  | $ | 13,964 | 
|                                 |      |                        |   |            |  |          |  |            |  |            |  |       |     |  |  |        |     |  |   |       



---



|    |                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents the net amount of the write-off of
    uncollectible accounts (less recoveries) and foreign currency
    translation changes.                                                                   
|   
|(2) | Represents the net amount of the write-off of
    inventory (less recoveries) and foreign currency translation
    changes.                                                                                
|   
|(3) | Represents the net amount of foreign currency
    translation changes.                                                                                                                                     
|   
|(4) | Represents Bartley R. F. Systems, Inc. purchase
    price adjustments, of which $2,000 was recorded in accounts
    receivable and $694 in goodwill and $1,185 in foreign currency
    translation changes.
|   
|(5) | Represents reserves acquired related to the
    purchase of Bartley R.F. Systems, Inc.                                                                                                                     

F-33



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##### Table of Contents






EXHIBIT INDEX

|                |  |                                                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |  |  | 
|--------------- |  | --------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  |  |  | 
|                |  |                                                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Exhibit Numbers |  |                                                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                |  |                                                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(3)             |  | Certificate of Incorporation and By
    Laws             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  | 
|                |  | (a)                                                       |  | Third Restated Certificate of Incorporation
    (filed as Exhibit (a) to Registrants Registration
    Statement on Form S-8, Registration No. 333-96805,
    filed July 19, 2002 (Commission file number 1-6016) and
    incorporated by reference)                                                                                                                                                                                                                                                         |  |  |  | 
|                |  | (b)                                                       |  | By-Laws, as amended through February 16,
    1999, filed as Exhibit Number 3(c) to Registrants
    Form 10-K Annual Report for the fiscal year ended
    December 31, 1998 (Commission file number 1-6016 and
    incorporated herein by reference)                                                                                                                                                                                                                                                         |  |  |  | 
|(4)             |  | Instruments defining the rights of security
    holders  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  | 
|                |  | (a)                                                       |  | Rights Agreement, dated as of January 20,
    1998, between the Registrant and Harris Trust Company of New
    York, as Rights Agent (filed as Exhibit Number 4.1 to
    Registrants Form 8-K Registration Statement on
    Form 8-A, filed on January 9, 1998 (Commission file
    number 1-6016) and incorporated herein by reference)                                                                                                                                                                    |  |  |  | 
|                |  | (b)                                                       |  | Credit Agreement, dated as of December 31,
    1998, among the Registrant, the Banks signatories thereto, NBD
    Bank, as Documentation Agent, and Key Bank National Association,
    as Swing Line Lender, Syndication Agent and Administrative Agent
    filed as Exhibit 4(b) to Registrants Form 10-K
    Annual Report for the fiscal year ended December 31, 1998
    (Commission file number 1-6016 and incorporated herein by
    reference)                                                       |  |  |  | 
|                |  | (c)                                                       |  | Amendment dated as of July 30, 1999 to the
    Credit Agreement dated as of December 31, 1998 among
    Registrant, the Banks signatories thereto, NBD Bank, as
    Documentation Agent, and Key Bank National Association, as Swing
    Line Lender, Syndication Agent and Administrative Agent (filed
    as Exhibit 4(c) to Registrants Form 10-K Annual
    Report for the fiscal year ended December 31, 1999
    (Commission File Number 1-6016) and incorporated herein by
    reference)            |  |  |  | 
|                |  | (d)                                                       |  | Amendment No. 2, dated as of April 19,
    2000, to Credit Agreement dated as of December 31, 1998
    among the Registrant, the Banks signatories thereto, NBD Bank,
    as Documentation Agent, and Key Bank National Association, as
    Swing Line Lender, Syndication Agent and Administrative Agent
    (filed as Exhibit 10(a) to Registrants Form 10-Q
    Quarterly Report for the quarter ended March 31, 2000
    (Com-mission file number 1-6016) and incorporated herein by
    reference)     |  |  |  | 
|                |  | (e)                                                       |  | Amendment No. 3, dated as of
    November 15, 2000 to Credit Agreement dated as of
    December 31, 1998 among the Registrant, the Banks
    signatories thereto, NBD Bank, as Documentation Agent, and Key
    Bank National Association, as Swing Line Lender, Syndication
    Agent and Administrative Agent (filed as Exhibit 4(e) to
    Registrants Form 10-K Annual Report for the fiscal
    year ended December 31, 2000 (Commission File Number
    1-6016) and incorporated herein by reference) |  |  |  | 
|                |  | (f)                                                       |  | Amendment No. 4, dated as of June 19,
    2001, to Credit Agreement dated as of December 31, 1998
    among the Registrant, the Banks signatories thereto, NBD Bank as
    Documentation Agent, and KeyBank National Association, as
    Swingline Lender, Syndication Agent and Administrative Agent
    (filed as Exhibit 4.1 to Registrants Form 10-Q
    Quarterly Report for the quarter ended June 30, 2001
    (Commission file number 1-6016) and incorporated herein by
    reference)             |  |  |  | 
|                |  | (g)                                                       |  | Amendment No. 5, dated as of
    September 28, 2001, to Credit Agreement dated as of
    December 31, 1998 among the Registrant, the Banks
    signatories thereto, NBD Bank as Documentation Agent, and
    KeyBank National Association as Swingline Lender, Syndication
    Agent and Administrative Agent (filed as Exhibit 4.1 to
    Registrants Form 10-Q Quarterly Report for the
    quarter ended September 30, 2001 (Commission file number
    1-6016) and incorporated herein reference)       |  |  |  | 

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##### Table of Contents



|                |  |                                                                                                                                                                                                                                                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |  |  | 
|--------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|                |  |                                                                                                                                                                                                                                                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Exhibit Numbers |  |                                                                                                                                                                                                                                                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                |  |                                                                                                                                                                                                                                                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                |  | (h)                                                                                                                                                                                                                                                                             |  | Amendment No. 6, dated as of
    November 15, 2001, to Credit Agreement dated as of
    December 31, 1998 among the Registrant, the Banks
    signatories thereto, NBD Bank, as Documentation Agent, and
    KeyBank National Association, as Swingline Lender, Syndication
    Agent and Administrative Agent                                                                                                                                                                                                                                                                                                                                                 |  |  |  | 
|                |  | (i)                                                                                                                                                                                                                                                                             |  | Amendment No. 7, dated as of
    December 31, 2001, to Credit Agreement dated as of
    December 31, 1998 among the Registrant, the Banks
    signatories thereto, NBD Bank, as Documentation Agent, and
    KeyBank National Association as Swingline Lender, Syndication
    Agent and Administrative Agent                                                                                                                                                                                                                                                                                                                                                  |  |  |  | 
|                |  | (j)                                                                                                                                                                                                                                                                             |  | Note Purchase Agreement, dated as of
    November 1, 1997, among the Registrant and the insurance
    companies signatories thereto (filed as Exhibit Number 4(c)
    to Registrants Form 10-K Annual Report for the fiscal
    year ended December 31, 1997 (Commission file number
    1-6016) and incorporated herein by reference)                                                                                                                                                                                                                                                                                                                        |  |  |  | 
|                |  |                                                                                                                                                                                                                                                                                 |  | Other than the Credit Agreement and Note Purchase
    Agreement referred to above, no instrument defining the rights
    of holders of such long-term debt relates to securities having
    an aggregate principal amount in excess of 10% of the
    consolidated assets of Registrant and its subsidiaries;
    therefore, in accordance with paragraph (iii) of
    Item 4 of Item 601(b) of Regulation S-K, the
    other instruments defining the rights of holders of long-term
    debt are not filed herewith. Registrant hereby agrees to furnish
    a copy of any such other instrument to the Securities and
    Exchange Commission upon request. |  |  |  | 
|(10)            |  | Material contracts (Other than
    Exhibit 10(a), all of the exhibits listed as material
    contracts hereunder are management contracts or compensatory
    plans or arrangements required to be filed as exhibits to this
    Report pursuant to Item 14(c) of this Report.) |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | 
|                |  | (a)                                                                                                                                                                                                                                                                             |  | Allen Telecom Inc. 1982 Stock Plan, as amended
    through November 3, 1987 (filed as Exhibit Number
    10(c) to Registrants Form 10-K Annual Report for the
    fiscal year ended December 31, 1987 (Commission file number
    1-6016) and incorporated herein by reference)                                                                                                                                                                                                                                                                                                                                                                               |  |  |  | 
|                |  | (b)                                                                                                                                                                                                                                                                             |  | Amendment, dated as of December 4, 1990, to
    the Allen Telecom Inc. 1982 Stock Plan, as amended (filed as
    Exhibit Number 10(d) to Registrants Form 10-K
    Annual Report for the fiscal year ended December 31, 1990
    (Commission file number 1-6016) and incorporated herein by
    reference)                                                                                                                                                                                                                                                                                                                                                    |  |  |  | 
|                |  | (c)                                                                                                                                                                                                                                                                             |  | Amendment, dated as of June 14, 1995, to the
    Allen Telecom Inc. 1982 Stock Plan, as amended (filed as
    Exhibit Number 10.1 to Registrants Form 10-Q
    Quarterly Report for the quarterly period ended June 30,
    1995 (Commission file number 1-6016) and incorporated herein by
    reference)                                                                                                                                                                                                                                                                                                                                                    |  |  |  | 
|                |  | (d)                                                                                                                                                                                                                                                                             |  | Amendment, dated as of February 28, 1997, to
    the Allen Telecom Inc. 1982 Stock Plan, as amended (filed as
    Exhibit Number 10(e) to Registrants Form 10-K
    Annual Report for the fiscal year ended December 31, 1996
    (Commission file number 1-6016) and incorporated herein by
    reference)                                                                                                                                                                                                                                                                                                                                                   |  |  |  | 
|                |  | (e)                                                                                                                                                                                                                                                                             |  | Amendment, dated as of April 28, 2000, to
    the Allen Telecom Inc. 1982 Stock Plan, as amended (filed as
    Exhibit Number 10(a) to Registrants Form 10-Q
    Quarterly Report for the quarterly period ended June 30,
    2000 (Commission file number 1-6016) and incorporated herein by
    reference)                                                                                                                                                                                                                                                                                                                                                  |  |  |  | 
|                |  | (f)                                                                                                                                                                                                                                                                             |  | Form of Restricted Stock Agreement pursuant to
    the Allen Telecom Inc. 1982 Stock Plan, as amended (filed as
    Exhibit Number 10(e) to Registrants Form 10-K
    Annual Report for the fiscal year ended December 31, 1990
    (Commission file number 1-6016) and incorporated herein by
    reference)                                                                                                                                                                                                                                                                                                                                                 |  |  |  | 
|                |  | (g)                                                                                                                                                                                                                                                                             |  | Allen Telecom Inc. 1992 Stock Plan, as amended
    and restated as of May 1, 1998 (filed as
    Exhibit Number 4(e) to Registrants Registration
    Statement on Form S-8, Registration No. 333-51739,
    filed on May 4, 1998 (Commission file number 1-6016) and
    incorporated herein by reference)                                                                                                                                                                                                                                                                                                                                                     |  |  |  | 

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##### Table of Contents



|                |  |     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |  |  | 
|--------------- |  | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|                |  |     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Exhibit Numbers |  |     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                |  |     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                |  | (h) |  | Amendment, dated July 11, 2001, to the Allen
    Telecom Inc. 1992 Stock Plan, as amended (filed as
    Exhibit 10.1 to Registrants Form 10-Q Quarterly
    Report for the quarter ended June 30, 2001 (Commission file
    number 1-6016) and incorporated herein by reference)                                                                                                                                                         |  |  |  | 
|                |  | (i) |  | Amended and Restated 1992 Stock Plan (filed as
    Exhibit A to Registrants Proxy Statement dated
    March 17, 2002 (Commission file number 1-6016) and
    incorporated herein by reference)                                                                                                                                                                                                                                           |  |  |  | 
|                |  | (j) |  | Form of Incentive Stock Option to Purchase Stock
    pursuant to the Allen Telecom Inc. Amended and Restated Stock
    Plan (filed as Exhibit 10.2 to Registrants
    Form 10-Q Quarterly Report for the Quarter ended
    June 30, 2002 (Commission file number 1-6016) and
    incorporated herein by reference)                                                                                                                       |  |  |  | 
|                |  | (k) |  | Form of Non-Qualified Option to Purchase Stock
    pursuant to the Allen Telecom Inc. Amended and Restated Stock
    Plan (filed as Exhibit 10.3 to Registrants
    Form 10-Q Quarterly Report for the quarter ended
    June 30, 2002 (Commission file number 1-6016) and
    incorporated herein by reference)                                                                                                                         |  |  |  | 
|                |  | (l) |  | Form of Restricted Stock Agreement pursuant to
    Allen Telecom Inc. 1992 Stock Plan (Salary Increase Deferral),
    dated April 28, 1992, entered into by the Registrant with
    certain executive and divisional officers (filed as
    Exhibit Number 10(g) to Registrants Form 10-K
    Annual Report for the fiscal year ended December 31, 1992
    (Commission file number 1-6016) and incorporated herein by
    reference)    |  |  |  | 
|                |  | (m) |  | Form of Restricted Stock Agreement pursuant to
    Allen Telecom Inc. 1992 Stock Plan (Salary Increase Deferral),
    dated November 30, 1993, entered into by the Registrant
    with certain executive and divisional officers (filed as
    Exhibit Number 10(g) to Registrants Form 10-K
    Annual Report for the fiscal year ended December 31, 1993
    (Commission file number 1-6016) and incorporated herein by
    reference) |  |  |  | 
|                |  | (n) |  | Amendment to Restricted Stock Agreements pursuant
    to 1992 Stock Plan (Salary Increase Deferral), dated
    February 22, 1995 (filed as Exhibit Number 10(l) to
    Registrants Form 10-K Annual Report for the fiscal
    year ended December 31, 1994 (Commission file number
    1-6016) and incorporated herein by reference)                                                                                                     |  |  |  | 
|                |  | (o) |  | Amendment to Restricted Stock Agreements pursuant
    to 1992 Stock Plan (Salary Increase Deferral), dated
    April 25, 1997 (filed as Exhibit Number 10 to
    Registrants Form 10-Q Quarterly Report for the
    quarter ended March 31, 1997 (Commission file number
    1-6016) and incorporated herein by reference)                                                                                                               |  |  |  | 
|                |  | (p) |  | Amendment to 1992 Restricted Stock Agreements
    pursuant to 1992 Stock Plan (Salary Increase Deferral), dated
    February 17, 1998 (filed as Exhibit Number 10(q) to
    Registrants Form 10-K Annual Report for the fiscal
    year ended December 31, 1997 (Commission file number
    1-6016) and incorporated herein reference)                                                                                                   |  |  |  | 
|                |  | (q) |  | Form of Restricted Stock Agreement pursuant to
    Allen Telecom Inc. 1992 Stock Plan (Salary Increase Deferral),
    dated January 12, 1999, entered into by the Registrant with
    certain executive and divisional officers (filed as
    Exhibit Number 10(l) to Registrants Form 10-K
    Annual Report for the fiscal year ended December 31, 1998
    (Commission file number 1-6016) and incorporated herein by
    reference)  |  |  |  | 
|                |  | (r) |  | Form of Non-Qualified Option to Purchase Stock
    granted to certain directors of the Registrant on
    September 12, 1989 (filed as Exhibit Number 10(e) to
    Registrants Form 10-K Annual Report for the fiscal
    year ended December 31, 1989 (Commission file number
    1-6016) and incorporated herein by reference)                                                                                                          |  |  |  | 

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|                |  |      |  |                                                                                                                                                                                                                                                                                                                                                                               |  |  |  | 
|--------------- |  | ---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|                |  |      |  |                                                                                                                                                                                                                                                                                                                                                                              
|Exhibit Numbers |  |      |  |                                                                                                                                                                                                                                                                                                                                                                              
|                |  |      |  |                                                                                                                                                                                                                                                                                                                                                                              
|                |  | (s)  |  | Form of Non-Qualified Option to Purchase Stock
    granted to certain directors of the Registrant on
    February 19, 1997 (filed as Exhibit Number 10(q) to
    Registrants Form 10-K Annual Report for the Fiscal
    year ended December 31, 1996 (Commission filed number
    1-6016) and incorporated herein by reference)                                              |  |  |  | 
|                |  | (t)  |  | Allen Telecom Inc. 1994 Non-Employee Directors
    Stock Option Plan (filed as Exhibit A to Registrants
    Proxy Statement dated March 17, 1994 (Commission file
    number 1-6016) and incorporated herein by reference)                                                                                                                                                   |  |  |  | 
|                |  | (u)  |  | First Amendment, dated as of February 28,
    1997, to the Allen Telecom Inc. 1994 Non-Employee Directors
    Stock Option Plan (filed as Exhibit Number 10(s) to
    Registrants Form 10-K Annual Report for the fiscal
    year ended December 31, 1996 (Commission file number
    1-6016) and incorporated herein by reference)                                          |  |  |  | 
|                |  | (v)  |  | Second Amendment, dated as of February 17,
    1998, to the Allen Telecom Inc. 1994 Non-Employee Directors
    Stock Option Plan (filed as Exhibit Number 10(r) to
    Registrants Form 10-K Annual Report for the fiscal
    year ended December 31, 1997 (Commission file number
    1-6016) and incorporated herein by reference)                                         |  |  |  | 
|                |  | (w)  |  | Amended and Restated Allen Telecom Inc. 1994
    Non-Employee Directors Stock Option Plan adopted by shareholders
    on April 27, 2001 (filed as Exhibit A to the
    Registrants Proxy Statement dated March 16, 2001
    (Commission file number 1-6016) and incorporated herein by
    reference)                                                                        |  |  |  | 
|                |  | (x)  |  | Form of Non-Qualified Option to Purchase Stock
    pursuant to the Allen Telecom Inc. 1994 Non-Employee Directors
    Stock Option Plan (filed as Exhibit Number 10(o) to
    Registrants Form 10-K Annual Report for the fiscal
    year ended December 31, 1994 (Commission file number
    1-6016) and incorporated herein by reference)                                  |  |  |  | 
|                |  | (y)  |  | Allen Telecom Inc. Amended and Restated Key
    Management Deferred Bonus Plan (incorporating all amendments
    through February 27, 1992) (filed as Exhibit Number
    10(i) to Registrants Form 10-K Annual Report for the
    fiscal year ended December 31, 1992 (Commission file number
    1-6016) and incorporated herein by reference)                              |  |  |  | 
|                |  | (z)  |  | Amendment, dated as of February 28, 1997, to
    the Allen Telecom Inc. Amended and Restated Key Management
    Deferred Bonus Plan (filed as Exhibit Number 10(v) to
    Registrants Form 10-K Annual Report for the fiscal
    year ended December 31, 1996 (Commission file number
    1-6016) and incorporated herein by reference)                                      |  |  |  | 
|                |  | (aa) |  | Form of Restricted Stock Agreement pursuant to
    the Allen Telecom Inc. 1992 Stock Plan and Key Management
    Deferred Bonus Plan (filed as Exhibit Number 10(j) to
    Registrants Form 10-K Annual Report for the fiscal
    year ended December 31, 1992 (Commission file number
    1-6016) and incorporated herein by reference)                                     |  |  |  | 
|                |  | (bb) |  | Form of Severance Agreement, dated as of
    September 8, 1999, entered into by the Registrant with
    certain executive officers, officers and division presidents
    (filed as Exhibit Number 10(v) to Registrants
    Form 10-K Annual Report for the fiscal year ended
    December 31, 1999 (Commission file number 1-6016) and
    incorporated herein by reference) |  |  |  | 
|                |  | (cc) |  | Allen Telecom Inc. Master Discretionary Severance
    Pay Plan, effective January 1, 1993 (filed as
    Exhibit Number 10(t) to Registrants Form 10-K
    Annual Report for the fiscal year ended December 31, 1994
    (Commission file number 1-6016) and incorporated herein by
    reference)                                                                            |  |  |  | 
|                |  | (dd) |  | First Amendment, dated as of February 28,
    1997, to the Allen Telecom Inc. Master Discretionary Severance
    Pay Plan (filed as Exhibit Number 10(aa) to
    Registrants Form 10-K Annual Report for the fiscal
    year ended December 31, 1996 (Commission file number
    1-6016) and incorporated herein by reference)                                               |  |  |  | 

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|                |  |      |  |                                                                                                                                                                                                                                                                                                                                                                              |  |  |  | 
|--------------- |  | ---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|                |  |      |  |                                                                                                                                                                                                                                                                                                                                                                             
|Exhibit Numbers |  |      |  |                                                                                                                                                                                                                                                                                                                                                                             
|                |  |      |  |                                                                                                                                                                                                                                                                                                                                                                             
|                |  | (ee) |  | Allen Telecom Inc. Key Employee Severance Policy
    adopted by the Registrant on November 3, 1987 (filed as
    Exhibit Number 10(h) to Registrants Form 10-K
    Annual Report for the fiscal year ended December 31, 1987
    (Commission file number 1-6016) and incorporated herein by
    reference)                                                                  |  |  |  | 
|                |  | (ff) |  | Amendment, dated May 14, 1991, to the Allen
    Telecom Inc. Key Employee Severance Policy adopted by the
    Registrant on November 3, 1987 (filed as
    Exhibit Number 10(n) to Registrants Form 10-K
    Annual Report for the fiscal year ended December 31, 1992
    (Commission file number 1-6016) and incorporated herein by
    reference)                        |  |  |  | 
|                |  | (gg) |  | Amendment No. 2, dated February 22,
    1996, to the Allen Telecom Inc. Key Employee Severance Policy
    (filed as Exhibit Number 10(x) to Registrants
    Form 10-K Annual Report for the fiscal year ended
    December 31, 1995 (Commission file number 1-6016) and
    incorporated herein by reference)                                                               |  |  |  | 
|                |  | (hh) |  | Amendment No. 3, dated as of
    September 12, 1996, to the Allen Telecom Inc. Key Employee
    Severance Policy (filed as Exhibit Number 10 to
    Registrants Form 10-Q Quarterly Report for the
    quarter ended September 30, 1996 (Commission file Number
    1-6016) and incorporated herein by reference)                                                           |  |  |  | 
|                |  | (ii) |  | Amendment No. 4, dated as of
    February 28, 1997, to the Allen Telecom Inc. Key Employee
    Severance Policy (filed as Exhibit Number 10(ff) to
    Registrants Form 10-K Annual Report for the fiscal
    year ended December 31, 1996 (Commission file number
    1-6016) and incorporated herein by reference)                                                        |  |  |  | 
|                |  | (jj) |  | Amendment No. 5, dated as of
    February 24, 2000, to the Allen Telecom Inc. Key Employee
    Severance Policy (filed as Exhibit Number 10(b) to
    Registrants Form 10-Q Quarterly Report for the quarter
    ended March 31, 2000 (Commission file number 1-6016) and
    incorporated herein by reference)                                                             |  |  |  | 
|                |  | (kk) |  | Employment Agreement, dated June 28, 1988,
    between the Registrant and Philip Wm. Colburn (filed as
    Exhibit Number 10(m) to Registrants Form 10-K
    Annual Report for the fiscal year ended December 31, 1988
    (Commission file number 1-6016) and incorporated herein by
    reference)                                                                        |  |  |  | 
|                |  | (ll) |  | Amendment, dated as of February 27, 1992, of
    Employment Agreement, dated June 28, 1988, between the
    Registrant and Philip Wm. Colburn (filed as Exhibit Number
    10(p) to Registrants Form 10-K Annual Report for the
    fiscal year ended December 31, 1992 (Commission file number
    1-6016) and incorporated herein by reference)                           |  |  |  | 
|                |  | (mm) |  | Amendment, dated as of February 26, 1991, of
    Employment Agreement, dated June 28, 1988, between the
    Registrant and Philip Wm. Colburn (filed as Exhibit Number
    10(n) to Registrants Form 10-K Annual Report for the
    fiscal year ended December 31, 1990 (Commission file number
    1-6016) and incorporated herein by reference)                           |  |  |  | 
|                |  | (nn) |  | Amended and Restated Post Employment Consulting
    Agreement, dated as of December 20, 1990, between the
    Registrant and Philip Wm. Colburn (filed as Exhibit Number
    10(o) to Registrants Form 10-K Annual Report for the
    fiscal year ended December 31, 1990 (Commission file number
    1-6016) and incorporated herein by reference)                         |  |  |  | 
|                |  | (oo) |  | First Amendment to Amended and Restated Post
    Employment Consulting Agreement, dated as of February 19,
    1997, between the Registrant and Philip Wm. Colburn (filed as
    Exhibit Number 10(kk) to Registrants Form 10-K
    Annual Report for the fiscal year ended December 31, 1996
    (Commission file number 1-6016) and incorporated herein by
    reference) |  |  |  | 

v



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|                |  |      |  |                                                                                                                                                                                                                                                                                                                                                                                                       |  |  |  | 
|--------------- |  | ---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|                |  |      |  |                                                                                                                                                                                                                                                                                                                                                                                                      
|Exhibit Numbers |  |      |  |                                                                                                                                                                                                                                                                                                                                                                                                      
|                |  |      |  |                                                                                                                                                                                                                                                                                                                                                                                                      
|                |  | (pp) |  | Amended and Restated Supplemental Pension Benefit
    Agreement, dated as of December 20, 1990, between the
    Registrant and Philip Wm. Colburn (filed as Exhibit Number
    10(p) to Registrants Form 10-K Annual Report for the
    fiscal year ended December 31, 1990 (Commission file number
    1-6016) and incorporated herein by reference)                                                |  |  |  | 
|                |  | (qq) |  | Amendment, dated as of August 1, 1997, of
    Amended and Restated Supplemental Pension Benefit Agreement,
    dated as of December 20, 1990, between the Registrant and
    Philip Wm. Colburn (filed as Exhibit Number 10(pp) to
    Registrants Form 10-K Annual Report for the fiscal year
    ended December 31, 1997 (Commission file number 1-6016) and
    incorporated herein by reference) |  |  |  | 
|                |  | (rr) |  | Amendment, dated July 7, 2002, of Amended
    and Restated Supplemental Pension Benefit Agreement, dated as of
    December 20, 1990, between Registrant and Philip Wm.
    Colburn (filed as Exhibit No. 10.1 to Registrants
    Form 10-Q for the quarter ended September 30, 2002
    (Commission file number 1-6016) and incorporated herein by
    reference)                                   |  |  |  | 
|                |  | (ss) |  | Split Dollar Insurance Agreement, dated as of
    July 1, 1991, between the Registrant and Philip Wm. Colburn
    (filed as Exhibit Number 10(u) to Registrants
    Form 10-K Annual Report for the fiscal year ended
    December 31, 1992 (Commission file number 1-6016) and
    incorporated herein by reference)                                                                                |  |  |  | 
|                |  | (tt) |  | Change in Control Agreement dated as of
    September 8, 1999, between the Registrant and Philip Wm.
    Colburn (filed as Exhibit Number 10(ll) to
    Registrants Form 10-K Annual Report for the fiscal
    year ended December 31, 1999 (Commission file number
    1-6016) and incorporated herein by reference)                                                                                |  |  |  | 
|                |  | (uu) |  | Supplemental Pension Benefit Agreement, dated as
    of December 6, 1983, between the Registrant and J. Chisholm
    Lyons (filed as Exhibit Number 10 (r) to Registrants
    Form 10-K Annual Report for the fiscal year ended
    December 31, 1983 (Commission file number 1-6016) and
    incorporated herein by reference)                                                                      |  |  |  | 
|                |  | (vv) |  | Amendment, dated as of December 20, 1990, of
    Supplemental Pension Benefit Agreement, dated as of
    December 6, 1983, between the Registrant and J. Chisholm
    Lyons (filed as Exhibit Number 10(s) to Registrants
    Form 10-K Annual Report for the fiscal year ended
    December 31, 1990 (Commission file number 1-6016) and
    incorporated herein by reference)                      |  |  |  | 
|                |  | (ww) |  | Amendment, dated as of August 1, 1997 of
    Supplemental Pension Benefit Agreement, dated as of
    December 6, 1983 between the Registrant and J. Chisholm
    Lyons (filed as Exhibit No. 10(uu) to Registrants
    Form 10-K Annual Report for the fiscal year ended
    December 31, 1997 (Commission file number 1-6016) and
    incorporated hereby reference)                                |  |  |  | 
|                |  | (xx) |  | Amendment, dated July 7, 2002, of
    Supplemental Pension Benefit Agreement, dated as of
    December 6, 1983, between Registrant and J. Chisholm
    Lyons (filed as Exhibit 10.2 to Registrants
    Form 10-Q for the quarter ended September 30, 2002
    (Commission file number 1-6016) and incorporated herein by
    reference                                                               |  |  |  | 
|                |  | (yy) |  | Post Employment Consulting Agreement, dated as of
    September 12, 1989, between the Registrant and J. Chisholm
    Lyons (filed as Exhibit Number 10(s) to Registrants
    Form 10-K Annual Report for the fiscal year ended
    December 31, 1989 (Commission file number 1-6016) and
    incorporated herein by reference)                                                                       |  |  |  | 
|                |  | (zz) |  | Amendment, dated as of December 20, 1990, of
    Post Employment Consulting Agreement, dated as of
    September 12, 1989 between the Registrant and J. Chisholm
    Lyons (filed as Exhibit Number 10(u) to Registrants
    Form 10-K Annual Report for the fiscal year ended
    December 31, 1990 (Commission file number 1-6016) and
    incorporated herein by reference)                       |  |  |  | 

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|                |  |       |  |                                                                                                                                                                                                                                                                                                                                                                                   |  |  |  | 
|--------------- |  | ----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|                |  |       |  |                                                                                                                                                                                                                                                                                                                                                                                  
|Exhibit Numbers |  |       |  |                                                                                                                                                                                                                                                                                                                                                                                  
|                |  |       |  |                                                                                                                                                                                                                                                                                                                                                                                  
|                |  | (aaa) |  | Change in Control Agreement dated as of
    September 8, 1999 between the Registrant and J. Chisholm
    Lyons (filed as Exhibit Number 10(rr) to Registrants
    Form 10-K Annual Report for the fiscal year ended
    December 31, 1999 (Commission file number 1-6016) and
    incorporated herein by reference)                                                              |  |  |  | 
|                |  | (bbb) |  | Employment Agreement, dated June 25, 1991,
    between the Registrant and Robert G. Paul (filed as
    Exhibit Number 10(x) to Registrants Form 10-K
    Annual Report for the fiscal year ended December 31, 1991
    (Commission file number 1-6016) and incorporated herein by
    reference)                                                                                 |  |  |  | 
|                |  | (ccc) |  | Supplemental Target Pension Benefit Agreement,
    dated as of January 1, 1996, between the Registrant and
    Robert G. Paul (filed as Exhibit Number (kk) to
    Registrants Form 10-K Annual Report for the fiscal
    year ended December 31, 1995 (Commission file number
    1-6016) and incorporated herein by reference)                                                 |  |  |  | 
|                |  | (ddd) |  | Amendment, dated as of August 1, 1997, of
    Supplemental Target Pension Benefit Agreement, dated as of
    January 1, 1996, between the Registrant and Robert G. Paul
    (filed as Exhibit Number 10(zz) to Registrants
    Form 10-K Annual Report for the fiscal year ended
    December 31, 1997 (Commission file number 1-6016) and
    incorporated herein by reference) |  |  |  | 
|                |  | (eee) |  | Second Amendment of Supplemental Target Pension
    Benefit Agreement for Robert G. Paul, dated July 7,
    2002 (filed as Exhibit 10.3 to Registrants
    Form 10-Q for the quarter ended September 30, 2002
    (Commission file number 1-6016) and incorporated herein by
    reference)                                                                                      |  |  |  | 
|                |  | (fff) |  | Form of Split Dollar Insurance Agreement, dated
    as of November 1, 1991, entered into by the registrant with
    certain executive and divisional officers (filed as
    Exhibit Number 10(bb) to Registrants Form 10-K
    Annual Report for the fiscal year ended December 31, 1992
    (Commission file number 1-6016) and incorporated herein
    by reference)           |  |  |  | 
|                |  | (ggg) |  | Form of Termination Agreement regarding Split
    Dollar Life Insurance Policies with Robert G. Paul,
    Robert A. Youdelman and James L. LePorte, dated as of
    December 13, 2002                                                                                                                                                                                             |  |  |  | 
|                |  | (hhh) |  | Form of Death Benefit Agreement with
    Robert G. Paul, Robert A. Youdelman and James L.
    LePorte, dated as of January 27, 2003                                                                                                                                                                                                                                               |  |  |  | 
|                |  | (iii) |  | Form of Amendment No. 1 to Death Benefit
    Agreement with Robert G. Paul, Robert A. Youdelman and James L.
    LePorte, dated as of February 26, 2003                                                                                                                                                                                                                           |  |  |  | 
|                |  | (jjj) |  | Allen Telecom Inc. Deferred Compensation Plan,
    effective December 1, 1995 (filed as Exhibit Number
    10(mm) to Registrants Form 10-K Annual Report for the
    fiscal year ended December 31, 1995 (Commission file number
    1-6016) and incorporated herein by reference)                                                                                               |  |  |  | 
|                |  | (kkk) |  | First Amendment to the Allen Telecom Inc.
    Deferred Compensation Plan dated as of February 28, 1997
    (filed as Exhibit Number 10(ww) to Registrants
    Form 10-K Annual Report for the fiscal year ended
    December 31, 1996 (Commission file number 1-6016) and
    incorporated herein by reference)                                                                  |  |  |  | 
|                |  | (lll) |  | Allen Telecom Inc. Restoration Plan, effective
    January 1, 1996 (filed as Exhibit Number 10(nn) to
    Registrants Form 10-K Annual Report for the fiscal
    year ended December 31, 1995 (Commission file number
    1-6016) and incorporated herein by reference)                                                                                                          |  |  |  | 
|                |  | (mmm) |  | First Amendment to the Allen Telecom Inc.
    Restoration Plan, dated as of February 28, 1997 (filed as
    Exhibit Number 10(yy) to Registrants Form 10-K
    Annual Report for the fiscal year ended December 31, 1996
    (Commission file number 1-6016) and incorporated herein
    by reference)                                                                           |  |  |  | 
|                |  | (nnn) |  | Comsearch Division Supplemental Savings Plan,
    effective January 1, 1995 (filed as Exhibit Number
    10(oo) to Registrants Form 10-K Annual Report for the
    fiscal year ended December 31, 1995 (Commission file number
    1-6016) and incorporated herein by reference)                                                                                                 |  |  |  | 

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|                |  |                                                                                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |  | 
|--------------- |  | ------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|                |  |                                                                                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Exhibit Numbers |  |                                                                                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                |  |                                                                                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                |  | (ooo)                                                                                                                          |  | First Amendment to the Comsearch Division
    Supplemental Savings Plan, dated as of February 28, 1997
    (filed as Exhibit Number 10(aaa) to Registrants
    Form 10-K Annual Report for the fiscal year ended
    December 31, 1996 (Commission file number 1-6016) and
    incorporated herein by reference)                                                                                                                  |  |  |  | 
|                |  | (ppp)                                                                                                                          |  | Amendment No. 2 to Comsearch Division
    Supplemental Savings Plan, effective as of January 1, 2000
    (filed as Exhibit Number 10(ccc) to Registrants
    Form 10-K Annual Report for the fiscal year ended
    December 31, 1999 (Commission file number 1-6016) and
    incorporated herein by reference)                                                                                                                    |  |  |  | 
|                |  | (qqq)                                                                                                                          |  | Form of Supplemental Target Pension Benefit
    Agreement, dated as of January 1, 1996, entered into by the
    Registrant with certain executive and divisional officers (filed
    as Exhibit Number 10(pp) to Registrants
    Form 10-K Annual Report for the fiscal year ended
    December 31, 1995 (Commission file number 1-6016) and
    incorporated herein by reference)                                                |  |  |  | 
|                |  | (rrr)                                                                                                                          |  | Form of Amendment, dated as of August 1,
    1997, of Supplemental Target Pension Benefit Agreement, dated as
    of January 1, 1996, entered into by the Registrant with
    certain executive and divisional officers (filed as
    Exhibit Number 10(kkk) to Registrants Form 10-K
    Annual Report for the fiscal year ended December 31, 1997
    (Commission file number 1-6016) and incorporated herein by
    reference) |  |  |  | 
|                |  | (sss)                                                                                                                          |  | Allen Telecom Inc. Executive Benefit Plan, as
    amended and restated effective October 15, 1997 (filed as
    Exhibit Number 10(jjj) to Registrants Form 10-K
    Annual Report for the fiscal year ended December 31, 1997
    (Commission file number 1-6016) and incorporated herein by
    reference)                                                                                                                       |  |  |  | 
|                |  | (ttt)                                                                                                                          |  | Allen Telecom Inc. Executive Benefit Plan, as
    amended and restated effective June 16, 1999 (filed as
    Exhibit 10(ggg) to Registrants Form 10-K Annual
    Report for the fiscal year ended December 31, 1999
    (Commission file number 1-6016) and incorporated herein by
    reference)                                                                                                                                 |  |  |  | 
|                |  | (uuu)                                                                                                                          |  | Amendment to Allen Telecom Inc. Executive Benefit
    Plan (filed as Exhibit 10.6 to Registrants Form 10-Q for
    the quarter ended September 30, 2002 (Commission file number
    1-6016)), and incorporated by reference                                                                                                                                                                                                       |  |  |  | 
|(21)            |  | Subsidiaries of the Registrant                                                                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                    |  | 
|(23)            |  | Consent of Deloitte & Touche LLP                                                                                               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                    |  | 
|(99.1)          |  | Certification Pursuant to 18 U.S.C.
    Section 1350, as Adopted Pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                    |  | 
|(99.2)          |  | Certification Pursuant to 18 U.S.C.
    Section 1350, as Adopted Pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                    |  | 

A copy of any of these Exhibits will be furnished
to persons who request a copy upon the payment of a fee of $.25
per page to cover the Companys duplication and handling
expenses.

viii