** **

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, DC  20549**

 

**Form 10-Q**

 

**(Mark-One)**

| **ý**                                          |   | **QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES**  |
|-----------------------------------------------------|--------|--------------------------------------------------------------------------|
|                                                |   | **EXCHANGE  ACT OF 1934**                                                |
|                                                |   |                                                                     |
| **For the quarterly period ended March 31,  2004.** |
|                                                |   |                                                                     |
| **OR**                                              |
|                                                |   |                                                                     |
| **o**                                               |   | **TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES** |
|                                                |   | **EXCHANGE  ACT OF 1934**                                                |

 

**For the transitionperiod from             to             **

 

**Commission filenumber 001-14617**

 

**ANDREW CORPORATION**

(Exact name of Registrant as specified in its charter)

 

| **DELAWARE**                                                   |   | **36-2092797**                    |
|----------------------------------------------------------------|--------|-----------------------------------|
| (State or other jurisdiction of incorporation or organization) |   | (IRS Employer identification No.) |

 

**10500 W. 153rdStreet, Orland Park, Illinois 60462**

(Address of principal executive offices and zip code)

 

**(708) 349-3300**

(Registrant’s telephone number, including area code)

 

**No Change**

(Former name, former address and former fiscal year, if changed sincelast report)

 

Indicate by check mark whetherthe Registrant: (1) has filed all reports required to be filed by Section 13 or15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (orfor such shorter period as the Registrant was required to file such reports),and (2) has been subject to such filing requirements for the past 90 days.

Yes  ý    No o

 

Indicate by check mark whetherthe registrant is an accelerated filer (as defined in rule 12b-2 of the Act)

Yes  ý    No o

 

Indicate the number of sharesoutstanding of each of the issuer’s classes of common stock, as of the latestpractical date.

 

Common Stock, $.01 Par Value – 160,652,436 shares as of May 10, 2004

 

 

----

 

**INDEX**

**ANDREW CORPORATION**

 
| **PART I.**        |   | **FINANCIAL INFORMATION**                                                                       |
|--------------------|--------|-------------------------------------------------------------------------------------------------|
|               |   |                                                                                            |
| Item 1.            |   | Financial Statements (Unaudited)                                                                |
|               |   |                                                                                            |
|               |   | Consolidated balance sheets— March 31, 2004 and September 30, 2003                         |
|               |   |                                                                                            |
|               |   | Consolidated statements of operations—  Three and six months ended March 31, 2004 and 2003 |
|               |   |                                                                                            |
|               |   | Consolidated statements of cash flows— Six  months ended March 31, 2004 and 2003           |
|               |   |                                                                                            |
|               |   | Notes to consolidated financial statements—  March 31, 2004                                |
|               |   |                                                                                            |
| Item 2.            |   | Management’s Discussion and Analysis of  Financial Condition and Results of Operations     |
|               |   |                                                                                            |
| Item 3.            |   | Quantitative and Qualitative Disclosures  About Market Risks                                    |
|               |   |                                                                                            |
| Item 4.            |   | Controls and Procedures                                                                         |
|               |   |                                                                                            |
| **PART II.**       |   | **OTHER INFORMATION**                                                                           |
|               |   |                                                                                            |
| Item 1.            |   | Legal Proceedings                                                                               |
|               |   |                                                                                            |
| Item 2.            |   | Changes in Securities and Use of Proceeds                                                       |
|               |   |                                                                                            |
| Item 4.            |   | Submission of Matters to a Vote of Security  Holders                                            |
|               |   |                                                                                            |
| Item 6.            |   | Exhibits and Reports on Form 8-K                                                                |
|               |   |                                                                                            |
| **SIGNATURE**      |   |                                                                                            |
|               |   |                                                                                            |
| **CERTIFICATIONS** |   |                                                                                            |

 

2

----

 

**ITEM 1. FINANCIAL STATEMENTS**

 

**ANDREW CORPORATION**

**CONSOLIDATEDBALANCE SHEETS**

**(Dollars in thousands)**

 
|                                                                                                                                                                 |   | **March 31  2004** |      | **September  30  2003** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|-----------|-------------------------|--------|
|                                                                                                                                                                 |   | **(UNAUDITED)**    |      |                    |   |
| **ASSETS**                                                                                                                                                           |   |               |      |                    |   |
| **Current Assets**                                                                                                                                                   |   |               |      |                    |   |
| Cash and cash equivalents                                                                                                                                            |   | $                  | 200,855   |                    | $      | 286,269 |   |
| Accounts receivable, less allowances (**Mar. 2004 - $10,218**; Sept. 2003 -  $10,662)                                                                                |   | 391,912            |      | 326,282                 |   |
| Inventories                                                                                                                                                          |   | 326,628            |      | 247,750                 |   |
| Other current assets                                                                                                                                                 |   | 48,854             |      | 29,131                  |   |
| **Total Current Assets**                                                                                                                                             |   | 968,249            |      | 889,432                 |   |
|                                                                                                                                                                 |   |               |      |                    |   |
| **Other Assets**                                                                                                                                                     |   |               |      |                    |   |
| Goodwill                                                                                                                                                             |   | 886,481            |      | 821,398                 |   |
| Intangible assets, less amortization                                                                                                                                 |   | 83,479             |      | 93,086                  |   |
| Other assets                                                                                                                                                         |   | 51,429             |      | 50,398                  |   |
|                                                                                                                                                                 |   |               |      |                    |   |
| **Property, Plant, and Equipment**                                                                                                                                   |   |               |      |                    |   |
| Land and land improvements                                                                                                                                           |   | 23,936             |      | 20,926                  |   |
| Buildings                                                                                                                                                            |   | 124,480            |      | 116,038                 |   |
| Equipment                                                                                                                                                            |   | 484,898            |      | 469,296                 |   |
| Allowance for depreciation                                                                                                                                           |   | (401,914           | )         | (387,341                | )      |
|                                                                                                                                                                 |   | 231,400            |      | 218,919                 |   |
| **TOTAL ASSETS**                                                                                                                                                     |   | $                  | 2,221,038 |                    | $      | 2,073,233 |   |
|                                                                                                                                                                 |   |               |      |                    |   |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY**                                                                                                                        |   |               |      |                    |   |
| **Current Liabilities**                                                                                                                                              |   |               |      |                    |   |
| Accounts payable                                                                                                                                                     |   | 222,771            |      | 124,646                 |   |
| Accrued expenses and other liabilities                                                                                                                               |   | 71,929             |      | 58,893                  |   |
| Compensation and related expenses                                                                                                                                    |   | 49,566             |      | 52,255                  |   |
| Restructuring                                                                                                                                                        |   | 17,969             |      | 20,414                  |   |
| Notes Payable and current portion of  long-term debt                                                                                                                 |   | 13,861             |      | 17,750                  |   |
| **Total Current Liabilities**                                                                                                                                        |   | 376,096            |      | 273,958                 |   |
|                                                                                                                                                                 |   |               |      |                    |   |
| **Deferred liabilities**                                                                                                                                             |   | 60,674             |      | 73,941                  |   |
| **Long-term debt,**  less current portion                                                                                                                            |   | 288,663            |      | 301,364                 |   |
|                                                                                                                                                                 |   |               |      |                    |   |
| **STOCKHOLDERS’ EQUITY**                                                                                                                                        |   |               |      |                    |   |
| Redeemable convertible preferred stock (par  value, $50 a share: 130,414 shares outstanding at March 31, 2004 and 183,720  shares outstanding at September 30, 2003) |   | 6,521              |      | 9,186                   |   |
| Common stock (par value, $.01 a share:  400,000,000 shares authorized: 160,900,657  shares issued at March 31, 2004 and September 30, 2003, including treasury)      |   | 1,609              |      | 1,609                   |   |
| Additional paid-in capital                                                                                                                                           |   | 664,422            |      | 649,667                 |   |
| Accumulated other comprehensive income  (loss)                                                                                                                       |   | 7,099              |      | (14,115                 | )      |
| Retained earnings                                                                                                                                                    |   | 819,452            |      | 805,435                 |   |
| Treasury stock, at cost (329,258 shares at  March 31, 2004 and 2,608,290 shares at September 30, 2003)                                                               |   | (3,498             | )         | (27,812                 | )      |
|                                                                                                                                                                 |   | 1,495,605          |      | 1,423,970               |   |
| **TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY**                                                                                                                  |   | $                  | 2,221,038 |                    | $      | 2,073,233 |   |

 

See Notes to ConsolidatedFinancial Statements

 

3

----

 

**ANDREW CORPORATION**

**CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)**

**(Dollars in thousands, except per shareamounts)**

 
|                                                                      |   | **Three  Months Ended********March 31** |        | **Six Months  Ended********March 31** |   |
|---------------------------------------------------------------------------|--------|-----------------------------------------|-------------|---------------------------------------|--------|
|                                                                      |   |                                    |        |
|                                                                      |   | **2004**                                |        | **2003**                              |   | **2004** |   | **2003** |   |
|                                                                      |   |                                    | ** **  |                                  |   |   | ** ** |   |   |
| **Sales**                                                                 |   | **$**                                   | **447,146** | ** **                            | $      | 201,318 |   | **$** | **857,917** | ** ** | $ | 455,844 |   |
| Cost of products sold                                                     |   | **336,492**                             | ** **  | 149,601                               |   | **643,194** | ** ** | 332,914 |   |
| **Gross Profit**                                                          |   | **110,654**                             | ** **  | 51,717                                |   | **214,723** | ** ** | 122,930 |   |
|                                                                      |   |                                    | ** **  |                                  |   |   | ** ** |   |   |
| **Operating Expenses**                                                    |   |                                    | ** **  |                                  |   |   | ** ** |   |   |
| Research and development                                                  |   | **28,459**                              | ** **  | 19,665                                |   | **54,082** | ** ** | 39,564 |   |
| Sales and administrative                                                  |   | **52,654**                              | ** **  | 31,314                                |   | **105,147** | ** ** | 68,128 |   |
| Intangible amortization                                                   |   | **9,851**                               | ** **  | 3,683                                 |   | **19,272** | ** ** | 7,365 |   |
| Restructuring                                                             |   | **2,768**                               | ** **  | 126                                   |   | **3,462** | ** ** | 205 |   |
|                                                                      |   | **93,732**                              |        | 54,788                                |   | **181,963** | ** ** | 115,262 |   |
|                                                                      |   |                                    | ** **  |                                  |   |   | ** ** |   |   |
| **Operating Income (Loss)**                                               |   | **16,922**                              | ** **  | (3,071                                | )      | **32,760** | ** ** | 7,668 |   |
|                                                                      |   |                                    | ** **  |                                  |   |   | ** ** |   |   |
| **Other**                                                                 |   |                                    | ** **  |                                  |   |   | ** ** |   |   |
| Interest expense                                                          |   | **3,955**                               | ** **  | 906                                   |   | **7,842** | ** ** | 1,966 |   |
| Interest income                                                           |   | **(982**                                | **)**       | (179                                  | )      | **(1,731** | **)** | (502 | ) |
| Gain on real estate transactions                                          |   | **(1,402**                              | **)**       | —                                |   | **(1,402** | **)** | — |   |
| Loss on sale of broadcast assets                                          |   | **—**                              | ** **  | —                                |   | **4,511** | ** ** | — |   |
| Other (income) expense, net                                               |   | **(543**                                | **)**       | (1,410                                | )      | **1,307** | ** ** | (890 | ) |
|                                                                      |   | **1,028**                               |        | (683                                  | )      | **10,527** | ** ** | 574 |   |
| **Income (Loss) from Continuing**                                         |   |                                    | ** **  |                                  |   |   | ** ** |   |   |
| **Operations Before Income Taxes**                                        |   | **15,894**                              | ** **  | (2,388                                | )      | **22,233** | ** ** | 7,094 |   |
|                                                                      |   |                                    | ** **  |                                  |   |   | ** ** |   |   |
| Income Taxes                                                              |   | **5,563**                               | ** **  | (717                                  | )      | **7,782** | ** ** | 2,128 |   |
| **Income (Loss) from Continuing Operations**                              |   | **10,331**                              | ** **  | (1,671                                | )      | **14,451** | ** ** | 4,966 |   |
|                                                                      |   |                                    | ** **  |                                  |   |   | ** ** |   |   |
| **Discontinued Operations,**  net of tax benefit                          |   | **—**                              | ** **  | 1,760                                 |   | **—** | ** ** | 2,330 |   |
|                                                                      |   |                                    | ** **  |                                  |   |   | ** ** |   |   |
| **Net Income (Loss)**                                                     |   | **10,331**                              | ** **  | (3,431                                | )      | **14,451** | ** ** | 2,636 |   |
|                                                                      |   |                                    | ** **  |                                  |   |   | ** ** |   |   |
| **Preferred Stock Dividends**                                             |   | **119**                                 | ** **  | —                                |   | **434** | ** ** | — |   |
| **Net Income (Loss) Available to Common  Shareholders**                   |   | **$**                                   | **10,212**  | ** **                            | $      | (3,431 | ) | **$** | **14,017** | ** ** | $ | 2,636 |   |
|                                                                      |   |                                    | ** **  |                                  |   |   | ** ** |   |   |
| **Basic and Diluted Income (Loss) per Share  from Continuing Operations** |   | **$**                                   | **0.06**    | ** **                            | $      | (0.02 | ) | **$** | **0.09** | ** ** | $ | 0.05 |   |
| **Basic and Diluted Net Income (Loss) per  Share**                        |   | **$**                                   | **0.06**    | ** **                            | $      | (0.03 | ) | **$** | **0.09** | ** ** | $ | 0.03 |   |
|                                                                      |   |                                    | ** **  |                                  |   |   | ** ** |   |   |
| **Average Shares Outstanding**                                            |   |                                    | ** **  |                                  |   |   | ** ** |   |   |
| Basic                                                                     |   | **158,820**                             | ** **  | 98,330                                |   | **158,580** | ** ** | 98,307 |   |
| Diluted                                                                   |   | **159,590**                             | ** **  | 98,330                                |   | **159,114** | ** ** | 98,309 |   |

 

See Notes to ConsolidatedFinancial Statements 

 

4

----

 

**ANDREW CORPORATION**

**CONSOLIDATED STATEMENTS OF CASH FLOWS  (Unaudited)**

**(Dollars in thousands)**

 
|                                                 |   | **Six Months  Ended  March 31** |        |
|------------------------------------------------------|--------|---------------------------------|-------------|
|                                                 |   |                            |
|                                                 |   | **2004**                        |        | **2003** |   |
|                                                 |   |                            |        |   |   |
| **Cash Flows from Operations**                       |   |                            | ** **  |   |   |
| Net Income                                           |   | **$**                           | **14,451**  | ** ** | $ | 2,636 |   |
|                                                 |   |                            | ** **  |   |   |
| **Adjustments to Net Income**                        |   |                            | ** **  |   |   |
| Depreciation                                         |   | **31,306**                      | ** **  | 25,701 |   |
| Amortization                                         |   | **19,272**                      | ** **  | 7,365 |   |
| Other                                                |   | **(1,492**                      | **)**       | (41 | ) |
| **Restructuring and Discontinued Operations**        |   |                            | ** **  |   |   |
| Restructuring costs                                  |   | **(9,404**                      | **)**       | (5,935 | ) |
| Discontinued operations, net of taxes                |   | **—**                      | ** **  | 3,863 |   |
| **Change in Operating Assets / Liabilities**         |   |                            | ** **  |   |   |
| Accounts receivable                                  |   | **(45,304**                     | **)**       | 50,498 |   |
| Inventories                                          |   | **(57,873**                     | **)**       | (14,607 | ) |
| Other assets                                         |   | **(16,312**                     | **)**       | 5,411 |   |
| Accounts payable and other liabilities               |   | **84,190**                      | ** **  | (39,911 | ) |
| **Net Cash From Operations**                         |   | **18,834**                      | ** **  | 34,980 |   |
|                                                 |   |                            | ** **  |   |   |
| **Investing Activities**                             |   |                            | ** **  |   |   |
| Capital expenditures                                 |   | **(39,496**                     | **)**       | (14,619 | ) |
| Acquisition of businesses, net of cash  acquired     |   | **(23,227**                     | **)**       | (114 | ) |
| Settlement of pre-acquisition litigation             |   | **(29,000**                     | **)**       | — |   |
| Investments                                          |   | **(6,500**                      | **)**       | — |   |
| Proceeds from sale of businesses and  investments    |   | **3,000**                       | ** **  | 7,286 |   |
| Proceeds from sale of property, plant and  equipment |   | **3,781**                       | ** **  | 586 |   |
| **Net Cash Used for Investing Activities**           |   | **(91,442**                     | **)**       | (6,861 | ) |
|                                                 |   |                            | ** **  |   |   |
| **Financing Activities**                             |   |                            | ** **  |   |   |
| Long-term debt payments, net                         |   | **(17,808**                     | **)**       | (4,472 | ) |
| Notes payable payments, net                          |   | **(185**                        | **)**       | (33,690 | ) |
| Preferred stock dividends                            |   | **(434**                        | **)**       | — |   |
| Payments to acquire treasury stock                   |   | **(2,472**                      | **)**       | — |   |
| Stock purchase and option plans                      |   | **1,738**                       | ** **  | 111 |   |
| **Net Cash Used for Financing Activities**           |   | **(19,161**                     | **)**       | (38,051 | ) |
|                                                 |   |                            | ** **  |   |   |
| **Effect of exchange rate changes on cash**          |   | **6,355**                       | ** **  | 4,135 |   |
|                                                 |   |                            | ** **  |   |   |
| **Change for the Period**                            |   | **(85,414**                     | **)**       | (5,797 | ) |
| **Cash and Equivalents at Beginning of Period**      |   | **286,269**                     | ** **  | 84,871 |   |
| **Cash and Equivalents at End of Period**            |   | **$**                           | **200,855** | ** ** | $ | 79,074 |   |

 

See Notes to ConsolidatedFinancial Statements

 

5

----

 

**ANDREW CORPORATION**

**NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS**

 

**NOTE 1. BASIS OF PRESENTATION**

 

The accompanyingunaudited consolidated financial statements have been prepared in accordancewith U.S. generally accepted accounting principles for interim financialinformation and with the instructions to Form 10-Q and Rule 10-01 of RegulationS-X.  Accordingly, they do not includeall of the information and footnotes required by U.S. generally acceptedaccounting principles for complete financial statements.  In the opinion of management, alladjustments (consisting of normal recurring accruals) considered necessary fora fair presentation have been included. Operating results for the three and six month periods ended March 31,2004 are not necessarily indicative of the results that may be expected for theyear ending September 30, 2004.  Forfurther information, refer to the consolidated financial statements andfootnotes thereto included in the company’s annual report on Form 10-K for theyear ended September 30, 2003.

 

**NOTE 2. EARNINGS PER SHARE**

 

The followingtable sets forth the computation of basic and diluted earnings per share (inthousands, except per share amounts):

 
|                                                                              |   | **Three  Months Ended********March 31** |   | **Six Months  Ended********March 31** |   |
|-----------------------------------------------------------------------------------|--------|-----------------------------------------|--------|---------------------------------------|--------|
|                                                                              |   |                                    |   |
| **BASIC  EARNINGS****(LOSS) PER SHARE**                                           |   | **2004**                                |   | **2003**                              |   | **2004** |   | **2003** |   |
| Income (Loss) from continuing operations                                          |   | $                                       | 10,331 |                                  | $      | (1,671 | ) | $ | 14,451 |   | $ | 4,966 |   |
| Preferred stock dividends                                                         |   | 119                                     |   | —                                |   | 434 |   | — |   |
| **Income (Loss) from continuing operations  available to common shareholders**    |   | 10,212                                  |   | (1,671                                | )      | 14,017 |   | 4,966 |   |
|                                                                              |   |                                    |   |                                  |   |   |   |   |   |
| **Average basic shares outstanding**                                              |   | 158,820                                 |   | 98,330                                |   | 158,580 |   | 98,307 |   |
| **Basic income (loss) from continuing  operations per share**                     |   | $                                       | 0.06   |                                  | $      | (0.02 | ) | $ | 0.09 |   | $ | 0.05 |   |
|                                                                              |   |                                    |   |                                  |   |   |   |   |   |
| Net income (loss)                                                                 |   | $                                       | 10,331 |                                  | $      | (3,431 | ) | $ | 14,451 |   | $ | 2,636 |   |
| Preferred stock dividends                                                         |   | 119                                     |   | —                                |   | 434 |   | — |   |
| **Net income (loss) available to common  shareholders**                           |   | 10,212                                  |   | (3,431                                | )      | 14,017 |   | 2,636 |   |
|                                                                              |   |                                    |   |                                  |   |   |   |   |   |
| **Average basic shares outstanding**                                              |   | 158,820                                 |   | 98,330                                |   | 158,580 |   | 98,307 |   |
| **Basic net income (loss) per share**                                             |   | $                                       | 0.06   |                                  | $      | (0.03 | ) | $ | 0.09 |   | $ | 0.03 |   |
|                                                                              |   |                                    |   |                                  |   |   |   |   |   |
| **DILUTED  EARNINGS (LOSS) PER SHARE**                                            |   |                                    |   |                                  |   |   |   |   |   |
| Income (loss) from continuing operations                                          |   | $                                       | 10,331 |                                  | $      | (1,671 | ) | $ | 14,451 |   | $ | 4,966 |   |
| Preferred stock dividends                                                         |   | 119                                     |   | —                                |   | 434 |   | — |   |
| **Income (Loss)****from continuing operations available to common  shareholders** |   | 10,212                                  |   | (1,671                                | )      | 14,017 |   | 4,966 |   |
|                                                                              |   |                                    |   |                                  |   |   |   |   |   |
| Average basic shares outstanding                                                  |   | 158,820                                 |   | 98,330                                |   | 158,580 |   | 98,307 |   |
| Effect of dilutive securities: stock  options                                     |   | 770                                     |   | —                                |   | 534 |   | 2 |   |
| **Average diluted shares outstanding**                                            |   | 159,590                                 |   | 98,330                                |   | 159,114 |   | 98,309 |   |
| **Diluted income (loss) from continuing  operations per share**                   |   | $                                       | 0.06   |                                  | $      | (0.02 | ) | $ | 0.09 |   | $ | 0.05 |   |
|                                                                              |   |                                    |   |                                  |   |   |   |   |   |
| Net income (loss)                                                                 |   | $                                       | 10,331 |                                  | $      | (3,431 | ) | $ | 14,451 |   | $ | 2,636 |   |
|                                                                              |   | 119                                     |   | —                                |   | 434 |   | — |   |
| **Net income (loss) available to common  shareholders**                           |   | 10,212                                  |   | (3,431                                | )      | 14,017 |   | 2,636 |   |
|                                                                              |   |                                    |   |                                  |   |   |   |   |   |
| Average basic shares outstanding                                                  |   | 158,820                                 |   | 98,330                                |   | 158,580 |   | 98,307 |   |
| Effect of dilutive securities: stock  options                                     |   | 770                                     |   | —                                |   | 534 |   | 2 |   |
| **Average diluted shares outstanding**                                            |   | 159,590                                 |   | 98,330                                |   | 159,114 |   | 98,309 |   |
| **Diluted net income (loss) per share**                                           |   | $                                       | 0.06   |                                  | $      | (0.03 | ) | $ | 0.09 |   | $ | 0.03 |   |

 

6

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The company had130,414 shares of convertible preferred stock outstanding at March 31, 2004,which are convertible into 1,503,152 shares of common stock.  These shares were not included in thecomputation of diluted earnings per share because including these shares andexcluding the convertible preferred stock dividends would have increasedreported earnings per share.

 

The company’sconvertible subordinated notes are under certain circumstances convertible into17,531,568 shares of the company’s common stock.  These shares were not included in the computation of dilutedearnings per share because the market price of the company’s common shares didnot exceed the conversion price for the required number of days. These notesare convertible if the closing price of the company’s common stock exceeds 120%of the conversion price of $13.69 for 20 trading days in the 30 consecutivetrading days ending on the last trading day of the preceding fiscalquarter.  In addition, excluding theinterest expense on the convertible subordinated notes and including the17,531,568 shares would have increased reported earnings per share.

 

Options topurchase 5,627,136 shares of common stock, at exercise prices ranging from$17.11 - $38.17 per share, were not included in the computation of dilutedearnings per share for March 31, 2004 because the options’ exercise prices weregreater than the average market price of the common shares.  Options to purchase 6,445,727 shares ofcommon stock, at prices ranging from $9.36 - $38.17 per share, were notincluded in the computation of diluted earnings per share for March 31, 2003because the options’ exercise prices were greater than the average market priceof the common shares.

 

**NOTE 3. INVENTORIES**

 

Inventories consisted of the following at March 31, 2004 and September30, 2003, net of reserves:

 
| **Dollars in thousands** |   | **March 31  2004** |    | **September  30  2003** |   |
|--------------------------|--------|--------------------|---------|-------------------------|--------|
|                     |   |               |    |                    |   |
| Raw materials            |   | $                  | 151,985 |                    | $      | 112,130 |   |
| Work in process          |   | 56,158             |    | 44,513                  |   |
| Finished goods           |   | 118,485            |    | 91,107                  |   |
| Inventories              |   | $                  | 326,628 |                    | $      | 247,750 |   |

 

**NOTE 4. COMPREHENSIVE INCOME**

 

Statement of FinancialAccounting Standards (SFAS) No. 130, *ReportingComprehensive Income*, requires the company to report foreigncurrency translation adjustments and other items included in Accumulated OtherComprehensive Income, a component of stockholders equity, as comprehensiveincome.  For the six months ended March31, 2004 and 2003, other comprehensive income is made up primarily of netincome available to common shareholders and foreign currency translationadjustments.  Comprehensive income for thesix months ended March 31, 2004 and 2003 amounted to $35.2 million and $14.8million, respectively.  Comprehensiveincome (loss) for the three months ended March 31, 2004 and 2003 amounted to$3.7 million and ($1.5 million), respectively.

 

7

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**NOTE 5. ADOPTION OF NEW ACCOUNTING POLICIES**

 

In June 2002, the FASB issuedSFAS No. 146, *Accounting for Costs**Associated with Exit or Disposal Activities*.  The provisions of this statement wereeffective for exit or disposal activities initiated after December 31,2002.  The company’s currentrestructuring plan, initiated in September 2002, is being accounted for underthe previously existing accounting principles for restructuring, primarilyEmerging Issues Task Force Issue 94-3. The company accrued pre-tax charges of $44.0 million, in fiscal years2002 and 2003, when the company’s management approved the current restructuringplan.  If the company had accounted forthis restructuring plan under SFAS No. 146, certain costs included in this$44.0 million, such as employee termination benefits of $12.3 million and leaseand contract cancellation costs of $10.3 million, would have been recognizedover the restructuring period as incurred and not accrued for when the company’smanagement approved these plans.

 

In December 2003, the FinancialAccounting Standards Board (FASB) issued revised SFAS No. 132(R), *Employers’ Disclosures about Pensions and OtherPostretirement Benefits*. SFAS 132(R) revises employers’ required disclosures for pension plansand other postretirement benefit plans. SFAS 132(R) disclosure requirements became effective for the companystarting with the quarter ending March 31, 2004.  SFAS 132(R) only impacts disclosure requirements (see Note 13)and did not impact the company’s results of operations.

 

**NOTE 6. RESTRUCTURING**

 

At March 31, 2004, the companyhas a restructuring reserve of  $18.0million for its restructuring plans and the Allen Telecom acquisitionintegration plan.

 

The company initiated a restructuringplan in 2002 and has accrued $44.0 million of pre-tax charges for inventoryprovisions, employee termination costs, asset provisions, and lease andcontract cancellation costs in 2002 and 2003. As part of this plan the company has consolidated its operations intofewer, more efficient facilities and opened two new manufacturing facilities inMexico and the Czech Republic.  In thesecond quarter of 2004, the company accrued an additional $1.0 million ofpre-tax restructuring charges comprised of a $0.5 million provision for fixedasset disposals and a $0.5 million for additional lease cancellationcosts.  Due to changes in estimates forseverance and lease termination costs, the restructuring reserve was increasedby $1.2 million and reserves established under this plan in 2002 for inventorydisposals were reduced by $1.2 million. The company originally estimated that1,000 employees would receive severance benefits under this plan, and to datehas paid severance benefits to approximately 1,100 employees.

 

In 2003, as part of the Allen Telecom acquisition, thecompany accrued an initial estimate of $29.9 million of integration reserves,comprised of a $16.2 million provision for inventory and fixed assets and $13.7million for employee termination, lease cancellation and other costs. Duringthe first six months of 2004, the company has adjusted this initial estimateand recorded an additional $9.6 million of integration reserves comprised of a$2.9 million provision for inventory and fixed assets and $6.7 million foremployee termination, lease cancellation and other costs.  This $9.6 million increase in estimatedintegration costs was accounted for as a decrease in assets acquired and anincrease in liabilities assumed from Allen Telecom.

 

Under these plans, the companypaid $0.8 million of severance to 30 employees in the second quarter of 2004,and $4.0 million of severance to 351 employees in the first six months of 2004.The total number of employees terminated as part of these plans was 1,270 andit is anticipated that approximately 270 additional employees will beterminated before these plans are completed.

 

The company paid $1.2 millionof lease cancellation and other costs in the second quarter of 2004 and $6.9million for the first six months of 2004. Cash payments, net of cash receivedon the sale of assets and inventory under these plans, were $3.1 million in thesecond quarter and $9.4 million for the first six months of 2004.

 

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A summary of the restructuringreserve activity is provided below (in thousands):

 
| **Reserve  Activity for the six  Months ending March 31, 2004** |   | **Reserve  Balance  Sept. 30, 2003** |   | **2004  Accrual** |   | **Reserve  Adjustments** |   | **Charges  for  Six months  ended  Mar. 31, 2004** |   | **Reserve  Balance  Mar. 31, 2004** |   |
|-----------------------------------------------------------------|--------|--------------------------------------|--------|-------------------|--------|--------------------------|--------|----------------------------------------------------|--------|-------------------------------------|--------|
| Severance                                                       |   | $                                    | 11,189 |              | $      | 3,851                    |   | $                                                  | 2,067  |                                | $      | (3,969 | ) | $ | 13,138 |   |
| Lease cancellation and other costs                              |   | 9,225                                |   | 3,365             |   | (820                     | )      | (6,939                                             | )      | 4,831                               |   |
| **Total Reserve Balance**                                       |   | $                                    | 20,414 |              | $      | 7,216                    |   | $                                                  | 1,247  |                                | $      | (10,908 | ) | $ | 17,969 |   |

 
| **Reserve  Activity for the six  months ending March 31, 2003** |   | **Reserve  Balance  Sept. 30, 2002** |   | **Charges  for  Six months  ended  Mar. 31, 2003** |   | **Reserve  Balance  Mar. 31, 2003** |   |
|-----------------------------------------------------------------|--------|--------------------------------------|--------|----------------------------------------------------|--------|-------------------------------------|--------|
| Severance                                                       |   | $                                    | 11,877 |                                               | $      | (6,148                              | )      | $ | 5,729 |   |
| Lease cancellation and other costs                              |   | 3,452                                |   | (2,440                                             | )      | 1,012                               |   |
| **Total Reserve Balance**                                       |   | $                                    | 15,329 |                                               | $      | (8,588                              | )      | $ | 6,741 |   |

 

#### **NOTE 7.  STOCK-BASED COMPENSATION**

 

#### **The company accounts forstock-based compensation plans using the intrinsic value method described inAccounting Principles Board Opinion No. 25, *Accountingfor Stock Issued to Employees, and related Interpretations*.  All stock options granted by the company aregranted at market price and thus no compensation expense is recorded in thecompany’s results of operations.  UnderSFAS No. 148, *Accounting for Stock-BasedCompensation,* the company is required to report quarterly pro formanet income and earnings per share as if the company had accounted for its stockoption plans under the fair value method. The following table shows the company’s pro forma net income (loss) andearnings (loss) per share as if the company had recorded the fair value ofstock options as compensation expense.**

 
|                                                          |   | **Three  Months Ended********March 31** |       | **Six Months  Ended********March 31** |       |
|---------------------------------------------------------------|--------|-----------------------------------------|------------|---------------------------------------|------------|
|                                                          |   |                                    |       |
| **(Dollars in thousands, except per share amounts)**          |   | **2004**                                |       | **2003**                              |       | **2004** |   | **2003** |   |
|                                                          |   |                                    | ** ** |                                  | ** ** |   | ** ** |   | ** ** |
| Reported net income (loss) available to  common shareholders  |   | $                                       | 10,212     |                                  | $          | (3,431 | ) | $ | 14,017 |   | $ | 2,636 |   |
|                                                          |   |                                    |       |                                  |       |   |   |   |   |
| Less: Stock-based compensation, net of tax                    |   | (1,878                                  | )          | (1,744                                | )          | (3,611 | ) | (3,626 | ) |
|                                                          |   |                                    |       |                                  |       |   |   |   |   |
| Pro forma net income (loss) available to  common shareholders |   | $                                       | 8,334      |                                  | $          | (5,175 | ) | $ | 10,406 |   | $ | (990 | ) |
|                                                          |   |                                    |       |                                  |       |   |   |   |   |
| Reported basic and diluted net income  (loss) per share       |   | $                                       | 0.06       |                                  | $          | (0.03 | ) | $ | 0.09 |   | $ | 0.03 |   |
|                                                          |   |                                    |       |                                  |       |   |   |   |   |
| Pro forma basic and diluted net income (loss)  per share      |   | $                                       | 0.05       |                                  | $          | (0.05 | ) | $ | 0.07 |   | $ | (0.01 | ) |

 

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**NOTE8.  WARRANTY RESERVE**

 

The company offerswarranties on most of its products that qualify as guarantees under FASBInterpretation No. 45 and thus is required to disclose the components of itswarranty reserve.  The specific termsand conditions of the warranties offered by the company vary depending upon theproduct sold.  The company estimates thecosts that may be incurred under its warranty plans and records a liability inthe amount of such estimated costs at the time product revenue isrecognized.  Factors that affect thecompany’s warranty liability include the number of units sold, the type ofproducts sold, historical and anticipated rates of warranty claims and cost perclaim.  The company periodicallyassesses the adequacy of its recorded warranty liabilities and adjusts theamounts as necessary.  The company reportswarranty reserves as a current liability, included in accrued expenses and otherliabilities. Changes in the company’s warranty reserve during the three and sixmonth periods ended March 31, 2004 and 2003, are as follows:

 
|                                        |   | **Three  Months Ended  March 31** |       | **Six Months  Ended  March 31** |       |
|---------------------------------------------|--------|-----------------------------------|------------|---------------------------------|------------|
| **(dollars in thousands):**                 |   | **2004**                          | ** ** | **2003**                        | ** ** | **2004** | ** ** | **2003** | ** ** |
| **Warranty reserve at beginning of period** |   | **$**                             | **17,349** | ** **                      | $          | 10,171 |   | **$** | **12,470** | ** ** | $ | 9,932 |   |
| Accrual for warranties issued               |   | **3,210**                         | ** ** | 637                             |       | **9,082** | ** ** | 1,409 |   |
| Warranty settlements made                   |   | **(2,439**                        | **)**      | (957                            | )          | **(4,342** | **)** | (1,490 | ) |
| Warranty adjustments                        |   | **161**                           | ** ** | —                          |       | **1,071** | ** ** | — |   |
| **Warranty reserve at end of period**       |   | **$**                             | **18,281** | ** **                      | $          | 9,851 |   | **$** | **18,281** | ** ** | $ | 9,851 |   |

 

**NOTE9.  ACQUISITION OF BUSINESSES**

 

****In the firstquarter of fiscal 2004,**** the company made twobusiness acquisitions.  The companyacquired selected assets of Channel Master LLC, a U.S. manufacturer of highvolume antenna and antenna related products for the consumer Direct BroadcastSatellite market. The company also purchased selected assets of Yantai FineCable Company, a Chinese manufacturer of products for telecommunications andbroadband cable TV infrastructure markets. The company paid a total of $23.2 million for these acquisitions. Apreliminary allocation of the purchase price resulted in $2.3 million ofgoodwill and $7.4 million of intangible assets.

 

****On March 31,2004, the company acquired selected assets of MTS Wireless Components LLC, asupplier of cable accessories and steel components which support********theinstallation of wireless systems including antenna mounts and other equipmentsupport solutions.**** Total purchase consideration was $28.1 million, consisting primarily of1,650,000 shares of common stock, valued at $16.88 per share. A preliminaryallocation of the purchase price resulted in $12.7 million of goodwill and $1.4million of intangible assets.  Pro formaresults of operations, assuming these acquisition occurred at the beginning ofthe period, were not materially different from the reported results ofoperations.

 

**NOTE10.  SALE OF ASSETS**

 

****In November2003,**** the company sold selected assets fromits broadcast manufacturing operations to Electronics Research. Inc.(ERI).  For these assets the companyreceived $3.0 million in cash and $5.8 million in promissory notes.  The company recognized a $4.5 million losson the disposal of these assets, including $4.0 million of goodwill allocated to these assets based on fair value.

 

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**NOTE11. TRUEPOSTION SETTLEMENT**

 

During the second quarter of2004, the company reached a definitive agreement with TruePosition, Inc. tosettle patent infringement litigation filed against Allen Telecom, Inc., priorto the acquisition of Allen by the company. As part of this settlement thecompany paid  $29.0 million in cash andhas agreed to pay an additional $6 million over the next three years, with apresent value of $5.6 million.  Inaddition, the company issued warrants to purchase one million shares of thecompany’s common stock that have a four-year term and a $17.70 exercise priceper share.  These warrants were valuedat $8.5 million. The settlement was accounted for as an increase to theliabilities assumed in the acquisition of Allen Telecom, resulting in a $43.1million increase in goodwill. The company and TruePostion agreed tocross-license geolocation-related patents. This agreement also gives the company the opportunity to provide certaingeolocation products to TruePosition through October 2006.

 

**NOTE12.  DEBT COVENANTS**

 

Under the terms of thecompany’s $170.0 million revolving credit facility, the company has agreed to meetvarious quarterly requirements.  Thecompany was in compliance with all of these requirements as of March 31, 2004.The company must meet various requirements, including maintaining net worth,maintaining a ratio of earnings before interest, taxes, depreciation andamortization (EBITDA) to total debt, maintaining a fixed charges coverage ratioand limits on the amount of assets that the company can dispose of in a fiscalyear.  These requirements may limit theamount of borrowing under this credit agreement.  Under the most restrictive of these requirements, the company waslimited to a maximum borrowing of $117.1 million at March 31, 2004.

 

### **NOTE 13.  DEFINEDBENEFIT PLANS**

 

The company has two defined benefit plans.  Approximately 600 current and former employees of the company’sUnited Kingdom subsidiary, Andrew Ltd., participate in a defined benefitplan.  With the acquisition of AllenTelecom the company assumed the Allen noncontributory defined benefit plan thatcovers approximately 1,760 current and former employees.  This plan was frozen after the completion ofthe Allen acquisition.

 

The components of net periodic benefit costs for these plans for the threeand six month periods ended March 31, 2004 and 2003, are as follows:

 
|                                              |   | **Three  months ended********March 31** |       | **Six months  ended********March 31** |   |
|---------------------------------------------------|--------|-----------------------------------------|------------|---------------------------------------|--------|
|                                              |   |                                    |       |
| **Dollars in Thousands**                          |   | **2004**                                |       | **2003**                              |   | **2004** |   | **2003** |   |
| Service costs                                     |   | **$**                                   | **1,716**  | ** **                            | $      | 294 |   | **$** | **2,358** | ** ** | $ | 588 |   |
| Interest costs                                    |   | **1,489**                               | ** ** | 714                                   |   | **2,875** | ** ** | 1,426 |   |
| Return on plan assets                             |   | **(1,232**                              | **)**      | (491                                  | )      | **(2,427** | **)** | (982 | ) |
| Amortization of unrecognized prior service  costs |   | **61**                                  | ** ** | 10                                    |   | **72** | ** ** | 22 |   |
| Amortization of net loss                          |   | **294**                                 | ** ** | 253                                   |   | **571** | ** ** | 506 |   |
| Net periodic benefit cost                         |   | **$**                                   | **2,328**  | ** **                            | $      | 780 |   | **$** | **3,449** | ** ** | $ | 1,560 |   |

 

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**ITEM 2.****                                                  MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

 

**RESULTS OF OPERATIONS**

 

Second quartersales were $447.1 million, up 122% from $201.3 million in the year ago quarterand up 9% from $410.8 million in the first quarter. This increase in sales wasprimarily due to increased demand and the acquisition of Allen Telecom in thefourth quarter of fiscal 2003. Andrew’s sales momentum remained strong andimproved sequentially throughout the second quarter, despite what is normallythe company’s weakest quarter. Andrew benefited from overall growth in wirelessinfrastructure investment as operators focus once again on quality of service,improving capacity and technology upgrades. Sales grew in most of the company’smajor geographic regions and product groups. As a result of increased sales,net income was $10.2 million or $0.06 per share, compared to a net loss of $3.4million or $0.03 per share in the year ago quarter and up from net income of$3.8 million or $0.02 per share in the first quarter.

 

The table below shows Andrew’ssales by major geographic regions.

 
|                             |   | **Q2 FY 04** |      | **Q1 FY 04** |   | **Increase** |       |
|----------------------------------|--------|--------------|-----------|--------------|--------|--------------|------------|
| **Americas**                     |   | $            | 253.7     |         | $      | 228.9        |       | 11 | % |
| **Europe/ Middle East / Africa** |   | 133.2        |      | 124.1        |   | 7            | %          |
| **Asia Pacific**                 |   | 60.2         |      | 57.8         |   | 4            | %          |
| **Total**                        |   | **$**        | **447.1** | ** **   | **$**  | **410.8**    | ** ** | **9** | % |

 

Due to the impact of the fourthquarter 2003 acquisition of Allen Telecom, the company believes that it is moremeaningful to discuss sequential quarter trends.  Sales in the Americas were up 11% sequentially due to highersales in Latin America, new product sales in the broadband satellite market andan increase in geolocation product sales. Sales in Europe, Middle East and Africa were up 7% sequentially due tocontinued network expansion to support increased demand.  The increase in Europe was also driven bytechnology upgrades and movement toward EDGE,WCDMA and UMTS networks.  The Asia Pacific region was up 4%sequentially, driven by CDMA and GSM network build-outs in India.  Compared to 2003, second quarter salesincreased 122% and year to date sales through March increased 88%.  These increases were due to both the AllenTelecom acquisition and strong growth in the wireless infrastructuremarket.  The company has seen substantialgrowth, compared to fiscal year 2003, in all major geographic regions, evenexcluding the impact of the Allen Telecom acquisition.

 

The company saw strongsequential product growth in most major product groups.  Base Station Subsytems increasedsignificantly, driven by sales to OEMs to support network upgrades andexpansion. Antenna Product sales increased significantly driven by coverageapplications for network expansion and new products introduced into thebroadband satellite market.  NetworkSolutions sales increased due to continued deployments of geolocationsystems.  Cable Products and WirelessInnovations both decreased sequentially, but were higher than what the companyhad forecasted and significantly higher than last year’s second quarter.Compared to 2003, all of the company’s product groups increased for both thesecond quarter and for the first six months of 2004, even excluding the impactof the Allen Telecom acquisition.

 

In the second quarter of 2004,the company’s gross margin was 24.7% compared to 25.3% in the firstquarter.  The sequential decrease in thegross margin percentage was primarily due to start up costs associated with thecompany’s two new manufacturing facilities in Reynosa, Mexico and Brno, CzechRepublic and manufacturing variances related to a significant increase in unitvolume for new broadband satellite products. On a year to date basis gross margin was 25.0% in 2004, compared to27.0% in 2003.  This decrease in grossmargin percentage was due to the change in product mix as a result of the AllenTelecom acquisition, the impact of continued but moderating pricing pressureand start up costs associated with the company’s two new manufacturingfacilities.

 

Research and developmentexpenses were $28.5 million or 6.4% of sales, compared to $25.6 million or 6.2%of sales in the prior quarter and $19.7 million or 9.8% of sales in the secondquarter of 2003.  Research anddevelopment expenses increased from the first quarter due primarily to higherlevels of spending to support the introduction of new products for in-buildingcoverage and Base Station Subsystems. On a year to date basis, research and development expenses increased to$54.1 million compared to $39.6 million in 2003, due primarily to the Allenacquisition.

 

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Sales and administrative expenseswere $52.7 million or 11.8% of sales for the second quarter, compared to $52.5million or 12.8% of sales in the prior quarter and $31.3 million or 15.6% ofsales in the year ago quarter.  Salesand administrative expenses declined as a percentage of sales, due to highersales and the benefits from our on-going cost savings and merger integrationprograms.  On a year to date basis,sales and administrative expenses were $105.1 million or 12.3% of sales in2004, compared to $68.1 million or 14.9% of sales for the first six months of2003.  As a result of the Allen Telecomacquisition, sales and administrative expenses increased in total, but weresignificantly lower as a percentage of sales due to higher sales volumes andsynergies created by the Allen acquisition.

 

Intangible amortization was$9.9 million in the second quarter, compared to $9.4 million in the priorquarter and $3.7 million in the second quarter of 2003.  The sequential increase in intangibleamortization expense was related to the acquisition of Channel Master andYantai Fine Cable in the first quarter of 2004. On a year to date basis,intangible amortization increased to $19.3 million in 2004, from $7.4 millionin 2003. This increase was due almost entirely to intangible assets acquired fromAllen Telecom.

 

Interest expense was $4.0million in the second quarter, compared to $3.9 million in the first quarterand $0.9 million in the second quarter of 2003.  On a year to date basis, interest expense was $7.8 million in 2004,compared to $2.0 million in 2003. The increase in interest expense was due tothe convertible notes issued in August 2003 and the senior notes acquired fromAllen Telecom. Interest income increased both in the quarter and on a year todate basis, due to higher cash and short-term investment balances.

 

In the second quarter of 2004,the company recognized a net gain of $1.4 million on several real estatetransactions, principally due to the sale of a facility in Australia.  In the first quarter of 2004, Andrew recognizeda $4.5 million loss on the sale of selected broadcast assets to ElectronicsResearch Inc. (ERI).  Included in thisloss is an allocation of $4.0 million of goodwill that was attributed to thefair value these assets. (see Note 10 of the Notes to Consolidated FinancialStatements).

 

Other (income) expense wasincome of $0.5 million in the second quarter of 2004, compared to income of$1.4 million in the second quarter of 2003, and on a year to date basis wasexpense of $1.3 million in 2004 and income of $0.9 million in 2003.  Other (income) expense is mainly driven byforeign exchange gains and losses.  In2004, foreign exchange gains and losses were mostly due to fluctuations in theEuro.

 

The company’s effective taxrate for 2004 was 35% compared to 30% in 2003. The increase in the effective tax rate is due to an increase in U.S.taxable income, primarily as a result of the Allen Telecom acquisition.

 

Included in the first sixmonths of 2003 is a loss for discontinued operations of $2.3 million, due tolosses from the company’s wireless accessory and equipment shelter businessesthat were discontinued in 2003.

 

# **LIQUIDITY**

 

The company has maintained itsstrong balance sheet and reduced its outstanding debt by $18.0 million duringthe first six months of 2004.  Cash andcash equivalents were  $200.9 million atMarch 31, 2004, compared to $220.1 million at December 31, 2003 and $286.3million at September 30, 2003. Cash and cash equivalents declined due toworking capital requirements associated with higher sales and due to the $29.0million payment for the settlement of the TruePostion patent infringementlitigation. Working capital was $592.2 million at March 31, 2004, down 3.8%from $615.5 million at September 30, 2003, due to a decrease in cash and offsetby an increase in other working capital items.

 

On April 27, 2004, the companyfiled a universal S-3 shelf registration statement that, when declaredeffective, will allow the company to publicly issue up to $750.0 million ofdebt or equity.  This shelf registrationgives the company the flexibility to take advantage of strategic initiativesand other favorable long-term opportunities that will build shareholdervalue.  The company has a  $170.0 revolving credit facility that atMarch 31, 2004 had no outstanding borrowing and allowed the company to borrowup to $117.1 million (see Note 12 of the Notes to Consolidated FinancialStatements).  Management believes thatthe company’s strong working capital position, ability to generate cash flowfrom operations, and its ability to borrow under its revolving credit agreementwill allow the company to meet its normal operating cash flow needs.

 

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In the first six months of2004, the company generated $18.8 million of cash from operations.  Cash flow from operations was due to netincome of $14.4 million, non-cash charges for depreciation, amortization andgains on asset sales totaling $49.1 million, cash restructuring costs of $9.4 millionand a net change in operating assets and liabilities that resulted in a $35.3million decrease in cash flow. Increased sales resulted in an increase in accounts receivable reducingcash flow by $45.3 million.  Days salesin billed receivables (DSO) decreased to 77 days at March 31, 2004 compared to83 days at December 31, 2003 and 80 days at September 30, 2003. The decrease inDSO was the result of higher sales in the Americas.  The company has increased inventory levels to meet thesignificant increase in demand resulting in a $57.9 million year to datedecrease in cash flow.  The increase ininventory resulted in higher accounts payable balances, which increased year todate cash flow by  $84.2 million.  Netted in the increase in accounts payableand other liabilities is a $7.5 million payment made in the first quarter tothe pension plan acquired from Allen Telecom.

 

In the first six months of2004, the company spent $91.4 million for investing activities, including $39.5million of capital expenditures. These expenditures included investments in thecompany’s new facilities in Reynosa, Mexico and Brno, Czech Republic andinvestments associated with the Allen integration and SAP implementations. ** **Inthe second quarter the company paid $29.0 million to settle patent infringementlitigation with TruePosition Inc. as part of litigation brought against AllenTelecom prior to the acquisition by the company (see Note 11 of the Notes toConsolidated Financial Statements).  Inthe first quarter, the company spent $23.2 million on two asset acquisitions,acquiring selected assets of Yantai Fine Cable and Channel Master LLC (see Note9 of the Notes to Consolidated Financial Statements).

 

In the first quarter, thecompany made a $6.5 million investment in Andes Industries, a manufacturer ofhigh-performance optical equipment and other products for broadband cablenetworks. This investment was in the form of a convertible interest-bearingnote that allows the company to convert this note into an equity interest inAndes Industries.  Also, the company received$3.0 million in cash as part of the sale of selected assets of its broadcastbusiness to ERI (see Note 10 of the Notes to Consolidated FinancialStatements). The company received $3.8 million from the sale of various otherassets, mainly in connection with the sale of a facility in Australia.

 

The company used net cash of$19.2 million for financing activities during the first six months of 2004,primarily due to an $18.0 million reduction in debt, $2.5 million used torepurchase 225,000 shares of common stock and $1.7 million received from theexercise of stock options.  The companyreduced its long-term debt by $17.8 million primarily due to principal paymentson senior notes and the pay down of debt held by the company’s Italiansubsidiary.

 

**SAFEHARBOR FOR FORWARD-LOOKING STATEMENTS**

 

We have made forward-lookingstatements in this Form 10-Q under “Management’s Discussion and Analysis ofFinancial Condition and Results of Operations” and in the “Notes toConsolidated Financial Statements.”  Inaddition, our representatives or management may make other written or oralstatements that constitute forward-looking statements.  Forward-looking statements are based onmanagement’s beliefs and assumptions and on information currently available tothem. These statements often contain words like believe, expect, anticipate,intend, contemplate, seek, plan, estimate or similar expressions.  We make these statements under theprotection afforded them by Section 21E of the Securities Exchange Act of 1934.

 

Forward-looking statementsinvolve risks, uncertainties and assumptions, including those discussed in thisreport.  We operate in a continuallychanging business environment, and new risk factors emerge from time to time. Wecannot predict those risk factors, nor can we assess the impact, if any, ofthose risk factors on our business or the extent to which any factors may causeactual results to differ materially from those projected in any forward-lookingstatements.  Forward-looking statementsdo not guarantee future performance, and you should not put undue reliance onthem.

 

While Andrew Corporation’smanagement is optimistic about the company’s long-term prospects, one shouldconsider the risks and uncertainties in evaluating its growth outlook.  Factors that may cause actual results todiffer from expected results include the 

 

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company’s ability to integrateacquisitions and to realize the synergies and cost savings anticipated fromthese transactions, the effects of competitive products and pricing, economicand political conditions that may impact customers’ ability to fund purchasesof our products and services, the company’s ability to achieve the costssavings anticipated from cost reduction programs, fluctuations in internationalexchange rates, the timing of cash payments and receipts, end use demands forwireless communication services, the loss of one or more significant customersand other business factors. For a more complete discussion of these and otherrisks, uncertainties and assumptions that may affect us, see the company’sannual report on Form 10-K for the fiscal year ended September 30, 2003.

##### ** **

##### **ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS**

 

See Item 7a of the company’s Annual Report on Form 10-K for the year ended September 30, 2003.  With the exception of copper purchase commitments there has been no material change from the end of the previous fiscal year through March 31, 2004.

 

The company uses various metalsin the production of its products. Copper, which is used to manufacture coaxialcable, is the most significant of these metals.  As a result, the company is exposed to fluctuations in the priceof copper.  In order to reduce thisexposure, the company has entered into contracts with various suppliers topurchase copper. At September 30, 2003 the company had contracts to purchase38.2 million pounds of copper for $29.5 million.  Based on current market conditions and forecasted copperrequirements, the company increased the amount of copper under contract to 46.4million pounds for $42.8 million at March 31, 2004.

 

##### **ITEM4.  CONTROLS AND PROCEDURES**

 

Evaluation of Disclosure Controls and Procedures:

 

As of March 31, 2004, the company’s management,including its Chief Executive Officer and Chief Financial Officer, havereviewed and evaluated the effectiveness of the company’s disclosure controlsand procedures pursuant to Rule 13a-15(b) of the Securities Exchange Act of1934.  Based on that review and evaluation, the Chief Executive Officerand Chief Financial Officer have concluded that the company’s disclosurecontrols and procedures are adequate and effective and that no changes arerequired at this time.

 

Changes in Internal Controls:

 

In connection with the evaluation by management,including its Chief Executive Officer and Chief Financial Officer, of thecompany’s internal control over reporting, pursuant to Exchange Act Rule13a-15(d), no changes during the quarter ended March 31, 2004 were identifiedthat have materially affected, or are reasonably likely to materially affect,the company’s internal control over financial reporting.

 

**PARTII—OTHER INFORMATION**

 

**ITEM 1. LEGAL PROCEEDINGS**

 

On December 12, 2003, Antel Holding, Ltd. (Antel) asubsidiary of Group Menetap, Ltd., filed a Notice of Arbitration and Statementof Claim with the American Arbitration Association. The claim relates to thepurchase by Antel of the company’s interest in certain Russian venturespursuant to a Share Purchase and Sale Agreement dated November 5, 2001.  The Statement of Claim asserts that thecompany breached warranties and representations in connection with the sale andthat Antel was thereby damaged in an amount to be proven up to the indemnificationlimit of $40 million. The company believes that the Claim is without merit andintends to defend the matter vigorously.

 

The company is also a party to various other legalproceedings, lawsuits and other claims arising in the ordinary course of itsbusiness.  The company does not believethat such other litigation, if adversely determined, would have a materialeffect on the company’s business, financial position, results of operations orcash flow.

 

### **ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS**

 

Since 1997, the company’s Boardof Directors has authorized the company to repurchase up to 30.0 million commonshares.  As of March 31, 2004 thecompany has repurchased approximately 17.0 million shares under this plan.These repurchases may be made on the open

 

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market or in negotiatedtransactions and the timing and amount of shares repurchased will be determinedby the company’s management.  Includedin the 17.0 million shares repurchased are 225,000 shares repurchased in thefirst quarter of 2004 for $2.5 million. No shares were repurchased during the second quarter of 2004.

 

### **ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

 

(a)          The company’s Annual Meeting of Stockholders was held on February 10,2004.

 

(b)         Items submitted to a vote

 

1.               Electionof Directors

 
| **Nominee**  |   | **For**     |   | **Against** |   | **Broker/Non-Votes** |   | **Withheld** |
|--------------|--------|-------------|--------|-------------|--------|----------------------|--------|--------------|
| J. Bollinger |   | 136,173,767 |   | 0           |   | 0                    |   | 7,278,303    |
| P. Colburn   |   | 134,127,162 |   | 0           |   | 0                    |   | 9,324,908    |
| T. Donahoe   |   | 137,872,939 |   | 0           |   | 0                    |   | 5,579,131    |
| R. Faison    |   | 137,453,032 |   | 0           |   | 0                    |   | 5,999,038    |
| J. Fluno     |   | 136,316,107 |   | 0           |   | 0                    |   | 7,135,963    |
| W. Hunt      |   | 138,269,958 |   | 0           |   | 0                    |   | 5,182,112    |
| C. Nicholas  |   | 137,530,815 |   | 0           |   | 0                    |   | 5,921,255    |
| R. Paul      |   | 137,070,371 |   | 0           |   | 0                    |   | 6,381,699    |
| G. Poch      |   | 136,458,739 |   | 0           |   | 0                    |   | 6,993,331    |
| G. Toney     |   | 138,589,697 |   | 0           |   | 0                    |   | 4,862,373    |
| D. Whipple   |   | 140,014,936 |   | 0           |   | 0                    |   | 3,437,134    |

 

2.               The proposal toincrease the number of shares of common stock available for issuance under theAndrew Employee Stock Purchase Plan from 1,771,875 to 3,471,875 was approved bya vote of 116,691,315 shares for, 2,250,771shares against, and 2,310,279 shareswithheld and 22,199,705 broker non-votes.

 

3.               The ratification ofthe appointment of Ernst & Young to serve as independent public auditorsfor fiscal year 2004 was approved by a vote of 139,728,177 shares for,3,113,685 shares against, and 610,207 shares withheld.

 

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### **ITEM 6.  EXHIBITSAND REPORTS ON FORM 8-K**

 
| **Exhibit No.** |   | **Description**                                                                                                                                                   |
|-----------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |   |                                                                                                                                                              |
| 10.1            |   | Settlement  agreement, by and among TruePostion Inc., KSI Inc., Allen Telecom LLC, and Andrew  Corporation                                                        |
|            |   |                                                                                                                                                              |
| 10.2            |   | Warrant to  Purchase Common Stock issued on January 16, 2004, filed as Exhibit 99.2 to  Form 8-K, filed on February 3, 2004 and incorporated herein by reference. |
|            |   |                                                                                                                                                              |
| 31              |   | Rule 13a-14(a) Certification of Chief Executive and Chief Financial  Officers                                                                                     |
|            |   |                                                                                                                                                              |
| 32              |   | 18 U.S.C. Section 1350 Certifications of Chief Executive and Chief  Financial Officers                                                                            |

 

**(b) Reports on Form 8-K**

 

On February 3,2004, the company furnished, under Items 5 and 7 of Form 8-K, a press releaseannouncing that a definitive agreement had been reached with TruePosition, Inc.that settles pending patent infringement litigation filed against Allen TelecomInc. on December 11, 2001, as well as a copy of the warrant agreement that ispart of the settlement.

 

On February 3, 2004, thecompany furnished, under Items 7 and 12 of Form 8-K, a press release regardingfinancial results for the quarter ended December 31, 2003, as well as atranscript of the conference call presentation that followed the press release.

 

On January 9, 2004, the companyfurnished, under items 7 and 12 of Form 8-K, a press release announcing thatresults for the first quarter of fiscal 2004 are estimated to exceed previouslyprovided guidance.

 

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**SIGNATURE**

 

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

 
| Date   | May 12 , 2004 |   | By:    | /s/                                                        | Marty R.  Kittrell |   |
|--------|---------------|--------|--------|------------------------------------------------------------|--------------------|--------|
|   |          |   |   |                                                       |
|   |          |   |   | Marty R. Kittrell                                          |
|   |          |   |   | Chief  Financial Officer                                   |
|   |          |   |   | (Duly  Authorized Officer and Principal Financial Officer) |

 

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