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SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549
 Form 10-Q (Mark-One)þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2005. OR o
    
    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 001-14617 ANDREW CORPORATION  DELAWARE
(State or other jurisdiction of incorporation or organization)
    
    36-2092797
(IRS Employer identification No.)
 10500 W. 153rd Street, 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 since last report) 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 (or for
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 þ No o Indicate by check mark whether the registrant is an accelerated filer (as defined in rule 12b-2 of
the Act) Yes þ No o Indicate the number of shares outstanding of each of the issuers classes of common stock, as of
the latest practical date. Common Stock, $.01 Par Value  162,446,244 shares as of May 05, 2005   1




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INDEX
ANDREW CORPORATION PART I. FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Consolidated Balance Sheets March 31, 2005 and September 30, 2004Consolidated Statements of Operations Three and six months ended March 31, 2005
and 2004Consolidated Statements of Cash Flows Six months ended March 31, 2005
and 2004Notes to Consolidated Financial Statements March 31, 2005Item 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPART II. OTHER INFORMATIONItem 1. Legal ProceedingsItem 2. Unregistered Sales of Equity Securities and Use of ProceedsItem 4. Submission of Matters to a Vote of Security HoldersItem 6. ExhibitsSIGNATURECERTIFICATIONSForm of Deferred Stock Unit AgreementCertification of CEO and CFOSection 1350 Certification of CEO and CFO
 2




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ITEM 1. FINANCIAL STATEMENTS ANDREW CORPORATION 
 CONSOLIDATED BALANCE SHEETS
 (Dollars in thousands, except per share amounts)
 March 31
    
    
    September 302005
    
    
    2004(UNAUDITED)ASSETSCurrent AssetsCash and cash equivalents
    
    $
    172,099
    
    
    $
    189,048Accounts receivable, less allowances (March 2005 - $13,348; September 2004 - $13,798)
    
    
    471,812
    
    
    
    416,603Inventories
    
    
    358,358
    
    
    
    351,082Other current assets
    
    
    56,283
    
    
    
    34,190Total Current Assets
    
    
    1,058,552
    
    
    
    990,923Other AssetsGoodwill
    
    
    878,604
    
    
    
    868,078Intangible assets, less amortization
    
    
    63,264
    
    
    
    63,988Other assets
    
    
    84,119
    
    
    
    92,590Property, Plant, and EquipmentLand and land improvements
    
    
    23,496
    
    
    
    22,607Buildings
    
    
    127,965
    
    
    
    123,716Equipment
    
    
    514,352
    
    
    
    496,739Allowance for depreciation
    
    
    (432,669
    )
    
    
    (417,696
    )233,144
    
    
    
    225,366TOTAL ASSETS
    
    $
    2,317,683
    
    
    $
    2,240,945LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesAccounts payable
    
    $
    212,277
    
    
    $
    196,592Accrued expenses and other liabilities
    
    
    121,699
    
    
    
    82,291Compensation and related expenses
    
    
    47,181
    
    
    
    67,018Restructuring
    
    
    19,406
    
    
    
    18,887Notes payable and current portion of long-term debt
    
    
    24,829
    
    
    
    14,051Total Current Liabilities
    
    
    425,392
    
    
    
    378,839Deferred liabilities
    
    
    49,910
    
    
    
    54,388Long-Term Debt,less current portion
    
    
    276,766
    
    
    
    284,844SHAREHOLDERS EQUITYRedeemable convertible preferred stock liquidation preference $50 a share (120,414 shares
outstanding at September 30, 2004)
    
    
    
    
    
    
    6,021Common stock (par value, $.01 a share: 400,000,000 shares authorized: 162,436,202 shares
issued at March 31, 2005 and 161,015,917 shares issued at September 30, 2004,
including treasury)
    
    
    1,624
    
    
    

    1,610Additional paid-in capital
    
    
    674,890
    
    
    
    666,746Accumulated other comprehensive income
    
    
    33,888
    
    
    
    12,363Retained earnings
    
    
    855,462
    
    
    
    837,713Treasury stock, common stock at cost (23,124 shares at March 31, 2005 and
148,950 shares at September 30, 2004)
    
    
    (249
    )
    
    
    (1,579
    )Total Shareholders Equity
    
    
    1,565,615
    
    
    
    1,522,874TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    2,317,683
    
    
    $
    2,240,945
 See Notes to Consolidated Financial Statements 3




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ANDREW CORPORATION 
 CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
 (Dollars and shares in thousands, except per share amounts)
 Three Months Ended
    
    
    Six Months EndedMarch 31
    
    
    March 312005
    
    
    2004
    
    
    2005
    
    
    2004Sales
    
    $
    481,828
    
    
    $
    447,146
    
    
    $
    955,902
    
    
    $
    857,917Cost of products sold
    
    
    384,876
    
    
    
    336,492
    
    
    
    748,543
    
    
    
    643,194Gross Profit
    
    
    96,952
    
    
    
    110,654
    
    
    
    207,359
    
    
    
    214,723Operating ExpensesResearch and development
    
    
    25,577
    
    
    
    28,459
    
    
    
    52,448
    
    
    
    54,082Sales and administrative
    
    
    58,315
    
    
    
    52,654
    
    
    
    109,344
    
    
    
    105,147Intangible amortization
    
    
    5,388
    
    
    
    9,851
    
    
    
    13,128
    
    
    
    19,272Restructuring
    
    
    948
    
    
    
    2,768
    
    
    
    2,786
    
    
    
    3,462(Gain) loss on sale of assets
    
    
    (1,033
    )
    
    
    (1,402
    )
    
    
    (1,033
    )
    
    
    3,10989,195
    
    
    
    92,330
    
    
    
    176,673
    
    
    
    185,072Operating Income
    
    
    7,757
    
    
    
    18,324
    
    
    
    30,686
    
    
    
    29,651OtherInterest expense
    
    
    3,516
    
    
    
    3,955
    
    
    
    7,224
    
    
    
    7,842Interest income
    
    
    (1,367
    )
    
    
    (982
    )
    
    
    (3,073
    )
    
    
    (1,731
    )Other expense (income), net
    
    
    324
    
    
    
    (543
    )
    
    
    1,840
    
    
    
    1,3072,473
    
    
    
    2,430
    
    
    
    5,991
    
    
    
    7,418Income Before Income Taxes
    
    
    5,284
    
    
    
    15,894
    
    
    
    24,695
    
    
    
    22,233Income Taxes
    
    
    2,045
    
    
    
    5,563
    
    
    
    6,714
    
    
    
    7,782Net Income
    
    
    3,239
    
    
    
    10,331
    
    
    
    17,981
    
    
    
    14,451Preferred Stock Dividends
    
    
    115
    
    
    
    119
    
    
    
    232
    
    
    
    434Net Income Available to
Common Shareholders
    
    $
    3,124
    
    
    $
    10,212
    
    
    $
    17,749
    
    
    $
    14,017Basic Net Income per Share
    
    $
    0.02
    
    
    $
    0.06
    
    
    $
    0.11
    
    
    $
    0.09Diluted Net Income per Share
    
    $
    0.02
    
    
    $
    0.06
    
    
    $
    0.11
    
    
    $
    0.09Average Shares OutstandingBasic
    
    
    161,264
    
    
    
    158,820
    
    
    
    161,094
    
    
    
    158,580Diluted
    
    
    161,593
    
    
    
    159,590
    
    
    
    161,499
    
    
    
    159,114
 See Notes to Consolidated Financial Statements 4




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ANDREW CORPORATION 
 CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 (Dollars in thousands)
 Six Months EndedMarch 312005
    
    
    2004Cash Flows from OperationsNet Income
    
    $
    17,981
    
    
    $
    14,451Adjustments to Net IncomeDepreciation
    
    
    29,671
    
    
    
    31,306Amortization
    
    
    13,128
    
    
    
    19,272(Gain)loss on sale and disposition of assets, net
    
    
    (332
    )
    
    
    3,019Restructuring costs
    
    
    (5,190
    )
    
    
    (9,404
    )Change in Operating Assets/LiabilitiesAccounts receivable
    
    
    (43,160
    )
    
    
    (45,304
    )Inventories
    
    
    (5,790
    )
    
    
    (60,873
    )Other assets
    
    
    (13,554
    )
    
    
    (16,312
    )Accounts payable and other liabilities
    
    
    15,711
    
    
    
    82,679Net Cash From Operations
    
    
    8,465
    
    
    
    18,834Investing ActivitiesCapital expenditures
    
    
    (32,468
    )
    
    
    (39,496
    )Acquisition of businesses, net of cash acquired
    
    
    (19,204
    )
    
    
    (23,227
    )Settlement of pre-acquisition litigation
    
    
    
    
    
    
    (29,000
    )Investments
    
    
    
    
    
    
    (6,500
    )Proceeds from sale of businesses and investments
    
    
    9,494
    
    
    
    3,000Proceeds from sale of property, plant and equipment
    
    
    2,352
    
    
    
    3,781Net Cash Used for Investing Activities
    
    
    (39,826
    )
    
    
    (91,442
    )Financing ActivitiesLong-term debt payments, net
    
    
    (1,633
    )
    
    
    (17,808
    )Notes payable borrowings (payments), net
    
    
    9,064
    
    
    
    (185
    )Preferred stock dividends
    
    
    (232
    )
    
    
    (434
    )Payments to acquire common stock for treasury
    
    
    
    
    
    
    (2,472
    )Stock purchase and option plans
    
    
    669
    
    
    
    1,738Net Cash From (Used for) Financing Activities
    
    
    7,868
    
    
    
    (19,161
    )Effect of exchange rate changes on cash
    
    
    6,544
    
    
    
    6,355Decrease for the Period
    
    
    (16,949
    )
    
    
    (85,414
    )Cash and Equivalents at Beginning of Period
    
    
    189,048
    
    
    
    286,269Cash and Equivalents at End of Period
    
    $
    172,099
    
    
    $
    200,855
 See Notes to Consolidated Financial Statements 5




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ANDREW CORPORATION 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with
U.S. generally accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by U.S. generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been included. Operating
results for the three and six month periods ended March 31, 2005 are not necessarily indicative of
the results that may be expected for the year ending September 30, 2005. For further information,
refer to the consolidated financial statements and footnotes thereto included in the companys
annual report on Form 10-K for the year ended September 30, 2004. Certain previously reported
amounts have been reclassified to conform to current period presentation. NOTE 2. EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share (in
thousands, except per share amounts): Three Months Ended
    
    
    Six Months EndedMarch 31
    
    
    March 312005
    
    
    2004
    
    
    2005
    
    
    2004BASIC EARNINGS PER SHARENet income
    
    $
    3,239
    
    
    $
    10,331
    
    
    $
    17,981
    
    
    $
    14,451Preferred stock dividends
    
    
    115
    
    
    
    119
    
    
    
    232
    
    
    
    434Net income available to common shareholders
    
    
    3,124
    
    
    
    10,212
    
    
    
    17,749
    
    
    
    14,017Average basic shares outstanding
    
    
    161,264
    
    
    
    158,820
    
    
    
    161,094
    
    
    
    158,580Basic net income per share
    
    $
    0.02
    
    
    $
    0.06
    
    
    $
    0.11
    
    
    $
    0.09DILUTED EARNINGS PER SHARENet income
    
    $
    3,239
    
    
    $
    10,331
    
    
    $
    17,981
    
    
    $
    14,451Preferred stock dividends
    
    
    115
    
    
    
    119
    
    
    
    232
    
    
    
    434Net income available to common shareholders
    
    
    3,124
    
    
    
    10,212
    
    
    
    17,749
    
    
    
    14,017Average basic shares outstanding
    
    
    161,264
    
    
    
    158,820
    
    
    
    161,094
    
    
    
    158,580Effect of dilutive securities:Options, warrants, and equivalents
    
    
    329
    
    
    
    770
    
    
    
    405
    
    
    
    534Average diluted shares outstanding
    
    
    161,593
    
    
    
    159,590
    
    
    
    161,499
    
    
    
    159,114Diluted net income per share
    
    $
    0.02
    
    
    $
    0.06
    
    
    $
    0.11
    
    
    $
    0.09
 In the second quarter of 2005, the company converted 119,114 shares of convertible preferred stock
into 1,372,906 shares of common stock. Under the if-converted method, these convertible preferred
shares would have increased the diluted average shares outstanding by 1,144,090 for the second
quarter of 2005 and by 1,258,489 for the six months ending March 31, 2005. These shares were not
included in the calculation of diluted earnings per share because including these shares and
excluding the convertible preferred stock dividends would have increased reported diluted earnings
per share. At March 31, 2004, the company had an average of 130,414 shares of convertible preferred stock
outstanding, which were convertible into 1,503,152 shares of common stock. These shares were not
included in the calculation of diluted earnings per share because including these shares and
excluding the convertible preferred stock dividends would have increased reported diluted earnings
per share. The companys convertible subordinated notes are potentially convertible into 17,531,568 shares of
the companys common stock. These shares were not included in the calculation of diluted earnings
per share because including these shares and excluding the interest expense on these notes would
have increased reported diluted earnings per share. 6




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Options to purchase 7,435,459 and 7,931,743 shares of common stock, respectively, for the three and
six months ended March 31, 2005 and 5,627,136 shares of common stock for the three and six
months ended at March 31, 2004, were not included in the computation of diluted shares because the
options exercise prices were greater than the average market price of the common shares. NOTE 3. INVENTORIES Inventories consisted of the following at March 31, 2005 and September 30, 2004, net of reserves: March 31
    
    
    September 30(Dollars in thousands)
    
    2005
    
    
    2004Raw materials
    
    $
    119,634
    
    
    $
    133,483Work in process
    
    
    96,299
    
    
    
    85,917Finished goods
    
    
    142,425
    
    
    
    131,682$
    358,358
    
    
    $
    351,082
 NOTE 4. COMPREHENSIVE INCOME (LOSS) Statement of Financial Accounting Standards (SFAS) No. 130, Reporting Comprehensive Income,
requires the company to report foreign currency translation adjustments included in Accumulated
Other Comprehensive Income, a component of shareholders equity, as comprehensive income. For the
three and six months ended March 31, 2005 and 2004, other comprehensive income is made up of net
income available to common shareholders and foreign currency translation adjustments.
Comprehensive income (loss) for the periods ended March 31, 2005 and 2004 was as follows: Three months ended
    
    
    Six months endedMarch 31
    
    
    March 31(Dollars in thousands)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Net income
    
    $
    3,239
    
    
    $
    10,331
    
    
    $
    17,981
    
    
    $
    14,451Foreign currency translation adjustments
    
    
    (16,518
    )
    
    
    (6,874
    )
    
    
    21,525
    
    
    
    21,214Preferred stock dividends
    
    
    115
    
    
    
    119
    
    
    
    232
    
    
    
    434Comprehensive Income (Loss)
    
    
    ($13,164
    )
    
    $
    3,576
    
    
    $
    39,738
    
    
    $
    36,099
 NOTE 5. RECENTLY ISSUED ACCOUNTING POLICIES In January 2005, the Financial Accounting Standards Board (FASB) issued revised Statement of
Financial Accounting Standards (SFAS) No. 151, Inventory Costs,an amendment of ARB No. 43. The
amendments made by SFAS 151 clarify that abnormal amounts of idle facility expense, freight,
handling costs, and wasted materials (spoilage) should be recognized as current-period charges and
require the allocation of fixed production overheads to inventory based on the normal capacity of
the production facilities. SFAS 151 will be effective for the company beginning in fiscal year
2006. The company is evaluating the impact of SFAS 151 and has not yet determined its impact on
the companys consolidated financial statements. In December 2004, the Financial Accounting Standards Board (FASB) issued revised Statement of
Financial Accounting Standards (SFAS) No.123(R), Share-Based Payment, which will require the
company to record compensation cost for all share-based payments, including employee stock options,
at fair value. In April 2005, the SEC delayed the effective date of SFAS No 123(R) until the
companys fiscal year 2006. As permitted by Statement 123, the company currently accounts for
share-based payments to employees using the intrinsic value method as prescribed by Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees,and generally recognizes
no compensation cost for employee stock options because the exercise price of these stock options
equals the market price of the underlying stock on the date of the grant. Accordingly,
the adoption of Statement 123(R)s fair value method could have a significant impact on our results
of operations. The impact of adoption of Statement 123(R) cannot be predicted at this time because
it will depend on levels of share-based payments granted in the future. However, assuming no
additional stock options are granted, the company estimates that the unvested stock options
expected to be outstanding at the date of adoption will result in after-tax charges of
approximately $2.8 million in fiscal year 2006. 7




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Statement 123(R) also requires the benefits of tax
deductions in excess of recognized compensation cost to be reported as a financing cash flow,
rather than as an operating cash flow as required under current literature. This requirement could
reduce net operating cash flows and increase net financing cash flows in periods after adoption.
While the company cannot estimate what those amounts will be in the future (because they depend on,
among other things, when employees exercise stock options), operating cash flows recognized in
prior periods for such excess tax deductions were approximately $900,000 and $85,000 in fiscal year
2004 and 2003, respectively. On October 22, 2004, the President signed into law the American Jobs Creation Act of 2004. The Act
includes a temporary incentive for U.S. corporations to repatriate accumulated income earned abroad
by providing an 85 percent dividends-received deduction for certain qualifying cash dividends
received from controlled foreign corporations. The deduction is subject to certain limitations
and, as of today, uncertainty remains as to how certain provisions of the Act will be interpreted.
Therefore, the company is not yet in a position to determine whether, and to what extent, it would
repatriate unremitted foreign earnings. The company expects to finalize its analysis of these
provisions by September 30, 2005. NOTE 6. ADOPTION OF NEW ACCOUNTING POLICIES In September 2004, the FASB issued EITF No. 04-08, The Effect of Contingently Convertible Debt on
Diluted Earnings per Share.EITF No. 04-08 requires the company to include the impact of the
companys contingently convertible notes in the diluted earnings per share calculations, regardless
of whether the conversion contingency has been met. This contrasts with previous accounting rules,
which allowed companies to exclude contingent convertibles from the calculation of diluted earnings
per share, if the contingency has not been met. The company adopted EITF No. 04-08 beginning in
fiscal year 2005. EITF No. 04-08 includes a requirement to restate all periods during which the
convertible instrument was outstanding. The company has determined that no prior period
restatements are required because the contingently convertible notes were anti-dilutive in these
periods. 8




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NOTE 7. RESTRUCTURING AND INTEGRATION At March 31, 2005, the company had a restructuring reserve of $19.4 million, comprised of $4.9
million for its restructuring plans and $14.5 million for merger integration plans. Restructuring Reserve The company initiated restructuring plans in 2002. As part of these initiatives, the company has
consolidated its operations into fewer, more efficient facilities and opened two new manufacturing
facilities in Mexico and the Czech Republic. The company paid $1.5 million of severance to 126
employees in the first quarter of fiscal 2005 and made no severance payments in the second quarter
of fiscal 2005. In addition, the company paid $0.5 million of lease cancellation and other costs in
the second quarter of fiscal 2005 and $0.9 million for the first six months of fiscal 2005. At
March 31, 2005 the company had a reserve of $4.9 million for lease cancellation costs that are
scheduled to continue through fiscal 2007. A summary of the restructuring reserve activity is
provided below (dollars in thousands): Reserve
    
    
    
    
    
    
    ReserveRestructuring Reserve Activity for the
    
    Balance
    
    
    Utilization
    
    
    Balancesix months ended March 31, 2005
    
    September 30, 2004
    
    
    of Reserve
    
    
    March 31, 2005Severance
    
    $
    1,502
    
    
    
    ($1,502
    )
    
    $
    Lease cancellation and other costs
    
    
    5,836
    
    
    
    (889
    )
    
    
    4,947Total Restructuring Reserve Balance
    
    $
    7,338
    
    
    
    ($2,391
    )
    
    $
    4,947
 Merger Integration Reserve As part of the 2003 Allen Telecom acquisition, the company accrued a restructuring reserve for
costs to integrate Allens operations with those of the company and to eliminate duplicate
operations. At September 30, 2004 the Allen integration reserve was $11.5 million. In the second
quarter of fiscal 2005, the company paid cash costs of $0.9 million of severance to 26 employees
and $1.7 million to 69 employees for the first six months of fiscal 2005. Additionally, the
company paid $0.7 million in the second quarter of fiscal 2005 and $1.2 million for the first six
months of fiscal 2005 for lease cancellation costs. In fiscal 2005, the company completed the development of its merger integration plan for Channel
Master LLC, which was acquired in fiscal year 2004. The company accrued $5.9 million to close
Channel Masters U.S. manufacturing facility and relocate these operations to Mexico. As part of
this plan, the company expects to pay severance benefits to approximately 300 employees and plans
to complete the relocation of manufacturing operations by the end of fiscal 2006. The $5.9 million
was treated as a purchase accounting adjustment and was recorded as an increase in the value of net
assets acquired. As of March 31, 2005, the company has not incurred any charges under this plan. A summary of the merger integration reserve activity is provided below (dollars in thousands): Reserve
    
    
    
    
    
    
    
    
    
    
    ReserveIntegration Reserve Activity for the
    
    Balance
    
    
    Utilization
    
    
    
    
    
    
    Balancesix months ended March 31, 2005
    
    September 30, 2004
    
    
    of Reserve
    
    
    Accrual
    
    
    March 31, 2005Severance
    
    $
    6,279
    
    
    
    ($1,722
    )
    
    $
    2,262
    
    
    $
    6,819Lease cancellation and other costs
    
    
    5,270
    
    
    
    (1,247
    )
    
    
    3,618
    
    
    
    7,641Total Integration Reserve Balance
    
    $
    11,549
    
    
    
    ($2,969
    )
    
    $
    5,880
    
    
    $
    14,460
 The company recognized $0.9 million in the second quarter of fiscal 2005 and $2.8 million in the
first six months of fiscal 2005 of restructuring expense for severance and other costs incurred as
part of the companys integration plans and other cost cutting initiatives that were expensed as
incurred. 9




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NOTE 8. STOCK-BASED COMPENSATION The company accounts for stock-based compensation awards pursuant to Accounting Principles Board
Opinion No. 25 and its related interpretations which prescribe the use of the intrinsic value
method. Accordingly, no compensation cost is recognized for stock options since the exercise price
of these stock options equals the market price of the underlying stock on the date of the grant. Pro forma information regarding income and earnings per share as required by SFAS No. 123,
Accounting for Stock-Based Compensation, has been determined as if the company had accounted for
its stock option plans under the fair value method. The following table shows the companys pro
forma net income and earnings per share as if the company had recorded the fair value of stock
options as compensation expense: Three Months Ended
    
    
    Six Months EndedMarch 31
    
    
    March 31(Dollars in thousands, except per share amounts)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Reported net income available to common shareholders
    
    $
    3,124
    
    
    $
    10,212
    
    
    $
    17,749
    
    
    $
    14,017Less: Stock-based compensation, net of tax
    
    
    (486
    )
    
    
    (1,344
    )
    
    
    (9,638
    )
    
    
    (7,156
    )Pro forma net income available to common shareholders
    
    $
    2,638
    
    
    $
    8,868
    
    
    $
    8,111
    
    
    $
    6,861Reported basic and diluted net income per share
    
    $
    0.02
    
    
    $
    0.06
    
    
    $
    0.11
    
    
    $
    0.09Pro forma basic and diluted net income per share
    
    $
    0.02
    
    
    $
    0.06
    
    
    $
    0.05
    
    
    $
    0.04
 In the first quarter of fiscal 2005, the company granted 1.5 million stock options that vested
immediately and included a restriction on the resale of the underlying shares of common stock. For
pro forma disclosure purposes, these options were expensed in the first quarter of fiscal 2005,
increasing pro forma stock-based compensation expense by approximately $8.4 million. In the first
quarter of fiscal 2004, the company vested all outstanding options with an exercise price of $15 or
more per share, increasing pro forma stock-based compensation expense by approximately $4.1
million. The company has granted deferred stock units (DSUs) to officers, key employees and directors.
Compensation costs for DSUs are recognized on a straight-line basis over the vesting period and are
based on the market price of the companys common stock on the grant date. In fiscal 2005, the
company recognized operating expense of $1.2 million and $1.5 million in the second quarter and for
the first six months, respectively. In fiscal 2004, the company recognized operating expense of
$0.3 million and $0.4 million in the second quarter and for the first six months, respectively. NOTE 9. CONTINGENCIES Warranty Reserve
The company offers warranties on most of its products. The specific terms and conditions of the
warranties offered by the company vary depending upon the product sold. The company estimates the
costs that may be incurred under its warranty plans and records a liability in the amount of such
estimated costs at the time product revenue is recognized. Factors that affect the companys
warranty liability include the number of units sold, the type of products sold, historical and
anticipated rates of warranty claims and cost per claim. The company periodically assesses the
adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. The company
reports warranty reserves as a current liability, included in accrued expenses and other
liabilities. 10




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In the quarter ending March 31, 2005, the company recorded $19.8 million of warranty expense to
cover additional costs above normal warranty provisions associated with abnormally high field
failure rates for a specific component supplied by a third-party vendor used in certain base
station subsystem product lines. The company anticipates that it will incur the costs associated
with this component failure issue over the next 12 to 18 months. Changes in the companys warranty
reserve during the three and six month periods ended March 31, 2005 and 2004 are as follows: Three Months Ended
    
    
    Six Months EndedMarch 31
    
    
    March 31(Dollars in thousands)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Warranty reserve at beginning of period
    
    $
    20,222
    
    
    $
    17,349
    
    
    $
    18,900
    
    
    $
    12,470Accrual for warranties issued
    
    
    4,484
    
    
    
    3,210
    
    
    
    8,546
    
    
    
    9,082Warranty settlements made
    
    
    (2,834
    )
    
    
    (2,439
    )
    
    
    (5,748
    )
    
    
    (4,342
    )Warranty adjustments
    
    
    19,385
    
    
    
    161
    
    
    
    19,559
    
    
    
    1,071Warranty reserve at end of period
    
    $
    41,257
    
    
    $
    18,281
    
    
    $
    41,257
    
    
    $
    18,281
 Legal Proceedings In the quarter ended March 31, 2005, the company incurred $5.5 million of litigation and settlement
costs, recorded in sales and administration expense, in connection with settling two significant
litigation matters. On December 12, 2003, Antel Holding, Ltd. (Antel) a subsidiary of Group
Menetap, Ltd., filed a Notice of Arbitration and Statement of Claim with the American Arbitration
Association. The claim related to the purchase by Antel of the companys interest in certain
Russian ventures pursuant to a Share Purchase and Sale Agreement dated November 5, 2001. The
Statement of Claim asserted that the company breached warranties and representations in connection
with the sale and that Antel was thereby damaged in an amount to be proven up to the
indemnification limit of $40 million. The matter was heard before an arbitration panel in March and
on April 15, 2005, the panel dismissed all claims and ruled that the company has no liability to
Antel. On April 6, 2005, the company reached a definitive agreement with Ronald J. Huff and George D. Dill
(Plaintiffs) to settle pending litigation alleging that Andrew used its position as an investor
in Comtier, a California corporation founded by Plaintiffs, to take unfair advantage of the assets
and opportunities of Comtier. The definitive agreement settles all litigation between the parties. The company is also a party to various other legal proceedings, lawsuits and other claims arising
in the ordinary course of its business. The company does not believe that such other litigation,
if adversely determined, would have a material effect on the companys business, financial
position, results of operations or cash flow. NOTE 10. ACQUISITION OF BUSINESSES In November 2004, the company acquired selected assets of ATC Tower Services, Inc. a division of
American Tower Corporation that provides site installation services to wireless operators in North
America. This acquisition gives the company a national construction service presence and an
additional distribution channel for wireless infrastructure products. Total purchase consideration
was $8.3 million, consisting of $6.1 million in cash and the assumption of $2.2 million of capital
leases. A preliminary allocation of the purchase price resulted in $2.0 million of goodwill. In January 2005, the company acquired Xenicom Ltd., a United Kingdom based provider of software
solutions that help telecommunications operators plan, launch and manage wireless networks. Total
purchase consideration was approximately $11.3 million. A preliminary allocation of the purchase
price resulted in $6.4 million of goodwill, $7.9 million of intangible assets and $3.0 million of
deferred tax liabilities. The Xenicom acquisition includes an earn-out provision, which could
result in additional purchase consideration of up to 3.0 million British Pounds, or approximately
$5.6 million based on current exchange rates. The company is evaluating the tangible and intangible assets acquired in these acquisitions and
anticipates finalizing the allocation of purchase price by the end of the current fiscal year. Pro
forma results of operations, assuming these acquisitions occurred at the beginning of the period,
were not materially different from the reported results of operations. 11




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NOTE 11. DEBT COVENANTS Under the terms of the companys $170.0 million revolving credit facility, the company has agreed
to meet various quarterly requirements. The company was in compliance with all of these
requirements as of March 31, 2005. The company must meet various requirements, including
maintaining net worth, maintaining a ratio of earnings before interest, taxes, depreciation and
amortization (EBITDA) to total debt, maintaining a fixed charge coverage ratio and limits on the
amount of assets that the company can dispose of in a fiscal year. These requirements may limit
the amount of borrowing under this credit agreement. Under the most restrictive of these
requirements, the company was limited to a maximum borrowing of $88.0 million at March 31, 2005. NOTE 12. BENEFIT PLANS The company has two defined benefit plans, one that covers approximately 600 current and former
employees of the companys United Kingdom subsidiary and a defined benefit plan assumed as part of
the Allen Telecom acquisition, which has subsequently been frozen, that covers approximately 1,600
former employees of Allen Telecom. The components of net periodic costs for these plans, as well as the companys post-retirement
medical and life insurance plans, are as follows: Pension BenefitsThree months ended
    
    
    Six months endedMarch 31
    
    
    March 31(Dollars in thousands)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Service costs
    
    $
    502
    
    
    $
    1,397
    
    
    $
    1,006
    
    
    $
    2,039Interest costs
    
    
    1,596
    
    
    
    1,489
    
    
    
    3,195
    
    
    
    2,875Expected return on plan assets
    
    
    (1,435
    )
    
    
    (1,232
    )
    
    
    (2,827
    )
    
    
    (2,427
    )Amortization of unrecognized
prior service costs
    
    
    87
    
    
    
    61
    
    
    
    175
    
    
    
    72Amortization of net loss
    
    
    203
    
    
    
    294
    
    
    
    407
    
    
    
    571Net periodic costs
    
    $
    953
    
    
    $
    2,009
    
    
    $
    1,956
    
    
    $
    3,130
 Medical Plans and Other BenefitsThree months ended
    
    
    Six months endedMarch 31
    
    
    March 31(Dollars in thousands)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Service costs
    
    $
    50
    
    
    $
    173
    
    
    $
    100
    
    
    $
    346Interest costs
    
    
    179
    
    
    
    205
    
    
    
    352
    
    
    
    410Amortization of unrecognized prior service costs
    
    
    (135
    )
    
    
    (11
    )
    
    
    (270
    )
    
    
    (22
    )Amortization of initial net obligation
    
    
    
    
    
    
    34
    
    
    
    
    
    
    
    68Amortization of net loss
    
    
    158
    
    
    
    85
    
    
    
    316
    
    
    
    170Net periodic costs
    
    $
    252
    
    
    $
    486
    
    
    $
    498
    
    
    $
    972
 During the second quarter of fiscal 2005 the company initiated the process of terminating the
frozen defined benefit plan assumed as part of the Allen Telecom acquisition. The company
anticipates that the plan will be fully funded and terminated during fiscal 2006. In the quarter
ended March 31, 2005, the company made a voluntary contribution to the plan of $3.0 million. The
company estimates that additional contributions of approximately $5 to $8 million will be required
to fully fund and terminate this plan based on current actuarial projections. After the close of the second quarter of fiscal 2005, the company made a voluntary contribution of
$11.3 million to the companys United Kingdom defined benefit plan. The company made this
contribution and implemented other plan changes that require additional contributions by plan
participants to reduce the under-funded status of this plan and to reduce plan expenses. 12




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##### Table of Contents



NOTE 13. SEGMENTS The company operates in two reportable segments, Wireless Infrastructure and Satellite
Communications. The Wireless Infrastructure segment is based on meeting the infrastructure needs of
wireless service providers and Original Equipment Manufacturers (OEMs) and includes the following
product groups: Antenna and Cable Products, Base Station Subsystems, Network Solutions and Wireless
Innovations. The Satellite Communications segment is comprised of products supporting commercial
and consumer satellite applications. The company evaluates the performance of these segments based
on sales and operating income(loss). The table below shows sales and operating income(loss) by
segment. Three Months Ended
    
    
    Six Months EndedMarch 31
    
    
    March 31(Dollars in thousands)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004SalesWireless Infrastructure
    
    $
    447,505
    
    
    $
    396,195
    
    
    $
    872,676
    
    
    $
    778,460Satellite Communications
    
    
    34,323
    
    
    
    50,951
    
    
    
    83,226
    
    
    
    79,457Total Consolidated Sales
    
    $
    481,828
    
    
    $
    447,146
    
    
    $
    955,902
    
    
    $
    857,917Operating Income (Loss)Wireless Infrastructure
    
    $
    45,141
    
    
    $
    64,634
    
    
    $
    100,888
    
    
    $
    123,337Satellite Communications
    
    
    (2,854
    )
    
    
    (2,697
    )
    
    
    (3,895
    )
    
    
    (9,272
    )Items not included in segmentsUnallocated Sales and Administrative Costs
    
    
    (30,175
    )
    
    
    (35,164
    )
    
    
    (54,212
    )
    
    
    (62,033
    )Intangible Amortization
    
    
    (5,388
    )
    
    
    (9,851
    )
    
    
    (13,128
    )
    
    
    (19,272
    )Gain (Loss) on Sale of Assets
    
    
    1,033
    
    
    
    1,402
    
    
    
    1,033
    
    
    
    (3,109
    )Total Consolidated Operating Income
    
    $
    7,757
    
    
    $
    18,324
    
    
    $
    30,686
    
    
    $
    29,651
 The company allocates only certain assets, primarily inventory and certain accounts receivable, to
each segment. All other assets are managed on a consolidated basis. Total Assets
    
    March 31, 2005
    
    
    September 30, 2004Wireless Infrastructure
    
    $
    336,721
    
    
    $
    308,434Satellite Communications
    
    
    28,591
    
    
    
    53,429Unallocated Assets
    
    
    1,952,371
    
    
    
    1,879,082Total Consolidated Assets
    
    $
    2,317,683
    
    
    $
    2,240,945
 NOTE 14. CONVERTIBLE PREFERRED STOCK CONVERSION In the quarter ended March 31, 2005 the company converted all of its remaining outstanding
convertible preferred stock into common stock. On March 21, 2005 the company converted 119,114
shares of convertible preferred stock into 1,372,906 shares of common stock. 13




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##### Table of Contents



ITEM 2.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS SUMMARY Sales for the quarter ended March 31, 2005 were $481.8 million, an increase of 8% compared to the
second quarter of fiscal 2004 and up 2% from the first quarter of fiscal 2005. The increase in the
second quarter of fiscal 2005, compared to the second quarter of fiscal 2004, was due to a 13%
increase in sales for the Wireless Infrastructure segment offset partially by lower sales for
Satellite Communications. In the second quarter of fiscal 2005, the company recorded $19.8 million
of additional warranty provisions associated with abnormally high field failure rates for a
specific component used in certain base station subsystem product lines. Primarily due to higher
warranty costs, diluted earnings per share decreased from $0.06 in the second quarter of fiscal
2004 to $0.02 in the second quarter of fiscal 2005. Sales for the six months ended March 31, 2005 were $955.9 million, an increase of 11% compared to
the first six months of fiscal 2004. This increase was driven by growth in Wireless Infrastructure
sales. For the first six months of fiscal 2005, diluted earnings per share was $0.11, compared to
$0.09 per share for the first six months of fiscal 2004. RESULTS OF OPERATIONS Beginning in fiscal 2005, the company reorganized its product groups to better meet the demands of
customers and focus on the Satellite Communications market. This reorganization resulted in two
reportable segments, Wireless Infrastructure and Satellite Communications. The Wireless
Infrastructure segment is based on meeting the infrastructure needs of wireless service providers
and Original Equipment Manufacturers (OEMs), and includes the following product groups: Antenna and
Cable Products, Base Station Subsystems, Network Solutions and Wireless Innovations. The Satellite
Communications segment is based on products supporting commercial and consumer satellite
applications. Three Months Ended
    
    
    
    
    
    
    Six Months EndedSales by Segment
    
    March 31
    
    
    %
    
    
    March 31
    
    
    %(Dollars in millions)
    
    2005
    
    
    2004
    
    
    Change
    
    
    2005
    
    
    2004
    
    
    ChangeWireless Infrastructure
    
    $
    $448
    
    
    $
    396
    
    
    
    13
    %
    
    $
    873
    
    
    $
    778
    
    
    
    12
    %Satellite Communications
    
    
    34
    
    
    
    51
    
    
    
    (33
    %)
    
    
    83
    
    
    
    80
    
    
    
    4
    %Total
    
    $
    482
    
    
    $
    447
    
    
    
    8
    %
    
    $
    956
    
    
    $
    858
    
    
    
    11
    %
 In fiscal 2005, the company experienced growth in Wireless Infrastructure sales in all major
geographic regions, driven by network upgrades and expansion. Satellite Communication sales have
fluctuated due to changes in consumer broadband satellite sales. In the second quarter of fiscal
2005, Satellite Communications sales decreased 33% versus the corresponding quarter of the prior
year, due to an anticipated decline for certain products supporting the consumer broadband
satellite market. 14




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##### Table of Contents



Three Months Ended
    
    
    
    
    
    
    Six Months EndedSales by Major Region
    
    March 31
    
    
    %
    
    
    March 31
    
    
    %(Dollars in millions)
    
    2005
    
    
    2004
    
    
    Change
    
    
    2005
    
    
    2004
    
    
    ChangeAmericas
    
    $
    256
    
    
    $
    254
    
    
    
    1
    %
    
    $
    510
    
    
    $
    483
    
    
    
    6
    %Europe, Middle East, Africa
    
    
    165
    
    
    
    133
    
    
    
    24
    %
    
    
    323
    
    
    
    257
    
    
    
    26
    %Asia Pacific
    
    
    61
    
    
    
    60
    
    
    
    2
    %
    
    
    123
    
    
    
    118
    
    
    
    4
    %Total
    
    $
    482
    
    
    $
    447
    
    
    
    8
    %
    
    $
    956
    
    
    $
    858
    
    
    
    11
    %
 Sales in the Americas increased 1% in the second quarter and 6% in the first six months of fiscal
2005. These increases were driven by network expansion and coverage requirements in North America
and Latin America, and the inclusion of sales from the acquisitions of MTS Wireless Components and
ATC Tower Services. North American Wireless Infrastructure sales increased significantly late in
the second quarter of fiscal 2005, driven by strong Antenna and Cable Product sales. Wireless
Innovations sales increased in fiscal 2005, for both the second quarter and the first six months,
driven by an increase in operator needs for distributed coverage solutions. Network Solutions
declined compared to fiscal 2004 due to a reduction of geolocation hardware installations.
Satellite Communications sales increased in the first quarter of fiscal 2005 and declined
significantly in the second quarter of fiscal 2005 due to a reduced level of involvement in certain
consumer broadband satellite programs. Following the close of the second quarter of fiscal 2005, the company was informally notified by
one its customers that they have chosen a competitive solution for future E911 geolocation
hardware. The company believes that this decision may have been influenced by acquisition-related
factors, more so than technology or performance issues. Assuming no cancellation of existing
backlog with this customer, the companys fiscal 2005 sales forecast for Network Solution remains
essentially unchanged. The company forecasts that sales of geolocation products will decline from
approximately $150 million in fiscal 2004 to approximately $115 million in fiscal 2005, and
approximately $65 million in fiscal 2006 when on-going maintenance and support, Tier II and Tier
III operators, and international opportunities are expected to drive the majority of sales. Europe, Middle East, and Africa (EMEA) sales increased 24% in the second quarter and 26% in the
first six months of fiscal 2005, compared to the corresponding periods of fiscal 2004. This
increase was mainly due to Antenna and Cable Products and Wireless Innovations supporting network
upgrades, expansion and distributed coverage requirements in Western Europe and emerging markets.
EMEA sales also benefited from favorable foreign currency exchange rates, due mainly to a weaker
dollar against the euro. The company estimates that exchange rates increased EMEA sales by
approximately 7% in the first six months of fiscal 2005, compared to fiscal 2004. Sales in the Asia Pacific region increased 2% in the second quarter and 4% in the first six months
of fiscal 2005, compared to the corresponding periods of fiscal 2004. The increase was due to
higher sales in Antenna and Cable Products and Wireless Innovations supporting network upgrades,
expansion and distributed coverage requirements in India and China. These increases were partially
offset by a decline in Base Station Subsystems sales due to the timing of OEM sales supporting
network upgrades and the pending issuance of 3G licenses in China. In the second quarter of fiscal 2005, the companys gross margin was 20.1% of sales, compared to
24.7% in the second quarter of fiscal 2004. Of the 4.6% gross margin decline, 4.1% was due to a
$19.8 million pre-tax charge recorded to cover additional costs above normal warranty provisions
associated with abnormally high field failure rates for a specific component used in certain base
station subsystem product lines. Other factors contributing to the decline in the gross margin
percentage were lower average selling prices for certain of the companys products and higher
commodity costs, partially offset by a 1.3% favorable impact due to product mix. For the first six
months of fiscal 2005, the companys gross margin was 21.7% of sales, compared to 25.0% in the
first six months of fiscal 2004. Of this 3.3% decline, 2.1% was due to the $19.8 million warranty
charge recorded in the second quarter of fiscal 2005. The remaining decrease in the gross margin
rate was primarily due to lower average selling prices and higher raw material costs. For the first
six months of fiscal 2005, product mix had a slight favorable impact on gross margin, compared to
fiscal 2004. In fiscal 2005, the company has focused its research and development spending on key projects and
lowered its overall R&D spending. Research and development expense decreased 10% and 3% for the
second quarter and first six months of fiscal year 15




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##### Table of Contents



2005, respectively, compared to the
corresponding periods of fiscal 2004. Research and development expense was 5.5% of sales for the
first six months of fiscal 2005 compared to 6.3% of sales in the first six months of fiscal 2004.
Research and development expenses decreased as a percentage of sales due mainly to higher sales
leverage and a continued focus on project rationalization. Sales and administrative expenses increased 11% or $5.7 million for the second quarter of fiscal
2005 and increased 4% or $4.2 million for the first six months of fiscal 2005 compared to the
corresponding periods of fiscal 2004. This increase was mainly due to $5.5 million of litigation
and settlement costs associated with two significant legal matters that were resolved in the second
quarter of fiscal 2005. Sales and administrative expenses were 11.4% of sales for the first six
months of fiscal 2005, compared to 12.3% of sales in the first six months of fiscal 2004. Sales and
administrative expenses decreased as a percentage of sales due to higher sales leverage and cost
savings generated from the integration of Allen Telecoms operations with the companys. In the second quarter of fiscal 2005, the company settled two significant legal matters, the first
of which was an arbitration claim brought by the purchasers of the companys interest in certain
Russian ventures in December 2001. The arbitration panel dismissed this claim without liability to
the company. The company also reached a definitive agreement to settle all pending litigation
alleging that Andrew used its position as an investor in Comtier, a California corporation founded
by the plaintiffs, to take unfair advantage of the assets and opportunities of Comtier. Intangible amortization was $5.4 million in the second quarter and $13.1 million for the first six
months of fiscal 2005, compared to $9.9 million in the second quarter and $19.3 million for the
first six months of fiscal 2004. The decrease in intangible amortization was due to certain
intangible assets acquired in the companys 2002 and 2003 acquisitions of Celiant Corporation and
Allen Telecom, respectively, becoming fully amortized. The company anticipates that total
intangible amortization will decrease from $38.3 million in fiscal 2004, to approximately $23.0
million in fiscal year 2005. Restructuring expense was $0.9 million in the second quarter and $2.8 million for the first six
months of fiscal 2005, compared to $2.8 million in the second quarter and $3.5 million for the
first six months of fiscal 2004. These restructuring costs are the result of the companys
integration plans and other cost cutting initiatives. In the second quarter of fiscal 2005 the company recognized a $1.0 million gain on the sale of a
facility in Mexico. This facility was closed when the Reynosa, Mexico operations acquired from
Allen Telecom were combined with the companys existing Reynosa facility. In the second quarter of
fiscal 2004, the company recognized a net gain of $1.4 million on several real estate transactions,
principally due to the sale of a facility in Australia. In the first quarter of fiscal 2004, the
company recognized a $4.5 million loss on the sale of selected assets from its broadcast antenna
manufacturing operations to Electronics Research Inc. (ERI). This loss included an allocation of
$4.0 million of goodwill that was attributed to these broadcast antenna assets based on fair value. Interest expense decreased $0.4 million in the second quarter and $0.6 million in the first six
months of fiscal 2005 compared to fiscal 2004. While total debt levels have remained relatively
constant, the company has paid down its higher interest rate senior notes. Interest income
increased $1.3 million in the first six months of fiscal 2005 due to interest income received from
a favorable resolution of certain tax-related matters. Other expense was $0.3 million in the second quarter and $1.8 million for the first six months of
fiscal 2005, compared to income of $0.5 million in the second quarter and expense of $1.3 million
for the first six months of fiscal 2004. Other (income) expense, net is driven primarily by
foreign exchange gains and losses. Movements in the euro against the U.S. dollar have principally
accounted for these gains and losses. The effective tax rate was 38.7% for the second quarter and 27.2% for the first six months of
fiscal 2005. The effective tax rate for the second quarter and the first six months of fiscal 2004
was 35.0%. The decrease in the fiscal 2005 year-to-date tax rate was due to a $2.6 million tax
benefit recorded in the first quarter related to the reversal of previously accrued taxes resulting
from a favorable resolution of certain tax-related matters. The effective income tax rates for the
various tax jurisdictions in which the company operates can vary significantly. Fluctuations in
earnings in these jurisdictions have resulted in, and could continue to result in, significant
fluctuations in the companys effective tax rate. The company currently forecasts that the
effective tax rate will be 37.5% for the remaining six months of fiscal 2005, excluding any
potential impact of repatriating unremitted foreign earnings under the American Jobs Creation Act
of 2004. As of March 31, 2005, the company has a net deferred tax asset of approximately $67.9 million,
primarily attributable to U.S. net operating losses carried forward, which will begin to expire in
2018. Recoverability of this deferred tax asset is dependent upon the companys ability to generate
future taxable profits in the United States. The company continuously reviews and assesses the
recoverability of its deferred tax asset and it is the companys current opinion that the net
deferred tax asset is fully recoverable. Should the company subsequently determine it is more
likely than not that this deferred tax asset will not be realized, the company 16




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##### Table of Contents



would be required to
record a valuation allowance against some portion or all of the deferred tax asset at that time.
Recording of a valuation allowance could have a material adverse impact upon the companys
effective tax rate and reported financial results. The recently enacted American Jobs Creation Act of 2004 provides a temporary incentive for U.S.
corporations to repatriate accumulated income earned abroad. The repatriation of income from the
companys foreign subsidiaries could significantly impact the companys effective tax rate. The
company has not yet determined whether, and to what extent, it would repatriate unremitted foreign
earnings. The company expects to finalize its analysis of these provisions by September 30, 2005. LIQUIDITY Cash and cash equivalents were $172.1 million at March 31, 2005, compared to $189.0 million at
September 30, 2004. Working capital at March 31, 2005 was $633.2 million compared to $612.1
million at September 30, 2004. Management believes that the companys strong working capital
position, ability to generate cash flow from operations, and ability to borrow under its revolving
credit agreement will allow the company to meet its normal operating cash flow needs for the
foreseeable future. In the first six months of fiscal 2005, the company generated $8.5 million of cash from operations,
compared to $18.8 million in the first six months of fiscal 2004. The decrease in cash flow
generated from operations was primarily the result of higher working capital requirements due to
increased sales volume. The $8.5 million of cash flow from operations in the first six months of
fiscal 2005 was driven by net income of $18.0 million, $42.5 million of non-cash charges for
depreciation, amortization and non-cash gains on the sale of assets, $5.2 million used for
restructuring costs and a net change in operating assets and liabilities that resulted in a $46.8
million decrease in cash flow. The most significant change in operating assets was driven by accounts receivable, which increased
$43.2 million in the first six months of fiscal 2005. This increase was primarily driven by strong
sales growth in the second quarter of fiscal 2005. Days sales in billed receivables (DSO) increased
to 82 days at March 31, 2005, compared to 74 days at September 30, 2004, and 77 days at March 31,
2004. The increase in DSO was a result of a higher mix of international sales, which generally
carry longer payment terms than domestic sales. The company used $39.8 million of cash for investing activities in the first six months of fiscal
2005, compared to $91.4 million in the first six months of fiscal 2004. For the first six months
of fiscal 2005, capital expenditures were $32.5 million, down from $39.5 million in fiscal 2004. In
the first six months of fiscal 2005, the company spent $19.2 million on acquisitions. In the
second quarter of fiscal 2005, the company paid $11.3 million for Xenicom, a United Kingdom based
provider of software solutions that help telecommunications operators plan, launch and manage
wireless networks. In the first quarter of fiscal 2005, the company acquired selected assets of ATC
Tower Services, Inc., for total purchase consideration of $8.3 million, including $6.1 million of
cash. ATC Tower Services, Inc., was a division of American Tower Corporation that provides site
installation services to wireless operators in North America. Also in the first quarter of fiscal
2005, the company paid $1.1 million to acquire the 20% minority interest in a Czech Republic
subsidiary that was acquired in the Allen Telecom acquisition. In the first quarter of fiscal 2004,
the company spent $23.2 million on acquisitions, acquiring selected assets of Yantai Fine Cable, a
Chinese manufacturer of products for the broadband cable market, and Channel Master LLC, a U.S.
manufacturer of products for the consumer direct broadcast satellite market. Included in investing activities in 2004 is the second quarter payment of $29.0 million to settle
patent infringement litigation with TruePostion Inc. as part of litigation brought against Allen
Telecom prior to the acquisition by the company. Investing activities in fiscal 2004 also included
a first quarter investment of $6.5 million in Andes Industries, a U.S. distributor and manufacturer
of high-performance optical equipment and other products for broadband cable networks. This
investment was in the form of a convertible, interest-bearing note that allows the company to
convert the note into an equity interest. In the first quarter of fiscal 2005, the company received net proceeds of $9.5 million from the
sale of selected assets of its mobile antenna product line to PCTEL, Inc. In the first quarter of
fiscal 2004, the company received $3.0 million in cash from the sale of selected assets of its
broadcast antenna business to Electronic Research Inc. (ERI). The company received $2.4 million from the sale of assets in the first six months of fiscal 2005,
primarily from the sale of a Reynosa, Mexico facility acquired from Allen Telecom. In the first
six months of fiscal 2004, the company received $3.8 million from the sale of assets, primarily
from the sale of a facility in Australia. The company generated $7.9 million of cash from financing activities in the first six months of
fiscal 2005, primarily from additional notes payable borrowings. In the first quarter of fiscal
2005, the companys Indian subsidiary borrowed $9.1 million of notes payable under its local line
of credit to finance growth and to eliminate foreign exchange exposures. In the first six months 17




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of fiscal 2004, the company used $19.2 million for financing activities, primarily attributable to
$18.0 million of debt payments and $2.5 million used to repurchase 225,000 shares of common stock. SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS We have made forward-looking statements in this Form 10-Q under Managements Discussion and
Analysis of Financial Condition and Results of Operations and in the Notes to Consolidated
Financial Statements. In addition, our representatives or management may make other written or
oral statements that constitute forward-looking statements. Forward-looking statements are based
on managements beliefs and assumptions and on information currently available to them. These
statements often contain words like believe, expect, anticipate, intend, contemplate, seek, plan,
estimate, forecast or similar expressions. We make these statements under the protection afforded
them by Section 21E of the Securities Exchange Act of 1934. Forward-looking statements involve risks, uncertainties and assumptions, including those discussed
in this report. We operate in a continually changing business environment, and new risk factors
emerge from time to time. We cannot predict those risk factors, nor can we assess the impact, if
any, of those risk factors on our business or the extent to which any factors may cause actual
results to differ materially from those projected in any forward-looking statements.
Forward-looking statements do not guarantee future performance, and you should not put undue
reliance on them. While Andrew Corporations management is optimistic about the companys long-term prospects, one
should consider the risks and uncertainties in evaluating its growth outlook. Factors that may
cause actual results to differ from expected results include the companys ability to integrate
acquisitions and to realize the synergies and cost savings anticipated from these transactions, the
effects of competitive products and pricing, economic and political conditions that may impact
customers ability to fund purchases of our products and services, the companys ability to achieve
the cost savings anticipated from cost reduction programs, fluctuations in international exchange
rates, the timing of cash payments and receipts, end-use demands for wireless communication
services, the loss of one or more significant customers and other business factors. For a more
complete discussion of these and other risks, uncertainties and assumptions that may affect us, see
the companys annual report on Form 10-K for the fiscal year ended September 30, 2004. Section 404 of the Sarbanes-Oxley Act (the Act) requires that the company evaluate and determine
the effectiveness of its internal controls over financial reporting in order to allow management to
report on, and our independent auditors to attest to, such effectiveness. The company has dedicated
a significant amount of time and resources to ensuring compliance with section 404 of the Act. The
company currently has major ERP (Enterprise Resource Planning) software systems implementations
planned at three significant locations during the second half of fiscal 2005. If the company
encounters significant issues with any of these systems implementations it could impact the
companys ability to remediate any internal control deficiencies in time for its independent
auditors to conclude that the companys internal controls over financial reporting are effective at
September 30, 2005. The company is currently making preparations to comply with the European Union Directive 2002/95/EC
on the restriction of the use of certain hazardous substances in electrical and electronic
equipment (RoHS) and with the Material Declaration requirements imposed under WEEE (Waste of
Electrical & Electronic Equipment). The company has committed to provide its customers
RoHS-compliant products by January 2006 in order for our customers to comply with these regulations
by July 2006. If the company is not able to eliminate these hazardous materials from its products
or to comply with these regulations, it could adversely impact the companys sales, primarily in
Europe and to European OEMs. 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK See Item 7A of the companys Annual Report on Form 10-K for the year ended September 30, 2004.
With the exception of copper purchase commitments, there has been no material change from the end
of the previous fiscal year through March 31, 2005. The company uses various metals in the production of its products. Copper, which is used to
manufacture coaxial cable, is the most significant of these metals. The company uses approximately
50 million pounds of copper annually. As a result, the company is exposed to fluctuations in the
price of copper. In order to reduce this exposure, the company has entered into 18




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contracts with
various suppliers to purchase copper. At March 31, 2005, the company had contracts to purchase
15.3 million pounds of copper for $21.4 million. For the remainder of fiscal year 2005, the
company estimates that it will make additional purchases of approximately 11.7 million pounds of
copper in addition to the 15.3 million pounds that it currently has under contract. A 10% increase
in the current market price of copper would increase the companys cost of this estimated 11.7
million pounds by approximately $1.7 million. 
 ITEM 4. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures: As of March 31, 2005, the companys management, including its Chief Executive Officer and Chief
Financial Officer, have reviewed and evaluated the effectiveness of the companys disclosure
controls and procedures pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934. Based
on that review and evaluation, the Chief Executive Officer and Chief Financial Officer have
concluded that the companys disclosure controls and procedures are adequate and effective and that
no changes are required at this time. Changes in Internal Controls: In connection with the evaluation by management, including its Chief Executive Officer and Chief
Financial Officer, of the companys internal controls over reporting, pursuant to Exchange Act Rule
13a-15(d), no changes during the quarter ended March 31, 2005 were identified that have materially
affected, or are reasonably likely to materially affect, the companys internal controls over
financial reporting. 
 PART IIOTHER INFORMATION 
 ITEM 1. LEGAL PROCEEDINGS On December 12, 2003, Antel Holding, Ltd. (Antel) a subsidiary of Group Menetap, Ltd., filed a
Notice of Arbitration and Statement of Claim with the American Arbitration Association. The claim
related to the purchase by Antel of the companys interest in certain Russian ventures pursuant to
a Share Purchase and Sale Agreement dated November 5, 2001. The Statement of Claim asserted that
the company breached warranties and representations in connection with the sale and that Antel was
thereby damaged in an amount to be proven up to the indemnification limit of $40 million. The
matter was heard before an arbitration panel in March and on April 15, 2005, the panel dismissed
all claims and ruled that the company has no liability to Antel. On April 6, 2005, the company reached a definitive agreement with Ronald J. Huff and George D. Dill
(Plaintiffs) to settle pending litigation alleging that Andrew used its position as an investor
in Comtier, a California corporation founded by Plaintiffs, to take unfair advantage of the assets
and opportunities of Comtier. The definitive agreement settles all litigation between the parties. The company is also a party to various other legal proceedings, lawsuits and other claims arising
in the ordinary course of its business. The company does not believe that such other litigation,
if adversely determined, would have a material effect on the companys business, financial
position, results of operations or cash flow. 19




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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS Since 1997, the companys Board of Directors has authorized the company to repurchase up to 30.0
million common shares. As of March 31, 2005 the company had repurchased approximately 17.0 million
shares under this plan. These repurchases may be made on the open market or in negotiated
transactions and the timing and amount of shares repurchased will be determined by the companys
management. No shares were repurchased during the second quarter or the first six months of fiscal
2005. 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) The companys Annual Meeting of Stockholders was held on February 8, 2005. (b) Items submitted to a vote  1.
    Election of Directors Nominee
    
    For
    
    Against
    
    Broker/Non-Votes
    
    WithheldT. Donahoe
    
    139,287,330
    
    0
    
    0
    
    8,441,901R. Faison
    
    141,588,319
    
    0
    
    0
    
    6,140,912J. Fluno
    
    141,530,017
    
    0
    
    0
    
    6,199,214W. Hunt
    
    141,220,679
    
    0
    
    0
    
    6,508,552C. Nicholas
    
    140,909,517
    
    0
    
    0
    
    6,819,714R. Paul
    
    141,738,254
    
    0
    
    0
    
    5,990,977G. Poch
    
    138,386,559
    
    0
    
    0
    
    9,342,672A. Pollack
    
    141,688,884
    
    0
    
    0
    
    6,040,347G. Toney
    
    138,881,657
    
    0
    
    0
    
    8,847,574
  2.
    The proposal for a Management Incentive Plan providing performance-based incentive
compensation to officers and other key employees of the company was approved by a vote of
107,799,245 shares for, 16,649,553 shares against, 2,487,853 shares withheld and 20,792,580
broker non-votes.3.
    The proposal for a Long-Term Incentive Plan providing certain employees, consultants and
non-employee members of the board of directors with the opportunity to receive stock-based and
other long-term incentive grants, including stock options, stock appreciation rights,
restricted stock awards, performance awards and other stock awards was approved by a vote of
108,977,382 shares for, 15,476,614 shares against, 2,482,656 shares withheld and 20,792,579
broker non-votes.4.
    The ratification of the appointment of Ernst & Young to serve as independent public auditors
for fiscal year 2005 was approved by a vote of 142,652,143 shares for, 3,816,932 shares
against, and 1,260,155 shares withheld. 20




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ITEM 6. EXHIBITS Exhibit No.
    
    Description10.1*
    
    Form of deferred stock unit agreement10.2*
    
    Andrew Corporation Management Incentive Plan (included as the appendix to the
companys annual meeting proxy statement filed on January 5, 2005 captioned Andrew
Corporation Management Incentive Plan and incorporated herein by reference).10.3*
    
    Andrew Corporation Long-Term Incentive Plan (included as the appendix to the
companys annual meeting proxy statement filed on January 5, 2005 captioned Andrew
Corporation Long-Term Incentive Plan and incorporated herein by reference).31
    
    Rule 13a-14(a) Certification of Chief Executive and Chief Financial Officers32
    
    18 U.S.C. Section 1350 Certifications of Chief Executive and Chief Financial
Officers
   *
    
    Indicates a compensatory plan 21




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SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized. Date May 9, 2005
    
    By:
    
    /s/ Marty R. KittrellMarty R. KittrellChief Financial Officer(Duly Authorized Officer and Principal Financial Officer)
 22