##### Table of Contents

---

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2006

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission
file number: 001-14617

ANDREW CORPORATION

(Exact name of registrant as specified in its charter)



|                                                              |  |                                    
|------------------------------------------------------------- |  | -----------------------------------
|DELAWARE                                                      |  | 36-2092797                         
|(State or other jurisdiction ofincorporation or organization) |  | (I.R.S. EmployerIdentification No.)
|                                                              | 
|3 Westbrook Corporate Center, Suite 900 Westchester, Illinois |  | 60154                              
|(Address of principal executive offices)                      |  | (Zip Code)                         

(708) 236-6600

(Registrants telephone number, including area code)





---

(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 that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes x                 No ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of
accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.

Large accelerated filer x                     Accelerated filer ̈Non-accelerated filer ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).

Yes ̈No x

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.



|                             |  |                                     
|---------------------------- |  | ------------------------------------
|Common Stock, $.01 Par Value |  | 159,629,113 shares as of May 8, 2006



---



---

##### Table of Contents

INDEX

ANDREW CORPORATION



|          |  |                                                                                           |  |   
|--------- |  | ----------------------------------------------------------------------------------------- |  | --
|PART I.   |  | FINANCIAL INFORMATION                                                                     |  |   
|          |  |                                                                                          
|Item 1.   |  | Financial Statements (Unaudited)                                                          |  | 3 
|          |  |                                                                                          
|          |  | Consolidated Balance Sheets March 31, 2006 and September 30, 2005                        |  | 3 
|          |  |                                                                                          
|          |  | Consolidated Statements of Operations Three and six months ended March 31, 2006 and 2005 |  | 4 
|          |  |                                                                                          
|          |  | Consolidated Statements of Cash Flows Six months ended March 31, 2006 and 2005           |  | 5 
|          |  |                                                                                          
|          |  | Notes to Consolidated Financial Statements March 31, 2006                                |  | 6 
|          |  |                                                                                          
|Item 2.   |  | Managements Discussion and Analysis of Financial Condition and Results of Operations     |  | 16
|          |  |                                                                                          
|Item 3.   |  | Quantitative and Qualitative Disclosures About Market Risk                                |  | 22
|          |  |                                                                                          
|Item 4.   |  | Controls and Procedures                                                                   |  | 23
|          |  |                                                                                          
|PART II.  |  | OTHER INFORMATION                                                                         |  |   
|          |  |                                                                                          
|Item 1.   |  | Legal Proceedings                                                                         |  | 24
|          |  |                                                                                          
|Item 1A.  |  | Risk Factors                                                                              |  | 24
|          |  |                                                                                          
|Item 2.   |  | Unregistered Sales of Equity Securities and Use of Proceeds                               |  | 25
|          |  |                                                                                          
|Item 4.   |  | Submission of Matters to a Vote of Security Holders                                       |  | 25
|          |  |                                                                                          
|Item 6.   |  | Exhibits                                                                                  |  | 26
|          | 
|SIGNATURE |  | 27                                                                                       



2



---

##### Table of Contents

PART IFINANCIAL INFORMATION



|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------

ANDREW CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)



|                                                                                                                                                              |  |              |           |   |                  |   |           |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | --------- | - | ---------------- | - | --------- | -
|                                                                                                                                                              |  | March 312006 |           |   | September 302005 |  
|                                                                                                                                                              |  | (UNAUDITED)  |           |   |                  |  
|ASSETS                                                                                                                                                        |  |              |           |   |                  |   |           |  
|Current Assets                                                                                                                                                |  |              |           |   |                  |   |           |  
|Cash and cash equivalents                                                                                                                                     |  | $            | 154,938   |   |                  | $ | 188,780   |  
|Accounts receivable, less allowances (March 2006 - $9,711; September 2005 - $12,240)                                                                          |  |              | 477,742   |   |                  |   | 471,097   |  
|Inventory                                                                                                                                                     |  |              | 369,167   |   |                  |   | 353,402   |  
|Other current assets                                                                                                                                          |  |              | 62,173    |   |                  |   | 63,578    |  
|                                                                                                                                                              |  |              |           |   |                  |   |           |  
|Total Current Assets                                                                                                                                          |  |              | 1,064,020 |   |                  |   | 1,076,857 |  
|Other Assets                                                                                                                                                  |  |              |           |   |                  |   |           |  
|Goodwill                                                                                                                                                      |  |              | 871,221   |   |                  |   | 862,083   |  
|Intangible assets, less amortization                                                                                                                          |  |              | 45,172    |   |                  |   | 56,753    |  
|Other assets                                                                                                                                                  |  |              | 94,438    |   |                  |   | 83,772    |  
|Property, Plant and Equipment                                                                                                                                 |  |              |           |   |                  |   |           |  
|Land and land improvements                                                                                                                                    |  |              | 22,185    |   |                  |   | 21,693    |  
|Buildings                                                                                                                                                     |  |              | 132,064   |   |                  |   | 131,335   |  
|Equipment                                                                                                                                                     |  |              | 547,088   |   |                  |   | 533,317   |  
|Allowance for depreciation                                                                                                                                    |  |              | (468,022  | ) |                  |   | (454,783  | )
|                                                                                                                                                              |  |              |           |   |                  |   |           |  
|                                                                                                                                                              |  |              | 233,315   |   |                  |   | 231,562   |  
|                                                                                                                                                              |  |              |           |   |                  |   |           |  
|TOTAL ASSETS                                                                                                                                                  |  | $            | 2,308,166 |   |                  | $ | 2,311,027 |  
|                                                                                                                                                              |  |              |           |   |                  |   |           |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                          |  |              |           |   |                  |   |           |  
|Current Liabilities                                                                                                                                           |  |              |           |   |                  |   |           |  
|Accounts payable                                                                                                                                              |  |              | 222,207   |   |                  |   | 230,620   |  
|Accrued expenses and other liabilities                                                                                                                        |  |              | 106,042   |   |                  |   | 112,596   |  
|Compensation and related expenses                                                                                                                             |  |              | 47,847    |   |                  |   | 52,002    |  
|Restructuring                                                                                                                                                 |  |              | 11,070    |   |                  |   | 13,432    |  
|Notes payable and current portion of long-term debt                                                                                                           |  |              | 44,786    |   |                  |   | 26,966    |  
|                                                                                                                                                              |  |              |           |   |                  |   |           |  
|Total Current Liabilities                                                                                                                                     |  |              | 431,952   |   |                  |   | 435,616   |  
|Deferred liabilities                                                                                                                                          |  |              | 49,876    |   |                  |   | 49,255    |  
|Long-term debt, less current portion                                                                                                                          |  |              | 268,258   |   |                  |   | 275,604   |  
|SHAREHOLDERS EQUITY                                                                                                                                          |  |              |           |   |                  |   |           |  
|Common stock (par value, $.01 a share: 400,000,000 shares authorized: 162,476,513 shares issued at March 31, 2006 and September 30,
2005, including treasury) |  |              | 1,625     |   |                  |   | 1,625     |  
|Additional paid-in capital                                                                                                                                    |  |              | 679,668   |   |                  |   | 676,262   |  
|Accumulated other comprehensive income                                                                                                                        |  |              | 19,375    |   |                  |   | 19,720    |  
|Retained earnings                                                                                                                                             |  |              | 889,000   |   |                  |   | 870,588   |  
|Treasury stock, common stock at cost (2,824,983 shares at March 31, 2006 and 1,557,030 shares at September 30, 2005)                                          |  |              | (31,588   | ) |                  |   | (17,643   | )
|                                                                                                                                                              |  |              |           |   |                  |   |           |  
|Total Shareholders Equity                                                                                                                                    |  |              | 1,558,080 |   |                  |   | 1,550,552 |  
|                                                                                                                                                              |  |              |           |   |                  |   |           |  
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                    |  | $            | 2,308,166 |   |                  | $ | 2,311,027 |  
|                                                                                                                                                              |  |              |           |   |                  |   |           |  

See Notes to Consolidated Financial Statements



3



---

##### Table of Contents

ANDREW CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(In thousands, except per share amounts)



|                                            |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|------------------------------------------- |  | -------------------------- | ------- | - | ------------------------ | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                            |  | Three Months EndedMarch 31 |         |   | Six Months EndedMarch 31 |  
|                                            |  | 2006                       |         |   | 2005                     |   |         | 2006 |  |   | 2005    |  
|Sales                                       |  | $                          | 481,653 |   |                          | $ | 481,747 |      |  | $ | 996,352 |   |  | $ | 955,584 |  
|Cost of products sold                       |  |                            | 382,236 |   |                          |   | 365,206 |      |  |   | 779,929 |   |  |   | 747,883 |  
|                                            |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Gross Profit                                |  |                            | 99,417  |   |                          |   | 116,541 |      |  |   | 216,423 |   |  |   | 207,701 |  
|Operating Expenses                          |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Research and development                    |  |                            | 26,792  |   |                          |   | 25,577  |      |  |   | 54,751  |   |  |   | 52,448  |  
|Sales and administrative                    |  |                            | 58,318  |   |                          |   | 58,315  |      |  |   | 120,022 |   |  |   | 109,344 |  
|Intangible amortization                     |  |                            | 4,429   |   |                          |   | 5,358   |      |  |   | 9,548   |   |  |   | 12,908  |  
|Restructuring                               |  |                            | 1,362   |   |                          |   | 948     |      |  |   | 861     |   |  |   | 2,786   |  
|(Gain) loss on sale of assets               |  |                            | (72     | ) |                          |   | (1,033  | )    |  |   | 1,389   |   |  |   | (1,033  | )
|                                            |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|                                            |  |                            | 90,829  |   |                          |   | 89,165  |      |  |   | 186,571 |   |  |   | 176,453 |  
|Operating Income                            |  |                            | 8,588   |   |                          |   | 27,376  |      |  |   | 29,852  |   |  |   | 31,248  |  
|Other                                       |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Interest expense                            |  |                            | 4,139   |   |                          |   | 3,516   |      |  |   | 7,908   |   |  |   | 7,224   |  
|Interest income                             |  |                            | (1,351  | ) |                          |   | (1,367  | )    |  |   | (2,232  | ) |  |   | (3,073  | )
|Other expense, net                          |  |                            | 687     |   |                          |   | 324     |      |  |   | 533     |   |  |   | 1,840   |  
|                                            |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|                                            |  |                            | 3,475   |   |                          |   | 2,473   |      |  |   | 6,209   |   |  |   | 5,991   |  
|                                            |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Income Before Income Taxes                  |  |                            | 5,113   |   |                          |   | 24,903  |      |  |   | 23,643  |   |  |   | 25,257  |  
|Income taxes                                |  |                            | 1,544   |   |                          |   | 9,551   |      |  |   | 5,231   |   |  |   | 6,927   |  
|                                            |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Net Income                                  |  |                            | 3,569   |   |                          |   | 15,352  |      |  |   | 18,412  |   |  |   | 18,330  |  
|Preferred Stock Dividends                   |  |                            |        |   |                          |   | 115     |      |  |   |        |   |  |   | 232     |  
|                                            |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Net Income Available to Common Shareholders |  | $                          | 3,569   |   |                          | $ | 15,237  |      |  | $ | 18,412  |   |  | $ | 18,098  |  
|                                            |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Basic Net Income per Share                  |  | $                          | 0.02    |   |                          | $ | 0.09    |      |  | $ | 0.12    |   |  | $ | 0.11    |  
|                                            |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Diluted Net Income per Share                |  | $                          | 0.02    |   |                          | $ | 0.09    |      |  | $ | 0.11    |   |  | $ | 0.11    |  
|                                            |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Average Shares Outstanding                  |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Basic                                       |  |                            | 159,530 |   |                          |   | 161,264 |      |  |   | 159,873 |   |  |   | 161,094 |  
|Diluted                                     |  |                            | 160,260 |   |                          |   | 179,125 |      |  |   | 160,486 |   |  |   | 161,499 |  

See Notes to Consolidated Financial Statements



4



---

##### Table of Contents

ANDREW CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)



|                                                    |  |                          |         |   |      |   |         |  
|--------------------------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | -
|                                                    |  | Six Months EndedMarch 31 |        
|                                                    |  | 2006                     |         |   | 2005 |  
|Cash Flows from Operations                          |  |                          |         |   |      |   |         |  
|Net Income                                          |  | $                        | 18,412  |   |      | $ | 18,330  |  
|Adjustments to Net Income                           |  |                          |         |   |      |   |         |  
|Depreciation                                        |  |                          | 28,192  |   |      |   | 29,671  |  
|Amortization                                        |  |                          | 9,548   |   |      |   | 12,908  |  
|Restructuring costs                                 |  |                          | (2,130  | ) |      |   | (5,190  | )
|Loss on sale of assets and other                    |  |                          | (100    | ) |      |   | (332    | )
|Stock based compensation                            |  |                          | 4,045   |   |      |   | 1,470   |  
|Change in Operating Assets and Liabilities          |  |                          |         |   |      |   |         |  
|Accounts receivable                                 |  |                          | (3,694  | ) |      |   | (42,100 | )
|Inventory                                           |  |                          | (12,885 | ) |      |   | (6,267  | )
|Other assets                                        |  |                          | (6,118  | ) |      |   | (13,341 | )
|Accounts payable and other liabilities              |  |                          | (23,657 | ) |      |   | 21,149  |  
|                                                    |  |                          |         |   |      |   |         |  
|Net Cash From Operations                            |  |                          | 11,613  |   |      |   | 16,298  |  
|Investing Activities                                |  |                          |         |   |      |   |         |  
|Capital expenditures                                |  |                          | (33,181 | ) |      |   | (32,468 | )
|Acquisition of businesses                           |  |                          | (9,063  | ) |      |   | (19,204 | )
|Investments                                         |  |                          | (1,722  | ) |      |   |        |  
|Proceeds from sale of businesses and investments    |  |                          |        |   |      |   | 9,494   |  
|Proceeds from sale of property, plant and equipment |  |                          | 1,777   |   |      |   | 2,352   |  
|                                                    |  |                          |         |   |      |   |         |  
|Net Cash Used for Investing Activities              |  |                          | (42,189 | ) |      |   | (39,826 | )
|Financing Activities                                |  |                          |         |   |      |   |         |  
|Long-term debt payments, net                        |  |                          | (7,610  | ) |      |   | (9,466  | )
|Notes payable borrowings, net                       |  |                          | 17,839  |   |      |   | 9,064   |  
|Preferred stock dividends                           |  |                          |        |   |      |   | (232    | )
|Payments to acquire common stock for treasury       |  |                          | (17,600 | ) |      |   |        |  
|Stock purchase and option plans                     |  |                          | 3,019   |   |      |   | 669     |  
|                                                    |  |                          |         |   |      |   |         |  
|Net Cash (Used for) From Financing Activities       |  |                          | (4,352  | ) |      |   | 35      |  
|Effect of exchange rate changes on cash             |  |                          | 1,086   |   |      |   | 6,544   |  
|                                                    |  |                          |         |   |      |   |         |  
|Decrease for the Period                             |  |                          | (33,842 | ) |      |   | (16,949 | )
|Cash and Equivalents at Beginning of Period         |  |                          | 188,780 |   |      |   | 189,048 |  
|                                                    |  |                          |         |   |      |   |         |  
|Cash and Equivalents at End of Period               |  | $                        | 154,938 |   |      | $ | 172,099 |  
|                                                    |  |                          |         |   |      |   |         |  

See Notes to Consolidated Financial Statements



5



---

##### Table of Contents

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, 2006 are not necessarily indicative of the results that may be expected for the year ending September 30, 2006. 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, 2005.

Reclassifications

Certain previously reported amounts have been reclassified to
conform to the 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 endedMarch 31 |         | Six months endedMarch 31
|BASIC EARNINGS PER SHARE                                              |  | 2006                       |         | 2005                     |   | 2006    |  | 2005
|Net income                                                            |  | $                          | 3,569   |                          | $ | 15,352  |  | $    | 18,412  |  | $ | 18,330 
|Preferred stock dividends                                             |  |                            |        |                          |   | 115     |  |      |        |  |   | 232    
|                                                                      |  |                            |         |                          |   |         |  |      |         |  |   |        
|Net income available to common shareholders                           |  | $                          | 3,569   |                          | $ | 15,237  |  | $    | 18,412  |  | $ | 18,098 
|Average basic shares outstanding                                      |  |                            | 159,530 |                          |   | 161,264 |  |      | 159,873 |  |   | 161,094
|                                                                      |  |                            |         |                          |   |         |  |      |         |  |   |        
|Basic net income per share                                            |  | $                          | 0.02    |                          | $ | 0.09    |  | $    | 0.12    |  | $ | 0.11   
|                                                                      |  |                            |         |                          |   |         |  |      |         |  |   |        
|                                                                      |  |                           
|                                                                      |  | Three months endedMarch 31 |         | Six months endedMarch 31
|DILUTED EARNINGS PER SHARE                                            |  | 2006                       |         | 2005                     |   | 2006    |  | 2005
|Net income                                                            |  | $                          | 3,569   |                          | $ | 15,352  |  | $    | 18,412  |  | $ | 18,330 
|Preferred stock dividends                                             |  |                            |        |                          |   | 115     |  |      |        |  |   | 232    
|                                                                      |  |                            |         |                          |   |         |  |      |         |  |   |        
|Net income available to common shareholders                           |  | $                          | 3,569   |                          | $ | 15,237  |  | $    | 18,412  |  | $ | 18,098 
|Effect of dilutive securities:                                        |  |                            |         |                          |   |         |  |      |         |  |   |        
|Convertible bonds                                                     |  |                            |        |                          |   | 1,308   |  |      |        |  |   |       
|                                                                      |  |                            |         |                          |   |         |  |      |         |  |   |        
|Net income available to common shareholders after assumed conversions |  | $                          | 3,569   |                          | $ | 16,545  |  | $    | 18,412  |  | $ | 18,098 
|Average basic shares outstanding                                      |  |                            | 159,530 |                          |   | 161,264 |  |      | 159,873 |  |   | 161,094
|Effect of dilutive securities:                                        |  |                            |         |                          |   |         |  |      |         |  |   |        
|Convertible bonds                                                     |  |                            |        |                          |   | 17,532  |  |      |        |  |   |       
|Options, warrants, and equivalents                                    |  |                            | 730     |                          |   | 329     |  |      | 613     |  |   | 405    
|                                                                      |  |                            |         |                          |   |         |  |      |         |  |   |        
|Average diluted shares outstanding                                    |  |                            | 160,260 |                          |   | 179,125 |  |      | 160,486 |  |   | 161,499
|                                                                      |  |                            |         |                          |   |         |  |      |         |  |   |        
|Diluted net income per share                                          |  | $                          | 0.02    |                          | $ | 0.09    |  | $    | 0.11    |  | $ | 0.11   
|                                                                      |  |                            |         |                          |   |         |  |      |         |  |   |        

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.



6



---

##### Table of Contents

The companys convertible subordinated notes are potentially convertible into 17,531,568 shares of the
companys common stock. Except for the quarter ended March 31, 2005, 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.

Options and warrants to purchase 6,579,133 and 7,931,743 shares of common stock, at March 31,
2006 and 2005, respectively, were not included in the computation of diluted shares because the options exercise prices were greater than the average market price of the companys common stock.

NOTE 3. INVENTORIES

Inventories
consisted of the following at March 31, 2006 and September 30, 2005, net of reserves:



|                |  |              |         |                  |   |        
|--------------- |  | ------------ | ------- | ---------------- | - | -------
|(In thousands)  |  | March 312006 |         | September 302005
|Raw materials   |  | $            | 117,016 |                  | $ | 97,781 
|Work in process |  |              | 90,385  |                  |   | 93,917 
|Finished goods  |  |              | 161,766 |                  |   | 161,704
|                |  |              |         |                  |   |        
|                |  | $            | 369,167 |                  | $ | 353,402
|                |  |              |         |                  |   |        

NOTE 4. COMPREHENSIVE INCOME

For the three and six month periods ended March 31, 2006 and 2005, comprehensive income consisted of net income available to common shareholders and foreign currency translation adjustments. Foreign currency
translation adjustments are recorded in Accumulated Other Comprehensive Income, a component of shareholders equity. In the first quarter of fiscal 2006, the company recognized a $1.5 million gain for foreign currency translation adjustments
related to the liquidation of an investment in a foreign subsidiary. The following table sets forth comprehensive income for the three and six month periods ended March 31, 2006 and 2005:



|                                         |  |                            |        |      |                          |         |      |  |   |        |   |  |   |       
|---------------------------------------- |  | -------------------------- | ------ | ---- | ------------------------ | ------- | ---- |  | - | ------ | - |  | - | ------
|                                         |  | Three months endedMarch 31 |        |      | Six months endedMarch 31
|(In thousands)                           |  | 2006                       |        | 2005 |                          |         | 2006 |  |   | 2005  
|Net income                               |  | $                          | 3,569  |      | $                        | 15,237  |      |  | $ | 18,412 |   |  | $ | 18,098
|Foreign currency translation adjustments |  |                            | 10,298 |      |                          | (16,518 | )    |  |   | (345   | ) |  |   | 21,525
|                                         |  |                            |        |      |                          |         |      |  |   |        |   |  |   |       
|Comprehensive Income (Loss)              |  | $                          | 13,867 |      | $                        | (1,281  | )    |  | $ | 18,067 |   |  | $ | 39,623
|                                         |  |                            |        |      |                          |         |      |  |   |        |   |  |   |       

NOTE 5. RECENTLY ISSUED ACCOUNTING POLICIES

In May 2005, the Financial Accounting Standards Board (FASB) issued revised Statement of Financial Accounting Standards (SFAS) No. 154, Accounting Changes and Error Corrections, a replacement
of APB Opinion No. 20 and FASB Statement No. 3. This statement applies to all voluntary changes in accounting principle, and requires retrospective application to prior periods financial statements for changes in accounting
principle. SFAS No. 154 will be effective for the Company beginning in fiscal year 2007.

In October 2005, the FASB issued Staff Position
(FSP) 13-1, Accounting for Rental Costs Incurred during a Construction Period.The guidance requires that the rental costs for ground or building operating leases during the construction period be recognized as rental
expenses. The guidance permits either retroactive or prospective treatment for fiscal years beginning after December 15, 2005. The company is currently evaluating the impact of this FSP.



7



---

##### Table of Contents

NOTE 6. ADOPTION OF NEW ACCOUNTING POLICIES

In January 2005, the 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. The company adopted SFAS 151 starting in fiscal year 2006. The adoption of SFAS 151 did not have a material impact on the companys results of operations.

In March 2005, the FASB issued Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations(FIN No. 47), an
interpretation of FASB No. 143. This Interpretation clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. The company adopted Interpretation No. 47 starting in
fiscal year 2006. The adoption of FIN No. 47 did not have a material impact on the companys results of operations.

Starting in fiscal 2006 the company has adopted SFAS No. 123(R), Share Based Payments, as described in Note 7.

NOTE 7.
STOCK BASED COMPENSATION

In the first quarter of fiscal 2006, the company adopted Statement of Financial Accounting Standards (SFAS) No. 123(R),
Share Based Payments, which revises SFAS No. 123, Accounting for Stock Based Compensation. SFAS No. 123(R) requires the company to record compensation expense for all share-based payments, including
employee stock options, at fair value. Prior to fiscal 2006, the company had accounted for its stock-based compensation awards pursuant to Accounting Principles Board Opinion (APB) No. 25, Accounting for Stock Issued to
Employees, and its related interpretations, which allowed the use of the intrinsic value method. Under the intrinsic value method, compensation expense for stock option-based employee compensation was not recognized in the income statement
as all stock options granted by the company had an exercise price equal to the market value of the underlying common stock on the option grant date.

The
company has elected to use the modified prospective transition method to adopt SFAS No. 123(R). Under this transition method starting in 2006, compensation expense recognized includes: (a) expense for all share-based payments granted prior
to, but not yet vested as of October 1, 2005, based on the grant date fair value estimated in accordance with the original provisions of SFAS No. 123, and (b) expense for all share-based payments granted subsequent to October 1,
2005, based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123(R). As required under the modified prospective transition method the company has not restated prior period results. As a result, certain
components of the companys quarterly financial statements will not be comparable until the first quarter of fiscal 2007, the anniversary of the adoption of SFAS No. 123(R).

The company maintains long-term management incentive plans (LTIPs) which provide for the issuance of equity-based awards including stock options, which vest over a four to five year period. Prior to fiscal 2006, the
company used the intrinsic value method to value all stock options issued under these plans and therefore recorded no compensation expenses for these stock options. At the start of fiscal 2006, the company had approximately 1.0 million unvested
stock options outstanding under its LTIPs. Beginning in fiscal 2006, the company has recognized compensation expense ratably over the remaining vesting period of these options. The fair value of these options was calculated using the Black-Scholes
option-pricing model using the original provisions of SFAS No. 123. In the first and second quarters of fiscal 2006, the company recognized pre-tax compensation expense of $0.9 million and $0.8 million, respectively, and anticipates that it
will recognize expense of $3.2 million for these options in fiscal 2006.

During the first six months of fiscal 2006, the company has granted 463,900 stock
options under its LTIPs. The company has elected to value these options using the Black-Scholes option-pricing model and has determined that the weighted average fair value of these options is $5.29 per option. Based on this valuation, the company
recorded $0.1 million of pre-tax compensation expense in both the first and second quarter of fiscal 2006 and anticipates that it will recognize $0.5 million of expense for these options in fiscal year 2006. Total pre-tax cost recognized in the
first and second quarters of fiscal 2006 for all stock options was $1.0 million and $0.9 million, respectively, and a reduction to net income of $0.6 million and $0.5 million, respectively, or $0.00 per share per quarter and $0.01 per share for the
six months ended March 31, 2006. The company estimates that for fiscal 2006 the company will recognize $3.8 million, on a pre-tax basis, of compensation expense for all stock options, an estimated reduction to net income of $2.4 million or
approximately $0.02 per share. As of March 31, 2006, unrecognized compensation expense related to the unvested portion of the companys stock options was approximately $7.1 million.



8



---

##### Table of Contents

The fair value of each unvested option was estimated based on the date of grant using the Black-Scholes option valuation
model with the following assumptions:



|                        |  |           |   |  |           |   |  |           |   |  |           |  
|----------------------- |  | --------- | - |  | --------- | - |  | --------- | - |  | --------- | -
|                        |  | 2006      |   |  | 2005      |   |  | 2004      |   |  | 2003      |  
|Risk free interest rate |  | 4.42      | % |  | 4.25      | % |  | 4.00      | % |  | 3.98      | %
|Expected life           |  | 5.5 years |   |  | 6.0 years |   |  | 6.0 years |   |  | 6.0 years |  
|Expected volatility     |  | 50        | % |  | 66        | % |  | 61        | % |  | 58        | %
|Dividend yield          |  | 0         | % |  | 0         | % |  | 0         | % |  | 0         | %
|Estimated forfeitures   |  | 10        | % |  | NA        |   |  | NA        |   |  | NA        |  

The risk free interest rate was based on U.S. Treasury yields with a remaining term that approximates the expected
life of the options granted. The expected life used for options granted in 2006 was based on historical data of employee exercise performance. Prior to fiscal 2006, the expected life was based on the average life of outstanding options. The
estimated volatility for fiscal 2006 was based both on the companys historical stock price volatility and the market-implied volatility from traded options. Prior to fiscal 2006, the company calculated volatility based only on historical stock
price volatility. The company used an expected dividend yield of 0% for all periods because the company has never paid and does not anticipate paying dividends in the foreseeable future. Starting in fiscal 2006, the company has used an estimated
forfeiture rate of 10% based on historical data. Prior to 2006, the company used the actual forfeiture method allowed under SFAS 123 which assumed that all options would vest and pro forma expense was adjusted when options were forfeited.

The following table illustrates the pro forma effect on net income and earnings per share if the company had applied the fair value recognition provisions
of SFAS 123 to stock options for the three and six months ended March 31, 2005:



|                                                      |  |                                |        |   |                              |   |        |  
|----------------------------------------------------- |  | ------------------------------ | ------ | - | ---------------------------- | - | ------ | -
|(In thousands, except per share amounts)              |  | Three monthsended March 312005 |        |   | Six monthsended March 312005 |  
|Reported net income                                   |  | $                              | 15,352 |   |                              | $ | 18,330 |  
|Preferred stock dividends                             |  |                                | (115   | ) |                              |   | (232   | )
|                                                      |  |                                |        |   |                              |   |        |  
|Reported net income available to common shareholders  |  |                                | 15,237 |   |                              |   | 18,098 |  
|Less: stock-based compensation, net of tax            |  |                                | (486   | ) |                              |   | (9,638 | )
|                                                      |  |                                |        |   |                              |   |        |  
|Pro forma net income available to common shareholders |  | $                              | 14,751 |   |                              | $ | 8,460  |  
|                                                      |  |                                |        |   |                              |   |        |  
|Reported basic and diluted net income per share       |  | $                              | 0.09   |   |                              | $ | 0.11   |  
|Pro forma basic and diluted net income per share      |  | $                              | 0.09   |   |                              | $ | 0.05   |  

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 treated as if they were expensed in the first quarter of 2005, increasing pro forma expense net of tax by
approximately $8.4 million.

A summary of the companys stock option activity and related information follows for the six months ended March 31,
2006:



|                                  |  |                           |   |  |                                |      
|--------------------------------- |  | ------------------------- | - |  | ------------------------------ | -----
|                                  |  | Summary ofOption Activity |   |  | Weighted AverageExercise Price
|Outstanding at September 30, 2005 |  | 8,535,804                 |   |  | $                              | 17.41
|Granted                           |  | 463,900                   |   |  |                                | 10.14
|Expired or cancelled              |  | (467,871                  | ) |  |                                | 20.97
|Exercised                         |  | (244,881                  | ) |  |                                | 9.68 
|                                  |  |                           |   |  |                                |      
|Outstanding at March 31, 2006     |  | 8,286,952                 |   |  |                                | 16.98
|                                  |  |                           |   |  |                                |      
|Exercisable at March 31, 2006     |  | 7,197,288                 |   |  | $                              | 17.93
|                                  |  |                           |   |  |                                |      

The weighted average fair value of options granted during fiscal years 2005, 2004, and 2003, was $8.88, $7.07, and
$4.42, per share, respectively. During the first six months of fiscal 2006, the company granted 463,900 stock options with a weighted average fair value of $5.29.



9



---

##### Table of Contents

The range of exercise prices for options outstanding and exercisable at March 31,
2006 was $8.91 to $38.17.



|                         |  |               |           |                |   |                |  |                |           |                |   |                 |  |                |         |       |   |           |  |   |         |  |   |          
|------------------------ |  | ------------- | --------- | -------------- | - | -------------- |  | -------------- | --------- | -------------- | - | --------------- |  | -------------- | ------- | ----- | - | --------- |  | - | ------- |  | - | ---------
|Range of Exercise Prices |  | $8.91 -$10.27 |           | $11.09 -$12.91 |   | $13.03 -$16.94 |  | $17.11 -$18.65 |           | $19.12 -$22.19 |   | $22.65 - $24.94 |  | $27.19 -$38.17 |         | Total
|Outstanding Options      |  |               | 1,209,233 |                |   | 1,576,936      |  |                | 1,919,425 |                |   | 736,778         |  |                | 808,680 |       |   | 1,669,975 |  |   | 365,925 |  |   | 8,286,952
|Weighted Average         |  |               |           |                |   |                |  |                |           |                |   |                 |  |                |         |       |   |           |  |   |         |  |   |          
|Exercise Price           |  | $             | 9.71      |                | $ | 11.44          |  | $              | 14.84     |                | $ | 17.63           |  | $              | 21.86   |       | $ | 23.16     |  | $ | 36.23   |  | $ | 16.98    
|Average Life             |  |               | 7.71      |                |   | 7.54           |  |                | 7.51      |                |   | 3.79            |  |                | 5.79    |       |   | 3.75      |  |   | 0.66    |  |   | 5.97     
|Exercisable Options      |  |               | 728,156   |                |   | 968,349        |  |                | 1,919,425 |                |   | 736,778         |  |                | 808,680 |       |   | 1,669,975 |  |   | 365,925 |  |   | 7,197,288
|Weighted Average         |  |               |           |                |   |                |  |                |           |                |   |                 |  |                |         |       |   |           |  |   |         |  |   |          
|Exercise Price           |  | $             | 9.45      |                | $ | 11.50          |  | $              | 14.84     |                | $ | 17.63           |  | $              | 21.86   |       | $ | 23.16     |  | $ | 36.23   |  | $ | 17.93    

SFAS No 123(R) also requires the benefits of tax deductions in excess of recognized compensation cost be reported
as a financing cash flow rather than as an operating cash flow as required under SFAS No. 123. This requirement will reduce net operating cash flows and increase net financing cash flows in periods after adoption. The impact of this change was
$0.6 million for the first six months of fiscal 2006. Operating cash flows recognized in fiscal 2005 for such excess tax deductions were approximately $0.1 million.

As part of the companys LTIPs it has also granted deferred and restricted stock units (RSUs) to officers, key employees and directors. Each RSU entitles the participant to one share of the companys common
stock on the vesting date. In order to calculate compensation expense, SFAS No. 123(R) requires expense to be adjusted for an estimated forfeiture factor, with the company utilizing a forfeiture rate of 10% based upon historical forfeiture
rates. Compensation expense for RSUs is recognized on a straight-line basis over the vesting period and is based on the market price of the companys common stock on the grant date. RSUs generally vest based on service periods ranging from
three to four years. In fiscal 2006, the company granted RSUs that vest based on the company achieving a target return on invested capital (ROIC) goal in fiscal 2008. The number of RSUs that vest will range from 0% to 125% of the grant based on the
ROIC in fiscal 2008. In determining compensation expense, the company assumes that the ROIC target of 100% of the grant will be achieved; the company evaluates this assumption periodically. The fair value of these RSUs was based on the
companys common stock price at the date of grant. The company recognized pre-tax compensation expense for RSUs of $1.1 million for each of the first and second quarter of fiscal 2006, and $0.3 million and $1.2 million in the first and second
quarters of fiscal 2005, respectively.

The table below shows the companys outstanding RSUs at March 31, 2006:



|           |  |              |  |                   |  |                            |       |                                                              |   |       
|---------- |  | ------------ |  | ----------------- |  | -------------------------- | ----- | ------------------------------------------------------------ | - | ------
|Grant Year |  | RSUsGranted |  | Vesting Period    |  | Weighted AverageFair Value |       | Unearned CompensationExpense at March 31,2006 (in thousands)
|2004       |  | 298,800      |  | 3 years           |  | $                          | 12.04 |                                                              | $ | 882   
|2005       |  | 412,350      |  | 4 years           |  | $                          | 13.38 |                                                              |   | 3,746 
|2006       |  | 76,300       |  | 4 years           |  | $                          | 12.32 |                                                              |   | 877   
|2006       |  | 696,129      |  | performance based |  | $                          | 10.21 |                                                              |   | 6,092 
|           |  |              |  |                   |  |                            |       |                                                              |   |       
|TOTAL      |  | 1,483,579    |  |                   |  |                            |       |                                                              | $ | 11,597
|           |  |              |  |                   |  |                            |       |                                                              |   |       



10



---

##### Table of Contents

NOTE 8. RESTRUCTURING AND INTEGRATION

At March 31, 2006, the companys total restructuring reserve balance was $11.1 million, which is comprised of $1.9 million for its 2002 restructuring plan, $4.0 million for its Allen Telecom acquisition
integration plan and $5.2 million for the integration plan for Channel Master.

Restructuring Reserve

In 2002, the company initiated a plan to restructure its operations. As part of this plan the company consolidated its operations into fewer, more efficient facilities
and opened two new manufacturing facilities in Mexico and the Czech Republic. In 2002, when the company initiated its restructuring efforts, it incurred pre-tax charges of $36.0 million, consisting of inventory provisions of $11.1 million, charged
to cost of products sold, and an operating expense charge of $24.9 million. In 2003 and 2004, the company made additional accruals to operating expense of $7.9 million and $7.5 million, respectively, primarily for additional severance and lease
cancellation costs. The remaining reserve balance at March 31, 2006 of $1.9 million relates to a leased facility previously used by the Base Station Subsystems operating segment, for lease cancellation costs that are scheduled to continue
through 2007.

Since the start of this restructuring initiative in 2002, the company has paid severance costs of $17.3 million to 1,226 employees and $10.6
million for lease cancellation and other costs. During the first quarter of fiscal 2006, the company reversed $0.7 million from the restructuring reserve as the company terminated a portion of the lease obligation. Additionally, in the first six
months of fiscal 2006, the company incurred cash costs of $1.2 million for lease payments, lease termination costs and facility exit costs.

A summary of the restructuring reserve activity for the first half of fiscal 2006 is as follows (in thousands):



|                                                                       |  |                               |       |                       |         |   |                    |       |   |                              |   |      
|---------------------------------------------------------------------- |  | ----------------------------- | ----- | --------------------- | ------- | - | ------------------ | ----- | - | ---------------------------- | - | -----
|Restructuring Reserve Activity for the six months ended March 31,
2006 |  | Reserve BalanceSept. 30, 2005 |       | Utilizationof Reserve |         |   | Reversal ofAccrual |       |   | Reserve BalanceMar. 31, 2006
|Lease Cancellation Expense and Total Restructuring Reserve             |  | $                             | 3,966 |                       | ($1,378 | ) |                    | ($707 | ) |                              | $ | 1,881

Allen Telecom Acquisition Integration Reserve

As part of the Allen Telecom acquisition in 2003, the company accrued an integration reserve for costs to integrate Allens operations with those of the company and to eliminate duplicate operations. The initial
cost estimate of $29.9 million was comprised of a $16.2 million provision for inventory and fixed asset write-offs and a restructuring reserve of $13.7 million for employee termination, lease cancellation and other costs. During 2004, the company
adjusted this initial estimate and recorded an additional $13.6 million of reserves consisting of $14.1 million of additional employee termination, lease cancellation and other costs, and a $0.5 million reduction in expected inventory write-offs. In
fiscal 2005, the company reversed a reserve for a French facility that the company decided not to close. This resulted in the company reversing $2.7 million in severance and $0.9 million of lease cancellation and other costs that had been accrued
for closing this facility. Integration reserves established in purchase accounting were accounted for as a decrease in assets acquired and an increase in liabilities assumed from Allen Telecom.

Since the start of these integration efforts in 2003, the company has paid severance costs of $14.4 million to 407 employees and $9.4 million for lease cancellation and
other costs. During the first six months of fiscal 2006 the company paid $0.1 million of severance costs for two employees and $0.2 million in lease payments. The company anticipates paying severance benefits to approximately 35 employees and
expects to substantially complete its integration activities in 2006. The reserve balance at March 31, 2006 of $4.0 million primarily relates to the Base Station Subsystems business.

A summary of integration reserve activity for the second quarter of fiscal 2006 is as follows (in thousands):



|                                                                           |  |                               |       |                       |       |   |                              |   |      
|-------------------------------------------------------------------------- |  | ----------------------------- | ----- | --------------------- | ----- | - | ---------------------------- | - | -----
|Allen Integration Reserve Activity for the six months ended March 31,
2006 |  | Reserve BalanceSept. 30, 2005 |       | Utilization OfReserve |       |   | Reserve BalanceMar. 31, 2006
|Severance                                                                  |  | $                             | 1,426 |                       | ($66  | ) |                              | $ | 1,360
|Lease cancellation and other costs                                         |  |                               | 2,868 |                       | (210  | ) |                              |   | 2,658
|                                                                           |  |                               |       |                       |       |   |                              |   |      
|Total Integration Reserve                                                  |  | $                             | 4,294 |                       | ($276 | ) |                              | $ | 4,018
|                                                                           |  |                               |       |                       |       |   |                              |   |      



11



---

##### Table of Contents

Channel Master Integration Reserve

As part of the Channel Master acquisition, the company accrued an integration reserve for costs to restructure Channel Masters U.S. manufacturing operations. The initial cost estimate of $5.2 million was
comprised of a $2.9 million provision for relocation and restructuring of manufacturing operations and a $2.3 million provision to pay severance benefits to approximately 245 manufacturing employees. The $5.2 million was treated as a purchase
accounting adjustment and was recorded as an increase in the value of net assets acquired. Channel Masters operations are included in the Satellite Communications segment.

The company expects to substantially complete its Channel Master integration activities in 2007. A summary of integration reserve activity for the first six months of fiscal 2006 is as follows (in thousands):



|                                                                        |  |                               |       |                       |   |                              |  |   |      
|----------------------------------------------------------------------- |  | ----------------------------- | ----- | --------------------- | - | ---------------------------- |  | - | -----
|Channel Master Reserve Activity for the six months ended March 31,
2006 |  | Reserve BalanceSept. 30, 2005 |       | Utilization OfReserve |   | Reserve BalanceMar. 31, 2006
|Severance                                                               |  | $                             | 2,293 |                       | $ | 0                            |  | $ | 2,293
|Facility relocation and other costs                                     |  |                               | 2,879 |                       |   | 0                            |  |   | 2,879
|                                                                        |  |                               |       |                       |   |                              |  |   |      
|Total Channel Master Reserve                                            |  | $                             | 5,172 |                       | $ | 0                            |  | $ | 5,172
|                                                                        |  |                               |       |                       |   |                              |  |   |      

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.

In fiscal 2005, the company incurred $16.6 million of costs above normal warranty provisions associated with abnormally high field failure rates for a specific component supplied by third-parties used in certain base station subsystem
product lines. This $16.6 million was comprised of a first quarter 2005 charge of $19.8 million and a fourth quarter recovery from third parties of $3.2 million. The company anticipates that the repair and replacement of installed units will be
completed over the next 6 months. The company paid $3.8 million in the second quarter and $7.6 million for the first six months of fiscal 2006 for this component failure, which is included in warranty settlements in the table below. Changes in the
companys warranty reserve during the three and six month periods ended March 31, 2006 and 2005 are as follows:



|                                        |  |                            |        |   |                          |   |        |      |  |   |         |   |  |   |        |  
|--------------------------------------- |  | -------------------------- | ------ | - | ------------------------ | - | ------ | ---- |  | - | ------- | - |  | - | ------ | -
|                                        |  | Three months endedMarch 31 |        |   | Six months endedMarch 31 |  
|(In thousands)                          |  | 2006                       |        |   | 2005                     |   |        | 2006 |  |   | 2005    |  
|Warranty reserve at beginning of period |  | $                          | 25,482 |   |                          | $ | 40,022 |      |  | $ | 26,754  |   |  | $ | 18,900 |  
|Accrual for warranties issued           |  |                            | 4,364  |   |                          |   | 4,484  |      |  |   | 9,509   |   |  |   | 8,546  |  
|Warranty settlements made               |  |                            | (6,822 | ) |                          |   | (2,834 | )    |  |   | (12,783 | ) |  |   | (5,748 | )
|Warranty expirations and adjustments    |  |                            | (1,711 | ) |                          |   | (415   | )    |  |   | (2,167  | ) |  |   | (241   | )
|Product recall                          |  |                            |       |   |                          |   |       |      |  |   |        |   |  |   | 19,800 |  
|                                        |  |                            |        |   |                          |   |        |      |  |   |         |   |  |   |        |  
|Warranty reserve at end of period       |  | $                          | 21,313 |   |                          | $ | 41,257 |      |  | $ | 21,313  |   |  | $ | 41,257 |  
|                                        |  |                            |        |   |                          |   |        |      |  |   |         |   |  |   |        |  

Legal Proceedings

On October 25, 2005, TruePosition, Inc. filed a complaint in the U.S. District Court for the District of Delaware, alleging the companys potential sale of certain geolocation products to Saudi Telecom will infringe a TruePosition
patent. As relief, the complaint seeks, among other things, injunctive relief and unspecified monetary damages. The company filed its answer and counterclaim on December 15, 2005 and intends to defend this litigation vigorously.

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.



12



---

##### Table of Contents

NOTE 10. BUSINESS ACQUISITIONS

In February of 2006, the company acquired Skyware Radio Systems GmbH (Skyware), a German manufacturer of electronic products for broadband satellite communications networks for approximately $8.7 million in cash. The
Skyware acquisition agreement includes an earn-out provision, which could result in additional purchase consideration of up to $6.0 million if certain financial targets are met over a two-year period. A preliminary allocation of the purchase price
resulted in $7.2 million of goodwill. The company has not completed its allocation of assets acquired and has not yet assigned any of the purchase price to intangible assets. The company anticipates completing its purchase price allocation by the
end of the fiscal year. Pro forma results of operations, assuming this acquisition occurred at the beginning of the fiscal year, were not materially different from the reported results of operations.

After the close of the second quarter of fiscal 2006, the company completed two acquisitions. On April 13, 2006, the company acquired Precision Antennas Ltd.
(Precision), a Stratford, England-based designer and manufacturer of microwave antennas for use in carrying point-to-point radio signals, primarily for cellular network back haul applications. The company paid approximately $26 million (15 million
GBP) in cash to acquire Precision.

On April 25, 2006, the company acquired Cell Site Industries (CSI), a privately-held provider of wireless
equipment repair services based in Milpitas, California for approximately $6.2 million in cash. The CSI acquisition agreement includes an earn-out provision which could result in additional purchase consideration of up to $14.0 million if certain
financial targets are met over a three-year period.

NOTE 11. SALE OF ASSETS

In the first six months of 2006, the company recorded a loss on the sale of assets of $1.4 million. The loss on the sale of assets primarily includes a $2.0 million first quarter charge to write down to fair value
certain assets that the company anticipates selling by the end of fiscal 2006. These assets consist of intangible assets of $1.5 million and $0.5 million of inventory and fixed assets. In the first quarter of fiscal 2006 the company also recognized
a gain of approximately $0.8 million on the sale of assets, principally from the sale of unimproved land in Denton, Texas.

NOTE 12. DEBT COVENANTS

Under the terms of the companys $250 million revolving credit facility, the company is subject to various quarterly requirements, including
maintaining a ratio of earnings before interest, taxes, depreciation and amortization (EBITDA) to total debt, including letters of credit, maintaining a ratio of EBITDA to senior debt, maintaining a fixed charge coverage ratio and limiting 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. The company was in compliance with all of these requirements as of March 31, 2006. At
March 31, 2006, under the most restrictive of these requirements the company had the ability to utilize $233 million of the credit facility.



13



---

##### Table of Contents

NOTE 13. BENEFIT PLANS

The company has two defined benefit plans, one that covers approximately 650 current and former employees of the companys United Kingdom subsidiary and a frozen plan that was acquired from Allen Telecom that covers approximately 1,600
former employees of Allen Telecom.

The components of net periodic expense for these plans, as well as the companys post-retirement medical and life
insurance plans, for the three and six months ended March 31, 2006 and 2005 are as follows:



|                                                 |  |                                  |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|------------------------------------------------ |  | -------------------------------- | ------ | - | ------------------------ | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                 |  | Pension Benefits                 |       
|                                                 |  | Three months endedMarch 31       |        |   | Six months endedMarch 31 |  
|(In thousands)                                   |  | 2006                             |        |   | 2005                     |   |        | 2006 |  |   | 2005   |  
|Service costs                                    |  | $                                | 453    |   |                          | $ | 502    |      |  | $ | 900    |   |  | $ | 1,006  |  
|Interest costs                                   |  |                                  | 1,723  |   |                          |   | 1,596  |      |  |   | 3,433  |   |  |   | 3,195  |  
|Expected return on plan assets                   |  |                                  | (1,392 | ) |                          |   | (1,435 | )    |  |   | (2,772 | ) |  |   | (2,827 | )
|Amortization of unrecognized prior service costs |  |                                  | 80     |   |                          |   | 87     |      |  |   | 159    |   |  |   | 175    |  
|Amortization of net loss                         |  |                                  | (37    | ) |                          |   | 203    |      |  |   | (76    | ) |  |   | 407    |  
|                                                 |  |                                  |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Net periodic expense                             |  | $                                | 827    |   |                          | $ | 953    |      |  | $ | 1,644  |   |  | $ | 1,956  |  
|                                                 |  |                                  |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|                                                 | 
|                                                 |  | Medical Plans and Other Benefits |       
|                                                 |  | Three months endedMarch 31       |        |   | Six months endedMarch 31 |  
|(In thousands)                                   |  | 2006                             |        |   | 2005                     |   |        | 2006 |  |   | 2005   |  
|Service costs                                    |  | $                                | 102    |   |                          | $ | 50     |      |  | $ | 204    |   |  | $ | 100    |  
|Interest costs                                   |  |                                  | 243    |   |                          |   | 179    |      |  |   | 486    |   |  |   | 352    |  
|Amortization of unrecognized prior service costs |  |                                  | (135   | ) |                          |   | (135   | )    |  |   | (270   | ) |  |   | (270   | )
|Amortization of net loss                         |  |                                  | 337    |   |                          |   | 158    |      |  |   | 674    |   |  |   | 316    |  
|                                                 |  |                                  |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Net periodic expense                             |  | $                                | 547    |   |                          | $ | 252    |      |  | $ | 1,094  |   |  | $ | 498    |  
|                                                 |  |                                  |        |   |                          |   |        |      |  |   |        |   |  |   |        |  

In fiscal 2005 the company initiated the process of terminating the frozen defined benefit plan assumed as part of
the Allen Telecom acquisition. The company estimates that it will make additional contributions of up to $10 million by the end of fiscal 2006 to fully fund and terminate this plan based on current actuarial projections.

NOTE 14. INCOME TAXES

The reported tax rate was 30.2% for the second
quarter and 22.1% for the first six months of fiscal 2006. The reported tax rate reflects underlying effective tax rates on operations of 43.8% and 33.0%, respectively. The reported tax rates for both reporting periods of fiscal 2006 reflect
discrete non-recurring tax adjustments, primarily tax benefits related to the repatriation of foreign earnings. During the quarter, the effective tax rate on operations increased due to an unfavorable geographic mix shift of earnings coupled with a
decrease in pretax income in the second quarter of fiscal 2006 compared to the first quarter.

The reported tax rate was 38.4% for the second quarter and
27.4% for the first six months of fiscal 2005, reflecting underlying effective tax rates on operations of 46.5% and 39.6%, respectively. The reported tax rates for both fiscal 2005 reporting periods reflect non-recurring tax benefits related to
favorable resolution of certain tax-related matters with government authorities. The underlying effective tax rate on operations for the fiscal 2006 reporting periods decreased from the effective tax rates in the prior year reporting periods
primarily due to the permanent reinvestment of earnings in China during fiscal 2006 and a favorable geographic mix shift of earnings. In addition, the reported tax rate for the second quarter of fiscal 2006 benefitted from non-recurring tax
adjustments, primarily tax benefits related to the repatriation of foreign earnings as compared to the reported tax rate for the second quarter of fiscal 2005.



14



---

##### Table of Contents

As of March 31, 2006, the company had a net deferred tax asset of approximately $71.6 million, primarily
attributable to U.S. net operating losses carried forward, which will begin to expire in 2021. 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 would be required to record a non-cash charge to establish a valuation allowance against some portion or all of the deferred tax asset at that time. Establishing a valuation
allowance could have a material adverse impact upon the companys effective tax rate and reported financial results.

NOTE 15. SEGMENTS

The company manages its business in five operating segments: Antenna and Cable Products, Base Station Subsystems, Network Solutions, Wireless
Innovations and Satellite Communications.

Antenna and Cable Products includes a diverse product offering for the wireless infrastructure market including
base station antennas, coaxial cable and connectors and microwave antennas. Base Station Subsystems products are integral components of wireless base stations and include products such as power amplifiers, filters, duplexers and combiners. Network
Solutions includes geolocation products, network optimization analysis systems, and engineering and consulting services. Wireless Innovations products are used to extend and enhance the coverage of wireless networks in areas where signals are
difficult to send or receive such as tunnels, subways, airports and other coverage gaps. Satellite Communications is comprised of the following product lines: direct-to-home (DTH) satellite antennas, earth station antennas and systems (ESA) and high
frequency (HF) / radar products. The company evaluates the performance of these segments based on sales and operating income (loss). The following table shows sales and operating income (loss) by segment for the three and six months ended
March 31, 2006 and 2005.



|                                           |  |                            |          |   |                          |   |          |      |  |   |          |   |  |   |          |  
|------------------------------------------ |  | -------------------------- | -------- | - | ------------------------ | - | -------- | ---- |  | - | -------- | - |  | - | -------- | -
|                                           |  | Three months endedMarch 31 |          |   | Six months endedMarch 31 |  
|(In thousands)                             |  | 2006                       |          |   | 2005                     |   |          | 2006 |  |   | 2005     |  
|Sales                                      |  |                            |          |   |                          |   |          |      |  |   |          |   |  |   |          |  
|Antenna and Cable Products                 |  | $                          | 265,7111 |   |                          | $ | 242,5752 |      |  | $ | 556,6553 |   |  | $ | 474,3374 |  
|Base Station Subsystems                    |  |                            | 119,409  |   |                          |   | 115,962  |      |  |   | 242,863  |   |  |   | 233,110  |  
|Network Solutions                          |  |                            | 26,816   |   |                          |   | 43,923   |      |  |   | 49,236   |   |  |   | 78,695   |  
|Wireless Innovations                       |  |                            | 38,396   |   |                          |   | 44,964   |      |  |   | 87,214   |   |  |   | 86,216   |  
|Satellite Communications                   |  |                            | 31,321   |   |                          |   | 34,323   |      |  |   | 60,384   |   |  |   | 83,226   |  
|                                           |  |                            |          |   |                          |   |          |      |  |   |          |   |  |   |          |  
|Total Consolidated Sales                   |  | $                          | 481,653  |   |                          | $ | 481,747  |      |  | $ | 996,352  |   |  | $ | 955,584  |  
|                                           |  |                            |          |   |                          |   |          |      |  |   |          |   |  |   |          |  
|Operating Income (Loss)                    |  |                            |          |   |                          |   |          |      |  |   |          |   |  |   |          |  
|Antenna and Cable Products                 |  | $                          | 28,7931  |   |                          | $ | 37,0472  |      |  | $ | 72,2833  |   |  | $ | 75,4584  |  
|Base Station Subsystems                    |  |                            | 3,116    |   |                          |   | (586     | )    |  |   | 5,967    |   |  |   | (24,716  | )
|Network Solutions                          |  |                            | 5,676    |   |                          |   | 17,830   |      |  |   | 7,868    |   |  |   | 33,960   |  
|Wireless Innovations                       |  |                            | 6,385    |   |                          |   | 11,272   |      |  |   | 15,741   |   |  |   | 18,179   |  
|Satellite Communications                   |  |                            | (4,093   | ) |                          |   | (2,854   | )    |  |   | (6,694   | ) |  |   | (3,895   | )
|Items not included in segments             |  |                            |          |   |                          |   |          |      |  |   |          |   |  |   |          |  
|Unallocated Sales and Administrative Costs |  |                            | (26,932  | ) |                          |   | (31,008  | )    |  |   | (54,376  | ) |  |   | (55,863  | )
|Intangible Amortization                    |  |                            | (4,429   | ) |                          |   | (5,358   | )    |  |   | (9,548   | ) |  |   | (12,908  | )
|Gain (Loss) on the Sale of Assets          |  |                            | 72       |   |                          |   | 1,033    |      |  |   | (1,389   | ) |  |   | 1,033    |  
|                                           |  |                            |          |   |                          |   |          |      |  |   |          |   |  |   |          |  
|Total Consolidated Operating Income        |  | $                          | 8,588    |   |                          | $ | 27,376   |      |  | $ | 29,852   |   |  | $ | 31,248   |  
|                                           |  |                            |          |   |                          |   |          |      |  |   |          |   |  |   |          |  



|1 | Includes distribution service and freight revenue of $6,652 and operating income of $1,103.
|- | -------------------------------------------------------------------------------------------

|2 | Includes distribution service and freight revenue of $4,662 and operating income of $833.
|- | -----------------------------------------------------------------------------------------

|3 | Includes distribution service and freight revenue of $19,597 and operating income of $2,523.
|- | --------------------------------------------------------------------------------------------

|4 | Includes distribution service and freight revenue of $11,909 and operating income of $1,651.
|- | --------------------------------------------------------------------------------------------



15



---

##### Table of Contents

|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

The following discussion and analysis should be read in conjunction with the consolidated financial statements and accompanying notes contained herein and the consolidated financial statements and accompanying
notes and managements discussion and analysis of results of operations and financial condition contained in the companys Annual Report on Form 10-K for the fiscal year ended September 30, 2005. This discussion and analysis contains
forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those
described below under the heading Cautionary Statement regarding Forward-Looking Statements.

Overview

Andrew Corporation, together with its subsidiaries, is engaged in the design, manufacture, and supply of communications equipment, services, and systems for global
communications infrastructure markets. The companys products are used in the infrastructure for traditional wireless networks, third generation (3G) technologies, voice, data, video and internet services, as well as applications for
microwave and satellite communications, and other specialized applications. The company operates in five segments: Antenna and Cable Products, Base Station Subsystems, Network Solutions, Wireless Innovations, and Satellite Communications. With the
exception of Satellite Communications, all of Andrews operating segments sell products and services to the wireless infrastructure market.

The
companys financial results are influenced by factors in the markets in which it operates and by its ability to successfully execute its business strategy. Marketplace factors include competition for customers, raw material prices, product and
price competition, economic conditions in various geographic regions, foreign currency exchange rates, interest rates, changes in technology, fluctuations in customer demand, patent and intellectual property issues, litigation results and legal and
regulatory developments. The company expects that the marketplace environment will remain highly competitive. Andrews ability to execute its business strategy successfully will require that we meet a number of challenges, including our ability
to accurately forecast sales demand and calibrate manufacturing to such demand, develop, manufacture and successfully market new and enhanced products and product lines, control overhead spending, successfully integrate acquired businesses, and
attract, motivate and retain key personnel to manage its operational, financial and management information systems.

Highlights

Sales for the quarter ended March 31, 2006 were $482 million, unchanged from the second quarter of fiscal 2005. Revenue growth in Antenna and Cable Products and
Base Station Subsystems was offset primarily by a decline in E-911 geolocation equipment sales and a decrease in sales due to exchange rates as a result of a stronger U.S. dollar compared to the prior fiscal year. Wireless infrastructure sales,
excluding a decline in E-911 geolocation equipment sales, grew 5% versus the second quarter of fiscal 2005 due to growth for products supporting global wireless network upgrades and expansion. During the second quarter of fiscal 2006, sales were
weaker than expected in January and February, although sales and order activity increased significantly in March. Orders in the second quarter of fiscal 2006 were a record $549 million and backlog grew sequentially to $303 million at March 31,
2006.

Sales for the six months ended March 31, 2006 were $996 million, a 4% increase over the first six months of fiscal 2005, primarily due to
Antenna and Cable Products growth offset by anticipated lower E-911 geolocation equipment revenues and lower Satellite Communications revenues.

The gross
margin for the second quarter of fiscal 2006 was 20.6%, down from 24.2% in the second quarter of fiscal 2005. Gross profit margins declined in fiscal 2006 due to higher commodity costs, principally copper, and a decline in higher margin E-911
geolocation equipment sales.

Gross margin was 21.7% for the first six months of both fiscal 2006 and fiscal 2005. The first six months of fiscal 2005
included a $19.8 million warranty provision for a component used in certain Base Station Subsystem products, resulting in a 207 basis point decline in the fiscal 2005 gross margin rate. Excluding this $19.8 million charge, the year-to-year gross
margin decline was primarily due to lower Antenna and Cable Products margins, which were heavily affected by higher copper costs, and lower Network Solutions sales of higher margin E-911 geolocation equipment.



16



---

##### Table of Contents

Net income was $3.6 million for the second quarter of fiscal 2006, compared to $15.2 million in the second quarter of
fiscal 2005. This decrease was primarily due to lower gross margins. Net income was $18.4 million for the first six months of fiscal 2006, compared to $18.1 million in the first six months of fiscal 2005. Net income for the first six months of
fiscal 2005 was reduced by $12.2 million as a result of the $19.8 million pre-tax warranty provision recorded in the first quarter of fiscal 2005 for a defective component used in certain Base Station Subsystems products.

RESULTS OF OPERATIONS

Sales.Sales for the second
quarter of fiscal 2006 were $482 million, unchanged from the second quarter of fiscal 2005. For the first six months of fiscal 2006 sales were $996 million, a 4% increase over fiscal 2005, due primarily to higher wireless infrastructure sales in
fiscal 2006. Andrews sales by operating segment for the three and six months ended March 31, 2006 and 2005 were as follows:



|                           |  |                            |     |         |   |     |                          |     |         |  |   |     |  |   |     |  |     |   
|-------------------------- |  | -------------------------- | --- | ------- | - | --- | ------------------------ | --- | ------- |  | - | --- |  | - | --- |  | --- | --
|                           |  | Three MonthsEnded March 31 |     | %Change |   |     | Six MonthsEnded March 31 |     | %Change | 
|In millions                |  | 2006                       |     | 2005    |   |     | 2006                     |     | 2005    | 
|Sales                      |  |                            |     |         |   |     |                          |     |         |  |   |     |  |   |     |  |     |   
|Antenna and Cable Products |  | $                          | 266 |         | $ | 243 |                          | 10  | %       |  | $ | 557 |  | $ | 475 |  | 17  | % 
|Base Station Subsystems    |  |                            | 120 |         |   | 116 |                          | 3   | %       |  |   | 243 |  |   | 233 |  | 4   | % 
|Network Solutions          |  |                            | 27  |         |   | 44  |                          | (39 | %)      |  |   | 49  |  |   | 79  |  | (37 | %)
|Wireless Innovations       |  |                            | 38  |         |   | 45  |                          | (16 | %)      |  |   | 87  |  |   | 86  |  | 1   | % 
|Satellite Communications   |  |                            | 31  |         |   | 34  |                          | (9  | %)      |  |   | 60  |  |   | 83  |  | (27 | %)
|                           |  |                            |     |         |   |     |                          |     |         |  |   |     |  |   |     |  |     |   
|Total Sales                |  | $                          | 482 |         | $ | 482 |                          | 0   | %       |  | $ | 996 |  | $ | 956 |  | 4   | % 
|                           |  |                            |     |         |   |     |                          |     |         |  |   |     |  |   |     |  |     |   

Antenna and Cable Products sales increased in the second quarter and first six months of fiscal 2006 compared to
fiscal 2005 due mainly to growth in base station antennas, radio frequency (RF) cable supporting network expansion and coverage requirements, and field services. Base station antenna sales increased by $4.8 million in the second quarter of fiscal
2006 and $17.3 in the first six months of fiscal 2006, versus fiscal 2005, due to strong growth in India and sales of new products such as Andrews Teletilt® antenna systems. The companys field service revenue increased $5.4 million in the second quarter versus the year
ago quarter. Additionally, field services increased $19.1 million in the first half of 2006 versus the prior year as a result of the December 2004 acquisition of ATC Tower Services.

Base Station Subsystems sales increased 3% in the second quarter of fiscal 2006, versus the second quarter of fiscal 2005 due mainly to an increase in direct-to-operator sales in North America, partially offset by
lower overall sales in Europe. In the first six months of fiscal 2006, Base Station Subsystems sales increased 4% compared to the prior year due to stronger filter sales resulting from new product introductions in North America, partially offset by
lower overall sales in Europe and South America.

Network Solutions sales declined 39% in the second quarter and 37% in the first six months of fiscal 2006
due to a decline in E-911 geolocation equipment sales. Network Solutions sales have been driven by E-911 regulatory requirements in North America, where sales have declined as major market operators have completed upgrading their networks to meet
these E-911 requirements.

In the second quarter of fiscal 2006, Wireless Innovations sales declined 16% due mainly to the timing of several large projects
for distributed coverage solutions and a 5% unfavorable impact from a stronger dollar versus the euro. In the first six months of fiscal 2006, Wireless Innovations sales increased due to strong first quarter sales driven by the completion of several
large projects in North America and Europe.

Satellite Communications sales declined 9% in the second quarter of fiscal 2006 as compared to the prior year
quarter due to lower earth station and high frequency antenna revenues and the elimination of mobile antenna business sales. For the first six months of fiscal 2006, revenue decreased 27% primarily due to the companys planned reduction of
involvement in certain consumer broadband satellite programs.



17



---

##### Table of Contents

Andrews sales by region for the three and six months ended March 31, 2006 and
2005 were as follows:



|                                   |  |                            |     |         |   |     |                          |    |         |  |   |     |  |   |     |  |    |   
|---------------------------------- |  | -------------------------- | --- | ------- | - | --- | ------------------------ | -- | ------- |  | - | --- |  | - | --- |  | -- | --
|                                   |  | Three MonthsEnded March 31 |     | %Change |   |     | Six MonthsEnded March 31 |    | %Change | 
|In millions                        |  | 2006                       |     | 2005    |   |     | 2006                     |    | 2005    | 
|Sales                              |  |                            |     |         |   |     |                          |    |         |  |   |     |  |   |     |  |    |   
|Americas                           |  | $                          | 264 |         | $ | 256 |                          | 3  | %       |  | $ | 560 |  | $ | 511 |  | 10 | % 
|Europe, Middle East, Africa (EMEA) |  |                            | 155 |         |   | 165 |                          | (6 | %)      |  |   | 308 |  |   | 323 |  | (5 | %)
|Asia Pacific                       |  |                            | 63  |         |   | 61  |                          | 3  | %       |  |   | 128 |  |   | 122 |  | 5  | % 
|                                   |  |                            |     |         |   |     |                          |    |         |  |   |     |  |   |     |  |    |   
|Total                              |  | $                          | 482 |         | $ | 482 |                          | 0  | %       |  | $ | 996 |  | $ | 956 |  | 4  | % 
|                                   |  |                            |     |         |   |     |                          |    |         |  |   |     |  |   |     |  |    |   

In the second quarter of fiscal 2006, sales in the Americas increased 3% versus the prior year quarter due mainly
to growth in North America for Antenna and Cable Products and Base Station Subsystems supporting network upgrades and expansion, partially offset by lower sales of E-911 geolocation equipment and Satellite Communications products. In the first six
months of fiscal 2006, sales in the Americas increased 10% due to strong Antenna and Cable Products, Base Station Subsystems and Wireless Innovations sales supporting network upgrades and expansion, partially offset by lower sales of E-911
geolocation equipment and consumer broadband satellite products.

EMEA sales declined 6% for the second quarter and 5% for the first six months of fiscal
2006, compared to the prior year. The EMEA decline was due principally to unfavorable foreign currency exchange rates relating to a stronger dollar versus the euro and lower Base Station Subsystem sales offset by higher Antenna and Cable Products
revenue in Europe. Asia Pacific sales increased 3% in the second quarter and 5% for the first six months of fiscal 2006 due principally to increased demand in India and Taiwan for Antenna and Cable Products supporting network expansions offset by
lower Wireless Innovations revenue.

The top 25 customers represented 67% of sales in the second quarter of fiscal 2006, compared to 68% in the first
quarter of fiscal 2006 and 70% in the second quarter of fiscal 2005. For the first six months of fiscal 2006 and 2005, the top 25 customers represented 68% of sales and 69% of sales, respectively. Major original equipment manufacturers (OEMs)
accounted for 38% of sales in the second quarter of fiscal 2006, compared to 38% in the first quarter of fiscal 2006 and 41% in the second quarter of fiscal 2005. Cingular Wireless was the largest customer for the second quarter of fiscal 2006 at
10% of sales, flat with the prior quarter due mainly to growth in new product introductions offset by seasonal weakness for Antenna and Cable Products. Lucent Technologies, Siemens, Ericsson and Nortel each represented more than 5% of the
companys sales for the second quarter of fiscal 2006.

Gross profit.Gross profit was 20.6% in the second quarter of fiscal 2006
compared with 24.2% in the second quarter of fiscal 2005. For the second quarter of 2006, gross profit declined 360 basis points versus the second quarter of fiscal 2005 due mainly to higher commodity costs and product mix. The company estimates
that higher commodity costs adversely impacted gross profit by 200 basis points, with 140 basis points of this decrease due to increased copper prices. The company estimates that lower sales of E-911 geolocation equipment resulted in a 140 basis
point decline in the consolidated gross profit rate.

In the past year, copper prices have risen to unprecedented levels increasing from $1.55 a pound at
March 31, 2005 to $2.51 a pound at March 31, 2006. Additionally, on May 5, 2006 the spot price of copper was $3.60 per pound. Although the company has reduced its exposure to copper price fluctuations through the use of forward
purchase commitments, the increase in copper prices has significantly increased the companys costs. For fiscal 2006 the company has purchase commitments for copper that cover approximately 64 million pounds, or more than 90% of the
companys originally planned fiscal 2006 requirements. Due to an increase in customer demand, the company anticipates purchasing an additional six million pounds of copper in the open market during the second half of fiscal 2006, subject to
market receptivity of the companys cable price surcharge. The company announced a price surcharge effective April 3, 2006, on sales of RF cable products to partially offset the rising cost of commodities. In addition, the company has
purchase commitments for copper that cover approximately 21 million pounds or approximately 30% of anticipated fiscal 2007 requirements.

In the first
six months of fiscal 2006 and 2005 the gross margin was 21.7%. The first quarter of fiscal 2005 included a $19.8 million warranty provision for a component used in certain Base Station Subsystem products that resulted in a 207 basis point decline in
the gross margin rate. Excluding this $19.8 million charge, the year over year decline in the gross profit percentage was primarily caused by higher copper prices, which the company estimates decreased gross margin by 175 basis points and a change
in product mix driven by lower sales of higher margin geolocation equipment, which the company estimates decreased margin by 110 basis points.



18



---

##### Table of Contents

Research and development expenses.Research and development expenses increased 4.8% to $26.8 million, or
5.6% of sales, in the second quarter of fiscal 2006 compared to $25.6 million or 5.3% of sales in the second quarter of fiscal 2005. In the first six months of fiscal 2006, research and development expenses increased 4.4% to $54.8 million, or 5.5%
of sales, compared to $52.4 million, or 5.5% of sales, in the first six months of fiscal 2005. Research and development expenses increased mainly due to higher spending on Network Solutions products, the recent acquisition of certain assets of
Nortels mobile location business, higher Satellite Communications spending on new product development and the recent acquisition of Skyware Radio Systems.

Sales and administrative expenses.Sales and administrative expenses remained flat at $58.3 million or 12.1% of sales in both the second quarter of fiscal 2006 and 2005. Higher sales and administrative expenses versus
the prior year quarter were offset by lower legal costs primarily due to a $5.5 million charge in the second quarter of fiscal 2005 from the resolution of two litigation matters.

In the first six months of fiscal 2006, sales and administrative expenses increased 9.8% to $120.0 million or 12.0% of sales compared to $109.3 million or 11.4% of sales in the first six months of fiscal 2005.
Significant factors in this year-over-year increase were: a) a $3.6 million increase in sales commissions and selling expenses, b) $2.9 million for incremental expenses related to the acquisitions of ATC Tower Services in December 2004 and Xenicom
in January 2005, c) $2.6 million of additional expenses for equity compensation programs including $1.8 million from the initial impact of stock option expense recognition, d) $2.1 million of additional finance and administrative expenses caused by
increases in compliance, audit and legal expenses.

During the first quarter of fiscal 2006, the company adopted SFAS No. 123(R), Share Based
Payments, which requires the company to record compensation expense for stock options issued to employees. Prior to fiscal 2006, the company accounted for stock options granted to employees under the intrinsic value method of APB
No. 25, where no compensation expense was recognized. The company has elected to use the modified prospective transition method where compensation expense is recorded prospectively. The adoption of SFAS No. 123(R) resulted in $0.9 million
in the second quarter of fiscal 2006 and $1.8 million in the first six months of fiscal 2006 of sales and administrative expense for stock options compared to no stock option expense being recorded in the first six months of fiscal 2005. For
additional information see Note 7, of the Notes to Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

Intangible
amortization. Intangible amortization decreased to $4.4 million in the second quarter and $9.5 million for the first six months of fiscal 2006 compared to $5.4 million in the second quarter and $12.9 million in the first six months of fiscal
2005. The reduction in intangible amortization compared to the prior year is due mainly to a reduction of amortized expense associated with intangibles acquired in the acquisition of Allen Telecom in July 2003. It is anticipated that intangible
amortization, excluding the impact of recent acquisitions, will be approximately $18 million in fiscal 2006, compared to $22 million in fiscal 2005.

(Gain) loss on sale of assets. In the second quarter of fiscal 2006 the company recorded a gain on the sale of assets of $0.1 million. In the first six months of fiscal 2006 the company recorded a loss on the sale of assets of
$1.4 million, which primarily includes a $2.0 million write-down to fair value of certain assets that the company anticipates selling by the end of fiscal 2006. These assets consist of intangible assets of $1.5 million and $0.5 million of inventory
and fixed assets. This loss was partially offset by a gain recognized on the sale of unimproved land in Denton, Texas.



19



---

##### Table of Contents

Operating income. Operating income by operating segment for the three and six months ended March 31,
2006 and 2005 is as follows:



|                                           |  |                            |     |   |         |   |     |                          |      |     |         |      |   |     |   |  |   |     |   |  |     |   
|------------------------------------------ |  | -------------------------- | --- | - | ------- | - | --- | ------------------------ | ---- | --- | ------- | ---- | - | --- | - |  | - | --- | - |  | --- | --
|                                           |  | Three MonthsEnded March 31 |     |   | %Change |   |     | Six MonthsEnded March 31 |      |     | %Change |     
|In millions                                |  | 2006                       |     |   | 2005    |   |     |                          | 2006 |     |         | 2005 |   |    
|Operating Income                           |  |                            |     |   |         |   |     |                          |      |     |         |      |   |     |   |  |   |     |   |  |     |   
|Antenna and Cable Products                 |  | $                          | 29  |   |         | $ | 37  |                          |      | (22 | %)      |      | $ | 72  |   |  | $ | 76  |   |  | (5  | %)
|Base Station Subsystems                    |  |                            | 3   |   |         |   | (1  | )                        |      | NA  |         |      |   | 6   |   |  |   | (25 | ) |  | NA  |   
|Network Solutions                          |  |                            | 6   |   |         |   | 18  |                          |      | (67 | %)      |      |   | 8   |   |  |   | 34  |   |  | (76 | %)
|Wireless Innovations                       |  |                            | 6   |   |         |   | 11  |                          |      | (45 | %)      |      |   | 16  |   |  |   | 18  |   |  | (11 | %)
|Satellite Communications                   |  |                            | (4  | ) |         |   | (3  | )                        |      | (33 | %)      |      |   | (7  | ) |  |   | (4  | ) |  | (75 | %)
|Items not included in segments             |  |                            |     |   |         |   |     |                          |      |     |         |      |   |     |   |  |   |     |   |  |     |   
|Unallocated Sales and Administrative Costs |  |                            | (27 | ) |         |   | (31 | )                        |      | 13  | %       |      |   | (54 | ) |  |   | (56 | ) |  | 4   | % 
|Intangible Amortization                    |  |                            | (4  | ) |         |   | (5  | )                        |      | 20  | %       |      |   | (10 | ) |  |   | (13 | ) |  | 23  | % 
|Gain (Loss) on the Sale of Assets          |  |                            |    |   |         |   | 1   |                          |      | NA  |         |      |   | (1  | ) |  |   | 1   |   |  | NA  |   
|                                           |  |                            |     |   |         |   |     |                          |      |     |         |      |   |     |   |  |   |     |   |  |     |   
|Total Consolidated Operating Income        |  | $                          | 9   |   |         | $ | 27  |                          |      | (67 | %)      |      | $ | 30  |   |  | $ | 31  |   |  | (3  | %)
|                                           |  |                            |     |   |         |   |     |                          |      |     |         |      |   |     |   |  |   |     |   |  |     |   

For the second quarter and first six months of fiscal 2006, Antenna and Cable Products operating income decreased
compared to the prior year due mainly to higher copper costs. For the second quarter and first six months of fiscal 2006, Base Station Subsystems operating income increased versus the prior year due mainly to increased operational efficiencies and a
more favorable mix of products sold directly to carriers. Base Station Subsystems operating income for the first quarter of fiscal 2005 includes a $19.8 million charge for a warranty provision for a defective component used in certain base station
subsystem products.

For both the second quarter and first six months of fiscal 2006, Network Solutions operating income declined versus the prior year due
mainly to an anticipated decline in E-911 geolocation equipment sales. Wireless Innovations operating income decreased versus the prior year in both the second quarter and first six months of fiscal 2006 due mainly to a decrease in sales due to the
timing of operator spending for distributed coverage requirements and the unfavorable impact of a stronger dollar versus the euro.

The year-to-date
Satellite Communications operating loss increased versus the prior year due mainly to lower sales volumes resulting from the companys planned reduction of involvement in certain consumer broadband satellite programs. Satellite Communications
operating loss for the second quarter of fiscal 2006 includes a $1.2 million cost of goods sold provision in the legacy earth station antenna product line related to a multi-year program.

Interest. Interest expense increased by $0.6 million in the second quarter and $0.7 million in the first six months of fiscal 2006 compared to fiscal 2005
due to increased notes payable borrowings. In the first six months of fiscal 2006, the company increased its notes payable borrowings by $17.9 million to meet short-term working capital needs and reduced its long-term debt by $7.3 million. Interest
income remained flat in the second quarter and decreased $0.8 million in the first six months of fiscal 2006 compared to fiscal 2005, due primarily to interest income from a favorable tax ruling recorded in the first quarter of fiscal 2005.

Other expense. Other expense was $0.7 million in the second quarter and $0.5 million in the first six months of fiscal 2006, compared to
expense of $0.3 million in the second quarter and $1.8 million in the first six months of fiscal 2005. Other expense is primarily a result of foreign exchange gains and losses. Weakening of the euro against the U.S. dollar was the principal cause
for these losses.

Taxes. The reported tax rate was 30.2% for the second quarter and 22.1% for the first six months of fiscal 2006,
reflecting underlying effective tax rates on operations of 43.8% and 33.0%, respectively. The underlying effective tax rate on operations for the fiscal 2006 reporting periods decreased versus the prior year primarily due to the permanent
reinvestment of earnings in China and a favorable geographic mix shift of earnings. In addition, the reported tax rate for the second quarter of fiscal 2006 benefited from non-recurring tax adjustments, primarily tax benefits related to the
repatriation of foreign earnings as compared to the reported tax rate for the second quarter of fiscal 2005. The company currently forecasts its effective tax rate on operations to be 33% for the remaining six months of fiscal 2006.

The reported tax rate was 38.4% for the second quarter and 27.4% for the first six months of fiscal 2005, reflecting underlying effective tax rates on operations of
46.5% and 39.6%, respectively. The reported tax rates for fiscal 2005 include non-recurring tax benefits related to the favorable resolution of certain tax-related matters with government authorities.



20



---

##### Table of Contents

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents were $154.9 million at March 31, 2006, compared to $188.8 million at September 30, 2005. Working capital at March 31, 2006 was $632.1 million compared to $641.2 million at
September 30, 2005. Management believes that the companys strong working capital position, projected ability to generate cash flow from operations, and ability to borrow under its revolving credit agreements will allow the company to meet
its normal operating cash flow needs for the foreseeable future.

The company maintains a $250 million revolving credit facility with a group of lenders
that expires in September 2010. Under the terms of this facility, the company is subject to various quarterly covenant requirements, including maintaining a ratio of earnings before interest, taxes, depreciation and amortization (EBITDA) to total
debt, including letters of credit, maintaining a ratio of EBITDA to senior debt, maintaining a fixed charge coverage ratio and limiting 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. As of March 31, 2006, the company was in compliance with all of these requirements and had the ability to utilize $233 million of the credit facility.

In the first six months of fiscal 2006, the company generated $11.6 million of cash from operations, compared to $16.3 million generated in the first six months of
fiscal 2005. The decrease in cash generated from operations was primarily due to an increase in inventory and a decrease in accounts payable. Cash flow generated from operations in the first six months of fiscal 2006 was primarily the result of net
income of $18.4 million, $37.7 million of non-cash charges for depreciation and amortization, offset by a net change in operating assets and liabilities that resulted in a $46.4 million decrease in cash flow.

Accounts receivable increased by $3.7 million in the first six months of fiscal 2006. Accounts receivable were $477.7 million and days sales outstanding (DSOs)
were 83 days at March 31, 2006, compared to $464.3 million and 76 days at December 31, 2005, and $470.9 million and 81 days at March 31, 2005.

Inventory increased by $12.9 million in the first six months of fiscal 2006. Inventories were $369.2 million and inventory turns were 4.1x at March 31, 2006 compared to $364.8 million and 4.4x at December 31, 2005, and $358.8
million and 4.1x at March 31, 2005. Accounts payable and other liabilities decreased by $23.7 million in the first six months of fiscal 2006, due to a decrease in trade payables and decrease in accrued compensation expenses, primarily as a
result of annual incentive payments being made in the first quarter.

Investing activities.The company used $42.2 million of cash for investing
activities in the first six months of fiscal 2006, compared to $39.8 million in the first six months of fiscal 2005. Capital expenditures were $33.2 million in the first six months of fiscal 2006, up from $32.5 million in the first six months of
2005. In the first six months of fiscal 2006, the company paid $9.1 million for acquisitions, primarily $8.7 million for Skyware Radio Systems, a producer of electronic products for broadband satellite communications networks. The company also made
a final earn-out payment of $0.4 million for its 2004 acquisition of Yantai Fine Cable. The company increased its investment in interest-bearing convertible notes in Cambridge Positioning Systems LTD, a mobile location technology developer by $1.7
million. The company received $1.8 million from the sale of assets, principally from the sale of unimproved land in Denton, Texas.

Investing activities
for the first six months of fiscal 2005 included $19.2 million for three acquisitions. 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. The company also acquired selected assets of ATC Tower Services, Inc. for total purchase consideration of $8.4 million, including $6.8 million of cash. The company also paid $1.1 million to acquire the remaining 20% interest in a
Czech Republic subsidiary that was acquired as part of the Allen Telecom acquisition. 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 six months of fiscal 2005 investing activities included $2.4 million primarily from the proceeds of a facility sale in Reynosa, Mexico, which was acquired from Allen Telecom.

Financing Activities. The company used $4.4 million for financing activities in the first six months of fiscal 2006 compared to negligible net cash generated from
financing activities in the first six months of fiscal 2005. The company reduced its net long-term debt by $7.6 million and $9.5 million in the first six months of fiscal years 2006 and 2005, respectively. These debt reductions were due mainly to
annual principal payments on senior notes of $7.8 million in the first quarter of each fiscal year. The company borrows under its revolving lines of credit to meet its short-term financing needs. The company increased its notes payable borrowings by
$17.8 million and $9.1 million in the first six months of fiscal years 2006 and 2005, respectively. In the first six months of fiscal 2006 the company spent $17.6 million to acquire 1.6 million shares of the companys common stock. The
company generated $3.0 million and $0.7 million in the first six months of fiscal 2006 and 2005, respectively, from stock purchase and option plans. Included in the $3.0 million from stock purchase and option plans for fiscal 2006 is $0.6 million
for the tax benefit created from the exercise of stock options.



21



---

##### Table of Contents

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

The company has contractual obligations and commercial commitments as described in Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations  Aggregate Contractual
Obligations and Commitments of its Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended September 30, 2005. In addition, we have obligations under open purchase orders and the long-term
liabilities reflected in our consolidated balance sheet. There have been no material changes in our contractual obligations and commercial commitments since September 30, 2005 arising outside of the ordinary course of business.

CHANGE IN CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The company
uses certain critical accounting policies as described in Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations  Critical Accounting Policies of its Annual Report on Form 10-K filed with
the Securities and Exchange Commission for the year ended September 30, 2005. With the exception of the adoption of SFAS No. 151, Inventory Costsand SFAS No. 123(R), Share Based Payments, as
described in Notes 6 and 7 of the Notes to Consolidated Condensed Financial Statements in this Quarterly Report on Form 10-Q, there have been no material changes in the companys critical accounting policies during the six months ended
March 31, 2006.

This discussion and analysis of financial condition and results of operations is based on the companys condensed consolidated
financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States. The preparation of these financial statements requires the use of estimates and assumptions related to the reporting of
assets, liabilities, revenues, expenses and related disclosures. In preparing these financial statements, the company has made its best estimates and judgments of certain amounts included in the financial statements. Estimates are revised
periodically. Actual results could differ from these estimates.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

We have made forward-looking statements in this Form 10-Q, including under Managements Discussion and Analysis of Financial Condition and Results of
Operations and in the Notes to Consolidated Financial Statements. In addition, 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. You can identify these statements by the fact that they do not relate strictly to historic or current facts. 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 under the caption Risk Factors in the companys
Annual Report on Form 10-K for the fiscal year ended September 30, 2005 (Part I, Item 1A) and in this Form 10-Q (Part II, Item 1A). As a result, actual results could vary materially from past results and those anticipated, estimated or projected. 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.

We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent
required by law. You are advised, however, to consult any further disclosures we make on related subjects in our 8-K, 10-Q, and 10-K reports filed with or furnished to the Securities and Exchange Commission.



|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------

Information with respect to the companys exposure to interest rate risk, foreign currency risk and commodity risk is contained in Item 7A, Quantitative and Qualitative Disclosures About Market Risk, of the companys Annual
Report on Form 10-K for the year ended September 30, 2005. With the exception of copper purchase commitments, the company believes that there has been no material change from the end of the previous fiscal year through March 31, 2006 to
the companys market risks as disclosed in its Annual Report on Form 10-K for the year ended September 30, 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 forecasts that it will use approximately 69 million pounds of copper in fiscal year 2006. 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 contracts with various suppliers to purchase copper. At March 31, 2006, the company had contracts to purchase
27.6 million pounds of copper for $44.8 million through September 30, 2006. Due to an increase in customer demand, the company anticipates purchasing an additional six million pounds of copper in the open market during the second half of
fiscal 2006, subject to market receptivity of the companys recently announced cable price surcharge. As of May 5, 2006, the market price of copper was



22



---

##### Table of Contents

$3.60/lb. Based on this price, a 10% increase in the market price of copper would increase the companys cost of this estimated 6 million
pounds of copper by approximately $2.2 million. For fiscal 2007, the company has purchase commitments for 21.2 million pounds of copper for $44.4 million.



|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------

Evaluation of Disclosure Controls and Procedures:

As of March 31, 2006, the companys management, including its Chief Executive Officer
and Chief Financial Officer, 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 (the Exchange Act). Based on that
review and evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the companys disclosure controls and procedures were effective as of March 31, 2006 in providing reasonable assurance that information required
to be disclosed by the company in reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.

Changes in Internal Controls:

As
previously disclosed in the companys Annual Report on Form 10-K filed with the SEC on December 14, 2005, 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), the following changes were implemented during the quarter ended December 31, 2005 to the companys internal control over financial reporting as a
result of the existence of material weaknesses as disclosed in the companys Annual Report on Form 10-K:

Revenue recognition
accountingIn order to address the material weakness in its software revenue recognition, the company has established a formal procedure for the review of significant new contracts, including formal communication protocol among the contracts
and legal department, group finance directors and corporate accounting, in considering the applicability of SOP 97-2 and all other relevant revenue recognition guidance, and determination of the appropriate revenue recognition policies to apply to
those contracts.

Segment reportingIn order to address the material weakness in its application of SFAS 131, key personnel involved in
the financial reporting process have enhanced the controls by which the SFAS No. 131 authoritative guidance is monitored and applied on a regular basis. In addition, the companys disclosure committee now reviews segment reporting on a
quarterly basis.

The company completed the implementation of these changes in internal control over financial reporting during the fiscal quarter ended
December 31, 2005. The companys independent registered public accounting firm has not yet audited these remediated controls and will evaluate them in connection with its audit of the companys internal control over financial
reporting as of September 30, 2006.

Except as described above, during the six months ended March 31, 2006 there were no changes in the
companys internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) or in other factors that have materially affected, or are reasonably likely to materially affect, the companys
internal control over financial reporting.



23



---

##### Table of Contents

PART IIOTHER INFORMATION

Item 3 and Item 5 of this Part II are not applicable



|ITEM 1. | LEGAL PROCEEDINGS
|------- | -----------------

On October 25, 2005, TruePosition, Inc.
filed a complaint in the U.S. District Court for the District of Delaware, alleging the companys potential sale of certain geolocation products to Saudi Telecom will infringe a TruePosition patent. As relief, the complaint seeks, among other
things, injunctive relief and unspecified monetary damages. The company filed its answer and counterclaim on December 15, 2005 and intends to defend this litigation vigorously.

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.



|ITEM 1A. | RISK FACTORS
|-------- | ------------

Information regarding risk factors appears in
Item 1A. Risk Factors, in the companys Annual Report on Form 10-K for the fiscal year ended September 30, 2005. The information presented below updates and should be read in conjunction with the risk factors disclosed in the Form
10-K.

If we are required to establish a valuation allowance with respect to our net deferred tax asset, it would adversely affect our effective tax
rate and financial results. As of March 31, 2006, we had a net deferred tax asset of approximately $71.6 million, primarily attributable to U.S. net operating losses carried forward, which will begin to expire in 2021. Recoverability
of this deferred tax asset is dependent upon our ability to generate future taxable profits in the United States. We continuously review and assess the recoverability of our deferred tax asset and it is our current opinion that the net deferred tax
asset is fully recoverable. Should we subsequently determine it is more likely than not that this deferred tax asset will not be realized, we would be required to record a non-cash charge to establish a valuation allowance against some portion or
the entire deferred tax asset at that time. Establishing a valuation allowance could have a material adverse impact upon our effective tax rate and reported financial results.

If we experience difficulties in transitioning to new facilities, it could disrupt our business and adversely affect our financial results. On August 29, 2005, the company entered into a contract to sell
its Orland Park, Illinois manufacturing and corporate headquarters site for approximately $26 million. This transaction is expected to close in two phases over approximately an eighteen-month period. The corporate headquarters was relocated to a
leased facility in Westchester, Illinois in January 2006. The company is constructing a state-of-the-art manufacturing and office facility in Joliet, Illinois and expects construction to be completed in 2007. In order to avoid customer-related
disruptions, the company has developed a detailed plan to transition administrative and manufacturing operations to the Joliet facility. However, due to the scope and nature of the move, customer shipments could be affected, which could have an
adverse financial result.

The Chinese government could delay issuance of anticipated new wireless network licenses.The Chinese government is
planning to issue licenses for next generation wireless networks. It is anticipated that these licenses will be issued during calendar year 2006 and that, in fiscal 2007, we will experience an increase in wireless infrastructure
spending associated with the build-out of these anticipated new networks. Significant delays of license issuance could adversely affect our financial results.



24



---

##### Table of Contents

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, 2006, the company had repurchased approximately 20.2 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. Included in the 20.2 million shares repurchased are 1.6 million shares repurchased in the first quarter of 2006
for $17.6 million. No shares were repurchased in the second quarter of fiscal 2006.

The table below lists the
companys repurchases of shares of common stock during the six months ended March 31, 2006:



|                          |  |                                  |  |                                |       |                                                                    |           |                               |           
|------------------------- |  | -------------------------------- |  | ------------------------------ | ----- | ------------------------------------------------------------------ | --------- | ----------------------------- | ----------
|Fiscal Year 2006          |  | Total Numberof SharesRepurchased |  | Average PricePaid perShare (1) |       | Total Numberof SharesRepurchased asPart of PubliclyAnnounced Plans |           | SharesAvailable forRepurchase
|October 1 to October 31   |  |                                 |  |                                |      |                                                                    |          |                               | 11,389,568
|November 1 to November 30 |  | 725,000                          |  | $                              | 10.73 |                                                                    | 725,000   |                               | 10,664,568
|December 1 to December 31 |  | 875,000                          |  | $                              | 11.22 |                                                                    | 875,000   |                               | 9,789,568 
|January 1 to January 31   |  |                                 |  |                                |      |                                                                    |          |                               | 9,789,568 
|February 1 to February 28 |  |                                 |  |                                |      |                                                                    |          |                               | 9,789,568 
|March 1 to March 31       |  |                                 |  |                                |      |                                                                    |          |                               | 9,789,568 
|                          |  |                                  |  |                                |       |                                                                    |           |                               |           
|Total                     |  | 1,600,000                        |  | $                              | 11.00 |                                                                    | 1,600,000 |                               |           

---

|(1) | Average price paid per share is calculated using execution price, excluding commissions paid to brokers.
|--- | --------------------------------------------------------------------------------------------------------



|ITEM 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------



|(a) | The companys Annual Meeting of Stockholders was held on February 8, 2006.
|--- | --------------------------------------------------------------------------



|(b) | Items submitted to a vote
|--- | -------------------------



|1. | Election of Directors
|-- | ---------------------



|            |  |             |  |           
|----------- |  | ----------- |  | ----------
|Nominee     |  | FOR         |  | WITHHELD  
|T. Donahoe  |  | 139,578,198 |  | 10,149,320
|R. Faison   |  | 145,105,117 |  | 4,622,401 
|J. Fluno    |  | 145,277,574 |  | 4,449,944 
|W. Hunt     |  | 145,435,525 |  | 4,291,993 
|C. Nicholas |  | 145,859,789 |  | 3,867,729 
|G. Poch     |  | 139,563,008 |  | 10,164,510
|A. Pollack  |  | 142,927,566 |  | 6,799,952 
|G. Toney    |  | 145,216,174 |  | 4,511,344 
|A. Zopp     |  | 145,255,546 |  | 4,471,972 



|2. | The ratification of the appointment of Ernst & Young to serve as independent public auditors for fiscal year 2006 was approved by a vote of 146,515,316 shares for,
2,290,577 shares against, and 921,625 shares withheld.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



25



---

##### Table of Contents

ITEM 6. EXHIBITS



|            |  |                                                                                                                                             |  |                                                                                                                          
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                 |  | Reference                                                                                                                
|            |  |                                                                                                                                            
|10.1 *      |  | Executive Severance Benefit Plan Agreement dated April 14, 2006 between Andrew Corporation and Justin Choi                                  |  | Incorporated by reference to Exhibit 99.1 to the Form 8-K filed by the company on April 20, 2006 (SEC File No. 001-14617)
|            |  |                                                                                                                                            
|10.2 *      |  | Form of Indemnification Agreement dated February 17, 2006                                                                                   |  | Filed herewith                                                                                                           
|            |  |                                                                                                                                            
|10.25 *     |  | Deleted. Exhibit 10.25 to Form 10-K for the year ended September 30, 2005, for Executive Severance Benefit Plan Agreement with Jim LePorte. |  |                                                                                                                          
|            |  |                                                                                                                                            
|31.1        |  | Rule 13a-14(a) Certification of Chief Executive Officer                                                                                     |  | Filed herewith                                                                                                           
|            |  |                                                                                                                                            
|31.2        |  | Rule 13a-14(a) Certification of Chief Financial Officer                                                                                     |  | Filed herewith                                                                                                           
|            |  |                                                                                                                                            
|32          |  | 18 U.S.C. Section 1350 Certifications of Chief Executive and Chief Financial Officers                                                       |  | Furnished herewith                                                                                                       

---

|* | Indicates a management contract or compensatory plan or arrangement
|- | -------------------------------------------------------------------



26



---

##### Table of Contents

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, 2006 |  |  |  | By: |  | /s/ Marty R. Kittrell
|                 |  |  |  |     |  |                       |  | Marty R. Kittrell Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)



27