Exhibit 99.1
ALLEN TELECOM INC. 25101 Chagrin Boulevard, Cleveland, Ohio 44122-5687 /
216-765-5800 - FAX: 216-765-0410
[ALLEN TELECOM LOGO]
NEWS RELEASE
FOR IMMEDIATE RELEASE
ALLEN TELECOM ANNOUNCES THIRD QUARTER 2002
SALES INCREASE OF 17.1% AND EARNINGS PER SHARE OF $.05
Significantly Above Analyst Estimates for Sales and Earnings
Based on Strength of Geolocation Business
BEACHWOOD, OHIO, October 29, 2002 - Allen Telecom Inc. (ALN: NYSE)
today announced sales and earnings results for the third quarter ended September
30, 2002. Earnings per common share for the third quarter of 2002 were $0.05 per
share, a significant improvement versus a loss of $(0.06) per common share for
the third quarter of 2001 and a loss of $(0.04) per common share in the second
quarter of 2002. Excluding a restructuring charge related to headcount
reductions at several operating divisions, earnings per share for the second
quarter of 2002 would have been a loss of $(0.02) per common share. Earnings per
share amounts are basic and fully diluted. Sales for the third quarter of 2002
increased 17.1% to $107.0 million as compared to $91.3 million for the third
quarter of 2001 and increased 16.4% over second quarter of 2002 sales of $91.9
million.
Earnings per common share for the nine-month period ending September
30, 2002 were $0.01, excluding the $0.02 restructuring charge, as compared to
$0.06 per common share for the comparable nine-month period ending September 30,
2001. Sales for the nine-month period ended September 30, 2002 were $288.7
million versus $305.0 million for the comparable nine-month period ending
September 30, 2001.
Sales growth in the third quarter was led by a record quarter in the
sale of Geolocation Products with the remaining product lines, in total, showing
a modest decline compared to both the third quarter of 2001 (8.7%) and the
second quarter of 2002 (3.4%). Sales of Geolocation Products more than tripled
from $7.7 million in the second quarter of 2002 to $25.7 million in the third
quarter of 2002.
Robert G. Paul, president and Chief Executive Officer of Allen Telecom,
stated, "We are delighted with the continued progress we have made in our
geolocation business in the third quarter of 2002. Our Geometrix(R) E911 caller
location system has now been chosen by a number of TDMA, CDMA and, more
recently, GSM carriers to supply equipment for their E911 safety networks. We
are equally excited about the future potential for this product line based on
recent orders and our expectations for continued growth in sales for this
product line for the balance of this year and 2003.
"Backlog for the third quarter ended September 30, 2002 was $122.0
million, up 3.3% from the $118.2 million reported in the second quarter ended
June 30, 2002. The primary driver for the increase in backlog is the increase in
orders for Geolocation Products where backlog increased from $54.9 million at
the end of the second quarter to $57.8 million at the end of the third quarter.
Backlog in our Base Station Subsystems and Components product line increased
15.5%. Backlog for the remaining product lines declined or remained flat quarter
to quarter.
"We have continued our company-wide emphasis on cost reductions. While
we have added expenses to support the growth in our geolocation business, prior
cost reductions in our other businesses resulted in selling, general and
administrative expenses, as well as research and development expenses, declining
as a percent of sales during the third quarter. The Company expects to implement
further cost reductions in the fourth quarter and expects to incur restructuring
costs of approximately $3.0 - $5.0 million. Annual cost savings resulting from
these actions are estimated to be in the range of $1.5 - $2.0 million. Under the
new accounting rules, some of these restructuring costs may not be recorded in
the fourth quarter of 2002 and may be required to be expensed in 2003.
"We generated cash of $10.7 million during the third quarter of 2002
and we have increased our cash position, or reduced debt, by over $100 million
in the last four quarters. Inventories, which peaked in March 2001 at $142.7
million, declined by an additional $9.0 million in the third quarter to $109.0
million. Collection performance also improved substantially during the third
quarter as receivables grew just 3.2% on a 17.1% increase in sales, and average
days outstanding on receivables dropped from 92 days to 82 days.
"2002 continues to be a very challenging year for the
telecommunications industry. However, we believe that Allen Telecom's fourth
quarter 2002 sales and earnings will continue to improve significantly, led by
our Geolocation Products. During the fourth quarter, we expect sales of our
other product lines to hold steady at, or near, the third quarter levels. We
look for overall sales to improve 7 - 12% in the fourth quarter of 2002 as
compared to the third quarter. Our expectation for fourth quarter 2002 earnings
per share is $0.09 to $0.12, excluding any of the restructuring charges
mentioned above or potential non-cash goodwill impairment charges as mentioned
in last quarters' earnings release.
"Given the positive outlook for Geolocation Products, and the strong
customer relationships in our other businesses, we believe sales and earnings
per share will continue to improve in 2003 as compared to 2002."
Allen Telecom Inc. (http://www.allentele.com) is a leading supplier of
wireless equipment to the global telecommunications infrastructure market. FOREM
supplies sophisticated filters, duplexers, combiners, amplifiers and microwave
radios to an array of OEM customers. MIKOM focuses on providing repeaters,
in-building systems and other products that enhance both the coverage and the
capacity of a wireless system. Tekmar Sistemi provides integrated low power
fiber optic and cable distributed antenna systems for indoor coverage systems.
Decibel Products and Antenna Specialists manufacture land based and mobile
antennas in frequency bands that cover all of the
traditional wireless networks. Grayson Wireless supplies measurement and signal
processing systems for testing the performance of a wireless network,
network-based wireless caller geolocation systems for E 911 and value added
services. Comsearch offers program management, network planning, engineering,
development and installation of wireless networks worldwide.
Statements included in this press release, which are not historical in
nature, are forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements regarding the Company's future performance and
financial results are subject to a number of risks and uncertainties that could
cause actual results to differ materially from those set forth in the
forward-looking statements. Factors that could cause the Company's actual
results to materially differ from forward-looking statements made by the
Company, include, among others, the cost, success and timetable for new product
development including, for example, products for 3G, E 911 and power
amplification; the health, economic stability and relative currency valuations
in world and national markets; the cost and outcome of litigation, including,
for example, a lawsuit filed by a competitor in the E 911 geolocation business
claiming infringement by the Company of intellectual property rights; the cost
and availability of capital and financing to the Company and its customers; the
uncertain timing and level of purchases by the limited number of the Company's
customers of both current products and services, and those under development;
the effective realization of inventory, receivables and other working capital
assets to cash; the impact of competitive products and pricing in the Company's
markets; the ability of the company to generate future profits or to implement
other tax planning strategies needed to utilize the Company's tax loss carry
forwards in the U.S. and Italy; the changes in business conditions and/or
changes in assumptions, which could result in goodwill impairment charges; the
impact of U.S. and foreign government legislative/regulatory actions, including,
for example, the scope and timing of E 911 geolocation requirements in the U.S.
markets and spectrum availability and licensing for new wireless applications;
the impact of future business conditions on the Company's ability to meet terms
and conditions of the Company's borrowing agreements; the cost, timing and
availability of personnel, facilities, materials and vendors required for the
Company's current and future products; and whether and when backlog will be
converted to customer sales. Allen Telecom Inc.'s Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q may contain additional factors.
For further information contact: Dianne B. McCormick
Director, Investor Relations
(216) 765-5855 (phone)
(216) 765-0375 (fax)
Dianne_McCormick@allentele.com
ALLEN TELECOM INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Per Share Data)
(Unaudited)
THREE MONTHS ENDED Nine Months Ended
September 30, September 30,
------------------------------- --------------------------------
2002 2001 2002 2001
---- ---- ---- ----
SALES $ 106,954 $ 91,319 $ 288,673 $ 304,956
Cost of sales (81,145) (69,877) (219,650) (226,499)
-------- -------- --------- ---------
Gross profit 25,809 21,442 69,023 78,457
Operating expenses:
Selling, general and
administrative
expenses (13,880) (13,864) (41,853) (42,217)
Research and development and product
engineering costs (6,413) (5,908) (19,505) (19,978)
Amortization of goodwill (Note 1) - (1,968) - (5,935)
-------------- --------- ------------- ----------
Operating income (loss) 5,516 (298) 7,665 10,327
Net interest expense (1,595) (2,375) (5,734) (7,480)
---------- ---------- ---------- ---------
Income (loss) before taxes and minority interest 3,921 (2,673) 1,931 2,847
(Provision) benefit for income taxes (1,373) 1,040 (676) (1,110)
----------- ---------- ----------- ---------
2,548 (1,633) 1,255 1,737
Income (loss) before minority interest
Minority interest (48) (29) (59) (116)
---------- ---------- ----------- -----------
NET INCOME (LOSS) 2,500 (1,662) 1,196 1,621
Dividends on preferred stock (970) - (1,572) -
---------- ----------- ---------- ----------
INCOME (LOSS) APPLICABLE TO
COMMON SHAREHOLDERS $ 1,530 $ (1,662) $ (376) $ 1,621
========= =========== ========== ==========
INCOME (LOSS) PER COMMON
SHARE,
basic and diluted $ .05 $ (.06) $ (.01) $ .06
====== ======= ======= =====
Weighted average common shares outstanding:
Basic 30,430 28,000 30,390 27,970
Assumed exercise of stock options - - - 320
--------- ---------- --------- ----------
Diluted 30,430 28,000 30,390 28,290
========= ========== ========= ==========
Note 1: Effective January 1, 2002, the Company implemented the
provisions of Statement of Financial Accounting Standards No. 142 "Goodwill and
Other Intangible Assets." This Statement changed the accounting for goodwill
from an amortization method to an impairment only approach; accordingly, the
company ceased amortizing goodwill beginning in 2002. This change improved the
reported Income (Loss) Income Per Common Share by approximately $.07 and $.21
per common share (basic and diluted) for the three and nine months ended
September 30, 2002, respectively.
The following supplemental information is presented, on a
proforma basis, for the consolidated results of operations for 2001, as compared
with 2002, adjusted to exclude amortization of goodwill in the 2001 periods
(amounts in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------------------------------------------------------------------------------------
2002 2001 2002 2001
---------------------------------------------------------------------------------------------------------------
Reported net income (loss) $ 2,500 $ (1,662) $ 1,196 $ 1,621
Add back goodwill amortization
(net of related income taxes) - 1,963 - 5,921
---------------------------------------------------------
Proforma net income $ 2,500 $ 301 $ 1,196 $ 7,542
---------------------------------------------------------
Reported income (loss) per common share
(basic and diluted) $.05 $(.06) $(.01) $.06
Effect of goodwill amortization - .07 - .21
---------------------------------------------------------
Proforma income (loss) per common share $.05 $ .01 $(.01) $.27
---------------------------------------------------------------------------------------------------------------
In the second quarter of 2002, the Company completed its
initial evaluation of goodwill pursuant to the impairment requirements of the
aforementioned Statement No. 142. As a result of this evaluation, the Company
has determined that there may be an impairment with respect to $32,663,000 of
goodwill related to the Decibel Products portion of its base station and mobile
antennas product line. The Company will complete the valuation necessary to
determine the actual amount of impairment loss, if any, in the fourth quarter of
2002; however, based on its current information the Company estimates that such
loss could range between zero and $5,000,000. Impairment charges, if any, from
this initial evaluation would be reported as a "Cumulative Effect of an
Accounting Change" in the Company's consolidated statement of operations.
Note 2: Segment information for the Company is as follows (amounts in
thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------------------------------------------------------------------------------------
2002 2001 2002 2001
---------------------------------------------------------------------------------------------------------------
Sales to external customers:
Wireless communications equipment:
Base station subsystems and components $ 36,533 $ 38,132 $105,921 $152,165
Repeater and in-building coverage 19,044 23,295 67,807 66,750
products
Base station and mobile antennas 21,753 23,116 57,009 66,805
Geolocation products 25,687 2,355 45,880 2,355
---------------------------------------------------------
Total wireless communications equipment 103,017 86,898 276,617 288,075
Wireless engineering and consulting services 3,937 4,421 12,056 16,881
---------------------------------------------------------------------------------------------------------------
Total sales $106,954 $ 91,319 $288,673 $304,956
---------------------------------------------------------------------------------------------------------------
Results of operations:
Wireless communications equipment $ 6,929 $ 3,436 $ 13,695 $ 20,231
Wireless engineering and consulting services 371 (279) (780) 1,215
---------------------------------------------------------
7,300 3,157 12,915 21,446
Goodwill amortization - (1,968) - (5,935)
General corporate expenses (1,784) (1,487) (5,250) (5,184)
---------------------------------------------------------------------------------------------------------------
Operating income (loss) $ 5,516 $ (298) $ 7,665 $ 10,327
---------------------------------------------------------------------------------------------------------------
ALLEN TELECOM INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in Thousands)
September 30, December 31,
2002 2001
----------------- ----------------
(Unaudited)
ASSETS
Cash and equivalents $ 33,237 $ 16,368
Receivables 95,545 92,291
Inventories 109,035 124,026
Other current assets 20,907 25,245
-------- -------
Total current assets 258,724 257,930
Fixed assets 38,515 41,290
Goodwill 141,220 140,995
Other assets 73,816 71,741
-------- --------
TOTAL ASSETS $512,275 $511,956
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LIABILITIES
Notes payable and current maturities of long-term
obligations $ 12,579 $ 12,318
Accounts payable 47,141 40,355
Accrued expenses 30,263 27,827
Income taxes 14,364 14,633
-------- --------
Total current liabilities 104,347 95,133
Long-term debt 74,540 140,530
Other liabilities 14,888 17,936
-------- --------
TOTAL LIABILITIES 193,775 253,599
REDEEMABLE CONVERTIBLE PREFERRED STOCK 50,000 -
STOCKHOLDERS' EQUITY 268,500 258,357
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $512,275 $511,956
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