Exhibit 99.1
ALLEN TELECOM INC. 25101 Chagrin Boulevard, Cleveland, Ohio 44122-5687 /
216-765-5800 o FAX: 216-765-0410
[ALLEN TELECOM LOGO]
NEWS RELEASE
FOR IMMEDIATE RELEASE
ALLEN TELECOM'S FIRST QUARTER
EARNINGS RESULTS EXCEED EXPECTATIONS
BEACHWOOD, OHIO, April 24, 2003 - Allen Telecom Inc. (NYSE: ALN) today reported
its financial results for the first quarter ended March 31, 2003. Sales for the
first quarter of 2003 were $110.9 million, an increase of 23.4% compared to
$89.9 million in the first quarter of 2002.
Diluted earnings per common share in the first quarter of 2003 were $.26, up
significantly as compared to a reported loss of $0.02 per common share in the
first quarter of 2002. Earnings were impacted in the first quarter of 2003 by
$1.3 million of pre-tax costs from restructuring actions and costs related to
the pending acquisition of the Company by Andrew Corporation. The Company also
reported a one-time tax benefit of $2.0 million, which reduced its effective tax
rate for the first quarter of 2003 to 17% from the expected rate of 35% for the
remainder of 2003.
Allen Telecom's total order backlog increased 13.5% from $140.4 million at
December 31, 2002 to $159.3 million at March 31, 2003 and includes increases in
almost all product lines, most notably in Base Station Subsystems and
Components. The increase in backlog as of March 31, 2003 in the Company's
geolocation business to $94.2 million is an increase of 8.2% from the quarter
ended December 31, 2002.
Robert G. Paul, President and Chief Executive Officer of Allen Telecom Inc.,
stated, "We are very pleased to be one of the few participants in our industry
to report substantial growth in both revenues and profits in a most difficult
time. The telecommunications industry continues to deal with declines in
worldwide capital expenditures by carriers and original equipment manufacturers
(OEMs), delays in the build-out of third generation (3G) networks, primarily in
Europe, and the underlying economic uncertainty throughout the world. While the
number of mobile wireless subscribers and the minutes of use continue to
increase, the decline in capital expenditures by carriers is leading to
increased congestion and quality issues in the existing networks. Therefore,
while we cannot predict the ultimate timing of a turnaround in the
telecommunications industry, we believe there continues to be a strong demand
for wireless communications services and equipment and that the networks will
need to be expanded and improved in the future.
"We were very pleased by our gross margin improvement in the first quarter.
Although pricing pressures continue, we benefited from a favorable product mix
toward our more profitable products and the hard work at our divisions to reduce
production and material costs. As compared to the fourth quarter of 2002, gross
margins improved in all of our product lines.
"Our balance sheet and working capital position continued to improve in the
first quarter of 2003. We generated over $30 million in cash in the first
quarter. For the first time in nine years we are in a positive net cash position
as our $78 million cash balance exceeds our total debt. This is a dramatic
difference from just one and one half years ago when we had a net debt position
of over $150 million.
"We are delighted with the continued progress of our Geolocation Products line
in the first quarter of 2003. Our Geometrix equipment can accurately determine
the location of a wireless 911 caller and then forward the information to public
safety agencies. According to the Cellular Telephone Industry Association, over
155,000 emergency 911 calls are made from mobile phones on a daily basis. Few
public safety agencies have the systems and the equipment necessary to locate a
mobile phone user dialing 911 if the person placing the call doesn't know or
can't give his or her location.
"Our Geometrix network-based location systems and equipment expanded their
overall market leadership position among small, medium and large carriers. Sales
of this product line increased 249% in the first quarter of 2003 to $43.6
million from $12.5 million in the first quarter of 2002 and exceeded our record
fourth quarter 2002 shipments. So far in the month of April, we have received
additional orders of $15.7 million for geolocation equipment for shipment in the
third and fourth quarters of 2003. We have received orders from 10 customers and
have installed geolocation systems in 131 markets in 29 states.
"Our research and development expenditures increased in the first quarter which
was in line with several new product and process initiatives at our Forem and
Mikom divisions, including a digital repeater, a more integrated product
portfolio and next generation product concepts.
"Looking forward to the next quarter, we expect second quarter sales to be
between $113 and $120 million. Our expectations are based on the continuing
strength in our Geolocation Products line and improvement in most all other
product lines resulting from an improved outlook at some of our OEM customers
and to seasonal improvement with many of our products. Earnings per common share
in the second quarter are expected to be between $.20 and $.30 per common share.
"Allen Telecom and Andrew Corporation signed a definitive agreement on February
18, 2003 for Andrew to acquire Allen Telecom. The combination of these two
companies, given their complementary product lines, would create a single
company capable of providing global wireless infrastructure customers with an
extensive product line, strategically located manufacturing plants and a sales
base capable of servicing carriers and original equipment manufacturers
throughout the world."
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 indoor and outdoor
repeaters, in-building multi-band optical repeater 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 and third generation (3G) air interfaces.
Grayson Wireless supplies network-based wireless caller geolocation systems for
E911 and value added services, as well as measurement and signal processing
systems for testing the performance of a wireless network. 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, products for 3G, E911 and power amplification; the cost
and outcome of pending litigation, including, for example, a lawsuit filed by a
competitor in the E911 geolocation business claiming infringement by the Company
of intellectual property rights; the health and economic stability of the world
and national markets; the cost and availability of capital and financing to the
Company and its customers; loss or bankruptcy of one or more of the Company's
customers, which could adversely affect the Company's ability to collect its
accounts receivable; the uncertain timing and level of purchases of both current
products and those under development for current and prospective customers of
the Company's products and services; the effective realization of inventory and
other working capital assets to cash; the impact of competitive products and
pricing in the Company's markets; the impact of changes in the market value of
pension fund assets held by the Company's defined benefit pension plans; the
ability of the Company to generate future profits or to implement other tax
planning strategies needed to utilize the Company's tax loss carry forwards; the
changes in business conditions and/or changes in assumptions, which could result
in goodwill impairment charges; the impact of U.S. and foreign government
legislative/regulatory actions, including, for example, the scope and timing of
E911 geolocation requirements in the U.S. markets and spectrum availability and
licensing for new wireless applications; the impact of future business
conditions on the Company's ability to meet terms and conditions of the
Company's borrowing agreements; the cost, timing and availability of personnel,
facilities, materials and vendors required for the Company's current and future
products; whether and when backlog will be converted to customer sales; and the
impact, if any, on current or future sales, earnings or financial condition of
the Company resulting from the previously announced agreement under which Andrew
Corporation will acquire Allen Telecom. Allen Telecom Inc.'s Annual Report on
Form 10-K and Quarterly Reports on Form 10-Q may contain additional details
concerning these factors.
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 STATEMENT OF OPERATIONS
(Amounts in Thousands, Except Per Share Data)
Three Months Ended
March 31,
2003 2002
--------- ---------
(Unaudited)
SALES $ 110,934 $ 89,869
Cost of sales (Note 1) (72,997) (68,702)
--------- ---------
Gross profit 37,937 21,167
Operating expenses:
Selling, general and administrative
expenses (Note 1) (17,079) (13,154)
Research and development costs (Note 1) (8,000) (6,609)
--------- ---------
Operating income 12,858 1,404
Net interest expense (1,169) (2,366)
--------- ---------
Income (loss) before taxes and minority interest 11,689 (962)
(Provision) benefit for income taxes (Note 2) (2,042) 340
--------- ---------
Income (loss) before minority interest 9,647 (622)
Minority interest (27) (20)
--------- ---------
Net income (loss) 9,620 (642)
Dividends on preferred stock (968) --
--------- ---------
Income (loss) applicable to common shareholders $ 8,652 $ (642)
========= =========
INCOME (LOSS) PER COMMON SHARE:
Net income (loss):
Basic $ .28 $ (.02)
========= =========
Diluted $ .26 $ (.02)
========= =========
Weighted average common shares:
Basic 30,570 30,300
Diluted 37,470 30,300
ALLEN TELECOM INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
March 31, December 31,
2003 2002
-------- --------
(Unaudited)
ASSETS
Cash and equivalents $ 78,751 $ 48,420
Receivables 100,661 105,463
Inventories 107,506 100,474
Other current assets 13,074 28,569
-------- --------
Total current assets 299,992 282,926
Fixed assets 38,236 38,214
Goodwill 139,136 139,126
Other assets 65,423 69,772
-------- --------
TOTAL ASSETS $542,787 $530,038
======== ========
LIABILITIES
Notes payable and current maturities of
long-term obligations $ 12,938 $ 13,277
Accounts payable 47,238 54,003
Accrued expenses 46,634 36,192
Income taxes 9,592 14,600
-------- --------
Total current liabilities 116,402 118,072
Long-term debt 64,300 64,084
Other liabilities 24,080 23,628
-------- --------
TOTAL LIABILITIES 204,782 205,784
REDEEMABLE CONVERTIBLE PREFERRED STOCK 50,000 50,000
STOCKHOLDERS' EQUITY 288,005 274,254
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $542,787 $530,038
======== ========
Note 1: In the first quarter 2003, the Company incurred $840 thousand of
restructuring charges ($.02 per basic and diluted common share after related tax
effect) in connection with headcount reductions at its Base Station Subsystems
and Components product line in North America, as well as its Repeater and
in-building Coverage product line in Europe. Of these restructuring charges, $20
thousand were included in Cost of sales, $205 thousand in Selling, general and
administrative expenses and $615 thousand in Research and development costs. In
addition, the Company incurred $500 thousand, included in Selling, general and
administrative expenses ($.01 per basic and diluted common share after related
tax effect), relating to transaction costs in connection with the previously
announced planned merger with Andrew Corporation.
Note 2: The Company recorded a one-time net tax benefit of approximately
$2.0 million (or $.06 and $.05, per basic and diluted common share,
respectively) in the first quarter of 2003 resulting primarily from favorable
European tax legislation. This net tax benefit reduced the effective tax rate
for the first quarter 2003 to 17.5% from an expected ongoing rate of 35% for the
full year 2003.
Note 3: Segment information for the Company is as follows (amounts in
thousands):
Three Months Ended
March 31,
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2003 2002
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Sales to external customers:
Wireless communications equipment:
Geolocation products $ 43,618 $ 12,490
Base station subsystems and components 32,890 33,707
Repeater and in-building coverage products 16,419 22,470
Base station and mobile antennas 14,244 16,626
--------------------------
Total wireless communications equipment 107,171 85,293
Wireless engineering and consulting services 3,763 4,576
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Total sales $ 110,934 $ 89,869
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Results of operations:
Wireless communications equipment $ 14,995 $ 3,289
Wireless engineering and consulting services (461) (17)
--------------------------
14,534 3,272
General corporate expenses (1,676) (1,868)
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Operating income $ 12,858 $ 1,404
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