Andrew Corp.

10500 W. 153rd Street

Orland Park, Illinois 60462
(708) 349-3300

www.andrew.com

Sales

$1 billion

Business Description
CWith the acquisition of Allen Telecom (Allen) in July 2003, the company believes that it has established itself as the leading global supplier of communications products and systems to the wireless subsystem infrastructure market. The company has the ability to provide total customer solutions, including virtually all components of a wireless base station that are outsourced by major network OEMs (Original Equipment Manufacturers) and operators. This allows the company to better meet the evolving performance and cost efficiency requirements of its customers who benefit from the availability of one-stop shopping for all of their wireless infrastructure needs. Andrew’s products are primarily based on the company’s core competency, the radio frequency (RF) path. Andrew has unique technical skills and marketing strengths in developing products for RF systems. Andrew manages its business as one reportable business segment built around this core competency. 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 for government and commercial use.

The company now classifies its sales into five product groups: Antennas, Base Station Subsystems, Cable Products, Network Solutions and Wireless Innovations. The company believes these new product classifications better reflect the nature of its business now and in the future. The Antenna group products include base station antennas, earth station antennas, multi-band antennas and point-to-point antennas. Base Station Subsystems products are integral components of wireless base stations and include products such as power amplifiers, filters, duplexers and combiners that are sold individually or as parts of integrated subsystems. Cable Products include coaxial cables, connectors, cable assemblies and accessories. Network Solutions includes software and equipment to locate wireless 911 callers as well as equipment and services for testing and optimizing wireless networks. Wireless Innovations products are used to extend the coverage of wireless networks in areas where signals are difficult to send or receive and include both complete systems and individual components.

Over the last two years, the company completed two major acquisitions that have substantially broadened its product offering and established the company as the leading global supplier of communications products and systems to the wireless subsystem infrastructure market. These acquisitions allow the company to provide global wireless service providers and OEMs with a unique one-stop shopping partner. During the year, the company purchased Allen Telecom, a global provider of wireless infrastructure equipment and services. Allen’s product offering was complementary to the company’s and had minimal product overlap. This acquisition allows Andrew to offer a more complete RF footprint product offering with more value-added and integrated products. In June 2002, the company completed the acquisition of Celiant Corporation, a power amplifier manufacturer. Celiant’s engineering and technical capabilities, and intellectual property have made the company a leading supplier of power amplifiers.

While the company is optimistic about the long-term potential of the wireless infrastructure market, global spending on infrastructure has been weak over the last several years. In response to this decline, Andrew has taken steps to reduce expenses and improve financial performance. In September 2002, the company initiated a restructuring program that it anticipates will reduce annual operating costs by as much as $47 million. These restructuring plans included the closing of several facilities and the relocation of manufacturing operations to new facilities in the Czech Republic and Mexico. During 2003, the company substantially completed these plans and started manufacturing operations at these new facilities in the fourth quarter. Following the Allen Telecom acquisition, the company initiated a merger integration program that the company anticipates will reduce annual operating costs of the combined company by more than $52 million annually, beginning in 2005. These savings will be achieved through a global shared services implementation, combined sourcing of components and consolidation of manufacturing locations.

The company believes that developing markets such as China and India have significant long-term growth potential for the company. Developing countries represent some of the greatest growth opportunities for wireless communication, as wireless is the most cost efficient way to provide communications infrastructure to these regions. The company has a significant international manufacturing and distribution presence. Sales by non-U.S. operations and export sales from U.S. facilities accounted for approximately 56% of Andrew’s sales in 2003, 50% in 2002 and 57% in 2001. Over the last five years, Andrew has significantly increased its international manufacturing and distribution capabilities in some of the fastest developing wireless infrastructure markets. In 1998, the company built new manufacturing facilities in China and India. These new facilities have allowed the company to more effectively reach these growing markets and have helped to increase sales in the Asian market. The company also increased its manufacturing and distribution presence in the Latin American region, through the 1995 acquisition of a Brazilian company and by establishing a Brazilian cable manufacturing facility.

Principal Product Groups

Antennas

This product group includes antennas, support products and electronic equipment for applications in the wireless infrastructure market, satellite communications, point-to-point communication, and other specialty applications. The Antenna Group products include base station antennas, terrestrial microwave (TMW) antennas, earth station antennas (ESA), and multi-band antennas.

Andrew is a market leader for commercial base station antennas serving global market needs for all wireless protocols. Base station antennas are the last, critical piece of wireless infrastructure that captures the wireless signal from the user handset and sends it to operators’ base stations. The company offers a diverse product line of base station antennas ranging in size from approximately two feet in length to large, tower-mounted antennas in excess of twenty feet in length. Base station antennas are marketed under the trade name DECIBEL®. The DECIBEL® product line contains a variety of innovative products including technology to optimize the performance in CDMA and W-CDMA markets. The company holds significant intellectual property that is used to create innovative products, such as the Andrew Teletilt™ system, which is a remotely-controlled variable electrical downtilt base station antenna system that can be adjusted in minutes, without costly site downtime. This allows customers to enhance their network performance while reducing operating expenses.

The company manufactures a full line of TMW antennas for applications such as fixed-line telecommunications networks, broadband wireless, wireless infrastructure, and others. Microwave radio networks are commonly used by telecommunications companies for telephone, Internet, video and data transmission. They are also used by cellular operators to link cell sites with switching centers and by private companies, such as pipelines, electric utilities and railroads, for their internal communications needs. Andrew TMW antennas are marketed under the trademarks GRIDPAK® and ValuLine®. The company also offers additional passive microwave system components such as filters and duplexers.

The company includes its waveguide products in the Antenna Group. Waveguides are hollow transmission lines used to connect antennas and radios. Andrew manufactures circular, rectangular and elliptical waveguides for various uses such as television broadcasting and microwave transmission. Elliptical waveguide is the most commonly used waveguide, and it is used as a main feeder line for microwave transmissions between 1.7 and 40 GHz. Most of Andrew’s waveguides are sold as part of its antenna systems.

The Antenna Group also has a complete line of pressurization equipment that provides a constant supply of dry air to the transmission lines, providing high signal quality and reduced risk of component damage due to moisture. Pressurization products are marketed under the trademark DryLine®.

ESA systems manufactured by Andrew are used at earth terminals to receive and transmit signals to and from communication satellites. These products are used for the long distance transmission of conventional telecommunications traffic, to support broadband data infrastructure and for satellite delivered television broadcasting. System elements include an antenna, from one foot to thirty-two feet in diameter, electronic controllers, waveguides, polarizers, combiners, special mounting features, motor drives, position indicators, transmitters and receivers. The company’s ESA products are marketed under the trademarks Newsflash™, VALULink®, and ValuStar™.

Andrew is an industry leader in the design, manufacture and distribution of high quality, high performance antennas for Wireless Communication and Global Positioning System (GPS) applications. Andrew supplies multiband antennas and GPS products to automotive manufacturers and their suppliers for use in on-board telematics programs. Telematics products are used in vehicle communication and navigation systems, such as GM’s OnStar®, Ford’s vehicle communication system (VCS) and JaguarNet®. Andrew manufactures a line of specialized antennas and repeater kits for XM Radio and Sirius Satellite Radio reception. These repeater kits provide in-building satellite signal coverage allowing retail partner stores the ability to demonstrate XM and Sirius products, while antennas are used at the consumer level to bring the signal into their vehicle or home radio unit.

Andrew also offers a wide range of antennas and antenna/pedestal systems for applications such as air traffic control radar antenna systems, weather radar systems, low and medium earth orbit satellite ground tracking systems, and high frequency (HF) communication systems that include Andrew’s line of GRANGER® HF antennas.

In November 2003, the company sold the assets of its broadcast antenna and filter product lines to Electronic Research Inc. (ERI). The company’s broadcast group designed and manufactured broadcast antennas primarily for television broadcast. This sale included selected assets from the company’s Orland Park, Illinois facility and all of the assets of its Gray, Maine facility. The company’s broadcast group sales were approximately $20.1 million in fiscal 2003, and were included in the Antenna Group sales. Also in November 2003, the company acquired selected assets of Channel Master LLC, a designer and manufacturer of DBS (Direct Broadcast Satellite) and VSAT (Very Small Aperture Terminal) antennas and products, for approximately $18 million. This acquisition will significantly strengthen the company’s existing satellite antenna product offering.

Base Station Subsystems

Base Station Subsystems products are integral components of wireless base stations and include products such as power amplifiers, filters, duplexers and combiners. These products cover all the major wireless standards and frequency bands and are sold individually or as part of integrated subsystems.

Andrew designs and manufactures high power single and multi-carrier RF power amplifiers. RF power amplifiers are required by wireless communication systems to boost the radio signal power for transmission across long distances and are usually located within base stations. Andrew’s RF power amplifier products range in power from 10 to 100 watts of output power and in frequency ranges from 450 MHz to 2500 MHz. The company’s power amplifiers are custom designed for each OEM and are available for most wireless standards, including 2G, 2.5G, 3G and 4G technologies. The company recently introduced its next generation single and multi-carrier, highly linear power amplifiers with digital pre-distortion technology, and is currently working with major OEMs to design their next generation power amplifier products.

Andrew has recently developed two new integrated product offerings that include an integrated radio and amplifier and, in addition, an integrated radio, amplifier and receiver. Both of these products were developed to meet the low-cost demands of 3G deployments. Andrew currently has integrated products in development for several OEMs’ next generation 3G base stations.

Andrew designs and manufactures filters, duplexers, combiners and integrated antenna combining units. RF filters are used to filter high power transmit signals to meet frequency regulations and interference requirements in the different allocated wireless frequency bands. Transmit combiners allow the combination of multiple signals into one transmit antenna. RF receive filters are used to select intended signals and isolate these signals from unwanted interference and noise. Duplexers are used to allow one antenna to both transmit and receive signals. Andrew is a leading supplier for in-cabinet application of filters and duplexers. For this application, filters and duplexers are incorporated into base station transceiver cabinets provided to OEMs for site installations.

To support more sophisticated antenna filtering applications and to improve overall performance and costs, Andrew is supplying integrated antenna combining units to leading OEMs. This product provides antenna-filtering functions for both transmitted and received signals and low power amplification for received signals. These integrated antenna combining units also have control functions for antenna supervision.

Andrew also supplies tower-mounted amplifiers to OEMs and wireless operators that use these products to improve network performance. Tower-mounted amplifiers improve network performance by filtering and amplifying as close as possible to the actual receiving antenna, thus eliminating additional signal loss and noise. For this application, integrated receiving filters and amplifiers are directly mounted at the top of the cell site tower.

Cable Products

Cable Products include coaxial cables, connectors, cable assemblies and accessories. Coaxial cable is a two-conductor, radio frequency transmission line with the smaller of the two conductors centrally located inside the larger, tubular conductor. It is principally used to carry radio frequency signals. Andrew sells its semi-flexible and elliptical waveguide cable products under the trademarks HELIAX® and RADIAX®.

In addition to bulk cable, the company provides cable connectors, accessories and assemblies marketed under the HELIAX® brand name. Coaxial cable connectors attach to cable and facilitate transmission line attachment to antenna and radio equipment. Andrew provides multiple connector families, including OnePiece™ and the new Positive Stop™ connectors. Cable accessories protect and facilitate installation of coaxial cable on cell site towers and into equipment buildings. Accessories include lightning surge protectors, hangers, adaptors and grounding kits, including Arrestor Plus®, ArrestorPortII™, KwikClamp™, SureGround™, and Compact SureGround™ lines. SureFlex™ coaxial cable assemblies, used to connect the main feeder cable line to the antenna, are made up of smaller sized HELIAX® cable and the Andrew patented SureFlex™ connectors.

The company provides a full range of products suitable for in-cabinet applications and a wide range of traditional cable assemblies utilizing solid copper, braid, semi-rigid and conformable cables, as well as some technically unique cables for special applications. The company also supplies assemblies for high power, low intermodulation distortion, and phase matched and fixed electrical lengths. Andrew combines assemblies and supporting products according to customer specifications in “cabinet kits” to help reduce the OEM’s overall operational cost of building cabinets.

The company has recently started manufacturing coaxial cable and connectors for the broadband cable television market. These products consist of hard-line trunk and distribution cables used to carry analog and digital signals from the fiber node to the broadband network for Hybrid Fiber Coax networks. In November 2003, the company acquired the assets of Yantai Fine Cable, a Chinese manufacturer of broadband cable. This acquisition allows the company to offer drop cable, which connects the subscriber’s home equipment such as televisions and computers to the broadband network for a final end-to-end coaxial solution.

Andrew distinguishes itself from its competition by offering technically advanced and higher performance cable products. Two new innovative product offerings that the company has recently introduced are Coral™ and Andrew Virtual AirTM (AVA) Cables. Coral™ provides unwavering electrical performance even after repeated bending. This cable is ideal for voice/data and Wi-Fi network applications. The cable’s design uses a new ultra-flexible corrugation technology allowing for more diverse site installations. This multi-purpose cable provides 100% shielding, lower intermodulation (IM) and system loss, and better return loss when compared to braided cable. Constructed with a continuous solid outer conductor, the cable and connectors are waterproof, ensuring that a system is reliable and consistent over time. AVA cables are now being manufactured in 7/8” and 1 5/8” diameters. These cables offer the best attenuation performance in the wireless industry and lower system costs by utilizing smaller diameter cables.

Network Solutions

Network Solutions includes geolocation systems, engineering and consulting services, and test and measurement products. Andrew is one of two recognized suppliers of network-based geolocation systems capable of providing wireless operators with the equipment and software necessary to locate wireless E-911 callers, as mandated by the Federal Communications Commission (FCC). Andrew believes its network-based GEOMETRIX product is capable of exceeding the accuracy and reliability requirements set by the FCC for E-911 networks. The system can locate calls that transition between analog and digital sites, and calls in which the caller is a subscriber, roamer or non-subscriber. The GEOMETRIX product can be used with all air interfaces including AMPS, TDMA, CDMA, GSM and iDEN, and requires no changes in wireless service and no modifications or replacement of existing handsets. In addition, the system was designed to accommodate a variety of location-based services, such as fleet management, concierge services, mobile commerce, wireless information directories and other location dependent services.

Included as part of Network Solutions are engineering and consulting services offered under the Comsearch name brand. Comsearch is a leading provider of frequency planning and microwave coordination services as well as wireless network design and field engineering services. These services are provided to operators to assist in determining and analyzing network coverage requirements based on area topography and demographics. Andrew engineering expertise in spectrum sharing, microwave interconnectivity and cell system design has enabled the company to obtain orders from most major domestic operators. The company’s spectrum sharing software is currently licensed and utilized by major operators and consultants to perform analysis in most domestic markets and its software for microwave interconnectivity is operational in Asia, Europe, North America and South America.

Andrew also provides INVEX3GTM test equipment and SCOREBOARDTM analysis software that measure and analyze radio transmission characteristics for optimization of wireless communications networks.

Wireless Innovations

Wireless Innovations products are used to extend the coverage of wireless networks in areas where signals are difficult to send or receive and include both complete systems and individual components. These products support coverage and capacity enhancement for both operators and OEMs. Andrew provides turnkey systems and customized product applications for major projects throughout the world such as highway tunnels, subway and railway systems, airports and convention centers. This group of products addresses five main applications: coverage solutions for 2G networks (road tunnels/railways/stadium/buildings), 3G network elements (Pico Node-B), 2G-2.5G-3G shared networks with neutral hosts, public safety wireless networks (Tetra-European standard public safety network), and distributed antenna systems to OEMs.

Andrew provides a full line of RF repeaters and optical distribution systems for use in wireless communications systems, where physical structures or geography cause low RF signal strengths. They can also be used as an efficient and low-cost alternative to base stations in areas where coverage is more critical than additional capacity. These products can be used for both single carrier and multi-carrier applications. The company’s systems are available in a wide frequency range from 450 MHz to 2100 MHz and support all wireless technologies. Andrew’s systems have features and functions that allow operators to remotely monitor and adjust these systems.

Andrew offers a wide array of in-building coverage products consisting of both passive and active components that extend wireless network coverage into buildings and other areas where it is difficult to get wireless reception. The company’s active in-building products include Andrew’s Britecell®, a fiber optic based distributed antenna system. Andrew’s passive in-building products include antennas, cable, hybrid couplers, combiners, power splitters, cable taps and termination loads. Andrew Cell-Max™ antennas are especially designed for in-building use and are omnidirectional or directional, single or multibanded to provide high reliability and low cost. Andrew’s Radiax® coaxial cables, connectors and accessories are especially designed for in-building coverage. Radiax® is a coaxial cable with slots in the outer conductor that allow for RF coverage in buildings and tunnels. Andrew also offers small specialty cables that meet stringent fire codes and are flexible enough to bend around corners and over walls for in-building applications.