Exhibit 99.1
FOR IMMEDIATE RELEASE
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ALLEN TELECOM REPORTS SECOND QUARTER 2002
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- SECOND QUARTER SALES REACH $91.9 MILLION -
- EARNINGS, EXCLUDING A RESTRUCTURING CHARGE, $(.02) PER SHARE -
- COMPANY GENERATED $24.5 MILLION IN CASH -
BEACHWOOD, OHIO, July 31, 2002 - Allen Telecom Inc. (ALN: NYSE)
reported today that earnings per common share for the second quarter ended June
30, 2002 were a loss of $0.04 per common share in accordance with generally
accepted accounting principles (GAAP). Excluding a restructuring charge of $0.02
per common share in the second quarter for severance costs related to continued
headcount reductions at several operating divisions, earnings per common share
for the second quarter would have been a loss of $0.02 per common share.
Analysts' consensus estimates for the second quarter of 2002 were a loss of
$0.03 per common share. The second quarter loss, excluding restructuring costs,
compared to a loss of $0.02 per common share for the first quarter of 2002 and
earnings of $0.03 per common share in the second quarter of 2001.
Results per common share for the six-month period ended June 30, 2002,
excluding the restructuring charge of $0.02 per share in the second quarter,
were a loss of $0.04 as compared to earnings per common share of $0.12 for the
six-month period ended June 30, 2001.
Sales for the second quarter of 2002 were $91.9 million as compared to
$89.9 million in sales for the first quarter of 2002 and $105.1 million in sales
for the second quarter of 2001. Total sales improved 2.2% in the second quarter
of 2002 over first quarter sales, despite the anticipated temporary reduction in
geolocation system sales in the second quarter, as a result of the improved
sales in all other equipment product lines. Sales for the six-month period ended
June 30, 2002 were $181.7 million, down 14.9%, as compared to sales of $213.6
million in the six-month period ended June 30, 2001.
Backlog increased by more than 20% to $118.2 million as of June 30,
2002 from $95.7 million at March 31, 2002, due in part to a previously announced
large order for geolocation products. Backlog in two other product lines, Base
Station Subsystems and Components and Base Station and Mobile Antennas, also
increased significantly at June 30, 2002 as compared to March 31, 2002. These
increases were partially offset by reduced backlog in the Repeaters and
In-Building Coverage product line.
Allen Telecom generated cash of approximately $24.5 million during the
second quarter as a result of continuing controls on spending implemented
throughout the Company and a strong focus on reducing working capital. As a
result of this cash generation, the Company continued to strengthen its balance
sheet, increasing its cash balance and reducing long-term debt.
The Company has also completed its initial evaluation of goodwill as of
January 1, 2002 as required under the new accounting rule, Statement of
Financial Accounting Standards No. 142. As a result of this analysis, and
pending completion of the final analysis prior to the end of 2002, the Company
may have a non-cash goodwill impairment charge related to its Decibel Products
reporting unit estimated to be in the range of $0 - $5 million to be booked in
the second half of 2002. This charge does not effect the Company's operations
and has no impact on current or future cash flows.
Robert G. Paul, President and Chief Executive Officer of Allen Telecom
Inc., stated: "During 2002, we have focused our efforts on strengthening our
balance sheet, technology advancements and new product introductions. Over the
past six months Allen Telecom raised and generated approximately $71.8 million
in cash, including net proceeds of $46.8 million from our convertible preferred
stock offering in the first quarter and cash generation of $24.5 million during
the second quarter of 2002. We used the cash generated in the second quarter to
eliminate all of the Company's revolving credit debt as of the end of the
quarter and to increase our cash balances from $14.2 million to $22.4 million.
The improvement in the value of the Euro currency, as compared to the U.S.
Dollar, had a major impact on the equity portion of our balance sheet, a less
significant impact on other portions of our financial statements and no effect
on reported earnings per share. The strengthening of the Euro against the U.S.
Dollar also masked some of the continuing reductions in receivables and
inventory levels, which in constant currency were reduced by $10.3 million
during the quarter.
"We believe that the Company's actions, during the wireless
telecommunications industry's six quarters of announced capital spending
reductions and delays, places us in a position to benefit significantly from any
improvement in this marketplace. Given the strength of our Geolocation business,
we are well positioned to show improved second half performance even if there is
little or no improvement in the underlying telecom industry. We expect our
Geolocation business to grow significantly during the third and fourth quarters
of 2002 given the strong backlog and the recent actions by the Federal
Communications Commission to ensure implementation of E 911 initiatives.
"We have also lowered our costs and expenses and will continue to do so
where appropriate to insure that Allen Telecom will benefit when the current
market for telecommunications improves. During the second quarter we incurred
$1.0 million in severance and other restructuring costs, while instituting cost
reductions at an approximate $6.0 - $7.5 million annual rate. Cost reductions of
approximately $5.0 - $6.0 million were implemented in the previous two quarters.
"Looking forward, we expect the third and fourth quarters to reflect
increased sales levels as compared to the second quarter. This growth will be
predominantly driven by increases in Geolocation product sales, as certain
carriers increase their deployment of E 911 systems, together with increases in
sales of Base Station Subsystems and Components products and more modest growth
in sales of Base Station and Mobile Antenna products. The Company continues to
review its cost structure and may identify and incur additional restructuring
costs as the balance of the year unfolds. Other than any such restructuring
charge, the Company expects to return to profitability in the third and fourth
quarters. Our current expectation would be for sales growth of 10 - 15% in the
third quarter with resulting earnings per share of $0.01 - $0.03. We expect
fourth quarter 2002 results to be somewhat stronger than third quarter."
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 incurred, savings realized and timing
of the integration of acquisitions; 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 U.S. profits or to
implement other tax planning strategies needed to utilize the Company's tax loss
carry forwards; 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.
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CONSOLIDATED STATEMENTS OF OPERATIONS
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(Amounts in Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
2002 2001 2002 2001
---- ---- ---- ----
SALES $ 91,850 $ 105,094 $ 181,719 $ 213,637
Cost of sales (69,803) (77,983) (138,505) (156,622)
--------- --------- --------- ---------
Gross profit 22,047 27,111 43,214 57,015
Operating expenses:
Selling, general and administrative
expenses (14,819) (13,988) (27,973) (28,353)
Research and development and product
engineering costs (6,483) (7,170) (13,092) (14,070)
Amortization of goodwill (Note 1) - (1,987) - (3,967)
--------- --------- --------- ---------
Operating income 745 3,966 2,149 10,625
Net interest expense (1,773) (2,510) (4,139) (5,105)
--------- --------- --------- ---------
(Loss) income before taxes and minority interest (1,028) 1,456 (1,990) 5,520
Benefit (provision) for income taxes 357 (565) 697 (2,150)
--------- --------- --------- ---------
(Loss) income before minority interest (671) 891 (1,293) 3,370
Minority interest 9 (45) (11) (87)
--------- --------- --------- ---------
NET (LOSS) INCOME (662) 846 (1,304) 3,283
Dividends on Preferred Stock (603) - (603) -
--------- --------- --------- ---------
NET (LOSS) INCOME APPLICABLE TO
COMMON SHAREHOLDERS $ (1,265) $ 846 $ (1,907) $ 3,283
========= ========= ========= =========
NET (LOSS) INCOME PER COMMON SHARE,
basic and diluted $ (.04) $ .03 $ (.06) $ .12
========= ========= ========= =========
Weighted average common shares outstanding:
Basic 30,390 27,980 30,370 27,950
Assumed exercise of stock options - 240 - 330
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Diluted 30,390 28,220 30,370 28,280
========= ========= ========= =========
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 Net (Loss) Income Per Common Share by
approximately $.07 and $.14 per common share (basic and diluted) for
the three and six months ended June 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 Six Months Ended
June 30, June 30,
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2002 2001 2002 2001
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Reported net (loss) income $ (662) $ 846 $ (1,304) $ 3,283
Add back goodwill amortization
(net of related income taxes) - 1,982 - 3,957
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Proforma net (loss) income $ (662) $ 2,828 $ (1,304) $ 7,240
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Reported net (loss) income per common share
(basic and diluted) $(.04) $.03 $(.06) $.12
Effect of goodwill amortization - .07 - .14
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Proforma net (loss) income per common share $(.04) $.10 $(.06) $.26
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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 second half 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 Six Months Ended
June 30, June 30,
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2002 2001 2002 2001
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Sales to external customers:
Wireless communications equipment:
Base station subsystems and components $ 35,664 $ 54,610 $ 69,388 $114,033
Repeater and in-building coverage products 26,310 20,635 48,763 43,455
Base station and mobile antennas 18,630 23,169 35,256 43,689
Geolocation products 7,703 - 20,193 -
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Total wireless communications equipment 88,307 98,414 173,600 201,177
Wireless engineering and consulting services 3,543 6,680 8,119 12,460
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Total sales $ 91,850 $105,094 $181,719 $213,637
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Results of operations:
Wireless communications equipment $ 3,477 $ 6,533 $ 6,766 $ 16,795
Wireless engineering and consulting services (1,134) 1,336 (1,151) 1,494
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2,343 7,869 5,615 18,289
Goodwill amortization - (1,987) - (3,967)
General corporate expenses (1,598) (1,916) (3,466) (3,697)
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Operating income $ 745 $ 3,966 $ 2,149 $ 10,625
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ALLEN TELECOM INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
JUNE 30, DECEMBER 31,
2002 2001
------------ ------------
(Unaudited)
ASSETS
Cash and equivalents $ 22,351 $ 16,368
Receivables 92,569 92,291
Inventories 118,068 124,026
Other current assets 20,185 25,245
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Total current assets 253,173 257,930
Fixed assets 39,990 41,290
Goodwill 141,367 140,995
Other 76,222 71,741
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TOTAL ASSETS $510,752 $511,956
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LIABILITIES
Notes payable and current maturities of long-term
obligations $ 12,645 $ 12,318
Accounts payable 44,804 40,355
Accrued expenses 27,548 27,827
Income taxes 15,805 14,633
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Total current liabilities 100,802 95,133
Long-term debt 74,339 140,530
Other liabilities 16,946 17,936
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TOTAL LIABILITIES 192,087 253,599
REDEEMABLE CONVERTIBLE PREFERRED STOCK 50,000 -
STOCKHOLDERS' EQUITY 268,665 258,357
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $510,752 $511,956
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