Interim report january 1 - september 30, 2000

INTERIM REPORT JANUARY 1 - SEPTEMBER 30, 2000 Net sales rose by 32 percent to SEK 1,986 million (1,508). Operating income fell by 23 percent to SEK 71 million (92). Income after financial items fell by 47 percent to SEK 48 million (90). Surplus pension funds from SPP affected income positively by SEK 30 million (-). Allgon Systems reported record sales during the third quarter of SEK 462 million (287), an increase with 61 percent. Sales for January-September amounted to SEK 1,227 million (791). Operating income increased by 76 percent during the third quarter to SEK 75 million (43). Allgon Mobile Communications income was affected by low sales volumes and over capacity. Deliveries at Allgon Microwave were 50 percent higher than previous quarter. Wireless Solutions launched new WLAN products. Market Expansion of the infrastructure of the mobile telephone networks in North America is very rapid. The previous trend with a consolidation of the American operators continued. Improved roaming, anticipated strong subscriber growth and increased utilization of the mobile telephone networks stimulated this development. In South America, investments in infrastructure were stable. Subscriber growth remains high in Europe. A recovery in South-East Asia can be noted in the form of increased subscriber growth and capacity expansion. The subscriber trend in China remains strong. China now has more than 60 million subscribers and is thus the second largest market in the world after the USA, followed by Japan. Third quarter 2000 Allgon's net sales for the third quarter rose by 23 percent to SEK 672 million (545). Especially Allgon Systems, which reported record sales during the third quarter, contributed to the high net sales. Operating income fell by 66 percent to SEK 16 million (47). Income after financial items fell by 55 percent to SEK 18 million (40). Investments in Allgon Microwave and Wireless Solutions affected income negatively by SEK -33 million (-12). Third quarter income includes SEK 15 million relating to surplus pension funds from SPP. Group net sales and order intake Net sales rose by 32 percent to SEK 1,986 million (1,508). Orders received increased by 7 percent to SEK 1,887 million (1,761). Allgon Systems Net sales rose by 55 percent to SEK 1,227 million (789). The increase was especially evident in North and South America. Sales of repeater networks increased in North and South America. Sales of radio equipment and antenna systems developed very positively, especially in North America. Antenna sales more than doubled compared with the same period in the previous year. Sales of radio equipment also developed very strongly. Sales of antenna systems also increased in China, thanks to the local production unit which was established there during the second quarter. Operating income rose by 229 percent to SEK 142 million (62). Lars Jehrlander took over as Head of Business Area Allgon Systems on October 2, 2000. Allgon Mobile Communications Net sales fell by 6 percent to SEK 674 million (717). Allgon's distribution between retractable, fixed and built-in antennas was 34/64/2 (38/61/1) percent. During the third quarter, Allgon and Motorola Semiconductor Product Sector signed a letter of intent for a collaboration relating to joint development of new technology for antenna systems intended for the third generation's wireless multimedia terminals. Allgon's DCA concept (Digital Controlled Antenna) will use new technology from Motorola. The collaboration relating to DCA will also include other advanced radio components. The cost savings program is being implemented. Fixed costs will be reduced by at least SEK 50 million on an annual basis compared with the first half of 2000, with full effect as of first quarter 2001. Allgon Mobile Communications is involved in several projects relating to built-in antennas with leading mobile telephone manufacturers that have chosen Allgon as supplier. Sales of antennas for satellite telephones amounted to SEK 33 million (14). Operating income fell by 72 percent to SEK 29 million (102). Allgon Microwave Net sales amounted to SEK 80 million (2). Marketing activities in Asia, Europe and South America continued. A product range in accordance with FCC standard for the American market is being produced, and sales of this product are expected to start during the first half of 2001. The operating result amounted to SEK -33 million (-38). Wireless Solutions Net sales amounted to SEK 5 million (-). During the quarter, Wireless Solutions launched a new range of WLAN products for wireless data transmission with 11 Mbit/s, which is mainly directed at OEM manufacturers. A new PC card, new wireless access nodes, adapters for printers and stationary personal computers as well as a web camera are included in the new product range. The operating result amounted to SEK -50 million (-). Results Allgon's gross margin fell due to overcapacity in Allgon Mobile Communications' operations. Allgon's operating income fell by SEK 23 million to SEK 71 million (92). Operating income is charged with the growth investments, Wireless Solutions and Allgon Microwave, at SEK -88 million (-38). The result also includes SEK 30 (-), which relates to surplus pension funds from SPP. This amount is reported under other operating income/expenses. The reduced sales volumes in Business Area Allgon Mobile Communications negatively affected operating income. Income after financial items, which amounts to SEK 48 million (90), includes a positive one-off effect of approximately SEK 20 million from the divestment of the vehicle antenna operation. Income after financial items would have been SEK 51 million higher if Allgon had not had any hedging. An action program has been initiated to improve profitability. The program comprises intensified activities aimed at reducing production costs as well as a savings program for expenses. Financial position At September 30, 2000, the equity ratio amounted to 44 percent (50 percent at December 31, 1999). Net borrowing amounted to SEK 277 million at the period-end. (SEK 162 million at December 31, 1999). Capital expenditure During the period, capital expenditure in buildings and land, machinery and equipment amounted to SEK 176 million (196) gross, of which the new construction for Allgon Systems amounted to SEK 64 million (98). Offers from LGP and REMEC On August 22, LGP Telecom Holding AB made an offer for Allgon. Allgon was offered 0.56 of a newly-issued share in LGP for each issued Allgon A and B share. The offer expired on October 11. The Allgon Board of Directors supported by its financial advisors recommended the shareholders to reject the offer. LGP announced on October 16 that their offer had met with acceptances representing only 17 percent of the share capital and the offer will therefor not be completed. On September 28, REMEC Inc. made an offer for Allgon. REMEC raised its offer on October 9. Allgons Board of Directors recommended the shareholder supported by its financial advisors to accept the offer. New growth target Allgon has revised its long-term target for average annual sales growth from 20 percent to 30 percent over the next five years. Future information dates January 18, 2001 Year-end Report March 15, 2001 Annual General Meeting April 19, 2001 Three-Month Interim Report Täby, October 17, 2000 Allgon AB (publ) Jan Edhäll President and CEO For further information, please contact: Jan Edhäll Telephone: +46 8-540 822 31 President and CEO, Allgon AB Claes Silfverstolpe Telephone: +46 8-540 822 32 Chief Financial Officer, Allgon AB Condensed Consolidated 2000 1999 1998 1999 Statement of Income (SEK Jan- Jan-SepJan-Sep Jan-Dec million) Sep Net sales 1,986 1,508 1,294 2,136 Cost of goods sold -1,348 -936 -804 -1,340 Gross income 638 572 490 796 Selling expenses -215 -177 -135 -244 Administrative expenses -122 -86 -71 -123 Research and development -272 -217 -159 -297 costs Other operating 42 0 -18 -8 income/expenses Operating income 71 92 107 124 Net financial -23 -2 -6 3 income/expenses Income after financial 48 90 101 127 items Taxes -14 -27 -22 -44 Minority interests of net -2 -1 -2 -2 income for the period Net income for the period 32 62 77 81 Condensed Consolidated 2000 1999 1998 1999 Balance Sheet (SEK Sep 30 Sep 30 Sep 30 Dec 31 million) Assets Fixed assets 598 346 198 492 Current assets 1,018 760 695 889 Total assets 1,616 1,106 893 1,381 Equity and liabilities Shareholders´ equity 712 613 547 694 Minority interests 3 5 4 3 Provisions 55 47 34 63 Long-term liabilities 216 11 4 92 Current liabilities 630 430 304 529 Total equity and 1,616 1,106 893 1,381 liabilities 2000 1999 1998 1999 Key figures Jan- Jan-Sep Jan-Sep Jan- Sep Dec Orders received (SEK 1,887 1,761 1,302 2,266 million) Operating margin (%) 4 6 8 6 Profit margin (%) 2 6 8 6 Return on operating 10 24 41 20 capital (%) Return on capital employed 15 25 32 21 (%) Return on shareholders´ 6 14 20 13 equity (%) Equity ratio (%) 44 56 62 50 Interest-bearing liability 359 18 9 219 (SEK million) Average number of full- 1,265 1,019 860 1,053 time employees Capital expenditures for: - buildings and land (SEK 66 100 46 151 million) - machinery and equipment 110 96 74 130 (SEK million) Numbers of shares at 29,266 28,800 28,800 28,800 period-end (thousands) Earnings per share (SEK) 1.08 2.16 2.68 2.80 Equity per share (SEK) 24 21 19 24 Net sales (SEK million) 2000 1999 Change Jan-Sep Jan-Sep % Systems 1,227 789 55 Mobile Communications 674 717 -6 Microwave 80 2 Wireless Solutions 5 - Total 1,986 1,508 32 Europe 469 341 38 North & South America 1,157 686 69 Rest of world 360 481 -25 Total 1,986 1,508 32 QUARTERLY FIGURES Condensed Consolidated Statement of Income (SEK 1999 1999 1999 1999 2000 2000 2000 million) Jan- Apr- Jul- Oct- Jan- Apr- Jul- Mar Jun Sep Dec Mar Jun Sep Net sales 435 528 545 628 682 632 672 Cost of goods sold -261 -329 -346 -404 -452 -427 -469 Gross income 174 199 199 224 230 205 203 Selling expenses -55 -63 -59 -67 -75 -74 -66 Administrative expenses -26 -30 -30 -37 -36 -48 -38 Research and development -66 -79 -72 -80 -91 -91 -90 costs Other operating -4 -5 9 -8 -6 41 7 income/expenses Operating income 23 22 47 32 22 33 16 Net financial 4 1 -7 5 -6 -19 2 income/expenses Income after financial items27 23 40 37 16 14 18 Taxes -8 -6 -13 -17 -5 -5 -4 Minority interests of net -1 0 0 -1 -1 -1 0 income for the quarter Net income for the quarter 18 17 27 19 10 8 14 Condensed Consolidated Balance Sheet (SEK 1999 1999 1999 1999 2000 2000 2000 million) Assets Mar 31 Jun 30Sep 30Dec Mar 31 Jun 30 Sep 30 31 Fixed assets 247 302 346 492 558 553 598 Current assets 752 761 760 889 946 906 1,018 Total assets 999 1,063 1,106 1,3811,504 1,459 1,616 Equity and liabilities Shareholders´ equity 573 591 613 694 678 687 712 Minority interests 4 4 5 3 3 4 3 Provisions 51 53 47 63 58 60 55 Long-term liabilities 11 11 11 92 208 207 216 Current liabilities 360 404 430 529 557 501 630 Total equity and 999 1,063 1,106 1,3811,504 1,459 1,616 liabilities Key figures 1999 1999 1999 1999 2000 2000 2000 Jan- Apr- Jul- Oct- Jan-Mar Apr- Jul-Sep Mar Jun Sep Dec Jun Orders received (SEK 531 520 710 505 601 675 611 million) Operating margin (%) 5 4 9 5 3 5 2 Profit margin (%) 6 4 7 6 2 2 2 Return on operating 22 18 33 17 10 14 7 capital (%) Return on capital employed 23 19 33 22 13 17 14 (%) Return on shareholders´ 13 11 18 11 6 5 8 equity (%) Equity ratio (%) 58 56 56 50 45 47 44 Interest-bearing liability 18 18 18 219 335 291 359 (SEK million) Average number of full- 908 1,028 1,121 1,1551,199 1,267 1,329 time employees Capital expenditures for: - buildings and land (SEK 24 41 35 51 55 11 0 million) - machinery and equipment 28 34 34 34 39 31 40 (SEK million) Number of shares at 28,800 28,80028,80028,8029,183 29,183 29,266 period-end (thousands) 0 Earnings per share (SEK) 0.64 0.57 0.96 0.64 0.34 0.29 0.45 Equity per share (SEK) 20 21 21 24 23 24 24 Net sales (SEK million) 1999 1999 1999 1999 2000 2000 2000 Jan- Apr- Jul- Oct- Jan- Apr- Jul-Sep Mar Jun Sep Dec Mar Jun Systems 220 283 288 355 381 384 462 Mobile Communications 215 245 257 273 277 224 173 Microwave - - - - 24 22 34 Wireless Solutions - - - - - 2 3 Total 435 528 545 628 682 632 672 Europe 113 115 113 162 169 151 149 North & South America 157 248 281 305 388 363 406 Rest of world 165 165 151 161 125 118 117 Total 435 528 545 628 682 632 672 2000 1999 2000 1999 Operating income (MSEK) Jan- Jan- Jul- Jul- Sep Sep Sep Sep Systems 142 62 75 43 Mobile Communications 29 102 -29 30 Microwave -33 -38 -9 -12 Wireless Solutions -50 - -22 - Total 88 126 15 61 Net Group costs -7 -30 4 -13 Goodwill amortisation -10 -4 -3 -1 Operating income 71 92 16 47 2000 1999 Cash flow analysis (SEK Jan- Jan- million) Sep Sep Cash flow from current 111 130 operations Change in working capital -42 -112 Capital expenditure -162 -196 Cash flow after -93 -177 investments Financing 119 -22 Change in liquid funds 26 -199 ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2000/10/17/20001017BIT00650/bit0001.doc http://www.bit.se/bitonline/2000/10/17/20001017BIT00650/bit0002.pdf